Trading Strategy Based On Market Sentiment (Part I)

By Ahmad Hassam

How do you view the forex market is very important. Do you see it as a big mechanical matrix which is devoid of emotions? Most traders have a love hate relationship with the forex market. Most think that the market is either against them or for them.

At anyone time, the market is emanating the emotions of currency speculators around the world. The truth is that forex market is just the compressed display of emotions.

A market is like a big living organism made up of millions of cells. Each cell carries its own functions and interacts with other cells of the body keeping the living organism alive around the clock.

Knowing what the market thinks and how it thinks is crucial to trading success. A forex market comprises millions of participants acting out their perceptions and emotions.

Ultimately, you as the trader are dealing with other traders out there in the market whether they are big institutional players or an independent individual trader like you and me. You need to know what the other participants are thinking.

Market sentiment is the most important factor that drives the currency markets or that matter any financial market. What is the market sentiment? Market sentiment is simply what the majority of the market participants are perceived to be thinking or feeling about the market.

Market sentiment sums up to the overall dominating emotions of the market participants. Traders tend to act based on what they feel and think of certain currencies. They form their opinions based on emotions regarding their strengths or weaknesses relative to other currencies. It explains the current actions of the market as well as the future course of action.

Market sentiment is primarily based on the participating traders emotions. These emotions are one of the greatest factors in the determination of the currency exchange rate. One thing you should know is that market sentiment is not logical.

Market sentiment is like a fickle lover. It is capable of changing its mind based on new information that can upset the existing emotion. Market sentiment can be bearish, bullish or just plain confused.

If the majority of the market participants want to buy that currency, the market sentiment is bullish. If the majority wants to sell the currency, the market sentiment is deemed to be bearish. When most market participants are unsure of what to do at a particular moment, the sentiments end up being mixed up.

Understanding the current market sentiment and exploiting it with an appropriate trading strategy can help maximize your trading profits. If you can understand what the other traders are thinking and why the market is doing what it is doing, you will be in a better position to plan the entry and exit for your trade. In Part II of this article we will discuss what factors influence the market sentiment. - 23221

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Know Candlestick Patterns. Learn Forex Trading!

Can You Learn To Trade Like A Hedge Fund Manager? (Part II)

By Ahmad Hassam

You must have read Part I of how hedge fund managers trade forex. You need to understand that hedge fund managers are always on their nerves edge. They constantly look for strategies that work.

Hedge fund managers aim is to make good money consistently while always on their guard because a trade can go bad any time. If a trade goes bad, they know beforehand how to get out of a bad position before it results in a huge loss. You as individual investors also would put your own money at stake in the hope of making good money.

You should decide whether you want to range trade or trend trade? Many hedge fund managers are trend following traders. If you want to become a trend trader than you need to become a master of predicting and anticipating trends in your favorite currency pairs. If you want to be a contrarian trader and range trade, than you should understand how to scalp.

You also need to decide the time frame that you will trade most. You should decide whether you will use the 5 min charts, 30 min charts, 4 hour charts , daily charts etc and why.

Will you only day trade or hold your position overnight? If you are doing a job, will you trade after hours? What time of trading best suits you? These things should be very clear in your mind before you start trading.

Learning the art of entry and exit is essential for your success. Should it be single entry, single exit? Should it be single entry, multiple exits? Should it be multiple entries, single exit? Should it be multiple entry, multiple exits?

You should understand the money management rules. Never ever put more than 1% of your equity at stake in a single trade. Learn to calculate the risk/reward ratio.

Now, test drive the forex system by back testing and forward testing. Back testing can be done on Metatrader and other platforms. Forward test your strategies on a demo account.

Open a mini account and try to test it live with a small amount of money. This way you will not lose much money but will be playing against your emotions.

Ultimately trading is all about developing discipline and controlling emotions. You dont get this feel in demo trading when you know nothing is at stake.

Get intimate with your strategies. There are two primary types of trading strategies"one that has a high percentage of profitable trades and one that has a high profit factor.

The key factor here is to know and find out what type of market environment your trading strategy performs well in and what type of market environment your trading strategy fails in. Because only then will you know what works under what conditions and what does not work.

Drawdown is very important. Know how much drawdown you can afford. You can establish bench mark figures using a back test for each trading strategy. Decide before you trade, how much drawdown is acceptable before you need to pull the plug out of the trade.

The last step of thinking or trading like a hedge fund manager is self reflection on your past trading performance. Self reflection is very important. Most of the time we become so absorbed with trading that we do not notice the obvious and keep on repeating it again and again.

This is why it is important to spend some time on a weekly or monthly basis to go over or reflect on your trading. You need to establish a certain ROI level for yourself and keep on tweaking your trading strategies until you start achieving that figure. - 23221

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading and swing trading stocks and currencies. Learn Currency Trading. First Trade Your Forex Demo Account!

Beginners Guide To Forex

By Henri Ritand

Don't let the size and complexity of the forex market keep you from taking your piece of the pie. Trading forex can be done if you use the right tools and do the right research. Just like the stock market, you make money off of the ups and downs of the market. The forex market is open 24/7 which means no matter where you are you make money trading forex.

Several years ago Forex trading was not available to individuals. If you were not a broker for a large financial institution, a bank, or a large corporation you were not allowed in this fast paced, liquid market. The financial requirements were large and very strict to be able to trade currency with the big traders. That has all changed over the last few years and now you can become part of the largest financial market in the world with very little start up capital.

The late 90's brought about many of the changes we benefit from today. The technology became more advanced allowing Forex trading to become a viable choice for working from home. With a good internet connection you can trade forex from anywhere in the world. These advances made it possible for individuals all around the globe to profit from the largest financial market in the world.

Forex trading is more popular than ever with all the advances allowing individuals to trade from home and using automated forex software allows you more free time to do the things you enjoy. As with any business there are risks to go along with the large profit potential. Good research, and practice or demo forex accounts allow you to educate yourself at your own pace. You can start trading forex with very little capital as well as trading a mini account until you are ready to trade a full contract.

There are some seasoned traders that say you must trade the market before you can truly understand it. With that in mind, know you can learn the lingo, familiarize yourself with the charts and find a good expert adviser to get started in trading forex. But to become really good, you must actually become part of the largest financial market in the world.

Here are three simple things you need to start trading the forex market:

1. Home office set up with a computer that has high speed internet

2. Open a forex account and get it funded

3. A trading platform

Along with these three basic things you need to trade, you should also remember to get a basic understanding of charts. Charts will help you understand what is going on with currencies around the world and will help you plan your trading strategy. Learning to trade forex can lead to large profits but remember it does not come without risks. Prepare yourself with a good investment plan, a trading system, and begin with one of the free demo accounts offered by most forex brokers. You can be on your way to financial freedom, working from home, trading forex and being part of the largest financial market in the world. - 23221

About the Author:

Henri Ritand has put together a basic, easy to understand beginners guide to Forex Trading. Henri included some helpful hints including the value of having a good Forex Automated Software when starting to trade the forex market.

Mobile Forex Trading Software

By Paul Bryant

As a market that rivals the stock market in terms of size, Forex is one huge internationally recognized trading institution. It is open around the clock during the week and only closes at the weekend. Because of this it is popular way to make money for many people.

Although extremely popular, many traders are put off trading currencies online as they do not like the idea of sitting in front of their PC for hours on end waiting for the right moment to trade. This is no longer a worry for many who have embraced the latest technology - mobile Forex trading software. This allows you trade wherever you go through your cell phone or PDA, meaning you can make money wherever you are.

Now this Forex mobile trading software can be referred to as an anytime, anywhere technology! All you have to do is get the software installed in your cell phones and it will allow you to access all the relevant information you need anytime and from anywhere in the world.

So, the next time the market takes a sudden and unexpected (or expected!) turn you do not need to panic. Simply stay calm, take out your cell phone, load up your trading platform and execute whichever deal is needed to make you cash or cut your losses.

In addition to being able to execute a trade at any time, many mobile trading software have inbuilt alerts. This means you can find out quicker than most what is happening in the market, therefore making your trading more accurate and more efficient.

Additionally, if you trade best when you have access to charts and indicators then the software can give you the latest trends at the touch of a button. It is basically the same as having your computer in the palm of your hand with a constant Internet connection.

There are several companies which are coming up with this mobile trading software technology in the mobile phones. As the concept is new the customers definitely want to make sure that it really works well.

So, lot of companies give their customers a free trial period so that they can find out how best the software can be utilized and that it is a good choice for them. Therefore, make haste and get yourself a mobile trading software loaded phone so that you too can mint some bucks on the go! - 23221

About the Author:

Do you want to learn more regarding mobile trading software? If so then check out this site: Software for Mobile Forex Trading. It's full of information and tips regarding currency dealing.

Forex Signals & Do We Need Forex Signal In Forex Trading?

By Jon Nash

Forex signals are predictions (forecast) of the currency changing rate in the near future. It could be intraday forecasts daily, weekly or even monthly forecasts.

Accurate forex signals provide ordinary traders to see the market as experts does . It will make the trading process easier more profitable when you have enough knowledge of how the rate of each pair of currencies will behave in the next hours, days or week.

Although signals were predicted by experts in the field, but they remain human and they could be wrong sometimes, so dont ever consider forex signals as 100% accurate, but be sure the if its a good provider it will be accurate most of the time. And its always better than having nothing.

Some signals providers are more accurate than others, this you can find out by experience or by asking other users. Reviews of those providers on the net will give you no indication at all. So the best way for you to test some providers is by signing up with providers who offers money back guarantee for unsatisfied customers, or a free trail. This way you can test them up and see their service first hand.

I personally tested some of them and ended up with one service that provides the most accurate signals, you can find this service at forex signals provider.

Some experts on the currency trading market share their knowledge with ordinary trader in two ways.

1. They can develop software, to analyze the market using their definition of the market and the changes, those software are known now as Automated forex robots. Those robots can automatically trade using the parameters the experts define and the inputs you choose.

2. Forex signals, experts have developed great talent in understanding and analyzing the currency market, they can predicts changes with any given pair of currencies related to any news, event or even by the behavior of the pair in the last couple days. So they share these forecasts with ordinary traders to give them better chance of making money online with forex trading.

Forex signals are great way to take advantage of the experience of other professionals, and its like making them help you and assist you to earn in the forex market . And if you are smart enough you can start analyzing those signals and start developing an ability to predict changes in the forex market by yourself.

Forex signals are in most cases offered by a monthly payment service, and sometimes providers ask for high membership fee. But it worth it for anyone serious to get a share of a multibillion dollar market; this fact had opened a new window to scammers. You will find hundreds of internet marketers who have no experience with forex trading developing some kind of useless products and services in to this market, So you need to be very careful what service and what product to chose.

You can trade in the forex market without any signals or software, but signals can improve your trading experience and you earning in this market. The average trader is having at most a 35% chance of earning money on the forex market; its not a 50-50 chance. Others who use good robot can get to 60% chance of winning. But using forex signals can push your odds to 75%.

Greed and lack of patience can cause of losing all your money no matter what you do and what signals you have. And dont blame the providers or the software for that. Before using any kind of assistance in the forex trading try to control yourself and your behavior first. - 23221

About the Author:

Before you join any forex signal provider online, make sure you check Jon Nash excellent free report on signals providers Best Forex Signals Provider, on the Home Business Guide where the top experts are publishing their valuable information for free, and sharing their strategies and tips on making money online