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Forex Training - How To Trade Forex?

Having heard all the wonder stories about the ease and benefits of online forex trading, it may come as a shock to hear that more than 50% of first time forex traders make a lose on their first forex trading transaction. Why is that the case, you may ask how to trade forex than? The answer is fairly simple, in most cases new forex traders do not prepare themselves sufficiently well enough before they start to trade online, instead just jumping in believing the hype that forex trading is something anyone can do. If you wish to avoid this happening to you, then you need to master how to trade forex! And the only way you can prepare yourself for how to trade forex is to learn the trade of trading in forex. To help you, the following are some simple tools you can use to master how to make the perfect forex trade:

1. Go on a training course: Do a search engine search for how to trade forex and you’ll see that lots of websites offer basic forex trading training online. Moreover, most of these online training courses are inexpensive, while providing you with invaluable insight and training into what forex trading is all about. As with all aspects of life, if you want to master how to trade forex you need to be taught, and there is no better way to do it than to learn from someone who has been forex trading for years! As such, subscribing to an online forex trading course comes as a very highly recommended way of learning the art of forex trading.

2. Online fantasy games will teach you how to trade forex: Most of the world’s leading finance related publications have fantasy investment games. Playing these online games is a superb way to test your wit against other forex traders. You also get the opportunity to learn how to trade forex without it costing you any money at all. Indeed, if you’re any good at fantasy forex trading you may even win yourself a prize or two while you learn the ropes. Once you feel comfortable that your forex trading strategy has stood up to the test of a stimulation environment of forex trading, you can then feel more comfortable with progressing on to the real
thing.

3. Dummy forex trading account software: Similar to the online fantasy forex games, a dummy forex trading account software program allows you the opportunity to test your wits at being a forex trader without you having to risk losing any money up
front.

4. Read: There are literally hundreds of books and magazine all about how to trade forex strategies. While many of these expert books many not fit comfortably with your desired forex trading, reading these publications can give you useful ideas - both about ways in which you should trade that you may never have previously considered and also ways you should not trade that you previously thought were safe. Remember most of these publications have been written by people who have trade in forex and who have a story or two to tell!

There are a number of ways you can learn how to trade forex. None of these may be ideal to your needs, but collectively they should give you some insight in what to do and, more importantly, what not to do if you want to make money trading your forex portfolio
How To Trade Forex?

Forex Training -Strategy Based On Fundamental Announcements
Exchange rates of currency pairs fluctuate based on many criteria, particularly how investors perceive the value should be based upon news pertaining to the country of origin of the currency. There are many factors that contribute to the perceived value of a currency against another, but most importantly are the “Fundamental Announcements” from that country.

Countries and their currencies being traded on the Forex markets are like companies and their shares being traded on the stock market. If a company announces positive news, such as higher profits in their last quarter, then the stock market immediately
responds by the share price rising. Conversely, if the company announces negative news such as a loss in their last quarter, then their stock drops. In much the same way countries regularly make various announcements of economic importance, and the
value of their currency is also adjusted accordingly against other currencies.

You don’t have to know what the announcement is or even care about the news to profit by it with this system. All you need to know is when such Fundamental Announcements are being made, and how to profit from it as described in this system. This is like owning a magical crystal ball to know exactly the minute when the markets will explode, and how to profit from it. Regardless of whether the news is considered good or bad, and regardless of how the value of the currency changes due to the announcement you will make money. Typically a market responds by 50 pips to Fundamental Announcements (when it skyrockets); plenty of room to get profits in.

There are certain websites that publish a calendar of Fundamental Announcements. You can easily find these for free on many Forex related websites. So the first step is to go to view a Fundamental Announcements calendar to see what is scheduled to come up for tomorrow (weekdays, not weekends). Some days will have more announcements, some days will have less. Generally, the more announcements the more trading opportunities you will have, and the more announcements scheduled for a particular country at the same time the more likely you will see some interesting price
action.

Before we continue you will need to know what your time zone is in relation to GMT (Greenwich Mean Time), as most announcements are published according to this time zone. Make sure you take into consideration “Daylight Savings Time” if your time zone changes time in the fall and spring. You will need this information to adjust GMT time to your time to know when the announcements will take place from the perspective of your time zone. This kind of opportunity happens all the time and is by no means
extraordinary. Fundamental Announcements occur at various times of the day and night, depending on where you live.

Pay more attention to the currencies that make their Fundamental Announcements at a time convenient for you. If you live in North America and pay attention to the US and Canadian announcements, and then trade EUR/USD and USD/CAD respectively. US announcements can be traded against other currencies; the some of the best are EUR, GBP and CHF. They usually react the same way, but often have larger or smaller moves. On the calendars you will see a list of countries that are planning to release announcements, what time the announcement will happen, and what the announcement is about. Again, you don’t really care what it will be about, only when and who.

However, you should not misunderstand every false breakout as the result of the tricks big players play. False breakouts can be as a result of price action losing momentum soon after a breakout. Market running out of steam to reach higher highs and lower lows in a sustained price break may also give you a false breakout.

When there are not enough sellers in the market to sustain a downward price move or enough buyers in the market to sustain an upward price move, the breakout will fade out soon and may not be sustainable. Individual traders have higher chances of success if they also fade the breakout just like the big players who love to fade breakouts.

Profits potential in price breakout is far higher than in a failed breakout. Everyone wants big easy profits. Fading breakouts is counterintuitive and it is not something instinctive. The question is how to identify a false breakout.

Look for fading breakout opportunities on a minimum time frame of hourly charts or more. Fading breakouts can occur anywhere on the price charts at the levels of support and resistance.

You need to know how to draw trendlines. Trendlines are drawn by joining at least two extreme points of highs or lows over a long period of time. They can be horizontal or sloping. The price will bounce off the trendline in a false breakout and the probability of a false breakout is higher if the trendline is at an angle or a gradient.

The chances of this fading breakout are more if the moving average lies slightly above the descending trendline or slightly below the ascending trendline. Usually the third or sometimes even fourth extreme point of contact on a gently sloping trendline presents a good fading opportunity.

The chances of a false breakout or a trendline bounce will be much higher if the prices are approaching the trendline slowly and gently. The speed of price movement before the approach to the trendline should be considered. It is very important in identifying a fading breakout.

There will be a sustained follow through in prices if the price action has a high momentum. The fast and high amplitude approach of price action will most likely result in a successful price breakout of the trendline on the other hand. In such a case, don’t trade it as a likely false breakout.

You should place a limit or market entry order a few pips above an up trendline or below a down trendline. You will want to know how to trade a fading breakout? You can stagger your entry orders by placing another order a few pips away from the breakout if you are an aggressive trader.

Now there are a few chart patterns that are ideal for identifying the false breakouts. About placing staggered entry orders for fading breakouts, you should do it with a proper money management plan. Stops should be placed at least 20-30 pips beyond the support or resistance, away from the price zone. This will make your average cost of entry more favorable for either your long position or your short position.

You need to know technical analysis if you want to trade forex successfully. There are some chart patterns where the false breakouts are more likely to occur. You need to apply a lot of common sense in identifying a false breakout. You should be able to identify likely false breakouts in order to employ the breakout fading strategy.

Head and Shoulders Pattern:
The pattern resembles the head and shoulder pattern of a human. This chart pattern is the hardest for new traders to identify. Don’t confuse it with a shampoo. The head and shoulder pattern consists of three points of rallies. The middle rally is the highest with the left and right being smaller. A horizontal or sloping neckline can be drawn connecting the lows of the left and right shoulders.

It signals a bearish reversal or a consolidation period before the uptrend is continued if the head and shoulder pattern is found at the end of an uptrend. An inverted head and shoulder pattern can also be found in the middle or end of a downtrend. The head and shoulder pattern is usually found in the middle or end of an uptrend.

If they are buying up the rallies from the support level, many traders who have identified the head and shoulder pattern as a possible breakout signal place their stop loss orders below the neckline. Head and shoulder patterns are notorious for precipitating a false breakout.

Similarly, if traders are shorting the decline from the resistance level, they place their stop loss orders above the neckline of the inverted head and shoulder pattern. Traders can also place numerous entry stop orders below the neckline. Traders can also place entry stop orders above the inverse neckline in anticipation of a breakout besides the stop loss orders.

False breakouts are triggered by the market makers to shake out the positions of small traders most of the time. Prices will usually rebound. There maybe explosive price movements off the neckline in the pre breakout zone.

You may choose to place a stop loss slightly below the high of the second shoulder or slightly above the low of the second shoulder. You may fade the breakout with a limit of market entry order a few pips above the neckline or a few pips below the inverse neckline. It is always best to assume that the first break of a head and shoulder pattern will tend to be false.

Double Top & Double Bottom Chart Pattern:
The problem with this currency chart pattern is also this that it is used by novice and inexperienced traders as a signal for a possible breakout of the support or resistance level. A double top formation consists of two rally peaks separated by a valley and the two peaks need not be of the same height. A double bottom is simply an inverted image of a double top.

Fading false breakout is more effective in range bound markets. But first you need to identify a false breakout from a true breakout. The false breakout fading strategy usually does not work well when the market is in a strong trending phase. Using this chart pattern as an indication for a likely false breakout of support or resistance level makes these traders easy bait for the big players.