Don't give up on your Forex strategy now!

Today is September 9, 2008
Last two or three weeks almost all currency pairs were going wild, canceling the forecasts, denying logic, causing lots of troubles to many Forex participants both large and small.

The chaos in Forex still continues, however, already on Sunday, Sept 6, we saw the first glimpse of logic awakening in the market, which created a huge opening gap for major currency pairs and crosses.
Although it signalized about the first attempts to put those unexplainable rallies and sell offs on hold (which is good), it's shaken well everyone whose trading strategies were weak, causing to accept losses or give back all profits earned (which is bad).

Whatever you Forex strategy brought you during those weeks shouldn't scare you much. These conditions were a bit extreme and highly unpredictable even to expert traders. Therefore don't give up on your trading system, give it another chance to recover.
If you system, on the contrary, passed this market test with Flying colors - congratulations! You must be going in the right direction!

Cheese
Forex mouse ~C:>

A simple recipe for success in Forex

I have my own recipe for profitable Forex trading. This is my personal research after the long time practice. I'm now sticking to this recipe.

Here it goes. It is often difficult to determine what time frame to trade in Forex. I'd say, trade 1 hour TF, or 5 min TF. These are the best. Trade daily TF only if swaps by the end of the trading day are in your favor or exit your daily trade no matter what before the swap is added to your account, which means before 5 pm.

A thing of the paramount importance is exit. Use fixed and clear rules for exits, use Pivot points and trend lines for exits, use Fibonacci for exits etc. Whatever you use, make sure you stick to your rules and follow them.

Final recipe factor is timing. If you want to trade 1 hour charts in Forex, you must know what hours are the best for trading and what are the worst. Learn about best Forex trading hours and tighten your trade to those hours. Do not over trade. Whatever you got with your trading strategy for the day, take it and wait for the next day and a new opportunity to profit from Forex market.

That's it. The rules are simple: trade 1 hour, 5 min or daily charts, don't leave your trades without control, take exits in time, define a period during the day where your trading will be the most successful. Enjoy trading Forex!

Forex ascending/descending trend lines versus horizontal trend lines

Although I respect all trend lines, I don't use much ascending or descending trend lines. These types of lines can only be helpful for long term trading, such as daily, weekly and higher. Then on high time frame charts one can clearly see a trend line, and what's more important, trade successfully with it.

If to look at shorter time frames, less that 1 day, ascending/descending (let's call them Sloping) trend lines have almost no use: the moment Forex traders identify them and decide to base their trading decisions on them, the last one get passed by price without any significant respect. If someone doubts my words, please count how many times sloping trend line have really worked as expected...

With all that said let's not forget that trend lines aren't useless or hopeless. There are other great type of trend lines which is much more reliable - these are horizontal trend lines. Horizontal trend lines form levels of support and resistance. If you think about it, support and resistance levels are standing at certain price values. They have a clear identity of where (at which exact point or area) Forex market found difficulties moving further and stopped or reversed.

Compare it now with sloping trend lines, they have no such price values, because they are either ascending or descending as the time passes. They offer some sort of price corridor for the market, but don't advice clearly at which point to expect a change. that's probably why they are less predictable and reliable on smaller time frames.

What indicators to start with in Forex

Forex Trading platforms now are blooming with various indicators, where each indicator offers a different study of the market. For novice traders this variety of choices can create problem of which indicator to choose, where to start from.

There are couple of common Forex indicators that a Forex beginner may start with:

A. Moving averages: exponential, slow, weighted etc. Moving averages smooth out the data providing the clues about market directions.

B. Stochastic: slow, fast, full. Stochastic is a great indicator that shows market overbought, oversold states, and trend changes.

C. RSI: is an oscillator which works similar to stochastic.

D. MACD: moving averages convergence, divergence. An indicator that has many qualities, the main of which is to show divergence between the price and indicator readings.

So here you have four Forex indicators to start your tests with.
Good luck!

Forex lessons you won't forget

Some lessons in our life are boring, some are not. I like lessons that bring value along with fun.

Would you like to take another couple of free Forex lessons from amazing dark Forex host?

With those Forex lessons I stumbled upon lately you will be able to look inside your trading soul and may be find some hidden answers to your everyday Forex struggle.

Anyway, just a fun to read and learn. I'd recommend and you decide for yourself whether such dark mentor style is good for you :)

Stop placing tips to minimize losses in Forex

It is worth pointing out that when active trading position becomes a losing one it doesn't mean that our trading balance is going to actually shrink this time until we allow it to shrink by either accepting the loss and closing a position or moving our Stop loss too close or too soon or something else.

The art of placing Stops in Forex trading determines the success of failure of every trading order opened. It sets apart Forex traders that lose from Forex trader who win... on the same time frame, under the same market conditions!

Here are some Stop placing tips that may help avoiding painful losses in Forex:
1. Don't accept losses too soon, do your market research and have confidence in the trend you trade with.
2. Trading smaller lots increases tolerance to open negative trades. Small lot trading with wide stops is much better than big lot trading with tight stops!
3. Setting initial stop wider than you'd like to, gives a space for a new trade to develop in. Don't set stops tight, let the trade to mature, then move your Stop to a desired position.
4. Bring stop to break even to protect your balance, but not when you are +20 pips, wait till you get at leat +50 pips!
5. Set fixed targets near important support/resistance levels so that you can be sure that your trade has a fair chance to hit the profit mark rather than turn against you!

Cheese from Mouse ~C:>

Is discipline in Forex so important indeed?

Yes, I'm absolutely convinced, it has a paramount importance in everyones trading.
Let me get an example for you.

Suppose, a trader found an allegedly winning system. He brought it to MT4 and back-tested it. the system promised high yields. Our hero is ready to trade it.

But, although the factor of system potentials was positive, there is still one problem left. It is a human factor.
Trading is done by humans, unless a trader uses an automated system... this article is not for such traders, they should be fine. Do read on if you trade manually.

Let's go back to our example. Back-testing results were promising, but how smooth was the system performing? Did it require some nerves from times to times to hold a position open? If so, how prepared is a trader to trust a system and follow the rules without involving any emotions.

Discipline is a difficult part of the trading. It is most important part and it is most crucial part in trading success.
Many novice traders pay very little attention to discipline recommendations given all the time by experienced traders. But inevitably every trader comes to understanding the word "DISCIPLINE" in Forex.