In his book 'All About The Foreign Exchange Market in the United States' Sam Y. Cross says this about electronic trading, "Quoted prices change as often as 20 times a minute. It has been estimated that the world's most active exchange rates can change up to 18,000 times during a single day. There was a time when this price changed only once in many years. The years became months, then days, then hours and now seconds. These price movements have allowed traders to go in and out of the market at a pace not possible just a few years ago. Active modern day traders can go in and out of the FOREX market 200 times in a single day and take a small profit each time they perform these trades."
So, like a lot of people just being introduced to FOREX, the 64,000 dollar question you're probably asking yourself right now is this:IF THE MARKET NEVER SLEEPS (remember: the FOREX is basically a continuous 24-hour open electronic-trading session) WHEN SHOULD I BE AWAKE TO TRADE?Good question.First a little background for you, then our answer:- 24 hour market - Sunday 5pm EST through Friday 4pm EST. Rollover at 5pm EST - Trading begins in New Zealand, followed by Australia, Asia, the Middle East, Europe, and America - The US & UK account for more than 50% of turnover - Major markets: London, New York, Tokyo - Trading activity is heaviest when major markets overlap - Nearly two-thirds of NY activity occurs in the morning hours while European markets are open.=======================================Select the market, select the time, start trading:=======================================The foreign exchange "week" begins at 5am Sydney time on Monday mornings. The foreign exchange trading day almost never ceases except for short periods over weekends. At any given time, somebody somewhere is buying and selling currencies. As one market closes, another market opens. Business hours overlap, and the exchange continues as day becomes night and night becomes day. So, the answer to the above questions is this: The massive liquidity of FOREX, combined with a true 24-hour market that's traded 5.5 days a week, offers you exceptional independence and choices to trade FOREX when you want to, not when the market wants you to. Trades actually develop with relatively the same frequency, regardless of time. As long as the FOREX is open, there is about the same chance that you will find a trade, whenever your look.However, here's the rub...
During each trading day, overall FOREX *volume* (higher volume = a greater chance of finding more trade opportunities) is determined by what markets are open and the times each of these markets OVRERLAP one another. With each passing second, minute and hour, FOREX volume remains high, but peaks highest when the Asian market (including Australia & New Zealand), the European market and the U.S. market is open at the same time.Here's the Breakdown of OPEN Market Times (the times each countries *exchange-traded* markets are open. Important distinction here. Remember: exchange-traded instruments, such as foreign exchange futures, stocks, bonds, etc. adhere to the traditional exchange trading hours):* New York Market trade times: 8am-4pm EST* London Market trade times: 2am-12Noon EST - Great Britain Market trade times: 3am-11am EST* Tokyo Market trade times: 8pm-4am EST - Australia Market trade times: 7pm-3am EST* = Major Markets
Want to know what time it is in Tokyo when it's 7pm on the east coast of the United States? Go here:http://www.timeanddate.com/worldclock/converter.html
You will notice that there are two times when two of the major markets OVERLAP in trading times; between 2am and 4am EST (Asian/European) and between 8am to 12pm EST (European/N. American).Generally, the markets tend to make their biggest moves during these overlaps and, therefore, are usually the BEST times to trade.FUN TRIVIA (Neat to Know Info): Trading FOREX from Africa has advantages because of the time zone. The continent falls neatly between Asia, Europe and the USA. This means that trading time in Africa is the same as that in Europe and also catches both the end of the Asian trading day and the beginning of the U.S. trading day. This natural resource enables African traders to trade at the best times without having sleepless nights :-)
Wednesday, June 4, 2008
DEMO Your Way to Forex Trading Success ... or, How To Trade the FOREX for Free!
Lesson #11: DEMO Your Way to Forex Trading Success ... or, How To Trade the FOREX for Free!
Hey, here's a tongue-in-cheek, rhetorical question for you:WANT TO TRADE THE FOREX MARKET FOR FREE?
Who doesn't, right?What if we told you can get your ambitious, ever-ready little hands on the same state-of-the-art software package that professional FOREX traders, throughout the world, are currently using to make real-time, LIVE currency trades?What if we told you could experience the same dynamic market action and go through the same process of making decisions, based on breaking news, reacting to charting patterns, and tracking ones performance the same way full-time FOREX traders do?
And, what if, even if you don't put REAL MONEY into your account, you still really can't see any difference in how the market reacts to you and how you react to the market (well, okay, okay ... with imaginary money, we know ya just may be a tad more liberal with your trades, but we hope you aren't).Okay, so here's the deal...When we started writing this 20-part e-course, we realized these lessons could literally go on forever and, still, you won't know everything. At some point, every new FOREX trader needs to start DEMO-trading.Once you begin to place demo trades, you will learn a lot about how Forex transactions are placed. This is an important step for you to be able to learn how to become a trader. A Demo Account allows one to become familiar with trading procedures, such as placing Market, Stop, Limit, OCO Orders without any risk. All dollar losses or gains on a Demo Account are imaginary but, as mentioned above, the EXPERIENCE is not!
SIDENOTE: Although racking up big gains in a DEMO account does not insure profits in live trading, those who are NOT successful trading on paper (DEMO account) rarely are successful when money is on the line. So, yes, just playing around and getting familiar with a demo account can be a great learning experience; however, you will not learn how to become a trader this way. You need to have a trading strategy, like the ones we teach at http://www.rapidforexsystem.com/
Here's how to get started with your own demo account.Go to http://www.fxcm.com/mini-demo-registration.html
There you can sign up for a free mini-demo account. A mini account is just like a real demo account, except the trade sizes are smaller. In a real account the smallest trade size is $100,000, in a mini account the smallest trade size is $10,000 (this can be done with a $50 margin, the power of leverage!).There are several other places online to sign up for a free demo account, but we recommend FXCM, because they have the best overall reputation online. FXCM has built itself to the premier Forex trading platform. We don't get paid anything to endorse them, but they are currently the best.Once you sign up for your mini-demo account, you will need to try out one of the trial charting packages. Any of these will do because they all have the necessary indicator tools that we teach you to use in our course packages. You can then set up your demo account and start drawing trendlines, marking support & resistance levels, monitoring moving averages, etc. This is a good way to get used to how orders are placed. Once you have a real trading system, you will already know how to place orders properly.Everyone makes mistakes placing orders. You need to experiment in a demo account to make your mistakes without losing money.At this point you have to make a decision about how fast you would like to learn how to become a trader. The truth is that the longer you wait to get in on this market, the more potential money you are missing out on. You need to decide what time frame is right for you to begin trading.You need to decide if:1. You want to place real trades within the next 3 months (or sooner, depending on your desire) 2. You want to build your knowledge for several months before placing real trades.The choice is entirely yours. No-one else can make that decision for you. You need to make a plan and stick to it. It is important not to put off your success. Success requires action.If you want to place real trades within the next 3 months, you should check out http://www.rapidforexsystem.com/. There are some great resources there at extremely affordable prices that can get you trading in a very short amount of time. If you want to build your knowledge base, then continue to be on the lookout for these daily email lessons. You are already subscribed to it, all you need to do is read each article attentively as they are released.
Hey, here's a tongue-in-cheek, rhetorical question for you:WANT TO TRADE THE FOREX MARKET FOR FREE?
Who doesn't, right?What if we told you can get your ambitious, ever-ready little hands on the same state-of-the-art software package that professional FOREX traders, throughout the world, are currently using to make real-time, LIVE currency trades?What if we told you could experience the same dynamic market action and go through the same process of making decisions, based on breaking news, reacting to charting patterns, and tracking ones performance the same way full-time FOREX traders do?
And, what if, even if you don't put REAL MONEY into your account, you still really can't see any difference in how the market reacts to you and how you react to the market (well, okay, okay ... with imaginary money, we know ya just may be a tad more liberal with your trades, but we hope you aren't).Okay, so here's the deal...When we started writing this 20-part e-course, we realized these lessons could literally go on forever and, still, you won't know everything. At some point, every new FOREX trader needs to start DEMO-trading.Once you begin to place demo trades, you will learn a lot about how Forex transactions are placed. This is an important step for you to be able to learn how to become a trader. A Demo Account allows one to become familiar with trading procedures, such as placing Market, Stop, Limit, OCO Orders without any risk. All dollar losses or gains on a Demo Account are imaginary but, as mentioned above, the EXPERIENCE is not!
SIDENOTE: Although racking up big gains in a DEMO account does not insure profits in live trading, those who are NOT successful trading on paper (DEMO account) rarely are successful when money is on the line. So, yes, just playing around and getting familiar with a demo account can be a great learning experience; however, you will not learn how to become a trader this way. You need to have a trading strategy, like the ones we teach at http://www.rapidforexsystem.com/
Here's how to get started with your own demo account.Go to http://www.fxcm.com/mini-demo-registration.html
There you can sign up for a free mini-demo account. A mini account is just like a real demo account, except the trade sizes are smaller. In a real account the smallest trade size is $100,000, in a mini account the smallest trade size is $10,000 (this can be done with a $50 margin, the power of leverage!).There are several other places online to sign up for a free demo account, but we recommend FXCM, because they have the best overall reputation online. FXCM has built itself to the premier Forex trading platform. We don't get paid anything to endorse them, but they are currently the best.Once you sign up for your mini-demo account, you will need to try out one of the trial charting packages. Any of these will do because they all have the necessary indicator tools that we teach you to use in our course packages. You can then set up your demo account and start drawing trendlines, marking support & resistance levels, monitoring moving averages, etc. This is a good way to get used to how orders are placed. Once you have a real trading system, you will already know how to place orders properly.Everyone makes mistakes placing orders. You need to experiment in a demo account to make your mistakes without losing money.At this point you have to make a decision about how fast you would like to learn how to become a trader. The truth is that the longer you wait to get in on this market, the more potential money you are missing out on. You need to decide what time frame is right for you to begin trading.You need to decide if:1. You want to place real trades within the next 3 months (or sooner, depending on your desire) 2. You want to build your knowledge for several months before placing real trades.The choice is entirely yours. No-one else can make that decision for you. You need to make a plan and stick to it. It is important not to put off your success. Success requires action.If you want to place real trades within the next 3 months, you should check out http://www.rapidforexsystem.com/. There are some great resources there at extremely affordable prices that can get you trading in a very short amount of time. If you want to build your knowledge base, then continue to be on the lookout for these daily email lessons. You are already subscribed to it, all you need to do is read each article attentively as they are released.
Account Size, Lots, Margins, and the Allure of 200:1 Leverage
Normally, for most brokerages (at least the ones we recommend), a margin deposit of just $1,000 allows you to control a $100,000 position in the FOREX market. That's 100:1 leverage, or 1%. Or, said another way, a *regular full-sized account* -- sometimes referred to as a 100k account -- allows you to trade with lot sizes equal to $100,000. Each lot is worth $100,000 in currency. It will only require $1,000 to trade one lot (aka, "contract")
Think about this for a moment (it is what makes this market the hottest market to trade in right now): The FX broker has loaned you $99,000 dollars secured only by your $1,000. This is HUGE and, as you know by now, is what allows traders to make extraordinary incomes in this market. And, as you also are probably used to hearing - "leverage is two-edged sword" - it is what can cause you to lose a lot of money if you trade without rules or Stop-loss orders.
But, for argument's sake (and to keep the continued tone of this course on encouraging you to become a FOREX trader), let's just say you WERE the person to trade with reckless abandon -- with no common sense, no strategy, no money-management principles, etc. While we don't recommend that ... still, consider this:Unlike Futures (Commodity Trading), the market that most people associate with HIGH leverage, you can never have a debit balance when trading FOREX!So, despite the greater leverage associated with FX trading, it's still arguably less risky than futures trading. Futures markets are often prone to sudden and dramatic moves, against which you can't protect yourself, even by trading with protective stops. Your position may be liquidated at a loss, and you'll be liable for any resulting deficit in theaccount. But because of the FX market's deep liquidity and 24-hour, continuous trading, dangerous trading gaps and limit moves are eliminated. Orders are executed quickly, without slippage or partial fills.And finally, there are no margin calls -- for your protection, the FX broker's trading platform will automatically close out some or all of your open positions if your account equity -- meaning the total floating value of the account -- falls below the level required to hold the positions. Think of this as a final, automatic stop, always working on your behalf to prevent a debit balance.
======================A Quick NOTE about Margin:======================
Besides being generous with their margin requirements (LEVERAGE), FX brokers also are very flexible with you. In other words, you are able to select the degree of leverage, or "gearing" as they call it, that you feel works best for you. The default margin for most brokers is set at 1% (and, of course, most traders prefer the lowest possible margin requirement), but if you prefer to trade with less leverage, some brokers allow you to trade with a 2% margin.For instance, if you start with a 2% margin, then it will cost you $2000 to place a one-lot trade on a 100K (full) account. Your leverage is now 50:1 versus 100:1. As discussed in Lesson #3, currency moves in price-interest- points (pips), and in a regular (100K) account, each pip is worth about $8 to $10.
=========================================================Mini Lots VS. Full-sized Lots and How to Achieve up to 200:1 Leverage:=========================================================The Mini Account (explained more below) uses a different leverage calculation than a regular (100k) account. Instead of trading full-size currency lots (100,000 units), you'll trade in lots that are just 1/10 the size (10,000 currency units), which greatly reduces your risk. Pips in a Mini Account are worth, on average, $1 instead of the $8 to $10 mentioned above. The Mini FX account offers up to 200:1 leverage -- just a $50 margin deposit allows you to trade lots worth roughly $10,000 -- but the smaller lot sizes, with correspondingly smaller pip values, means that you'll be assuming less total risk. For example, while a 20-pip loss on a 100,000 EUR/USD position would be $200, the same loss on a 10,000 EUR/USD position in a Mini account would amount to $20.So, here's the OVERVIEW of LEVERAGE (Margin, Account Size) on each of the two accounts discussed above:100K (Regular Full-sized Account)- Minimum required account deposit = $2,000- Recommended required account deposit = $5,000 to $10,000- Traded in 100,000-unit currency lots- Default Margin: set at 1% ($1,000 per lot)- Leverage = 100:1 or 50:1 (if margin is set at 2%)MINI Account- Minimum required account deposit = $300- Recommended required account deposit = $2,000- Traded in 10,000-unit currency lots- Default Margin: set at 0.5% ($50 per mini-lot)- Leverage = 200:1=====================Because there is no downside to trading a MINI Account (i.e., you're still entitled to all the benefits that full-size FX account holders enjoy - same state-of-the art trading software, charts, resources, and tools, etc.), and it is ideal for a new FOREX trader to develop a disciplined, rational forex trading strategy without excessively focusing on profits and losses (note: with less than $5,000 starting capital, you can't be WRONG too many times when trading with a regular account). . . we've developed an extensive complimentary course on how to use a MINI account.If you haven't already read "Forex Freedom", just follow these instructions:
To DOWNLOAD "Rapid Forex Freedom":'Right-Click' on the link below,and use the 'save as' command.http://forexbooth.com/freedom.pdf
START SMALL, BUILD UP CONFIDENCE!!There is NO MAXIMUM trade volume on the Mini account. Although the standard trade size is 10,000 units – you are not limited to trading one lot! For instance, you can trade10,000 units, 50,000 units or 150,000 units. This means as you become more seasoned and build up confidence you can slowly increase the size of your positions to maximize profits (and losses). In fact the trade size of 10,000 units allows for more flexibility in terms of customizing the size of your trade. The ability to customize the size of the trade enables better risk management.
DEVELOP YOUR TRADING SKILLS WITHOUT FOCUSING ON P&L !!When trading 100,000 currency unit lots in a regular, full-size account, if you have a relatively small balance, you may tend to fixate on your equity fluctuations and sometimes base trading decisions on emotional reactions to these fluctuations. Many traders, for example, resist closing-out unsuccessful trades at a loss, because they hope that the market will turn in their favor. Conversely, many tend to immediately take profits when the market moves in the desired direction, rather than maximizing their gains by allowing profits to run. With less capital at stake in a Mini FX account, however, you can develop a disciplined trading methodology -- as well as the confidence needed to be a successful currency trader -- without the anxiety and distractions that come with large P&L swings.How to capitalize on these two advantages of the MINI account is exactly what we teach you in "Forex Freedom" -- we hope you enjoy it as much as Robert enjoyed writing it.And, to learn all about our famous technical-trading courses, just go here: http://www.rapidforexsystem.com/It is our goal to serve you with the best FOREX trading content on the planet. We have been labeled "the premier go-to website for value-packed, self-taught FOREX education & training." If you're not into forking out hundreds, or even thousands of dollars for seminars, DVD's and conference calls, we think you'll thoroughly enjoy what we have to offer.Until tomorrow's lesson, just remember, "Life is Short, Eat Desert First."
Think about this for a moment (it is what makes this market the hottest market to trade in right now): The FX broker has loaned you $99,000 dollars secured only by your $1,000. This is HUGE and, as you know by now, is what allows traders to make extraordinary incomes in this market. And, as you also are probably used to hearing - "leverage is two-edged sword" - it is what can cause you to lose a lot of money if you trade without rules or Stop-loss orders.
But, for argument's sake (and to keep the continued tone of this course on encouraging you to become a FOREX trader), let's just say you WERE the person to trade with reckless abandon -- with no common sense, no strategy, no money-management principles, etc. While we don't recommend that ... still, consider this:Unlike Futures (Commodity Trading), the market that most people associate with HIGH leverage, you can never have a debit balance when trading FOREX!So, despite the greater leverage associated with FX trading, it's still arguably less risky than futures trading. Futures markets are often prone to sudden and dramatic moves, against which you can't protect yourself, even by trading with protective stops. Your position may be liquidated at a loss, and you'll be liable for any resulting deficit in theaccount. But because of the FX market's deep liquidity and 24-hour, continuous trading, dangerous trading gaps and limit moves are eliminated. Orders are executed quickly, without slippage or partial fills.And finally, there are no margin calls -- for your protection, the FX broker's trading platform will automatically close out some or all of your open positions if your account equity -- meaning the total floating value of the account -- falls below the level required to hold the positions. Think of this as a final, automatic stop, always working on your behalf to prevent a debit balance.
======================A Quick NOTE about Margin:======================
Besides being generous with their margin requirements (LEVERAGE), FX brokers also are very flexible with you. In other words, you are able to select the degree of leverage, or "gearing" as they call it, that you feel works best for you. The default margin for most brokers is set at 1% (and, of course, most traders prefer the lowest possible margin requirement), but if you prefer to trade with less leverage, some brokers allow you to trade with a 2% margin.For instance, if you start with a 2% margin, then it will cost you $2000 to place a one-lot trade on a 100K (full) account. Your leverage is now 50:1 versus 100:1. As discussed in Lesson #3, currency moves in price-interest- points (pips), and in a regular (100K) account, each pip is worth about $8 to $10.
=========================================================Mini Lots VS. Full-sized Lots and How to Achieve up to 200:1 Leverage:=========================================================The Mini Account (explained more below) uses a different leverage calculation than a regular (100k) account. Instead of trading full-size currency lots (100,000 units), you'll trade in lots that are just 1/10 the size (10,000 currency units), which greatly reduces your risk. Pips in a Mini Account are worth, on average, $1 instead of the $8 to $10 mentioned above. The Mini FX account offers up to 200:1 leverage -- just a $50 margin deposit allows you to trade lots worth roughly $10,000 -- but the smaller lot sizes, with correspondingly smaller pip values, means that you'll be assuming less total risk. For example, while a 20-pip loss on a 100,000 EUR/USD position would be $200, the same loss on a 10,000 EUR/USD position in a Mini account would amount to $20.So, here's the OVERVIEW of LEVERAGE (Margin, Account Size) on each of the two accounts discussed above:100K (Regular Full-sized Account)- Minimum required account deposit = $2,000- Recommended required account deposit = $5,000 to $10,000- Traded in 100,000-unit currency lots- Default Margin: set at 1% ($1,000 per lot)- Leverage = 100:1 or 50:1 (if margin is set at 2%)MINI Account- Minimum required account deposit = $300- Recommended required account deposit = $2,000- Traded in 10,000-unit currency lots- Default Margin: set at 0.5% ($50 per mini-lot)- Leverage = 200:1=====================Because there is no downside to trading a MINI Account (i.e., you're still entitled to all the benefits that full-size FX account holders enjoy - same state-of-the art trading software, charts, resources, and tools, etc.), and it is ideal for a new FOREX trader to develop a disciplined, rational forex trading strategy without excessively focusing on profits and losses (note: with less than $5,000 starting capital, you can't be WRONG too many times when trading with a regular account). . . we've developed an extensive complimentary course on how to use a MINI account.If you haven't already read "Forex Freedom", just follow these instructions:
To DOWNLOAD "Rapid Forex Freedom":'Right-Click' on the link below,and use the 'save as' command.http://forexbooth.com/freedom.pdf
START SMALL, BUILD UP CONFIDENCE!!There is NO MAXIMUM trade volume on the Mini account. Although the standard trade size is 10,000 units – you are not limited to trading one lot! For instance, you can trade10,000 units, 50,000 units or 150,000 units. This means as you become more seasoned and build up confidence you can slowly increase the size of your positions to maximize profits (and losses). In fact the trade size of 10,000 units allows for more flexibility in terms of customizing the size of your trade. The ability to customize the size of the trade enables better risk management.
DEVELOP YOUR TRADING SKILLS WITHOUT FOCUSING ON P&L !!When trading 100,000 currency unit lots in a regular, full-size account, if you have a relatively small balance, you may tend to fixate on your equity fluctuations and sometimes base trading decisions on emotional reactions to these fluctuations. Many traders, for example, resist closing-out unsuccessful trades at a loss, because they hope that the market will turn in their favor. Conversely, many tend to immediately take profits when the market moves in the desired direction, rather than maximizing their gains by allowing profits to run. With less capital at stake in a Mini FX account, however, you can develop a disciplined trading methodology -- as well as the confidence needed to be a successful currency trader -- without the anxiety and distractions that come with large P&L swings.How to capitalize on these two advantages of the MINI account is exactly what we teach you in "Forex Freedom" -- we hope you enjoy it as much as Robert enjoyed writing it.And, to learn all about our famous technical-trading courses, just go here: http://www.rapidforexsystem.com/It is our goal to serve you with the best FOREX trading content on the planet. We have been labeled "the premier go-to website for value-packed, self-taught FOREX education & training." If you're not into forking out hundreds, or even thousands of dollars for seminars, DVD's and conference calls, we think you'll thoroughly enjoy what we have to offer.Until tomorrow's lesson, just remember, "Life is Short, Eat Desert First."
Lesson #9: FOREX Order Types and How to Use Them
When you open your trading station software (provided to you for fr.ee by any one of our recommended brokers), you will find there are TWO main ways to ENTER a market or, said in another way, there are two ways to place an initial order to buy or sell any currency pair.
(AFTER we discuss the MARKET and ENTRY order, we'll cover how to protect your profits and limit any potential or realized losses with the STOP and LIMIT order).=============================
MARKET ORDER - an order to buy or sell a currency pair at the market price the instant that the order is received and processed (within seconds of hitting the "OK" button on your screen). When a market order is placed, you are simply saying "I'll buy or sell the currency pair at whatever price it is at when my order gets processed."
Example: If you are looking to place an order for JPY (YEN) when the dealing price is 104.00/05, a market order will request to buy JPY at 104.00 or will request to sell JPY at 104.05 (of course, whether you BUY it or SELL it is up to you and is chosen on the software drop down box. And, again, once you've made your selection, this order is placed with a single click and is executed almost instantly).Within the courses we have for sale at RapidForex.com, 99% of the time, we will have you avoiding MARKET orders. The reason? They tend to compel the trader to act on impulse instead of according to a trading plan.
ENTRY ORDER - an order to buy or sell a currency pair when it reaches a certain price target. This can be any price in theory. You could set an entry order for the low price of a time period, or the high price of a time period. For instance, in one of our courses (Rapid Forex Education Manual 9.0) we teach you to always set an ENTRY order to be the same price as the *open price* of the time period. When you place an ENTRY order to BUY, for example, you are simply saying "I want to buy this currency pair at a certain price, if it never reaches that price, I don't want to purchase the pair."Example: the current "real-time" quote for the EUR/USD is 1.3317. Your analysis shows that IF the pair hits 1.3329 (a key resistance point) that there's a high-probability the pair will turnaround (retrace down) so you decide to place an ENTRY order to sell the EUR/USD at 1.3327.The ENTRY order above shows you how you are fully-empowered to pick a price and place an order to sell at that price. If the market hits 1.3327 ... great, you now have an OPEN position and, as long as the EUR/USD pair keeps dropping and you close out (exit) your trade at a price lower than 1.3327, you make money.And, if you don't get in the trade, via your ENTRY order, don't worry. New trades are constantly developing and if your order entry doesn't get filled you can't lose any money. Learn not to be upset when an ENTRY order isn't filled. You are saved most of the time anyway because the currency pair did the opposite of what you thought and you would have lost money, most likely, if it did get filled. Remember, when orders are not filled, it means you never risked any money!
=============================
After your ENTRY order is placed, you can set a STOP and/or LIMIT order if you desire. STOP and LIMIT orders are both ways to exit a trade, automatically (i.e., without closing out your position via the click of your mouse - manually), after the trade is entered.A STOP order (something we always recommend) is used to stop losses. A LIMIT order (recommended if you can't monitor your open trade) is used to redeem profits. Where these orders are placed, in relation to your open trade, depends on the direction of the entry order.Example STOP order: If you have an open buy position on USD/JPY, which you bought at 104.20, and you want to set a stop order in case the U.S. Dollar starts to depreciate against the YEN, to stop your loss (or limit your loss - however you want to look at it), you could set a stop order at 104.00, thus closing your position at a 20-pip loss.Tip: a STOP order is always placed BELOW the current market value of that currency pair (if you are in a long trade).Example LIMIT order: Assume you placed an ENTRY order to BUY EUR/USD for 1.6100. You might place the STOP order at 1.6081 (limiting your loss to 19 pips) but, at the same time, you could place a LIMIT order for somewhere around 1.6171. If the currency pair reaches that price level, the LIMIT order becomes a market order to sell, or close out, the BUY position for a 71-pip profit.Tip: a LIMIT order is always placed ABOVE the current market value of that currency pair (if you are in a long trade).
=============================This is all you really need to know in terms of placing orders. It's really not that complicated and, of course, our courses will walk you through the finer points of calculating your entry and exit points and ensuring you know how to scale in and out of trades with ease and precision.If you've ever traded ONLINE before, maybe using e-Trade or a stock brokers online software package, you will be pleasantly surprised at just how intuitive, fun, and easy it is to use the desktop-based online software that a reputable FX broker can provide you.
(AFTER we discuss the MARKET and ENTRY order, we'll cover how to protect your profits and limit any potential or realized losses with the STOP and LIMIT order).=============================
MARKET ORDER - an order to buy or sell a currency pair at the market price the instant that the order is received and processed (within seconds of hitting the "OK" button on your screen). When a market order is placed, you are simply saying "I'll buy or sell the currency pair at whatever price it is at when my order gets processed."
Example: If you are looking to place an order for JPY (YEN) when the dealing price is 104.00/05, a market order will request to buy JPY at 104.00 or will request to sell JPY at 104.05 (of course, whether you BUY it or SELL it is up to you and is chosen on the software drop down box. And, again, once you've made your selection, this order is placed with a single click and is executed almost instantly).Within the courses we have for sale at RapidForex.com, 99% of the time, we will have you avoiding MARKET orders. The reason? They tend to compel the trader to act on impulse instead of according to a trading plan.
ENTRY ORDER - an order to buy or sell a currency pair when it reaches a certain price target. This can be any price in theory. You could set an entry order for the low price of a time period, or the high price of a time period. For instance, in one of our courses (Rapid Forex Education Manual 9.0) we teach you to always set an ENTRY order to be the same price as the *open price* of the time period. When you place an ENTRY order to BUY, for example, you are simply saying "I want to buy this currency pair at a certain price, if it never reaches that price, I don't want to purchase the pair."Example: the current "real-time" quote for the EUR/USD is 1.3317. Your analysis shows that IF the pair hits 1.3329 (a key resistance point) that there's a high-probability the pair will turnaround (retrace down) so you decide to place an ENTRY order to sell the EUR/USD at 1.3327.The ENTRY order above shows you how you are fully-empowered to pick a price and place an order to sell at that price. If the market hits 1.3327 ... great, you now have an OPEN position and, as long as the EUR/USD pair keeps dropping and you close out (exit) your trade at a price lower than 1.3327, you make money.And, if you don't get in the trade, via your ENTRY order, don't worry. New trades are constantly developing and if your order entry doesn't get filled you can't lose any money. Learn not to be upset when an ENTRY order isn't filled. You are saved most of the time anyway because the currency pair did the opposite of what you thought and you would have lost money, most likely, if it did get filled. Remember, when orders are not filled, it means you never risked any money!
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After your ENTRY order is placed, you can set a STOP and/or LIMIT order if you desire. STOP and LIMIT orders are both ways to exit a trade, automatically (i.e., without closing out your position via the click of your mouse - manually), after the trade is entered.A STOP order (something we always recommend) is used to stop losses. A LIMIT order (recommended if you can't monitor your open trade) is used to redeem profits. Where these orders are placed, in relation to your open trade, depends on the direction of the entry order.Example STOP order: If you have an open buy position on USD/JPY, which you bought at 104.20, and you want to set a stop order in case the U.S. Dollar starts to depreciate against the YEN, to stop your loss (or limit your loss - however you want to look at it), you could set a stop order at 104.00, thus closing your position at a 20-pip loss.Tip: a STOP order is always placed BELOW the current market value of that currency pair (if you are in a long trade).Example LIMIT order: Assume you placed an ENTRY order to BUY EUR/USD for 1.6100. You might place the STOP order at 1.6081 (limiting your loss to 19 pips) but, at the same time, you could place a LIMIT order for somewhere around 1.6171. If the currency pair reaches that price level, the LIMIT order becomes a market order to sell, or close out, the BUY position for a 71-pip profit.Tip: a LIMIT order is always placed ABOVE the current market value of that currency pair (if you are in a long trade).
=============================This is all you really need to know in terms of placing orders. It's really not that complicated and, of course, our courses will walk you through the finer points of calculating your entry and exit points and ensuring you know how to scale in and out of trades with ease and precision.If you've ever traded ONLINE before, maybe using e-Trade or a stock brokers online software package, you will be pleasantly surprised at just how intuitive, fun, and easy it is to use the desktop-based online software that a reputable FX broker can provide you.
Lesson #8: "A rising tide raises all ships" ... Or ... How To Determine if The Trend is truly your friend
As we explained yesterday, the basis behind using technical analysis is to find trends when they first develop so you can ride the trend until it ends. The foreign exchange market is a very STRONG trending market and is, therefore, a place where technical analysis can be very effective.
But, as sure as the day is blue, we still know and meet traders every week who still end up buying (being "long") while the currency pair is in a basic downtrend, or selling short when a market is in a uptrend.
The key here is this: (it's so simple, some want to overlook it or "argue" with it).Use as many technical indicators as you want, or create a personalized trading strategy based off a combination of indicators, to RECOGNIZE THE TREND. In other words, professional FOREX traders try to identify the major trend, the intermediate trend, and the short-term trend and then construct their trades in that direction, based off how long their rules allow them to hold a position.
"We know that prices move up and down. They always have and they always will. My theory is that behind these major movements is an irresistible force. That is all one needs to know. It is not well to be too curious about all the reasons behind price movements. You risk the danger of clouding your mind with non-essentials. Just recognize that the movement is there and take advantage of it by steering your speculative ship along with the tide. Do not argue with the condition, and most of all, do not try to combat it."
-- Jesse Livermore
So, what is Mr. Livermore - one of the most colorful, flamboyant and respected market speculators of all time - telling us?In our terms, he's saying: If the action of the market shows your judgment to be correct, the successful trader 'stays with the market' and endeavors to make the maximum profit on each trade, according to his/her risk-to-reward / equity management rules. If and when the market goes against him/her, the smart trader will take profits and get out. In a narrow market (see definition below), when prices are not going anywhere to speak of, but move within a narrow range, there is no sense in trying to anticipate when the next BIG movement is going to be - up or down.What Mr. Livermore is saying is to watch the market and see what the market is telling you about upcoming trends. Never argue with the market, or ask it for reasons or explanations.=========================The market often display's some very familiar patterns of price movement. Once a pattern is established, it becomes the most probable course of future price action until the market changes.
There are two types of markets which will become important for you to identify; trending and trend-less. Each market type has two specific patterns which you will also notice over time. These market types and patterns are defined as follows:>>> Trending - Steady elongated price movements with less than a 45-degree angel with occasional pauses, profit taking, or resting periods.In a Trending market, you have:- Uptrends - A pattern of higher highs and higher lows.- Downtrends - A pattern of lower lows and lower highs.>>> Trend-less - Erratic price movements which are often steep ( greater than 45 -degree angle ) and cannot sustain and therefore must reverse. Although the movements can move many points in a short period of time, they often result in very little net price movement over time.In a Trend-less market, you have:- Choppy - An erratic pattern of higher highs and lower lows.- Sideways - A narrow pattern of lower highs and higher lows.While up-trend and down-trend days can offer excellent trading results, choppy markets often create stop outs, while sideways markets produce for little in either direction. Your trading objective is to get into a trending market and ride until you make our target objective.We cover many Trend Trading Strategies in our book, "Rapid Forex Surfing" -- you will learn how to identify and draw your own channel trendlines, support and resistance lines, triangle patterns, chart key top and bottom formations, etc.
But, as sure as the day is blue, we still know and meet traders every week who still end up buying (being "long") while the currency pair is in a basic downtrend, or selling short when a market is in a uptrend.
The key here is this: (it's so simple, some want to overlook it or "argue" with it).Use as many technical indicators as you want, or create a personalized trading strategy based off a combination of indicators, to RECOGNIZE THE TREND. In other words, professional FOREX traders try to identify the major trend, the intermediate trend, and the short-term trend and then construct their trades in that direction, based off how long their rules allow them to hold a position.
"We know that prices move up and down. They always have and they always will. My theory is that behind these major movements is an irresistible force. That is all one needs to know. It is not well to be too curious about all the reasons behind price movements. You risk the danger of clouding your mind with non-essentials. Just recognize that the movement is there and take advantage of it by steering your speculative ship along with the tide. Do not argue with the condition, and most of all, do not try to combat it."
-- Jesse Livermore
So, what is Mr. Livermore - one of the most colorful, flamboyant and respected market speculators of all time - telling us?In our terms, he's saying: If the action of the market shows your judgment to be correct, the successful trader 'stays with the market' and endeavors to make the maximum profit on each trade, according to his/her risk-to-reward / equity management rules. If and when the market goes against him/her, the smart trader will take profits and get out. In a narrow market (see definition below), when prices are not going anywhere to speak of, but move within a narrow range, there is no sense in trying to anticipate when the next BIG movement is going to be - up or down.What Mr. Livermore is saying is to watch the market and see what the market is telling you about upcoming trends. Never argue with the market, or ask it for reasons or explanations.=========================The market often display's some very familiar patterns of price movement. Once a pattern is established, it becomes the most probable course of future price action until the market changes.
There are two types of markets which will become important for you to identify; trending and trend-less. Each market type has two specific patterns which you will also notice over time. These market types and patterns are defined as follows:>>> Trending - Steady elongated price movements with less than a 45-degree angel with occasional pauses, profit taking, or resting periods.In a Trending market, you have:- Uptrends - A pattern of higher highs and higher lows.- Downtrends - A pattern of lower lows and lower highs.>>> Trend-less - Erratic price movements which are often steep ( greater than 45 -degree angle ) and cannot sustain and therefore must reverse. Although the movements can move many points in a short period of time, they often result in very little net price movement over time.In a Trend-less market, you have:- Choppy - An erratic pattern of higher highs and lower lows.- Sideways - A narrow pattern of lower highs and higher lows.While up-trend and down-trend days can offer excellent trading results, choppy markets often create stop outs, while sideways markets produce for little in either direction. Your trading objective is to get into a trending market and ride until you make our target objective.We cover many Trend Trading Strategies in our book, "Rapid Forex Surfing" -- you will learn how to identify and draw your own channel trendlines, support and resistance lines, triangle patterns, chart key top and bottom formations, etc.
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