1. The trader must believe in The 10 Keys to Successful Trading and merge them into his personality. His success is dependent on creating a trading plan, and maintaining the discipline to TRADE THE PLAN!
2. The trader must commit himself to continued education and learn as much as he can about technical analysis and the psychology of successful trading. He must use logic, and not his emotions, in trading. The trader must learn to trade in control, not out of control!
3. The trader must map out a sound plan of equity management to insure a return on his investment. A successful plan is to trade no more than 20% of a margin account and risk no more than 5 to 10% of that account on any single trade.
Levels Of A Trader
LEVEL ONE: Beginner Trader - To study and paper trade for a minimum of one month with imaginary money, gaining the experience required to establish a track record of profitable performance.
LEVEL TWO: Advanced Beginner - To trade one or two lots with real money, working through emotions and establishing a track record of making money.
LEVEL THREE: Competent Trader - To trade in control with equity management, achieving a financial return.
LEVEL FOUR: Proficient Trader - To trade based on my belief, education, and experience and achieves a financial return.
LEVEL FIVE: Expert Trader - To mechanically execute profitable trades with no emotion.
WHAT IS THE FOREX?
-FOREX = FOReign EXchange
-You can trade 24 hours a day
-The FOREX is larger than all other financial markets COMBINED
The Foreign Exchange (FOREX) market is a cash (or “spot”) interbank market established in 1971 when floating exchange rates began to materialize. This market is the arena in which the currency of one country is exchanged for those of another and where settlements for international business are made.
The FOREX is a group of approximately 4500 currency trading institutions, including international banks, government central banks and commercial companies. Payments for exports and imports flow through the Foreign Exchange Market, as well as payments for purchases and sales of assets. This is called the “consumer” foreign exchange market. There is also a “speculator” segment in the FOREX Companies, which have large financial exposures to overseas economies participate in the FOREX to offset the risks of international investing.
Historically, the FOREX interbank market was not available for small speculators. With a previous minimum transaction size and often-stringent financial requirements, the small trader was excluded from participation in this market. But today market maker brokers are allowed to break down the large interbank units and offer small traders the opportunity to buy or sell any number of these smaller units (lots).
Commercial banks play two roles in the FOREX market:
(1) They facilitate transactions between two parties, such as companies wishing to exchange currencies (consumers), and
(2) They speculate by buying and selling currencies. The banks take positions in certain currencies because they believe they will be worth more (if “buying long”) or less (if “selling short”) in the future. It has been estimated that international banks generate up to 70% of their revenues from currency speculation. Other speculators include many of the worlds’ most successful traders, such as George Soros.
The third category of the FOREX includes various countries’ central banks, like the U.S. Federal Reserve. They participate in the FOREX to serve the financial interests of their country. When a central bank buys and sells its or a foreign currency the purpose is to stabilize their own currency’s value.
The FOREX is so large and is composed of so many participants, that no one player, even the government central banks, can control the market. In comparison to the daily trading volume averages of the $300 billion in the U.S. Treasury Bond market and the approximately $100 billion exchanged in the U.S. stock markets, the FOREX is huge, and has grown in excess of $1.5 trillion daily.
The word “market” is a slight misnomer in describing FOREX trading. There is no centralized location for trading activity (“pit”) as there is in the currency futures (and many other) markets. Trading occurs over the phone and through the computer terminals at hundreds of locations worldwide. The bulk of the trading is between approximately 300 large international banks, which process transactions for large companies, governments and for their own accounts. These banks are continually providing prices (“bid” to buy and “ask” to sell) for each other and the broader market. The most recent quotation from one of these banks is considered the market’s current price for that currency. Various private data reporting services provide this “live” price information via the Internet.
For More details visit www.cogenttsedu.com
