Professional Trading Strategies You Can Use Now With Free PDF by Nishit Kumar Three main things differentiate a successful trader from an unsuccessful one; discipline, dedication, and 12/08/ · 7 Star Day Trading Strategies (PDF) for Beginners August 12, Strategy This is a multilingual system to get good deals on this particular part of trading strategy can Options Trading Strategies Quick Guide With Free PDF by Stelian Olar For investors in every field, hedging against the unknown and the inherent risks in their core business should be the Top 10 Best Forex Trading Strategies that Work Price Action Trend Strategy 4. Stretch Breakout Channel Strategy The Stretch Breakout Channel strategy is a scalping strategy 05/06/ · DOWNLOAD PROFESSIONAL TRADING STRATEGIES PDF 1. Scalping. Scalping is a trading strategy that holds an order for a few seconds to a few minutes. The goal of ... read more
With passive investing, you buy a particular portfolio of shares, and you earn money regularly in the form of dividends for holding the stock. Over a period of time, the share price might appreciate too, but your primary source of income is the dividends that these shares provide. There are two primary classes of strategies that people use; fundamental analysis and technical analysis. Each of these suits different types of investors, and you need to understand both to choose the one that works best for your needs.
Often, traders also use both these in conjunction; therefore, a cursory understanding of both these methods will definitely augment your trading abilities. In this post, we discuss the different trading strategies you can use for trading in the market and what types of investors each of these strategies are suitable for.
NOTE: You can get the best free charts and broker for these strategies here. The main difference between technical and fundamental analysis is the desired outcome in each scenario. Both forms of analysis involve identifying companies whose shares can be bought and sold; however, both forms of analysis have different parameters and different outcomes.
Each of these strategies has its own ups and downs, which have been discussed in detail below. Investors then invest in these companies and aim to profit when the company grows in size and becomes more profitable. Under fundamental investing, the money is being invested into the company that has issued these shares. The ideal outcome is for the company to grow over time.
Fundamental analysis is primarily suitable for long-term investors with varying risk appetites. These investors largely profit from dividends and the long-term appreciation in share prices.
Technical analysis is different because it often has nothing to do with the company whose shares are being traded. While these fluctuations could definitely happen due to fundamental factors, technical traders are only interested in the price movements in the market.
Technical analysis is primarily suitable for active traders who have access to accurate trading information and are willing to put in the time to trade and improve constantly. Based on the kind of analysis that you are planning to use, there are several different professional trading strategies that you can choose from. Below, four of the most commonly used trading strategies have been analyzed and discussed in detail.
Swing trading refers to a trading strategy that primarily utilizes technical analysis to capture gains that might be realized in a few days or weeks. It is a short-to-medium term strategy, and some traders also use fundamental analysis for bigger trades for a more detailed understanding of the company.
This enables them to re-confirm their assumptions about the expected movements of the stock over the next few days. One of the major risk factors involved in swing trading is called the overnight and weekend risk. When a trader uses swing trading, they leave their positions open overnight and across weekends, unlike day trading, where all positions are closed on the same day. This means that the stock price might be affected by overnight changes when the markets are closed.
Sometimes, the stock price might open at a different level than the price it closed on the previous day, increasing the risk factor for traders. Traders generally follow a set risk-reward ratio while trading using these strategies and their stop-loss and profit for each trade using this ratio. In addition to this, traders might also choose to close the position themselves based on a technical indicator or unexpected movements in the price action.
Scalping is a trading style that does not really rely on fundamental or technical analysis for the most part. The basic idea behind scalping is that drops and drops make an ocean. Scalpers usually open and close hundreds of trades on any given day, making small profits on each of them. The main consideration is that there needs to be a strong exit strategy in place for every trade. Due to the high volume of shares being traded, even a small unfavorable movement can lead to significant losses for the trader.
To ensure maximum profitability, scalpers need to ensure that they have access to real-time data, a direct-access broker, and the stamina required to place several trades in any given day.
The idea is to have more profitable trades than loss making trades so that traders can end their day in the green. While earlier, this was only done by traders employed by large financial institutions, with the advent of online trading platforms, day trading has become much more accessible to the general populace.
Day traders apply a variety of different strategies and methods to identify profitable trading opportunities. They commonly rely on technical analysis since their timeframe is not long enough for fundamental analysis to come into play. However, they do trade on company announcements, earnings reports, and other fundamental factors.
In addition to technical analysis, day traders also incorporate various indicators that signal to them when there is a good buying or selling opportunity. A central risk-reward ratio also governs their trades. They require a high degree of objectivity and discipline to consistently profit in the market, alongside an ability to introspect and identify what went wrong whenever they have a loss making trade.
For all intents and purposes, Positional traders are the opposite of day traders in that their time horizon is very long, often running into a year or even more. They operate under the fundamental belief that when a trend emerges, it is likely to continue for quite some time, and hence, it would be a good idea to follow the trend and ride it for profits.
Position traders often make very few trades in a year, and they are not really concerned with the day-to-day fluctuations in the stock prices. What matters to them is the long-term trends, and the only reason they bother with the stock news is if there is something that fundamentally changes the company to the extent that would affect their long-term view of the position.
Mistakes are proof of my inadequacy. This fear-based thinking shows up in our minds as thoughts, and our avoidance of them is what keeps us fused to them. What you need to do is clean house and invite some new guests to the table. Changing self-limiting beliefs requires recognizing what they are, and addressing them for long-term re-organization of self.
Compassion is the emotion that reorganizes the self for internal validation rather than external validation. All it does is continue to feed self-limiting beliefs of inadequacy or powerlessness. As a trader, you need to build a mind for the management of probability.
Self-Compassion of a Caregiver Recognizing you are valuable and important From time to time, each of these programs has been called into service, and you can remember instances when you faced a challenge head-on, showed extraordinary discipline, exercised impartiality and demonstrated compassion.
These traits are inside you, and they need to be called to the surface. They are your friends in the trading world. That gets you to mindfulness Stage 2. Next you disrupt the self-limiting beliefs that have been developed without your knowledge Stage 3.
When you can trigger the emotions of courage, discipline, compassion, patience and impartiality, then you have re-organized the trading mind Stage 5. You are developing a calmer mind that thinks and processes information, rather than knee-jerking to perceived threats. With an empowered mindset, you approach uncertainty from a position of Discipline, Courage, Patience and Impartiality rather than fear.
Their emotions are under control and they face uncertainty with courage, discipline, patience and impartiality. They are almost Zen-like. They seem to process information effortlessly, and make well-reasoned decisions. These people are not operating from a fear-based mind. None of that noise is cluttering up their minds. You need to recognize and identify your fears, and the self-limiting belief systems you have patterned based on fear. When you get to this place, your trading account will look much better.
In addition to this, he has worked for many years as a personal development coach teaching individuals how to affect positive change, peak performance, personal growth, and leadership potential. His work centers on how to break the fear-based, self-limiting patterns to which the brain adapts us for survival and how to reorganize the self to a higher level of functioning. This is accomplished by learning how to manage biological fear and its impact on thought and thus access much more empowered parts of the self that shift our capacity for positive performance.
Most traders trade in a state of fear, so they never can open the possibility of performing on a higher level. His emotional regulation training has been used to treat violent prisoners, break the cycle of domestic violence, and free people from the limitations of fearful thinking.
His belief is that, until you understand the power of your biology and how to manage it, you will be overwhelmed by it. Momentary success will be sucked down the drain of the pattern- making machinery of your brain.
To break free of old limiting patterns, you must reorganize the brain -- not the mind. The mind follows the brain. What does this look like? Go to any standard motivational seminar and feel the emotion -- it feels like you can change the world and it will last forever.
Then where are you 4 weeks later or less -- back to the same old place. His work with traders began when one came to him seeking improvement in his trading performances. More traders showed up seeking training due to this success.
Welcome to this mini Forex Foundation course, your roadmap to trading the Forex Markets. Today I run fxtradersedge. com, a comprehensive program that offers courses and numerous coaching and trading services. Trading Pub asked me to explain what makes Forex a great market to trade so I thought I would start with some basic terminology and history, to show you how the market has evolved as one of the fastest growing markets to trade. I will then switch gears completely and talk about a strategy which is very easy for a new Forex trader to grasp.
It is even good for advanced traders! The strategy is called the continuation and reversal pattern and we will show how to use it during trend and end of trend cycles. What is Forex? Foreign Exchange Trading is known as Forex, or by the acronym FX. Today we are going to talk about the transactions of the foreign exchange market known as the spot market. This market involves a worldwide electronic network of banks, brokers and other financial intermediaries. This ensures that transactions happen in seconds directly with the market makers.
All profits are settled immediately in cash. The Lingo in Forex is about pips and lots. What is a pip? If we look at the EURUSD at 1. When we talk about a move in the EURUSD of 5 pips, we are referring to a move from 1. Figure 1: The Forex Spot Market A pip move is from 1. If we look at the USDJPY at If the USDJPY moves 1 pip in the market, it moves from Nowadays, brokers quote to 5 decimal places in the EURUSD and to 3 decimal places in the USDJPY.
For example, the EURUSD would be quoted as 1. Currencies used to only be traded in specific Lot or Unit sizes. Today brokers allow traders to vary the Unit size without sticking to the standard Lot sizes. That margin will vary according to the leverage the broker is willing to offer. Of course, any losses or gains on the position will be added to or deducted from the balance in the account.
The Forex market has evolved faster than any other financial market in history. However, foreign exchange transactions existed a long time before that. Between and currencies gained a new phase of stability because they were supported by the price of gold. The Gold Standard replaced the age-old practice in which kings and rulers arbitrarily devalued money and triggered inflation.
The Gold Standard was a commitment by participating countries to fix the prices of their domestic currencies in terms of a specified amount of gold. Beginning in , countries operated under the Bretton Woods Accord. A total of 44 countries met in New Hampshire to design a new economic order. However, heavy American spending on the Vietnam War led to persistent U.
balance-of- payments deficits and steadily reduced gold reserves. Finally, on August 15, , President Nixon announced the suspension of converting dollars into gold, unilaterally devaluing the U. dollar and effectively ending the Bretton Woods Accord. After the Bretton Woods Accord, the Smithsonian Agreement was signed in December of This agreement was similar to the Bretton Woods Accord, but it allowed for a greater fluctuation for foreign currencies. The US trade deficit continued to grow, however, and the US dollar needed to be devalued beyond the parameters established by the Smithsonian Agreement and this resulted in its collapse in An acronym I developed is the Be RICHeR network and this network trades Forex.
Figure 2: Who Trades Forex? The Retail Forex Brokers came on the scene after Investment Management Firms have foreign exposures from their stock and bond portfolios and they transact with the banks. Corporations in their daily, monthly and yearly foreign exchange transactions deal with the banks.
The Central Banks are also key players managing their currency exposures and dealing with investment banks. Hedge funds manage a variety of asset classes, including currencies, and they transact with Banks. Finally, we have eRetail, dealing electronically through trading platforms of retail Forex Brokers.
When you take your first currency trade, you too will become part of this Be RICHeR Network! A CFD, or contract for difference, is a product whose price is based on the underlying instrument and is considered an over-the-counter OTC product, which is not traded on any exchange.
For most brokers, the lists of offered instruments continues to grow. As retail traders, we have the ability to trade all of these instruments on Forex trading platforms. The number of markets quoted will vary from broker to broker. One way to do that, is to look at several markets at once to compare them.
In this example we are looking at the major USD pairs to see if there is a particular trend in these pairs. Then we can do the analysis and decide which pairs to trade and when. In the example below, the USD pairs that have the cleanest price action include the commodity currencies, the USDCAD, NZDUSD and AUDUSD.
The three other pairs — the EURUSD, USDJPY and the GBPUSD - illustrate choppy, sideways markets which are not high probability charts for the upcoming trading session. In addition to scanning the charts for clean price action, it is necessary to review the news releases to be prepared for events which could move the markets.
An understanding of the fundamentals is key to relating the price action to the economic backdrop affecting the markets. The simple trading strategy that I have selected is the strategy for continuation trades and end of trend trades. First we are going to look at the pattern as an end of trend, or reversal trading strategy, also called the top and bottom pattern.
The top and bottom pattern is a very powerful pattern that signals a trend reversal. It can also be used as a trend continuation, which will be described shortly.
First, the reversal pattern. Scenario 1: In an uptrend, the market hits a new high, labelled point 1. Price then pulls back to a short-term support level, labelled point 2.
Finally, price moves up to an area between points 1 and 2, labelled point 3. It then reverses down again and begins a trend in the new direction.
Trade Entry: The pattern is complete when the price trades below point 2. At a top, the strategy is to sell on a break of point 2. The measuring objective is the distance between point 2 and point 3 projected below the break at point 2. The stop loss is set just above point 3 but a more conservative stop loss is above the start of this move, at point 1. This is a choice that the trader must make and only by trading it over and over again will the trader feel comfortable with the choice of a stop loss.
Also watch for reversal candlestick patterns at point 3 to trigger the entry. Figure 5 summarizes the top and bottom trade. We just looked at scenario 1 which is the top. Now we will discuss the opposite scenario of a bottom. Scenario 2: At a bottom, the market hits a low at point 1, trades up to point 2, trades back down to point 3, and back up through point 2 to begin a new uptrend. I also learned that if the pattern has between 10 and 20 bars between points 1 and 3, it is more likely to succeed.
What I have to say about that is back test and see for yourself. I take most of my trades based on this pattern alone. It is very powerful. You can also use this pattern on a smaller time frame once the market reversal is identified. You will get a closer entry to point 1 and will therefore be able to take a larger position, using the same money management rules.
The formation is classified as a major reversal pattern and is one of the best indicators of a trend reversal. They are found on every time frame. The swing or position trader will look for these patterns on the weekly, daily and 4-hour charts. The momentum trader will trade these patterns on the 5-minute, 1-minute and tick time frames.
Stop losses for tops should be set above point 1 initially, and positions need to be sized accordingly so as not to exceed the risk limit for the trade. Another option is to place stops above point 3. However, the odds are increased of being stopped out early. It is better to take a smaller position and leave the stop above point 1. Stop losses for bottoms are set below point 1, or alternatively, below point 3.
Optional: On a reversal using any time frame, wait one or two candles for confirmation. Ideally price will come back and retest the breakout or breakdown point for a safer entry. This helps to avoid whipsaw. At this point in the video we look at more reversal examples using market data.
The Pattern as a Trend Continuation Strategy We have just completed the section on the reversal pattern as confirmation of the end of the trend.
However, while the end of trend top and bottom is a great entry method for taking reversal trades, most of your trades as swing and day traders will be trying to get into a trend move — getting into the trend in the middle of it.
How do you get into the trend in the middle of it? The safest trades you can make are the ones where you are trading in the direction of the current trend. In other words, if the trend is up, you should be long — and if the trend is down, you should be short. If you miss the start of the trend, you still need a method to enter a confirmed trend during its progress. Enter on a break of the newly established point 2 with a stop above point 3.
Follow the market up or down, depending on the trend. Method 2 Draw your points. Enter at point 3 once price turns down with a stop above the new point 1. The safest trades are taken in the direction of the current trend. Trade entry is easily done with the internal formation. In a trend, the first pattern is the reversal pattern that occurs at market tops and bottoms. Take note how each point 3 becomes the new point 1 for the next internal pattern.
In a strong trend, the retracements can be as shallow as Preferred entry is on the break of point 2. However, alternatively, you may enter at point 3. And, wait for the candles to start trending again before entering.
Profit taking is recommended along the way for day traders. Position and swing traders may hold the positions and trail the stop every time we trigger a new trade. The stop would then be placed above the new point 1, and previous stops would be moved to the new point 1. At this point in the video we look at additional continuation examples using market data.
Once a trader understands that all of the markets are related in some way — currencies, commodities and stocks — and that correlations exist between certain markets, the excitement comes in understanding these relationships in order to confirm market moves day in and day out. Learn the fundamentals, scan the markets for the best markets to trade, and select a simple strategy such as the Strategy to stay with the trend, or find the end of the trend for a market reversal.
She works with members of her program in group and private coaching sessions and is passionate about teaching individuals how to trade the market cycles and use entrepreneurial skills and habits to effectively manage their business. In this program, we are going to take you on a journey to further your trading education.
That means that we will start with the basics, cover the intermediate levels, and end with more advanced concepts. CLICK HERE TO LEARN MORE! The report is broken down into a four different sections: Section 1: Forex Basics — Whether you are new to Forex trading or have some experience under your belt, this section helps lay a solid foundation. Section 2: The Continuation Method — This trading strategy has been one of my closely guarded secrets until now.
Read and re-read this section and then put the strategy to the test. Section 4: Forex Lingo — This is a glossary of some important Forex-related words and phrases.. On the simplest level, Forex is the market in which currencies are traded.
When you trade the Forex you are essentially buying and selling money. The currency market used to only be the playground of central banks, large institutional banks, hedge funds, and international companies with a lot of money. Now the average investor can gain access to this incredibly exciting market 24 hours a day 5 ½ days a week.
All you need is a computer and Internet access. Pips are similar to ticks or points in the stock market. Here is where it gets really interesting Trading the Forex requires most traders to use leverage using margin to increase their potential return for small moves in the exchange rate. then you can trade with as high as leverage. Traders who live outside of the U.
can use as much as leverage this is not suggested. Also, unlike the stock market, there is no central market location. Trades are conducted through a lot of individual dealers or financial centers. Non-Correlated Price Movement: For the most part, currency prices are uncorrelated to the stock market. This means that if you are a stock trader who is long the stock market, you can benefit from fluctuating currency prices that are completely uncorrelated.
Fewer Rules: Unlike the trading of stocks, futures or options, currency trading does not take place on an exchange with rules like the NYSE or CME.
In fact, if you had exclusive information, and it was used to make a lot of money, legal issues would not arise, like they would in the stock market. In other words there are no insider trading rules in the Forex. No to low commissions: For the most part there are no exchange, brokerage or clearing fees in the Forex market.
Instead, brokers make money on the difference in price you pay to buy, or the amount you receive when you sell, currencies, also known as the spread. If you are a night owl you can trade at 3 AM if you want to. Less Market Manipulation: Because the Forex market is so large there is less market manipulation, with the only real manipulation coming from the Central Banks.
This kind of manipulation is actually good because it creates large trends in the market. Buy and Sell With Ease: Unlike the stock market there is no uptick rule in Forex. This means that you can sell just as easily as you can buy. In other words you can make just as much if not more money by shorting a currency as you can by buying it. I am not a tax specialist so make sure to consult your tax preparer to confirm that this will work for your situation.
Historically A Trending Market: There has been no shortage of trends in the Global Currency Market since the end of the Nixon era gold standard. Trends are where the money is made and the Forex market usually has at least big trends every year. Technical Traders Dream: Technical analysis tends to work very well for currency trading.
This allows short-term traders to pull quick and precise profits from the market and long-term trend followers to profit along the way of the big trends. The beauty is that you can add to your account regularly and use the power of compounding to grow your wealth over time. Understanding how to make money by trading Forex is pretty simple. In Forex, unlike stocks or futures, you are trading two countries rather than one stock or one instrument. Essentially you are betting that the value of one countries currency will go up or down rela- tive to the value of another countries currency.
Since currencies are traded in pairs, when you buy one currency you are simultaneously selling the other currency. If the AUD had decreased in value to the USD you would have lost money on the transac- tion instead of making a profit. Forex trading, like any form of trading, is not without risk. Some may even suggest that trading in the Forex market actually carries above-average risk. There are two reasons for this: 1. No Central Exchange — While having no central exchange can be a benefit there is also a risk involved.
The main risk from this comes from less regulation which means that some brokers are unscrupulous. That is why choosing the right broker is so important. Leverage — Leverage margin trading can be a double-edged sword. When the new trader starts trading with leverage there will often notice right away that the dollars in their account generally stretch a lot farther.
This can lead to two things: a. These are both things that can really decimate your account. Trading with margin is no different than trading without it as long as you respect it and use it wisely. Trend following is a scientific and mechanical way to approach trading that removes most of the guesswork. It has a strong history of performance during crisis periods and is at the core of most of my trading methods. The idea behind the Continuation Method is to wait for a setback in the market and then jump in the direction of the trend.
We are using only technical analysis meaning that we are going to be looking at price charts for different currency pairs to make our decisions. Tools You Will Use 1. Its purpose is to tell whether a commodity or currency market is trading near the high or the low, or somewhere in between, of its recent trading range. We will use this in combination with a simple trend finding technique to determine the best possible entry during a correction in the trend.
The 50 Exponential Moving Average — EMA is a type of infinite impulse response filter that applies weighting factors, which decrease exponentially.
The weighting for each older datum decreases exponentially, never reaching zero. This helps us to measure trend by taking all previous data into account. The 5 Simple Moving Average — The Simple Moving Average is the unweighted mean of the previous N data. We will use this as a way to exit the market and trail our stop loss to protect profits. These indicators can be found in most charting software programs. Here is a screenshot showing how the chart looks with each of the indicators in place.
Once you have installed the template for MT4 simply right click on any chart and select template. Then select the Continuation Method template. With this method you have the option of trading in multiple time frames. Here is a breakdown for how to use the different time frames. End of Day Trading — This means you will look at the charts one time a day at the end of the day.
You will be in trades for days. Charts to use: Weekly and Daily Charts — Confirm trend on the weekly and trade the daily. Swing Trading — This means that you will look at the charts a few times a day and you will be in trades from days. Charts to use: Daily and 4-Hour Charts — Confirm trend on the daily and trade the 1-hour. Intra-Day Trading — This means that you will look at the charts several times a day and you will be in trades from days. Rule 1: Find the trend on the higher time frame.
If you are doing End of Day trading then you will be using the weekly and daily chart. The first thing you want to do is find the trend on the higher time frame chart weekly. The way you do this is very simple. You look at the 50 EMA and count back ten bars and determine whether or not it was sloping up more over the last ten bars or if it was sloping down more over the last ten bars. If the 50 EMA was is sloping up then the trend is up.
If the 50 EMA is sloping down the trend is down. If the trend is up you can only take buy trades. If the trend is down you can only take sell trades. After bar ten you can begin to look for buy trades on the Daily Chart. This leads to Rule 2. Rule 2: Move down to the lower time frame daily chart in this example and look for a pull back against the trend.
A pullback is identified by anytime a candle closes on the opposite side of the 50 EMA against the trend. The trend on the weekly chart turned up and the trend on the Daily chart is up as well. The next thing that you want to do is to look for a pull back against the trend. The way you identify this is very simple.
If a candle closes below the 50 EMA while the trend is up then this is considered a pullback against the trend. If a candle closes above the 50 EMA while the trend is down, then this is a pullback against the trend. This leads to Rule 3. In the case of this current example you can see an uptrend and you are looking to buy the market. Once it goes below the level you are now looking for it to rise back above the level.
The green dotted line shows where you would place our entry and the red dotted line shows where you would place our stop loss. Y would place a buy stop above the high of the signal candle or below the low for a sell. The stop loss will go below the low of the closest swing point in the opposite direction. A swing point is defined as a candle with a lower low than the previous candle and the following candle. Not every trade will be a winner. I wanted to show you a losing trade right off so that when you see all of the winners you will understand that losses will happen.
This is the very next trade that happens just a few days later. In this case you can see that the trade makes a tidy profit. Is the trend up in-line with the weekly chart?
Do we have a pullback? In this example your pip risk is pips. That means the price must move pips in your favor before you can move your stop. This enables you to dynamically follow the market as far as possible before cashing out and taking profits. This way you can let our winners run and cut your losses short. Once price reaches 1. Notice that price is above the 5 SMA at the point of the green line.
Then abruptly it closes below the 5 SMA. The next day it closes below the 5 SMA again. At this point you move your stop to the lowest of the two closes as identified by the green dotted line. The following day price breaches the lowest of the two closes and you are stopped out of the trade with a profit of pips.
The end reward to risk ratio is 1. If a transaction is not made as the desired price is not met by the close of trading, the end of day order will be canceled. In this case the order will not be cancelled until it is filled or until you manually cancel it. Swing Trading: A short-term strategy used by traders to buy and sell a market whose technical indicators suggest an upward or downward trend in the near future -- generally one day to two weeks.
If you want to spend even less time in a trade you can drop down to the 60 minute chart and do the exact same thing. The key is trading in the direction of the trend and being precise on following the rules. you are trying to capture the big trades with this that earn you much more money than you risk. Position Sizing Position sizing also known as money management is critical to your success as a Forex Trader.
When trading the Forex you are using high leverage and position sizing becomes even more critical. Position size is the only real determining factor as to how much you will win and how much you will lose on a trade. I recommend using a fixed fractional position sizing method. You are ready to start this wonderful and potentially very profitable journey of Forex trading. The Continuation Method has been responsible for hundreds of thousands of dollars in profit for myself and many other traders and investors and it can be for you too.
But you have to take action today. You have to take a risk if you want to get any kind of reward. Use the quick start checklist on the next page as your motivator to move forward with your dreams and goals of a bright financial future trading the Forex. Below is a simple Quick Start Checklist to help you get moving fast. Get started today. This is going to allow you to get familiar with how to read quotes and place trades on their platform.
Step 2: Pick Your Trading Platform The two recommended charting and trading platforms of choice are MetaTrader 4 and Ninja Trader. MetaTrader 4, or MT4 for short, is the most widely used Forex charting and trading platform in the world. Ninja Trader is another common charting and trading platform that can be used with multiple brokers. Click here to download it. Once you have downloaded MetaTrader 4 from your broker of choice you can download and install the template. To load the template on a chart simply follow the instructions here.
Step 3: Look For Trade Setups Using These Four Simple Steps 1. Identify the trend on the higher time-frame see rule 1 above 2. Move down time frames and look for a pull-back against the larger trend see rule 2 above 3. In this case you will use a buy stop to buy and a sell stop to sell. Conclusion Keeping things simple as a trader is a way to almost guarantee long-term success. The best traders in the world have become very good at mastering simple strategies. Simple strategies give you as the trader a better ability to execute the strategy with precision and accuracy thereby reducing the number of mistakes you make.
In my experience mistakes are one of the greatest cost factors to a new trader. Some mistakes can even be devastating to a newbie trader. This makes it all the more important to keep things simple. My philosophy has always been centered around what I call the K. stands for Keep It Simple To Succeed. The Continuation Method is a simple strategy that newbies to veterans alike can put into their trading arsenal immediately and start to see results.
Try it out today and let us know what you think. His first experience in trading was interning with a currency trading fund. He was so convinced that trading would be a big part of his future that he sold his mortgage brokerage firm, and went to work as an intern for minimum wage. After 12 months as a junior trader he got an opportunity to manage a small private fund for the firm.
Shortly after, in , Mr. Robles became a CTA and launched his own currency-trading firm, YourForexMentor. Robles has since traded millions of dollars in client funds and has educated thousands of traders around the world through his books, seminars and online courses.
Robles also speaks in the U. and abroad on trend following, technical analysis and money management for the FOREX markets. But did you know that a good entry is the least important part of a profitable trading equation? The truth is that your exit in the trade is far more important than your entry. The exit in a trend ultimately determines whether you take a profit or a loss. That means the right exit can help you maximize profits and minimize losses. The right exit can turn a losing trade in to a winning trade.
Conversely, the wrong exit can turn a winning trade in to a losing trade. Then market reverses and crosses over where your Take Profit was set. Why do average traders lose money consistently? Markets do this: Markets spike up and down, taking out levels along the way. You are almost guaranteeing that the market will stop out your order for a loss. How do you reverse this problem? This simple logic works with any entry strategy and it is designed to put active traders in a position to win more trades and deposit more money into their accounts.
It is very difficult to trade profitably in chaotic market conditions. This means you have a negative risk to reward ratio. o For example, if the ATR for your time frame at the time of entry is 7 pips, you want your take profit to be pips.
But if you are winning better than 70 percent of your trades, you are still making money consistently. If the market is expanding, the zones are stretched. If the market is contracting, the zones are tightened.
For investors in every field, hedging against the unknown and the inherent risks in their core business should be the ultimate goal. In professional trading , options trading strategies are one of the most important trading methods to both create profit and minimize risks. Options are extremely versatile. Profits can not only be generated by directional trades, i. This guide explains what options are and how options work.
One option is a conditional futures contract. The buyer of an option has the right, but not the obligation, to buy or sell a particular underlying asset at the expiration date or during the term at a pre-agreed price.
The seller of an option has — in the case of the exercise of the option by the buyer — the obligation to deliver the underlying asset at the pre-agreed price in the case of a call option or to buy the underlying asset in the case of a put option.
By buying an option, you buy the right to either buy or sell a specific underlying asset at a specific time and a pre-defined price. Options transactions are often referred to as futures transactions.
The most important feature of options is that with the purchase of the option, only the right to buy or sell is acquired, but not the obligation to execute this option. The way options work is straightforward to understand. NOTE: You can get the best free charts and broker for these strategies here.
A stock option entitles the holder to purchase shares of a particular public limited company to buy or sell at a fixed value. It means that stock options are not valid indefinitely but have an expiry date. Although an option, unlike a share, does not constitute a stake in a company, it allows the purchase or sale of such a company. The difference with direct stock trading is that the price is already fixed, although the transaction date is in the future.
The seller can only wait and see how the underlying asset develops. Hence the term still holder. In return, he receives an option bonus. The buyer, on the other hand, can become active. Depending on the option, he can decide during the term or at the end of the term expiry date whether to let the option expire or exercise it. The exercise variant determines when an option can be exercised, and the business process determines whether an option entitles you to buy or sell a share. The buyer can also buy the underlying asset before the maturity date, at the strike price if it is a call option , or sell it if it is a put option.
Whether this always makes sense for the option holder e. The possibility of exercising these options at any time also increases the premium to be paid because the seller wishes to be adequately compensated for this obligation.
On the pre-defined due date, the buyer owner of the option can thus exercise the associated right. In the case of a call option, he could buy the underlying asset at a fixed price; in the case of a put option, he could sell it.
The seller of the option silent partnership holder must then issue or accept the corresponding underlying asset in the event of exercise. However, for this risk, the seller is compensated with the option premium. If the option is not exercised, this is his profit. In the case of stock options, a distinction can be made between call and put options. Both call and put options can be sold and sold.
Managers of listed companies often receive bonuses in options from the employer and their normal salary. It means that the manager benefits when the share price of the company rises. Usually, the price of a share rises with the positive company development and with good figures. The manager or board of directors should thus be interested in a long-term increase in value. Compared to the usual options, these options often have very long holding periods.
If a manager has now managed successfully, he can exercise his options and buy shares in the company. However, this is much cheaper than the current price. Thus, in addition to the salary and direct bonuses, he makes even more profit. This is perhaps the most common use for stock options. If an investor is unsure about the performance of a stock position, he can hedge it with an option by the option behaving exactly opposite to the share price.
The investor must pay the option premium for this. However, there is no longer any risk if prices collapse. When hedging the deposit, therefore, only one option per shares should be purchased. No pure hedging effect is guaranteed. Incidentally, this strategy is called Protective Put. Particularly interesting is the leverage effect of the derivatives.
Because the option premiums are significantly lower than the equivalent of shares 1 contract , more profit can be generated with little money. However, the risk is also increased. For example, with covered calls, more can be extracted from a stock portfolio than just dividends and price gains. The custodian can then collect additional option premiums. It is also possible when starting to invest.
In the covered call strategy, you buy securities for a specific underlying asset and at the same time sell a short call option over the same value.
You cover the open position in the option through the paper in your depot. The income on the covered call comes exclusively from the option premium. However, you will only benefit from this return if the price value of the security at the maturity of the option is very close to the exercise value.
If the price rises, you are obliged to sell more valuable security at the agreed price. If the price falls, the holder of the option will let his options right expire. However, you must bear the loss due to the lowered price. With a protective put, you cover the risk of a stock position falling. You buy a Put option on a share that you have in your portfolio.
That is, the passing of time is a disadvantage for you. The paid option premium is comparable to the premium for insurance to cover a risk. The maximum loss of the position is due to the difference between the purchase price of the shares and the strike the put option and the paid option premium. This method thus differs from the simple long put, which can also be bought without the underlying asset.
If the price of the underlying drops lower than the strike price, the put can be exercised in profit. This strategy is ideal for price hedging of stock positions. With the Protective Put, two factors determine the amount of the premium. The further the put option is out of the money, the lower the option premium.
The second important factor is the runtime of the option. The straddle consists of a combination of two options. One put, and one call are traded. Depending on whether the options have been sold or sold, the options trader speculates on rising or falling volatility.
A short straddle strategy benefits from falling volatility. As a result, the prices of the options fall, and a buyback of the position is cheaper than the premium paid at the beginning. For a long straddle, the options trader is the owner of the option and benefits from an increase in value. The strategy starts at a loss because two premiums had to be paid.
The loss for this cannot increase any higher. For the strategy to generate profit, however, significant price movements are necessary. The direction of the movement is irrelevant. Both call short call and put options short put are sold on the same underlying asset, with the same strike and maturity date. A short straddle obliges the options trader to buy or sell a stock at a set price, provided that one of the two options contained is tendered.
The option premium received is higher than on its own with a short call or short put by selling two options. The long strangle involves buying a call option long call and buying a put option long put of the same underlying asset with the same expiry date. Remember, for the Long Straddle, different strikes are chosen. Since the options are usually out of money, the long strangle is cheaper. In return, the price increase or drop must be even stronger than with a long straddle to generate profit.
The fundamental objective of this strategy is also to benefit from changes in the share price in both directions. The cost of a long strangle is comparatively high compared to other strategies. It is suitable for volatile stocks. Here, a put option with strike A short put and a call option with strike B are sold short call. The underlying asset price should be between strike A and B on the due date for maximum profit. Both options are ideally worthless.
Experts in options trading use this strategy, just like a short straddle, to benefit from falling implied volatility. In market phases with high volatility, the options may be overvalued. The goal is to close the position at a profit as soon as volatility drops. The option premium received for the sale of the call option compensates for the cost of purchasing the option.
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