Several Useful Tips Often Time I Tend To Forget Them

1.0 In plain simple term, trading forex is about :
 "PREDICTING PRICE MOVEMENT & MANAGING RISK "

In Philosophical term, trading forex is:
"THE ARTS OF READING THE MIND OF MAJORITY TRADERS",
because, majority traders will dictate & initiate the price movement.

2.0 The single most VITAL job as a trader is to accurately IDENTIFY

WHERE THE PRICE IS GOING RIGHT NOW?         
WHERE IT WILL END?
WHEN IT WILL REVERSE?

2.1 In order to make an ACCURATE PREDICTION, you must know:

 What factors that move the price?
 What tools to use to predict price movement?

2.11 Factors that move the price: INFORMATIONS about economy, central bank activities & policies, government policies, politic, war & natural disaster

2.2 The word PREDICTION means, you can't guarantee 100% winner, you can go wrong & lose everything. Therefore, it is very important to enforce a measure to avoid losing badly.

3.0 RISK MANAGEMENT is to ensure that you "WON'T LOSE" all the PROFIT you have made, while preserving your CAPITAL. I bet, you won't listen to me, until you experience it yourself.

4.0 Rules of Risk Management:

RULE 1: Take PROFIT regularly at key support or resistance level
                Get out COMPLETELY once you have made a GOOD PROFIT

RULE 2: Enter the trade... ONLY...when you have TRADING EDGE

RULE 3: Stop the BLEEDING... Get rid of BAD TRADE ASAP

RULE 4: Set a REASONABLE STOP LOSS that allow
               the trend to develop sufficiently

RULE 5: Stay away from US NON-FARM-PAYROLL release,
                If you want a piece of action, enter at pullback

RULE 6: Follow other rules that applied in risk management


5.0 Single most important indicator is CANDLES FORMATION PATTERNS
or PRICE ACTION (this is the most recent & up-to-date indicator)

6.0 Second most important indicator is KEY SUPPORT & RESISTANCE levels in
DAILY chart (draw them to precise level by using line chart)

7.0 Third most important indicator is TREND LINE & CHANNEL LINES

8.0 Forth most important indicator is MOVING AVERAGES
(widely watched EMA :  8, 21, 50, 100, 150, 200, 365)

9.0 Always start your entry with ONE lot, no matter how confidence are you.
Add-up later when you start making profit.
Do THOROUGH ANALYSIS before entry.

10.0 A small mistake in new entry can WIPE OUT your accumulated profit.
It could turn PROFIT into LOSSES

11.0 Analyze RELATED PAIRS before entry, it could avoid the MISTAKE in reading candles signal.
For example, to enter "LONG" AUD/JPY, you should analyze AUD/USD & USD/JPY
You want to see the AUD is strengthening (Aud/usd is rising) or/and
JPY is weakening (usd/jpy is rising) in order to confirm the VALIDITY of your new entry.
By analyzing related pairs, It will ALERT you about incoming trend REVERSAL.

12.0 WAITING for a right moment to ENTER is the name of the game.
You just need to be PATIENCE in order to win.
   
13.0 ENTRY is very important,
It's the FIRST STEP of EXIT. Good entry will EASE your exit. The pro will smell entry signal miles away from the actual entry.

14.0 Enter new position when the price CALM  DOWN or SETTLE DOWN. Many traders will enter at a bounce of key support & resistance levels.

15.0 Never enter trade at :
      1 beginning or ending of Tokyo, London, NY sessions
      2 during major data release
      3 major support & resistance level in Daily chart
      4 fibonacci level
      5 psychological no 1.0000, 1.2000, 1.2300
      6 trend line, top/bottom channel lines
      7 200 ma, (price normally will react to it)
      8 Wait for possible break-out or retracement & correction
 
16.0 Before entering trade, always check for  :
      1 up-coming major data release
      2 news headline
      3 mkt sentiment (what issues that matter traders right now)
      5 risk appetite or risk aversion (Dow and S&P 500 are up or down)
      6 how's Asia, Europe, NY stock mkt doing? (red or green)
      7 gold & oil prices (up or down)
      8 US 10-year treasury bond's yield (up or down)
      9 USD index (up or down)

17.0 The price always test support & resistance level TWICE.
      If you miss this bus, just wait for another bus coming in

18.0 Exit at the RIGHT TIME to TAKE PROFIT can be a determinant factor between a winner & a loser

19.0 If there's no schedule data release, forex mkt will follow the lead of stock mkt. Bullish stocks mkt in Asia will be passed on to Europe then NY, and vice versa

20.0 Don't overly confidence. Mkt can do impossible, unthinkable, unexpected & it could surprise you, I have seen it many times. So, manage your risk properly. Leave some  margin to re-enter at the top or bottom, in case you're trapped by unthinkable move.

21.0 Diversify your positions, don't bet too much in one single pair, you'll get burned

22.0 DAILY chart is your MAIN GUIDE to enter & exit positions

23.0 WEEKLY chart is your guide to FORECAST for the next (2-6 weeks)

24.0 4-HOUR chart is used to micro-manage your daily positions

24.1 ONE-HOUR chart is used to zoom in for any sign of early & initial price movement

25.0 Many good traders lost simply because they don't do good job in managing risk. Making money in forex is easy, but losing money is much more quicker.

26.0 Nobody really knows of what's going to happen in the mkt, even the experts. In many occasions, I notice, the experts were wrong. Just stick to your candle formation pattern & price action, & aware of incoming related data.

27.0 Always pay attention when these guys speak: US Federal Reserve Chairman & FOMC, Governors of cental banks of EURO, England, Japan, Swiss, Canada, Aud, NZ, Finance Minister of German & Japan. Price will spike immediately in big time as soon as they made remarks

28.0 Euro will normally follow the stocks mkt trend but not all the time

29.0 In mkt uncertainties, investors will seek shelter in gold, US-10 yr bond, USD, yen, swiss franc, and sell euro, aud, nzd which are considered riskier

30.0 The 200ma is widely watched by traders. If price is above 200ma, it's an up-trend & if below 200ma, it's down-trend

31.0 Pay attention to German economic report like GDP, growth, and listen to what their Chancellor & finance minister have to say. Euro will react because German is the one to bail out other troubling members

32.0 gbp/usd is difficult pair to trade, many traders got burned by this pair

33.0 Aud/usd is a wild ride, you need large margin to absorb the swing plus interest rate.

34.0 When the price touches the lowest point, for example, the lowest price in 10 years; it's very possible it will go down further by 300-600 pips, and stay right there for 1-3 months before rebound back upward. Similarly, when price touches the highest point.

35.0 Don't enter trade simply because you want to be in action. Entering new trade is solely based on opportunity, after watching them for days or weeks. It's wise to stay on sideline rather than risking your capital.

36.0 Focus on couple pairs & currencies that you are comfortable with, and study them thoroughly. I am comfortable with usd, euro, yen, aud, nzd, gbp and pretty much entering my positions based on those currencies, because I know them very well. I know their behavior & character, just like knowing my friend for 20 yrs

37.0 Trading ROBOTs don't seem to work and I tested several of them. You should stay away from them. Similarly about Trading SIGNAL, many signals are poor quality, you should do homework before signing -up for one

38.0 Many new traders simply don't know how read the signal in single candle & group of candles.This skills is the KEY in winning forex, and it took me 16 months in TRADING, PRACTISING & TESTING in LIVE MICRO ACCOUNT.

39.0 To become a PRO, you will need :

     1 (1-2) YEARS TRADING EXPERIENCE IN LIVE MICRO ACCOUNT
        (This is accounted for 75% toward your trading performance)

     2 Six months of LIVE TRADING EXPERIENCE WITH A PRO or MENTOR
        (This is accounted for 15% toward your trading performance)

     3 Continuing Education like reading BOOKS, articles, & attending seminars.
        (This is accounted for 10% toward your trading performance)

     4 (1-2) years trading experience in DEMO account, trading in STANDARD LOT
        size, so that you could feel the amount of money you are dealing with in real trading

40.0 Live Micro Account will prepare your TRADING SKILLS & EMOTION

     1 Ability TO READ the PRICE MOVEMENT with dept understanding

     2 SKILLFUL in using all INDICATORS

     3 Experience the EXCITEMENT of winning, FRUSTRATION & DISSAPPOINTMENT
of losing, because you will be going through this feeling millions of times, and you must remain RATIONAL in order to win

41.0 SIX MONTHS Live trading experience with PRO or MENTOR is helpful. You will see of how the PRO EXECUTES HIS TRADE, and later COPY THEM TO BECOME YOURS. Things you will learn

      1 To forecast, plan, prepare, enter, exit the trade
      2 To handle the losing trade & to react with incoming data release      
      3 To interpret the released data & remarks from people like Fed Chairman etc.
      4 To use various indicators, the appropriateness & importance of each indicator
      5 To use various fundamental data as the signal for entry & exit
      6 To use various trading strategies to win the trade
      7 Most important, you will be in the SAME PAGE with the Pros as how they
        analyze & interpret the market, and finally, BOARDING THE SAME TRAIN
      8 Be careful ! TOO MANY FAKE PRO, don't pay too much for the service

42.0 Bollinger Band at (2 & 3) standard deviation can provide a Alert signal of over-bought
& oversold position, and incoming trend reversal

43.0 Classification of trading methods
     1 Using price Action
     2 Using technical indicators
     3 Using fundamental data
     4 Combination of ALL the above methods

44.0 Most CORRECTIONS or pullbacks occur at FIBONACCI levels: 38.2, 50.0, 61.8

45.0 MACD offers an ACCURATE signal for TRENDING market but the signal is Lagging (behind 2-3 candles)

46.0 If you don't have trade opportunity, don't force yourself to find one. It's better of to stay in sideline. Maybe the market is waiting for something big to happen.



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VITAL Key Fundamental Data In Forex Trading

Beside regularly schedule release of economy & job data, the following fundamental informations are vital in currency trading:

(1.0) Dow & S&P 500 . It indicates investors' willingness to take risk (risk appetite), or investors' refusal to take risk (risk aversion).

The index will go up, when investors are willing to take more risk, and we'll see the spike in currencies like Euro (eur/usd), Gbp (gbp/usd), Aud (aud/usd), Nzd (nzd/usd). At the same time, the safe haven currencies like usd & chf will decline, and we'll see usd/jpy & chf pairs are declining.

In contrast, when investors refuse to take risk, the index goes down, the higher interest currencies will decline, and the safe haven currencies will appreciate.

It's very useful to identify the TREND and support & resistance levels of S&P 500, so that we can enter and exit the market at the right time & right price. The index also tells us whether the current trend of the above mentioned pairs will continue or about to reverse.

(2.0) GOLD price. Five currencies like AUD, CHF, CAD, NZD, USD, are very much influenced by the movement of gold price. Aud/usd, Nzd/usd, Usd/cad, Usd/chf, Gbp/chf will react, when gold price appreciate or depreciate.

AUD is the world's 3rd largest gold producer is strongly correlated to gold price. NZD has nothing to do with gold, but it economy is closely linked to AUD, therefore it will react the same way as aud. CAD is the 5th largest world's gold producer is strongly correlated to gold price.

CHF is not a gold producer, but it keeps 25% gold reserve to back up every note issued, therefore, chf is strongly correlated to gold price. No wonder it's the safest currency around.

US is the world's 2nd largest gold producer behind South Africa, but it negatively correlated to gold price. When gold price appreciates, usd will depreciate, and gold is called " anti-dollar", because it's an alternative to usd. Investors buy gold for 2 reasons: (1) to seek shelter during mkt uncertainties (2) to hedge against inflation. Gold price is determined by supply & demand, and does not affected by stocks or bonds mkt.

(3.0) USD index. It measures usd against six currencies according to percentage weight: Eur (58.6%), Jpy (12.6%), Gbp (11.9%), Cad  (9.1%), Sek (Swedish krona 4.2%), Chf (3.6%). A decline in usd index will spike in EURO because it's the heaviest weighted currency being measured against.

(4.0) US 10-yr Treasury Bond. It shows the real value of USD, and a steady increase in yield, followed by a decline in gold price, may indicate a significant rally of USD. If stock mkt goes bad, investors always seek  shelter in US-10 yr bond, and you will see it's yield declining due to high demand. It may serve as an alert signal of incoming mkt uncertainties & risk aversion, followed by declining in euro, aud, nzd, and rising in yen, usd, chf. An increase in demand of US 10-yr treasury bond (during mkt uncertainties) will cause it yield to decline, and a decrease in demand of this bond (during stable mkt) will cause it yield to rise. The movement of yield will serve as an indicator of when to enter safe haven currencies vs high interest currencies    

(5.0) OIL PRICE. It has weak correlation with oil producers GBP & CAD, but has major
impact on energy-sensitive US economy & USD, since it is world largest oil importer. High oil price adds up to cost of production, thus increases products' prices, thus increases inflation, thus increases interest rate. It has major impact on world economy. Strenthening USD will lower oil price because oil is priced in USD.
A decline in oil price could signal a weaker demand in manufacturing products or services, decline in export,  slow down in economic growth, an early sign of recession. A rise in oil price may signal a better prospect of world economy or a workable solution to previous economic problems, and an optimistic of future outlook.


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