Forex Automoney FAQ Session 2

How can I be sure I'm trading correctly?

Make sure you have the correct time zone set in Account Preferences.
Make sure you are entering trades EXACTLY when signals are generated (or nearby this time - but not i.e. 20 minutes later or 1 hour later)
Make sure you are using "get profit" and "stop loss" parameters. Without using them, the system is useless.
Make sure you're setting correct "get profit" and "stop loss" values:If you BUY:(Stop Loss Level) is the (ASK)-(Stop Loss value)(Take Profit Level) is the (ASK)+(Take Profit value)If you SELL:(Take Profit Level) is the (BID)-(Take Profit value)(Stop Loss Level) is the (BID)+(Stop Loss value)The interpretation is pretty easy:If the price exceeds bounds the trade will stop.If you "buy" and price go down, means things go wrong way, so you should have "lower limit" (ASK-stop loss), but if it's good and price goes up you can take profit by going up the higher bound (ASK+take profit).When you sell - the situation is opposite - it's good when price goes down and it's bad if price goes up.
Make sure you do not MIX the strategies - if you're trading daily, you do not look at weekly and daily ones in the same trades.DO NOT USE MORE THAN ONE STRATEGY with one brokerage account.in other words:ALWAYS USE ONLY ONE STRATEGY with your brokerage account.Usually it's not possible to trade with more than one strategy with one brokerage account.A simple example:
In the Daily Strategy you BUY 10 units of eur/usd at 8:00 AM
Then, you're reading the Intraday Strategy at 10:00 AM and it tells you to SELL EUR/USD.You decide to SELL 10 units of EUR/USD.
but then, in fact you closed the previous position!You had 10 items and you just sold them. You mixed strategies.So either use only one strategy or open 3 separate accounts - each one for one strategy.
Make sure you quit trades properly.Trades will be closed automatically either when "stop loss" or "take profit" levels are reached or your should close them manually if the next signal is generated and it has the opposite direction (for example was "BUY" 4 hours ago in the Intraday strategy and now, after 4 hours the next Intraday signal for this pair is "SELL").If it's the same type of order (i.e. was "BUY" and the next signal is "BUY" as well) - you should keep the position opened and modify the trade by entering the new "stop loss" and "take profit" values basing on the current price.

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Signals are wrong! Currencies go opposite direction!
Make sure you are using correct "Take Profit" values! And make sure you ARE using them. They will "catch" your profit and they will give you money even if prices generally go opposite direction. YOU MUST NOT use only "BUY" or "SELL" signals. You MUST also set "Take Profit" and "Stop Loss" values. If you broker do not support them - change your broker.Please see how it works:Let's say you have a "BUY" signal. Even if the price is falling down, it's not happening immediately. Almost everyime, in the meantime it's going up a little bit and you have to "catch" the profit then. Of course it will happen automatically if you set the "Take Profit" value:And of course the same about "SELL" signal:
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What are the most common trading mistakes?

Setting wrong time zone.Please refer to the "Signals Timing & Time Zone" section above for details.
Using more than once strategy.Please refer to the question above: "How can I be sure I'm trading correctly?"
Using "BUY" or "SELL" signals without using "Take Profit" and "Stop Loss" levels.Please refer to the question above: "Signals are wrong! Currencies go opposite direction!"
Entering trades 20 minutes, 50 minutes or 2 hours after signals were generated.You have to enter them on time.
Entering bad Take Profit and Stop Loss values.Please refer to the "Why I'm getting 'Invalid TP/SL' error?" question in the "Platform" section below.
Using red and green arrows from the left "Real Time Quotes" column as buy/sell indicators.They are not buy or sell signals! They only inform how the price changed in the last 30 seconds
Omitting trades.If your next Intraday signal will be generated on 10:00 PM and you will not be able to check it, DO NOT enter previous trade at 6:00PM. Trades are not closeing automatically every time, and you may have to close it manually. If you are not online when the next signal is generated it may reach Stop Loss later, even if it's in profit on the time!

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Which currency pairs should I trade? Which pairs are the best ones?
There are no "better" pairs, however most frequently traded ones are: EUR/USD, USD/CHF, USD/JPY and GBP/USD.
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Is there a time limit to enter the trade after displaying the signal?
There's no time limit, however you should enter the trade exactly when the signal is generated (of course several seconds or few minutes usually do not matter). That's why, in the Account Settings tab, you can set when to generate signals - to choose the best time for you.
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What currency pairs should I trade?
All of them are good ones. The most popular ones are EUR/USD, USD/CHF, USD/GBP and USD/JPY.
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What are the best Forex trading hours?
There are no 'better' timings. Forex market is open 24/day, so every time is good one.
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When should I quit the trade?
The trade will automatically be closed when the "stop loss" or "take profit" levels are reached or you should close it manually if the next signal is generated and it has the opposite direction. If it's the same type of order - you should keep the position opened and modify the trade by entering the new "stop loss" and "take profit" values basing on the current price.
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When I'm buying XXX/YYY - am I buying XXX and selling YYY?
Yes.For example when you buy EUR/USD - you buy EUR and sell USD. Or when you are selling AUD/JPY you are selling AUD and buying JPY.
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Which strategy do you recommend?
There is no recommended strategy.The Intraday Strategy is the most risky one, but also should give the best profit in the long term.The Daily Strategy has an average risk and should give the medium profit in the long term.The Weekly Strategy has the lowest risk factor and will probably give the lowest profit in the long term.
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Can I change Intraday / Daily / Weekly signals every hour or so?
Of course technically you can, however it's not recommended.The system is not designed to work this way. If you read the Manual posted in Members Area you will see that after opening the trade can be either closed automatically by reaching the Stop Loss or Take Profit level or has to be manually closed when the next generated signal has the opposite direction (please see the Manual for details). If the next signal has the same direction, you should only change the Stop Loss and Take Profit levels to the newly generated ones.So, for example, if you're using the Daily Strategy and you have a trade opened, you must wait 24 hours to be sure it does not require manual closing or if you should change the Stop Loss and Take Profit to the new levels (when the next signal has the same direction as the previous one -- it's also described in the Manual). Even if the trade will close automatically after -- say -- 30 minutes, the system is designed to predict the next position after 24 hours (in case of the Daily Strategy) or 7 days (in case of the Weekly one). So if you change the timings of your signals -- you are upsetting the system and it will not work the way it should. Most likely you'll get bad results and lots of loses.
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I'm trading with leveraging. Can I lose more than I invested?
If you trade with $10 with 1:100 leverage, than in fact you're trading with $1000. If you lose everything - you owe $990 ($10 was yours already)."Trading on Margin" and "Trading with Leverage" are two ways to describe the same thing; the ability to trade a position larger than the amount of money in your account. Leverage is expressed as a ratio, for example 20:1 or 100:1. Margin is expressed as a percentage of position size, for example 5% or 1%, or in monetary terms, such as $50 or $2,000.But most brokers WILL NOT ALLOW YOU TO HAVE A DEBIT (so you don't have to worry). Let's say you're trading with $10 and leverage 1:100. Then - as already said - you're trading with $1000. Then the value of your investment will fall down by 1% ($10 which is yours is 1% of $1000 which you're trading with), your position will be automatically closed by broker. That means that in fact you cannot lose more than you have.
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What is the "Probability Weighted Risk to Reward Ratio"?
The "Risk-to-Reward" ratio is a concept widely used in technical analysis.For Forex this parameter is equal to the ratio of the absolute value of the Stop Loss level (risk) and the Take Profit level (gain). For example, if the Take Profit level is 30 pips and the Stop Loss is 10 pips, the Risk-to-Reward ratio is 10:30 = 1:3.A trade is considered good when the Risk-to-Reward ratio is at most 1:2 - the lower the ratio, the better.The reasoning behind this is as follows: if you risk 10 pips, then you should have a chance of gaining at least 20 pips. This way, even if the result of the trade is random, on average you will win twice as much as you lose.Such an interpretation does not correspond to the actual situation, unfortunately.This is because a deviation of +30 pips is not equally probable as a deviation of -10 pips. The standard model described above assumes equal probability of these two movements - statistically for every -10 movement there is one +30 movement - so the average outcome is +20.However, the equal probability assumption is NOT fulfilled in reality. Let's consider an exaggerated example: is the movement of +1 pip within the next minute as probable as a movement of +1000 pips? Of course not!A question arises: how does the probability of gaining/losing change with relation to their expected value?The answer is: it varies like 2-x+1, where x is the price deviation.This changes the result of the whole discussion substantially: a gain of 30 pips is 4 times less probable than a gain of 10 pips.So if one takes the probabilities into consideration, the model changes entirely: it is much more beneficial to set small Take Profit values and larger Stop Loss values (as opposed to the standard "Risk-to-Reward" model). This occurs because a small deviation is much more probable than a large one.Example:BUY EUR/USD, TP = +10, SL = -40;In this example we risk the loss of 40 pips, but we can only gain 10 pips. Can this be profitable? Yes, because the probability of reaching the Stop Loss value is 3 times smaller than the probability of reaching the Take Profit values. We may lose 40 pips and gain 10, but the probability of gaining is 3 times higher than losing.Following this example further, the classic "Risk-to-Reward" ratio equal in this example to 40/10 should be multiplied by 2-3, which is 1/8. As the outcome we get a new value - "Probability Weighted Risk to Reward Ratio". In this example it is equal to (40/10*1/8) = 1/2, which can be written as 1:2.00.The interpretation of this result is as follows: for each pip of loss there are 2 pips of gain connected with the same risk. In other words, it is equally probable that we will gain 2 pips as it is probable that we will lose 1 pip. So the gain is twice as high as loss while the same probability of loss and gain is retained.What should be the value of the "Probability Weighted Risk to Reward Ratio"?It is assumed that the classic "Risk-to-Reward" ratio should be equal at most to 1:2.0 (so "better" values than this are, for example, 1:2.5, 1:3.8, etc.).
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