Forex: Technical analysis VS Fundamental analysis

Many traders wonder how to analyze the market – via the chart or via the news and events, many traders think that the news lead the movement of the price… But our opinion(and not only ours) is that the influence of the major events is not as big as you think. Trader’s Sentiment is what moves the price up or down. And you can see the sentiment of the traders at the chart. Most of the time the bad news are coming as a result of the previous downtrend movement and the good news are coming as a result of the previous uptrend movement. Read More

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Forex: Demo Account – exposing the myth of success

Recently I explored a lot of websites and forums orientated towards Forex traders and I realized that the most of the beginners (especially in India) think that if they “trade” on Demo Account for several months they will learn how to analyze the market and they will gain experience. And what happens? In the end when these “Demo Traders” put(eventually)  their money counting on their “Forex experience” most of them loose everything in a short period of time.

Now I will tell you what I know about Demo Account:

For the Forex Brokers this is a tool to seduce people who are afraid of the risk in  Forex market.

For the Forex Traders this is a tool to understand how reliable the platform is and to get used to it.

For the Demo Traders this is waste of time.

If you think that analysis is everything you are totally wrong! Yes, it is important, but you can find more important things. If you put 4 year old kid on the PC it will have approximately 50% success in its predictions. A grown up can do much better if he dedicate just a little bit time to learn. But 95% of the people who invest on Forex loose their investment. Of course this is because of bad Money Management.

But how can you learn how to manage your real money when you are trading with virtual money? The simulation of the market is almost the same as with real money, however your emotions are not the same –  you loose 10 000$ on Demo Account and you don’t care, you just open another position with leverage 100 and take the 10 000$ back – It is so easy to trade on Forex… And then you finally decide to open a real account – it is great. You have read an article for Money Management and you decide to trade at low risk. And it works – you make 20% profit in the first week. And you become involved with the trading, you overestimate yourself and you start trading with bigger lots so when the price hits your stop loss level it is just like Mike Tyson hits your head – Knock Out in the first Round.

So dear Demo Traders, I recommend you to open live account! Of course with smaller amount – I am aware that you are afraid to loose! But this is the truth…no pain – no gain! I guarantee that your first position closed on loss will show you that I am totally right! You will feel demotivated, you will loose confidence and you will consider to stop with this Risky Forex Market – unfamiliar feelings for you till that moment. And when you start getting over this feelings – this is the point where you can say the words “I have experience!”

AUD/NZD Weekly Elliott Wave Analysis

When you look at the weekly chart of AUD/NZD you can see that since August 2008 till now it perfectly formed uptrend Elliott Wave movement. It also formed Symmetrical Triangle. This can give us the signal that the price more likely will break the resistance levels at 1.3050 and 1.3270 and will target the strong resistance at 1.3720. So we recommend you to open long positions if it breaks the resistance at 1.3050. You decide where to put your stop loss!

Good luck!

Islamic Account in Forex

In the last few years the number of Muslims interested in Forex trading kept on growing, however how could they trade when it was in a contradiction with their religion – According Shariah (the Islamic law) the interest payment is prohibited. Of course the brokers figured it out and created Islamic Forex Accounts which became very popular recently. The main difference between the regular Forex Account and the Islamic Forex Account is that  with the second one there is no swap and practically this way they don’t pay interest to the broker.

The brokers also offer Islamic Forex Account that is managed by a professional trader. The difference between the regular managed account and the Islamic Managed Account is that with the second there is no other fee involved but the spread of the broker.

However our recommendation for the Muslims is to choose carefully who to manage they money! Ask a lot of questions, read a lot of articles and reviews an then decide which broker would be good for you!

Here you can see some good companies who offer very good Islamic Forex Accounts. We recommend you to register for all of them and to decide which one is suitable for you!

Good Luck!

GBP/USD goes up for Head and Shoulders?

In the last 3 days Cable broke the trendline and  support at 1.6050 and tested the other significant support at 1.5770. Now we can see on the chart the left shoulder and the head, so if it rebounds from the support at 1.5770 most probably it will make a correction till 1.6000-1.6050 to form the right shoulder and after that  GBP/USD will continue the downtrend movement.

Trading idea: Open a position at 1.5780 with stop loss at 1.5705 and take profit at 1.6030. If you use high leverage better skip this idea!

If you want to know what we consider high leverage and how leverage and big risk affect your trading click here .

If you like this analysis feel free to follow us via email and to share it on Facebook!

Good luck!

Forex: Money management – what separates winners from loosers

Have you asked yourself what strategy do you need to learn in order to become a successful trader? Have you tried to learn a lot of analyzing tools and indicators? Trend, support, resistance, Fibonacci, Gann, MACD, Moving Average, Bolinger bands etc. And in the end of the day you loose your capital… What is the problem? You analysis is over 50% successful however you loose money.

The answer is simple – Money management! In my opinion it is very easy to analyze the market over 50% successful! The hard part is to stay calm, to be patient to control your greed and emotions.

Have you been in a position to know that the market is going up, to think again and again “Why shouldn’t I put more money in this position? I am 100% sure it will go up!”? And then you decide to keep it the normal amount and… the market is going up and you regret your decision with the feeling that you have missed a good profit. And the next time when you are sure it will go up you open a huge position with high leverage(you are 100% sure it will go up) and… this time it goes down… and you loose a lot of money.

So what is the secret? NEVER risk more than 1-2% of your capital!

What is your success rate if you open a position with 100 pips take profit and 100 pips stop loss? Generally it is 50/50 which means that in a perfect world if you open 30 positions this month you will have 15 winning and 15 loosing positions and you will pay only the commission to your broker. If you risk 1% of your money you will be able to do it, however if you risk everything you cannot afford to loose on a position more than 2 times in a row.

Now imagine if you develop a little bit in technical analysis and your success is not 50/50 but 60/40, so you have opened 30 positions this month, 18 winning and 12 loosing. Lets say that you are trading with 10000$ – 1 pip= 1$ and leverage 1:1 . You always put your stop loss and take profit levels 100 pips away.

Calculation:

12 loosing positions * 100 pips = 1200 pips on  loss

18 winning positions * 100 pips = 1800 pips on profit

30 opened positions * 3 pips spread = 90 pips commission

So 1800-1200-90= 510 pips on profit = 510$ for 1 month

This is 6120$ profit on yearly basis which is 61.2%. I think  this is  great!

On the other side if you trade on high risk there is a chance to loose your whole capital for 1 hour…

Do you understand now why Money Management is one of the most important things in Forex?

All you need is discipline, self control, and just a little bit knowledge about the Forex market!

I wish I have helped you with this article!

If you think that what we write here is good don’t forget the option to follow the blogs via email! We will write a lot more in the future! And if you think that this will help your friends to develop in Forex trading you can just share t with them!

Good luck!

USD/INR is going down?

USD/INR reached the significant resistance at 54.00 and in our opinion it  more likely will rebound and will target the support at 53.20. So if you decide to open a short position we advice you to put the stop loss 10-15 pips above the resistance at 54.00 and to place your take profit order at least 10-15 pips above the support at 53.20. You should consider  that if the price breaks the resistance at 54.00 it most probably will continue the uptrend movement!

Tip: Always put your stop loss! Even the most experienced trader can make a mistake analyzing the market, so when you open a position always put your stop loss!

More tips you can find at http://newonforex.com/forex-tips/