Successful Forex Trading Is All About Probabilities

When you first start to trade forex, it's very easy to test out a technical indicator or two and then apply it to your first few trades, or even just trade based on your gut feelings, but if you are serious about becoming a long-term successful trader then you need a well-thought out strategy.

A good forex trading strategy is one where the probabilities are in your favour for every single trade you make.

For example, I don't believe in entering a position where one single technical indicator provides a good signal, but instead rely on several indicators to all indicate either a buy signal or a sell signal in order to enter a trade with confidence.

I also use different time frames as well to show the overall trend. For example, if I'm analyzing a 5-minute chart and all my indicators indicate a buy signal, then I will check the 30-minute chart as well to make sure that we're not in an overbought position or that we are in a strong downwards trend.

So always try and create a trading system that will provide you with high probability trading positions as this is the key to making long-term profits from forex trading.

Slow Stochastics Key to Dollars Forex Indicator

Correlate Multiple Indicators for Maximum Profit

Slow Stochastics for the technical trader can be most effectively used in conjunction with another oscillator such as the RSI (Relative Strength Index). These two indicator by themselves do not become the "holy grail" for the budding forex trader. However, they can be used to observe momentum shifts within charting patterns.

Trading Tip:
Multiple indicators correlating within multiple time frames leads to the perfect moment to enter the trade. Time frame overlays with correlating indicators are the sign posts for entry into your forex trade.

The original stochastic indicator, developed by Dr. George Lane, is plotted as two lines, %K line, a fast line, and %D line, a slow line.

The %K is far more sensitive than the %D line. The % D line is the moving average of the %K line. And the %D line triggers the trading signals. "Trigger lines" are drawn are typically drawn at the 80% and 20% levels. A signal may be generated when these lines cross.

The 80% value is often used as an overbought warning signal and the 20% value as an oversold signal.

Signals are generated in three main ways:
1.When the 80% or 20% lines are crossed.
2.Crossovers between the %D and the %K lines.
3.Divergence between the stochastic and the underlying price.

A Simple Way To Increase Your Forex Trading Profits

Many people spend years looking for a trading system that will make them consistent profits but the fact is that most people ultimately fail to do so. However the truth is that even the most basic of trading systems can be made into a money-making machine if you follow this one simple strategy.

Successful forex trading is all about probabilities, and finding high probability set-ups is the key to making winning trades on a consistent basis. Indeed this is why technical analysis is so popular because it's basically a tool that enables you to find instances where several key indicators correspond to give a clear buy or sell signal.

So how do you increase your overall profits?

Well assuming you are currently using some kind of trading system, take a few minutes to look through some of the positions you've taken in recent weeks. You should find some trades that you took that turned out to be winners and you remember being extremely confident about when you opened the trade. You should also find some losing trades which you didn't really have any confidence in before placing the trade.

Now to increase your profits you should only be trading these high probability set-ups that you are extremely confident in, based on past performance and experience. Therefore before each trade what you want to do is to give each potential trade a ranking out of 10 based on how confident you are that a position will turn out to be a winning one.

It's unlikely that you will ever give a trade a 10 rating because no-one can be 100% sure about a trade, but you should get plenty of 8s and 9s. Now you should concentrate on only trading these high ranking positions, ie 8 and above, and ignore the rest.

This simple strategy can potentially have a dramatic effect on your overall profitability and can even turn an unprofitable trading system into a profitable one so it's well worth doing if you want to increase your success rate.

Related Post :
Is there Any Forex Trading System Holy Grail?

Source :
Here's A Simple Way To Increase Your Forex Trading Profits

Is there Any Forex Trading System Holy Grail?

Many people spend a large part of their lives searching for the perfect forex trading system because after all if you can consistently make winning calls then your bank could potentially grow exponentially using leverage. However does this holy grail actually exist?

If you visit any forex forum you will often find many questions from newbies asking about the perfect forex trading system and how to consistently make money from forex trading. The response from others is nearly always the same - there is no such thing as the perfect trading system. It's a sad fact but unfortunately it's completely true.

Similarly on the same forums you will often find traders starting a new thread just to boast about their new trading system which they claim to be their most profitable yet. Unfortunately with almost all of these systems, they may be profitable initially, but over a period of time they nearly always lose money overall.

The fact is that there is no holy grail trading system that will consistently make winning calls, however you can of course make consistent profits from forex trading without having the perfect system. The key is to devise a system where the probability of making a profit is always in your favor for every trade you make.

So for example you could devise a system using a number of technical indicators and only trade long or short when they are all in agreement with each other, so statistically you are more likely to make a profit than a loss. Similarly you could use 3 time frames, and look for a trend in the same direction on the 2 longer time frames, and look to enter a high probability position on the shorter time frame. For instance if the 1 hour chart and 4 hour chart are trending upwards, you could look to go long on any oversold positions on the 15 minute chart.

These are all examples of how you can trade positions where the probabilities are on your side, which is the cornerstone of so many successful trading systems. You don't necessarily need to make winning calls 70-100% of the time either. Even a trading system that boasts a 30 or 40% success rate can be profitable over time if a good stop loss policy is used and winning positions are allowed to run.

So stop wasting your time buying the latest and greatest trading system and going to forex forums in the hope that you'll find the perfect trading system, because it doesn't exist. Instead focus on developing your own forex system based on probability trading that will generate steady profits for years to come.


Source :
The Perfect Forex Trading System - Does It Exist?

US Non-Farm Payrolls Likely to Disappoint on Friday Given Weak Challenger, ADP Figures

by Terri Belkas, Currency Strategist
Wednesday, 05 November 2008 13:49:29 GMT

US non-farm payrolls (NFPs) are anticipated to fall negative for the tenth consecutive month on October, and the odds are looking in favor of a very disappointing reading given this morning's employment releases. First, Challenger Job Cuts surged 78.9 percent from a year earlier in October, marking the eighth straight month of growing job losses.

Meanwhile, the ADP Net Employment Change plunged in October for the third consecutive month to match the November 2002 low of -157K. While these readings are not as bad as the levels we saw in mid-2001, they nevertheless signal a clear deterioration in the labor markets.

Challenger Job Cuts (YoY, Monthly Chart)

Source: Bloomberg

ADP Employment Change (Monthly Chart)

Source: Bloomberg


Source:
DailyFx : US Non-Farm Payrolls Likely to Disappoint on Friday Given Weak Challenger, ADP Figures