Business Ideas Centre

Forex Currency trading swindlers often attract customers through advertisements in local newspapers, radio promotions or attractive Internet sites. These particular advertisements may flaunt low-risk high-return investment opportunities in foreign currency trading. They may even offer high paid currency-trading employment opportunities. Be very skeptical when promoters of foreign currency trading claim that their services or account management will earn high profits with minimal risks. Be wary if they claim that employment as a Forex currency trader will make you wealthy quickly.
Avoid opportunities that sound too good to be true. Forex currency trading that involves get rich quick schemes are generally swindles. Retired folks with access to their retirement funds are attractive targets for fraudsters. Once your money is gone, it is almost impossible to get it back. Be very careful of companies that will guarantee you a profit. Be careful as well, if they flaunt extremely high performance. These types of statements are generally false.
If the company tells you that written risk, disclosure statements are routine formalities imposed by the government, stay away from that company! Forex trading is very volatile and can be a huge risk for the uneducated and uninformed. If you cannot afford to lose money then do not get into the Forex currency trading market. Do not use your retirement funds for Forex currency trading; that would be extremely foolish.
Be very wary of online trading, it can be impossible to get a refund but it is very easy to transfer your funds. The internet is an easy way for fraudsters to reach potentially millions of people. The internet also can hide where a Forex trading company resides. If you transfer your money to a foreign location, it may be impossible to get it back.
You must get the background of the company you are dealing with. You should ask for all information in written form. Check with the Better Business Bureau as well. Do not rely strictly on information you here verbally. If you are not completely satisfied or comfortable with the information you find out then just do not deal with that company.
You may here the term ‘interbank’, it refers to a loose network of Forex currency transactions that are negotiated between financial institutions and other large companies. These are usually the only ones investing in the interbank market. So, be careful of a company that indicates that you should trade Forex in the interbank market. This can be a sign of an unscrupulous trading company.
Another term you may here is Margin trading. Margin trading can make you responsible for losses that are greater than the dollar amount you deposited. Many Forex currency traders will ask customers to give them funds, which they sometimes refer to as “margin.” These sums can be in the range of $1,000 to $5,000. Those dollar amounts actually control a far larger dollar amount of trading and customers are not aware of this sometimes. So, in essence do not trade on margin unless you fully understand what it means and what you are doing. You must be prepared to accept losses that can exceed the margin amounts you have paid.

If you buy a currency trading system from a vendor, chances are it won’t make money in line with its track record. Furthermore, if you test your own in most cases it won’t produce the same in real time trading.

Why? The answer lies in curve fitting – if you don’t know what curve fitting is, read this article and it could save you a lot of money.

What is curve fitting?

Curve fitting is when the system rules are bent (curve fitted) to the data, to make it produce a profit. This is very similar to shooting blindly at a barn door with a shotgun and then drawing a bulls-eye around everyone afterwards!

Curve fitting and buying a system

Most of the currency trading systems sold by vendors have great track records in back testing and in most instances never produce the gains in real time.

A hypothetical track record is exactly that:

It’s designed knowing the closing forex prices and of course it’s easy to make a profit when you know the closing price in advance.

Many vendors simply make sure the trading system makes money so they can sell it.

They know it wont work in real time, but that doesn’t matter, their after system sales.

A clue to curve fitted system is:

1. Black box – Where the logic and rules are not revealed.

2. Optimization – This is where the data has to be bent. Clues to an optimized curve fitted system are – unique rules or parameters, for different market conditions or currencies.

The Gamblers Illusion

Of course, on a few years currency trading history there is an apparent order, but just like the roulette gambler who sees number sequences repeating themselves, they will never exactly repeat in the same order again.

Bending the rules and curve fitting to make a currency trading system more profitable is a futile exercise.

If a system is robust and based upon sound logic, it should contain only a few rules and parameters and they should be applied to all currencies and all market conditions.

Of course, not all vendors selling currency trading systems deliberately curve fit, like individual traders back testing their system they do it without understanding exactly what they are doing.

Many individual traders I have seen, back test their systems and make money, but they want to improve profitability, so they simply bend the system to fit the data with lots of parameters and indicators.

When they trade it real time they lose.

They would have been better off with their simpler non curve fitted system!

No snap shot of trading history will produce the same patterns again – it’s an illusion as we have just seen.

When back testing or looking at a system just keep the following points in mind:

1. It should be based around trading the odds.

2. It should be simple with only a few rules or parameters.

3. It should trade all currencies the same way.

4. It should trade all market conditions the same way.

5. If a track record has an absence of drawdown chances are its curve fitted, so if a hypothetical track record looks to good it probably is.

Don’t fall into the trap of curve fitting!

Curve fitting is done by the majority of trading systems sold and most traders when constructing their own fall victim to it.

Curve fitting deliberate or not, is the major reason hypothetical track records that appear to give fantastic growth rates in hindsight fail miserably in real time trading.

Here’s a startling fact: Over 95 percent of the currency trading systems promoted by vendors cause traders to lose their money.

So, how do you find one of the 5 percent of trading systems that make money – better yet, make big consistent profits.

Here are 5 tests you should apply, in order to find the best systems to incorporate in your Forex trading strategy – thus helping you and achieve big currency trading gains.

1. The Track Record

As the old saying goes, “the proof of the pudding is in the eating” – and the first place you need to start with any trading system is the track record.

Look for a system that’s been used by the vendor – and made real dollars, in real trading.

The problem is, you won’t find many systems that qualify.

You’ll normally be given a hypothetical track record. Although these systems haven’t actually been traded buy the vendor, you can see if they’ll work for you, by paying attention to the following points:

. Is it tracked in real time? Some ratings agencies do this and calculate profit and loss. This is almost as good as a real time track record – and well worth considering.

. If the system isn’t tracked in real time, then don’t buy it – move on!

Anyone can produce a track record knowing the closing prices – and most vendors do this – and hope you’re naive enough to buy it. The track records are simply made up, and not worth your consideration.

In conclusion, a currency-trading system either must make real profits, or be tracked in real time – to show that the logic that provides the trading signals is soundly based.

2. The logic

Make sure you understand the logic (even if the system is successful). The reason for this is, you must have confidence in the trading system’s ability to make money – even when it hits a losing streak.

If you don’t understand the system, then you won’t have confidence in it – and you’ll lack the discipline to follow the system. If you don’t have the discipline to follow a Forex trading system, then you don’t really have a system at all!

3. Personality

Some systems require you to make subjective judgements, whilst other systems are totally objective – you must decide which suits you the best. In addition, are you a patient trader? If so, a long-term system will suit you. If you’re impatient, then go for a swing trading system.

You also need to look at the worst peak to valley drawdown, using the systems track record. What is the worst loss you would have taken? – And how long did it take to recover?

Are you comfortable with it? Always assume the worst drawdown is to come – and be prepared for it.

Finally, how much work does the trading system need to operate – and do you have sufficient time to operate the system?

4. Find out about the vendor

How long have they been in business? Are they traders themselves?

Ask many questions – and carefully analyse the responses – to see if the vendor’s answers makes you feel comfortable.

Are they the type of people who you are comfortable working with? Do you think that you’ll get support when you need it? Start asking questions and you’ll soon find out!

5. Guarantee

Never buy a currency trading system without a guarantee of satisfaction.

Most vendors who have confidence in their system will give you a money back guarantee – and sufficient time to test the system. You should also carefully check the terms and conditions of the guarantee – and if you’re not happy with them, pass the system by. Somebody will be offering another new trading system for sale before long!

Final Words

Successful currency trading systems are out there – you just have to find them. If you do find a good trading system, it can pay back the purchase price hundreds, maybe even thousands of times over.

If you are going to trade currencies then you need a currency trading system and below we are going to give you the points you need to consider when building one for yourself which is a lot simpler than many traders believe.

Firs Things First.

Currency trading is a game of odds not certainties so ignore any of the theories or inputs that claim you can predict with science.

So immediately bin Fibonacci, and anything to do with Elliot wave or Gann. They don’t work and won’t help you achieve currency trading success.

Now – its time to get a currency trading system together, that trades the odds and keep this in mind:

Your system should be simple.

It should only contain a few indicators and use support, resistance as its foundation.

It’s a known fact that simple systems work best, as they are more robust in the face of ever changing market conditions.

Make a system to complicated and it has too many elements to break and will lose.

Now here is your currency trading system plan.

1. Base it On Support and Resistance

Make sure that it’s valid i.e. several tests, that if the levels hold or break, their considered important by the market.

2. Use valid Data

That means forex swing trading or trend following, with data long enough that you can calculate the odds. Forget forex day trading systems – they don’t work and never will as the data is too short to be meaningful.

3. Use Breakouts

By all means sell into resistance and buy into support, but if the levels give way remember to:

Buy breakouts!

If you don’t, you will miss some of the best high odds trades.

It’s a fact that most of the best trends start from new market highs NOT market lows. If you don’t know about breakout methodology, its simple to understand and a timeless way of making money, so make it part of your forex education.

4. Confirm Confirm Confirm!

Don’t simply execute trading signals and hope that levels hold or break – confirm them first.

This is one of the major errors novice traders make, they want to predict.

Well, if you predict you are hoping and the market will slaughter you – so make sure you confirm.

Make sure price momentum is going in the direction of your trading signal. If you don’t know about momentum indicators then its time to learn. Start with the stochastic, Relative Strength Index and ADX, There are more but these are excellent ones to start with.

These indicators will confirm and trigger your trading signal so you’re trading with price momentum and the odds will be on your side.

5. Understand Standard Deviation

If you don’t understand standard deviation of price and volatility, you will lose.

Volatility destroys more novice traders than anything else – so learn to deal with it or join the 95% of traders who get wiped out.

REMEMBER

If you understand the 5 points above and work on them, you can build your own currency trading system – it’s not hard to do.

The difficult part about forex trading is not so much getting a method – but having confidence in it and trading it with discipline. If you don’t trade with discipline you will lose and you must have confidence to acquire discipline.

If you build your own system based upon the above points, you will have a logical simple system, which is easy to understand have confidence in, can lead you to big Forex profits and currency trading success.

You currency trading signal is your way of timing the market and determines whether you win or lose and most people lose as they don’t understand one key fact behind their currency trading signal so here it is…

The key factor that will determine whether you win or lose long term with your forex trading strategy is – understanding the logic your signal is based upon and most new forex traders in particular, forget this and never make it part of their forex education.

There is a huge industry today in currency trading, where companies and vendors that will sell you currency trading signals and send them to your mobile, or your email box. Most traders simply take the vendors word for it or simulated track record, that these signals will make money.

The trader has no idea of the logic and as soon as they hit a few losses, they throw in the towel.

The same goes for forex traders who buy forex trading system software that generates trading signals. They again accept a simulated track record of profits and have no idea why the system should work (and in most cases it doesn’t) and again they throw in the towel when they hit a few losses.

If you want to follow trading signals you MUST understand the logic they are based upon and be convinced it is soundly based, so you can follow the trading systems signals through the bad periods to hopefully, enjoy long term currency trading success.

The equation that is vital to succeed in forex trading (if you follow a vendor) or generate the trading signals yourself is:

Logical methodology = Understanding = Confidence = Discipline = Forex trading success.

Today, too many traders follow vendors who produce enticing marketing copy and make up a simulated track record in hindsight and the trader is blinded by greed and fails to check the logic is sound and that they understand it.

Where and when you enter your trading signal is vital to you winning longer term at FX trading and you need to know the logic, to have confidence in it and the discipline to follow the signals through periods of drawdown.

Trading is only partially method, the overriding reason traders lose is lack of discipline.

The best way to succeed in forex is to do your homework and understand exactly how and why your currency trading signal is generated, by learning your vendors system and testing it or even better building your own system.

If you want to learn forex trading the right way you need to understand the logic that your currency trading signal is based upon – PERIOD.

There are many vendors who sell currency trading signals and traders can then use them to make forex profits without having to study the market and of course you can get software to do the same. Let’s look at the best ways to get superior forex timing with these signals.

The first point to keep in mind is – there are a lot of people who will try and sell you currency trading signals and their not traders, their simply marketing organizations and have no trading experience.

To avoid these people and to find out if a forex signal trading service or forex trading system can generate trades that are likely to make you money, look for the disclaimer below – if a vendor uses it or similar one, don’t buy the system.

Here it is read it carefully:

“cftc rule 4.41 – hypothetical or simulated performance results have certain limitations. unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown”.

The one above is a standard CFTC one and it effectively allows anyone to make up a track record in hindsight – knowing the closing prices.

Anyone can do that, even a child – but forex trading is not so simple, we have to trade going forward.

Look for real time track records and get verification.

Even if you are lucky enough to find a forex signal trading service that has a real time track record – you must understand the logic it is based on, otherwise you won’t be able to follow the signals with discipline.

If you don’t have confidence in the logic and the discipline to follow the signals through losing periods (and you will have them) you don’t have a system!

The traders who buy currency trading signal services, are normally traders who are greedy and looking for a fast buck – or traders who are simply naïve. They end up disappointed and lose their money, because there is no easy money to be made in forex markets.

Of course, you wouldn’t expect there to be, with the profits to be made.

THE BEST WAY…

To enjoy currency trading success is to generate your own currency trading signals, by learning forex trading and building your own system which you can be confident in and you can apply with discipline.

While this may sound daunting – its not and you can do it in a couple of weeks, if you work smart and get the right forex education.

Currency trading success is based upon understanding confidence and discipline and the best and most profitable path is to generate your currency trading signals.

If you have the desire to succeed and a willingness to learn you can do it.

Could you make money at international currency trading? The answer is yes – but you need to understand a few key points as, it’s a well known fact that 95% of traders fail. So let’s look at the advantages and how to avoid the pitfalls and enjoy currency trading success…Anyone can trade – but most fail and first you need to learn currency trading the right way and get yourself a solid forex trading education. First avoid the myths and there are plenty of them, so here are some common ones to avoid. – Day trading and forex scalping makes money – Following a forex trading robot with simulated track record will see you win – You can trade news stories – You can predict forex prices – You can earn a regular monthly income with little or no drawdown All of the above assumptions are wrong so avoid the myths. Forex trading is NOT easy and as the potential for profit is so high, you wouldn’t expect it to be easy. The good news is anyone can build a forex trading strategy for success. Here are some points to put you in the right direction with your forex trading system – Keep it simple as simple systems work best and have fewer elements to break. – Learn the system don’t try and follow anyone else. You need to know what your doing to have confidence- Base your strategy on forex charts and use the reality of changes in price to execute your trading signals – Do NOT trade news events, these are discounted immediately and your playing catch up – De leverage sure you can get 200:1 but 10:1 is plenty for most traders – Over leverage destroys equity quickly as your stop has to be to close – Base your trading strategy on breakouts to start. We have written on this frequently and it’s a high odds way of trading – Be patient! Only trade sparingly, the big high odds trades don’t come around often so wait for them. The big key to winning at international currency trading is having the discipline to execute your plan and this is built on confidence in what you are doing. You can’t follow anyone else – you’re on your own. With the rise of electronic online trading we have seen a huge rush of naïve and greedy traders enter the market, who think trading is easy and the facts point to the opposite. For the forex trader, prepared to get the right forex education and work smart with a disciplined mindset the potential is huge. The world of international currency trading offers you the potential for currency trading success either via a good second income or a life changing income. Sure it’s a challenge – but if you are prepared to work smart, get the right education and adopt the right mindset, you can win. Are you up for the challenge?

If you want to make money trading currencies, then we will show you how to do this in simple steps. Here we will give you the basics and help you build a currency trading system for long term trading success. Step 1 – Get the Mindset for Success You cannot get currency trading success from others and there are plenty of people wanting to sell you automated forex robots and systems but they don’t work. If you want to win, you have to understand that you need work and learn currency trading for yourself. If you do this, you will have confidence in what you do and the discipline to follow your system. Most traders fail because, they don’t have the discipline to follow their system and if you don’t have the discipline to follow it, you don’t have a system!Step 2 – The Methodology to Base Your System On The best, simplest and easiest to understand methodology, is to buy or sell breakouts of price, to new market highs or lows. Look at any forex chart and you will see most major trends start and continue from new market highs or lows. If you can go with them, you can make a lot of money. Most traders don’t and that’s why the majority lose. Most traders want to wait for a pullback, to buy at a “better price” and of course prices don’t pullback and they sit and watch, as the trend sails over the horizon and makes thousands of dollars in profit and their not in!Go with breakouts and sure you miss the first bit of the move – but if it’s a good break, you will have a lot of profit ahead of you. Step 3 – Basics of Your System You need to understand support and resistance. Look for levels that are considered important by the market and the more times the level has been tested the better. You then need to confirm that when a break starts, the odds are on your side and it will continue and for this you need to use momentum oscillators. We have discussed these fully in our other articles but for now, you simply need to know they will help you determine price strength through the breakout point. If price momentum accelerating, the odds are on your side and you can enter. Look up the stochastic and RSI for this – there great indicators and you can learn how to use them in about 30 minutes. Step 4 – Money Management You need to play great defence and defend your equity. Just like all the great football teams, if you have a great defence, the offence will get the opportunities and make them successful. With breakout trading, your stop is close and obvious (below the breakout point) and you should trail it slowly as the market moves. Don’t make the mistake of using too much leverage. You can get up to 400; 1 but 20:1 is plenty, more traders lose due to over leveraging than any other reason. Putting it all Together You don’t need a complicated currency trading system, you need to keep it simple so your trading system is robust, in the face of brutal market conditions. The key though is discipline; you must be able to trade through losing periods, until you hit a home run. If you want to make money trading currencies – you can. The above tips will help you and remember, work smart not hard, keep it simple, get the right mindset and you will enjoy long term currency trading success.

There are some great currency trading courses that can give you a head start in your quest for profits and here we will look at the criteria you should use for finding one which can help you achieve the success you desire… First, many courses make huge claims and have systems that are supposed to give you huge regular profits so ignore any forex robot course or trading signal course that carries this disclaimer.”CFTC RULE 4.41 – Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown”.Most of these currency trading courses have no chance of teaching you anything and the fact that they present a track record and then put the above warning on gives currency trading a bad name. Now look for the following: A Specific Currency Trading Strategy You don’t need to know currency trading basics, you can get all that for free online you want something that will give you a trading edge and enable you to enter the 5% of winners. Ignore any course that claims you will learn to do the following: – Learn secrets – a contradiction in terms as if everyone knows them they can’t be secrets!- Predict market moves – You cant predict you trade reality – Day trading courses – day trading simply doesn’t work so don’t try – Scientific theories – Don’t work, if there was a scientific theory of market movement, we would all know the answer in advance and there would be no market! Look for a sensible, odds based trading system which either long term trend follows, or swing trades.Forex trading is not an area you get success with no effort and you can’t follow anyone to success. You need to learn what you are taught – only then will you be able to apply your currency trading system with discipline and this is the key to trading success. Look for unlimited email support and check that the retailer of the course is a trader. You can test this by simply asking some questions before you buy and see what response you get and how quick it is. Finally look for a money back guarantee in full – if you are not satisfied. Choosing a currency trading course is really common sense. Ignore the hype and get one which will give you a solid grounding in the subject, plenty if support and a trading edge, you can learn and apply for big trading profits.

A beginner in forex currency trading must do some research and learn all the basics before actually playing with real money. It’s very important to understand the entire mechanism behind forex trading and only after you feel you’re ready you should try your luck on the trading market.

Most online forex trading platforms offers a demo account that allows you to try out placing trades and stop losses modelled on real live trading scenario before trading with real money.

The forex market is known to be very big, even bigger than the stock market. 24-hours a day the traders are moving millions of dollars from one place to another and as much as you want sometimes is actually very hard to keep track of all that.

At first, this market was the playground of some wealthy people that had to present the money before actually trading them. Now, the online trading companies changed all that because they invited practically everyone to join the forex market. Any beginner can begin to trade forex online as it only cost a few thousand dollars to start a forex account.

Forex trading is all about people selling and buying almost any currency of the world. During a trade, a person sells a certain currency in order to buy another one. It’s all about pairs. In other words, one currency paired with another one establishes the quotes of currency.

The most commonly used currencies are: the Euro and the U.S. dollar (EUR/USD), the U.S. dollar and the Canadian dollar (USD/CAD), the U.S. dollar and the yen (USD/JPY) and the Australian dollar and the U.S. dollar (AUD/USD).

On the forex market everything happens very fast because the entire mechanism is electronic. Many people join the market each day and that’s why you’ll always find someone willing to trade.

Also, leverage is another important attribute of currency trading because the 200:1 ratio is more than attractive for anyone. If you join the game with only a small amount of money you can start trading different currencies and make some profit.

The beginners must be very careful because they must understand that forex trading won’t make you rich over night. If you don’t know the rules and you act only based on impulses and dreams you can lose big time.

That’s why it’s very important to understand the way forex market works. You have to be prepared to join this trading club because knowledge will lead you to success and will bring money into your pockets.

The small-time online investors can ask an online company for help. The Internet hosts several websites that will teach you how to trade with virtual currency. Any beginner can learn a lot from the seasoned player and if you’re really determined to become a trader you’ll learn everything right away.