This article is all about using technical analysis the RIGHT way - and using Forex charts to make big consistent profits.
Here we are going to look at some proven ways of analyzing forex charts and some great indicators.
You can then use them to generate trading signals, to zero in on the low risk high profit opportunities all traders want.
1. Trend Lines
You need to start and learn to draw basic trend lines to spot opportunities, it may sound old fashioned but it’s the best way to spot trends.
2. Support and Resistance
The basis of most of the top trading systems.
Support and resistance is simply defined as levels where prices move to and then reverse.
In a rising market prices rise to resistance levels and fall while the exact opposite occurs in a bear market.
When prices break above or below significant support or resistance, a good trending move could be on the way - especially if the resistance or support is valid.
So how do you know if support or resistance is valid?
Look for lots tests - and look for how many different time periods tests have occurred in - by looking back at your Forex charts and also the distance in time between them.
3. Breakouts
If prices break through important support or resistance, then the odds are that the supply and demand position is changing and a new trend will develop.
Trading with breakouts, and trading in the direction of the break is profitable but most traders can’t do it.
Why?
Because most traders like to buy low and sell high.
They wait for a pullback to buy at a better price - and it doesn’t come and the move is missed.
Most major currency trends start from new market highs - NOT market lows.
To catch the trend you need to go with the break and forget about buying low, however not every breakout will work but how do you spot the ones that do?
You need to watch price changes in terms of momentum and volatility.
Volatility Changes
Volatility is a term used to describe the magnitude, or size, of day-to-day price fluctuations - regardless of their direction.
Generally, changes in volatility give clues to changes in price. A breakout that is accompanied by high volatility, is the ideal set up.
An indicator you should look at to determine volatility is the Bollinger band.
Bollinger bands can also help you identify support, resistance and targets for the move and are an essential indicator.
Price Momentum
Momentum is a general term used to describe the speed at which prices move over given time-periods. Momentum indicators can therefore determine the strength or weakness of a trend by looking at shifts in price momentum.
If price momentum increases on a break, then the odds are that the break will continue and a new trend will develop.
There are two good indicators for looking at changes in momentum:
The Stochastic and Relative Strength Index (RSI).
There is not enough room here to go into how they work simply see our other articles or look them up on the net, both give a highly visual picture of changes in price momentum and are easy to use.
Finally
If you can draw trend lines, spot breakouts and use volatility and momentum indicators that we have outlined above you could soon be on your way to making big consistent profits with your forex charts.
Thursday, July 17, 2008
Forex Charts – Simple Tips for Bigger Fx Profits
Winning Strategies With Forex Charts
As you read forex charts, remember that the two fundamental approaches for online forex trading: fundamental analysis and technical analysis.
Fundamental analysis doesn't rely on forex charts. It scrutinizes political and economic indicators to determine trades. Charts here are deployed as used as a secondary reference.
Technical analysis on the other hand, attempts to predict price swings by analysis of historical price activity. Those who use technical analysis study the relationship between price and time.
The most actively traded pair of currencies is the Euro and the US dollar, so we will use them in our example. The dollar is on the right hand side of the chart and the Euro is on the left hand side. The currencies are expressed in relationship to each other in pairing. Forex charges will always display how much of the currency on the right hand side is necessary to buy a unit of the currency on the left side. Looking at the typical EU-USD, chart you will notice the last price displayed per given date. This number is always emphasized. The time is tabbed horizontally across the bottom of a chart and the price scale is displayed vertically along the right hand edge of the chart. The time and the price are set in all caps to help the trader remember that technical analysis rests upon the relationship between time and price.
The trader observes the price and time movement on a chart. These include bars, lines, point and figure, and Japanese candle sticks-- the most favored method. With the candlestick method there is a large, red section that is the body of the candlestick. Lines protrude from the top and bottom and they are the upper and lower wicks. When you look at all the candles on a chart it is apparent that bodies come by difference sizes. Sometimes no body exists at all.
The same is true with wicks. Candle wicks come by many difference sizes; there may be no wick at all. The length of the body and the length of the wick are determined by the price range for the candle. Longer candles will have had more price movement during the time that they were open. The top of a candle wick is the highest price for that currency while the wick's bottom is the lowest price. A currency is bullish when the close of the candle is higher than the open. In simple terms this means that there were more buyers than there were sales during the opening time period. Sometimes the candles will not have wicks. The price opened and it dropped off until it closed.
Forex charts don't offer bullet proof trading hints, but they can help a trader. Past trends do have their place in forex trading as most traders will admit, and using the charts to track historical trends can assist a trader in making a snap decision.
The online investor typically joins a service that provides realtime charts that updates on currency activity. Charts can be checked on a minute to minute basis. For those who primarily do their trading based on historical accuracy this can ease the burden of prediction.
Most forex traders however use a combination of fundamental and technical analysis. They may chart historical trends, but they will also pay close attention to political, cultural and economic indicators within a region. They might use charts and other techniques to check correlation between political climate and currency fluctuations. But even the most sophisticated technical analysis software or tool has its limitations. A trader must be prepared to take risks... and invest money that is not needed for the immediate future.
Forex Charts - This Equation is Critical for Forex Trading Success
The equation in this article is the equation that makes market price move and if you don't understand its significance you are 100% guaranteed to lose and join the 95% of traders who lose their money, so here it is:
Fundamentals (Supply and demand news) + Investor Perception (the sum total of opinions = Price
IT MAY BE SIMPLE BUT:
Let's looks at how people don't stop to digest its significance when implementing their forex strategy.
We all have the facts - there for all to see but we all make subjective judgements based upon what we see (and we all see things differently) and the total mass of humans observing the facts is the price.
So what is the best way to trade?
Well first let's look at what won't work and a huge number of traders make the following mistakes and burn their equity.
- Any Method That Tries To Predict
If you try and predict you're hoping and guessing and you can't guess what a huge mass of traders is going to do in advance - you should only react to the price as it is.
Think of how many people try and predict by buying a dip to support and hoping it will hold - well if you rely on hope you lose.
- Any Method that Applies Science
Human nature is constant so markets so you can use scientific theories to accurately predict market movement - Wrong
Stand up anyone who follows Gann, Elliot wave or Fibonacci - they all claim they have scientific theories -but by definition a scientific theory should work all the time and none of the above do.
There is no scientific theory of market behaviour, because if the markets were scientific, we would all know the price in advance and there would be no market.
This is common sense! But many traders who show it in everyday life forget it when trading forex.
- Day Trading
So you can predict what millions of traders are going to do in the short space of a few hours - Really? Try it and lose, all short term volatility is random and you can't win.
- Trade Breaking News
Sure you get it in a split second but so to does everyone else and the fundamentals are instantly discounted by the price, so it is impossible to trade.
SO HOW DO YOU MAKE MONEY?
The first point to keep in mind is that forex trading is a game of odds - NOT a game of certainties but if you play the odds you can make a lot of money.
The best way for a novice trader is to ignore the fundamentals (these facts discounted instantly) and simply follow their affect by looking at the reality of price on a forex chart.
A forex chart however gives you something more - it shows you how ALL The participants view the facts, so by following and trading price trends you can profit.
What you need to look for are trends and execute trading signals in line with price momentum to keep the odds in your favour.
For example, you see prices dip to support (which you expect to hold) but you don't trade until you see prices turn away from support supported by price momentum
You then execute your trading signal based upon the reality of price.
Your not going to win every trade (remember were trading odds not certainties) but if you do it correctly you will win more trades than you lose and enjoy currency trading success.
A simple forex trading system is all you need.
Check support and resistance, execute on the reality of price momentum and use sound money management.
It may sound simple and it is - but you need to do your homework and be prepared to take losses as well as profits - but if you trade the odds you will enjoy long term currency trading success.
Forex Charts - 5 Essential Technical Indicators for Bigger Profits
If you are using forex charts then you need to know about the indicators we are about to discuss if you use forex charts and these great indicators you will enhance your profitability – so here they are.
Here are your 5 indicators for bigger profits.
1. Relative Strength Index RSI
The RSI, measures the relative strength of price currently compared to the past:
The formula usually uses a 14-period input.
As an oscillator, above 70 is considered overbought and below 30 is considered oversold.
Watching prices turn down from overbought levels and up from oversold levels, can help you spot contrary trades and you can also use it to define the strength of the overall trend when trend following.
2. Stochastic
Is a momentum oscillator that can warn of strength or weakness in the market, often well ahead of time and allow you to initiate trades.
Is based upon the fact that when a financial instrument is trending strongly it tends close, closer to the high than when it is falling, where it will tend to close near its lows.
The best use of the stochastic is as a timing tool and taking crosses with bullish or bearish divergence to indicate trend changes.
If you combine it with RSI It is the ultimate combination for timing trade entries – a fantastic but neglected trading tool.
3. Bollinger Bands
Bollinger bands give you an idea of volatility and standard deviation of price from the norm.
Bollinger Bands are based upon a simple moving average and standard deviation levels are plotted above and below a moving average.
Bollinger Bands are a technical tool used to determine whether a currency pair is high or low relative to its history.
Great for helping you pick areas of high volatility to buy and sell – they should be used to spot the opportunity then use other tools to time entry.
You can also in strong markets use the middle band as value area to get into existing trends.
4. Average Directional Movement
The ADX is a momentum indicator which tries to determine if the market is trending, or is trading sideways.
As you should always trade with the trend this is a great indicator for picking the strong trend.
Apart from determining the trend, it can be useful for taking profits – look for a rise above 40 and a turn down, to alert you to a trend change.
5. Moving Averages
Moving averages identify trends over specific periods smoothing out the day-to-day price fluctuations that are simply caused by market volatility and can be used to great effect with support and resistance to identify areas of entry to a trend.
The equation is:
The closing price is added up and divided by the period of the moving average.
Moving averages as a trend identification tool are great but you must use a period that is longer term.
40 or 200 day averages are great to use to identify areas of support and resistance then you can use momentum indicators to time your entry.
Don’t ever use them on there own or in to short a time frame use them for longer term trend identification only.
These are 5 of the best indicators you can learn and study and if you do so correctly with support and resistance levels you will catch more profits from them, spot turning points and time your entries with greater accuracy, for bigger profits.
If you use forex charts then make sure you study and use these tools.
Forex Charts - 4 Deadly Mistakes Made by Traders
Using technical analysis and forex charts is an excellent way to make money in forex trading. The problem is there are a number of myths that traders fall victim to and lose. The mistakes are easy to avoid and enclosed.
1. Trying To be to Complicated
Many traders see all the indicators that are available to them and think they have to use them, after all 10 indicators are better than 2 - Wrong.
The best forex trading systems are simple and this means they are more robust in the hard world of real trading with fewer elements to break, than a complicated trading system.
Less really is more in forex technical analysis! All the best forex trading strategies used by successful traders are relatively simple and yours should be too.
2. Predicting Prices
If you try and predict forex prices your predictions will be as accurate as your horoscope and you will lose. Predicting is another word for hoping or guessing and that won't get you far in life or forex trading.
What you need to do is to simply act on the reality of price change.
Sure you miss the exact change but you can't predict that anyway.
Your aim is to make money not strive for perfection!
3. Scientific Methods
Leads on from the above and currency prices unfortunately don't move to a scientific theory. This is of course obvious because if they did, we would all know the price in advance and there would be no market.
A forex market moves because we don't and never will know what happens next.
So forget prediction and forget science, they won't help you your trading the odds but if you trade them successfully you will make a lot of money.
4. Invalid Data
The biggest mistake novice traders make is to believe the myth of forex day trading and scalping.
Forex day traders never make money and never will - why?
Because the data is invalid and all volatility in short term time frames is random.
As volatility is random, you can't get the odds in your favour and you will lose. You need to trade longer term time frames where you can get the odds in your favour and this means long term trend following or swing trading.
The above are the 4 biggest mistakes traders make with forex charts and there easy to avoid.
If you want to learn currency trading the right way, then you need to understand forex charts can help you achieve currency trading success only if you use them in the correct manner.
Forex Charts - Exhaustion Gaps a Hugely Profitable Chart Formation
If you use forex charts trading exhaustion gaps can be hugely profitable. There one of the most reliable chart patterns to trade if you know how to take advantage of them. They don't come around often in forex trading but when they do, there a great formation and you can get some great profits.
What is a gap?
A gap in a chart is exactly as it sounds:
An empty space between one trading period and the previous trading period.
They usually form because of an important an event or in a market that is dominated by greed and fear. They tend to be highly reliable, because they reflect a highly reliable trait in human nature.
Short term price spikes never last for long and prices tend to return to areas of more realistic value.
The above reflects human nature pushing prices too far (as they always do) away from fair value and prices return after greed and fear has run its course.
Exhaustion gaps are marked by high volume, and can offer tremendous fade trade opportunities, with excellent profit potential as the tide turns and momentum shifts quickly.
Fact:
In most cases exhaustion gaps are filled soon after they are formed.
These emotional price gaps caused by panic and fear provide some excellent trading opportunities when looking for a reversal. The question now is how do you trade them?
There are several options open to you:
One of the best is to look for over bought oversold indicators and look for extremes - like the stochastic or the Relative Strength Index and hit a downturn from extremes.
You can wait for the gap to be filled (checking of course momentum supports your view) but another way is to top and bottom pick with options.
While forex options are not as popular as they once were, they can be an excellent risk control vehicle, offering you unlimited profit potential combined with limited risk.
All you have to do is trade in the money from the price you buy your option.
So hit it at the money and buy 3 months to expiry and get time on your side and you can ride out any short term volatility - you don't have to be to fussy about timing your trading signal, so long as you are confident the price spike will fade.
Exhaustion gaps are one of the best if not best chart formation to trade, as they reflect extreme emotions that normally fade within a very short period of time.
You don't get to many exhaustion gaps in forex, because it's a 24 hour market and they really only come over the weekend on the open of Far East trading after the weekend.
A Chart Formation for Big Profits
Human nature never changes and short term price spikes will continue to reoccur as greed fear, drive prices. They never last long and if you use gaps and exhaustion gaps in particular, you will have one of the most reliable chart formations to trade.
Forex Charting in Stock Market Exchange
Forex charting is popular. These charts provide investors with readings from the stock market progresses. Investors' odds in stocks improve, since the readings show them the changes in the high/low. The investors use these results to know when the best time is to bet/ask, trade/sell, etc.
You have a selection of Forex charts, which may include the Web and Java charts. With the Web charts, it supplies the investors with specs. Often they receive details from various stock markets streaming from different banks around the globe. These banks have a big institutional bank, which is located in New York. London banks, Irish banks, Hong Kong and other banks link to the headquarters in Stock or Forex marketing.
Charts will supply the investors with valuable tools. This technology arranged software programs would give accurate readings. Some of the programs will read out rate of changes, stochastic, (Random probabilities), Bollinger Bands, Common Deviations, and so on.
Some of the readings, such as Bollinger's are an indicator. This indicator enables the investors to evaluate volatility and prices on a timeline. Indicators make up bands that rotate, moving toward averages in the stock exchange to the center of Forex Charts. The bands at the crown of the charts deviate, the stands (SMA) to sum up, while the low bands will subtract these stock deviations. Clearly, investors must know how to read instabilities in the stock as well as learn how to read pricing. This will help investors at the buy/sell, trade, ask/bid, etc stages.
Change rates permit the investors to track all percentages. Sometimes the oscillator moves back and forward, fluctuating. This means that at the time the market reaches "subzero" additional changes may occur. At this time Forex, stock investors can read the results to see positive/negative results. Each result will display high/lows in the stock market and will show divergences within Forex. When the lines cross over the subzero mark, signals are sent that indicate to the investors when to bid.
You want to learn about these changes, charts and more when considering this stock market. Most starters must invest $10,000 to enter into the Forex market exchange. If you are new to this stock market, then be sure that you become well informed before opening an account.
The advantage that Forex stocks provide that stock market exchange do not is that when the markets are low you still have a chance at winning. This is because you are betting on currencies amidst countries, which these currencies may change at any given moment. Currencies pair, which may include EUR/USD, or JYP/USD, USD/JYP, and so on, which you need to has an understanding of these currencies to know when to bid/ask, trade/sell etc in Forex stock exchange.
Forex Charting in Stock Market Exchange
Forex Charting in Stock Market Exchange
Author: Martin Lukac Author Ranking Gold Featured Author | Posted: 09-04-2007 | Comments: 0 | Views: 25 | Rating: (50) Article Popularity - Green (?) Got a Question? Ask.
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Forex charting is popular. These charts provide investors with readings from the stock market progresses. Investors' odds in stocks improve, since the readings show them the changes in the high/low. The investors use these results to know when the best time is to bet/ask, trade/sell, etc.
You have a selection of Forex charts, which may include the Web and Java charts. With the Web charts, it supplies the investors with specs. Often they receive details from various stock markets streaming from different banks around the globe. These banks have a big institutional bank, which is located in New York. London banks, Irish banks, Hong Kong and other banks link to the headquarters in Stock or Forex marketing.
Charts will supply the investors with valuable tools. This technology arranged software programs would give accurate readings. Some of the programs will read out rate of changes, stochastic, (Random probabilities), Bollinger Bands, Common Deviations, and so on.
Some of the readings, such as Bollinger's are an indicator. This indicator enables the investors to evaluate volatility and prices on a timeline. Indicators make up bands that rotate, moving toward averages in the stock exchange to the center of Forex Charts. The bands at the crown of the charts deviate, the stands (SMA) to sum up, while the low bands will subtract these stock deviations. Clearly, investors must know how to read instabilities in the stock as well as learn how to read pricing. This will help investors at the buy/sell, trade, ask/bid, etc stages.
Change rates permit the investors to track all percentages. Sometimes the oscillator moves back and forward, fluctuating. This means that at the time the market reaches "subzero" additional changes may occur. At this time Forex, stock investors can read the results to see positive/negative results. Each result will display high/lows in the stock market and will show divergences within Forex. When the lines cross over the subzero mark, signals are sent that indicate to the investors when to bid.
You want to learn about these changes, charts and more when considering this stock market. Most starters must invest $10,000 to enter into the Forex market exchange. If you are new to this stock market, then be sure that you become well informed before opening an account.
The advantage that Forex stocks provide that stock market exchange do not is that when the markets are low you still have a chance at winning. This is because you are betting on currencies amidst countries, which these currencies may change at any given moment. Currencies pair, which may include EUR/USD, or JYP/USD, USD/JYP, and so on, which you need to has an understanding of these currencies to know when to bid/ask, trade/sell etc in Forex stock exchange.
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Martin Lukac, represents http://www.RateEmpire.com, an internet consumer banking and mortgage marketplace, is a destination site of personal finance, investing, taxes and mortgage rates. Rate Empire provides mortgage guides and financial rates and information. Rate Empire also operates a financial portal http://www.1ahl.com and http://www.1AmericanFinancial.com
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Many forex traders think technical analysis is akin to some kind of science where prices move to some mysterious theory but they don't, they are a direct result of human nature. If you understand the formula enclosed and its significance, you could soon be making some big forex profits.
Prices move to this equation:
Fundamentals (supply and demand facts) + Trader perception of = Price
The news and supply and demand factors are important but it is human perception of them that makes the price. We all have the same facts to look at - but you, me and millions of other traders all have our own views and this mass view, equals the price.
Human nature is constant - we are not creatures of logic though, we are creatures governed by emotions. The emotions that dominate in forex trading and can be seen on a chart are: Hope, greed and fear.
Forex charts are not a science as many technical traders would have you believe, humans don't conform to a scientific theory - but we do as a mass create high odds chart formations, as a direct consequence of our emotions. Our trading psychology repeats and will continue to repeat, as human nature NEVER changes.
Trends tend to reflect the long term supply and demand for the currency and can last for weeks, months or years and are easy to spot on a forex chart. Of course, any currency reflects the underlying health of the economy and economic trends last a long time.
As humans though, we have a tendency to push prices too far (both up and down) and these price spikes are pure emotion. Prices always return to fair value from these spikes and the fact there temporary means - They can be spttted and traded for profit.
Fact:
Markets collapse when they are most bullish and rally when they are most bearish - this is human nature at work.
Price spikes can be traded for profit and they don't just occur in long term time frames, they also occur in shorter periods within the main trend and traders will try and swing trade these overbought/ oversold scenarios.
Forex charts are a great way to trade because, you see the reality as it is - the fundamentals are taken into account and more importantly, all trader's perception of them.
A technical analyst doesn't care how or why prices move, he just wants to make profits when they do!
Charting as we have said is an odds game not a game of certainties - its an art and you have to learn the right formations and how to time your trading signals; this comes with practice and anyone can learn to use them. Furthermore, when using charts you only need a simple system based upon support and resistance and a few timing indicators and that's it. In forex trading, simple trading systems work best, as they are robust and have fewer elements to break than complicated ones.
So if you want a great way to trade forex markets get your charts out and start practicing your art, it could make you big profits and bring you currency trading success!
Forex Charts - Deadly Errors You Need to Avoid to Win Big
If you want to win at forex trading then using forex charts and technical analysis is a great way to do it. Forex charting is easy, time efficient and works yet; traders still make basic errors that cause them to lose.
Let's look at the errors made and why you need to avoid them.
1. Forex Charts Predict
A common mistake, traders think they need to predict to win - but of course this is simply hoping or guessing and is destined to see you lose.
If you use charts the correct way, you trade on the reality of price change and trade it, you don't predict.
There is a big industry in forex trading that says prices move to a scientific theory and you know what will happen next - but of course if prices did move to science, we would all know the price in advance and there would be no market.
Don't believe any of the prediction nonsense - trade the reality of price change i.e if a price comes to support, don't predict support will hold, wait for it to move the other way and trade the fact it has held.
Another great way to trade is to trade now breakouts to new highs or lows - it's a proven fact that most big moves start from these breaks, so make breakouts part of your forex trading strategy.
2. The More Inputs the Better
5 or 6 indicators must be better than 1 or 2 - totally wrong!
The more inputs the more chances are the system will break.
Simple forex trading systems work best and always have.
All you need is support and resistance and a few indicators and your all set.
3. Using Invalid Data
You need to use technical analysis on valid data, where you can get the odds in your favour.
Do not try and use forex day trading or scalping systems the data is to short to be traded. All volatility is random and you can't use it, so don't - Either forex swing trade or trend follow.
4. Using Indicators in the Wrong Way
Many traders do this.
They use lagging indicators such as moving averages to enter price, or Bollinger bands are stops. This is not what they were intended to do!
Use an indicator for what it was intended and understand its limitations.
5. Curve Fitting
To succeed with forex charts we have said you need to keep your system simple and if you do, you will avoid another common mistake curve fitting.
Today with powerful software packages, it's tempting to back test and bend the rules to fit the data to make a profit - this is also known as curve fitting.
If you do this, the system will collapse in real time trading, as no two segments of data repeat themselves in the same way again.
To avoid curve fitting - keep it simple and make sure the rules you use to execute your trading signal are the same for all currencies and all market conditions.
A Simple Route to Profits
Forex charting is essentially simple - You need to use support and resistance and a few confirming indicators and to trade the reality of price change either, with breakouts or shifts in price momentum near support and resistance tests.
If you do the above, you can build your own forex trading system in about a week and you could soon be making profits, big ones, in less than 30 minutes a day.
Pricing for Profit in Your Small Business
Most businesses operate with the idea that profitability is a natural occurrence or that the challenge of developing profitable products or services is so simple that there is never a need to review pricing processes.
Often times I hear business owners, CEOs and even CFOs touting their business success due to profitable performing products and services where I often wonder what their true understanding of pricing is as it relates to profitability.
Sure all business wants to be profitable and all business believes they are actually profitable, but there is a large percentage of businesses out there that do not understand the concept of profitable products or services.
A truly profitable product or service must at least breakeven in preparation for profitability. Understand that the most common definition of breakeven is the point at which a product or service does not win or lose.
In other words, a product or service that has the ability to breakeven actually has no loss or gain either way. We need to understand how to add the percentage of profitability onto the known breakeven number which is where we will really get our profit.
The term of breakeven is also often used in production and fabrication where one can determine the number required to be produced to breakeven.
For example, if I were a manufacturer of joist hangers, I would want to know how many joist hangers I need to produce to cover my raw materials costs otherwise known as breakeven, where all the joist hangers I produce after that known number would be profit.
Contractors are a good example here where most contractors will factor in all of the raw materials costs of each project and add what they believe is an acceptable percentage of profit.
The error here is that contractors mistakenly factor in their labor costs into what they believe is their profit margin when at the end of a project they really don't profit what they think they should because the project took too much time to complete via labor expenses.
Unfortunately for most contractors and most businesses, that perceived percentage of profit that is added to the raw material figure is in fact just a perception of what they believe to be profit.
Smaller contractors and smaller businesses that operate as sole proprietors and are in fact truly operated by one person, really don't have to worry about the actual calculation of breakeven and proper pricing as much as the other businesses.
The key to proper pricing for profit is to capture three important parts of the pricing equation. The first being direct costs. Those are costs that you pay for in order to sell what you sell.
For example, if I am a cabinet maker I will have to buy the wood, the screws, the nails, the wood glue etc in order to produce a cabinet. Those are my direct costs. Some might define this as plain old inventory.
Next I will have to factor what is known as indirect costs such as other expenses that directly relate to the production and sales of those cabinets. I can also take into consideration those expenses that I also incur as a result of delivery and installation of the finished product such as labor, fuel, parking fees, etc.
In large scale manufacturing some businesses incorporate what is known as Activity Based Costing (ABC), where every aspect of production that is involved in the production of a product is taken into account and recuperated in the price of the product.
As a small business, I do not recommend trying to recuperate every aspect of your costs where sometimes we may price our product out of range of our consumers. This process of recovering costs in the price of our product is dangerous if not managed properly.
There are only certain expenses you can recover in the price of your product without making the price of the product so high and out of reach that no one will buy your product.
For example, as the cabinet maker we do want to recover the cost of installation via labor on each cabinet installation where we cannot recover the advertising expenses that got us that client in the first place. Advertising is a normal expense of business.
If we go back to the example of producing joist hangers, we will want to recover the cost of the sheet metal along with the cost of each employee that actually works on the production of joist hanger. This is another example of Activity Based Costing.
Remember that there is a difference between direct cost and indirect costs. Direct costs are those raw materials costs and indirect costs are those expenses we spend to make the products we make.
Direct costs and indirect costs now only gives us two of the three parts needed to properly calculate pricing. Next we need to figure out our overhead costs, or our overhead percentage rate.
This part is simple where all we need to do is divide our indirect costs into our direct costs which will give us a percentage. The trick here is to capture the appropriate amount of indirect costs. Remember, indirect costs are those additional expenses that allows us to produce the products or service we offer.
Based on previous articles I have published, we should be familiar with our income statement which will give us the number we are looking for when we try to find our indirect costs. As mentioned earlier, our indirect costs are those expenses that we incur to produce our product or service.
Increase Profits by Marketing to Existing Customers
Business owners want more leads, more customers, more sales. It sounds logical: attract more customers and more sales will follow, leading to increased profits. But is this the best way to maximize profits? Sometimes it’s difficult to see the forest for the trees.
What about the customers your business already has?
It can cost up to seven times more to acquire a new customer than it can to sell more to an existing customer. Yes, generating leads is important, and attracting many new customers may lead to fast profits. But looking after your existing customers, providing quality service and developing a long term relationship will allow you to tap into an ongoing profit source.
Marketing is the most powerful tool for attracting customers, and search marketing techniques can pinpoint the preferences of your target market using data from search engines. Knowing what your market is thinking is the key to generating fat profits. Online strategies are vital to uncovering the potential of your business. Once you have found your niche and have a sophisticated marketing strategy in place, you need to systematize your business to achieve automation. Profit will come with satisfied customers and having the proper systems in place will ensure that customers are satisfied, employees are productive and your business is generally running on autopilot. Profit is more or less guaranteed once this is the case.
Increased profits are achieved through a step by step process where marketing and customer satisfaction are at the core of the business. While there are methods to quickly generate leads and achieve fast profits, a certain level dedication is required to create a truly successful business. There is no quick fix solution to achieve the profit and success you want.
Profitable Trend Forex System Review — Following the Trend to Profits!
by virtue of the immense volume of trades made during a trading day in the foreign exchange market, there are on any given day a number of opportunities from which traders may profit. Identifying the trend and riding it through to a profitable exit point forms the basis of John Chen's Profitable Trend Forex System. And this review will endeavor to address how successfully his system is theoretically able to accomplish this.
While there are many forex trading systems that use this same premise for trading, few are structured to give the trader the minute-by-minute trend information needed in order to profit consistently from this market. While some forex trading systems try to forecast future market movements, others concentrate on analyzing the up-to-the-moment data in order to provide traders with a profitable exit point. This is what John Chen's Profitable Trend Forex System intends to do for its users. John's system utilizes the MetaTrader4 charting software, which can be downloaded free; all the given indicators are taken from this software.
Chen has been successfully trading the forex market now for several years. He has made the claim to have never had a single losing month using his system. One fact that he discloses which may make this claim credible is that he admits his system is only 70-75% accurate. And that what he attempts to accomplish is more higher-profit winning trades while limiting his losing trades to lower amounts. In other words, he endeavors to abandon a trade promptly once it indicates that it's headed in the opposite direction of a profit in order to cut his loses. On average, he states, he's been able to accomplish this using his Profitable Trend Forex System.
Chen's forex trading system concentrates on giving the trader two very crucial pieces of information vital to any successful trade: it endeavors to identify the trend, and to join the trend with precise timing. In addition, two other important factors are also given high priority consideration: these are "stop loss" and "take profit." A stop loss is an order to cease trading when the currency reaches a certain point. The take profit mode is a conservative approach to a market upswing which results in guaranteeing a profit while at the same time limiting the downside risk of a quick collapse.
By following the precise entry and exit rules, the trader is given the two information keys to either a profitable trade or a timely exit from a potential losing trade. Money management also plays a key roll in the Profitable Trend System, and disciplined money management rules are heavily stressed. One user of the system reports that "so far it's making me money consistently." Another user exclaims that: "For me, it's a flexible and profitable system that really improved my trading."
How to Achieve What 95% of Traders are Unable to Profitable Success
Now come back to my tips how to trade Forex market:
I use 5 steps to trade Forex:
1. Identify potential new trades.
2. Provide you with proprietary bullish and bearish trend outlook for the current market.
3. Provide levels for entering a trade, closing a trade and booking profits at the end of a trade.
4. Include the Pyramiding Trading technique to help you extract maximum profits from any trended move.
5. Protect your trading capital with sound money management and stop loss mechanism.
I guest you already know about those steps. This time I will not discuss every steps in detail; except the Pyramiding trading technique, which has been the core of my trading system.
- What is Pyramiding technique ?
Pyramiding trading is the process of using profit generated from an existing position to acquire additional positions. This results in a "doubling" of your position during each pyramid iteration to rapidly achieve exponential gains. Pyramiding trading technique help you extract maximum profits from any trended move.
Some said "Pyramiding: A Risky Strategy"
Let me explain more about this one: Pyramiding is adding to positions as price moves in the desired trend direction. Pyramiding is a highly aggressive trading strategy suitable for professional traders who know how to control risks and have the discipline to execute a tested plan consistently.
Reward/risk tradeoffs quickly turn against the pyramid trader when the price trend reverses. Because adding to positions changes the total cost of the entire position on a per-unit basis toward the last price, a quick reversal to the original entry price can result in a significant loss.
Pyramiding should be executed only according a predetermined and tested method which includes an effective stop loss or hedging technique.
- What is a hedging technique?
Hedging is a strategy designed to minimize exposure to an unwanted financial risk, while still allowing the assets involved to profit
from their investment activity. PointBreak trading system use strong hedging strategy. It means PointBreak will hedge using the same currency (100% correlation and every 1 long position will be hedge by 1 short position). This hedge aims to minimize the risk from moves with the currency pair used, thus allowing profits to be accrued from the daily movement.
Although pyramiding increases profits if the trend continues as hoped, pyramiding also increases losses if the trend reverses, so
Risk Control is key.
In PointBreak EA, risk contol is our main concern, we never overtrade our pyramiding techinique. This will ensure that PointBreak trading strategy will go smooth, giving you profit month after month.
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PointBreak EA that used Pyramiding strategy since the beginning continue to deliver very consistent profit both on our Live account
and Demo account.
Our Very Aggressive Account has profit 135% (It's 47,187.67 now - the account start at $20,000 ~ Oct 01, 2007).
Our Trial account (Very Conservative Setting) has profit more than 20% (It's 29,854.66 now, start at $25,000 ~ Dec 04 2007)
You can even login to our account & password using to check everything is correct, through this link below:
Pointbreak EA Trading Report
You can also download our LIVE account reports (using REAL money) at our performance page below:
Pointbreak EA Performance
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- When to Pyramid ?
There are just ways of pyramiding. One is to buy more or sell more just as soon as the market breaks into new territory or makes a new
high or a new low. In a fast running market, you can continue to buy or sell every few points the market moves in your favor, all depending on the stock or your method o pyramiding. A pyramiding
should always be followed up with proper and strict stop loss orders or special hedging technique above.
When you do a pyramid trade, the signal to add to positions may be triggered at predetermined price points that confirm the trend direction. Such price points might be based on volatility bands,
moving averages, a variety of trendlines, logical chart points, penetration of resistance levels, and so on.
No matter what method is used, because your profits must in all case be protected. The more profits are there on the table, the more room you can give the market to fluctuate or have its reverse moves or reactions, that is you can place your loss order further away from the market so that a natural reaction will not disturb
your pyramid. PointBreak EA divide its pyramid trade into multiple cycle to protect the profits and to minimize the risk.
For Example:
You have followed and added up on a EUR/USD market that is 100 points gain in your favor now. If the market has had a previous reaction of 20 points, it could again react 20 points without
changing the main trend, therefore your stop loss order could be 20 points under the market, because if it was caught, you would not be
losing part of your capital but only a fraction of your paper profits, while in early stages of your pyramid your stop loss order would have to be closer in order to protect you original capital.
- Pyramiding Trading Type
1. The Standard Pyramid, which is also known as the scaled-down pyramid or upright pyramid, starts with a large initial position and is followed by predetermined additions that decrease systematically in size as price moves in the indicated trend direction. For example, if the initial entry was for 10 lots, then as price moves to the next predetermined level add 5 more lots, then 3 more at the next level, then 2 more, for a total of 20 lots.
2. The Inverted Pyramid, which is also known as the equal amounts pyramid, adds to an initial position in equal share-size increments. For example, if the initial entry was for 10 lots, then as price moves to the next predetermined level add 10 lots more, then if the price continues 10 lots more, then 10 lots more, for a
total of 40 lots. Here, however, the average cost per share is much higher, such that a smaller price reversal eliminates all profit.
The inverted pyramid offers greater potential reward at the cost of much greater risk, as compared to the standard, scaled-down
pyramid.
3. The Reflecting Pyramid systematically adds to a position up to a predetermined price level, then it reduces the position systematically as the trend continues, so the reflecting pyramid is
not a pure trend following method. If the price does have a major move in the indicated trend direction, the reflecting pyramid would
result in less profit than both the standard and inverted pyramids.
4. The Maximum-leverage Pyramid keeps on adding maximum size up to the limits of accumulated profits and margin requirements. This is the
most aggressive strategy possible, and it offers the maximum potential reward, the maximum potential risk, and the worst reward/risk ratios. This pyramid must be combined with tight exit
rules, or else it is a formula for near-certain ruin.
Learn Currency Trading - How Did These Traders Make Millions After Two Weeks Training
If you want to learn currency trading and what it takes to win then you should make this story part of your essential for ex trading education. In just 14 days ordinary people with no experience learned to trade and make hundreds of millions of dollars. How did they do it?
In the nineteen eighties trading legend Richard Dennis decided to prove that anyone could learn to trade, with the right forex trading system and mindset.
He therefore gathered a group of people together who had no trading experience, who were of all ages, both sexes and of all educational standards. The group was diverse consisting of a security guard, to an actor.
He then taught them to trade forex and after 14 days gave them trading accounts.
This group made $100 million dollars in 4 years and went on to become legends.
So how did they do it -after all 95% of traders lose what made them different?
Dennis knew that the problem with traders is not so much method but mindset - they simply cannot stick to a plan and keep going when they incur losses. So although he taught them a simple method, he didn't tell them blindly to follow it, he taught them to learn it and have confidence in it.
You cannot have discipline without confidence.
Even when your confident, its hard to keep trading when the market hands you loss after loss and makes you look a fool.
It's a fact that anyone can learn to trade yet, few succeed and the reason is they either get the wrong information or simply cannot stay disciplined.
Most traders are simply unprepared for the fact that they must execute rules and stay on course when they lose trade after trade and don't believe all the rubbish you read online, about regular income and 90% accuracy - that's not the real world.
You can win at forex trading but you must be able to take losses to win longer term.
Most traders simply don't have the discipline to do this.
We don't have time to explain all the aspects of trading discipline here but it's hard to achieve but that's why traders who can trade with discipline are so successful - Dennis proved it.
The forex trading system used was simple ( essentially a long term breakout strategy) but it was the mindset he taught the traders - to stand on their own two feet, be confident and take short term losses, to seek longer term gains which was so important.
If you can learn a simple forex trading strategy, get confidence in it and apply it with discipline, you can win.
Sure its not easy, but you wouldn't expect it to be with the rewards on offer.
So if you want to learn currency trading the right way get a simple forex trading strategy and focus on your discipline and remember if you can't trade a system with discipline you don't have one!
There are big rewards to be made but your on your own and must have courage, confidence and conviction in what your doing - do that and you can enjoy spectacular currency trading success.
Currency Trading Courses - Getting One for Currency Trading Success
Many traders want to learn currency trading and the obvious place to start is with a currency trading course and there are many that are sold online - but how do you choose one? Here are some important points to consider.
1. Are The Vendors Traders?
I would say most the currency trading courses sold online are not traders and are simply marketing companies. Ignore any course that promotes itself in the following way:
- You can earn a living forex trading with no effort
- You can make a regular income
- Forex day trading or scalping works
- They will reveal secrets that no one else knows
All the above is simply hype used to sell a course and none of it has any basis in reality.
2. Track Records
The next point to look at is the track record.
If your currency trading course does present one then look for the following disclaimer if you see it - don't buy it! Here it is:
"CFTC RULE 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown".
Well if you have read that you will see a vendor can make up anything he likes in hindsight to make his currency trading course more attractive - don't be fooled its not real.
2. Guarantee
Do not ever buy a currency trading course without a guarantee of what you are getting most reputable currency courses will give you your money back if they don't deliver what they say, so make sure you have the comfort of one before buying.
3. Be Realistic and Remember
A currency trading course should not be seen as someone giving you profits but someone giving you the tools you need to apply for profits.
Vendor can only give you the tools and show you how to use them the rest is up to you and you must accept responsibility for your actions - ONLY you can give yourself success.
It's a bit like teaching someone to do anything, there will always be those that fail, those that achieve success and those that achieve massive success. The good news is - everything about learning currency trading can be specifically learned and applied, by those with the desire to succeed and a willingness to learn.
You are not restricted by body or mind only certain people can become successful sprinters and rocket scientists but currency trading is different. You don't need to be fit and you don't need intelligence - currency trading is essentially simple and does not rely on an innate gift from god.
You are going to say if that's true why 95% of currency traders fail do.
International Currency Trading - an Opportunity for Wealth for Wealth for All
Could you make money at international currency trading? The answer is yes - but you need to understand a few key points as, it's a well known fact that 95% of traders fail. So let's look at the advantages and how to avoid the pitfalls and enjoy currency trading success...
Anyone can trade - but most fail and first you need to learn currency trading the right way and get yourself a solid forex trading education.
First avoid the myths and there are plenty of them, so here are some common ones to avoid.
- Day trading and forex scalping makes money
- Following a forex trading robot with simulated track record will see you win
- You can trade news stories
- You can predict forex prices
- You can earn a regular monthly income with little or no drawdown
All of the above assumptions are wrong so avoid the myths. Forex trading is NOT easy and as the potential for profit is so high, you wouldn't expect it to be easy. The good news is anyone can build a forex trading strategy for success.
Here are some points to put you in the right direction with your forex trading system
- Keep it simple as simple systems work best and have fewer elements to break.
- Learn the system don't try and follow anyone else. You need to know what your doing to have confidence
- Base your strategy on forex charts and use the reality of changes in price to execute your trading signals
- Do NOT trade news events, these are discounted immediately and your playing catch up
- De leverage sure you can get 200:1 but 10:1 is plenty for most traders - Over leverage destroys equity quickly as your stop has to be to close
- Base your trading strategy on breakouts to start. We have written on this frequently and it's a high odds way of trading
- Be patient! Only trade sparingly, the big high odds trades don't come around often so wait for them.
Currency Trading Basics
Here we are going to look at some currency trading basics and focus on why anyone has the potential to win but why so few people do. If you understand the points enclosed you can join the elite 5% who win big.
Let me start with a rather inspiring story...
Back in the eighties, trading legend Richard Dennis believed that anyone could learn to trade with the right mindset and his partner disagreed - so Dennis conducted an experiment:
He took 14 people from diverse backgrounds, who had never traded before and taught them to trade in just 14 days - the result?
They made him $100 million in 4 years and became legends.
These were not college guys or all clever they included a security guard, a kid fresh from school and an actor so just ordinary Joe's.
So what did he focus on to make them so successful?
The first point to keep in mind in this introduction to currency trading basics is - The system he taught them was simple. If you are learning currency trading then keep this point firmly in mind - simple systems work best because there are fewer elements to break in the brutal world of trading.
Now so far so good you're saying I can do that!
Yes you can but here is the reason why Dennis succeeded, while most traders fail is this:
Most traders don't have confidence and because of this don't have discipline.
Dennis didn't just teach his students to follow him. He made them learn the system backwards and how and why it would work and gave them confidence in it, enabling them to trade with discipline.
Discipline is the one trait most traders simply cannot acquire.
They cannot execute their trading signals with discipline when there losing and stick with their system - they throw in the towel and lose.
Don't think it's easy to keep executing your trading system when it loses time after time (and it happens to all traders) it's hard very hard - but you can do it, if you have confidence, discipline and the right mindset.
Today most traders cant think for themselves, they buy worthless trading systems off the net with simulated track records, try and follow guru's or news stories and get wiped out.
You must take responsibility for your actions and know what your doing know one else can lead you to success.
Most traders fail to do this. It's not getting a currency trading system which is hard - that's easy but executing it with discipline, standing alone and trusting your judgement is the hard part.
Of course you can do it - but you must get the right forex education and adopt the mindset. Sounds easy?
In theory yes - It's hard in practice though, the good news is - anyone can learn to trade and anyone can acquire discipline, if they really want to.
If you take note of the currency trading basics enclosed, you can be a winner and put yourself on the way to maybe even a life changing income.
