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Price Action Forex Trading Strategies Tutorial

Learn to trade the forex market

Learning to trade the forex market can seem like a daunting task to any beginner. Fortunately there are many people out there who have made all the common mistakes and already traveled down the bumpy road of learning to trade. The best advice to give a total beginner to forex trading is to learn from a professional, someone with time-tested and relevant trading strategies; someone with a no nonsense market philosophy as well as a unique market perspective. Learning to trade forex does not have to be the frustrating, pull your hair out task that it so often turns into for people. You need to develop the proper market mindset and this can best be taught by someone who already possesses it. Just as the best way to learn any other job-related skill is from a mentor, learning to trade forex should be no different.

If you want to learn to trade with the least amount of trial and error possible, I suggest you learn from a professional trader who offers on-going support. Learning to trade can be a very expensive endeavor, so I suggest you do not try to go it alone. There is a lot of good information available on the internet for learning to trade forex. However, there is probably far more junk information as well as people trying to scam you out of your hard earned money.

Most people who want to learn to trade the forex market are mainly interested in the technical aspect of trading. That is, making trading decisions based on the information provided on a price chart. Where many people go wrong in technical trading is thinking that more is better, or that if they understand how more indicators work it will lead them to bigger profits. First of all, you need to understand that when it comes to technical analysis and your charts, more is not always better. Professional traders and hedge fund managers do not use lagging indicators because they understand that such tools are useless and even counter productive.

Most professional forex traders you will find make their decisions based on pure price action analysis with a certain amount of fundamental economic understanding. A price chart is at the very heart of any market and reflects all market participants’ beliefs about that market. There are so many trading courses for sale that make you believe you need to over-lay a bunch of indicators on your chart that it can be extremely frustrating for someone who teaches and trades just from pure price action like myself.

Learning to trade is difficult enough without all the unnecessary bells and whistles that many so called forex educators try to sell to you. When learning to trade you need someone you can trust and who is providing a valid and time-tested product. Don’t fall prey to charlatans trying to take your money and run. Look into price action analysis and I promise that once you find a genuine price action trainer you will never go back to your overly complicated indicator method. Learn to trade from price action and you unlock a world of difference in the way you think about trading.

How To Make Money In Forex Market

Forex training

A thorough education in trading the forex market is essential to your development and success as a trader. Forex trading is one of the most difficult professions to excel at; as any active trader will attest to. The most difficult part about forex training is finding an experienced forex mentor who is a professional trader and a great educator. The fact is that most professional forex traders are not out there telling you how they trade or trying to help people trade better. Generally they are too busy taking money out of the market and concentrating on their own discipline and self-control to have time to help aspiring traders. There are some forex trading educators out there who are genuine; however they tend to get lost in a sea of people trying to sell you a black-box system or that don’t really know if the method they teach is consistently profitable.

There are some definite characteristics of a great forex trading trainer you need to watch for in a prospective candidate you have in mind. First of all, if you want to find out whether or not the person is genuine than take a look at their website. Is it just an e-book trying to sell you something at the bottom with no concrete forex training information? If they are not offering anything at all for free on their website than they are likely just a sales person trying to take advantage of your trading aspirations. Most genuine forex educators will have numerous free trading articles, videos, etc on their forex training website. Now, that’s not to say there is anything wrong with selling a quality forex training course to interested traders, because there isn’t. A genuine forex trainer will have spent years of trial and error and frustration perfecting their trading method, so it only makes sense that they charge something to share it with the world.

A superior forex training website will not only have numerous free materials available, but it will also have the main forex educator well advertised. If you don’t even know what your prospective forex mentor looks like, than I would take that as a warning sign in and of it’s self. When you purchase a trading course or subscribe to a forex website essentially what you are doing is buying the person behind the training materials. This person should obviously be knowledgeable about forex trading and well spoken. It does not make very much sense to buy a course or subscribe to a service that does not give you any kind of clue as to who is behind the training material.

Forex training generally comes in two forms; someone trying to sell you a piece of software that consists of a few lagging indicators that give you buy and sell signals with no real market perspective or actual educational material included, or, someone trying to sell you an e-book at a ridiculous price with a bunch of common sense information about forex that you can find for free all over the internet. The third form of forex education is a bit more difficult to find. Specifically, I am talking about an on-going forex training website with various forms of educational material’s that are constantly up-dated and expanded.

So before you purchase any forex training course or subscription service you should ask yourself what am I really getting anything for my money? Does the person selling this product seem genuine and also, do I even know anything about them? Look for free forex trading material as well as a common sense and straight forward trading method. Finding a quality forex training website in the ocean of forex material floating around the internet is harder than you might think. So take the time to see what forex trading training method fits you best and ask yourself if you trust the person you are learning to trade forex from.

Trading Reversal Bars - Price Action Trading System

Consistency is the key to forex success:

When starting down the path to learn about forex trading, we often hear that we need to be consistent in our approach to the markets. What exactly does this mean and how do we achieve consistency in the forex market? Consistent trading profits are a result of consistent actions. There is no room for emotional reactions while trading the forex market; however, there is a need for flexibility. Consistency is the product of a mindset that consciously manages a person’s emotions while interacting with the market. So exactly how can a forex trader develop a consistent approach to the market while not eliminating flexibility from their trading plan?

The only true way you can ever develop consistency in the forex market is by first finding your edge. A market edge is a method of trading in the forex market that gives you a positive ratio of winners to losers over time. You need to have confidence in your edge because not every trade is a winner; you must be able to endure a series of losing trades in order to see your profitable edge play out over time. As you gain confidence in your trading method you can then start to develop some rules around it that give you a little more rigidity in your trading plan, this allows you to remain calm and follow your rules no matter what comes your way in the markets.

Once you have developed your own rule based system off your market edge you will be well on your way to consistency in the forex market. This takes time. Contrary to what some people think forex trading is not a get rich quick scheme; it can easily become a get poor quick scheme however. At best it is a get rich slowly scheme, and only through consistency will you be able to achieve your long-term goals in the market.

As discussed above, flexibility is an important part of any trading plan. While developing a rule based system is crucial to your long-term consistency, building in some flexibility to your trading plan is also important. The forex market is extremely volatile at times and no two moments in the market are ever exactly the same. This is why you need to be flexible in your approach to trading the forex market. I know it seems contradictory to be emphasizing the need for a rule based trading system to develop consistency and at the same time emphasizing flexibility. Consistency and flexibility are must have components of forex trading success however, part of the reason why so few ever achieve that success.

Our approach to the market needs to be consistent and flexible, thus we need a trading method that gives us a flexible yet consistent view of the market. Forex Price action analysis is the only method I have come across that is inherently flexible yet at the same time can offer you concrete strategies to develop a system around. Price action is simple and effective and will greatly help you in developing the flexible yet consistent approach that forex trading success requires.

Forex training - price action

The market mindset trap:

The Forex market can be a very dangerous place for those not operating from the proper mindset. Since trading is almost entirely psychological, how you think about the market is the most important factor in determining your long-term trading success. To succeed in the forex market an objective mindset is required. While many traders start out with an objective mindset towards the market, few can maintain this way of thinking.

The difficulty in maintaining an objective market mindset lies in the fact that you can do a large amount of damage to your trading account extremely quickly in the forex market. Traders have access to an enormous amount of leverage in the foreign exchange market and leverage is extremely dangerous to someone who is trading from the wrong market mindset. So how can a foreign exchange trader achieve and maintain an objective mindset in the ever changing and volatile arena of forex trading?

The correct market mindset stems from not trading money that you can’t afford to lose. You should not be using money to trade with that you could possibly need to live on or that anyone else in your family might need. This is the first step in operating from an objective point of view in the market. Not needing the money in your trading account allows you to develop virtually no emotional attachment to anyone trade you enter, this is very important if you want to consistently make profits in the foreign exchange currency market.

Only after we have confirmed that we are not using money we need for any day to day expenses should we move on to the next most important factor in achieving and maintaining the proper market mindset; a truly profitable and easily definable trading methodology. We need an edge in the market, a definable and profitable edge is important because we need it to base our trading plan off of. Money management is just as important, if not more, than your profitable edge. However, you first need to define your trading method before you can develop a money management plan.

Planning your money management scheme is the next step after you know what your definable trading edge in the forex market is. You need sit down and map out how much you are able to risk each time your edge appears in the market. Many traders cannot maintain an objective mindset while risking more than 2% on any one trade. This of course is only a general rule and mostly depends on the frequency of your trading, if you only trade once a month than you might be able to operate objectively by risking 5% per your once a month trade. However, if you are trading once a week or more than generally speaking 2% is the max you should have at risk per trade if you want to give yourself a realistic shot at not trading based on emotion.

I can recommend a very good trading method that will provide you with solid strategies for finding a truly consistent edge in the forex market. The best method I have found for trading the foreign currency market is price action analysis. After discovering and implementing specific price action setups into my trading I was able to easily map out my money management technique. This allowed me the ability to remain calm and confident during every trade; thus achieving an objective market mindset. There are many ways to profit in the market, which ever way you do it though one thing is for sure; you need to think objectively about all of your market related activities.

forex trading training strategy

Advantages of trading forex versus other markets:

§ The foreign exchange currency market is extremely liquid.

Daily average turnover is more than 3.2 trillion dollars the forex market has by far the most liquidity of any market in the world. This means there is practically no slippage; in other words, the price you see advertised is the price you get.

§ 24×6 hours of liquidity in a week.

The forex market is unique from other markets in that a trader can place a trade 24 hours a day 6 days a week. Where as stock and futures markets have certain trading times their respective exchanges are open, forex markets allow for trading at any time of day. This provides for more time to test strategies and larger samples of data to work off of, as well as the ability to trade during other countries’ active trading hours.

§ No actual physical market.

Since forex trading can be done from your own home there is no centralized trading market. The advantage this gives the retail forex trader is that there are no broker’s commissions or fees. Forex brokers, commonly called market makers, collect the difference between the bid and ask price on a currency trade, this is known as the spread. The effect on the trader is that their position will start off being between 1 and 10 pips negative, depending on the volatility of the currencies being traded. However, to the trader with a consistently profitable trading method, this small burden is hardly detectable.

§ It is impossible for your account to go negative in forex.

Forex market makers generally all offer trading platforms that instantly terminate a client’s open position if they have an open loss that exceeds the margin requirement. This means there is no risk of your account going negative at which point you might actually owe money to the exchange, which can happen in futures trading

§ Low margin requirements allow for leverage.

In forex trading a trader can get leverage up to 400:1 on a micro account. This means they can control 400 times the amount of money they are risking on a trade. Market players call this leverage and it provides the possibility for very large profits relative to account size, but also for very large losses.

§ Demo account trading is easily accessible.

Generally every single forex broker you will encounter offers a free demo account to learn how to trade from. If properly utilized a demo account can help teach you the mechanics of trade execution as well as give you time to develop and test your own personal trading method. A trading method that consistently makes money on a demo account, if traded the same way, should make money on a real account. The difference lies in the fact that real money trading is much more emotionally difficult on people. However, if you take the time to test your trading method on a demo account and really take it seriously, the transition to trading real money in the forex market can be relatively seamless.

Price Action Forex Trading Strategies Tutorial

What is Forex Currency Trading?

The foreign exchange currency market is the largest market in the world with a daily average volume exceeding 2.1 trillion. Trader in the forex market buy and sell curreny pairs with the hope the currency pair will move in their favor allowing them to profit. Economic and world events are the main catalysts that propel the forex market.

Forex Basics:

The foreign exchange currency market is not limited to a physical location like stock markets are. The forex market is much bigger than all the world’s stock markets combined. The internet and telephone are the main mediums of transmission for forex trading. Most forex trading transpires in the major cities of the United States, England, Australia, Japan, and Germany.

The forex market has names for each currency in a pair, the first currency is known as the base currency while the second is called the quote currency, counter currency, or terms currency. Exchange rates in forex are quoted per unit of base currency, for example, the exchange rate between the U.S. dollar and the euro will be indentified as EUR/USD, so the number will be the amount of U.S. dollars that can be exchanged for one euro.

The euro currently has first precedence as base currency, thus all currency pairs containing the euro should have it as the base currency. The hierarchy for base currency is as follows: Euro, Pound Sterling, Australian Dollar, New Zeeland Dollar, United States Dollar, Canadian Dollar, Swiss Franc, and Japanese Yen.

How Forex trading works:

In the foreign exchange currency market quotes include a bid and an ask price. The bid is the price to sell the base currency in exchange of the counter currency. The ask is the price to buy the base currency in exchange of the counter currency. In forex, we call the difference between the bid and ask price the spread. Forex brokers act as market-makers; they provide a place where market participants can buy and sell currencies. Rather than charging a commission on each trade like stock brokers do, forex brokers instead collect the spread on the currency pair being traded.

Movement of a currency pair is expressed in pips. One pip is the term for the smallest incremental change of any currency pair. For example, if you see the current price of GBP/USD (British pound/U.S. dollar) quoted as 1.6832(bid)/1.6837(ask), then the spread of this currency pair is 5 pips, because the difference between the two is .0005. So for the GBP/USD currency pair one pip; the smallest incremental change for that pair would be equal to .0001.

Forex trading can be quite volatile due to the multitude of big money players that trade this market. If properly utilized, volatility in the forex market can help you make profits fast, however if you risk too much for your account size volatility will take your money very fast. Make sure you understand the many intricacies of price action before jumping into the market head first.