But no matter what you prefer, you come across again and again the problem of whether you should trade with the trend, or trade for range. The impact of which method is chosen affects your chance of success, and, the reason we’re all here, your wallet (or purse as the case may be).

But those dealing in the FOREX have a unique advantage in that the market responds well to both styles of trading. So, what exactly is trading trend and range? Let’s take a look.

Following the crowd

Put simply, a trend is the direction a market, or the price of a single asset, takes. Trends vary from short, to long, to longer and to even longer or shorter.

There are trend identifiers that can tell you which way the wind is blowing. The simplest, and probably the best, method is to look at the higher lows in an uptrend and the lower highs when the market or asset is in a downtrend. There are other methods of course. For example, some investors like to define a trend as “a deviation from a range as indicated by the Bollinger Band.” What’s a Bollinger Band, you ask? It’s a band plotted two standard deviations away from a simple moving average.

But in the end, it doesn’t matter how you define it or look at it because the goal is the same: to make money by buying in on a trend early and holding on until the trend gives out and starts slowing. Most traders use tight stop trade orders (an order to buy or sell a security when its price surpasses a certain point), to limit their risk.

This method of trend trading can have huge payoffs. Leverage in the FOREX, because of its size and 24 hour trading, is typically 100:1, meaning that you only need to put down $1 of margin to get $100 worth of currency control. Given that the stock market is 2:1 and the futures market which is usually 25:1, you can see why you can make a huge amount of money with trend trading in the FOREX.

The Long Term

But trend trading isn’t for everybody. It takes discipline, with many traders meeting 20 or even 30 stop calls before they can catch a trend. If you get emotional about it and try to fight the market, you could lose your shirt.

That’s where range trading comes in. The range trader doesn’t care about direction. He trades knowing that no matter where the currency goes, it will come back to where it started. Range trading is based on the theory that prices will trade at the same levels many times, and the range trader will be there to gather up those profits from the oscillations in price.

But range trading isn’t free and clear either. A range trader will have to have a lot of money they are willing to risk to put the practice into play successfully. But, with more money (in the case of the FOREX, more leverage), there’s more chance of the trader’s enemy (i.e. emotion) coming into play. Positions can go against you many times in a row before you get a profit, and many traders just don’t have the stomach to watch their hard earned cash dwindling while they hang on to the idea of profits in the future. Also, if you’re not careful, with more than a few losses in a row you could trigger a margin call before you’ve had a chance for the currency to produce profits for you.

But, don’t despair. Many FOREX dealers have come up with a solution: they allow you to trade in mini-lots. By trading in mini-lots you can withstand many more drawdowns before triggering a stop order. This allows you to withstand more losses in a row before a margin call is issued.

One or the Other

Regardless of which method the trader chooses, the FOREX market is ready and able for both. As long as the trader remains disciplined and realizes that there will be some losses no matter what they do, they will improve their chances of fattening their bank accounts.

Kevin Davis has been investing online for 10 years and just recently started looking into expanding his investments into the FOREX market. To learn more about Kevin, visit his blog at http://www.KevinHDavis.com

When we are dealing with present situation, it is mainly focused on clearing any type of credit or loan that you have pending. Clearing them up before you take the next step towards investing is the wisest course of action and the first line in any book of a professional investor. Suppose you have $1000 credit to be paid and also an opening where you can invest these $1000 it is better to clear your credit first. This is especially true if you are in possession of a credit card that has high interest rates. Such high interest credit cards are always best to be exchanged with low interest credit cards. If not you can reschedule your loan scheme to that which has low interest loans. In case you have a outstanding credits, don’t even think about investing first to earn more and then pay through the profits obtained through investment. Out of ten people who try this sort of stunt more at least five of them end up being bankrupt. This is because psychologically even if you do receive any profit, you will be pulled towards gambling tendencies rather than paying up your dues in time.

It is always safe and satisfactory to be debtless while dealing with investments. The progress of your financial situation through investments depends on your stability to manage your finances correctly rather than earning a very large profit and not knowing what to do with it. Stabilize the current situation to be stable in any kind of trading situation. In this way any kind of profit will satisfy you and you will not be disappointed when the income you have received does not equal your credit and loans. Remember that there is not one regular investor in the world has never lost through investments at some point.

Dr. Joshua Geralds is a successful Investment Specialist with over twenty years experience increasing the income of people world wide. Visit http://www.pipsalot.com to learn how to make steady profits through safe trading.

At this juncture world is confronting the same fearful word “Recession” in empirical way. The world had good news that U.S. GDP (Gross Domestic Product) has grown 3.3% annually in second quarter of year 2008 but it was just like an oasis and faded away when US government has given whopping jobless claims 444,000 on last Thursday. Rising inflation, housing slowdown, 16 year low housing prices, diminishing industrial growth, Federal Reserve policy on interest rate all are rubbing salt on the wounds. Now US government is pondering over the Fannie and Freddie financials and set to take over the housing mortgage giants.

It is not only United States of America but whole world starting from African countries to European countries, which covers Asia too. Markets from New Zealand to India suffered a sell-off Friday, September 5, 2008, with as many as five benchmark indices set 52-week lows, as investors dumped stocks on concerns about weakening growth prospects and uncertainty over the global economy.

Socio-political issues has created unusual troubles in South Africa, which is known as the most prosperous country in the African continent and precious metal mining hub across the globe, had reeled on august 6, 2008, when rand has fallen 1.90% against the USD due to trade union nationwide strike to protest against the food and electricity prices. State military of Nigeria said, “Blast was not an accident but deliberate sabotage by a group protesting the alleged nonpayment of fees by the energy company to the local population.” Nigeria social turmoil is on acme and any time untoward happening may occur that can fuel, for the time being subsidized, crude oil prices. Zimbabwe political instability continues to romp over the constructive activities in the region. The inflation in Zimbabwe jumped to over 11,250,000% in June. Rebels in Kenya are also contributing enough in poorly shaped African economic condition.

Now look at Asian economies, first comes China where everyone was thinking that after the Olympics china will resume the economic work on growth agenda and the demand for the commodities like copper, aluminum and steel will rise but it was a distant dream all base metals are setting new lows on commodity exchanges. China also eyeing on currency markets and all set to devalue the Yuan against its rival currencies in order to enhance the export growth which has become less lucrative for the exporters. World Bank has trimmed China’s growth rate to 9.60% from earlier 10.80% for the current fiscal. China needs to generate more than a million jobs every year and it is very difficult without double digit growth rate on the cards.

Japan, The land of rising sun, is also undergoing through tremendous inflationary pressure which was previously known for deflation. Prime Minister Yasuo Fukuda resigned after less than a year in office. His government failed to rein in inflation. The rise in inflation has been a trauma for a country that has spent the last decade grappling with deflation. Core consumer prices were up 2.4% in July 2008 from a year earlier, a panic bounce since 1997, and many Japanese have clamped down on spending. Japanese finance ministry has already given cowardice statement over the current year GDP growth rate. Experts say Japan has already slipped into recession and no one is predicting growth above 1% this year.

HengSeng, the Hong Kong stock index, has broken the 20,000 level. South Korea is under the scan of developed world where nuclear energy matters continues to harass the top officials of the nation. Korean Stock index is also not showing any glimpse of breaking upper records.

India’s economy grew at its lowest rate in the first quarter of financial year 2008-09 since last three years. The Reserve Bank of India is all set to rein into record high inflation by applying tight credit policy which remained above 12% level for the past few weeks. Annual growth slowed to 7.90 % in the first quarter of 2008-09 which ended on June 30, significantly lower than the 8.80 % rate reported for the January – March quarter.

Europe also nowhere different at present whole Europe is combating with rising inflation and fresh downward revisions in the growth rate. European inflation accelerated to the fastest pace in almost 16 years to a record high 4% earlier before arriving at 3.8%. Consumer business confidence index is also recorded significant decline and Economic confidence fell in August to 88.80. Brussels has revised the Euro zone growth rate downwards to1.80% from earlier November estimate 2.20%. Economic experts offering a faded hope and a few of them declared that next revision would be 1.30%.

Now the world is witnessing a global slowdown which can be said recession but optimistic experts say it is temporary and can be worked out with revamped financial policies. But at this juncture when the status quo is not allowing the central banks to act any way, one side inflation is rising which is not encouraging the central banks for rate cut and other side slowing economic growth is not supporting the rate hike. Hence forth in the last week Bank of England and European Central Bank kept their interest rates undisturbed, 5% and 4.25% respectively. United States Federal Reserve also kept its rate unchanged in last meeting.

Then utmost what can happen?

I think US credit market turmoil and high inflation is nowhere supportive in economic way for the world. Russia- Georgia tension, US-Iran-Israel issue and destructive happenings like terrorist attacks, natural calamities and political turmoil all over world is not foreboding good for the world.

The stock markets, commodity markets and financial instruments are heading towards south and not left even an iota of positive happening. Dow Jones, Nasdaq, FTSE, BSE, CAC, KOSPI, HengSeng, Nikkei, Shanghai all these stock exchanges shed their most of last year gains. Simultaneously commodity markets also near to nadir gold, the safe heaven commodity, has fallen more than $200 US after reaching $988US earlier this year. Silver is already near to set a new of the year. Likewise copper, platinum and aluminum are also fallen to lower extreme. Euro, USD, GBP, and Japanese Yen are behaving in the strange way and creating turmoil in the fundamentals of other financial instruments and markets. At present market elements are fighting for the worst rank. If the currency exchange rates changes more than 10% within a week,

The Raison d’être behind whole scenario of financial instability is that, fundamentals have not been respected during last year across the world. Investors have lost confidence over the period of wrong happenings that led to unsystematic investment in the financial markets. As far US, the world largest economy is concern until presidential election (new President) glimpse of hope is far away since it requires a major policy change. If same situation prevails shortly world may face biggest foul turnaround.

The whole world need to get together and must make necessary changes in the economical and political policies in order to overcome from this current imbroglio. The fundamentals of the market i.e. Demand and Supply has to be restored. People must realize the real money. G-7 meeting proposals have to be implemented in order to soothe the boiling intricacy of the world.

What can an investor do?

A good investor must workout different strategy for the investment. Meantime investors can stay away from the paper stocks and they can invest in the real asset value market viz. real estate, and commodities which runs on fundamentals rather than speculations. This is the best time to invest in housing because the prices are at possible lowest end. Markets with real assets value will perform better than paper assets in coming year.

Contact author at http://www.safetradeadvisors.com or safetradeadvisors@gmail.com

Why equities are a bad choice

Virtually all listed companies fund their activities through a combination of both equity (issuing shares to investors) and debt. The debt component of a companies funding can be both short term (such as an overdraft facility) or longer term in the form of a term loan or through the issue of bonds.

The recent credit crisis has occurred because banks have become much less willing to lend money to each other and other large corporate for fear that the counter party will have losses related to the housing crisis in the form of mortgage backed securities. In short they are scared and wary of counter parties losing money through sub prime investments and defaulting on their repayments.

The above factor has had the effect of making borrowing more expensive. If companies have to pay more to borrow their profits will be reduced. As a result of this stock markets have been performing badly.

A lot of investors have been moving their money instead into commodity related investments such as oil, gas and energy. This makes sense for a couple of reasons. Firstly such commodities tend to have a scarcity factor. In other words the supply of oil is limited by the amount that there is in the ground.

In addition to limited supply the demand for these commodity products has been increasing dramatically as emerging nations and economies such as India and China grow rapidly and consume them at a much higher rate. The net effect of these factors has been rising commodity prices.

With neither demand looking likely to fall or supply increasing, investing in commodities is looking like a smart bet, especially at a time of such high volatility in the equities markets.

To learn all you need to know about trading commodities or investing in oil please visit one of the links above.

Look for experience

Many reputable people and firms will offer information on investment opportunities. The main way to find out if the offer is genuine is to look at the structure of the organisation that is making the offer. You need to go into the historical results and structure of the organisation.

In Australia, investment advisors need to be licensed. How long has the firm you are considering been licensed? If the people or firm have only been licensed for a year, then they have no previous historical results that you can look at. It might be wise to review them at a time further down the track when they have performance results to show you. Look for experience.

Beware The Unbelievable

In your research travels, you will come across all sorts of offers. Some are too good to be true. Often they are just that. Unfortunately, there are those people that become trapped in financial exploits and need money to bail themselves out. Often they need or want your money. These are dangerous investments. It takes a shrewd business person to rescue a financially exposed business opportunity. These are not investments for beginners. You may be offered ownership rights, with the majority of profit outcomes as a lure into financially rescuing a business opportunity. You see all the outcomes as positive, and are rarely aware of the downsides of costs and viability. A financial disaster awaits you.

Misleading Headlines

Headlines are meant to grab your attention. Brochures and advertisements rely on this. However with the misleading headline, once your attention is gained, the explanation behind the headline is never reached or given in the follow up. Headlines that state “Massive profits!” and “Opportunities never to be repeated!” are marketing tools that can be used to mislead the investor into believing that easy profits are to be made. The main question to ask here is that if easy profits are to made, has the person offering the product or service made the profits they are talking about, and if so why are needing investors to make the same profits? What’s in it for them? This cautious attitude will save you from many bad investments.

Good Information – Bad Information.

In summary, the three main points to look at are ;

1) Who

Who is giving you this information, what are the history and track performance records that can be verified?

2) What

What is on offer and is it too good to believe. It often will be.

3) Why

Why is the offer being given to you? Has the person making the offer completed and made the same profits that they are offering you?

4) When.

When is the offer expiring? Do not get pushed into acting by an expiration date. This is often used to stop you properly exploring the background information you need to make your decisions.

For more investment information visit http://www.investmentinformation.freedvd.com.au/

James McInnes is a professional share market trader and investment entrepreneur, with many years experience trading the Australian Share market. You can visit his site at http://www.investmentinformation.freedvd.com.au for further information on trading the Australian Share Market and investing.

FOREX is a somewhat unique market for a number of reasons. Firstly, it is one of the few markets in which it can be said with very few qualifications that it is free of external controls and that it cannot be manipulated. It is also the largest liquid financial market, with trade reaching between 1 and 1.5 trillion US dollars a day. With this much money moving this fast, it is clear why a single investor would find it near impossible to significantly affect the price of a major currency. Furthermore, the liquidity of the market means that unlike some rarely traded stock, traders are able to open and close positions within a few seconds as there are always willing buyers and sellers.

Another somewhat unique characteristic of the FOREX money market is the variance of its participants. Investors find a number of reasons for entering the market, some as longer term hedge investors, while others utilize massive credit lines to seek large short term gains. Interestingly, unlike blue-chip stocks, which are usually most attractive only to the long term investor, the combination of rather constant but small daily fluctuations in currency prices, create an environment which attracts investors with a broad range of strategies.

How FOREX Works

Transactions in foreign currencies are not centralized on an exchange, unlike say the NYSE, and thus take place all over the world via telecommunications. Trade is open 24 hours a day from Sunday afternoon until Friday afternoon (00:00 GMT on Monday to 10:00 pm GMT on Friday). In almost every time zone around the world, there are dealers who will quote all major currencies. After deciding what currency the investor would like to purchase, he or she does so via one of these dealers (some of which can be found online). It is quite common practice for investors to speculate on currency prices by getting a credit line (which are available to those with capital as small as $500), and vastly increase their potential gains and losses. This is called marginal trading.

Marginal Trading

Marginal trading is simply the term used for trading with borrowed capital. It is appealing because of the fact that in FOREX investments can be made without a real money supply. This allows investors to invest much more money with fewer money transfer costs, and open bigger positions with a much smaller amount of actual capital. Thus, one can conduct relatively large transactions, very quickly and cheaply, with a small amount of initial capital. Marginal trading in an exchange market is quantified in lots. The term “lot” refers to approximately $100,000, an amount which can be obtained by putting up as little as 0.5% or $500.

EXAMPLE: You believe that signals in the market are indicating that the British Pound will go up against the US Dollar. You open 1 lot for buying the Pound with a 1% margin at the price of 1.49889 and wait for the exchange rate to climb. At some point in the future, your predictions come true and you decide to sell. You close the position at 1.5050 and earn 61 pips or about $405. Thus, on an initial capital investment of $1,000, you have made over 40% in profits. (Just as an example of how exchange rates change in the course of a day, an average daily change of the Euro (in Dollars) is about 70 to 100 pips.)

When you decide to close a position, the deposit sum that you originally made is returned to you and a calculation of your profits or losses is done. This profit or loss is then credited to your account.

Investment Strategies: Technical Analysis and Fundamental Analysis

The two fundamental strategies in investing in FOREX are Technical Analysis or Fundamental Analysis. Most small and medium sized investors in financial markets use Technical Analysis. This technique stems from the assumption that all information about the market and a particular currency’s future fluctuations is found in the price chain. That is to say, that all factors which have an effect on the price have already been considered by the market and are thus reflected in the price. Essentially then, what this type of investor does is base his/her investments upon three fundamental suppositions. These are: that the movement of the market considers all factors, that the movement of prices is purposeful and directly tied to these events, and that history repeats itself. Someone utilizing technical analysis looks at the highest and lowest prices of a currency, the prices of opening and closing, and the volume of transactions. This investor does not try to outsmart the market, or even predict major long term trends, but simply looks at what has happened to that currency in the recent past, and predicts that the small fluctuations will generally continue just as they have before.

A Fundamental Analysis is one which analyzes the current situations in the country of the currency, including such things as its economy, its political situation, and other related rumors. By the numbers, a country’s economy depends on a number of quantifiable measurements such as its Central Bank’s interest rate, the national unemployment level, tax policy and the rate of inflation. An investor can also anticipate that less quantifiable occurrences, such as political unrest or transition will also have an effect on the market. Before basing all predictions on the factors alone, however, it is important to remember that investors must also keep in mind the expectations and anticipations of market participants. For just as in any stock market, the value of a currency is also based in large part on perceptions of and anticipations about that currency, not solely on its reality.

Make Money with Currency Trading on FOREX

FOREX investing is one of the most potentially rewarding types of investments available. While certainly the risk is great, the ability to conduct marginal trading on FOREX means that potential profits are enormous relative to initial capital investments. Another benefit of FOREX is that its size prevents almost all attempts by others to influence the market for their own gain. So that when investing in foreign currency markets one can feel quite confident that the investment he or she is making has the same opportunity for profit as other investors throughout the world. While investing in FOREX short term requires a certain degree of diligence, investors who utilize a technical analysis can feel relatively confident that their own ability to read the daily fluctuations of the currency market are sufficiently adequate to give them the knowledge necessary to make informed investments.

Rich McIver is a contributing writer for The Forex Blog: Currency Trading News ( http://www.forexblog.org ).

Automated forex trading systems can make sure that an investor will not miss out on profitable trades, and that these trades are completed quickly. Automatic forex software can be tailored to fit any FX strategy and will pro-actively seek out the best trades and conduct them quickly. These “software robots” remove much of the hassle involved with using human traders to conduct business on the currency exchanges, but more importantly, they are able to gather and accumulate information quickly and respond to it instantaneously.

The unique worldwide nature of the currency exchange market means that good deals may occur late at night or thousands of miles away, and the information regarding the trade may be buried deep within exchange rate listings. Currency exchange rates often change rapidly in response to government intervention or financial news, and forex software insures that trades in response to such actions are conducted immediately. There is often very little time to react in the constantly changing world of currency exchange, but good forex software insures that the trades get done on time, no matter when or where they need to happen.

While it is still possible to conduct trades the without automated software programs, essentially all investors trading in the FX market are relying on some type of quality trading/analysis software. Forex software opens the doors to smaller investors with less currency and resources to trade with, and enables them to do profitable day trading.

Since the forex markets are open twenty-four hours a day, five days a week, it’s extremely difficult for small investment firms and individual investors to manually keep track of the constantly shifting exchange rates. Automated forex software is always active to monitor and make the trades that it has been instructed to look for.

Alison Wells is an avid Forex Trader who relies on automated Forex software trading systems to make winning trades. She has many years of foreign currency trading experience and writes frequently on Forex trading systems and self-adaptive trading software. She can be found at http://www.WinningForexProgram.com/?id=EzineF10

As recently as ten years ago, Forex Currency Trading was confined to the large institutions and banks as they only had access to the tools and systems required to meet the then high barriers of entry set in the Forex Trading game.

Today, things have changed drastically. Recent advancements in technology have empowered the individual investor to participate in the game, and trade with any of the various online trading platforms that exist today.

Once you get started with buying and selling in the Forex Currency Trading market, it will become obvious to you that there exist four “Currency Pairs” that completely dominate the Forex market. The four pairs are “US Dollar vs. Euro”, “US Dollar vs. British Pound”, “US Dollar vs. Japanese Yen” and “US Dollar vs. Swiss Franc”.

The prime goal of any investor who deals in the Forex market is to hold a currency that is appreciating in value in relation to the other currencies. To illustrate with an example, if you choose to buy 100 British Pounds in exchange for 200 US Dollars, hold the 100 British Pounds for a week and in that period, the value of the British Pound appreciates in relation to the US Dollar, you get to convert those Pounds back into Dollars for say $250 and make a tidy profit.

Unlike domestic stock markets around the world that operate for only a few specified hours each day, Forex Currency Trading is open 24 hours a day. Since every country trades on the Forex market, it’s always business hours in some part of the world and so it’s open all day. The volume of trade on the Forex market is roughly a whopping $1.2 Trillion.

Another important distinction is that Forex Currency Trading is not centered on any exchange such as the NASDAQ. There is no central governing authority or organization and trading is carried out between all the major banking institutions of the world.

The advent of the internet has given rise to online Forex Brokers which are similar to an online stock trading account. These brokers have thousands of investors placing orders through their online portals and so are able to allow anyone to open a Forex account and buy and sell in any quantity.

Times have changed and made it extremely easy for anyone to trade on the Forex Currency Market. But, a new investor must keep in mind that it is a very complex and complicated environment that may offer amazing opportunities for wealth creation, but is also capable of relieving you of your hard-earned money in an easy fashion. A would-be investor is advised to do a lot of homework and gain as much knowledge as possible about the Forex market before choosing to make an investment.

For more information on Forex Currency Trading visit our site: All You Need to Know About Forex Trading Market.

Match Your System with The Market

Of course, whatever style or method you choose to trade, it needs to be profitable. Mathematically, this means that at the end of the day (or month, or year), if you clump all the winners and losers, you’ll end up net positive. Statiscally, this is called having an edge, or having a positive edge. You must make sure, through backtesting and managed forward testing, that your system is indeed profitable. You might be asking, “But I can’t seem to follow my trading plan.” We’ll get to that later, but for now, let’s assume that you CAN follow your trading system perfectly.

Matching your system with the market means that the system works for that market at the time. Keep in mind your system might work for the EUR, but maybe not for the CAD. Also keep in mind that the system might have worked for the previous 6 months, but something happened to the market that the participants are acting differently now; this would mean that your system was profitable for the past 6 months but the market change has nullified your system’s edge.

Let’s assume that your system is somewhat profitable if you could follow it perfectly. So what’s next?

Match The System With Yourself

At this point, you might be thinking, “Hey, I was looking for a How to trade forex article, not some self-help psychoanalysis article.” Do yourself a favor, and read through the entire article, because this might be the key ingredient your trading has been missing.

This is the part where 99% of the traders don’t seem to understand. If you happen to talk with other traders, please feel free to point this section of the article out; it might be the missing key ingredient in your entire system.

It’s pretty obvious that if you have a profitable trading system written down in your trading plan, but you can’t seem to follow the rules, that trading plan is as good as useless. So why do you deviate from you trading plan that you’ve researched so hard for? There are two primary reasons: 1) Your expectations as an analyst versus your expectations as a trader. And 2) Your trading system doesn’t match your personality. I could write an entire book on the first issue, but we’ll focus on the second issue in this article.

To trade with consistency, you need to understand how your subconscious mind works. If your trading system contradicts who YOU are as a person, your mind will NATURALLY pull you away from that trading style, and SUBCONSCIOUSLY gravitate you to a particularly different trading style. A lot of people get confused here, and this is one tough concept, (and really, not too many people want to learn about it) so don’t worry if you’re confused. Let me give you a few examples, the first ones illustrating basic principles, then drilling down to more subtle points:

First example is John. John likes playing video games. He loves playing 5 handed table Texas Hold’em (poker) with his friends. He likes playing hardcore sports. He is a risk-seeker. His natural trading style is day trading and/or fast swing trading. He cannot naturally trade longer time frames because that’s not who John is, and John is a fast-paced guy. So no matter trading system he’s researched, backtested, and written, he won’t be able to trade it unless it fits his naturally fast-paced personality. Also note that his personality has gravitated John towards all these other fast-paced activities like video games and poker.

Let me give you a more subtle example: Susan was an underdog all her life. So she pictures herself as David who fights against all the Goliaths of life. Whenever there’s a competition, election, or basketball game, she always roots for the underdog because subconsciously she relates more with the underdog.
How does this affect her trading? She’s naturally a fader. Fading the market means going the opposite of the major trend. So while trend followers go with the majority of the market participants’ decisions, Susan is the opposite; she naturally likes to bottom/top pick and go against the trend. This means that she has to either 1) change herself to match the trend following system (which is hard), or 2) find and develop a profitable fading trading system (which is easier). Mostly likely, she’ll have a better time trading sideways markets, fading at the edges of the channel. Of course, how she decides to trail also depends on her self-image.

At this point, you might be thinking, “Ok, this is starting to make a little more sense now. But I don’t really know how to do all this stuff.” Let’s move on to the final point.

Know Yourself

Schedule a 1~2 hour block of free time and go through this this action plan:

• 1. Make a list of all the activities you enjoy doing.
• 2. Make a list of all the people you naturally enjoy hanging out with.
• 3. Make a list of all the movies, TV shows, sports, etc. you naturally find pleasure in.
• 4. (Insert more questions you can make up)

Take a close look at all those items, and focus on analyzing what kind of item it is. For each item determine:

• 1. Is this fast-paced, medium-paced, or laid back? Are you a New York City person or a Southern California person?
• 2. Is this more number smart or people smart? Are you naturally good with numbers or with peoples’ feelings?
• 3. Is this more of an underdog or topdog activity? When you watch a tennis match, do you root for the topdog or the underdog?

All these things reflect who you are at the time. The more laid back you are, the larger the timeframe you need to trade (because you would trade less frequently and the trades would take a longer time). The more fast-paced you are, the more you should swing trade or even day trade. The more number smart you are, the more systematic, quantitative, and progamming-oriented you are with your backtesting and trading. The opposite would be much more of a discretionary trader. The more topdog-inclined you are, the more of a trend-following system you need to trade. The opposite would be fading at the edges of a sideways channel.

But keep in mind that most people are a combination of the two. Explore yourself. Take some time for self reflection. Here’re more questions for you to really think about:

• 1. What does this list say about how I should trail my trades?
• 2. How should I enter and exit? Partial profits or not?
• 3. Which markets should I trade? Which session should I trade?
• 4. Should I consider trading stocks, options, or futures instead?
• 5. Should I use technical analysis, fundamental analysis, or both?
• 6. Am I even right for trading?

Let’s look at one last example:

Mathematically, if you don’t take partial profits – that is, you enter and exit only once, and not exit multiple positions – you would make approximately 3~4 times more profit than traders that do take partial profits. To clarify, let’s say you’re long 3 contracts, and you unload 1 lot at +25 pips, the second at +45, and the last at +60: this is what I mean by taking partial profits. But let’s say you’re short 3 lots, and you decide to exit all 3 lots at +47 pips. That would be the opposite of taking partial profits.

But again, let’s take a closer look at what I talked about in this article and relate it to this point: Sure, on paper you’d be more profitable, but then again, all trading plans are profitable. It’s just that you couldn’t follow that plan in the first place. Just as likely, not taking partial profits is more profitable, but it’s the same principle – it’s easier on your mind to take partial profits. It’s a trade off between psychological ease and economical gain.

There is a deep underlying reason why every trader naturally wants to take partial profits, and I could write a separate article on it, but suffice it to say that everyone initially is naturally inclined to cut profits short and let losses run. (As a teaser, it’s about how we grew up in society/school/parents that has instilled beliefs that are beneficial to us in society but detrimental in the markets.) The more question is can you trade this way? Should you trade this way? Forget about what’s more profitable on paper. Focus on being able to trade with consistency by trading according to your natural self.

Well I hope this article has shed some interesting insights with your trading. Perhaps you’re ecstatic at this new finding, perhaps you thought this was a waste of time, or perhaps you don’t even have a trading system yet. Don’t worry, take your time.

So what now?

So now you’ve done your due diligence and now you know what your ideal trading system is. Well, good news! We’ve done most of the research for you. My website has compiled most of today’s forex trading system. If you’re somewhat of a discretionary swing trader, I highly suggest this Forex trading system. Feel free to browse for the right system for you. Feel free to even browse for more Forex education.

Now, before I finish, I’d like to leave you with this: Risk is not a function of the market, but a function of the investor. The greatest thing you can invest in is not in a specific instrument or market. The greatest thing you can invest in is yourself. Never stop reading, never stop learning.