How does an investor set themselves up for success when thinking about a market as large and volatile as the Forex? Also known as the Foreign Exchange market, the Forex allows investors to speculate on the movement of currency exchange rates between different countries. It is impossible to accurately predict the movements of the market all the time but many of the top investors maintain that there are ways to increase your odds of anticipating market fluctuations and capitalizing from them. Here are just a few ways to enhance your chances for success with Forex technical trading:

1. Only trade at end of day
2. Avoid over-trading
3. Do not read FX reports
4. Backtest, backtest, backtest!

All investors are tempted to believe that they must constantly be “in the know” or risk getting caught out of position. Thus, these dedicated investors may sit in front of a computer screen all day and monitor their investments for fluctuations. For those living in North America, the end of the business day is 5 p.m. EST or 2 p.m. on the West coast and this really is the best time to consider trading—and note the word consider!

At the end of the business day, there are two factors in your favor: First, traffic tends to be down so there are fewer chances for price fluctuations. Second, if you wait until the end of the business day, then you can look at information flowing in from the East to help guide your decisions.

Over-trading is basically like going back and back to a casino thinking your odds are actually improving—because they are not! Over-trading increases your chances of jumping into a position too late and getting burned or out of position too early and missing out on profits. Put stops in place that can safeguard you from losing more than you can afford—and then let them alone and relax!

Reading what someone else says about the outlook on the market is going to do one thing: cause you to question your strategy. None of us are going to get it right every time and no one can predict the future so reading those reports can only harm, not help, once you have purchased a position. If you are going to read those reports, do so before buying in—after that, just leave them be.

Investors buy and sell positions based upon their theory of the market and where a particular currency pair is headed. While you should not change your stops while already having a position, you can certainly continue to test your theory by backtesting. People capitalize in the Forex market by identifying trends and buying a position on that trend and riding it for as long as possible. Continuous backtesting helps investors hone their theory and better identify trends quickly and take advantage of them for profit.

The Forex market may be the largest and most volatile—but it also holds the greatest potential for profit. The few tips listed above will help ensure your success in Forex trading and they will greatly enhance your odds of success. Be sure to review them carefully!

Many investors are turning to Forex investing and are using some of the proven best forex indicators as a major portion of their portfolio. Trading forex is unlike normal stocks, bonds, and mutual fund investing. The rewards can be great with less time and risk involved.

This is not to imply that trading Forex is not risky. It can be very risky. Using proven best forex indicators can help you minimize that risk and become a more proficient trader.

Learning about Forex indicators is essential for trading forex. Learning to use the proven best forex indicators may take some time and effort. This time and effort will be well rewarded in the form of increased profits, more trading confidence, and financial stability.

Most forex software comes with several forex indicators. Some of the proven best forex indicators that are used in forex trading are Simple Moving Average (SMA), Exponential Moving Average (EMA), Bollinger bands, Parabolic SAR (stop-and-reversal), Rate of Change, RSI (Relative Strength Index), Momentum, Moving Average Convergence/Divergence (MACD), and ADX,.

*** The Two Favorite Proven Best Forex Indicators ***

Two of the favorite proven best forex indicators are the Simple Moving Average (SMA), and the Bollinger bands.

The simple moving average indicator gives you the average price for a currency during a set period. One example might be the closing aver for a period of the last four or five days.

The Bollinger bands indicators are levels that show the upper level and the lower level of the value of prices. The prices should be between the two bands. This depends on the volatility of the currency price that you are evaluating. Once the price sets a trend towards breaking a band, trading is indicated.

In order to effectively use the proven best forex indicators you must take the time to learn how to read them and understand exactly what the indicators are telling you. Many companies provide education and training sessions on learning how to use forex indicators.

One excellent way to practice and test your knowledge of using forex indicators is with a practice account. Most online trading sites will offer you the chance to open a practice account. This practice account allows you to make real-time trades just as though you were using real money. Its an excellent way to refine your forex skills before you invest your hard-earned dollar.

There are also several online classes and e-books relating to forex indicators and forex trading. Learning all you can about the markets is always advised.

You have heard it often buy dips in bull markets and wait for the market to rise but buying dips is not as easy as it first seems and most traders lose.

Let’s look at how to buy them correctly, avoid losing trades and pile up some good profits.

Ask yourself this question

If you see a level of support and prices are moving down towards it – price momentum and the trend is against you.

So why do you want to buy?

Most traders will say support “should” hold, so get in just above at support and you’re in with good risk reward.

No your not – The markets are not as easy as that.

The fact is that levels of support that “should” hold more often than not don’t hold.

Trader gets stopped out as support is taken out.

Doing this in leveraged markets will soon see your equity wiped out.

The better alternative

Is to look at price momentum and get confirmation that the support level HAS held and prices are moving up again after TESTING support.

You’re not predicting – you’re acting on CONFIRMATION and trading with the trend.

The Best Indicator

The way do this is top use an indicator that measures price momentum and near term strength and the stochastic is ideal and is explained in our other articles.

The way to do this is watch the market move to support and wait for the price momentum to reverse.

This is done by watching for a cross in the stochastic lines with bullish divergence – then you trade.

This way you have higher odds that the support has held and the chances of prices resuming the up trend are greater.

This effectively puts you in with price momentum after a test of pullback support.

Be a savvy trader

If you buy pullbacks this is the way you are getting the odds in your favor and that’s what trading is all about.

The professional traders are not interested in being clever or predicting - they want to trade with price momentum and the trend and get high odds trades and this way will ensure you do to.

There’s an old saying:

“A bottom picker becomes a cotton picker”

So don’t predict get confirmation.

You will then find not only does this method keep you out of a lot of losing trades but will also create some high odds trades and make some great profits to.

It doesn't happen often, but when it does, its tough to contain your excitement. The stock you bought at $0.95 is now worth over $2.30, and you begin to imagine what you can buy with your new found wealth. A car? Down payment on a house? We've heard the trading mantra to let your winners run. So when you are up over 150%, what do you do then? Does the same advice hold true?

The biggest challenge that any trader will be faced with is when to sell. That becomes even more difficult when emotion gets involved. It tough enough fighting the emotion to hold onto a losing stock. It's even worse when facing the decision to sell. You're worried about selling too early, missing out on even more gains, and you're worried that if you dont lock in your profits now, you're going to lose them. Its natural, but, you have to fight it.

So what do you do?

The first thing to remember that while greed is good, too much of a good thing isnt. Pigs get slaughtered. While it may be an over used cliche, its funny how true it is.

You have 3 strategies to choose from:

1. Sell 100% of your position

Nothing wrong with taking your money off the table. Taking your profits is what its all about. The key here is not to look back. Enjoy your profits, turn off your computer, walk away from your computer, and think about how you're going to reward your good fortune.

2. Sell 50% of your position

This is the best way to hedge your bets if you think there is still more upside, while minimizing risk. Now you are risking the same amount of capital that you started with. If it moves lower, then you know what to do with the other half.

If the stock does retrace, and appears ready to make another move, you can re-enter the position while lowering your risk at the same time. If the stock moves from a high of $2.30 and moves back to create support at $2.00, you know where the downside risk is.

3. Don't sell, but wait.

If you are an experienced technical analyst, then just wait for your sell signals. You may not be able to time the top, but you'll know when the sellers are about to leave for the exits.

There is a 4th strategy that you can take, however, it involves a mindset more than anything. If you're like me, its easier to sell if my stop loss point is hit than it is in trying to figure out if there is more upside. What I do, is I take the current price, and use that as my entry price. So if I bought the stock right now, where would I set my stop loss point? If its hit, I sell. If it moves higher, I use the same exercise.

Its important to remember that these strategies work well for the short-term trader. If you're in it for the long haul, you'll have a different set of rules to follow.

If you start thinking about the amount of money you have made, or might be losing by selling slightly lower, do yourself a favor and just sell. Your emotions have the best of you. On the other hand, if play it like you just entered, your focus in on the share price, not the amount of profit you have.

When stock markets worldwide crash and burn, many traders will run helter skelter. Many traders especially the newer ones who has entered some time into the extended bull run of the past few years have never experienced a stock market crash before, and will be surprised at how prices of stocks can fall faster than they have risen.

In all the commotion, can forex trading be a safer haven? Is it worthwhile to migrate to forex trading as a financial instrument of consistent income during a time of great volatility experienced during a stock market crash?

Consider these advantages forex trading has over stocks:

1. A Continuous market

Forex trading is a continuous market 24 hours a day. You can access a market to trade at any time. In that sense, effects arising from stock market crashes or up swings from other international markets has a continuous effect on prices of currencies, however small, and there are no sudden abrupt gaps due to differences in overnight markets from overseas markets.

2. Low Access Fees

Trading in forex is no longer a complete institutional game. The small time trader can access a forex account and start to trade with as low as $25. Check out established forex brokers - they have different types of accounts that meet your needs as a trader.

3. Trading Platform inclusive in most accounts

Within the trading platform provided for you as part of your trading account is a charting interface that allows for you to track your forex trades by means of charts , and can take your orders at the same time. There is no need for you to trade blindly without a live chart interface.

4. Trading to your own preferences

The current crop of currencies and currency pairs provide for day trading and swing trading opportunities across multiple time frames. You can be a day trader in one currency pair and still be swing trading for a longer period for another currency pair, tailoring a trading mix to your own preferences.

5. Easy liquidity

Currency markets are always liquid - you can sell or buy them at split seconds of giving your orders. Trading volumes are important in stocks and shares and you may end up holding some stocks that are illiquid or when volume shrink during stock market crashes and there are no buyers unless you bail out at heavily discounted prices.

Can trading markets ever be "safe"? There is always risk trading in markets, whether it is forex, stocks and shares or futures and commodities. Have the mindset that you are a trader in the forex markets and that trading forex is a business. When you have that mindset, you will seek to apply the best business practices into your forex trading- including the use of the best trading systems that have consistently outperformed the markets, the importance of stop loss and money management, and the power of re-investing as you scale in and out of trades.

Forex trading can be a hard world when you are just starting your trading career and you are in the beginning of the learning curve that will guide you to the goal of becoming a profitable forex trader; someone with the ability to make all the money needed to have a comfortable lifestyle just with the help of the currency markets.

Many forex traders tend to think that in order to become a good forex trader they must use many technical indicators so they can foresee what will happen in the currency markets and then act accordingly to enter the appropriate trade and make a good profit from their ability to read the indicators.

Technical indicators are good and will greatly improve your profitability, but there other ways to approach the world of forex trading that can be more simple but not without great profitable results, and this despite the use of fewer indicators. It’s a fact that forex trading systems that are based on logical, scientifically sound, and well-tested forex trading concepts have been performing extremely well and will continue to do so for many years to come. So you must aim to base your trading career on these kind of systems that on the long run will greatly outperform other kind of systems.

To be successful in forex trading, you only need to do two things: Identify the trend (or have someone or something to identify it for you) & join the trend with the precise timing. That’s really all profitable forex trading is about.

Step 1 - Stop thinking you're going to be rich trading forex in the next 18 months. This is the most dangerous thing that kills most traders. Why is it that it is important that you get that idea out of your head? It will cause you to blow up mini account after mini account.

Don't believe me?

Come back later (several accounts later) . . . you'll believe me then. I guarantee it.

Most small traders start with ideas of getting rich starting with a little stake and turning it into some large number in short order (1 to 2 years). Unfortunately, it doesn't work that way. The experienced market players will take your money.

Step 2 - Now that you've cooled your blood a little, you need to get a good trading method. I'm talking about something old and reliable. You know, along the lines of Fibonacci or trading pullbacks.

You need something simple and proven. There is no need to spend $997 on the latest, whiz-bang system. It's not necessary.

You don't need to be trading something that no one else is trading. After all, think about it. What causes the price of a currency to go up? Buying pressure.

More buyers than sellers. More demand than supply.

Let me ask another question. When you buy do you want the price to go up? Obviously, yes. So you want to buy when others are buying. Since that's the case, why wouldn't you want to trade in a way that others are trading and be caught up in their upward move?

See?

Find an old reliable method. Don't be worried that everyone else is trading it so it won't work anymore. Of course it will, if it was a sound system to begin with.

Step 3 - Practice. To quote a cliché, "Practice makes perfect." You gotta work at it. There is no free lunch.

Do you want to learn more about how I trade? I have just completed my brand new guide, "Forex Trading - What Finally Worked For Me".

In part 1 we looked at how human psychology pushes prices away from fair value.

When there are extreme moves away from fair value you can make a contrary trade to the majority and pile up big profits with low risk.

So what tools do you need? Lets take a look.

As a general rule these tools will work in any market not just forex markets.

What sets ups do you look for?

Generally you want a set up that is the news where there is “no end in sight” to a spike move.

This generally indicates that greed and fear have taken hold and the market being looked at is emotionally driven and away from fair value.

This happens all the time:

The recent spike in crude oil, the 87 stock market crash and many others including in the forex market.

First place to start

Is the chart look for huge price spikes in short time spaces accompanied by “experts” and the news telling you there is no end in sight.

Now delve a bit deeper to see the true picture.

Useful technical tools are:

RSI, Sochastics and Bollinger bands

Then add in these sentiment tools to the mix.

% Bullish

This indictor is a poll of people, expert’s, brokers etc that have a view or interest in the market.

When this poll indicates above 70% are bullish the market is in overbought territory and when below 30% is in oversold territory.

In the currency markets we like to look for even more extreme readings of below 20% and above 80%

Commitment of Traders Net - Traders Position Report

This is a tool used for years by futures traders and shows the breakdown of open interest among three main participants.

We will explain what it means in a minute buy here is its definition of the groups.

Hedgers – The smart money commercial traders

Large speculators – These are normally large funds with reportable positions

Small speculators everyone else.

The commercials are long term traders and are close to the fundamentals and move very slowly – they are hedging not speculating and not influenced by greed or far and are the “smart money”.

Speculators on the other hand, both funds and small speculators, are driven by greed and fear

If you see a set up where commercials start to move the opposite way to speculators at a market top or bottom and hold an opposite extreme, then prices have moved to far from fair value.

With the commercials taking and building the opposite position to speculators in a rampant bull or bear market you know prices are probably due to re bound.

You must only use extremes with this tool and this normally means 8 months to 2 years.

Breaking it down

Study chart first, look for experts telling you there is no end in sight to the move, then look at % bullish and then net trader report.

Finally, use the technical indicators to confirm the move.

These moves do not happen often.

Maybe a few times a year.

But when they do

You can zero in on a contrary trade that not only offers huge profit potential but offer low risk.

When the world markets, including the stock markets started to slide a few days ago, many experienced traders would only smile. Not that they were not affected, but they were smiling because they knew markets do go up and come down. It is only at what point in time is it necessary for a trader to quit a trade that has gone wrong- and these experienced traders could smile because they knew when to quit the markets, irrespective whether it is the currency markets, the stock market or the futures and commodities market.

Whether it is a smile or a smirk, these experienced traders have a good reason to do so.

Because when you quit at the appropriate moment, before a market collapse, you would make a lot of money getting out of the markets before the big drop. Those who quit immediately on the confirmation of the drop would not have done much worse, because they would also salvage a large part of their gains that have been obtained over the many months the markets have gone up. It is only those that hold on to their stocks, or shares or financial instruments they are investing in, that will feel the pain as the values of their holdings start to erode... and fall further, and further.

So the big question to ask today is"When exactly is the time to abort a trade?"

Many adopt stop losses, or make a certain cut off point to get out of their stocks.

So let us have some instruction today on the effective way to get out, or the correct timing to abort a trade.

There are two main ways to abort a trade.

The first way is to fix a time determinant to get out of a trade.

For example, for the day trader, if he or she has a basic understanding of a chart pattern leading to a trade, and believed that the chart pattern will work, and has entered a trade based on that chart pattern, but the conditions for that pattern to perform is no longer present, then he must immediately quit the trade, especially if a set number of trading bars have occurred.

For example, if you identify a break out pattern of an ascending triangle has occurred, and you have opened a trade by buying, but soon after you have purchased, your expected outbreak pattern has not occurred after 3 bars, then you may wish to abort that trade when 3 bars have occurred and yet the outbreak has not occurred.

When the time determinant as signified by the 3 bars have passed, it is easy to recognise the conditions for the trade have not occurred and you must then terminate or abort the trade.

The second way to know when to abort a trade is to do so when there is a pattern failure. Again, using the breakout of an ascending triangle as an example, if the price has broken out of the triangle, but then has fallen back into the triangle, signifying a failed pattern, then the conditions for the expected pattern have changed and it is no longer feasible to hold on to the projection of an ascending triangle. In other words the pattern has simply failed and it is the best time to abort the trade immediately.

Any delay is going to hurt you financially. It is wisest to quit a trade when the expected conditions are not fulfilled. Markets have a way to hurt the trader who procrastinates and wastes the earlier chances to get away with a profit, no matter how small.

Here we are going to look at two trading opportunities last week we banked a great profit in the British Pound. This week we are going to look at the US Dollar V British Pound and Japanese Yen.

Lets look at these two set ups and simple method to profit from them.

For charts we are using the free service futuresource.com. We are using Cash charts, although same logic applies to futures and this is being written Monday AM CET 05 March

British Pound

If you saw our previous report you will see we banked a great short profit in the Pound and now were looking at it from the long side in line with the longer term trend, with the same method.

Daily chart shows short term weakness and prices are moving to the 19000 level.

The fall has been quite strong and the above is key short term resistance to key off.

Bollinger band has been penetrated, RSI is becoming oversold (30.76) stochastic momentum is weak and oversold.

It’s a simple trade.

Look at 19000 level to hold and upside momentum to re assert itself.

The trick for entry is to watch the stochastic momentum and watch a cross to the upside with bullish divergence to indicate strength in the Pound.

Japanese Yen

We have clearly defined nearby support in the dollar at the 11400 level

Prices are rapidly closing in on this level of support.

We have bottom Bollinger band taken out, RSI oversold (28.8) and stochastic momentum weak but not oversold.

Again it’s the same set up:

Dollar strength and resumption of up trend would be indicated by a cross of the stochastic with bullish divergence. A close below 114000 means all bets are off.

Right or wrong keep in mind the following:

These trades look good from a risk reward point of view and have clearly defined levels where the above trading scenario would be negated.

In trading it’s all about risk reward keeping losses small and targeting bigger profits with high probability set ups.

The British Pound trade we were correct with and made nice profit, but even if we were wrong the set up fitted the above criteria, as do these two trading set ups.

Take a look at the scenarios for yourself and see what you think.