There are free forex trading strategies you can get online and one of the best is a free forex robot which will beat over 95% of the ones sold online and is proven to make big gains here it is...
The robot is called Richard Donchian's 4 Week Rule and it was devised in the late seventies by Richard Donchian to trade commodity markets (although it will work on any trending market) and as currencies trend well, this is an ideal market to trade the system on.
Its very simple and you don't even need a computer to do the calculation:
Here are the rules:
Cover short positions and reverse to a long position when a price exceeds the highs of the previous 4 weeks. Close long positions and reverse to a short position when a price falls below the lows of the previous 4 weeks.
Now that's what I call simple!
Don't think it doesn't make money it does back test it and see.
The 4 Week Rule has been used by some of the world's top traders and even trading legend Richard Dennis was a fan so if some of the top traders have used it then your in good company.
If you use it, you will be on every major trend and long term it will make money.
There is of course a drawback and that's - what happens when the markets aren't trending?
Here you may want to filter the exit and use a 1 or 2 week period to exit and re enter on the next 4 week rule, this will smooth the equity curve.
Now despite the fact the free forex trading strategy will make money, few traders will use it and here are the reasons why:
Its to simple
People just assume it wont make money because its so simple but of course all the best forex trading strategies are simple. A simple strategy is likely to be very robust in the face of brutal ever changing market conditions with fewer elements to break than complicated ones.
Its Not Trendy
It doesn't have the ring about it like a system based on artificial intelligence or chaos theory but it will beat most despite its simplicity same goes for all the scientific theories that don't work used by the far out investment community - Gann, Elliot and Fibonacci.
Its Not Fussy about Market Timing
It's not a pinpoint trading system which predicts, it simply reacts to price change. Of course, this is the way to trade - but most traders are looking for the perfect entry (of course they cant do it) and won't try this system.
Its boring
If you like trading a lot its boring, a few trades a month at best and 5 m minutes a day to execute them. On the other hand, if you like making money and want to get on with your life this system is fantastic!
So there you have it a free forex trading strategy that works and will continue to work. It be adapted to your risk tolerance as well customized as well Take a look at this free forex trading strategy and you will find, it can help you achieve currency trading success in less than 15 minutes a day!
Tuesday, October 28, 2008
Foreign Exchange (Forex) Risk Management
The foreign exchange or forex market is one of the largest and most liquid financial markets in the world with a daily transaction of almost 1.5 trillion U.S. dollars. Banks, financial institutions and individual investors, therefore, have huge potential of economic gain as well as losses.
Foreign exchange risk is a potential gain or loss that occurs as a result of a change in exchange rate. In order to minimize the possibility of financial loss, every investor needs to adopt some forex risk management measures.
For minimizing forex risk, one must remember few basic points: (1) value of a currency changes frequently affecting firms and individuals engaged in international transactions; (2) assets, liabilities, and cash flows are affected through changes in the exchange rates.
So the forex market presents risks involving accounting and translation exposure, economic exposure, transaction exposure and real operating exposure.
Transactional exposures involve quite high risk for foreign exchange. Impact of exchange rate fluctuations on present cash flows, export and import, borrowing and lending in foreign currency, all can cause fluctuation in currency rates which should be considered while developing risk management features.
In most currencies there are futures or forward exchange contracts whose prices give indication on expected market prices of the currencies. These contracts can lock in the anticipated change. So the foreign exchange risk arises due to unanticipated exchange rate changes.
Foreign currency risk management involves managing two types of risk: systematic and unsystematic risk. Systematic risk affects all investments, such as the market risk, inflation risk and interest rate risk. Unsystematic risk relates to individual events that affect a particular investment, such as the business risk and financial risk. Unsystematic risk can be hedged.
If you are a trader or an investor engaged in day or intra-day trading, you must have a trading strategy at place. Your online broker or trading platform should incorporate risk management features in their trading strategies.
The signals and indicator to be generated must be based on risk analysis. You can join some professional workshop or course on foreign exchange risk management where you can learn the basics. The course should be interactive and customized where you can get your specific queries answered.
It is important that foreign currency risk management begins before the risk exposures and not after it has developed. The risk management course should include practical examples from real life incidents on basis of which you can learn the techniques of decision-making.
For calculating foreign exchange risk factors, you can find many advanced project management software that has integrated risk analysis. You can seek help from financial advisers who monitor, assess and hedge the risk in particular investments and in overall portfolios, depending on the investment objectives of the investor.
The foreign exchange risk management should use market indexes and averages in market analysis. It should consider theories of forex market behavior, including technical fundamental analysis. The risk management methods should periodically review investment objectives like safety, growth, speculation, and should always inform the investor about his or her investments.
Foreign exchange risk is a potential gain or loss that occurs as a result of a change in exchange rate. In order to minimize the possibility of financial loss, every investor needs to adopt some forex risk management measures.
For minimizing forex risk, one must remember few basic points: (1) value of a currency changes frequently affecting firms and individuals engaged in international transactions; (2) assets, liabilities, and cash flows are affected through changes in the exchange rates.
So the forex market presents risks involving accounting and translation exposure, economic exposure, transaction exposure and real operating exposure.
Transactional exposures involve quite high risk for foreign exchange. Impact of exchange rate fluctuations on present cash flows, export and import, borrowing and lending in foreign currency, all can cause fluctuation in currency rates which should be considered while developing risk management features.
In most currencies there are futures or forward exchange contracts whose prices give indication on expected market prices of the currencies. These contracts can lock in the anticipated change. So the foreign exchange risk arises due to unanticipated exchange rate changes.
Foreign currency risk management involves managing two types of risk: systematic and unsystematic risk. Systematic risk affects all investments, such as the market risk, inflation risk and interest rate risk. Unsystematic risk relates to individual events that affect a particular investment, such as the business risk and financial risk. Unsystematic risk can be hedged.
If you are a trader or an investor engaged in day or intra-day trading, you must have a trading strategy at place. Your online broker or trading platform should incorporate risk management features in their trading strategies.
The signals and indicator to be generated must be based on risk analysis. You can join some professional workshop or course on foreign exchange risk management where you can learn the basics. The course should be interactive and customized where you can get your specific queries answered.
It is important that foreign currency risk management begins before the risk exposures and not after it has developed. The risk management course should include practical examples from real life incidents on basis of which you can learn the techniques of decision-making.
For calculating foreign exchange risk factors, you can find many advanced project management software that has integrated risk analysis. You can seek help from financial advisers who monitor, assess and hedge the risk in particular investments and in overall portfolios, depending on the investment objectives of the investor.
The foreign exchange risk management should use market indexes and averages in market analysis. It should consider theories of forex market behavior, including technical fundamental analysis. The risk management methods should periodically review investment objectives like safety, growth, speculation, and should always inform the investor about his or her investments.
Two Elements ALL Successful Traders Need
There are two elements to a successful Forex trading strategy but most traders fail to understand how the two elements combine to make a profitable Forex trading strategy. Most traders don't understand the link and lose...
The first element you need and you probably guessed - you need a robust, simple, forex trading system based on sound logic - most traders however cannot even get this right and make these critical errors.
1. Use a Forex Robot that's Been Back Tested
They then think this should work in real time and of course it doesn't. If you have all the data and bend the track record to fit you get profit in hindsight - but going forward no two data segments repeat exactly the same and the system collapses in real time. Most traders follow these automatic trading systems and all the ones with simulations destroy equity.
2. Day Trading and Scalping Strategy
The logic of doing this form of trading is dumb - all volatility in short term time frames is random, so you can never win.
3. Predictive Mathematics
Predicting is hoping and guessing and you won't win at Forex doing that. Also markets don't move to a mathematical formula, only the odds - so a complicated theory can be very clever but the market won't respect it, as it doesn't move to maths - period.
To win your strategy should be simple. Simple Forex trading systems work best as they are more robust in the brutal world of trading and you should always trade the reality of price change and not try and predict.
Now the next element is the hard part.
The Keys of Confidence and Discipline
You need the discipline to apply your method through periods of losses, stay on track with your trading signals until you hit a home run - it's not easy, here's why:
Many people online claim that you will suffer little or no drawdown periods and they don't last long - rubbish! Even the best traders in the world suffer weeks or months of losing periods, sure they win longer term - but these periods happen to them and they will happen to you.
When they do, you need to trade through them as the market wrong foots you and hands you losses and its hard to do for most traders.
You need to have confidence in what you are doing and this will be transmitted into discipline. You will never have discipline, if you don't have confidence and that is why you need to know what you're doing, even if you are following someone else's trading system.
Get the right forex education, get a simple, robust, logical method, learn it and have confidence in it. You will then have the discipline to win and enjoy currency trading success.
The first element you need and you probably guessed - you need a robust, simple, forex trading system based on sound logic - most traders however cannot even get this right and make these critical errors.
1. Use a Forex Robot that's Been Back Tested
They then think this should work in real time and of course it doesn't. If you have all the data and bend the track record to fit you get profit in hindsight - but going forward no two data segments repeat exactly the same and the system collapses in real time. Most traders follow these automatic trading systems and all the ones with simulations destroy equity.
2. Day Trading and Scalping Strategy
The logic of doing this form of trading is dumb - all volatility in short term time frames is random, so you can never win.
3. Predictive Mathematics
Predicting is hoping and guessing and you won't win at Forex doing that. Also markets don't move to a mathematical formula, only the odds - so a complicated theory can be very clever but the market won't respect it, as it doesn't move to maths - period.
To win your strategy should be simple. Simple Forex trading systems work best as they are more robust in the brutal world of trading and you should always trade the reality of price change and not try and predict.
Now the next element is the hard part.
The Keys of Confidence and Discipline
You need the discipline to apply your method through periods of losses, stay on track with your trading signals until you hit a home run - it's not easy, here's why:
Many people online claim that you will suffer little or no drawdown periods and they don't last long - rubbish! Even the best traders in the world suffer weeks or months of losing periods, sure they win longer term - but these periods happen to them and they will happen to you.
When they do, you need to trade through them as the market wrong foots you and hands you losses and its hard to do for most traders.
You need to have confidence in what you are doing and this will be transmitted into discipline. You will never have discipline, if you don't have confidence and that is why you need to know what you're doing, even if you are following someone else's trading system.
Get the right forex education, get a simple, robust, logical method, learn it and have confidence in it. You will then have the discipline to win and enjoy currency trading success.
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