Review Category : Trading Education

Foreign Exchange Sydney Trading Psychology

Foreign Exchange Sydney Psychology

This article looks at the winning and losing attitudes of traders in the foreign exchange Sydney market.

The foreign exchange Sydney trading market can be a very challenging market to enter.  To succeed in this market, it is necessary for you to be strong mentally and emotionally stable.  You need to be in absolute control of your emotions at all times.  This attitude can be achieved by looking at your attitude as regards winning and losing.

Winning Attitudes

Determination

You must be determined to overcome any obstacles you face whilst trading.  Your main reason for entering this market is to make money and you should have the determination to achieve that.  To do this effectively, you need to educate yourself in the workings of the market, practice on a regular basis and apply the concepts you learn.  You should maintain the systems you implement and not allow negative thoughts to interfere with your trading.

Confidence

When you are well prepared for the task at hand, you will be confident about your abilities.  You are aware that you will be able to achieve excellent results because you have prepared the groundwork for the task you are about to face.

Novices in this financial market can achieve this winning attitude by learning as much as possible about forex trading and practicing their trading methods and strategies.  This can be achieved by opening demo accounts and using it for practicing purposes.  A demo account provides you with all the facilities you would have in a normal live trading account.  This allows you to place orders and watch the movements whilst the market is active.  By doing this will ensure that your trading strategies are effective and profitable.  You will be able to determine the profits and losses applicable to your trades.  It is recommended that you trade with a demo account for a period of at least 6 weeks before you move on to a live account.  By that time you should have the confidence to enter a live market environment.  You will be comfortable in the knowledge you have gained about the market and the results that applied to your demo account.

Losing Foreign Exchange Sydney Attitudes

Fear

The one fear most traders have is failure.  This distorts their perception of the market.  Fear can become mind numbing and will prevent you from absorbing information and this will limit the choices you have.  This happens when traders decide to extend their losses and cut short their profits.  To overcome this situation, you should apply your trading plan and strategy and stick to it.  If you are comfortable with your system, you should enter the market with confidence.  You also have to accept the reality that you will experience both profits and losses in this market.

Greed

This financial market offers you the ability to make huge profits in a short period of time.  This instils greed in many traders and they start imagining all the money they could make.  This often becomes an unrealistic expectation of their abilities and the market.  Greed generally steps in when a trader is on a winning streak.  They decide that if they enter more positions, their profits would be larger.  This is not always the case.  The same attitude takes over when traders are in a losing position.  They think they can make up their profits with the next trade and five trades down the line they have actually lost much more.

 

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Failing On The Foreign Exchange Melbourne

foreign exchange Melbourne

In order to become successful on the foreign exchange Melbourne, you are going to need various qualities such as dedication, emotional control, and an analytical bent of mind. However, these are just general qualities that most traders know about but do not understand.

The result of their lack of understanding is that they make the right noises when talking to others but fail to incorporate everything that they are seeing into their forex trading process. In other words, certain bad habits, tendencies, and attributes combine to limit most new traders on the Melbourne foreign exchange. Consider the following.

Financially Undercapitalised

The saying that you have to speculate to accumulate is very relevant on the Melbourne foreign exchange. What it essentially means is that if you do not put up enough money then you should not expect large returns.

While on some trades your returns might be disproportionally high to your investment, in the majority of cases this would not happen. Therefore, if you are financially undercapitalised then you should postpone your trading plans.

Undisciplined and Compulsive

The foreign exchange Melbourne is an extremely volatile and unpredictable place to trade in. If you are undisciplined and compulsive in your actions then you would only be adding to the volatility and unpredictability of the market instead of countering it. Effectively, instead of a science or art form, you will turn forex trading into a form of gambling.

Prone to Overtrading

You will not profit on the foreign exchange Melbourne by trading heavily. You will instead profit by trading smart. If you start focusing on the number of trades you place in the market then you would start choosing inefficient and dangerous trades as well when you should be selecting surer and more profitable trades.

Egoistic and Delusional

If you are egoistic and think that you are larger than life then the foreign exchange Melbourne will cut you down to size very quickly. There is value in humility when it comes to forex trading because no matter how smart or rich you may be, you will never influence the market deliberately.

Anxious and Impatient

Just like ego and delusions can be a problem on the foreign exchange Melbourne, anxiety and impatience can too. Anxiety will see you dithering with good trades while impatience will see you place trades whether they have merit or not. Both these personality traits are not useful in the forex market and must be avoided or controlled.

Rigid and Stubborn

The foreign exchange Melbourne is one of the most dynamic investment markets in the world. It is always in a state of flux and change which means that no trend or pattern remains constant for too long in the market. In this environment, if you are rigid and stubborn then you will not be able to change your strategies with the changing conditions of the market.

Consequently, your strategies and concepts will become obsolete and you will start incurring losses, which will gradually grow in size to wipe out your whole account.

 

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Australian Forex Brokers Comparison Criteria

Australian forex brokers

There could be only two reasons why you are looking at various Australian forex brokers in the market. These reasons could be that you are completely new to the forex market and are only beginning your career or that you are dissatisfied with your current broker.

Regardless of which category you fall into, it would be extremely important for you to not arbitrarily choose any broker in the Australian market. You should instead use a detailed comparison process to pick out the best option from the various Australian brokers vying for your business. Here are the criteria on the basis of which you should be comparing the options available to you.

Multiple Account Types

This aspect is especially important if you are a new trader, while if you have been in the market for some time it may not be as relevant to you. When you are only starting out in the forex market, you will start with a demo account and move through smaller accounts like the micro and mini before actually opening a standard account. This is why you should look for those Australian forex brokers that provide multiple account types.

Low Minimum Account Deposits

Every broker has his own internal rules for deposits. If you are new to the forex market then you will want to start with a small amount of money until you have become competent with forex trading. For this reason, you will want to look for those Australian forex brokers who accept low minimum account deposits.

Low Spreads

Spreads, as you may already know, are differences between Bid and Ask prices. Different Australian forex brokers offer different spreads systems. Options include fixed spreads, variable spreads, and even fractional spreads.

While the type of spread system you choose will depend on your strategies, you should always look for the lowest spreads because they amount to the sum of money that you pay brokers for their services.

Real Time Execution

The forex market is an extremely fast paced world where every second counts. If the execution speed of your system is low then you can lose out on certain profits and, in some cases, even opportunities. This is why you should look for those Australian forex brokers that can execute your market orders without any delays on a real time basis.

Free Charting Tools

You cannot trade in the forex market unless you have charting and analytical tools available. Moreover, the quality and variety of tools available to you often determine how successful you are in the forex market. Analyse the charting package that the Australian forex brokers are offering to you before making up your mind either way.

High Leverage Options

You use leverage in the forex market to increase your purchasing power. Leverage can thus help you increase your profits without actually increasing your initial investment.

The higher the leverage being offered, the more flexibility you will have in the market. This is why you must choose those Australian brokers who provide you maximum leverage.

 

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Success Factors in Foreign Exchange Trading

foreign exchange trading

All goals that are rare, unique, and special in the world require a lot of effort and struggle. As there is no market which is more financially rewarding than the forex market, it is only natural that foreign exchange trading is going to be full of obstacles and hindrances.

In fact, only about five percent of people actually end up making a career in foreign exchange trading which should show you your chances in the market. However, this aspect of the market should be tempered by the knowledge that the 95 percent who fail do so because they do not work on acquiring the attributes crucial for success.

Proper Financial Capitalisation

Even though it is true that you can start small and make it big through foreign exchange trading, your small start will become an added obstacle that you will have to cope with. Therefore, it is important that you wait to dive into the forex market until you have accumulated a sum of money that will improve your chances.

Commitment and Dedication

As trading foreign exchange is technically a form of speculation, it can be equated to starting a business. In fact, a trader must treat forex trading as he would his business because without the same kind of commitment and dedication he would not be able to overcome any of the obstacles in the market.

Low Risk Tolerance

The forex market is an extremely dangerous place for a person who likes a lot of excitement and enjoys the thrill of taking risks. Such an individual would soon be wiped out by the market because sooner or later he would go too far with the risks he takes. This is why you need to develop a low risk tolerance in the forex market if you want to succeed in foreign exchange trading.

Objective and Careful

Having a low risk tolerance does not mean that the trader does not take risks in the market because without taking risks your returns will not be much. Therefore, you will have to take risks but try to control them in a way that, even if they come to pass, your losses are not significant. This requires a lot of objectivity about the market and a careful attitude.

Emotionally Secure

An impulsive and compulsive individual would never survive in foreign exchange trading. His on the spot decisions would mean that he is not objective and he will start losing money. On the other hand, an emotionally secure individual will not only survive but prosper in the market.

Meticulous and Organised

Because there are so many obstacles and unforeseeable situations in foreign exchange trading, planning everything in advance gains a lot of importance. Moreover, because the market has the potential to be extremely inconsistent, you, as the trader, must be as consistent as you can be in your actions.

Your consistency should be able to counter the inconsistency of the market. Unfortunately, you cannot be consistent in the market without being meticulous and organised.

 

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Tips For Making Foreign Currency Exchange Investments More Successful

forex

Investing in foreign currency exchange is one of the most lucrative ways to interact with the financial markets, and it can be significantly worth your while to choose to trade in this way. Forex markets have a reputation for being a venue where you can secure thousands in returns on your capital. Unlike the stock market, which can take years to show any kind of considerable return, forex markets can deliver you with the maximum gains over a period of just a few days. In some cases, hours are all you need to make the level of returns you are looking for from the forex markets. But this doesn’t come easily, and you need to make sure you are trading in a logical, measured way if you want to see these results.

The value of experience in forex trading is significant, and traders who have been there and done that before have the ability to save money on the risks, while maximizing the gains available to them. If you don’t have the benefit of this experience, or even if you do, there are tips you can use to make trading in the forex markets more effortlessly profitable from the beginning.

How To Make Foreign Currency Exchange Investments That Turn A Profit

Foreign currency trading can make you a profit when you invest in the markets in the most effective ways. There are plenty of opportunities to trade throughout the day, and investors can choose to trade a range of markets in any direction according to how they best thing they can find a profit. When you do trade these positions, it is important to establish early on whether you have a good position or one that is struggling. Good positions should be given time to mature and develop into something more significant. Bad positions, or those that are wobbling in and out of profit, should probably be closed to avoid further risk to capital. It is this level of instinct that is required to make your trading sufficiently successful.

You Need To Avoid Excessive Foreign Currency Exchange Losses

Losses are a fact of life, and in forex these can frequently feel more sever than normal. That is because forex trading in this way can often lead to positions that don’t quite work out, and when leverage is involved this has the ability to completely cut down on your total available profits. Heavy losses eat your capital which affects trading performance tomorrow as well as today. Avoid these through better research, the use of stop losses and a constant vigilance to identify and eliminate risks from the trading equation. This will help you make sure you are avoiding the losses of foreign currency trading so you can make the most amount possible from your trading labours.

Profiting From Foreign Currency Exchange Long Term

If you want to profit from forex long term, you need to throw yourself into the markets and learning about what they have to offer and how they work now. The sooner you get started, the better – there is so much to be said for knowledge and experience. With the right approach that maximizes the gains and keeps losses down as low as possible, it should be doable for your trading to be more profitable over time.

 

 

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Volatility Of The Foreign Exchange Rates

Foreign exchange rates

There are two ways in which the inherent volatility of foreign exchange rates is described in the forex market. The first is that this volatility is esteemed because it makes huge profits for even the most inexperienced of traders. Secondly, volatility is also said to be the cause for many traders losing their accounts with minimal warning.

If both these aspects of the volatility of forex rates are true then it means that skill in forex trading lies in making the former happen without letting the latter occur. This is where money management comes in. Here are some key principles of money management which will help you cope with the volatility in the forex market.

Account Size

First and foremost, you need to have a decently sized account if you hope to make any significant profits in the market. A small account will see you struggle in the forex market because the intensity of the volatility of foreign exchange rates would be too much for you to handle with small sums of money.

Trade Selection

Even though it is obvious, most traders struggle with the simple concept of choosing the right trades. Foreign exchange rates will always give you opportunities to enter the market, regardless of whether they are ranging or trending.

You have to be able to differentiate between the promising trades and the mediocre ones so that you can target your limited capital towards the trade that has the most potential to bring you profits.

Risk on Each Trade and Total Account

Money management also requires you to plan for losing contingencies in the market even if foreign exchange rates are showing strong trends. The trick is to assess the level of risk on each trade while operating under an umbrella rule of not investing more than one or two percent of your entire account capital on any single trade.

Risk to Reward Ratios

You must also assess the risk to reward ratio of each and every trade that you consider on the basis of your analysis of foreign exchange rates. Risk to reward ratio is essentially how much you stand to lose on the trade and how much you can make from it.

You should never place trades which have risk to reward ratios of lower than 1 to 1.5. In fact, you should try to aim for trades with risk to reward ratios of 1 to 2 if not more.

Stop Losses

Stop loss orders are perfect for minimising the damage that surprise losses can cause. For instance, imagine a situation where your signals turn out to be wrong and the foreign exchange rates move against your projection in a swift manner. The massive losses that such situations can create can be countered with stop loss orders which can stop the downward slide automatically.

Position Sizing

Your position size should vary from trade to trade and depend on your assessment of the merits of each trade. This would prevent you from protecting yourself and also resisting the urge to move your special order placements.

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Foreign Currency Exchange Needs You To Do Your Research Work

forex

When you trade in foreign currency exchange, you have the potential to make an absolute fortune from trading in the markets. Those that learn how to trade forex well can make a killing, through trading on positions that grow their capital in a leveraged way. However, these gains don’t come easy in forex, and you really do need to make sure you know your stuff before you hit the markets. Forex traders who are out to succeed in the markets often begin by conducting thorough research and analysis into the trades they are taking. This process allows them to develop the most effective insights into the forex markets and the currency positions they trade, so they can make more consistent profits as a result.

Trading forex without the right research behind you is a fool’s game. You will only end up losing your money, because you will have been unable to maintain the consistency and strike rate necessary to succeed long term. However, by making sure you do your homework, you can find the best opportunities to trade, and make your positions as viable as they possibly can be.

Why Research Is Essential For Foreign Currency Exchange Successes

Researching the forex markets is an essential part of what it takes to make money on a lasting basis going forwards. Forex markets are affected by the forces and pressures that exist all around them. In some instances, these will be price pressures, where are market is under or over-valued and a correction needs to take place. In other circumstances, the pressures will come from external factors like economic performance and political goings on. The individual trader need to do constant research into this and every factor that surrounds the forex markets they trade, in order to get the most value from their trading input. That way, it becomes considerably easier to put in place the trades that will drive the necessary profits to make a success of your forex exposure.

How To Research Foreign Currency Exchange Markets

There are two main ways of researching forex positions that traders will commonly use. The first is technical analysis. Technical analysis is the process of using chart and price data in order to make assessments about where a currency price might be heading next. Through interpreting the various data points shown on these charts, traders can form opinions about different positions and how they are likely to trade in the near term future. The second major type of research and analysis available is known as fundamental analysis. Fundamental analysis is the study of surrounding factors relating to foreign exchange markets, and this can also be crucial to identifying the price pressures that will prevail going forward.

Making Foreign Currency Exchange Trading Pay For Your Capital

When you trade forex, you ideally want it to pay dividends on your capital for a long time to come. Through compounding, it can even be used to increase your capital. By making forex pay for your account, you can increase the effectiveness of your trading in future through deploying more extensive resources through your leveraged, forex trading account.

 

 

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Pyramiding Strategies For Foreign Currency Exchange Traders

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There are various different techniques and strategies available for traders of foreign currency exchange. Regardless of the type of positions you like to trade, or of the specific currency pairs you feel most comfortable with, deploying the right types of strategy is critical to success with these markets. Pyramiding is a strategy traders use in order to increase the rate of return they can expect from the positions they trade. This happens on a lower risk basis than normal, because traders have the chance to effectively test drive markets to see if they are profitable before risking the fullest amount of their capital. This combines to make pyramiding a strategy that can make you a lot of money, and can improve your returns versus regular, straight up trading.

Pyramiding strategies demands a particular approach to trading the markets, and investors need to understand what is involved, as well as the risks, if they are to make any money. But how does pyramiding work in the forex markets, and what tips can you take with you to ensure you will be good to trade your currency positions profitably going forward?

Pyramiding Strategies Explained For Foreign Currency Exchange Trading

There are a number of strategies you will encounter when you hear discussions of foreign exchange trading. Pyramiding is one of the most celebrated strategies, and a number of traders use this approach to maximize the potential gains available from the trade. Different strategies of this kind are designed to ensure that when trades do go well, they deliver more significant benefits. Pyramiding tests the water for trades, by investing small positions to begin with. When things start to go well, the pyramiding strategy will see you rapidly increasing the amount of capital invested behind the position. Through varying your amounts and capital and using moveable stops around your positions, it can be possible to make maximum profits – sometimes even on a risk free basis, when your account is already in the green.

Are Pyramiding Strategies More Effective Than Regular Foreign Currency Exchange Styles

Pyramiding strategies can never be guaranteed to work, and perhaps that is their major downfall, given the severity of risk that a wrongly executed pyramiding strategy will pose. However, when things go well, this can be a good way to protect your capital and maximize the gains available to you. The more effectively you are able to execute these strategies, the more generous the profits are that you will be able to extract from the markets. Pyramiding can be one of the most effective strategies open to you on balance, but like most things it can take some time of getting used to in order to deliver the best long-term results.

Using Pyramiding Strategies To Your Advantage In Foreign Currency Exchange

Pyramiding strategies can be spread thin, and deployed across a wide number of positions as you do business in the forex markets. This kind of approach can make you the most possible amounts of money, while allowing you to keep your capital insulated from risks as far as possible.

 

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Testing The Waters In Foreign Currency Exchange Markets

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When you trade foreign currency exchange, there is a lot to take on board in order to ensure you make an overall profit. Traders of forex are not guaranteed to be able to profit from the positions they trade, and there is never any certainty that you will be investing in the right position. For this reason, many traders choose to use ways to test the waters, and to find out how to most effectively trade positions in their markets. By testing out positions with a smaller stake first, traders can control the risks of entering into different positions, and give themselves a fighting chance of profiting from the trade. There are a number of strategies and techniques that lend themselves to forex success, and traders can use different methods to achieve this kind of outcome.

Trading forex successfully is in large part all about the strategies and techniques you have in place. You must be able to test the waters with the positions you are about to trade, and to make assessments on the relative risk to reward involved in your trading. But how can these markets be so risky, and what are the traditional problems associated with this?

How Foreign Currency Exchange Markets Can Be Risky

Forex markets are notoriously difficult places in which to do business. This is factually true, and many forex traders will experience pretty early on the difficulties that can be posed with risky forex markets. When you are trading in leverage, there is no way you can allow risks to develop and expand into something more considerable. That is not a possibility, because it will inflict too much damage on your capital account to be acceptable. The markets themselves are extremely volatile, and have the potential to move upwards and downwards in a volatile way. This makes it dangerous for traders to invest in the markets without the protection of a stop loss, and it is also imperative that you use your head when researching to identify possible market risks your account could face.

Where To Test Your Foreign Currency Exchange Strategies

There are two main approaches to testing out different trading strategies. The first is to get involved immediately in the markets and to trade out small positions until you can establish which strategies are the most effect. Some traders feel this is the only option, because it is the only way to test strategies in the real world environment while keeping the overall risks low. Other traders use free demo accounts to test out their strategies, which means they don’t have to risk any capital in trading in these markets. These accounts are often a good place to test out your strategies, and in this sense, traders can use demo accounts to help them make better trading profits.

Making The Most Of Foreign Currency Exchange Trading Through Planning

The planning and strategic elements of your trading in the forex markets will have a major bearing on the success you are able to demonstrate from your trading time. The more thoroughly you research and plan different strategies and happenings, the more likely it is that you will be able to trade profitably throughout your forex career. And with such a scale of earnings potentially available to those on the right side of the market to claim them, this is a worthwhile end destination for traders to arrive at.

 

 

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Flaws Of Demo Accounts of Forex Brokers

Forex brokers

New forex traders almost always hear about the virtues of practising through the demo accounts of forex brokers. In fact, the drone of the benefits of doing this can become quite incessant if you look through the internet for guides pertaining to forex trading.

It is likely that the constant reminder to practise through the demo accounts of forex brokers before actually diving into live forex trading has piqued your interest in them. For this reason, consider the following.

What Are These Accounts?

Demo accounts are essentially like real accounts. The difference is that they do not carry real money. Instead, they are loaded with virtual money which a trader can use to trade just like he would be trading with real money. Forex brokers provide demo accounts to give traders the chance to test their services as well as test their own capabilities in the market.

Why Are They Recommended So Much?

You are most probably also asking yourself why practising through these accounts is so highly recommended by all the expert traders. The reason for this is simply that before a trader starts with a live account, he or she is completely green and does not know what it takes to apply theoretical and conceptual knowledge on the ground.

The purpose of a demo account is that it will allow you to learn the practical aspects of currency trading. However, there are some crucial downsides of demo trading and it is also recommended that you do not depend on them.

They Will Not Give You A Real Experience

While demo accounts are touted by forex brokers as being identical to standard accounts, they are actually not. For instance, demo accounts are almost always free from problems that standard accounts are plagued by, such as slippage and requotes. Therefore, if you take the absence of these aspects into account then demo accounts cannot give you the real experience of trading.

They Will Not Teach You to Control Emotions

Another downside of demo accounts which forex brokers will never tell you is that they will never teach you to control your emotions, which is a crucial skill to have in the live market. The reason for this is the fact that you will never get worried about losing virtual money nor get excited about a huge win of virtual money either.

They Will Not Force You to Use Money Management

Because you will not really care what happens to the virtual money in your demo accounts, you will never learn to protect it. Effectively, by the time you move onto the standard accounts of forex brokers, you will already have the bad habit of ignoring money management principles.

They Will Make You Overconfident and Open to Taking Risks

In addition to not taking preventive measures through money management techniques, demo accounts will also make you more prone to take big risks in the market which is exactly what forex brokers want you to do anyway. Effectively, depending on demo accounts will set you up for losing your whole account.

 

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