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The Expert Level

The Expert Level - FX Trading School

In this Section we introduce you to the concepts of using tools that will help you to fine tune your trading.

This will give you an edge as it enhances your existing knowledge already.


THE EXPERT LEVEL UNITS - Ordered by Serial Number
"When a beginner to forex trading is asked about what their biggest investment would be, they would often reply with money. This may be true to a certain extent. But it is time that is your biggest investment as a forex trader. Without dedicating the time required, you will not learn much about the markets. By dedicating time, you will set yourself up to learn about the markets, how the different instruments interact and also learn how to trade the markets professional. Many professional traders takes years of hardwork to reach where they are. Therefore if you think that you can become a profitable trader overnight by trading forex, then you are mistaken. You would end up losing more money rather than make any money in the first place. In this article, we will show you why time is so important in your journey as a forex trader and why you should be looking at giving yourself enough time to…
"A trading journal is one of the most important aspects of trading. As a trader, your trading journal will help you to get focused and also helps you treat your trading system as a business. Many traders often start out with a trading journal but soon lose focus. This is because it obviously takes a lot of time to keep and also to maintain a log. But this is so in order that you treat your trading seriously. The importance of maintaining a trading journal cannot be stressed further. In this article we take a look at the top five reasons why you should maintain a trading journal. We will also show you the importance of maintaining a trading system and why many successful traders make use of a trading journal in order to remain consistent in their trading. Read about the top five reasons why you should maintain a trading journal and its importance for you as a trader."…
"Designing a forex trading system is something that will take time. Not every forex trader is able to get a level where they can design their own trading strategy. There are a number of things that you as a trader should be aware of before building a trading system. If you have come to a point where you can design your trading system, then congratulations. We expect that you already know quite a bit about the markets and the technical aspects of trading. Once you are at a stage where you want to design your trading system, this article will help to act as a guideline in terms of assisting you in designing your trading system. There is nothing complicated about building a forex trading system. You just need to apply some common sense and logic in order to have your own customized trading system that you can trade for yourself." Building a trading system might seem like a complex…
"A mechanical trading system is something that you will come across during your journey as a forex trader. But what exactly is a mechanical trading system and why is it so widely talked about in the forex circles? A mechanical trading system, as the name suggests is a trading system that is based on technical indicators. The buy and sell signals are generated based on a simple set of rules. When these rules or criterion are met, the trader takes a long or a short position. In the forex markets, traders either make use of a mechanical trading system or one that is based on discretionary based trading system. Remember that there is no right or wrong way to trade. Both these approaches comes with its own pros and cons. It is up to the trader to understand what approach they are better at when it comes to trading. In this article, we look at what a mechanical trading system…
"A currency carry trade is a type of strategy that is derived from what is known as a carry trade approach. A carry trade simply means that the trader or investor borrows funds and pays interest on it, in order to fund something else which gives a higher rate of return. Carry trade is commonly used across many markets but primarily found in the bond markets. A customized version of the carry trade is used in the currency markets, which gives it the name currency carry trade. The basic purpose of carry trade is to seek for a low funding currency in order to fund a higher yielding currency. Interest rates and their differences forms the premise for currency carry trade. While this strategy can give good returns, the performance of this strategy is depended on a number of factors which can last for years. Thus a currency carry trade is not always advisable to be used unless you have…
"A currency carry trade strategy might seem sophisticated. This is because many large institutional players often tend to take advantage of the economic and monetary policy conditions. For the retail forex trader, a currency carry trade strategy might seem like an alternative approach to regular technical analysis. But to be adept and to make a profit from currency carry trade, traders should focus on a lot of aspects. It is not just technical analysis but also fundamental analysis that plays a big role in your success in currency carry trade. In this article, we explore the criteria and the risks for a currency carry trade strategy. The approach in this method of trading is entirely different and therefore it is not recommended for all traders. Typically, you will find currency carry trade being explained as simply buying one currency with higher interest rate and selling another currency with lower interest rate. But there is more to that." Carry trade strategy…
"Breakouts and fakeouts might seem like a fancy terminology. But you might have come across these terms if you have had some basic trading experience. Breakouts and fakeouts are quite popular with day traders. This is because these occur a lot more on the smaller time frame charts than on the longer time frame charts. While trading breakouts posts significant risks, they can be quite rewarding as well. Because traders are always influenced by profits, breakout based trading is quite popular. Before you get into breakout based trading, you should be aware of the risks. A failed breakout is nothing but a fakeout. A fakeout can trap your position to the point that if you do not employ good money management strategy, you could end up with big losses. While there are a number of indicators you can use, breakouts are quite unique to each other. Sometimes they work and most of the times they don’t. Learn what are breakouts…
"Market sentiment is a term given to the general health of the markets at large. It is a broad and an umbrella term used to describe the general investor feeling for the stock markets. Market sentiment is a reflect of what investors feel based on the news such as the fundamentals that are coming out. Market sentiment is an important aspect as it can prepare you as a trader in identifying what currencies or commodities to trade and which ones to stay away from. The market sentiment is largely applied to the stock markets. But you can also see this playing out in the forex or the currency markets as well. As a trader, it is in your best interest to understand the concepts of market sentiments. This article gives you a primer on what market sentiment is all about and what it infers. Based on this information, you will then able to make better judgements about your trading choices."…
"When you trade the financial markets, you will come across some key reports. These reports can vary depending on the type of markets and the instruments that are being traded. Among the many reports, the Commitment of Traders report is one such report that traders closely watch on a weekly basis. Released on a Friday, the report shows how the large money is positioned in the general markets. This data is reported by some of the biggest firms in the U.S. and the positions are reported as of the previous Tuesday. Despite the lag in the reporting, the CoT report holds its ground. The Commitment of Traders based trading was made popular by Larry Williams. Williams’ published a book talking about how he was able to make millions by building a trading strategy around this report. No doubt, the book was a hit and it also made the CoT based trading strategies very popular." The Commitment of Traders report is…
"The Commitment of Traders report is no doubt something that will fascinate many traders. After all, the goal in trading is to find an edge in the markets. Some information that can put you ahead of the rest. The CoT report is one such report that aims to bring about some transparency. Because the markets are made up of large institutional players, the CoT report aims to make it a bit of a level playing field. Thus, the widely available free information is used in the retail markets. It provides traders with some key information that is otherwise not possible to have. In the previous article we gave you a brief outline to the Commitment of traders report. But in this report we will dig closer into understanding what the CoT report is all about and also explain some of the key points in this report. You should be able to have a basic understanding and be able to read…
"The Commitment of Traders report is something that we have covered in the previous articles. They give you the basic foundation of what the Commitment of Traders report is all about and how this information can be used. In this article, we give you more insights into how you can use the Commitment of traders report into understanding the implications in the market trends. By analyzing the data, you will be able to see how the commercial and non-commercial positions will influence the market trends and how you can use this information for trading. This article gives you a basic outline of many traders make use of the CoT report in their day to day trading. We also outline some of the limitations of using the Commitment of traders report in your daily forex trading. By the end of this article, you should have a fair idea of reading the CoT report and understanding what it means in the technical…
"Tops and bottoms are key levels in a price chart. This indicates that price has completed its trend and reached a top (and a bottom). When a top is formed, it infers that the previous uptrend is nearing its completion, or at the very least, price is due for a correction. Similarly, when a bottom is formed, it indicates that price is nearing the end of its downtrend and is either likely to change direction or will post a correction before the downtrend resumes again. In technical analysis, traders make use of various technical indicators such as moving averages and so on in order to understand the change of trend. Being able to catch a top or a bottom can be lucrative as it gives you an early positioning into the markets. This gives you a lot of time to stay within the trend and be able to make big profits. While it is risky to trade tops and bottoms,…
"Currency correlation is a method of applying correlations to understand which currency pairs exhibit the same behavior. Currency pairs can be positively or negatively correlated to each other. What this means is that positively correlated currency pairs move in the same direction. Meanwhile, a negatively correlated currency pair moves in the opposite direction. Correlations are often found in different markets and not just confined to the forex markets. But in the forex markets, you will find correlations being used more because of the fact that forex markets works on the basis of currency pairs. Thus, there is a good chance that a base currency in one currency pair can become a quote currency in another currency pair and vice-versa. In this article, we give you the basics of currency correlations and how you can use these to your advantage when trading the forex markets. While correlations might seem a bit complex, they are actually very simple." Currency correlation is defined…
"Trading multiple currency pairs can make forex trading a lot more exciting. Depending on the assets that you are trading, there is a good chance that the profits can be increased greatly. However, in doing so, traders do not realize whether they are taking on more risk. Of course, logic dictates that when you have an exposure in more than one currency pair, you are indeed taking on more risk. But besides this, there is another aspect that many traders do not know. This is to do with the concept of currency correlations. Currency correlations basically dictates, based on mathematical formula on how two currency pairs will behave. The behavior can be either positive, meaning that the two currency pairs move in the same direction, or negative, meaning that the two currency pairs move in opposite directions. Without knowing this relationship, if you take on multiple positions, there is a good chance that you are doubling your risk rather than…
"Currency correlations are an important but often overlooked aspect when it comes to trading multiple currency pairs at the same time. Many traders do not pay attention to currency correlations because they fear that they will be missing out on trading opportunities. In fact, currency correlations are simple to understand. And by applying some logic you will be able to tell whether the currency pairs that you are trading have some kind of relationship or not. This will help you to manage your risk and at the same time, allows you to make a bigger profit by just simply understanding the correlations between the different currency pairs. In summary to the previous sections about currency correlations, this article gives you details into how you can use currency correlations to your benefit. We present five simple things that you need to look at in order to manage your risk and also to ensure that you are trading in the right direction."…

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