Following Oil in Currency Trading

By Ahmad Hassam

If you want to become a good investor in forex, then you need to learn that the currency markets evolve and change with time. As the forex markets evolve and change, your trading strategies should also evolve and adjust. You will need to make a little tweak here and a little tweak there sometimes in your trading strategies in order to continue making profit.

There will be periods of low returns and even losses when the markets suddenly change and new trends are formed. Your trading strategies will need adjustment with the markets with these changes. When you have made the adjustments to your trading strategies, you will start making profits again as before. You should never make the mistake of getting stuck with only one currency pair and only one trading strategy. Always look at macroeconomic events. Try to understand how different currency pairs react to these events.

Now, lets discuss a trading strategy that depends on following oil prices in the markets. There are many sources of oil. Some currency pairs react more strongly than other when oil prices change. Fortunately for you, oil prices trend for extended periods. When oil prices rise, they continue to rise for several months.

Almost in the same fashion, when oil prices start declining, they tend to continue declining for several months. In 2008, we saw oil prices on the rise for several months before a sudden collapse. Oil prices than stabilized around $55 for many months. Some of the currencies that react strongly to oil price changes are British Pound (GBP) and the Canadian Dollar (CAD). Lets focus on USD/CAD currency pair in our example.

United States is the major importer of Canadian oil. The value of CAD increases with increase in oil prices in relationship to US Dollar (USD). Increase in oil prices means that the pair USD/CAD should start trending downward. This is a good example of a trend trading strategy.

Watch for times when the oil prices are rising and the exchange rate USD/CAD is decreasing. Similarly, watch for times when oil prices are declining and the exchange rate USD/CAD is increasing.

Use CCI, Commodity Channel Index, to trigger your trade. Watch for the 14 period CCI (Commodity Channel Index) to cross above 100 and then cross back below 100. This will tell you that the buyers have made a temporary upward push on the currency pair USD/CAD but were unable to turn the trend around. The trend is still downward.

Set a limit order of 300 pips and a stop loss order of 75 pips. This gives you a risk reward ratio of 1:4. This risk reward to reward ratio is very good. It allows you to be wrong a few times without ruining your chances of being profitable. 300 pips mean $3000. Usually such a trade will continue for 4-5 weeks.

You can also trade the USD/CAD currency pair in the opposite direction if the oil prices start to decline. However, prolonged downtrends in the oil prices are unlikely under rising global oil demand. This trading strategy depends on just knowing which way the oil prices are moving right now. You can take advantage of this oil price movement. Oil prices have again started to climb. It has reached above $68. Take advantage of the rising oil prices by trading USD/CAD pair as described above. - 23221

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading and swing trading stocks and currencies. Discover A Revolutionary New Forex Robot. Develop your own Forex Trading System.

Know These Trading Secrets

By Ahmad Hassam

Trading can be challenging. Trading is not investing. It is speculating. Speculating is defined as assuming business risk in the hope of making a profit from market fluctuations. Successful speculating requires analyzing different market situations, predicting outcomes, and putting your money on the side of the trade on which you think the market is going to go up or down.

Trading can also be the appreciation of the fact that if you apply the correct techniques for analyzing trades, managing your money and protecting your account, you can be wrong 70 percent of the time and still be a successful trader.

Over time, opportunity keeps on shifting from one market to another. For example, right now forex and gold markets are really hot while stocks are down. Gold prices are going up. Those who entered the trend by investing at the right time and are going to ride the trend till it lasts will make a lot of money in the gold markets. At the moment almost everyone is running and buying gold as a hedge against turmoil in the global markets. Everyone includes countries, institutional investors, hedge funds and retail investors.

This situation may continue for some months or some years but suddenly you will find that crude oil futures have become a great investment opportunity. Many hedge funds had made a lot of money by investing in crude oil futures in the year 2008.

Timing for entering the market and the timing for exiting the market is very important for a successful trade. In trading it is the timing that is of essence. As the global economy recovers and demand for oil increases, oil prices will again go up in a few years time.

Investors and traders make the mistake of focusing only on one market. Many end up spending time on only one market. In reality all the markets are interlinked. Futures, options, forex, stocks, commodities, all markets are effected and in return effect other markets. If something happens in one market, you will find the repercussions in the other markets. Successful trading requires mastering a strategy that enables you to trade multiple markets and multiple time frames.

They do testing, development, put on a million indicators, go and trade live. They do everything they can while spending all kinds of time trying to figure out one market and one timeframe. But then what almost happens is that market starts to go sideways or the opportunity shifts to another market.

You really have to have the ability to be able to adopt the market conditions and not waste your time to really master one market which is critical. There were so many stocks just a few years ago that were incredible to trade that either dont exist anymore or would not trade successfully today.

Mastering different markets is counterintuitive. Many gurus will teach you that you really need to learn the ins and outs of one market. They will tell you to focus only on one market and then stick with it. But the problem with that philosophy is that opportunity keeps on shifting from one market to another. A good trader always follows where the money goes. - 23221

About the Author:

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

Finding the Right Forex Trading Broker

By Jane MacRae

For investors in the forex market, to have a forex trading broker is not a must but can be of enormous help if you get the right one. The reality is that there are so many brokers out there that you may feel overwhelmed to make a smart choice. With this article, I am about to give you some tips to help you go about.

* Choose One That Offers a Free Demo Account

Many online forex brokers offer free demo or test accounts to new and potential members. Take advantage of them.

Aside from being a great introduction for those forex newbies, demo accounts also let you take a look at the trading platform used by that broker. You want an interface that is easy to learn and understand, and that you will be comfortable to use.

* Ask for References

A good broker will not mind giving you references. You need to be able to talk to other people who have used his services, and find out whether or not they are happy with their experiences.

If a broker is unwilling to give you references, he probably is not your choice.

* Check Out the Minimum Deposit Requirement to Open an Account

All forex brokers set their own minimum deposit requirements when you open an account with them.

In case one broker asks for a larger deposit than you are willing to start with, search for one that requires a lower minimum. There are options out there for every investor, no matter how much or how little they have to invest.

* Check the Broker's Credentials

Despite that there is no centralised, governing body to regulate the whole forex market over the world, the business practices of each forex broker is regulated by institutions in the countries where they are located.

A broker located in the US, for example, should be registered as a Futures Commission Merchant (or FCM) with the Commodity Futures Trading Commission (or CFTC). They should also be registered with the National Futures Association (or NFA).

* Check Out the Service Charge

Keep in mind that cheaper is not always better.

Some brokers charge smaller service fees than their competition. However, they may try to make up for the difference with hidden fees that you may not even be aware you are being charged.

So, before you engage any broker, be sure to ask about possible hidden fees, read the fine print, and learn as much about them as you can.

It can be an inevitable (and sometimes painful) experience for most forex players to find a right forex trading broker. With the tips given in this article, you should at least know what to look at. Remember, though, you can still make mistakes but don't get frustrated. Sometimes, we just grow out of try and error. - 23221

About the Author:

Click here for our review of a well-known automatic forex trading system in the market, which will grant you a huge advantage over your competitors. You many also like to check out this related article about trading spot forex.

Trading Strategy - Descending Triangles Upside Breakout

By Jeff Cartridge

The descending triangle can be traded very successfully on the long side entering the trade as the stock breaks out to the upside. The pattern forms when the two boundary lines that contain the price movement converge to a point. The top line slopes down toward the bottom line which is horizontal.

Descending Triangles, Ok To Trade

The breakout of the descending triangle would be expected to be down, but a strong support level causes 43% of the patterns to break to the upside. The upside breakout of descending triangles can deliver positive returns with 41% of the patterns being profitable. The average return for the long trades is 0.87% in 8 days. So it is not the best pattern to trade long, but could be profitable.

Refine Your Entries

A break to the upside works better in a rising market or sector environment. By using filters that require the market and sector to be in a consolidation or an up trend you can improve the results. Because the upper line is sloping down the stock will be in a short term downtrend. Profitable entries tend to occur as a pull back in an up trend.

Descending triangles that breakout early in the pattern, produce inferior results. A breakout is better if it occurs after the pattern gets 30% of the way to the point of the pattern. Shallow patterns are also best avoided, where the pattern height is less than 2% when compared to the stock price.

Avoid descending triangles where there are two consecutive closes at the same level or two consecutive highs at the same level prior to the breakout. These are often signs of an illiquid stock. Ensure that the volume is supportive of the breakout, i.e. volume as the stock rises is greater than volume as the stock falls.

Descending Triangles Can Be Profitable

You can improve your trading results by using a series of simple filters that have been outlined here. This select group of descending triangles delivers an average profit of 1.45% in 10 days and is profitable on 51% of the trades. Overall this makes descending triangles attractive to trade.

Note: Statistics for this article have been provided by Patterns Trader after analyzing over 60,000 chart patterns on the Australian market from 2000 - 2008. - 23221

About the Author:

Jeff Cartridge has been trading chart patterns since 1998 and created the website LearnCFDs.com A Simple Timeless Method for Huge Gains

Online Currency Trading Software Analysis

By Reginald Shiver

Are there any lucrative and genuine online Forex trading software and where can you download them? Having examined numerous currency trading methods and software, I have come to understand that majority of them are not profitable over the long term even though their systems' logic makes accurate sense. They are generally disguised as some powerful system and software by intelligent marketers who appear to make high profits by selling them to naive traders.

However, there are a few genuine Forex programs and software that are actually valuable and work to make wealth in the long term. Their owners generally provide useful lifetime maintenance to keep informed their clients regarding the latest market fashions.

1. How to Make Bucks with an article of Genuine Online Forex Trading Software?

Some of the best currency devices include software that can assist its users analyze market trends and even creates deals and produces money automatically for its users. The entire package that I use provides me with an essential education on forex trading and what I need to do to get started making bucks from currencies business. It should give you a clearer knowledge of Forex trading and also pioneer you to a complete host of devices and software that can make your business processes easier.

2. What Are the Most Common disadvantages of Online Forex Trading Software?

Most programs and systems will require their users to learn and analyze complicated technical diagrams and terms unnecessarily. These complicated analysis processes can usually be eradicated with the correct trading techniques and software courses. These are the exact kind of tools that generate huge financial organizations huge profits everyday, and traders worldwide are constantly looking for the most beneficial Forex software. I presently use a software course also termed as an Expert Advisor that earns me income consistent every single month. - 23221

About the Author:

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