Friday, February 3, 2012

Trading Real Forex Money

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The diagram above is the timing chart for the  euro/usd currency pair ..All currency pairs have simular  timing charts although they may vary somewhat.  This timing  chart is simple  price points over time.                                                                                                                                                                                                          Take a  few  minutes to study the diagram.   First the price points always  start on the left and end on the right (time can be hours or days or months).                                                                                                                                            The  lower value  start at the bottom  at  1.2977 and goes up to  higher  value of 1.3199 at the top                                                                                                                                         There are  much more information embedded in this chart but for now we will just consider the basic concepts of placing our first real money trade .                                                                                                                                              The first technique is  to Buy  the currency pairs at the lowest point possible  then Sell it at its highest point thus locking in profits..                                                                                    A  second technique  also exists where the pair can be  Shorted  when it reaches the highest point at 1.3199 and take profits when it trade back down to the 1.2977 levels..                                                                                                                                              Our basic idea here in placing our first real money trade is to Buy 1 mini lot of the  euro/usd at 1.2977 level  and wait over time until the trade reaches the 1.3199 levels before closing out this trade and look for another trade opportunity. In this trade we would have gained over 200 pips in profits, however if the trade went against our  trade position we would have lost over 200 pips.                                                                                          There are  3 basic time frame from which to trade forex..   short term trades otherwise called  interday  trade, medium term trade lasting few days and lastly long term trades lasting several months.                                                                                                                  We will begin with short term trade. As a  rule short term trade usually last 3 hours. What this means we  would Buy the pair at 1.2977 level then monitor the pair for 3 hours. if the pair is trading up in our favour we would  stay in the market for 3 hours, how ever if after making some gains in our favour the pair begins to trade against our BUY position we would terminate the trade and  get  out of the market before the 3 hours time frame.                           If on the other hand the pair traded for 3 hours  with noticeable profits we would   get out of the market  and begin to look for other opportunities. Reason  for getting out of the markat at this point is that  most short term trades retrace after 3 hours intervals.                                                                                                                                               In short term trades you should  enter  your  trade position  early in the trading day and exit  3 hours later.                                                                                                                     In general  2 to 3 pip spread  is charged when trading the euro/usd pair. This 2-3 pip spread  is  deducted automatically from your account  up front as soon as  the trade is placed..                                                                                                                                             The spread  can be verified by placing the trade  and watch to see  where the pair starts trading. If the pair start  to trade  at -3 , then  it simply means that the spread is 3 pips.
Comments: In our next post we will analyse the trade to find out if it is a good trade placing our bets.

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