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Forex & The Big Mistake One of the biggest myths in foreign currency trading is that price is predictable and that for every level that price has visited, it will revisit that level again.
If you are a regular reader of my articles, you will be aware that as the result of my trading system support service, I get asked a lot of questions.
One particular question that I am asked on a fairly regular basis is - "Do I really need to use a stop loss? After all price always returns sooner or later doesn't it?"
Well no actually, it does not, but I can see why I am often asked this question.
Price is very capricious. Price loves nothing better than to lead us traders into a false sense of security, take all of our hard won money, and then to smile sweetly over it's shoulder as it waves us goodbye.
What do I mean by this?
A recent question that I received sets the scene quite nicely:-
"Why is it necessary to set a stop loss? I have been setting stop losses as detailed in the trading system, but I find that sometimes I get stopped out and then price moves back in the original direction and makes a lot of pips. Even when price runs against me it nearly always comes back".
Did you spot the dangerous word in that question?
It is a strange phenomenon that we traders fool ourselves into believing something to be totally true, when in fact it may only be true most of the time, and in trading, this could be a very costly mistake.
Well, if you haven't guessed, the dangerous word was "nearly".
You see, if price ALWAYS came back, we could - given deep enough pockets - hold on in there, watching our losses grow, but certain in the knowledge that sooner or later we would see those losses reduce and then turn to profit.
This does happen quite often, but quite often is not often enough because if we are prepared to let our loss run, at
NYMEX-Crude ends off lows as Wall St up
 U.S. crude oil futures ended lower but well above the day's lows on Friday, as Wall Street strengthened on positive earnings results and with oil traders
HY Markets - This week on the Markets
As extreme market volatility continues, the U.S. dollar is once again drowning under weaker-than-expected economic data. A report released today showed new U.S. claims
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HY Markets Market Commentary - Forex
EUR/USD closed higher on Monday as it consolidates above the 10-day moving average crossing. The high-range close sets the stage for a steady to higher opening on
U.S. STOCK MARKET INDICES
DJI closed lower on Monday but the high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are turning bullish signalling that
HY Markets Market Commentary - Energy
Crude Oil closed unchanged on Monday and the high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI remain neutral to bullish
HY Markets Market Commentary - Metal
Gold closed lower on Monday and extend the decline after a short covering bounce off the 38% retracement level of this year's rally crossing. The mid-range close sets the
HY Markets Review of Last Week - Energy
Crude Oil – Oil prices surged last week to an 11-week high above $79 a barrel, lifted by stronger-than-expected economic data that boosted equities markets and by
HY Markets Review of Last Week - Stock
Indices – Global stocks slid last Wednesday as investors poured money into safe havens such as bonds after Federal Reserve Chairman Ben Bernanke said the US economy
HY Markets Review of Last Week - Forex
Forex – The euro rose against the dollar on Friday after most euro zone banks passed stress tests, though analysts worried the checks were not strict enough to reveal
U.S. STOCK MARKET INDICES
DJI closed higher on Friday renewing this month's rally. The high-range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are turning
HY Markets Market Commentary - Energy
Crude Oil closed lower due to profit taking on Friday as it consolidated some of Thursday's rally. The mid-range close sets the stage for a steady opening on Monday.
HY Markets Market Commentary - Metal
Gold closed lower on Friday ending a short covering bounce off the 38% retracement level of this year's rally crossing. Stochastics and the RSI are oversold and turning
HY Markets Market Commentary - Forex
EUR/USD closed higher on Friday as it consolidates above the 10-day moving average crossing. The high-range close sets the stage for a steady to higher opening on Monday.
U.S. STOCK MARKET INDICES
DJI closed sharply higher on Thursday following the release of a number of strong profit reports and better-than-expected existing home sales. Sales of existing home
some point the loss will keep on increasing until we are completely out of funds, at which point we will be forced (possibly by a margin call) to liquidate our position and this will likely more than wipe out the other times when we profited from price making a return to the levels that we had hoped for.
Price can come back nearly every time, but it only has to fail to do so once to wipe you out if you do not use a stop loss.
Setting a stop loss is a very sensible and essential thing to do.
Setting a stop loss should be an intrinsic part of your trading method. You should be in the habit of setting your stop loss on every single trade, at the same time that you place the trade.
Selecting your stop loss position is something that should be calculated prior to the placement of your trade, and you should at that time also consider the amount that you are about to place at risk in relation to your money management objectives.
Sure, sometimes you will get stopped out for a small loss and price will then carry on in the direction that you had hoped, leaving you on the side lines. On these occassions you will not gain all of those pips of profit.
In the long run though, setting your stop loss will keep you in the game, and staying in the game will allow you to make your profits from the many times when price moves just the way that you want it to. By: Article Directory: http://www.articledashboard.com Martin Bottomley is a full time professional trader, acknowledged author, tutor and co-developer of trading software including The Amazing Stealth Trading system.You will find more information at: www.stealthforex.com
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Gone are the days when stock market was limited to the rich who paid brokers to manage their portfolios. Thanks to online investing, now there is a multitude of business savvy middle class individuals who indulge in the trading game. Web sites like Forex offer opportunities to nearly anyone to start investing in the stock market and earn money as a stock or currency trader.
It is important to note that Forex is a Web site that is used by investors who are self directed. It is not for the weak of stomach, and all investors need to be comfortable with some amount of risk. And, unlike other trading sites that trade in stocks, Forex is mainly a currency trader. Access to the foreign exchange market is given through an account, and you can invest in one form of currency or another, hoping to make money off of the way currency values fluctuate.
While the main point of Forex is to allow access to the foreign currency market and allow you to make trades, the Web site does provide many tools to help you make better-informed decisions. That said, it is important to realize that trading Web sites will not take responsibility for losses, and most of them charge commission or charge a flat rate for each transaction.
Forex has a learning center for users. It provides exhaustive information about the foreign currency market. It is particularly useful for people who are not familiar with the currency trade. It helps them by explaining how the market works and how to read the market.
Another more advanced tool is the Forex trading section. This builds on the knowledge gained from the learning center and helps you learn specifically how to use Forex. In addition, Forex offers tools such as tutorials on how to read the quote board, how to understand bid and ask, and the method to figure out the high and low. The training is comprehensive enough to help you watch and understand the market trends and decide what to do.
The free practice account offered on the Forex Web site is one of the most helpful features. It opens up a mock account stocked with practice money to help investors get started without much apprehension. As you read the charts and quotes, and buy and sell you get an idea of how much money you have made or lost. It is like a warming up exercise before you actually get going in the currency market.
The Forex website makes available all the charts and investing tools to the investor along with comprehensive real-time charting and research to get on with the investment process. The training tools at the Forex help you better understand and use the charts and the research. You can set up an account with Forex with amount as little as $250 in your account and once you become member of the website you get access to more advanced charts and tools to foray in the market.
If you are looking to learn how to trade better and earn money for a vacation, or even for retirement, you can do so with the help of Forex and its direct access to the currency exchange.Article Source: http://www.ArticleJoe.com About the author: Jimmy Jooves writes exclusively for Forex Fun, there's a wealth of knowledge on the website, plus their free newsletter is well worth signing up for too. If you want to read more Forex articles go to: www.forexfun.com/articles
Click here for other unique forex articles.
By Gone are the days when stock market was limited to the rich who paid brokers to manage their portfolios. Thanks to online investing, now there is a multitude of business savvy middle class individuals who indulge in the trading game. Web sites like Forex offer opportunities to nearly anyone to start investing in the stock market and earn money as a stock or currency trader.
It is important to note that Forex is a Web site that is used by investors who are self directed. It is not for the weak of stomach, and all investors need to be comfortable with some amount of risk. And, unlike other trading sites that trade in stocks, Forex is mainly a currency trader. Access to the foreign exchange market is given through an account, and you can invest in one form of currency or another, hoping to make money off of the way currency values fluctuate.
While the main point of Forex is to allow access to the foreign currency market and allow you to make trades, the Web site does provide many tools to help you make better-informed decisions. That said, it is important to realize that trading Web sites will not take responsibility for losses, and most of them charge commission or charge a flat rate for each transaction.
Forex has a learning center for users. It provides exhaustive information about the foreign currency market. It is particularly useful for people who are not familiar with the currency trade. It helps them by explaining how the market works and how to read the market.
Another more advanced tool is the Forex trading section. This builds on the knowledge gained from the learning center and helps you learn specifically how to use Forex. In addition, Forex offers tools such as tutorials on how to read the quote board, how to understand bid and ask, and the method to figure out the high and low. The training is comprehensive enough to help you watch and understand the market trends and decide what to do.
The free practice account offered on the Forex Web site is one of the most helpful features. It opens up a mock account stocked with practice money to help investors get started without much apprehension. As you read the charts and quotes, and buy and sell you get an idea of how much money you have made or lost. It is like a warming up exercise before you actually get going in the currency market.
The Forex website makes available all the charts and investing tools to the investor along with comprehensive real-time charting and research to get on with the investment process. The training tools at the Forex help you better understand and use the charts and the research. You can set up an account with Forex with amount as little as $250 in your account and once you become member of the website you get access to more advanced charts and tools to foray in the market.
If you are looking to learn how to trade better and earn money for a vacation, or even for retirement, you can do so with the help of Forex and its direct access to the currency exchange.
Article Source: http://www.ArticleJoe.com About the author: Jimmy Jooves writes exclusively for Forex Fun, there's a wealth of knowledge on the website, plus their free newsletter is well worth signing up for too. If you want to read more Forex articles go to: www.forexfun.com/articles
Click here for other unique forex articles.
Gone are the days when stock market was limited to the rich who paid brokers to manage their portfolios. Thanks to online investing, now there is a multitude of business savvy middle class Read more...
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