Mini Forex Trading - The Three Stage Approach To Generous Profits

Mini Forex Trading - The Three Stage Approach To Generous Profits

Mini Forex trading usually comes after many months of paper trading or demo account trading - a wise strategy!

However, at some point, if a trader is going to progress, they have to take the plunge and begin mini Forex trading by opening an account with a minimum of $250-$300. At around $1 a pip, the losses are still small and reasonably contained.

Costs start adding up when the account keeps going below the margin level and cash injections have to be made to keep trading.

The three stage approach outlined below shows how to utilize a Forex mini account and use it to make substantial profits:

Stage 1: The Trading With Real Money Mindset

No matter how long a trader practices on paper or in a demo account, nothing can simulate the real world when it comes to trading.

Yes, the trader may like to think they take the demo account very seriously and treat it as if it was real money, but once they start mini Forex trading they soon realize there is a major psychological leap from a demo account to a live account.

This step, going from a demo to a mini is a crucial one and shouldn't necessarily be put off. Be prepared to blow the first attempt. At least you have got your feet wet. If that happens go back to trading in a demo for a while until your confidence comes back. Then have another attempt at mini Forex trading.

Remember, mini Forex trading is still basically practicing for the time when you will manage a regular account.

Stage 2: Maintaining The Mini Account

Once a trader has gone backwards and forwards between a mini account and a demo account a few times, the time will come hopefully when the mini account stabilizes and no longer gets taken below the margin requirement.

This is a great stage to reach. The balance starts to be maintained and now starts to grow, albeit slowly.

Great satisfaction can be derived from seeing the initial balance grow from $300 to $600, a doubling of equity.

Stage 3: Trading Multiple Lots In A Mini Account

When you reach this stage equity can really start to grow. Many seasoned traders recommend keeping your risk on any one trade to 1% to 2% of your equity.

In a mini account however, some traders suggest making the risk larger given the small amount of equity involved.

For example, with $600 in the account, some traders suggest starting to trade two lots instead of one. If equity falls below $600 then go back to trading a single lot until the balance is over $600 again.

The advantage of trading multiple lots is that you have far greater flexibility when taking your profits.

No trade is guaranteed. Price can turn and go in the other direction at any time.

So by trading two lots, one lot can be taken at a conservative target limit, perhaps 15 to 20 pips, and the second lot can be allowed to run to a more aggressive profit limit. At the same time the first profit is taken, the stop can be moved up to break even point so the trade can't lose.

Once the compounding factor kicks in with mini Forex trading the equity can start to grow quite steadily.

Once $2,000 or so is in the account it is probably wise to then revert to the strict 2% limit for risk control from thereon.

Some traders continue with mini Forex trading even when their equity grows to $20,000 or more. Why?

Because of the flexibility.

If you go to a regular account too soon you lose the advantage of being able to trade multiple lots and still stay within your strict risk management.

For example, with equity of $10,000, you may wish to trade 8 or 10 lots. See how this can work: 6 lots can be taken at the first profit target, 2 can be taken out at the second profit target, and the last 2 can be allowed to run in the event price just keeps on going.

The profits from those last 2 lots can add up to a considerable sum in time.

In Conclusion

With this 3 stage strategy, you can turn mini Forex trading into a very lucrative business. Eventually, when you have considerable equity, you may wish to open a regular account.

But don't be in too much of a rush. Mini Forex trading, with compounded profits from using multiple lots, can still pay the successful trader very generously.

Learn how the MACD indicator can help you avoid much anxiety:

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Forex Currency Trading - 3 Easy Steps To Double Your Discipline

Forex Currency Trading - 3 Easy Steps To Double Your Discipline

Pick up any book on trading and you'll see that discipline is an absolutely essential element of profitable forex currency trading. This specific aspect of trading is also one of the biggest challenges for most traders, even sometimes for those that have been trading the currency markets for years.

Use these 3 simple steps to double your discipline in very short order. Don't underestimate this method. While it won't solve every discipline challenge you may encounter, it will move you in the right direction and it is possible to double your discipline very quickly.

Step one: Be aware while you're in the moment. In the moment when you find yourself tempted to deviate from your trading plan, ask yourself this simple question: "Am I thinking about doing this out of emotion here or would this be congruent with my better judgment?" Being aware of how you're feeling - at the time - is what is key, and then asking yourself the question. Often, the mistake occurs because we simply are getting caught up in our emotions and the simple act of staying aware the emotional surge will help to keep things in control. Awareness is only the first step though.

Step two: Realize where the real problem stems from. Usually the urge to deviate from your trading plan is because of a fear. Here are a couple examples.

* Entering or staying in a trade when you know that you shouldn't often comes from being afraid of missing out on an chance to profit. What is often incorrectly attributed to greed is often a scarcity mindset coming into play. The fear of saying "No" demonstrates the fear that there "isn't another bus coming soon". When you don't have the certainty that there are numerous profitable opportunities to be capitalized on and that you have the know-how to take advantage of them, then the fear arises in the moment.

* Failing to enter a trade is often the fear of making a mistake more so than the fear of loss. On the surface it feels like the fear of loss, but the risk on any given trade is easily foreseeable. This one is an issue of self-doubt due to past errors.

In reviewing the examples above, you may have noticed a common underlying factor. There is a way to eliminate fear, and the third step is to address this specifically.

Step three: the most effective way to eliminate fear is through building your confidence. Your daily life is full of risk and yet you can function will amidst this risk without any fear all. Why? Because you have the confidence to deal with it effectively. When you drive your car, go out in public, walk down a flight of stairs, you have no fear. You have developed the skills to do these things and do them well and without getting hurt. The potential for harm is there, but you have the confidence to handle these situations.

Forex currency trading is a fairly simple activity compared with other professions, particularly with the technology available in today's world. It is certainly within your abilities, and as you broaden your knowledge of and build your skills, you'll find that your fears subside as your confidence grows. The challenge then becomes how to properly go about building your confidence - real confidence, not just bravery.

Real confidence comes from awareness, education, competence, practice, measurement of results and feedback for continuous improvement. Forex currency trading involves a substantial body of knowledge and a respectable skill set to be developed to trade confidently. Unfortunately, most traders are not given the information when they start out to even know what they need to work on to become that successful trader that they envisioned at the beginning of their Forex trading career.

Failing to stick to your system is but one of the many mistakes currency traders make that create losses and anguish. By understanding the root of the mistakes and having specific actions to take to avoid them, you can be a more consistent and profitable trader. There are more than 39 trading mistakes listed in the book, "The Subtle Trap of Trading" along with particular actions you can take to keep from making them. When you understand where mistakes originate, you will find that your forex currency trading is both more profitable and lower in stress.

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3 Tips to Super Charge Your Profits

Forex Trading Tip - 3 Tips to Super Charge Your Profits

The forex trading tip enclosed is all about increasing your profitability and there logical, easy to apply and work. So here are your 3 trading tips, to increase the profitability of your forex trading strategy.

1. Learn The 80 - 20 Rule

It's a fact that in many areas of business work etc that 80% of your profits come from 20% of your efforts and it's also true in forex trading.

Most traders over trade and trade for the sake of trading, they think that if their not trading they will miss a move or the more they trade the better and this is not true. What you need to do is:

Cut you're trading dramatically and only focus on the high odds set ups. I know traders who trade less than once a month but earn triple digit profits. They know trading frequency has nothing to do with forex trading success and you should learn this to.

2. Don't Diversify

Diversification is seen as a way to cut risk - that's only true if you diversify into good high odds trades, but most traders think they should trade a spread of positions, take marginal trades but all that does is dilute profit potential.

Most forex trader's accounts are so small they simply can't diversify and have meaningful gains. No you need to concentrate on high odds trades and then use the next tip to milk them for all their worth.

3. Load up The Risk Reward

How many times do you read that you should only risk 2% per trade well for a small forex account of say $5,000 you wont make much doing that that's $100!

No you need to risk up to 20% on the high odds set ups - if you don't take a risk, you won't make big gains, its as simple as that.

You are not being rash, you are taking a calculated risk based upon the odds and like a good card player, you are going to load up your trade.

The tips above are simple and mean that you have to see forex trading for what it is a high risk - high return odds based game, where you need to be patient, to wait for the right trades and when you see them - hit them hard.

Think about the above simple forex tips and you will see they make total sense.

They will help you enhance your forex trading strategy and enjoy forex trading success.

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Forex Trading Strategy - Pivot Points

Forex Trading Strategy - Pivot Points

When it comes to a forex trading strategy you can use to build a good business model from, nothing is more important than keeping things nice and simple. There's nothing wrong with delving deep into the unknown areas of forex trading, however when it comes to building a successful trading business, keep it simple and try to stick to one method.

Find One Forex Trading Strategy and Stick To It

Probably the most important part of building a successful forex trading business is to find one method of trading and stick to it. When we speak of strategies, we generally speak of trades which can work as a process between any two currencies. So what we tend to look for are pivet points within the market.

Pivot Points

Pivot points are one of the most studied elements of forex trading as well as any form of trade amongst the financial market. Pivot points are normally used by short term traders looking to make a lot of money in a short period of time. This is extremely common with the forex trading circle as the forex market is one of the most volatile markets to trade in.

A lot of people tend to be put off by its volatility, however in most cases this can in fact work as a benefit, especially those who know how to detect pivot points easily.

Pivot points are found by calculating the average of the currency price's high, low and closing prices. Pivot points are flexible in that they can be derived between any length in time, hourly, daily weekly etc, however most successful traders tend to stick to short pivots rather than long one's to again take advantage of any volatility present in the market.

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Benefits of Trading Forex

Benefits of Trading Forex

Trading the Forex market has several advantages over other financial markets. Amongst the most important are: liquidity, it's a 24hr market, leverage trading (margin), low transaction costs, low minimum investment, specialized trading, you can trade from anywhere and others.

Liquidity - Forex market is by far the most liquid financial market in the world with nearly 2 trillion dollars traded every day according to the Bank of International Settlements.

Why is the liquidity so important to us? Because it helps us in several ways:

- The most important of all is that superior liquidity ensures price stability. With such a big market, there will be always someone willing to buy or sell any currency at the quoted price, making it easy to open and close trades or transactions at any time of the day. However, there are periods of high volatility during which it might be not easy to get a good fill.

- Because of the great amount of liquidity, most of the time we are able to get in and out the market fast with consistent executions. But as any other market, during periods of instability slippage is always a possibility.

- Higher liquidity also makes it hard to manipulate the market in an extended manner. If some of its participants try to manipulate it, the participants would require enormous amounts of money (tens of billions) making it practically impossible.

We see that the UK and US account for around 50% of the total turnover, and as a rule of thumb, the more liquidity the more the market moves. We will talk about this later on.

24hr Market - The Forex market is an around the clock market. This means that you could open or close any position at any time from Sunday 5:00 pm EST (Eastern Standard Time) when New Zealand begins operations to Friday 5:00 pm EST, when San Francisco terminates operations. The main reason for this is that there is no physical location where all transactions take place (OTC).

Brain Feeder - As you can see in the image above, there are 4 hours in which the London and the New York sessions overlap, what could this mean in terms of volume and liquidity?

Leveraged Trading - Forex trading gives much more buying/selling power than many other financial markets. This allows us to control greater transactions with a small margin deposit. Some brokers offer up to 400:1 leverage, meaning that you can control for instance a 100,000 US dollar transaction with just .25% or US$250. This also allows us to keep our risk capital at the minimum.

However, beware as this is a double-edged sword. If the leverage is not properly used, this could also be a disadvantage. The more leverage you use, the more of your account is at risk.

Imagine this scenario: Two traders with the same capital using different leverage:

Trader A: using 400:1 with a US$2,000 trading account

Trader B: using 100:1 with a US$2,000 trading account

If both of them open a standard trade (100,000 units) trader A will have at risk US$1,750 (2,000 - 250 = 1750) while trader B will only have at risk US$1,000 (2000 - 1000 = 1000)*.

*Of course there are risk management techniques that allow traders to reduce that amount of risk such as stop loss orders. We will go deeper in to this in the following lesson...

For this reason, using leverage greater than 100:1 is not advised.

Remember: the margin is used as a deposit; everything else is also at risk.

Low Transaction costs - The Forex market is considered one of the markets with the lowest costs of trading. Most brokers collect their fees based on two schemes:

Spread - Brokers collect their fees by charging a different price for long and short positions. The difference is what is collected by the broker.

Spread and Commissions - Most brokers under this scheme charge a commission but usually the spread is tighter and transaction costs can even fall below brokers under the spread "only" scheme.

Low minimum investment - The Forex market requires less capital to start trading than any other markets. Some brokers allow traders to open trading accounts with an investment that could go as low as US$1 (yes, you read that right, that is one US dollar.) On average however, brokers allow traders to open accounts with around US$250.

Of course, you can't expect to make a fortune with that investment but it will get your feet wet before you start risking a larger amount of capital or you can try to slowly start growing your account from there.

Specialized trading - The liquidity of the market allows us to focus on just a few instruments (or currency pairs) as our main investments (85% of all trading transactions are made on the previously mentioned seven major currencies). This allows us to keep track of, monitor and get to know each instrument better.

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