If you do an Internet search for companies that trade in currency, you may be surprised to find that there are dozens, if not hundreds, of web sites dedicated to promoting the purchase of the Iraqi currency. Many of them tout it as a get rich quick scheme. Others say that it is a patriotic way to support the new democracy of the Iraqi people and their government. Still others base their marketing on the notion that buying the Iraqi currency (the dinar) is like buying a penny stock – it is so cheap that you can afford to buy huge quantities, so that even a slight increase in value will guarantee huge yields on your original investment. But buyers beware, because there is no proof that the dinar will make a comeback anytime soon.

Here are a few things for would-be investors to consider before venturing into ownership of the dinar. First of all, there is still no official and organized market for trading the Iraqi currency. This means that even if you want to buy and sell the dinar as a currency trader, there is no way to ensure that you will be able to find a market for it. Without buyers and sellers coming together in an organized fashion, the currency lacks liquidity – if you need to sell your dinars to convert them to dollars, you may have to wait days, weeks, or months to find a buyer to take them off your hands. And without such liquidity, those who broker the notes will be taking big commissions, to make it worth their while. All of these things will factor into your ability to make a profit from trading the currency.

Many who advertise sales of the dinar will not buy the same currency. That should make you somewhat skeptical, because if it is such a good deal, traders would not only sell dinars, but also be interested in purchasing them. And they claim that even a fraction of an upward movement in the currency can make you a millionaire. That may be true, but it is no insurance that the currency will go up. And meanwhile, currencies of other, more economically stable countries in the world – like Turkey, for instance – are cheaper to buy that the dinar, so why not invest in those currencies instead? The fact is that Iraq’s economic outlook is bleak, and the possibility of making huge profits by buying and selling the dinar remain slim – at least for now.
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Today I would like to talk with you about a few very important rules of investing in the Forex market. If you follow these rules, you will most surely come out on the winning side in the long run.

Rule number 1 is never risk more money than you can afford to lose. No trader is perfect, you are going to have losing trades. There is no system you can learn that wins all the time. So expect to lose some money.

Rule number 2 is to cut your loses short and let your winners compound to greater gains. The secret to not losing your shirt is to use stop loss orders consistently and not let your emotions rule your trading. It’s better to lose a little and get out of a trade than to hope that things will turn around and suffer a devastating loss. If you are using the proper techniques and strategies on how to trade, you can usually tell right away if your trade is going in the right direction. If it’s not, get out of the trade. There are always more opportunities to get into the market and try again. So be a smart trader, not an emotional one.
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Bollinger bands will help you to predict big trending moves, act on big trend reversals and finally, time trading positions with greater accuracy for bigger profits.

Here we have related Bollinger bands to the currency markets (as it is here that they are most useful) – but they are useful in all financial markets.

What are Bollinger Bands?

Developed by John Bollinger, Bollinger bands are volatility bands drawn around a simple moving average.

You calculate Bollinger bands using the standard deviation of price over the same period as moving averages and plotted as lines above and below the moving average.

As moving averages have been traditionally used to identify the underlying trend, Bollinger bands combine this with the volatility of the individual market (or the standard deviation) – to plot a trading envelope.

The distance between upper and lower Bollinger bands reflects the volatility of the market traded.
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If you want to make big profits from currency trading, you need to lock into and follow the longer-term trends.

“The art of contrary” thinking is one of the most powerful tools a trader can use, and is a trait with which all true great traders are familiar with.

What is the Art of Contrary Thinking?

Humphrey Neill’s book, “the art of contrary thinking,” the best known work on the subject, is based on a simple powerful idea that:

“When everybody thinks alike, everybody is likely to be wrong”

“The art of contrary” thinking consists in training your mind to ruminate in directions opposite to general public opinions; but basing your opinion in the light of current events and human behavior”.
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