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Forex Scalping Expert Advisor Programs: Do They Work?

Some of the forex scalping expert advisor programs that were popular until recently have been getting a bad press in the last few months. It seems that they are selling when they should buy and buying when they should sell. So what is happening, and can you still trade successfully with a scalping expert advisor?

Scalping is a tactic that relies on making small, quick trades to exit with a profit not many times the size of the spread. In fact generally anything more than 3 times the spread is not considered scalping at all. Scalpers are aiming to move in and out of the market in just a few minutes, or sometimes even less than one minute. They plan to do this many times in a day to achieve many small profitable trades adding up to good profits over the course of time.

The first problem for all forex scalpers is finding a broker who will allow you to do this. Brokers, even if they are not deliberately taking a position against you, often have some time delay before they cover your position in the open market. This may only be a few seconds to one minute which is not significant with long term trading but can put them into a loss position with successful scalpers who may close their trade before the broker has covered it.

But assuming that you are hooked up with a broker who will accept your EA working in this manner, why does it happen that sometimes the EA itself starts to foul up the trading?

One reason is that some EAs have been based around indicators that lag, such as moving averages. It should be obvious to anybody that if you are trading on small price movements you need to react very fast to new trends and a lagging indicator is not the best to use.

However, while the market was relatively stable with slow moving trends, it was possible to profit from scalping tactics even with lagging indicators. This pattern may continue for several years, long enough for many people to believe this is a genuinely possible system and certainly long enough for scalping expert advisor software to be developed to implement these strategies.

But sooner or later the market will enter a more volatile period. This may only happen every 7-10 years but when it does, lagging indicators become useless for scalping techniques. It is better to use indicators such as Bollinger bands which do not rely on measuring movements over such a long period in the past.

So if you want to continue scalping during times when the market is particularly volatile, you should ask questions about the basis of the software that you are thinking of buying and look for a scalping expert advisor that does not rely on lagging indicators.

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Tuesday, December 7th, 2010 fx trading software, Strategy No Comments

Trade Forex For Profit: One Thing You Must Have

If you want to trade forex for profit, there is one thing that you must have and that is a trading plan. The forex market is a fast moving financial environment where a lot of money can be made in a short time, and lost too. This makes it stressful and confusing in the beginning.

If you do not have a plan for your trading strategies you will be making decisions based on the emotions of the moment which could be fear, greed, panic or euphoria. Decisions made from emotion will almost certainly not be good decisions.

First establish your goals and your boundaries. Do you have a clear idea of how much you might expect to make if your trading is successful? It will probably not be millions. Plan for a slowly increasing level of profits and start small. If you have big expectations you will be tempted to take big risks to try to meet your profit targets, and you could end up with nothing but losses.

Boundaries means risk. How much money are you prepared to risk when you trade forex? This should be money that you do not need for any other purpose. Are you confident enough that you have a good chance of making money with it, rather than losing it? Have you already been trading successfully with a demo account?

You also need to be clear about your position size for each trade. This means taking account of the consequences when a trade goes against you. This will certainly happen sometimes.

Your position size will also relate to your system. Some systems aim to provide a very high percentage of winning trades but losses are large when they happen; others have more losing trades but each loss is smaller. What are the chances of your system giving you two, three, or five or more losses in a row? You need to adjust your position size to provide for the worst that can be expected, because sooner or later it will happen.

A forex trader needs to remain as calm as a poker player and accept losses as well as gains. It is all part of the experience. Remind yourself that your trading system is based on sound analysis and if you keep to your trading plan you should profit. At all times you should know how much you have at risk, what is your potential gain and your potential loss, and where you plan to close the trade in both cases.

Your trading plan should also include how you will implement your forex trading system. What sources of information will you use? Which of the indicators are most valuable for your forex trading style? Where will you go for advice when you need it?

Foreign exchange trading requires a clear strategy that you can set out in a written plan. Remember, if you fail to plan you are planning to fail. You can modify your plan if it needs it, but do not change it while you have open trades. Never enter the market to trade forex without a clear trading plan that you know you can stick to!

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Thursday, December 2nd, 2010 Introduction, Strategy No Comments

3 Currency Trading Tips To Help You Make Money

There is a lot of money to be made in foreign exchange trading. Here are currency trading tips to help you maximize your profits.

1. Use weekly charts as well as daily charts

Checking back over the week’s price movements for your chosen currency pair will give you a better perspective on both short and long term trends in the market. It is easy to become blinkered in spot forex trading especially if your method concentrates on day trading. Weekly charts allow you to take a step back.

Sometimes the new perspective that you gain in this way will help you see what went right or wrong with your trading and why. This can help you to refine your systems to make them more profitable. However, do not make changes in a good system every time something goes wrong. There is a need for balance here.

2. Do not trade too much

It is tempting to jump into the market and open a trade whenever you think you spot an opportunity, when really you should have held back. It is often true that the fewer trades you make, the more money you will make. This seems counterintuitive because we tend to think that we need to make a lot of trades to build up big profits. But opening a trade at the wrong moment leads to losses, so in fact the opposite is often true.

You need to be comfortable with risk in order to engage in forex trading. Most traders even enjoy the risk. So it can be difficult to hold back from something that looks like a big opportunity. Remember this is investment, not gambling. You must choose your trades carefully. Taking chances in the hope of making a big killing is likely to lead to your account balance taking a hammering.

If you have a profitable forex trading system that does not often offer the opportunity to trade so it is not making you much money, do not be tempted to widen the criteria so that it lets you trade more often. This will almost certainly turn your profitable system into an unprofitable one.

Instead there are two things you can do. First you can increase the amount of each trade. This increases your risk and is probably not a good idea unless you are very sure of your system. Second you can try to find a different system that is equally profitable that you can operate alongside the first. This is the better option for most people but make sure that you test your new system thoroughly before adopting it.

3. Set realistic targets

When you are thinking about how much money you hope to make with currency trading, it is important to be realistic and accept that sometimes you will lose. You should only be trading with money that you can afford to lose and do not expect to double your money over and over in a short time.

Unfortunately many advertisements lead you to have very high expectations. You may see an ad that suggests you can double your money in 7 days, for example. This does not mean you are certain to double your money, and it definitely does not mean that you can do it every 7 days with no setbacks. Doubling your money in a short time is possible but doing it over and over without losses is not realistic. Expect to take at least one step back for every two steps forward and have reasonable targets by comparing with what you might make if you invested in stocks or bonds.

Before starting forex trading for real, be sure you are armed with sound strategies that you have tested for yourself. Weigh up all of your options and remember that you are entering a risky business. Keep these currency trading tips in mind and give yourself the best chance of succeeding as a forex trader.

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Wednesday, November 24th, 2010 Introduction, Strategy No Comments

Forex Trading Signal Providers: What To Look For

As the popularity of trading the currency exchange markets online from home increases, the number of forex trading signal providers is increasing too. In fact they are proliferating to such an extent that it can be very difficult to know how to find the best one.

Signals are the main source of information for some traders who do not have the time, experience or inclination to analyze the markets for themselves but do not want to trust their trading to a robot. Equally they can be a useful source of additional information and trades for those who mainly make their own trading decisions.

You usually have to pay to subscribe to a forex signal service. Fees may be charged per month or per signal. Some companies offer a trial period where you can test their service on a demo account. If not, you will be paying out money from the start so to have a chance of making profits, you need to be trading at a level where you can expect to make more money from the signals than they are costing you.

The first thing that most people look at when considering forex trading signal providers is their recent results. This can be a mistake. Recent results are not as important as performance over the long term. So do not be seduced into signing up with a company who make a huge deal of their last month’s good results but will not tell you what their signals have made over a full year. Also remember that when they show their profits, they do not have to take account of the cost of the signal service itself.

Remember that most traders starting out in the forex markets lose money. Forex is a risky form of investment and you should be prepared for this. Losses are not always the fault of the information. Even if you are receiving profitable signals, you can make losses if you do not have a clear plan for managing your funds. It is very easy to take bigger risks than you should, so that an unexpected loss has a big impact.

Most companies who offer forex signals will send them to you by email and/or SMS text message. It is best to get both, although SMS alone can be enough for some people. The only problem with SMS messages is that it is very frustrating when one arrives and you are too far from a computer to access your account. If you are a serious forex trader relying on signals, you may want to get your PDA hooked up to your trading account so that you can deal with those signals that arrive when you are stuck in traffic or having lunch with a client.

Remember that the foreign exchange is a 24 hour market. Be prepared to be woken in the middle of night by your cell phone bleeping with an SMS that you need to act on right away. You may want to check how your spouse feels about this too. Even the best information from the top forex trading signal companies is probably not worth getting a divorce for!

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Monday, July 6th, 2009 Strategy No Comments

Is Forex Investment Safe?

You will see advertisements for forex investment just about everywhere. In newspapers and magazines, on the TV, on the internet … it seems that everywhere you turn, you will meet with somebody telling you that this is a great way to make money. But what is forex? Is it really profitable, and is it safe?

Forex or foreign exchange trading is a way of making money by exchanging foreign currencies. The rates of exchange are constantly changing, so a sharp investor can make a lot of money by buying a currency that is about to rise, then selling it after the price has gone up. In this respect it is a little like trading on the stock exchange.

It would be possible to invest in currency for the medium to long term if you believed that a particular country’s currency was going to rise or fall in a more or less steady way over a period of time. However, this is not what most people do and this is not what the ads that you see are for. Most people use trading techniques to try to make smaller profits over a short time.

Often a trader will enter the market to open a trade and close it again within minutes. He may be buying a currency that he thinks will rise or selling one that he thinks will fall. He will watch the markets until he sees a situation developing that leads him to believe that a pattern or trend is forming, then he jumps in.

The technique of making money with currency trading has opened up for the private investor in the past few years. Now that so many people have a high speed internet connection at home, brokers have seen the opportunity to draw in people whose funds may not be very large. You can begin forex trading with just a few hundred dollars.

There are many systems that you can follow which will help you learn to become a successful forex trader. There are also automated forex trading systems known as robots which will even open and close the trades for you.

Some people who start out in currency trading are hoping to make a lot of money. Often they will be disappointed. You need certain skills to survive in the foreign exchange markets and you also need a lot of self discipline. These can be learned or developed if you do not have them already but it can take time to become successful.

Other people begin foreign exchange trading simply because they enjoy the challenge of trying to increase their starting fund. If they make profits, they may later become serious traders, but in the beginning it is almost a game. This is fine if you like taking risks and can afford to lose a few hundred dollars if things go wrong.

World events can have a big effect on the currency markets and sometimes they are completely unpredictable. Something like the events of 9/11/2001 would be an example. You can put stops in place to make sure that your trade is automatically closed if the market suddenly goes against you, but any trader must accept that losses sometimes happen and must be balanced against the potential gains.

Forex investment can be lucrative but if you are trading on the currency exchange markets it cannot really be described as a safe way to invest. Think carefully before you get involved and be prepared to spend some time learning how to manage your currency trades.

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Tuesday, June 23rd, 2009 Introduction No Comments