Voices in Finance » Forex

Finding Good Forex Trading Software

J. Hamilton Fraser — Mon, 28 Mar 2011 07:23:06 +0000

In theory, one of the best ways that you can make money in the forex market is by getting a piece of forex trading signal software. In theory, the software will analyze the market trends and then automatically suggest buying and selling points to you. While this might sound all well and good, in practice it operates much different than in theory. Compounding problems is the fact that many fly by night operators will try to take your money and sell you a subpar piece of software that will actually lose you money! So how do you know which are good and which are bad? Here’s a few quick tips.

First, always make sure that any forex trading robot that you buy comes with proof of live testing. While backtesting is also important, a track record of live testing will prove that the program will actually work under real market conditions. If the robot is only backtested, it could be coded simply to take advantages of situations the programmers knew existed and won’t operate well on the real market.

In addition to live testing, your trading signal software should also have a relatively low level of risk. Ideally, try to make sure that you only need one winning trade to make up for one losing trade. This shows you that the robot isn’t taking unnecessary risks on the losing side os that it doesn’t record any losses. This alone doesn’t mean that the robot is necessarily safe – it could also be making huge bets to make huge gains, but it does help you decide.

Finally, always make sure that any forex software that you buy comes with a money back guarantee. This will let you test the software yourself to make sure that it works and it lives up to all the claims that it has put up on it’s website.

When Uncertainty Prevails, Seek the Wisdom from One That Has Earned It

Mike — Mon, 06 Dec 2010 09:57:35 +0000

This is a guest post from Tom Cleveland

In eras long past when the future was highly uncertain, the masses would seek out the scions of their day for enlightenment. The Oracle of Delphi comes to mind, but in these turbulent economic times we need not seek counsel from the strange interpretations of resident priests. Instead, we can prevail upon the wisdom of a few selected market professionals that have accumulated years of experience and a positive track record in their market-based predictions. Jeremy Grantham is just such an individual.

Mr. Grantham is one of our esteemed, elder statesmen, investor, and Chairman of the Board of Grantham Mayo Van Otterloo (GMO), a Boston-based asset management firm with over $100 billion in management. He and his firm have correctly forewarned others about no less than 34 asset bubbles that have transpired over the past several decades. He predicted the Internet crash two months before its collapse and warned investors about the most recent recession and real estate market debacle. In a recent interview with a popular cable commentator, Mr. Grantham shared his current thoughts on the state of global markets.

Here is a summary of a few of his more salient insights:

The Fed’s $600 Billion Quantitative Easing Program: The Fed should be in the business of destroying asset bubbles before they form, not creating them from the outset. Their proposed program worries him the most since it will weaken the Dollar and threaten currency wars across the globe. It will be difficult to accuse the Chinese of manipulating their currency while we are manipulating ours. Commodities have skyrocketed, an obvious bubble, and stocks are overvalued, another “boom and bust” cycle in the making;
What is going on with commodities? The simple fact is that there are not enough of them to go around. The hard metals, like Gold, Silver, Copper, and Palladium have witnessed steep run-ups that are unsustainable, an indication that the global economy is in recovery. However, the run-ups in the soft commodities, cotton, corn, rice, and wheat, have also gone through the roof. A weakening dollar only makes a bad situation worse, bordering on disaster. Currency manipulation is just another form of tariff;
What about Emerging Markets: Mr. Grantham began advising investors back in 2000 to invest in the developing world. The value appreciation over the past seven years has been 3.3 times that of the S&P 500 Index, and there may be a few more good years to go. The developed world is mired in 2% growth targets while developing countries are in the 6% plus inflation range. Population demographics favor emerging countries as well;
Are Stocks and Bonds worth buying? Both are overvalued in his estimation. Fair value for the S&P 500 Index is in the 950-range. Old blue-chip stocks that pay regular dividends are cheaper than the rest of the market;
And what of the Dollar? He believes it is a cheap currency at the moment, but if a true currency war erupts around the globe, then anything could happen and forex software may be stressed by the volatility. QE2 and any following programs, coupled with low interest rates, force investors to take risks for their returns. If it leads to increased domestic employment, that is a good thing, but it will redistribute wealth from retirees to the rich that save and spend less, an especially bad idea at the moment.

Currently Mr. Grantham is advising clients to be in cash, with some blue chips and emerging markets, and to be patient. Investment opportunities will come in short order.

Starting to Trade in Forex

Mike — Wed, 20 Oct 2010 11:59:43 +0000

Forex trading, like any other job, has to be studied and practiced first hand in order to earn some real money.
If you are trading for some time now – this advice might help you. Now the expression “for some time” could have a very broad sense in a currency trading context. One trader might have traded profitably for a year and developed his own valuable technique and foreign exchange trading tactics. He could have experienced one or even several margin calls, but if he practiced in a demo account version – he did not loose anything, just gained some knowledge.

Yet another unsuccessful trader might be still experiencing some losses. Actually, he could never have the skill to participate in foreign exchange business. You might be the person who must avoid this venture at all costs, because of your psychological and mathematical incapability. Forex market will never let you know if you fail today, the next day or even for the whole month. If this exact thought frightens you, I believe you’d better find another job, where you know exactly what you will get for your tough labor. If you want to be sure how much you will earn per hour – foreign exchange trading is not for you. Moreover, if you are very sensitive and you mourn over some small things like few bucks’ loss, I would not suggest trading in foreign exchange business or making any other risky financial investment. Emotions are the least thing you will need in forex.

If you have traded enough or for some time, you must have developed some kind of effective currency trading technique, which covers fundamental or technical analysis, indicators, chart patterns and so on.
Development and usage of trading strategy should take at least half a year. The longer period is – the better. Forex trends may completely change in a year, or even years. New strong currency tendencies emerge, requiring completely different approach, for instance flat price movement might take up the same time period as past trend, and consequently it could whipsaw every trend trader. It’s good if you have developed this kind of trading technique that proved itself in the long run. If you apply breakout plan – you will be lucky enter an early uptrend or downtrend and earn a few pips. What if there is no trend? The currency pair could move in a range for several weeks, and you could be trying to apply some breakout technique. You could enter your loosing trades 5 times in a row, just because the currency pair breached the resistance line and reversed taking out your stop losses. You have to know forex trend changes and this experience comes slowly, with time.

Long term profitable strategy is a must. If you trade profitably in your practice account, no matter what market conditions are – you can transfer little money and trade in a real account. However, it will be harder to make trade decisions, once the money are yours. Stress and pressure will be your constant companions and the sooner you learn to manage your emotional issues the better.

I have been trading in forex market for about 5 years now. If you are looking for some more guidance, my forex trade signals might help. For those who do not have time to trade, I suggest using managed forex trading

My Currency Trading Story

J. Hamilton Fraser — Sun, 12 Sep 2010 23:15:13 +0000

I’ve been investing in the stock market for over 10 years now and at the beginning I did spend a bit of time dabbling in different financial markets. One of these was trying out currency trading. I had mixed success with this type of investing and I ended up getting so caught up in the world of stocks that I left it alone. I’ve recently got back into the swing of things after listening to a friends success stories about currency trading. So far I’ve had moderate success.

The big difference for me between buying stocks and having to learn currency trading is the uncertainty involved. With the stock market there are certain techniques you can learn which can greatly reduce the risks involved with your money. I personally have a great interest in the teachings of Warren Buffett and his value investing techniques. Although there is no such thing as easy money especially in the world of stocks, I feel much more secure risking my money in an environment where I have a little bit of knowledge in what might happen in the future. There are certain industries that I can follow in the news and know to stay away from. With the currency market I don’t have the same level of knowledge so it’s difficult for me to make a judgement call on currencies that I think will come up and down in price.

This is purely from my own personal experience of course. I’m sure there are lots of people out there who are making a killing in currency trading, my friend is certainly one of the. For now I believe I’ll sink the majority of my money into the stock market as it something I feel much more comfortable with. Every now and then I get a taste for trying something a little bit different and it’s usually currency trading. Perhaps I’ll try investing in mutual funds next time around! I could also check out one of those penny stock brokers I hear so much about online!

Forex Robots : Which One Should I Use?

J. Hamilton Fraser — Wed, 08 Sep 2010 18:25:17 +0000

If you are looking for a forex robot, there are many forex robots you can download online. Although utilizing a forex trading robot does not ensure a 100% return of your investment, getting or using one is great if you do not want to do the dirty work.

Forex robots come in many brand names but before you spend a few hundred dollars for the best robot, you should take a look at what forex trading robots are available in the market. Reading a forex robot review is also advisable especially for those who are not well-versed in such software.

A highly recommended forex robot is FAP Turbo. The said Forex Autipilot engine works real well with almost all currencies but do not be deceived by the word autopilot in its name because it takes a while before you can perfect your formula. The accuracy rate of the said system however is quite astonishing. Compared to its peers, it has a 90% possibility of winning trades.

No.2 in the list is Forex Megadroid. With a winning accuracy of 70% to 90%, this robot can do the work for you. Apart from that, it can also observe the behavior of the market and report back to you. Having this bot is like having your own finance assistant.

Apart from the Megadroid and FAP Turbo, there are still other robots that you can utilize. If you need a software that can help you with trade recommendations and market predictions, you should take a look at Forex Automoney and Forex Ambush. These two provide trial services and giving them a test drive is highly recommended.

If you are a rookie in foreign exchange, you should not rely on your robot to do the forex robot investing for you. Before you buy such software, you should take a crash course about Forex first.

Risks of Trading on Margin

J. Hamilton Fraser — Mon, 14 Jun 2010 19:14:58 +0000

Many brokers offer margin trading accounts. It’s way for small traders to leverage large amounts of money that they don’t have and to exponentially multiply their returns. It’s probably one of the most attractive features commodities trading, especially in the forex market.

In fact, especially in currencies, it wouldn’t make much sense for a small trader to enter the market unless they had a forex trading margin to work with. The fluctuations in the currency market is so minute, often by small fractions of a penny, that you require either huge trading capital or being able to leverage more buying power.

But you should be aware that there is equally a risk factor to trading on margin as well. As fast as you can make a lot of money with margin, you can also lose all of it very fast as well. So in order to make sure you don’t lose everything before you’ve really had a chance to get in the game, you should do a couple of things.

First of all, make sure you have enough on deposit to cover a considerable decline in your trading position. You have to make contingencies for the normal up and down volatility of this market. In order to ride out the temporary lows, you should make sure you have enough to keep the broker from pulling a margin call on you.

Secondly, you should practice your trading so you get a sense of how much of an extra buffer you need. Every trader has his own unique trading personality. Find out what yours is and how much buffer it’s going to require of you.

Even the best forex trading strategies out there require you to have a margin account to trade from. They wouldn’t make much financially without them. So to get the gains without losing your shirt, make sure you have these two things planned out beforehand. It might save your trading career.

Forex Investing

Mike — Tue, 25 May 2010 19:08:57 +0000

So, you want to know all about forex investing? Well, you’ve come to the right place!

Actually, I might not know any more about forex investing than you do, but I do have some limited knowledge. So the purpose of this article is to pass on a few tips that I’ve learned over the years, to try to offer some basic advice to anyone who might be interested.

In summary, there are three main things you should remember when investing in Forex.

Get into the mindset of cutting your losses and letting your profits run
ALWAYS place a stop loss order against an open position
Never risk more than you can afford to lose.

Let’s look at each of those guidelines in a little more detail, starting with the first one. Any successful trader, whether they invest in forex, in stocks, in commodities, bonds, derivatives or whatever, will always tell you the same thing. Cut your losses and let your profits run. Unless you are a very short-term swing trader or a volatility trader, the trend is your friend. If you have a winning position, let it ride and only close it out when you are sure the market has turned. Likewise, if you have a losing position, make sure you always limit your losses. Which brings us nicely on to our second point.

Whatever you do, whenever you have an open position, ALWAYS have a stop order in the market. Whenever you open a new trade, the first thing you should always do is to place a stop order to limit your losses on that position. If you are not sure exactly what a stop order is, allow me to explain. If you have bought a currency (i.e. you are long), then you place an order in the market to sell and close you position if the price drops below a certain level. Likewise if you have sold a currency (you are short), you place a stop at a higher price to limit your losses if the price moves up. For example, say you buy GBP/USD at 1.4270. This means you are long and you want the price to move up. Now, to limit your loss on this position, you could place a stop-loss order to sell and close the position if the price moves below 1.4200. That way you would be limiting your losses to 70 bps.

Stops are not just used for limiting losses. You can use trailing stops to follow the trend on a winning position too. This is the method many forex traders use to let their profits run and close their positions out once the market has turned. Let’s continue with our example. Say over the course of the next week, the GBP/USD price trends upwards to 1.4300, then 1.4350, then 1.4450 etc, and by the end of the week it has reached 1.4590. What you can do is to move your stop order up in line with the price, so each day you move it to 1.4230, then 1.4280, then 1.4380 etc, all the way up to 1.4520. Now, it just so happens that 1.4590 is the top of the market and the price now starts retreating. As it hits 1.4520, your stop order is triggered and you close out your position. Congratulations, you rode the trend and saw a profit of 250 bps!

Which brings us on to our third rule of forex investing. Never, ever risk more than you can afford to lose. Decide before you start trading how much cash you are going to set aside for your investment in forex, and set this amount in stone. Then, when you start trading, start small and don’t risk that amount all at once. If you find that all your trades are losers and your initial investment is eaten away so you have nothing left, take it as a lesson in life that maybe forex investment is not for you.

One of the things you can do as a novice trader is maybe join a forex investment group. There are a number of of forex investment clubs out there made up of a good mix of seasoned and novice traders. The great thing about these groups is that you don’t feel you are alone and you can get some advice from the more experienced traders who can probably tell you a lot more than I can about forex investing.

Forex Trading Tips

J. Hamilton Fraser — Mon, 24 May 2010 18:03:56 +0000

The forex is a huge market, with a daily dollar volume in the trillions. As a matter of fact, it’s the largest financial market in the world. The amount of money you, as an individual retail investor, can use can be a bit overwhelming if you don’t know what you’re doing, so here are some basic Forex trading tips.

Don’t get taken in by scams. The forex market is not a get rich quick scheme in and of itself, however there are so many scams surrounding the forex that Wikipedia has an entire page dedicated to them. This is caused by the low cost of entry for Forex combined with high leverage, and the genuine potential to make a lot of money. The problem is that these scams fail to mention the overwhelming odds of failure especially if you make full use of your available leverage. You are much more likely to wind up broke and owing your broker money, than even being profitable, let along getting rich. Don’t pay someone to tell you how to trade the Forex; there is plenty of free information available.

Start small and slowly. When you open your forex account, be sure to elect for the ability to trade mini lots. Mini lots are smaller sized lots (only $10,000 as opposed to $100,000) that will minimize your risk and losses. It also limits your profits, but if you can’t be profitable trading for $1 pips, what makes you think you can be profitable trading each pip at $10? Establish a method, and understand your own risk tolerances and abilities before you scale into full-sized positions. This will ensure that you remain profitable for the long-term.

Study and work hard and the profits will follow. Contrary to what the scammers want you to believe, you can’t simply set some automated program up and make a bunch of money. Successful trading and investing requires a lot study, patience and work. You’re going to have to delve deeper than the simple currency trading tips found here. Understand the currency market as a whole, and learn your chosen currency pair or pairs inside and out. Know what world events affect your pairs, and more importantly, how to trade off of such events. This is going to take quite sometime, sometimes years, but it will pay off.

Forex trading takes a lot of work and studying to become successful, but if you stick with it, it can be quite lucrative. The great thing about the forex market is that it’s infinitely scalable due to the immense liquidity of the market. This means as your account grows, so will your profits, and this potential is limitless. The trick is taking these starting forex trading tips, then going above and beyond to really learn what you’re doing. Take your time, really learn the Forex, and the profits will follow.

Managing Your Mental Capacity As A Trader

J. Hamilton Fraser — Thu, 20 May 2010 06:44:08 +0000

Every trader has a mental capacity. Trading is mentally and emotionally very intense, and every trader needs to know and stay within their limits. Many in the securities trading world understands that successful traders exhibit the same qualities as elite athletes.

Their focus is extraordinarily strong, they understand how to hand rigorous mentally and emotionally draining activities, and they are determined to win at the end. And most importantly, they know how to get back up after they fall to rise above the rest.

Here are some ways to stay sane as you do your trading on a daily basis.

First recognize that we all have mental limits. There is only so much intense activity that we can do on an optimal level at a time. So understand where your limits are and know when to quit when you begin to lose your sharp edge.

Secondly, keep things very simple. Too many traders try to use very complex and hard to understand and execute strategies and systems for their trading. The underlying strategy might be good. But in the heat of battle, a complex strategy that is supposed to work maybe failed to be executed well enough to succeed. So keep this matra of KISS: keep it simple stupid.

If you can keep your strategy simple, you have the best changes to executing it well. In addition, you have the added benefit of it not killing you to execute on a daily basis. You need a trading strategy and system that is sustainable over the long term.

If you’re strategy makes you exhausted after every trade, then it’ll probably not be sustainable and you won’t be able to manage it. If you’re going to do this forex investment game, you want to stay alive for the long haul.

So, again, keep it simple. Trade only one or two trading pairs at a time. If you do trade two currency pairs, make sure they talk to each other. What I mean is that make sure they are related somehow.

For example, if you think the AUD/USD will somehow affect the CAD/EUR for whatever reason, that’s a good reason to trade both. But if they are significantly mutually exclusive at any given time, it may not be smart to have to mental tracks at one time.

Lastly, practice. The reason an elite athlete can handle and overcome in the intensity of the moment is because they practiced and built up their tolerance and expanded their limitations. If you haven’t already, get a forex demo account to practice before you start. It may not be the same thing as trading real cash, but that doesn’t stop the athlete from getting up at 5am to run 5 miles everyday.