Sunday, June 29, 2008

List of ECN for Forex

Definition of ECN

Electronic Communication Network is an electronic system that brings buyers and sellers together for the electronic execution of trades. It disseminates information to interested parties about the orders entered into the network and allows these orders to be executed. Electronic Communications Networks (ECNs) represent orders in NASDAQ stocks; they internally match buy and sell orders or represent the highest bid prices and lowest ask prices on the open market. The benefits an investor gets from trading with an ECN include after-hours trading, avoiding market makers (and their spreads), and anonymity (which is often important for large trades).

List of ECN collection: (owned by Citi) (formerly CoesFX I believe) (FXCM, not sure how legit this is) (not sure that this is an ECN yet)

Wednesday, June 25, 2008

Learn to Manage Your Forex Non-Method Trades

Non-method and non-setup forex trades are in effect trades that are "bad" forex trades, which are done without proper analysis or method. These are trades that are outside of your usual trading methods and strategies. One would think that traders would avoid placing forex trades that goes against their own tried and tested forex method, but in reality this is not the case.

Many forex traders often do this, even the experienced ones are no exception, and they pay the price because they hold out on "bad" trades too long, hoping against hope. The interesting thing is, often times, the forex trader is actually aware of what he/she is doing, but makes the trade anyway.

This behavior is called the forex trading psychology problem, that is, a forex trader knowingly taking a non-method trade AND then is forced to accept the additional 'baggage' when there is a loss.

A bad trade is not only based on the results of the actual trade - ie a bad trade is not always a trade that ends up a losing trade. A losing trade based on forex methods and setups is not a bad trade. There is always some risk involved in all of one's trades, and that is factored into one's analysis in the methods and set-ups. So the risk of loss from a percentage of your method and set-up trades is accepted. Losing this way is not a result of a trading psychology problem.

To call a trade a bad trade, one knowingly takes a non-method and non-set-up trade, probably as result of chasing a missed trade, or because of fear of missing a trade. A trade bad IF: (1) the trade does not have method components that setup-trigger the trade (2) the trade is done at a 'filter point' specifically established to eliminate a trade at that given time.


The implication of a trading psychology problem goes from taking bad forex trades and knowingly taking non-method trades, goes further than the obvious, where the forex trader has to accept that they were the cause of the loss. There are times where the bad trade is a winning trade, however this will still have trading psychology manifestations, as the 'winner' reinforces the continued taking of non-method trades.

Trading psychology causes enough problems for forex traders as it is. We should learn how to not make create additional problems by trading psychology becoming a primary cause. Any winning trade that you may occasionally be able to get from placing non-method and non-setip trades, is going to be far outweighed by the losing trades AND especially by the additional trading psychology issues that make method trading become more difficult.


Sunday, June 22, 2008

Forex Trading, Not Knowing When to Place Trades

I have been helping teach a female friend of mine forex trading since January this year. The chart on the right shows short (sell) trades on the EUR/USD that was placed by her a few months ago when she had absolutely no idea what she was doing - thankfully this is not the case today! But I wanted to post it here to illustrate one common mistake beginners make when placing their entry positions. In this chart, you see that three trades were opened within a five-minute time frame towards the end of a fall in prices.

Of course, when the trades were placed, she did not realize that there was an end to the fall in prices. Her rationale was simple - prior to opening the positions, she noticed that the prices were falling markedly. She did not want to miss an opportunity to get in on the action, so she quickly placed the three trades.

That was common beginner mistake number one; ie, rushing to place the orders without first studying the chart because you are afraid of missing a big move. It is never wise to place trades when a big move (in this case, a fall in prices) is already in motion. Instead, it is better to wait and see what happens. If she had waited, he would have seen that the prices were starting to make a turn upwards!

The second mistake made in this trade was that she sold right when the prices were on (or near) the lower blue line (the 24 bollinger bands). Typically, buyers are waiting to buy at the lower blue line. If someone wanted to sell, the best place to have done that would be at the gray line (the one in between the two blue lines). But by the time the price went to the gray line, it would have become obvious that the price had already reversed directions, and was now heading up!
The take-home lesson in this example would be to not enter a position when a big move is already in play. Be patient and wait for the next opportunity.

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Forex Trading

Into my thirties, I realized that although I am highly educated with three degrees from ivy-league schools, I have been trained for nothing that brings me the big bucks. Wishing to attain a lifestyle that does not require me to work 70 hours a week as a modern-day slave, I picked up trading - stocks, options and forex. What I like about trading is that it is something anyone can do so long they are willing to spend the time to learn. Today, I am starting to see the fruits of success in my trading. And I created this blog to transmit information on what I have learned to others interested in the same areas. This will also help me solidy my strategies. Being a female trader, I am particularly hopeful that women readers benefit from my blogs because I don't find too many women out there with similar interests in forex trading.

I started trading currencies about three years ago. I was looking for a way to earn fast money from home without putting in much effort. I opened my first forex trading with FX Solutions, and promptly lost all the money I had in the account. Thankfully, I had only begun with the minimum requirement for opening the account, which was a $100.

I did not know anything at the time about leverages, margins, moving averages, nor even how to read the trendline and charts. Subsequent attempts also met with failure - I think I must have cleaned out my account about 3 times before I started to make consistent money!

Since then, I have devoted time to observe and learn the forex markets. And today I am happy to say I can make money doing forex trading on a consistent basis.

Still, forex trading is risky because the markets are volatile, and the up and down trends can change very quickly. Even an experienced trader can make mistakes, so if you don't know what you are doing, chances are you will end up losing, and then getting disillusioned about the whole trading business.

So to avoid that, let's get educated readers!