Gold Advances – Again by GoLearn Forex

Commodity currencies rallied today with the AUD gaining 1.03% on the Greenback while the Pound gave up nearly 3/10^th of a percent.  The EUR and CHF were basically flat on the day.  Speculation in the market about European exposure to Dubai kept the respective currencies in check.  Gold advanced $1.20 to 1,178.90 and Oil picked up $1.15 to close at 77.18. In the Agricultural space Corn, Wheat, and Soybeans were up strongly as well.

Global Equity Markets were mixed as Asian markets advanced while European markets gave up Friday’s premature gains.  In the U.S the DJIA picked up 34.92 points to close at 10,344.84.  Normal trading volumes are expected to resume tomorrow.  Futures at the moment are mixed with Asian markets looking to give back Monday’s gains while European markets look set to advance.

On the data docket for Tuesday we have the RBA set to announce its interest rate decision.  The market is looking for another quarter point hike to 3.75%. In Switzerland GDP is set to print.  In the Euro-zone, German Unemployment Change is due out with analyst expecting a positive print.  In the U.S. ISM Manufacturing figures will be publish and expectations are for a 55 figure.

Upcoming Forex Events for December 1, 2009

JPY Interest Rate Decision Actual  0.10%   Previous  0.10%

CHF GDP (QoQ) Actual  0.30% Forecast  0.30%  Previous  -0.30%

JPY BOJ Press Conference

USD ISM Manufacturing Index Forecast    54.80  Previous  55.70  

Learn Forex but Keep it on the Sunny Side

You will read everywhere that a positive outlook and a dash of optimism is integral when trading in the foreign exchange market.  Learning forex trade is more than just examining charts and diagrams, but rather keeping a stiff upper lip and a bit of self control.

Attitude carries more than the worth of gold when dealing with the pressure and consequence of trading forex.  Frustration grows easily when forex traders miss a lucrative opportunity or take a big loss.  The temptation to go “all in” can be overpowering and impatience can breed a losing attitude.

Not allowing your emotions determine your next trade is easier said than done.  It all comes down to one word – discipline.  If you think that after a big loss (or a series of small ones) that you are going to “take vengeance” on the market, you’re about to embark on a disappointing path.  Yes, being able to make serious decisions spur of the moment is crucial, but not when they are done in a reckless, emotional way.  What differentiates these two behaviors is the thought process leading up to the quick trade.

Throwing off the negative feelings and low worth that accompany a loss is often the driving force that leads to these behaviors.  You should never risk more than 2-3% of your capital on any trade, however during these emotional hazes, traders sometimes leverage 5-7% to compensate for the previous losses.

There are a few simple practices that you can implement that can help keep you grounded when trading in such a highly volatile market.

1. Have a trading plan.  Start your day with a purpose, after reading the reports and signals.  This plan needs to have freedom to move according to market fluctuations, but put certain boundaries on your trading behavior.
2. Be the adult.  When you feel those feelings welling up inside of you that push you to make irrational trading choices, walk away from the trade.
3. Keep a “mantra” or “motto” next to your computer.  Find something that speaks to you and your goals as a forex trader. Draw on this wisdom instead of trusting your emotions whenever you feel tempted to make forex more of a gamble than an investment option.
4. Analyze your losses, don’t just try to erase them.  It is irrational to take a loss for 60, 70 or even 100 pips. This is the obvious outcome of a bad trade decision.  If this happens it’s time to take a step back and re-evaluate whether you’re trading with your mind or your emotions.
5. Put your heads together.  Keep in the company of grounded individuals who are also experienced in forex trade.  By getting feedback and analyzing together, you will feel less isolated and be held accountable to trade with the right expectations and intentions.

There’s always tomorrow, “it’s only a day away.”  So, meditate on this and be assured that the next profitable trade will be coming along in a short while.  Exercise some patience and faith and keep your mind free and clear to ensure success.  Avoid getting down in the dumps over a few losses and keep on the sunny side of the forex trade.