Make Money On Forex with Support and Resistance Lines

I often write about the Forex market and how to get an edge in regards to trading on a regular basis. One of my favorite topics is based on how to use indicators successfully so that you can get that edge in the Forex market. I must admit however that my favorite indicator is the old reliable support and resistance lines. This indicator goes back as far as I can remember in one fashion or another and I think that it still has staying power speaks to the effectiveness of this trading tool.

There are plenty of Forex traders that depend on so-called market predicting tools like neural nets or algorithms. As far as I am concerned they can have these tools and leave me with good old fashioned support and resistance lines.

The best way to describe a support and resistance line is a certain level of price exchange rate level in which the market has hit this level and later pulled back in the other direction. Here is a good way to remember which is which: Support lines are on the bottom while resistance lines are on the top.

So why is this method so effective? This is a good question but it would help if we went back to why the Forex moves at all. The answer to this is obvious: Traders move the markets. The random population of traders consist of individuals, corporations, Central Banks, and hedge funds. On a technical level, there are exchange rate values (emotionally charged) that can make very nice support and resistance lines.

As a result of the fact that we run on a base-10 number system, these emotionally-packed values are the round numbers. The bottom line is that support and resistance lines are simply exchange rate values that are considered by many traders to be critical points that are traded on. The way to make money on this is to know what side to be on as demonstrated by the support and resistance.

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Cal Relerd has been involved in the Forex market and investment world for many years. He is a firm believer in the Forex market being one of the greatest and most accessible means to building substantial capital in a relatively short period of time.

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Breaking Down The Forex Mechanical System Trading

A variety of trading strategies are available to make the currency investment a successful venture. Which strategy is to be adopted by you while you trade with currency is totally dependent on the particular currency that you trade with and the recent price pattern in the currency market. A particular strategy that seems to be ideal to trade with a particular pair of currency need not be so for another pair of currency. For this reason one has to be very careful while choosing a particular strategy to trade with currencies.

Whatever be the nature of the currency trading that you are engaged in you should have at least one mechanical trading system with you if you want to make fortunes out of your forex trading.

Until recently forex mechanical system trading was found to be very expensive and unaffordable for individuals. As only a few brokers were there to provide forex mechanical system trading, one had to invest a fortune to get the assistance of a mechanical trading system for his currency trading.

With the development in software technology forex mechanical system trading also has become cheaper and affordable for all traders. A number of brokers are now offering free automated trading platforms for the investors to experiment with. By using the free service offered by the brokers you will get a chance to evaluate the different system before you actually invest in one.

If you are thinking of developing a system for your trading purpose, you will have to disclose your trading strategy including trade entry and exit to the programmer of the system. A concrete idea of your strategy narrating the proper currency marketing condition for entry, trade set up and final confirmation should be communicated to the programmer before you purchase a forex mechanical system trading for your use. Trade exit also muse be defined in the same way while programming a system to regulate your currency trading activities.

Back testing is some thing that you should not avoid to get the maximum from your system. You can avoid the troubles of back testing by hand by availing the service of the brokers who offer free trading system platforms. Frequent back testing will enable the trader to understand the performance of the system in a better way and he will start to learn the randomness of a particular currency trade through this exercise. It will also ensure the consisting execution of the trading strategy of the person using the system without fail.

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Forex Trading Strategies - Stop-Loss - Do You Need to Use It Right Now? Pros and Cons

There are pros and cons of using stop-loss in your forex trading strategy. In this article I want to summarize the most important points of this topic and help you to understand if you need to use this trading instrument or not.

Pros:

• You cut down your losses, so no matter what happens and no matter how the market moves, you won't lose more money than you set. This is also the main purpose for using this order.
• You protect your deposit from the sudden big market movements against you. Remember - they can always happen, and this doesn't depend on your trading system. But you can protect your money from this dangerous trends by using stop-loss forex trading strategy and setting it properly according to your trading rules.
• You can calculate your maximum total loss for your trading system. It usually happens on the "bad" market for your system and is a result of series of losses that come in a row. This will help you manage your risks better. Knowing the weak points of your system, you can always set your trading lots so you don't lose too much money even if things go the worst way.

Cons:

• If your stop loss order was executed and than market movement changes, you can't profit from it because your deal is already closed. So you can't recoup your losses if your forex trading strategy doesn't imply opening additional deals to cover the losses.
• Sometimes market is "stormy" - volatility increased, no particular trend. This usually happens when some important news comes out. On this market trader usually opens a lot of positions, and a lot of stop-loss orders execute again and again. This can summarize into one big loss.
• You need to consider certain currency pair's volatility - and then set your stop losses according to it. If your SL (stop-losses) are too small it will cause a lot of series of small losses that can result into a big one. If your SL are too large, one loss can drain all your profits, so your bottom line will be near to zero. So you need to take into consideration the volatility of the currency pairs you're working with.

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