Advanced knowledge
You have learned strategy, now is the time to learn tactics
Currency countries heavily dependent on exports of commodities are often called "commodity currencies." An important factor in any forex trader should consider is the value of the commodity currencies are usually associated with the rise and fall of the country main export commodity value. Whether it is the value of goods and commodities in the country trade balance, in the valuation of commodity currencies important factor. The most commonly traded commodity currency is the Canadian dollar, New Zealand dollar and Australian dollar. Therefore, these commodity currencies, often referred to as "comdolls". While other countries export commodities, exports of these three countries accounted for their annual gross domestic product (GDP) ratio of greater. Therefore, fluctuations in the value or quantity of the merchandise exports of these countries, a country currency will be more significant impact.
Canada
Canada is a major oil exporter. While most countries imported more than the amount of crude oil exports, Canada is the only developed country a net exporter of oil. In the past few years, the export of petroleum products on average more than 60 billion US dollars per year. Another Canadian aluminum exports, increased 800 million in revenue annually. Canada also operates other precious metals, export including zinc, copper and nickel increased significantly - Each value is increased more than 50% over last year.
Canada is a major oil exporter. While most countries imported more than the amount of crude oil exports, Canada is the only developed country a net exporter of oil. In the past few years, the export of petroleum products on average more than 60 billion US dollars per year. Another Canadian aluminum exports, increased 800 million in revenue annually. Canada also operates other precious metals, export including zinc, copper and nickel increased significantly - Each value is increased more than 50% over last year.
Australia
Australia is the world second largest gold producer after South Africa. This is very important? Gold exports accounted for a large proportion of the country gross domestic product, so the change in the price of gold will have a significant impact on the GDP of the country and its currency value. Also, if gold production fell, it could indicate a potential weakening Australian dollar. Although Australia is its gold export foreign exchange trading, oil is also an important export commodity. Australia in the past few years, the export of petroleum products has grown faster than any other export commodities, currently more than 13 billion US dollars annually in the country.
New Zealand
New Zealand exports without any kind of commodity-based, but the largest proportion of timber, dairy and meat products. Various commodities index has proven to be worth the long-term reference value index NZ.
Cross Currency Trading
Just means not involving cross currency dollar currency pair. Because the dollar is the most traded currency in the foreign exchange market, people can think of cross-currency as the major currency pairs.
The euro and the yen crosses
Dollar, euro and yen trading volume behind and as a reserve currency country. Therefore, there are several euro and yen-based cross, including: EUR / GBP, EUR / JPY, GBP / JPY, CHF / JPY, EUR / CHF (CHF CHF), Euro / Canadian yuan, EUR / AUD, EUR / NZD.
Use relative strength
Some forex traders choose never trade such as the euro / sterling, etc., especially cross-currency pairs. In fact, many of the more obscure the associated cross currency pair can provide clues about the relative strength of its US dollar or the yen.
Funds Management
Money management is one of the most important aspects of forex trading. Even the most brilliant traders not 100 percent judge the market, you instantly good fundamental analysis or technical trading, position control will lead to ultimate failure is not good.
Buy and sell your total working capital of the correct ratio is one of the most important aspects of money management. However, it is only a few tactics to help to minimize your risk and exposure, thereby setting the stage one of the consistent positive returns. Therefore, we will not stop there, but will discuss the success of each of the key foreign exchange funds management.
Risk-reward ratio
Traders profitable transactions must understand the concept and implementation of risk and return. The concept of risk and reward, as its name implies, to quantify the expected loss (if the transaction is unsuccessful) the expected benefits (if the transaction is successful) ratio. When the probability associated with the results of the combination of trade, the proper use of risk and return will greatly increase the chance of a successful trader.
While this ratio is usually referred to as "risk and reward" the actual value. As an example, a 2: 1 risk-reward ratio indicates that traders expect profit 2 units / return, or loss of a unit / risk. In this example, the "unit" can be a trading unit, an idea, or any other measure - it not a problem, because the calculation is a ratio.
Foreign exchange risk and reward is how to determine?
For each and every market raised the following two questions should be asked (trade on the front):
1) If I am correct, the trade is profitable, how much can I expect to earn?
2) If I was wrong, I was able to withstand much damage?
Such as
If I see a great opportunity to buy EUR / USD at 1.3200. If my analysis is correct, I can reasonably expect to see 1.3400. If this happens, I will get 200 ideas - this is my goal, or I expected return. But if I do not correct the trend, I am only willing to lose 50 points. I will place my stop at 1.3150 established the greatest risk 50 points.
Risks and benefits of the formula: Expected rate of return / greatest risk
Our example: 200 pips / 50 = 4 points
Our risk-reward ratio: "4: 1"
The risk-return combination and probability
Risk-reward ratio is only profitable part of the equation. Another important factor that must be considered probabilities. The probability of answering the question: "What are the odds that this market will reach its target?"
Purely random events - like flipping a coin - will have a 50% probability.
And the probability of the risk-benefit relationship to be displayed between, let us ask ourselves a question:
If one day I was in the probability of four quotes, risk and return, I need to break-even point?
Through this example, let say we only consider a 3: 1 return on the stock market risk. This means that every market, I won - I earn $ 3. Every market, I lost - I lost $ 1.
In this example, a 3: 1 risk-reward ratio, 25% probability of winning together, let us break even in four market.
Here is the probability that a combination of risk and return a table and the required breakeven point
Creating a trading plan
General advance to create a trading plan is a good habit. There are people who deal trading strategies than others it is more conducive to long-term planning. For example, the day of moving and changing market, many people can not plan too far in advance, are largely dependent on the reaction of traders almost instinctive.
But for most of the trading strategy (even the most wavering transaction type) to create a pre-investment plan is also very important. Perhaps the single most important part of the transaction plan is the goal you set. When you think the market reversal, you should know ahead of sell orders should be set accordingly. The exit point is you, as a vital part of a successful trader.
A good overall strategy is to draw support and resistance levels of the day, so you in a relatively quiet time, when your currency near its support line or resistance line, may decide to buy or sell.
Before you do business, you should evaluate how much you are willing to tolerate losses. What is the expected volatility? How confident are you? These issues are, you should ask yourself when you are in your plan, and decide where to place a stop.
In your plan, fund management is part of a trader is most concerned about, but it is one of the most important variable, not because of the potential returns from the correct money management, but because you risk a strike is causing your position is too large you can not guarantee this.
Write out a clear transaction process, not only as a very useful document for reference, it also forces you to review your thinking, you see the weakness of the strategy and plan your ultimate potential defects. As important creative process, it forces you to look at your second hypothesis and demonstrate some of the conclusions that you might take it for granted.
Therefore, even if the creation and review of your trading plan (should clearly list each important step) do not change easily, it can be enhanced as a long-term investor skills.