The number one most important and most overlooked component to becoming a successful trader or investor is risk management. As a trader or an investor, capital preservation is priority. Regardless if you are an investor looking at the potential move of months or years ahead or a day trader looking to capture the small intra-day swings for quick profits, you must have a complete plan. You must plan how much risk you are willing to take on each trade before entering, know how to use trailing stops properly and know when to take profits. There will also be times when you are in a trade and things are just not going according to plan. And you must get out of that trade and look for another opportunity.

Do you know what your own risk tolerance is psychologically? How much can you afford to lose? Are you risking too much based on your total capital? Are you allowing yourself a chance to trade another day or looking to hit a home run on each trade? You must have a predetermined plan and know your limits based on the amount of capital you plan to invest or trade with.

Once you enter a trade, if the market moves against you by the predetermined risk amount you planned, get out! Take the loss. Accept that when investing and trading you will have losses. Losing is expected and part of the business of investing and trading. Think of losses as part of the expenses of running a business. Every business has expenses. The key is to manage the loss to keep it small. The most successful investors and traders will have regular and frequent small losses. Understand that taking small losses is healthy for you. By doing so, it allows you to think more clearly to find new opportunities down the road. If you’re hanging onto a losing trade, you will have difficulty thinking clearly to see new opportunities. A quote from Reminiscences of a Stock Operator by Jessie Livormore said it all. “Losing money is the least of my troubles. A loss never bothers me after I take it. But being wrong - not taking the loss - that is what does the damage to the pocketbook and the soul.”

To this day, it amazes me how so many people who want to make money in the stock market or want to become day traders come into this business without a plan. What most fail to realize is this is a business. It is no different than any other business looking to make a profit. You can’t just sit on the edge of your seat and make money. While the business of investing and trading is risky, it doesn’t mean you have to have a gambling mindset. The worst thing any investor or trader can do is stay with a losing trade, hoping it will come back and turn into a winner. This mistake is fatal. Many traders freeze when they’re in a losing position. They think if they stay in the market a few more ticks, maybe it will turn around. Train yourself to use stops to help control risk. Using stops is a necessity to having long-term trading success. Learn to take your loss. You can always get back in when the market turns around.

Investing and trading are based on probabilities. Work with a fixed dollar amount you are willing to lose if wrong. Based on your total account size, figure on anywhere from 3 to 5 percent to risk per trade. To some this is a very conservative amount, but it’s best to be more conservative than overly aggressive. Learn to use trailing stops once the position moves in your favor to manage your risk more effectively. Take part profits along the way at predetermined points. Yes, you must learn to take profits as well. By doing so you are controlling your risk more effectively and locking in profits. Remember, you’re investing or trading to make money. Learn to ring that cash register.

A common mistake by inexperienced investors and traders is they trade without a pre-planned amount to lose if wrong and no plan to lock in profits if correct. That type of action usually results with the investor or trader working on hope and prayer that will eventually run them to failure. Think back to the bull market, when so many stocks were running straight up. Many people got caught up thinking they could do no wrong.

I remember talking to many investors who asked for advice as the stock market climbed higher. I suggested they take part profits along the way and use trailing stops, but greed blinded them into thinking the market has to keep moving higher. One hundred percent, 200 percent, 300 percent and more was not enough. If they sold their stock at a profit, they complained about having to pay taxes on those profits. I often wonder why so many find it easier to hang on to a loser and have a tax write-off rather than happily paying taxes on making profits. Those same people now wish for 10 percent return.

Professional-minded traders know the use of several simple effective techniques would have saved many investors from giving back a majority of their profits or from stopping them from going in the red. The key is learning how to manage your investments no differently than a day trader manages trades. Doing so will help you become a better investor.

To better equip yourself as a trader/investor

· Understand how to read a chart properly to see key resistance and support levels.
· Understand and know how to identify a trending market and the failure of the trends.
· Understand that trading and investing are no different than any other business.
· Control your expenses and maximize your profits, otherwise you will be out of business.
· Be flexible and adapt to current market conditions.
· Learn and accept the fact it’s ok to be wrong and take the loss.
· Learn to take profits when you are in a profitable trade.
· When wrong, get out of your position.
· When right, scale out and use trailing stops to continue locking in profits if the move continues in your favor.
· Keep it simple and remember your downside risk must be less than your upside potential.

Steve Rifkin S.E.R. Enterprises, Inc. One Northfield Plaza, Suite 300 Northfield, IL. 60093 Visit The Power of the Force at http://www.NaturesForceTrading.com

steverifkin@naturesforcetrading.com 847-441-3205

If you’re wondering why there seems to be so much buzz these days about forex trading, you’re not alone. There are a number of reasons why forex trading is one of the hottest “new” investment opportunities for average folks. Fortunately, more and more information is surfacing about forex, making it a great time to start doing your research.

The purpose of this short article is to present a basic overview of key aspects which differentiate forex from other investment vehicles with which most of us are more familiar.

Today, the average person has a home computer with an internet connection. In addition, the number of people with a hi-speed broadband connection is rapidly increasing. This places a power and control in our hands that we’ve never before experienced. It’s no longer necessary to have to rely upon the technical infrastructure of banks, brokerage firms and mutual fund advisors. This is incredibly significant. The internet represents more and more independence and choice for the individual to handle investing activities.

The nature of forex fits right in with the independence and freedom of the having your internet connection. You can trade anytime from anywhere, starting with a very low investment; under $1000. There are no fees to pay and although the currency market is very liquid, it’s also very predictable. You can also make money whether markets are up or down. That’s why it works. The really fun thing is that you can get online and practice by paper trading and learn without any risk. Then, after gaining a better understanding of how it works, you can begin with a small amount and make it grow.

Previously, only the “big boys” and financial institutions were in-the-know about forex trading and very active in it as well. Seasoned investors have also been involved over the last few years. Experienced stocks and commdities traders have discovered the power of forex trading. The daily forex trading volume is said to be somewhere in the neighborhood of 1.5 trillion dollars., which is 30x the combined volume of all the US equity markets. That’s some pretty tall talkin’, but certainly worthy of your investigation. Now, because of certain regulatory changes that occurred in the late ‘90’s and the explosion of home computing & internet technology, forex has become an investment opportunity that most people can be involved with in the comfort of their home as they control their own investment strategies.

Like I said, this is really just a light overview, but I urge you to give some attention to forex trading and discovering more about it. You may find it quite rewarding.

The author is an avid researcher of internet marketing, investment and home business opportunities.

For a FREE guide with the straight facts on Forex trading, visit http://www.4xtradingprofits.com.

In the first part of this article I have outlined 10 good reasons why Forex (Foreign Currency Exchange Market) is an excellent investment opportunity for anyone to make money, online, even with very little start-up money available. In this part I will explain how to get started.

If you want to make money with Forex, online, you have to think of it as a business and treat it as such. You have to get serious about it and you need to get organised. Initially, you have to ‘go to work’ just like you would in a conventional business. Set aside some quite, work hours for yourself, in a quite corner of your house so you can concentrate on your business without any interruptions.

Also, as with any other business or trade, you have to train yourself and hone your skills, continuously. The Forex offers an amazing opportunity to make money, with little effort in record time, however, you have to know what you are doing and you do have to put in some work. Just as you would not allow your 10 year old kid to drive your fancy, expensive car, it would not be a good idea for you to jump into trading the Forex without learning how to drive this ‘vehicle’.

If you are a beginner spend some time on reading up on the Forex and perhaps find someone who is already trading successfully. Ask them to mentor you or allow you to look over their shoulder. Once you have some idea on what makes Forex tick, you should open a demo account with one of the many reputable online brokers. This is the best way to learn what happens to your money and your account in the real world without actually risking any of it. You also have to develop good record keeping habits. It’s not a hard job to do it, you just have to be disciplined enough to keep up with it. Again, it’s no different from a normal business except that the rewards can be much, much higher in relation to the work you have to put in and of course you can do it from anywhere as long as you have access to the Internet.

So, here is a simple list of how to get started:
1) Setup a quiet corner for yourself as a work-area,
2) You must have a reliable computer and reliable connection to the Internet, if you can afford a second connection to the Internet with a different service provider than it’s even better (I’ll explain why in a future article). Also make sure you are comfortable and have plenty of light, a dingy, dark corner will soon dampen you enthusiasm,
3) Set aside some ‘quality’ time for you business the same time, every day in the beginning, you can spend less time as you get more experienced,
4) Find out more about how the Forex works, train yourself and find a mentor who is already trading successfully,
5) Open a demo account with a reputable online broker,
6) Start keeping a record of everything that you do and why you do it. The easiest way I found to do this is with a simple Excel Sheet(c) or something similar,
7) Analyse the results of your actions and see how they affect the balance of your demo account,
Make backups of all your records, I can’t emphasis this enough, it’s really, really important,
9) Revise your actions and record keeping methods then go back to step 4.

It may sound a lot, however, most of it is common sense and applicable to any and all businesses. It is critical that you keep a record of everything that you do, whether it’s changing your chair or the lighting, a new trading platform. Whatever you do make sure you have a record for it and an indication of how, if at all, it has affected your trading ability. I have records of everything I do, not just for Forex, but for all of my other businesses going back 7 years! Now, that’s a lot of record keeping but with computers it’s real easy.

I think we have covered a lot in this second part. I’ll go into more details in future articles. Meanwhile, go through this article and start putting my suggestion in to action. If you have any questions about what I’ve said above or need information on anything related, just refer to the resources and links at the end of this article.

Wishing you success,
Ference

Ference is fanatic about currency trading and teaching others about this amazing opportunity. Contact him at ference_kish@yahoo.co.nz or visit his site at http://www.forexguys.com.

Legendary trader W D Gann amassed a fortune of $50 million dollars in the first half of the last century, although he died in 1955, his commodity trading systems are still used today by traders all over the world.

Successful commodity trading systems have the ability take the emotion out of trading, liquidating losses quickly and spotting and holding the big longer-term trends and that’s exactly what Gann’s Commodity trading systems did.

Gann’s Commodity Systems Track Record

Gann’s commodity trading systems allowed him to make some stunning predictions and trading gains such as:

1. He predicted improvements in business in 1921 and the Bull Run in stocks.

2. 1928 he forecasted the end of the Bull Market in stocks a full year in advance of the 1929 crash. He then bought stocks in the Dow at an all time low in 1932.

3. In 1935, of 98 trades in cotton, grain, and rubber, 83 trades showed a profit. His percentage of profitable trades was often 90% or higher.

History Repeats Itself

Gann was a prolific writer and wrote extensively, outlining his thoughts on commodity trading systems in a series of books and courses. Some of his ideas were grounded in empirical studies, while others were more mystical in nature.

Gann’s major contention was that certain laws governed not only the markets, but nature as well and were universal in scope. He believed that human psychology was constant and that this manifested itself in repeatable price patterns.

“We cannot escape it (emotion) In the future it will cause another panic in stocks. When it comes both traders and investors will sell stocks, as usual, after it is too late or in the latter stages of a bear market”

He was aware that human nature was constant and influenced the majority of traders.

“Therefore, in order to make a success the trader must act in a way to overcome the weak points that have caused the ruin of others”

For more information on trading psychology excellent books to read any by Jake Bernstein, Jesse Livermore, Larry Williams, Van Tharp and Jack Shwager and you will see why human nature repeats itself.

The Influence of Price and Time

One of the most important thoughts behind Gann’s commodity trading systems was the concept of combining price and time.

Gann believed that crucial price movements happened when price and time converged. These points could indicate an important trend change was imminent. If on the other hand, price and time were not coordinated, or did not converge, time always held priority over price. Time was therefore considered by Gann as the ultimate indicator, because all of nature was governed by time.

In the “Wall Street Stock Selector” Gann said.

“Just remember one thing, whatever has happened in the past in the stock market and Wall Street will happen again. Advances in bull markets will come in the future, and panics will come in the future, just as they have in the past. This is the working out of a natural law …” and, “It is action in one direction and reaction in the opposite direction. In order to make profits, you must learn to follow the trend and change when the trend changes.”

Making Big Profits with Gann

There are many commodity-trading systems to choose from and Gann with its unique method of technical analysis is worth serious consideration by any trader.

If you are, a day trader or long-term position trader, look at Gann’s commodity trading systems and see how they can help you become a better and more informed trader.

To learn more about using Gann methods to improve your trading performance please visit our web site: http://www.gann.co.uk

This article will explain some of the differences between Technical Analysis and Fundamentals and explain a bit about each type of trading. Excerpts are taken from the best-selling book ‘Market Wizards’ where Jack Schwager interviews Ed Seykota and Bruce Kovner.

Ed is a trend trader (uses technical analysis) and also relies on hunches from 20 years of experience. He definitely emphasizes his reliance on technical analysis. While reading this, I liken, the ‘hunches’ to knowing the effect fundamentals can have on a market although I could be mistaken, they could be purely from reading lots of charts so well. Here are is exact words “Fundamentals that you read about are typically useless as the market has already discounted the price, and I call them ‘funny-mentals.’ However, if you catch on early, before others believe, then you might have valuable ‘surprise-a-mentals.’”

Ed says his priorities when trading are the long term trend, the current charts and picking a good spot to buy or sell, in that order.

Bruce says technical is awesome and very useful but by no means disregards fundamentals.

It’s important to note that technical analysis is a critical method of understanding the history of market movements and hence useful to identify trends. It doesn’t actually tell us where the currency is going but analyses historical data. We then need to use our own intelligence to see what the activity of trading says about future trades.

Technical Analysis can be compared to taking a patient’s temperature. To ignore it is ignorance and it can tell you whether a market is active, or cold and dormant.

It also picks up unusual behaviour. Anything that creates a new chart pattern is something unusual. He also says “Studying the charts is absolutely crucial and alerts me to existing disequilibria and potential changes.”

It’s the fundamentals that will help to indicate whether a trading value will increase or decrease.

Everything that makes a country tick, in Forex terms. Consumer spending, government spending, employment cost index, government policy, political concerns and even an individual event can influence the market heavily.

In summary, the fundamentals will indicate the direction of a price but not exact prices. The chart analysis or technical analysis is better for that, so together you can really increase your chances of coming away with some pips.

The reason technical analysis is so emphasized is that many traders use charts to trade and at any given time, will be drawing the same lines of resistance and same lines of support. So if you can read the charts well, you have an awesome chance of predicting market movements. The best way to learn about the effect of fundamentals is to learn one piece of economic data at a time. This will help you make better-educated trades.

For a complete guide to Forex trading, for beginners and advanced traders, visit http://www.wealthyforex.com. Here you’ll find arguably the best resources available for Forex trading. For traders already making excellent returns, you’re sure to find tips that will improve your trading.