If you want to make money in forex trading you need to have a soundly based forex trading strategy. This is far easier to achieve than many traders think it is and here we will show you how to build one in 4 simple steps.

1. Success Comes From Inner Understanding

To succeed at forex trading you need to do it on your own and understand EXACTLY how and why your system works.

Even if you follow a vendor or someone else’s currency trading system, you can’t simply follow it you must learn it and have confidence in it.

If you don’t understand how your trading system will help you succeed, you won’t have confidence in it which will lead to a break down of discipline if you hit a losing period.

Keep in mind if you don’t have the discipline to follow your trading method, you don’t have a method!

2. Keep It Simple & Work Smart

Many traders believe the more effort they put into their forex trading strategy the more they will make – this is not true. You get rewarded for being right with your trading signal and that’s it.

Other traders think the more complicated their system is the more chance it has of succeeding but again – this is not true.

All the best forex trading systems are simple and this means they have fewer elements to break and are more robust in the face of brutal market conditions.

This is actually good news, as you need to work smart and not hard to succeed.

Simply focus on the right areas and learn them. If you do this, it will lead you to currency trading success.

3. A Successful Trading System

Here we can’t give you all that goes into a successful trading system – but we will give you some important basic elements you need to keep in mind when building one.

- Do not day trade, as you are guaranteed to lose. All short term volatility is random and you cannot get the odds on your side, either swing trade or follow long term trends.

- Base your system on the concept of support and resistance and breakout methodology.

- Do not predict with your system. Use momentum oscillators to confirm each and every trading signal.

If you predict that’s simply hoping or guessing and you won’t win.

Trade the truth of price action and confirm.

- Always place stops and assume the worst eventuality – you need to protect what you have above all else. As one trader I once knew said:

“If you take care of the losses the profits will look after themselves”.

4. The crucial Point You Need to Understand!

In forex trading 95% of traders lose.

This is simply in most instances down to the fact they don’t work smart and learn the right information.

They therefore don’t have confidence to apply their system with discipline.

You need to understand as part of your forex education that your method is important – but you need the right mindset to apply it.

If you want to learn currency trading you can, in fact anyone can – but you must learn how to trade currencies the right way and build a logical, simple forex trading strategy which, takes into account all the points we have made above.

This week has been a strange and yet interesting week on the Forex.  The volume has been incredibly light due to end of summer festivities in the US and Canada and Western Europe, however the flow of data and information has not ceased. 

We have seen officials declaring the recession over, and yet only a few hours later a piece of Data comes out that contradicts that idea. And we have seen the Dollar getting bounced around.

September in the stock market is normally the worst month, about an average of 3% loss are recorded each year since 1929. While October is the “crash month” (last year alone the market fell 13% in October) the downfalls are few and far between – so September is the hard month. 

A reason for this is that people come back from vacation and pull back their investments to gage the market and see what has happened – a portfolio reshuffle is how brokers define it. 

In the forex trading though it is different: A down market typically means a stronger currency and although this works out most of the time, this year, 2009, we are not seeing this trend.

The worries that investors have now are no longer just about which company will do better next year, or which company is poised for a breakout, the concern is based on governmental activities and it is affecting the Forex’s relationship to stocks. 

As currency is a true indicator of how strong a country is economically, traders have begun translating this into their stock holdings as well. 

Which company will be most affected by government legislation or which organization will fall under a new law or which bank will need money? 

The Dollar has been falling this month – in tandem with the US stock markets.  The question remains for Forex traders, will this trend continue and if so, how low can it go?  

The Dollar fell broadly on Wednesday, in the online forex market, after an informal data release showed a higher than expected rate of unemployment. 

US employers in the private sector shed 298,000 jobs in August according to the ADP payroll report. The Dollar initially rose on risk aversion sentiment, however continued fears over the mounting governmental debt load along with a very light volume combined to bring the Dollar down in late session trading. 

The ADP jobs report is an early indicator of how the official government “non-farm payroll” (NFP) report will look. 

The NFP report is set to come out on Friday and includes both public and private industries.  The consensus on the street is that 225,000 jobs will be reported as lost, although with private industry alone shedding close to 300,000, the NFP is likely to disappoint.

At 11:00 PM GMT, the Dollar was down .42% to the Euro to 1.4282, down .9% to the Japanese Yen to 92.15, down .85% to the British Pound to 1.6286, down .05% to the Canadian Dollar to 1.1041, down 1.2% to the Australian Dollar to .8357 up .2% to the Kiwi to .6736 and down .55% to the Swiss Franc to 1.0594.

The USD/CAD currency pair is up challenging that 1.1100/20 area again on weakness in the commodity currencies and a new sell-off in oil. A close above that level looks significant for further progression towards perhaps 1.1400 or more. 

The 55-day moving average is up just above 1.1100 as well, but the USD/CAD doesn’t seem to have much of a habit of paying attention to that number.

If oil continues below 67 dollars a barrel and equities remain in a sour mood, it’s hard to see the pair not continuing its ascent. Structurally, the failed attempt to maintain new lows below 1.0800 recently has neutralized the old bearish trend, but we’ve no bullish confirmation just yet. 1.1120+ would be a first step.

By: Forex Ace

Of you are looking for Forex trading strategies for success, then the one enclosed is one that most traders ignore, despite the fact it works and many of the world’s top traders use it – let’s look at it in detail and see how it can lead you to Forex trading success.

The strategy is based upon simple facts about Forex price movement which are…

Currency markets trend and move in a sustained direction for long periods and these big trends can make you a lot of money, if you trade them with leverage on your side. So how do you get in on these trends? The answer is simple and a close look at any currency pair, will show you how a bullish currency trend starts and continues…

They break new chart highs so, if you focus on getting into the big trends, via breakouts and holding them, you can make a lot of money. While this sounds a simple, the losing majority of traders, simply cannot trade these breaks.

In their mind, they feel they have missed the start of the move and want to wait for a dip back to the breakout point this logic is wrong!

If you look at the best breakouts they don’t come back, they carry and the trader who waits for the dip back misses a great trading opportunity.

Of course, not every break to new chart highs continues, so you have to look to trade levels which have been tested a few times before the breakout occurs, by a few, I mean at least six or more.

These levels will be considered important by the market and when they break, the supply and demand situation will have changed and the odds of a continuation of the break are good.

You will get a few good breakouts each month and there enough to make you a lot of money if you get into them and hold them.

Breakout trading works and many of the top traders use this method and while it appears you have missed the start of the trend ( which of course you have) you can’t predict that anyway, so simply, focus on how much profit will be ahead of you as the trend develops!

Breakout trading, is ignored by most traders but its a proven way to make huge profits, so try it and you will have one of the best Forex trading strategies for success and be in the company of some of the world’s best traders who use this method to enjoy Forex success.

By: Kelly Price