Monday, 6 February 2012

Automated Forex Trading Online 4 Key Points For Success

Automated Forex trading online has increased dramatically over the last several years as trading programs, quick computers and high speed internet have become more available.  Unfortunately many new traders start with inadequate knowledge about Forex trading and therefore tend to lose money and give Forex trading a terrible name.  Many people make lots of money trading Forex online and there are a few key points new traders must be aware of for success.  These are vital whether you use an automated Forex trading system or not.

1: Charts.  Reading and understanding charts while trading Forex is vital, especially if you do not use an automated Forex system.  You must know the basics of chart plotting.  This plotting must include multiple time frames and various key indicators, e.g. resistance and support.  The automated Forex system you use will dictate the types of charts and indicators you use and therefore the types of indicators you need to know.

2: Trade Set Up:  Your automated Forex trading system will determine the individual trade setups and must have specific rules to follow.  But, you have to make the final choice, if not using a fully automated Forex trading system.  Therefore you need to know the setup rules and do the trade.  You must be able to watch the charts and see that a trade is setting up even before a Forex trading signal has been produced.  This is an area many traders tend to overlook. This can be a very costly mistake. 

3: Entry Points.  If you are using an automated Forex trading system, entry points must be part of the trade rules of the system you are using.  But, you must know where the entry points are likely to be before the Forex signal is produced Entry points are just fee levels that, based on your trade rules, have a high probability of trade success.  But, if you miss the entry your chance of a profitable, lower risk trade decreases sharply.  There is an ancient saying:  “better never than late.”

4: Stop Loss And Take Profit.  You must know your stop and profit levels even before you place the trade.  Why?  If the potential profit is not passable compared to the potential loss you may not want to place the trade.  Typically you may have multiple profit levels and evaluate the trade as it approaches each level. Excellent money management dictates that you have solid profit and loss levels to protect your money.  If you have a Forex system that does not emphasize these key levels then go to a system that does have these components.

Excellent online Forex trading systems will indicate where the stop and profit targets must be located.  In a fully automated Forex trading systems these levels must be programmed into the system.  In an automated system you may have to determine these levels based on trade rules.  If you are trading for larger profits, instead of scalping, then a trailing stop is vital to protect profits.

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