Forex Trading Resources & Tools: May 2014

Image courtesy of [Stuart Miles] / FreeDigitalPhotos.net

News trading accounts for more of the huge success I have achieved in Forex Trading. I want to share with you my personal news trading strategy, which got me over 78 win trades, and about 26 loss trades since April 2014 till date. The money management made the bad trades highly insignificant when compared to the overall account equity and balance.

An infallible fact is that news trading is one of the highly profitable trading methods in Forex. It is precise and most times have a definite outcome because of the fundamental factors involved. However it is not that easy, hence a good deal of experience, and broad knowledge of the economic and political events in the world is necessary.

In my early years in Forex, i was quite glued to the technical way of trading. My first live account got burnt through the effects of an economic news release. At that time i was ignorantly trading during the news release, and in less than few seconds i got a margin call. I never knew at first that i was exposed to the swift impact of the news release.

News release most often comes with great volatility enough to drain an unprotected account. Brokers tend to widen their spreads at such times thereby compounding the effects. (In subsequent chapters i will share some tools to help you get prepared adequately for the news release).

I am not about to reinvent the wheel on news trading but to share with you my personal method, which i have been successfully using to trade the news. But before this is revealed, its important we understand some few basics and facts about news trading especially for those who do not have any knowledge on this subject.

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Some Basics & Facts

Forex in the real sense is not just buying and selling of currencies. There is something that drives the appetite to buy or sell a currency.

Financial investors invest only in areas where they expect high returns. The choice of investment is determined by the economic performance, and strategic financial programmes of a country. The economic performance or financial statistics are released periodically. These figures serves as a guide to investors.

Real investors invest in the commodity (tangible & intangible) of a country, which in-turn affects the currency positively or negatively. This is reflected in the price of the currency being bought or sold by the Forex traders.

Investors watch out closely for the outcome of economic news release. A good release would spur investments (BUY) and a bad release will cause withdrawal of investments (SELL). This is a simple way to define fundamentals in Forex.

The effects of these fundamentals in Forex is what drives the market. It is like the fuel a vehicle needs to move. Ordinarily the market would still move but the fundamentals has the capacity to change its course, and most often sends it wild.

There is bound to be an economic news release every week. See economic news calendar

News trading can be discomforting due to time factors. I am most often fortunate to trade the US & UK news release due to my geographic location. However i find it difficult to trade Australia, New Zealand, Asia & some other country's news release because it sometimes comes out at midnight in my location.

Technical tools and strategies are most often useless or fails during a high or medium impact economic news release.

There is a high probability of spread widening by brokers during news release. So not all brokers are good to trade the news.

A very high impact news release can cause extreme movement of price (spikes) in nanoseconds faster than the eyes can see.

Most sideways movement and narrow movements usually occur as a sign of an upcomming news release.

Do not expect the best from your broker during news release. Prepare for unlikely mishaps, and unprecedented issues due to sever overload, and heavy request from data feeds. This often is responsible for error messages like "off quotes", "Invalid SL/TP", "Trade

Automated News Trading System

Timeouts", "Trade Context Busy", e.t.c. (My strategy takes care of this).

There is no Holy-Grail system to trade the news. However some systems have shown proven performance trading the news.

Major Currencies/Investments That Attracts Investors

We could refer this to the major news trading currencies.

Major Trading Currencies:

United States of America (USD), United Kingdom (GBP), Japan (Yen), German (EUR) France (CHF), Canada (CAD), Austrialia (AUD)

Major Investments/Commodities (Tangible & Intangible):

Housing, Food, Energy, Fuel, Mining, Jobs, Sales, Manufacturing, Production, Services, Bank Rates, e.t.c.

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In the next chapter we'll reveal the necessary resources required for news trading. Meanwhile go through your charts and look out for areas where you can spot a spike. Study the chart pattern before it occurred and the reactions that followed.

Happy Trading.

This guide presents solutions for traders who wish to subscribe to MQL's signal services but do not have the Signal Tab installed on their platform.

Metaquotes integrated some functionality like Signal Tab, Market, Code Base, e.t.c into MT4. However some MT4 Platform do not have the Signal Tab because some brokers stopped supporting it, and took it off due to reasons best know to them.

MQL has one of the largest auto signal services, which directly places trades on subscribers platform. They have about 3,670 trading signals available for subscription as at 30th April, 2014, while the community has grown to over 236,910 users as at May, 2014.

(02/06/2014) Update!!! HotForex has launched MQL Signal Services on their Trading Platform. Click here for more info or Open a HotForex Account and subscribe directly to MQL's Signal Services Providers.

If your platform does not have the Signals Tab or your broker does not support it then follow the steps below:

Open an account with a broker that supports signal trading from MQL. A demo account is sufficient. I recommend AxiTrader

Configure the demo account with a deposit higher than your original account size. For example if your account is $1,000.00 then use either $1,000.00 or $2,000.00 preferably on the demo account. The master account sometimes get depleted due to some uncontrollable factors so its better to increase the deposit on the master account and replenish it more often. The client has more filtering features to control and discard bad trades.

Configure the signal services in the demo account. See Axitrader Signals Guide

Select a signal service provider from the list of providers in the signals tab, or goto www.mql5.com to subscribe directly to a signal provider.

Download a Forex Copier Application. You will need this to copy signals from the demo account to your real account. I recommend Forex Copier, LTC Copier and Trade Copier Software

Install the Forex Copier Application to the server (master) and client (slave) platforms. The server platform will be the demo account which has the Signal Tab, while the client platform is your platform, which would copy the trades from the demo account platform.

When configuring the Forex Copier ensure that the following features are configured properly; Lot Multiplier, Risk Ratio, Lot Size, Pending Order Manipulation, Synchronization, Magic Number, News Feature, Reverse Trade, Filters.

Ensure you have subscribed to a signal provider before going to step 8. See picture below for a subscribed signal service on a master account.

Open the platform with the demo account, and attach the Forex Copier to a chart (preferably EURUSD). Please follow the instructions from the Forex Copier User Guide.

Wait for sometime for synchronization to take place. Usually if there is an ongoing trade the Forex Copier would require your confirmation to copy them or you can configure an automatic action.

Give sometime before opening the receiving platform (client) in order to enable trade synchronization to be sorted out in the master platform. This is necessary to guide against copying negative trades.

If step 1 to 12 is done correctly then trades would be copied from the master to the client whenever the signal provider places an order.

CAUTION AND TIPS

Do not use proxy internet connection, and do not turn off your platform rapidly.

I strongly recommend using a reliable VPS Provider to ensure 100% utilization of the trade signals so that you will not miss important signals when your computer is off or when you go offline.

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The quality of your internet connection is crucial to how fast the signal trades are synchronized, copied, modified, and manipulated.

The quality of your computer system resources matters a lot in terms of the ability to handle speed, and processing (See: How To Fix Slow & Frequent Crashing Platforms).