Expert Advisor Review Tips
Jun 20th
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It can be very helpful to look at expert advisor review websites when you are considering buying one of these automated forex trading systems. If you are successful in finding and installing a good expert advisor, you can make a lot of money on autopilot.
However, if you do not set it up right, or if you pick a bad one or just hit a bad point in the market, it can simply lose money for you. Of course you can avoid that to a large extent by using a demo account until you are sure that the robot is profitable. Most expert advisors come with a 2 month guarantee so you can test it out in demo for that time and get a refund if it does not prove profitable for you. However, you could waste a lot of time if you did that with one EA after another. So reviews can help you pick your way through the huge choice of EAs that you will find from a brief search.
One difficulty with expert advisor review websites is that some reviews do not tell you anything about the product that is not already on the developer’s website. In other words, instead of doing their own review, these site owners have just taken some facts and copied out. They will probably say nothing negative about the robot and the page may read more like a sales letter than a genuine review.
A real expert advisor review should give you some indication of how suitable the robot is for beginners, how easy it is to install, and perhaps some hints and tips on getting the most out of it. This type of information can be very helpful. Sometimes, even if there were things that the reviewer did not like about the robot, you might want to go ahead because those negative points would not apply to you. Other times this kind of article can help you choose between several robots that might be reviewed side by side.
Another point to look for in an expert advisor review is the trading style. Some robots use a scalping system that will make many small trades in a short time. Others will open fewer trades, but leave them running longer. Both methods can be equally profitable but some people are more comfortable with one than the other.
For example, many people will complain about robots that do not trade often enough, as if more trades automatically meant more profits (it doesn’t). However it is true that if you only have a very small balance in your account, you cannot risk much per trade and you may find it frustrating if your robot only makes one or two trades per week.
You may have to read between the lines a little bit to work out some of these points. However, you will be in a much better position to assess which is the best EA for you if you keep these tips in mind any time that you are reading an expert advisor review.
Foreign Exchange Tutorial: The Basics
Jun 19th
This foreign exchange tutorial will cover the basics that anybody needs to know about the forex market before they start trading, or even before they decide whether or not they want to try forex trading. There are so many advertisements on TV, magazines and online, all focusing on the huge amounts of money that can be made. They do not tell you about the risks, or if they do, it is in very fine print. And there are plenty of other things that you need to know before you start any forex training or begin trading on a live account.
First we will cover some of the terminology in this foreign exchange tutorial. Foreign exchange is usually shortened to forex, FX or 4X. The practice of trading on the foreign exchange market is also called currency trading. It involves buying and selling different currency pairs according to whether you believe that the price of the pair will rise or fall. Then of course you close the trade with the opposite transaction after a certain time. If the price went your way, you will profit.
It is a little like stock exchange trading except that we are dealing with currencies instead of stocks and that is why we always talk in terms of a pair. In order to buy one currency you must sell another, so it is always a matter of exchanging one currency for another.
However, you can deal in virtually any currency, at least in theory. You are not limited to trades that involve the currency of your own country. Of course in practice most traders keep to the most heavily traded currencies, which are those of the major players in the global financial market (not necessarily the biggest countries).
The most traded currency is the US dollar, followed by the euro, Japanese yen, British pound, Swiss franc, Canadian dollar and Australian dollar. The most traded pair is USD/EUR, the US dollar and the euro. This is the pair that most beginners are recommended to start trading.
To begin trading you need an account with a broker, a broadband internet connection and, of course, some money to invest. Since the internet opened up the forex market for so many private investors, known as retail traders, it has been possible to trade with smaller and smaller sized accounts. For some micro accounts now you can start with less than $100.
Of course, you will only be able to make small profits with an account this small. Nevertheless, leverage means that it is possible to control large amounts of money in the market (usually 100 times your stake, and sometimes 200 times), so the return on investment can be high. However, it is important not to be carried away by dreams of riches and overstretch your funds. Limit your risk and set stop losses to ensure that you do not lose more than a certain amount if a trade goes against you.
The forex market is open 24 hours a day Monday through Friday and this is a big advantage for many people. It means that you can trade outside of normal business hours. Many people therefore find that foreign exchange trading suits their lifestyle, while stock trading would not. This is why so many people are attracted to forex trading and seek out a foreign exchange tutorial from sites like ours.
How To Read Candlestick Charts
Jun 19th
Knowing how to read candlestick charts is essential for both stock trading and foreign currency trading. Candlesticks are a record of price movements that can help a trader to identify trends and spot upcoming breakouts and reversals or retracements. Many traders are able to develop profitable trading systems almost entirely on the basis of candlestick charts, and many more systems rely on them as a first or primary signal.
The chart is made up of a series of blocks or candles, each one showing the open, close, high and low prices over a period. These can be prices of anything: stocks, commodities, currencies or whatever. The open and close prices may be the prices for a day’s trading but in most cases you have control over the period and you can set your chart to show a candle for each hour, for 5 minutes or whatever. If you are designing systems around this type of chart you will probably want to check your signals over more than one time period before you open a trade.
If shown in monochrome, the candle will be unshaded or white for a price that rose during the period. In this case the open price is the bottom of the candle’s wide block and the close price is the top of the block. If the price fell during the period, the body of the candle will be shaded, either black or a color. In this case of course the upper edge of the body is the open price and the lower edge is the close.
In either case, the high during the period is the top of the vertical line or wick stretching upward from the top of the block. The low during the period is the bottom of the vertical line or wick running down from the bottom of the block.
Some charts these days are shown in two colors. You might have green or blue for a bullish period when the price was rising and red for a bearish period when the price was falling.
The beauty of candlesticks is that you can see the direction of price movements at a glance. Not only do you see whether the candle as a whole is above or below the previous one, but you can also tell by the colors whether it marked a reversal or a continuation of the trend.
Certain patterns are particularly important in learning how to read candlestick charts.
In some cases of course the open or close will be the high or the low. In that case you do not have a wick in one or both directions. If there is no wick in either direction, this is called a Marubozu pattern.
In another case, the opening and closing prices may have been the same. Then there is no candle body but only wicks stretching up and down from the horizontal line that marks the open and close. This is called a Doji pattern.
If the body of the candle is long with short or non existent wicks, close to Marubozu, this indicates a fairly steady movement, possibly part of a trend. The color of the candle will tell you whether it is an upward or downward movement.
On the other hand if the wicks are long and the body is short or non existent, more like the Doji pattern, this can indicate a choppy market with big fluctuations. Trend based trading will tend to be suspicious of Doji patterns, which may be a sign that the market is becoming unreliable.
Of course one candlestick by itself is not enough to form the basis of a trading decision. You will always look at a series of candles. For example, you can draw trend lines along the highest highs and lowest lows on candlestick charts. These will help you to identify whether a trend is forming, or if the lines are converging, whether a breakout may be expected. When you know how to read candlestick charts you can base systems around these indications.
Forex Trading: How Much Money Can You Make?
Jun 18th
Foreign exchange trading or forex is advertised as one of the best ways to make money on the internet, but how much money can you actually make? Of course the answer is that it depends on many factors. These include your starting investment, your training, the time that you have available and your attitude. But one of the most important factors is how you manage the money itself.
Most traders, when they are starting out, spend a lot of time hunting around for the perfect system. Now of course it is true that you do need a system that has the potential to make profits, but there are still systems that some people make profits with and others do not. You will realize this if you look at online reviews. Some will say that a system is great and they are making a lot of money with it. Others are losing. Why is this? Often, it is all in the way that they manage their money.
Take for example a system that, on average, makes 30 pips profit per winning trade and 15 pips loss per losing trade, with 50% winning trades. Clearly this system will make a profit over time. However, if you have ever played roulette or tossed coins you will know that a system with an average of 50% wins will quite often have runs of 5 or more losses, or runs that go something like 8 out of 10 losses.
So even though this is a profitable system, a trader who was risking 20% of his funds on each trade, would quickly be wiped out by it. Someone risking 10% per trade would survive longer, but would probably still fall victim to a bad run in time.
Someone risking just 1% per trade, on the other hand, would probably be able to make money indefinitely with this system. Profits would be small at first, but they would grow and grow. And at 2%, a trader would probably still be safe while making twice as much money as the 1% trader.
Clearly, then, in order to maximize your profits from foreign exchange trading it is important to know a few basic facts about your system. This means at least backtesting it over a long period, and preferably testing in real time through a demo account too.
If you are sure that your system is profitable, you can begin to trade at low risk. However, to go as high as you safely can, you need to know what is the worst case scenario that you can expect, that is, the maximum loss that you are likely to encounter before an upturn in the worst bad run, then double it, and make sure that you will be able to cover that.
As a rule of thumb, limiting your risk to 2% of your account balance is a good strategy for most traders. This can be hard for beginners and those with low startup funds because it does mean that you will not get rich overnight. This can be disappointing but it is a fact of life. As the old saying goes, anything that looks too good to be true, probably is.
It is vital to understand that many of the cases that you see where people double their money in a month, for example, rely on using maximum leverage and maximum risk which might result in doubling your money in the first month and then losing it all in the second. This is gambling, not investing.
Foreign exchange trading is a process that can be used to make a lot of money, but only if you allow your funds to grow gradually, along with your experience. Understand that a 5% to 10% return on your investment per month is a great result, and you have a good chance of making money consistently with foreign exchange trading.
