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If you want to win at trading currencies correct forex market timing is needed but if you try and be too precise you will lose. This may sound strange at first but if you look at how forex prices move it will become clearer.
1. When novice traders think of market timing they are dominated by two major thoughts:
Predicting market tops and bottoms
It’s very tempting to do this as you want to be in at the best possible price with your forex trading strategy but you cannot predict in advance why?
Because if you then you are simply hoping and guessing a level will hold and that wont get you anywhere in life and certainly wont give you currency trading success. Let me give you an example:
A forex trader sees prices moving to a support level and buys just above it hoping it will hold – but instead the price carries on towards support, goes through the level and stops him out.
What he should have done is confirmed that the level was going to hold (we will go through how to do this in a minute) but first lets look at another commonly held belief related to the above.
2. Buy low sell high
You will have heard this is the way to make money in investing – but it’s again relying on hoping and guessing which we know will not help us win and also means you will miss the major forex trends and not get in with your forex trading signal – Why?
It’s a fact that most new trends (and the strongest) develop from new market highs o and you can check this on any forex chart. Traders who wait hoping to get into the market at a better price, simply see the trend disappear over the horizon and they don’t make any profits from it.
The Solution
Is to base your forex trading strategy on confirming if level will hold or break with momentum oscillators. If you don’t know what they are its time to learn.
We don’t have time to cover them here – but they are covered in our other articles and will give you advance warning of changes in velocity of price.
If a price is dropping to support – wait for a turn to be confirmed by these indicators.
You will miss the exact turn but you can’t see that in advance anyway, so there is no point in trying and if you trade with momentum on your side the odds are in your favour.
The same technique is used when a market breakout to new highs or lows – if momentum supports the move execute your trading signal and go with the break.
Trading the Odds
In both of the above examples you have not got in at the lowest or best price but what you have done is, got in at the lowest or best price with the odds on your side and traded the reality.
Perfection and perfect timing is a myth, no one can do it and the best way is to trade the reality when you use a forex trading system and that means confirming ALL moves are going your way before trading.
Keep in mind if you get just 50% of every major trend you would be very rich. If you want to learn currency exchange the right way you will realise perfection is impossible.
Forex trading is about making money not trying to be clever and it’s about trading high odds moves and then means waiting for confirmation.
Also you can see the video related to forex market
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Here some answer the question about forex market
I want to Learn about Forex Market?
"Foreign Exchange" is the simultaneous buying of one currency and selling of another. I understand is a good business but I have no knowledge about it. I read books but could not understand the trick. Can someone put me through all the steps and tricks I need to trade in the forex market. Thanks.
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July 27th, 2009 at 6:20 pm
Hi,
I'm trading forex.
I think all your interesting questions are disclosed in those books:
Technical Analysis by Jack D. Schwager;
Comprehensive Course on The Wave Principle by A.J. Frost and Robert Prechter;
Candlestick Charting Explained- Timeless Techniques for Trading Stocks and Futures by Gregory L. Morris;
Trading Chaos – Applying Expert Techniques to Maximize Your Profit by Bill Williams;
New Trading Dimensions by Bill Williams
Read it and you discover how useful those are. Than you be able to create your own trading technique accordingly to your available funds, time and character
July 27th, 2009 at 7:57 pm
Your tax reporting for dealing with a US broker is the same as dealing with a cdn broker in that the income reporting and transactions should be translated in Cdn $.
Regarding your quesion whether your loss should be a capital loss depends on whether your "playing" in the fx market constiute an investment or a business. There are no provisions in the Act which specify whether a foreign exchange gain or loss is on account of income or capital. An investment is generally in a situation of buy and hold, while a business is in a situation when you are knowledgeable and maybe with insider information, lots of daily time spent and numerous buys and sells during the day or week, etc.
Please see the CRA’s IT-95R “Foreign Exchange Gains and Losses”. http://www.cra-arc.gc.ca/E/pub/tp/it95r/it95r-e.txt
July 27th, 2009 at 8:01 pm
Typically, what happens is you will be given the difference between the strike price and the current market price, as clearly the Writer of the Option cannot physically deliver a curreny pair at an older, lesser price than the market. So they owe to indemnify you, or place in you in a financial position similar to that as if you have the currency pair at the current market value.
Now as for option contracts, YOU DO NOT need to exercise them if they are about to expire. That would make no sense, as if they are 'out-the-money' you would lose money. A contract can expire, leaving you out the contract's premium.
Hope this helped
July 28th, 2009 at 1:21 am
Hi,
Different countries have different laws.
Generally speaking, if you're just trading for your friends and relatives, you probably don't need to be registered.
However, if you're looking to trade professionally (on behalf with clients), then it's a more complicated matter.
Hope this helps.
July 27th, 2009 at 6:14 pm
- funny……
July 27th, 2009 at 7:27 pm
I don’t think so, I think that if you use the 12,26,9 MACD parameters at the 1 or 5 minutes chart,you would get only market noise. I sugest trying with lower parameters and wach it for 1 or 3 days and then get in to the market. But u should use it at 1 hour or daily chart. Saludos…desde México…
July 28th, 2009 at 5:30 am
In theory yes, but in practice it would take many billions of dollars. Big government-sponsored banks sometimes come into the market to drive up one currency or drive down another and it's effective for a short while but even they can't prop up a currency forever if it's crappy and going to fall.
July 27th, 2009 at 11:40 pm
i have never liked the macd indicator. it seems like it lags to far behind. i am suprised that it is the default on all charts. i am a novice, but just sayin. is it just me?
July 28th, 2009 at 12:17 pm
The particular website linked at the bottom specializes in giving novice/beginner forex-traders helpful fundamental information regarding large and detailed introductions on foreign exchange, forex-trading tips, concepts, fraud warning info, trading safety info and also excellent, detailed information on the Major currencies of the world and the Central Banks that go with it.
There is also an article written especially for novice traders, where a more advanced trader is writing about his experiences in forex-trading during one day. All these articles are for novices and beginners, but the very first link at the top of the list below is especially written for novices. On the home-page of the website, it will show the latest news on economies and forextrading and may help you while you trade.
I find this site particularly helpful since im still learning too! hope this helps!
July 28th, 2009 at 10:14 am
i am puzzled about one thing tho.
at the end of the video the example with great signal with entry buy ,respective exit selling.
my question specific to exactly this great signal : nobody says a word about multiple time frame. what about that?
July 29th, 2009 at 9:42 am
Actually the US dollar has been doing well during the recent crisis. Since this is a global financial event, foreigners think the dollar is safer than a lot of their home currencies.
In the Forex market, you're always comparing one currency to another- it's not like the DOW that either goes up or down. So if the dollar goes up versus the Euro, one is going up while the other is going down.
They don't like to talk about the Forex because the PTB (Powers That Be) would prefer that you invest your money here in the US of A. If you buy Euros or British Pounds or whatever, you're investing overseas.
July 29th, 2009 at 8:47 pm
maybe the 3 numbers that are set do not match the chart you are watching – such as 1 minute chart, 15 min chart or even daily chart- you have to set MACD to what you are watching
July 30th, 2009 at 7:01 am
The most important indicator in Forex is the price. Specially if you're trading on the short term.
On the long term fundamentals take an important role. So if you don't want to use indicators, you don't have to use them.
Money management is the most important part of trading. Even if you consider yourself good at money management, remember you can always get better.
July 30th, 2009 at 2:18 am
on a one minute chart – what parameters should the MACD be set at ? or the 5minute chart? what MACD parameters would you use ?