common forex mistakes

1) Reading news and analizing them

Many times, seemingly straightforward news releases from government agencies are really public relation vehicles to advance a particular point of view or policy. Such “news,” in the forex markets more than any other, is used as a tool to affect the investment psychology of the crowd. Such media manipulation is not inherently a negative. Governments and traders try to do that all
the time.
Often, news that might seem definitively bullish to someone new to the forex market might be as bearish as you can get.

2) Don’t trade surges.

A price surge is a signature of panic or surprise. In these events, professional traders take cover and see what happens. The retail trader also should let the market digest such shocks. Trading during an announcement or right before, or amid some turmoil, minimizes the odds of predicting the probable direction. Technical indicators during surge periods will be distorted. You should wait for a confirmation of the new direction and remember that price action will tend to revert to pre-surge ranges providing nothing fundamental has occurred.

3) Simple is better.

The desire to achieve great gains in forex trading can drive us to keep adding indicators in a never-ending quest for the impossible dream. Similarly, trading with a dozen indicators is not necessary.
Many indicators just add redundant information. Indicators should be used that give clues to:
1) trend direction,
2) resistance,
3) support
4) buying and selling pressure.

4) Using high leverange with a huge quantity of trade


If you will trade having in an account 1000$ and making trades of 2 or 3 lots (200 000
or 300 000) with high leverange you are playing with fire. Today you can choose brokers that will offer leverange of 400:1. So you will be able to use 1 lot just for 250$ and one pip trade will be 10$. Brokers are doing that knowingly - they gets more for the spread and waiting for you to make an additional deposit.

5) trying to scalp

It is common mistake in traders. They are using also a lot of monitor to look at a few pairs at the same time. They wants to have from trade 2-5 pips. Today brokers offers 1.5 to 5 pips for the spread in major pairs. That will encourage traders to scalp and making them richer.
Trader that is using that technique has a small margin of lapse. They will say that in forex it is impossible to gain more than 10% monthly.
I have tried few methods and I can say that if you will use the simple methods and putting orders for a 2-3 weeks you can gain more than 30% in interest rates and difference in course.

6) gape at the charts all the time

Beginners in forex will stare all the time looking at the charts. They will try to catch the best price, pits and hillocks of the price. So they will try to scalp. It can lead them to make an another deposit.

forex websites

I would like to show my favourite forex websities:

http://forexstreet.com a great site with news, forex strategies, signals etc.
http://babypips.com basic and intermediate knowlege for beginners and intermediate forex traders.
http://reuters.com fresh news from all around the globe.

Carry trading

In forex there are swaps or interest rates for each pair. For example aud/jpy is 1.1 pip for long position and -1.17 for short position for that pair. So you can have additional money just for carry that position for few days.

For instance, the primary interest rates in Great Britain are much higher than in Japan, so if a trader buys GBP, he/she will earn interest at 5 PM EST. on the other hand, if he/she sells GBP in this currency pair, he/she will pay interest at 5 PM EST.

It's like free money, right? Well, not quite. The big risk is the uncertainty of exchange rates. Remember, you've still got to pay back the money in a foreign currency. If your domestic currency falls in value relative to the currency you borrowed, then you run the risk of losing money. Also, these transactions are generally done with a lot of leverage, so a small movement in exchange rates can result in huge losses unless hedged appropriately.

An example of a "yen carry trade" is borrowing 1,000 yen from a Japanese bank, exchanging the funds into U.S. dollars and buying a bond for the equivalent amount. Assuming that the bond pays more than the amount you must pay the bank for borrowing the funds, and the exchange rate does not move adversely, you will earn a profit.

BENEFITS OF FOREX TRADING

There are many benefits and advantages to trading Forex. Here are just a few reasons why so many people are choosing this market as a business opportunity:

1. LEVERAGE: In Forex trading, a small margin deposit can control a much larger total contract value. Leverage gives the trader the ability to make extraordinary profits and at the same time keep risk capital to a minimum. Some Forex firms offer 200 to 1 leverage, which means that a $50 dollar margin deposit would enable a trader to buy or sell $10,000 worth of currencies. Similarly, with $500 dollars, one could trade with $100,000 dollars and so on.

2. LIQUIDITY: Because the Forex Market is so large, it is also extremely liquid. This means that with a click of a mouse you can instantaneously buy and sell at will. You are never ‘stuck’ in a trade. You can even set the online trading platform to automatically close your position at your desired profit level (limit order), and /or close a trade if a trade is going against you (stop order).


3. PROFIT IN BOTH ‘RISING’ AND ‘FALLING’ MARKETS: On the stock markets, you can only make money if shares are rising, but in economic recession and falling ‘bear’ markets, there is little chance of making big money. Forex is different. One of the most exciting advantages of FX trading is the ability to generate profits whether a currency pair is ‘up’ or ‘down’. A trader can profit by taking a ‘long’ position, (buying the currency pair and buying it back at a lower price), or a ‘short’ position, (selling the currency pair and buying it back at a lower price). For example, if you think the US dollar will increase in value vs. The Japanese Yen then you will buy Dollars and sell Yen (go long). If you think the Yen will increase in value against the Dollar then you will sell Dollars and buy Yen (go short). As long as the trader picks the right direction, a potential for profit always exists.

4. 24HRS: From Sunday evening to Friday Afternoon EST the Forex market never sleeps. This is very desirable for those who want to trade on a part-time basis, because you can choose when you want to trade, morning, noon or night.

5. FREE ‘DEMO’ ACCOUNTS,NEWS,CHARTS AND ANALYSIS: Most Online Forex firms offer free ‘Demo’ accounts to practice trading, along with breaking Forex news and charting services. These are very valuable resources for traders who would like to hone their trading skills with ‘virtual’ money before opening a live trading account.

6. ‘MINI’ TRADING: One might think that getting started as a currency trader would cost a lot of money. The fact is, it doesn’t. Online Forex Firms now offer ‘mini’ trading accounts with a minimum account deposit of only $1 with no commission trading. This makes Forex much more accessible to the average individual, start-up capital.

What is FOREX?

The Foreign Exchange, also referred to as the “Forex” or “Spot FX” market, is the largest financial market in the world, with over $ 1.2 trillion changing hands every single day. If you compare that to the $25 billion a day volume that the New York Stock Exchange trades, you see how giant the Foreign Exchange really is. In fact it is 3 times larger than all of the Equity and Treasury markets combined !

What is traded on the Foreign Exchange ? The answer is money. Forex trading is where the currency of one nation is traded for that or another. Therefore, Forex trading is always traded in pairs. The most commonly traded currency pairs are traded against the US Dollar (USD). They are called ‘the majors’. The major currency pairs are the Euro Dollar (EUR/USD); the British Pound (GBP/USD); the Japanese Yen (USD/CHF); and the Swiss Franc (USD/CHF).

Because there is not a central exchange for the Forex market, these pairs and their crosses are traded over the telephone and online through a global network of banks, multinational corporations, importers and exporters, brokers and currency traders.

Traditionally, currency trading has been a ‘professionals only’ market available exclusively to banks and large institutions, however, because of the rise of the new E-economy, online Forex trading firms are now able to offer trading accounts to ‘retail’ traders like you and I. Now almost anyone with a computer and an Internet connection can trade currencies just like the world’s largest banks do.

My first blog post

Hello,

My name is Tom and I am forex trader. I am trading forex for 2 years.
I have made a blog that will show my trades and results.
I will try to put here a lot of systems, conceptions etc.