Understanding The Market Sentiment (Part I)

By Ahmad Hassam

Most traders have a love hate relationship with the market thinking that the market is either against them or for them. Do you see the market as a big mechanical matrix which is devoid of emotions? How do you view the forex market is very important.

The truth is that forex market is just the compressed display of emotions. At anyone time the market is emanating the emotions of currency speculators around the world.

You should think of a market as a big living organism. Think that this organism is made up of millions of cells. Each cell is doing its own functions. Each cell also interacts with other cells of the body keeping the living organism alive and kicking around the clock.

Knowing what the market thinks at anyone time and how it thinks is crucial to your trading success. Forex market comprises millions of traders acting out their perceptions and emotions about the different currency pairs.

You need to know what the other participants are thinking. Ultimately, you as the trader are dealing with other traders out there whether they are big institutional players or an independent trader.

What is the market sentiment? Market sentiment is simply what the majority of the market participants are perceived to be thinking or feeling about the market. Market sentiment is the most important factor that drives the currency markets.

Market sentiment sums up to the overall dominating emotions of the market participants. Traders tend to act based on what they feel and think of certain currencies. They form their opinions based on emotions regarding their strengths or weaknesses relative to other currencies. It explains the current actions of the market as well as the future course of action.

Market sentiment is primarily based on the sum total of all the traders emotions. These emotions are one of the greatest factors in the determination of the currency pair prices. One important thing you should know: market sentiment is not logical.

Market sentiment is like a fickle lover. It is capable of changing its mind based on new information that can upset the existing emotion. Market sentiment can be bearish, bullish or just plain confused.

If the majority of the market participants want to buy that currency, the market sentiment is bullish. If the majority wants to sell the currency, the market sentiment is deemed to be bearish. When most market participants are unsure of what to do at a particular moment, the sentiments end up being mixed up.

Suppose you can understand what the other traders are thinking and why the market is doing what it is doing. You will be in a better position to plan the entry and exit for your trade. Understanding the current market sentiment is important for you. You can exploit it with an appropriate strategy that can help maximize your trading profits. In Part II of this article we will discuss what factors influence the market sentiment in the short term as well as the long term. - 23200

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Know Candlestick Patterns. Learn Forex Trading!

How The Hedge Fund Managers Trade Forex? (Part II)

By Ahmad Hassam

You must have read Part I of how hedge fund managers trade forex. You need to understand that hedge fund managers are always on their nerves edge. They constantly look for strategies that work.

Hedge fund managers want to make good money while always on their guard if things go bad, how to get out of a bad position before it really hurts. You as individual investors also want to bet your own hard earned money in the hope of making capital gains.

You should decide whether you want to range trade or trend trade? Many hedge fund managers are trend following traders. If you want to become a trend trader than you need to become a master of predicting and anticipating trends in your favorite currency pairs. If you want to be a contrarian trader and range trade, than you should understand how to scalp.

You also need to decide the time frame that you will trade most. You should decide whether you will use the 5 min charts, 30 min charts, 4 hour charts , daily charts etc and why.

Will you only day trade or hold your position overnight? If you are doing a job, will you trade after hours? What time of trading best suits you? These things should be very clear in your mind before you start trading.

Learning the art of entry and exit is essential for your success. Should it be single entry, single exit? Should it be single entry, multiple exits? Should it be multiple entries, single exit? Should it be multiple entry, multiple exits?

You should understand the money management rules. Never ever put more than 1% of your equity at stake in a single trade. Learn to calculate the risk/reward ratio.

Now, test drive the forex system by back testing and forward testing. Back testing can be done on Metatrader and other platforms. Forward test your strategies on a demo account.

A better approach would be to open a mini account and try to test it live with a mini lot. You will not lose much money this way but you will be playing against your emotions like when you will put large amount of your money at stake using this strategy.

Ultimately trading is all about developing discipline and controlling emotions. You dont get this feel in demo trading when you know nothing is at stake.

Get intimate with your strategies. There are two primary types of trading strategies"one that has a high percentage of profitable trades and one that has a high profit factor.

The key here is to know exactly what type of market environment your strategy performs well in and what type of market environment your strategy fails in, because only then will you know when it is time to pull the plug.

Understand how much drawdown you can afford on your trading account with this trading strategy. You can establish a bench mark figure using a back test. Decide before hand how much drawdown is acceptable before you pull the plug out of the trade.

The last step of thinking or trading like a hedge fund manager is self reflection. Oftentimes we become so absorbed with trading that we do not notice the obvious.

This is why it is important to spend some time on a weekly or monthly basis to go over or reflect on your trading. You need to establish a certain ROI level for yourself and keep on tweaking your trading strategies until you start achieving that figure. - 23200

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading and swing trading stocks and currencies. Learn Currency Trading. First Trade Your Forex Demo Account!

Currency Dealing Articles

By Paul Bryan

Forex trading is the act of buying or selling one currency in exchange for another. Many global currencies are available for trade and profit is made by the natural currency movements. It is one of the worlds biggest trading markets and is responsible for billions of pounds and dollars exchanging hands every weekday.

Foreign currencies are traded in pairs only; for example - EUR/USD, GBP/USD, EUR/JPY etc. An estimated 70% of all transactions are made with major currencies like U.S. dollar, Australian Dollar, British Pound, Swiss Franc and Japanese Yen.

Due to the recent boom in interest in currency dealing, a range of websites and media sources are publishing a wide selection of forex trading articles. Many of these focus on the analytical and strategic side of trading.

However, you should be aware that not all of the content you read can be trusted. Many come from biased or unknowledgable sources and it is up to you to work out how reliable an article source is. Some of the articles that focus on strategies are ok but please be aware that successful trading systems can take years to formulate.

It can be a challenge for any beginner to spot phoney content - even an expert can be caught out. However, if you check whether the source of the article has a hidden agenda you can stay one step ahead.

Reading currency dealing articles will help you to understand the market and trade more profitably. However please do make sure you figure out why the person has written the article in the first place.

currency trading articles that are simple in their approach and contain a good wealth of information without going overboard are more likely to be telling the truth. Look out in particular for articles written by professional and successful traders.

Risk management is one of the most important aspects of currency dealing so make sure the article is advising you off this and not making unrealistic claims about how much money you will make. A good article will be written to be useful to you and so the writing style should reflect that.

If you can track down a Forex expert who has published some forex trading articles then you can trust and learn from their content. Often these will focus more on the analytical side of things such as fundamental and technical analysis - two areas that can be difficult to understand without reading up on the subject.

Forex trading articles can offer you a lot more than just a bed time story. They can provide you with real knowledge that you can use to start becoming a better, more informed Forex trader. - 23200

About the Author:

Paul Bryan has years of knowledge trading the Forex market and has now built his own trading website full of articles, hints and advice to help you be an improved, more profitable trader. To find out more simply visit: Forex Trading Articles

Don't Overlook These Key Points When Starting on Forex

By Alex Miller

If there is one thing that I've learned about getting involved in new projects, it's the fact that they can be rather intimidating if you are unfamiliar with what it is that you are doing. The only way for you to really get a handle on the situation and to deal with it effectively is to take in as much information about the subject as you possibly can. Regardless of what the subject is, knowledge is what is going to be able to help you overcome your issues.

Something that we are currently working one is trading on the Forex market, and that was certainly intimidating to us whenever we were first getting started. The unfortunate thing is, we did not take the time to study the subject in depth at first and we ended up losing a little bit of money and becoming frustrated with the entire prospect of building up a nest egg. After we started taking in some information about the subject, however, we were able to turn those earlier failures into successes.

You have access to an almost endless supply of information on any subject that you can possibly think of. I'm talking about the Internet, and if you're reading this, you are sitting in front of your computer at this very moment. Finding the right kind of information is paramount in order for you to be successful in the Forex market, so here is a way for you to do so effectively.

Your first stop will be at an Internet search engine, and you have several to choose from. Most people have a search engine set up as their default whenever they open their Internet browser but it is also possible for you to go directly to Google or perhaps Yahoo. Start typing in search queries in order to find out the information that you need, but don't be too broad in your searches. Remember, the more specific you are in what you are looking for, the more specific the returned results will be.

What you are looking for whenever you are scanning through the search engine results is an online resource that gives you information that is trustworthy. There are plenty of websites out there that are simply trying to sell you their system on the Forex market, so make sure that the resource that you're looking at is better than that. Of course, every website has the right to sell something but it should not focus on that entirely.

If you're able to find an archive of articles on the subject, you really have access to something that can help you in untold ways. The reason why this is the case is because most of these articles are broken down into smaller micro subjects so you can study them, learn what it is talking about and then move on to the next article. If you are able to find an archive of articles like this, make sure that you can return there in the future.

One other thing that you need to know about looking for information such as this is that at times, it takes and perseverance. Make sure that you follow through on your efforts, bookmark any important sites that you come across and take in all the knowledge that you can. Your nest egg will thank you for it. - 23200

About the Author:

We have all of the Forex tutorials that are necessary to get you up and running quickly

Forex Signals & Do We Need Forex Signal In Forex Trading?

By Jon Nash

Forex signals are predictions (forecast) of the rate of each pair of currencies in the near future. It could be intraday forecasts daily, weekly or even monthly forecasts.

Accurate forex signals provide ordinary traders to see the market as experts does . It will make the trading process easier more profitable when you have enough knowledge of how the rate of each pair of currencies will behave in the next hours, days or week.

Although signals were predicted by experts in the field, but they remain human and they could be wrong sometimes, so dont ever consider forex signals as 100% accurate, but be sure the if its a good provider it will be accurate most of the time. And its always better than having nothing.

Some signals providers are more accurate than others, this you can find out by experience or by asking other users. Reviews of those providers on the net will give you no indication at all. So the best way for you to test some providers is by signing up with providers who offers money back guarantee for unsatisfied customers, or a free trail. This way you can test them up and see their service first hand.

I personally tested some of them and ended up with one service that provides the most accurate signals, you can find this service at accurate forex signals provider.

Some experts on the currency trading market share their knowledge with ordinary trader in two ways.

1. They can develop software, to analyze the market using their definition of the market and the changes, those software are known now as Automated forex software. Those robots can automatically trade using the parameters the experts define and the inputs you choose.

2. Forex signals, experts have developed great talent in understanding and analyzing the currency market, they can predicts changes with any given pair of currencies related to any news, event or even by the behavior of the pair in the last couple days. So they share these forecasts with ordinary traders to give them better chance of making money online with forex trading.

Forex signals are great way to take advantage of the experience of other professionals, and its like making them help you and assist you to earn in the forex market . And if you are smart enough you can start analyzing those signals and start developing an ability to predict changes in the forex market by yourself.

Forex signals are in most cases offered by a monthly payment service, and sometimes providers ask for high membership fee. But it worth it for anyone serious to get a share of a multibillion dollar market; this fact had opened a new window to scammers. You will find hundreds of internet marketers who have no experience with forex trading developing some kind of useless products and services in to this market, So you need to be very careful what service and what product to chose.

You can trade in the forex market without any signals or software, but signals can improve your trading experience and you earning in this market. The average trader is having at most a 35% chance of earning money on the forex market; its not a 50-50 chance. Others who use good robot can get to 60% chance of winning. But using forex signals can push your odds to 75%.

Greed and lack of patience can cause of losing all your money no matter what you do and what signals you have. And dont blame the providers or the software for that. Before using any kind of assistance in the forex trading try to control yourself and your behavior first. - 23200

About the Author:

Before you join any forex signal provider online, make sure you check Jon Nash excellent free report on signals providers Forex Signals, on the Home Business Guide where the top experts are publishing their valuable information for free, and sharing their strategies and tips on making money online