Tutorial Forex

Trading a high probability trading strategy with CFDs is certainly attractive. This style of strategy is right very often, which makes it much easier to trade.

The impact of leverage is not as great as these strategies are less likely to have losing streaks so the drawdown is reduced.

However traders seeking high probability trading strategies may be missing the whole point of trading.

Trading Is Not About Being Right

It is not just the win% that makes a trading strategy work, it is a combination of the win% and the risk reward. Looking at only one of these measures in isolation is a sure way to fail.

Consider the following trading strategy that is profitable 95% of the time. The strategy wins $100 on each profitable trade, so from 100 trades the strategy makes $9,500 trades on average. But what happens on the other 5% of the trades.

If the average loss is $2,500 then the strategy loses $12,500 based on 5% of the 100 trades. Even though this strategy is right very often it still loses money. It is not one or the other measure in isolation, it is the combination of win% and the risk reward.

Losses Still Happen

Most high probability trading strategies rely on small profit targets and wide stop losses. FAP Turbo is one example of this a Forex trading robot that is right 95% of the time.

All goes well until you experience a series of large losses. The losses can be reduced by tightening the stop loss, but this is very likely to reduce the number of times the strategy wins.

Balancing The Tradeoff

Back testing can be used to determine the optimal balance between risk and reward and the win%. Try testing a variety of different stop loss levels to determine the best outcome for risk reward and win%.

In my own trading I have tested a variety of chart pattern breakouts. The best trades breakout and keep going in the direction of the move. Because of this tight stops work ell with chart pattern breakouts as they improve the risk reward results. Profit targets on the other hand improve the win%, but actually reduced the overall profitability.

Make Money First, Be Right Later

Strategies that follow the trend are not right very often and win about 30% of the trades. The wins are much bigger than the losses with a risk reward greater than 3. This combination produces a profitable strategy.

A short term scalping strategy that wins 70% of the time with a risk reward of 1:1 is also profitable.

In the pursuit of being right and chasing high probability trading strategies, remember to ensure that trading is about making money, not being right.

Support and resistance levels enable traders to project how far they believe a currency pair will move. It also tells them at what points the price action of a currency pair may turn around and start moving in the opposite direction.

But sometimes, there is a fundamental shift in the markets. The markets are strong enough to cause a currency pair to break through a previously established support and resistance. When a previous support and resistance level is broken, new levels are established by the markets. Plus, the broken levels may still have some influence on the markets in the future.

Sometimes there are attempted breakouts. This is also known as False Breakouts. It will become obvious to you that prices do not always stop at exactly the same points each time. So if you are going to set up stringent requirements for your support and resistance levels, those levels may not hold up. You would fake yourself out of a lot of valid price movements.

Even when you take all the precautions, you may fall victim to a false breakout. Now, you will ask how I can tell a false breakout from a true one and when the price has truly broken through support and resistance in a new direction.

There are two methods that help you screen out a false breakout with a true breakout. Setting price-amplitude benchmarks and identifying role reversals.

Setting price amplitude benchmarks involves analyzing a chart to determine if you can identify when the price momentarily broke through the prevailing support and resistance level before pulling back and once again returning to the previous level.

The dips through the predetermined levels are usually short lived. You can draw a secondary support and resistance lines which you can then utilize as your price-amplitude benchmarks.

A price amplitude benchmark will tell you if the price has broken through the predetermined level but has not broken through the benchmark; you dont have to worry much about a new direction and the change in the trend direction. However, if the price had enough momentum forcing it to breach the benchmark, it can continue in the new direction establishing a new trend.

Identifying role reversals method involves watching the price action to see if support levels turn into resistance levels and resistance levels turn into support levels. Often, you will see the price action bounce off a level of resistance, then turn around and start heading lower and bounce off the previous resistance level.

Once a resistance level is broken, that same level will turn into a support level. Similarly, when a support level is broken, that same level will turn into a resistance level. You understand both the benchmark and the role reversal confirmations and use both in your trading analysis to filter out a false breakout from a true one.

It is surprising with how long the Chinese economy has taken to strengthen to its current position. Indeed, it could be argued that China, as an economy and therefore an investment opportunity, has simply been treading water for the last two decades. As growth explodes now however; rich pickings are available for those with money to invest in China.

Growth has been most noticeable in several key areas. Most noticeably for the early protagonists that chose to invest in China, is in clothing. Always a sound investment, consumers in the western world are both in need of, and in desire of clothes; male and female alike. Computers too are popular and, to a lesser degree, furniture.

A direct reverse to this has been seen in the toy industry, where growth is seen on a daily basis, despite some “horror” stories regards lead usage in paints, metals and plastics in stuffing materials and sweatshop conditions.

Many other opportunities to invest in China are out there and clearly signposted. For example, China is second only to the US in its consumption of oil; whilst being both the biggest consumer and producer of coal. Indeed, investment in this sector is booming despite the global collective towards environmental concerns.

Assisted by the awarding of contracts to tenders from the west, an area already ripe and only ripening further is to be found in the national railway infrastructure, operations and rolling stock. Whilst not the most environmentally focused of countries, China does at least realize the potential of railway travel for its immense populous.

Before rushing out to Beijing to invest in China however, do be warned. Resilience, determination and a sense of bravery will be called for as the Chinese economy, (as with any other fledging market), can be volatile and prove unsteady; particularly as the world continues to ride the global recession.

Knowing what type of a trader you are, can make or break your investment career. Take the analogy of a football team. All players are talented and super fit. Everyone can throw and catch the ball. Everyone is a hard hitter. However some are more skilled as receivers. Others are more skilled as kickers. If the receiver is going to do the job of the kicker, not many field goal points will be made.

Investing in the markets is also the same. It depends on your personality makeup what type of trading is best suited to you. In general there are three types of trading: Positions trading, swing trading and day trading.

In currency trading, position trading means you are in a trade for many months trying to capitalize on a major long term move in the market. Position Trading is generally the buy and hold strategy of investing in stocks over a long haul. Usually positions traders are in a trade for a large long term move like when you carry trade AUD/JPY. Options traders can also be position traders through covered calls and other strategies.

Swing trading is possibly the most dynamic of the three types of trading. A swing trader is able to switch up holding times quickly as the market demands. Swing traders take advantage of technical and fundamental analysis. Swing Trading means taking short term positions in anticipation of quick market movements over a series of days or weeks.

Day trading is not easy. It is certainly not a hobby. In Day Trading, you attempt to capitalize on intraday movements with the markets often trading on momentum and news. Day traders are also known as Kings of Stress. Sometimes when the positions warrants holding for a longer period, day trading can become swing trading!

You should note that if you dont have time to watch your trades every moment, you should not think of day trading. Day trading is the riskiest of the three trading styles. Day trading is ideal for those who are able to handle erratic market movements while actually also having time to monitor the positions throughout the day.

Swing Trading Is a Better Alternative to Day Trading Many people are attracted to the glamour and excitement of day trading. Day trading hardly ever ends up well especially if the trader has no previous professional trading experience. Only 10% of the day traders succeed. Most day trader usually blow up their accounts and fade away.

Swing trading can be on the other hand a much more effective trading style especially if you are a newer trader. By holding positions overnight and even for a few weeks, you can expose less money for larger moves. If you are a new trader, think about it for a moment.

Investors rely on two types of analysis when determining whether to buy or sell an investment. They look to fundamental analysis and technical analysis. And the most successful investors continually analyze HOW they are gathering and evaluating data

Black Horse Fund, a private forex fund, has recently revised its proprietary algorithm to drive even greater success into its investing practices. While their algorithm undergoes continuous change, this most recent upgrade was noteworthy, even if they are keeping the details under wraps.

The private forex fund Black Horse Fund is a limited partnership. Partners pool their money and Black Horse Fund trades on their behalf, applying the collected expertise of their trading staff to profit from fluctuations in foreign currency, a market that is larger and more liquid than the equity market.

Fundamental analysis is one of the two major types of analysis that investors use to help them know how to trade. They examine news and business analysis and annual reports, along with economic data, to gin insight into a currency, a currency pair, or the overall market.

Technical analysis is the other major type of analysis that investors use to help them know how to trade. Technical analysis examines current market movement ” including price and trends ” to inform traders and help them anticipate the direction that currencies are likely to go. This is where Black Horse Fund’s algorithm comes into play.

The algorithm created by Black Horse Fund has delivered successfully so far as the partnership’s traders make advanced investment decisions based on the algorithm’s results. But no algorithm should remain static and Black Horse Fund’s recent enhancement will make the insight generated from the technical analysis even clearer.

Because of the success of their algorithm, and their trades overall, Black Horse Fund’s available limited number of partnerships have virtually disappeared, filled up by eager investors who want to invest in a market that is far more liquid than the equities market.

Rather than looking at the commercial participants, you should focus on the non-commercial participants when you look at the COT report. You would want to know the reason for ignoring the commercial category in the COT report. Commercial participants are mostly trading currency futures for hedging their future business transactions against exchange rate fluctuations. Commercial participants are mostly large transnational companies. These companies keep on rolling their positions from month to month for hedging even though they maybe taking losses.

However, large speculators trade the forex futures contract for speculation and capital gains. They do not have any intention of taking delivery of the currency in cash like the commercial participants. Most will immediately close their losing position instead of rolling it over to the next month.

You can also gauge the market sentiment in the spot forex market by gauging market sentiment in the currency futures market. There is a close correlation between the currency futures market and the spot forex market and both the markets move in tandem.

Forex futures are basically spot prices adjusted for the forwards to arrive at the future delivery price. Near and on the maturity of the forex futures contract, both the prices converge and become equal.

The main difference between the spot forex market and the forex futures market is that the spot forex market is not a centralized market. It is an Over the Counter (OTC) market. However, Forex futures are traded on a Centralized Exchange Chicago Mercantile Exchange (CME). CME functions as a clearing house between the counter parties.

There are some differences in price quotation system used in both the markets that you should become familiar with. However, the spot and futures prices of a currency tend to move in tandem. When either the spot or the future price of the currency rises, the other also tends to rise and when either falls, the other also tend to falls. For example, if GBP futures price goes up spot GBP/USD goes up too.

Calculate the net position of the non-commercial contract by subtracting the long position total from the short position total. Usually when a particular currency is trending up against the US Dollar, the non-commercials tend to register a net long position as the large speculators would like to continue riding the trend.

The opposite would be also true when a particular currency is trending down against the US Dollar. The non-commercials will have a net short position. By comparing the latest net positioning with that of the past few weeks or months, you can tell if the latest net positioning is skewing towards an extreme reading.

When the majority of the market is positioned incorrectly, dramatic price moves like the major turning points tend to occur. You can detect turning points in the spot forex market with the COT reports by keeping an eye on the net directional positioning and net contract volume in the non-commercial category.

You can use your COT report analysis to optimize your trading strategies. Entry and exit cannot be timed solely based on COT report but it can generate warning signals of a possible turn ahead in the spot forex market. What deters many traders from using the COT report is its raw organization of data. COT report is a treasure trove.

Many forex traders choose the currency pair for trading without much study. Many traders make the mistake of forming their opinion around only one currency in the pair, ignoring the other currency in the pair. Right choice of the currency pair is essential for making good returns.

Most of the trades involve US Dollar as either the base currency or the counter currency. Many traders make the mistake of only studying the economic factors that have the potential of affecting dollar.

This neglect of the other currency economic conditions can greatly hinder the profitability of the trade. It also makes the odds of a loss high.

When you trade against a strong economy, the chances of failure are more. The weak currency in the pair could flop badly while the strong currency in the pair may appreciate more than what you calculated.

You must study the economies of both the currencies before you decide to trade a particular currency pair. The best trading strategy is to find the strong economy/weak economy pairing. This has the potential of giving maximum returns.

For example, when FED announced its intention of containing inflation in March 22, 2005 FOMC meeting; most of the other currencies tanked against the dollar. A string of other positive economic data also reinforced the dollar.

While after the initial tanking, GBP rebounded and recovered its strength, due to the impressive economic growth of British economy at that time. Yen kept on depreciating. Japanese economy was weak in those days. Dollar gained more than 300 pips in two weeks against the Yen.

Therefore, USD strength had a much higher impact on the struggling Yen as compared to the consistently strong GBP.

While choosing a currency pair, study the economies of both the currencies in the pair. You also must examine the behavior of the various crosses. In brief, your best choice should always be the strong economy/weak economy currencies.

How do you measure the currency market sentiment? The mood of the currency market depends on what the majority of the traders are thinking about the present market situation. By reading reports of analyst and financial journalist in the news wires, you can get an idea of the overall market sentiment. You can also join online trading forums to see what other traders are thinking about the current market situation.

You may think that the other traders are in a buying or selling mood. But that may not be what is really happening in reality. This way of getting the feel of the market sentiment is not very accurate.

You will ask how you gauge the market sentiment then. You can accurately gauge the spot forex market sentiment by analyzing the Commitment of Traders (COT) report. What is COT report? The COT report provides the detailed positioning information about the futures market on a weekly basis.

COT report is one of the most underrated reports that forex traders can use to gauge the market sentiment. The COT report is compiled and released on a weekly basis by the Commodity Futures Trading Commission (CFTC) in the United States every Friday at 15:30 EST. You can assess the COT report on the CFTC website for free.

Basically two types of COT reports are made available. The one is the futures only COT Report and the second is the futures and options combined COT Report. A look at the futures only COT report will give you the glimpse of what has happened in the futures currency market and its implications for the spot forex market.

The data arrives three days later. Many traders spend their weekends going through the COT report. So the information in the COT report can be nonetheless useful to you. No doubt there is a time lag between the reporting of data and the release of the report but still you can use this report to gauge the market sentiment.

There are three categories in the COT report. The COT report tells you the long and short positions undertaken by participants from each category. The three categories are: 1) Commercial, 2) Non-commercial and 3) Non-reportable.

Commercial: The commercial category consists of those currency futures market participants who use the futures contract for hedging purposes. These commercial participants are mostly exporters and importers in the market. They are hedging against the currency fluctuations for the next few months. Lets take an example, suppose Japanese company Toyota expects to receive $500 million worth of sales from the US market in the next quarter.

In order to hedge against the US Dollar decline, Toyota company will short $500 millions in JPY Forex Futures. Similarly if the US pharmaceutical company exports $50 million worth of drugs to the Japanese market in the next quarter, it will long $50 million JPY Forex Futures.

Non-commercial: The non-commercial category consists of large speculators like hedge funds, banks, institutional investors and so on who want to speculate in currency futures.

Non-reportable: This category comprises small speculators like retails traders.

In these days of super efficiency, support workers who have the ability to fix computers and networks, and offer ongoing advice to users, are vital in all sections of the business environment. Our requirement for those members of the workforce is constantly growing, as industry becomes vastly more technologically advanced.

An area that’s often missed by new students thinking about a course is the concept of ‘training segmentation’. Essentially, this is the method used to break up the program for timed release to you, which completely controls where you end up. You may think it logical (when study may take one to three years to achieve full certification,) for many training providers to send out the training stage by stage, as you complete each part. But: It’s not unusual for trainees to realise that their training company’s standard order of study isn’t ideal for them. They might find varying the order of study will be far more suitable. Could it cause problems if you don’t get everything done at the pace they expect?

In a perfect world, you’d ask for every single material to be delivered immediately – so you’ll have them all to come back to in the future – whenever it suits you. Variations can then be made to the order that you move through the program if you find another route more intuitive.

Full support is of the utmost importance – look for a package that provides 24×7 direct access, as anything less will not satisfy and will also hamper your progress. some companies only provide email support (slow), and so-called telephone support is normally just routed to a call-centre that will just take down the issue and email it over to their technical team – who will call back over the next day or so (assuming you’re there), at a suitable time to them. This is all next to useless if you’re lost and confused and have a one hour time-slot in which to study.

Top training companies utilise several support facilities across multiple time-zones. They use an online interactive interface to seamlessly link them all together, any time of the day or night, help is at hand, avoiding all the delays and problems. Find a company that is worth purchasing from. Because only live 24×7 round-the-clock support truly delivers for technical programs.

Be watchful that any qualifications you’re considering doing are commercially relevant and are the most recent versions. Training companies own certificates are often meaningless. All the major commercial players such as Microsoft, Adobe, Cisco or CompTIA each have nationally renowned skills courses. These heavyweights will make your CV stand-out.

Authorised exam preparation and simulation materials are crucial – and must be obtained from your course provider. Avoid relying on unofficial exam papers and questions. The way they’re phrased can be quite different – and sometimes this can be a real headache when it comes to taking the real exam. Ensure that you ask for testing modules so you’ll be able to test your comprehension along the way. Mock exams will help to boost your attitude – then the actual exam is much easier.

Looking around, we find a plethora of professional positions up for grabs in IT. Deciding which one could be right out of this complexity can be very difficult. What is our likelihood of grasping what is involved in a particular job when we haven’t done that before? Most likely we haven’t met someone who performs the role either. Deliberation over many points is vital when you want to dig down the right solution that will work for you:

* Your personal interests and hobbies – these often highlight what possibilities you’ll get the most enjoyment out of.

* Are you driven to obtain training for a certain raison d’etre – i.e. are you looking at working based at home (self-employment?)?

* Is salary further up on your wish list than other factors.

* Learning what typical work areas and markets are – including what sets them apart.

* Taking a serious look into the effort, commitment and time that you can put aside.

For most people, getting to the bottom of all these ideas tends to require the help of an experienced pro who has direct industry experience. And not just the qualifications – but the commercial needs and expectations of the market as well.

A+ consists of four exams and specialised sectors, but you only have to get your exams in 2 of them to qualify for your A+. Because of this, most training colleges restrict their course to just 2 areas. But allowing you to learn about all 4 options will provide you with a far deeper level of understanding of the subject, which you’ll come to realise is vital in industry.

In addition to learning how to build and fix computers, students involved in this training will be shown how to operate in antistatic conditions, along with remote access, fault finding and diagnostics. If you would like to be the person who is involved with a big team – supporting, fixing and maintaining networks, you’ll need to add CompTIA Network+, or follow the Microsoft route – MCP’s, MCSA or MCSE because it’s necessary to have a deeper understanding of how networks work.

Commercial qualifications are now, very visibly, beginning to replace the traditional academic paths into the IT industry – so why is this the case? With an ever-increasing technical demand on resources, the IT sector has of necessity moved to the specialised core-skills learning that can only be obtained from the actual vendors – namely companies like Adobe, Microsoft, CISCO and CompTIA. Frequently this is at a far reduced cost both money and time wise. University courses, for example, become confusing because of too much background study – with a syllabus that’s far too wide. This prevents a student from getting enough core and in-depth understanding on a specific area.

The crux of the matter is this: Accredited IT qualifications tell an employer precisely what skills you have – it says what you do in the title: i.e. I am a ‘Microsoft Certified Professional’ in ‘Managing and Maintaining Windows Server 2003′. So employers can identify just what their needs are and what certifications are needed for the job.

Considering the amount of options that are available, does it really shock us that a large majority of career changers balk at what job they will follow. Scanning long lists of different and confusing job titles is just a waste of time. Most of us don’t even know what our good friends do at work – so we have no hope of understanding the intricacies of any specific IT role. The key to answering this quandary correctly comes from a full conversation around several areas:

* Your individual personality and what you’re interested in – what kind of work-centred jobs you love or hate.

* Why you want to consider getting involved with computing – maybe you want to overcome a particular goal such as working for yourself maybe.

* How highly do you rate salary – is it of prime importance, or is enjoying your job further up on your list of priorities?

* Because there are so many markets to choose from in computing – it’s wise to achieve some background information on what sets them apart.

* Our advice is to think deeply about the amount of time and effort you’re going to invest in your training.

The best way to avoid the confusing industry jargon, and find what’ll really work for you, have an informal meeting with an advisor with years of experience; someone who will cover the commercial realities and truth whilst covering all the qualifications.

A knowledgeable and specialised consultant (in contrast with a salesperson) will cover in some detail your current experience level and abilities. This is useful for working out the point at which you need to start your studies. Often, the starting point of study for a student with experience is largely different to the student with no experience. Always consider starting with a user-skills course first. This can help whip your basic knowledge into shape and make your learning curve a bit more manageable.

Students who consider this area of study can be very practical by nature, and don’t always take well to classrooms, and endless reading of dry academic textbooks. If you identify with this, go for more modern interactive training, where everything is presented via full motion video. Where we can utilise all of our senses into our learning, then the results are usually dramatically better.

Interactive full motion video with demonstrations and practice sessions will beat books every time. And you’ll actually enjoy doing them. Be sure to get a look at some courseware examples from the training company. You’ll want to see slide-shows, instructor-led videos and virtual practice lab’s for your new skills.

You’ll find that many companies will only provide online training only; sometimes you can get away with this – but, imagine the problems when you don’t have access to the internet or you get intermittent problems and speed issues. It’s much safer to rely on DVD or CD discs which removes the issue entirely.

Beware of putting too much emphasis, as many people do, on the training course itself. Training is not an end in itself; you’re training to become commercially employable. Focus on the end-goal. It’s an awful thing, but a great many students commence training that sounds fabulous in the prospectus, but which provides a job that doesn’t fulfil at all. Just ask several college graduates for examples.

Take time to understand what your attitude is towards career progression and earning potential, and if you’re ambitious or not. It makes sense to understand what the role will demand of you, which qualifications are required and in what way you can develop commercial experience. All students are advised to speak to a professional advisor before they embark on a study path. This is required to ensure it contains the relevant skills for the chosen career path.