Currency trading systems have become more popular than ever in recent years.

Here we will look at the advantages of currency trading systems and how to pick one that’s right for you.

Trend Following the Key to Big Profits

As economic cycles of boom and bust take years, so do currency trends that mirror the health of the economy.

Traders who can spot and lock into these trends can make substantial profits.

The major currencies traded include:

US Dollar
Japanese Yen
Euro
British Pound

These currencies have good trends, and have high liquidity – which is essential when exiting markets quickly to lock in profits and more importantly, cut losses.

A Disciplined Approach to Trading Profits

Currency trading systems remove the emotional component from trading, which is the major reason most traders lose.

A currency trading system has no emotions, will trade in a mechanical disciplined fashion, cutting losses and running the big profitable trends for maximum long-term profitability.

Emotions – The #1 Major Reason Traders Lose

The definitive book on the subject was Edwin Le Feuvre’s, ‘Reminiscences of a Stock Operator’, which was based on the trading experiences of legendary trader Jessie Livermore.

If you don’t think emotions will interfere with your trading then you need to read it!

Other authors to discuss trading systems and emotions include: Jake Bernstein, Larry Williams and Jack Shwager and the latter’s book “Market Wizards” is essential reading for any trader.

Just how effective a system can be was proved by “The Turtles”, a group of traders who had never traded before, but who all were given access to a system and went on to make millions of dollars.

Technical Analysis

The developments in terms of computer software and the growth of the Net have seen system trading reach a wider audience than ever before.

For example, packages such as Tradestation and Supercharts, allow traders to build and test their own systems using technical indicators such as stochastics, bollinger bands, moving averages and candlestick charting patterns.

You can test these indicators in various combinations over historical data to see which combinations are successful. Traders who do not wish to do this able to buy ready made packages from vendors.

Finding a Technical Trading System that Makes Big Profits

If you choose to buy a ready-made currency system, these six guidelines will help you.

1. Understand the basis of the logic of the system. If you don’t understand and believe in the logic, you will not have the discipline to follow it.

2. The system should aim to catch the long-term trends; day trading currencies has less probability of success than long term trading.

3. Simple systems tend to work best, as they are more robust in the face of changing market conditions. There is no link in currency trading systems between complexity of systems and their success.

4. Look at the maximum drawdown from peak equity. This is important in terms of money management, as you need to expect your biggest drawdown is ahead and commit sufficient funds to cover these downturns.

5. Not all systems come with real trading records; they can come with simulations over historical data. Don’t discount simulations; if the basis is soundly based logic then they can still work well.

6. Finally, judge a system over years not months. All systems can and do have periods of losses.

Currency trading systems give anyone the potential to make big profits in the currency markets.

To find out more about currency trading systems and how you can increase your trading profits, visit our site: http://www.financial-trading-success.com

A common question I am asked repeatedly is, “How much time does it take to become a successful trader?” Each time I give the same simple answer, “Do everything, which is needed to be successful that an unsuccessful person is not willing to do. You must strive to be the best you can be. You must create new ideas in order to be successful. You must have a burning desire to be successful. You must be persistent and never quit until you achieve the success you are looking for.” Are you willing to do that?

In reviewing the past ten years that I have been mentoring traders, the majority of traders that do not have the success they have been striving for, come to me continuously to seek out new trading methods and new trading systems. Most traders think the answer is external. But the answer for the majority is an understanding of the way we think and act, an internal answer.

What they fail to realize is self analysis is just as important as technical analysis. Repeating patterns occur on the charts just as repeating patterns occur within us! The problem is most traders fail to pay attention to the most important part of being a successful trader, our thought process while we trade. How many times have you been in a trade, which was working in your favor and you heard an inner voice say, “It’s not going to work.” You get out of the trade only to see it do what you had expected it to do when you first put on the trade. Or you are in a trade that is not working quickly enough, the market is trading close to your protective stop out point and that inner voice appears again saying, “It’s not going to work” and you exit the trade only to see the market move in the original direction you expected.

Trading can be frustrating, especially when you don’t understand and recognize your own self-defeating patterns. Once you become cognizant of bad habits, you can start improving them and eventually get rid of them. The first step is to see those patterns is to document your thoughts on paper. For each trade, write out the reason you’re placing the trade. Did it fit into your plans? Are you following your rules? Did you know ahead of time what your risk was? Did you know your exact protective stop out point? Did you have a profit point? Did you place your trade with confidence, or are you trading scared? Are you trading impulsively, or with discipline? Do you trade with patience, or consistently exit your trade before you give it a chance to work? The most important key of self analysis is writing your feelings at the time you place your trade.

These are questions you need answer. Becoming aware and understanding how you act while trading, is the key to successful trading. Mastering your emotions and learning to trade what you see and not what you believe is a key ingredient to any trader’s success. This is what trading in the zone is all about.

ARE YOU TRADING IN THE ZONE?

1. Be prepared! Know all key points ahead of time.

2. Be aware of Globex price action before day session opens.

3. Be aware of all news events ahead of open.

4. Be aware of all reports that will come out during the trading session.

5. Be aware of the current market trend.

6. Trade what you see, not what you believe.

7. Trade to win, not to lose.

Psychological components that need to be developed to be

Trading In the Zone

Goals: without goals you will be lost.

Daily Plan: without a daily plan of attack you are like a sailboat without a rudder in the ocean, you will just drift away.

Positive Attitude: you have to believe you can. You must have a positive attitude for everything you do. By having a positive attitude your productivity level increases.

Confidence: having a daily plan will help you become more confident. Take action expecting to succeed.

Action: without it nothing happens. Action creates confidence.

Control of the Mind: you must adjust to changing situations in which you have no control.

Wisdom: you must have wisdom and take action from what you have learned.

Risk: you must be willing to take on risk, manageable risk. Without risk there is no chance of gain.

Decisive: you must make decisions without questioning yourself. Make decisions with determination to get results.

Persistence: you must constantly work to achieve your goals, never quit and always try new angles for success.

Patience: you must be patient, wait for clear opportunities to arise. Be patient and wait to take action. By being patient you see things more clearly.

Discipline: you must be disciplined and consistently control your risk. You must consistently follow your daily plan of attack. By being disciplined you have total confidence and have control of your mind.

Desire: you must have a burning desire to succeed at what you do. A desire from that compels you to take the action needed to achieve your goals.

Excellence: Seek excellence, taking whatever time is needed to perfect what you are doing.

Auto-suggestion: Use auto-suggestion to create a positive attitude in your sub-conscious mind. You create feelings when using auto- suggestion, making your sub-conscious believe the thoughts, which in turn make you take action.

Success: Do everything which is needed to be successful that an unsuccessful person is not willing to do. Strive to be the best. Create new ideas to be successful. You must have a burning desire to be successful and be persistent, never quitting until you achieve success.

Work on the Psychological Components you need and the end result you are currently looking for will appear before you. You must master yourself before you can master the markets, by doing so you will then be Trading in the Zone.

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

Currency-trading is quite similar to trading stocks on the market. While you may or may not have any familiarity with those options, you should know that trading in this form is quite popular and it keeps gaining in popularity. There are many reasons for that but in most cases it is popular because it works and is quite straightforward which makes it very well worth your time.

Currency-trading is a method of trading based on the value of currency. In most cases, the world’s economy is the judge of how much you can and will make. This is different than with stocks which rely heavily on the United State’s economy. In this case, you are dealing with world markets and world currency rates.

The basis is very simple. You simply will purchase currency at a time in which it is worth less. For example, the dollar is worth more. You purchase low and then as the economy strengthens in that country, you can sell to make a profit. Basically you turn in your money for dollars again.

But, that is quite a simplistic look at it. There are many things that influence currency-trading. What makes it attractive to anyone anywhere is that you can invest pennies or quite a bit of money. Obviously you can make more money on the more you invest, but you still make money either way. Currency-trading is a market that many are looking to get into for that very reason.

There are many currency-trading options available to you to help you as well. You will find that people often have a system in place to help them monitor and make sales. This software is able to be found throughout the web and can be quite beneficial if you want to do the trading yourself. If you do not, you can easily get the help of any of the currency-trading advisors out there. It’s a great opportunity!

for more information please see http://www.currency-trading-help.co.uk

The numbers of people working from home utilising the talents of the Internet continues to grow at breakneck pace and one of the largest areas of growth in Britain is Online Trading, both in sports and miscellaneous markets.

There are numerous advantages of setting up and running a sports or miscellaneous trading operation from home. Firstly overheads are kept to a minimum, there is no need for expensive office accommodation or expensive staff, and there is no requirement to buy stock or any possibility of bad debts. Secondly, any and all profits are completely tax free (in Britain presently at least, though you would need to check that stat in your area.)

The markets that you can trade from home are far too numerous to mention here, but are not confined solely to sports. Political appointments and results, stock markets, even reality TV show results are avidly followed by the growing army of online traders.

So what is the difference between online trading and gambling? Simple, in gambling you back a horse or a team in the hope that it wins. In online trading you buy a bet because you believe it to be of good value, and then you can sell it to someone else for more money if you wish, thus locking in a guaranteed profit regardless of the outcome of the race or event or whatever it is. Alternatively if you believe a bet to be overvalued you can sell it first, with the idea of buying it back at less money later on to make your profit. This operation was totally impossible with a traditional bookmaker prior to the invention of betting exchanges.

So what is the difference between trading the Dow Jones closing price on the stock market, to trading the same thing on a betting exchange? In my view, absolutely nothing at all, except of course the ridiculous advantage I previously mentioned that all your profits on the betting exchanges are untaxed. Little wonder then that serious businesses and serious money have been pouring into the betting exchanges in the past few years.

They also offer a hedging vehicle to balance existing trading in more traditional markets and here too the influx of business has been heavy and sustained.

Already there are countless books and courses available supposedly to tell you and teach you how to effectively trade these exchanges. As with all business books and manuals, some are brilliant and rapidly become bibles, while others need leaving in the nearest public convenience poste haste.

All this interest in online trading has brought a huge surge in liquidity that makes it so much easier to trade. On one exchange alone during a recent cricket match in excess of forty million pounds was matched, that’s about seventy million dollars. On one game!That’s a stat that is bound to make anyone think seriously about online trading.

Incidentally you can still get a free thirty-dollar bet with Betfair.com, the London based exchange, if you enter the code 6CHE3VPWJ when prompted. Take a look too at Betdaq.com, an Irish exchange based in Dublin that is going from strength. They have a very nice website packed with interesting markets and a comprehensive help section.

Betting exchanges are gaining credence and influence all the time and with each month that passes seemingly another country legalises the entire operation, and it would seem that it is only a matter of time before the large exchanges are completely legalised and accepted worldwide. The exponential growth in this sector is sure to continue, governmental interference being the only possible obstacle to their onward worldwide popularity. Little wonder then that this is one of the largest growth sectors for new start-up businesses, a fact that is bound to attract even greater interest as it continues to grow.

If you are thinking of starting a new online business from home, and if you have a talent for maths, you could do a lot worse than check out the whole business of online trading. Best of luck.

David Carter’s latest published work is SPLAM! Successful Property Letting And Management. Splam! Contains over 240 pages of hints and tips on how to start your own property business on a limited budget, and how to successfully let residential property. You can view actual extracts of the book at http://www.splam.co.uk and order a download or hard copy at this site. He also runs a holiday cottage website where you can access over 7,000 cottages, apartments and villas worldwide at http://www.pebblebeachmedia.co.uk You can contact David on any matter at supalife@aol.com

If you are looking for a trading option outside of traditional stocks and bonds, derivatives trading may be a good option. Derivatives pay off over a period of time based on the performance of assets, interest rates, exchange rates, or indices. The payoff can be in cash or assets and vary, of course, by performance and timing. In addition to stocks and bonds, derivatives can also be traded through in the money market, foreign exchange (forex), and credit. Indicators affecting a derivative’s performance are varied, and depending on the type of derivative. These can range from the stock market index to the consumer price index to weather conditions and fluctuations in currency exchange rates. The following reasons provide information on why it may be a good idea to begin derivatives trading.

1. Less Risk than other Trades

When you trade in derivatives, you are not purchasing the underlying product or buying into the company, although in some cases you are agreeing to purchase assets in the future, also known as futures trading. Instead, your risk is on the performance. There are two main types of derivatives: futures and options, which allow someone the option to buy or sell at a prearranged price. There are three main types of firms that use derivatives. These are investment banks, commercial banks, and end users, such as floor traders, corporations, and hedge and mutual funds.

While you can still lose money in derivatives trading, the risk is much less of an investment. Further, you can get involved in derivatives trading for a much lower initial investment, something that may appeal to those who cannot or do not want to invest as much as is required to purchase stock. Derivatives can also be a good way to add balance to your total portfolio, thereby spreading risk throughout a variety of investments rather than in only a few.

2. They Can be a Good Short Term Investment

If you are looking for an investment opportunity that can pay off in a shorter time frame, derivatives may be a good option. While some stocks and bonds are long-term investments over the course of many years, derivatives can be days, weeks, or a few months. Because of the shorter turnaround time, they can be a good way to break into the market as well as a good way to mix short and long-term investments. If you have a portfolio consisting of long-term investments, such as some stocks, and want an option to put your money to work now, derivatives may be an option.

Making derivatives work for you requires careful research and consideration just like any other investment opportunity. However, in a fast-paced world, investors have the option to see results much sooner in options or futures trading that are not available through other means.

3. Variety and Flexibility

The nature of derivatives essentially means that the opportunities for trading this type of investment are limited only by the imagination. The other side of this is that someone interested in entering the derivatives trading market needs to either have a trusted financial representative, or learn as much about the business as possible. Doing both is the best option, as you can then work with a financial representative in a much more involved way and have a better handle on what your money is doing and where. Numerous resources are available on the Internet for learning more about derivatives trading and the many options available. Those interested in derivatives training may want to begin by focusing on a particular area, such as currency trading. Some types of trading options are available around the clock, on a global scale. This is another reason some investors are drawn to derivatives trading. Getting involved in the global economy can be exciting, and it opens international options that may not be available through the traditional stock market (particularly given the regulations placed on foreign companies to comply with U.S. laws such as Sarbanes-Oxley).

In short, derivatives trading can be an excellent way to either break into the trading market or to round out an existing portfolio. It offers a wide range of options, including international opportunities. Finally, with some skill, research, and a bit of luck, it can be a good way to make your money work for you.

Mike Singh is a finance enthusiast who writes articles about variety of fiscal topics. Checkout more Forex-related articles at Forex made easy.

Trading covers a multitude of sins, or at least a multitude of markets. Mention “trading” to a non-trader and they’ll probably think of stock and shares but there are many other markets you can trade in. These include commodities, futures, indices, CFDs and options. They all have their pros and cons and some require specialized knowledge.

The most popular markets used by traders are stocks, commodities, futures, indices and forex. Some traders switch between markets, others stick to just one. Let’s highlight some of the similarities and differences between them.

Shares

In the USA there are over 40,000 shares so you have a lot of markets to choose from. You can’t deal in all of them so you need to home in on those that offer good trading opportunities using whatever trading methods you decide to use.

When buying shares you usually have to put up all the money at the time of sale. That might seem obvious but it’s not so with all markets. Some brokers offer a 50% margin with shares which means you can trade to the value of twice the amount in your account. This seems like a good deal but if your shares start to go down you’ll get a “margin call” and will either have to put more money in your account or sell the shares at a loss.

Shares are normally traded in lots of 100. If you want to trade an expensive share – and some shares are very expensive, particularly in the US markets – you need a considerable amount of money in your account.

It’s not easy to sell shares short. Selling short is a strange concept to many people who think of buying shares at a low price and selling then at a higher price. But it’s often easier to predict that a share will fall rather than rise so what you’d like to do is to sell it at a high price and then buy it back later at a low price. The net result is the same whatever the order of the deals – buy low, sell high.

However, you can’t sell something you don’t own so in order to sell shares short you must “borrow” them from your broker. This is not quite as straightforward as buying and not all shares are available for selling short.

Finally, share dealing takes place during market hours so if you don’t live in the country where they are being traded you must adjust your trading hours to suit.

Futures, commodities and indices

Commodities are goods such as corn, copper, crude oil, orange juice, oats, gold and wheat.

Technically, a futures contract is an agreement to make or accept delivery of a commodity on a certain day at a certain price. In practice this rarely happens unless you’re a manufacturer who actually wants the goods. The vast majority of futures traders are simply speculating on whether the price will go up or down and never take delivery of an item.

Futures contacts include commodities and also stock market indices such as the S&P 500, Dow Jones and the Russell. Indices are simply a composite of securities that provide an overall reading of the market or some section of it.

The S&P 500 (Standard & Poor’s 500) tracks 500 of the largest companies in the US market. The Dow Jones Industrial Average tracks only 30 of the largest and longest-established companies while the Russell 2000 is an index of smaller stocks.

Essentially, commodities and indices are futures and traded in much the same way although traders may use the terms interchangeably.

Unlike shares, futures can be sold short just as easily as they can be bought. Each futures contract has its own fluctuating price and many traders deal in just one lot contracts.

Brokers usually charge a flat fee commission per contract, often expressed as a “round turn” which is one buy and one sell transaction. This may be a few dollars, often less than the value of a point or two on the contract. If you’re trading a long time frame the commission is negligible but if you’re day trading and scalping for a few points here and there it becomes a considerable part of the cost.

Futures brokers usually offer a margin of around 20% of the value of the underlying instrument so you can control $10,000′s worth of a contract for maybe $2,000. However, the same rules apply – if you over-leverage your account you’ll receive a margin call or your positions will be closed at a loss. Margin and leverage are a two-edged sword.

Many brokers offer a demo account so you can get used to the trading platform and test your trading strategies before you put real money on the line.

Forex Currency Trading

Currency trading, foreign exchange or forex as it’s more commonly known, has fast become one of the most popular markets for private traders in recent years.

As its name suggests, it involves buying and selling foreign currency. The most commonly traded currencies are referenced against the US Dollar and are sometimes referred to as a “currency pair” even though you are only trading one instrument. For example, the GBPUSD is the UK Pound/US Dollar pair. A value of 1.7625 would mean that the one Pound is worth 1.7625 Dollars. Other popular pairs include the Euro (EURUSD), the Swiss Franc (USDCHF) and the Japanese Yen (USDJPY) although there are others.

So unlike shares and futures, you don’t have a mass of markets to choose from, but there is variety within forex currency trading to give you a range of markets to trade.

The value of each pair differs slightly but the minimum movement – called a “pip” – is worth approximately $10. The GBPUSD has been averaging 100-150 pips per day which would be $1000-1500. Many brokers let you trade half or even quarter-size lots which are useful when you’re starting out. Also, many brokers offer a demo account so you can practice before risking real money.

The total value of the forex market is worth trillions of dollars per day, far larger than shares or futures. It is also a truly international market with dealing taking place all around the globe 24 hours per day from Monday to Friday. You can, therefore, trade at any time of the day or night at times to suit you. It’s worth noting, however, that the bigger moves generally occur during the US and European trading sessions.

You can sell short forex just as easily as you can buy and brokers offer highly-leveraged accounts too – but the same warning regarding margins apply here as well.

Brokers tend not to charge a commission for trading forex and you will often see adverts for “commission free” trading. However, they make their money on the spread which is the difference between the buying price and the selling price. The spread is usually between 3 and 5 pips although some brokers may offer a 2 pip spread on some pairs, and some less-popular pairs may have a larger spread.

Paying on the spread is particularly useful when trading mini lots. A 3-pip spread on a quarter lot will be about $7.50 whereas on a full-size lot it would be $30. Again, the spread is more important when trading short time frames where you’re only aiming to make a few pips per trade. You need to build the spread into your trading system so you don’t overestimate the amount you might make per trade.

One interesting aspect of forex currency trading is that there is no central clearing house where absolute prices are quoted, unlike shares and futures. So it’s quite possible to see different brokers quoting slightly different prices for the same pair. As the market has become more efficient, this difference has reduced, in most cases, to a few pips but it highlights the importance of checking that the data you are using for analysis is the same – or close to – that used by your broker for placing your orders.

The market you decide to trade will depend on many things, not least of all, your budget, but also how many markets you want to look at and what hours you want to trade. There are trading vehicles to suit all preferences and pockets.

For more Currency Trading Forex information, visit http://www.forextradinglive.com

Currency trading may be one of the most liquid forms of trading, but it is also a volatile market that requires strategy if you wish to make money. The truth is that more people make small profits in this market, while a few are highly successful. The constant change makes this form of trading exciting and with a high profit potential; however, making a fast buck in this market may not be as easy as it used to be.

What is Currency Trading?

In its basic form, currency trading, also known as “forex trading,” is simply that–trading money. It involves trading one currency for another, such as U.S. dollars for the Euro. The exchange rate is known as the foreign-exchange rate, forex rate, or FX rate and is one of the largest markets in the world, trading trillions of U.S. dollars each day. Currency trading gained enormous popularity in the 1990s, and continues today. One reason this type of trading is so popular is that it can be done from a computer, twenty-four hours a day. There are fewer currencies to trade with, which makes learning the practice much easier (as opposed to learning about the many stock options available). The most commonly traded currencies are the U.S. dollar, the Japanese yen, and the British pound.

Currencies are traded in pairs. The trader buys the one that he or she believes will appreciate in value over the other. Currency fluctuates as there is demand for it. Interest rates tend to be an indication of a currency’s demand. The higher a country’s interest rate, the higher demand. However, countries will sometimes try to create demand for a currency by changing interest rates. The well-informed trader needs to conduct research and make educated guesses on a currency’s future.

Currency Trading is Big Business

The currency trading business is big. An estimated two trillion in U.S. dollars is exchanged each day. The forex market is the largest in the world. Because it can be done from home, many people are interested in getting involved, and the payoff can be big. It is also possible to get involved with little investment. Traders simply determine how much they are able and willing to risk, and they can enter the market.

As with other forms of trading, watching the market and making calculated decisions is more likely to result in a profit than making decisions based on emotions, hunches, or preferences. Many courses are available on currency trading. Learning more about the process can help traders make better choices. Choosing a quality course is also a matter that requires a bit of research. However, currency markets fluctuate on both short and long-term timelines, and learning how to best track these changes and the events that affect the markets can help traders, especially those new to the process. The allure of making quick cash is still out there, however, as it is possible to close a contract after a few minutes, hours, days, or weeks.

Is it Nearing its Peak?

The currency trading frenzy, which expanded rapidly during the 1990s, may be reaching a peak. Why? While in some ways currency trading is easy, many people who enter the market do not make money. The idea that you can make quick cash is not as easy as it sounds. Additionally, while traditional stocks are based on a company’s physical assets and product, currency trading is not absolute. Further, governments control, or attempt to control currencies to reach political objectives. Unforeseen events, such as natural disasters, can also alter a currency’s value, making it more difficult to make an educated guess on a currency’s future. Finally, the global marketplace is changing currencies around the world (the Euro is one such example).

This does not mean that a person cannot make money in the currency market. However, as the global marketplace continues to expand and global politics affect currencies, it is much more difficult to determine a currency’s value. Making money in the Foreign Exchange market is possible, but it is not easy. Even economists have a difficult time estimating the future of currencies and purchasing power, so a trader must conduct thorough research, determine trends, and try to make the best guess possible.

Mike Singh is a finance enthusiast who writes articles about variety of fiscal topics. Checkout more Forex-related articles at Forex made easy.

Indian stock market is no doubt one of the most volatile stock market in the world; many people have made millions of profits, and sadly lost millions also. The problem is that 90% of traders in India rely on tips which are given by amateurs and some so called technical analysts who claim 90% or in some cases 100% accuracy, this is very immature and I really feel that some autonomous body in India should come who should track these analysts closely and give them ranking or ratings on which investors can rely and then subscribe to them on the basis of the ratings, of the autonomous body. Anyways this will take time to formulate, but if done then it will surely bring sanity to the minds of day-traders and investors who invest huge sums of money on the basis of these analysts’ tips.

I am more interested in delivering profits to an average investor but on the same time I would like the investor or day-trader to understand the concept of technical analysis, which is a very widely used word among traders who do some reading on websites and watch TV channels. Technical analysis is an incomplete study of statistical indicators, not one indicator is perfect, you have to use many indicators together in order to come to a particular conclusion that a stock is going to correct or is it going to fall.

There are many factors which effect a trader’s mind while trading in stocks. There are three ways a trader can trade:

1) The trader can call his broker on phone and place the trade via phone.

2) The trader can trade from home via internet, and place order by himself.

3) The trader can go to the broker’s office and do trading from there only.

1st and 3rd are old methods, and can bring huge losses to the trader, the 2nd method is also dangerous, but less, if the trader knows’s technical analysis. The 3rd method can be good again if the trader knows technical analysis, but then the broker’s trading software should have graphs for stocks, with technical indicators. Technical analysis requires a focused mind, technical analysis is not just making a cup of tea and then drinking it and then you become a renowned analyst, NO!, it requires patience, a focused mind, and surely a four letter word “PLAN”. Without planning you cannot succeed in technical analysis it is the fuel which runs technical analysis, once you plan that you want to short sell Reliance the next trading day, you watch out for a breakout of crucial support level and the short sell it, during the intra-day and while short selling you also make sure that Sensex and Nifty also show weakness or are in clear downtrend.

This a very simple technique just explained to you, but obviously it includes a lot of graph analysis which is not being discussed right now as then this article will be of more than 100 pages and I have just started typing this article and will like to do so, in future . When you read the word “PLAN” then many thoughts come in the mind, what sort of planning should I do when I know market is going to fall tomorrow, or rally? There are many methods but the best method which I have followed is to follow the trend and big stocks like SBI, RELIANCE, TCS, INFOSYS, and SATYAM.

Let me give you an example: To follow the trend I track BSE SENSEX chart everyday and in intra-day as well, the moment I find important turning points, where Sensex will correct or from where Sensex will bounce back at, and when that is confirmed I take a directional call on a stock for example short sell Reliance at 750 is that is broken and keep a target of Rs742, stop loss I keep as 757, which is roughly 1% of Reliance cash market price. When I keep a target of 742 and I see a bullish pattern forming at bottoms in Sensex and at that time reliance is at 744, then I buy it at that price or wait for it to touch 743, and make it a point to cover the short sell fast. 90% of people who loose money in short sell is that they either get over confident or they want higher profits, and wait for lower targets as they get confident that market is correcting then why should we cover it, let the market correct, this policy sometimes give good profits but sometimes take away money also, and loads of money. So when you are getting profit after short selling Reliance at 749.50 and Reliance is at now 743 you are getting Rs6.50 profit per share. Say you shorted 500 shares then 500 x 6.50 = Rs3250, say the brokerage is .0005 per transaction (5 paisa), then:

Bought brokerage .0005 x 500 x 749.50 = 188 sold brokerage .0005 x 500 x 743 = 186 total brokerage = Rs374 Total profit = Rs3250 – 374 = Rs2876
5 paisa brokerage is equivalent to 5 / 100 = .05 then .05 / 100 = .0005 which is the % to be used in order to calculate the actual brokerage.

Just exit at 743 if reliance touches that level, Rs2876 profit in a single day is enough. Even if Reliance touches 744 I will exit, because volatility sometimes is huge and I don’t trade for targets, I trade for profits. When I say I track sensex it is because Sensex is a broad based index as compared to NSE, when I say broad based index, it is because sensex has more stocks listed in its exchange and its base starts from 1975 onwards, than nifty and also sensex is the oldest index in Asia, NSE came in 1995 or 1996 if i am not wrong. Sensex gives sometimes very early signals of correction which Nifty does not.

Another rule I follow is to trade only after 10:15am, this is because when market opens at 9:55am then market is at peaks of volatility and first 20minutes decide the trend of the market, and this phenomena is very important to follow the trend, what happens that if market opens in negative then in first 20min itself market might correct and start moving up which if you short sell in those 20min you will get stuck on lower levels and hence stop loss will trigger and you loose. To use technical analysis you have to set some rules, and the most important rule is to trade after 15-20min market has moved and some sort of stability has formed, in the market. After 10:15am one should read the charts of the indices and try to figure out the main trend of the index, and then try to find those stocks which are moving with the index and are near very crucial support and resistances, and then once those levels are broken then one can trade in that stock which obviously has broken out in the direction of the trend and also its crucial support or resistance.

Technical analysis is not a magic wand which you can swing and get instant results in a few minutes, instead technical analysis is a tool which can be used to enter and exit from stocks profitably, or in any financial markets, technical analysis lays a lot of weightage on volume. Make sure the stocks you are analysing have enough volume so that your analysis is accurate on the basis of tools you are using. For example my thumb rule is based on atleast 1 million shares are traded on that stock to be listed in my analysis list, otherwise I don’t do analysis on that stock.

Right now I have not mentioned how to find that support and resistance levels, neither i have explained how to find the main trend of the index, these key points will be discussed in the later articles. I use Japanese candlesticks, in order to find the trend reversal points and also to find the main trend of the index or the stock in which i want to take my entry. Japanese candlesticks is vast study and requires at least 100 pages (can go to 300 pages) of articles with examples to be explained in order to make it clear to you. If you follow Japanese candlesticks and other technical indicators and are an amateur, then the method explained above will bring some method and refinement in your trading.

I will end here my article which is a short one, but will post many other articles to bring clarity in your mind in order to catch the trend in stock market at right time, as that is the key to success in day trading, otherwise indian stock market is big jungle and you can get lost in it!

DISCLAIMER

This article is written by Mohit Thapar, technical analyst and trader in stock market who is managing his website http://www.bookprofit.com, and are his views and any decisions taken by any reader of this article after reading it, in stock market then the reader is solely responsible for his/her actions. Stock market is a very volatile place to invest your hard earned money, and you might incur losses if you don’t follow some rules, or you should hire either a technical analyst or financial analyst to manage your money. If you are interested to post this article on your site, then please don’t delete this disclaimer and give a link back to http://www.bookprofit.com, Bookprofit is a registered trade mark. Bookprofit is registered. Thanks.

Mohit Thapar is a technical analyst and webmaster for http://www.bookprofit.com He also conducts technical analysis training for 2 days on weekends, in New Delhi, India. He gives free technical analysis support to all his students, for 1 month after successful completion of a 2 day workshop which is 7 hrs each day.

The basis behind using technical analysis is to find trends when looking at the forex charts and be aware of when they first develop so you can ride the trend until it ends. The foreign exchange market is a very strong trending market, lots of ups and downs in short periods of time, and is, therefore, a place where technical analysis can be very effective.

But even considering the great amount of indicators available, there are still many traders every week who still end up buying (being “long”) while the currency pair is in a basic downtrend, or selling short when a market is in a uptrend. This is, they end doing things backwards.

If you want to become a profitable forex trader you will need to use as many technical indicators as you want, or create a personalized trading strategy based off a combination of indicators, to recognize the trend. In other words, professional Forex traders try to identify the major trend, the intermediate trend, and the short-term trend and then construct their trades in that direction, based on how long their rules allow them to hold a position. More information here; http://www.1-forex.com

If the action of the market shows your judgment to be correct, the successful trader ‘stays with the market’ and endeavors to make the maximum profit on each trade, according to his/her risk-to-reward / equity management rules. If and when the market goes against him/her, the smart trader will take profits and get out. In a narrow market, when prices are not going anywhere to speak of, but move within a narrow range, there is no sense in trying to anticipate when the next BIG movement is going to be – up or down.

In short, if you want to be in good profitable terms with the forex markets you must follow this words of wisdom: “Never argue with the market, or ask it for reasons or explanations”.

Adrian Pablo

Forex Trader and Freelance Writer

http://www.1-forex.com

If you consider the possibility of trading stocks, there are some things you should know from the start. The first thing you should know is what exactly stocks trading mean. Well, first of all, stock shares represent a way companies raise capital for their business. A company issues new stock share, people buy them and the money goes into the company’s bank accounts to be invested in the company’s business. The public has access to these stock shares through a stock broker who is selling and buying them. One thing you should always keep in mind when you start buying shares: their price is constantly changing based on supply and demand balance for those shares. When the supply is high, the price falls; but when the demand is high, the price is going up. This is the golden rule of stocks trading. A raise of price brings money to your pockets.

Stocks trading have changed lately due to technological evolution. Internet has eased the selling and buying process. It is now possible to sell and buy shares instantly. Consequently, the stocks trading process has changed as people chose to sell and buy more often instead of just keeping the shares as they used to do years ago.

Stocks trading are a process that presents both advantages and disadvantages.

First of all, the profit is bigger when you are constantly trading your shares portfolio instead of just keeping the shares for years. There is a huge amount of shares available for buying on the market. But be careful, not all shares have price moving up. You just have to dig up and find those shares whose prices are bringing you profit.

If you don’t know what company’s shares are better to buy, you can always go for popular companies as Microsoft or IBM. They always bring a sure profit.

Leverage is stocks trading biggest disadvantage. This means that if you have a margined account, the maximum leverage you can get is no more than 4:1. Forex trading and even futures trading offer better deals than stocks trading. Another disadvantage is the fact that a trader who is doing more than 4 trades in a 5 days period is required to hold at least $25, 000 in his/her trading account.

The uptick rule represents another disadvantage of the stocks trading process. You are required to wait for the stock price to tick up before you are aloowed to sell it.

Another big disadvantage is the cost of stocks trading. Although the costs for online trading are low, they still count quite a lot at the end of a trading day.

In conclusion, stocks trading are a process which has its upsides and downsides as any other trading method. The best thing for you is to choose the kind of trading you consider is most suitable for you. But keep in mind that all trading processes (no matter if they are forex trading, future trading or stocks trading) have both advantages and disadvantages.

For a Stock Trading system and investment strategy that is simple and easy to follow just visit http://www.mytradingsystem.net Portfolio management strategies that work in all types of stock market.