2Bull Forex Blog

If you are just getting started in forex trading then forex swing trading is the ideal method to start with and here we will outline out to do it and enjoy currency trading success…

Swing trading aims to take advantage of the intermediate trends, within the big long term trends and your aim is to sell at overbought levels and buy at oversold levels.

Trades typically last for a few days to around a week and it’s a great method for new traders for the following reasons:

- You get plenty of trading opportunities
- You get profits and losses quickly so its easy in terms of discipline
- Its very simple to spot overbought and oversold levels

Swing trading is much easier than trend following as you don’t need to have the patience to wait for long periods for potential trades to emerge and you don’t have to be disciplined for long periods while the trend is in motion, as your trades are completed quickly.

It’s also very easy to learn swing trading and all you have to do is have a concept of overbought and oversold.

Prices will always be pushed to far away form long term value and at these levels you will look to hit trading signals to take advantage of these levels.

To do this all you need to do is look for support and resistance levels on the chart and watch the price approach them but don’t make the mistake most traders do of assuming the levels hold wait for confirmation.

Confirming the Move

To confirm the move you need to check the momentum of price – if it starts to fall into resistance, or turn up into support you have a potential swing trading opportunity.

You need to use some momentum oscillators to confirm moves. To do this and all these are visual ones, you learn in a few days:

The stochastic, RSI, MACD and the ADX line.

Only use a few that you like and you can test them up until you’re comfortable.

Another good indicator for isolating oversold overbought levels is the Bollinger Band which, you can use in conjunction with trend lines and they will also help you establish targets too. You use them to set up the trade not confirm it but for that there a great tool.

Profit taking

I swing trading profits need to be taken at target if you are short and coming to a level of support don’t wait for the test, take your profit and bank it and the same is true in a bear market. If you don’t nip your profit in, you will more often than not see it disappear.

A fun and Profitable Way to Trade

Forex swing trading is simple and you can learn it in about a week; it’s a fun, profitable way of trading and if you include it in your forex trading strategy, you can enjoy currency trading success.

If you look at the great traders a huge amount of them came from being successful poker and blackjack players and if you think that successful forex trading, has no similarity with being a successful card player, you would be dead wrong. There are huge similarities here’s why…

Before we look at the similarities, one story sticks in my mind which comes from the 1980s and its when Richard Dennis taught a group of traders in the 1980s, with no experience to trade and after 14 days, they opened accounts and went on to make hundreds of millions of dollars. Interestingly, there were 2 professional card players in the group and they were very successful.

Since then I have read about numerous card players who count their background in card playing as a crucial element of their trading success.

Reason is, card players understand that making money is based around being at the table and betting and they live by this maxim

“There’s a time to hold them, a time to fold and a time to get out of town fast”

This is the basis of successful forex trading.

You only want to take trades with high odds (hold them) you pass by low odds trades (fold them) and you employ rigid money management (get out of town fast). The above is summed up in run your profits and cut your losses but there is another key that the successful card player uses and that’s bet size.

Bet Size

The successful card player will bet and bet big on high odds trades and very rarely bets the same amount per trade.

Most traders have no idea of when to bet and bet size in relation to the odds and that’s why they lose.

Losing is Part of Winning

You have to lose to win in cards and same is true in forex trading – but most traders in forex trading hate losing and run losses – not the successful poker player he cuts them. Losing forex traders hate doing this and leverage destroys them.

Furthermore, they simply lack discipline and cant stay on course through a string of losses (and all trading systems have them) and throw in the towel to soon.

The card player knows if he continues to maintain discipline and take his losses his time will come.

Science V Odds

Most traders like to think they can win all the time and try and follow others – but the fact is success comes from within and is based on your confidence and discipline, your on your own. Most forex traders cant stand on there own two feet, they want to trade with the crowd or want to always be right but forex trading is simply not like that.

So you can learn a lot from poker when trading forex:

You can learn that, you must only bet when the odds are in your favour and vary your bet size in line with the odds. You must cut your losses and you must rely on yourself. Most traders cant do this – but if you learn from the great poker players who became multi millionaire traders, you will know this is the route to spectacular currency trading success.

Today, traders all around the world are using complex computer programs and mathematical equations to work out the scientific theory of market movement. What are the results and how can they benefit your FX trading strategy?

Let’s start with a fact:

Today 95% of traders lose their money and it’s the same ratio as 50 or 100 years ago and this is despite all the so called advances in computers, forecasting and number crunching applied and this leads to an obvious conclusion.

Forex markets don’t move the certainties i.e. mathematics, they only move based upon odds and you can try as hard as you like to apply science and maths – but if prices move to the odds this is futile. It’s obvious:

If markets moved to a mathematical theory, we would all know the price in advance and there would be no market! Common sense – but traders love complexity, it makes them feel safe and they think it cuts risk. They may love it but it won’t help them.

Today there is a huge industry in robots and automation is the buzz word and you see extra ordinary profits in hindsight and simulations – but they never work in real time, because no two pieces of data are ever the same and you really are chasing your tail if you try it.

Just as in yester year, simple forex trading systems work best, as they are more robust with fewer elements to break. A simple odds based system should be the basis of your FX Trading strategy. Don’t be deceived a simple odds based system can make a lot of money.

The problem today is we are used to science and maths solving problems in life and making our life easier, more comfortable and it does – but that doesn’t mean it works in all areas of life and the forex market is one, where it doesn’t. You need to keep it simple, have confidence in what your doing and if you do, you can enjoy currency trading success.

So stop trying to beat the market and see it for what it is, a high stakes, high odds game and get the right forex education. If you keep it simple and trade the odds, you can make a lot of money with your FX trading strategy and that’s a fact.

There are two major types of Forex brokers, and which one is best for you can depend on your specific trading strategies. There are Market Makers (MM) and Electronic Communications Network (ECN) in the Forex market, and knowing the difference between the two is extremely important if you want to be a successful Forex trader.

Market Makers (MM) are brokerage firms that set both the asking price and the bid price. This means that an MM sets up every part of your trade. No matter if you are buying or selling, the MM is your trading partner and taking the other side of that trade, therefore ensuring that your trade will go through.

Electronic Communications Networks (ECNs) take the bid and ask prices from several different market participants (such as individual traders, banks, MMs) and then the bid and ask prices are displayed as bid/ask quotes.

When you place an order to buy, it’s matched with a sell order set at the same price. If there is no match, then your order simply will not take place because you will have no partner to trade under those terms. Unlike the MMs, the broker in an ECN does not take the other side of the trade, and is under no obligation to do so. The partner ends up being whatever trader wants to go the other way with the same currency pair.

Three positives of an MM:

1. Most market makers have set spreads.
2. Market makers normally have user-friendly, downloadable trading platforms that include free charting software
3. MMs, since they are your trading partner, tend to guarantee that your orders will almost always be filled.

Three positives of using an ECN:

1. The bid/ask prices are normally better because there are multiple sources used to derive them.
2. You can make trades within the spread itself and take the role of an MM.
3. Prices are more volatile, which is better for scalping.

Many traders who use diverse styles of trading will have accounts with both types of brokers. In fact, I have accounts with both. Knowing the differences between these broker types will help you know how to have the best set up for each type of trading strategy your system calls for you to use. For some the MM is a better choice, while for others an ECN clearly reigns supreme.

Once you intimately know the pros and cons of both types of Forex brokers you’ll be one step closer to being ready to learn to make a killing in the Forex market.

This post is all about the basics of forex charts and using technical analysis to win. It’s the simplest most time efficient way to achieve currency trading success and anyone can do it with the right forex education…

Forex charts allow you to see all the inputs that go to make up the price and while you get people who say you cant trade without taking into account the fundamentals, that to a degree is true – but forex technical analysis does take the fundamentals into account and the following equation will make this clearer:

Fundamentals (supply and demand) + Investor View Of = Price

The fundamentals are not important by themselves – it’s how all the traders view them that makes the price. We all have the same facts to look at but we all draw different conclusions from what we see and this vast mass of opinion makes the market price.

Technical analysis simply assumes that all fundamentals will quickly show up in price action and it also does something more – it tells you how the investors perceive them.

Markets move on investor sentiment and that’s why studying charts is so effective.

Human nature is constant and this is reflected in the charts.

The same formations reflect human psychology, again and again and if you can spot these high odds formations or patterns, you can execute you’re trading signals, with the odds on your side and enjoy currency trading success.

A big myth about forex charting is you need to predict what happens next.

You don’t.

If you do you are simply hoping or guessing and that won’t get you far in life, let alone forex trading. You should simply trade the truth, as you see it, on the chart and by doing so, you will have the odds on your side.

When trading with charts you only need a simple system, as it’s proven that simple systems work best, as they are more robust in the face of brutal ever changing market conditions.

You also need to trade valid data.

This is data where you can get the odds on your side and this means no day trading and no forex scalping!

The data is not reliable and prices can and do go anywhere in a day. In the longer term you can measure investor sentiment but not in the short term.

If you have a simple trading system, trade the reality of price and show discipline you can win.

Forex charts allow you to step back from the crowd and see value and sentiment, right there on the chart which you can trade for profit.

Charting is an art not a science but if you practice your art, you will soon have a powerful way of trading which will allow you to seek big forex profits in just 30 minutes a day.