If you look online you will find lots of them all claiming you will make money but the fact is 99% of the systems sold don't make money and if you are thinking of buying one, then you need to read this article. Why don't they work? It's simple:
They have never been traded and normally carry this or similar - read and digest it:
"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 the forex trading systems sold by vendors and you will see this and what use is it?
It's no use at all.
We can all make track records up if we know the closing prices but that's not the real world of forex trading.
I am amazed that people trust a trading system that has not been traded, when they would laugh at a person who tired to teach them to drive who hadn't past their driving test! It's the same concept - but people in forex markets tend to let greed blind them and then they let themselves fall for the advertising hype:
- Make a six figure regular income
- I made $7,000 last week
- 80% profits guaranteed
- No Losing months
Yeah right - I have been trading for 25 years and forex trading is hard and you would expect it to be with the rewards on offer. You can win but you won't win buying a useless, back tested, curve fitted bit of software from a vendor who, has never walked the walk.
If You Want to Win - Do Your Homework!
You get nothing in life without effort and your forex trading strategy is the same, you need to work at it and put in some effort.
If the above mechanical trading systems made money, no one would bother to work; we would all spend a few hundred bucks and be rich.
Forex trading offers you a life changing income, the rewards you can make can be life changing - but it's a challenge and you must put in some effort to get a reward.
So go and get yourself some proper forex education, learn forex trading the right way and you can enjoy success it really is that simple.
Technical indicators are data points that try to predict how the market will move in the future. While they are not always 100% accurate, technical indicators have proven to be rather reliable signals. In this article, we will briefly discuss the RSI and Stochastic indicators.
Relative Strength Index (RSI)
Without going into too much technical detail, the Relative Strength Index (RSI) compares the recent upward and downward price movements in the market. This comparison is expressed as a ratio and the result is normalized between a range from 0 to 100.
When we see that the RSI ‘line’ crosses above 70 points, the currency pair is considered to be ‘over-bought’. This means that the buying pressure has been ‘too strong’ and that prices are likely to come down again soon.
Conversely, when the RSI ‘line’ crosses below 30 points, the currency pair is considered to be ‘over-sold’. This means that the selling pressure has been ‘too strong’ and that prices are likely to go up again soon.
For best results, the RSI indicator should be used as a trade exit signal, NOT a trade entry signal.
Stochastic Oscillator
Similar to the RSI, the Stochastic Oscillator is mostly used to indicate ‘over-bought’ and ‘over-sold’ market situations. Also, it is scaled from 0 to 100, just like the RSI.
This indicator measures the ratio of closing prices with the recent market volatility.
These buying and selling conditions for this indicator are expressed by two lines: %K and %D. The divergence between these lines and the market price action can be a reliable trading signal.
If you want to win you need to have the right forex mindset, this means taking on character traits that would be frowned upon in society - but in forex can make you a big winner. Here are the character traits that if you take them on could lead you to forex trading success.
1. Don't Mix or Listen to Anyone
If ever you want to find forex traders who are losers visit a forum!
If you are a successful trader you trade in isolation and don't listen or talk to anyone.
In society, know that since stone age times grouping together has been essential for our survival and it's seen man survive and prosper. Were a social animal and seek the reassurance of the pack.
The problem is, if you start mixing and talking in forex trading, your emotions will get involved and you will lose.
Fact is 95% of traders lose, so you gain nothing from others. Stay away from others and be a loner.
2. No one Knows Better than You!
Today, we tend to consult advice about everything and call for an expert if your foxing your car great but is there such a thing as an expert in forex trading?
Maybe, there are people out there who will teach you to trade and give you forex education - but ignore the vast amount of so called experts who tell you they can give you success - they can't.
All over the net, there are experts selling systems which have never been traded, new forex traders buy them and think there going to get rich - get real, no one can give you success, you have to work for it.
In forex trading you are on your own and you know best - arrogant?
Not at all, the fact is, in forex trading success comes from within and your on your own.
3. Make your Own Rules
In life were used to a structured society we know what time we need to be in work not to drop litter in public and to stop at red traffic lights but in the market there are no rules or structure and you have to operate in it.
This causes traders problems, as they have to take responsibility for their actions ( and most traders hate doing this, preferring to blame their brokers, friends or the cat!), they have to make there own rules to survive in the anarchy of the trading environment.
Your rules apply to you and you can do what you want - no one tells you what to do.
Finally
So there you have it you're a loner, a know it all - you decide what you want to do without anyone else telling you or laws you need to obey. In normal society you would have no friends at best and get locked up at worst!
The fact is forex trading mindsets have to be completely different to our normal one and that's why so many traders lose - they can't change, if you can you can enjoy spectacular forex trading success.
The EUR/USD exchange rate is one of the most traded contracts in the world. In total the forex market trades around $2 trillion Dollars every day but there are only a few currency pairs that are traded with high volume.
When you want to trade this pair then you need to know the spread and the value of a pip. The spread is the difference of the buy and sell price. For example you want to buy the Euro against the Dollar. The current price that your trading platform displays is 1.5000 x 1.5003. That means there are 3 pips spread.
You can buy the Euro at 1.5003 but sell it only at 1.5000 right now. The price of the currency pair is constantly changing. The spread can also change. The spread will get bigger with more market activity for example. Your broker is the one who earns the spread. He widens the spread when he has more risk and reduces the spread when the risk for the broker becomes smaller.
You have no other choice than paying the spread. There are brokers that offer zero spread trading but that is often an illusion. The broker makes the pricing and he can give you any price he wants. The price you see may have no spread but you can be sure that you pay a price for it some way.
Other popular currency pairs are GBP/USD, USD/JPY and CHF/USD. Your trading platform may have dozens of pairs available but do not forget that only the major currencies provide enough volume and volatility for day trades.
Humans are social creatures. As children, we learned about the ways of the world by observing the people around us. We’ve been conditioned to take cues from others regarding how we should behave. For example, if a friendly stranger smiles at you, you’ll feel the compulsion to smile back. It’s only natural, isn’t it?
Throughout our formative years, we were always looking for social recognition. As teenagers, we were preoccupied with the ‘most popular’ kids in school. It was ‘hip’ to like the same pop songs as everyone else, and it was ‘cool’ to go to the same parties as everyone else. To be liked, you had to follow the opinions of the people around you.
That’s how we grew up.
But that’s a deadly trait to have as a Forex trader. When you make trading decisions according to what everyone else thinks, you’re finished. You need to be able to make your own decisions based on your observations; not what other people tell you.
Why You Should Stop Asking Questions
And that’s why you should stop asking questions about trading. While the school system encourages students to ask questions to get answers, this is just simply not how it works in the Forex market. No trader ever got rich by following others’ opinions. The trick is to find out the answers yourself. Just experiment, and observe.
Hard work and persistence is required, and this is what turns most people off. They want a straight and easy answer: “The market is going to go up to by 100 pips”. That’s what they want to hear.
It’s Not That Simple
Sure, anyone can tell you that the price is going to go up by 100 pips. That’s not hard to predict at all. The question is WHEN and HOW it’s going to happen.
Unfortunately the answers to these questions take experience in the market to understand. And you won’t get any experience simply by having your questions answered… that’s where the hard work and dedication comes to play.
So stop asking so many questions, and find them out for yourself. Observe the market, and note down your questions or queries. Wait for the market to show you the answer. No one can give you a better answer than the market itself.
A Rich History
Actually, there is a rich history behind the foreign exchange rates so you need to understand the importance of understanding why things happen the way that they do on the Forex market and also educate yourself in making the right decisions so that you can capitalize on your knowledge.
So, to actually comprehend foreign exchange rates, you must be certain of what they in fact really are A definition of foreign exchange rates would be that they are the value of one currency as it relates to a second currency.
Therefore, when the exchange rate between two different currencies is listed as being a first currency fetching 1.20 of the second currency, then the foreign exchange rate is 1:1.2. Additionally, you will also need to comprehend why currencies have values that are different and this can be best explained by the fact that after the valuation of currencies throughout the world moved away from 'gold standards', the prices of currencies started to be pegged against the US dollar, and other currencies fluctuated upwards or downwards as they related to this currency in a range of not more than a single percentage.
Hence, this was the start of foreign exchange rates and it was commonly referred to as fixed exchange rate. Since these changes in the method that the trade is carried out in recent times, both the fixed exchange rates and the gold standard have been abandoned so the forex exchange rates are now typically known as fluctuating exchange rates.
In reality it means that presently forex exchange rates are influenced by the forces of the market and when demand for a specific currency exceeds its supply then the Forex exchange rates will end up going higher for the currency being demanded, and the opposite would occur should the demand decrease.
Now that the US dollar is the base currency in Forex trading, the US government merely prints additional dollars and then sells these new dollars to various countries in the form of debts, though due to rising oil prices as well as stronger world economies, currently the US dollar is losing its vice like grip as the predominant currency of the world which is eroding the exchange rates of the dollar and the United States closest trading allies are affected as well.
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