My answer has always been that I’d rather teach you to trade for yourself than have you rely on me to make your trading account grow. Also signal services have a pretty bad reputation – they promise a lot and deliver little usually. That’s because most people have an expectation that us “professional traders” can make vast sums of money very quickly.  That leads many signal service providers to make exaggerated claims and even maybe produce false statements because without that no one would be interested in a service that “only” makes 10% a month.

So, it’s with some more than a little apprehension that I announce the TRADERS-HUB Signal Service.

Why apprehension? Because this service will provide “real” trades based on four hour forex charts using simple indicators and price action to determine trade entries and simple but consistent trade management with a view to catching the rare, but hugely profitable big moves the markets sometimes make. Along the way risk is reduced and most trades turn out as small winners, but with of course a reasonable number of losing trades also.

It’s a fact that has taken me many years to absorb, that we trade 90 out of 100 trades and only break-even (talking longer term trading here – 5 minute charts are somewhat different!) It’s just the last 10 trades that make profits. These are the 10 most profitable trades and can add up to significant profits – but they take time to come along. You can’t make the market give you profits! The best way to trade is to be defensive, lose as little as possible whilst “allowing” the market to give you profits when the time is right.

Like many things in life trading is about being in the right place at the right time. You can’t make money if you’re not in the market so my way of trading is to err on the side of taking too many entries and manage the trade to reduce risk quickly in the knowledge that sometimes, just sometimes, the price will go your way and keep going!

Many people will find this a difficult way to trade as there can be some long losing runs but they’re kept small compared to the occasional big winners which over time will put us ahead.

There's a list of signal service trade alerts since January 2011 here together with more details about how to join the service.

How and Why do Prices Move?

In this first How To Trade Forex lesson we’ll look at the mechanics behind price movement. We’ll examine the Market Psychology and what you and I as traders do that effects changes in price.

Let’s look at trading in the old fashioned, but still used, “trading pits”. We do this because what happens is more transparent and therefore understandable in these open outcry markets. Let’s say it’s the September Corn trading pit and the market has just opened. Price yesterday closed at $350/bushel. Several brokers around the pit have orders from their clients, some to sell from producers who have decided that now, with price at $350 they would like to lock in that price. Some other brokers have sell orders from clients who bought Futures Contracts at $325 so want to take the $25 profit per contract. Other brokers have orders to buy from say breakfast cereal manufacturers fearing prices may rise still higher and want to avoid the impact that would have on their bottom line.

Thus we have both traders wishing to sell to exit the market, traders wishing to sell to enter the market, and the same for buyers.

So who wins?

The answer to that depends on how the various traders place their orders, how quickly they want to get their trades filled and, of course, how “speculators” come into it. That, by the way is us! Speculators are the lubricant that allows the large trades held by the brokers to get filled; we have no special price to get a trade at, we have no particular direction to trade. Speculators just wait for an opportunity then trade accordingly.

Let’s say that our broker wanting to sell at $350 has 150 contracts to sell at, or as close as possible to that price. He kicks things off by telling his floor traders to sell whenever price hits $352. as a “normal” size trade maybe only 5 contracts it could well take quite some time to get all the 150 contracts sold at that price – price may of course fall consistently and never hit $352. He’ll need a new plan, but for now we’ll assume that price does move up and gets to $352. Now every “buy” order will be met with one of the 150 “sell” orders at that price. Price will drop to $351 as the market waits for another buy order at $352. If, and when the next one comes along it will immediately be greeted with another sell order from the 150 to be sold.

This shows on a chart as “resistance” and will last until either, the 150 sell orders are filled and there is no longer a barrier at $352, or, there are an overwhelming number of buy orders that push price above $352. The floor traders will still be selling the 150 contracts but at an even better price – this may just spark into life a new strategy by the broker to take advantage of even higher prices.

Once that broker has his 150 contracts sold he’ll move onto a new plan for his next large order from one of his clients who have been watching the market and now decided to act with an order to buy or sell at given prices.

Imagine an ordinary auction where there are 10 of a particular item to be sold to the highest bidder. If there are 20 people in the audience who would like the item then most likely the items will easily well above their reserve price. If there are only 5 people who wish to bid then price may struggle to meet the reserve price even once, leaving all the items unsold.

So it’s supply and demand that drives prices in a market, be that a small local auction, or the Global Forex Market. Price is constantly looking for equilibrum where supply and demand is in balance, and for periods of time price finds that point and settles down. That may last for a minute or hours with price only moving a small distance before returning to “fair value”. Then something will change the status-quo and the balance moves up or down to a new level and price again starts to move up and down to find that level.

This price action continues constantly and generates three decernable price patterns:-

Congested – where price is for a while in equilibrium
Range-Bound – where price is seeking “fair value” by gyrating  up and down but with no overall upwards or downwards bias
Trending – where the “fair value” price is steadily and constantly moving either up or downward – price still gyrates about the ever changing fair value price but has a trend either up or down.

In an ideal world traders would trade each different phase using different methods but it takes time to discern which state the market is in and by that time the phase can, and often will have changed. So the challange for traders is to trade in a manner that is able to accomodate whichever phase the market is in. This rarely possibly with a single trading “system” and what we must do is develop suitable systems for each phase of the market.

Therefore the aim of HowToDayTradeFOREX is to give students sufficient knowledge of the markets to enable each individual to trade in a way that they are comfortable with and that is working “with” the market.