Forex Trading – The Key To Huge Profits Is

Forex Trading – The Key To Huge Profits Is
by Sacha Tarkovsky

Fact: Most traders don't have the mental discipline to make big gains. This may sound odd we all want them don't we?

Of course, but most traders don't have the mental discipline to hold them they bank them early or get stopped out. Let's look at why and how to hold and bank the big moves.

Why most traders cannot maintain discipline.

The reason lies in human nature. We all hate to be wrong and when we have a small loss we let it get bigger (after all it will turn around soon) so a small loss becomes a big loss – then it’s too big to take and the trader hangs on until he is wiped out.

Traders have problems with losses, but they also don’t have the discipline to make profits!

If this sounds odd (after all we all want forex profits) on reflection it’s not.

When a trader has a profit he gets excited and the bigger the profit becomes the more the temptation is there to take it before it gets way.

As normal market action eats into open equity, the greater the temptation becomes to take it, after all no one goes broke taking a profit?


YES they do!

If you don’t have the discipline to run the big profits, you will ever cover your inevitable loses.

The way to get disciplined in simple steps is.

1. Understand what you are doing

If you follow anything you don’t understand you will lack discipline and this is what many traders do.

They follow gurus or systems they don’t understand the logic of and of course wilt and throw in the towel when losses occur.

Understanding is the key to:


2. Confidence

If you don’t understand you won’t be confident to follow your system through the bad times. You will over ride it or bin it and frankly you may as well not have a system at all

3. The key

Here is the equation for success

Understanding = Confidence = Discipline

Let’s look at this in a bit more detail.

1. On your method make sure its simple and you understand why it works long term and think of losses as just a normal cost of doing business. Don’t ever follow a system blindly.

2. Make sure you place your stop as soon as you open a trade

3. Understand that the big profits in forex trading are made following the long term trends – and these last months or years and can be worth 10, 20, 30,000 or more!

4. To hold these trends you must learn to take pullbacks in open equity. This is hard when you lose a 1,000 in a day or more but keep your eye on the bigger picture – Don’t move stops to soon, you will get taken out by market noise

5. To win you have to have the discipline to cut losses, but you also have to have the mental discipline to accept big profits.

If you think about the above it’s logical, but is very hard to achieve in practice when money is on the line emotions kick in even with experienced traders, but if you understand the above you can stay disciplined and if you do you can achieve some huge forex profits.


MORE FREE BETTER TRADING INFO

On all aspects of becoming a profitable trader including info about legendary trader W D Gann who made a $50 million fortune trading go to our website for an exclusive Gann Trading Course at http://www.net-planet.org/index.html

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Evaluating A Money Manager

Scams and frauds are designed to take your money through false promises and phony claims. Money management is supposedly designed to increase your net worth. Sometimes these two worlds meet and the results are not in your favor, i.e., you have a considerable decrease in net worth.

The information in this article won't keep future money managers honest but it will help you find the one who is right for your situation. There are four criteria you must consider before you give your money to anyone to manage.

1) Philosophy-- This is the thought theology used by the money manager to make your money grow. In other words, does (s)he focus on stocks, options, mutual funds, annuities, a blend of investment vehicles, etc.? Does this philosophy coincide with your risk tolerance? If stocks are too risky, a manager concentrating in that arena isn't for you. The philosophy also points you to their performance.

2) Performance-- We all know the markets are not stagnant. They go up, they go down. No investment manager can predict the market with absolute certainty. But, they should perform well, or even above average, in their specialty. For example, a stock focused money manager in today's market environment should have performance numbers that would make even Warren Buffet take notice. You want as long a performance record as possbile. To be fair, one market cycle should give you a decent indication of the manager's performance in his/her area(s) of expertise.

3) Process-- This is the means the manager uses to select securities for the portfolios. For example, does (s)he rely
only on in house research or does (s)he incorporate research
from outside sources? If so, who are they and on what frequency are they used?

4) Personnel-- Besides wanting to know the manager's experience, you'd be wise to learn all you could about the folks working in the office. Who actually manages the portfolio? His/her experience? How long has (s)he been in business? Who will manage your account when (s)he is out of the office, on vacation, on business?

Some people would say cost is one of the criteria. I say it is, but to a lesser degree. In over 30 years in this business, I can guarantee that paying the highest commission did not necessarily result in receiving the best advice. Paying the lowest commission did not necessarily result in receiving the worst advice.

Cost comes in the form of fees and commissions. ALL money managers charge. Cost, initially, should not be in your criteria because it often becomes the ONLY determining factor. That will skewer your thinking and could result in not having a
winning team working for you. Make the above four parameters your
primary criteria and cost will take care of itself.

How? You will be quoted a charge. If you are not comfortable with that price, negotiate. All fees and commissions are negotiable. If the manager refuses to negotiate, then and only then, make cost a member of the criteria team.

This article won't solve all of the money management problems or costs associated therewith. However, it'll at least start you thinking in the right direction and keep
your money in your pocket until you are ready to hand it over.

2004 (c) This article may not be reprinted without permission of the author who can be reached at tom-koziol@excite.com

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Forex: Pivot Points Calculation Rules by Andrey Moraru

Forex: Pivot Points Calculation Rules by Andrey Moraru

The presented article covers the topic of pivot points calculating. Different pivot points are the popular and simple tools of technical analysis in Forex market trading. In this article the rules for floor, Tom Demark’s, Woodies and Camarilla pivot points are described. The following article will be useful for all Forex traders who wish to be more acquainted with the generic technical analysis.

The floor pivot points (the most basic and popular type of pivots) are widely used in Forex trading technical analysis. The main aim of a pivot point is to represent a primary level of support/resistance - the point at which the trend can become bearish or bullish. Levels of resistance and support (from first to third) serve as the additional points of possible trend breakouts or the trend range limits. These are the rules to calculate floor pivot points:

Pivot (P) = (H + L + C) / 3
Resistance (R1) = (2 X P) - L
R2 = P + H - L
R3 = H + 2 X (P - L)
Support (S1) = (2 X P) - H
S2 = P - H + L
S3 = L - 2 X (H - P)

Tom DeMark’s pivot points are not as popular as floor pivots, but it is even simpler and can be used to determine the range for a current period trading corridor using the High, Low and Close values of the previous period and the Open value of a current period. To calculate DeMark's pivot points one can use these rules:

If Close < x =" H"> Opencurrent Then X = 2 X H + L + C;
If Close = Opencurrent Then X = H + L + 2 X C;
New High = X / 2 - L; New Low = X / 2 - H

Another way to calculate pivot points are Woodie's pivot points. They are very similar to floor pivot points, but are calculated giving more weight to the Close price of the previous time period. The rules to calculate Woodie's pivot points are as follows:

Pivot (P) = (H + L + 2 X C) / 4
Resistance (R1) = (2 X P) - L
R2 = P + H - L
Support (S1) = (2 X P) - H
S2 = P - H + L

Camarilla pivot points are based on the Camarilla equation method developed by Nick Scott. They are presented as a set of eight levels of support and resistance values without a middle pivot point (which is crucial for floor pivot points). The precise way of calculating these pivot points is somewhat unclear. But more important is that these pivot points can still be calculated and work for all traders. They can be used to set the stop-loss and take-profit orders to automate Forex trading. Use the following rules to calculate Camarilla pivot points:

R4 = (H - L) X 1.1 / 2 + C
R3 = (H - L) X 1.1 / 4 + C
R2 = (H - L) X 1.1 / 6 + C
R1 = (H - L) X 1.1 / 12 + C
S1 = C - (H - L) X 1.1 / 12
S2 = C - (H - L) X 1.1 / 6
S3 = C - (H - L) X 1.1 / 4
S4 = C - (H - L) X 1.1 / 2


by Andrey Moraru

http://www.earnforex.com
http://earnforex.blogspot.com


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