Psychology of Greed in Currency Trading

When Greed Hits You

I know when I am trading when greed has hit me and wants to take over. I have these mixed feelings of excitement and elation and nothing else matters. The feeling I get makes me believe I can not be wrong. In fact how could I be wrong when the last one, two, three four or more trades have gone my way. I am on a roll, invincible. Then greed kicks in. I move my position up a little, then I have a wider stop because it doesn't matter anyway after all I can not be wrong. I even look at entering trades that are not strategy set ups.

When you get the feeling of invincibility in trading and start getting the feelings and doing the actions outlined above then it is important to stop. Greed can take over in one second and send you in a spin which can easily wipe out any winnings or worse still reduce your equity curve to zero.

Dealing with Greed

We all face situations in our lives when we need to deal with greed. This does not have to relate to money. Indeed there are issues with being greedy around food, possessions, time with people and so on. To deal with the whole issue on greed could take some time and would require a large amount of writing space. I am going to stick with the issue of greed when it comes to trading. When I talk about trading it can refer to forex, options, futures, stocks, commodities, indices and any other financial instrument. Here are my six tips for dealing with greed in the trading environment that I will discuss further.
Only ever trade your StrategyStick to your Trading RulesOnly risk between 1% and 3% depending on market conditionsAlways have your Position Size relative to your RiskBe ConsistentDo your own Analysis

Only ever trade your Strategy

I have an excellent mentor who has shown me several strategies regarding trading. I tested these strategies to assess if they worked for me and I could use them to fit into my trading schedule. I am using one of the strategies for a more longer term approach which can net between 100 and 500 pips in a weeks worth of price action. If I do not see a trade that is set up with my strategy I simply do no trade.

The markets have been around for many years and I am sure they will be round for more to come so as long as you know you can get a good number of pips from your strategy per month then there's no need to force the trade. For me I actually do not want to stress out and trade all day, every day so my strategy is great for me.

Have a set of rules within your strategy that tell you what criteria you are looking for to enter the market. The criteria should include when you could exit and the value within the market. As with all these rules the emotion is taken out of trading when you become more mechanical. So you have a tick list once all criteria are met and you have value in the market then the trade is good to go otherwise stay away.

Stick to your Trading Rules

Have a set of trading rules that you stick to like glue. This is critical to trading and will help take the emotion out of trading. You do not want to be haphazard with your trading for sure so you must have some guidelines set out detailing your behavior towards trading. So for example part of your rules will be which markets you trade, the times you trade, the time you will dedicate to trading each day and so on. This is sometimes referred to as a trading plan.

Trading should be treated like a business and any organisation that succeeds has plan. So trading is no different. Therefore you must treat trading and put together a business plan (set of trading rules) that govern your behavior. You will have have your objectives with the plan so you can keep a check on your progress.

If you have a plan and are able to check your progress against it then sticking to it will go some way to help combat the times greed tries to kick in. By sticking to your plan and rules you will force the decision not to enter a trade that does not contribute to your progression. Just like a business will not enter a market that is not in the business plan then you will not enter a trade that is part of your business plan.

Only Risk between 1% and 3% depending on Market Conditions

This is a straight forward rule to follow however once greed takes its hold on you then here is where the trouble starts to really kick in. The simple rule is if you have an account size of £10,000 then your risk is between £100 and £300 per trade. Simple!!! Just remember when the market conditions are difficult to trade keep your risk level low. When you have more confidence in the market dial it up to 3%. Never go over 3% because it is very easy to go on a losing run of four, five or more trades. You can even lose 10 trades, which if you have a solid strategy should not happen, and still be in the game because you will have lost £3,000 so still having £7,000 to trade.

Always have your Position Size relative to your Risk

Once you know the amount you can trade with, so continuing our example from above say £300 per trade, then you can adjust your position size depending on the value you have recognized in your trade set up. If, from your analysis, you would place a stop 100 pips from your entry then your position size should be £3 per pip. If your stop loss was 200 pips away then the position size should be reduced to £1.50. So the maximum you will ever lose is the amount you have previously agreed (with yourself) as being available to risk on the trade.

Be Consistent

You will lose a trade. You will lose trades. Fact. So get used to it and live with it. What you do not want to do is lose a trade then chop and change you strategy. One of the only ways that you will be successful in trading is to ensure you have a strategy that you will stick to on a consistent basis over a long period of time. Give your strategy time to win. Now if you give your strategy time by being consistent you will know and accept the level of winning trades. Once you know and accept this you will then negate any effects of greed because psychologically you have already accepted a set of results so once you receive what you have expected you can move on with other trades that are defined within your rules.

Do your own Analysis

It is very important to do all your own analysis when trading. Yes it is great to speak with other traders and learn from them however ultimately it is you that will be pulling the trigger so you are responsible for all your trades. Now this is important in relation to greed because once you have done all your analysis and followed your rules are then in a position to make a clear decision. So based on your rules and analysis you can take greed out of the equation because quite simply it will not be an option.

Conclusion

Greed is only of the disciplines you must master to become truly successful at trading. You can learn more and follow my trades and analysis for free on http://www.myforexjournal.com. I look forward to speaking with you on the site and helping you as much as possible.

Happy trading

Adam Gallagher MBA, ACMA
Professional Retail Trader

http://www.myforexjournal.com/

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Currency Trading Reviews of Online FX Brokers

If you have decided to invest in Forex currency trading, you have a responsibility to yourself to do the required due diligence about this risky business. One critical thing you need to do is to update yourself with the latest currency trading reviews. When you surf the internet, you will be amazed at the number of websites doing forums, seminars and reviews. When it comes to currency trading reviews, you must spend time to compare and study available reviews and comments.

There is lot of discernment to be done in scanning these reviews. Basically, it is important to look into the reviews of online Fx brokers who are active in the business. How about the category of education reviews being offered out there by Forex gurus?

Under this topic, you can learn lots of things from the reviews made about self-study courses in general. There are also negative and positive reviews you will encounter about 1 on 1 training, seminars, books, magazines, blogs, live training, etc being offered online together with their freebies.

With respect to the tools category, you will find lots of reviews about charts, software, news, calendar, reference and hardware. Now, the systems category is fascinating. It is broken down to automated and non-automated system. About the automation, you will be curious about lots of robots doing the trading for the investors and allegedly making a lot of money. Lastly, the category under services is also critical. Under it comes the FX signals, managed accounts, trade advisories, research and analysis reviews.

Some fly-by-night Fx operators take advantage of the excitement and ignorance of beginners and mislead them to believe in fake positive reviews. Remember that the Forex market does not yet have a specific regulatory body. So, be wary of Forex review sites by doing some background and reference checks. Go to sites where reviews are true and unbiased and coming from both the traders and the brokers' perspective. One website you can visit is that of Forex Justice whose mission is to minimize Forex scammers.

The website of bestonlineForexbrokers.com came up with a list of the top online Forex brokers around the world review. They were rated from more than 400 Forex brokers listed in their website. The criteria for inclusion is an independent trading rating of 6.8 out of ten based on collected data from many Forex traders around the world and other salient requirements.

Their top Forex broker is Hot Forex based in Port Louis, Mauritius and founded in 2007. Its business model is ECN/STP with Metatrader 4 and Currenex as platform. You can open a minimum $25 account. Their minimum transaction is for 1000 units with a maximum leverage margin of 500:1. This Forex broker has been doing online trading since 2010. Its typical spread on majors is 0.3-2 pips. It has an 8.7% independent rating.

Another Fx broker with an independent rating of 8.53% is Trading Point based in Limassol, Cyprus and founded in 2009. It began its online Forex trading in 2009. Its business model is STP and Metatrader 4 as its platform. Its transactions were regulated by FSA, BaFin and CySec. Its minimum account is $1 with a minimum transaction of 10 units. It has a maximum leverage of 500:1 with a typical spread on majors of 1-3 pips. Other Forex brokers you may want to review are Delta Stock AD, Loyal Forex Financial Ltd, Exness, Windsor Brokers Ltd, MB Trading, Ipipfix, Forex4you, Alpari (UK) Ltd., 4RunnerForex, Dukascopy Swiss Forex Bank, e-toro, LiteForex, Fastbrokers, Tadawul FX, ForexCT, FIG Solutions Ltd., IFC Markets Corp. and Avail Trading Corp. All of them have received high independent trading ratings.

Remember that the Forex broker review is just one important aspect of a responsible currency trading review. You also need to look into the other reviews under the other categories listed in the beginning of this article. If you follow these important guidelines, your percentage of success when you actually play the Forex game will definitely be above average.

My name is Alex DeGuzman and I am an expert in providing useful tips for forex trading for beginners. Please visit my site at http://forextrading-online.org/ to find proven tips to succeed in forex trading online.

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How to Play It Smart and Minimize Your Currency Trading Risk

Similar to other types of investments, there are potential risks in the business of currency trading. They are typified as sovereign, interest and exchange rate risks. If you are decided to get into this game, it is vital that you must be familiar with the plus and minus points. Otherwise, you will not find yourself in a win-win situation. The best way to be a winner and not a loser is to know how to play it by heart. This means studying, learning, training, practicing and simulating before you actually become a player. Some professional traders enter a transaction only if they have the chances of making 3 times more than the funds they are risking. It is one key secret to winning in this game. Give yourself a 2:1, 3:1 or 4:1 reward to risk ratio.

One way of learning is to know stories of losers and determine the causes. Another profitable way is to study the testimonials of winners and how they do it. When you are ready and committed, another important fact is to bear in mind that each currency trading transaction has its own inherent risk. Political uncertainties and other variable factors affect currency exchange rates. You should always find time to look into the positive and negative angles.

Unlike the United States investors who enjoy protection from different government and quasi-government and private regulatory agencies, some forex markets do not have the same kind of safety net. As a wise trader, you have to weigh the transaction's pros and cons carefully. One variable is government intervention and another is currency devaluation. When this happens, it will adversely affect the value of financial instruments. And this is a matter which is outside of the perimeter of control.

Other risk factors involve any negative development relative to the social, economic and political situation of a nation. General market volatility is an inherent risk in the foreign currency trading. Another risk is the management of leveraged currency deals. This is a system of borrowing funds against your minimal capital investment. The risk of losing in a trade is high and your potential for winning a lot of money is likewise the same. Leveraged trading margins vary from 50:1 and can rise up to 20:1 which means you can manage $2 million with only a $10,000 start-up investment. If you are not well versed and experienced in this area, the risk of a substantial loss is quite high. This is a very high leveraging risk and it can be suicidal.

Lack of knowhow in risk management is also a big factor. You will definitely lose money if you do not study and learn systematic currency trading risk management. If you just play on the basis of determining how much you are ready to lose in every trade, you are playing like a casino player. It is not investing but gambling. What is important in order for you not to lose your shirt is to know how to manage your total trading account money.

Another currency trading risk is undercapitalization. It is a big mistake to enter forex trading with the wrong capital. If you do not have at least $50k risk capital that you have accepted to lose anytime, then don't play this game. Otherwise, you will end up frustrated and broken-hearted and that is not good for your cardiovascular system.

Take your time. Study the rules of the game; follow how professional traders do their work online thru several blog posts. Enroll in good forex courses. When you are ready with the right capital, skills and proper disposition that is the perfect timing! Timing is everything. So, don't get too much excited in getting right away into this forex business just because of what you hear about some beginners who are already doing good and making a killing! Play it smart and minimize your currency trading risk!

My name is Alex DeGuzman and I am an expert in providing useful tips for forex trading for beginners. Please visit my site at http://forextrading-online.org/ to find proven tips to succeed in forex trading online.

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If You Own Iraqi Dinar Currency, Selling It Won't Be Easy

If you are among the thousands of people who have bought Iraqi Dinar currency in hopes of scoring a big profit, you may now be wondering what options there are for liquidating your Dinar holdings.

The Iraqi Dinar investment dream has been around for nearly a decade now. The dream is promoted by a slew of websites that sell Iraqi currency - that is, actual physical bundles of currency - to "investors" through mail order. The websites' sales pitch goes like this: "Before the 1990's Gulf War 1 million Dinar was worth $3,200,000 USD; today you can buy 1 million Dinar for just $1,150.00 USD". As the Iraq economy improves the Dinar will likely be revalued. If the revalue is at a level approaching it's pre-war exchange rate, today's small cash outlay could return millions for those savvy enough to get in now. Iraq's vast oil resources, well-educated population and guaranteed rebuilding aid from the US make buying Iraqi dinar almost a sure bet."

This rationale has proven compelling for thousands of people who've taken the plunge and bought Iraqi currency.

But people who buy Iraqi dinar are not buying a liquid, actively traded investment; rather they are buying a numismatic "collectible" that has very high transaction costs. For example, today you can expect to pay about $1,150 USD for 1,000,000 of Iraqi Dinar (IQD) currency from on-line dealers. The same 1,000,000 IQD has an official exchange rate value of just $854 USD - a hefty 30% markup. Dealers justify this margin by noting the high costs of transporting and safekeeping foreign currency bundles.

Similarly, if you are a holder of Iraqi currency and have decided to convert your Dinar back into US dollars, your options are limited and costly. One Dinar website makes the following noteworthy disclosure in its fine print Q&A page: Until markets develop for the resale of Iraqi Dinars, it may be difficult for you to liquidate your Iraqi Dinars or exchange them for US Dollars.

One option is to sell the currency back to a Dinar dealer. Typically, online Dinar dealers who advertise 1,000,000 IQD for sale for $1,110 are willing to pay $800 to buy back the same 1,000,000 IQD. In other words, when you drive the Dinar off the lot, it's instantly worth 32% less in the eyes of the dealer that just sold it to you! Selling Dinar back to a dealer is the option having the highest transaction cost but least amount of hassle.

A second option is to sell your holdings on eBay. With eBay, transaction costs should be 10% or less (meaning you might pocket $1,000 if your 1,000,000 IQD can fetch $1,100). (This eBay fee calculator will give you a good idea of your transaction costs.) However, for the newcomer, eBay can be intimidating and entail a substantial learning curve. You should be aware too that eBay has a very active community of Iraqi dinar dealers who you will be directly competing with.

A third option is to sell your Dinar holdings on Craigslist. Craigslist is free, easy to use and very effective for selling items. However, the audience is primarily local and the number of listings for IQD is relatively small - even in the larger Craigslist communities.

The Iraqi Dinar dream may someday become reality for those investors willing to buy and hold dinar for the long-term. But people looking to liquidate their Dinar holdings today will likely take a significant loss on their "investment".

Tim Paul is a financial management executive with more than 30 years experience. His websites focus on personal finance issues including 401k Planning and whether investing in Iraqi Dinar currency is a sensible choice.

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Tips on Choosing the Best Currency Trading Programs

The availability of numerous currency trading programs today makes it quite confusing to choose the best program that suits your needs. These forex programs are meant to make the life of forex traders easier by giving them the tools and relevant information about the foreign currency market that can significantly improve the potential earnings of traders and their clients' portfolios.

The success of the first batch of currency trading programs years back resulted in the emergence of various brands offering the same services. Some of them are inferior in quality, yet are still as expensive as the best ones. These programs only ripped traders off their earnings by not giving them the real value of the amount they invested in their products.

To avoid subscribing to inferior quality trading programs, it is important to consider several factors that can help you in sorting out inferior trading programs from the superior ones. One of these vital factors is excellent customer service. Keep in mind that programs like this are service-based products that rely mainly on the services provided by the company. That is why it is important to check the type of services that the program provides. This includes the response time to your queries, as well as how well they managed your issues and problems at hand.

To do this, try to ask questions via the customer service of each program, and compare the quality of their services based on their responses. You will also notice that some programs do not even have customer service or phone lines that allow you to ask questions during times of emergency.

Always remember that currency trading programs are mostly about investing on the right currency at the right time. A difference even by a few seconds can result in heavy losses or lesser profits at your end. Therefore, timing is very vital in this case. If you encounter some issues while using the program, it is imperative that such issues must be resolved in the soonest time possible. It is for this reason that you have to ensure that the currency trading program that you are planning to subscribe offers awesome services with fast response rate.

Similarly important is the user interface of the program. Each software has its own unique interface. Some of them have simple designs while others have relatively more complex designs. Go for the ones with simple designs that are user-friendly. However, you must also make sure that the program is also equipped with the standard features, especially features that allow you to halt or minimize losses and features that allow you to program the software to take profits at a certain level of percentage earnings.

Lastly, go for currency trading programs that offer trial periods or a money-back guarantee. Companies that offer guarantee, even for a few weeks or months, are confident of their products or services. This gives you added assurance on the good quality of the programs they are offering to their customers. Thus, when searching for forex programs, make sure to consider these essential factors and you shall enjoy higher chances of achieving success in your forex trading business.

My name is Alex DeGuzman and I am an expert in providing useful tips for forex trading courses. Please visit my site at http://forextrading-online.org/ to find proven tips to succeed in forex trading online.

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Why Forex Currency Trading Software Is Embraced By 40% of All Traders

The forex market is the largest investment market on the planet as it is encompassed by a number of individual trading markets which all have their individual opening and closing times. These schedules overlap with one another so it can be very time consuming to keep on top of the forex market around-the-clock. This is why so many investors choose to outsource their analytical work to forex currency trading software.

Forex currency trading software is that which automatically carries out every aspect of investing in your stead. This is not limited to analytical work but it actually goes the extra step and places and ends trades for you in the forex market at the most opportune and responsive times.

Forex currency trading software keeps on top of real-time market behavior around the clock, scouring it looking for high probability trading opportunities to further investigate. It invests accordingly when it finds a high probability trading opportunity using your money and then follows that trade around-the-clock to ensure that you are always on the winning end of your trades.

When that investment turns out of your favor, the program trades away the now bad and costly investment to shield you from experiencing any loss.

Using forex currency trading software to invest in the forex market is a good idea for a number of reasons. First and foremost, using forex currency trading software obviously enables anyone to invest in the forex market like the pros without needing the time nor experience to devote towards it because every aspect of investing and analytics is carried out 100% in your stead.

This technology has enabled thousands of first-time and experienced traders to realize their financial independence without having to lift a finger.

Secondly, using forex currency trading software is a good idea because it's much more cost effective than hiring a broker to do the same job and it's arguably more effective at that. Brokers charge fees and commissions on your gains to remain employed, whereas forex currency trading software is able to keep a constant surveillance over real-time market behavior 24 hours a day for a one time fraction of the cost which you'll pay a broker.

Finally, using forex currency trading software is the most reliable way to invest because every move which the program makes for you is the product of algorithmically deciphered market behavior. No emotions ever factor into your trading and in a market where emotions kill more successful trades than any other means, this is the most reliable way to invest hands down

Even if you're fresh off the boat when it comes to forex investing or you don't have the time to devote to it, if you're ready to realize your financial independence I highly suggest you give the best forex currency trading software a chance.

I've compiled a review site to share my experiences and reviews on the best systems I've used which you can visit by clicking on this link for forex currency trading software.

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Swiss Franc is the Only Safe Haven Currency

According to conventional market wisdom, there are three safe haven currencies: the Swiss Franc, Japanese Yen, and US Dollar. It is to these currencies that investors flock whenever there is a crisis, or merely an outbreak of uncertainty, and for much of the period following the collapse of Lehman Brothers, the three were closely correlated. As you can see from the chart below, however, one of these currencies has begun to distinguish itself from the other two, leading some to argue that there is now only one true safe haven currency: the Swiss Franc.

What’s not to like about the Franc? It boasts a strong economy, low inflation, and low unemployment. Unlike the US and Japan, Switzerland is not plagued by a high national debt and perennial budget deficits. Its monetary policy has been extremely conservative: no quantitative easing, asset-purchases, or any other money printing programs with euphemistic names.
Ironically, the only thing that makes investors nervous about the franc is that it has already risen so much. Remember when it reached the milestone of parity against the dollar in 2010? Since then, it has appreciated by an additional 20%, and seems to breach a new record on an almost weekly basis. The same goes for the CHF/EUR and CHF/JPY. The President of Switzerland’s export association is expecting further gains: “Parity is a realistic scenario. Given the indebtedness of the eurozone and the strong attraction of the franc, the euro is likely to continue to lose value.”

Given that Swiss exports have surged in spite of (or even because of) the rising Franc, however, he has very little to worry about at the moment. As you can see fromt he graphic below (courtesy of the Financial Times), the balance of trade continues to expand, and has exploded in a handful of key sectors. To be sure, economists expect that this situation will eventually correct itself and are already moving to revise downward 2011 and 2012 GDP growth estimates. Then again, they made the same erroneous predictions in 2010.

The main variable in the Swiss Franc is the Swiss National Bank (SNB). Having booked a loss of CHF 20 Billion from failed intervention in 2010, the SNB is not in a position to make the same mistake again. In fact, SNB President Philipp Hildebrand has not even stooped to verbal intervention this time around, undoubtedly cognizant of the fact that he has very little credibility in forex markets.
At the same time, the SNB is not in any hurry to raise interest rates, lest it stoke further speculative interest in the Franc. Its June meeting came and went without any indication of when it might tighten. Interest rate futures currently reflect an expectation that the first rate hike won’t come until March 2012. Thus, the downside of holding the Franc is that it will continue to pay a negative real interest rate. The only upside, then, is the possibility of further appreciation. Fortunately, the SNB is unlikely to stop the Franc from rising, since it serves the same monetary end as higher interest rates. In other words, a more valuable Franc serves as a direct check on inflation because it lowers the cost of commodity imports and should (eventually) soften demand for Swiss exports.
It is possible that the Swiss Franc will suffer a correction at some point, if only because it rose by such a large margin in such a short period of time. On the other hand, given that its economy has proved its ability to withstand the Franc’s appreciation, it’s no wonder that investors continue to bet on its rise.

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