Forex Trading - Overcoming the Obstacles

Life would be a lot easier if everybody would conform to rules. If everyone becomes a law abider then, perhaps, there will always be peace and happiness.

In the same way, if there are rules printed in black and white involving forex trading then everybody wins. The sad truth, however, is there are no clear cut rules to forex trading. The forex market, in fact, operates in an unstructured environment, thus succeeding in forex currency trading becomes an obstacle for most people. If truth be told, only 5% actually succeed as a forex trader.

There are definitely downsides to operating in an unstructured environment as forex. For one, you have to be responsible for your actions and this is quite impossible especially if you are already used to having somebody else to blame if things go wrong.

Moreover, there are no standard rules to follow in forex trading. Since rules are important in any undertaking, you must come up with your own -- and stick to them at all cost. One possible reason why some traders fail is because they do not follow their own rules. They get frustrated easily when things look bad and they forget that there are rules they need to abide by.

One other thing you must understand trading forex, it is not your own effort that matters but to make the right decisions that count the most. You can work for 16 hours a day and that will amount to nothing if you make one wrong move. In forex trading, too, you have to be emotionally detached. You may find this difficult to do considering that man, by nature, is a social being. However, in forex currency trading, you have to be able to make your own decisions and not be influenced by the dictates of society.

If you are able to overcome these obstacles, you will most likely find success trading in the foreign exchange market.

Automated forex software help to avoid the pitfalls while trading forex. These forex trading systems are specifically made to analyze technical data and give forex signals when to buy and sell. Since these forex robots don't involve human emotions, they help for more profitable trading in the forex market.

For more information on forex trading visit http://www.fxmoneytrading.com

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Forex Day Trading- Two Step Trend Analysis

If you approach forex day trading by just looking at the 5 minute and 15 minute charts there is a strong possibility your account will evaporate sooner rather than later.

In order to get a feel for the market and an indication of the current trend it is necessary to do an analysis by looking at multiple charts on different time frames starting with higher level charts first.

Rather than having the charts cluttered with numerous indicators and signals which can cause signal paralysis, I recommend just two:

1. MACD (with default settings)

2. 200 EMA (Exponential Moving Average)

Now examine your charts using a top down approach:

• Daily
• 4 Hour
• 1 Hour

As you check each chart take note of these two factors:

1. Has MACD crossed down or up and is it above or below the water line?
2. Is price above or below the 200 EMA?

While it is not crucial to have them all lined up on these three time frames for successful forex day trading, if you want to be a cautious trader and go for high probability trades then certainly MACD on the 4 hour chart and 1 hour chart should be in agreement as also should price in relation to the 200 EMA.

The daily chart can be useful in seeing the larger picture and for noting key levels of support and resistance. They stand out on a daily chart so if price is within 100 pips of a crucial level of support or resistance as seen on the daily chart, make a note of the figure.

Then scale down to the lower time frames and see if this level matches with other indicators such as pivot points or Fibonacci levels.

Once you have done this groundwork, NOW you can look at the 15 minute and 5 minute charts for a suitable entry point.

Remember, for successful Forex day trading you need to adhere to the No. 1 commandment: Buy The Dips and Sell the Rallies!

So avoid chasing the market and going with the flow. Instead, wait for price to come the level you want, set your entry order, and let price pull you into the trade.

The Danger With Lower Time Frames

Just concentrating on the 15 minute and 5 minute charts will not give you the bigger picture. You could see what looks like a perfectly good trade and set your stops and limits only to find you get blown out within a few minutes.

By looking at the higher time frame you would probably have seen you were close to a key support or resistance level and either not gone into the trade or adjusted your stops and limits accordingly.

For the novice, Forex day trading can involve a huge learning curve. Include this simple daily top down analysis approach to your trading and protect yourself against making trades you wish you didn't!

Click here to learn how to use the 200 EMA in a simple yet powerful way:

http://www.vitalstop.com/Forex/Advisor/200EMA-forex-strategy.htm

For a free candle & chart pattern recognition reference tool click here:

http://www.vitalstop.com/Forex/Candle-Chart-Patterns

For the best free economic calendars plus a free pivot point calculator and Fibonacci calculator click here:

http://www.vitalstop.com/Forex/tools.html

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