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Do you want to make larger and easier profits with your online day trading? Are you looking for a day forex guide to profitable trading of stocks, bonds, mutual funds, and currency online? Here are my top 3 hints to day trading profits.

Hint #1 – Balance your portfolio

You have to maintain a strong balance between long term investments and short term investments. Make sure that you have a large chunk of your money set aside in safer investments that will achieve gains over 10 years or so. Also make sure that your calculated riskier investments for short gains are substantial.

I like to put about 30% of all my investments into 3 different long term stocks, 2 mutual funds, and I buy bonds from time to time also. These are all safer investments and will allow me to retire sooner rather than later.

Hint #2 – Do your research

I like to know what I am putting my money into. I like to know that the company or companies I am investing is have a strong management team, a product that fills a need, and are going to profit over time. I have certain criteria that I follow in order to fit a company into my portfolio

Hint #3 – Watch the trends with young people

Our future is held in our young people and they will set the trends that can make you a ton of money. If you were to invest in the next hottest product when the stock is first offered and then, sell right before it goes out of style, you could be the proud new owner of many Benjamin Franklin’s ($100 bills).

Forex Trading continues to attract many people because of the quick profits that can be generated and the apparent ease of trading in the forex market. You see a neighbor or co-worker working only a few hours a week. And you see that they are living quite well. You find out they are traders and it is hard not to get excited and want to jump right into Forex Trading.

My advice is to hasten slowly. You need a solid foundation to reap the rewards of Forex Trading. Without some basic training and an understanding of the markets, there is an extremely good chance that you will fail. And the failure can be expensive.

You can gain a forex trading education on a do-it-yourself basis or take advantage of the experience of experts. The first method is not recommended. And you need to carefully evaluate any forex trading courses you buy. The problem with most forex training is that once you have studied a particular method, the odds are still against your success. Using indicators, subscribing to signal providers and buying "black box" systems still does not work for 90% of traders.

Veteran trader Avi Frister has taken a different approach and created his revolutionary Price Driven Forex Trading (PDFT) method. Frister teaches this method in his course "Forex Trading Machine". He teaches methods that are innovative, different and original. His strategies are not used by 99% of the traders.

But they are used by the top successful forex traders.

In Frister's own words:

"My objective as a trader is ALWAYS being in that top 1% group of traders and this is why I developed Price Driven Forex Trading. PDFT is the outcome of 11 years of trading, learning, testing, creating and designing and now a select group of traders can have access to this amazing Forex trading method."

"Price Driven Forex Trading (PDFT) is a method of trading the forex market without using any type of indicators, support or resistance levels, moving averages, pivots, oscillators, fibonacci, trend lines or ANY other trading tool you can think of. PDFT only uses the price of the currency pair and a time element. That's it!"

Forex Trading continues to attract many people because of the quick profits that can be generated and the apparent ease of trading in the forex market. You see a neighbor or co-worker working only a few hours a week. And you see that they are living quite well. You find out they are traders and it is hard not to get excited and want to jump right into Forex Trading.

My advice is to hasten slowly. You need a solid foundation to reap the rewards of Forex Trading. Without some basic training and an understanding of the markets, there is an extremely good chance that you will fail. And the failure can be expensive.

You can gain a forex trading education on a do-it-yourself basis or take advantage of the experience of experts. The first method is not recommended. And you need to carefully evaluate any forex trading courses you buy. The problem with most forex training is that once you have studied a particular method, the odds are still against your success. Using indicators, subscribing to signal providers and buying "black box" systems still does not work for 90% of traders.

Veteran trader Avi Frister has taken a different approach and created his revolutionary Price Driven Forex Trading (PDFT) method. Frister teaches this method in his course "Forex Trading Machine". He teaches methods that are innovative, different and original. His strategies are not used by 99% of the traders.

But they are used by the top successful forex traders.

In Frister's own words:

"My objective as a trader is ALWAYS being in that top 1% group of traders and this is why I developed Price Driven Forex Trading. PDFT is the outcome of 11 years of trading, learning, testing, creating and designing and now a select group of traders can have access to this amazing Forex trading method."

"Price Driven Forex Trading (PDFT) is a method of trading the forex market without using any type of indicators, support or resistance levels, moving averages, pivots, oscillators, fibonacci, trend lines or ANY other trading tool you can think of. PDFT only uses the price of the currency pair and a time element. That's it!"

The best forex trading advice starts with treating it like a business, keeping in mind that you are going against highly trained professionals who trade in the forex market for a living.

In that regard, you must follow a tested and proven forex trading system. Now, you may start out with a forex day trading method that generates profitable trades right away, or you may not.

Quite frankly, it doesn't matter much to your long term success, as losing trades are a normal and expected cost of doing business. With that stated, your objective should simply be to have far more winning trades than losing trades consistently.

The forex trading advice you ultimately decide to implement to execute trades should put the odds of a winning trade in your favor using a trading system designed to capture 20-50 pips per trade during the first 1-3 hours following specific key economic announcements.

Forex markets provide multiple opportunities to trade and profit within a 24 hour period. This can be a two edged sword at times because it can mean very late night or early morning trades.

Let's face it no one really wants to monitor trade positions 24 hours a day, five days per week. The stress and fatigue factor is far too great to effectively trade at a profitable level over time.

You can greatly reduce stress and improve your forex trading using an economic calendar to schedule trades for no more than an hour or so daily. Get in, get out and shut it down for the day with fewer losses and more trades in your favor.

Avoid losing thousands of dollars of your hard earned money trading with free or cheap tools, software and education materials unless you are absolutely certain they are the very best on the market. Expect to invest at least a few hundred dollars for the proper trading tools.

Forex trading tools that deliver fast and accurate data in a timely manner is the key ingredient to trading success. Having access to reliable information at the right moment often determines whether a trader makes or loses money.

The forex trading platform you ultimately select to trade forex should provide prices in real time with the same liquidity offered to institutional traders such as hedge funds. You can be assured your dealer-broker has staying power if it can handle the volume of liquidity required by commercial traders.

Introduction

In this article we'll take a look at two related practices that are widely used by traders called Backtesting and Data Mining. These are techniques that are powerful and valuable if we use them correctly, however traders often misuse them. Therefore, we'll also explore two common pitfalls of these techniques, known as the multiple hypothesis problem and overfitting and how to overcome these pitfalls.

Backtesting

Backtesting is just the process of using historical data to test the performance of some trading strategy. Backtesting generally starts with a strategy that we would like to test, for instance buying GBP/USD when it crosses above the 20-day moving average and selling when it crosses below that average. Now we could test that strategy by watching what the market does going forward, but that would take a long time. This is why we use historical data that is already available.

"But wait, wait!" I hear you say. "Couldn't you cheat or at least be biased because you already know what happened in the past?" That's definitely a concern, so a valid backtest will be one in which we aren't familiar with the historical data. We can accomplish this by choosing random time periods or by choosing many different time periods in which to conduct the test.

Now I can hear another group of you saying, "But all that historical data just sitting there waiting to be analyzed is tempting isn't it? Maybe there are profound secrets in that data just waiting for geeks like us to discover it. Would it be so wrong for us to examine that historical data first, to analyze it and see if we can find patterns hidden within it?" This argument is also valid, but it leads us into an area fraught with danger...the world of Data Mining

Data Mining

Data Mining involves searching through data in order to locate patterns and find possible correlations between variables. In the example above involving the 20-day moving average strategy, we just came up with that particular indicator out of the blue, but suppose we had no idea what type of strategy we wanted to test? That's when data mining comes in handy. We could search through our historical data on GBP/USD to see how the price behaved after it crossed many different moving averages. We could check price movements against many other types of indicators as well and see which ones correspond to large price movements.

The subject of data mining can be controversial because as I discussed above it seems a bit like cheating or "looking ahead" in the data. Is data mining a valid scientific technique? On the one hand the scientific method says that we're supposed to make a hypothesis first and then test it against our data, but on the other hand it seems appropriate to do some "exploration" of the data first in order to suggest a hypothesis. So which is right? We can look at the steps in the Scientific Method for a clue to the source of the confusion. The process in general looks like this:

Observation (data) >>> Hypothesis >>> Prediction >>> Experiment (data)

Notice that we can deal with data during both the Observation and Experiment stages. So both views are right. We must use data in order to create a sensible hypothesis, but we also test that hypothesis using data. The trick is simply to make sure that the two sets of data are not the same! We must never test our hypothesis using the same set of data that we used to suggest our hypothesis. In other words, if you use data mining in order to come up with strategy ideas, make sure you use a different set of data to backtest those ideas.

Now we'll turn our attention to the main pitfalls of using data mining and backtesting incorrectly. The general problem is known as "over-optimization" and I prefer to break that problem down into two distinct types. These are the multiple hypothesis problem and overfitting. In a sense they are opposite ways of making the same error. The multiple hypothesis problem involves choosing many simple hypotheses while overfitting involves the creation of one very complex hypothesis.

The Multiple Hypothesis Problem

To see how this problem arises, let's go back to our example where we backtested the 20-day moving average strategy. Let's suppose that we backtest the strategy against ten years of historical market data and lo and behold guess what? The results are not very encouraging. However, being rough and tumble traders as we are, we decide not to give up so easily. What about a ten day moving average? That might work out a little better, so let's backtest it! We run another backtest and we find that the results still aren't stellar, but they're a bit better than the 20-day results. We decide to explore a little and run similar tests with 5-day and 30-day moving averages. Finally it occurs to us that we could actually just test every single moving average up to some point and see how they all perform. So we test the 2-day, 3-day, 4-day, and so on, all the way up to the 50-day moving average.

Now certainly some of these averages will perform poorly and others will perform fairly well, but there will have to be one of them which is the absolute best. For instance we may find that the 32-day moving average turned out to be the best performer during this particular ten year period. Does this mean that there is something special about the 32-day average and that we should be confident that it will perform well in the future? Unfortunately many traders assume this to be the case, and they just stop their analysis at this point, thinking that they've discovered something profound. They have fallen into the "Multiple Hypothesis Problem" pitfall.

Introduction

In this article we'll take a look at two related practices that are widely used by traders called Backtesting and Data Mining. These are techniques that are powerful and valuable if we use them correctly, however traders often misuse them. Therefore, we'll also explore two common pitfalls of these techniques, known as the multiple hypothesis problem and overfitting and how to overcome these pitfalls.

Backtesting

Backtesting is just the process of using historical data to test the performance of some trading strategy. Backtesting generally starts with a strategy that we would like to test, for instance buying GBP/USD when it crosses above the 20-day moving average and selling when it crosses below that average. Now we could test that strategy by watching what the market does going forward, but that would take a long time. This is why we use historical data that is already available.

"But wait, wait!" I hear you say. "Couldn't you cheat or at least be biased because you already know what happened in the past?" That's definitely a concern, so a valid backtest will be one in which we aren't familiar with the historical data. We can accomplish this by choosing random time periods or by choosing many different time periods in which to conduct the test.

Now I can hear another group of you saying, "But all that historical data just sitting there waiting to be analyzed is tempting isn't it? Maybe there are profound secrets in that data just waiting for geeks like us to discover it. Would it be so wrong for us to examine that historical data first, to analyze it and see if we can find patterns hidden within it?" This argument is also valid, but it leads us into an area fraught with danger...the world of Data Mining

Data Mining

Data Mining involves searching through data in order to locate patterns and find possible correlations between variables. In the example above involving the 20-day moving average strategy, we just came up with that particular indicator out of the blue, but suppose we had no idea what type of strategy we wanted to test? That's when data mining comes in handy. We could search through our historical data on GBP/USD to see how the price behaved after it crossed many different moving averages. We could check price movements against many other types of indicators as well and see which ones correspond to large price movements.

The subject of data mining can be controversial because as I discussed above it seems a bit like cheating or "looking ahead" in the data. Is data mining a valid scientific technique? On the one hand the scientific method says that we're supposed to make a hypothesis first and then test it against our data, but on the other hand it seems appropriate to do some "exploration" of the data first in order to suggest a hypothesis. So which is right? We can look at the steps in the Scientific Method for a clue to the source of the confusion. The process in general looks like this:

Observation (data) >>> Hypothesis >>> Prediction >>> Experiment (data)

Notice that we can deal with data during both the Observation and Experiment stages. So both views are right. We must use data in order to create a sensible hypothesis, but we also test that hypothesis using data. The trick is simply to make sure that the two sets of data are not the same! We must never test our hypothesis using the same set of data that we used to suggest our hypothesis. In other words, if you use data mining in order to come up with strategy ideas, make sure you use a different set of data to backtest those ideas.

Now we'll turn our attention to the main pitfalls of using data mining and backtesting incorrectly. The general problem is known as "over-optimization" and I prefer to break that problem down into two distinct types. These are the multiple hypothesis problem and overfitting. In a sense they are opposite ways of making the same error. The multiple hypothesis problem involves choosing many simple hypotheses while overfitting involves the creation of one very complex hypothesis.

Trading the Forex markets has become one of the most popular activities among people from all walks in life but with the solid interest of gaining financial freedom away from the traditional environments of the office work.

But Forex trading is not always easy. You will need a good amount of knowledge related to how the currency markets behave in order to become a profitable forex trader. It is the dream of every trader to have a forex trading machine that would help them once the time to make a transcendental decision in the markets comes.

Now a days a veteran trader has been spreading the word about an original and quite revolutionary way to trade the forex markets. It is a system based on what is called Price Driven Forex Trading (PDFT).

He claims that this is at last that elusive Forex Trading Machine that has been dreamed by many traders for many years. PDFT is a system based in three trading strategies that are able to produce consistent and systematic profits for the trader that follows PDFT to the letter.

Many veteran traders agree that in order to be successful in the world of forex trading you must be original, innovative and different in your trading systems. And this is the basis of the Forex Trading Machine based on a different approach to currency trading, this is by the use of PDFT which is a method of trading the forex market without using any type of indicators, support or resistance levels, moving averages, pivots, oscillators, fibonacci, trend lines or any other trading tool you can think of. Price Driven Forex Trading only uses the price of the currency pair and a time element. Quite innovative I would say.

The foreign exchange, FX or forex market, as we know it has been evolving for hundreds of years. It is believed that the concept of banking first arose in ancient Mesopotamian times. Royal palaces and temples were used to store harvested commodities which in turn created the need for receipts. These receipts were used for transfers to those who made the deposits and to third parties. The very same banking and receipt business was also used in ancient Egypt. Receipts were often used to settle debts with priests, tax collectors and exchanged with traders. It wasn’t until the early forms of coinage came about that we saw the first real currency traders. As empires were divided, expanded, conquered and founded the currencies of different cultures had to be exchanged for one another.

During the Middle Ages paper bills replaced coins as the currency of choice. This made foreign exchange much easier. At this point things remained relatively stable in the World of foreign exchange until the First World War.

At the end of WWI there was a brief period of massive currency speculation. The official view on currency speculation at this point was decidedly negative but no regulations were ever drawn up. This speculation came to a crashing halt with the arrival of the ‘Great Depression’. This World recession effectively killed any growth in FX speculation as disposable income was at a premium. Sentiment returned to favouring stable exchange rates until the Second World War brought about some factors that would force governments to regulate their currency rates.

The Bretton Woods Accord

Until the start of WWII, the British Pound Sterling (GBP as we know it today) was the World’s most prominent currency. It was against the GBP, and not the dollar, that most other currencies were compared. However, the arrival of war saw a massive Nazi counterfeiting campaign aimed at devaluating the Sterling. The campaign worked and the World’s confidence in the GBP was shaken. At this time neither the United States nor its Dollar Currency had endured this devaluing campaign or the strain of War on domestic infrastructure. The US Dollar had been out of favour due to the massive stock market crash in 1929 but the economy had recovered and it was seeing a boom cycle once again.

At the end of WWII the World’s economy, with the exception of the US, was in disarray. Representatives from the US, Britain and France met at Bretton Woods, New Hampshire with the objective of creating an infrastructure that would allow the rebuilding of the World’s economy. The result was the Bretton Woods Accord.

The Accord decided that the US Dollar would become the World’s benchmark and all other countries would measure the value of their currencies against it. Part of this agreement was the Gold Standard which fixed the price of Gold at $35 an ounce. All other currencies were pegged to the dollar at a certain rate. This rate was not allowed to fluctuate more than 1% in either direction (higher or lower). If a fluctuation greater than 1% did occur then the relevant central bank had to enter the market and restore the exchange rate to within the accepted band. There are mixed opinions as to whether the Bretton Woods Accord was successful in restoring economic stability to Europe and Japan. Despite this, the agreement eventually failed in 1971. It was superseded by the Smithsonian Agreement.

The Smithsonian Agreement

The Smithsonian Agreement tried to succeed where Bretton Woods had failed. Rather than give a 1% margin, greater room for manoeuvre was introduced. Not long into this agreement, Europe made its first attempt at breaking free from the Dollar dominated system. In 1972 Europe formed the European Joint Float. Member nations included West Germany, France, Italy, the Netherlands, Belgium and Luxembourg. This agreement was very similar to Bretton Woods but with a larger band for rate fluctuation.

Just as their predecessors had failed, these agreements were flawed and subsequently fell apart. However, this time there was no new agreement to take its place. For the first time since WWII there was a ‘free float’ system in place. This was not the result of some Genius planning; it simply existed because there was nothing else to replace it. The value of each currency is now governed completely by the laws of supply and demand. Large banks, private companies and individual speculators are all active participants in the Forex market. The Internet boom and the increasing ease of access to foreign exchange has further increased participation, especially that of individual speculators.

However this lack of official restraint hasn’t stopped central banks from trying to manipulate the value of their currencies in the free float system.

The European Monetary System

The European Economic Community (EEC), as it was known in its early days, established the European Monetary System in 1978. Its purpose was to regulate the value of EEC members’ currencies against each other. A rate fluctuation band of 2% was introduced. As previously seen in the Bretton Woods and Smithsonian agreements, central banks were required to maintain this band. The problem with this system was that it failed to recognise the number of private speculators that were now active participants and their cumulative financial might. This mistake was very costly for the Bank of England (BOE). In 1993 speculators made an attack on the GBP forcing the bank to intervene. The financial attack was so strong that the BOE deemed currency regulation too expensive and withdrew from the European Monetary system. This led to the collapse of the system leaving the free float that has remained unchallenged to the present day.

Introduction

The importance of well-placed stop orders to a FOREX trader cannot be over emphasized. The margin percentage required in a typical FOREX account is so small that a fully leveraged trader could easily lose a substantial amount of their net worth from a single position if it moves too far in the wrong direction. The name of the game is risk control and the key tool for protecting your account from substantial losses is the stop order.

That being said however, I do know some traders who claim never to place stops. Usually the rationale for this is that their trades are very short term (on the order of just a few minutes) and they are watching the market during the entire trade, finger twitching on the exit trigger ready to bail out at the first sign of trouble. Even when I counter this with arguments that a stop will provide the discipline needed to avoid the "deer in the headlights" syndrome or that stops can protect them when their system crashes, I still meet with stern resistance to the use of stops. Eventually I came to understand that this resistance can stem from the frustration of being stopped out of good trades much too often.

And frustrating it is! In 2004 I opened up my first FOREX account with just a few hundred dollars in order to test out the waters a bit. I figured, "OK, how hard can this be? I'll just set my targets at three times the distance to my stops so I'll have a 1:3 risk/reward ratio. Then, all I need to do to make a profit is be right more than 25% of the time on my trades. Any dolt can do that, right?" Well this dolt apparently couldn't, because about a dozen trades later I think I may have hit my target about twice. Every other trade was stopped out. Unbelievable. What was happening?

There are a couple of possible explanations for this. The first and most obvious is that I was simply setting the stops too close. This may have allowed the random "noise" of the price movements to trigger my stops. Another possibility is that either my broker's dealing desk or some other heavy hitter in the market was engaging in "stop hunting". I've written a more complete article on this subject already, but basically this involves market players who try to push the price to a point where they think a lot of stop loss orders will be triggered. They do this so that they can either enter the market at a better price for themselves or to cause a snowballing move in a direction that benefits their existing positions.

Let's deal with the first issue of placing stop orders too close. Traders may do this for a couple of reasons. Some may do it because they are following a risk control rule involving the maximum loss that they are willing to take, while others are simply choosing inappropriate places on the chart for the stop. We'll look at each of these cases in detail.

Stop location determines position size, not the other way around!

Money management and risk control rules are great, but make sure you apply them in the correct sequence. Let's say you have a rule that you will risk no more than 1% of the account equity, or $50, on a single trade. You decide to take a short position on 10,000 NZD/USD at 0.6600 which means that each pip of movement will equal $1.00. So your stop should be 50 pips back at 0.6650 right?

Well actually...not really. This reasoning is backwards. We took our money management rule and our position size and used those values to calculate our stop loss point in the market. But this doesn't really make sense because why should the market care what your rules and position size are?

We really should be placing the stop loss at some logical place based on the chart. Let's say we look at the chart and see that a good place for a stop would actually be 80 pips back at 0.6680 (we'll discuss how to find good places for stops next). This presents a problem because if our position size is 10,000 then our potential loss is $80 which violates our money management rule. That's not acceptable, so how can we put the stop at the stop at the logical point of 0.6680 while still only risking $50? Well, we only have three variables to work with and we've already decided on our maximum loss and stop location. The only other thing we can change is position size, and that's what we need to do. If we cut our position sized down to 50/80 x 10,000 = 6,250 then we're all set. We can put our stop in a logical place, while still following our rule of only risking $50.

In summary, let your stop location determine your position size, not the other way around!

Where should the stop be?

Every trader will have different methods for placing stops, but a common theme among many of them is that a stop should be in a place where it will only be hit if you are obviously wrong about the trade direction. Many traders just look for the nearest local high/low or resistance/support line and place the stop on the other side of it. However, prices exhibit false breakouts all the time, so just because one of these obvious support/resistance points is breached does not mean that the price will continue in that direction.

Any investment involves an element of risk - in fact, it may even be essential to the proper function of world commerce. Foreign exchange, which relies upon the fluctuation of currency and conversion to generate profit, also has the politics and economy of the day to contend with, since a mild change in current affairs can translate drastically to the price and or liquidity of a share. So how can you avoid falling prey to the rigors of such sensitive information and dangerous fluctuation? Initially, you must endow yourself with a comprehensive Forex trading education. With the right training, you can confidently embark on what ought to be a lifelong relationship with foreign exchange, and avoid many of the problems which face - and often defeat - a first time investor.

A good place to begin your trading education is with a practice run. This can take many forms, and perhaps the most obvious is a 'demo account'. You can also accompany friends online or discuss the trading habits of colleagues and monitor those of your friends and fellow investors. Once you've learned the basics, it is easy to be tempted straight out onto the market floor, but the idiom 'practice makes perfect' was never truer than with Forex.

Once you have begun to see a return on your efforts, a Forex trading education will equip you with the skills you need to protect your earnings. Using a moving stop-loss, you can keep your successful position and go some way to capping your current profits. Many newcomers to Forex find that those fluctuations mentioned above can move them swiftly from a winning to a losing position under the first changeable conditions, so guarding your profits is an essential first move. A stop-loss will also help you to limit those unavoidable losses when they do occur.

A good trading education will also help you to monitor the difference between your risk and reward. This ratio is fundamental to the process of understanding and gaining from Forex trading. Calculating it successfully, and making sure you always start with around 2-to-1 or greater, is perhaps the number one difference between a continually successful investor and a brash newcomer who is destined for a fall.

With a sound Forex trading education you'll also become a guru with the interplay between bid price and ask price, the details of the 'spread' and the two business days of reckoning which constitute the interest rollover!

Margaret Dorsey has over 35 years experience in the legal field. She enjoys helping individuals develop and hone their online trading and skills through Forex Trading Education. Her firm belief is anyone can be an accomplished self-starter and develop multiple streams of income.

The best forex trading advice starts with treating it like a business, keeping in mind that you are going against highly trained professionals who trade in the forex market for a living.

In that regard, you must follow a tested and proven forex trading system. Now, you may start out with a forex day trading method that generates profitable trades right away, or you may not.

Quite frankly, it doesn't matter much to your long term success, as losing trades are a normal and expected cost of doing business. With that stated, your objective should simply be to have far more winning trades than losing trades consistently.

The forex trading advice you ultimately decide to implement to execute trades should put the odds of a winning trade in your favor using a trading system designed to capture 20-50 pips per trade during the first 1-3 hours following specific key economic announcements.

Forex markets provide multiple opportunities to trade and profit within a 24 hour period. This can be a two edged sword at times because it can mean very late night or early morning trades.

Let's face it no one really wants to monitor trade positions 24 hours a day, five days per week. The stress and fatigue factor is far too great to effectively trade at a profitable level over time.

You can greatly reduce stress and improve your forex trading using an economic calendar to schedule trades for no more than an hour or so daily. Get in, get out and shut it down for the day with fewer losses and more trades in your favor.

Avoid losing thousands of dollars of your hard earned money trading with free or cheap tools, software and education materials unless you are absolutely certain they are the very best on the market. Expect to invest at least a few hundred dollars for the proper trading tools.

Forex trading tools that deliver fast and accurate data in a timely manner is the key ingredient to trading success. Having access to reliable information at the right moment often determines whether a trader makes or loses money.

The forex trading platform you ultimately select to trade forex should provide prices in real time with the same liquidity offered to institutional traders such as hedge funds. You can be assured your dealer-broker has staying power if it can handle the volume of liquidity required by commercial traders

Trading options is a simple concept to learn but a very difficult one to master. However, in order to become proficient at trading options, you first must completely understand the basics. So what exactly is an option? An option is the right to buy or sell (it depends on the type of option) an asset (like a stock) at an agreed upon price for a fixed amount of time. The two basic types of options are a call and a put. A call is an option that gives you the right to buy a stock at an agreed upon price for a specified amount of time while a put gives you the right to sell a stock at an agreed upon price for a specified amount of time.

Let me give you an example: In your opinion, you think that Microsoft is undervalued at $30 per share. In this case you would want to buy a call on Microsoft at a strike price (the agreed upon price) of 30. The longer an option is good for the more the option will cost. Let's say you decide to buy a 3 month call option on Microsoft with a strike price of 30. This option is likely to cost around $150 for every 100 shares. One option gives you the right to buy 100 shares of stock. To summarize, it has cost you $150 for the right to buy 100 shares of Microsoft at $30 per share anytime in the next 3 months.

Now that you own a call option you want the stock to go up. If Microsoft were to go up to $35 in the next 3 months you could still buy it for $30 per share with your option. This would give you a $500 gain [($35-$30) x 100 shares] from the purchase of 100 shares of Microsoft. If you subtract your option cost of $150, your profit would be $350. You may be able to earn a higher profit by closing your position through selling your option, but to fully explain why would require me to go into much more detail that is not suited for a beginning article on option investing. Of course, if Microsoft were to go below $30 for the next 3 months, you would lose the $150 you spent on the option. When you buy an option, you can never lose more than the cost of the option.

On the contrary, if you think Microsoft is overvalued at $30 per share, you would want to purchase a put option. After you purchase a put option you would like the stock to decrease in value. For example, if Microsoft were to decrease to $25 per share you would still be able to sell the stock for $30 if you have a put option with a strike price of 30. If Microsoft were to go up, you would lose whatever you spent to buy the option. Once again, you can never lose more than the cost of your option when buying an option, regardless of whether it is a call option or a put option.

A few things to keep in mind when buying options as an investment. Basic options require something to happen to become profitable. This simply means that if the stock price doesn't change much, the option will erode in value until the option expires and becomes worthless. Also, an option's value will erode more quickly the closer it is to expiring. Finally, options offer the opportunity for a greater investment return, but with this opportunity comes greater risk.

Being a geek, it's only natural that I'm primarily a technical trader. However, I've never been satisfied with the current state of Technical Analysis (TA) because of the lack of a widespread, rigorous scientific approach to the subject. Here are four main problems with technical analysis that I see:

1. Classic chart-reading is too subjective:

"It's a rising wedge of course!"
"Err, and it has a head and shoulders top kind of embedded in it...or something."
"Actually, I think it's an uptrend with a channel line, which is just part of a larger diamond consolidation formation..."

Yeah, right. The problem here is that human beings tend to look for patterns, so the more patterns that chartists "define", the more likely it is that one or more of them will show up in a chart. There's no confirmed uptrend on the chart? What about a reverse head & shoulders? No? OK, well how about a rising wedge or a falling flag, or maybe a cup with handle, rounded bottom, or double top? Get the idea? If you can't find a pattern, just keep inventing new patterns until one shows up on your charts. This isn't helpful, and the problem is exacerbated by the fact that most of the "patterns" in classic chart reading are not rigorously defined. By this I mean that it would be difficult to write a computer algorithm that describes how to identify every possible instance of the pattern.

One of the major research projects that I've worked on over the past couple of years involves a method of classifying and identifying chart patterns in a rigorous way. This method, called "Bar Pattern Analysis" (BPA), consists of coding certain characteristics of price behavior so that any action on a chart has a unique "string" of code that describes it. This way, there is never any doubt about what pattern we are looking at, keeping everyone on the same sheet of music. I'm still working through some conceptual issues with this approach, and will write more about it in future articles.

2. Few TA indicator "signals" are supported by research:

Technical Analysis does not just consist of classic chart reading however. Many technicians understood the drawbacks of classic chart patterns that I've discussed, and took a great step forward with the construction of indicators. Technical indicators such as moving averages, MACD and RSI provide clear unambiguous signals such as moving average crossovers, overbought/oversold levels and so forth and helped to eliminate much of the "subjectivity problem" with TA. However, not everyone agrees whether a given signal is bullish or bearish. Even when there is agreement, it is usually based only on common beliefs about market behavior or on anecdotal evidence ("See? The Williams %R flashed an oversold signal on GBP/USD here, and the price went up soon after!"). This is not to say that no actual scientific research has been done on TA indicators, but it's far from a common practice. Much of my own work involves the use of statistical analysis to determine whether the behavior of a given technical signal has any significant correlation to future price movements.

The appeal of day-trading and its overwhelming popularity of late stems from its easy accessibility, and promises of easy money.

Trading is a game of probabilities and at any given point in time a move may happen out of nowhere that was totally unforeseeable.

There are few jobs at which it is more difficult to make a living than trading!

Estimates are that 80% to 90% of all those who begin trading today will lose their trading capital within the next 12 months.

However, if you study diligently, read the works of "the masters," plan your work and work your plan, you can make a decent living trading right from your desk at home. With your computer, that is. Officially, "day-trading" is the act of trading during the daily market hours and closing all of your trades before the market closes each day.

To make a living at day-trading, you need the large daily point moves. This is referred to as volatility. Without volatility, a day-trader cannot make money.

You only need to make $100 per day starting with 1 lot. No need to overtrade or be greedy. As your account increases, add the number of lots.

Predicting where the market is going to go.

Not even the professional trader has an idea what is likely to happen to a particular trade, whether it will go in his favor or not. You will never be able to predict the market. So, your best bet is to follow the market, because you certainly aren't going to lead it.

It is very risky for inexperienced futures traders who try to predict the market and speculate without having enough resources or experience.

Lack of understanding leads to rumours, false belief and wild stories.

New traders with PhDs and new traders lacking high school diplomas succeed and fail alike trading. Once you realize that the market is not a thinking entity that has an evil streak that doesn't want you to succeed, you can learn to trade "in the moment".

The markets are always producing information. That information is always what "has" happened, not what "will" happen. The trader, on the other hand, will take this information and then arrive at some bias or belief as to what "may" happen, or what "should" happen, or "will" happen. No two traders are likely to come to the same exact conclusion although the market is providing them all the same information.

If there is a single goal that a trader should have, novice and experienced alike, it should be consistency.

Studies have shown that over 80% of traders do not have a trading plan.

The most successful traders have a methodology or system that they use in a very consistent manner.

Even a bad plan that is used consistently will fair better than jumping from system to system. Consistency is required in deciding the conditions under which you enter trades, exit trades, how much capital you commit to each trade. Traders love excitement, and their view is, if they are in the market they may catch the big move. Well they may - but chances are they won’t.

Once you have a trading plan you need to have the discipline and patience to wait for the right opportunity. You can increase your chances of success greatly by simply waiting for the right trade.

Have a written trading plan with an edge. Start trading, making small gains and becoming comfortable with your feelings, and use discipline as your main weapon.

Systems with a high winning percentage reinforce discipline. If we are trading a system with a low percentage of winners, it becomes increasingly tempting to start skipping trades.

Having favorable odds with your system will help maintain the necessary discipline to operate the system exactly as it was designed.

Patience is a virtue in trading.

There is one rule: never break your rules. Plan your trade and trade your plan.

Remember rule no. 1. This in itself should help keep your emotions in place.

Trading successfully is by no means a simple matter. It requires time, market knowledge and market understanding and a large amount of self restraint

A good trade is made when you follow your trading plan to the letter regardless of a profit or loss result. It is a sign of a disciplined trader.

Have a trading plan that sets out your financial goals and why you are taking on this role of being an active investor. You should also have some personal development goals. Your personal development trading goal must be to become consistent.

A good way to trade is to wait for the market to CONFIRM a trend is under way, and jump on board. You may not buy the bottom or sell the high, but you can catch the major chunk in between.

We can't predict anything the market is going to do. Instead, we react to the market.

Winning traders spend most of their time thinking about how traders will react to what the market is doing now, and they plan their strategy accordingly.

Systems with a high winning percentage are much more rewarding psychologically. No one enjoys losing.

Achieving consistency is no mean feat. As trader John Hayden states: “Indecisive traders will always produce inconsistent behaviour, and consequently inconsistent profits.”

In day trading you are pitting your wits against every other person in the market. Every dollar you make is on the back of someone else's losses.

Every losing trader has failed at trading. Every successful trader has also failed at trading in their past.

It is a very rare individual that can make money off capital loaned - the psychological influences will handicap you.

Day trading is extremely risky. It's simply unrealistic to expect to be able to trade professionally and profitably from day one. Mistakes will be made; lessons will be learned; money will be lost as you learn.

Risk comes from not knowing what you are doing. A good trading plan should go a long way in the direction of trading success.

If you fail to plan then plan to fail, rather "Plan your work and work your plan".

If you violate your trading rules, you are more than likely going to be on the losing side of the game.

Greed Kills!!!! Money goals have to be realistic, clear and specific, and once you've made up your mind to achieve that goal, then go forward and make that goal a reality.

Be patient and let the magic of compounding work.

Don’t trade to feel good or to get high. Handle trading as a serious business.

Day trading is like running any other kind of business. Adequate training, experience, capital and dedication is always required.

Day trading is a full time job - you need to be ready to trade whenever the market shows you a great opportunity.

Limiting your losses when day trading is far more important than making big profits.

Remember, The Trend is your Friend. Never fight the trend. And when in doubt, stay out.

When day trading, set yourself a limit on how much you are prepared to lose on any particular trade, and set your stop loss at that level.

Avoid systems that are complicated. It does not mean they are better, in fact, the simpler the system the better.

It’s important to feel confident with your chosen method of trading and not to change it all the time.

Anthony Robbins has made a living by proving that success starts with a strong desire.

A really important element in trading success is: YOU. Hold yourself accountable if things don’t go the way you want them to. Be disciplined, determined, persistent, and most of all enjoy and have fun.

The benefits of Day Trading are all there for the taking, as with any change of career or indeed any major life change, as long as you go into it with your eyes open, and above all, prepare, then there is no reason why it cannot work for you .

A trainee airline pilot won’t be let loose into the skies without having learnt the skills of flying, so you will endeavour to learn everything there is about Day Trading, whatever it takes to succeed.

It certainly will take intensive studying and a lot of practice before becoming a consistent trader, but the end result of that hard work is an immensely valuable life skill that nobody can take away, and that allows for incredible freedom.

If you can master this single element, taking the next, the next and the next trade, you will be ahead of 99% of all traders. Having the discipline to repeat your proven strategy, day after day, is the single most important facet of successful trading.

"When it comes to trading, your fears will act against you in such a way as to cause the very thing you are afraid of to actually happen."
Mark Douglas, Trading in the Zone

The main reason why people lose money in day trading is because they fear loss.
Courage is moving ahead even though you're afraid.
Discipline and emotional balance is critical to success.
Above all, you need to be able to trust your system completely. You have to feel completely comfortable.

If you have a simple method that will produce a steady, though small, profit regularly - and follow it religiously - you will be the trader who walks away consistently winning. By simply changing the amount of capital you risk in your day trading, you can turn a system from returning 10% to returning a 100% per annum.

Once you have tested and refined your system, it is then possible to enter the market with realistic expectations. It is when we begin modifying our systems without first testing the changes that we risk unknown dangers.

Don’t try to predict outcomes. Just take every clear trade setup. Do not seek ‘certainty’ on trade outcomes, because certainty does not exist in markets.

By taking all of your clear trade setups, the odds are rigged in your favor.

Concentrate on just one or two good setups at the most to make trading more manageable, which will help you to trade better.

When the strategy has too many indicators and conditions, the day trader can be easily confused, and a confused trader has almost no chance of executing successful trades. Use strategies that are powerful, but easy to apply.

Constantly feed yourself with information which helps improve your trading.

Many traders experience stress and frustration because they are trading poorly and lack a true edge in the marketplace. Working on your emotions will be of limited help if you are putting your money at risk and don’t truly have an edge.

Stop loss pricing is the key to becoming a successful day trader. Always focus on limiting your losses, not maximizing your profits. Never add to a losing position. It is a prescription for disaster.

Traders are just as susceptible to overconfidence during profitable runs as lack of confidence during strings of losers.

The surest path toward emotional damage is to trade size that is too large for one’s account. Understand what your personal edges might be. Having an edge in the market isn’t just a slight advantage; it could be the pivotal difference in your success. So it’s very important to list your edges in your business plan.