TOP Secrets of Famous Currency Traders

Famous currency traders are not on top just because of nothing. They are on top because they found the right ingredients to make success just within their reach. 

If you want to be like them too, you have to know that the foreign currency trading market thrives on changes and be able to adapt in the times. You need to be able to shift yourself accordingly and you need to be flexible when it comes to changes.

Famous Currency Traders Learn Nonstop

Although they have accomplished quite a lot already, these traders know that one success alone does not give them license to rest. It should only motivate them to do better and find ways to become more successful. 

The best and the brightest understand that they cannot be complacent especially in an industry where tough competition exists. They find ways on how they can boost their knowledge and gain more expertise in their area.
There are plenty of ways in which you can learn forex. There’s the usual course of signing up for extra studies which are often flexible too because they are being done online. Then there’s also the way of learning through various online means such as article directories, forex websites, and even online forums. It’s up to you which ones would be most convenient for you.

Famous Currency Traders Have an Established Professional Network
Currency traders understand that they need to have some public exposure in order for them to sustain their business. They need to create some sort of familiarity and buzz about their names. They do not necessarily need to be a media hog or pay all that much for public relations to happen for them. Establishing a credible network of professional colleagues is already enough to do the work.

There are plenty of conferences and engagements happening in the forex market. Some of them are for free while some come with a fee. You can try to invest on some of these events and make sure you keep a tab on free ones even if they are just informal gatherings. These are valuable places where you can meet and get to know a wider population of professionals in the forex industry.

Famous Currency Traders Use Technology
Gone are the days when trading is done manually. With the help of the internet, everything is fast and more efficient these days. You don’t have to be a techie geek to be able to use technology in forex. Most of the automated systems being deployed these days are WYSIWYG (what you see is what you get) and user-friendly. You would not find it hard to operate them on your own.

You just need to remember to carefully read the specifics of these programs. It would also be best to peg a specific budget before you look at your purchase options. Customer service support is also a very important aspect to consider. You need to make sure that the company would be able to attend to your inquiries especially when you need them answered as soon as possible.

Forex trading styles

       When trading currencies online, there are several trading styles that forex traders can profit from, the following is a list of the most common trade types complete with a brief description of each style of trade.

Scalping

A style of trading that is designed to capitalize on small moves, it involves the rapid and repeated buying and selling of currency pairs, the typical objective for a scalp trade is 4-15 pips. The best scalping opportunities are found when the currency market is very active (Euro open till European Close) or during News Events. Scalp setups are typically found using charts in smaller intraday timeframes such as a 1, 5, and 15 minutes. 
 Scalping requires a lot of market understanding and is not for the beginning currency trader. The professional scalper uses a specially designed trading platform, for example Currenex or a forex broker which allows scalping .

Day trading

A day trade is a position initiated and closed out the same trading day (before 5PM NY time), the typical objective for a day trade is 15-100 pips. The best day trading opportunities are found during the EURO and US sessions. Day trade setups are typically found using intraday charts with medium length timeframes such as a 15, 30, 60 and 240 minutes. Most online currency traders are day traders and typically, they use technical analysis (support & resistance, chart patterns, indicators,..) to set up their trades.

Swing Trading

The main difference between a swing trade and a day trade is the length in holding the open position, typically, swing traders will hold their open position(s) 2-5days looking for 100-250 pips profit potential. Trade setups are typically found using daily charts and most common, swing traders use technical analysis (support & resistance, chart patterns, indicators,..) to set up their trades.

Position Trading

The main difference between a position trade and a swing trade is that position traders will normally have a longer time horizon than swing traders for holding a position in a currency pair, typically, position traders will hold their open position(s) 5-50days looking for 250-1000 pips profit potential.
Trade setups are typically found using daily, weekly and monthly charts , normally, position traders use both technical analysis and fundamental analysis to set up their trades.

Long – Term

Trading Long term currency traders usually hold positions for month or even years profiting from a long term trend. They usually use both fundamental and technical analysis to make trading decisions.

Advantages of Forex Trading over Stocks

Advantage	Forex Market	Stock Market
Trade Around the Clock	Yes	Limited
Pay No Commissions	Yes	Limited
Market Information Easily Available	Yes	Yes

Trade Around the Clock

The forex market is a near-seamless 24-hour market. Subject to available liquidity, FXCM offers forex trading from Sunday, starting after 5:15 p.m. ET, until Friday, 4:55 p.m., ET (FXCM Client Service is available 24/7). Orders placed prior may be filled until 5 PM (ET). With the ability to trade around the clock, currency traders have the advantage of customizing their own trading schedule; they can usually get in or out of the market at any time without waiting for an opening bell or encountering a market gap. While trading stocks after usual market hours is possible, very often that possibility is negated by a lack of order flow or a drastic widening of the bid-ask spread.

Pay No Commissions

In the forex market costs are generally confined to the bid-ask spread. FXCM charges no commission and is compensated through a mark-upwhich is added to the spread it receives from its liquidity providers§ via the FX Trading Station.

Forex Market Information Easily Accessible

Information about stocks is abundant, but so are the stocks. Finding a trade opportunity in the equities markets may mean sifting through data on thousands of stocks, while the forex trader has only six major currencies to research. Additionally, the vital information that moves equity markets, such as revenues and profits, is proprietary and private, and sometimes subject to fraud, deception and insider trading. In contrast, virtually all of the news that bears on the forex market is in publicly disseminated reports from governments or research institutions, and released to everybody at the same time.
We feel that the knowledge you've gained in analyzing stocks can easily be transferred to the forex market. Many of the economic indicators familiar to equity traders, such as payroll data and interest rates, affect the currency markets. And many technical traders have found the forex market to be particularly attractive, since currencies respond well to many of the common technical indicators, such as MACD, RSI, and Candlestick charting.

Forex Trading is a High Risk Investment

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Following a trading plan

        
 Simple enough? Yes, it implicates plenty of hard work though... First, in order to follow your trading plan, you need to have one!!! So, if you don’t have a trading plan, this would be a good time to start writing one.
Now, see the questions above? You’ll need to address all of them (and more) on your trading plan:
How to determine which currency pairs to trade? This is not the entry signal; you need to address the conditions that need to be met in order to start looking for trade opportunities.
How to enter the market? This one is your entry signal, the indicator has to do this, or that, etc, price action, or a combination of them, etc.
How to exit the market? On both, when the market goes against you, and when the market moves on your favor?
How to handle each trade? This is known as trade management, are you going to add to your position, take partial profits or losses, and the conditions that have to be met in order to act.
Risk management? The methodology you are going to us to set your stop losses, are you going to trail your stop, etc.
How much to risk on each trade? Yep, this is capital management. i.e. I’m going to risk 1% of my account on each trade.
How to deal with fundamental announcements... are you going to leave your trades open during important announcements?
Weekends... are you going to close your trades before the market closes on Friday?
These are a few of the questions that you need to address in to create your trading plan. There are more but with the ones above you are going to have a nice start.
So please, create your trading plan, you need to know where you are going, all your trading actions need to target your main goal: follow your plan, only then, you’ll know you are doing things right.
            One more thing, it doesn’t matter what happens as long as you are following your trading plan, if doesn’t matter if the market goes against you, the only thing that matters is that you are following your trading plan, it’s the only way to achieve consistent results.

Our job is as traders

         Have you thought about this question? What is what we traders have to do, what is what best describes our job? Understanding the answer to this question will help you achieve your trading goals a Forex trader.
So, before you continue reading this article, I want you to think for a few minutes about this, what is what you think is our job as traders? Or better yet, what do you think is our main goal as traders?
Told you a few minutes... not a few seconds :)
Might seem simple at first sight right? But it isn’t... it wasn’t for me anyway, I spent years trying to figure this out, trying to think what is what best describes our job as traders. Here are a few of “objectives” I thought on my early days as a trader:
To make X amount of pips each month - Nope, this isn’t our main objective. This one comes as a result of achieving or main goal.
To manage our risk - Well... you have to manage your risk if you want to survive on the trading arena.
To use capital management on each trade - Again, we have to... this is what will keep us alive and trading in case we run into drawdown, and it also helps us have a geometric growth on our capital through a winning streak... It’s important, but is far from our main objective.
To have a streak of at least 20 positive trades - Nope... we are never in control over the market, we don’t know what is going to happen next. If I was able to know ahead of time that my next trade was going to hit my take profit order (you see, just my next trade, imagine if I knew what is going to happen on the next 20) I’d risk my whole account on it... but it is just impossible.
To make X% of return per month - As the first one, it comes as a result of achieving our main goal.
To be psychologically ready to trade - Ahhh, this one is important, we need to understand our emotions in order to trade successfully, but again, if you are able to achieve your main goal, you will not have problems with this one.
So, none of these “objectives” accurately describes our job as traders or our main objective, I think it’s much simpler than that.

Forex market size creates liquidity

       The foreign exchange market is the largest market by total nominal value of all things traded. That is, the forex volume makes it the largest market on earth. Each day, some $4 trillion in value trades hands between governments, institutional investors, corporations, and individual traders who trade world currencies between themselves.
Other markets find it hard to compete against the foreign exchange market’s massive size. 

Having a large market isn’t a benefit of itself. While being big is good, it isn’t just the size that makes the foreign exchange market one of the best markets for traders. Instead, it is the secondary benefits that come from the market’s size that make it an excellent market to trade.
Liquidity is one of these fringe benefits.
Liquidity is a word that describes how easily a financial product—in this case, a currency—can be bought and sold on the market. When markets are highly-liquid, they allow traders to buy and sell large amounts of currency in an instant. When markets are less liquid, buyers and sellers may have to wait for a transaction, or even worse, they may not be able to complete a transaction at a price that is close to the current market price.
Let’s look at two common investments to show how liquidity works. We’ll compare real estate and currencies:
Real estate – Real estate is a very illiquid investment because there aren’t many buyers and sellers. In many cases, it takes weeks, months, or even years to find a match between buyers and sellers in the market. To sell real estate quickly, a seller would have to agree to offer a very big discount to attract a lot of buyers. That’s not good from the sellers perspective, since they are losing money each time they lower their price.
Currencies – Everyone has to use currencies, and unlike houses, currencies are the same thing as long as they’re worth the same amount of money–a $20 bill isn’t any different from 4 $5 bills. As a result, currencies can be exchanged easily and rapidly, since there are many buyers and sellers. To sell $100,000 for euros, for example, isn’t nearly as hard as selling a $100,000 house to a buyer. There are many different types of $100,000 houses, but there isn’t a difference between $100,000 worth of currency.

Larger returns always require larger risks.

If you want to get 100% of return per month, you’ll need to risk a similar amount of money. And yes, you could get lucky the first few months, but sooner or later, the market will teach you that this is not a game and you’ll probably end up blowing up your entire account because you are risking too much.

Leverage and realistic expectations are tied together, because with higher leverage you’ll get better returns, provided that expected value of your system is positive. But what if it is negative? You guessed it, you’ll get larger losses too.

So, instead of trying to own the world on the first four years of your trading career, why not trying a more realistic approach: 
growing your account steadily, risking a small percentage of your account per trade, using sound money and risk management techniques, handle each trade, being disciplined? From my point of view, this is how it’s done. It requires discipline, hard work, commitment, managing risk and capital, a sound strategy, to know yourself, control emotions, and more to make it possible. Yeah, it’s not easy (there is no free lunch), but listen, once consistent, it is probably the most rewarding job on the world.

At the end, I think articles such as the one you are reading, or the one on Reuters I mentioned above are good, not because of Forex being riskier than other markets, but because the better traders are educated about the risks involved using leverage, the better their possibilities to succeed in their task to become profitable traders. 

Risk, leverage and realistic expectations

             Recently I read an article on Reuters about the SEC (Securities and Exchange Commission) warning traders about the risks involved on retail Forex. Amongst other things, they warned about:

• The higher levels of leverage, and
• Fraud/lack of a central clearinghouse (Brokers fraud)

But, is it really riskier than other financial instruments? I don’t think so, and here are the reasons.

Brokers Fraud

Yes, there are some fraudulent Forex brokers who only want your money, they will execute your stop losses even when the market does not reach your SL level, they won’t send you the money you withdrawn from your trading capital, they won’t execute your take profit orders even when the market passed that level, etc. But there is one simple solution to this problem: don’t open an account with a Forex that is not regulated.

When a broker is regulated allows investors to dispute any resolution such as stop hunting, etc. increasing the investors protection. So we just need to make sure we open our trading account with a regulated broker, with good support capital and with good reputation.
 
Leverage and realistic expectations

The other day I got contacted by a trader, who wanted me to teach him how to make 100% on a monthly basis. He said “it’s per month eh, not per day or week... I’m not asking something unrealistic here”.

I explained to him it is impossible to achieve like that and he replied, “Well, I better take my business somewhere else”.

Let’s see what happens, just for fun... If a trader starts with US$250 of trading capital (some brokers allow you to open an account with that amount of money) and consistently achieves 100%, on a monthly basis. 

Some traders are attracted to the Forex market because of sales ads around the web/tv showing how easy is to make money on the Forex market, and of course most of them never mention the risks involved. 

NO trading when market conditions are clear

      If you have a system and you are not trading when you are supposed to trade, the first thing that pops up on my mind is that you are afraid of losing. You need to remember that when you developed the system, created an edge, you know exactly what the market needs to do to help you take advantage of low risk trading opportunities, what is left for you is just to take advantage of it.

      Losses will be around forever, professional traders know this, they know its impossible to win all trades, there is no system that is right 100% of the time. And those traders who look for high accuracy entries, most of the time (if not always) they have a very low risk reward ratio, which is what really help us trade consistently.

Don’t be afraid of losing, even the most famous and profitable traders know that around 80% of their profits come from around 30% of their trades. They are comfortable with their system and they know that in order to become profitable traders, they just need to follow their system, if it was well developed and includes good risk and trade management, probabilities will play in their favor, sooner or later.

I guess these two mistakes have a lot to do with the strategy we are following, we need to feel comfortable with it, and this way we’ll follow it with discipline and get consistent results at the end.

Here is small set of rules that will help you get rid for once and for all of these two mistakes:

1. Develop/follow a system. First you need to develop an edge, you can use some one else’s, but you need to make sure it fits you and follow it to a 100%. It should include every important aspect of trading such as: how to set entry and exit orders, risk and trade management, position sizing, etc.
2. Market analysis. At the beginning of your trading day, make and analysis and determine which currency pairs have a clear market condition. The main goal of this step is to determine which currency pairs to trade and on which direction.
3. Setup. Determine what the market needs to do to make you enter your positions (i.e. the market needs to retrace back to the support level, the indicator reading needs to cross the overbought territory, etc).
4. Trading Journal. You need to have a record of your trades, when you analyze your trades you’ll notice certain “patterns” about your trading that are difficult to see at simple sight (i.e. most trades around 11:00 an stop me out).

Follow these four steps and you’ll avoid these two costly mistakes.

How to get rid of over trading

 Forex Is So Risky :
One of the most frequent mistakes when it comes to trading, on any market, not just Forex it’s over trading. Over trading can lead to substantial losses when the market is not clear enough. But the other extreme isn’t that good either, trading less frequently when the market has clear market conditions can stop us from reaching our goals on a monthly basis.

There is no “right” amount of trades to be made on one particular day, week or month! I guess that depends on each trader and the methodology each one of them is following. But we know something for sure: If you are consistently losing money it’s because:

1. You don’t have a complete and sound strategy (or not following it). This includes using money management, risk and trade management, entry system, SL and TP orders, etc.
2. You are Over trading. You are trading with more frequency than you are supposed to trade.
3. You are not taking advantage of the opportunities offered by the market. You are trading with less frequency than you are supposed to trade.

In this article we’ll focus on the latter two.

Over Trading :

You are over trading when you are taking more trades than you are supposed to take. Traders make this mistake when they feel overconfident (i.e. think you are better than your system), they don’t trust their methodology, want to make a quick gain here and there, they are just following other`s advice, etc.

Sometimes traders tend to focus on the profit potential and don’t take in consideration the risk involved on a particular trade, this leads them to take more trades than they should. On the other side, professional traders follow their strategy because they know that only when their system signals a trade, the odds are on they favor, and they just take advantage of it.

Other times, especially for novice traders, when they are not trading they feel like they are doing nothing, so they just take a trade to make them feel they are doing something, even when their trading capital is at stake.

You need to remember that being on the sidelines is a trade decision, you are preserving capital. For instance, let’s consider these two scenarios:

A.    You are eager to trade, your system doesn’t signals a trade and you decide to enter. The market goes against you and stops you out.
B.    You are eager to trade, your system doesn’t signals a trade, and you stay on the sidelines.

On scenario A, you lost money, while on scenario B, you preserved capital. So being on the sidelines is actually a trading decision that could help you reach your goals on a monthly basis.

Trading psychology

        Trading the Forex market has many benefits over other financial markets, among the most important are: 
superior liquidity, 24hrs market, better execution, and others. 

Traders and investor see the Forex market as a new speculation or diversifying opportunity because of these benefits. 
Does this mean that it is easy to make money trading the Forex Market? Not at all.

Trading psychology: 
 They are aware of every psychological issue that affects the decisions made by traders. They have accepted the fact that every individual trade has two probable outcomes, not just the winning side.

These are, among others, the most important factors that influence the success rate of Forex traders.

We know now that it is not easy to make money trading the Forex market, but it is possible. We also discussed the most important factors that influence the rate of success of Forex traders. 

But, how much time does it take to have consistent profitable results? It is different from trader to trader. For some, it could take a life time, and still don’t get the desired results, for some others, a few years are enough to get consistent profitable results. 
       The answer to this question may vary, but what I want to make clear here is that trading successfully is a process, it’s not something you can do in a short period of time.

Trading successfully is no easy task; it is a process and could take years to achieve the desired results. There are a few things though every trader should take in consideration that could accelerate the process: 
 having a trading system, using money management, education, being aware of psychological issues, discipline to follow your trading system and your trading plan, and others.

What Should I Know About Forex Trading

How difficult is it to make money trading the Forex market? How much time does it take to actually be able to make a living trading the Forex market? These and other important aspects of trading are to be discussed in this article.

       Trading the Forex market has many benefits over other financial markets, among the most important are: superior liquidity, 24hrs market, better execution, and others. Traders and investor see the Forex market as a new speculation or diversifying opportunity because of these benefits. Does this mean that it is easy to make money trading the Forex Market? Not at all.


Forex brokers agree that 90% of traders end up losing money, 5% of traders end up at break even and only 5% of them achieve consistent profitable results. With these statistics shown, I don’t consider trading to be an easy task. But, is it harder to master any other endeavor? I don’t think so, consider musicians, writers, or even other businesses, the success rates are about the same, there are a whole bunch of them who never got to the top.

       Now that we know it is not easy to achieve consistent profitable results, a must question would be, Why is it that some traders succeed while others fail to trade successfully in the Forex market? There is no hard answer to this question, or a recipe to follow to achieve consistent profitable results. What we do know is that traders that reach the top think different. That’s right, they don’t follow the crowd, they are an independent part of the crowd.

A few things that separate the top traders from the rest are:

 
Forex Education:  
They are very well educated in the matter; they have chosen to learn every single and important aspect of trading. The best traders know that every trade is a learning experience. They approach the Forex market with humility, otherwise the market will prove them wrong.

 
Forex trading system:
  Top traders have a Forex trading system. They have the discipline to follow it rigorously, because they know that only the trades that are signaled by their system have a greater rate of success.

 
Price Action:
 They have incorporated price behavior into their trading systems. They know price action has the last word.

 
Money management:
  Avoiding the risk of ruin is a primary subject to the best traders. After all, you cannot succeed without funds in your trading account.

6 Deadly Mistakes That Assure Failure in Forex

          Before venturing into your trading journey there are some things you need to be aware of, otherwise you could succeed on your trading adventure, and we don't want that to happen, do we? This Forex training guide will help you track the most costly mistakes Forex traders do.

1+ first of all, make sure you don't have a trading system. Having a trading system might increase the odds of your success. If you have a system, you will have an objective way to get in and out the market. When traders create their trading systems they think objectively since there is no position to be taken at the moment. If there is no position to be taken, there is also no money at risk, if there is no money at risk, we do think objectively and are open to every possibility, thus we are able to find low risk trading opportunities. So make sure you don't have a system and trade based on a randomly approach.

2+ If you have already created your system, then don't follow it, be undisciplined. If you follow your system, there is a possibility that you can profit from the Forex market based on the trading opportunities you have found. If you want to fail on your trading, be sure to be undisciplined.

3+ Don't get educated. Most successful traders are very well educated in the market they trade (stocks, Forex, futures, etc.) If you get educated, you might acquire the knowledge and experience you require to master the Forex market. Don't read about the Forex market, don't enroll into Forex training programs and don't even look at historical charts.

4+ Don't use any money management technique. The purpose of money management is to avoid the risk of ruin, but at the same time it helps you boost your profits, allowing them to grow geometrically. For instance, by using no money management techniques, there is a possibility that in loosing 10 trades in a row you could empty your trading account. On the other hand, by applying simple money management techniques you can avoid it. So make sure, if you want to fail, don't even consider money management.

5+ Forget about psychological issues. You need to get every trade to win. Successful traders know that they don't need to win every trade in order to profit from the market. This is one characteristic that is hard to understand and really apply. Why? Because we are taught, since kids, that any number below 70% is a bad number. In the Forex trading environment, this is not true.

6+ Don't even consider using a Risk-reward (RR) ratio greater than 1-1. If you use a RR ratio of 1-2 (willing to make twice the amount risked in one trade) then you only need a system that is right around 50% to make money. If you use a RR ratio of 1-3 (willing to make three times the amount risked in one trade) then you will need a system that is right around 40% of the time to make money. So make sure to use a RR ratio below 1-1.

Chief Drawbacks of Forex Traders

          Why is it that very few traders succeed in the Forex trading environment while the grand majority of traders fail to achieve success? There is no hard answer to this question, there are a few things that will put you one step ahead and will definitely put the odds in your favor.

        The main purpose of this article is to guide you through some important aspects of Forex trading.  But in a different way, instead of telling you what to do or the best way to do it, it will tell you what to avoid. Sometimes it is better to identify the main drawbacks on a discipline and then isolate them so we have the best results at a certain level of development.
 

The Holy Grail

Many traders spend years and years trying to find the Holy Grail of trading. That magic indicator or set of indicators, only known by a few traders, that will make them rich in a short period of time.
Fact: Well, there is no magic indicator, nor a set of indicators that will make anyone rich in a short period of time. The main reason of this is because market changes, every single moment is unique. Every Forex trading system will fail from time to time. Our work here is to find a Forex trading system that fits our personality as traders, otherwise the trader will find it hard to follow it.
   

Looking for Easy Money

Unfortunately most traders are attracted to the Forex market for this reason. Mainly because of the publicity showing or rather trying to show how easy is to trade and make money in the Forex market.
Fact: Yes, it is very easy to trade, anyone can do it. It is as hard as one click. But the second part of it isn’t that easy. Making money or achieving consistent profitable results is hard. It requires lots of education, patience, discipline, commitment, and this list could go to infinite. In a few words, it is possible to have consistent profitable results, but definitely it is not easy.
 

 Looking for Excitement

Some other traders are attracted to the Forex market or any other financial market because they think it is exciting to be a trader.
Fact: Yes, it is very exciting to trade the Forex market. But if this is the main reason you are still trading the Forex market, sooner or later you will discover the most expensive adventure you have ever known. Do some thinking on it.
   

Not Using Money Management

Most traders forget about this important aspect of trading. They think they shouldn’t be using money management until they achieve consistent profitable results. They totally forget about the risk side of trading.

Fact: Money management allows your profits to increase geometrically, but also limits your risk on every single trade. Money management tells you how much to risk on each trade. Using money management is a must if you want to achieve your trading goals. By using money management you make sure you are going to be able to trade tomorrow, the next week, month and the following years.

 

 Not Being Psychology Tuned

This is one of the most underestimated subjects when it comes to trading. One of the main principles of financial markets is that the price of each instrument is based on the perception of each individual participant “the crowd.” In other words the price of each instrument is determined by the fear, greed, ego and hope of all traders.
Fact: Being aware of all psychological issues that affect the decisions made by traders will definitely put the odds in your favor.
 

Lack of Forex Education

Education is the base of knowledge on every discipline. As lawyers and doctors require several years of college until they get their degree, Forex traders also require long years of study.

It is better to have someone experienced to guide you through your trading, since some information could take you in the wrong path.

Fact: The market teaches us invaluable lessons on every single trade made. The process of education for a Forex trader could take for ever. That’s right, we never stop learning. We should be humble about the markets and our knowledge; otherwise the market will prove us wrong.

These are some of the most important barriers every trader faces when trying to trade successfully.

 Trading successfully the Forex markets is no easy task, it requires a lot of hard work to do it right, but with the right education, you will put yourself closer to your trading goals.

Dictionary of Banking and Finance . 3rd Edition

 Description :

        This edition provides comprehensive coverage of the terms used in banking and finance, ranging from personal bank accounts to international money markets. It is aimed at professionals working in or involved with banking and finance, and for students, whether studying A-Levels, degree or professional qualifications in banking and finance. Contains over 9000 entries providing clear, up-to-date coverage of all aspects of banking and finance, the book also includes encyclopedic comments on banking and financial practice, expanding on complex terms such as "poison pills" and "bills of exchange", and special supplements on money, currencies, international banks and stock exchanges."

Dictionary of Banking and Finance By Katy McAdam, Joel Adams and more
Publisher: A & C Black Publishers 2005 | 400 Pages | ISBN: 0713677392 | PDF | 12 MB

 

 

 

 

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Forex IS The Future

        A non-geographical, existential market, the foreign exchange market exists wherever one currency is traded for another. Far and above the largest market in the world, the $2 billion traded every day includes trading between large banks, individual investors, corporations, governments and various other institutions.

Established in 1971, Forex trading has only recently become an individually traded market. Until the present time, only major institutions could trade on this market. Retail traders are currently a small, but constantly growing, part of the Forex.Ten years ago, the Wall Street Journal estimated the daily trading volume in the forex market to be in excess of $1 trillion. Today that figure has grown to exceed $1.8 trillion a day. Based on the Bretton Woods Agreement of 1945 aimed to stabilize international currencies and prevent money fleeing across nations, the U.S. dollar became fixed at a rate of $35 per ounce of gold.Thus, the gold standard was formed and Forex trading became a possibility. 

         But only in 1971, when the Bretton Woods Agreement was abandoned, was the Forex market established. By 1973, major currencies became free to the push of supply and demand. The power of speculators came to be.With the advent of technological innovations like computers in the 1980's, money was soon able to be traded across time zones. Within minutes, like never before, massive amounts of currency could be exchanged. Today, London holds the world's largest international financial center and the major site for Forex trading.The interbank market is beneficial for both the major commercial turnovers and large amounts of purely speculative trading that takes place on an everyday basis. Some large banks trade billions of dollars daily. While some of that trading is on behalf of the bank's customers, much is for the bank's own account. Until recently, brokers on the market did most of the business of trading for a small fee, but now individual investor's can jump in on their own.

The benefits of individual investors gaining hands-on access to Forex trading really came to be when the large inter-bank units began to offer small traders the opportunity to buy or sell smaller units (or lots) on their own.At present, the Forex market is appealing because of its massive trading volume, extreme liquidity, the number and variety of traders in the market, long trading hours, factors that affect the currency exchange rates and the geographical dispersion of the market.Between April 2005 and April 2006, Forex trading increase by 38 percent and has more than doubled since 2001. 

        This can be attributed to the increasing importance of foreign currency exchange as an asset and an increase in fund management assets. Also, the vast array of execution venues, like Internet trading platforms, has also made it easier for retail traders to trade.In May 2006, a European exchange survey company found the top 10 investors in the Forex market were mostly American banks such as Bank of American and JP Morgan Chase, as well as international investors like Deutsch Bank and Barclays Capital.Trading on the foreign exchange market is up and coming.

Perks of Automated Forex Day Trading

        Are you interested in automated forex day trading? There are many things that you should know about automated forex trading, and this is a great place to learn about it. The idea of automated forex day trading is recently getting more and more popular. Futures exchange was the first to adopt this system and later on, the FX market followed suit and employed automated forex day trading.

- Efficiency This system is very efficient and successful because of its capability to carry out a deal or a trade 

- real time. This means that there are no lags and fewer complications when trading and these results to more income generated. Achieving this level of efficiency is very hard to do by manual means especially if the decision to trade or not to trade can only be done in a time window of a few seconds. There are even instances wherein the window of opportunity is just a few milliseconds! There are instances wherein the trader is not in his desk and the opportunity suddenly presents itself, while sometimes a trader will skip deals for a while if he recently came from losing deals. These factors are eliminated by an automated system.

- Versatility An automated system allows you to trade in diverse fields. It makes it possible for you to trade in varying markets as well as an array of time zones. Many trading models can be used by the trader since the system will be the one managing each trading model. 

       Short term data can be analyzed by the system and this provides you with an advantage since you can use the data analyzed for making decisions based on what is currently happening in the market. Analyzing where the market will go in the next 15 or so minutes is impossible without using an automated forex trading system.- Improved liquidity Liquidity is greatly improved by the use of automated trading systems. 
          This can be deduced by observing the behavior of the futures exchange market after employing an automated forex trading system.- Setback Traders are foreseeing that a problem may arise when the time comes that all traders will adopt the automated system. The volume of orders may be so great that the existing bandwidth as well as current equipment used may not be able to accommodate this influx of information in real time. 

Existing systems might be able to carry the load and crash which will result to chaos in the market. As of now, safety controls have been created and set in place to prevent this scenario from happening.- Risk Management Another big issue that concerns forex traders is risk management. Even automated forex trading systems require a risk management tool to ensure that there are no errors while trading. Risk management tools requires that before opening a position, checks should be conducted to ensure that no excessive correlation is present in already existing positions. 

        To be 100% sure that the check is accurate and free of error, the whole system must first be synchronized. But as the technology used in forex trading progresses and evolves, these will no longer be issues to be concerned about.There are even instances wherein the window of opportunity is just a few milliseconds! There are instances wherein the trader is not in his desk and the opportunity suddenly presents itself, while sometimes a trader will skip deals for a while if he recently came from losing deals. 

These factors are eliminated by an automated system.These are some of the things that you should know about automated forex day trading. The information provided here will give you a better grasp and knowledge about this topic. Hopefully this will be helpful when you are deciding to try this kind of business.

Why Trade the Forex Market

       
      Trading the Forex market has become very popular in the last years. Technology advances like the internet have spawned this new trading craze, where anyone with a secure internet connection prepared to undertake a small amount of training can engage in trading foreign exchange on the forex market. 

   Before the Internet, only corporations and wealthy individuals could trade currencies in the Forex market through the use of proprietary trading systems of banks, often through private banking. The foreign exchange market is one of the largest in the world if not the largest. It is more than 3 times larger than the stock/equities market and more than 5 times bigger than futures, give Forex traders nearly unlimited liquidity and flexibility. 

It has been estimated that approximately $2 trillion USD of currency exchanges hands each and every day. The foreign currency markets are very liquid because worldwide, the most powerful international banks provide a market around the clock. The Global foreign exchange market daily averages of the Bank for International Settlements in 1998 were $660 billion and now have increased to $2.3 trillion (2006). 

There is really no insider information in the forex markets. Since exchange rates are calculated by actual money flow as well as by the outlook of financial flow, which takes into consideration such things as inflation, GDP changes, trade and budget deficits and surpluses, as well as interest rates, it would be difficult to come across so-called 'insider information'. 
All of these factors are self-evident, though different projected outlooks may prove more accurate than others. There is less room for market manipulation is there may be for thinly traded stocks. A equally important property of forex market is the fact that trends in forex market last longer and are more clearly defined than in any other trading instrument. Analysis of forex market charts also often displays identifiable chart patterns of price movement and once a pattern is established, the trend or pattern becomes the most probable course of future price action until the market changes. 

         Because the FOREX market is so huge, there is no possibility of someone controlling the market price for a long time. When there are a lot of buyers and a lot of sellers, you can expect to buy or sell at a price that is very close to the last market price. The market maker in the forex market is usually a bank or brokerage company that provides during the trading day a bid and ask price. 
Example of forex market makers include CMS Forex, GFS, Forex, Forex Capital Markets (FXCM), and Global Forex Trading, all of which are regulated by the Commodity Futures Trading Commission (CFTC) of the USA. Brokers offer clients access to online FX trading system, platform or software that can make it easy and fun to trade the market and usually there are usually no commission charges. With these trading systems and platforms you can trade the forex markets for free using the same state-of-the-art software packages that professional Forex traders use to help them make real-time, live currency trades. 

     So, individuals with a few hundreds of their own currency hope to buy and sell something for a smiling profit. Speculators trade to make a profit by purchasing one currency and simultaneously selling another. In conclusion I think the FOREX market is one of the best investment opportunities around today. There are great opportunities in the FOREX market because of the constant movements of the exchange rates. 

There is no surprise that more and more traders are turning to the foreign currency market to take advantage of the fluctuation in exchange currency rates as a way to speculate and trade to increase their capital and wealth.

You Need A Real System!

           Although it has been some years since I was actively involved in trading, I have just returned to the markets and have begun to trade a small account on my own behalf. This has perhaps given me a slightly skewed perspective of the markets, almost like a new entrant, but one with a lot of experience.

There have been some big changes whilst I have been inactive, not least in the number of online brokerages fighting for every dollar.But many things stay the same, at the heart of which is one, I guess, unbreakable truth. Trading is basically a very simple business, with any trading stocks, options, FOREX, whatever only really involving three steps:

1. Find several possible trades evaluate them and decide which to go for,
2. Calculate how much to trade, and decide at what points to enter and exit the market
3. Keeping an eye on, or monitoring, open market positions Now, these three steps were basically all there was to it a few years ago, and they still And, guess what, people are still getting totally bogged down right here, at this early stage of the trading process, generally, for one of two reasons.

The first possible reason is that they simply are not aware that these are the steps involved in the trading process, or (the second reason) they have no clearly defined rules for actioning these steps. 

         Thus, less experienced, more nervous, traders can often take hours to evaluate a small number of potential trades.Experienced day traders, on the other hand, are fully aware that, with little time available to execute their trading, they must have a process plan and they must stick to it.
 
A day trader will set out his (or her) plan of action something like this:

1. Recognize the opportunity, enter the market
2. Stay in the trade for as long as possible if it is going for him or
3. Get the heck out of there with minimum losses, as soon as it is clear it is going to go the wrong way That s it! That s essentially what a day trader in any market was doing years ago, and that is what a day trader is still doing today, with little or no change to their working practices brought about by the vastly more advanced technology of today .

Savvy day traders learn very quickly that they must plan ahead of time, so that they are in prime position to take full advantages of the opportunities that occur in real time.Thus, day trading, which on paper at least is a pretty dangerous and risky manner of working markets is, in fact, one of the most disciplined trading schools! By the nature of market movements and the way they operate, day traders simply cannot afford to run their trading business on a wing and a prayer!

Learn Forex Trading Innovatively And Easily

        Why Learn Forex trading? The forex market is by far the largest market in the world. It is estimated that around $1.5 TRILLION is traded every single day. By far more then all the stock, bond and futures markets of the entire world combined! Forex or currency exchange is the term used to describe the trading of world currencies. 
       A trade occurs when a trader simultaneously buy of one currency and sell of another one. E.g., to buy British pounds with US dollars. The currency combination used in a trade is called a pair.What does a forex trader do? Simple, buy a currency at a low value and sell it at a higher value, and in the process profit from it! For example, buy Great British Pounds with US Dollars, wait for the Pound rate to go up and make money! 
This can be done several times a day if the forex trader is a day trader or several times a week or month if the trader is a forex swing trader.What are the main benefits of trading in the forex market?Many currency pairs are very volatile. Volatility means that they move a lot during the day, from side to side, allowing traders to capture sometimes 5-6 price swings per day, each one potentially allowing the trader to make impressive profits.5-7 currency pairs to monitor (instead of over 10,000 stocks!), no commission trading, guaranteed fills for stop losses and limit orders, impressive leverage. 

        The forex market is a 24 hour market. Never stops. This means that as a forex trader you can chose exactly when to trade. Some traders have day jobs and do not have the necessary time to trade during the day so they can trade at night. People who make their living as forex traders can chose to trade any time of the day or night. The point being, a 24 hour market allows the trader a lot of flexibility.What are the Exclusive benefits offered by forex trading?An incredible benefit of the forex industry is that today all forex brokers allow traders to open free demo accounts. 

        This demo account has the full capabilities of a "real" account including live market rates, access to real-time market analysis, and the ability to execute trades off streaming prices. This means that the trader can test his or her strategies without risking a single dollar! No other business opportunity allows you to see if it works before you spend money!Making a living as a forex trader allows you to be truly free! No office, no workers, no inventory, no marketing worries, no advertising, no selling. Learning the right forex trading system allows the forex trader to trade by just following simple rules. If A happens and B happens then do C. 

This is called mechanical trading. It requires absolutely no discretion, interpretation or thinking from the trader.In conclusion, Learning forex trading provides all level of investors with a lot of opportunities that many markets and industries do not provide. 
The reason many people have not heard of this opportunity until recently is that until not long ago trading currencies was reserved to the big dogs (banks, institutions, companies etc). Today with the help of the internet anyone can take advantage of on-line currency trading that was once reserved to an exclusive group.

How To Choose Your Online Forex Broker

           Online Forex brokers are known to be a required evil if you are going to trade in currency. There are also those people who are eligible to trade without outside assistance, but for the normal trader, enforcing to trade on the Online Forex market with no broker is like trying to chase a grizzly bear with a soup spoon. 

        Your chances of achievement are actually very low, and there is a distinct option you would get hurt quite badly. Of course choosing the incorrect forex broker might return results same as to the sick fated bear hunt. That is why it is significant that you select a broker in the right way.
     First thing to be considered is to be sure that the broker you choose has the proper qualifications. When you look at the brokerage firms in the United States, immediately exclude those that are not registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC). 

This is again important as this designation means that you are confined against scam and any possible abusive forex trading practices. Covering your personal security before a forex trade has been made is a high-quality way to wade gradually into the forex currency market.
         Once you have removed the ones who do not have the required qualifications, and now have a short list of potential, the internet comes into picture. Just don't go with the brokerage firm, which has the best profitable, or gets the most excellent "Law and Order" individuality to assist in the following advertising, research your choices. A superior idea is to send some effective emails to your customer service people. Estimate how long it takes them to get in touch to you. This is, after all, a customer examine ambitious profession.
Once you are pleased with a firm's experience and customer service practices, its time to get down to your self-assurance tacks. Online forex trading speed is forever an issue, so find out how fast it takes your own potential online forex broker to carry out an order. 

      Also, you would desire to know how much slippage could be expected. This needs information, which could be discovered in a phone call, or any email to customer service. You would desire these answers not only for regular markets, but for fast moving ones as well.

Learn Forex Trading to Increase Opportunities

           Capitalize on the opportunity to learn forex trading so you can begin the process of branching your portfolio out of domestic stocks and into the global market. Any financial advisor worth his weight will tell you that it is important to diversify your investment portfolio and this is by far the largest volume market in the world. 

       Daily, it does nearly four times the volume of trading than the New York Stock Exchange does. Anyone who holds a basic understanding of how money is converted and exchange rates work can learn forex trading. The sale or trading of currency is at the heart of what forex is. Using one currency to buy another means that your counterpart is using their currency to buy yours. 
As exchange rates fluctuate and the economies of nations surge and recede, these investments in cash behave in value very much like a traditional stock. As with any new venture, you will need to master the vocabulary that is an inherent part of forex. 
When you begin to learn forex trading you will be introduced to terms like pip, spread, cross, base currency and trade currency. Foreign exchange trading does have some unique terminologies. While they may be new to you, you will learn them quickly because they describe certain parts of forex quotes that you will need to understand in order to trade. 

There are quite a few resources available to those who wish to learn forex trading. The reliability of internet access has opened the door to online forex trading, which means that more investors have the ability to participate in trading activity. Since the foreign exchange trade is considered a spot market, the ready availability of internet access is crucial. 

           Business is done on the "spot," thus the name. You can capitalize on many benefits when you learn forex trading. The availability of a 24-hour a day market is one. Since forex involves the trade of currency at banks across the globe, the market never closes. The market is also remarkably liquid, meaning that you will never have trouble finding trading partners. Since most of your trading partners are banks and the medium is cash, you will never be at a loss for customers. 

Another benefit is the lack of commissions. Since you make the trades on your own, you don't have to spend part of your profit on brokerage commission fees. Taking the time to learn forex trading opens one more investment door for you. As you continue to realize the importance of diversifying your investment portfolio, it may be a good idea to begin looking at what kinds of opportunities are available to you in foreign exchange trading. You may be surprised to see who else is capitalizing on this market and just how easy it is.

How to Find a Suitable Broker for the FOREX Trading Market

        It's not always easy to know what to look for in a broker in any market, much less a market as complex as the FOREX. But, if you want to trade in FOREX you need a broker. While it might be tempting to simply ask the brokers what they can do for you, you can't always depend on them to give you a straight answer. Here are a few things to consider when choosing your broker. 

You will want a broker that has low spreads. Since FOREX brokers don't charge a commission, this difference is how they make money. Low spreads will save you money. Along with this, you should be looking for a broker attached to a reputable institution. Unlike equity brokers, FOREX brokers are usually attached to large banks or lending institutions. 

         The broker should also be registered with the Futures Commission Merchant (FCM) as well as regulated by the Commodity Futures Trading Commission (CFTC). Once you've narrowed your choices down to brokers that won't cost you too much, and that are reputable, consider the trading tools that they are offering you. FOREX brokers have many different trading platforms for their clients, just like brokers in other markets. 
These often show real-time charts, technical analysis tools, real-time news and data, and may even offer support for the various trading systems. Before you commit to any one broker, request free trials of their tools. Brokers generally provide technical as well as fundamental commentaries, economic calendars, and other research to help you make good trades. Shop around until you find a broker who will give you what you need to succeed. 

The next item that you will need to evaluate carefully is the number of leverage options your potential broker has. Leverage is a necessity in FOREX trading because the price deviations in the currencies are set at fractions of a cent. Leverage is expressed as a ratio between the total capital that is available to be traded and your actual capital. 
          For example, when you have a ratio of 100:1, your broker will lend you $100 for every $1 of actual capital you have. Many brokerage firms will offer you as much as 250:1. If you have low levels of capital you will need a brokerage with high levels of leverage to make reasonable profits. If capital is not a problem, any broker that has a wide variety of leverage options would be a good choice for you. A variety of options will let you vary the amount of risk you choose to take. For example, less leverage (and therefore less risk) may be preferable if you are dealing with highly volatile (exotic) currency pairs. 

Along with different levels of leverage, look for brokers that offer different types of accounts. Many brokers will offer you two or more types. The smallest account is known as a mini account and it requires you to trade with a minimum of around $300. The mini account also generally offers a high amount of leverage. 

The standard account allows you to trade at a variety of different leverages, but it requires minimum initial capital of $2,000. And finally, there are premium accounts, which often require significant amounts of capital. They also generally have different levels of leverage available to the traders who use them, and often offer additional tools and services. You will need to make sure that the broker you choose has the right leverage, tools, and services for the amount of capital that you are able to work with.

Forex trading is a global phenomenon.

          Forex trading, or foreign exchange current exchange trading, is a global phenomenon. This is the single largest market in the world. There are many different market sectors that are involved with Forex trading. 

These include, but are not limited to; " Banks" Corporations" Governments" Individuals What is Forex trading you ask? At its simplest, Forex trading is currency being traded for another currency. 

         However, Forex trading is anything but simple. The market has massive trade volume and is very fluid. Not to mention the hundreds of different currencies being traded and their ever changing value.

Forex trading is a very focused area of trading, but the amount of time and energy most people and companies spend getting trained and educated on Forex trading and its inner workings and pitfalls, is at least as much time as it takes to learn the stock market.Because of the complexity, Forex Trading is not your typical overnight success operation. 

There are many large corporations, such as GCI Financial which is a market leader in this space.Forex trading is unique in that everyone does not have access to all of the same information and prices at the same time, as they do with the stock market. I won't get into specifics here, but basically there is a tiered level whereby different levels of access are given to the Forex traders and Forex firms.

The other main thing to remember about Forex trading is, until such time that the world adopts a single currency, Forex Trading will be around for a very long time.

What Is a forex broker ?

 Definition :

An online forex broker is a firm that facilitates retail trading using Internet 
technologies. Global Forex Trading (GFT), one of the popular online forex brokers. 
It provides retail traders with a free demo trading account, allows users to open a live account, gives live help, provides software called DealBook FX 2, and allows viewing of account documents. 

(DealBook FX 2 can be downloaded for the demo trading account).Gain Capital Group's Online Forex offers 200:1 leverage. In some cases, the total return on investment is higher due to leverage. For example, with $1000 cash in a margin account, the investor can control up to $200,000 in notional value. 

       Of course, trading on leverage magnifies both the investor's profits and losses. GCI Financial Ltd. offers commission-free online trading in forex. GCI offers Internet trading software, fast and efficient execution, and 0.5% margin requirements. This broker offers USD or Euro denominated trading accounts. 

The spreads are 3 pips in EUR/USD and USD/JPY, and are 4 to 5 pips for other major commissions. Clients can hedge by opening positions in the same currency in opposite directions. 
Risk to the investor is limited to the deposited funds. Market analysis and research, real-time charts, and forex trading signals are available at no charge.ACM, part of the REFCO group, offers 3 pip spreads on all major currencies, which works out to between 0.02% and 0.03% on the dollar value. 
They also offer commission-free trading, and forex trading with a 1% margin, which means that a trader can control $1,000,000 with $10,000 in his account.There are many online forex brokers that offer free demo accounts for potential forex traders to practice trading. 

It is only a matter of registering and starting demo trading to get a feel for forex trading. In addition, at most sites, traders can find free forex news to assist them with their trade strategies.

Swing trading is one of the best ways to make money in forex

       Swing trading is one of the best ways to make money in forex trading, it's also a lot easier psychologically than trend following.It's therefore a great way to trade for novice traders. Over the last few weeks we have looked at some live examples:

Banked 4 profits, scratched one trade at break even and have one open. Let's look at it and another potential opportunity.First why is swing trading an easy way to trade?When we say is easy, we mean psychologically.You get in quick with low pre defined risk and you're normally out in 2 - 5 days with a good profit. 

This is much easier than long term trend following, in that you do not have to wait for months and see dips eat into your open profit.Long term trend following is highly profitable but requires a lot more discipline.We personally mix the two ways of trading to gain some diversification of style and smooth the equity curve.

Swing trading basics We normally look for important chart support and resistance and trade contrary to it.We wait for prices to test these areas and watch for stochastic momentum to fall against resistance or rise against support.Then we know the level has held and trade off it.We also use RSI and Bollinger bands to define targets and that's it.Nice and simple, but can be very profitable you can read more about this method in our other articles.

British Pound We are short at recent nearby highs and would look for a pop to the downside to Fridays low or near the middle of the Bollinger band.Stochastic is weak at present and odds favor a bit more to the downside.With swing trading you don't want to hang around to long, get out on specific target and that's very close now.Another opportunity Lets look at another potential opportunity that's could be shaping up. 

The euro is trading near its highs and the spike high on the chart is resistance. Stochastic momentum is waning and a cross with bearish divergence will put the odds in favor of the bears.The important point is to wait for confirmation of the crossover - the target is then Fridays low just above the middle of the center of the Bollinger band.

Finally The tools used swing trade are simple and easy to use, but that doesn't mean they can't make profits as we have shown.Importantly, for novice traders the discipline needed to trade this way is a lot easier.If you practice a bit and learn to spot the set ups you will soon be able to spot some great low risk high reward trades.

Unique Trading Strategies To Survive During Tough Markets

         Surviving the rough times to be present for the big moves is the name of the game in commodity trading. With some luck we can even break even while the other participants are getting chopped to pieces. 

It requires giving up something to get something else. Learn how a few of the big hits can be avoided for a small price. Read about ways to participate in the long haul moves while still sleeping well at night.Let's say our forecast makes us bullish on the market. We want to check out the possibility of buying a future contract and hedging it by buying a put option. 

There will always be a choice here - either buying an option spread (as in the previous example) or buying a future with an option hedge. One method will always be better than the other. We need to determine this to get our strategy edge on the market. Much depends on the option premiums. Again, this is where it's handy to have an automated option evaluation program.

Now we can get creative and more flexible. Let's say you have faith in your forecast that the market is going to rally within 2 - 3 weeks. If it doesn't happen by then, then the trade is suspect. Let's buy a futures contract and also buy a put option as close to the current market price as possible. Hopefully we pay a reasonable price for the put option. The closer you buy it, the less loss and risk if the futures contract declines sharply against you. However, the option premium will be higher too.

The put option becomes a synthetic stop loss order for the futures contract. You will lose until the market hits that option strike price and then no matter how far the market drops, the futures contract loss is fixed and limited. Now here's the trick and edge...Select an option with only a small amount of time, like 30 days or so. The option will cost less because of having a short time remaining. 

If your future contract moves up within 2-3 weeks as you expect, the put option will lose its value quickly and expire within 30 days anyway. The option is the sacrificial lamb that has done its job for a few weeks and then dies. It has protected you against the big potential hit. We dodged the ball. Now it's up to the futures contract. 
That's where the profit will come from, if the trade is destined to work out.Once the futures contract gets far away from your entry point under the initial protection of the option, you can then move up the future's stop loss order to break-even. A new option could always be bought later if desired to synthetically lock in some profits. However, this is option overuse and the premiums start to catch up with you. 

We must take on risk or the market will not pay us. We become parasites if we hedge too much, add no liquidity or load risk onto others. In this example we economically used an option to lay off large risk at a critical time. After that brief, partially-hedged window, we again assumed the risk. There are other ways to do this, but beyond the scope of this article. 

More later.So far we have discussed entry techniques and ways to lower our risk at critical times when our exposure is the greatest. Remember that we are trying NOT to get hit by the dodge-ball and are happy making singles and doubles. Let the newbies swing for the fences and strike out 90% of the time. 

The idea here is survival until we identify a big market forecast and the move starts. That's the only time to swing for the fences. You want to play it conservative 90% of the time and swing hard 10% at most. To do otherwise is the road to consistent losses. Trade like a guerrilla warfare fighter. Survival first, shoot at our own time and place...sparingly. 

Let the others line themselves up and face off to their heart's desire. In another article we will discuss methods of using futures and options for synthetic exit strategies. This will include option granting, and futures hedging of options.

Good Luck !!!!!!