Forex Day Trading - Analyzing The 2 Major Risks Of This Lucrative Business!

Like other kinds of investments, forex day trading is laden with risks.

This, however, doesn't mean that the foreign exchange market ceases to be a highly lucrative opportunity. When you understand the brilliant statement below, you will become a smart trader...

Success is not a matter of avoiding risks altogether, after all. Success is a matter of studying risks and conquering them.

Now, let's have a quick overview of the three major risks that plague any investor who wants to try his hands on forex day trading.

Risk No. 1: The Exchange Rate Risk

This is the first and bigger risk that a foreign currency exchange investor has to contend with.

To protect himself, a trader will need to use the position limit and the loss limit as well.

These two concepts are so easy to implement, yet many people do not use the tools at their disposition.

Risk No. 2: The Interest Rate Risk

To avoid being victimized by interest rate risks, the trader needs to pay attention to the interest rate trends.

Just be sure to read and watch programs like bloomberg and other forex news sites.

Now that you know the two major risks, let's talk about risk reversal In Forex Day Trading

This tips will allow you to play the game safer.

The first advice I can give you is that you need to invest your profits immediately. It's counter intuitive and that's why many other fail. This is compounding.

Also, be sure that you don't make any impulsive decision. You may need to read some books on forex psychology to understand how human mind work.

Are Day Trading Futures Right For You?

With the recent market volatility, there has been a rash of articles and ads hyping futures trading. The question is, is it right for you.

There are several questions that you need to consider before deciding if trading futures might work for you. It is the intent of this article to go over several of these issues.

1. Savings And Conservative Money - Before you start any investment strategy, you must have a certain amount in a savings or money in a money market account. This amount of money needs to be up and above your investment money. As a general rule, you should have at least 6 to 8 months of your average monthly expenses in that account.The reason for having this emergency account is so you can pay for unexpected events in your life without having to take money out of your investment account. This allows you to also trade without fear of using money that you "might" need in the near future.

2. Trading Capital - There has been much written about the amount of trading capital one needs to trade futures. Some consideration should be given to what investment vehicle you are planning on trading. There are different margin requirements (the amount of money a brokerage firm requires you to have in your account to trade 1 contact) for different futures contracts. This article is going to focus on the Russell 2000 e-mini futures contract. Most brokers require a minimum margin requirement is around $3,500 for 1 contract. Obviously, the more money you have in your account, the better. There are many market commentators that recommend at least $5,000 for 1 contract. There are some brokers that require substantially less to trade 1 contract (like $500). Unless you have been trading for a while, you probably need to wait until you have a bit more capital to trade.

3. Finding The Right Trading System - After you have come up with your trading capital, the next part of deciding if trading futures is right for you is to find the right trading system to fit your style and personality. There are some traders who like to trade often (several times a day). Others like to trade maybe only once or twice a day. it doesn't matter to me but it should make a big difference to you. For most traders, if you are in a trade that is up 3 or 4 points ($300 or $400 on the Russell) and then down 3 or 4 points on the same trade before going back up. There are some trading web sites that say that if you are up 2 points on any trade, you shouldn't ever take a loss in that trade. Again, that is a choice you have to make, but one that you need to consider before you begin to day trade.

4. To Pay Or Not To Pay - There are a lot of gurus out there selling there particular spin on how to make money trading futures or forex or stock or whatever. Most of these guys have systems that are usually pretty complex. The bottom line is that you have to understand that there is still a lot of personal interpretation on how to implement that system. Sites that don't charge for their information tend to have excellent strategies. Sites like Woodies CCI Club and Trading Naked are very good sources for the new day trader.

5. To Demo Or Not Demo, That Is The Question? - For the new trader, this is obvious. The answer is YES. There are some people who think that a demo account is a "crutch" and that you should cut your teeth using real money. A demo account allows you to trade as if you were trading real money, using stops, limit orders, market orders, etc, without risking any of your money. That way you can "test" any of the strategies that you come across, watch how you various trades play out after you enter them. At some point, you need to switch to a real platform and trade with real money. There is question that it is easier to take trades when there is no pain for the responsibility for taking a trade, but the demo phase of a trader's learning curve is very valuable.

I hope that the information in this article helps you to determine if day trading is right for you.

Regards,

Ron Lewis

Day Trading Mistakes - Avoid These 7 Fatal Deadly Sins!

Forex trading is not really an easy and novice-friendly investment opportunity. You are bound to stumble along the way, and commit some day trading mistakes in the beginning. This is normal. It's how things go. You learn from your mistakes.

At some point, you will have enough knowledge and experience to succeed in forex day trading, but beware... some mistakes can be very costly and you can lose all your hard earned money.

What you need to do to avoid this situation?

The best thing you can do to avoid this is investing in your forex education. Why not learning from others mistakes?

Experienced traders spent years developing systems and proven methods, and all this knowledge is waiting for you on the Internet.

Just read and watch some forex videos (on youtube for example) before you start.

Another thing you should do is never trade in a real account... Unless you are profitable with your demo account several months in a raw.

In fact, you could even stay one year trading with your demo account before starting for real. Don't be afraid to practice with fake money. If you lose, it's not a big deal...

Many beginners in forex will do on of these 7 fatal day trading mistakes:

1. Impulsive decisions

2. Ignoring forex news

3. Not understanding the charts

4. Not using stop loss

5. They don't invest in proper material

6. No mentor (or mastermind group) in the beginning

7. Not understanding compounding

Remember, to minimize the effects of the consequences of these mistakes you might inadvertently commit, observe compounding as your game plan.

When reinvest your profits (that's what smart traders do), you'll considerably reduce your risk because even if you lose money, your initial investment will be safe.

I really hope you won't fall in any of these day trading mistakes.

Day Trading Basics - What Question Should You Ask Yourself Before Your Purchase A Forex Software?

Whether you've been reaping some benefits from this busy industry for many years or you are just starting day trading, you have surely considered, at one point, whether or not you should invest on a good forex software program.

There are many benefits for your foreign exchange business, and the main advantages for you are centralization and automation.

What does this mean?

The purpose of this tool is to automate some of the rather tedious tasks essential in doing business with currencies and it will centralize all your transactions, all the currencies you are monitoring, all the spot deals, future deals and the forward deals you are engaged with in one place using one system.

While you will save a lot of time and probably place more profitable trades, I recognize that those tools are pretty expensive.

That's why I decided to tell you the critical questions you need to ask yourself before you decide to buy any of those time and money savers.

All softwares are not created equal and they don't have the same purpose either.

The first questions you should ask yourself are:

Do you know what this software actually does and how it will benefit you? Is it a forex entry signal program? Will you be able to monitor your progress?

Once you know this, you need to know if the program will be able to show charts of various currencies in multiple markets.

Your goal is to make your life easier and saving time. After all, you need money to have more free time, not to analyze charts all day long.

You also need to know how often is the application updated?

This is important because the forex is an ever changing market and it's better for you to have access to help and support from real humans that can provide essential updates that will allow it to cope up with the changing times.

Then, you will need to know how much is the minimum balance and how much does it cost.

Many forex softwares work on a subscription basis. That means that you will pay every single month to get access to the service.

For beginners, it's better to start with a one time payment software like Forex killer for example.

Day Trading Basics - Do You Know The Forex Fundamental?

Being a $2 trillion a year industry, many people want to try the foreign exhange market to earn an extra income from home. The sad truth is that most of them will fail because they overlooked the day trading basics.

There is a lot of money to be made in the forex market, but it's not really, what we can call as a newbie-friendly business.

Let's take a short day trading basics lessons...

There are 4 kinds of forex trading setups. Each of them has its own pros and cons. Essential in day trading basics is determining which of these systems is the right one for the novice investor.

Setup 1: Currency Spot Trading

With this method, you trade currency on the spot. It's the most popular setup accounting for 37% of the total number of transactions in the industry.

Basically, an investor agrees with another investor to trade currencies during the course of trading hours. Spot trading involves the trading of currencies deliverable within 2 days,

Setup 2: Forward Currency Trading

This kind of trading involves the trading of currencies the delivery of which can be effectuated somewhere between 3 days to 3 years.

This kind is for investors who want to take the speculative game a little further, by investing on currencies now and reaping its benefits later on.

Setup 3: Future Currency Trading

Future currency trading is somewhat similar to forward currency trading.

So what is the difference?

Whereas in forward currency trading, the parties have to exchange currencies based on their values at the time the trade is consummated, in future currency trading, the trade will depend on the value of the currencies at the time the agreement is made.

We can say, for the sake of this lesson on day trading basics, that future currency trading is a combination of spot currency trading and forward currency trading.

Setup 4: Options Currency Trading

In options currency trading, the buyer buys the "option" to trade a particular currency for a particular price at a particular period he will name. The seller will be obliged to deliver the particular currency in accordance with the terms provided by the buyer.

Indeed, options currency trading is a forex exchange system that involves options to purchase currencies at "preserved" prices.

Day Trading - A Fantastic Way to Lose Your Money Quickly

Day trading is simply one of the best ways to lose your money and the logic is simply stupid. However across the net, you see huge amounts of day trading systems claiming they can make you profits - but there not quite telling the truth, check this point and you will understand why.

Because they have never been traded!

The track record is normally a made up simulation and accompanied by a disclaimer such as the one below:

"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 there you have the answer!

You can get the previous closing prices and simply make up a track record and of course, if you know the closing prices it's not difficult to make paper profits - a child could do it.

If you want to make money in the market you don't have the luxury of knowing the closing prices and it's a lot more difficult.

The fact is most of the day trading systems sold are by marketing companies, it's a good story and the mug traders falls for it. The vendor gets a nice profit, from a trading system sale and the trader gets the loss.

So why doesn't day trading work?

Well think about it:

Millions of traders all with different motivations and governed by greed and fear, all contribute to a final price and their not logical.

You cannot hope to predict what this vast diverse group will do in just a few hours or less - its total nonsense.

Of course this means that you cannot use support and resistance levels as all volatility in short time frames is totally random and you cannot get the odds on your side.

You would have as much luck flipping a coin.

Furthermore, day trading breaks the cardinal rule of trading - run your profits and cut your losses.

Sure a day trader has small losses (and lots of them!) but he will get lucky now and again and win - but does he run his profit? Of course not, he banks it at the end of the day.

So profits never cover losses and even lucky traders luck runs out and he loses.

The biggest myth of day trading is that it works - it doesn't.

Longer term you will lose and if you don't believe me - try and find a forex day trading system, with a real time track record, of gains over the longer term.

Just one word of warning - get ready for a long and fruitless search.

Candlestick Patterns in a Bear Market

As we entered into 2008 with the worst start to a trading year in history, traders still remained conflicted as to whether or not we were entering into a bear market. Last week, the numbers of our economic situation became clear, as we experienced a second month of lowered GDP growth - meaning we are one month away from being in an "official" economic recession.

With that said, a bear market may certainly be on the horizon - and many charts on traders' screens in America are showing bearish patterns. Utilizing candlestick charts can provide you with a dynamic alternative to bar charts. There are several common bearish candlestick patterns that have either emerged - or are on the verge of emerging - in our current market:

Evening star - The evening star is easy to identify in a bearish market. Upon opening, the candle pattern occurs below the previous session's small real body, which may be either green or red. In addition, in comparison to two trading sessions prior, the evening star will close deeply into the real body. The evening star symbolizes the loss of investor confidence, and with another session in the red, the pattern is confirmed.

Engulfing pattern - The engulfing pattern turns into an uptrend during a bear market. The red, real body becomes elongated, engulfing the green, smaller real body.

Harami - Spotting a harami in a bear market is easy. The small red real body will be completely encompassed by the previous trading session's real body. With this signal, you must watch the pattern closely. In a bear market, the harami indicates that the current uptrend is coming to an end - especially if there is low volume.

Harami Cross - During a bear market, the harami cross involves a harami pattern - however, the doji will replace the small real body in the next trading day. The doji that appears will be contained within the previous session's real body. Similar to the standard harami, the trend is initially visible, but the volume will flat line during the trading session - closing at the same price as opening.

Candlestick patterns contribute an additional dimension to the standard bar charts, and interestingly, reading candlestick charts has prevailed through hundreds of years - starting with the Japanese rice speculators. When you are entering into a bear market, candlestick charts can detect the potential reversals, bottoms, and ceilings - giving you a technical edge in a turbulent market.

Trading Is A Competition

Let's face it, trading is a competition. When one person buys, another person must sell. There is no, "win win" situation in trading. When you win, someone else must lose. This is what is meant by the term, "Zero-Sum." It is very plain and simple.

I don't know about you, but I am a very competitive person. Competition is hard wired into my genes. Competing is living to me.

If you are not competing against other people, you should be competition against yourself to make yourself a better trader.

I work at perfecting my trading skills everyday. I will do whatever it takes to make sure my trading skills give me a profit at the end of every day, week, month and year. Yes, I do have losses, as all traders do, but the point is, you must strive for perfection.

I will out work, out learn, and out perform anyone in front of me. It is my shear determination to become a better trader and win that keeps me going.

Being the best trader is my passion! It comes before anything else in my life, yes even my family.

It is not a hobby or dream. It is a my living addiction.

I find God in my charts. I pray to him before I attempt any trade. I ask him to give me good judgment and make my profits large and my losses small.

Trading is no different than anything else that you want in life. Everything in life has a price to pay. The question that you must ask is, "Are you willing to pay it?"

So before you start to trade, you must ask yourself, "Can I compete with someone like Michael?"

If the answer is, "No" save you money and buy Index Mutual Funds with low or no loads.

If the answer is, "Yes" get the best training you can find and trade.

"What we have to learn to do, we learn by doing." -Aristotle

Can You Teach Me To Trade & Make Better Trades? Become A Day Trader - Learn To Day Trade Stocks

In the stock market its always possible to watch certain stocks go up between 30% and 80% within a few hours or days. And even when you can see stock traders that make $3000 on a single trade, it is also not unusual to see beginner investors lose a great deal of money because of a series of unwise decisions.

The problem is that if you don't know how to choose among stocks & how to properly approach them you could end up wasting good money instead of increasing your profits.

You can't just trade stocks like if you where gambling in Vegas.

The rules and the opportunities are the same for everyone, so either you are going to make money when you pick a stock and make a trade or you are simply going to lose it in favor of the more seasoned ones.

To become a profitable day trader your winning trades have to overcome your loser ones in terms of dollars and cents.

Successful traders know how to adapt to different market environments and choose among the best trading opportunities by applying effective trading strategies.

Just always keep in mind that a good strategy is simple and practical. Complicated stock systems will always make you slow in your decision making process or confuse you from the start.

In the end, stock market day trading is all about picking the best daily stock opportunities and following your buy and sell setups with ease and simplicity.

Once you learn to master your trading decisions, you can aspire to produce consistent profitable results.

Online Trading - An Easy And Lucrative Option

With the advent of the Internet, several applications are done online. In fact, Internet has opened a new vista for people all across the world. It was like a dream a decade ago, but today, it's true - everything is within your fingertips. Click the mouse button and you are done. From online marketing to online trading, everything is possible. If you talk about trading, Internet has really played a crucial role in this sector. Those who had never tried their hand in stock market are now happily investing their hard earned money and gaining substantial profits in a minimum time frame.

The main advantage of such trading is that you can operate your account from anywhere in the world. Moreover, this is one of the easiest ways of trading in the present time. Unlike other investment options, online stock trading gives you the leverage of managing your finance in the best possible ways. You can take out your money whenever and wherever you need, as there is no locking period associated with it.

However, comprehensive market knowledge is a must if you want to gain maximum profits in a short period of time. Here again Internet plays a crucial role - you can access a wealth of information online. Read articles, blogs, and press releases and gain knowledge about the market. Once you get familiar with the basics that are often used in trading, you can do well in the market. Many new investors often asks questions like where to open an account, how to buy and sell stocks, etc. These are basic questions and every investor should know the answer.

Just keep in mind that the main purpose of your investment is to save money for future and earn profits from your investment. Therefore, a good planning is a must - for that you can take advice from professional experts or can discuss with online financial experts. They can better advice you regarding your trading and investment plans. In addition, you also need to look for the best stock trading company where you have to open an online account. Though there is no middleman involved in stock market trading unlike tradition brokerage house, still you need to pay some commission for every transaction you do online. Therefore, it is always better to have a reputed trading company who would charge minimum commission rate.

Since, these online trading industries are mushrooming - you will have to do a good market research. Select some good industries; see their services and the terms and conditions they follow. Then choose the best company as per your need. Once you open an account and your account gets activated, you can start trading online. Here your broker plays an important role - he is the person who really does all kinds of transaction as per your command. A good

Psychological Capital - A Trader's Best Friend

Many of my articles have discussed how important it is for the active trader to develop the proper mind set to trade. The concept of "psychological capital" is going to be the topic of this article.

As I have said may times, finding the right trading system or strategy represents about 10% of the equation on the road to trading profitability. What is the other 90% of the equation? You guessed it. It is having the proper mind set. That's where psychological capital comes in.

Have you ever taken a trade because you were bored or because "it looked good to you" only to have the trade fail, hitting your stop and taking away your real capital? When that happens, how do you feel? Do you beat yourself up mentally, vowing never to do it again? Have you ever been in a trade that just "doesn't feel right" and discover that one of your trading criteria wasn't met before you took the trade? Do you exit immediately or hold on and "hope" that the trade makes money.

If you are like most trader's, these scenarios have happened not only once, but many times. When these types of situations happen, they take away not only from you real capital, they also take away from your "psychological" capital. They drain you from being able to act in a rational manner or when making trading decisions. If you take a losing trade and don't have sufficient psychological capital, taking the next trade will be difficult. You begin to doubt yourself, your trading methodology, and your ability to pull the trigger next time a trading opportunity sets up.

Self Talk

This brings me to another topic: Self talk. As a student of the mind and the various aspects of the how the mind effects how you trade, one of the things that has become evident to me is how much your "inner voice" effects how you preform. If you are in a trade, do you say to yourself, "I know that I am going to get stopped out" or do you say to yourself, "I know this is going to make my objective!" If you get stopped out of a trade, do you say to yourself, "I just am not any good at trading, I can't do anything right" or do you say, "Taking a loss is just a part of trading and I am going to take the next trade with the same positive expectation that my trading plan dictates."

My point to this whole article is that how you handle that inner conversation, how you protect your psychological capital is as important to making money trading as having the right system or rules to trade. The biggest obstacle to being consistently profitable, is all of the small things that come into your mind while trading (this is just as true for all of your day to day activities as it is for trading). A trader needs to develop very positive, uplifting, and confirming internal talk words to keep your trading at it's peak performance.

I hope that creating a positive mental attitude and preserving you "psychological capital" helps you to: Catch a Whopper!

Trading Rooms - Nuissance or Helpful?

Debates on internet trading chat rooms have been going on for as long as the internet itself has been in existence. No one can agree whether these services provide an added benefit to individuals who wish to become full-time day-traders. Nowadays with so many chat rooms covering every type of market and products that its dizzying where to begin to find which one is the right for the beginning traders.

Trading rooms offer every need to every individual, from day trading the E-minis to stocks to Forex. There is also trading rooms for commodities and options. From day trading to swing trading, the main attraction is day trading since every trade is live and there is more action. Swing trading in chat rooms doesnt muster up the excitement since not too many trades are placed.

Many claim that trading rooms help further their understanding of the market, of themselves and discover new trading methods and approaches. Because of the camaraderie among the traders in sharing their experiences, they tend to learn from each others mistakes and weaknesses. In doing so, they learn to become aware of these mistakes and try to avoid them, thus quicken the learning curve. From their interactions with their fellow traders, they learn to see who they are as traders with feedback from others. When they make comments and get immediate feedback they can identify what state of mind they are in as well as their true personality appears when confronted with the market. This provides invaluable information in understanding their nature when trading. Some would become emotionally high and excited while another may be angry and vengeful and yet another may be wishful and hopeful. All these interactions bring out a new phase in the new trader to learn about himself and his psychological make-up. As for market understanding, he learns the psychology of the masses more than any particular strategies or setups.

Why then trading rooms have many complaints against them? Each individuals background and circumstance is different. Not everyone is able to day trade, either by the nature of the stress of day trading or other hindrances such as not financially or competently prepared enough. Some are well suited to swing trade or hold a long period on a position while another cannot stay more than two minutes in a trade.

Each chat room has a particular style and strategy in trading the markets. Some are for scalping trades while others for holding longer. Some encourage to trade more than 20 trades each while other limit to 5 trades maximum. Some use indicators while other use market internals such as the volatility, times and sales and the level II to trade, while others use patterns and price action to trade.

The problem with chat rooms is that they tend to be distracting. Trading requires a high level concentration, particular in day trading, where many signals must come in synch in order for a setup to become apparent. Judging and measuring the probability of winning on that setup has to be considered as well. When there are chatters that spend time socializing, they are in fact removing their own concentration from the charts and markets. While some are there to avoid boredom or find human contact, they distract others from trading. Some are there to wait for the signals and calls from the experts to take their trades. In short, there are many different motives and reasons why the traders are there, sometimes not really to trade.

Most times, trading rooms are a necessary step for traders to mature and discover his own strengths and weakness. But it usually comes down to opportunity cost: time and money. It takes time to learn on ones own. In order to accelerate the learning process, money needs to be spent to train with a mentor, an instructor or a book. This money is also needed to trade in real time with real money to grow as a trader. In the end, how much the trading rooms charge per month is really issue. Is one willing to pay a specific amount every month? Each trading room has its own strengths and weakness. Some are obscenely expensive while there are others that are free. Looking for the right one that fits an individual traders personality, trading skill level, financial status is the real answer.

The main problem comes from individuals not knowing what he wants and how he begins. Many don't know if his/her problem is psychological or strategy or money management. Hence, they tend to move from trading room to trading room to find out what is out there and what possibly want help pinpoint their deficiencies. But the most important factor is probably the expectations by individuals from these trading rooms. There are services that tout they can convert anyone into successful traders in a short period of time. Such deceitful marketing campaigns create mistrust against others that do provide legitimate services. The gap of delivery by the trading rooms and the expected receipt of service is what cause such problems. One must do due diligence and ask many questions. In asking those questions, he can find in himself what hes looking for.

Stock Trading - Can You Get Rich Day Trading?

Can you get rich day trading stocks? Well, let me ask you this. Can you get rich picking garbage up?

The answer, yes. (I know some people who own garbage companies and they do very well for themselves).

So what's my point?

My point is if you can get rich picking up garbage, you can get rich doing just about anything. And that would include day trading. I bet you can guess what I think of day trading now. Look at it this way. One of the biggest enemies of a trading system is transaction costs.

It's the reason trading isn't a sum zero game. It isn't because of transaction costs. That makes it a negative sum game. In day trading, you rack up many more transactions than anyone else ever would just trading normally. So you have a huge thing to overcome there. But it gets even worse. You have less opportunity to profit.

The price swings that happen in a day are relatively small compared to the price swings that happen over time (say over a week). So you have less opportunity to profit, and you have many more transaction costs.

Now if you approach day trading as say a way to get a better fill in a trade, but it's a trade that you will hold for a period of time (again say a week or more), then yes that is viable and can work. The key with trading is to give yourself a chance, and you really don't with traditional day trading.

How Safe Is Online Trading?

Is online trading safe? Are there any advantages of such trading? Many new investors often ask these fundamental questions. Have anyone seen an advertisement of a man basking in the sun and surfing the net near the seashore? What is he actually doing? He is transacting in the stock market. After a few mouse clicks, he keeps the laptop aside and jumps into the sea for a cool swim. This advertisement itself tells everything in a very smart way.

If you can trust this advertisement then trading is all very similar to this and more. Internet has indeed replaced those over-busy and hard-fisted brokers. Unlike traditional brokerage house, several online trading company websites are promoting Internet based trading and are trying to convince investors to experience the switchover. However, there might be some perplexity in your mind about online trading system. Find some of the common questions that consumers often ask are:

If I don't have any computer knowledge: Most of us often feel that comprehensive computer knowledge is a must for trading. This is not true; you only need to understand some basic operations that are required for browsing stock related websites. Anyone can learn these basic functions in a very short period of time. Almost all trading websites come equipped with easy demo. Watch the demo and start trading from today.

What are the basic requirements for trading stocks: First of all you have to decide whether you want to go for long-term or short-term investment plan. Then the next step would be to open an account with a trading company website. But, here you need some market research. Since, trading today is one of the easiest means of making money online, there are several companies offering their services on the Internet. But, to grab the best company, you will have to compare their services and pick the best one as per your requirement.

How Internet stock trading is favorable: First, you can trade stocks from anywhere in the world through the Internet. The other major advantage is that you can transact anytime. Your money is not locked unlike other investment options. Finally, your online broker acts as a channel between you and the stock exchange. You can buy and sell stocks anytime you wish. Moreover, your broker also keeps you abreast of the latest market shares that you can buy. You can also access a wealth of information from the website such as latest market news, stock quotes, etc.

How safe is online trading: As far as trading websites are concerned, they use sophisticated tools to ensure your privacy and no one can access your information that is available on the website. However, if you talk about the stock market, many potential investors feel that though it's a risky platform, but if you market your share intelligently, you will always be on the safe side. Learn more about market trends, do more research on the Internet and always try to keep an eye on major company shares.

Brokerage rates: In

Weekly Wrap-up - 18 Winning Trades, 2 Break Even Trades, 1 Losing Trade, $3,400 Net

I thought it would be a good idea to evaluate how my strategies did this week. For those of you who have read my blog or any of my articles know by now that one of the things I think that is imperative for a new trader (or any trader for that matter) to do is spend time every day/week going over the day's/week's trading action. It is only by doing this simple, but mundane task that allows a trader to identify weaknesses in his/her trading techniques and mental toughness. Yes, I said mental toughness. With all of the many distractions in our daily trading world, it is easy to let small news stories or worldly events skew our take on how we trade. Therefore, the only way to counteract those influences is to constantly evaluate the performance of how we are trading.

Ok, I'll get down off my soapbox for now. On to the weekly wrap-up. First, many people who read the title of this article might start out thinking "Here he goes; he is going to try to sell me something." I don't blame you. Many of the ads you read always start off by showing you some big, spectacular numbers and then give you a sales pitch at the end. I assure you that this is not the case here. Every strategy, trick, and nuance to trading that I have learned over the last 20+ years in this business is ENTIRELY FREE!!! Why, you might ask? First, trading is hard to master and there are so many "gurus" out there selling you everything from options, to stocks, to forex that it becomes confusing (you are probably saying, you don't have to tell me because I have tried most of them.) Well, don't feel alone. So have I. Don't get me wrong. Many of these gurus have great ideas and I have learned much from them (usually for a great cost). The bottom line is that it is my hope that you can take much of the information that I have learned over the years that I share in my blog and use it to become a better trader, ALL FOR FREE. The second reason is that to be honest, the tips and strategies that I learned on free sites has been more informative than most all of the so called sure things I paid thousands of dollars for.

We had a good trading week. There were 22 valid trades. 18 were winners. 3 were break-even and 1 was a loss. Since my objective on each trade is 2 points and my stop loss on each trade is 2 points, you can calculate how much my strategies would have made last week if you took all trades. Each point on the Russell 2000 is worth $100. There were 18 winning trades. 18 times 2 points = 36 winning points. 36 times $100 (the value if each Russell 2000 point) =$3,600. There were 2 break even trades. Once a trade is up a minimum of 1.50 points without making my objective, I move the stop to break even (the price I entered the trade). A side note about break-even trades. There are times that a trade is up 1.8 or 1.9 points and goes down to stop me out at break even. Then it takes off in the direction if my original trade and makes my objective. This is frustrating, but I have seen trades that are up 1.80 to 1.90 points that have turned around and stopped my out for my full 2 points stop loss. Those trades are harder for me to take. I once knew a trader who referred to that as psychological capital. Psychological capital is a term used to describe how your mind reacts to how your trades preform. If you are up almost 2 points (almost $200) and end up losing 2 points ($200), that trade takes a toll and uses up some of your much needed psychological capital. In many ways, preserving your psychological capital is as important as preserving your REAL capital. It let you take trades more confidently.

There was 1 loss. As I said, my stop loss is 2 points. 2 points times $100 per point = $200 loss. So for the week, my winning trades were up $3,600. My 2 break-even trades cost me nothing except the cost of commission and slippage and my 1 losing trade lost $200. So my strategies were up a net $3,400 for the week. As I have discussed in other articles, the margin requirement I feel comfortable with for 1 contract is $5,000. So if you were trading a $5,000 account and made $3,400, you would have a very nice return. Can that be done? Absolutely! If you are just starting out, it may take you some serious screen time to get to that level. The only way to get to that level is to read as much as you can and watch to see how the market reach to various scenarios. For more information regarding these strategies and to have my daily wrap-up commentary e-mailed to you daily, go to

Seeking Support As A Stock, Options And Forex Trader

Seeking support from others is actually a natural process, and also a reciprocating affair. You should seek others support with the intention of having a mutual friendship, but also to make yourself accountable.

If you know what you're supposed to be doing with your trading but you aren't because you lack discipline, then you may need to find a few people to make you accountable. In other words, you list 10 things you're supposed to do this week, and tell them. If you break any of your rules, or don't do these 10 things, then you must confess.
A forum is a great place to find these sorts of people, but do bear in mind, you must know what you want. Those that float aimlessly in trading can also bring other traders down with them.

Floating aimlessly in trading is the same as floating aimlessly through life. If you don't know what you want, where on earth are you going to go? Nowhere, you just float with no direction. This is a terrible curse to have, especially in the field of business.

Trading is a business and as such must be treated like one. If you decide to go into business for yourself, I would assume that you would put a lot of planning into it. You're probably going to try and seek help from professionals such as accountants and so on, but you also should seek support.

If you have family to support you, all good. If you don't then get out there and find people with similar ambitions. It's not hard, every major city throughout the world has groups of people who get together and discuss trading. Meeting with such people on a regular basis can aid you greatly in your planning and execution.

But most of all, have fun. I meet up with several groups and sometimes we don't even discuss trading. We'll start talking about something else, and before we know it, it's late. It's the bonding between a group of people that can have an uplifting effect on each individual...

Forex And The Incompetent Fraud

Just because a company or their traders are subject to regulatory control does not mean it's going to perform as expected or that the managers are completely honest. Regulatory bodies around the world are busy prosecuting regulated and licensed traders and companies who invest and manage money. Professional traders use OPM (other people's money) when they invest money - and have little or no liability for its loss through bad trades or incompetence. Regulatory control does not mean that you have recourse just because you lost your money or that you'll get it back even if fraudsters are prosecuted. It's not always easy to recognize the wolves which are why so many innocent lambs get fleeced. Let me tell you a true story.

An investor I know, let's him Harry, signed up with, let's call him 'Spud' a professional trader for a Forex trading company in a major Texas city. They had prime offices with panoramic views. Their trading floor was big enough to look impressive, they had dozens of computer screens, desks filled with files, manager booths, traders, and the works. Their charting software hummed away and an impressive overhead flashed currency spot prices. Harry envisioned profits and signed papers that allowed his personal expert trader responsibility to manage his account using LPOA (limited power of attorney). In Forex, Spud said, he had to act quickly and Harry might not be available to approve transactions. Harry knew a little about Forex trading, but not enough so what was the point of getting in the way of profit. Harry wanted to make money. Spud said he would and that he would try and call when possible on trades but that Harry would always receive email trade notices to track any Forex trades anyway. Harry's comfort level was high enough to excitedly invest the minimum $20,000 required to 'get in' with the experts. Spud was Harry's instructor at a Forex night class at community college.

Spud won the first two small trades. Harry felt good at winning a couple of hundred dollars. Early days, good things to come he thought. A day later Spud called one evening to say he had just missed an entry opportunity but he would keep an eye on a possible entry point. Next morning Harry saw a trade notice showing the whole nine yards of his account had been placed on one 'buy' trade at a peak high. Harry could see from the chart that it was madness, but Spud reassured him to the contrary. Price continued to move downwards. Account value fell. Spud explained how he would save the day as the price continued to move against the positions. He never did of course and the entire account was blown out on that one trade within a week.

Six months later the company was shut down. Turned out they never actually placed any trades at all. The trade notices they sent out were all made up, based on market numbers, but designed to simply prove a trading loss. They were pocketing the funds that they had showed lost in their trade notices. How they thought they could get away with total wipeouts and not have a regulator verify actual trades at some point was probably biggest incompetent fraud of the year. Forex is less regulated than other trading arenas so there is greater risk for incompetence, loss and fraud; and more opportunity for fleecing. That is changing now of course. But, once the money is gone there's generally no getting it back. The point to be learned is that the appearance of established professionalism does not guarantee honesty,integrity or performance. And there is little recourse for honest losses by bad trading. You have to prove fraud, false advertising or broken promises, etc and that's not easy.

What lessons could Harry have learned before investing money? First, learned that Forex is complex and you are betting that your broker can beat the professionals. Many cannot so get a track record. Second, he could have asked for personal references. Third, insisted that no trade be done without his approval. Fourth, learned about the Forex market and have his own trading software. Most important of all don't let the trader force an immediate answer to a suggested trade. They pressure you into an immediate decision when you don't have the first clue about the trade they describing. The broker will put you through to a recorded trade verifier. His purpose is to record that the trade was your idea and they are only following your instructions. Verifiers are of course necessary in doing any telephone transactions, but you have to understand the trade and should check it on your own charts until you find a broker you really trust. Finally, don't let greed exceed your need. Get out cut your losses when you have to. Spread your funds out between different investments or money making opportunities. See which ones work and which don't over a long time frame. Invest only risk capital and never ever borrow funds for speculative investments. Don't repeat the same mistakes.

Forex has been heavily promoted with numerous strategy and trading aids on line and on TV. Books are a great starting point. If you get involved with Forex you will inevitably blow out accounts before you start to learn. Use risk capital and be prepared for a strenuous learning curve and you might get lucky and be successful after a couple of years. If you don't have the time, risk capital, patience or learning skills then look elsewhere such as traditional and non-traditional vehicles. Finally decide what you really want and what risk and time you are prepared to invest.

The Most Difficult Thing A Trader Can Do

I expect that most of you watched the absolutely amazing Super Bowl yesterday. Most every one that I knew was rooting for the Patriots... and why not? Throughout the entire year they were perfect. They won every game, broke every record and really dominated everyone they played. Enter the New York Giants. They came into last nights game with a 10-6 record, even losing the last game of the season to the Patriots.

Why am I going through all of this in an article about the most difficult thing for a trader do?

Because last night the Giants, when it really mattered, came back to win in the final nerve wracking minute of the game. Everyone said they couldn't do it. No one gave them a chance. With the odds against them, there backs against the wall... THEY WON!

More than that, they are a testament to every thing a trader needs to be. With everything on the line, they rose to the occasion. They took chances and gave it all they had. Even though no one expected they could win, they beat the perfect undefeated team... when it mattered most. No matter who you were rooting for, you really had to admire their spirit, their heart.

So, here is the point. Wherever you are in life right now, don't forget that no matter what happens to you...you can win. Don't worry about the last losing trade you took. Don't even think that you can't do it; that its too difficult, to hard to master day trading. It has been my experience that my thought process contributes a great deal to my trading performance. This one thing is what I believe is the most difficult thing for a trader to master. Forget what family or friends say, forget about what is supposed to happen and just believe. Take a page out of the Giants play book and believe in yourself. Believe in your rules. When you do that, something wonderful happens. All of a sudden you start to have positive expectations about what you are going to get the next time press the button to take a trade. Your attitude totally changes. You become more confident. You feel like you finally understand the market. Life becomes much easier as you continue to develop your strategies and work on your positive mind set. Hold on to your dreams and continue to work hard every day to become the best trader that you can be. Just like the New York Giants,you can beat the odds by persevering. Don't give up and one day you will be able to "catch a whopper."

Regards,

Ron