Do you know that over 60% of newbie traders actually targeted their own catastrophe when opening their forex trading account? As surprising as it may seem, researches have proven that novice traders make a lot of classic mistake as soon as they being the first step of opening their real forex trading accounts. We are not talking about cliché mistakes such as diving into forex trading because they think this type of investment is a get-rich-quick scheme here; we are talking about simple, practical, mistakes that should be avoidable quite easily if these novice traders took their time to study forex trading before even opening their real account.

The first mistake is under-capitalization. Starting a standard account with only $1000 is simply unacceptable even when your forex broker said that you can open a standard account for a lot less. If you under-capitalize yourself, you will be tempted to use higher leverage; this is the second mistake, and they haven’t even got to the charts yet. Yes, 500:1 leverage may sounds like a serious money making opportunity, but if you can make $10 per pip trading 1 full lot of EURUSD with only $1000 margin, you can also wipe your account clean after a mere 100 pips move against your position; believe me when I say that 100 pips movement can hit you in a matter of minutes in forex trading. If you open a standard account with this kind of combination, you are simply opening a gambling account and you will have to be superbly good to profit.

You may think that the forex market is moving erratically, but Ralph Nelson Elliott defined a theory stating that market, whether it is the stock market of forex market, is actually moving in repetitive cycles. These repetitive cycles, as he pointed out, are cause by emotions of traders themselves or the major psychology of the masses at the time. Although Ralph Nelson Elliott stated what known to us as the Elliott Wave Theory back in the old days — during the 1920-30s — the theory actually proven itself to be usable even in today’s modern forex market.

The Elliott Wave Theory is showing a 5-3 wave pattern often found in trending market movements. The first 5 waves, which we are discussing here, are called the impulse waves; these 5 waves are actually moving to a certain trend and direction although they move in waves. Let’s just say the trend is upward to make the explanation easier to understand. First, the market would move upwards for the initial trend (1) causing the price to rise. After a certain length of upward movements, traders will take profits causing the market to move slightly downward (2). After the first and second movements, the pair would caught more traders’ attention, placing enormous long positions and causing the market to move back up (3) with stronger force. Then it will correct itself; traders will take profit because the market is showing overbought signals causing the price to go down slightly (4), followed by the same hysteria to place long positions for the pair again causing it to move back up (5).

There are several oscillators in the wide selections of forex technical indicators. Stochastics, Parabolic SAR, and the Relative Strength Index (RSI) are all oscillators often used by traders to display signals or market movements. That is exactly why oscillators are also called “Leading Indicators”; they can ‘predict’ a movement before it actually happens.
Mastering the use of oscillators can seriously improve your trading strategy. Oscillators move only between two certain points, usually -100 to 100, to display market conditions. Traders use oscillators to display signals of oversold and overbought, enabling them to take positions to anticipate market’s next move. When combined with other technical indicators, chart reading skills, and solid fundamental analysis, oscillators can surely signal and confirm market movements, allowing you to take positions accordingly.

If the oscillators is showing an overbought signal while the chart is making a double-top or higher high than the previous high value, with no affecting fundamental factors such as announcements coming up, you can easily enter short position because the market is clearly signaling a rebound or a downward movement. The same thing goes for oversold. These examples showed how powerful oscillators can be and how profitable you can become if you know how to use oscillator-based indicators as part of your overall trading strategy.

A lot of automated trading systems, also known as Expert Advisors in the MetaTrader platform, based their analysis and signaling on oscillators. Remember that oscillators can show false signals, so make sure you double-check before making any trades.

Forex market is open 24 hours a day from early Monday morning to early Saturday morning. Although the market is open 24 hours a day, there are certain hours where the Forex pairs are more volatile; more volatility means more profit-taking opportunities to enjoy. You can surely benefit from trading Forex during busy hours, because the movements are large and usually trended. Plus, several fundamental announcements are made during the busy hours, increasing the number of opportunities for profit-taking even more.

If we take a closer look at major Forex trading sessions, we can see that the earliest major session starts at 7 p.m. EST when the Tokyo market is open. The London session is open at 3 a.m. EST, yet the Tokyo market is not closed until 4 a.m. EST. This means that from 3-4 a.m. EST, both the Tokyo and London markets are open. When two major Forex markets are open, you will surely see a lot of movements especially to pair corresponding to both markets. In this case, EURJPY and GBPJPY are the two pairs usually showing most movements during this time; USD-related pairs may also enjoy an increase of movements because both countries use a lot of this currency to pay for foreign trades, so watch closely for trade announcements as well.

The US market session is open at 8 a.m. EST, and the London market session will not be closed until 12 p.m. EST. This is also another great money-making opportunity. There has been researches concluding that Forex market, and almost every pair traded in it, shows its highest movements between 8-12 p.m. EST, both the London and U.S. markets are open. This is because the volume traded by traders of the two sessions are combined, thus causing even higher volatility.

An ongoing debate about whether technical indicators can be counted on when making Forex trading decisions is getting hotter due to the latest increase of popularity among automated trading systems. A lot of long time professional traders are still using fundamental analysis as a big part of their trading strategies, but new-age system trader are also claiming that they have been making substantial profits using their systems as their sole source of information. For now, let’s go beyond the debate and take a closer look at these two different trading styles.

The first one, system trader or mechanical trader, is basically a trading style where you rely on technical indicators to make decisions. It is common that they allow technical indicators to automatically enter and exit trades for them, generating a boost of popularity for automated trading systems. This style is very popular because people are naturally in a constant search of money making possibilities that will allow them to sit back and do almost nothing while their bankroll gets bigger. System traders mainly use oscillators to provide information about market overbought or oversold, and enter or exit positions based on this information.

Discretionary traders add fundamental analysis as part of their decision making process. Technical indicators do tend to make mistakes when the market is moving erratically; this is where fundamental analysis can help determine whether the technical indicators’ signals are reliable. Although I keep a neutral position on this matter, discretionary traders usually do better jobs when it comes to dodging potential losses due to unnatural market movements; something system traders are lacking at.

Understanding what kind of trader you are before going deeper into the forex world is seriously important. You will be making trading plans and strategies based on this knowledge; by properly identifying what kind of trader you are you will be able to trade more comfortably. Trading personality can be defined easily by seeing what time frame you are using the most.

Traders who are using a 1 or 5 minutes chart, and you aim at extremely short-term small profits, you are a scalper. If you are someone who love actions and you can stay in front of your computer watching market movements closely to seek small opportunities where you can bank a couple of pips, you are a scalper. Scalpers usually make big bucks by making several trades in a matter of hours, or even minutes.

If you are comfortable with opening and closing your positions within the same day — meaning you can enjoy waiting a couple of hours till the market move to your target profit — you are a day trader. Most forex traders are day traders, and this is probably the easiest trading style to adapt.

There are also traders who are comfortable with opening and closing positions within several days. They are swing traders. Swing traders enjoy the benefit of not having to monitor charts constantly; they usually make medium-run analysis and trade only when seeing good market swings.

For those of you who are comfortable with long-term investments, you will surely love adapting to the position trader style. Position traders hold positions for as long as weeks, even months. The analysis can be hard, but the profit is very much rewarding on occasions.

The Forex market can be hugely profitable for some, and yet result in a devastating loss of money for others. Many people treat the Forex market as they would a casino; they think in terms of ‘placing bets’ rather than trading. Unlike a casino, where they odds are stacked against you and you have absolutely no chance of winning in the long term, with Forex you can, with proper knowledge and proven strategies, tip the odds solidly in your favor. This will allow you to profit consistently.

If you know anything about forex at all, you will know that around 95% of people who begin trading the forex market fail. They lose every cent they invested. They lose money they could not afford to lose: rent money, food money. Some even lose their shirt.

95%. That is an extremely daunting statistic. I know what you’re thinking; you have no intention of being part of the 95% of losers, you’re going to be one of the winning 5% minority who rake in tens of thousands, even millions, in forex profits each year – and with apparent ease! But before you go off and put your hard-earned cash on the line, take a look at some of the most obvious reasons why so many traders fail:

If you do not have a trading strategy, you will fail in forex.

First of all, you’re going to need a solid trading strategy. This should incorporate the conditions required before entering the market, and a clear exit strategy that will tell you when to exit the market when a trade goes south. This strategy should be followed religiously and objectively. Know when to get in, and know when to get out.

If you don’t keep your emotions in check, you will fail in forex.

Anyone who has traded forex for any period of time will tell you that it can be a terrifying rollercoaster of emotions. Here are some of them:

Adrenalin Rush:  You place your trade and your heart starts to beat in your throat because, now, you are no longer using the ‘play’ money of a demo account, you are now risking your own hard-earned cash. Will you profit, or will you lose money?

Euphoria: You feel crazy with joy because the trade turned out the way you wanted it to and you’ve made a handsome, bankable profit. This trading business isn’t so hard, right?

Fake confidence: On the back of the last win, you stupidly jump in and quickly place another trade without justification.

Heart-stopping terror: the trade has gone against you and you watch as the market rips into your trade and devours your money like a ravenous Pac Man on steroids.

Remorse: The last trade just about wiped you out. You should have got out while you still had the chance, but you didn’t. You sat in there staring at your screen, willing the market to turn in your favor – but of course it didn’t. What made you think that you could bend the market to your will?

Guilt: Why, oh why did you lose so much money? Money that you could not afford to lose? How are you going to pay the rent now? What will you use to buy food? And what will happen when the utilities aren’t paid?

At the end of the day you are emotionally drained and exhausted. You barely have the will, the strength, or the available funds, to trade another day. You see, emotions have no place in trading forex. You need to be cold, logical and objective if you want to succeed as a trader in this unforgiving, brutal market.

If you don’t educate yourself in Forex, you will fail

Forex is not just simply ‘placing a bet’ on currency markets that go up and down like a yo-yo. There is far more to the market than meets the eye. Learn as much as you can and as quickly as you can – before you lose your shirt!

These are just some of the basic issues why so many people fail in Forex; there are many, many more. For example, money management, and risk-reward ratios – and dozens of other factors you need to learn before you can begin to profit consistently.

In the past, people made money from investing in “traditional” methods such as legitimate business, real estate, stocks & bonds, mutual funds etc. But then online forex trading became a reality and suddenly, this type of wealth potential was put within the grasp of ordinary people who, typically, would never even have considered this kind of wealth generating investment before. Most had never even heard of Forex trading, but gradually the online success stories started filtering through  and people realized that it was possible to make a great deal of money trading online – even millions!

A hugely attractive aspect of trading Forex online is that you can do it from the comfort of your home, in your pajamas if you choose, and you can do it 24 hrs a day, five days a week. The very concept is absolutely mind-boggling for many, and attracts a multitude of “newbies” every day.

So, is all this hype about making serious wealth online from forex just a load of BS, or is it justified? Is it actually possible for the ordinary man and woman in the street – who has no experience and no knowledge of currency trading – to actually make money with this trading method?

Let’s take a quick look at some facts about Forex:

Forex involves trading international currencies, nothing more, and nothing less. There is no marketing, promotions or sales involved. You don’t need stock or warehousing as you would if you were selling physical products. And there’s no interaction with customers needed. So far so good.

It’s dead easy to get started. All you need to do is open an online trading account with a broker. This can be done for free and most brokers allow you to start with a demo account, to learn and test the waters first, before committing your own money. This is a great way to learn the forex market without any risk.

It actually surprises many new traders that there’s nothing ‘mysterious’ about trading forex: currencies either go up, or they go down – that’s it. Simple example: if the currency is low, you place a buy order. Then you wait. Within a few minutes – even seconds – the currency can go up, and you sell to make a profit. If the currency is high, you place a sell order, and wait for the currency to go down. And you make a profit. Can it really be that easy? In theory, yes, many people who trade fulltime make thousands of dollars a day. And it has a snowball effect: the more profit you make, the larger the amounts you are able to invest in trading, which means higher profits. You know what they say about the rich getting richer!

The other aspect of Forex trading that makes it so attractive, is the leverage factor. You can invest $1 and control (and make profit on) a $200 investment. Alternately, $200 can control a $50,000 investment. Or perhaps you would like to leverage $1,000 of your own money into a $200,000 investment. Leveraging your money to these high levels is just another very lucrative aspect of forex.

But maybe you don’t quite like the idea of spending hours each day behind your computers staring at currency graphs? No problem. With online forex trading you can put in buy and sell orders in advance. When a currency reaches your specified amount, your order will automatically be activated. And when it reaches the sell figure you want, the order is automatically sold and your account is credited.

Can this all be for real? Do people really make huge fortunes trading forex online? The short answer? Yes, they do. In excess of 3 trillion dollars are traded in Forex globally every day.  It iscertainly possible for the average person to accumulate a fortune in a very short space of time trading Forex. But for the newbie, be warned: there’s a lot more involved in trading forex than first meets the eye. There is a steep learning curve to master. Arm yourself with a demo account, and read as much as you can on the subject before trading with your own money. If you are serious about trading forex find your local Forex Office at the Alpari Worldwide website.

Many average people who have never made any kind of financial investment before are drawn to the Forex market, and with good reason.  It seems like a quick, viable method of making money online – something just about anyone with a computer and an internet connection is able to do. But how hard is it really to make money from Forex?

Some people will have you believe that trading the forex market is really very easy and that this foreign currency market can be summed up in a few simple phrases, for example: In order to make money in forex all you need is to do two basic tasks:

1. Buy currency pairs to make a profit or,
2. Sell currency pairs to make a profit

After all, Forex currency pairs can only do two things: they can either go up, or they can go down. That’s it. Oh yes, they can go ‘sideways’ sometimes, when the market is pausing before deciding what it wants to do. But eventually it will either go up or down again. Sounds stupendously simple, doesn’t it? Maybe even a twelve year old can do it? Don’t be fooled for once second – the Forex market is far more difficult and complex than first meets the eye. Heck, if it wasn’t, we’d all be staying at home, trading forex, and raking in the millions with ease, wouldn’t we?

No, profiting from Forex is far more complicated that first meets the eye. Becoming a successful trader requires diligent study, and make no mistake, there’s a steep learning curve involved. You need to learn the basics: what the forex market is all about; why do banks, institutions and individuals trade foreign currencies; what types of events – for example, the news – effect the market and can send it spinning off in a new, unexpected direction – that’s just the start of it. And then you need to learn about personal money management to reduce risk, and placing effective stop losses, and the pros and cons of using robot software to place the trades for you, and on and on.

So no, the market is not as easy as it appears at first glance – nothing that’s worthwhile ever is. If you’re serious about pursuing this as a career and intent becoming a successful trader, then you will need to get an education in forex trading and get it as quickly as possible. With a solid knowledge about the Forex market behind you, you could be well on your way to making excellent, consistent profits in the long term.

But where to start? Well, there are many excellent Forex training courses available online. Some of these are eBooks, and some are in-depth mentoring programs offered by successful Forex traders.

Choose a course that allows you to learn at your own pace. Start with a demo or micro account to get your feet wet, and implement what you have learnt. From my experience, it will take a good six months of trading and studying the market before you really begin to understand what forex trading is all about.

Picture this scenario: you know absolutely nothing about technical analysis or the intricate nuances of trading Forex, but you’re keen to get started right away, and begin raking in those profits by the boat load. You have dollar signs flashing in your eyes, and you’re trying to decide whether you should settle on ordering a Ferrari, a Lamborghini or the latest Aston Martin. But first, there’s the tiny hiccup of actually making profits on Forex – big profits. You’re going to need huge amounts of money cascading into your anorexic bank account before you can embark on the stylish lifestyle you just know you were born for.

So how do you get from broke, Forex greenhorn, to rich successful trader in one quick easy step? It’s easy! You need a system that can work for you so you don’t have to learn about all the boring stuff yourself. You need a system that’s smart enough to pick more winning than losing trades – consistently. You need a system that is automated, so that you can spend your valuable time sipping cocktails on the deck of your private yacht, watching the sun set over the Bahamas.  And didn’t you just come across the sales page of some ninja stealth Forex robot they were marketing the other day that promised wealth beyond your wildest dreams? So, is a Forex trading robot the answer to all your fervent prayers?

Hold on there, not so fast. Sure, we live in a technological age; we are accustomed to looking to the computer to solve our problems for us. Computers are capable of crushing numbers, huge numbers. Computers can analyze data with ease and make decisions based purely on logic. Computers are not swayed by human emotions. In fact, a computer sounds like everyone’s perfect idea of the ideal Forex trader. So does Forex trading software, or expert advisors as they are known, work? Do they make money? How easy are they to set in motion? Is it as easy as pointing the program at an online trading platform, giving it full control over your trading account, clicking a little green button that says “go!” and sitting back watching the fairy gold roll in?

This would be wonderful if true, but unfortunately Expert Advisors are a little thornier to deal with than at first glance.

For example:

If the EA is to be profitable it needs to be configured and optimized to deal with prevailing market conditions and the specific currency pair you are trading. There is a lot of tweaking and fine tuning that goes on before the robot can even start delivering profitable trades. To put it bluntly, the Forex newbie just isn’t knowledgeable enough to have even a halfway decent idea of what is required.

Configuring correct parameters will depend on which currency pair you wish to trade as currency pairs behave very differently from each other. For example, some pairs are stable, while others, such as the EUR/USD, are notoriously volatile. This means that inputting parameters that suit one currency can be totally wrong for trading another pair.

You may also not be aware that not all brokers allow forex robots on their trading platforms. You’ll have to do some research and find out which brokers do allow this method of trading.

Another factor you should also keep in mind is that unfortunately the forex market attracts more than its fair share of rogues and scam artists. These unsavory characters will promise you the earth, pocket your money, and then deliver a shoddy software product that does not even halfway deliver the results it promised. Squandering good money on useless Forex software is a total waste.

But if you are determined to trade with a Forex robot, be sure to attach it to your demo account first and carefully analyze the results. Never trade with a robot on your real account unless you are absolutely sure of what you’re doing.