Options Trading in Progress

One of the reasons why so many people are attracted to trading forex compared to other financial instruments is that with forex, you can usually get much higher leverage than you would with stocks. While many traders have heard of the word leverage, few have a clue about what leverage is, how leverage works, and how leverage can directly impact their bottom line. (To learn more, see How does leverage work in the forex market?) What is leverage? Leverage involves borrowing a certain amount of the money needed to invest in something. In the case of forex, that money is usually borrowed from a broker. Forex trading does offer high leverage in the sense that for an initial margin requirement, a trader can build up - and control - a huge amount of money. To calculate margin-based leverage, divide the total transaction value by the amount of margin you are required to put up. (For more insight, check out Margin Trading.) Margin-Based Leverage = Total Value of Transact...

It has been said that the single most important factor in building equity in your trading account is the size of the position you take in your trades. In fact, position sizing will account for the quickest and most magnified returns that a trade can generate. Here we take a controversial look at risk and position sizing in the forex market and give you some tips on how to use it to your advantage. The Undiversified Portoflio In the book "The Zurich Axioms", author Max Gunther states that in order to break away from the "great un-rich," an investor must avoid the temptation of diversification. This is controversial advice, since most financial advice encourages investors to diversify their portfolios to ensure protection against calamity. Unfortunately, nobody gets rich from diversification. At best, diversification tends to balance winners with losers, thus providing a mediocre gain. The author goes on to say that investors should "keep all [their] eggs i...

When most people start trading, they do not put much thought into their trades. They will either buy or sell a currency pair (probably the EUR/USD) because they think they see a trend or maybe even because they put a moving average on the chart. Sometimes there is no reason at all for the trade, they just want in. Either that trade nets a small profit or the trades starts going against the new trader. The trader that gets the small profit will feel invincible and likely base trades in the near future on the same reason as the first one. Of course they expect every trade to win. The trader whose position moves against them leaves their position open, stares at the their computer without blinking, and laments that they will get out if the market only goes back to break even. Sooner or later, the trader who won their first trade puts on a loser and acts much like the trader above who lost their first trade. After a large loss to the account, the trader then puts on a large posit...

This beauty setup was captured on Monday 18 October 2010, This is a reversal market, observe a clear hammer before the setup was completed, this is a very important setup. The AO and AC coincide with each other and the CCi 6 gave a very beautiful cross over the ZL.

Attached is a good example of trade that failed during news time!!! When report released, no matters how good the setup will be the trade might still fail you. There is no reason and no logic behind this failure, market just behave like that during news release!!! Why Trade the News The simple answer to that question is "To make more money!" But in all seriousness, trading the news gives U.S. another opportunity to trade the forex market. As we learned in the previous section, news is a very important part to the market because it's what makes it move! When news comes out, especially important news that everyone is watching, you can expect to see some major movement. Your goal as a trader is to get on the right side of the move, but the fact that you know the market will indeed move somewhere makes it an opportunity definitely worth looking at. Dangers of trading the news As with any trading strategy, there are always possible dangers that you should be awa...