Which Forex System?: May 2012

Wednesday, 30 May 2012

Hi and welcome to the 'Which Forex System?' blog.

I'll be posting regular market updates from well respected Forex experts and showcasing the best Forex advice and systems, so you don't have to waste fruitless hours searching for it yourself!

Add me to your 'Favourites' now and as a special thank you, I'd like to give you 4 fantastic FREE gifts by simply entering your details on the right of this page >>>

You'll receive my 3 Part Ebook series 'The Forex Decoder' which covers everything from the history of Forex, to revealing the most consistently profitable indicators you'll need in your Forex arsenal. I've sorted the 'wheat' from the 'chaff' so you don't have to make the same mistakes as I did when I first started.

You'll also receive a copy of Mark Nelson's famous '7 Habits Of A Highly Successful Trader' which will prove an indispensible aid in your Forex career, as it has done in mine.

Just enter your details on the right and get these 4 fantastic gifts absolutely for FREE >>>

Yours 'Forexly',
Cliff

Why Are You Concerned About Your Win/Loss Ratio?

By Rick Wright

Hello traders! This week I’d like to talk about a topic that comes up in every Online Trading Academy class that I teach – that is the topic of your win/loss ratio. Most new traders (and many experienced ones!) believe that a very high win/loss ratio is necessary to be a profitable trader. This is very far from the truth.

First let’s define what a win/loss ratio is. Investopedia defines the win/loss ratio as: ”A ratio of the total number of winning trades to the number of losing trades.”

It does not take into account how much was won or lost, simply if they were winners or losers.

If you make ten trades and have six winners and four losses, your win/loss ratio is 6:4 or 3:2, or even 60%. Many new traders think this number is too low! Why do they think that? In my opinion one of the primary factors that make people think this number is too low is that they compare it to the same grading scale that they have had in their regular education experience. In the schools that I grew up in, if you only scored 60% you were a “D” student, bordering on failing. For those of you who aren’t familiar with our basic grading schedule, scoring between 90% and 100% is an A, 80-89% is a B, 70-79% is a C, 60-69% a D, and below 60% is an F or failing grade. Too many new traders are looking at this win/loss ratio and comparing it to their grades in school! This is understandable, as most of us spent most of our formative years being graded in this way – from fifth grade or so (about age 10) to high school graduation (about age 18) to college, through grad school, etc. This deeply rooted and long-held belief will cause many new traders to become discouraged when their trading performance doesn’t equate to getting a good grade in school. What about in your regular job, before you got into trading? How many jobs out there can you be wrong 50-60% of the time and still keep your job? Weatherman? Politician? The point is this: you have been “programmed” for years if not decades to believe that attaining 70-80-90 percent or higher is necessary to be a success. This is far from the truth in trading.

When speaking to more experienced traders, including other instructors, many tell me that their win/loss ratio is around 50% or even below. Oh no, they must be a failing student or a bad trader! This is far from the truth. When focusing on the win/loss ratio only, you are missing the very important component of your average wins vs. your average losses. If your average wins (gains) are 20 pips and your average loss is 20 pips, you must have a win/loss ratio of well over 50% to make any real money in trading. In our classes we recommend that traders look for trades that offer at least a 3:1 reward to risk ratio. The two main reasons for this is that you will search for higher quality trades, plus you don’t have to have a very high win/loss ratio to make actual money in trading. With a 50% ratio and average winners of 30 and average losses of 10, out of ten trades you would have gained 150 pips and lost 50, giving you a net of 100 pips. Not too bad!

The sooner you can get to the point of realizing that the win/loss ratio isn’t the most important thing in trading the better off you will be. Occasionally I will read a book or an article about trading written by some legendary trader out there (thanks Alex P. for loaning me the last one!). Most of the time these books refer to their win/loss ratio as a mere afterthought – many are so “concerned” about taking large losses that they manage their trades very, very closely. So closely that they may take just a few pips or ticks of a loss, but these traders are very good at letting their winners run. Taking nine small losses of ten pips, but having ONE big winner of 100 or more makes you a profitable trader. It all comes down to letting your winners run which was covered in several previous newsletters. These traders may have a win/loss ratio of 1:9! This ratio might be difficult for new traders, so finding the happy balance that works for your psychology is of utmost importance.

In the future, actively manage those trades going against you and letting your winners run will eventually show you large profits! Practice managing your winners, and you too could be as right as a weatherman and still be a profitable trader.

http://lessons.tradingacademy.com/article/why-are-you-concerned-about-your-winloss-ratio/

Monday, 28 May 2012

Simon Denham's Daily Market Comment

As the month of May draws to a close investors will remember it for the reigniting of the eurozone crisis where investors saw already tetchy financial markets take a turn for the worse and heading towards bear market territory. The FTSE has lost 6% up to now with the Dax off nearly 6.5% in May, but this morning at least the fears of a return to a bear market have abated with indices starting the week in fine form.

Despite a higher than estimated reading in the US consumer confidence last Friday it seemed events in Europe had the upper hand again, pushing the Dow Jones 76 points lower to 12,455. Requests for help from the regional governments in Spain raised concerns about the country’s financial health amid ongoing uncertainty regarding Greece’s membership in the euro. So, ahead of a holiday weekend in the US investors avoided taking chances, leaving the relief rally for another day.

Today is Memorial Day in the US so markets across the pond are closed and we can expect low volumes as a result over this side. The next couple of weeks see lots of bank holidays in various countries and as the summer months get underway, with in particular the double whammy bank holiday in the UK next week for the Queen’s Jubilee, volumes may struggle over the coming weeks.

The FTSE has already made a visit back above 5400 this morning and is looking in good shape starting this week that will see a plethora of economic data releases. These early gains are down to the latest poll from Greece which has shown a strong percentage of voters are willing to give pro-bailout parties a chance, purely because the vast majority of Greeks would rather stay in the euro than leave. The alternative of an exit aren’t in the slightest bit appetising for Greek voters are they appreciate a return to the Drachma will be a very painful experience, causing serious uncertainty well beyond its shores.

Yet the risks of the eurozone crisis escalating further still remain very apparent with Spanish ten year government bond yields edging higher this morning where they stand at 6.4%. The money the government is throwing at Bankia is making investors nervous that the sovereign will soon need a bailout out if their yields carry on ticking higher in the fashion.

There is nothing in the way of economic data out today with the bank holiday in the US, but highlights for the rest of the week are US, UK and EU consumer confidence, US GDP data and unemployment figures in the form of the ADP number on Thursday and the big NFP on Friday.

The euro continued its plunge versus the greenback last Friday on the back of renewed speculation that Greece’s financial troubles are becoming contagious. It was Spain’s regional governments which admitted their struggle with high borrowing costs that sent the shared currency 21 pips down to 1.2512. However, the euro opened higher last night and is on its way for a recovery amid expectations of thin volumes due to the Memorial Day holiday in the US.

In the face of a slightly stronger US dollar, gold prices moved up $14.4 on Friday, finishing at $1572.3 thus paring some of overall losses for the week. Concerned that events in Europe might escalate at any moment, investors exited those previously short positions especially ahead of an extended weekend in the US.

It was a draw in the energy sector as the positive influence of better than expected US economic data was cancelled off by signs of problems popping up elsewhere in Europe (Spain) not just in Greece. The chart indicated a slightly higher close for the WTI prices at $90.86 but within an inside day pattern. Today’s trading is anticipated to be thin due to the Memorial Day holiday in the US so watch out for any possible spikes.

http://www.capitalspreads.com/simon-denhams-daily-market-comment

Friday, 25 May 2012

Hi and welcome to the 'Which Forex System?' blog.

I'll be posting regular market updates from well respected Forex experts and showcasing the best Forex advice and systems, so you don't have to waste fruitless hours searching for it yourself!

Add me to your 'Favourites' now and as a special thank you, I'd like to give you 4 fantastic FREE gifts by simply entering your details on the right of this page >>>

You'll receive my 3 Part Ebook series 'The Forex Decoder' which covers everything from the history of Forex, to revealing the most consistently profitable indicators you'll need in your Forex arsenal. I've sorted the 'wheat' from the 'chaff' so you don't have to make the same mistakes as I did when I first started.

You'll also receive a copy of Mark Nelson's famous '7 Habits Of A Highly Successful Trader' which will prove an indispensible aid in your Forex career, as it has done in mine.

Just enter your details on the right and get these 4 fantastic gifts absolutely for FREE >>>

Yours 'Forexly',

Cliff

Watch the Price NOT the News

By Johnathon Fox

One of the hardest things in Forex trading is trying to make sense of the news and fundamental analysis that many websites put out every day. The great news for you is that you don’t need to worry about any of it and don’t even have to bother trying to understand it or even reading it.

Fundamental analysis and news releases only serve to do one thing for the majority of traders and that is to confuse them. The majority of traders are trying to work out what a certain release means and then which way they should trade to make profit. The main problem with this is by the time the trader has worked out what to do even if they do make the correct decision they will be too late.

There is a saying in the market “Buy the rumour and sell the fact”. What this basically means is the money is made from taking a position when there is a rumour around, and when the news is actually released it is the time to get out. The reason the markets act like this is because the big traders will open trades in the direction they think the news will be released. By the time the news announcement is made the markets price already has the news factored into it.

Forming a Bias from the News

One of the main concerns of traders following the news is they begin to form a bias on what they think should happen. For example a trader may read a bad announcement out of Great Britain. They then form the view that they should only short the GBP/USD. The chart on the GBP/USD may be roaring higher but the ‘traders mind will switch off to obvious trades that go long.

The other reason forming a bias from the news can be dangerous is because it fails to recognize what the big players and other traders in general are doing. As we covered above, the major players normally leave the market once the news has been released. By the time the news is actually released the price already has factored in the announcement. Taking positions after the news has been released will only lead to you playing catch up and doing the opposite to what the big players are doing.

Forget the News and Concentrate on Price

The best advice for aspiring Price Action traders is to forget the news altogether. Everything you need to know and analyse can be found in a raw price chart. We can tell if other people are buying or selling from simply looking at the price data. We can tell the market is looking to reverse by learning how to spot and trade reversal signals. We don’t need to follow any news services or read up on the latest fundamentals for each country.

Because the big players have entered before the announcement has already been made, price reflects what is likely to happen when the news is released. What this basically means is we can simply follow the price for hints to which way the market wants to go.

Many traders will not open trades going into major news announcements, but if we were to adopt this rule we would not be making trades the majority of the year! There is always some sort of news being released and once again we only need to follow price to get a feel for the market.

When major news is released the affected pairs will normally become very volatile with larger spreads. This extreme volatility will be a major concern for traders trading small time frames such as the 5min and 15 min charts.

Price Action will show you all you need to know to make money consistently. If you are signed up to news services or are in the habit of reading economic calendars, stop and commit to following Price Action only so that you can perfect your method and forget the news all together.

http://www.dailyforex.com/forex-articles/2012/05/Watch-the-Price-NOT-the-News/12275

Wednesday, 23 May 2012

Hi and welcome to the 'Which Forex System?' blog.

I'll be posting regular market updates from well respected Forex experts and showcasing the best Forex advice and systems, so you don't have to waste fruitless hours searching for it yourself!

Add me to your 'Favourites' now and as a special thank you, I'd like to give you 4 fantastic FREE gifts by simply entering your details on the right of this page >>>

You'll receive my 3 Part Ebook series 'The Forex Decoder' which covers everything from the history of Forex, to revealing the most consistently profitable indicators you'll need in your Forex arsenal. I've sorted the 'wheat' from the 'chaff' so you don't have to make the same mistakes as I did when I first started.

You'll also receive a copy of Mark Nelson's famous '7 Habits Of A Highly Successful Trader' which will prove an indispensible aid in your Forex career, as it has done in mine.

Just enter your details on the right and get these 4 fantastic gifts absolutely for FREE >>>

Yours 'Forexly',
Cliff

So what is a Forex Trading System?

By Nathan Tucci

Most times you hear about Forex Systems, you are talking about an automated program or a trading robot, but that is only one definition for a trading system.

Let’s talk about what a Forex Trading System really consists of.

First, there is the obvious part: an entry strategy. A trading system MUST have a very detailed entry strategy. The entry strategy should be written out on paper and should include everything you need to see on the chart in order to make your entry. The entry strategy should include:

- What the candle should look like that you are entering on.
- What needs to happen before that candle.
- What time frames you will take an entry on.
- Where the price needs to be.
- What indicators you are looking at.
- What those indicators need to be showing.
- What filters you have in place to keep you out of bad trades.
- What trend or reversal signs you are looking at.
- Whether news impacts an entry or not.
- What time of day you are willing to enter a trade in.
- What pairs you are willing to trade.

The entry strategy for a COMPLETE Forex System must have EVERY detail you are looking at in order to make a trade. It should be so exact that you never need to ask yourself whether or not you should enter the trade–it is just a simple “yes” or “no” based on the criteria that you have defined in your entry rules.

The next thing a Forex Trading System MUST include is a risk management strategy. The risk management strategy must include exactly what your risk parameters are.

This part of the trading system would describe what type of management the system uses so does it risk a standard amount of pips, or a certain dollar amount or a certain percentage, ect. Not only does the system need to describe what type of management is used, but it also needs to detail how that particular system works. For instance, if you are risking a standard 2 percent per trade, your system should describe how you are going to calculate your lot size, if there are any instances where risk should be decreased or increased, if there is a max pip amount that you would place a stop loss on, if the risk decreases if there are other trades already open in your account, if there is a maximum or a minimum lot size you are willing to place on a given trade, if different currency pairs require your system to put forth more or less risk, ect.

Again, there should be zero guesswork in how you set up your risk on a given trade. Everything should be black and white if you have a complete Forex Trading System.

The next thing a trading system must have is a trade management strategy. This is different than risk management, because trade management talks about how you handle the trade after the entry itself.

This is extremely vital to a trading system, because no system can be consistent or successful without knowing how you are going to manage the trade BEFORE you even get into it. Once again, you really need to know everything black and white without having to think about it in order to create a true trading system.

Trade management should include everything you would possibly encounter while a trade is open–which is A LOT! Let’s think about some things a system would need to cover in terms of trade management:

- Is there a hard profit target?
- Is there a trailing stop?
- What system do you use to trail the stop?
- When does the trailing stop kick in?
- Do you take partial profit?
- How much profit do you take?
- When do you take the partial profit?
- How many times do you take partial profit?
- Is there a point where you would add to the trade?
- Will you add if it is winning or losing?
- At what percent of winning or losing will you add?
- How much will you add?
- Is there a point where you would add a hedged position?
- When would you add a hedged position?
- How much of a hedged position would you add?
- Should you ever pull the entire trade off before it hits a stop or target?
- How do you handle the trade if news is coming out?
- How do you handle the trade if other trades are in play?
- Do you leave your trading station with a live trade in play?
- How do you set up a live trade if you are leaving or going to bed?
- How do you handle a trade if it is struggling at support or resistance?
- What do you do if you accidentally enter an incorrect size on the trade?
- How long will you hold a trade if it is floating around the same price?
- Will you take an entry on a pair if you are already in the same direction on a correlating pair?
- How many trades will you take on at once?
- Will you hold a trade over the weekend?
- Will you hold trades that earning negative interest in your account?
- How long will you hold a trade that is earning negative swap?
- What if there is a signal, according to your entry rules, in the opposite direction before you get out of the trade?

You should have a written out answer to every one of those questions BEFORE you enter a trade. If you do that and follow it, your system will have a MUCH better chance of being successful.

Once you have set up specific entry rules, solid risk management, and a complete trade management guide, you are on your way to having a Forex Trading System.

Fir the system to be complete, you should also consider account management. You should think about the point at which you need to be withdrawing money regularly from the account, if your risk should decrease as your account grows, if you should split your capital into multiple accounts, ect.

If you have a good system in place and are able to manage the capital that system is producing, you will be a very successful Forex trader, and that is what having a Forex Trading System is all about.

http://www.winnersedgetrading.com/forex-trading-system/

Monday, 21 May 2012

Simon Denham's Daily Market Comment

Another G8 summit passes and the same old hot air emerges from the talks where leaders agree that something has to urgently be done about the eurozone crisis. But the only thing that is agreed is some more meetings in the coming weeks, where further discussions can be had about the never ending troubles in the world’s largest economic block.

The main thing though to come out of this weekend’s talks was the increased pressure on Germany to accept the idea of a Eurobond. The creation of such an asset would not be the only solution needed to resolve Europe’s woes, but it would certainly go someway to calm the waters. The major issue with this is that it would have to come with major strings attached in order to avoid the peripheral states going on a Eurobond issuing spree, precisely the opposite of what Germany has been trying to prevent by instilling some sort of fiscal discipline into the region. The other stumbling block is that Chancellor Merkel is simply not going to allow it because if she does make Germany the back stop behind a Eurobond, ultimately having to pay for the PIIGS profligacy, she will most likely lose power when it comes to the Germany general election in a year and a half’s time. If there’s any one thing that political leaders really hate, it is losing votes.

The markets have commenced will a little spring in their step this morning with the FTSE up by some 15 points at the time of writing as polls in Greece suggested that there’s a chance a pro-bailout coalition might be formed in just under a month’s time. But we’ve seen this all before in recent weeks with the bulls looking like they are just about to take control of matters and push the market higher, only for it fizzle out quickly. Support is seen at 5235 and 5185 meanwhile the downtrend is capped by the upper downward trend line which comes in at around 5300. Other resistance is seen at 5360, 5435 and 5490.

There’s nothing in the way of any meaningful economic data out today, but things get a little more interesting as the week goes on. Inflation numbers are out tomorrow, then retail sales and the BOE minutes on Wednesday, and then the second reading of Q1 GDP on Thursday. All in all a quiet week on this front as nothing is released on Friday so we’ll continue to focus on the next summit and developments in Greece.

Amid ongoing turmoil in the Greek political arena, some reports mentioned fresh support for a conservative party which entertains the idea of remaining in the euro area. In addition, European leaders seem determined to hold the Union together which includes Greece. So the euro was able to take a breather on Friday recovering 97 pips to $1.2778, but it will take a lot more to overturn that abrupt downtrend. So far this morning has already seen a bit of strength with EUR/USD at 1.2780.

Gold continued its rebound last Friday, gaining $18.73 to $1592.90 as bargain hunters were again present in the market. By and large the reason behind the rally was a weaker greenback making the dollar denominated gold look cheaper. It’s also possible that some investors took a second look at Fed’s choices and decided that QE3 is still a possibility.

It did not matter too much that the US dollar was under pressure last Friday which usually tends to support crude oil prices. It was rather the continued weak fundamentals picture in the US that dominated the energy sector already spooked by fears that oil demand in Europe faces even bigger challenges. As a result WTI crude prices fell another $1.38 to $91.48, but not before touching $90.93, the lowest point since Nov 3rd last year.

http://www.capitalspreads.com/simon-denhams-daily-market-comment

Friday, 18 May 2012

Hi and welcome to the 'Which Forex System?' blog.

Yours 'Forexly',

Cliff

Understanding Trend Lines and Channels

By Christopher Lewis

While support and resistance is most often found at round whole numbers, there is also another form of both in the shape of what is known as a trend line. If a support level is a horizontal line, and therefore horizontal support, then a trend line should be thought of as vertical or angular support. Needless to say, this works for both support and resistance like the horizontal levels that traders use. In fact, the similarities are many and the tools are used the same way in many aspects.

Simply put, a trend line is a sloping line in which price either has trouble rising above, or sinking below. It is much like the support and resistance levels that traders use, but is drawn at an angle. By this very definition, trend lines only occur in some form of a trend. (Hence the name.) Much like support at resistance levels, the best ones are the most obvious ones. It is also true that the trend lines that appear on higher time frames are more reliable under most circumstances.

While this seems like a simple thing, and it really is, when you look around the internet you will see people use varying metrics in determining their trend lines, and quite frankly – a lot of mistakes. When drawing a trend line, one of the most important things to bear in mind is how many times price has touched it. For example, a trend line that has been tested twice isn’t nearly as strong as one that has been tested nine times. This is because the support or resistance that it represents has held true nine times, showing just how interested the buyers become at the line. In fact, as a general rule, many traders will insist on at least three touches.

Also, there is the question of piercing. The line can be pierced from time to time, but as long as the candle closes above an uptrend line, or below a downtrend line, it shows that the line has repelled the opposing force. This is why trend lines are best analyzed after the candles close to avoid placing an order that gets whipsawed. Some traders feel that a trend line that has been pierced is invalidated, but this really is a matter of opinion and comfort. While some traders are very rigid about it, others feel that as long as the line holds over time and at the close of the candle, that it simply proves strength. Whichever one you choose as a rule is entirely up to you.

Channels

Channels are another form of “vertical support and resistance” and can be used in much the same manner. The main difference is the unlike a trend line, it is actually a pair of them running parallel. Because of this, you will have both support and resistance going forward, as the bottom will be supportive, and the top be resistive. The same rules for a channel line apply as they do for a trend line. These paths allow the trader to see the gradual rise or fall of price over time. Think of this as a range bound market, but with a tilt. Many traders will buy at the bottom of the channel, and sell at the top, over and over until the channel gets broken out of.

http://www.dailyforex.com/forex-articles/2012/05/Understanding-Trend-Lines-and-Channels/12055

Wednesday, 16 May 2012

Monday, 14 May 2012

Simon Denham's Daily Market Comment

European markets are selling mode once again as the political fallout in Greece is knocking confidence across financial markets. The delay to any government formation is bringing bond repayment deadlines closer and without a coalition soon another round of elections will be needed which will simply cause more uncertainty as the anti-austerity party that is causing the deadlock is gaining significantly in the polls. When you’ve got central bankers talking about how to deal with a possible “Grexit” then it really is more likely that the euro as we know it today could be very different to the euro we’ll know at the end of the year. In fact many parts of the market have been preparing for an exit for sometime now and for them what’s happening is just the beginning of the end of their euro membership.

On top of this the many Germans who went to the polls at the week end gave Chancellor Merkel a slap on the wrist in an anti-austerity vote, and worryingly for her it is a warning for the re-election bid in 18 months time. In order to appeal to her electorate she will likely have to take a less aggressive stance when it comes to austerity, which will play into the hands of the newly elected French President who meets Merkel this week. But letting profligate European governments go on spending sprees once again will only serve to destroy all the hard work that’s been done so far to try and balance the books.

The FTSE had been called to open lower by some 50 points but it has actually now broken below the 5500 level and we’re seeing a sea of red across the dealers’ screens. Banking stocks are feeling the brunt of the selling and the weakness is attracting some buyers who have been used to the FTSE bouncing swiftly following any declines, but this time the bounce doesn’t seem to be forthcoming. As a result we’re ticking back towards the lows of the year set last week and this time the failure to bounce off the 200 day moving average doesn’t bode well for the bulls. With so much negative sentiment surrounding Greece there seems to be few investors willing to buy at these levels.

With little in the way of any economic data out today the focus will be on Italian and Spanish bond auctions. Both countries have seen their yield on the 10 year governments creeping higher in recent days, with Spain’s getting back above 6%, but as yet neither have really raced away out of control.

The euro continues to weaken now that it has firmly established itself below the 1.3000 level. A few positive cues in the form of Greece receiving €4.2B from the current rescue package and Spain partially nationalising Bankia failed to provide any upward momentum. However, uncertainty about Greece’s commitments to the EU/IMF bailout conditions still place huge downward pressure on the single currency and this morning EUR/USD is at 1.2880 and bears will be watching the support levels at 1.2875/60 closely. Meanwhile the resistance is seen quite some way off at 1.2955/80.

Gold prices continued to slide on Friday as risk aversion sent traders fleeing out of risky assets and into the safety of the dollar. The rush into dollars over the last few days has seen gold make new lows for the year. Spot gold fell 0.8 percent to $1,580.25 an ounce, shedding 3.7% on the week. This morning that weakness is continuing into today with the yellow brick at $1570.

Crude oil prices continue to hold below $96 pressured by the slowdown in China, turmoil surrounding Greece and the news from OPEC that supplies were 8% higher than consumer demand. With supplies more than ample and negative cues in the global economy sapping demand prices look set to remain under pressure.

http://www.capitalspreads.com/simon-denhams-daily-market-comment

Friday, 11 May 2012

Daily Affirmations Will Improve Your Trading & Your Life

By Niall Fuller

This article is guaranteed to improve both your trading and your life.

Don’t believe me? Well I am living proof that the concepts in this article work. I am not just talking about trading here, I am talking about life, happiness, success and freedom. Everything I have achieved in my life or in business can be attributed to the concepts in this article in some way. So do yourself a favor and read this article twice.

Anything you want to achieve in this world can be attracted to you by following the core principles in this article. For those reading this who have the goal to become a better trader – please take this knowledge, practice it and harness it’s power to improve your trading and your life.

An affirmation is defined as: “The assertion that something exists or is true”. Daily affirmations are a widely practiced method for attaining success and accelerating your ability to achieve goals.

Napoleon Hill is one of my favorite authors, and in my opinion he was the best motivational coach of all-time. He became famous by interviewing many of the most successful people of his time like Andrew Carnegie, Thomas Edison, Henry Ford and others, and the one thing that they all seemed to have in common was that they “acted as if” what they desired most already existed before they had it. Indeed, this is the core philosophy of Hill’s work and is the main reason why daily affirmations are so important to long-term success in any field, including trading. Here’s my favorite quote from his work:

“What the mind of man can conceive and believe, it can achieve” –Napoleon Hill

This is perhaps the most famous motivational quote of all time, I have it on the wall in my trading office and I read it out loud to myself every day, I strongly suggest you do the same. You can check out this link later to learn more about the great work of Napoleon Hill.

Here is a list of 17 daily trading affirmations that you can incorporate into your trading plan and that you should read out loud to yourself every day. Doing this will work to keep you motivated to practice proper trading habits and generally stay on the path to Forex trading success:

1. “What the mind of man can conceive and believe, it can achieve” – Napoleon Hill

This is the most important motivational quote of all time, which is why I have it listed again. If you haven’t read Napoleon Hill’s Think and Grow Rich Book, I suggest you do so in the near future, it’s the single best piece of motivational literature ever written in my opinion, and it will likely have transformative effects on your trading and your personal life.

2. “I am a successful trader”

If you repeat to yourself everyday that you are a successful trader, it will make you a lot more likely to do the things that are necessary to become one. If you do not believe you are a successful trader, you will never become one, as with anything else in life, you have to believe in your cause or goal before you can make it a reality.

3. “I am consistently following my trading plan”

You need to approach Forex trading as a business and be strategic and logical in following your trading plan; don’t deviate. If you’ve taken the time to formulate a comprehensive trading plan based on your trading strategy, your trading will be the most effective when you follow your plan, since you were objective and clear-minded when creating it.

4. “I have a Forex trading journal and I use it”

If you have a Forex trading journal and you actually use it, you will be far ahead of most traders. It’s critical to keep a running track record of your trading performance so that you have a tangible piece of evidence that reflects your trading ability or lack thereof. A trading journal will also give you something to stay accountable too and help you remain disciplined and organized.

5. “I practice proper risk management”

It’s important to remember that trading success is defined over a large series of trades, not over one or two. This means that you should not give too much significance to any one trade, and the way to do this is by never risking more than you are comfortable with losing per trade. By that I mean, never risk an amount that keeps you up at night thinking about or watching your trades. Remember to take small losses and that you are going to have losing trades; it’s just part of doing business in the Forex market.

6. “I trade according to what the market IS doing, not what I think it ‘should’ be doing”

We want to trade what we actually see on our Forex price charts, not what we “think” should happen or what we “want” to happen. At the end of the day, it doesn’t matter what you want the market to do; it’s going to do what it wants, so your job is to learn how to read its price action and take advantage of it, not fight against it.

7. “I will only take trades that give me a reward which clearly outweighs my risk”

The goal of any trader or investor is to make sure that the prospective reward of a trade clearly outweighs the risk involved. You need to gauge the market structure prior to entering a trade and make sure there is a logical reason for expecting that the risk reward on the trade is at least 1:1.5 or 1:2 or better.

8. “I will find other things to do besides watching my trades after they are live”

There’s nothing wrong with checking in on the market every 4 or 8 hours, but if you are sitting there addicted to your charts like a junkie, you are going to self-sabotage your own trades and probably end up losing a lot of money in the process. We have to learn to let the market “do the work” and just forget about our trades for a while after they are live. The set and forget forex trading strategy is something that I stand by and that I implement in my own personal trading, because meddling in your trades after they are live is an emotional decision and thus it’s usually the wrong thing to do. Find anything to do except watch your charts after you enter a trade.

9. “I am not emotionally affected by my profits or losses”

Both losses and profits have the ability to induce emotional reactions in us. A loss can cause us to want to take ‘revenge’ on the market and try and ‘make back’ the money we just lost. A profit can cause us to become overly-confident or even euphoric, which can cause us to deviate from our trading plan and take a trade that is lower probability than what we normally would take. Either way, you have to always be on guard against making an emotional trade immediately after a trade closes out, whether it was a winner or a loser. The best thing to do is to simply remove yourself from the markets for 12 to 24 hours after any trade.

10. “I try to trade with the dominant daily trend as much as possible”

I know you’ve heard this before, and I know it’s very cliché, but it’s also very true; the trend is your friend. I am often amazed at how many emails I get from traders telling me they are losing money in the markets and simultaneously asking me to comment on the chart they’ve attached to the email that shows a counter-trend trade on the intra-day charts. The easiest way to make money in any financial market is and has always been trading with the dominant trend. There are times when trading counter-trend is warranted, but until you’ve mastered trend-trading you should forget about counter-trend trading. Remember, don’t fight the dominant daily chart trend, instead, capitalize on it and ride the momentum until it ends.

11. “Instead of over-trading, I will be patient and let trading opportunities present themselves to me”

Don’t trade just because you feel like you have to or you want to…make sure there’s a real reason to do so and never trade when your pre-defined trading edge is not present. The downfall of most traders is over-trading, because most traders simply don’t have enough patience to trade forex like a sniper and not a machine gunner.

12. “I’m a professional trader and thus I will not engage in gambling my money in the markets”

Gamblers make random bets in casinos or elsewhere, and traders who don’t have trading plans or who don’t follow their trading edge are also gamblers. It’s really easy to click your mouse and put a trade on and hope to get lucky, kind of like pulling the arm of the slot machine at a casino. The difference is that you can actually develop and implement a high-probability trading edge like price action strategies when trading the markets. So, it’s up to you if you want to be a gambler or a trader.

13. “I will not interfere with my trades without just cause”

This one is similar to number 8, but it’s so important I wanted to touch on it again. Interfering with trades is usually an emotional reaction born out of risking too much or over-trading, both of which cause you to become overly attached to any one trade, which in turn causes you to over-analyze your trades and meddle with them once they are live. There are times when there’s just cause to interfere with your trades, such as a giant pin bar reversal that forms counter to your position, or some other opposing price action. However these instances are rare and it takes time and effort to develop your discretionary trading sense to the point where you can “effectively interfere” in your trades.

14. “News and fundamentals will not influence my trading decisions”

Traders who fall into the temptation to over-analyze the thousands of Forex news variables that occur each day, usually end up losing their trading accounts pretty quickly. All market variables are reflected via the natural price movement of the market, so by analyzing and trying to “figure out” what’s going to happen by reading economic news or watching CNBC you’re simply adding unnecessary and confusing variables to your trading approach.

15. “I am happy to take a profit and I will not be greedy”

Take your profits when your targets get hit, don’t change targets in an effort to try and get “just a little bit more” profit…These attempts to get a “little more profit” are usually in vain, and they usually lead to you letting a winning trade turn into a losing trade. Traders with smaller accounts especially need to take logical profits as they come, in order to build their accounts up and their confidence. If you get a 1 to 1.5 or 1 to 2 risk reward, there’s nothing wrong with taking the money off the table. Don’t fall into the trap of hoping that every trade you take goes on a parabolic run in your favor, the markets ebb and flow, meaning they don’t go in straight lines for very long.

16. “I invest in my trading education & myself”

Investing in your own education is paramount to success in any field. Forex trading is no different; whether it’s a book on trading psychology or the knowledge of an experienced Forex trading coach, learning something each day to make yourself a better trader will only improve your edge in the markets.

17. “I believe in my trading strategy completely and whole heartedly”

It’s critical to your trading success that you learn and trade with a strategy that’s proven and that you personally enjoy trading with. You have to follow it without deviation by remembering the fact that one loss does not negate the whole trading strategy. Don’t jump from one strategy or system to the next just because you stumble upon a few losing trades; losing trades are a natural part of any trading method. The key lies in losing trades properly and making sure you are trading with a strategy that is both simple and effective, like price action.

I trust that you’ve learned something from today’s article and I hope you write down or print out the above daily affirmations and read them out loud to yourself every day before analyzing the markets. Eventually, they will become cemented into your thinking and will thus turn into a habitual part of your trading routine. At that point, you will have transformed yourself from a losing trader to a successful and confident one.

http://www.learntotradethemarket.com/forex-articles/affirmations-improve-your-forex-trading

Tuesday, 8 May 2012

Simon Denham's Daily Market Comment

What traders must try to avoid is extrapolating what politicians say when they are trying to get elected from what they actually do. Monsieur Hollande is very unlikely to implement some of the more aggressive statements in his manifesto. Taxing people 75% above €1m euro would impact tax revenue and employment numbers very negatively.

People should be aware that the bulk of big earners are not in financial services. They are in the vast array of private companies that proliferate across the European landscape. Taxing the earnings of such people would drive investment out of France into more accommodative countries across the globe. The basic question you have to ask is “why would anyone invest, work, risk capital or time, only for the state to take the vast bulk?”

A financial transaction tax would almost immediately drive such business overseas and, whilst people say “so what, financial trading is ‘socially useless’ anyway”, this in all probability would also mean moving the capital behind the trading overseas as well. This certainly would impact on broker/bank balance sheets. It is not as though either the UK or Germany is a million miles away.

On the other hand any attempt to implement some kind of Expansionary Austerity certainly would set markets on edge. Soft Austerity is just another way of saying “do nothing and hope something turns up”. I am afraid that the woes of the Euro zone sovereign debt situation are well beyond this. One of the major problems is that Government expenditure seems to be a virtually un-slayable beast. Companies appear able to actually cut or at least stop expenditure in not just ‘real terms’ but in actuality. But a huge swathe of government outlay (benefits/pensions/capital expenditure) is fixed versus inflation or other factors. To impact outlay would mean a combination of actually cutting salaries and final pensions (even those of people already retired), slaying the dragon that has become the health budgets and maybe deciding that we don’t need to involve Europe in solving the World’s problems.

This said we all know that politicians will continue to make the easy choices until the choice is effectively taken away from them (Greece, Spain, Italy and Ireland), and Hollande risks falling into this camp.

Today sees a bit of a pull back in markets and it is difficult to argue with this. In the current environment the simple route is probably the wisest. The Major European markets are still up nicely on the year so it is not cowardly for investors to pocket some return, take the chips off the table and await events.

The markets had a bit of an exciting opening yesterday as the Far East reacted very negatively to the Euro Elections. Throughout the day some bargain hunting held sway as investors pondered whether anything would really change and ended higher than the close on Friday. Today is seeing a reaction with the Dax sitting just above the previous support at around 6500/10, currently quoted at 6524/25, and technical traders will be looking to see a test of this level. On the up side 6570/75 and 6590/6600 are the hopes for the bulls.

The FTSE, in all of this, remains at the lower end of the years trading range (effectively 5550-5975) at 5635. There is little to really go for in either direction but our clients are getting long in anticipation of a potential confirmation of the range, with the possibility of a move back up towards 5800 and beyond. Only a close below 5550 might change this opinion.

On the currency markets the Euro is starting to fracture a little at the edges but the fear remains that a break up of the periphery might actually increase the value of the Euro as the weight of Germany would no longer be counteracted by the weaker members. For the last few years the effective range has been 1.20-1.46 versus the dollar so meandering around 1.30 and 1.35, as it has done for the last four months, puts us pretty much in the middle of the game. If the Eurozone staggers on into the middle distance building up huge liabilities then the prospect must be that any currency weakness will not be able to accommodate the fiscal burden, whilst politicians try to hold on to their expensively created edifice at all costs. The Garlic belt cannot afford to remain or leave at the moment but the North has an even bigger problem in that they are mortgaging their present for an unquantifiable future.

For the meantime the support is at 1.3000 and 1.2965/75 and then 1.2865/85, on the upside resistance is at 1.3068/78 and above this at 1.3140/50. The longer and medium term falling trendlines are currently around 1.3250 which will be watched very closely if we do manage a rally.

Sterling is currently a general gainer in all of this as money moves out of Europe looking for temporarily less volatile regions. Versus the Euro the pound is now at a three year high but the 1.2400 region proved a high watermark in 2010, and so we have been seeing speculative selling here from our clients with stops above 1.2450.

Gold also remains in recent trading ranges albeit near the bottom. For those of you who love long term momentum the last two big rallies have both failed to make new highs, which has not really happened for a very long time. It seems as though previous peaks are getting harder and harder to overcome. This said there also seems virtually no appetite at all in selling below 1600. With the price at 1626 we can anticipate buyers coming in very soon. Whether they will achieve the same result as in the previous attempts will be interesting.

http://www.capitalspreads.com/simon-denhams-daily-market-comment

Monday, 7 May 2012

Hi and welcome to the 'Which Forex System?' blog.

Yours 'Forexly',

Cliff

Forex market hours - FREE Forex Clock

The Forex market is open 24 hours a day. It provides a great opportunity for traders to trade at any time of the day or night. However, although it may not seem to be very important at the beginning, the right time to trade is one of the most crucial points to being successful in trading on the forex market.

The best time to trade is when the market is the most active and therefore has the biggest volume of trades. More active currency moves will create a good chance to catch the trade and make some profit. A calm, slow market is literally a waste of time — turn off your computer and don't even bother!

Here's a fantastic FREE Forex clock you can download, which tells you in real time when the major markets open (and overlap) and trading is at its most active... CLICK HERE

Friday, 4 May 2012

Hi and welcome to the 'Which Forex System?' blog.

Yours 'Forexly',

Cliff

Regular and Hidden Divergence Explanation

This great little video explains how to spot regular and hidden divergence using price action and some kind of oscillator.

http://www.youtube.com/watch?v=saEGnxz6oUY

Wednesday, 2 May 2012

http://www.youtube.com/watch?v=PcQ4MgFBL2Q