OKE FOREX

Thursday, 12 July 2012

Swing trading for dummies

I have already written a post on the subject and talked about this kind of trading strategy in many of my posts, but I still want to deal with it in this article. Swing trading is type of trading system when a trader keeps his position open from one day to a few weeks. Much depends on the momentum that a security gains from some piece of news or any other fundamental as well as technical factor(s). A lot of day traders ultimately become swing traders as they get disappointed with trading short term trading strategies such as scalping or similar ones.

The key difference from any other day trading style is that a trader who uses swing trading system relies more on long term charts such as: daily, 8 hour, 4 hour and less often on 1 hour, 30 minutes or 15 minute charts. This, as you may understand allows him to avoid various �daily market noises� that are bountiful and concentrate on a bigger picture. If you only look at what happens on this particular day you will never know what caused this or that big move in the market. Maybe some bank unloaded its� huge position or some crazy piece of news caused traders to buy or sell some particular securities.

In swing trading you want to catch a bigger move and capitalize on it as much as possible. It is very similar to trend trading and in some cases these terms absolutely coincide. However, trend trading refers to bigger moves than market swings and usually last longer. Some traders tend to call any tendency short or long term that is in the market to be a trend. They might be right to some extent, but then we should definitely distinguish between mega and micro trends, because trend traders would follow the former ones and day traders the latter ones.

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Range tradingcan also involve various swing trading strategies. It is a broader concept as market swings usually happen within a certain market range. The best way to trade those is to enter a long trade at the bottom of the range and go with the full swing till the top of the range where you close your long order and reverse by taking a short order which you (possibly) keep till the bottom of the range. Of course, market never forms perfect swings, but I hope you understand what I mean.

Hope the post was useful.

Monday, 9 July 2012

My 3 top Forex news releases

I have written a lot about importance of Forex news in day trading. These events give us day traders a lot of opportunities to make a lot of pips quite fast. Of course, news trading is pretty risky and requires a lot of patience, practice, experience, very strict money management rules and ability to make decisions fast when things go not as we have planned. In the article I want to single out those Forex news releases that are my favorite.

First of all, I want to say what criteria I have for news releases to trade them. If you look at the schedule of those events and then look at market reactions to them, both before the release and after the release you will quickly notice that some events have very low importance, some have medium importance and yet others have very high importance. The latter are in my area of interest.

Big movements in securities are necessary for money to be made on these news releases. These are not often, but when they happen you are rewarded for your patience and discipline.

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So, which news are top? The answer may differ a bit, but for me they are as follows:

1. Non Farm payrolls. The release has been quite a sensitive area for most traders as the state of US jobs are one of the main ways to see the state of the economy of the strongest country in the world. This event causes a lot of volatility in all markets, not only Foreign Exchange. I still remember times when the news would cause currency pairs move hundreds of pips in a matter of a second. This has changed, but from time to time history repeats itself. Be aware of that!

2. Interest rate decisions from central banks. These may not always have immediate reactions, but reactions will be in a matter of a few days. There might be a few decisions the same week or even day, so it is better to wait till all of them are announced and only then place trades. Markets often become less active before the announcements and volatility increases in the first hours after the release or in the next two days. When this news is announced around important support or resistance levels you might catch a nice reversal and make a swing trade that might allow you to get 1000 pips or even more.

3. GDP from around the world also is an event that will have strong impact on the markets medium term. Again, the reaction may not me immediate, but as the market digests the data that is releases it will eventually move one direction or another. You will simply have to go with the flow.

I hope you will take time to watch what happens when these news events happen and learn from the experience. Hope the post was useful and interesting too.

For more on the topic of Forex news read:

10 essential rules for trading Forex news profitably

Top 15 Forex trading strategies for profit

Disclaimer

Monday, 2 July 2012

Is day trading for a living possible

I know how difficult it is for most people to trade relying on the big picture. They are impatient to wait for opportunities and want to have quick profits trading financial markets. On the one hand, it is possible to make a decent living by day trading securities. On the other hand, it is much easier to trade large market trends and do other businesses. Since a lot of people want to make money fast there are a lot of internet scams connected with that and various materials written on the subject that have one single purpose � make money from you. So, be careful and do not be deceived. There is no easy way of making money day trading. However, we can do the job which is very difficult and still make money. Let us look at some of the things that are necessary for successful day trading.

What does a day trader need to be profitable?

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Firstly, it is a deep understanding of the market.

You cannot just read one article on the subject, open an account and start making money within a week. That is a scam! You might be successful in the beginning, but difficult situations will come and you will lose all your deposit. I know what I am talking about, because this happened to me and I saw it happening to hundreds of newbie day traders. Some say that knowing a lot about a market will only confuse you. Do not worry about that. With time you will be able to select what is essential and what is not and take advantage of that knowledge.

Secondly, you will need to have a good trading system or even a few of those.

You should understand what you are doing, when you are entering the market and exiting it. You should wait for specific set ups before you get in. Don�t even try to rely on your feelings. You will fail! Even an average strategy is better than trying to make fast spontaneous decisions by relying on what you see happening in front of your eyes. Be proactive, not reactive!

Thirdly, do not overtrade.

Overtrading is a �disease� of most newbie traders. They are searching for opportunities every hour. And they find them! And they lose money on those, because you cannot catch all the moves in the market. Wait for what you know really works. This may mean that you will make only one or two trades per day, but do not worry about that. Your account balance will definitely be better at the end of the month.

Fourthly, be disciplined.

Stick to what you know works and do not improvise. You do not want to make your trading a dramatic and stressful experience. You want as little stress as possible and discipline will help you to achieve that.

Fifthly, analyze your trades after the day is over.

See your progress. Check if you were able to follow your plan. Try to be as objective and critical towards yourself as possible. If you see a trend of deteriorating from your trading plan and strategy it would be good to stop trading for a few days, re-think your activities and go back to strict discipline.

Sixthly, invest in your financial education.

You need to improve and possibly expand your knowledge so that you can make better day trades and fewer mistakes. It will mean more reading books and articles from people in your field, maybe attending some seminars or workshops. This will probably help you to modify your strategy and make it even better.

Hope the steps were useful.