There are many different Forex trading strategies used by both amateurs and professional Forex traders today. Some are based on stringent sets of rules, some use complicated software packages, and some require the learned skill of expert market analysis. Below we examine four different types of Forex trading strategies that are most commonly used by Forex traders as well as the systems they utilise.

Mechanical Forex Systems Based on Rules

Some Forex trading systems are built using indicators that are mechanical and based on rules. They are designed to respond to specific sets of rules for entering and exiting that rely on a type of signal, which is produced by one or many indicators. Although often a profitable Forex trading strategy, using this type of system in your Forex trading strategy has its issues. Like all Forex trading systems that are built using indicators they can be very difficult to wholly understand and interpret, lending to confusion. Furthermore, because this Forex trading strategy relies on a rather rigid set of rules, it is generally not flexible and often does not apply to all market situations. In other words, the Forex market fluctuates in a very dynamic and complex way and influenced by outside factors such as politics, therefore an attempt to fully ‘define’ it with sets of rules has its limits.

Forex Trading Software or Robots

Especially on the Internet, Forex trading robots are considered by many to be the best Forex trading strategy. Smart programmers design fully automated trading systems using Metatrader 4 or 5 platforms. The main advantage here is that they remove the primary cause for error in Forex trading- human emotion. If a trader can exercise discipline, this is a Forex trading strategy that works. An undisciplined trader can deviate from the system and override the automated trading software. Ultimately the human trader is still in control.

Discretionary Strategies

This encompasses various Forex trading strategies that currency traders use to analyse and trade. Some classic Forex techniques include simple chart patterns, ‘candlestick’ analysis, support and resistance strategies, trend strategies, breakout strategies and more. These can be described as professional Forex trading strategies and are learned through experience and practice. They must be used with discretion and utilised more like a trading tool as part of an overall Forex trading strategy. For beginners these strategies are worth understanding.

Price Action Trading Strategy

Many consider this to be the best Forex trading strategy. Currency traders can set up price action trades to develop a complete Forex trading strategy. This technique is highly flexible and adaptable, working in any currency market environment. This is the main difference between price action strategies and software-based or mechanical systems. It’s also a very efficient and clean method of trading currency, as traders are not bogged down by a plethora of indicators. Again traders require a sound knowledge of the currency market. It’s recommended to try a variety of Forex trading strategies to gain a holistic understanding of the currency market and to find an overarching and personalised strategy that suits you best.

Penny Munroe is a self-taught currency trader and uses an online Forex broker. She currently trades using a metatrader 4 Forex broker but aims to expand her Forex trading strategies to include other techniques and systems.

You are courageous, open-minded and faced with the opportunity to beat the markets. Lone traders observe, learn and develop systems to earn millions while others suffer from the group-thinking complex that leads to failure. Although many traders fail in developing their systems, they also gain skills necessary to see opportunities before anyone else. You may feel like you are alone in the beginning, but you are entering a state of accountability no one can claim as their own.

Your conscience is clear

You can enjoy trading without a nagging or haunting feeling in the back of your mind. Lone traders often build systems from scratch and then gain experience. If you trade with others, you have to listen to what they want and participate in buys you may not believe in. Your conscious eats away your courage to break from the pack, but it’s an exhilarating experience. Clear your mind and let your trading strategy lead the way.

You can experiment without approval

A group meets, reviews and decides on each buy. Sometimes this can cause problems and make you lose out on opportunities the market does not see. The trade window shrinks and so do the potential profits if you have to wait for a group decision. If you are lone trader, you can make the decision in minutes and then enjoy the profits on your own.

You own every profit or loss

After you take responsibility for your trading, you are responsible for everything going on in your account. Lone traders have to assess the market, find buys relevant to their goals and risk losses alone. There is no one around to help you figure out your next steps. You have to take responsibility for every decision.
Consider the problems associated with trading groups:

• If one person is not able to provide their portion, someone else must make up the loss.
• You are blamed for a potential loss if the group agrees on a particular buy.
• You cannot enjoy unseen fortunes if you have to share your strategy with many.

According to Investopedia, the markets change due to a given system traders follow. If more traders kept their strategies private, the profits would remain in their favor. You, as a lone trader, can see opportunities before the market corrects them but you have to act fast and with caution.

You must hold yourself accountable

No one can point a finger if you make a bad decision. The little guilty feelings you have can disappear in minutes instead of a trading partner bringing it up during a meeting. You can create your own set of rules to follow. You make the decisions and you keep your dignity intact.

You deserve the right to explore

Markets change without consent and so does your ability to find trade windows to make profitable decisions. Group trading is okay for some people, but you have to develop your own philosophy, style and tolerance for the market before you engage with others. A lone Forex trader meets his or her goals without clouding his or her judgment by a group’s decision. You never have to ask for approval if you design your own strategies.

You may not have the funding to trade alone. You may not understand the markets completely, but you can take advantage of the opportunities to buy small to earn big profits. In the midst of your training career, you may notice that a public trading system or group is not good for you. You can decide stick with the group or find your own success. The choice is yours.

Guest post by Elizabeth Goldman, a freelance forex writer and contributor to a number of top communities across the web, on behalf of Sunbird Forex Trading – home to the MetaTrader platform. All views and opinions are those of the writer and do not represent Sunbird or etiksite.org.

It seems like a good time to look into the growing popularity of alternative investment. If you’re considering diversifying or expanding your portfolio then expect your wealth manager to bring alternative assets and investments up.  Any investment that wouldn’t be included in the average portfolio (up to and including Hedge Funds) is classed as ‘alternative’ so it’s a pretty broad range. One that includes traditional commodities like diamonds or gold, but is anything up to and including classic cars, modern art and even postage stamps, but it adds a diversity that could just provide a little more security to a portfolio in the current volatile financial conditions.

Art is being touted as safer and more rewarding investment than stocks and shares in various commentaries. Alternative Asset Analysis (AAA) claims that art out performed equities again this year, making it two consecutive years. The expanding Asian investment in art, antiques and collectibles is showing no signs of slowing and is producing steadily rising prices in various collectors markets. Hong Kong’s auction’s turnover grew by 300% from 2009 to 2010 according to James Pomfret and Lisa Yuriko Thomas for Reuters. While much of the early investment was in Chinese and Japanese antique art and furniture the trend is expanding into nearly all collectible areas. Beware though, to profit from the rising prices a certain amount of expertise in the particular area is recommended, but if you do have a solid, in-depth knowledge in movie memorabilia or Victorian art then perhaps it’s time to take that hobby a little further.

Alternative doesn’t necessarily equate with the concept of ‘passion investing’, pundits don’t have to be expert wine tasters to invest in fine wines. Millions is being invested in Fine Wines via enterprise investment schemes (EISs).  A Wealth Manager won’t realistically be a wine aficionado, art buff, or passionate about stamp collecting -although they might! They should, however, be able to help their customers access more general alternative assets, gold or diamonds are showing good returns at present.

Over a trillion dollars was invested in alternative assets in 2010 purely in US pension funds according to Towers Watson with the FT.  The Alternative Investment Market (AIM) is growing, according to Paul Lupton of Deloitte, with de-listings hitting a six-year low in 2011 meaning that the actual number of companies listed should actually increase for this quarter for the first time in six years. While alternative assets are often seen as high risk, at present most of the market is either very low yield or as equally high risk, so spreading the risk around a little makes sense. Beware though; some alternative investments are low in liquidity so customers that need easily liquated assets should give any deals a great deal of thought.

Forex trading is not an exact science. While you can analyse the markets’ history to determine trends, there will always be an element of risk taking. However, tools like forex indicators can help traders choose a good moment to enter or exit a bid. We take a closer look at what forex trading indicators are and a few of the different types that you must know if you plan on trading on the forex market.

Trend Following Tool

The most common and simplest to understand of the trend following tools is the Moving Averages indicator. This tool will measure the average closing price over a predefined number of days and smooth out the data so that traders can clearly see the market trends and tendencies. It is important that traders realise that this is a forex indicator that can help analyse trends, it is not a separate trading system.

Trend Confirmation Tool

Once you have set about analysing trends using your trend following tool, it is a good idea to run through a trend confirmation tool. This will help you see whether or not that your trend following indicator is reliable. One of the most commonly used trend confirmation tools is the Moving Average Convergence Divergence. What this forex indicator does is measures the distance between two moving average lines.

On a forex chart you will see the MACD line and the second line which is called a signal line. When the MACD ine falls below the signal line it is an indication that traders should sell, and conversely when it rises above this is a signal to buy.

Overbought/Oversold Indicator

As you can imagine, if one trader sees that it is a good time to buy into a currency, then there are sure to be a number of other traders around the world thinking the same thing. In this situation you may want to buy in straight away or wait a while until risk is reduced. However, if you choose to wait until this point you may find using a technical forex tool such as an overbought or oversold indicator such as the relative strength indicator quite useful.

The RSI indicator plots the differences between the averages of the closing prices on up days compared with the closing prices on down days for a pre-defined period of time. This is plotted on a graph with a vertical scale of 0 to 100 and is measured in a period between 5 and 25. When it is between 20 and 30 this is a forex indicator to buy as the currency is likely to reach its low for the trend. When it is overbought in the 70 to 80 area, this is forex sell signal as the currency has reached its top.

Profit Taking Tool

Finally traders should use a profit taking tool as this forex indicator will help them determine when is a good time to get the best volume of the profit in a winning trade.

As you can see, using forex indicators is an extremely important part of successful trading.

Bella Gray is a part-time forex trader who recommends practising trading in a metatrader demo account before trading realtime in a forex trading account.

Depending on your experience in the stock market, you may or may not have heard of the January Effect, a Wall Street term given to the general increase in the rise of stocks in January each year. This phenomenon is in general attributed to a sharp increase in buying which usually occurs toward the end of the year in December, when investors quickly offset capital gains and sell their stocks to create tax losses.

However, according to Mark Hulbert of MarketWatch, a highly authoritative financial information website that provides business news, analysis and stock market data, this information should be taken with a pinch of salt. The stock market January Effect is based on research that was conducted so many years ago that many investors of today have forgotten a very important point; that this tendency of stock to strengthen does not apply to the entire stock market.

The January Effect was in fact first recognised way back in the 1940s, but the strength was only quantified by Donald B. Keim in 1982 in a study that utilised stock market records dating back to 1925. Since Keim, various studies into the January Effect have been conducted by market leaders and professionals. Most recently in 2010 the Wall Street Journal reported that from the year 1900 to 2009, the Dow Jones Industrial Average increased by 62% in the period of January, with the Nasdaq Composite Index rising by 67%.

However, before you switch from trading currencies to stocks on your mt4 platform, the trend of more recent years has shown that the January Effect actually starts in December, probably due to increased awareness of the upward trend. According to the broad market measured by the S&P 500, January has actually seen a steady decline in the years 2001-2003, 2005, 2008, 2009 and 2010.Professionals agree, however, that it is in fact small stocks are the biggest contributor to the January effect, and that investors can still make large profits if they fully understand how to take advantage of the January Effect stock market.

Strength after the New Year comes mostly from stocks of comparatively small companies, according to data from Eugene Fame, a finance professor at the University of Chicago, as well as Ken French, a finance professor at Dartmouth. According to their figures, the average return in January from smaller-cap stocks is 7.9% larger compared to the 0.9% average from February to December. Thus to fully take advantage of the January stock market Effect, one needs to do the research and seek small companies to bet on, with market caps below $100 million, that are recommended for purchase by financial services. As well as other stock market and Forex trading tips, view what Mark Hulbert recommends for the January Effect 2012 on MarketWatch.

Penny Munroe is an avid writer in Forex news and tips from around the world and aims to educate her readers in the skills of succesful trading.

Bad credit mortgages are an option if you don’t have the best credit. You may really want to own your home, and that is holding you back. Even though bad credit mortgages get a terrible reputation, they can still be a huge benefit. You do need to learn more about them though so you can make a well informed decision.

#1 Start Improving your Credit

You may feel that your credit is so far down that it will never get better. Yet a bad credit mortgage is a start to improving it. By making that monthly mortgage payment you will be able to show that you are credit worthy to other lenders. It could be the path that gets you into a new card, gets you credit cards, and more in the future. Take small steps though and give your credit time to improve after you get your mortgage.

#2 You can Refinance Later

Right now, you may feel that you are wasting your money on rent. It could be just as high as a mortgage payment. If that is the case, go for it with a bad credit mortgage. You can always refinance later for a lower rate of interest. This will help you to save a great deal of money. At the same time though, it means you get into a home now instead of later. It means that your money is going towards an investment and not just being blown on rent.

You may be able to refinance in just a year or two. That time will go by before you know it. There is no guaranteed time frame though. Your credit and the current rates of interest will influence what you can do. Still, it doesn’t hurt to keep your eyes open and to explore possible refinancing options.

#3 Tax Benefits

When you file your income taxes, you want to have ever single deduction that you can get. What you may not realize is that all of the interest you pay for your bad credit mortgage is going to be tax deductible. That is some solace for you when you are paying a high rates of interest. This deduction could help you to get a very nice refund back from the IRS.

With that tax money, you can pay off debts to improve your credit score. You can also use the funds to pay towards the principle of your mortgage. When you are renting, you don’t get any deduction. The tax benefits are higher when you first get your bad credit mortgage loan. This is because early on in the loan, the majority of your payment will be going towards the interest.

If you have poor credit, don’t assume you can’t get a loan for a home. It may be more difficult and you will have to prove you can keep up on the payments. Yet it is worth talking to a lender that specializes in bad credit mortgages. They can help you to evaluate the options open to you based on your current circumstances.