What Is Position Trading? (Part II)

By Ahmad Hassam

After performing the fundamental analysis, the trader may be confident that the US Dollar is indicating overall weakness and the Euro is indicating overall strength for the coming six months.

Keeping in view the overall strength of Euro and the weakness of US Dollar, the next step for the position trader would be to open a long position in EUR/USD pair. This simultaneously provides the position trader with long Euro position and a short US Dollar position.

The long term directional bias has been formed by the position trader on the basis of fundamental analysis. Going long on Euro and at the same time short on US Dollar, this combined trading position fulfills the fundamental outlook of the position trader on both the currencies.

So position trading depends on using fundamental analysis in identifying a profitable position in the currency market. But you still need technical analysis to determine your entry and exit in the market. You will have to use technical analysis in setting up the actual trade. Pinpointing the best time for the trade entry as well as setting risk managed control strategies is best accomplished by using technical analysis.

As all currencies are traded in pairs unlike the stock market or for that matter other financial markets, this concept of strength/weakness fits extremely well with the forex markets. The position trading uses fundamental analysis in pairing strength with weakness.

Trading forex requires a directional commitment on two currencies for each trade, so position trading is ideal for forex trading. Position trading with the strength/weakness model is the most logical fundamental method for approaching long term forex trading.

You only invest in stocks that go up and down but two stocks can never be paired together in stock trading. You can buy different stocks to diversify your portfolio but can never pair two individual stocks the way you can pair two currencies in forex trading. Buying one currency because it looks like it will become stronger while simultaneously selling another currency because it looks like it will become weaker is a better way to trade as compared to stocks and other financial markets.

What should be your first step to identify a strong/weak pair? Your first step as a position trader should be analyze the Central Bank policy statements, economic growth factors of these countries, global economic news etc to identify the currency with the strongest positive future prospects and the currency with the strongest negative future prospects at a given point in time. You will have to do fundamental research and analysis on all major currency pairs as a position trader.

You will have to study all the major currencies like US Dollar, Euro, British Pound, Swiss Franc and the Japanese Yen. Suppose you identify GBP and USD as the strongest loser currencies by performing fundamental analysis while EUR and CHF as the strongest gainer currencies in the foreseeable future. Possible currency pairs for position trading could be long EUR/USD, long CHF/USD, short GBP/EUR and short GBP/CHF.

In currency markets, price action never moves in a straight line and is never ever linear. It is always up and down with minor trends superimposed on a major general trend. Swing traders usually ride the minor trends while position traders ride long term general trends. You can enter the trades with the help of technical analysis and hold them as long as they move in the correct direction disregarding minor corrective swings and market noise in position trading.

Position trading maybe the most difficult method of approaching forex trading for the beginners! It requires a great deal of patience and faith in ones own analysis to weather the inevitable swings against the trading position. But if done properly it can be one of the most effective methods of extracting long term profits from the forex markets. - 23200

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Try Strignano's Forex Signals free. Discover a revolutionary Forex Robot Trading System!

How to Make Money Through Using A Stop Loss in Stock Investing

By Sam McNeill

A stop loss is a pre-determined price that we use as the trigger to sell out of a losing trade. If the share price falls instead of rising then we sell and we sell at a pre-determined price to ensure that we minimise losses. We need to have a stop loss price because not all trades succeed - some fail. Even the best trading techniques struggle to deliver a success rate of more than 70%. Therefore even using some of the best trading techniques we will still end up with two or three losing trades out of every ten. For these losing trades we must keep our losses really really small.

Every trade can only have one of five possible outcomes:

A large profit.

A small profit.

A small loss.

A small profit.

A large loss.

Five possible outcomes, no more, no less. Every trade that you ever do will result in one of these five outcomes. If you had the choice of eliminating one of these five outcomes, you would certainly choose to eliminate the large loss. Eliminating the large loss only leaves the other four possible outcomes. If our small losses, breakeven trades and small profits even out over a period of time we will only be left with the occasional rather pleasing large profit.

By now you should be in no doubt about the wisdom of eliminating large losses. The Stop Loss is what we use in every trade in order to eliminate any large losses.

We use a Stop Loss Rule with three parts to it:

1. With every single trade that you do you must have a Stop Loss in place.

2. The level at which you set your Stop Loss price is set at the level where your loss will be 2% of total trading capital.

3. When your Stop Loss price is hit then you must sell. No ifs, no buts, no maybes. No waiting one more day/week/month/year until your trade turns into a "long term investment".

For those who may be new to share trading the most difficult part of this rule is part 3. You must sell when your stop loss price is hit. It's the most difficult part of the rule because it brings into play your emotions. Despite the huge emotional drag not to sell - you must sell. When your stop loss price is hit then you sell, no scond guessing. Following this simple and straight forward rule protects your hard earned cash. - 23200

About the Author:

Learn more about share trading education. Stop by the Just Shares site where you can find out all about how to trade shares and what it can do for you.

Forex Exchange Trend Is Your Friend

By Chris Green

Most forex exchange traders by now should know what the "trend" is. The old saying "The Trend Is Your Friend" is not just a simple rhyme, but an excellent tip for a trader if used properly. Finding the trend in the currency pair you are trading is usually a good place to start. It can give you an idea on where the market is turning. Not all of the time it is best to just follow the trend, but it is a good starting point for giving you an idea of the market direction.

Forex exchange trading can sometimes be a but difficult to figure out when are good times to follow the trend, and when to take your own intuition direction. World wide events in many ways can and do effect the market conditions. A great way to keep up to this info is to read daily global news and local news. Constantly being aware of current world wide events can have a very positive influence on your trades, and can help things make more sense as an understanding of events that effect the market.

When preparing your forex exchange for trading, it is important to constantly be taking in information about the markets conditions and effecting world news. Don't just take a short time frame of research before your trades, this won't work out for the best. Prepare for hours or even days before jumping back into the market. If you fall a day behind in your research into the market, the chances are that your knowledge is a day behind, and many traders wonder why they are not a successful trader. It is all about being prepared.

For a forex exchange trader, constantly keeping yourself saturated with info on the forex market will end up making trades come easier for you. The reason behind this is, if you are constantly reading world wide events and have an intake of forex market conditions, your brain is going to connect it all together without realizing it. Keeping yourself constantly informed about market information will make your trades come almost like second nature.

Sticking to the forex exchange trend is a good starting point, but you need to take your skills beyond that to get the real results you need. Dont be the average trader, and a failing statistic. Become consumed by your trading mindset, and you will be able to become a master. Second guessing yourself can also be a bad move, know your nature, your either good at what you do or average. Which do you want to be? - 23200

About the Author:

If you truly want to get out of the ditch and make money, check out the "Big Wigs" Forex Exchange method. If you have read up to this point, and have had it with endless searching, stop letting the "Big Wigs" spoon feed you info, find out their dominating ways to Forex Exchange.

Are You Aware Of Some Bankruptcy Alternatives To Keep From Filing Bankruptcy?

By Emma Elvie

As people find themselves struggling with their finances they usually end up coming to the internet in hopes of begin able to find some bankruptcy alternatives that will help them avoid filing bankruptcy. It seems as people everywhere want to learn what they can do to prevent financial disaster.

Chances are if you have landed on this site then you too are looking for some bankruptcy alternatives that you can use to save your credit. We all know that filing bankruptcy can be one of the quickest ways to ruin your credit score.

Of course some times there is absolutely nothing that you can do avoid filing; however you should know that there are steps that you can begin using to find some alternatives to bankruptcy.

One of the first things that you should do if you are struggling with your finances is to talk to someone who will understand your situation. Most of us tend to hide behind our financial troubles because we fear what people will think and we tend to believe that if we ignore our problems they will go away on their own.

The best way to avoid filing bankruptcy and get your finances back in control is to find ways to make more money. You should be well aware that one of the main reasons that people find themselves struggling with their finances is because they do not bring in enough money to cover their obligations.

We as a society tend find ourselves spending money on things that we really do not need or can not afford. In fact as a society we have become so used to spending money on things even if we do not have the money in our bank account.

We all know how difficult it can be to save money or make your monthly payments when you are not making enough. This is one of the main reasons that you should visit the site below to find some information that you can use as bankruptcy alternatives and get your finances back on track. - 23200

About the Author:

What Are Some Alternatives For Bankruptcy What You May Not Know! Filing Bankrupt Online

Forex Tutorial: Automated Forex Trading Software

By Bart Icles

Many forex tutorials will help you learn almost everything that you would need to successfully participate in forex trading. However, how does the idea of participating in forex trading with a partner who is logical, smart, and ever vigilant for money-making trades? How would you like to partner with someone who executes trades almost instantly whenever an opportunity comes up and then immediately posts profits to your account? Would you be interested in having a partner who is not swayed by emotions? Having this kind of partner would make a forex tutorial a thing of the past but the truth is, there are forex tutorials that are meant to help investors work with automated forex trading software.

Automated forex trading software has all the aforementioned qualities and many investors are starting to make use of this helpful tool. There are many different kinds of automated forex trading software and they are all available commercially. These computer programs are designed to scan the forex market for advantageous currency trade, without the presence of a live trader. This is possible through the use of some pre-set parameters that a certain user has programmed into the system. An automated forex trading computer program usually comes complete with a forex tutorial to help investors understand how to best use the trading software to their advantage.

Both beginners and seasoned traders can benefit from the use of automated forex trading software in developing trading decisions. These automated forex trading computer programs come in a good range of levels of sophistication and prices that any forex investor will definitely find an automated forex trading software that would best fit his needs.

These automated forex trading computer programs often come with instructional manuals so that users can have a better grasp of how to navigate through the software. Some of these programs can even allow a user to access to different tools like a forex trading guide, forex tutorial, forex trading tips, and many others. There are also those that offer free trial periods so users can test the software before they make a decision to purchase it.

Using automated forex trading software sure appears to be an attractive option but foreign exchange traders and investors must keep in mind that these computer programs are not 100% foolproof. They cannot guarantee successful trades 100% of the time. Therefore, it is still important for forex traders to invest on their forex education to continuously keep themselves informed. Going through a forex tutorial every now and then can help. - 23200

About the Author:

A forex video tutorial starts with a desire to learn and a drive to become a great trader. Learning with a forex tutorial takes dedication and a good teacher. But once you learn how to trade and do so successfully your life will change and you have options and financial resources you never had before.