I have a real passion for trading in the money markets. The flashing screens, the changing candlesticks, the potential of huge financial profits – it couldn’t be better! When I started out I really believed all this, and spent hundreds of dollars on new systems in an attempt to fulfill my dream.

Hindsight, as they say, is a wonderful thing, and with the benefit of time I can look back on my flirtations with Forex trading and I can reflect on what I would do if I could repeat the whole experience again.

Before committing to any trades I would ask myself three key questions:

1. How much time can I regularly put into trading?

Watching the Forex markets can be very time consuming. If day trading, I would need to be certain that I could be at my screens for the duration of peak trading times. For UK markets this would mean between 6.30am and 10.00am, and again between 2.00pm and 4.00pm. Watching the trading screens can be quite tedious, and a certain amount of self-discipline is required.

If trading longer-term markets (i.e. not day trading) then less time is required as trades are opened and then left for a more prolonged period of time. This type of trading is more suitable for potential traders with less free time on their hands.

2. How much stake money can I start with?

The amount of money put up front will obviously affect the potential for decent profits and the possibility of making a living from Forex trading. For example, I have invested in certain systems that clearly promised weekly incomes in excess of $750. However, what wasn’t made clear was the fact that a starting balance of $10,000 would be required!

Other systems have started with very small amounts (between $100 and $500), and through the power of re-investing and compounding have built up relatively quickly to quite sizeable balances.

If slightly more money is available, then considerable gains can be predicted. I have quoted elsewhere that if I could start with a budget of $2,000, and if I could regularly make on average 3 pips a day, then in two years I would have a running balance in excess of $90,000!

3. Can I cope with the emotional side?

Many books have been written about the psychology of trading, and it should never be under-estimated. Emotions can make or break traders. Consecutive winning trades can be really exhilarating, but several losses in a row can be equally devastating.

When losses occur there is a risk of revenge trading, and the desire to make up for lost money can be very strong. It can take a lot of will-power to exit a losing trade, turn off the screens, and walk away. You always believe that the next trade will be the big one.

To be successful in trading requires enormous self-discipline, and an ability to view the money markets as long-term sources of income and not short-term gains.

Will I go back to trading the money markets again? Undoubtedly the answer must be yes. I have a real passion for trading, and one day I will return. However, in light of my questions above, I know what the conditions will be.

1. A consistent trading effort during the peak trading times.

2. A bank of no less than $2000 to begin with.

3. A determination to stick with a trading system, have a long term view, and avoid any temptation to tweak or break the rules.

By clear application of these three conditions I know that there are profits to be made – and trading can also be a lot of fun!

Give it a go, but be careful out there!

Graham

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Graham Bray is an enthusiastic internet marketer, and for nearly five years he has been developing websites as part of his Multiple Income Pathways. To learn more about internet marketing and how you can download a *free report* visit his blog at http://www.easierinternetmarketing.com

Retracement traders often fade the trend. These traders trade directly against the trend at strategic price levels. It is no secret that most of the most successful traders in Forex are retracement traders.

Why are these traders so successful? In most cases trading against the trend is a self taught skill requiring a mixture of having a special psychological, against the trend philosophy, coupled with a intimate knowledge of market behaviour.

Once you have a good knowledge of market behaviour and understand what makes trends stop and reverse these opportunities are not difficult to spot or anticipate. In general turning points occur when there is a huge unexplained volume increase in the market or near announcements or at the opening and closing of markets and at major support & resistance levels.

When retracement trading one can often use much smaller stops than with conventional with the trend trades. This offers exceptional return on risk percentages. This is so as the turning points are so well defined using the approaches mentioned above.

Retracement or turning point trading is the one way that a trader can capture up to ninety five percent of a trend. Turning points techniques can be used as both entries and exits. This makes it possible to catch huge percentages of the total moves.

There are many forex trading techniques that are being promoted and taught. Most are, with the trend techniques that require twenty five to fifty percent of the trend to identify that it is a trend in the first place. Often a reversal of the same magnitude is required to identify that the trend is over.

There are two approaches to trading turning points. You can use the exact estimated turning point as your entry using this approach. This requires a degree of accuracy but can be done when using volume and support based principles. Channel trading often results traders catching most of the move.

The other approach is to wait for some sort of confirmation before committing to the bounce or turning point. Certain approaches force this as the confirmation occurs after the bounce has happened and not at the bounce point. Using candle sticks is a good example of this. You can only enter after the bounce has happened and the spike or candle formation confirms that.

Both approaches have their merits.

There are however many challenges with Trading Turning points or retracements. Psychologically, it is often scary as it is compared with standing on a railway track in front of an oncoming train. It is quite amazing to see the relief on the faces of forex traders new to this concept when they make a profit with their first transaction and overcome this fear.

When you have experienced the low risk, high return benefits and the success ratio, you become soon mopre relaxed with this trading approach. It is often like being very scared of a wild roller coaster ride and then you just want to do it again and again after your first ride.

These types of transactions can fail. One of the biggest fears Forex Traders have about trading is the fear of failure. Some traders using some of these approaches have only a sixty percent success rate and yet they make huge amounts of money. This is so because they make twice or three time more on their winners than they lose on their losers. You need to know how to deal with losing if you are going to trade the forex market.

The concept goes against generally accepted trading “Sacred Cow” Forex trading and training concepts. traders wary of trading directly against the trend Expressions like “let the trend be your friend”. Against the trend techniques are generally not taught as often as with the trend techniques. Retracement trading takes more experience than the indicator based, trending techniques which are seen as being easier and safer to teach to new traders.

Hopefully you will consider the merits of becoming a retracement Forex trader after this article
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Alex du Plooy is a trader for Expert4x ( http://www.expert4x.com ) and has regular live trading webinars to discuss as demonstrate forex trading techniques in action ( http://www.longcandleforextrading.com/ ) . He regularly contributes to videos, articles and systems promoting techniques and trading approaches to help and assist Forex traders.

Trading breakouts can be profitable if you know how to do it correctly. What I mean by doing it correctly is that most breakouts tend to fizzle out or fail when the prices return to where they were before the breakout. However, it happens often the prices will retrace to the level before the breakout and then start moving in the direction of the breakout again.

So what you need is a stop loss strategy that gives the trade a little breathing room. This means placing the stop loss under the last minor low in an upside resistance breakout or the last minor high in a downside support breakout. This stop loss strategy provides the necessary breathing room while trading breakouts.

While trading breakouts, you need to utilize entry filters to distinguish a true breakout from a false breakout. One entry filter entails waiting for a certain minimum price increment before entering into a trade in the direction of the breakout. If the price moves beyond the certain minimum price increment, it means that the momentum is in the direction of the breakout.

Another entry strategy entails waiting for the breakout candlestick or the bar to close. If the breakout candlestick or the bar does not close beyond the breakout level, it means it is a false breakout. If the breakout bar or the candlestick closes beyond the breakout level, wait for the next bar or the candlestick to close beyond the breakout bar or the candlestick extreme in the direction of the breakout. If it doesn’t wait for the subsequent bar or the candlesticks before entering into a trade in the direction of the breakout.

Another breakout trading entry strategy is to wait for the pullback in the downside breakout or the throwback in an upside breakout. As a breakout trader, you can wait for the pullback or the throwback to take place and then enter into a trade in the direction of the trade or you can use it as a secondary entry if the original entry was missed.

The best method to exit a breakout trade is to use a trailing stop loss. Once, the breakout is confirmed by the above strategies and you enter into a trade, simply use a trailing stop that will trailing the price action and take you out of the trade automatically when the momentum slows down and the price action starts to make a retracement. Always use a stop loss as described above so that you don’t get burned out by a false breakout.
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Most inexperienced Forex traders are looking for the perfect entry into a Forex trade. They are looking for the one entry technique that will work in any market condition and will consistently work day in and day out.

They are less concerned about risk management (stop loss placement), money management (lot sizing), finding good exits for profitable deals, and the psychology of trading. They argue that if they can get a good entry the rest will take care of itself.

Most experienced traders can identify with this natural, but short sighted, view of Forex trading one has when starting out. Using one entry technique all the time does not work in practical Forex trading. That is because the Forex market is a dynamic market where the market trades sideways one moment and then starts trending the next. The market is very quite at times (before Asia opens) and highly volatile (after high impact announcements) the next.

Traders often think that one trading strategy and one entry technique is going to make them wealthy beyond their wildest dreams. Another misconception that traders often have is to confuse Forex Trading strategies with entry techniques.

Forex Trading strategies involve all the items mentioned above such as risk management, lot sizing, exit, entries, time of day factors, currency selection, psychology etc. An entry strategy focuses on the way an entry is made and the motivation for making the entry.

So what is the answer? It is important for Traders to know a number of entry and trading techniques. The reason for this is to have a collection of Forex trading techniques which can be used when various trading circumstances present themselves. If you know 1 basic entry technique and the market changes, there are not going to be many trading opportunities for you for a very long time. It is therefore essential that traders have to have a wide range of trading techniques for the many market conditions.

There are not as many ways to enter the Forex as what new traders think. Most entry technique could be classified into breakout and bounces trades, trend and trend continuation trades, momentum trades, horizontal support and resistance based trades, non horizontal support and resistance trades, mathematically calculated entry point trades and trades based on specific market behaviour.

Forex traders will benefit from investing some time and effort to understanding the principles on which the above entry techniques are based and building a repertoire of ways of entering the forex market using those principles. Very often numerous entry techniques will confirm a potential Forex market entry opportunity adding to the potential success of the transaction.

The market changes regularly and being multi skilled by having an entry trading approach that caters for all or most of these changing market conditions will increase trading confidence and stack the odds in a traders favour.
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Alex du Plooy is a trader for Expert4x http://www.expert4x.com and has regular live trading webinars to discuss and demonstrate forex trading techniques in action http://www.forextrading-alerts.com He regularly contributes to videos, articles and systems promoting techniques and trading approaches to help and assist Forex traders. He also contributes to the Simple-N-Easy series.