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How to Set Forex Trading Goals

Setting targets is strongly correlated to success. Before you start risking capital, make sure you know how to set Forex trading goals.

Establishing goals is a crucial part of achieving anything. The goals you set become the roadmap to reaching your ambitions. A common mistake that new traders make when setting their first Forex trading goals is quite simply to confuse goals with desires.

Defining your trading goals is essential. Lots of consideration should be given towards establishing goals you can and will achieve. Hopefully, this blog will offer inspiration on how to set Forex trading goals that are specific, measurable, realistic and ultimately support your path to success.

How Not to Set Forex Trading Goals

Before advising you on how to set Forex trading goals, it might be easier to mention how not to do it. The following forex trading goals are inadequate:

Unrealistic: “I want to turn $500 into a million dollars by the end of the year and retire.”
Vague: “I want to make forex trading my full-time job and set my own hours.”
Unmeasurable: “I want to make lots of money and be successful at trading forex.”

None of the above statements is a goal per se. They could be better described as ambitions. While it’s essential to have a bigger picture in mind, that alone is not enough to get there.

Any of these ambitions can be enhanced by adding specific objectives or milestones that narrow down the steps needed to reach these ultimate aspirations.

Good Examples of Forex Trading Goals

As mentioned, you should set your sights on something specific, so you know when you reach that point. A lot of people think you can have just one goal and focus exclusively on it. In reality, you can be working towards multiple targets simultaneously.

Here are some excellent examples of Forex trading goals:

“I will only place three trades per day and stop trading immediately after my third trade is closed.” This goal encourages you to consider the trades you are going to make.
“After each unprofitable trade I close, I will take the dog for a walk or make a cup of tea.” This goal helps you to clear your head, reflect on what may have gone wrong and prevents you from revenge trading.
“If I have made 5% on my account in a day, I will stop trading until tomorrow.” This goal encourages you to finish your trading session on a high note and feel good about your success.
“I will not modify my take profit or stop loss after my opening order is filled.” This goal restricts you from second-guessing yourself and listening to the voices in your head that you were wrong, and this trade is doomed.

You may notice that all of these goals are quite mundane. While true, they are also highly actionable, achievable and closely related to following a consistent trading strategy and best practices.

These are good examples of Forex trading goals as they aim to prevent you from making some of the most notorious mistakes in forex trading.

How to Set your Own Forex Trading Goals

Your trading goals need to be specific to you. Ideally, your goals will focus on certain areas that you struggle with and want to correct or areas you feel you excel at and want to develop further.

Do you want to focus on controlling your behaviour, following your risk management parameters, increasing your knowledge or otherwise? To effectively set your goals, much soul searching is required to uncover your strengths and weaknesses.

Your goals will also depend on your personal circumstances, such as how much time do you have to allocate to your trading endeavours, how much capital can you afford to risk and how committed you are to the idea of developing yourself into a successful go-getting forex trader.

Some traders are so committed that they will get a job working for a forex broker to reach their goal of learning how the market functions and the industry operates. If you are a doctor or lawyer, you probably won’t find it reasonable to take such a drastic life decision to aid your quest of uncovering the secrets of the forex industry.

When you set goals, they should be framed positively. For example, instead of stating a goal as “don’t lose money and fail on more than three trades a day” it could be expressed as “when I am not successful, try not to allow it to happen more than three times a day.”

How to Evaluate your Goals

To help you identify any flaws or areas that can be improved in your trading strategy, you should be keeping a detailed journal. A journal isn’t just your trading history. You should keep a diary where you not only pinpoint which indicators, timeframes and other tools you were using but also how you felt at the time, what influenced you to make certain decisions and how you think you could have improved on the final result.

A well-documented journal can be a valuable asset for setting and evaluating your Forex trading goals. To prevent stagnation or to go off course, you should review your goals periodically, depending on how often you trade. If you trade every day, weekly evaluations would be reasonable. Or if you trade a few hours a week, then monthly assessments might make more sense. It’s good to challenge yourself but don’t overreach and exhaust yourself or set yourself up for failure.

Achieving goals should make you feel good about yourself. The road to success is long and bumpy. If you don’t enjoy the journey, then you may sadly give up. If you make your forex trading goals too easy, you won’t get a sense of gratification for reaching them. Likewise, if you make your goals too hard to meet, you’ll start to lose hope and feel inadequate.

Most important of all is learning valuable lessons that will support your trading career or hobby.

Disclaimer:
Any advice included in this website or correspondence is general advice only and is based solely on consideration of the investment or trading merits of the financial products alone, without taking into account the investment objectives, financial situation or particular needs (i.e. financial circumstances) of any particular person. Before making an investment or trading decision based on the advice, the recipient should carefully consider the appropriateness of the advice in light of their financial circumstances and should carefully review the PDS of the relevant financial product as provided by your investment broker.

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Should I Trade Forex or Stocks?

Many aspiring investors will find themselves confronted with the same question; Should I trade Forex or Stocks?

Many traders are attracted to forex trading because of the ease of access and seemingly endless trading opportunities. Historically, the idea of investing has been something far out of reach of the average Joe. But around a decade ago, Forex brokers dramatically changed the ideology that investing is only for the privileged.

Thanks to clear regulations, simple account opening procedures, a variety of funding methods, low minimum deposits and easy to use trading platforms, almost anyone can now trade Forex. Add the fact that technology has been aggressively democratising finance, making it more and more accessible. Some apps let you invest in ETFs with $20, others allow you to buy fractions of a share of a publicly listed company for a dollar.

In the past couple of years, forex brokers such as Propex 24 have evolved into much more than simple brokers that offer foreign currency exchange. You may be aware that many retail FX brokers such as ourselves, also offer precious metals, energy products, cryptocurrencies and even indices.

Now, there is a growing trend of brokers introducing stocks alongside the classic trading pairs and this trend has put the same question on every trader’s mind; should I trade Forex or Stocks?

The Downsides of Trading Stocks versus Forex

Investing in stocks lacks many of the benefits that Forex trading is best known for offering.

Stocks Have Shorter Trading Sessions than Forex

Every stock market in the world trades for several hours, only during local business hours. Whereas the Forex market is open to trade 24-hours a day, five days a week. Yes, you could buy different shares on different stock markets at different times of the day, but when the market is closed your capital is locked, but you’re not earning.

Stocks are Less Volatile than Forex

Stocks tend to trend up or crash. This makes it very difficult to profit from short term trading strategies. On the Forex market, a single currency pair can experience several breakouts in a different direction in a single day. Thanks to this volatility, the Forex market offers an abundance of opportunity. It allows traders to profit from holding short term positions which allows them to trade the same capital multiple times a day.

Stock Brokers Offer Lower Leverage

Stockbrokers do not offer leverage when buying shares, even if you hold them in an account. Forex brokers offer leverage, which on average in Australia is 100:1. In some rare cases, leverage can be even higher.

Stock Trading is More Expensive than Forex Trading

Stockbrokers charge differently to forex brokers. A stockbroker charges you per deal, as opposed to calculating commissions based on the value of your investment or trade. A stockbroker may cost in the region of $5 to $20 per deal. If you buy ten shares of Commonwealth Bank (CBA) for $70.00, you will pay a commission of around $20 with the major Australian share trading brokers.

The Stock Market is not as Liquid as the Forex Market

Yes, the New York Stock Exchange is the largest exchange in the world by any metric, including liquidity. However, not all 2,300 shares listed on the exchange are as popular as Apple Inc (APPL). Many shares are thinly-traded and very illiquid. Don’t let anything fool you into thinking that liquidity, volume or market cap on any stock exchange comes anywhere close to the $6.6 Trillion that is traded each day on the foreign exchange market.

You Usually Only Buy and Hold Shares

If you are trading on the stock market, you usually buy and hold stocks, then wait for them to appreciate. Sure, the objective of any publicly listed company is to perform well, pay dividends and boast strong fundamentals which inevitably raises the price of its shares. It can take a long time for a stock to increase in value; meanwhile, your cash is locked up. Keep in mind that just like Forex, there are various derivatives available such as Options and CFDs where you can speculate on the price of different stocks, usually with leverage and the option to short. But it’s often much more expensive and opens yourself to various other risks when markets close for the day.

How Forex Brokers Make Trading Stocks Better

Based on the above comparison that is definitely one-sided, you will notice that stock trading is very different from forex trading. In its natural form, trading stocks is only really suitable for long term investment as opposed to active trading strategies.

However, Forex brokers have started introducing global stocks on their trading platforms. They do not merely offer the ability to buy shares. Still, They have added them as CFDs, allowing them to be traded just like Forex.

Because of how forex brokers run their business and how CFD products function, stock trading has started to gain interest with Forex traders and short-term speculators, forex brokers have managed to flip some of the disadvantages of trading stocks to make them more attractive.

While there is little that a Forex broker can do about exchange trading hours, they have managed to solve other critical issues. FX Brokers that offer shares on their trading platforms allow clients to short-sell, just as they can on EUR/USD. Brokers also provide traders leverage on stocks. The commissions charged for trading shares with a retail FX broker are also closely aligned with their FX trading pairs.

The Bottom Line on Whether you Should Trade Forex or Stocks?

With so many investment products on the table, it can be hard to choose whether to trade forex or stocks. Both forex trading and stock trading are highly popular trading products.

One of the merits of dealing with certain Forex brokers is that they could also offer many other asset classes. You may not open your trading account with the intention of trading stocks. Still, if opportunity strikes, you wouldn’t want to find yourself in a situation where you can’t do anything about it.

Even so, many active traders would argue that Forex trading trump stock trading because of the volume, volatility, leverage and long trading sessions.

Disclaimer:
Any advice included in this website or correspondence is general advice only and is based solely on consideration of the investment or trading merits of the financial products alone, without taking into account the investment objectives, financial situation or particular needs (i.e. financial circumstances) of any particular person. Before making an investment or trading decision based on the advice, the recipient should carefully consider the appropriateness of the advice in light of their financial circumstances and should carefully review the PDS of the relevant financial product as provided by your investment broker.

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3 Most Used Technical Indicators in Forex

Most Forex Trading platforms are loaded with dozens of indicators. Here are the top 3 most used technical indicators in Forex.

There are hundreds of technical analysis indicators used by forex traders. Every trader will eventually establish their favourites but not before years of painful trial and error. If you’re new to using technical indicators in Forex you probably find it overwhelming to gaze into the screen of your trading platform only to see dozens of indicators staring back at you. Which indicator should you use for technical analysis? This article will give you a leg-up.

Way Too Many Technical Analysis Indicators

In MetaTrader 4, there are 30 technical indicators. In MetaTrader 5, there is 38, and in cTrader, there is 65. Most traders will use more than one indicator in their Forex technical analysis; it’s doubtful there are many who use 30 of them.

Not only are there a lot of indicators, but each indicator also comes with various settings that you can modify. Some platforms let you choose whether the indicator formula uses close prices or you can change it to open, high or low prices. Some platforms also allow you to change the number of periods that prices are derived from.

In this article, we will be introducing you to the three of the most used technical indicators by Forex traders. While there is no official statistic on what the most popular indicators are, we’ve compiled this shortlist based on what traders share in forums, chatrooms and blogs.

Types of Technical Indicators Used Forex

There are four categories of technical indicators, which are Trend, Oscillators, Volatility and Volume.

Trend indicators are used to identify trends in the market.
Oscillator indicators are used to identify overbought and oversold conditions.
Volatility indicators are used to show volatile conditions in the market and highlight when volatility starts and stops.
Volume indicators are used to show how active a market is based on the trading frequency and order volumes of the asset.

Technical analysts usually use an indicator from each of these categories as each piece of information can be helpful towards building a conclusion and making a trading decision. We’ve gone over 3 of the most used technical indicators in forex below.

1. Simple Moving Average

The Simple Moving Average (SMA) is a Trend indicator. Moving averages are used to smooth out the volatility that is shown on a typical chart. When applied on a standard Candlestick chart, you are able to see the highs and lows of each period and the SMA line shows the average price based on previous periods. Usually, this line will slice through the middle of the candlesticks. Traders use Moving Averages to observe trends and get confirmation of other signals they generated from different analytics.

There are several variations of the Moving Average indicator, such as Exponential, Weighted, Triangular, Time Series and Wilder Smoothing. Each of these indicators has a somewhat modified calculation which allows it to show different details.

Traders use Moving Averages for confirming mid-term and long-term trends, identifying support and resistance levels. Moving Averages are very weak when it comes making predictions as they simple consume price data from the past and compare it to current market data.

What makes Moving Averages so widely used, despite the lack of foresight it offers is that many other technical indicators are based on Moving Averages. One such example is Bollinger Bands, which are mentioned below.

2. Bollinger Bands

Bollinger Bands are a Volatility indicator. This indicator is made up of three lines. The middle line is a Simple Moving Average, and the upper band has a standard deviation of 2 added to it, whereas the lower band has a standard deviation of two subtracted from it. As price volatility increases, the bands move further apart. As volatility decreases, the bands move closer together.

The market will roughly trade between the upper and lower bands. Traders use the bands to help them to place support and resistance levels. The higher band is always interpreted as a resistance level and the lower band a support level. The middle band is interchangeably interpreted as either a support or resistance level.

3. Parabolic SAR

Parabolic SAR is another Trend indicator. Parabolic refers to the parabola or curve-like appearance of this indicator. SAR stands for Stop and Reverse.

A downtrend is highlighted by dots above the prices plotted on the chart whereas an uptrend is represented by dots below. Traders look for changes in the positioning of these dots.

When the curve switches from being below the candles to above, it signals that the current uptrend will come to an end. Not only does this indicator signal trend changes, but it helps traders to place their take profit and stop loss levels as well as pending orders to enter the market.

Parabolic SAR is considered by many to be one of the simplest trend indicators to read, which is why we believe it to be widely used by Forex traders. Just like Moving Averages, it does a great job of confirming the presence of a trend. However, Parabolic SAR is also a lagging indicator. It works best only when the currency pair you’re analysing is in a strong trend. If the market is flat, you can’t read much from this technical indicator.

Final Thoughts on Using Technical Indicators in Forex

Some traders like to prove their genius to their peers by sharing complex trade setups with so many lines and objects on their charts that you can barely see the candlesticks. Other traders believe that too many technical indicators in forex can cause decision paralysis.

The truth is, you need to figure out what works for you. Using indicators doesn’t tell you when and where to buy and sell. You still need to test drive them many times and ultimately craft your very own forex trading strategy around the technical indicators that you select.

Any advice included in this website or correspondence is general advice only and is based solely on consideration of the investment or trading merits of the financial products alone, without taking into account the investment objectives, financial situation or particular needs (i.e. financial circumstances) of any particular person. Before making an investment or trading decision based on the advice, the recipient should carefully consider the appropriateness of the advice in light of their financial circumstances and should carefully review the PDS of the relevant financial product as provided by your investment broker.

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What is Share Trading? – Buying Shares vs CFD Trading

A beginners guide designed to answer what is share trading, and help decide whether investing or CFD trading is right for you.

There’s no getting around the fact that share trading can be a complicated, overwhelming venture. With so many different ways to trade and invest in the share market, this guide is not only about answering what is share trading, but also which avenue of market exposure is right for you.

The simple definition of share trading is that you’re buying and selling a portion, known as a share, in a company. These shares are then traded on a centralised exchange where you’re able to buy and sell at a market driven price.

This market driven price is determined purely by factors of supply and demand. Something that in many cases is driven purely by speculation on the future performance of the company.

If a company is expected to perform well over the near-term, then demand for shares will rise and the price will go up. On the other hand, if a company is expected to underperform, then demand for shares will dry up and the market may be flooded with supply, meaning the price will fall.

There are however, a number of ways to profit from the stock market through trading shares. One such method offered by Propex24 being through CFD trading (or contracts for difference), a synthetic instrument that allows you to make money without actually owning any shares at all.

Let’s start by going over the difference below.

Buying Shares v CFD Trading

We know that the basic premise of profiting from share trading is that you sell your shares for a higher price than you initially paid to purchase them.

There are however, a number of ways stock market exposure can be achieved. Let’s go over the difference between buying shares outright and trading them in the form of CFDs.

Buying Shares

Shares, sometimes referred to as stocks or equities, are used to describe purchasing ownership in a company.

As an owner, or shareholder in this regard, you’re entitled to vote on internal matters as well as to your share of the company’s earnings in the form of a dividend.

Trading CFDs

CFDs, or contracts for difference in full, are a synthetic product that enable you to speculate on the price of an underlying asset without ever actually taking ownership.

Brokers offer CFDs on a whole range of asset classes including individual shares, share market indices, forex, commodities and even cryptocurrency markets.

CFDs are traded on leverage, meaning you’re able to control a much larger position than you otherwise would by simply buying shares outright. Always keep in mind that while profits can be magnified using leverage, if the market goes against you, then losses are too.

Share Trader or Investor

Whether you’re a share trader or investor is determined by the period you intend to hold onto your shares or position in the market.

So now we understand the difference between buying shares and CFD trading, let’s go over how each asset class can be most effectively used.

Trader

A trader focuses purely on the short term. They look to profit from movements in price, often buying and selling multiple times over a short period of time.

While there are a plethora of different share trading strategies for buying/selling outright and trading CFDs, there is no right or wrong way to trade.

One defining factor of trading shares via CFDs is the fact that you’re able to short a stock. That is, you’re able to profit when the price falls as well as rises.

Investor

An investor on the other hand, focuses on the long term. Not only do they look to profit from a rise in price when they choose to sell, but they also benefit from dividend payments that shareholders receive.

Investors can hold their shares for years and even decades. Many choose to reinvest their dividend profits into more shares, building a large stock investment portfolio in the process.

Trading Share Market Indices

An alternative to buying and selling individual shares is trading share market indices.

Sometimes referred to as a stock market index, indices markets are some sort of market grouping which gives an overall stock market snapshot. Grouped by size or market segment, indices markets take their value from all combined prices of the underlying assets that make up the index.

Some popular share market indices markets that clients of Propex24 are able to trade via CFDs, include:
SPI200: The 200 largest publicly traded companies listed on the ASX.
S&P500: The 500 largest publicly traded companies in the US.
DAX30: The 30 largest publicly traded companies in Germany.

Using CFDs as a Hedge

One popular share trading strategy includes using CFDs as a hedge against falling prices in a market where you already own outright shares in a company. If you believe that the share price of a company you own is going to go down in the short-term, but you don’t want to sell your entire investment, then shorting a CFD is an option.

By shorting CFDs in that same market, you’re able to offset any short term losses in your share investment. Simply close out your shorts when you believe the short-term bearish trend has concluded.

Using CFDs as a hedge works well in highly volatile markets that experience price swings in an overall bullish trend.

Final Thoughts on Share Trading

As you can see, share trading is a complicated beast that can be attacked from numerous angles. The most important thing to remember is that there is no right or wrong when it comes to share trading.

You just have to figure out what works best for you and your own particular circumstances. Having compared buying shares and CFD trading, you’re hopefully now in a better place to decide which avenue that is.

Any advice included in this website or correspondence is general advice only and is based solely on consideration of the investment or trading merits of the financial products alone, without taking into account the investment objectives, financial situation or particular needs (i.e. financial circumstances) of any particular person. Before making an investment or trading decision based on the advice, the recipient should carefully consider the appropriateness of the advice in light of their financial circumstances and should carefully review the PDS of the relevant financial product as provided by your investment broker.