Many new forex traders start out with the attitude that they should be online as much as possible looking for trading opportunities so that they can trade as often as possible. They want to be constantly involved in a trade. The result is that they are over eager and impatient, and will start trading at the slightest indication. Not surprisingly, a lot of their trades go wrong.

Forex is not gambling. There are clear indications when a price is moving in a certain direction and forming a trend. If we wait for these moments before we trade, we have a very high probability of making money. This may mean only opening a new trade a couple of times a week. This requires discipline and patience but they are well worth developing.

Let’s take an example to demonstrate this more clearly. Trader 1 is trigger happy and wants to be in on every possible price movement. He makes 2-5 trades per day, some winning, some losing, but ending up with around 10 pips per day profit. So that’s 50 pips per week.

Trader 2 is less eager to trade and more interested in serious forex investing. He makes one trade per week, but expects to make 50-100 pips from each of his trades.  Who is making more money?

Clearly, trader 2 is in a better position. Not only is he making more profits, but he probably has more of a life away from the computer. He is less stressed. He also has a much more positive view of his trading and his ability to succeed at it. Where trader 1 probably feels that forex is more or less of a gamble, trader 2 knows that he has a strong, successful forex system and strategy. This confidence will help him to deal with the ups and downs of forex trading and always come out a winner.

Beginners usually start out with the first strategy and go for day trading or scalping. Often times this is why they fail. It is true that there are some successful traders out there who are day traders and always will be, and certainly if day trading is working for you, then stick with it.

But a lot of beginners get into this way of trading simply because they lack the skills to identify a real trend or the confidence to leave a trade open for a longer time. This is a sign that they are not ready to be trading for real at all. Instead of getting into scalping trades that will probably eat away at their funds until there is nothing left, they should be reminding themselves that forex investing is for the long term, and work on their skills first.

That might be a surprising statement. You can probably imagine that a trading system, which depends on the trader to put it into practice successfully each time, could have very varied results for different people. The assumption is often that robots either work or they don’t, and that they will work in the same way for everybody, so that all users make the same profit at all times. But in fact this is not true.

In broad terms of course most traders’ results will follow peaks and downturns at approximately the same time if they are using the same software, but surprisingly, the actual results can be quite different. In fact in some of the expert advisor forums you can find two people using the same EA and one is making a profit while the other is making a loss. So why is this?

There are several factors that contribute to the discrepancy. First, there is the question of currency pairs. Most expert advisors have the potential to work with several currency pairs and they will not always perform equally well with all of them. You can often get better results by concentrating only on the pair or pairs that are the most successful. Expert advisor reviews can be great for working out which are the best pairs to trade.

Second there is the question of settings. This is the most common question in forums, on blogs and to EA support staff: what are the best settings for this robot? It is a little like the quest for the best system: it is almost impossible to evaluate. The permutations are almost infinite and what would have worked best last month will not necessarily work best next month.

Generally, the safest option is to follow advice on settings from the company’s own information, but in some cases you may pick up useful tips from expert advisor reviews and user websites. Remember though not to trust everything that you read, and always test new settings before going live.

Fourthly, risk management makes a huge difference to whether you can sustain profits in the long term. If your risks are too high, then even an EA that is profitable can wipe you out. This often happens to beginners. Remember that even the best EA (like the best human traders) will have losses and losing runs. It is vital to set your risk low enough that you can survive the bad times.

Finally, it makes a difference which broker you use. Some will have higher costs, some may operate in a way that tends to trigger stop losses more often, and so on. The EA will usually come with information about which brokers you can use, but that is often based solely on technical compatibility of the software. Forex robot reviews and users will sometimes recommend particular brokers for their quality of service, and that can be helpful.

So EA reviews certainly have their uses, even though no reviewer can guarantee that another individual will have the same experience with the robot. So do seek out feedback from those who have had a chance to use and analyze the software, but be aware that you will not necessarily achieve the same results. It is important to read expert advisor reviews carefully to assess whether a particular EA is likely to suit your individual case.

Currency trading is a way of making money by buying world currencies that rise in price, or selling those that fall. Of course, predicting the rise and fall is where the skill comes in. If the price moves the opposite way, you will lose. For this reason some people compare it to gambling. The difference is that in currency trading you are investing in an asset that is worth something. The general public often fails to see the difference, and this can lead to a lot of misunderstandings about forex.

Forex simply means foreign exchange, so forex trading is the same as currency trading. You may also see it abbreviated to FX or 4x. It is a global market involving all of the world’s currencies. Trading always involves exchange, because currencies can only be bought and sold using other currencies. So traders are constantly exchanging one currency for another.

However, they do not actually take delivery of the currency that they buy. Instead they are dealing in lots which they will trade out (exchange back) after the price has moved. The major part of the two trades will cancel each other out and what is left will be a profit if the price went the right way, or a loss if it did not.

Clearly it is important to have a system that allows you to analyze the market and know when to trade, and in which direction. There are many different systems and methods for forex trading. It is best to choose one to start, and work with it until you understand it thoroughly.

You can do this in a demo account where you do not have to use real money. Then if it is working for you, that’s great. If not, it might be time to look for another, but you will have the advantage of understanding the market and your own needs much better through the experience of testing out the first currency forex trading system.

So what are the essentials that you should look for in your forex guide? First, it should cover the basics. Even if you know most of the language, you will probably learn something new from this section. It should explain the terminology of the forex market, such as pips and spread.

Then it should cover technical analysis, that is, the analysis of the market using charts and indicators. It should explain how to read a candlestick chart and cover the most useful of the technical indicators including those based on moving averages. It should explain support and resistance, and how to identify a trend.

Beyond that, a forex guide will normally cover at least one forex system. In many cases a forex ebook or training course will focus on teaching you one particular system that the author has used successfully. This is often much more useful than a book that covers a lot of different systems in a sketchy way. Following one system step by step is probably the best route if you want to begin trading successfully as soon as possible, which most traders do! Nobody ever sets out intending to be one of the losers!

So it is very important to have clear instructions for the central system that is being taught. If it is an ebook, expect some screenshots so that you can see examples. You may be lucky and have something that includes video training. This is probably the best way to learn, assuming you are able to follow the narrative. People who have English as a second language may find a written book easier to understand. You can actually pause the video while you go copy the step exactly, then click on play when you are ready to continue.

A good currency trading guide will not ignore the vital subject of psychology. A trader’s mindset is just as important as his or her system. This is one of the things that beginners find hard to understand. Everybody wants the perfect money making system, but they do not want to learn about things like stress reduction and developing patience. Most traders have to hear over and over how important this is, before they stop and take notice. Learn all you can about psychology from your forex guide, because it can turn a losing trader into a profitable trader, and vice versa.

Hedging could be described as a form of insurance. It can be used either for an existing or for a planned position. In other words, you can employ hedging strategies either right from the start when you first open a trade, or at any time during the trade. You can use it to protect your profits or to minimize loss from the outset. Basically what you are doing is sacrificing some potential profit in order to take up an opposite position that will pay out if things go wrong.

Your main position will probably be a spot forex transaction, but you are not limited to spot transactions for your hedge position. In fact the most popular choice is probably to open a position in forex options. You can also use currency futures, the other major derivative. In both cases you may have possibilities that are not so limited as the spot forex market.

There are four steps to forex hedging. All of them are important if you do not want your balancing trade to turn around and bite you in the butt.

1. Risk Analysis

Most forex traders would not hedge every trade, but only those that involved some kind of unusual risk, or where risk has changed since you opened the position. In this step you need to calculate the current risk.

2. Subtract Risk Tolerance

While there are a few traders who try to hedge every trade to a position of complete safety, most of us accept some risk in order to maximize profit. Risk tolerance is not about how you feel, but what is your normal level of risk on a trade or the loss that you are prepared to accept for this trade under your system. Subtract this from the total risk and you have the excess risk that you need to remove by hedging.

3. Select Your Strategy

Consider the cost and effectiveness of the various possibilities, including a trade in derivatives.

4. Act and Monitor

Then go ahead and implement your strategy, but do not stop there. Keep monitoring the markets. As the situation changes you may be able to close out part of either your original or your hedge position to give you a better overall result.

Hedging is not for every trader or for every trade but it has its uses and can be a very effective tool to add to your skill set. You may want to paper trade or back test to see how these forex tips on hedging can increase your profitability.

However, automated trading systems or forex robots seem to cut the learning curve right down to zero. They will apply a system for you to the letter every time. You just need to leave the software running on your computer, connected to the internet over broadband, and they will open and close trades for you according to whatever settings they are given.

They also have the advantage that you can set them and forget them. It is easy when you are starting out as a forex trader to become hooked on the market to the extent that you can hardly step away from the computer. You do not want to eat or sleep in case something happens in that time. Of course this leads to burn out very quickly. Experienced forex traders know how important it is to have a life away from the computer. Using a forex robot can help you achieve this from the start.

However, there are a few things you should know before you switch on your robot for the first time. First, there is a wide choice of robots available. Some are more effective than others. Check reviews and user feedback to be sure that you are buying one of the best.

Second, you will need to understand at least the basic terminology of forex trading, and spend some time mastering the settings, in order to optimize the robot so that you have the best chance of success. Do not become frustrated if this takes you a day or two. You then need to test it out in demo mode to be sure that everything is set up correctly. If you go live too soon, the results may be surprising, and not in a good way.

Third, you must accept that you will not see winning trades every time. There will be some losses. Overall if the robot is working well you should make a profit, but at times, the losses could exceed the gains for a while. Because of this, it is important that you do not risk too much of your money on each trade. Never risk more than 5% of your total funds on one trade, and if you want to be safer, aim for 1% to 2%. Set stop losses so that the trade will automatically close if the price goes the wrong way. This controls your risk.

One of the biggest benefits of using a forex robot is that it takes the stress out of trading. Many beginners do not realize how important this is. It sounds like just a feel good thing, but it is not. Stress affects us physically. It causes us to make snap decisions, often diverting us away from a tried and true system into emotional trading that will end up in disaster. Forex automated trading systems will remove any possibility of this.

The good news is that even if there is no perfect currency trading system, there are plenty of good ones. You just have to accept that you may need to do some searching and tweaking in order to find the system that is best for you. Here are 3 questions to consider when you are looking for your forex system.

1. Does It Fit With Your Style?

Every trader has slightly different requirements and so what is the best system for you, might not be the best for me. So before acting on somebody else’s recommendation, consider whether what they propose would suit you.

Consider the style of the system. Is it a short term system involving scalping or day trading? These can be very profitable if you have the time to stay online to trade currencies at the right times, and if you cope well with stress. But if you have a day job or tend to make bad decisions under pressure, you will be better off with a system that follows longer term trends so that you do not have to be checking the market all of the time.

2. Does It Have A High Success Rate?

Unless you are a very experienced trader, it is best to choose a system with a high rate of winning trades (over 75% minimum). Of course this does not guarantee higher profitability. A system that has bigger, less frequent wins could make as much in the long term. However, a system with a high success rate will not suffer so many runs of several losses in a row.

The importance of this is psychological. It can be very discouraging to see 5 or 6 losing trades in a row, or have your balance gradually eaten down by a long run of losers with only occasional wins. This type of scenario is much more likely when you go with a system with a lower success rate, and it can be a killer for many traders. You lose confidence in yourself and in the system, and begin to trade erratically, so that when the upturn comes you are no longer following the system strictly enough to benefit. So choose a system that will support a positive mindset.

3. Is It Clearly Explained?

If you are buying a system, you should expect to receive clear step by step training in how to implement it. This may be in the form of an ebook and/or videos. If the system is free, then of course you cannot expect so much. However, you still need to be sure that you have understood what you are to do. In some cases you might pick up a few tips on a forum about some new system that is said to work perfectly but in fact you can never get the exact information you need to put it into practice. It is better to pay a few dollars so that you can trade currencies with a system that you understand and have faith in.

The forex market is driven by economic forces, so forex forecasts depend to a large extent on economic or fundamental indicators. These form the basis of the financial news and announcements that you can see coming up on a forex calendar.

Of course, some of these economic factors are more important than others in terms of currency prices. Some will pass with scarcely a ripple on the surface of the market. Others have the power to shake the forex market by its roots and overturn even the biggest trends. So which are the ones that you must keep track of for your forex forecasts? Here we list the 7 top fundamental indicators for the currency market.

1. Interest rate

An interest rate change in any of the major financial powers (USA, Britain, Japan, Germany, etc) can have a huge effect on currency prices. Even if you are trading a pair that does not include that particular currency, you are likely to see a knock on effect. Interest rates are the biggest driving force for the forex market.

This is because the interest rate is one of the strongest and fastest indicators of a country’s economic performance. Investors are looking to invest in countries with a strong performance, so a rise in the interest rate will immediately attract investors. This affects currency prices because they must in effect buy that country’s currency in order to invest in its stocks. It will also, clearly, affect the currency of other countries where they will selling investments in order to buy into the new strong country.

Interest rate changes in turn are driven by other factors which the central banks will watch in order to decide whether a change in the interest rate is needed. This means that instead of waiting for the interest rate to change and affect the market, you too can watch these other indicators and formulate your own forex forecasts from them. The remaining 6 factors will all be used by central banks as indicators of a country’s performance.

2. Consumer Price Index or CPI

A high index (high prices) reflects a strong economy.

3. Producers’ Price Index or PPI

This is the cost of materials for manufacturers etc. When these rise, the price rises will be passed on to consumers, which leads to a higher CPI (inflation) and perhaps a rise in the interest rate.

4. Gross Domestic Product or GDP

The GDP is like the accounts sheet of the whole nation. Results are reported every quarter and economists generally take this as the strongest indicator of the nation’s economic performance. Again a high GDP may be a signal that interest rates could be rising.

5. Payroll Employment

National payroll figures are a measure of the employment situation in the country. This index is also high when the economy is strong.

6. Retail Sales

This figure records the total receipts of retail stores in the nation, indicating consumer spending and confidence.

7. Durable Goods Orders

This is a measure of the value of orders placed with manufacturers.

So increases in all of these factors will indicate a strong economy and probably strong currency values. Do be aware, however, that sometimes a result may be announced which is less of a rise (or fall) than the market expected. This applies particularly to GDP and interest rates. In this case the market will have moved in anticipation of the change, and when the announcement comes and is less of a change than expected, it could cause a backlash. So even if you watch the indicators, forex forecasts can sometimes catch you out.

On the other hand, there are some secrets of success that will work for practically everybody. These focus around mindset and good practice and they are much more important than most people realize. In fact, they are probably even more important than your system. So check out these 5 forex trading secrets to success.

1.  Set A Morning Routine

Every morning (or whenever you start trading) there will be certain things that you need to do. The first is to check the economic calendar for the next 24 hours. This is vital and you can be sure that the one day you forget will be a day that something big happens. So if necessary, set up something on your computer so that you see a reminder as soon as you log in.

Email is a distraction so give yourself set times for checking and answering email, and close your email client the rest of the time. The last thing you want is an icon flashing or bleeping about incoming mail when you are in the middle of a trade. The same is true of your phone.

2.  Move That Body

Sitting at a computer all day without breaks is one of the worst things you can do to your body. Be sure to stand up, walk around and change the focus of your eyes at least once an hour. Get a drink of water or visit the bathroom and instead of rushing straight back, spend 5 minutes pacing the room or looking out the window. This will help you to relax and avoid serious problems such as thrombosis or eye strain.

If you are working at a desk full time, either for your trading or in a day job plus your trading, plan some workout time into your day too. This could be when you first wake up or later in the day, but make it at least two hours after a meal. Choose either cardio, flexibility or strength training and aim for at least 30 minutes, 4-6 days per week.

3.  Get A Life

If you are not going to go completely crazy, you will need to have some outside interests. If you have a partner or family around you, they will probably take care of most of your spare time. If not, seek out friends or pursue a non-trading interest that brings you into contact with other people. It can be tempting to want to do nothing but trade, but you will burn out fast that way.

4.  Use The Forums

Forex forums can be great for chatting online with other traders. You can ask questions, give and receive advice, check out reviews of systems and pick up a lot of forex trading secrets and tips. It gives you somewhere to go when trading is slow. Just make sure you don’t start spending all day there … it is easy to do.

5.  Spread Your Wealth

When you are starting to make good money from your trading, it is time to diversify. Consider investing some of your funds in property, bonds or even stocks if you have the knowledge of that market.

Even if you are not yet making enough to want to divert money away from trading right now, you probably only need half or less of your funds to be in your account, so withdraw the rest and invest it safely. This means that even in the worst disaster you cannot lose everything. You will not regret doing this. Protecting your funds is one of the major forex trading secrets and golden rules.

The big advantage of a blog over other types of website is that you do not need your own domain or web hosting. You can build a blog on one of many platforms which are provided by the big internet companies like Google. They do all of the hosting for you with their blogging platform, known as Blogger. Go to blogger.com and you will see how easy it is to get started. There are other similar sites too, such as wordpress.com.

Once you have chosen a name and template for your blog, you can just go ahead and write. You can write about your own trading if you want and use the blog as an online record of your systems, ideas, successes and failures. Or you might prefer to write about the state of the market as you see it, with weekly updates on various currency pairs.

Remember that the whole world can see your forex blog. This does not only mean complete strangers in far corners of the world. The world also includes your boss, your kids and the tax department. This means that you may prefer to remain anonymous, at least in the early stages. Later, if you build up a following and want to sell your profitable trading systems from your forex blog, you will find that you are much more successful if people can see exactly who you are. But in the beginning, think twice before you post your real name or photos.

The biggest question for most bloggers, after what to write about, is how to have anybody visit your blog. The blogging platform may send you a few random visitors who have found your blog through an index, but they may not even be interested in forex trading. Sure, in time your blog will show up when people run a search in Google, but there are a huge number of forex blogs and websites out there, so yours could be way down the list, especially while it is still very new.

One of the best ways to attract visitors is through forex forums. If you are a regular visitor at any forums, you can usually add a link to your blog in the signature section of your profile. Your link will then show up under every post that you make in the forum. Other members will see it and are very likely to visit your blog, especially if you are an active member of the forum. Check the rules because some forums do not allow this, but in most cases a link to a personal forex blog will be accepted.