Forex Education

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

Forex Articles

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In these section we are going to include general articles about Forex and the financial markets. These articles will have a variety of topics, from trading systems, system evaluation, trading psychology, market analysis, Forex brokers, Forex autotrading, Forex signals and more. In this way, the trader may complement their training with interesting articles that will give you a more complete picture of trading.

These articles will be written by traders with experience in the financial markets, mainly in Forex. If you have any questions or suggestions about an article that you would like to read, please let us know.

Likewise if you wish to contribute with some articles written by you, you will be welcome. If you want we can include the name of the author and the link you want.

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Position in Trading

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What is a position?

In the field of trading in financial markets, a position is a binding commitment to buy or sell a specific amount of financial instruments such as stocks, currencies, commodities or derivatives, to a certain price. The term “position” is also used in finance to describe the number of assets held by a person, company or institution as well as the state of property of the investments of an individual or institution.

Do not confuse the meaning of “position” in the trading of financial instruments with the term “financial position”. The latter stands for “status” or “statement”, ie the balance sheet liabilities in a company to take charge of their debts and obligations.

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Forex Money Management Guide

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In this section, we will try to explain what is money management, what are the different techniques used when applying it, as well as other concepts related to this topic.

Introduction to Money Management

Money management is probably the most important aspect of managing a trading account. It is something so simple that can be learned in ten minutes and certainly is one of the most important causes of losses for most traders, usually in a reduced time.

As the name suggests, Monetary Management is nothing more than a set of techniques that help us to determine the size of our position to control potential losses that may arise when the market move against us.

Due to the high leverage offered in the Forex trading, many inexperienced traders assume a higher risk than any investor should take, resulting in hardly recoverable losses.

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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 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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