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There are basically two types of Forex trading systems, mechanical
and discretionary systems. The trading signals that come out of
mechanical systems are mainly based off technical analysis applied in a
systematic way. On the other hand, discretionary systems use
experience, intuition or judgment on entries and exits. But which one
produces better results? Or more importantly, which one fits better
your trading style? These are the answers we will try to answer on this
We will first analyze the pros and cons about each system approach.
This kind of system can be automated and backtested efficiently.
It has very rigid rules. Either, there is a trade or there isn't.
Mechanical traders are less susceptible to emotions than discretionary traders.
There are many trading systems and strategies out there. There are
many free ones printed in trading articles, journals, books and on
trading-related websites. You can buy them as software or you can
subscribe to them periodically.
Novice traders say they do not have the time, the aptitude,
the talent nor the brains to work out how to trade properly. They would
rather purchase a program or subscribe to a trading system for hundreds
— or in some cases — thousands of dollars. They say they do not have to
do anything except be told what to buy, when to buy and how much of it
you need to buy. Some ask me if this strategy or approach is advisable
for trading the financial markets. To answer this question, I am then
forced to consider the advantages and disadvantages of using such an
approach to trading.
There are a great number of people in America that are interested
in investing in order to make a tidy profit. There are many ways to
invest and many ways to make profits by investing. One method that has
been gaining in popularity is that of the Forex trading system. If you
are unsure of what this is, let me explain. Forex stands for foreign
exchange. A Forex trading system is defined as the simultaneous
exchange of one countries currency for another countries currency. If
you would like more information, please let this be your guide to
learning a Forex trading system.
With the day things are today, more people are getting interested
in investing their money to make them grow faster. The problem is, not
too many people are willing to take the risk of investing it because of
the risks, so some of them just let their money rut in banks. Not that
there's anything wrong with banks, it's just that they have low rates
and the money takes a long time to grow. If you want real money, you
have to have the guts to risk it. Making money needs money; risks are
always involved if you want to have money fast and big.
Anyone who is serious about trading needs to have a Forex Trading
System that is tailored to them, but there is no reason to start
constructing your Forex trading system from scratch.
Why try and reinvent the wheel when you can benefit from
other traders years of experience and borrow your trading system's
ideas and concepts?
Trading the Forex market has became very popular in the last few
years. But how difficult is it to achieve success in the Forex trading
arena? Or let me rephrase this question, how many traders achieve
consistent profitable results trading the Forex market? Unfortunately
very few, only 5% of traders achieve this goal. One of the main reasons
of this is because Forex traders focus in the wrong information to make
their trading decisions and totally forget about the most important
factor: Price behavior.
Technical analysis and fundamental analysis are the two basic areas
of strategy in the FOREX market which is the exact same as in the
equity markets. However, technical analysis is by far the most common
strategy that is used by individual FOREX traders. Here is a brief
overview of both forms of analysis and how they directly apply to forex
If you think it's hard enough to value one company, you should
try valuing a whole country instead. Fundamental analysis in the forex
market is often an extremely difficult one, and it's usually used only
as a means to predict long-term trends. However it is important to
mention that some traders do trade short term strictly on news
releases. There are a lot of different fundamental indicators of the
currency values released at many different times. Here are a few of
them to get you started:
* Non-farm Payrolls
* Purchasing Managers Index (PMI)
* Consumer Price Index (CPI)
* Retail Sales
* Durable Goods