start forex

If you have been looking for a way to learn to trade the Forex, you have no doubt seen courses and educational materials suggesting you can turn a small investment of a few hundred dollars into $XX,000 in just so many months or within 1 or 2 years.

While theoretically the figures add up, especially when the power of compounding kicks in, can a newcomer to the Forex market really learn to trade the Forex in a short period of time and expect that kind of huge return on investment?

Honest answer: It is extremely unlikely!

This is not to say it is not possible at some future time, but realistically there is a huge learning curve for anyone starting to learn to trade the Forex.

If you are interested in taking this path you can generally reckon on spending at least 1 to 3 years before you acquire the necessary skills and experience needed to see consistent profits.

How fast you learn to trade the Forex, whether it is nearer 1 year or 3 years will depend on your aptitude to a certain extent and the time you have available to study and practice.

The Knowledge And Skills You Will Need

Here is what you will need to learn:

1. Basic terminology and fundamental concepts of what the Foreign Exchange market is and how it operates.

2. Signup with an online broker, download their trading platform, and get familiar with the charting package.

3. Learn how the main indicators work on the charting package including:

• Moving Averages
• Fibonacci
• MACD
• Average True Range
• Stochastics
• Bollinger Bands

4. Study pivot points and become familiar with the concept of support and resistance.

5. Study basic strategies on how to use the above technical indicators using an online study course or mentoring program.

6. Learn how to make trades from your trading platform in a demo account.

7. Start trading in the demo account for some months keeping a careful diary of trades and monitoring progress.

8. Practice, practice, practice, studying charts for hours on end until patterns start becoming familiar and the mind quickly absorbs the significance of what the eyes are feeding it.

9. Develop the trader’s mindset.

This is probably the most difficult aspect you will encounter when you learn to trade the Forex.

Months, even years may be needed to develop the emotional and mental discipline to handle trades successfully. The two greatest enemies an individual will face when they start to learn to trade the Forex are:

• Fear
• Greed

Fear will cause them to exit trades prematurely when more profits were going to be put on the table.

Greed will cause a trader to stay in a trade longer than they should only to see the market take back what it offered. On the other hand, greed can cause a trader to refuse to admit when a trade is going bad and hold on as the deficit gets greater and greater.

Developing the emotional and mental discipline of a successful trader can only come through many months of hard work, practice and experience.

The Forex Is A Business

If all this sounds like hard work you are absolutely right. Forex is a business and should be treated as such. Every business that produces substantial results usually requires a major investment of time and energy.

One advantage when you come to learn to trade the Forex is that you can start with minimal monetary investment. Mini accounts can be opened for as little as $250-$300. Even if you blow your account a few times in the course of gaining your education that is still a small outlay when you consider what you are hoping to gain.

So if you are making a decision as to whether or not to learn to trade the Forex, be realistic, avoid being taken in by exaggerated claims, and weigh up all the factors.

If you are prepared to put in what it takes to learn to trade the Forex, you may get to be in a minority group of traders who get paid very generously!

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Many traders believe that to be successful you need mountains of indicators that give you some kind of “edge” over the market. I am here to say that trading as a means of consistent income does not have to be painful or difficult. That less is certainly more when it comes to trading. I’ve met traders with every indicator under the sun on their charts, with years of training under their belts having spent thousands of $$$’s and STILL not making a consistent income….

Why? Because Indicators are liars! Sure sometimes you might pull of a trade or 2 but in the end you always get spanked….Why? Because not everyone uses a MACD with your settings, not everyone uses the Stochastic or the RSI. I believe to be an effective trader you have to look at what the majority of traders look at…So what do most traders look at? Support and Resistance! Almost every system out there uses Support and Resistance to some extent. Support and Resistance is our number 1 indicator. So why not make Support and Resistance your system?! Mark up some levels on a chart using time frames from 1hr and above (this is what the big boys who move the market watch, so no lower please) and see what happens! Use other info that the majority of traders watch ONLY as confluence, Market Profile levels, Pivots and Fibs.

Support and Resistance levels are considered high probability areas for market “reversal”, offering retracements of 0.75 points to in some cases 50+ points. In many instances historically referenced Support and Resistance levels can help traders catch markets tops/ bottoms to the very tick! Why? Because Support and Resistance levels are the most widely used trading tool! Everyone from Hedge funds and banks to the small time trader at home use Support and Resistance levels

For many it may be difficult to leave the system you are using now so why not use Support and Resistance levels as a guide alongside set ups defined by the system/strategy that you are implementing. Using Support and Resistance levels obtained from the 1hr, 4hr and daily timeframes offers the highest odds Support and Resistance levels. All levels should have historical significance and thus will be considered high probability trading areas. Throughout the trading day these numbers can become areas of Support AND Resistance.

We believe that using Support and Resistance as your CORE trading methodology can reap great rewards for traders.

To find a methodology that really works and receive FREE Support and Resistance levels please visit us at http://www.supportandresistancetrading.com/

The Moving Average Convergence Divergence charts, or MACD charts for short, are a technical indicator that is derived from the more simple moving average.

The MACD charts are oscillating indicators, meaning that they move above and below a centerline or zero point. As with other oscillating and momentum indicators, a very high value indicates that the stock is overbought and will likely drop soon. Conversely, a consistently low value indicates that the stock is oversold and is likely to climb.

THE 12-DAY AND 26-DAY EMAS

The MACD charts are based on 3 exponential moving averages, or EMA. These averages can be of any period, though the most common combination, and the one we will focus on, are the 12-26-9 MACD charts.

There are 2 parts to the MACD. We will focus first on the first part, which is based on the stock’s 12-Day and 26-Day EMA. The 12-Day EMA is the faster EMA while the 26-Day is slower.

The logic behind using a faster and slower EMA is that this can be used to gauge momentum. When the faster (in this case 12-Day) EMA is above the slower 26-Day EMA, the stock is in an uptrend, and vice versa. If the 12-Day EMA is increasing much faster than the 26-Day EMA, the uptrend is becoming stronger and more pronounced. Conversely, when the 12-Day EMA starts slowing down, and the 26-Day begins to near it, the stock movement’s momentum is beginning to fade, indicating the end of the uptrend.

THE MACD LINE

The MACD charts use these 2 EMA by taking the difference between them and plotting a new line. Very often, this new line is depicted as a thick black line in the middle chart.

When the 12-Day and 26-Day EMA are at the same value, the MACD line is at zero. When the 12-Day EMA is higher than the 26-Day EMA, the MACD line will be in positive territory. The further the 12-Day EMA is from the 26-Day EMA, the further the MACD line is from its centerline or zero value.

THE 9-DAY EMA

This line on its own doesn’t tell much more than a moving average. It becomes more useful when we take into account its 9-Day EMA. This is the third value when we talk of 12-26-9 MACD charts. Note that the 9-Day EMA is an EMA of the MACD line, not of the stock price. This EMA (the thin blue line alongside the MACD line) acts like a normal EMA and smoothes the MACD line.

The 9-Day EMA acts as a signal line or trigger line for the MACD. When the MACD line crosses above the 9-Day EMA from below, it indicates that the downtrend is over and a new uptrend is forming. Time to consider bullish strategies. Conversely, when the MACD line drops below its 9-Day EMA, a new downtrend is forming and its time to implement bearish strategies.

THE MACD HISTOGRAM

So far, we have covered the most simple form of interpreting the MACD charts. We now look at the MACD histogram. Just as the MACD line is the difference between the 12-Day and 26-Day EMA, the MACD histogram is basically the difference between the MACD line and its 9-Day EMA.

So when the MACD line crosses above its 9-Day EMA, the MACD histogram will cross above zero. In order words, a bullish signal is obtained when the MACD histogram crosses above zero, and a bearish signal is obtained when it crosses below zero.

POSITIVE AND NEGATIVE DIVERGENCE

The MACD histogram forms valleys and peaks. Sometimes, multiple peaks are formed, with each subsequent peak becoming lower and lower. These progressively lower peaks constitue what is known as a negative divergence. A negative divergence on the MACD histogram is an indication that the current uptrend might reverse in the near future. This could happen even though the actual stock price seems to be making higher peaks in the chart. Basically, the MACD histogram negative divergence is a warning that the stock might turn down soon.

Similarly, the positive divergence on the MACD histogram predicts the subsequent uptrend. However, sometimes these divergences can create false alarms. If we follow these signals, we could have bought into a downtrend.

As such, I would like to remind you that individual indicators such as the Moving Average Convergence Divergence (MACD) charts should not be used on their own, but rather with one or two additional indicators of different types, in order to confirm any signals and prevent false alarms.

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We all know the stats: 99% of traders lose their money in the first year of trading. Quite honestly, I am sick and tired of hearing it because it sets up a trader’s mind to get defensive and fearful. That is the absolute worst case situation a trader wants to be in. I would rather focus on the positive and talk about what does work. I want to show you how to rule the market with this trading indicator: The MACD. Let us take a further look into this matter.

The MACD (or Moving Average Convergence Divergence) is one of the oldest and most reliable instruments of technical analysis and works particularly well in the forex trading market. The indicator works through the use of moving averages, they are also considered lagging indicators, which also employ a certain measure of trend following characteristics. The way the MACD works is by subtracting the shorter and longer moving averages and thus turns into a momentum oscillator. The outcome of this plot is a line that has an oscillator that runs above and below the zero mark.

OK, so what does the MACD do exactly? Or, “WHat does this mean in terms of profits?”

The most important thing to remember about the MACD is that there are three ways to receive a bullish signal and they are:

This is just one of the more basic but profitable forex trading indicators available to every trader. I suggest that you dig into it and get real familiar with it, you’ll be glad you did.

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I love stock trading. I’ve actively traded in the stock, bond, options and futures markets almost every day for over 30 years, and I’ve learned some secrets to significantly improve my success. I will share them with you.

The cardinal rule it’s this: “Don’t get your ego involved!”

Always remember you’re in this game to make money, not to impress your friends. You don’t need to be right all the time… it’s virtually impossible. So learn to take losses when a trade isn’t working - and take them quickly and move on.

W.D. Gann had a great trading rule: “Cut your losses short, let your profits run”.

I am a swing trader and I live by that rule. If a trade is working I hold it. If it violates my stop price I exit. Usually I like to hold trading positions for two weeks to three months, rarely longer.

These days with the proliferation of ETF’s and options it’s just as easy to be short as long. So we no longer need to worry about the direction of the market, or whether we’re in a recession, going into a recession or in the middle of a boom… every day is a good day in the market. There’s always an opportunity out there… we just have to find it.

I’m not going to teach you how to invest - I’m a stock trader - I’ll teach you how to trade. If you want to invest… buy a bond!

Your capital is your weapon… guard it well. Don’t trade with a full service broker - the fees will kill you until you have enough money to demand a big discount.

Here are some rules to help you:

1. The market is made up of stocks in a variety of industry groups that are all in different stages of rally or pullback. Your first job is to define these groups, follow them daily and get to know how they trade. The main groups I like to follow are financial services, technology, energy and metals and mining.

2. Trade in the larger stocks that trade lots of volume every day. Choose a handful of stocks in each group and follow them daily on your charts. I know a lot of you want the big killing on the junior market and I have a suggestion about that later, but that’s another game entirely. If you find a $50 stock that makes $10 swings every 3 months and you can clip $5 out of each swing, that’s $20 a year on a $50 stock - 40% - not bad.

If you want more action than that then use deep in the money options that have virtually no premium built in to the price and get your leverage that way.

3. Try not to have an opinion about the broad market direction… it’s totally unimportant to your trading future. Instead, follow your groups and form a loose opinion of the direction of each group. If gold is going up then likely financials are going down so be long a gold stock and buy the Bear ETF on the financials.

If the general trend of your group is down then focus on taking the short trades in that group because the down moves will be bigger and vice versa.

4. Find some stocks that follow the 3 month cycle rhythm. Preferably stocks that tend to stay in trading ranges for quite a while and watch their charts every day, learn their patterns; lay in wait for them to come to you and then take your position either long or short. Don’t feel you have to take any old trade that comes along… wait for all of your indicators to flash you the go signal.

5. I find it’s critical to use some sort of momentum indicator like Slow Stochastics or MACD or RSI to give me the overbought/oversold readings as my first signal that a trade may be on. When the oscillator readings get to the 20 or 80 levels I get ready. Now I start to watch for a trendline break in the price or a breakout from a small consolidation pattern and I take a position. I place a mental stop below the last low or above the last high or for a maximum dollar amount I am willing to lose and I execute on that stop and get out.

6. Whatever money you have available, divide it into 10 and look to take 10 different positions, long or short it doesn’t matter, usually it’s a mix of both.

7. Be patient. You don’t need to have all of your money deployed all of the time. Wait for the trades to come to you. If you get a sudden windfall move in a stock triggered by some news event and it takes the price into an area of support or resistance… grab your profit. These moves are reversed a big percentage of times and it hurts to watch that windfall disappear.

I have spent over 30 years successfully trading the stock and futures markets and personally I hate riding out the reversals.

I have noticed that stocks tend to have a very reliable 6 week rhythm that will bring you profits time and time again.

Would you like to learn how I do it?

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