The Trading Teacher

He turned his attention to me and asked, "What share are you trading?"
"XYZ (I changed the name for the purpose of this article)", I replied quite happily. Perhaps I could squeeze a tip or two from him about the stock.

"Do you know what the intrinsic value of XYZ Company is", he asked.
I nodded my head sideways and muttered, "no".
"I'll tell you what the value of XYZ is... it is zero!" He barked.

I was taken aback by his response. Zero? Then what are we paying money for when we buy a share? I thought. Then he clarified himself.
"Price is only a perception - it is people's perception of what they think the value of the share price is".

"The key to success in trading is psychology", he continued. Psychology? I thought. How did psychology get involved in this? "The stock market is like an opinion poll. It is a measure of what people think is going to happen. If they think the price will go up, you will see an upward movement on the chart because there are more buyers so the sellers increase their price because some of these buyers are willing to buy at higher prices", he explained.

He then used an example to explain a typical trader's behaviour when he trades without a system. As he explained it, I recognised my own behaviour in his demonstration.

This was all a revelation for me. When I was buying and selling shares I wondered what type of people were on the other side of the trade because collectively, they were pretty smart. Now I know. It was people like Bauer who were on the other side of those transactions, doing the exact opposite of what I was doing, using similar methods like the ones he was using.

They were looking at the share market with a philosophy and an approach that were completely alien to me. Traders like him were making all the money and traders like me were losing.

I shook my head in disbelief that other people saw things the way they did. I felt excited knowing that there was another alternative, another approach in analysing the markets.

"What you need, is to develop your own trading system." He exclaimed to everybody in the entire room. "Without a trading system, you will fail. I guarantee you. This trading system must be something that is suited for you and you only.

Even if I give you my trading system I am certain that you will fail to make money, because my system is not designed for you. It is designed for me. That is why you need to learn how to use the tools and acquire the skills needed to be a trader".

I accepted his advice without fully understanding this concept of matching a trading system to suit the trader's own personality. It lingered in my mind for a long time. The wisdom of his advice became apparent to me as I slowly learnt more about the nature of trading.

Bauer diverted our attention to the charts on the screen projected from his laptop. All I saw were lines, curves, rectangular boxes and more squiggly lines. The tools of a professional trader: I thought. I was being shown the tools that my market 'adversaries' have been using to 'clobber' me with all this time. My heart was beating faster than usual. I was in awe. I wanted those tools.

I asked Bauer what program he used to analyse the markets. He told me. I also asked him how many indicators he used. I had read enough about technical analysis by that time to know that technical analysts use indicators to analyse share prices. There are many indicators to choose from so I wanted to know how many of those are used by professional traders. He started counting his fingers. 'Seven', he said.

I think many people there had not really read up on technical analysis but I had done my homework and by that time, I was pretty much the only person in dialog with him, asking him questions. I wanted to gain as much knowledge and wisdom he was willing to give me.

Then I heard one of the most important lessons I've learnt which minimised my losses during my early years of trading: "Trade so small that it is almost a waste of your time. Assume the next trade is going to be the first out of a thousand trades you are going to be making in your life. Even though your profits are smaller, your losses are smaller too. There is no need to rush. Do not worry about getting rich too quickly."

He was suggesting that novices like me should trade using small position sizes. That means to buy small number of shares at the start. I was intrigued. I did not know a person should trade that 'small'.

Eventually, the seminar ended. I grabbed the booklets and brochures given out by some of the staff. In one of these brochures was the name of the program he uses. They were selling the software with the courses they were offering. I could not afford the entire package but I knew I had to buy the same charting software Bauer used.

I decided to learn as much as I could about how to use charts and graphs to analyse the market. I needed to develop my own trading system.

As for my friend, he said he had a car loan to take care of first. He would look into trading shares later when he had a little more money to set aside.

A couple of days later, I got a call from the organiser of the seminar, telling me that based from the questions I had been asking that night, I was the type of person that would most benefit from their education package. Bauer was asked to demonstrate the need for trading education because he traded the markets. In the process, he was selling the courses well.

Bauer seemed knowledgeable and experienced. He has enlightened me and probably several other people in that room about how much there was to learn. I was sold. I just could not afford the courses at the time but I wanted them so badly that I asked the sales person on the other end of the line if I could work for them in exchange for the course.

I did not get to do the course but I bought the software from a different distributor at a cheaper price. I also bought the two books Bauer wrote. I figured that I could acquire the skills and wisdom through self-education. I learnt a lot from those two books and from using the software.

Having that opportunity to attend that seminar was a 'gift from the heavens', as far as I was concerned. Wherever you are, Bauer, I thank you. You - and others like you -- have made me recognize the value of passing on knowledge and experience for others to follow.

Best Forex Brokers

Finding the best forex brokers is imperative to maintaining a forex business.
You will find that these people are very important because they can provide you with continuous leads for your business. You no longer have to do everything all by yourself. But keep in mind that hiring a forex broker also involves making an investment. So to help you make the right choice, here are the factors you need to consider:

1. Expertise and your level of confidence in the person
Perhaps the most important thing that will make you decide whether it is worth it to hire a particular person as a forex broker is his professional background. Make it a point that you see and observe where he came from and what led him to become a forex broker. This is an effective way of helping establish your confidence in the person. You should also choose someone whom you feel comfortable working with. Expertise and your level of confidence must go hand in hand.

2. Location of the forex broker
Actually, the address of the forex broker may or may not matter a lot when it comes to doing business with them. You can always make your transactions through online means and phone communication anyway. The important thing is that you keep your communication lines open to each other.

The location of the forex broker may only cause a major bearing if he happens to choose to accept only a specific currency. This may also be an issue if you choose to hire someone from another country.

3. Background research
Try to obtain references from the forex broker you wish to hire. If you can also try getting the contact details of the reference person then that would be much better. You can also try verifying some basic details about him if you want to make sure that he's clean from any involvement with the authorities.

By getting in touch with their references, you will also be able to evaluate what type of wok were they able to accomplish before.

4. Receptiveness
The way your prospective forex broker communicates with you must also be observed. You need to observe how quick they are to get back at your queries no matter how small those questions are. This is important because it gives you a glimpse on how it would be like to work with that person.

You should actually start observing them right when you contacted them. This would help you figure out how interested they are with the prospect of working with you and how much they value their broker profession.

5. Affiliations and Networks
This is also a key factor to consider when getting in touch with the best forex brokers. Check out the organizations which are affiliated with the person. You can also ask him about his current connections in the forex industry to give you an idea of the kind of business networks he may be able to establish for you. Remember to ask questions too about how he got affiliated with these organizations.

How To Successfully Trade The Forex Market

Anyone that has investigated forex trading on the Internet knows that it is an industry full of scams. If you were to believe the outlandish claims made by many on the internet, you might be mislead into thinking that forex trading is easy, and that it you can be profitable by simply making one easy payment of $99.95. As someone that has traded for a long time, I can tell you that this certainly isn't the case.



It is possible, however, to make a significant amount of money from the market, but your approach has to be grounded on solid underlying principles and an understanding of market dynamics. The first step of the process is to figure out what kind of trader you are most suited to be.

Most people either trade technically, fundamentally, or a combination of both. Technical traders base their market decisions primarily on price, and its graphical representation on charts. They often use indicators based on price to further define their entries and exits in the market. However, you must remember that these are merely tools; in the end, you should spend a significant amount of time learning how the market works, and trying to determine periods of what you believe to be non-random behavior. Once you have identified such periods, you can refine them into your market edge, and then figure out how to consistently capture that enough to be profitable.

Fundamental traders, on the other hand, base their market decisions on macroeconomic trends and forecasts. For instance, a fundamental trader would sell the dollar if they believed that it should get weaker, based on their assessment of global economic factors. They aren't often as concerned as technical traders with the current market price, believing that the market will ultimately move to reflect their understanding of these economic factors. Those that trade on this basis often take longer-term positions than the technical traders, since the fundamentals can often take sometime to properly manifest themselves.

Many people combine both types of analysis to make their trading decisions. For example, someone might only trade in the direction that confirms their fundamental assessment of the market, but will determine their specific entries and exit positions based on price through technical analysis.

Obviously, this only scratches the surface of what someone should learn to be a successful forex trader. Money management is another significant factor. You should learn about appropriate position sizing, to ensure that you will not lose more than a specified amount on any given trade. Risking too much of your capital on a couple trades is one of the main reasons that people lose a lot of money. Finally, it is extremely important to realize that no position is ever a sure thing, and the market can always move against you, even in a trade that you are completely certain will go in your direction. If you have respect for that concept - and are following a consistent strategy based on an understanding of market dynamics - you will have a much better chance of being successful.

What is CFTC ?

The Commodities Futures Trading Commission (CTFC) has noted an increase in the amount of foreign exchange plots over the last few years as FX trading has increased in popularity. The information in this article will provide you with some useful tips to help you recognize some of the forex plots that are out there today.

Congress created the Commodity Futures Trading Commission (CFTC) in 1974 as an independent agency with the mandate to regulate commodity futures and option markets in the United States. The stated mission of the CFTC is to protect market users and the public from manipulation, fraud and illegal practices related to the sale of commodity and financial futures and options, and to foster open, competitive, and sound financial futures and option markets.

CFTC is legally in charge of regulating the foreign exchange market of US. The CFTC works to ensure the integrity of the commodity and financial futures markets. It protects the public and market users from fraud, manipulation, and abusive practices while fostering an open marketplace for trading commodity futures as well as foreign currency.

Trading in the Interbank Market

Interbank Market

The Interbank market it usually used for high level Forex trade and accessed by top level banks and financial institutions. Forex currency trading that involves the Interbank market can be extremely insecure and un-regulated. The entire currency transaction is done over a very loose network, making it extremely easy for you to lose money. Dealing in Interbank market is the perfect recipe to court trouble and disaster. If anybody proposes a scheme which involves the Interbank market, it would be best to stay away from it.

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How To Trade On Margin?

Trading on Margin

If you are a newbie to the world of Forex currency trading, avoid trading on margin. It takes a while to understand exactly what it means and entails and scamsters rely on this to fool gullible customers. Unless it is executed properly, margin trading is a very high risk strategy that can swing either way - you may end up making a lot of profit, or you could end up losing all your money. If you have a 50% margin, you can buy double the amount of stocks that you could with just the initial value of cash in your account. It goes without saying that if there are losses, you are liable to pay an amount that far exceeds the actual amount in your account.

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The Intelligent Trader

No Financial Risk Involved

The ground rule of Forex currency trading is that a certain amount of risk is involved. The nature of the business is such that risk is almost expected. Therefore, companies that are inclined to downplay risks with an air of nonchalance, or do not show you the risk disclosure statements readily are surely out to fool you. Another thing to look out for is a person who asks you to use money that you can't afford to part with. Any intelligent trader knows the importance of diversifying investments. When you come across someone who wants to put all the eggs in one basket, you'd better keep the eggs secure and look for another basket to put them in.

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