Casual Forex Trader

I’m often asked about forex support and resistance, when I talk to them about various things. I think this is a very important concept to understand, but a lot of people really don’t fully understand what it is. But I think you can get a very basic understanding of it by looking at the graphic above.

Resistance is a level at the top of a price that prevents it from going higher.
Support is a level at the bottom of a price that prevents it from going lower.

It’s important to note that forex support and resistance levels are not set in stone (not a universal concept). They’re a good indication of what is happening in the market, but they’re not going to always be nice to you. Sometimes a support will give out and a resistance will be broken through. That is life as a trader and you just need to accept that as an inevitability of the market.

Here is a more detailed picture that is a little more realistic of what you’ll see in the market. You’re probably wondering why you need to know this. Trading and prices are a very odd thing, but you’d be surprised how trades will stick between support and resistance. I’m sure you’ve watch stock market commentary lately and you’ll hear an expert say “If the S&P goes below 800, we could see a sell off.” What that means is that if the support is broken, you could see a sell off.

This has nothing to do with actual market conditions. It’s completely an emotion of traders that naturally strive to keep things within the support and resistance levels.

I hope this has been enlightening for you and you understand a little more about forex support and resistance.

I think everyone is starting to recognize how important credit is to an economy like the United States. It’s pretty apparent that in this credit crunch, it has been more than difficult to get loans for things like cars, houses or any other things that you’re looking to have. The US dollar has been getting hammered over the last month over fears that the USA could lose it’s AAA rating.

I know what some people are thinking, “The US is a super power. No way will we lose our triple A rating.” I’d like to think that this would be the truth, but other first world countries have lost their AAA rating as well. Great Briton is a prime example of this. Their country has officially ran out of money. They are consistently running out of people to buy their bonds.

What does this all mean?

Well, it basically means that the US will be looked at as a person that is more risky for default. That’s basically a good way to look at it. Being downgraded from a AAA rating to a AA rating doesn’t seem like a big deal, but it is. When you give out money to someone that is more risky, you want to have higher interest rates because of the risk.

In the case of governments, the central bank needs to start raising interest rates. That makes the cost of debt more expensive for both the government and the private sector (you and me). It also puts a damper on the easy credit that is designed to stimulate the economy. But the higher interest rates help lenders to the government make more return and hedge against things like inflationary trends.

Trading This

Traders have been already pushing out of US dollars in anticipation of it losing the triple A rating. They been buying up commodity rich currencies like Canada and Australia. If the change in the rating happens, there will be a huge dump on the US dollar, so make sure you leverage yourself to profit on this news.

It’s hard to predict what will happen, but I wouldn’t be surprised if the rating stayed the same or was downgraded.

I thought I should compile a list of resources that you can use to help yourself learn more about forex. Well, of course this site is designed for that purpose, but sometimes you need a different perspective when it comes to this stuff. Here are the top 10 sites that I use to help me learn forex and stay up to date on things.

1. Forex Street

I like this site for two main reasons; first, it keeps up to date with a lot of talk on daily events inside the market, so you can learn by simply observing what is going on. Secondly, it also contains a learning section that you can dissect and learn everything you need to know.

2. Daily FX

This site does a lot of analysis work that I find quite useful and you should too. You can also check out their forum, where you can ask questions and read other people’s questions.

3. GFT Forex

The cool thing about this site is that they have broke it down into three different sections; new traders, active traders and professional traders. This way you can always stay with the right information and not get overwhelmed.

4. Forex Factory

This is mainly a site built on a forum and there is nothing wrong with that. Forums (especially an active one like this) help to create a community and friendship. Sometimes you won’t know what to do and just asking helps.

5. Babypips

This is a great site for newbies. The articles are all very easy to understand and there is even a forum for you to learn in. Check out this article on the US Canadian dollars. It’s exactly what I was talking about earlier in this post.

6. Action Forex

This site I go for information on news related forex, but it does have some indepth analysis that you might find useful.

7. Forex News

This is purely a forex news site and it keeps a lot of the statistics out there for you to see, so definitely a plus in my book.

8. CMS Forex

This site has a nice little course that you can go through to learn all about how to trade as a completely new person to foreign exchange.

9. Forex TV

I know that some of you don’t like to read all the time, so here is forex tv. All you have to do is put on the videos and watch. Doesn’t get any easier than this.

10. Forex Markets

This is a very interesting site because it has tools that you can take advantage of for your forex trading. Might be worth it to take a peak around and see what you might be able to use.

I thought I’d take the time to do a post on something that I talk about in my free course that I offer. Obviously learning the fundamentals is an important part of forex and candlestick graphs are no exception to the rules.

As you can see here, this is a close up view of a red and green block on a candlestick graph and I have broke down exactly what each element means to you.

The body is signifies the difference between open and close. If it is green than it has gone up in value since the open and if it is red it has gone down in value. These are the two easiest things for people to understand, but everyone has an issue with the black thing sticking out of the top and bottom.

That black thing is known as the shadow. It is a way of signifying the activity of buyers and sellers of forex. Basically a long shadow shows that there was huge fluctuations in the price that was being offered in trades and a short signifies that things stuck mainly around the opening price.

If you want to think of it another way, it signifies the battle between the sellers price and what buyers want to pay. Obviously there is a difference (if you follow markets), but sometimes the differences can create pretty wide spreads. Knowing about these spreads can be seen through a simple candlestick graph and you obviously need to know how to read it.

I thought it was about time that I did a good post on how to properly practice forex trading and doing it in such away that it enhances your real trading. Everyone knows of the demo accounts where you can run simulations in the market and test out how things work. It seems like the perfect device that will let you learn everything you need to know without investing a penny. I’ve seen people follow this simple philosophy only to lose all their money when they got into the real market.

The Demo Software is “OK”

It is important to note that the demo software is just okay. It can help in a lot of ways if you know how to use it properly. If you treat it as nothing more than how things will be in the real market, than you’re going to have the floor wiped with you.

The forex demo software typically uses old data for you to run your tests on and that’s fine, but you have to remember that it is OLD DATA. People assume that if a trading strategy worked in the past, than it will work in the future. Maybe, I don’t know. The demo software isn’t going to let you know.

Take all this economic mess we’re in. Things have been pretty erratic with a lot of the foreign exchange. We’ve seen very rapid movements in currencies we never seen move like this before and it is sort of scary. When you use your demo software to test on old data, you’re not going to know if it will work today.

It’s also important to note that information in the old days could alter the data. Who knows if the demo account has a Federal Reserve interest rate change right in the middle of your testing. This could turn a bad trade positive and you would be fooled.

Look, the point I’m trying to make is that when you practice forex trading you’re going to have to realize what you’re doing. It’s old data that may or may not work. Things might come out distorted. There are specific things that you can learn by using a demo software, but you have to be well aware of the learning capabilities.

I wanted to talk to you about sniping forex trades and what that means to you. Sniping, at least in a market sense, was first introduced to me on eBay. When you snipe on eBay, you end up waiting to bid on an auction until the last minute and steal it away form those bidding. The idea behind it is very simple. Instead of bidding up the price for days in advance, just wait and snipe at the last minute, which should result in a much cheaper price than in some sort of bidding war.

The process of sniping in the forex market, you have to anticipate when there is going to be a huge move in some sort of currency. This can sometimes be a little trickier to understand, but once you can identify the (sure thing) events that will cause a currency to jump in price, you snipe in and buy.

The most obvious thing to snipe with is the Federal Reserve (or any other Central Bank for a currency). The central bank of all countries set the interest rates in which banks can get cash. It’s really just a way to expand the supply of currency or reduce the supply of currency entering the market.

When the actual supply of currency is increased, you can expect that the value of the currency will go down. This happens when the interest rate is lowered.

When the actual supply of currency is decreased, you can expect that the value of the currency will go up. This happens when the interest rate is raised.

You can snipe in when you anticipate a move in either direction and profit. That’s all there is to sniping forex trades.

All of you know that I’m a big fan of trading software and the same is true for Andreas Kirchberger’s Forex Killer (www.forex-killer.com and www.forexkiller.net). I’ve been using it for sometime now and it has treated me well (and my friends well too). There are a few reasons that I like this particular package, but let me first talk about my results as a trader.

I wanted to be objective here and record what I went through as a trader. I ended up investing $1000 for the trading software to play with. Obviously, I was going to watch it like a hawk because like hell was I going to let my money go down the drain.

I’d like to point out that these results weren’t “amazing, I’m rich” kind of results. What I like about this software is that it consistently worked for me and produced decent returns.

I invested my $1000 and by the end of the year I had $2000 in my account. Is that a large amount of cash? No, but that is a 100% ROR on my invested cash. There are people that invest in the stock market with the hope of getting 9% ROR each year, so this is definitely a better avenue.

Did I have bad trades? Of course. Bad trades are just part of life, but the software made more correct trades – so I always ended up ahead.

If you’re planning on giving it a try it currently costs $198 US. That’s a lot, but I was able to track down a 50% off coupon (drta50off), that you just put in the coupon field before ordering. There’s really no risk in ordering because there is a 100% money back guarantee if you’re not satisfied within 56 days. There’s no harm testing it for that amount of time.

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Andreas Kirchberger

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I have to talk to you about the Canadian dollar because it has been on the move for sometime now. I think that it has been up 6 weeks (or something along those lines). This is something you can start leveraging and making some money with. Understanding the Canadian currency is very important to profiting from it.

What you may not realize is that Canada is a huge oil country. As of 10 years ago it wasn’t that big of a deal, but recently the oil sands have become legit oil because technology has advanced to the point that they can profitably extract it. That puts their oil reserves at 2nd in the world behind Saudi Arabia.

Over the last few months, oil has been on a strong move up and at the time of writing this post is above $60. If you take a look at a graph over the last 5 years of the Canadian dollar and the price of oil, you’ll see that they virtually follow the same moves.

Due to the negligent policies by Washington, I expect to see a continued increase in the price of oil and a devaluing of the US currency. But with every problem like this, there is opportunity to profit. It’s time to start moving money into the Canadian currency because it will soon be up to parity with the US dollar and I wouldn’t be surprised if it surpasses the value of the US currency.

On a side note, investing in the TSX (Toronto Stock Exchange) is probably a good idea since you can make a return on Canadian priced stock that will probably double in value when the economy improves. Now that’s leverage.

From Chezz Larsson
I thought it would be important for me to help you stay organized when you trade. A lot of people don’t understand this, but it actually makes you a much more effective trader. When you can easily look through all your trades and understand it in a relatively short manner, you’re obviously going to be better off with your trading. This is why I think a trading journal will be very beneficial for you.

Personally, all I use is Microsoft Excel for this, but if you don’t have that you can just use OpenOffice‘s version of it (which is free). A lot of people get intimidated by spreadsheets and I was once like you. I remember having friends at university that used it and I could never figure out why. It just had a bunch of cells you could write in. It didn’t seem like anything user friendly or fun to maintain.

All you want to do is put all the important information in about the trades you make. Here is a list of what you should include:

• Time of placing trade and selling trade
• Attempted Strategy
• The Pair
• Entry and Exit
• Profit/Loss
• Comment – On the trade

This is really all you need for your trade journal. You just want to have the basic information about the trade there. This isn’t going to be a Bible of accurate and profitable trading, but it should help you learn and understand. Understanding is really the key and that is the value it will give you.

I thought it was time for me to do a little investigation to find out what is the best trading robot that you can get. I think it is best to examine this type of things with a few basic guidelines. The first is basically overall accuracy because if it isn’t accurate, than what is the point. Secondly, does it correct mistakes? The robot will have to be wrong at some point and if it is, will it actually identify the mistake and minimize your loss. Lastly, I want to know if I can learn from the robot and become a better trader.

From all my research and testing I was only able to find one piece of software that worked well. I’d first like to point out that I get to test a lot of expensive software for free because I do have this site and people are always looking for promotional methods for their software. I test out all sorts of expensive stuff on a regular basis.

Automatic Forex Cash is really the only program that I think meets the criteria that I listed above. The robot happens to be very smart and sophisticated, which keeps it quite consistent and accurate during these economic times. That’s pretty surprising considering other software has trouble with the wild fluctuations that have been happening lately.

When it comes to profiting, it does a consistent job at this. Which is surprising because other software you really have to play the odds. Which means that you have bad times and good times, but in the end it all balances it. This works much more consistently in the black, than the red.

So Check out the Automatic Forex Cash.