Investors - What Separates the Good Traders from the Bad Traders?

Outlined in this article, are the key trading actions that ultimately separtates the winners from the losers. This component is so simple to master, yet difficult to experience. Rarely do traders realize the importance of this powerful problem solving devise. This information ends with an open-ended comment with the intention of leading the reader into suspense. You can use my follow up article as the conclusion. How to Reduce the Negative Effects of Psychology Pertaining to Trading.

There are many forms of investing online. While I can give you a list that is a mile long, these are the most common forms of successful investments. Some of the following know how to invest terms are:

1. Option trading

2. Future trading

3. Currency trading

4. Stock trading

5. Future trading

6. Forex trading (Foreign Exchange Trading)

I want to start this investing online critique out with a story... On a beautiful late spring afternoon, twenty-five years ago, two young men graduated from the same college. These men were very much alike. Both, better than average students, were personable and filled with ambitious dreams for the future.

For the sake of my example, I will set both college graduates off online trading using a day trading plat form. Through a gift, both start with the same online investing investment risk capital the same daytrading plat form, and the same trading system with precise rules for entry and exits.

Shockingly, there is a difference. After one month, one day-trader went broke / bust, while the other day trader returned a 20% profit.

Have you ever wondered, as I have, what makes this kind of difference in people\'s trading? It is not always a native intelligence, talent or dedication. It is not that one person wants success and the other does not.

The difference lies within the psychology of the brain. Your psychological mind set is likely to play a larger role in your trading online career than your chosen technique or any other details associated with your day-to-day practice.

Here are some good examples:

1. One person looks at a glass ? empty, while the other personality looks at that same cup as ? full. 2. Someone may look at problems and call them stress, while another individual looks at troubles as challenges.3. Another one may look at a ship in a storm as an adventurous roller coaster ride, while another human being sees the same situation as a hurricane that has a death call.

I am not the only one to discover this

In his book, Trade Your Way to Financial Freedom, the renowned American psychologist Dr. Van Tharp discusses the role psychology plays in trading success. He divides trading into three Ingredients.

In his pie chart:

-- System is 10%-- Money Management Success is 30%, and -- 60% pertains to the psychology of thought and emotion.

Tharp discovered that the trader\'s psychology make up of the mind has more to do with his success than anything else does.

However, what exactly is the psychology of the mind?

In short, the psychology of the mind refers to your thinking and emotional actions and responses to any given situation In trading, fear, greed, vanity, pride, hope, jealousy, denial - all these can affect investment decisions. Although, your aim in the market is to maximize your profit and minimize your risk, thinking and emotions often make this easier said than done.

FOR EXAMPLE - Traders, who cannot control the psychological process of thought and emotion, make the wrong decision - such as the common amateur mistake of holding a losing position in the belief that someday it will become a winner.

Loss aversion is a classic mistake. By nature, humans value a loss. Therefore, you suffer almost twice as much pain losing $1 as you would in gaining $1. Loss aversion compels most traders to hold a losing stock while it plummets downward. This clouded judgment clearly contradicts the trading adage: cut your losses and let your profits run.

Emotional investors hold losing positions because they view paper losses differently from realized losses. An investor also engages in other forms of irrational behavior.

EXAMPLES are attributing success as natural and losses to bad luck.

This is just the tip of the iceberg. When talking about the other devastating effects of trading, if you do not have the psychology of your thought and emotions in the proper prospective the consequences can be devastating.

This is what opens up problems for new traders, and then they lose manage money very quickly in the markets. Most people completely wiped out their finances within the first year of trading. So, as you can see, your thinking and emotions play a big part in determining whether you fail or succeed, but did you know that thought and emotion make up two different spheres pertaining to trading success?

Appraising Forex Trading Methods

In this article I will be answering the most common question that people ask me: what is a good trading method and what features to look for. I shall be delving upon why certain methods are not good and also a simple way to evaluate a trading method.

If you look closely you will find that some alleged forex trading systems and methods have the following features that I consider to be inadequate.

They are not complete systems of teaching. They focus more on hours of theoretical teaching and do not incorporate lessons for systematic plans that help you trade for profits. You simply have to look up a well known course by Bill Poulos’ Forex profit accelerator course to learn about systematic plans for trading.

They lack in risk management. This is the biggest mistake that any forex trading method can commit. Risk is inherent to trading in the markets and unless it teaches how to minimize it, the trading method is of no use. Bill Poulos, on the other hand has risk management as a primary lesson in his course.

Misplaced focus. They mostly focus on basic analysis. Reading fundamentals is a time consuming activity and understanding it is a subjective matter. Every person reads them differently and also requires a deep understanding of the economic and financial issues. If you fail to understand them correctly you will not be able to succeed.

They require you to day trade. Day trading requires you to sit before your computer for endless hours and wait for an opportunity to exit or enter the market. This is practically an impossible task for many people.

Now that you know the inadequacies of these so-called trading methods, have a look at what comprises a good method.

After having studied many forex trading methods I have short listed four criteria that must be part of a good forex trading method.

A good trading method must teach how to setup conditions that leave nothing to chance. It should teach you rules of entry, stop loss and exit strategy rules. Also, in line with its trading method it should also incorporate financial and risk management. It must use technical analysis. At the same time it should neither be totally mechanical nor totally automated. Personally, I prefer a forex trading method that takes only 20-40 minutes of your time on daily basis.

Using these simple guidelines you can evaluate a trading method and sift the pretenders from contenders. In short, only those methods can be rated as good methods that incorporate an exhaustive explanation of how to apply strategies, how to trade and protect them from risks. In this regard, the guidelines provided by Mr. Bill Poulos can give you the instant profits that you are looking for.

Basic Principles of Forex Trading

The first thing to understand is that forex market is a global market created by banks, market makers and brokerage houses where trading in currencies takes place 24 hours a day and 7 days a week. The market is open to all and has the potential to give huge profits. It is also the biggest financial market in the world where trillions of dollars are traded during the course of a day. At the same time forex trading is a growing market as more traders are turning away from trading in stocks.

Trading in forex involves trading simultaneously in two currencies, which is known as a pair. When you are selecting a pair you are trading one currency against the other. The first name in the pair (base currency) is the currency you are buying and the second name (counter currency) is the currency you are selling. For example, if you choose EUR/USD you are buying the Euro against the US Dollar.

Similarly, there is a fixed format of displaying prices. The price is always of the counter currency. If the price of EUR/USD pair is shown as 1.3667 that means one Euro is trading at 1.3667 dollars.

Most prices are displayed in 4 decimal points with the exception of the Japanese Yen, whose price is displayed in 2 decimal points. The reason behind this is that the Japanese Yen is usually more than 100 Yen to the dollar. Thus, if the USD/JPY price is expressed as 108.25 it means that the Japanese Yen is trading at 108.25 to the dollar.

The minimum change that can occur in the price of a pair is called pips. It is the fourth decimal point expressed in the pair price. For example, if the price of EUR/USD changes from 1.3667 to 1.3668 it is said to have risen by one pip. This is what makes your profits run and rise instantly in forex trading.

The bid price of a pair is always listed first and the ask price is listed second. Now, what is a bid price and what is an ask price. The bid price is the price that the market is ready to buy from a seller at a given point of time. The ask price is the opposite of a bid price and is the price at which the market is willing to sell a specific pair. For example, when the price of EUR/USD is quoted as 1.3667//1.3670, the first is the bid price and the second is the ask price. The difference between the two is known as spread, which in this case is a spread of 3 pips.

Trading in equity and stocks involves commissions that a client pays to a brokerage house for trading. In the forex market the market makers and brokers earn through the concept of spread. The spread of a currency pair largely depends upon certain factors. These include but are not limited to market conditions, specific broker or market maker and the currency pair you are trading in. The currencies where trading turnover is low have a higher spread while the frequently traded currencies have extremely low spreads. Also, some brokers/market makers are known to charge more than others.

Forex trading is done in “Lots.” A LOT means the units of the base currency that you are trading in. Lots are normally termed as standard, mini and micro lots. A standard lot comprises of 100,000 units, a mini lot of 10,000 units and a micro lot of 1,000 units of a currency pair. If the EUR/USD paid is quoting at 1.3667/1.3670 and you are buying a standard lot then that means you are buying 100,000 Euros and selling short 136,700 dollars.

While trading in forex market is easy, it still requires a fair amount of training to get the instant profits that it is known to provide to traders. There are many so-called trading methods doing the rounds over the Internet and in the shape of books.

The Forex profit accelerator course created by Mr. Bill Poulos ranks as a complete training program that explains in detail as to how to place orders, put stop losses in place and strategies regarding exiting at the right time so as to manage risks that are inherent in trading in this highly volatile market. Ever since the Forex profit accelerator was launched it has been instrumental in helping people make instant profits with minimal risk.

You can look for information as to how to join Mr. Bill Poulos Instant profit program on the World Wide Web and make your profits run like never before.

Day Trading in Forex

Day trading is popular in stocks and bonds. A lot of people want to know whether they have to day trade in Forex also. Trading Forex like day trading in equity markets is prevalent but a lot of people prefer not to. This is mostly because day trading forex would involve sitting in front of the computer terminal all day long and the forex market operates 24 x 7. The other concept is to trade in the forex market on end-of-the day basis, a concept in which Mr. Bill Poulos has a long and thorough experience. He is a past master in forex trading business. His forex profit accelerator course provides an excellent insight into trading in the forex market.

Trading on end-of-the day basis has the same potential of instant profits as day trading but needs less time and is less stressful. Many rules that apply to day trading do not apply to end-of-the day trading and you need to look for a program designed specifically for this type of trading.

Day trading in Forex requires you to take instant decisions and there are time pressures on all activity including order entry, placement of stop losses to meet targets of instant profits. Day trading can be very stressful indeed. At the same time those who are new to the forex market should be aware that if they cannot make profits by trading Forex on end-of-the day basis they would hardly fare better in day trading.

By studying the charts of six major currency pairs you will be able to recognize the trends and the potential of instant profits in the short term as revealed by the chart. The reality is that day traders make fast but small profits and that too after a lot of stress. End-of-the day traders, on the other hand, can take home larger profits and that too without stress as patience is the basic mantra of this strategy.

Day trading Forex is not the only way of making instant profits in the forex market. End-of-the day trading yields similar or rather better profits and it requires you to devote very little time, often not more than half an hour daily. To know more about forex before you start trading it would better to refer to the notes and guidelines written by Bill Poulos. His forex profit accelerator course has been designed specifically for beginners. It will do you good to you to know more about it. His course is intended for managing risk in this highly volatile market and to make your profits run.

Choosing Between Fundamental and Technical Analysis

While there is no dearth of information for forex traders to choose, the information must to selected and evaluated for initiating profitable trades. The Forex markets are driven by two major forces: fundamental and technical forces.

As is normal with all debates, there is an equal number on either side, some traders swear by technical analysis being the best while other would have it that by analyzing fundamentals one can read the market better.

Fundamental Analysis

Traders using fundamental analysis for potential trades have to time the market to be able to move along with the market. This is possible only if the trader has chosen day trading to be his preferred plan. As a day trader you are ‘always on’ and have to be on your trading platform always.

The markets are constantly reacting and discounting to information from around the world. The reaction times can be as short as instant. You miss the action triggered by the ‘surprise’ report if you cannot be at your trading platform in a minute.

This translates into a situation where the market’s reaction to data is important while the data per se has no relevance. What is important here is that most fundamental data is in the shape of projections. The news is confirmed only when there is an official release to authenticate the ’projected’ data. This makes timing even more important. If you can time the markets then only you stand to make short term instant profits. If you initiate trades based on fundamental analysis but have not chosen the right time then you should be ready to suffer a loss.

Technical Analysis

Traders using technical analysis are in an advantageous position as they have maneuverability in the markets. The fundamentals are reflected in the technical analysis. The trends that you see in technical analysis are based on certain criteria. When you ride a trend you are reasonably sure that it is appearing on the chart due to the changed fundamentals.

When you are trading on technical analysis you have time in your hands. The trend itself allows you that time to generate fast and instant profits. At the same time, technical analysis by its inherent nature indicates when the trend is expected to run its course. The price movements in forex markets dictate what trades you should make. Either way, you will find that your profits run in forex markets.

The bottom-line is that technical analysis is easier and allows you enough time to initiate trades. You need not be at the terminal all the time. You can increase your profits by looking into the end-of-the day trading concept recommended by Bill Poulos in his Forex profit accelerator course.

Trading Mindsets and Forex Trading

Your mindset, that characteristic mental attitude that determines how you will interpret and respond to situations will determine the type of profits that you make in the Forex market. You can choose to be an independent Trader or a Dependent Trader. The type of trader you are affects the potential of instant profits that you make in the forex market. Rather, it would not be an exaggeration to say that it could affect the way you live the rest of your life: how long you will keep working for someone else, how and when you take vacations or how and where you live.

Let us be frank about it. It is only those who take the initiative can change the way they live. To quote an old saying, it is only those who jump in the water will reach the other shore, those who sit on the shore and keep contemplating will always remain where they are.

Remember that anything that requires little or no effort produces limited or temporary results. The opposite is also true: things that require you to think and act lead to permanent and lasting results. This is truer when it is applied to forex trading or for that matter, to trading in any market.

That brings us back to the original point of trader mindsets. Which type of a trader are you: independent or dependent?

A dependent trader wants quick and instant profits without earning them the hard way. A dependent trader never wants to put in an effort, follows the crowd and initiates trades based on hot tips, that are available dime a dozen in any market. The dependent trader is also on the lookout for automated trading programs that promise the moon and make you a millionaire overnight. These types of traders trade without a plan, with no understanding of what they are doing. They listen to news programs airing expert views and initiates ‘can not lose’ trades. It is another matter that such trades do lose.

The end result of such traders is frustration and they eventually do the only thing that is in their hands: they give up. What they do not realize is that all they had been doing all this time was nothing more that investing in lottery tickets, where the odds are heavily stacked against them, with the hope that they will one day get lucky and hit the jackpot.

Dependent traders neither have control over their lives nor do they have a chance for financial success.

Independent may be the opposite of dependent but an independent trader is not exactly the opposite of a dependent trader. There is a little bit of dependence in everyone but an independent trader uses that little bit of dependence to seek help and learn from others. Independent traders are workers; they work for everything they want. Either they know or they make an effort to know. They will go out of the way to seek people who can educate them.

Independent traders are not afraid to make mistakes because they know one can learn from one’s mistakes. At the same time they try their best not to repeat their mistakes.

Whereas an independent trader will depend on a mentor and/or learn form education to take control of situations, a dependent trader will never do that.

If you want to change your mindset and become an independent trader in the forex market here is what you should try to do.

1. Think of a trading plan and execute it. Select before hand what you want to be. See what fits in your daily work schedule and decide whether you want to be a day trader or end-of-the day trader or do you want to trade once a week. Then select what sources fit your plan the best. Never ever try to apply day trading techniques to end-of-the day trading or the other way round. They are not interchangeable at all and if you do you will discover that it does not work that way.

2. Try to educate yourself. You can look for education sources. Better to search more than one, preferably 2 or three, reputable sources. We can suggest well known and trustworthy names but the idea is that you identify them yourself and make an intelligent choice. Learn the techniques meant for your trading plan but also learn to apply them on your own.

3. Do not depend upon only one method of trading. Learn different trading methods and check them out. Your success is not guaranteed unless you have some basic understanding of trading methodologies, especially when using fundamental or technical indicators.

In the markets you can lose money very easily and quickly. You will gain nothing but frustration from losing money like that. Instead invest in yourself and gain knowledge. This can be your trading education cost which will bring you instant profits in the forex marketing.

The Reason Why Amateurs Traders Fail to Make Profits

The forex markets are reputed to give instant profits to traders. However, many amateur traders fail to cash in on this potential and usually quit the market after getting frustrated. One of the major reasons why amateur traders fail in forex markets is the complexity of the method that they choose for trading.

Whatever research amateur traders do while choosing a trading method is almost always based on a gut feeling rather than on important aspects that actually make your profits run. It is important to note that methods for trading in forex markets must necessarily include risk management, discipline and psychology.

The gut feeling that induces amateur traders to buy training products is usually due to hyperbole used in promotion materials of training courses. They use phrases like ‘jaw dropping secrets of forex markets revealed’ or ‘unlock the mysteries of Forex trading.’ More often than not, the reality dawns upon them soon after they have purchased the course and they find that they had already heard about the method before.

Some amateurs will look for a complicated formula under the impression that anything that gives you instant profits cannot be simple. To their disappointment they find that the formula is actually so simple that they could have thought of it on their own.

The basic why amateurs fail to succeed in forex markets is thus not devoting time or ignoring to learn the full process of trading.

If you are an amateur looking for a method for trading forex then do not make that mistake. Most trading methods available are not complicated but a simple set of rules woven together in an easy manner that are applied in an uncommon way. Complex systems are for banks and obsessive computer enthusiasts. Remember the basic fact of learning: if you cannot understand it, you cannot possibly apply it.

Never ever skip through the learning process. Make sure that you learn the rules of the game: when to set up a trade, the price at which to enter and when to exit. Any program that does not teach you when to exit is not worth it. Neither is the one that does not show you how to protect and manage risk in the trade.

You need to learn how to apply your method in a timely manner, hourly, daily or weekly. You can become a better trader only if you are able to learn how the various aspects of forex trading work in tandem with each other.

Getting an edge in the markets is not complex methods but simple and powerful methods that use only a few indicators.

How to Trade

Forex trading is a business where profits and risks run together. If you are interested in forex trading you can make use of the Forex profit accelerator course designed by Bill Poulos for teaching people how to make instant profits from forex business. Bill Poulos has been trading successfully in forex since years and an expert teacher. You can follow the guidelines provided by him and expect to see your profits run.

The question that most beginners ask is how to trade in forex. Here is a characteristic trade situation.

We assume that it is a standard Lot that you will be trading in. A standard Lot comprises of 100,000 units of currency.

Now let us suppose that the current bid/ask quote for EUR/USD is 1.3802/05 and you want to take a long position in it. Going long means you are buying because you think the Euro will gain against the dollar.

When you place this order then you are actually buying 100,000 Euros for $ 138,050 at 1.38050 to the dollar. The margin that you will have to deposit for this trade is $ 1,381, which is 100:1.

If the Euro actually gains against the dollar and is now trading at 1.3865/68 and you decide to book your profit, you will have to sell one standard Lot. The profit you take home is 60 pips.

When you sell this pair you have sold 100,000 Euros for $ 138650 at 1.3865 to the dollar. Considering that you purchased this Lot for $ 138,050 you make a cash profit of $ 600. That is how profits run instantly in forex markets.

There is a possibility of the Euro falling instead of gaining. Suppose the Euro went down to 1.3775/78 and you want to exit from the trade, you will be booking a loss of $ 300 (being the difference between you purchase for 138050 and sale for 137750) as the Euro fell by 30 pips.

You have invested $ 1381 in the trade and you need to protect your equity by employing a healthy risk management rules. This is one of the important aspects of trading to ensure that your account equity does not fall below margin levels. If it does then your trade will be liquidated automatically resulting in a considerable loss.