GamingGuide.net Team asked:


Trading in any market is risky, but trading in the forex market is especially risky. There are no guarantees that you’ll make money, and even if you do make some money you’ll need to be prepared to lose some too. However, there are some forex trading strategies you can employ to maximize your potential to make money.

The first forex strategy is to never trade with money you cannot afford to lose. This means do not withdraw money from your savings or retirement accounts to fund your forex trading. Trading can be just as addictive as gambling in that you may think that the next trade will be the “one.” Unfortunately, if all you do is continue to lose, then you are really harming yourself and others who depend on you. Withdrawing money from a savings or retirement account is not the only place to get money when trading. You can apply for a margin account for forex trading. Using a margin account as a forex trading strategy is not a very good one. In reality, margin trading can open doors for huge profits, but it can also be a door to huge losses. For example, if you borrow $500 to fund a trade and the trade makes $2000, then after you have paid back your $500, you walk away with $1500. However, on the flip side, if you borrow $500 to fund a trade and the currency goes down resulting in a loss of $2000, then you have really lost $2500, because not only did the trade lose $2000, you also have to find $500 to pay back the loan.

Your next forex trading strategy should involve determining whether the forex market is in an up trend or down trend. Furthermore, you should also try to determine the length of the trend and whether the trend is going to continue. Understanding the direction and atmosphere of the forex market will ultimately help you trade. After establishing the mood of the forex market, the next forex trading strategy you should employ involves establishing an entry and exit point. These points are prices at which you wish to enter and exit a trade. There should also be two exit points. The first exit point should be the point at which you wish to exit the trade should the trade go up. The second exit point should be the point at which you wish to exit the trade should the trade go down. The second exit point is almost more critical than the first because you are losing money and there needs to be a point at which you know to leave a trade. The hardest part about setting and following through with this point is that you want to make money, so you may hold out hope that the trade will turn around. One of the best forex trading strategies to utilize actually occurs just before entering a trade and that is listening to your instincts. Your instincts, as with many things in life, can be your best friend. If something is nagging at you to stay out of a trade, then do so. You may regret it if you don’t.

Pretending to trade is another forex trading strategy that can prove extremely useful. This allows you to practice your trades without losing any money. You can pretend to trade with paper by yourself, or you can utilize services on the Internet that allow you to do this for a small fee. Regardless of how you practice your trades, you will need to act as if you were actually trading, including picking entry and exit points. This will give you a good idea of how well you are doing at trading in the forex market as well as if you are improving.

Other forex trading strategies include using what other traders use to forecast their trades. Such tools include the 14-day RSI, Fibonacci retracement, MACD, and exponential moving averages (9, 20, 40 day). These are often the best indicators of when to enter into a trade. Keep in mind that while these are the most popular tools used in a forex trading strategy, they are not the only ones. There are many tools as well as many forex trading strategies. You just need to find the ones that work the best for you.



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Orlando Thompson asked:


Forex Charts are based on the forex market action involving price. Charts are a major tool in forex trading. There are many kinds of charts, each will help to visually analyze the forex market conditions, assess and create better forecasting, and identify forex market patterns and behavior.

Forex charts and spreads weigh heavily on the return on your trading strategy (this can have a huge affect on your profit or loss). As a trader, you are solely interested in buying low and selling high (like futures and commodities trading on Wall Street). Wider Forex charts and spreads means buying higher and having to sell lower.

A half-pip lower spread does not necessarily sound like much, but it can easily mean the difference between a profitable trade and one that losses money. The tighter the spread is the better things are going to be for you (Happy Days).

Nevertheless, tight Forex charts and spreads are only meaningful when they pair up with good execution of a well laid out trading strategy. A good example of this is, as you analyze your forex chart it shows a tight spread, but your trade shows it has filled, or mysteriously rejected.

When this occurs repeatedly, it means that your broker is showing tight Forex charts and spreads but is effectively delivering wider Forex charts and spreads. Rejected forex trades, delayed execution, slipping, and stop-hunting are strategies that some brokers use to get rid of the promise of tight Forex charts and spreads (so be on the look out for this type of activity and run fast if you notice it).

Both the technical and fundamental forex analyst uses Forex charts. The technical analyst analyzes the “micro” movements, trying to match the actual occurrence with known patterns. The fundamental analyst on the other hand tries to find correlation between the trend seen on the chart and “macro” events occurring parallel to that like (political and other events).

As you can imagine, reading and understanding forex charts can get confusing for the inexperienced trader. You can get most charts now online, as part of a subscription service, and they most often include frequent updates. Because technical analysis is such a popular method of forecasting and predicting movements in the forex market, there are many services available online.

If you would like to become more proficient in Forex chart techniques (and I highly recommend you do), joining a service that provides charts via the Internet, and assistance in reading and analyzing the chart information, this can be very helpful and profitable in the end.

So let us not talk a little about the different types of Forex Charts Line Charts The simplest form, based upon the closing rates (in each time unit), forming a homogeneous line. (Such charts, on the 5 minutes scale, will show a line connecting all the actual rates every 5 minutes).

This forex chart does not show what happened during the time unit selected by the viewer, only closing rates for such a time. Line Charts are the best simple way to chart for support and resistance levels.

Point and figure charts

Point and Figure Charts are charts based on price without time. Unlike most investment charts, point and figure charts do not present a linear representation of time. Instead, they show trends in price. A rising stack of Xs represents increases, and a declining stack of Os represents decreases.

This type of chart used to filter out non-significant price movements, and enable you (the trader) to determine critical support and resistance levels quickly.

Bar Chart

This chart shows three rates for each time unit selected: the high, the low, the closing (HLC). There are also bar charts including four rates (OHLC, which includes the opening rate for the period). This chart provides clearly visible information about trading prices range during the time period (per unit) selected (very valuable information).

Candlestick Chart

Kind of chart based on an ancient Japanese method. The chart represents prices at their opening, high, low, and closing rates, in a form of candles, for each time unit selected. The empty (transparent) candles show increase, while the dark (full) candles represent decrease.

The length of the body shows the range between opening and closing, while the whole candle (including top and bottom wicks) show the whole range of trading prices for the selected time unit. Pattern recognition is a field within the area of “machine learning”.

Alternatively defined as the act of take in raw data and taking an action based on the category of that data. As such, it is a collection of methods for “supervised learning”.

A complete pattern recognition system consist of a sensor that gathers the observations to be classified or described; a feature extraction mechanism that computes numeric or symbolic information from the observations; and a classification or description scheme that does the actual job of classifying or describing observations, relying on the extracted features.

In general, the forex market uses the following patterns in candlestick forex charts:

Bullish Patterns – hammer, inverted hammer, engulfing, harami, harami cross, doji start, piercing line, morning star, morning doji star.

Bearish Patterns – shooting star, hanging man, engulfing, harami, harami cross, doji star, dark cloud cover, evening star, evening doji.

Note: Keep in mind these are just general and not all-inclusive as the forex market is huge and are so with the charts and techniques.

Let us now look at the 5 top errors made where forex charts are concerned and why you should stay away from them.

1. Predicting with Forex Charts

A common mistake made by inexperienced forex traders (and some more seasoned),is thinking they need to predict to get profitable results – but of course this is simply hoping or guessing and is destined to see you lose. If you use charts the correct way, you will trade using the price changes and trends, you will not need to predict.

There is a big industry in forex trading that says prices move to a scientific theory and you know what will happen next – but of course, if prices did move to science, we would all know the price in advance and there would be no market.

Do not set yourself up and believe the prediction nonsense – make all your trades using reality of price change i.e. if a price comes to support, don’t predict support will hold, wait for it to move the other way and trade based on the fact it has held.

Another great way to trade is to trade now breakouts to new highs or lows – it is a proven fact that most big moves start from these breakouts, so you should make breakouts a consistent part of your forex trading strategy.

2. The More Inputs the Better

You may think five or six indicators must be better than one or two – very wrong!

The more inputs the more….



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