A Roth IRA Withdrawal may seem like a complicated and difficult process with many rules, and a lot of potential penalties.  It’s really not that difficult though, once you break it down.  An IRA (or Individual Retirement Account) is an account intended to provide income after retirement, hence the name.  With this in mind, the government gives you certain breaks in these accounts, and a Roth IRA is no exception.  After being so generous with their breaks, the government doesn’t appreciate you withdrawing your funds prior to retirement, and this is where you might incur a Roth IRA withdrawal penalty.

Roth IRA Withdrawal Rules

Whether or not a withdrawal is penalized depends on whether or not it is a qualified withdrawal.  First and foremost, you can withdrawal your principal, or contributions at any time.  This is because money you’ve put into a Roth IRA has already been taxed.  It is not like other retirement vehicles where the money is contributed before taxes.  Where you run into trouble is when you try to make an unqualified withdrawal of your Roth IRA earnings.  In order for the withdrawal of your earnings to be tax and penalty free, it must be a qualified withdrawal, which means it much follow the following rules:

Roth IRA Withdrawal Without Penalty or Taxes

• You must be at least 59 ½ at the time of withdrawal.
• Or, the withdrawal must be on behalf of a beneficiary after the account holder has deceased
• Or, the withdrawal has been made after the account holder has become disabled
• Or, it must be a Roth IRA withdrawal for home purchase up to $10,000 for first-time home buyers only.

In addition to falling under one of the scenarios above, the account must fall under the 5 year rule, which simply means the account must have been initially opened and contributed to at least 5 years prior to withdrawal.  On the first day of the 5th year, it’s considered a qualified withdrawal.

Roth IRA Withdrawal Without Pentaly, but With Taxes

Adhering to the above rules will avoid both the 10% penalty as well as taxes.  There are also some situations that allow for withdrawal of your earnings that avoid penalty, while being taxed as income.  Those situations are as follows:

• It is a qualified reservist distribution for those reservists called into active duty after September 11th, 2001
• It is a qualified disaster recovery distribution
• The distribution is a result of an IRS levy against the account owner
• The distribution is less than your total qualified higher education expenses, including those of qualified family members
• You have lost your job, and are paying your own health insurance premiums
• You have medical expenses that exceed 7.5% of your gross annual income, and those expenses are not reimbursable

You can always withdrawal both your earnings, and your contributions from your Roth IRA at any time, but unless it falls under one of the above rules or situations it will be subject to a 10% penalty as well as normal income taxes.  The best way to avoid both of these things is to truly use this as a retirement account.  Open a Roth IRA account early (like when you’re 18) and you shouldn’t have to worry about the 5 year rule.  Then, just leave it alone until you retire.  Of course, that’s easy to say, but that’s 40 years of living where outstanding situations may arise that require early withdrawal, so just keep the above rules in mind if you are in such a situation.

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Most brokers offer simulated forex trading through their chosen trading platform(s).  What this means is you can trade using the exact same software you would be if you were trading with real money, except you don’t use real money.  In order to learn trading and investing on the forex you’re allowed to practice on a demo account that has a fake money in it.  You can usually set the amount of money in the account, as well as the position sizing (standard, mini or micro lots), and you can reset the fake account back to its original amount at any time.  The best way to begin is to set the parameters to exactly what they would be were you to open a real live online forex trading account.  There are some both benefits and drawbacks to simulated trading, and we’re going to discuss both here as well as some demo currency trading tips.

Benefits of Forex Simulated Trading

The biggest benefit to trading with a forex simulator is that you learn the mechanics of your broker’s trading software.  This ensures you’ve worked out how to enter the various types of orders (limit, market, stop, etc.) before you have any money in the game.  Another big benefit of forex simulator trading is that you get a feel for how the market moves and how each pair moves on a daily basis.  Some people specialize and study just one specific pair because that pair has way of moving on a day to day basis that suits their trading personality.  This time with your demo account can allow you to learn whether or not you have a bias towards one pair or not.  The final benefit we’re going to talk about is that this demo trading allows you to get a feel for how forex margin actually works.  You can read about the math of margin all day, but until you really see how much currency you are able to purchase compared to the amount of money in your account, you can’t really grasp the amount of power and leverage it grants you.  You’ll be able to see just how much you’re probably going to lose when you  trading, or gain if you’re very lucky or you stick with it long enough to really learn how to trade.

Negatives of Simulated Forex Trading

A lot of people believe you should skip the step of trading on a demo account.  This is because trading involves a lot of emotion, and without any real money in the market, it’s difficult to gauge how you might react in these high-emotion situations.  A forex trading demo also allows you to develop bad habits.  That account reset button allows you to renege or call a mulligan on bad trades or poor trading days; this doesn’t happen in a real account.  In a real account you lose real money and there’s no reset button to make yourself feel better about your day.  Further, another bad habit that might develop as a result of having easy access to that reset button is taking excess risk, and taking trades you never should and never would if you had real money on the line.  You’ll start winning some of there trades, and start to falsely believe you’re a great trader, then when you go to put real money in an account, the fx will quickly show you your mistakes and hopefully you don’t go broke in the process.  Finally, there’s a big difference with how trades play out in a simulator as opposed to how they get filled in the open market.  While the foreign exchange is the most liquid market in the world, there are situations where your order might get hung up for one reason or another, especially depending on whether your broker uses a dealing desk or not.  This doesn’t happen in a simulator – orders are always filled immediately and this is unrealistic and makes it difficult to get a feel for how the real market will operate.

Forex Simulator Trading Tips

If you do go the demo account route, there are some things you can do to help you transition to real trading.  First, use the demo account mostly to learn the mechanics of trading.  This means how orders are entered, how to set alarms and alerts, and other things that will be basically the same on a demo or real account.  Second, try to remain disciplined and trade only as you would in a real account.  Don’t get carried away with the fact that you can set yourself a large account limit, or have a reset button on hand.  And thirdly, move on to a real account as quickly as possible.  Don’t rely on your demo account to give you real feedback on your skills as a trader, and don’t wait until you’re successful on a demo account before you move on.  You might have wasted 6 months learning terrible habits, that you don’t any real idea how the market operates, and that you can’t control your emotions when money is on the line.

Simulated forex trading has its place in a trader’s tool kit, but it should be for a quick introduction and education on the basic mechanics of software, trading, and charting.  Considering the fact that you can trade in mini and micro lots, there’s really no reason not to have at least some money in the market when you’re learning how to trade.  A dollar a pip is a very cheap education compared to how much you might make if you stick it out, really learn how to trade, and inevitably become a successful trader.

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A commodity exchange traded fund, or exchange traded commodity (ETC) is a fund that invests in commodities or futures.  They can either be diversified throughout the entire commodities market, or focus on one specific commodity (Gold, for example).

Commodities themselves are broken into segments, eg Agriculture, Precious Metals, Industrial Metals, and from there they are broken down into more specific components, eg Grain, Gold, and Aluminum respectively (neither of those are complete lists, obviously).  Commodities exchange traded funds are funds that base their trading strategies on one or more of these commodities, or their respective Futures.

If you’re looking to invest in the commodities market, then it’s important to differentiate between the type of fund that (usually) owns, and who’s price is based on, the underlying commodity and those that are funds based on Futures trading.  The former is a way to capitalize on movements you think are going to be made in the commodities market.  For example, if your research has lead you to believe the price of oil will increase significantly over the next year, you will want to invest in a fund that has a direct correlation with the price of oil.  On the other hand, funds that are merely based on futures trading puts that same sort of confidence in someone else’s research.  Depending on which area a futures trading fund focuses on, their traders are trying to make the best of fluctuations in the market.  This may seem like a rather small difference, but it really boils down to how much control you want to give to someone else.  If you feel like you, as an individual, has a better chance of predicting market moves, go with the funds that are based directly on the commodities.  If you’re just learning how to get started trading and investing, then you might want to turn that control over to experienced traders and investors, while still keeping your hand in the commodity market.  This is when you’d go with a fund that is based upon the trading of futures, rather than the price of any commodity or sector.  The performance of these funds can vary widely from any corresponding commodity, so bear that in mind.

Some of the more well-known exchange traded commodity funds include U.S. Natural Gas (UNG), U.S. Oil (USO), SPDR Gold Shares (GLD) and iShares Silver Trust (SLV).  This isn’t a recommendation to buy or sell any of these funds, nor it is even an assessment of whether or not they are seful trading vehicles, they are just, in our experienced, some of the more talked about exchange traded commodities (ETC) on the market.

Overall, from a trader’s perspective, a commodity exchange traded fund makes just a good trading vehicle as any other on the market, as long as there is reason for the market to move the price.  If you’re looking to invest in the commodities market, ETFs are, again, as good a choice as any as a place to get started.  Depending on how much research you plan to do yourself, you will have to either choose a fund based on commodity prices, or one based on Futures trading; that choice is entirely up to you though.

Disclosure: The author of this article does hold a position in any of the stocks of funds mentioned in this article at the time of its writing.

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In our post about currency trading tips, we discussed not over-leveraging yourself with forex margin.  Using the margin made available to you on the currency market in a responsible way is one of the keys to your longevity in forex trading and investing.  In this post we’re going to briefly touch on what margin is, how it is used in currency trading, and how to go about using it as the tool that it is, and not abusing it as many new forex traders do.

Margin, as defined by Investopedia and in the context we’re using here, is

“1. Borrowed money that is used to purchase securities. This practice is referred to as “buying on margin”.”

In this case, the security we’re trading is foreign currency.  You borrow money from your forex broker in order to purchase enough of a currency pair to make a reasonable profit.  Currency pairs move in fractions of a penny called “pips” and these moves won’t provide much profit without leveraging some of your brokers borrowed money, or margin.  Forex margin trading is the standard, and while it increases profits, it also increases risk and potential losses.

Forex trading margin is high compared to other markets.  The typical margin with most Forex brokers is 100:1, and is standard, whether working with a real or simulated forex trading account.  This can also be represented by saying the margin setting for your account is 1%, meaning for your transactions or trades, you pay 1%, while your broker pays 99%.  This isn’t a fee, it is simply a way for your broker to allow you to fully participate in foreign exchange trading.  In dollar terms, it means that for every $1 in your account, you have the power to buy $100 worth of currency; or you’re allowed to buy 100 times more than you deposit.  This magnifies every move you make in the market, from your profits to your losses, which is why it’s very important to understand how to properly use this margin so you don’t burn through your account too quickly.

Forex margin requirements are simply that you have 1% of the amount of money you’re attempting to leverage.  Some people might choose to raise their requirements to 5%, 10% or more in order to prevent accidental over-leveraging.  An accidental purchase of excessive currency can cause you lose much more than your trading plan allows for.  This is something seasoned traders don’t worry about, but when you’re just starting out, and not sure exactly how it all works, it’s very easy to push the boundaries beyond your comfort level, and suffer catastrophic losses as a result.

The money you deposit in a forex trading account should always only be money that you can afford to lose.  This is more important in the case of Forex, because of the very high margin allowed.  This high margin can cause an unexperienced, over-eager, and over-leveraged trader to quickly lose every penny in their account, and then some.  A forex margin call happens when you’ve fallen below your minimum margin requirements  Some brokers will offer you the opportunity to deposit more funds into your account, but often they will simply close your positions immediately.  This forced margin call will not take into account stops or slippage, it simply triggers an open market order.  If this occurs during some world event that is moving the market very quickly, you can suffer losses beyond the value of your account, causing you to owe your broker money.  This is why trading capital must always be purely risk capital; never expect that you’ll be getting that money back.  It takes a long time to learn to actually profit from any market, and the percentages say you’re more likely to lose it all, than make any money at all.

When you’re new, the responsible way to use margin is to only use a small fraction of what is available to you.  Even if you’re a seasoned veteran, at that point you should have a large enough account that leveraging your account to the maximum should not be required in order for you to profit.  It doesn’t matter how good you are 1:100 margin is dangerous in any hands.  If you deposit $1000, and are able to purchase $100,000, that is 1 standard lot, 10 mini lots, or 100 micro lots.  While you can afford to purchase those 10 mini lots with your capital, a loss is going to cause an immediate margin call.  Knowing that, a new trader might just bump it down to 9 mini lots, but that’s really too much as well.  A loss of 100 pips is going to crush your account with that amount of leverage.  New traders should start trading 1 or 2 mini lots (given a starting capital of $1000 – go with micro lots for anything less than that), and work your way up from there.  It’s understandable that you want to jump in and make money right away, but as we’ve stated, and will always state, you’re more likely to lose money.  If you can’t make money trading 1 mini lot, what makes you think you’re ready to jump in with 10?  Start small, and start slowly.  Learn how to really trade, and adapt with the market, or perish with 90% of new traders.  It’s your choice.

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Trading mutual funds is possible, but is it worth the time and effort?  We’re going to briefly discuss what mutual funds are, and then we’ll discuss what it means to trade them, and we’ll draw a final conclusion as to whether or not mutual fund trading is going to be a worthy pursuit.

Mutual funds are an open-ended fund that have been used for the past couple of decades as a sort of safe-haven investment vehicle.  They don’t provide the most outstanding returns, but they are considered reasonably safe, though the level of risk varies from fund to fund.  You can choose to go with a passively maintained fund, or one that is actively traded.  Mutual funds are not traded on an open exchange (NYSE, NASDAQ, AMEX, etc) which is part of what differentiates them from Exchange Traded Funds (ETFs).  The SEC defines Mutual Funds as:

“… a company that pools money from many investors and invests the money in stocks, bonds, short-term money-market instruments, or other securities. Legally known as an “open-end company,” a mutual fund is one of three basic types of investment company.”

The inability to purchase these funds on an exchange is then listed as their first defining characteristic.  When you invest in a mutual fund, you are purchasing shares of the fund itself, and not directly purchasing the stocks, bonds, or other instruments that the mutual fund owns.   The cost of each share is determined by the Net Asset Value (NAV) and these shares can only be purchased directly from the fund itself, or a broker acting in the name of the fund.  The Net Asset Value is based on the closing price of all assets held within the fund less any liabilities associated with the fund.

Fees are imposed in a few different ways, but if you’re interested in trading mutual funds, you’re going to be looking at no-load funds.  Front-load fees are applied  when you purchase some mutual funds, and is a percentage of your invested capital that goes directly to the mutual fund, rather than directly to the purchase of shares in the fund.  This is simply lost cash.  There are also different back-load types where you are charged for selling your shares (a percentage often calculated depending on the amount of time you’ve held the shares).  Given that you’re looking to trade mutual funds, all of these fees are undesirable (and are often undesirable when investing long-term as well).  This is why you’re looking for no-load mutual funds.

Trading mutual funds can only be done at the end of the trading day after the mutual funds NAV has been calculated.  An order to buy or sell has to be entered before this value is calculated.  An order to buy or sell after the NAV has been calculated will be carried out the next day after the market closes, and the NAV is recalculated.

Side note:  Late trading mutual funds is when a mutual fund allows certain investors to buy or sell based on that day’s NAV after it’s been calculated, and they’ve researched what other markets were doing, and observe how news items (like the many earnings announcements that are made after-hours) impacted the markets.  This research allowed them to reasonably assume where the market would open the next day.  This gave such investors and unfair edge, while piling on fund-related fees, that all investors in the fund had to pay for.  Mutual fund late trading is illegal, and the SEC cracked down on this practice in the early 2000′s.  This is not to be confused with after-hours trading, which is legal and unrelated.

All right, so back to trading in mutual funds.  Because mutual funds are only priced once a day, traders lack ability to see any real-time data.  The only way to really have an idea of where a mutual fund might close is to study the mutual funds holdings portfolio.  This level of research is something you’d also have to do if you were simply trading the stocks, or other instruments themselves.  Even if you could predict swings in the prices of the mutual funds portfolio, once again, you’re only able to trade the funds (essentially) once per day at the closing price for that day.  These funds are infinitely liquid though; if you want to sell your shares, the fund has to buy them, and you can’t be stuck in a position.  This is really the only positive for trading mutual funds.

It’s our belief that it’s unreasonable to try to trade mutual funds using market timing.  There are too many better instruments and better markets to spend your time and money trading in.  You might find mutual funds to be a great investment, but trading and investing are two different things.  The potential fees, and lack of visiblity and flexibility make them too difficult to deal with for trading purposes.  ETFs are similar to mutual funds in their diversity of holdings (sometimes) but they allow you the trading flexibility of a stock.  If you’re interested in trading mutual funds, we suggest looking into trading ETFs, like a biotech ETF, instead.

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[Jump to the Biotech EFT List]

Biotech is a volatile industry, and as you might imagine, any Biotech ETF shares in that volatility.  It is a industry known for sudden bursts in either direction depending on a company’s research, its results, and whether or not they’re positive or negative.  The companies in this industry are unlike those in other industries, in that one failure in some research project can completely derail a stock’s (or related ETF’s) price, at least temporarily.  Even slight hiccups in the research process can wildly affect the price of the stocks of these companies as well as Biotech ETFs.  This is why it’s difficult to invest in this market; it requires extensive research and knowledge of both finances and biotechnology.  Even still, it can be difficult to protect yourself against the major fluctuations in this market.  It is known for being very unpredictable.  If you don’t have the time, inclination, or ability to do the research involved, but still want to be involved in the biotech market, this is when you would go with a Biotech ETF.

A Biotech ETF is an exchange traded fund who’s holdings consist only of Biotech companies.  Some of these biotechnology ETFs are heavily invested in only a few companies, while others have a broad selection of holdings to hedge itself against the unpredictability of each individual company .  One of the advantages to trading and investing in this industry, despite it’s unpredictable nature, is that it’s a growth industry that is essentially recession-proof.  Our need to research and develop new technologies in this area will continue to grow whether or not the economy is doing well.  As our population and life expectancy increases, so too does the market for the biotech industry.  In addition, instead of being the one-off lottery that has plagued the industry, the individual companies themselves are starting to expands their holdings and projects, thereby reducing their exposure to the risk of crashing from one bad investment.  This improves the long-term viability of the biotech sector, and biotech ETFs and might put it on par with the stable investment in something like a commodity exchange traded fund.

Some fundamental analysts have concluded that many biotech companies may not have enough cash to last beyond the end of the year, which is more reason to diversify using an ETF.  This will also weed out the weaker companies in the industry, and propel the rest forward as the playing field clears out.  The companies with the highest potential for failure are the ones who have failed to adapt to the landscape, and still bet on those one-off projects instead of mitigating their risk.  Adapt or perish, that’s the name of the game, and the biotech industry is no acception.

Biotech ETF List

Here is a Biotech ETF list, including the newest Proshares 2x Leveraged biotech ETFs:

• ProShares Ultra Nasdaq Biotechnology (BIB) – Typical of ProShares products, this is a multiply leveraged fund seeking to magnify the gains and losses of an index.  In this case, it’s a 2x biotech ETF that seeks to double the returns of the NASDAQ Biotechnology Index.  The fund’s daily holdings can be found here.
• ProShares UltraShort Nasdaq Biotechnology (BIS) – Again, typical of ProShares products, this is the reciprocal version of the 2x leveraged fund equivalent to -2x the returns of the NASDAQ Biotechnology Index.  The fund overview can be found here.
• HOLDRS Biotech ETF (BBH)  - BBH’s holdings are notoriously thin, typically holding between 10 and 20 stocks at any given time, with large percentages of their holdings in Amgen (AMGN) and Gilead Sciences (GILD).  This is because their holdings are based on market cap.  The larger the market cap is on a stock, the larger the percentage of their portfolio that stock will make up.  This makes it the least diverse of the available funds.  Considering that many people’s reason for investing in ETFs is diversification in a particular industry, BBH might not be the best choice.  That doesn’t mean it’s doesn’t have value; it just presents more risk than other, more diverse, products.  Its complete list of holdings can be found here.
• First Trust Amex Biotechnology Trust (FBT) – Similarly to BBH, FBT isn’t particularly diverse either.  What FBT does have over BBH is that its holdings are spread out evenly amongst the stocks within its portfolio.  The stocks in their portfolio also represent a larger range in the type of stocks it holds with a combination of the standards (GILD, BIIB) and some riskier stocks like Human Genome Sciences (HGSI).  FTB’s holdings portfolio can be found here.
• iShares Nasdaq Biotechnology Trust (IBB) – IBB seeks to mirror the performance of the NASDAQ Biotechnology Index.  Unlike the ProShares products, this fund isn’t leveraged – it’s a pure 1 to 1.  Because it holds every stock in the index, it’s technically the most diverse of all available biotech ETFs.  It’s portfolio is weighted by market cap though, so the largest stocks (AMGN, GILD, GELD, ADR) make up 25-30% of its holdings, while over 100 stocks make up less than 1% each.  Many consider this the best biotech ETF due to its extreme diversity.  It’s also is the most tradable of the funds because of its high daily liquidity. IBB’s entire holdings can be found here.
• PowerShares Dynamic Biotech & Genome Portfolio (PBE) – This funds holdings are based on a proprietary set of criteria called the “Intellidex.”  Typically holding around 30 stocks, this fund doesn’t base it’s holdings percentages on market cap.  This means that the stocks that they feel are there best according to their qualifications hold the top spots in their holdings.  As of this publishing this includes Waters Corp. (WAT) at 5.69%, Millipore Corp. (MIL) at 5.45% and Alexio Pharmaceuticals Inc. (ALXN) 4.96%.  Their entire holdings can be found here.
• SPDR S&P Biotech (XBI) – XBI seeks to follow the performance of the S&P Biotech.  Generally containing around 30 stocks, this fund is considered rather diverse in its portfolio simply given the range of the types of stocks contained therein.  It is an equally weighted fund, with each position coming in between 3 and 5% of the portfolio.  An overview with a downloaded list of its current holdings can be found here.

After a relatively flat decade to start the century, it’s looking like the biotech industry may be poised for some solid growth over the next decade.  These funds had quite a start to the year, and though this is being considered one of the growth markets for the next decade, it is not entirely immune to the fluctuations of the stock market.  Many of these funds have given up their gains from the start of the year, but expect them to turn around if the market as a hole can gain some footing.

Disclosure: The author of this article holds no position in any of the funds or stocks mentioned in this article at the time of writing.

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When you’re initially learning how to get started trading and investing, real currency trading tips are difficult to come by.  This is because currency trading (or forex or fx trading) is a much-maligned form of trading; there are just too many scams claiming to be able to make you millions of dollars while you sleep.  Combine this with a relatively low barrier of entry, and high paying advertisers and you have the perfect storm for disingenuous information about a topic you’re really trying to learn about.  The truth about currency trading is that it’s easy to learn, but difficult to master.  Here are some tips for the currency trading beginner.

Don’t Over Leverage Yourself - For a forex trading beginner, the amount of leverage given can be quite overwhelming.  The minimum deposit on some accounts is $500, and then you are given a forex margin of 1:100 (and sometimes higher).  This amount of leverage is dangerous in the hands of a beginner.  What does it mean?  It means that with your $500 you are able to purchase half a million dollars of currency.  Yes, that’s $500,000 USD in cash.  You can purchase 5 standard forex lots of $100,000 with that amount of leverage.  This would make every pip of movement in a currency pair worth about $50 (this is over simplified and will vary between currency pairs, but it is a fair approximation).  A simple move of 10 pips will wipe your account out before you can blink.  You will not get a chance to recover, you will be automatically closed out of the position for the loss, and hopefully slippage doesn’t leave you owing your broker any money (which it likely will).  The point here is that you should start small.  If you open a small account, trade mini lots.  Mini lots are equal to buying $10,000 USD in currency, and makes pips only worth about $1.  This is much more manageable for someone who is new and who doesn’t have a large account.

Practice with Real Money – Yes, just about every forex broker allows you to use a simulated forex trading account until the cows come home before you finally make the decision to pony up some cash.  There are some theories that imply that brokers fix prices and order fills on practice accounts making it appear much more easy to make money on the Forex than it really is.  This may or may not be true, but either way, paper trading can’t really give you the feel for the real market.  Order fills will be immediate and unrealistically beneficial, and your emotions will be different when playing with fake money as opposed to real.  As mentioned above, start with mini lots.  $1 per pip is a cheap education while you nail down your trading strategy.  You’ll have real money in the currency market, so your emotions will reflect this.  You will find that losing such small amounts of money will affect you, but not hugely.  This small effect will actually maintain itself as you grow your positions sizes.  This is because you’ve had real money in the market while learning, and you’ve learned to stay cool while you’re trading.  If you didn’t start out small, you might blow up when you begin losing large amounts of money with position sizes you weren’t emotionally ready to handle.  In addition, the market mechanics will be totally real and not made up in some off-the-books market made up by your broker; sometimes brokers have you trading an internal market made up of only other practice accounts.  This is an unrealistic situation compared to the real dog-eat-dog forex market.

Don’t Buy Expensive Indicators - One of the biggest mistakes people who are new to currency trading make is buying a bunch of expensive proprietary indicators in the hopes that it will make them more money.  The problem is, if you buy more than one, you’ll likely find that the indicators conflict on when to buy and sell.  This can be confusing for someone starting out.  Secondly, you really don’t need all those indicators.  You’ll start out buying these proprietary forex indicators, or just adding a whole bunch of the free ones before you understand what they do, and as you actually learn how to trade, you’ll end up taking them all off.  Some of the very best currency traders use few or no indicators, and you can believe the ones they use didn’t cost them hundreds of dollars.  Many times they develop their own, and if you’re lucky, you’ll find that they’ll give it away for free.  In general, the only time someone sells an indicator is if it doesn’t work anymore, or never worked in the first place.  Someone spent a lot of time and effort trying to “figure out the markets,” found out that their work was all for nothing, and they would rather get paid for something that doesn’t work than scrap all that hard work.  The truth is, the currency market is a lot simpler than people want to believe, and indicators are just a way of interpreting the only basic fact of the currency market – price.  Price vs time, price vs volume, price of one currency pair vs. another divided by time supplemented by the price of grain during the vernal equinox.  I kid you not, there are indicators that are that absurd, and you’ll notice they all depend on price.  Just keep an eye on prices, and know that history repeats itself, so resistance at a price level becomes support and vise versa.  Knowing that simply fact will get you a lot further than the latest indicator.

There are probably more currency trading tips that we could share, but if you follow the ones above, you’ll stay in the game a lot longer than most beginners.  Just know that over-leveraging will cause you to burn through your account before you know it, keep those starting position sizes small but trade with real money, and eliminate the noise.  Learn to spot patterns in the forex market.  If you get enough time watching charts, you’ll find these patterns are easier to pick out than a red spot on a discount cashmere sweater.

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