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Thread: FAQ for beginners

FAQ for beginners
  1. ForexPeoples Team Administrator's Avatar

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    #1

    FAQ for beginners

    What is strategy ?


    Answer:

    If we do not use strictly academic language, strategy is a number of assumptions preconditions, factors, signals and algorithms, which guides us to commit those, or other actions.

    In terms of Forex this word means a set of signals (or algorithms, purely mathematical, for example) on the basis of which we open transactions; or a set of signals which guides us to close transactions (or other algorithms for closing transaction); or which are used for capital management and risk management (although very often they are presented as not connected with any strategy).
    In other words, strategy is quite a rigorous formalization of behavior depending on conditions.

    There are various types of trading strategies. They differ from each other by the basis which is used to make decisions on transactions; which in its turn depends on the type of analysis. It could be fundamental analysis (analysis of fundamental data), or technical analysis (analysis of technical indicators, price charts). Technical analysis also covers fractal analysis, candlestick analysis, Elliot waves, etc. These analyses are often referred to as independent types of analysis. I personally am not inclined to refer them as independent analyses and believe that there are types of analyses: FA and TA (Fundamental analysis and technical analysis), the rest are just specifications.

    Urgency of performance is also an important criterion of trading strategy. It could be, for example, extra- urgent trade, medium and long term trade. Different sources interpret timeframe in different ways. I have seen versions where holding of a position within 1-5 days was interpreted as extra -urgent trade, which, in realities of current internet trading is considered as medium term trade. At the same time I have encountered explanations, which describe holding of a position for a couple of minutes or an hour as extra- urgent trade; from one to 5 days as medium- term trade, and a situation when a position is hold for a week or longer is regarded as a long- term trade.

    Systems are also divided by way of gaining profit. It can be, for example, operations in the price channel (from the borders towards inside the channel or by way of breakdown), it could be anti-trend system (when we try to find trend reversals); after-trend trading system (when we are looking for pullbacks and try to enter, hoping that existing trend will be continued.

    As a rule, systems are designed for different conditions. For example, I have witnessed that people tried to break down price channel when the market is quiet, flat (offset price movement). At the same time after-trend systems as a rule are used when a trend is very marked.

    Usually all these criterions are interrelated and there is no need in strict analysis to understand why exactly this decision was made.
    Last edited by BlackID; 03-18-2012 at 01:50 AM.
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    #2

    What types of market orders exist?

    Answer:

    Types of orders:

    Client's terminal provides facilities for preparing and issuing orders for a broker to conduct trading transaction. In addition, terminal allows you to control and manage open positions. Several types of trading orders are used for this purpose.
    Order is a client's instruction to a brokerage agency to conduct a trading transaction. There are following orders in the terminal: market order, pending order, stop loss, take profit order.

    Market order
    Market order - is an order to a brokerage to buy or sell a financial instrument at the existing price. Execution of such order leads to opening of a trading position. Purchase is carried out at Ask price (price of demand) and selling at a Bid price (price of the offer). Stop loss and take profit orders can be referred to as a market order. (These orders are described below). Mode of execution of market orders depends on the financial instrument.

    Pending order
    Pending order is an instruction to a brokerage agency to buy or sell a financial instrument in the future at a specified price. This order is used to open trading positions subject to equity of future quotes to the established level. There are four types of pending orders.

    Buy Limit - buy if future Ask price equals to the established value; while current level of prices is higher than the value of the order. Such orders are made bearing in mind that after dropping to a certain level the price for the instrument will eventually begin to rise;

    Buy Stop - buy if future Ask price equals the established value; while current level of prices is less than the value of the order. This order is placed bearing in mind that instrument price will exceed a certain level and continue to grow;

    Sell Limit - sell if future "Bid" price equals to the established value. At the same time current level of prices is less than the value specified in the order. Usually such orders are placed with the expectation that instrument price will start to decline after reaching a certain level;

    Sell Stop - sell if future "Bid" price equals the established value. At the same time current level of prices is more than the value specified in the order. Usually such orders are placed with the expectation that instrument price will reach a certain level and continue to decline;

    Stop loss and Take profit refer to a pending order. After the execution of the pending order its stop loss and take profit are automatically attached to the opened position.

    Stop loss
    Order was designed to minimize losses if the price of the financial instrument begins to move in the loss-making direction. If the price reaches this level, position will be closed automatically. This order is always connected with an open position or pending order. The order is given to a broker together with the market or pending order. When checking the status of this order for long positions Bid price is used; and, for checking short positions- Ask price.

    To automate the movement of the Stop Loss order following the price, you can use Trailing Stop.

    Take profit

    Take profit is designed for gaining profit if the price of the financial instrument reaches predicted level. Execution of this order leads to closing of a position. It is always connected with an open position or with a pending order. Order can be only given together with market order or pending order. For checking the status of the order for long positions, the Bid price is used; and, for checking short positions - Ask price.
    Last edited by BlackID; 03-18-2012 at 01:51 AM.
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    #3

    Please tell me how to place SL and TP if a transaction is already opened?

    If you need to place Stop or Profit in the open position or you need to move them to other levels (for example, you want to move Stop to breakeven stop), it can be done any time in the working hours of the exchange.

    In order to do this, double click the left hand side of the mouse in the icon of this terminal on the line S/L or T/P in the position where you want to change the Stop or Profit. You can enter the values you want in the special boxes of the displayed icon and press the Change button.

    Yes, if only you are not in the long term position if there is a gap against you, Stop Loss will not be able to help. None of brokers closes orders at a price which hasn't ever existed.
    Last edited by BlackID; 03-18-2012 at 01:51 AM.
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  7. jhoreis's Avatar

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    #4
    I want to ask at the time frame how SL can be a maximum of how it works? Can SL in combination with robotic trading in every transaction?
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    #5
    Quote Originally Posted by jhoreis View Post
    I want to ask at the time frame how SL can be a maximum of how it works? Can SL in combination with robotic trading in every transaction?
    "If there is a gap against you, Stop Loss will not be able to help. None of brokers closes orders at a price which hasn�t ever existed. "
    Its happen only when the week end open after a gap on its next... usually market always open with a gap some time big some time low...when Market close End of the Week and Open next week with a big gap that if it is cross stop loss then nothing will happen because mt4 will not see any price that time ..So it will go its next price and close there...
  9. Agung Prasetyo's Avatar

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    #6
    sorry I'm still new in the world of forex. I would ask is how to take the open position when the beginning of the week and the beginning of the month

    whether we use an indicator with a period of weeks and month or by the day before the market close
  10. master rubigul's Avatar

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    #7
    you will find Real Time technical analysis overview for the major currency pairs. This analysis is a complete summary of the forex trading pairs which are currently used in the trading
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    #8
    Quote Originally Posted by Nafi View Post
    "If there is a gap against you, Stop Loss will not be able to help. None of brokers closes orders at a price which hasn�t ever existed. "
    Its happen only when the week end open after a gap on its next... usually market always open with a gap some time big some time low...when Market close End of the Week and Open next week with a big gap that if it is cross stop loss then nothing will happen because mt4 will not see any price that time ..So it will go its next price and close there...
    wow, I just know this
    means stop loss does not work if the market and a gap closing?
    is that so?
    This may be the reason why many traders avoid Friday
  12. pinpin's Avatar

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    #9
    Quote Originally Posted by camelformula View Post
    hi to you guys

    what is the most safe way to trad in forex?
    that can give 40 to 50 pips daily.

    as i know there are many way but some of them are risky and not safe too.
    let us have one and work togother to test it.
    any one can add them here

    thanks

    wish all to success
    I think we have tried many systems and looking for a system that fits perfectly with our
    and of course other people's systems do not necessarily fit with our character. if I usually do scalping, but just looking for just 20 pips per day. by trading up to 7 times the open position
    The biggest enemy is ourselves
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    #10
    Quote Originally Posted by pinpin View Post
    I think we have tried many systems and looking for a system that fits perfectly with our
    and of course other people's systems do not necessarily fit with our character. if I usually do scalping, but just looking for just 20 pips per day. by trading up to 7 times the open position
    In my own trading, no forex trading strategy will remain profitable for a life time so this means that we traders must try our best in order to be able to have a number of trading strategies that we will use in our trades.

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