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Have you ever thought of market timing? There is always a bull market somewhere if you look hard. In other words if you look around you will always be able to find a market that is trending up or down that you can use to make money. Market timing maybe the trading method of the 21st century!

The world is moving from a North American and Eurocentric world view to one that includes Asia, South America especially China, India, Brazil and Russia. Power and influence is spreading to more places around the world.

Internet has ushered in a revolution in the global financial system. Money gets transferred around the globe at the speed of light. This is enough to create opportunity for market timing.

This is the new world where the ability to move faster in and out of trading positions and to trade markets that are rising or falling profitably is becoming increasing important to the long term investors. Dont forget the hedge funds when we talk of long term investors. Hedge funds have the skills and resources for market timing around the globe. The buy and hold investing strategy is losing its appeal. Does buy and hold work in todays market? Most say it does not.

Whether it is stocks, options, futures, bonds, commodities or currencies around the globe, market timing is the act of entering or exiting trades at the most opportune times in any market.

If the market goes up, you go long and if the market goes down, you go short. Now if you can make money when the market is going up and when the market is going down, you have twice the opportunity to make money. Your goal in using market timing is to maximize your profit potential.

Market timing is about recognizing opportunities early on in any market. Consider timing different markets at the same time. Consider going long in one market and going short in another market at the same time. This will hedge your risk. Moving into positions with well planned strategies and monitoring the progress on a frequent basis. Market timing is not day trading. Many people try to confuse market timing with day trading.

Market timing is about seeing the intermediate term trend which lasts for weeks or months. Market timing is close to swing trading and position trading. It can last as long as the trend continues in the market and getting out when your profit targets have been met.

What makes market timing one of the useful trading methods is that you can use the techniques to time stocks, bonds, mutual funds, futures, options, currencies, commodities or exchange traded funds!

Most of the markets are influenced by almost the same fundamental factors. Volatility in one market will definitely affect volatility in the other markets. Market timing requires knowledge of fundamental and technical analysis. You can diversify your investment opportunities with market timing. Market timing is as much a state of mind as it is a combination of trading methods.

With market timing, you want to stay with the dominant trend. You want to swim with the tide by buying stocks in a rising market and selling or shorting in a falling market. Market timing also helps you decrease your exposure to risk.

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Know These Candlestick Patterns. Learn Candlestick Charting!

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Have you ever heard of the Inverse Currency ETFs? Exchange Traded Funds (ETFs) are a great tool for the retail traders and enable them to trade a variety of markets and sectors individually or with options. ETFs are a recent financial innovation. Overtime ETFs have become highly popular with the investing public. An ETF is made up of different component stocks, currencies, commodities or bonds. An ETF is a security. An Exchange Traded Fund (ETF) is typically designed to track a particular index or segment of the market.

ETFs can also reduce volatility. As ETFs track a group of securities, ETFs volatility is less than that of its component stocks, bonds, currencies or commodities. With ETFs you can also implement strategies previously only available to large investors. ETFs enable you to reduce risk by offering unleveraged access to certain asset classes.

ETFs are similar to a mutual fund. But they trade like a stock which means you dont have to wait till the end of the day to exit a position. If you are looking for a segment of the market to invest or trade, there is a good chance that an ETF will be available that will fit your requirements. There has been an explosive growth in ETFs. So dont hesitate seeking an ETF for a market you wish to trade.

Many ETFs are passively managed and are based on a specific index like the S&P 500 index. Some recent ETFs are actively managed. So you should always check the ETF prospectus to check which index it tracks.

ETFs trade on major US stock exchanges. Buying and selling ETFs is like buying and selling stocks. ETFs popularity has also given rise to the availability of research and scanning tools for ETFs on brokers websites.

The good thing is that you can use ETF options to reduce risk further since the initial investment is reduced. Since most of the ETFs track some index, you may ask what the difference between index options and ETF options is. The two products differ in three important ways:

1) Index options are cash settled while the ETF options are settled using the underlying security. 2) ETF options have an underlying security that you can own; they lend themselves to combination strategies. 3) Index options can be European Style or American Style while ETF options can only be American Style.

When combining ETFs with ETF options, you have access to an index based security that you can protect as well as reduce its cost. If you have traded stock options than ETF options are pretty natural next step for you. However, as with stocks not all ETFs have options available for trading.

You must again note that not all ETFs have options contract available for trading. If ETF options are available check how liquid the fund and the options contract are. You can use the protective put, covered call or collared positions to manage risk with ETF options.

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Know Swing Trading. Learn Forex Trading!

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Do you know what Candlestick Charts are? Candlestick charts were responsible for making many Japanese rice traders rich. Candlestick chart was developed by the Japanese rice traders in the 17th century to profit from rice trading. A picture is worth more than a thousand words. The forex charts is perhaps the best proof of this clich.

Dont confuse the Head and Shoulder pattern with the name of a shampoo. Head and shoulder is an important trend reversal chart pattern. Appearance of certain chart patterns can give you priceless clue about the direction in which the market is about to turn. Traders have become very sophisticated in understanding charts and the information contained in them over time.

Study of charts is known as Technical analysis. Whether it is sideways, upward or downward, by studying the patterns that appear on the forex charts, you can predict the likely direction of the currency pair. Technical analysis depends on the study of different types of charts to understand and predict the likely direction of the currency market. Without technical analysis, you wont be able succeed in forex trading.

There are four main types of forex charts that are used in the world of forex trading. The four main types of forex charts are: 1) Line Chart, 2) Bar Chart, 3) Candlestick Chart and 4) Point and Figure Charts (P&F Charts). A brief description of each one is given below.

Line Charts: Line charts are the simplest of the four forex charts. It does not contain much information. This chart resembles a line hence the name line chart. This chart simply connects the closes from one period to another. Critical data is missing from a line chart as it only shows where the price closed in a period. A line chart doesnt show you where the currency pairs price opened for the period. Nor does it points the high and lows for a period.

Bar Charts: A bar chart shows the opening, closing and the low and high for each period. The bar chart addresses many of the shortcomings of the line chart. The bar chart can provide the hourly, daily, weekly and even monthly information. It is also often called the OHLC (open-high-low-close) bar chart.

A horizontal line protruding from the left of the bar represents the opening price of the currency pair. A horizontal line protruding from the right of the bar represents the currency pairs closing price. The periods high and low are the top and bottom of the bar.

Candlestick Charts: Traditional bar charts and the candlestick charts do almost the same thing. But candlestick charts do it more effectively. Candlestick chart clearly depicts the currency pairs open, high, low and close. A candlestick chart is made up of two components.

The range between the open and the close is called the real body of the candle. It is also called the candle body. The price movement above and below the body is called the shadows. It is also known as the candle shadows. If the currency pair closing price is above the opening price, the candlestick body is white and it is taken as a bullish sign. Similarly if the closing price is below the opening price, the candlestick body is painted black and it is taken as a bearish sign.

Point and Figure Charts (P&F): The main advantage of the P&F charts is that they filter out noise. The only downside is that they dont represent the time well. Point and figure charts plot the currency pair price using a column of Xs to represent rising price movements and Os to represent falling price movements.

The new plot is only made when the price exceeds the predetermined threshold by a fixed amount. The Xs and Os are plotted only when the currency price moves by a predefined amount. A plot may not be made if the currency price does not move significantly.

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Know These Forex Charts. Learn Forex Trading!

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When you have identified the triangle formation on either the daily or weekly chart, get ready for a breakout. Each triangle type has its own directional bias. When you trade triangle breakouts, ignore any first breakout attempts whether it is to the upside or the downside. There can be three possibilities when you try to trade the decreased volatility breakout strategy.

Possibility No 1: You should not forget to ignore the first breakout. Suppose the second breakout attempt is in the upside direction for an ascending triangle and it is in the downside direction for the descending triangle. In other words, the second breakout attempt is in the direction expected of the triangle type. This breakout could signal either the continuation of the existing trend or the trend reversal.

For an ascending triangle make sure each side of the triangle gets touched two times at least. Place a stop buy order at least 10 pips above the horizontal resistance level to capture the potential upside breakout. Place a stop loss order 10 pips below the horizontal level of the triangle to protect against false breakout. Set profit target according to your time frame.

In case of the descending triangle again make sure the triangle is touched two times before the breakout. Place a stop sell order 10 pips below the horizontal support level to capture the potential downside breakout. Place a stop loss order 10 pips above the horizontal support level.

Possibility No 2: The second breakout is in the downside in case of an ascending triangle and it is to the upside in case of the descending triangle. Again ignore the first breakout attempt. In other words, the second breakout attempt is in the opposite direction of the expected triangle type breakout direction.

In case of an ascending triangle, since the breakout direction is opposite to the most expected direction, cut the position size to half for this trade in order to reduce risk. Set stop sell order at least 10 pips below the upward sloping trendline in order to capture the expected downside breakout. Ignore the first breakout attempt and make sure the triangle is touched at least two times. Place the stop loss 10 pips below the breakout point.

In order to capture the potential upside breakout in case of a descending triangle, place a stop buy entry order at least 10 pips above the downward sloping trendline. Set your profit target in accordance with your time frame. Again reduce the position size to half in order to reduce risk. Place stop loss 10 pips below the breaking point.

Possibility No 3: There is an equal possibility of upside as well as the downside breakout in case of symmetrical triangles. Just follow the above guidelines and place stop buy entry order or the stop sell entry order 10 pips above the downward sloping trendline or 10 pips below the upward sloping trendline. Similarly set your stop loss orders. The decreased volatility breakout strategy works better when it is implemented on a daily or weekly chart. Dont use intraday charts on this strategy.

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Develop your own Forex Trading System. Learn Forex Trading !

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The crowd psychology behind the descending triangles is that every time the currency price goes down to a certain level that forms the support there are buyers who want to hold that level stubbornly for their own reasons. Buyers thus push the price up each time the support level is tested. Spotting a descending triangle in a downtrend signals the downside breakout of the support level.

Thus when the price bounces off the support level, the bears take the opportunity to short again. Sellers are quite anxious to sell as they feel that the currency price should fall over time.

Spotting a descending triangle should allow you to be prepared for a downside breakout from the support level especially if it is a down trend. Bulls and bears face a skirmish with both camps not feeling confident of the next market move as with an ascending triangle.

When the support level is broken many of those long positions which have been placed above that level soon get stopped out. Prices tend to break in the middle or the final third part of the triangle formation.

Unless you have reversal signals in the form of technicals or turn around of the market sentiment, you should always assume the continuation of the prevailing trend. It tends to give off even more bearish vibes than if it is formed during an uptrend if the descending triangle is formed during an existing downtrend.

If the descending triangle appears in the midst of a downtrend, the triangle serves as a continuation pattern. A descending triangle should not be considered to be the final word on impending downside breakout. However, with that said prices also sometimes breakout from above the descending triangle successfully in a burst of bullish momentum.

Symmetrical Triangles: A symmetrical triangle consists of two converging trendlines that join a series of lower highs and higher lows. A symmetrical triangle has some resemblance to a wedge pattern. There are no horizontal lines in symmetrical triangles. This differentiates it from the ascending and the descending triangles.

As they are willing to accept less and less of the price over time, the lower highs reflect the mildly bearish conviction of the sellers. When buyers of the currency pair are willing to pay a bit more to get a piece of action, the higher lows are formed.

There is no way to predict the future breakout direction until one of the symmetrical triangle lines is penetrated. A symmetrical triangle tends to be less reliable as compared to an ascending or descending triangle. Breakouts usually occur in the middle or the final third of the triangle as with the other sloping triangles.

When trading triangle breakouts, you should always consider other pieces of information so that you can better pinpoint a higher probability trade set up. Besides the triangle formation, decreased volatility can also be detected with the exponential moving averages and the Bollinger bands.

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Know These Forex Charts. Learn Forex Trading!

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Triangles are one of the best depictions of decreasing price volatility in the currency price charts. Triangle formations appear relatively common in charts. Through triangle formations you can ride on a potentially high momentum move that is likely to occur after a period of decreasing volatility.

A high probability trade is in sight when the technicals are coupled with the current market sentiment when a particular type of triangle has been identified by the trader. All triangles show decreasing price volatility in action.

Triangles are basically continuation patterns. But they can also be reversal patterns. This depends on the different types of triangles and whether they occur in an uptrend or a downtrend. Triangles are also known as Wedges. There are basically three types of triangles: 1) Ascending, 2) Descending and 3) Symmetrical.

Ascending Triangle: It is basically a bullish signal when you see an ascending triangle on the chart. An ascending triangle can be easily identified by its upward sloping trendline. This upward sloping trendline creates the lower boundary of the ascending triangle. An ascending triangle can be either a continuation or reversal pattern.

The upper boundary is roughly horizontal and this horizontal line should connect at least two price points. The horizontal line represents the resistance level. What is the crowd psychology behind an ascending triangle? There are sellers in the market who push the price down every time the currency price goes up to the resistance level.

When the prices retreat from their high and are on the way down, there are buyers who believe very strongly that the currency price should rise based on their own reasons. The buyers thus bid the prices higher than the previous low forming the upward slope of the triangle.

The triangle is formed when these two lines, one sloping and the other horizontal converge at one point. Breakouts tend to occur in the middle or the third of the triangle formation measuring from the start of the triangle to the tip. The appearance of an ascending triangle should prepare you for an upside breakout form the resistance.

It is seen as an uptrend continuation pattern when you see an ascending triangle during an uptrend in general. But if it formed in during an existing downtrend, it acts as a bullish reversal pattern.

Descending Triangles: A descending triangle works the opposite of an ascending triangle. It is viewed as a bearish formation even though it can be either a continuation or reversal pattern.

A descending triangle can be identified by the downward slope of the trendline which is formed by connecting the lower price highs. This downward sloping trendline forms the upper boundary of the triangle. The horizontal lower boundary of the triangle represents the support level and it is formed by connecting at least two price points.

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Know These Forex Charts. Learn Forex Trading!

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Aging Trend: This is the third stage of the trend and is the period of consolidation as the trend comes to maturity. As the momentum of the trend exhausts itself, volatility tends to decrease at this stage of the trend. This is the period where lot of profit taking will take place.

Both the bulls and the bears are hesitant to make daring moves at this stage of the trend. Experienced traders try to get out of their trades at this stage of the trend by closing their positions. This satisfies the appetites of inexperienced traders as they consolidate their positions.

The trend takes a short break and the volatility is low during this stage of the trend. This is the period of consolidation and the prices tend to stay calm during this period. Currency prices have moved by a large amount in the previous period of high volatility.

End of Trend: This is the time when the prevailing trend ends and reverses itself after some new information is revealed about a currency that changes the mass opinion. This results in the rapid adjustment of prices within a short time as the market players tend to absorb the information.

Many stops will get triggered during this stage of the trend. Especially if they have been caught on the wrong side of the market, traders become desperate to get out of their positions.

During this stage of the trend there is a sharp follow through of the prices in the reversed direction. You can see even within a trend currency prices can experience decreased volatility followed by increased volatility as the crowd psychology keeps on changing.

Traders with open positions during this low period of volatility are the most vulnerable to unanticipated news. Decreased volatility can be found during trending or ranging phases.

When the market shift from high volatility to low volatility or vice versa, this time can be used to profit from the change in volatility. During this time gains can be made from the unsuspecting players and this is known as the Decreased Volatility Breakout Strategy. Deceased volatility provides an excellent opportunity to traders to prepare and profit from an imminent change from low to high volatility.

There are several technical indicators that can help you visualize the volatility in the currency prices. The success of this strategy lies in measuring the volatility of the forex market correctly.

You can use triangle patterns as one of the best indicators of decreasing price volatility in the currency price charts. Combine the triangle patterns with technical indicators to confirm or deny decreasing price volatility. Two of the most useful indicators that can help you measure the volatility of the currency prices are: 1) Moving Averages and 2) Bollinger Bands.

Through identifying the triangle formations, you can take advantage of the decreasing price volatility in the forex market. All triangles show decreasing price volatility in the forex market. When a particular type of triangle has been identified by the trader, a high probability trade may be in sight.

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Get Netpicks Forex Signals Free. Learn Forex Trading!

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Trading breakouts is one of the most popular ways of making pips from the forex market. Decreased volatility breakout is one of the subsets of breakout trading. While this strategy is similar to the strategy of trading breakouts, but it is specific to a certain conditions in the forex market.

Volatility tends to be high when prices change to a large extent within a short span of time. Volatility is a measure of the scale of price fluctuations over time. The reverse also holds when prices oscillate more or less close to a certain price level without deviating much from it over a long span of time, the volatility tends to be low during such periods.

It is the periods of high volatility that lets traders make pips and it is the volatile nature of the forex market that attracts the risk seekers in search of high returns. However, entering the market in periods of high volatility can be stressful for most of the traders as they dont know whether the trade will go their way or not. Why not concentrate on the low volatility period instead of focusing on the high volatility market.

Just like other financial markets, there is a tendency in the currency prices to alternate between periods of high volatility and low volatility in the forex market. This recurrent pattern is due to the crowd psychology which is the force behind changes in the forex market.

There are four main stages of a trend. These four stages are: 1) Nascent Trend, 2) Fully Charged Trend, 3) Aging Trend and 4) End of Trend. At each stage of the trend, there is a different crowd psychology behind it. These four stages are closely linked to the cycle of volatility in the market. Lets discuss these stages of a trend in detail.

First Stage-Nascent Trend: Most market players are still skeptical about the possible new trend direction during the nascent stage of the trend. In the beginning when the new trend just starts either upside or downside, volatility is low as both bears and bulls tread carefully and are cautious. Nothing is clear at this nascent stage of the trend when it is forming. Market players are trying to confirm or deny the start of a new trend. So everyone is cautious whether the new trend will continue or it will fizzle out.

Fully Charged Trend: This is the second stage of the trend and during this stage the trend becomes well established! The trend becomes fully charged as there is now evidence from fundamental data that supports the trend direction. The trend is in full progress and it is time for more action now. Traders who are caught on the opposite side of the market become exposed when the new information proves them wrong. They become desperate.

During this stage of the trend, a lot of changing positions will take place. Traders who were initially on the wrong side of the market become new converts to the trend. This causes the currency prices to move more dramatically within this stage of the trend. Volatility is high during the fully charge stage of the trend.

New information convinces most of the traders of the direction of the trend. Traders become convinced of the direction of the trend. Everyone wants to jump in the trend. More and more positions are established bringing prices to higher highs in an uptrend or lower lows in a down trend. Hence volatility tends to be high during this period.

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Know These Forex Charts. Learn Forex Trading!

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So you need to control and face fears. Greed is a form of fear which is the fear of missing out. The first step in overcoming fear is to recognize the various forms of fear connected with trading.

Why so many people bought tech stocks during the dot com boom? Everyday their mouths would salivate on reading rosy pictures of potential gains that could be made in investing in those stocks further fueling the bubble that was going to burst all of a sudden. Have you ever thought why do so many people rush to the departmental store during the sales season? Is it is the fear of missing out. Any kind of buying mania stems from the fear of missing out. People are afraid of missing out a good opportunity. This form of fear is a kind of greed.

This fear manifests itself especially during a sharp rally or decline of a currency pair in forex trading. Suppose you are interested in choosing a good currency pair for trading. You see on your computer monitor that the EUR/USD pair is making new highs, as it keeps on going up and up.

Your heart starts pounding. Immediately buy, buy, and buy signals start ringing in your mind. You start feeling the acute pain of not being in the market when the EUR/USD pair continues to move higher and higher.

The rising graph of the EUR/USD pair hypnotizes you. This fear of losing out hypnotizes you into placing buy orders frantically. You start thinking, Everyone is buying and I havent. I am losing out a highly profitable trade. You have some doubts at the far back of your mind but you simply ignore them. You want to ride the trend just like everyone by rushing into it headlong. You are not willing to rationally analyze your trading decision.

The mindset, How can I not be buying/selling when everyone else is buying/selling, is extremely dangerous. This type of fear is very dangerous and it compels you to enter into a trend very late when most of the buying has been done. Be disciplined and be glad to think that most of the traders are pouring dumb money into buying a currency pair.

Trading is a game. There will be winners. There will be losers. Sometime you win and sometimes you will lose some of your trades. The fear of losing out is the most prominent among the new traders.

New traders become afraid of pulling the trigger when it comes to entering or exiting a trade as they fear losing money. Many new traders become victims of analysis paralysis. New traders dont yet have the adequate skills and knowledge to help assess and evaluate trading opportunities with a high level of confidence. This leads to trading paralysis. They become victims of procrastination. They dont know when to enter and when to exit.

It is essential for you to practice on your demo account. Though you wont feel the real emotions like when you trade with your real money but still practice can make you confident. Now you should not be afraid of pulling the trigger and being fearful of damaging the account based on only one trade. How to overcome this type of trading paralysis? How much you can afford to lose, decide before entering into a trade. Use a stop loss order that is in accordance with your money management rules. Proper use of stop loss should help you become less fearful of losing out a major portion of your account.

Do not get caught up feeling invincible or pessimistic after a win or a loss. It is very easy for traders to oscillate between emotional high and low. The outcome of just one trade should not affect your overall performance. Try to develop your own winning forex trading system that can give more winner than losers in the long run.

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Know These Forex Charts. Learn Forex Trading!

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Human beings are emotional creatures. It is often said that we are our own worst enemy. In forex trading, this is the ultimate truth. Most of our trading decisions are guided more by emotional than logical thinking. Our mind is capable of playing emotional tricks on us.

Emotions can work for us and against us. Your battles are won or lost in your mind first. We can get seduced into unfavorable situations by our emotions. A traders mindset is the most important ingredient of success.

Do you have a strong desire to succeed in forex trading? Forex trading is not for everyone. If you just want to try your luck or dabble in trading, you will end up like the majority who end up losing their money. Do you have the passion for trading forex?

In order to become a successful forex trader, you must be highly self motivated. You must have a concrete plan of action and not be afraid of failure. Are you ready to devote a lot of time and effort into picking up trading skills and knowledge?

In order to become a successful forex trader, you need knowledge and skills in that field. A huge amount of time, effort and money is required for a trader to attain consistent success in forex trading.

Are you willing to accept losses as part of trading? You are going to make mistakes while trading. Do you understand that you can suffer losses in trading? Are you willing to learn from your mistakes? Do you have a traders log that you use to reflect on each lost trade and learn from it?

Most of the new traders read some market analysis from an analyst and enter into the trade on his/her recommendation. If the trade turns out to be a loser, most of us tend to blame on the market analysis. It is easy to blame others.

But is it fair to blame someone when you could have done further market analysis on your own. It is foolish to blame others for your mistakes when you could have planned your trade in a better way. Dont be trigger happy? Only pull the trigger when you are confident that you have done your analysis to confirm what others are saying.

Fear and greed are the two most dominant emotions that affect not only the individual traders but also the currency markets. In fact, these two emotions are the main drivers of the forex markets.

Fear makes you over pessimistic about a currency pair. Similarly, greed is going to make you over optimistic in thinking that a currency is going to appreciate. In nutshell, fear and greed are behind the steering wheel of the currency market. When fear takes over, the market turns bearish. When greed takes over, the market becomes bullish.

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Know Swing Trading. Learn Forex Trading!

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