Forex Education

Education on Forex trading and financial markets for beginners and professional traders interested in earn money trading

Basic Rules for a Proper Risk Management

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Of course no one likes to lose money under any circumstance, but losses are inevitable in trading and that is why we need some rules to keep them controlled at all times. Therefore we include the following basic rules of risk management:

1. Do not risk more than 1% on each trade. This will give you a chance to survive a series of losses (draw downs) without affecting your account too much. We must bear in mind that what makes a trader wins in Forex and other financial markets at the long-term are the accumulated earnings of all winning trades so we must begin limiting the losing trades.

We will talk later about what technical features must have a successful trading system, but the point is that we must find or develop a model with a high percentage of effectiveness (Win Rate), so that the amount of points earned will become greater than the amount of points lost at the long term.

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The Money Management – Basic Principles

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money management applied in trading

What is money management?

Many traders believe that the most important thing in trading is the knowledge of everything related to the market analysis or having a trading system with high reliability. It is true that these aspects are part of the success of a trader, but are only one part. However, one of the most important aspects of trading refers to the risk control and money management, because if we enter the market without a contingency plan for the worst case scenario, we are betting, not trading. We can spend much effort improving our trading system and gain knowledge about the market, but unless we develop a money management strategy we will not survive long in an environment as unpredictable as the market.

Money Management or Operational Risk Management is defined as the process of analyzing the trades according to risk and potential profits, determining how much risk, if any, is acceptable, and managing each position to control risk and maximize profit according to the equity in the trading account. Following the principles of preservation of capital, money management may consist of anything from a few simple rules to complex portfolio management theories. However, for most traders and investors, a common sense approach is more than enough to start earning money.

In this section I hope, for a moment, we will divert your attention from the search for the perfect system, so you can discover that you can turn a loser  system into a winner just by changing the rules of money management.

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The Interest rates

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What is the interest rate? The interest rate is the rate paid by a borrower for the use of money borrowed from a lender. For example, a company (borrower) asks borrowed capital to a bank (lender) to buy new assets for their businesses, in exchange for lending money, the lender receives interest at a predetermined rate. The interest rate is … Read more

The Forex Market

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Forex market description

What is the Forex Market?

The word Forex stands for Foreign Exchange and it refers to the Foreign Exchange Market. The Forex is a decentralized market which exists wherever one currency is traded against another such as financial centers worldwide, banks or any financial institution or company where currency transactions are conducted. Therefore it is the largest financial market in the world, especially in terms of daily trading volume.

In this market participate central banks, major financial banks and similar institutions, multinational corporations, governments, currency speculators (large, medium and small investors) and other market participants and institutions of all kinds. Small investors (those who speculate with relatively small amounts of money) are a small part of this market and they can participate directly by companies dedicated to providing trading services or indirectly through banks or brokers.

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Elliot Waves Theory – Description and Features

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Elliot Waves Theory – Offering Great Predictions!

The Elliott Wave theory developed by Ralph Nelson Elliott (1871-1948), is based on the principle that price movements of financial markets can be described through the waves that form it and the study of the graphic formation of these waves. It is based on Dow theory and is a significant advance on this. In other words, it analyzes the different movements or «waves» in any period of time, both the bullish and the bearish waves.
After the death of Elliott, this theory was almost forgotten and years later was AJ Frost and Robert Prechter who with his book Principles of Elliott Waves (1978) made ​​it popular.
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