What Is The Principle Reason That Forex Traders Fail?

Some traders are without doubt, their own worst enemy. There really are not that many reasons why forex traders fail. However, one of the main reasons that forex traders fail is overtrading. Overtrading can be understood as trading either too often, or with positions which are too large for the trader or the trading account. Here I will briefly cover the first.

Forex Signals

Trading too frequently

The reasons behind this could be unrealistic trading goals, a simple addiction to the market, or the psychological mindset that “the next one will be the winner”.

Let’s consider unrealistic expectations. Setting yourself attainable, realistic goals in trading, will go a huge way to relieving the psychological pressure that you can otherwise place on yourself and which can result in poor decision making. Never view trading as a way to get rich quick, because it most certainly isn’t! A patient and consistent approach, whereby controlled losses and profits are expected can avoid desperation and anxiety taking hold, which can then lead to chasing the market. This concept of chasing the market, is something that institutional traders will never do and is something that can run your trading account to 0 very quickly.

When you trade too frequently, the chances are you aren’t looking at the trade set up properly, you are not doing sufficient analysis and you are not following your strategy. In these circumstances it could be a good idea to reset your mindset. Returning to a demo account for a period of time to reset your mindset could be very useful in these circumstances.

Trading positions that are too large –

One of the main advantages of trading forex is that it is traded on leverage. This means that you can trade much larger positions with just a fraction of the value of the trade in your account. However, what you don’t want to do, is over leverage yourself. This could result in your positions being closed out for you on a lack of funds to support the trade. The key is to have sufficient funds in your account and then not too risk all of these on one large trade. Having smaller trades, which risk a smaller portion of the total amount available on your account, will go a long way towards improving the chances of running a profitable account, whilst also easing in a big the psychological pressures of trading.

Think about this scenario. You have one big trade on your account. If this trade moves against you will lose a substantial proportion of the funds in your account. The chances are your will behave in a very emotional way towards this trade. On the other hand, you are running a trade, which if goes against you the losses account for just a small portion of what you have a available in the account. Should this trade go against you, the chances are you will be relaxed enough to still stick to your trading plan.

So, this brings us to the million-dollar question of what size should my trade be? A general rule of thumb is that beginners should look to risk no more than 1% of the capital in the account per trade. But just keep in mind that trade size is not the only way to limit risk – stop loss orders can also be used, but the same rule applies – risk just 1% of the capital in the account. Risking more than this when you are new to trading makes you much more likely to run heavy losses. Having sufficient funds in your account actually makes you much more likely to have a winning account.

When you are choosing a forex broker, it is useful choose a broker that offers you a demo account in addition to a live account and a comprehensive educational programme so that you understand concepts and calculations needed to trade. Vantage FX is an award winning Australian broker which offers its clients an unlimited demo trading account. This means that you can return to the same demo time and time again, should you need to tweak your mindset or your strategy. Furthermore, they over their clients an excellent educational package including free webinars, so you have all the knowledge necessary to start trading.

How can you Trust Forex Signals

Naturally, as humans, we like to achieve optimal results with minimal effort. This also rings true when trading forex. If there are any ways of achieving good or better trading results with little effort and preferably little expense, then we naturally tend to lean towards these options. Particularly if these options mean that we can avoid making costly mistakes ourselves.
Forex signals potentially provide just that. A good forex signal provider can provide you with sound information enabling you to make profitable trades with little effort. However, these can come at a cost.
Forex Signals
The majority of novice traders, and may be not so novice, traders will usually look for signal provider through a google search, which are free or very cheap. They will be reluctant to pay for an expensive, premium service, especially if they don’t quite understand it. However, as with most things in t he world you get what you pay for. Good, free services are extremely difficult to find for anything and that includes forex signals. The important point here is that even if the signal is free, the trading that you do on the back on that signal could is more likely to more a losing trade and therefore cost you money.
The other point to keep in mind regarding costs, is at the other end of the spectrum. If you slash out too much on trading signals and your trading costs are very large, then even if your trades are winning trades, they may not cover your trading costs.
Rather than searching on google for free forex signal providers, a better approach would be to go on forums. Once you have identified a provider, which comes highly recommended, with a good six months of evidence, approach the provider for a free trial period. Most reputable forex signal providers will be willing for you to test the product before committing.
Finally, whilst signals can be extremely useful you shouldn’t rely on them at the expenses of learning yourself. Trading forex is hard work and there are no shortcuts. There is nothing wrong with using forex signals in your trading strategy, however these should be secondary to your own analysis.
Trading Forex is not easy. Some brokers such as Vantage FX provide a good educational programme for traders to learn through. This includes webinars, seminars and online resources. Learning to trade is a long process which requires patience, however with the help of a supportive broker you can turn yourself into a profitable trader.

Types of Forex Brokers and Tips to Choose the Best for you

Forex trades are facilitated by brokers, and as you begin your day trading career, it’s important that you fully understand the different types. In general, Forex brokers fall into two different categories: Dealing desk brokers and no dealing desk brokers.
So which one is the best? Well, it depends on your trading style. Each has their own advantages and disadvantages, and they offer different methods for entering and exiting trades. For example, some offer tighter spreads, but charge commission, while others have wider fixed spreads but don’t take a commission on each trade. Each broker will offer the trader an electronic trading platform to enter and exit trades, but the biggest difference is how these trades are set up.
Trading Forex
Here’s a look at the different types of Forex brokers:

Dealing Desk Forex Brokers (DD)

This type of broker is called a “market maker,” which essentially means they can quote their own prices and they often trade against your position. For example, a dealing desk broker will take a counter position to you, and in effect, your losses are profit for the broker or one of the broker’s clients. Thusly, the majority of trades are fulfilled using the broker’s own liquidity.
Dealing desk broker make their money on the spread – the difference between buy and sell prices for a currency – and they don’t take commissions. Yet, as market maker, the broker sets their own fixed price quotes, and sometimes these prices differ from actual market prices. Also, since winning trades are often fulfilled through the broker’s own liquidity pools, you often won’t be passed onto the interbank market to be paid.

No Dealing Desk Forex Brokers

Unlike DD brokers, no dealing desk, or NDD, brokers enable traders to buy directly through the interbank market, meaning the broker links up two parties on the interbank market who want to make opposing trades. These trades are facilitated through the broker’s electronic platform. One difference is that the spreads offered by NDD brokers are not fixed, but variable. And thus during market volatility, the spreads can quickly widen. NDD brokers also can make money on the spread, or they may choose to charge a commission as well.
ECN, or Electronic Communication Network, means the broker also provides real-time order book data, which increases the transparency of the trading.

Tips to Choose the Best Forex brokers in Australia

Choosing a Forex broker can be a daunting task especially if you are doing it for the first time. Indeed each one of them has their own particular services, and you might have some trouble in choosing the best ones. How should you proceed then? In this article, we will be sharing some tips to help you choose the best broker.

Location

Firstly, a broker that is located in the same country is preferred to be chosen by you. For instance, if you are located in the United Kingdom, you might want to contact a broker situated in the country. This might avoid some legal issues in the long run when it comes to transferring your money to your local back account. Additionally, it may save you some money in currency exchange if you want to change your profit into your local currency.

Reference

It is important that you pay attention to the reputation of the broker. Given the growth of the Forex industry, there are many scam brokers that have mushroomed all over the place. This is the reason that before choosing a broker you should make your due diligence. The best way is to search the name of the Forex broker with the world scam on Google and find out what other people are saying about the particular broker.
Alternatively, you might want to visit the Facebook pages of the Forex broker to find out real customer feedback.
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Federal Reserve Interest Rates: A Sure-Fire Hike on the Horizon?

For the past six months, many online trading specialists such as those affiliated with CMC Markets have been speculating on a potential interest rate hike by the United States Federal Reserve. Although some were calling for such an increase as early as November, it is no surprise that the tumultuous election results have delayed this action. Now, it appears all but certain that Janet Yellen will announce this hike during the upcoming 14 December meeting. Why are analysts confident in such an outcome and what will this (potentially) signify for the electronic trading community as a whole?

Inflationary Data

From a purely technical point of view, the United States job market has seen significant improvements throughout the 2016 financial year even if recent figures may indicate a bit of a short-term slump. Perhaps more importantly, Mrs. Yellen pointed out that inflation has started to pick up pace (1). These tend to be the two historical conditions which indicate that a rate hike is not far off. Unless some drastic economic data emerges during the next three weeks, it is perfectly reasonable to assume that this action will go forward as planned.

An Independence Issue?

While the technical factors behind such a move are clear, astute online traders need to appreciate some other causes which may not be as explicitly stated. It is no secret that soon-to-be-president Donald Trump has been a sharp critic of the big banks. This has no doubt fed into the increased likelihood of such a hike. Mrs. Yellen rightfully pointed out that politics and banking do not necessarily mix and that countries which saw an intertwining of the two had experienced “terrible” consequences in the past.

Federal Reserve Bank

The main concern is that Trump will try to reign in the power of such institutions. Although this may be unprecedented in recent years, the fact that he has already sharply criticised Mrs. Yellen for her handling of the economy could signal that troubling times lay ahead for larger financial institutions. So, an interest rate hike on 14 December might also be interpreted as a move to bolster the economy and strengthen the argument that the government should not overtly meddle in financial policies.

A Dangerous Example?

There have always been concerns that a Trump victory could free up paths for other conservatives in the United Kingdom to gain ground. When Ed Balls (former Shadow Chancellor) recently called for the independence of the Bank of England to be curbed to address what he called “growing discontent” (2), we have to wonder if an interest rate hike within the United Kingdom is not far off. However, the one solid argument against any such move is that the government will not want to “rock the boat” after the recent referendum.

Online Trading Implications

It seems a rather safe bet at this point to assume that a rate hike initiated by the United States Federal Reserve is indeed in order. So, what does this mean for the average online trader? In order to appreciate the implications, it is important to look beyond the immediate impacts of the hike itself.

Although there is no doubt that this move makes a great deal of sense from the point of view of the domestic economy, it is just as critical to realise that a hike is likely meant to (partially) quell jittery market nerves between 14 December and when Trump is officially sworn into office. There are many who have already grown sceptical in regards to the officials being appointed to senior posts within his new cabinet. Perhaps more worryingly is that as of yet, he has still not outlined how he plans to tackle the domestic economy. These actions (and inactions) have investors worried. So, a rate hike could represent at least a temporary means to allay such concerns.

We should therefore look for a short-term rally on the dollar immediately after the announcement of the rate hike before its value somewhat levels off during the holiday season. As for what will occur once Donald Trump is sworn into office, it appears as if we are truly entering into uncharted territory.

Is Forex Really a Business Opportunity for All and Sundry?

Foreign currency market is a completely different niche and you shouldn’t mistake it for stock trading. If you are really serious about FX trading, you must first learn the basics, get used to the trading environment and the technical aspects of it and get involved in the trading game. Learning FX trading is like learning swimming or bicycling. You may know how to stay afloat or how to maintain balance while peddling, but you need to keep practicing. Is Forex trading really suitable for you? It depends on how well-equipped you are with the knowledge and money market insights.

Trading Forex

Market knowledge reigns supreme

There are many new traders who think that people with a natural penchant for mathematics and finance would easily derive more profits than others. However, Forex market is not that simple. A trader who has a deep understanding of international politics and bureaucracy would quickly figure out how the national leaders of different countries are reacting to statements of one another and how it actually impacts the economy, the currency.

There is no denial of the fact that somebody with an economic or financial background would get the edge over somebody who has, for example, studied literature for all his life. However, even if you do not have a background in finance, you can still do rough estimations without having a background in finance. However, nobody gets too knowledgeable about the market. There is always a vast scope to learn.

Experience is the key

While Forex market brokers will tell you that the market treats all the first-timers quite generously, experience always plays a pivotal role. Right now, getting success in FX market trading depends solely on how good an individual is at trading and how experienced the trader is. While dealing with fresh challenges, you can bring your experience to the table and you can soon be able to find certain patterns in the market trends.

Now, everybody does not have the patience to get on the learning curve. They take it for a money-spinning scheme or machine and get disappointed as soon as they start losing. You can always get a Forex tutorial for learning more about the market. However, you need to have the mindset to accept loses as they come. If you can’t accept loss, you should not enter the market in the first place.

Patience, patience, patience

For a newbie, straining his eyes by looking at the seemingly meaningless numbers on the screen can be quite a burden. However, if you are really passionate about FX trading, you will soon learn read between the rows and columns. Forex trading is about exercising patience and the moment you lose your focus from it, you actually start losing the game. Do not let your greed take over your rational thinking. You should steer clear of anything that distracts you or breaks your patience. Like in harvesting, you need to give the tree some time for it to bear fruits.

If you are eager to make Forex trading your full-time pursuit, visit CMC Markets to know more about how it actually works.

Top Reasons You Should Trade On The Forex Market

The Forex market is where people trade different currencies. In terms of sheer size, it is by far the biggest market in the world. That means there are lots of different opportunities for investors with money to spend. Of course, there is always going to be a level of risk involved in any currency bet, but those who educate themselves properly tend to do rather well. In this post, we’re going to highlight some of the top reasons you should get involved with that market today. Don’t worry if you don’t have any previous experience because we’re going to keep things as simple as possible.

Top Reasons You Should Trade On The Forex Market

We know there is no point in using industry jargon at this stage. You just need to understand the benefits.

  • High returns

If you manage to land on a good deal, it is more than possible to make some very high returns from the Forex market. Indeed, many of the world’s most successful traders frequently use that market to raise funds for more risky investments. ACM forex trading could make sense if you are just starting out, but you can also handle it all single-handed.

  • Small initial investment

One of the best things about the Forex market is that you don’t need to risk millions in order to see positive outcomes. Some traders start with as little as a few hundred dollars and successfully make thousands in their first month. You are never going to get that when you focus on the stock market.

  • Easy to understand

Out of all the different markets in which one might choose to invest, the Forex is by far the easiest to grasp. That is because there aren’t that many choices to make. You are simply investing in currency and making a profit as valuations decrease and increase. Understanding Forex pricing is essential, but you can get your head around that in a couple of days. Simples!

  • Convenient

Most markets only run for a certain amount of time each day. That means it can be difficult to trade on them while still holding down a full-time job. The Forex market is international, and so it is open twenty-four hours each day. That allows people to trade at whichever time might be convenient to them.

  • Daily profits

Lastly, you don’t have to wait months to see a return on your investment in currency. The Forex market allows you to make and withdraw daily profits. That is one of the most attractive elements for many people. Just remember that you should never risk more money than you can afford to lose.

As you can see from the points made in this post, the Forex market offers the best benefits for traders who are still finding their feet. Investing in the stock market simply doesn’t make sense unless you have a lot of expertise. Anyone can make money from the Forex market without having to exert much effort. As you become more experienced, you will have the opportunity to move into other investment areas. However, we think you should play it safe right now.

The Four Types of Futures Trading Explained

Futures trading can seem rather complex, but the concept is actually quite simple. One of the easiest ways to explain it is to use an analogy:
Imagine that a farmer offers a horse owner 5,000 bales of haylage to feed their animals through winter at a price of £30 per bale. In doing so, the farmer gurantees that this is the amount the buyer will pay. The buyer is obligated to pay this price. However, the farmer is betting on the fact that prices will not end up being substantially higher than this, and the horse owner on them not being any lower.
futures-trading
This is futures trading; trading futures contracts that allow a particular stock, commodity or asset to be purchased at a pre-determined price.
What is Futures Trading? 
Futures are a medium that draw their value from their underlying assets. Their purpose is to allow buyers and sellers to draw up contracts and come to arrangements that protect them from a change in price.
There are four types of futures traders in existence: hedgers, speculators, arbitrageurs and spreaders.
Hedgers 
Hedgers trade on the basis of minimising the risk of dramatic fluctuations in price. They tend to be the owner of the underlying asset or other futures contracts of the same ilk. Their transactions go short in order to shield the market against damaging changes in price.
Speculators 
Specualtors are the driving force behind the futures market, providing activity in the form of day trading and swing trading strategies. They transact through brokers like Sucden Financial, buying and selling futures contracts in an attempt to make a profit through their speculation. They indulge in the most high risk form of futures trading.
Arbitrageurs 
Arbitrageurs are a very specialised type of trader. Their sole purpose is to spot price anomalies and utilise them to their advantage. This is a highly technical area, and traders usually rely on advanced systems and super computers to detect these anomalies between futures contracts and their underlying assets automatically, before anyone else can seize on the opportunities that they provide.
Spreaders 
Spreaders use ‘futuresspreads’ to inform their trades, utilising the variation in price and rate of change of different offsetting futures contracts. This is quite hard to understand; essentially, these traders create futures positions that can only fluctuate within a set limit, increasing the likelihood of profit and lowering commission rates for spreaders. Thus, their aim and intention is to reduce their risk and improve the probability that they will make a profit.
Voila – the four types of futures trading explained!

Understanding Forex Pricing

One of the keys to becoming a successful forex trader is an understanding of the basic fundamentals of buying and selling currency. To do this, it is vital that you can use quotes and spreads to inform your trades.

Understanding Forex

To help you out, here’s a quick rundown of how forex pricing works…

Factors Influencing Buy and Sell Rates 

In their most basic form, rates are what they are simply because banks and forex brokers are willing to buy and sell them at these amounts.

However, the prices that these individuals are willing to pay are influenced by a number of factors, such as:

  • Actual monetary flows i.e. how much money is entering and leaving the market;
  • Supply and demand;
  • Global events that will impact the market.

Pips 

If you’re trying to understand how pricing works, then it’s important to know about ‘pips’. ‘Pip’ stands for ‘percentage in point’, and is the smallest quoted change in the value of one currency relative to another.

Each of the major currencies around the globe, with the exception of the Japanese yen, is priced to four decimal points. Thus, a pip is 1/100th of one per cent, so if a currency priced at 1.0000 moved to 1.0005, it would have increased by five pips.

The Japanese yen is the only currency where pips work a little differently. Values are priced to the third decimal point, and a pip is calculated at the second of these. This means that if, for example, the yen was at 86.000 dollars, and moved up to 86.010, it would have increased by one pip.

Spreads 

A spread is the difference in pips between the asking price and the bidding price of a currency rate.

Forex trading brokers use these spreads to make a profit. The way it works is like this:

Imagine that your forex broker uses a three-pip spread. Your broker may pay 1.3000 dollars for a unit of euros. Using a three-pip spread, they would sell this unit to you at 1.3015, and buy it from you at 1.2985. As you can see, both transactions would result in a profit for them.

This spread has an impact on your own profits, with smaller spreads, such as those offered by brokers like ThinkForex, offering the greatest monetary opportunities to traders.

To learn how to trade successfully, it’s incredible important that you understand these concepts. Profit margins within forex trading can be minute, and knowing about underlying concepts such as pips and spreads could be the difference between profiting and making a loss.

Enhance Your Forex Capabilities With Price Action

Perhaps you are new in the forex trade and you have heard other traders talking about price action or PA and wondered what they were referring to; they are simply talking about forex charts in general but specifically the movement of actual prices. You will realize that, if you have a candlestick on the one hour timeframe you will end up with PA data worth an hour and if your candlestick has a five hour timeframe you will have 5 hours of PA data. This means that you need more PA data for you to have more accurate predictions; getting a daily candle therefore gives you more data to work with than someone who goes for smaller timeframes.

Forex trading using price action gives you the ability to predict price movements on the charts by only observing the available PA data. You only need to be able to spot a particular PA setup or configuration which will allow you to make an accurate prediction on the direction the price is taking. Most traders use indicators such as RSI or Stochastic on their charts even though they don’t really understand how they work. Most of these indicators use very complicated mathematical formulas to draw lines on the chart you are watching. It beats logic for anyone to use a system that is too complicated to understand.

May be you need to know that these indicators actually use price action to draw those lines for you and if that is so, you can avoid all the confusion and go straight to the source of the information. By going straight to price action you will have cut out those indicators and in the process start understanding trade patterns and why you should take particular decisions. Thai enables you to place any trade that you do with the confidence of knowing that you understand what is happening and exactly how the system works. The other advantage of using PA is that the indicators are sometimes slow which means you can easily miss out on some moves. Using price action makes you, the trader, understand the market and spot the patterns for yourself; you also position yourself in a place where you see all the positive action.

There are different PA setups traders can learn to work on; these can be in the form of a candlestick or a combination or two or three and sometimes a cluster of them. Price action trading setups are normally simple even though there are those that are a little complicated. You are always better off playing it simple because when it comes to forex trade, keeping things simple doesn’t necessarily mean you will get less profit. Actually, the secret of succeeding with PA is keeping things as simple as possible. Experienced traders will tell you that trading with single candlestick has always been the most profitable approach. As long as you learn how to watch and correctly interpret candlestick signals, you will make better profits without exposing yourself to very high risks. This is actually the essence of forex trade; you can become an accomplished trader by using simple price action methods correctly.