Thursday, September 13, 2007

Forex Trading Strategy - The Ultimate Momentum Indicator for Huge Profits

Many traders in their forex trading strategy simply pick levels and buy or sell into them and hope they hold. This simply sees them lose, as they are hoping levels will hold and NOT acting on confirmation of price momentum to put the odds in their favor.

Here we are going to look at the ultimate momentum indicator that will help you time your trading signals with laser accuracy.

The momentum indicator we are referring to is the stochastic and it simply should be considered by anyone serious about making money in forex trading.

The logic

Of the stochastic is based on the assumption, that when a market is rising, it will tend to close near the highs of the session - and when a market falls, it tends to close near the lows.

Lets look at the calculation although you dont need to understand just as you dont need to understand an internal combustion engine to drive a car you can look at it visually which we will return to in a minute first:

The Calculation

The stochastic oscillator is plotted as two lines called %K, a fast line and %D, a slow line.

%K line is more sensitive than %D

%D line is a moving average of %K

%D line gives the trading signals

Its actually similar to the way a moving average is plotted.

Therefore consider %K as a fast moving average, and %D as a slow moving average.

The lines are plotted on a scale of 1 to 100 scale.

"Trigger" lines are normally drawn on stochastics charts at the 80% and 20% level this indicates when markets are overbought, or oversold and a trading signal maybe generated.

Using Stochastics

The best way to get a feel for stochastics and how they can help your forex trading strategy is to look at them you can see them free on many services and a good one is

The 80% value is normally used as an overbought signal, while the 20% is used as an oversold signal.

The signals are even more reliable if a forex trader waits until the %K, and %D lines turn upward, below 5% before buying - and in conversely, above 95% before selling.

The most reliable way to trade stochastics is to use the above as a warning sign and wait for the stochastic lines to cross with bullish or bearish divergence.

For example, buy when the %K line rises above the %D line, and sell when the %K line falls below the %D line.

Beware of short-term crossovers these can generate a false signal and cause losses.

The best crossover is generated when the %K line intersects, after the peak of the %D line.

Dont worry if it sounds confusing it becomes much easier when you look at the set up on a chart service such as the one we referred to earlier and you will soon be getting the hang of them.

Why they are so valuable

Because they allow you to shift the odds in your favor instead of relying on hope when you trade into support or resistance you will shift the odds in your favor by knowing the strength of price momentum.

Stochastics are the ultimate timing tool for traders and allow you to enter your trading signals with the odds on your side. In any forex trading strategy you need to trade the odds and the stochastic is a powerful weapon that you can use for currency trading success.

Discover the stochastic indicator and you may be glad you did.


On all aspects of becoming a profitable trader including features, downloads and some critical FREE Trader PDF's and more FREE forex education visit our website at

Introduction to Day Trading

History of online day trading

The birth of day trading was made possible when the computerized, over-the-counter NASD became available in 1971. Day trading was pretty much the domain of stockbrokers and remained that way until the late 1990s, when the increasing popularity of the internet, motivated the international stock markets to move online. The consequence of this move was that day trading brokers became optional because anybody with Web access could execute their own trades, provided that they had an account with a registered online brokerage. The uptake was enormous, because by 1999, at least 25% of all trades made were done as online trading by individual investors. Day trading online grew in popularity as these investors started gaining online trading maturity. This growth found further impetus with the Dot Com Bubble as many traders could buy and sell the same share on the same day with three digit returns.

What is day trading?

The U.S. Senate Permanent Subcommittee on Investigations defines day trading as "Placing multiple buy and sell orders for securities and holding positions for a very short period of time, usually minutes or a few hours, but rarely longer than a day. Day traders seek profits in small increments from momentary fluctuations in stock prices after paying commissions." With day trading it is common to focus on short-term trading, where a trade could last for anything between a couple of seconds to a couple of hours. In day trading online, the number of trades made may vary from between just a few to a couple of hundred per day. It is also common to finish the day with a closed overnight position. This means that everything you bought gets sold, before market close. There are many different techniques or strategies that you can use in day trading. Some of the more common online trading systems include:

  • Trend following
  • Range trading
  • Scalping
  • Rebate Trading
  • News Playing
One of the techniques that started surfacing in day trading is algorithmic trading. Algo, as it is commonly called, is favoured by hedge -, pension and mutual funds. It is estimated that 33% of all US and 40% of all UK trades during 2006 were made by algo traders. Algo trading is automated, meaning that the trader leaves it up to the computer to decide when to buy and sell. Day trading can either be done by institutions or by individuals. Individual day traders normally make use of direct trading firms that offer them direct, real-time electronic access to stock markets. For a day trader real-time access is important because it enables them to have a live view of movements on the Securities Exchange of those stocks, stock options, currencies, futures contracts, interest rate futures and commodity futures that they are trading online.

What are the pros of day trading?

Self employment Day trading online offers you the potential to earn really good money and it goes without saying that you will enjoy flexibility in where and when you work.

Stimulation Trading online is both exhilarating and interesting. It requires analytical thinking and continually challenges your abilities. Every day is a new start stagnation is not possible at all!

What are the cons of day trading?

Financing In day trading you need money to make money and lots of it. Day trading penny stocks could be high risk, so you will probably need to play in the bigger leagues, or at least find a happy (and profitable) balance between the two. There are also regulatory requirements around the amount of money you need in your account. In the US for example, it is $25,000.

Latent loss potential You are pretty much at the mercy of economy figures, analyst comments, interest rates, and so forth. A single press release or a single comment could turn a profitable stock into a dead loss. This makes your income unpredictable. Day trading online can be highly profitable and produce rapid returns, in spite of being high risk. The risk is mainly due to margin use, and other day trading practices. Naturally, most risks can be managed if you remain prepared, alert and focussed. In example, when you start trading online, you will probably find that you have to exit a losing position very quickly, to prevent a loss. At the same time, you will need to move just as quickly to capitalise on any winning positions you may have. Day trading online can be a fun and even profitable adventure, provided that you have good discipline, -risk and -money management.

"The key is consistency and discipline. Almost anybody can make up a list of rules that are 80% as good as what we taught. What they can't do is give (people) the confidence to stick to those rules even when things are going bad." Richard Dennis, on Turtle Trading

At both the novice and experienced trader will find the best ways and all the information you need, to trade stocks, shares, futures, commodities, FOREX etc.

Forex Trading - To Invest or Not To Invest, That Is The Question

Forex trading is all about buying currency. You buy as much as you can of a currency when its value in relation to another is low and wait for the situation to change. When the value of the currency you bought goes up again you sell. At least you sell when you think it is going to stop going up. If you wait too long it may go down again and you are left waiting for another rise. This is dead money. You want to keep moving the money to earn.

Because of the turning globe there are always a number of exchanges open, so trading continues around the clock. This works in a kind of relay because what has been happening in the other markets while one is closed will have on their days trading when they open. This effect varies and can have a positive and negative effect on the market. It is up to the traders and brokers to watch what is happening and take advantage of favourable conditions when they occur.

The foreign exchange market develops when two countries having different currencies trade goods. They must of course pay each other. This could be done using either their own or some other agreed currency. The American dollar is a popular choice for international trading.

Other than ordinary trade, i.e. trading goods, many people trade only currency. Much of this is done through the banks. The banks rum many of the currency exchanges and people going to foreign countries buy their currency here making it their first and often only brush with foreign currency trading.

A good way to learn the trade is to buy one of the trading software programs. They are similar to games and quite easy to learn. They do not substitute for the training that a licensed broker gets, but they will give some small indication of what the forex market is all about. Forex system trading? Well, everyone in the business actually that is not strictly true. Many people in the business have a forex system. But, they are a bit like the systems that you hear about casinos. Some good some bad. You might get lucky with one. Ill say no more on that.

If you decide to become involved in forex as an individual you can not do so alone. You must go through a broker or some financial organisation. If your investment is small it may be difficult to get anyone to take an interest. Brokers deal in millions every day. An individual is known as a spectator because of the relatively small amounts invested. (a technical term)

You should do your background checking and learn all you can about forex before actually investing any money. The markets are heavily regulated and there are many laws protecting investors but there are also con men out there just waiting for an unwary investor to come their way. They are online and off. First make sure that they are qualified and licensed to operate in your country. If in doubt check it out. Talk to someone you know or a friend of a friend before taking the plunge.

If you can spare the cash to invest in fx it can be an exciting and interesting pastime. But dont blow your pension on it. Values fall as well as rise.

Eric Long. Forex Trading at Good With Money

The Very Basics Of The Forex Market

The forex, or foreign exchange, market is a specialized type of market in which types of currency are exchanged for other types of currency. On average, the daily trade within the forex market is more than $1.9 trillion. As the worlds largest financial market, forex involves trading among central banks, large banks, governments, multinational corporations, large banks, and other institutions and markets of a financial nature. Individuals may also participate in the forex market through banks or brokers, though individuals represent only a small fraction of those trading within the market.

The Levels of Forex

Forex is different from the stock market, which provides the same prices to all participants. With forex, the market is actually divided into various levels. The top level is the inter-bank market that consists of the largest banking firms. The spreads of the inter-market usually are not shared with those outside of this exclusive circle. As the spreads work their way down through the levels, the difference between the ask price and the bid actually widens. This is primarily because those within the inter-bank level are capable of guaranteeing larger numbers of transactions and, as such, can demand a better spread.

The level below the inter-bank market is comprised of the smaller investment banks. The next level is made up by multi-national companies that pay employees in various companies as well as some retail forex market makers and large hedge funds.

Forex Trading Characteristics

Within the forex market, there are a number of different rates, or prices, which depend on what is being traded by the market or bank. In addition, there are a number of recognized trading centers within the forex market, with the main centers being in New York, London, Singapore, and Tokyo. In addition, a number of banks throughout the world participate in forex training. With so many markets located throughout the world, the market is literally open 24 hours per day. As such, traders can make trades immediately when events occur that can impact the market.

Interested in investing in the forex market? Read our Investment Guide first!

Spammers Use Excel to Cloak Malware

Spammers are using Microsoft Excel as the newest packaging for their spam, says Commtouch, a Nasdaq-listed anti-spam technology provider. The finding is based on the companys analysis of billions of email messages globally.

Like other types of spam messages, the Excel spam is being sent from zombie computers or bots typically home PCs that have previously been infected by Trojan malware, the company says in a media statement.

The Excel spam packaging promotes stocks in file attachments with names like invoice20202.xls, stock information-3572.xls, and requested report.xls.

Commtouch CIO Amir Lev says Excel is a natural progression after a recent spate of PDF spam, which itself was a development from basic image spam.

We expect other file formats to follow suit; think of the spam potential in PowerPoint files, or Word documents, he says.

Other file formats Commtouch recently released its Email Threats Trend Report for the second quarter of 2007. The report showed PDF-spam made up 10-15% of global spam messages during a 24-hour period, increasing overall global spam traffic by 30-40%.

Image spam dropped 50% to less than 15% of all spam in that period. In the previous quarter of the year, image spam accounted for 30% of all spam in the first quarter of 2007. The report also showed global spam levels remained high, with 85-90% of all global email being spam.

Lev says spammers assume that by wrapping the same message in a new format, they will bypass most anti-spam engines that try to analyze the content of mail messages.

However technologies that rely on identifying patterns in mass emails block these types of messages automatically, regardless of the content or format.

Malware writers have used Excel in the past as a carrier for viruses. In June and July 2006, a series of attacks exploited vulnerabilities in Microsoft software, including Excel, Microsoft Word, and PowerPoint.

Damaria Senne is a journalist and author based in Johannesburg, South Africa. She writes about the telecommunications industry in South Africa and Africa, including cellular, mobile and wireless technologies and messaging news and trends.

She regularly interviews executives of multinational companies expanding their business into Africa, as well as government officials and regulators in the African communications market.

Damaria is also an author and would like to write books that inform, educate, empower and entertain for parents and children.

Learning Forex Trading - The Eight Steps To Get You On Your Way

Learning forex trading can certainly be a daunting process if you have no idea where to start. Although forex is less complex than some other methods of trading because it only deals with one specific commodity, it can still be a chore to get to grips with. There is so much involved when learning forex trading, especially if you want to be successful, but by following the tips below, you can soon obtain the knowledge and know how that you need.

1. Research forex trading You can never walk into any kind of investment without first investigating the possibilities and weighing up the advantages and disadvantages, and learning forex trading is no different. You should at least know what it is and how the concept of forex trading works before committing yourself to attempting to profit from it.

2. Learn all about currencies Most individuals know a little about the dollar, pound and euro, but it is essential to learn about all currencies and their histories whilst learning forex trading. Without having basic knowledge of the fundamentals of currency, you cannot hope to do well at forex trading.

3. Assess the odds The odds of success and failure are part and parcel of learning forex trading because you need to be able to recognise trends, analyse profit margins and recognise potential.

4. Learn the key terms Every investment opportunity has some form of jargon attached to it. Ensure that you have a full understanding of the jargon associated with learning forex trading before progressing to the next possible step.

5. Watch the market As with anything in life, always watch the market to get the feel of it before progressing to participation. Learning forex trading is all about understanding before participating, and the only way for you to do that is to watch other before attempting it yourself

6. Use software to trade for free Some softwares enable the learning forex trading before you actually invest. You can trade imaginary amounts via simulators to give you practice and give a greater understanding of the system. You can analyse your mistakes and rectify them before actually investing your own money!

7. Set a budget Always work out what you can afford to trade whilst you are learning forex trading. It is easy for an individual to get in over his or head and end up losing far more than he or she can afford, so make sure that you are not one of those people!

8. You are ready to begin for real Your learning forex trading crash course is complete so as soon as you feel confident, go for it!

Simon Aridej is the owner a site which provides a good information about forex trading tips, how to trade like a professional forex trading free forex trading ebook and much more. You can download forex trading ebook for free by Click Here!