Forex Trading – Use Discipline or Use Emotions?

Posted by Richard Olson on January 13, 2009 under Forex Trading | Be the First to Comment

by Richard U. Olson

As an investor, you know that there are two things which influence the decisions which people make on the market. These two prime motivators are greed and fear. These are two of the most primal human emotions. Fear can become panic and greed can lead one to make risky decisions. The most successful investors, including Forex traders are those who are not swayed by these emotions.

Smart Forex traders work using managed Forex trading. They use trading strategies which are based on proven mathematical models. These investors often use an automated Forex trading system and trading software to make their investments. Some of these investors also use the services of an expert Forex advisor to help them in making good decisions about their Forex trades.

Whatever their particular strategy, Forex traders who are successful are those who are not basing their investment strategies on their emotional responses to market movements. While they of course still have these emotional responses, they try to make their investment choices based on reason and of course, profit motive. They take losses and profits in stride and stay focused on the goal of making successful investments.

They ignore any type of feeling that may be influenced by various things such as the way their day is going, unfortunate financial news headlines and any internal voices telling them insistently to buy or sell on a trading platform beforehand, if these types of feeling may cause them to waver from their prepared Forex trading strategy.

Self-discipline is key to being successful in Forex trading. You risk losing a lot of potential profit by allowing your emotions to take hold and dictate the investments that you make. Fear may cause you to place a stop-loss when doing so will actually cost you money or take your profits and run when you could have made far more money by allowing your investment to run its course. By the same token, greed can lead to irrational exuberance and lead you to lose a lot of money by making unwise decisions about your trades.

So a Forex trading discipline has to be based upon tried and true trading principles and strategies that have been proven to work. It has to be based upon real history.

A successful trader actually makes a lot of their money at the expense of those who make their decisions on an emotional basis. The movements in the market which can cause many to panic or become overconfident can bring large profits to the savvy Forex trader.

One of the best ways of staying true to a trading discipline in the Forex market is to use automated software. This software makes use of mathematics to analyze patterns and possibilities in the market. If you makes use of Forex trading software, you can help yourself stay true to your strategy and avoid getting caught up in your emotions.

About the Author:

Richard U. Olson uses the incredibly accurate Forex Autopilot System and he recommends it to make consistent profits in the Forex markets. Grab his FREE e-course on The Crucial Facts On Forex Trading to realize your financial dreams.

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The Nuts and Bolts of Japanese Candlesticks

Posted by Mark Deaton on under Currency Trading | Be the First to Comment

by Mark Deaton

Japanese Candlesticks have been around for centuries. In use since the early 1700's Japanese candlesticks were first used to trade the rice markets. Over the last 400 years of course they have become popular to many including stock and forex traders.

Japanese candlestick charts display market sentiment like other charts but most would agree you get a little more insight from a candlestick chart. Basically you measure 2 parts of a candlestick, the body, and the wicks. The body can be either full or hallow, and the wick or shadows, can be long or short, or not present at all. All tell a story.

Your highs and lows for the session are marked by the tops (high) and bottoms (low) of the wicks. Likewise a close that is greater than an open is represented by a hallow candlestick the bottom is the open, and the top is the close. A close that is less than the open is represented by a full or black candlestick. The top is the open and the bottom is the close. (See below.)

Candlestick patterns are not only more easy to read, they are also more intuitive once you get the hang of reading them. You see there are patterns with candlesticks you will soon learn to easily recognize, combine this with the intuitiveness and you have yourself a method for assessing price far superior to any other.

All candlesticks have a body and a wick or shadow, unless the open close high and low are equal to each other in which case you would have a little dash and that's it. A white body is an empty body, and a black one is a full body. The empty/white body represents a close greater than the open, and a black/full body represents a close less than the open. The size of the body represents the distance between the open and close.

When you have a body with no shadows its called a Marubozu. I can be black or white in which case its a "black Marubozu or a white Marobozu". In each case the open and close are equal to the high and the low. With the black the open is equal to the high and the close is equal to the low. The white would be the open is equal to the low and the close is equal to the high.

A spinning top is a candlestick with a short body and a long or short wick/shadow. The short body tells us that price opened and closed rather close to one another, while a long shadow/wick tells us that during the session price made its way in that direction but failed to hold its ground. This failure to "hold ground" could be a clue for price direction in the next session.

About the Author:

Candlestick patterns are very telling. Once you start using them you will look at any other chart and wonder how you did it without a candlestick chart. Candlestick charts are easier on the eyes, current market conditions popout at you instantly, and the overall process of reviewing charts becomes 10 times easier. To download our masters course and flash-cards visit us at http://www.candlestickgenius.com