Forex Frequently Asked Questions
The following is an index frequently asked questions regarding trading and the Forex market. These are questions have been answered to the best of our experience and knowledge as professional Forex traders. If you would like to have your question answered by experienced professional Forex traders, please submit you question by clicking on the following link, in the "Message Subject" area please put "FAQ".
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What is the Best Time to Trade Forex?
What is the Best Forex Pair to Trade?
What is the Best Forex EA?
What is MACD Pressurization?
How Can I Succeed In Trading Forex?
What is the Best Time to Trade Forex?
This is one of the most often asked questions by traders as they begin to trade the Forex market. There are a couple of reasons this question is so prevalently asked.
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The Forex Markets can be trades 24 hours a day five and a half days a week. No other market has this broad a trading spectrum as to available times to trade.
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Most people learning to trade already have busy schedules and are looking to find the optimum time to learn and profit in the Forex markets and are willing to adjust their schedules to be able to trade at the best time possible in the Forex market.
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As all other traders we want to make the most money trading Forex that we can.
One of the first things we need to realize is that the Forex market is like any other market when it comes to the best time to trade it. When is the best time to trade the NY Stock Exchange? When is the best time to trade the London Equity Markets? When is the best time to trade the Japanese markets? The answer is based on your trading strategy. If you have a trading strategy that is based on what price does at a specific time during a market such as New York Stock Exchange's opening or the open of the London Forex Markets, then that is the best time for you to trade those markets. Although there are some trading strategies that are based around the open and closes of markets due to the volatility associated with those market timings, such strategies make up and extremely small percentage of successful trading strategies.
The majority of traders use trade entry methodologies that are based on trend line breaks, support, resistance or combination of a myriad of technical indicators. When finding a trade entry with one of these methods time is no longer a factor in your trading. You trade when the trading system or trading rules tell you to and one cannot expect the time of such entries to come at any consistent specific time on a repetitive basis.
When trading the Forex market we recommend that you find a successful trading strategy and trade it whenever it appears. As traders with years of experience we can tell you that trades based on your set of trading rules can consistently appear at inconsistent times. The greatest danger this poses to most Forex traders is that they will begin to force trades in the currency market that they should not be taking at all.
The lesson learned is that if you can only trade at a certain time each day be sure to trade with discipline and only place trades that follow your trading rules. Your alternative is to find a good Forex scalping trading course and follow those trading rules during the time of day that you can trade.
What is the Best Currency Pair to Trade in Forex?
The answer to which is the best Forex pair to trade is not a single bullet answer. Some of the currency pairs are better than others for beginner traders, scalping, trend trading, etc.
The currency pairs that are best for new and beginning Forex traders are the EURUSD and the NZDUSD. Both of these pairs are slower moving currency pairs and typically have less spiking and whipping that tends to shake most beginner traders out of their trades. These pairs also have smaller spreads than most of the other currency pairs. These two components usually make most newer currency traders feel more comfortable.
The EURJPY and the GBPJPY are good for trend trading in the shorter term and the longer term. While these pairs trend nicely on most time frames the price action can be very erratic and make newer traders very nervous.
What we hope you see from the above comments is that there is no currency pair that is the best to trade and that there are currency pairs in the Forex market that are better suited for different types of traders and different types of trading. Take some time to ask experienced traders which currency pairs they prefer to trade the best and under what style and types of trading they tend to trade them.
What is the Best Expert Advisor for Trading Forex?
There are countless Expert Advisors that have been designed for MetaTrader, we have even worked to design some of our own. There are far too many EAs on the market for any one trader to test them all so we will provide you with some important advice before you consider running an EA on your real money Forex account.
You can purchase most EAs for a cost from $49-$250 USD. After that investment most Forex traders feel compelled to run it on their real money account. The Forex trader becomes 'account committed', they will run it on their account until it makes money even if it never does and the entire account is blown out. This is the primary danger you should be concerned with when looking at using an EA to trade the Forex market because of the psychological element 'that this EA HAS to work for you since it works so well for others and I have seen the results from the people I purchased it from', this is the reasoning of financial destruction for any Forex account running an Expert Advisor.
How can I improve my chances of success with and Expert Advisor? First, be committed to let it run for three to six months on a demo account and see the real results from a demo account. Six months should be sufficient to see how it performs in trending and consolidating markets. Second, if it performs well in the first test, then allocate a small amount of capital and allow it to run on a real Forex trading account for at least three months. Third, if the Expert Advisor passes both sets of tests successfully then allocate full capitalization to the Forex account you are running it on. This is the best way to find the best Expert Advisor for MetaTrader.
WARNING NOTE: Check the account the Expert Advisor is running on EVERY day! EAs can break and if you are not monitoring them they can cost you more money than your original investment in both cash and time. Also, adjustments are usually made to MetaTrader severs near the end and start of the month so you may wish to make sure it is working correctly a few times a day for those few days.
What is MACD Pressurization?
MACD Pressurization is a terminology we came up with to settle a constant question and while keeping the integrity of common trading terminology. Many traders understand what divergence is when trading with technical indicators; it is when price and the indicator are going the opposite direction. But what about when price is staying at or near current levels and the indicator is moving in the opposite direction? That is not technically a description of divergence but is the basis for what we call Pressurization. Notice how price in both examples was at or near the recent highs and the MACD continued to move lower, this is what we call MACD Pressurization.
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It is important to note that MACD Pressurization works like MACD Divergence and we are expecting a pull back in the current trend, occasionally it turns into a full reversal. That said the lesson we learn is that we never know how far each technical trade is going to move so we must book our profit professionally.
How to Succeed in Trading Forex?
Before you jump into trading the Forex there are some things you should keep in mind, otherwise you could fail terribly and we are sure that is not what you want to do. This Forex training guide will review the most costly mistakes Forex traders make and you will want to avoid.
Make sure you have a trading system. Having a trading system will increase your chances of becoming a successful Forex trader. A Forex trading system is a set of clearly defined set of rules or criteria that tell you when to enter and exit a trade. Having a trading system, will allow have an objective way to get in and out the market. When traders have a trading system they will be on the path of thinking more objectively since they know there is no reason to enter the market if their trading rules are not telling them to take action. If there is no position to be entered, there is also no money at risk, if there is no money at risk, we are able to be more objective while we are trading and that will allow us to see what the market is really saying and it is this that will help us to see find low risk trading opportunities that our trading system signaling to us. Make sure you have a trading system and trade only when it tells you to take a trade.
Once you have a trading system you need to follow it in a disciplined manner. If you follow your system, there is a dramatic increase in possibility that you can profit from the Forex market based on the trading opportunities you r trading system indentifies in the market. Should your goal be to fail in trading the Forex then make sure your trading is undisciplined.
Get some quality Forex education. Most successful traders are well educated in the market they trade (stocks, Forex, futures, etc.) Good Forex education will give you the knowledge and experience you require to begin to master the Forex market. There are two types of Forex training you need in, Fundamental Analysis and Technical Analysis. You can learn to trade with Technical Analysis much faster that you can learn to trade with Fundamental Analysis. You can begin to trade successfully with Technical Analysis long you understand the Fundamentals of the Forex market. Your understanding of the Forex Fundamentals will come through your experience in trading the Forex market over the years of your trading career.
Use a good money management strategy. The purpose of money management is to prevent the risk of ruin, or blowing out your trading account but at the same time it helps you boost your profits, allowing them to grow consistently and realistically. For instance, by using no money management techniques, there is a possibility that after you have lost 5-10 trades in a row you could blow out your trading account. However, by applying simple money management techniques you can make sure that you have money to trade when you really know how to trade.
Understand the psychology of trading. You do not need to get a win on every trade. Successful traders know that they don't need to win every trade in order to profit overall from the market. This is one characteristic that is hard to understand and even harder to apply.
By applying the concepts in this Forex training guide, you will greatly improve your chances of successful Forex trading. Do the opposite, and you will have the possibility to lose everything that you wanted to achieve from trading and more.
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