If you want to make money in forex trading then you need to learn forex trend following and how to lock into the big trends and milk them for all there worth. The big trends last for months or even years and can offer fantastic profits, if you learn to follow them.

So how do forex trend follow correctly?

Let's start with some basics:

The big trends in currencies last a long time, because they reflect economic cycles and they last for months or years, so currency trends do too.

Forex trend following does not mean trying to day trade or scalp this is a way to lose money, as all short term volatility is random so don't try it.

How do you catch and follow forex trends? You need a robust, simple, forex trading system which is based on forex charts. Here are the basics of a system that will catch EVERY Big move.

Buy breakouts - FACT:

Most major forex trends start from new market HIGHS, so you need to buy breaks of resistance.

The more times a resistance level has been tested the more valid it is and if possible the time frames should be weeks or months apart. The more tests, in more time frames and the wider they are apart the better.

When you buy these breaks make sure price velocity is on your side.

You can find out by using some momentum indicators these are covered more fully in our other articles - but two great ones are the stochastic and RSI Indicators. If they support the break then you have a potential high odds trading signal.

The stop is then easy - right below the breakout point.

With this method you're not interested in trading for the sake of trading, you need to be patient as the big high odds trades don't come around every day and sometimes you need to wait weeks or even months for a high odds trade to present itself but they always do and when they do offer stellar profits.

Your not interested in trading for fun - your interested in trading for big gains so forget all the lows odds trades.

Once you have locked into a trend and it's underway, you need to get ready for the hard part:

Following the trend and this takes a lot of discipline.

The bigger a profit becomes the more tempted a trader is to take it or lock in profits by moving his stop. The bigger the profit becomes the bigger the temptation is to take it, that's human nature - but you must stand firm.

You are going to have to sit on open equity swings against you which eat your open equity however so long as the long term trend is intact, hold it.

Trail your stop very slowly and way outside of random volatility and accept the fact when the trend changes you are going to have to give a good chunk back - but that's ok, if you caught 70% of every major trend you would be very rich.

Forex trend following is all about having a simple system, being patient, buying valid breakouts and following breakouts with discipline - its not easy to do - but if you can do it, you will make huge gains and enjoy currency trading success.

When trading currencies online, there seems to be no end to the mistakes a beginning forex trader can make. Beginning traders are always the most susceptible, but experienced traders can often revert back into bad practices as well. Here are some of the most common trading mistakes listed in no particular order, and how to avoid them.

Predicting instead of reacting. Otherwise known as overconfidence. This usually happens after a winning trade or two. The trader starts to think that if he can enter a trade sooner, he will get more pips. He begins to believe he can pick the top or bottom before the market reveals it to him. So instead of reacting to what the market is telling him, he starts to predict what the market will do. He enters a trade and the market continues its move, which is against him. Now, does he admit he was wrong and close his position, or does he add to it?

Adding to losing positions. Here is an extension of predicting instead of reacting. Look, you just entered a trade and the market is going against your position. The market is telling you, you are wrong. Now is the time to close your position, not add to it. If you add to your losing position, you are making at least two incorrect decisions. First, you are predicting the market will turn around. Second, you are hoping the market will prove you right because you are unable to admit you made a losing trade. Losing trades are a fact of life in the forex market. You weren't wrong, simply, your edge didn't play in your favor on this trade. Close your losing position and move onto the next trade.

Insufficient capitalization. Forex trading is already highly leveraged. Insufficient capitalization just magnifies the potential problems you can face. If you read about the famous and big name traders, they never use more than 1% - 2% of their trading capital on a position. Get out a calculator and let's see... 1% of $10,000 is $100. So as a position trader who might have a stop-loss order of 100 pips, you can only trade one mini lot of one currency pair for each $10,000 in your trading account. That is, if you want to trade like the pros. Do you have $10,000 in your account? Why do forex dealers boldly advertise you can start trading with only $250 then? Because they are in business to make money, and if they can convince you to commit trading errors, they stand a much better chance that they will soon have your money.

Overtrading. A close cousin of insufficient capitalization. Knowing that very few currency traders trade with sufficient capital in the first place, they further compound the potential problems by trading too actively and in too many currency pairs. Spreading themselves too thin you might say. Potential problems include loosing focus and margin calls. Getting a margin call is a very irresponsible position for a forex trader to be in and is a direct result of overtrading, over leveraging, and insufficient capitalization. This is as close to the perfect recipe for failure as you can get.

Not using stop-loss orders. There are very few times when not using stop-loss orders is the correct action to take. Large traders with several hundred or more lots don't want to advertise where their stops are placed is one. The other might be scalpers whose stop is only 10-15 pips away. By the time they figure the math and enter it in the system, the price might already be there or even past it. And some forex dealing stations won't let you place stops closer than 15 pips anyway, especially in fast moving situations. Other than those times, you need to put stop-loss orders in on every position. It is in your own best interest to protect yourself. I know, some people whine that their stops are always being run by the dealer. A whole article could be written on stop-loss order management, if not a complete chapter in a book. Let's just say for now, don't put them where everybody else does, and don't put them too close.

Trading as a hobby. Golf is a hobby and it costs you money to play. Horseback riding is a hobby and it costs you money as well. The point is hobbies cost money, business makes money. You need to treat your forex trading as a business if you ever hope to make money on a consistent basis. That means keeping records, keeping a trading journal, and have a written business plan. You wouldn't invest money into a start up business without first seeing a business plan, so why would you invest money into your own trading account without the same thoughtful consideration.

Not having a trading plan. This is one of those catch-all mistakes. If you have a written trading plan, and follow it, you will already have identified and hopefully eliminated all of the above mistakes. If you don't have a written trading plan, you are almost assuredly making some, if not all of the above mistakes. Maybe not all at once, but even occasional mistakes add up quickly. Do yourself a favor and don't put on another trade until you think through and write down the response for all of the above mistakes and any others you can identify, as well as entry and exit rules. Then follow it.

These are just some of the many mistakes you can make as a forex trader. You need to take responsibility for yourself and your money and act in your own best interest. The currency markets are a zero sum game and the many players are out to make a profit. Don't let them profit with your money. Do your best to eliminate the above mistakes, and you will go a long way to ensuring you are the one who profits in the forex market.

If you are interested in currency trend following then you need to understand and cope with standard deviation of price - if you don't you will lose and it's a significant and underestimated area to study for currency trading success...

Lets look at currency trend following and how standard deviation can help you spot trends and hold them and get bigger profits from your forex trading. Standard Deviation simply measures volatility statistically and shows the difference of the values from the average one and is calculated by taking the square root of the variance, the average of the squared deviations from the mean.

In simple terms:

The volatility as well as the standard deviation of the market studied gets higher if the closing prices and average closing prices differ considerably. If the difference is small the standard deviation and the volatility of the market is low.

Fact:

Humans make the price of any market and they will push prices below or above the average, when the emotions of greed and fear come into play. This never changes because human psychology never changes - humans always push prices to far up or down and always will. These price spikes tend to be temporary and prices eventually fall back to fair value or the average.

You can spot price spikes on any forex chart and the big spikes simply don't last long they return to fair value - Understand this and you will have a head start on your quest for profits with your forex trading strategy.

Keep these points in mind:

1. The reversals of trends are accompanied by high volatility levels as prices blow off.

2. A chart breakout after low volatility that sees high volatility unfold can indicate anew big trend is underway.

3. High volatility within any trend in motion, is common and traders can take profits on these spikes and add to new positions on dips to the average.

A good tool to use in relation to volatility is the Bollinger Band which has two outer bands (the standard deviation) and the middle band which represents the average or mean price.

The Bollinger band is an excellent tool for spotting new trends, spotting reversals and getting in on existing trends, when the risk / reward is at its best.

When following currency trends many traders can pick the currency direction correctly - but lose because they have their stops in the wrong place or hold trends for to long.

The Bollinger band can help with all of these problems and help you enhance your profit potential.

One of the keys to successful trend following is balancing the risk reward and if you use Bollinger bands in conjunction with momentum indicators and support and resistance, you will time your trading signals with greater accuracy, stay with trends longer and see turning points better.

When currency trend following, if you want to win and catch and hold the big trends you need to understand volatility and standard deviation of price - if you don't, you will probably lose, so make it an essential part of your forex trading education.

I have experienced getting well enough result in my first trading with real account. I have a good trading system and I have discipline on running it. My money grew day by day. But you know what happened next?
I once loss several times, then I start to let my emotion take over my trading. And guess what? I loss all of my money within 3 days!!!

Based on my experience, I want to share my experience which probably could help you in first day of your trading. Surely, you often hear about technical analysis, fundamental analysis, trading management, money management, and various other forex theories. So, I feel that I don’t need to tell more about forex theory to you, because it will only make you feel more confuse. I will enhance one important thing, that will balance all theory that you already have: emotional management!

You possibly have your own management trading, like, will not use your capital more than 10% at one trading, or will not use stop loss more than 20 pips. But have you make the rule concerning on your emotional management?
For example:
1. I will never open a position, when I’m having a bad mood
2. I will turn off my computer when I feel angry because I’m loss
3. I will not trading when I feel sleepy
4. I will never open position when I feel tired
5. etc.

I’m sure many things that concerning emotion which often make you loss on your trading. You can think of your other bad habit that often you do, whenever you are in a bad mood to do a trading, and you can start to make the rule to eliminate all your bad habit one by one. I hope you will try to manage your emotion. However, although you are very smart, without emotional management, you would fail sooner or later.
Then, if you want to become the 5%, you must defeat your emotion with emotional management..!!

Enjoy your trading

If you are considering forex and currency FX trading then you this article is for you and will give you the basics you need to know to succeed...

The first fact to keep in mind is that around 95% of traders lose all their equity and lose it quickly. If you want to be in the small minority of winners then you should consider the following and whether you have the mindset and motivation to do what it takes to win.

Don't Follow ANYONE!

There are many vendors on the net who would like you to follow their systems and they all promise you will get rich - but you shouldn't follow them. Most are selling unproven systems, with simulated track records which have never been traded and we can all make money on paper.

There are no secrets to successful forex, Currency and FX trading and success really is down to a good forex education and the right mindset to succeed.

Why You Can Win If You Want To

While 95% of forex traders lose - it is a known fact that everything about forex trading can be specifically learned. It's not easy and you wouldn't expect it to be with the potential rewards on offer but it can be done and that's very encouraging.

So What Do You Need to Be a Winner?

Well you need a simple forex trading system and the simper the better. Simple systems have always worked best, because they have fewer elements to break than complicated ones. Now comes the hard part:

You need the mindset to succeed and execute you're trading system with discipline.

Always keep in mind if you don't have the discipline to execute your trading signals in line with your system, you don't have one!

Discipline is The Key

Mindset and discipline are the keys to success.

It's a fact that most traders simply cannot acquire these traits and to be fair, it's not easy - but you can do it, if you are prepared for the following:

- To do trading signals that disagree with the majority.

- To ignore news stories and expert opinion.

- To follow your rules with discipline even when you are taking loss after loss.

- To look stupid when the market wrong foots you.

- To be prepared to take a majority of losing trades and pay for them by running a minority of winners.

- The discipline to hold trades even short term dips in equity are costing you thousands in open profits.

The above list contains just a few of the factors you will face, where you have to stay disciplined and keep your emotions and bay which will be telling you to do the opposite of what you should do - Easy?

Far from it, it's very hard - but if you can do it, then you will be rewarded with long term currency trading success.

Winning traders have a plan and execute it with discipline.

They are prepared to stand along and not rely on anyone else. Its uncomfortable being along and standing away from the crowd - after all, man is a pack animal and seeks approval of his peers - but in forex trading run with the crowd and you will lose.

There are few occupations that give you the earnings potential of forex currency FX Trading and providing you are prepared to get the right education and learn to get the right mindset there is no reason why you cannot enjoy currency trading success.

Automatic forex day trading systems allow traders to make money by simply following forex trading signals which are generated by the system they are following. It's time efficient and allows you to make money without much effort - but how do you find a good system?

If you want to get rid of 99% of systems advertised on the net which are destined to lose - look for the disclaimer below and pass it by.

Read the disclaimer carefully:

"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".

An automatic forex trading system that carries the above note in relation to performance ( or similar) means it has NEVER been traded for real and simply simulated in hindsight and that of course is easy. We could all be rich beyond our wildest dreams if we had tomorrow's price today, but forex trading is a little bit harder - we need to trade not knowing the future!

The forex trading systems that you see for a few hundred dollars and sold on the net with extraordinary track records always carry the above.

You can find some with real track records and these are the ones you should seek out.

Sure, past performance doesn't guarantee future results but if you are like me at least it shows the vendor has had the confidence to trade it!

If you do find one with a track record of real gains, make sure you are happy with the track record and you understand how and why the system works, so you can follow it with discipline.

A Better Way to Make Forex Profits

There is another route get your own together and trade it - building a forex trading system is not as hard as ,many traders think and we have covered this in our other articles.

You can of course get some free automatic trading systems and one of the best is Richard Donchian's 4 week rule.

This is a simple powerful system devised by the father of modern trend following - Richard Donchian and it's been used as a base by many of the world's top traders and is so simple:

All it postulates is the 4 week cycle can be traded in any currency or commodity.

All you do is buy a 4 week high and go long, or sell a 4 week low and go short - that's it!

Sounds simple - it is and you don't even need a computer package to do it, you can do it by hand. Does it work? Back test it and see.

Simple forex trading systems work as they are more robust than complicated ones with fewer elements to break. The above is simple - but don't think that it doesn't make money, it does.

If you want to follow an automatic forex trading system find one with a real time record but a better way in our view is to build your own or use a free one like the 4 week rule - the 4 week rule has made money and will continue to do so unlike the systems sold with simulated track records and of course it's free - look it up and test it and you maybe surprised at how much money it makes.

Many forex traders think technical analysis is akin to some kind of science where prices move to some mysterious theory but they don't, they are a direct result of human nature. If you understand the formula enclosed and its significance, you could soon be making some big forex profits.

Prices move to this equation:

Fundamentals (supply and demand facts) + Trader perception of = Price

The news and supply and demand factors are important but it is human perception of them that makes the price. We all have the same facts to look at - but you, me and millions of other traders all have our own views and this mass view, equals the price.

Human nature is constant - we are not creatures of logic though, we are creatures governed by emotions. The emotions that dominate in forex trading and can be seen on a chart are: Hope, greed and fear.

Forex charts are not a science as many technical traders would have you believe, humans don't conform to a scientific theory - but we do as a mass create high odds chart formations, as a direct consequence of our emotions. Our trading psychology repeats and will continue to repeat, as human nature NEVER changes.

Trends tend to reflect the long term supply and demand for the currency and can last for weeks, months or years and are easy to spot on a forex chart. Of course, any currency reflects the underlying health of the economy and economic trends last a long time.

As humans though, we have a tendency to push prices too far (both up and down) and these price spikes are pure emotion. Prices always return to fair value from these spikes and the fact there temporary means - They can be spttted and traded for profit.

Fact:

Markets collapse when they are most bullish and rally when they are most bearish - this is human nature at work.

Price spikes can be traded for profit and they don't just occur in long term time frames, they also occur in shorter periods within the main trend and traders will try and swing trade these overbought/ oversold scenarios.

Forex charts are a great way to trade because, you see the reality as it is - the fundamentals are taken into account and more importantly, all trader's perception of them.

A technical analyst doesn't care how or why prices move, he just wants to make profits when they do!

Charting as we have said is an odds game not a game of certainties - its an art and you have to learn the right formations and how to time your trading signals; this comes with practice and anyone can learn to use them. Furthermore, when using charts you only need a simple system based upon support and resistance and a few timing indicators and that's it. In forex trading, simple trading systems work best, as they are robust and have fewer elements to break than complicated ones.

So if you want a great way to trade forex markets get your charts out and start practicing your art, it could make you big profits and bring you currency trading success!

Many forex traders want to use forex robots and make automatic forex profits but if you want to follow a forex trading system then you need to be able to spot curve fitting or you will lose...

So what is curve fitting?

Curve fitting is testing a system over back data and bending the rules of the system to fit the data. This is similar to shooting at a barn door with a blindfold on and then drawing a bulls-eye around everyone afterwards!

Most forex robots you see are curve fitted and a good clue is - if you see the disclaimer below with the track record read it very carefully!

"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".

Check any forex trading system you buy for the above and if you see it the track record is meaningless.

Anyone can make a profit in hindsight and bend the rules to fit the data in a back tested simulation - its easy.

The problem is vendors simply make up track records and curve fit them, knowing they will lose in real time (if they had confidence in them, they would of course trade them themselves and have a real one), these robots rely on clever marketing copy and the fact that most traders simply don't read the small print. These traders are either naïve, greedy or both and pay for it in the market.

If you must want to trade an automated forex trading system, make sure it has a real time track record - but beware - there few and far between and expensive. You don't get good performance for a few hundred dollars.

Even if you do find one, make sure you have confidence in how and why it works so you can follow it with discipline.

A Better Way To Trade?

Another way to trade is to simply make your own forex trading system and this is much easier to do than many traders think. You can soon get a simple robust system together and be making some great FX Profits and we will cover this in the next article in this series.

In conclusion be very careful of forex robots that promise you huge gains with low risk, for a few hundred dollars - they don't work long term, are curve fitted and as you can see from this article, your clue to avoid them is in the disclaimer.

Bollinger Bands Defined

Developed by John Bollinger, Bollinger bands are one of the most popular, flexible and easy to use technical indicators around. Here we will look at the logic behind them and how to use the to enjoy greater forex profits.

Bollinger bands are simply, volatility bands one each side of a simple moving average.

Bollinger bands are calculated using the standard deviation of price over the same period as moving averages and plotted on either side of the moving average. Moving averages are used to identify the underlying trend and Bollinger bands combine this with the ability to see the volatility of the individual currency as a trading envelope.

The distance between upper and lower Bollinger bands reflects the standard deviation of price (volatility) of the currency traded.

As prices become more volatile the outer bands move further away from the longer-term average, as volatility decreases they are of course closer to the moving average.

Why There so Useful

In any market, the value of it tends to rise slowly overtime but price spikes occur from time to time and these are normally a reflection of the greed or fear of the participants.

Short term price spikes never last for long and prices eventually come back to more realistic levels ( in the case of the Bollinger band) this is the moving average. The volatility of the outer bands therefore tells us how volatile prices are - and how far away prices have moved from fair value.

Bollinger bands can be used in the following way

1. Catching New Trends

When a market is in consolidation it tends to exhibit low volatility, when it trends on the other hand higher volatility is normally present.

When Bollinger bands are narrow, this shows a market with low volatility however low volatility in currencies never lasts for long and traders can be on alert for a breakout and new trend.

Trader should look for prices to break out of the outer bands in either direction to indicate a potential new trend.

2. Timing Your Trading Signal

If you want to get in on an existing trend the Bollinger Band can help you determine the best area to execute your trading signal in terms of risk to reward.

In a strong trend prices will tend to dip to the centre band or fair value and this is the place to execute your trading signal.

Look at any strong trending currency and you will see how effective this simple strategy is.

3. Spotting Market Tops and Bottoms

When top of the band is hit, you can sell, prices should revert back to the moving average. If the price touches the bottom of the band, they look again for prices to revert back to the average.

DO NOT USE IN ISOLATION!

Bollinger bands are a volatility indicator - they should NOT be used in isolation to enter trading signals.
When using Bollinger bands they should be combined with support and resistance lines on your forex charts and ideally, before entering a position, you should use momentum oscillators, to confirm your move. An ideal one is the stochastic ( although there are many more), if you confirm each set up, you will get the odds on your side and that means big long term profits.

Bollinger Bands are a great tool and if you want to trade more profitably, make Bollinger bands part of your forex education.

Here are the 4 deadly mistakes that you need to avoid to enjoy forex trading success.

1. The mechanical trading system with the simulated track record

You will find them all over the net and people fall for these and yet they have never been traded and all have this disclaimer read it carefully and you will see why if you buy one you're destined to lose:

"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".

So what use is that?

You can make up anything in hindsight. Traders fall for these again and again and wonder why they lose - well they should have checked the above and then they would know - the so called profitable track record was made up.

If you want to learn currency exchange learn this - no one is going to make you rich for a few hundred bucks, life is simply not like that.

2. Predicting Forex Prices

How many traders think they have to predict forex prices to win? Most and if you try it you will lose. Why?

Because a forex trading strategy based on predicting prices is destined to lose, as prediction is simply another word for hoping or guessing and you won't get far with doing that in life or forex trading!

In forex you don't predict - you act on the confirmation of price movement.

Forget the scientific methods of such gurus as Gann, Elliot Wave and Fibonacci that claim there is a scientific method to forex price movement to predict forex prices in advance - there isn't.

If there was a scientific method of forex market movement, we would all know the price in advance and their would be no market - common sense - but huge numbers of people fall for the science and prediction theories.

Trade the reality of price change only and forget prediction or your trading signals will be as accurate as your horoscope!

3. Trading the news and expert opinion

There are a lot of people who think they can trade news stories or listen to so called experts in the media.

The news is quicker and better researched than ever but will it help you win?

Of course not, it's an opinion that's all. News tends to reflect the greed and the fear of the majority and the majority always lose, so don't pay to much attention to it.

Will Rogers once said "I only believe what I read in the papers" he was joking of course - but many forex traders take news stories from CNN or Bloomberg as gospel and lose.

4. Not Knowing What the edge is

Most traders simply try forex trading but have no idea they need a defined edge.

A defined edge is the reason you will win at forex trading when the vast majority over 95% of traders lose - what sets you apart?

Despite the low odds of success and the fact that forex trading is obviously not just a walk in the park, people plunge headlong into it without a well thought out forex trading strategy which can give them a trading edge - Do your homework and don't make the same mistake.

So there you have 4 of the most common mistakes made by most of the losing majority avoid them get the right forex education, find your trading edge and trade with discipline and you will enjoy currency trading success.

What is a gap?

A gap in a chart is exactly as it sounds:

An empty space between one trading period and the previous trading period.

They usually form because of an important an event or in a market that is dominated by greed and fear. They tend to be highly reliable, because they reflect a highly reliable trait in human nature.
Short term price spikes never last for long and prices tend to return to areas of more realistic value.
The above reflects human nature pushing prices too far (as they always do) away from fair value and prices return after greed and fear has run its course.
Exhaustion gaps are marked by high volume, and can offer tremendous fade trade opportunities, with excellent profit potential as the tide turns and momentum shifts quickly.
Fact:
In most cases exhaustion gaps are filled soon after they are formed.
These emotional price gaps caused by panic and fear provide some excellent trading opportunities when looking for a reversal. The question now is how do you trade them?

There are several options open to you:

One of the best is to look for over bought oversold indicators and look for extremes - like the stochastic or the Relative Strength Index and hit a downturn from extremes.

You can wait for the gap to be filled (checking of course momentum supports your view) but another way is to top and bottom pick with options.

While forex options are not as popular as they once were, they can be an excellent risk control vehicle, offering you unlimited profit potential combined with limited risk.

All you have to do is trade in the money from the price you buy your option.

So hit it at the money and buy 3 months to expiry and get time on your side and you can ride out any short term volatility - you don't have to be to fussy about timing your trading signal, so long as you are confident the price spike will fade.

Exhaustion gaps are one of the best if not best chart formation to trade, as they reflect extreme emotions that normally fade within a very short period of time.

You don't get to many exhaustion gaps in forex, because it's a 24 hour market and they really only come over the weekend on the open of Far East trading after the weekend.

A Chart Formation for Big Profits

Human nature never changes and short term price spikes will continue to reoccur as greed fear, drive prices. They never last long and if you use gaps and exhaustion gaps in particular, you will have one of the most reliable chart formations to trade.

To make the above data more relevant to the beginner, this particular example can be applied--an American consumer with one dollar could buy 110 Yen worth of Japanese candies at the start of 2008. But towards the middle of March, the same one dollar could only buy about 96 Yen worth of Japanese candies.

This kind of volatility can have disastrous consequences in the real world, especially to an American importer of Japanese candies as the example above would suggest. On the other hand, forex traders, especially those with their ears firmly planted on the ground, could actually have cashed in big time on this kind of currency fluctuation.

During times like this, veteran forex traders might actually issue a caution to those just beginning to test the forex trading waters. The reason is simple--beginners might become too spoiled. They may think that making huge amounts of money is this easy.

The point is, these kinds of big fluctuations do not occur regularly. While the opportunity for big profits does arise when such fluctuations happen, beginners must keep in mind that forex trading itself is a system.

This is a basic concept that some people fail to understand. For beginners, you must first make up your mind and ask yourself two questions before entering--1) do you want to make this a long-term investment? or 2) do you want to make this a full-time career?

The difference between the two is basically that one is passive and the other is active. Either way, a beginner is advised to enroll in a good training course and shop around for a broker that can help you with your needs.

A good forex coach or broker will help you achieve the following:

1. Plan your strategies;


2. Develop discipline in order to carry out your strategies and make profitable trades;


3. Learn risk management;


4. Familiarize you with the software and trading platforms that best suit you;


5. Most importantly, they will make you understand that there are substantial opportunies for huge losses.

There are various forex trading systems available in the market. The problem is not finding them but actually finding out which one works as promised.

To be honest, I am always very skeptical about any forex system that gets marketed. Why would somebody sell a system that works and makes money. There are some reasons but all of them do not sound reasonable to me. Anybody with a working system would rather use it to make profit rather than messing around with customers and marketing.

It is probably the worst thing you can do if you follow the trading signals of any system blindly and buy and sell when the systems tells you so. When you approach the topic from a different angle though then these trading systems are actually helpful.

The better approach is to test different systems and methods to improve your personal skills and knowledge. A trading system can open your eyes for different trading styles and tactics. And even if it the signals are totally worthless and produce loosing trades all time, it could drag your attention to other profitable trades.

There are forex systems sold for a few bucks to several hundred Dollars per month. The key problem with all systems is the fact that the market is simply not predictable. For no one. Every system therefore tries to calculate some numbers that come from the past. Some programs are simply better in handling different variables than others.

If you look for a forex system then just get one that meets your trading style. Use the system to complement your existing research and not to replace it, even if you believe you are the worst trader in the world. Follow the system and see how it handles draw downs, how it cuts losses and how it lets profits run. You can learn from the algorithms.

When you follow the system closely then you will discover very soon its weaknesses. If you can use the system to improve your own trading then it is a good system. That is all that counts. Do not expect the system to trade for you.