By ACM/Refco

Trading successfully is by no means a simple matter. It takes time, market knowledge and market understanding and a massive quantity of self restraint. ACM doesn't manage accounts, nor does it give market advice, that's the job of money managers and introducing brokers. As market professionals, we can point the novice in the right direction and indie what's total nonsense and what are right trading considerations and tactics.

Anybody who says it is possible to consistently earn money in foreign exchange markets is being untruthful. Foreign market by character, is a volatile market. The custom of trading it by way of margin increases that volatility . We are talking about a'fast market' which is naturally inconsistent. Following that precept, it is logical to say that in order to make a trade, a trader must take into account technical and fundamental data and make an edued decision based on his perception of market sentiment and market anticipation. Timing a trade correctly is the main factor in trading but always there will be times where a traders' timing will be away. Don't expect to generate returns on each trade.

Let us enumerate what a trader needs to do in order to place the best opportunities for profitable trades on his side:

Trade with money you can afford to lose:

Trading fx markets is both insecure and can lead to loss, it is also exciting, exhilarating and may be addictive. The further you are'involved with your money' the harder it is to earn a clear-headed choice. Should never be traded, although is precious.

Identify the state of the market:

What is the market ? Is it trending upwards is it in a trading range. Is the trend weak or strong, did it start ago or does it look like a new trend that's forming. Finding a clear picture of the market scenario is laying the groundwork for a trade.

Ascertain what time frame you are trading on:

Many traders buy in the market without thinking when they'd like to get out, after all the goal is to earn money. That can be true but an individual must extrapolate in his mind's eye the movement that one expects to happen, when trading. In this extrapolation, resides a price evolution. Attached to this is the concept of exit price. The importance of this is to put your trade in perspective and though it is obviously impossible to know exactly when you are going to depart the market, it is important to define from the beginning if you will be'scalping' (trying to find a couple points off the market) trading intra-day, or going longer duration. This will also determine what chart period you are looking at. Should you trade many times a day, there is no point basing your technical analysis on a daily graph, you'll probably need to analyse 30 hour or minute charts. Also it is very important that you be aware of the time intervals when financial facilities enter and exit the market as it creates volatility and liquidity and can affect market movements.

Time your trade:

You may be right about a potential market motion but be too early or too late when you enter the trade. Timing considerations are twofold, an market figure like CPI, retail sales or a federal reserve conclusion can merge a movement that's already underway. Timing your reloion means knowing what's expected and taking into account all factors before trading. Technical analysis can help you identify if and in what price a transfer may occur. We'll look at technical analysis in more detail.

If in doubt, stay out:

In case you are unsure about a trade and discover you are hesitating, remain on the sidelines.

Trade logical transaction dimensions:

Margin trading allows the fx trader a very large sum of leverage, trading in total margin capacity (in ACM's instance 1% or 0.5%) can make for some quite large profits or losses within a single account. Scaling your transactions so you may reevaluate the market or create transactions on other currencies is generally wiser. In a nutshell, do not trade amounts which may wipe you out and do not put all your eggs in 1 basket. ACM provides the very same rates irrespective of transaction sizes therefore a client has nothing.

Quantify market sentiment:

Market sentiment is what the majority of this market is perceived to be feeling about the market and hence what it is doing or will do. That is basically about trend. You may have heard the term'the trend is your friend', this basically means that if you are in the right direction with a powerful fashion profitable trades will be made by you. This of course is quite simplistic, a trend is capable of change at any moment. Technical and fundamental data can indie if it is weak or strong and if the trend has started long ago.

Market anticipation:

Market expection relates to that which many individuals are anticipating as far as forthcoming news is worried. If individuals are expecting an interest rate to rise and it does, then there usually will not be much movement because the data will have been'discounted' from the market, instead if the adverse occurs, markets will react violently.

Use what other traders utilize:

in an ideal world, each trader would be looking at a 14 day RSI and making trading decisions based on that. If that was the situation, when RSI would go beneath the 30 level, everybody would buy and by consequence the price would rise. Needless to say, the world isn't ideal and not all market participants follow the exact same technical indiors, draw the trendlines and identify the exact same support resistance levels. The great diversity of processes and opinions used translates into price diversity. Traders nevertheless have a tendency to use a restricted variety of specialized tools. The most common are fibonnacci retracement and 14 day RSI, obvious trendlines and service amounts, 9, MACD and 9, 20 40 day exponential moving averages. The closer you get to what traders are considering, the more exact your estimations will be. The cause of this is simple arithmetic quantities of buyers than sellers at a certain price will move the market up from that price and vice-versa.