The psychology of trading deals with how human behaviour affects the market. Now we all know that humans are driven by a mixture of emotions, gut feeling, and even a little logic sometimes. Your success at trading will be determined in part by your state of mind when your making your trading decisions.

Fear and Greed are the prime human drivers, that strongly affect how we make decisions.

But there are other effects that come into play. Humans are affected by cycles such as night/day, lunar phases, seasons, years and others. A huge part of the population believe in astrology and guide their lives by reading the stars. Now there is no scientific proof that astrology can affect our lives but if enough people believe in it then it will have an affect. It’s like a placebo.

Another interesting aspect of trading is that human beings love dealing with round numbers. A round number is a number that ends in one or more zeros.

People view round numbers as targets, goals or achievements. For example, when you dream of making money, do you say, I wish I could have USD 9,345,765 or do you say I wish I could have USD 10,000,000.

We are attracted to these round numbers in every aspect of our lives.

Round Numbers in Trading FOREX

If you look at any FOREX chart for any pair then you will see a quotation given in 4 or 5 figures like 1.6543, or 1.65432. Now as the market moves up and down occasionally you will see it pass through 1.6500 or 1.6600 or 1.7650.

Generally the more zeros at the end the more significant the value, and he more effect it has on human behaviour.

Traders will set their stop losses at round numbers, or their profit targets.

As the market moves towards these levels you normally see the market bouncing off these levels as they act as support and resistance points. If the same level becomes a support and resistance level then they are a pivot point.

As time passes by the market may hit these point time and time again and they will get stronger and stronger. The more times the market has hit the point in the past the more likely it will react again.

How Can You Trade Using These Numbers?

If pivot points occur around numbers ending in one or more zeros, then they tend to be more reliable indicators of reversal points. A trader can use this knowledge to plan a new trade. The probability of a reversal is higher and if you have a conjunction of other indicators saying the same thing such as Fibonacci, Candlesticks etc then you have a very good chance of profiting from the reversal.

Another way of using these numbers is as a potential stop loss. If you are going long and there is a round number close to your entry point (and the difference between the entry point and the number in pips is acceptable to your risk management plan), then place your stop just on the other side of that number.

The chances are if the market goes against you initially then it will reverse near the stop loss and then your trade will move into profit.

Once again if thee number is also a pivot point or there are other indicators supporting your strategy then the stronger the stop loss will be.

The Market has a Memory

Remember, when you look at your charts, to mark our the round numbers and see if there are any pivot points. Go back in time and look on different time frames. If you work on a daily chart then check the weekly and monthly charts. Be aware of the bigger picture. It can have a huge effect on your trading.

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Trading forex is the most lucrative business you can get into. The currency market is the biggest and most liquid of financial markets in the planet. Everyday at least three trillion dollars are estimated to change hands in it. Despite the enormous opportunities, it is unfortunate that most neophytes lose money and never try trading again. Learning how to trade, however, is not really actually that difficult. A forex mentor is the fastest way. Add to this patience and commitment and you cannot miss.

The income generating opportunities that FX provide is so huge that services related to providing the general public with the means to participate in it has become a veritable industry. The services include online forex platforms featuring demo trades, FX signals software, indicators and calculators, forex education and training and the more personalized FX mentoring.

Naturally, mentoring is the ideal service. You’d expect your mentor – an individual or an organization – to do everything he can do to help become a successful trader. He will teach you everything about the market and forex trading from the basics to the more complex aspects of fX such as forex trend analysis and forex method and strategies. The ultimate goal of forex mentoring is transform you into somebody who trades with confidence backed up by first-rate analytical skill.

Forex mentoring is a new concept in forex. Formerly, if you want to learn forex either you study it on your by availing of many reading materials about it and applying the theories in real trading through demo trades integrated in free online platforms or you can enroll in some forex training courses. Forex mentoring is more than training courses since unlike courses which usually have fix time-frames, it continues until the goal is achieved.

Many are offering mentoring services. You should make sure you engage one who really is an expert or you’ll end up getting scammed.

Relative to the price of the Euro, the U.S. Dollar began a decline in June 2010 which carried to a Low in early November. Investors and economists were nearly universally convinced that the Dollar was on its way to ultimate destruction as a reserve currency. Several notable investors had taken very publicized and very large negative financial positions in the Dollar. The Candlestick chart pattern, indeed, painted a bleak picture in the eye of most observers, but a few recognized it as a corrective formation the end of which was reasonably foreseeable and predictable.

The important aspect to be borne in mind about corrective patterns is that, eventually, they retrace to and beyond the price point at which they began. In the case of the Dollar, this means that, sooner or later, its price will be at or above 88.71, which was its price at the time when the correction started.

Bullish Engulfing patterns emerged in early November, on both the Weekly and on the Daily charts of the Dollar Index, thereby giving rise to the conviction that the correction was likely complete and that prices should begin a strong rise.

One major concern was a technical resistance level at 80, stemming from a compaction grouping of Weekly prices from February through March 2010 and reversal resistance which occurred in August.

Subsequent to the bullish patterns of early November, prices of the Dollar Index did, in fact, escalate sharply, as expected, but came to an abrupt halt on November 24 and 25, stopped in place precisely at 80. The question then became “Would the Dollar be able to break upward through that resistance, or would it be repelled downward?”

Today’s Candlestick chart pattern on the Daily chart tells the story. The Dollar has indeed burst upward through that resistance. The chances are excellent now that it will continue in stair-step fashion to, and above, 88.71.

Forex Charting

Forex charts software is an important part of the accomplished trader’s toolbox, helping contextualize the numbers to present data in a more manageable form for making decisions. Often handled by standalone, dedicated applications, forex charts software comes in a variety of different guises with a wide range of different features and functionality, all designed to make it easier to produce and analyze real-time trading and market data. However, as you might expect, the market for forex charts software is particularly crowded, and settling on the right forex charts software might take a bit of effort in researching the options.

The first thing you want to look for in any potential forex charts software application is the load time of the graphics. Aside from being a source of endless frustration for the trader, slow loading charts can actually also hamper your chances of investment, and can certainly hinder the profit potential from certain trades. If the data is drawn up too far behind real-time, markets may have completely changed by the time you get around to executing your chosen position, meaning you might miss out on the start of a profitable swing or you open a position in a market that has since started to reverse.

This is, of course, also dependent on the processing speed of the computer you’re using, and isn’t solely a software issue, and while improving technologies are making this a largely redundant criticism, it’s important nevertheless to make sure the load times are up to scratch before implementing your charting application within your real-life trading.

The quality and type of graphics produced by the forex charts software in question should also have a bearing on which application ultimately makes its way into your trading setup. Chart style graphics are usual good for highlighting trends and identifying correlations, whereas you may be looking for some further technical charting technologies to identify over- and under-pricing in particular currency pairings.

For the new or inexperienced trader, this is an issue that’s best resolved with trial and error, working your way through software applications until you find one that feels right for your trading style. Luckily, there are a number of free and trial solutions that can help reduce the costs of trying out different applications, so it needn’t be too much of a concern if you’re looking to narrow down the field in a hands-on fashion.

Another handy feature offered by many forex charts software packages is the ability to annotate the graphs with notes and pointers, so you can keep track of important points of interest for trading – e.g. the point at which you entered a transaction, or the previous upper limit of a currency pairing. Some applications also allow the trader to program in his own automated indicators and annotations, making it even easier to adhere to a set trading strategy through using forex charts software.

Fortunately, much of the forex charts software you’ll be considering comes with free demo versions, sometimes lasting up to 30 days to give you the fullest chance to try out the program’s features. It is highly recommended you take advantage of these features – the more free demos you download and play with, the better chance you’ve got of finding the forex charting application that best suits your needs.

The forex market is open all day long therefore people can carry out their transactions anytime of the day – that is why forex trading is regarded mostly as a part-time job instead of a full time occupation. The forex arbitrage strategy is completely different from the stock markets where people most likely need to rely on inner information to pick the right choices. Besides, the forex does not keep you engaged to substantial brokerage fee albeit every trader is subjected to a minimal fee of the buying and selling of the currencies.

If you at the verge of embarking into the forex trading market, one essential step to take is to garner and learn well all the knowledge, information as well as come hands-on training. Take a quick glance on the internet, you would be surprised to see the broad series of options when it comes to the software, training platforms and even trading opportunities. Beginners are advisable to gain experience and pick up some skills through the training platforms. Always remember that you are using your hard-earned capital to risk for profit so equipping yourself with sufficient information can do you good.

Aside from that, due to the involvement of money one can never simply make decisions. A smart trader will apply the right forex arbitrage strategy then make wise investment to ensure that maximized profit is achieved. Despite the fact that forex trading is believed to bring lower risk than other investments such as bonds and stocks, the mild risk should not be neglected. Some people may figure their money would be safer to be kept in a fixed deposit account but take note that the return is much higher from the forex trading, although it requires abundance of skills.

Among the many great ways to learn about the forex trading market, one of the effective methods is via online forex forums. From these forums, you are given the opportunity to share, learn, quest or read about the genuine experiences of real time investors. You can discuss about the best training channels, trading ideas, the forex calculators and any issues in relation to the forex arbitrage. However, be aware that the liquidity of the transactions may be very high, possible up to trillions of US dollars if you are a huge investor. Thus, always be alert and do not rush into decisions.