2Bull Forex Blog

With the advancement of internet technology, more and more people around the world are gaining access to a high-speed internet connection via their computers. This makes online trading an increasingly popular activity among traders, and more people than ever are looking for online trading accounts to start trading with.

Benefit 1 Of Online Trading Accounts - Control

Perhaps the biggest benefit of gaining access to an online trading account is that you as a trader can be more in control of your trades. Most online trading accounts come with a free trading platform for you to look at the live market price charts. You can thus be able to execute your own trades via your computer (or trading terminal) without having to call your broker to do it for you. This is especially important if you are a scalper in the Forex market where your trades are entered into and exited in a manner of minutes. You wouldn’t want to be calling your broker every 5 minutes when you wish to exit or enter into a trade, right?

Having an online trading account also enables you to have access to your specific account details, such as your available margin and your account balance. Since you can have instant access to these figures, you can constantly adopt your trade strategy according to the changing circumstances of your account. For example, if you notice that you are using up too much of your trading margin too quickly, you may want to tighten your trade criteria and only enter into trades with the highest winning probabilities while discarding those with a lower winning probability.

Benefit 2 Of Online Trading Accounts - Comfort And Convenience

With an online trading account, you can trade in the comfort of your own home without having to put up with all the noise and distractions in the trading pits. It will be easier for you to focus on your market analysis and trading decisions when you are in a comfortable and quiet environment.

The answer is a resounding no. If you think you have to work hard to succeed at forex trading or that being smart will help you, you’re in for a reality check…

In life working hard can bring you bigger rewards in forex trading its all about working smart and learning the right knowledge, If you work extra hours in real life you get more money on most occasions in forex trading you get rewarded for one thing and one thing only:

Being right with your trading signal.

It can take you 5 minutes or 10 hours, it doesn’t matter it’s the result that counts.

In forex trading the very best traders are very often not educated to a high level, they use simple systems and in currency trading this works here’s why:

Simple systems work best!

They always have and this can be proved by the fact that 50 years ago 95% of traders lost and they still do today, despite all the advances we have seen in forex forecasting and technology.

If you try and complicate a trading system, it has too many elements to break in the brutal real world of forex trading. Simple systems tend to be more robust.

Clever traders who think they deserve success very often lose.

The problem is they come with an ego and an ego means they like to be right.

Well in the forex markets you are going to be wrong a lot of the time and the market is going to make you look a fool. Remember, there is only one right price and that’s the market price.

Of course in forex trading you have to take losses, that’s just the way it is - but that doesn’t mean you can’t make money you can.

Some of the best traders I have seen or read about are card players. Why?

They now how to hold, fold and bet and that’s exactly what you need to do in currency trading. A simple system that trades the odds is all you need and that’s easy to build.

You then need the discipline to follow your system and be humble - take your losses cheerfully and run your profits.

In my time I have probably taught 5,000 + traders to trade and the most successful one was an 81 year old lady who owned a sheep farm called Louis.

She wasn’t smart (which she would admit) but she had a simple system she applied with discipline and she piled up huge profit.

On the other hand I have tried to train some mathematicians and of course they were smart but could they take losing when the market turned their clever systems to dust - no, their egos just couldn’t take it.

So there you have it education is no barrier and to success and simple systems applied humbly with discipline is all you need.

This post is in memory of Louis, a great trader and lovely person.

There are lots of forex trading systems online and all promise to make you a lot of money, some can but most don’t. This article is all about finding the best currency trading system for you…

Lets look at the points to consider in no particular order of importance, they ALL are!

1. Mechanical or Human Input

Some traders like a completely automated forex trading system, others like to have some manual input on the trading signals - the one you choose will simply depend on your trading personality.

2. Do You like Action or - are You More Patient?

If you are a patient trader, then a long term forex trading system will suit you. If you like short term trading, then you will be more attracted to swing trading - again this is simply personal preference.

3. Is the Track Record Realistic?

The first question you need to ask yourself is the track record real?

By this we mean has it been traded. 99% of forex trading systems we see on the net have not and simply make the track record up in hindsight and use this warning:

“CFTC RULE 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown”.

The system may work - but most simulations fail and really you best off with a real time track record.

4. Can You Stand the Peak to Valley Drawdown?

A track record can make profits but it will have drawdown so assume that you join on the worst possible day and check the worst drawdown.

Can you stand it in terms of size and time to recovery?

Always assume your worst drawdown is ahead of you.

5. Do You Have Confidence in the Logic?

You will never have the discipline to apply any currency trading system unless you understand and have confidence in the logic. Keep in mind, any forex trading system has loses, so you need the discipline to ride them out.

Make sure you take the time to learn the logic and have confidence in it, as without the discipline to follow your trading system - you don’t have one!

The Myth and Reality

The above are basic questions you need to ask when considering buying any trading system.

There is a huge industry in forex robots and vendors promising you huge riches based upon a simulated track record but they normally always fail.

Be sensible and be realistic in terms of seeking out a trading system that’s right for you in terms of - your personality, your tolerance of risk, your objectives and your understanding.

Spending some time and keeping your feet on the ground, will enable you to find a forex trading system that’s just right for you and can lead you to currency trading success.

If you want to know whether you are likely to win at forex trading then simply answer this question with confidence and with no hesitation. Your answer will tell you if you can enter the small minority that make big consistent gains…

The question is: What EXACTLY is your Trading edge? The part of your forex trading strategy which will set you apart from the vast majority of losers?

Now when you answer the above keep in mind, a trading edge is none of the following, listed below! If you think any of the answers below gives you a trading edge your wrong - here are some common answers …

- I have bought a forex trading system from a vendor with simulated track record it made money in back testing and should work for real
- I can succeed at day trading and scalping
- I am following news stories and expert advice
- I am using a scientific theory and predicting market movement
- I have won money in a demo account so am confident
- I am clever and work hard so success is bound to follow
- I am using a very complicated trading system which I have back tested until it worked

NONE of the above is a trading edge. Most are commonly held views or myths and there all a recipe for failure.

The first point to keep in mind is that no one can lead you to success you have to take responsibility for your destiny. Furthermore, even if you do have good advice, you need to learn the basics of how and why the advice will work for you otherwise you will never follow it with discipline.

Being clever is no help either. You don’t get rewarded for being clever, you only get your reward for being right furthermore, complicate your trading to much and your trading system will break in the brutal real world of trading.

Trading success is based on a simple, robust system which you have confidence in and you can apply with discipline.

To do the above requires you build a set of rules which are logical, you understand have confidence in and can apply with discipline.

Forex trading success is a combination of a robust system and the ability to apply it.

The fact is anyone can learn to trade and if you avoid the myths the biggest obstacle to success is yourself - your emotions. You see, to win at forex trading you need to acquire traits that are not normal in everyday life:

- A Capacity To Work and Act in Isolation

We find this hard as we are pack animals and like to run with them and its helped us survive since Stone Age times - but run with the pack in forex trading and you will lose.

- You Need to Make Your Own Rules

Most people simply cannot do this; there so used to following rules they can’t take responsibility for their actions.

- Looking Stupid

None of us want to looks stupid but the market will do it to you over and over again. The market price is always right; only you can be wrong and people have a problem with being wrong.

Final Words

Its very hard to get the right mindset to trade forex successfully - but if you have confidence in your ability, a willingness to accept responsibility and discipline to follow your own rules, then the forex markets offer you a life changing income.

Forex price movement what makes the price a simple question? Yes but most traders get it wrong, they either think its supply and demand fundamentals or prices move to some higher god on charts - neither is true.

Prices move based upon the sentiment of the people trading - they all come together to make a price so the equation for price movement is:

Supply and demand Fundamentals + Investor Perception of them = Price

Lets look at why technical analysis and fundamental analysis have limitations and two great sentiment indicators you can use to add to help you judge sentiment and make bigger profits.

You can’t trade the fundamentals in isolation. Why?

Because all the facts are there for people to see - but we all draw different conclusions from what they mean colored by our emotions. You can’t trade them we all have the information now in a split second and it depends on sentiment toward them which way they go.

Charts don’t move to a scientific theory that many people believe.

You will find many chartists claim that because human nature is constant, there is a scientific formula for market movement - but that’s rubbish!

If there were, we would all know the price in advance and there would be no market!

Charts are useful however in showing sentiment as short time price spikes never last for long and prices always correct back to fair value, this is easy to see on a chart looking backwards - but how do you judge sentiment to back up what you see on a chart?

Answer:

Use sentiment indicators and here are 2 that if you use them, will help you spot market tops and bottoms and improve your market timing.

% Bullish

Been around for decades and is simply a poll but a very useful one.

If over 80% of people polled are bullish, sentiment is at a bullish extreme and a correction is likely and if the figure is below 20%, prices are at a bearish extreme and a rally is likely.

The above represents opinions not action and while it’s useful, it becomes even more useful when used with the Commitment of Traders Report issued by the CFTC which shows action in the market place and allows you to top the worlds best traders.

How would you like to see what some of the smartest traders are doing with a track record of warning of every major top and bottom? Well you can, with this report and it’s FREE.

While it is used in the futures market it’s a great indicator for FX trend changes.

There are 3 groups of investors that are logged.

Commercials - smart money they own the currency and are hedging and know the long term fundamentals.

Big Speculators - Mostly large funds

(The above two groups under law have to report there positions)

Small Speculators - Everyone else.

What you need to do is watch when the commercials are buying or selling heavily and the other two groups are going the opposite way.

The commercials are hedging so only move on big spikes against their position, there not leveraged and only move when price extremes occur.

If you see a big rally and the commercials are selling, while the other two groups are buying and they are at an extreme position against each other - a trend change is at hand.

You can then look for clues too enter on your charts and get confirmation there.

People move markets not by science - but by greed and fear learn to sell extreme greed and buy extreme fear and you can catch every major trend change.

The two services above help you gauge sentiment and allow you to get market timing on your forex charts.

Forex trading is a game of odds and having the sentiment behind the chart movements is a huge advantage in seeing forex price action as it is and where it may go next.