FOREX FOR DUMMIES by dude007(MMG)

Hello Everyone
Its good to see so many people getting interested in trading Forex smile.gif . I've been into forex for the past 8 months. I see a lot of newbies trying to find Help. Well I've been there n ill tell u wot i did so it might help u guys. Ill be postin helpful info in this thread so keep ur eyes open. I spent 6 months Reading and learning everything I can from the internet without paying a Dime because I am a student at University lol. I finally opened a demo account 2 months ago and started practicing and testing out over 50 strategies. Trying to copy another persons strategy is not very rewarding because everyone's style of trading n strategies are different. So u need to develop your own style and strategy from all the strategies and indicators u learn to use.
Let me try n walk through wot u need to know.
FOREX has a HUGE amount of information to learn so u will never stop learning even if u trade for 50 years. So learn to accept this and remember the following:
!!!LEARN WOT U NEED TO MAKE MONEY AND LEAVE WOT U DONT NEED TO KNOW!!!
This is wot i did:

1. EDUCATE YOURSELF
Read and understand all the basic stuff on forex ie all the free materials from the internet and how some indicators work e.g. MACD, Bollinger Bands, Stochastic, RSI, Pivot Points etc. A really good and simple place to learn them free is: http://www.fxstreet.com/education/fxstrategy.asp

2. JOIN THE FORUMS AND MAKE A NETWRK OF TRADER FRIENDS
I cant stress the importance of joining Moneytec http://www.moneytec.com/index.php & http://www.elitetrader.com/. It will help u immensely and learn things in an hour which might normally take a week to learn. It has loads of strategies n advice from other traders. It is also a great place to make a network of trader friends to help u on the way smile.gif .

3. PRACTICE ON A FREE DEMO ACCOUNT - U know wot they say PRACTICE MAKES PERFECT.
I recommend u practice all the strategies n indicators on all the 6 major currency pairs. JUMP INTO THE DEEP END n practicing on a demo account its the best way to learn forex. Always keep your eyes open and observe carefully how all the indicators work. Also flip back n forth on the time charts 1min, 5min, 15min 30 mins 1 hr, 4hrs etc n look at the trends. The BEST trading platform that i found to trade on is Metatrader 3.0 or 4.0 http://www.metaquotes.net/metatrader
Oanda http://www.oanda.com/

4. CONTROL YOUR EMOTIONS, GREED AND DICIPLINE YOURSELF TO A CERTAIN STRATEGY TO WIN THE GAME OF FOREX.
Control your emotions and don't be Greedy because u will end up losing more. Its always good to take small bites at the apple instead of trying to Swallow the whole thing lol. Forex is not for everyone as u may know the famous figure of 90 to 95% fail. So if u try it out n think its not for u !!!LEAVE AT FIRST SITE!!!. From day one Practice n in your mind set a goal to develop your own style and strategy. From months of practice i have noticed i like short trades which lasts 10 - 30 mins per trade (sometimes up to an hour) on a 5 mins chart picking up 3 - 10 pips per tradesmile.gif. I am suited to this style and i have developed a strategy to go with it AND DECEPLINED MYSELF TO FOLLOWING IT.
*NEVER THINK U WILL FIND A STRATEGY THAT WORKS 100% OF THE TIME*
You WILL lose money in forex ladies n gents but U can win MORE time than u LOSE in forex that is the key to remember. Its possible to develop strategies that will win 90% of the trades u take and lose 10 % smile.gif . That's wot u have to aim for.... U will get there if u put in the hours and work SMART N HARD. It is really worth it at the end. Like all things "the first step is the hardest to take". When u know your stuff its simple.

5. HAVE A REALISTIC AIM
Before u start trading make sure u have a clear head otherwise u WILL LOSE. Aim for 10 to 15 pips of profit a day for starters. It's pretty simple to catch 10 - 15 pips per day if u know your stuff if u dont u WILL LOSE. when u'r fairly consistent at getting that aim for 20 - 30 pips this is possible when u get experienced and understand how different currencies behave n also develop ur senses for predicting accurately, u become a PRO at using a number of good indicators and DECEPLINE URESELF at using them. Occasionally u will catch 80 - 100 pips a day when u are at it so there is somthin good to look forward to rolleyes.gif.
Well thats how far i got up to folks with my trading. I hope it helps u guys. I have heard of people getting over 100 pips a day consistently n i think it is possible when u become a GURU in forex laugh.gif laugh.gif . I am not online as much as i like to because of my busy lifestyle but feel free to ask questions when iam online on MMG or post it here. So good luck n work ur way through smoothly "DONT LEARN TO RUN BEFORE U CAN WALK". and elite trader because it has tons of indicators, its pretty easy to learn compared to others, u can automate strategies n its free. is another very good one, its probably the easiest one to use but it doesn't have many indicators to use.

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The most important technics u guys must learn to use in every trade are:

**PIVOT POINTS AND FIBONNACHI RETRACEMENT**

I have labelled on the chart so u know how they look like smile.gif . i cant stress enough how important they are because it is at those levels that the trend can change around most of the time. Think of them like walls where the ball can bounce of from. if u spend abit of time reading about them and then use them in every single trade u will soon master it. IT MIGHT LOOK COMPLICATED and annoying but its VERY IMPORTANT. If u learn them PROPERLY u can predict how the trend will develop for the day with a 70% accuracy. When u use this technic it better to trade on 1hr or maybe 15mins as well.

You can download a pivot daily indicator from Moneytec but u need to work out the fibbonnaci levels using the following calculator http://global-view.com/ssi/fibcalc.html by entering the previous days High and Low.

If its too confusing for the newbies study the PIVOT POINTS AND FIBONNACHI RETRACEMENT and then u will know wot iam gettin at.

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*THE SECRECT TO USING INDICATORS*

Hello Everyone

I just wanted to mention something really important in order to trade well. Its just amazing how many things u learn on the way to being a better trader. Some people think its impossible to Win with Forex well that's true but its not impossible to WIN MORE TIME THAN U LOSE.

Everyone knows that emotions, patience, a good eye, practice, money management and a good system are vital in order to achieving this but yet a lot of people end up losing.

why IS THIS:

Well one common PROBLEM is that people keep changing there strategy when they lose 1 trade or another common problem is that MY INDICATORS WENT AGAINST ME OR IT GAVE ME A FAKE SIGNAL

Well I don't blame u cuz the same thing happened to me over thousand times

What's important is that u realize Y it went against u.

I will try and explain Y so it will help u to be better. Lighten.gif

Most of the indicators out there (around 99%) are all LAGGING Indicators which means they need past data in order to predict the future but we ALL know that markets don't always do what they did in the past so that's y they go against u at times.

Some of the most common lagging indicators are as follows:

MACD
MOVING AVERAGES
RSI
STOCHASTICS
ADX
WILLIAMR
CCI etc


Lagging indicators are good and u do need them at times but u need to use them in a package with some OTHER POWERFUL STUDIES in order to achieve that vital thing called CONSISTANCY.

The answer is u need the group of LEADING INDICATORS which can give u a good indication of points in the future where the market has a good chance of heading to and might retrace or have significant effects. Imagine the impact it will have on your trading if u can make high probable predictions on where the market is heading to before u place the trade. Believe me it will help alot. I suggest u use a mixture of lagging and leading indicators in your strategies to IMPROVE your chance of winning more trades.

Some examples of leading indicators are as follows:

FIBONACCHI
TRENDLINES
PIVOTS
ELLIOT WAVE
ANDREWS PITCHFORK
GANN etc

I suggest u do your research and develop an understanding on exactly how some of them work. They are more difficult to learn than lagging indicators but its well worth your time to learning them and develop strategies around them. Trendlines and pivots are the easiest ones to learn.

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Guess wot i got some more goodies for u to improve ur trading. I have 2 exotic custom made indicators thts works excellently with the strategy that I recommended. These 2 indicators which I have attached below only work with metatrader 4 (that's y I've been nagging u guys to use metatrader 4).
The indicators are as follows

1. ERGOTIC - its very similar to MACD but is more sensitive n gives a clearer picture of trends. So remove MACD n put this one instead.

2. WILLIAMR36 -this is a new one tht Iam using n probably one of the best indicators tht I've come across with. Just place this on your chart n u will see 2 lines probably a green n red line. When both lines are at the centre u wait but when the green or red light starts moving apart u quickly check the other indicators for a trend change n make a trade. This indicator works wonderfully with the strategy which I recommended.

Study on williams % R here : http://www.trade10.com/williams.htm

Finally I got one more surprise for u guys. Remember I told u how important it is to use Fibonacchi Retracement with every trade. Well few of u asked me how it works so I found a nice ebook which explains HOW fibonacchi works. All I can say is READ n LEARN IT. Its nicely worded n only 22 pages. The website is currently allowing people to view the ebook for FREE .

Check it out at: http://www.fibonacciprofits.com/fb

Thats all for now but do post some some of ur trading results in this thread so it will give others n idea of how people are performing.

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The main concept of my trading is:

1. I use daily, 4hr, 1hr and the 30min chart to get the big picture of wots going on.

2. Then i use fibonacchi n pivots on a 15min or 5 min chart as a guide ie u can also chk 1hr or 4hr charts as well.

3. Finally i place a trade when my indicators show me a GO signal.

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These are the indicators iam using:

Bollinger Band (default setting)
EMA 10 & 50 (both short)
Kaufman 2 (default setting) - this is same as EMA but i use this as a trigger when it crosses EMA 10 wink.gif .
Daily Pivots (make sure u turn the Camarilla to TRUE in the properties of the indicator) .

Stochastic (Default setting)
William 36 (Default Setting)
Ergodic (Default Setting)
ADX (default setting)
Denapoli MACD Histogram (default setting) - this is a new one i picked up n is very similiar to ergodic but better than the normal MACD. The reason i use this is to remove whipsaws and get a clear picture of wots going on. However ergodi allows me to view the trend closer. U can use either this or ergodic but i prefer both to be there smile.gif .

Finally and most importantly place FIBONACCHI RETRACEMENT for the day on the chart smile.gif .


I know iam using tooo many indicators but they all help me n u need to practice looking at all of them within 20 sec before a trade n make a judgement.

This is wot u do

1. Look at the 4hr, 1hr, 30 min and 15 mins charts to check the big picture of wot exactly is happening for the day.

2. Check between which Fibonacchi retracement level the trend is currently at e.g. 61.8 to 100. Then look at where all the pivot points are between the fib levels.

3. Goto 5 mins or 1 min chart n check where the 50 EMA is. If its below the currency trend its a BUY signal if its above the currency trend its a Sell signal. Also check the trend in relation to Bollinger band as well. Once thats confirmed u need to look at 10 EMA and Kaufman 2 for a cross to occur in the direction of the trend.

4. As soon as the cross is about to occur u need to look at Stochastic, adx, Denapoli MACD Histogram to see if they are in the correct postion n the trend that is developing will be a genuine one ie not a whipsaw or a fake signal.

5. The u quickly look at william 36 and ergodic to see if they have both changed directions if they have then GET READY TO PLACE A TRADE. As soon as William 36 and ergodic cross the trend will accelerate n make u big money lol.


PLEASE BEAWARE THT WHEN THE CURRENCY TREND GOES BELOW 0 OR ABOVE 100 IN THE FIBONACHI LEVELS U NEED TO BE CAREFUL N BETTER NOT TO PLACE NEW TRADES.
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Well iam using the same strategy as the one i listed in detail on above post. Its just a strategy that i have made up myself using all the stratagies that i have read and practiced to suit my trading style. Since then i managed to fine tune the strategy furthermore after following it in a decepline manner. I just cant beleive the way its working.

I USE METATRADER QUOTES AND PLACE TRADES ON FXCM

These are the indicators iam using:

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Bollinger Band (default setting)

EMA 50 (short)

Daily Pivots (make sure u turn the Camarilla to TRUE in the properties of the indicator) .

Stochastic (Default setting)

William 36 (Default Setting)

Denapoli MACD Histogram (default setting) - This is my magic pill indicator smile.gif which is a fine tuned Macd . The reason i use this is to remove whipsaws and get a clear picture of wots going on.

Finally place FIBONACCHI RETRACEMENT for the day on the chart.
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Well i managed to remve a few of the indicators from my previous post.

This is wot i do

1. Look at the daily, 4hr, 1hr, 30 min and 15 mins charts to check the big picture of wot exactly is happening for the day. Also look at the 50 ema on the charts and check wether its below the currency trendline (bullish BUY movement) or above the currecny trendline (bearish SELL movement) on the 1 HOUR CHART N THE 30 MINS CHART.

2. Check between which Fibonacchi retracement level the trend is currently at e.g. 61.8 to 100. Then look at where all the pivot points are between the fib levels.


4. THIS IS THE IMPORTANT BIT - say for example the 50 EMA is below the currecny trendline on both 1 hour chart and 30 mins chart which indicates the market is goin up (bullish). Now check the Denapoli MACD Histogram ON 30 MIN AND 1 HOUR CHARTS and see it it also indicates a upward bullish trend forming if so then jump to the 1 minute chart.

5. Then u quickly look at the 1 minute chart and see where exactly the currency trandline is between the FIBONNACHI RETRACEMENT LEVEL N PIVOT POINTS. if there a gap of about 10 pips or more towards the next pivot point or fib point UP (bullish movement) then u can place a trade dance9bh.gif smile.gif. if they are not u can use the stochastic and the william36 to see wots happening on the 1 min chart and wait for it to occur.

6. So remember the whole point of the gamu is u trade ONLY BETWEEN PIVOT POINTS AND FIB LEVELS if there is a 10 Pip or more gap in the direction of what the 30 minute and the 1 hour chart is showing u in regards to EMA 50 AND MOST IMPORTANTLY THE Denapoli MACD Histogram smile.gif . ALWAYS PLACE UR TRADE ON THE 1 MINUTE OR 5 MINUTE CHART.

U can catch between 5 - 20 pips per trade with this strategy. Each trade takes me on avarage about 40 mins.

I've been using this strategy since 14th April and has been over 90% consistant.
PLEASE NOTE : DONT AIM TO CATCH TOO MANY PIPS IN ONE GO. Just get in and get out ASAP. Also set limits to your profits at the next pivot or fib level (which u keep the 10 pip gap for) from and a stop loss at about 30 pips. This strategy works very well on GBPUSD. I have recently strateg using them on other pairs with very good results as well smile.gif .

I have posted my trading results below since i started trading demo with fxcm on 9th of april which has over 50 trades smile.gif . Just look at the results from 14th april when i put this baby on.
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