Wednesday, March 29, 2017

Forex Trading is Goddam Scary Stuff!

Having been trading Forex for close to twenty years has given me some insights into the Forex business. I will share a few things that I have gleaned from my experience.

Without a doubt, the favored introduction for newbies is the Metatrader platform. Many brokers offer it and it is easy to set up on desktop and mobile. The internet is full of ads describing the fortunes to be made in Forex trading.

As soon as the new trader makes his cash deposit, he is ready to make his fortune. Well, maybe he is ready to donate his account balance to the broker.

If the trader does not understand the charts and indicators, there is the opportunity to use a trading strategy devised by someone else…… and for a price.
Surely if someone is selling an expert adviser on the internet it must make money.

Well, not really, most of them fail almost immediately. The new trader then rushes out to buy another ‘Holy Grail’.. and loses, even more, money.

The next step is to follow one of the online trading gurus……. one who spends his time marketing his supposed brilliant money making strategy instead of trading…..
There are hundreds of these gurus just waiting to sign the unsuspecting newbie to a $3,000 course, a course which will leave them earning nothing or, worse, losing their account.

One of the ‘hooks’ that the MT4 brokers use is their bonus….. new traders think of the bonus as a gift, that is, until the bonus period expires and their account gets clobbered.
Many, many traders have been trapped by the bonus offers…..
Those bonus offers entice them to start trading and ultimately lose their money, just as on a gambling site.

Most of the Metatrader 4 brokers are operating in an environment where they are unregulated or ineffectively regulated.
As a consequence, the traders have no recourse when the broker takes advantage of them.
New traders, in particular, are at the mercy of the brokers and some of those brokers are ruthless in how they try to take money from their clients.

Trades, when entered, are often manipulated by the broker so that the broker profits from the spread and also by trading against the client.
Bids are changed as the order is processed, spreads are changed, orders are requoted, there are many devious methods to cheat the traders.

Is there any wonder that few make any money trading forex?
Widely known by the experienced traders is that many Metatrader 4 brokers actually use software that is in the public domain to manipulate their client's orders.
The new traders will be unaware of this situation for a long time until they start to seek answers.

When a Metatrader 4 broker is located in a country such as Cyprus or Belize and is regulated only by a local official....., traders should run away fast.

Have you ever looked at a Forex Broker website and attempted to determine the broker's ownership or financial capacity? Many of the Metatrader 4 brokers have very little information available on their site.. mainly because they have little in the way of assets...... and that could be a disaster for a trader when the markets start to turn ugly.

When huge returns are promised by a Forex money manager...., it would seem very risky, especially when these are individuals other than a regulated broker. Too many of these high-yield schemes end up falling apart and costing the investors huge amounts.

Considering the items in this article, be sure to do due diligence before selecting a Metatrader 4 broker, it will be time well spent.

Good Trading!

Friday, March 10, 2017

Has Gold Halted its Drop?

Today has seen Gold drop in price below what appears to be a key level of $1,200.00 to $1,195.85 and has since recovered back above the $1,200.00 mark.

A stronger US Dollar, buoyed by the NonFarm Payrolls report pushed Gold lower during the session.

Here are some technical charts

Money Management for Forex Trading

Money Management for traders is a subject that has been beaten heavily by many writers and authorities, people make all sorts of claims, some of them make sense and some of them are completely silly.

This topic is one that people will have to evaluate for themselves and draw their own conclusions as to what is going to be right for them and their trading plan.

I am going to list some ideas, hopefully those will trigger the reader to evaluate what is best for him/her to incorporate into their trading plan.

The thing we can not control is what our market will do next, what we can control is what we do. Evaluating what we will do as far as a trade entry is something that we can control and through trial and error and experience we can determine what will work and what will not work. That is an individual thing, not what the guru says, not what the people in the forums say, but what we actually develop for ourselves.

Let’s look at some criteria related to Money Management..

Position Sizing.

There are many theories about this . Some people prefer to use a fixed lot size or a portion of a lot. Others prefer to use a percentage of their account equity or a portion of their account. There are recommendations to use as much as five percent of the account balance or two percent of the account balance. This is an individual decision based on how much risk a trader is willing to take, the size of his account and what he is prepared to lose.
Personally, I am a bit timid and use  two percent of the account equity so that if I am doing well the trade size increases and if I am not doing well the trade size decreases. I might mention that I am quick to reduce the trade size to one percent if lady luck decides to flee for a few days…. One prominent broker recommends no more than one percent trade size.

Stop Loss

Personally a stop loss is mandatory for every entry, and the reason I say mandatory is that I have been tempted to think that I could apply a stop mentally…. Adn thereby lost a lot of money, more than a few times.

Keeping Score

The best entries can go bad, the best traders can have a run of mistakes and poor entries, and if they are not paying attention they can clobber their account very quickly. I suggest a limit of three bad trades and then get out of the market for a while or take the rest of the day for something other than trading.
Taking losses is sometimes devastating and can destroy confidence for tomorrow.
If it is a bad day…… get away from the charts and do something enjoyable and return tomorrow.

Cut Losses, allow Profits to run.

Back to the Stop Loss, through experience you will develop what stop loss is appropriate for the trade entry that you use, hopefully a hard stop. The mistake that many traders make is that they will move the stop again and again hoping that the market will move their way. And that will lead to a disaster.
Many people advocate for a risk:reward strategy for stop loss and take profit. That has to be something that a trader will do his own research on and develop the ratio that works best for him.
In my trading robots I usually attempt to get a ratio of better than 1:2 and hopefully that will lead to some profits……. (robots are not always profitable, even with excellent testing).
Daily Fx has an excellent article here


Forex brokers love to tempt us with leverage…… huge profits with great leverage. And that can quickly be a disaster. We have to use caution in this area. Although a great marketing tool for the brokers, high leverage can be most damaging to a trader.

I will continue this another day as there are many more aspects to Money Managment for Traders.

Good Trading!

AUDCAD as at March 10, 2017 Flag Trading Strategy

This pair is showing a Flag Pattern on the 30-minute chart and may be suitable for an entry.
Please do due diligence on every entry.

Chart courtesy of Forex Trendy.

(This is merely and educational post and in no way is to be used as a trading signal or trading advice. Consult a professional)

US Dollar Index As At March 10, 2017

The #USDX has been drifting lower so far today, however, there are some economic reports due later in the day that could move it up or down.

Price is approaching the Ichimoku cloud which and prevent any significant drop in the price. may offer support.

Later this morning we will see the reports for Average Hourly Earnings, Non-Farm Payrolls, and the Unemployment rate, all of which could have a significant impact.

 Have a great weekend!

Thursday, March 9, 2017

NZDUSD as at March 9, 2017

This pair on the 5 minute chart has a triangle at present, a sell signal.

This chart courtesy of Forex Trendy.

Emerging Forex Patterns as at March 9, 2017

These patterns are currently in effect reflecting a trading opportunity on these daily charts.




Charts are courtesy of Forex Trendy.
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