Elements of a Successful Trading Plan--The Markets You Trade

Another trading plan consideration is the markets you trade. There
are about forty futures markets with sufficient liquidity to allow
prudent speculation. However, it is important to select a good
universe of markets that are appropriate for your account size, risk
level and trading style.
It also important that your market universe be diversified. There are
always a number of big market moves every year, but no one knows
in advance where they will be. If you trade a diversified portfolio,
there is a greater chance that you will catch some of the truly big
moves that make for successful trading.
Another consideration in choosing a market to trade is its historical
propensity to have more big trending moves. Since the trend is your
edge in trading, you can maximize your edge by selecting the most
trendy markets. The following are some of the best trending markets
in various trading sectors.
The currencies are the best trending sector. The currencies to trade
are the Swiss Franc, the German Mark, the Japanese Yen and the
British Pound.
Interest rate futures are also good trending markets. T-Bonds
represent long-term interest rates and Eurodollars are for short-term
interest rates.
In the energy complex, Crude Oil, Heating Oil and Natural Gas are
good trading vehicles.

In the food sector, Coffee, Orange Juice and Sugar are
recommended.
In metals, you can trade Gold, Silver and Copper.
In agriculturals, Corn, Oats, Soybeans and Cotton are the best.
Now you have the outline of an overall plan to trade commodities.
The key to success is to test whatever strategy you intend to apply
before you trade with it. Remember that the conventional wisdom
that you read in books is mostly ineffective. When applied
consistently, most trading methods don't work.
You can't test your plan unless it is specific. The rules must be
precise and objective. Having a thoroughly tested plan is crucial to
maintaining the confidence necessary to keep trading the plan
through the inevitable losing periods that every good system and
every good trader must endure.
The reliability of non-computerized testing is highly suspect. Using
computer software that tests a particular approach or a variety of
approaches is preferred. You must learn the correct way to test and
evaluate trading approaches.

Elements of a Successful Trading Plan--Let Profits Run

The next part of the plan involves a more pleasant alternative: when
to exit a trade that is profitable. The cardinal principle involved is Let
Profits Run. In other words, stay with your profitable trades as long
as possible because the trend is likely to continue and make your
profits even larger.
Again, this is easy to understand but not so easy to do when real
money is involved. The difficulty is that although your profit may
become much larger if you stay with a trade, it may also decrease
and even disappear. Human nature is such that it values a sure
profit much more highly than the probability of a much higher profit.
Thus, traders are inclined to take their profits too soon. This can be
fatal to long-term success because big profits are necessary to
overcome the inevitable collection of small losses.
There is a good way to let profits run while still guarding against the
possibility that prices will turn around and take away much of your

accumulated profits before the trend actually reverses. It is called a
trailing stop. You include in your plan a method for moving an exit
point along some distance behind your trade. As long as the trend
keeps moving in your favor, you stay in the trade. If the market
reverses direction by the amount of your trailing stop, you exit the
trade at that point. You would also offset your trade and reverse
position if the trend reversed.
One way to set a trailing stop is to protect a certain percentage of
the accumulated profit. That will always insure that you keep some
profit on a good trade.

Elements of a Successful Trading Plan--Getting Started

The first element of any trading plan is the amount of capital you
intend to invest. This is up to you, but you should understand that
there is a direct relationship between the amount of capital you
commit and your probability of success. The more you invest, the
greater is the likelihood that you will make money.
What is the minimum advisable amount to start with? Most
professionals agree that it takes a minimum of $10,000. If you try to
trade with anything less, what happens to you will be luck. You won't
have the capital necessary to apply proper risk management
principles.
An important thing to keep in mind when deciding how much to
commit initially to commodity trading is that the amount you invest
must be "risk capital." Risk capital is defined as money you can
afford to lose without affecting your standard of living. It should also
be money that you feel comfortable risking. Think of your commodity
account as an investment in a business. Many businesses fail.
That's life. Make sure you won't be so afraid of losing money that it
will affect your ability to make correct trading decisions.
The next part of your trading plan involves how you will make your
actual buying and selling decisions. Under what conditions will you
enter trades? When will you exit your trades? What markets will you
trade?
There are four cardinal principles which should be part of every
trading strategy. They are: 1) Trade with the trend, 2) Cut losses
short, 3) Let profits run, and 4) Manage risk. These building blocks
are so basic and important that I have written a whole book about

them. You should make sure your strategy includes each of these
requirements for success.

Learning To Trade Correctly

One way to learn how to trade correctly is to find a successful trader
and have him or her teach you exactly how they do it. However,
even if you could find such a person and even if they would be
willing to spend the time with you, it would not necessarily make you
a successful trader. You might not have the capital necessary to
trade the way they do. You would definitely not have the years of
experience they had developing their successful approach. You
might not have the personality profile necessary to execute their
style of trading.
Another way to learn is by trial and error. This is the method of
choice for most people although they probably don't realize it. The
trouble with trial and error in futures trading is that you don't always
take a loss when you trade incorrectly and you don't always make a
profit when you trade correctly. Some of the best methods generate
losses more than half the time. You can take many losses in row
applying a very effective system. On the other hand, if you are
lucky, you can makes tons of money trading quite stupidly.
Psychologists call this random reinforcement, and it makes good
trading impossible to learn through trial and error.
The most obvious and practical way to learn how to trade correctly
is to read books. Find the best books by the most respected authors
and the best traders and learn from them. While this may work in
other areas of life, it is more problematic in commodity trading.
One of the few real secrets in commodity trading is that most of
what you read in books about how to trade does not work in the real
world. Even books by respected authors are full of trading methods
that lose money when put to the test. You may find this shocking,
but almost no commodity authors demonstrate the effectiveness of
the methods they advocate. The best you can hope for are some
well-chosen examples or a few cursory tests.
Learning to trade is a combination of being exposed to ideas plus
practical experience watching the markets on a day-to-day basis.
This is not something that can happen in only a few weeks. On the
other hand, you can become a great trader even with only average
intelligence. Professional trader and money manager Russell Sands
describes the makeup of a successful trader: "Intelligence alone
does not make a great trader. Success is equal parts of intellect,

applied psychology, practice, discipline, bankroll, self-understanding
and emotional control."
Furthermore, to be successful you don't have to invent some
complex approach that only a nuclear physicist could understand. In
fact, successful trading plans tend to be simple. They follow the
general principles of correct trading in a more or less unique way.

The Trading Process

Here are some typical steps in the process of making a commodity
trade including the trader's decision-making process and the
procedures involved in actually placing the trade.
In order to make decisions about when to trade commodity futures,
you must have a source of price data. Many daily newspapers carry
some commodity prices in their financial sections. The Wall Street
Journal has comprehensive commodity price listings. Investor's
Business Daily has both price tables and numerous price charts
All experienced commodity traders prefer to look at price activity on
a chart rather than trying to interpret tables of numbers. In financial
analysis, charts are indispensable for quickly grasping the essence
of historical and recent price action.
The typical commodity chart depicts daily price action as a thin
vertical bar which indicates the day's high and low by the top and
bottom of the bar. The opening and closing prices are shown as tiny
dots attached to the left and right side of the bar. A typical daily
price chart can show up to six months of price action this way.
It is easy to change the bar's time frame from days to weeks or
months and thus show from two to twenty years of historical price
action in the same format. For short-term trading you can change
the bar's time frame to hours or even minutes.
Looking at such bar charts enables a trader to see the recent trend
of prices--whether up, down or sideways--in whatever time frame he
chooses. Following the current trend of prices is a cornerstone of
successful trading.
There are a number of ways to obtain the price charts a trader
needs to analyze the markets. You can make your own using graph
paper. This sounds rather primitive, but some experts recommend it
as a good way to put yourself in close touch with price activity and
monitor risk.

Another source of charts is the printed chart service. There are
about half a dozen of these. They typically mail a booklet of
numerous charts covering all the tradeable markets after the
markets close on Friday. There is space on the charts to update
them daily during the following week until next chart book arrives.
These printed chart books normally have a number of indicators
plotted along with the price action and contain a wealth of additional
information.
For computer owners there are many software programs that create
fancy charts on the computer screen. You can input the price data
manually or, via telephone modem, download comprehensive data
after the markets close for the day. Those with larger budgets can
install a small satellite dish and watch price changes in all the
markets nearly instantaneously as they occur. The software creates
charts dynamically on the computer screen as each trade takes
place on the exchanges. You can put many different charts on the
screen and thus watch numerous markets all around the world in
real time. The cost can range from a few hundred to $1,000 a month
depending on the software and the number of exchanges you
subscribe to.
It is easy to believe that computers can make a big difference in
trading success. Vendors of expensive software will tell you that
since other traders, who are your competition, have expensive
computer setups, you need one too. This isn't really true.
Those who can't trade profitably without a computer probably won't
be helped too much by using a computer. It may actually be
detrimental by causing an increase in trading frequency. While a
computer will not make a bad trader into good one, they are fun to
use, and they do make a trader's life easier.
There are two primary analytic methods for deciding when to take a
futures position: fundamental analysis and technical analysis.
Fundamental analysis involves using economic data relating to
supply and demand to forecast likely future price action. Technical
analysis involves analyzing past price action of the market itself to
forecast the likely future price action.
While there are differences of opinion about the relative merits of
the two approaches, almost all successful traders emphasize
technical analysis. There are a number of reasons for this. First and
foremost is the difficulty of obtaining accurate fundamental data.
While various governments and private companies publish statistics
concerning crop sizes and demand levels, these numbers are gross

estimates at best. With the current global marketplace, even if you
could obtain accurate current information, it would still be impossible
to predict future supply and demand with enough accuracy to make
commodity trading decisions.
Technical analysts argue that since the most knowledgeable
commercial participants are actively trading in the markets, the
current price trend is the most accurate assessment of future supply
and demand. If someone is correct that for fundamental reasons,
prices will likely move up strongly in the future, the commercial
participants who have the greatest knowledge and influence on the
markets should certainly be moving the price upward right now. If
price instead is moving down, a lot of very knowledgeable people
must think price in the future will likely be down, not up.
For this reason, almost all successful speculators learn to follow
price action and not try futilely to predict turning points in advance.
They seek to trade in tune with the large participants who move the
markets.
In his classic book, Technical Analysis of the Futures Markets,
famous analyst John Murphy summarizes the rationale for technical
analysis: "The technician believes that anything that can possibly
affect the market price of a commodity futures contract--
fundamental, political, psychological or otherwise--is actually
reflected in the price of that commodity. It follows, therefore, that a
study of price action is all that is required. By studying price charts
and supporting technical indicators, the technician lets the market
tell him which way it is most likely to go. The chartist knows there
are reasons why markets go up and down. He just doesn't believe
that knowing what those reasons are is necessary."

The Risks of Trading

Before becoming too excited about the substantial returns possible from commodity trading, it is a good idea to take a long, sober look at the risks. Reward and risk are always related. It is unrealistic to expect to be able to earn above-average investment returns without taking above-average risks as well.

Most people are naturally risk averse. They don't like to take big risks, especially financial risks. Perhaps you can relate to the point of view of humorist Will Rogers: "I am not as concerned about the return on my money as I am about the return of my money."

Commodity trading has the reputation of being a highly risky endeavor. It is true that a high percentage of traders eventually lose money. Many people have lost substantial sums. There is a famous old line about the best way to make a small fortune trading commodities . . . start with a big one.

However, commodity trading's reputation as a highly risky activity is somewhat undeserved. Think of yourself walking into a gambling casino in Las Vegas or Atlantic City. You decide to play roulette. The table has a $5 minimum bet and a $5,000 limit, which happens to be your total bankroll. If you place a $5,000 bet on red, you should not be surprised if you immediately lost your $5,000. On the other hand, if you made only $5 bets, you could play for a long time and probably not lose very much at all.

Commodity trading is the same in the sense that the individual is the one who decides how he wants to operate. He can make large bets or small ones. One can trade commodities carefully and risk as little as $100 or $200 on a trade. You could trade a long time this way and only lose a few thousand dollars. However, most people are not that patient. The unfortunates who lose big are those who can't control themselves. They take big risks in an attempt to get rich quick. Another way to lose big is blindly to turn your money over to others to trade such as brokers or money managers.

One of my favorite quotes about trading comes from trading psychology expert Mark Douglas. As he points out, most of us are not as willing to take financial risks as we think: "Most people like to think of themselves as risk takers, but what they really want is a guaranteed outcome with some momentary suspense to make them feel as if the outcome had been in doubt. The momentary suspense

adds the thrill factor necessary to keep our lives from getting too boring."

Anyone who is going to try speculation should be fully aware of and be comfortable with the risks involved. Managing the risks of trading is a very important part of any trader's success. Although the risks can be managed, they can never be eliminated. Remember that the high returns successful speculators can earn are available only because the speculator is being paid to take risk away from others.

When a commodity trader buys a futures contract, he will lose if the price declines. His risk is theoretically limited only by the price of the commodity going to zero. If he sells, he will lose if the price goes up. The risk is theoretically unlimited because there is no absolute ceiling on how high the price of the commodity can go.

In practice, however, the trader can offset his position when the trade is going against him to limit his loss. While a prudent trader always has a plan to limit his losses when trades don't work, it is not possible to guarantee a particular loss limit amount. As a practical matter, however, you can usually limit losses to within a few hundred dollars of an intended amount. Very often losses are within $100 of the amount you project. Only when very unusual things happen suddenly can losses balloon to thousands of dollars more than you expected.

A good example of this was what happened to many traders in stock index futures just before the Gulf War started in 1991. In The New Market Wizards by Jack Schwager, respected money manager Monroe Trout describes his ordeal: "January 9, 1991 was the day that Secretary of State James Baker met with the Iraqi ambassador in an effort to avert the Gulf War. At the time there was a reasonable degree of optimism going in to the meeting. Addressing the press after the meeting, Baker began his statement with the word 'Regrettably.' A wave of selling hit the stock and bond markets. I lost about $9,500,000, most of it in about ten seconds." Trout was holding 700 S&P futures contracts at the time.

One of the trading systems I was using during that period was a day trading system for the S&P. Although on most days that system didn't trade at all, it was unlucky enough to be in a long position that morning. I remember watching Baker's news conference and the S&P price action at the same time in my office. Even though I had a

$500 stop-loss in the market, my system lost $5,500 per contract on that day's trade because the market's liquidity evaporated so rapidly.

The S&P stock index is the most expensive market to trade, and those with accounts less than $25,000 should probably not be trading it at all. Therefore, this once in-a-decade event would have cost about twenty percent or less of a reasonably capitalized account.

Other kinds of surprise situations that can cause unpredicted losses are freezes, floods, droughts, government currency interventions and crop reports. With attention and foresight a trader can sidestep these risky situations. The best way to control unpredictable risks is to trade conservatively so larger-than-expected losses are still only a small percentage of the total account.

Another thing to understand about risk in trading is that you cannot avoid losses by careful planning or brilliant strategy. Numerous losses are part of the process. In The Elements of Successful Trading, Robert Rotella puts it this way: "Trading is a business of making and losing money. Any trade, no matter how well thought out, has a chance of becoming a loser. Many people think the best traders don't lose any money and have only winning trades. This is absolutely not true. The best traders lose a lot of money, but they eventually make even more over time."

There is no point trading commodities if you cannot handle the psychological discomfort of making losing trades. While people tend to take losses personally as a sign of failure, good traders shrug them off. The best trading plans result in many losses. Because of the amount of randomness in market price action, such losses are inevitable.

If I haven't scared you away so far, let's take a closer look at what successful commodity trading is all about.

Things to Know to Deal With Foreign Currency Exchange

The main purpose of the foreign currency exchange market is to make money but it is different from other equity markets. There are various technical terminologies and strategies a trader must know to deal with currency exchange. This article will give an insight into the normal operations in the foreign currency exchange market.

In the Currency Exchange market the commodity that is traded is the foreign currency. These foreign currencies are always priced in pairs. The value of one unit of a foreign currency is always expressed in terms of another foreign currency. Thus all trades incorporate the purchase and sale of two foreign currencies at the same time. You have to buy a currency only when you expect the value of that currency to increase in the future. When it increases in value, you have to purchase the currencies you have bought to make your profit. When you buy or sell a currency then the trade is called open trade or in open position and can be closed only when you sell or buy an equivalent amount of currency.

You must also understand how the currencies are quoted in the currency exchange market. They are always quoted in pairs as USD/JPY. The first currency is the base currency and the second one is the quote currency. The quote value depends on the currency conversion rates between the two currencies under consideration. Mostly the USD will be used as based currency but sometimes euro, pound sterling is also used.

The profit of the broker depends on the bid and the ask price. The bid is the price the broker is ready to pay to buy base currency for exchanging the quote currency. The ask is the price the broker is ready to sell the base currency for exchanging the quote currency. The difference between these two prices is called the spread which determines the profit or loss of the trade.

The bid and ask prices are quoted in five figures. The spread is measured in pip which is defined as the smallest change in price based on the current conversion rates of the currencies under consideration. For USD/JPY if the bid price is 136.50 and ask price is 136.55 then spread is 5 pips and you have to recover the five pips from your profit.

Margin used in the foreign currency exchange terminology refers to the deposit that a trader makes to his account to cover any losses expected in the future. A high degree of leverage is supplied by the brokers to traders for currency exchange. The ratio is 100:1 normally. The brokerage system will calculate the funds required for the current trade and will check for the availability of margin before executing any trade.

Currency Exchange Agencies in the UK

Traditionally it was the High Street Bank that was used to transfer currency abroad. Their reputation was second to none and generation after generation used them to Transfer Money Abroad. However in our competitive world we have seen Building Societies command more of the banking market by issuing 'bank accounts'; and also Currency Brokers who originally were formed to transfer large amounts of currency in moments for the Forex Trade Market, have now engulfed the transfer of large funds by being able to beat the processing costs of High Street Banks.

Currency Brokers as do High Street Banks buy their Foreign Currency at wholesale prices. But the one redeeming factor in the brokers favour is the percentage of profit added to each deal. The banks tend to add between 3% to 4%; whereas the Currency Broker will add up to 1%.

For the unsuspecting client this can be all confusing. When the High Street Banks are offering 0% commission why aren't they the best option? There isn't a simple explanation other than saying that over the past 4 decades a commission payment for the transfer of currency has been the normal process. The High Street Banks play heavily on this factor; as I may say do some Currency Brokers.

But ... What we need to establish is what will our money get us when transferred? Forget the 0% commission or any other special offer ... it is the bottom line that counts. If we have £100,000 what will we get?

For those who read this article and have their reservations about using a currency broker allow me to give you a few examples:

Currency Exchange Case Study - In September 2007 Jason and Helen wanted to buy an Apline ski home in Austria. The property was valued at £295,000. They hadn't gone to the bank as they had both heard that the banks weren't always the best choice. A broker will be fully aware of what the banks charge at what rates they work with: Barclays on this day was working with an exchange rate of ¬1.35 / £1; the broker on the other hand could get ¬1.38 / £1. Using Barclays, Jason and Helen would have received ¬398,250; whereas the broker actually secured him ¬407,100 which has a difference of ¬8,850 (£6,400).

Currency Exchange Case Study - In August 2007 there was Ellie from Southampton, she was buying a property in Almeria, Spain. Her transfer was for a villa at £325,000; a superb 5 bedroom villa with sea views. Her bank had frightened her with the exchange rate, so she decided to look elsewhere; fortunately she came to a Currency Broker's website. She was offered an exchange rate of ¬1.39 / £1; we were able to offer ¬1.41 / £1. This meant had she continued with the bank Ellie would have realized ¬451,750 - however fortunately the broker service could manage ¬458,250; saving Jayne ¬6,500 (£4,600)

Currency Exchange Case Study - Paul and Debbie from Bootle in Cheshire had taken 9 months to purchase a villa in Pescara in the Abruzzo region of Italy for ¬650,000; January 2008. Sadly when a house purchase takes so long there can be fluctuations in the currency rate, and on this occasion it wasn't in Paul and Debbie's favour. So it became even more important to save on the currency exchange. Had they gone to a bank they would have paid ¬8,100 more than what they paid a Currency Broker. They successfully managed to save them £6,090.

I hope that showing these examples have helped in your understanding. Do not be afraid to get a quote from an Online Currency Broker; they can provide testimonials should you be concerned.

Each and every step of the process is done through a traditional bank; and account is setup for each transaction and such transaction history can be supplied should you need it.

Forex Secrets. Delusion No1. Forex Currency Rate and Economic Factors Impact on Exchange Rate

The delusion conceptually propounds that intraweek and intraday FOREX currency quotes movement is governed by either improvement or by deterioration of the state’s economic situation. But in reality, even in case the actual Forex news are superior to the estimated one, the FOREX quotes up/down movement is of 50/50 probability.

This statement is thoroughly important. Once the job of Forex trader is gambling on FOREX exchange rates differential (FOREX pairs up/down movement), the following is to be realized to obtain faultless profit:

FOREX pairs pricing mechanism (say at point X where you are completing the market analysis)

Factors imparting growth/decline to FOREX rates (up/down from point X).

Thus, having understood the FOREX ratesfactors effective at the extra-exchange (book-maker) FOREX market and the given currency motive factors, a trader must possess distinct knowledge of whether to buy or to sell the given currency pair.

So, what are these factors?

FOREX student suggest unambiguous interpretation of factors responsible for the price formation and the fluctuations there of:

Forex rate constitutes a demand-supply balance for a given goods (currency).

Any violation of this balance, (for instance, in case where the estimated news is in disagreement with the issued official one), results in the FOREX rates reciprocation in chase of a new demand-supply balance. Poor demand brings about decline in a certain currency rate, with a high demand leading to the growth of the latter. The situation continues as long as the currency buy/sell demand comes to balance at another level or at another point.

Referring to the B. Williams (“Trading Chaos 2” Chapter 1 “The market is what you are thinking of it”):

Each world market is dedicated to distribute or share limited amount of something… among those desirous to obtain it most of all. The market affects it by way of finding out and identifying the exact price? Underlying the buyer’/sellers’ power absolute equilibrium point.

The above point is readily established by stock, futures, bonds, FOREX and options markets, be it either via an open auction or by virtue of a computerized facility. Markets spot this point prior to any misbalance being detectable by You or by me or even by traders at the exchange floor.

With this scenario holding true – and it really does – we are in position to jump at certain simple yet important conclusions as regards the information being circulated through the market and enjoying doubtless acceptance”.

Thomas Demark was more laconic in “Technical analysis - an emerging science”:

“Price movement is governed by demand and supply. Should demand exceed supply, there’s a price rally and if visa versa, there’s a price decline. All economists do share these underlying principles”.

Hence, the role of fundamental analysis for FOREX market is readily apparent.

In scholar fiction one will discover roughly the following explanation, persistently wandering from book to book, from site to site and suggesting attaining successful trading at FOREX market by way of scrutinizing the country’s economic fundamental data, viz. by tracking the factors reflective of the country’s economy condition as below:

State economy condition dynamics indicators (GDP, trade & payments balance, current account, industrial production, etc. It is knowledge, that the higher the above indicators – the faster the economic and the currency price growth);

Stock indices, via average arithmetic index of the country’s securities market condition and dynamics. E.g.: 0.3% daily DJI growth in the USA means that this certain day the shares of 30 leading US companies, being pictured by DJU, went 0.3% more expensive. By similarity, DAX30 is the major German index, incorporating the price of shares of the country’s 30 leading companies.

The country’s interest rate, since the higher the rate, the greater number of investors is eager to invest into the country’s economy and hence into national currency strength.

Rate of inflation (the higher the rate, the quicker the National Bank will hike the interest rate). With this assumption, the CPI constitutes a key factor.

Money supply growth in domestic market, which fact brings about the inflation, leading to the interest rate hike.

The country’s gold and currency reserve assets.

Variation dynamics correlation of: balances of payment, trade balance, state budget, gross domestic product (GDP), etc.

Trade and industry dynamics (industrial production, industrial orders, DGO, capacity utilization, retail sales, etc.)

Construction statistics (construction spending, new home sales, housing under construction, building permits, etc.)

Labor statistics (unemployment rate, new jobs, etc.)

Society investigations (consumer confidence, consumer sentiment, purchase managers and service managers sentiment, etc.)

To be considered additionally are the country’s political stability and tranquility (clearly, any political, natural and other cataclysms are sure to turn investors nervous making them withdraw the investments from the country, thus weakening its national currency). And with the currency being the national economy derivative, changes in economic data will inevitably result in the above currency rate movement.

Conclusions:

Progress in economy results in the currency exchange rate rally.

Decrease in economic indicators leads to the national currency rate decline.

To sum it up, critical economic and political news (whose calendar is issued in advance and is familiar to any trader) constitute a standing factor giving rise to misbalance and causing the currency rate fluctuations.

In anticipation of important economic and political news FOREX pair crawl to the rates as inspired by the estimates (“rumored trade”), whereas upon actual news there occurs a pulse motion of FOREX pairs in accordance with the scheme below;

Forex rate grows if actual news are better than the estimated one;

Forex rate declines if actual news are worse than the estimated one.

5 Risks The Novice Forex Trader Needs To Be Aware Of

Forex trading, just like most other forms of trading, carries risks and the novice Forex trader needs to be aware of these before dipping a toe into the foreign exchange pond. Here we will consider the 5 most common risks of foreign currency trading.

1. Forex scams. In recent years the industry has done a great deal to put its house in order and today Forex scams are certainly far less common than they used to be. They do however still exist.

It is fairly easy to open a Forex trading account, especially online, and a Forex scam in its simplest form is a case of a crook setting up a website posing as a broker, inviting you to open an account and deposit money into it and then disappearing without trace.

To ensure that you do not get caught out check out any broker carefully before opening an account. Choose a broker who is associated with a major financial institution (for example, a bank or insurance company) and who is also registered as a broker. In the United States brokers will be registered with the Commodities Futures Trading Commission (CFTC) or will be a member of the National Futures Association (NFA).

2. Exchange Rates. One of the attractions of the foreign exchange market is that it can be extremely volatile with currencies moving significantly against each other in very short periods of time giving rise to fast and substantial gains. The other side of this coin however is that the market can also produce substantial and rapid losses.

Fortunately there are tools available to the trader to limit this risk, such as stop loss orders, and novice traders need to familiarize themselves with these tools and to ensure that they make full use of them whenever they enter a trade.

3. Credit Risk. Because there are two parties (a seller and a buyer) involved in every transaction there is a possibility that one party will fail to honor his or her commitment once a deal is closed. This usually happens where a bank or financial institution declares insolvency.

You can reduce any credit risk considerably by trading only on regulated exchanges which require members to be monitored to ensure their credit worthiness.

4. Interest Rates. When trading any pair of currencies traders need to watch for discrepancies between the underlying interest rates in the two countries in question, as any discrepancy can result in a difference between the profit predicted and that which is actually received.

5. Country Risk. Occasionally a government will intervene in the foreign currency exchange markets to limit the flow of its country’s currency. It is unlikely that this will happen in the case of a major world currency but could occur in the case of minor and less frequently traded currencies.

These of course are just some of the risks involved in Forex trading and novice traders will need to familiarize themselves with the others as they go along. However, a good understanding of the 5 risks detailed here is essential before you enter the trading arena.

You Must Have A Forex Trading Strategy Before You Start Foreign Currency Trading

If you are new to the world of Forex trading then, before you even think about making your first trade, you need to sit down and draw up a Forex trading strategy. The foreign currency market is one of the most exciting and lucrative markets in the world, but it is also extremely fast moving and volatile and, while you can make tremendous profits, you can also make substantial losses if you don not have a very clearly defined game plan.

There are a number of different strategies which you can adopt for trading in the currency markets and you will need to come up with a strategy that suits you. At the end of the day exactly what strategy you decide to adopt is largely immaterial but, what is important, is that have you a strategy before you start to trade.

Many traders today choose to base their strategy on a technical approach to trading while others prefer to follow a fundamental approach. Both approaches are fine but the truly successful traders will tell you that the real secret lies in not selecting one or the other but in combining the two.

Technical analysis holds that prices follow trends and that markets possess clearly identifiable patterns which can be recognized if you know what you are looking for. Both knowledge and experience play an important role in technical analysis but here it is a case of knowledge and experience of not just the patterns in the market but of working with the barrage of tools which are know available to the technical analyst.

Within technical analysis many traders like to work with what are called support and resistance levels. In this case a support price is a low price to which a currency repeatedly returns, effectively representing the bottom of the market or the price at which it supports the market. By contrast, a resistance price is the high price which a currency reaches from time to time but above which it tends to resist rising.

The importance of these two levels is that once a currency price drops below its support level it will commonly continue to fall and, similarly, once the price exceeds its resistance level it will continue to climb.

It is also common for technical analysts to make use of moving averages which show the average price of a currency over a given period of time within a longer period. This is extremely useful for eliminating short term fluctuations in a currency price and producing a clearer picture of the movement of a currency over time.

These of course are just two of the many tools available to Forex traders who are following a technical approach and there is a wide range of far more complex and powerful tools available today.

In addition to technical analysis, many traders also believe strongly in fundamental analysis which holds that currencies move in response to a wide range of factors including political events, changes in trade agreements and trading patterns, economic numbers, interest rates, employment figures and much more.

Forex Information For More Educated Trading Decisions

The concepts of Globalization have changed the forex trading dramatically over the past several years. New investment strategies and instant electronic trading now ensures high returns for the investors. Therefore it has become quite important for the traders to have authentic forex information. Internet and other electronic sources like CDs, DVDs, etc., are fast replacing the conventional resources like books, magazines, etc.
The advantages of these electronic sources are there ‘interactive’ modules and ease of navigation, which make them faster and more effective for even beginners to comprehend the information. Dynamic features like search or graphical representation of live data with two or three dimensional charts, graphs, and ‘easy to learn’ e books are presented quite attractively to help the readers in understanding the subject.
You can have online forex information on:


* Forex definitions and terms including glossary

* Market background information and the developmental stages of the trading

* Trading strategy and decision making

* Different methods of Technical and Fundamental analysis

* Controlling the risk


Forex trading has long been recognized as a superior investment opportunity and the market is expanding to the individual small or medium traders than ever before. If you are powered by the knowledge and keep yourself informed, you have huge potential for earning from the market. Internet sites offer you wide ranges of e books which are classified in different groups like: forex books for beginners, books on market in general, on market profile basics, money management, trader's psychology, strategy and even books for advanced traders for supplementing their knowledge.
Forex information in the form of articles is again an exhaustive resource. One single site may present 2000 featured articles from which you can read any depending on your needs. These articles can be on brokerage, technical and fundamental analysis, money management, general tips or strategy building etc.
There are vendors or market professionals who offer forex tips and signals, which you can have by subscribing to their services. You can have information on forex market analysis, charts and technical analysis, trading platforms, facility to open demo account, etc. Different forex forums and groups are again a very useful resource for authentic information. You may find your queries being answered by veteran forex traders and the best thing is, most of the time, these tips are free. These traders very often share useful strategies and tips that proves to be extremely helpful.
Other than these electronic resources, you can always authenticate the forex information from books and magazines. Crash courses and short term seminars organized by different universities also prove to be helpful for those who are comfortable with the conventional class room mode of learning. Another advantage of these seminars is you get your doubts cleared by the experts directly. So the buzzword is to get informed and educated before you tread into the trade.

Forex Charts - Using The ADX Indicator For Bigger Profits

If you're using charts, then you want to trade the strong trends - and the Average Directional Movement Index Indicator, or ADX, enables you to do this.

Wells Wilder developed the ADX, and outlined it in his classic book “New Concepts in Technical Trading Systems”.

Let’s look at this essential indicator in more detail - and see how to apply it on your forex charts, to give you greater accuracy when generating your trading signals.

Determining the Strength of the Trend

The ADX is a momentum indicator, which aims to measure the strength of the trend - and attempts to determine if the market is trending, or is trading sideways.

The Advantages of the ADX

A core belief of technical analysis is that a strong trend in motion is more likely to continue, than reverse. Therefore, you always want to be trading strong trends - as your odds of success are higher. The Average Directional Movement is a good indictor – and you should consider using it as part of your currency trading system.

The Technical Bit

For the boffin’s out there, here’s the technical bit – don’t worry if you don’t understand the calculation, its easy to use when visually plotted. The ADX is based on the comparison of two other directional indicators, both of which were also developed by Wilder, and they are:

Positive Directional Indicator (+DI) and the Negative Directional Indicator (-DI) to produce ADX as showed in the following formula:

ADX = SUM[(+DI-(-DI))/(+DI+(-DI)), N]/N

Where:

N: Refers to the period of calculation. The formula above produces the ADX line, which oscillates between 0 to 100 values. The +DI and -DI are both present and can be seen to make up the indicator.

You don’t need to understand the above calculation to use the indicator – you only need to accept that the indicator works.

The indicator is easy to use when it’s visually plotted - and you’ll find it included, with most of the good forex chart services.

How to Trade using the ADX Indicator

The ADX it’s not a bullish, bearish trading signal generator - and should never be used as such.

The ADX indicator simply indicates the strength of the trend - and other indicators should be used to enter, and exit trades.

Although the ADX fluctuates from 0 to 100, it rarely moves above 60.

Use the ADX in the following way:

Readings above 40 indicate the strength of the trend.

Readings below 20 indicate range trading and flat periods of consolidation.

You can use the crossing of +DI and -DI to determine the trend direction; when +DI crosses -DI upward, it’s a bullish signal, on the other hand, when +DI crosses -DI downward it’s a bearish signal.

The ADX line is a great momentum indicator and like the RSI (also developed by Wells Wilder), the ADX it will help you trade the strongest trends - and give you advance warning of changes in momentum.

The Bottom Line

If you want currency trading success, you can’t just trade support and resistance levels, and hope they hold or break. You need confirmation of momentum to get the odds on your side - and the ADX indicator will assist you.

Final Words

New Concepts in Technical Trading Systems was published in 1978, and was one of the first trading books I ever bought. Every trader should make this book a part of his or her forex education. If you want to learn forex trading the right way, get the book, and use the ADX indicator to increase your chances of making big FX Profits.

Forex Technical Analysis – 6 Simple Tips For Bigger Profits

Using forex technical analysis can and does help traders make big profits however you have to know how to use it correctly, to achieve currency trading success and that’s what this article is all about.

Let’s look at six tips to make your forex technical analysis successful.

1. Trade Valid Data

Using technical analysis on forex charts is designed to get the odds in your favour and to trade the odds you need meaningful data. Do NOT day trade – day traders never win as all short term volatility is random.

Either swing trade look for trades that last a week or long term trend follow.

2. Use Weekly and daily charts

Don’t just use daily charts - use the weekly chart as well to spot the major trends – remember in currency trading currency trends follow economic cycles and these can last for several years and they are apparent on the weekly chart.

You can then use the daily chart to time your trading signals and entry and exit points.

3. Understand Support and Resistance

All successful forex traders need to understand support and resistance and you want to look for valid levels – These are levels that have been tested several times ( at least 3 ) and preferably in two different time frames.

Try and trade these valid levels and again start with the weekly chart first and see if they line up with the daily levels – these are the very best set ups.

4. Understand Breakout Methodology

While support and resistance can hold they can obviously break as well and it’s a fact that many of the major trends in forex trading take place form new market highs NOT market lows.

Many forex traders hate buying new highs as they feel they have missed a bit of the move – while this is true these trends simply accelerate away and you should grit your teeth and enter.

5. Use Momentum to your advantage

So will support or resistance break or hold? You don’t know and you should never predict or hope you should use momentum indicators.

Whenever you enter a trade your view should always be supported by price momentum. Two of the best indicators are the stochastic and Relative Strength Index. They will help you time your trades better get the odds on your side and help you make bigger profits.

Never make the major mistake that most traders do in forex technical analysis of trying to trade without momentum if you do you will lose.

6. Keep it simple

Your system should be simple – simple systems work best as they have less elements to break and are more robust in real time trading.

You can trade successfully and make a lot of money just basing your system on the tools we have outlined above.

6. Be Patient and be disciplined

Be patient don’t trade for the sake of trading.

Only execute treading signals that your forex technical analysis system generates and don’t lose discipline and chase losses or try and hurry profits.

When you have entered a trade maintain discipline and make sure you place a stop and have a realistic target.

Our view of forex technical analysis may strike you as simplistic and it is but after trading for 25 years and trying just about every method out there we have found the above works and makes us money and maybe it can help you to.

Treat Trading Less Like a Hobby and More Like a Business

At Emerald Passport they have a video that educates you regarding the pitfalls of FOREX trading. I suggest you go to Emerald Passport and watch the video before proceeding with this article.

When Emerald Passport-educated traders, or any day traders, consider securing a new trading system for stock market trading, they stereotypically do not mull over the expenditure of ownership. But, there are numerous considerations that new Emerald Passport traders should consider when purchasing a modern piece of software, like the price tag of keeping up the software and the expense of the facts and figures the program will need to function.

The outlay for owning a trading system or charting bundle for trading the stock market can be very prohibitive. Several factors come into play when looking at the overall cost, like the type of market you trade and whether or not you plan to use end-of-day or real-time statistics. The format of the information can make a difference too. A package that requires a detailed data structure can be more costly to own. Two common formats of facts and figures for trading software are Metastock and ASCII.

There are pros and cons of using both. But since these are among the industry standards for statistics organization, and make data sellers more abundant, there is more rivalry. Evidently, it is this competition that keys the amount down. When the Emerald Passport trader mulls over a real-time service, they can end up paying much more. However, the cost may be right depending on how regularly the trader trades and the type of market he or she trades.

A trader who trades in markets such as futures, can incur a good deal of volatility and, therefore, they may want to have a real-time package where they can see the instability of instability that occur during the day in the plans of their trading. An alternate to real-time is a delayed service. A provision that delivers delayed quotes can cut the cost of the facts and figures by as much as 80% from the real-time counterpart. This can make a vast difference for traders who are just starting out and may want to use the money to trade rather than pay for real-time data.

The expense of buying a trading system can be pretty frightening for beginners and professionals alike, regardless of whether or not you are interested in stock market trading or some other market. When considering purchasing a firsthand system, should take the cost of their statistics feed into account. This sets their foot firmly on the path of treating FOREX trading less like a hobby and more like a business.

HYIP Owner Does Not Want You To Read This Easy Tactics

HYIPs bring me $8289.68 in this month. How did I get this money without work? Answer is simple: I followed my golden rules of HYIP investing. I have compiled a short list of some of the things you can do before investing into a program to make sure you get the most for your money:

#1 - Look at the main HYIP monitoring sites such as theHYIPs.net. Main aspect that you should check it is status of program. If program has status PROBLEM most likely this HYIP will be closed in next 2 days. Look at votes and comments. If it looks like a program has been cheating the ratings by voting for themselves, or it looks like they may have hired a paid voter, then stay away. Check the voters IP, maybe the cheaters were not careful and didn't use a proxy

#2 - Search all HYIP forums for the name of the HYIP. Maybe, somebody created topic about program which you want. . Look for people's opinions. Often those who have been investing in HYIPs for some time are the ones with the best insite. If you see that somebody are spamming it is sign of short HYIP. Most importantly, look for complaints of people who have not been paid.

#3 - Do a search on google. Copy small parts (1-2 sentences) of the text from both the homepage and the page with information on how they make their returns. Paste it into the google search bar with quotes around it, and see if anything comes up. A good amount of the time, google will return results that are an exact match, usually a professional traders website. Also, do the same thing with any images of people that are shown to look as though they are the admin of the program. Simply get the name of the file that the image is uploaded as by viewing the properties of it. Then paste this into the google image search. You will be amazed that a lot of the time you will see that the image is a direct copy from another site. This proves that the admin is lying.

#4 Ask the Admin for as much personal information as possible. Also, check out all the information he/she provides. If he/she gives a phone number, then give them a call. If an address is given, then check it out for authenticity by looking at online phonebooks, and other databases. The more information that is available, the less likely it is that the admin will take the chance of scamming hundreds of people out of their investments. It makes sense to email the admin and ask some questions such as: where are you located, how long have you been around, and how do you make your returns. Then compare this information with found one. The common answers you will receive are United States, 2 Years, and Forex trading. Usually if these are the answers the admin is lying to you. About 75% of all new HYIPs claim that they have been paying members offline for over a year. 99.9999% of the time this is a lie. If an investing firm is able to deal with members offline for 2 years, there usually is no need to go online with their business.

All in all, if you follow these steps you will likely be saving yourself a descent amount of money in the long run. They improve your chances of walking away with profits. This tips are not complete list. Full one of golden HYIP rules collected on http://thehyips.net/lessons/.

Proper Analysis Of The Forex Chart

In all media references, you may have heard about Foreign Exchange. Still, a lot of people have little idea when it comes to forex trading, especially reading the forex chart. People seldom realize its importance because they probably have not participated in it.

But it is actually quite easy to understand the forex chart, as long as you know what to look for. There are essentially two basic approaches for buying and selling currencies and this is where the understanding of a forex chart comes in.

First off is the Fundamental Analysis approach. This approach doesn? depend on forex charts at all. Instead, it uses economic and political factors to establish trades. Charts are essentially used just for reference regarding exiting and entering trades. The other approach is the Technical Analysis approach. This approach, meanwhile, tries to forecast the direction of prices by studying historical price movement on a particular chart. Technical analysts observe the relation between price and time.

To know how currencies are related to one another is very important. A forex chart always shows to your RIGHT, the value of the currency so one can buy a unit of the currency found to the LEFT. Recorded horizontally, time will be found somewhere at the chart? bottom alongside the price scale to the right. Price scale always stands for the currency to the east in the forward slash.

The most popular way of observing price or time movement on a forex chart is by means of the Japanese candle sticks. In order to watch price movement, one must pay attention to Japanese candle sticks. In case you don? know, a lot of traders depend on these sticks in making decisions in trading. A Japanese candle stick provides a way to examine price movement for a currency pair over a given timeframe. How much "time" each candle represents depends on the timeframe of the chart. If the chart below were a one-hour chart, each red and blue candle on it would represent the price activity for the currency pair over the course of one hour. If the chart were a daily chart, each candle would represent price activity for one day. It does not really matter what the timeframe is. You just have to remember that a candle represents price activity for the timeframe of whatever chart you are viewing.

The following are the basic parts and whatnot of a typical forex chart. The fat red section is the body of that candlestick. The lines protruding from the top and bottom are the upper and lower wicks. The bodies of the candles can be of varying sizes in a forex chart. There may also be times when there are no bodies in the chart at all. This is not something out of the ordinary. The same goes for the wicks. The wicks can be of varying sizes, or there just might not be any wicks at all. The length of the body and the wick is determined by the price range for that candle. Longer candles had more price movement during the time they were open. The very top of a candle? wick is the highest price for the currency pair, while the wick? bottom represents. When a candle is considered "bullish", this means there were more buyers than sellers during the time the candle was open.

Forex Charts - Novice Trading Mistakes

Using Forex charts is like being a ships captain at sea: Your charts can help you navigate successfully to port or you can hit the rocks and drown - the choice is yours.

It’s the same with forex charts 95% of users drown – Let’s look at common errors that novice traders make and how to avoid them.

1. Predicting Price

No one can predict price movement and if you do - you are simply hoping levels will hold.

Do this and you will be wiped out quickly the market wont reward you for hoping or guessing.

If you want to win, act on the reality and that means - trading with price momentum AFTER a test of the level you are looking at.

Trade with momentum on your side and you are trading a fact and your odds of success are increased dramatically.

If you don’t use momentum indicators in your forex technical analysis learn what they are quickly.

2. Indicators Chosen and Misuse Of Them

A common error is to use lagging indicators to enter trades such as moving averages – This really leads on from the above: A

Always use momentum indicators to enter trades and only use lagging indicators to determine levels of support and resistance.

Many indicators traders use are useless good examples are:

Fibonacci levels and cycles - they again involve prediction and simply help wipe out equity.

3. Trading Invalid Data

Day traders are the worst offenders here. They are picking a short time frame where volatility is random they can’t calculate the odds - so they lose.

4. Systems that are to complicated

Some people devise very clever systems and lose.

Fact is - in forex trading you get your reward for being right – NOT Being clever.

Simple systems are best - as they are more robust and have fewer elements to break.

5. Not understanding volatility

Do you know what standard deviation of price is? If you don’t learn it backwards as this will help you determine everything from stop levels to targets for your trades and help you stay in winning trades longer and get better money management.

6. Your edge

Ask yourself this question:

What is your trading edge which will see you win when 95% of traders lose?

If you don’t know what it is – then find out or do more work on your forex trading strategy!

If you don’t know what your edge is kiss goodbye to your equity.

7. Following a method

Many traders have perfectly good methods but simply don’t have the discipline to follow them – if you dont have discipline you have no method in the first place.

If you want to enjoy currency trading success don’t make the mistakes above or you will lose.

Finally, there are a lot of vendors on the net promising you untold riches from their currency trading systems, for just a few hundred dollars – its not that easy so don’t buy them.

Trading is hard, but for the forex trader prepared to put in the work, the rewards can be immense.

Do your homework, be realistic and you could soon be making big returns from forex charts and executing some great trading signals for big profits.

Forex Trading – Experiencing low Gains? Simple Tips to Get Triple Digit Gains

In forex trading the bulk of traders experience mediocre gains or lose - this applies to 95% of traders. However many traders are closer than they think to achieving bigger gains and the simple tips below can be incorporated in any forex trading strategy to increase returns – lets look at them.

1. Trade Less

One of the major problems that traders have is they equate trading a lot with getting more profits and they simply trade too much.

There is NO correlation between how often you trade and how much you are going to make - so the first point is cut your trading back to high odds trades only.

This means hitting the long term trends and turning points that yield the really big profits. The big trades only occur a few times each month in a currency so focus on these.

Forget day trading and scalping - the odds are not in your favour and you are guaranteed to lose so don’t try – Hit the big trends and milk them for all you can.

2. Risk More

If your trading a small account don’t diversify ( this is another word for diluting potential gains ) so risk more per trade.

If the odds are in your favour you need to increase your bet size.

You will hear a lot of traders saying you should risk 2% per trade! Well if you don’t risk much you won’t gain much – risk 10 – 20% per trade and more if you have a total conviction the odds are in your favour.

The enemy of successful forex trading is volatility and you need to have your stop far enough back that you are NOT clipped out by it and trail your stop slowly.

With reward goes risk and that’s a fact.

Most traders are so afraid of risk they create it, by having stops to close and losing.

They think they have a low risk but they may as well have not bothered trading in the first place!

3. Use Momentum

The biggest error traders make is trying to predict – If you do you will lose.

Why?

If you predict you are hoping a level will hold and the market is not going to reward you for hope.

You need to make sure that whenever you trade price momentum is on your side. This means missing a bit of the move – but as you can’t predict it’s the best you can do and it will still mean you can make a lot of money as:

You are trading the reality and always trading with the trend.

If you get 70% of the major trends you will make a lot of money.

Trading The Odds For Bigger Gains

If you like the action and the buzz of trading the above is not for you but if you are interested in increasing profits from your forex trading strategy then you will find the above is logical common sense.

You will be trading the best odds trades, risking amounts that can give you big rewards and timing your entries for maximum profit to lowest risk and this over time means big profits.

Automated Trading Systems for Financial Markets and Recommendations for Their Usage

1. Introduction. Today using information and trading platforms has become a de facto requirement for successful trading in the financial markets. Their advantages as compared to conventional trading schemes include, for example, an unprecedented speed of processing and delivery of information to end users, the level of integration with data providers, and a wide array of built-in technical analysis instruments. At the same time, an investor opening an account with a brokerage firm simply cannot simultaneously manage the real-time analysis and trade in more than 4-6 financial instruments in several markets 24 hours 7 days a week. This brings about the need to employ automatic trading systems in the form of runtime environment with client and server parts and the programs to control these systems (scripts).

2. Comparative Analysis of the Problem Area. Various software components embrace the entire target sector of the market-from analytics and forecasting to complex trade and administration. The components of a trading platform provide its clients-brokers, dealers, traders, financial analysts and advisors-just the service they need at the very moment they need it, from immediate round-the-clock access to information of concern by means of mobile devices, to multi-move trading operations in the major client terminal. The software market offers a great many of information and trading platforms that differ, first of all, in the functionality of the client and server parts, and the list of services provided by the financial company once an account has been opened. However, only a relatively small number of software solutions include the components that automate trading.

2.1. MetaTrader4-based Solutions. One of the world's most widely used trade platform products is apparently MetaTrader4, developed by MetaQuotes Software Corporation for Forex market trading. The platform includes an integrated development environment (IDE) MetaEditor, intended for writing scripts in a programming language called MetaQuotes Language, or MQL4 for short. The language's syntax is based on the classic C language syntax, and the flow logic has not been significantly changed since the previous version of the platform that used MQL II as the programming language. The new automated trade framework is, undoubtedly, an evolution of the previous one. Both languages feature good functionality, with an optimum set of built-in trading and utility functions which is quite sufficient to implement the basic operations, and a facility to define custom functions to help implement non-standard ideas. From the programming point of view, MQL4 is much more convenient that its predecessor; this language is more oriented at professional programmers, while MQL II, in my opinion, will rather suit financial experts wishing to build trading programs (or trading advisors, in the MetaQuotes terminology) of their own.

2.2. Omega Research-based Solutions. In the New World, the vast majority of companies use the Omega Research platform developed by TradeStation Securities, Inc. This platform has long ago proven its worth at the worldwide market, and to date experts consider it to be the best system for technical analysis. The provided IDE called Omega Research PowerEditor is intended to create control programs in EasyLanguage (EL). The language's major advantage that strikes the eye is the easiness (hence is the name) of placing opening and closing orders. The corresponding program instructions can be written such as if we were formulating an order to our broker in the plain human language. In MQL4, for example, placing an order to open a position would involve specifying about a dozen of various parameters. In EasyLanguage, the same can be expressed in a short statement using a few words. Working with technical indicators is about that simple, too. But don't fall under an illusion: when creating these simple commands, language developers sacrificed the functionality and limited the possible ways of using a particular function, therefore effectively depriving the IDE users of the opportunity to accurately implement their own algorithms. TradeStation decided not to create extensive libraries of built-in trading and utility functions but to limit to only an essential set. As the platform advanced, the number of functions written by both in-house and third-party developers grew, and TradeStation simply included them as user-defined functions into the repository of its scripts. As a result, the functionality offered to users is not in the least scarcer than that of MetaQuotes product. PowerEditor provides a built-in dictionary that lets user search and get help on the available functions. Another handy tool worth mentioning is the strategy builder. Using the strategy builder, the user can easily create a basic algorithm for his or her trading program, and then modify and adjust it as necessary. EasyLanguage is an old-timer and pioneer in the field of creating automated trading systems for the stock market. It was the basis for the development of MQL II. EasyLanguage will be a good choice for programmers, but still a better one for financial experts more oriented at analyzing the market than trading.

2.3. ProTrader-based Solutions. Professional financial experts can choose the ProTrader2 or ProTraderFX platform as their working tool, depending on the type of the financial market-stock or Forex, respectively. The two platforms are developed and supported by PFSoft LLC. While featuring the specially developed ProTrader Language (PTL), the provided IDE named PTL Builder offers also the opportunity to create scripts in MQLII, MQL4 and EasyLanguage. For this, the text of the program is translated to a language-independent code. Therefore, at runtime it does not matter in which language the script was written. This technology does not only enable creating new scripts, but makes it possible to use freely the entire accumulated collection of scripts that many experienced traders possess. The main idea put into the new scripting language was to ensure maximum reliability and predictability of the scripts being run. The PTL language is built so as to minimize the possibility of making a mistake in the text of a user's script-the potentially dangerous points will be detected even before the script is tested or launched. Regardless of the programming language chosen, the platform works with verified managed code while running the script. This Microsoft-developed technology enables proper handling of errors that cannot be detected before the script is run. This means the program will not fail and will not perform any unwanted operations that might be due to critical errors or damage caused by another program, for which the account holder would eventually have to pay. The PTL Builder IDE will serve well both financial experts and programmers thanks to its support of different programming languages and provided tools such as tester and debugger.

3. Approaches for Creating Automated Trading Systems and Recommendations for Using Them. It hardly needs mentioning that choosing an information and trading platform should be taken with all seriousness. For those who plan to use an automated trading system in their business, below are some points I would recommend considering, based on my personal experience.

Choosing a Working Environment First of all, define the type of tasks the automated trading system is to perform. These could be:

Actual trading: opening and closing positions in selected instrument(s). Secondary support-type functions. These could include placing protective orders, creating and sending out reports of notifications. Analyzing the market with different technical analysis tools using your own algorithm. Now, after you have studied user comments on the Internet and perhaps consulted your broker, proceed to getting the feel of the products offered. I strongly encourage you not to just have a cursory look, but to test the system for a day of two, thankfully, most of the large companies will let you sign up for a demo account for testing. Pay attention to both the convenience of the IDE and the tools that go with it, and to reliability and security of the control programs created with the IDE.

4. Conclusion. In this article, I neither discuss any programming rules for creating the advisors, nor the specifics of writing scripts in a particular language. On these subjects, there are whole books written as well as a number of articles. My aim was to present several points which I think to be quite important but which have not been sufficiently covered in existing publications. So, are automated trading systems your ally or enemy? When used carefully and without hasty judgments, an automated trading system can facilitate the financial expert's work and bring in certain profits. But when used incorrectly, incompletely tested, or having settings changed frequently, the automated trading system can lose the money you entrust to it. Remember that an automated trading system is not going to do your job for you without any effort on your part. Use it to solve your existing problems and not add new ones.