There are hundreds of successful forex trading systems and strategies, ranging from 5 minute scalping and news trading to long term swing trades. But what is the best forex trading strategy for a new investor? I like to keep it simple, and recommend that new traders start out with a price driven forex trading system.
Why trade a price driven system? The main reason is the overall ease of learning the system. Entry position, exit position, trailing stops, and stoploss are all easily calculated using the rules of the system. It is much easier to manage trades with a price driven system. There are no EA's (expert advisers) or messy fibonacci numbers, no support or resistance levels to worry about, or moving averages to fuss with. You don't need to spend all day analyzing forex charts to trade successfully.
Another benefit of a price driven trading system is they tend to be conservative. It is not uncommon to only make 2 or 3 trades a week. Price driven systems are designed to catch bigger moves in the market, not for short term scalping. Once you are a successful long term trader, you can worry about learning different scalping methods.
Although there are several price driven forex trading strategies available, my top 2 recommendations are: The 10 Minute Wealth Builder and The Forex Trading Machine (Full review coming soon!).
Both of these systems are proven forex winners, and a perfect introduction to price driven forex trading strategies.
Wednesday, October 29, 2008
Sunday, October 26, 2008
Fundamental and Technical Analysis Explained
There are two types of analysis used in the forex market: fundamental and technical. Many currency traders develop trading systems that favor one type of analysis over the other, but it is important to have at least a basic understanding of how each of them function.
Fundamental analysis is the study of various economic and political events, and their influence on the currency market. A weak economy will lead to lower exchange rates, while a strong economy will lead to higher valuation of the country's currency. Interest rates, Gross Domestic Product reports, trade balances, and unemployment rates are the main economic indicators a fundamental trading system will use.
Another important tool for fundamental analysis is an economic calendar. An economic calendar is a listing of all of the important events and economic indicators that affect the currency market, and ranks their importance. It will contain previous figures, what the forecast is, and updated figures as they are released.
Technical analysis relies on using the price history in order to try and predict its future movements. Forex charts are analyzed using a variety of technical indicators. Trend lines, support and resistance levels, fibonacci levels, and moving averages are commonly used to identify what is going on with the market and where it is likely to go.
There are 3 types of moving averages used for technical analysis: simple, weighted, and exponential. A simple moving averages weigh each price point equally over a specific period of time. These price points are averaged, and a line is drawn on the chart. A weighted moving average will place more emphasis on the latest data. Weighted moving averages tend to give more accurate volatility estimates than simple moving averages do. Exponential moving averages are calculated by multiplying a percentage of the most recent price by the previous periods average price. Exponential moving averages will respond to recent price changes much faster than simple moving averages will.
Fundamental analysis is the study of various economic and political events, and their influence on the currency market. A weak economy will lead to lower exchange rates, while a strong economy will lead to higher valuation of the country's currency. Interest rates, Gross Domestic Product reports, trade balances, and unemployment rates are the main economic indicators a fundamental trading system will use.
Another important tool for fundamental analysis is an economic calendar. An economic calendar is a listing of all of the important events and economic indicators that affect the currency market, and ranks their importance. It will contain previous figures, what the forecast is, and updated figures as they are released.
Technical analysis relies on using the price history in order to try and predict its future movements. Forex charts are analyzed using a variety of technical indicators. Trend lines, support and resistance levels, fibonacci levels, and moving averages are commonly used to identify what is going on with the market and where it is likely to go.
There are 3 types of moving averages used for technical analysis: simple, weighted, and exponential. A simple moving averages weigh each price point equally over a specific period of time. These price points are averaged, and a line is drawn on the chart. A weighted moving average will place more emphasis on the latest data. Weighted moving averages tend to give more accurate volatility estimates than simple moving averages do. Exponential moving averages are calculated by multiplying a percentage of the most recent price by the previous periods average price. Exponential moving averages will respond to recent price changes much faster than simple moving averages will.
Friday, October 10, 2008
Forex Trading System: 10 Minute Forex Wealth Builder Review
I've spent the last couple of weeks looking over various forex trading systems, trying to find a strategy that would work for a complete forex newbie. Although I like "automated" (or robot) trading systems, I think they can be too dangerous for a new investor. You should really understand how the forex market works before relying on a script to trade it for you. That being said, I believe I have found an excellent forex trading system for newbie (or experienced) forex traders: Dean Saunders's 10 Minute Wealth Builder.
The heart of the system is basically using trendlines, support, and resistance to determine when to enter and exit your trades. There are rules in place that determine your stop-loss and take profit points. The system is geared towards large market moves, not for day trading. Trading all major currency pairs, you can expect to have 3-5 trades per week. Dean claims his system wins 60-70% of all trades, with the average winning trade being twice as big as the average losing trade. This means that over the long term, the 10 Minute Wealth Builder should definitely make you some money! Please note that no system produces 100% winning trades, and trading the forex market can be risky. Do not invest money you cannot afford to lose!
Why is Dean Saunders's 10 Minute Wealth Builder a good forex trading system for newbies?
It takes a simple, conservative approach to trading. Dean provides detailed video tutorials on reading charts, as well as money management. You don't need to use any complicated indicators or EA's to identify entry and exit points. Everything you need to know to successfully trade forex is covered in this course.
The heart of the system is basically using trendlines, support, and resistance to determine when to enter and exit your trades. There are rules in place that determine your stop-loss and take profit points. The system is geared towards large market moves, not for day trading. Trading all major currency pairs, you can expect to have 3-5 trades per week. Dean claims his system wins 60-70% of all trades, with the average winning trade being twice as big as the average losing trade. This means that over the long term, the 10 Minute Wealth Builder should definitely make you some money! Please note that no system produces 100% winning trades, and trading the forex market can be risky. Do not invest money you cannot afford to lose!
Why is Dean Saunders's 10 Minute Wealth Builder a good forex trading system for newbies?
It takes a simple, conservative approach to trading. Dean provides detailed video tutorials on reading charts, as well as money management. You don't need to use any complicated indicators or EA's to identify entry and exit points. Everything you need to know to successfully trade forex is covered in this course.
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