Currency trading, foreign exchange trading, forex trading or Fx trading are just four different titles often given to act of investing in the currency exchange market. If you are interested in investing in the foreign exchange market, then you need to understand the seven currency trading basics:
1) What is currency trading?
Currency trading is simply buying and selling currencies and making a profit from a positive price change between two different currencies involved in a trade. The two currencies involved in a trade are known as the forex pair. The most common currency involved in forex trading is the US dollar which is involved in 85% of all trades.
A forex trader will monitor the financial markets and react to trends in the movement in price between one currency and another. He makes a profit if he buys or opens a trade at a low price and sells or closes at a higher price. The skill is being able to understand what is happening in the market and correctly anticipate the upward or downward movement of currency prices. There are many tools available to help with the analysis of the market - the most common being a variety of charts which show historical trends and patterns. Increasingly, there are new trading software packages entering the market which automates much of this process eg Click Here!
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2) The forex market
The volume in the foreign exchange market is massive, with around $4 trillion dollars being traded every single day. The international banks and financial investment companies are the main players but especially now with the internet and high speed connections, the market has opened up to the small private investors who are entering the market in their droves. The constant fluctuation in price between currencies provide a lucrative market for the shrewd investor.
3) Investment Capital
Just a few hundred dollars is enough to get started. You need to open an account with a broker but generally they do not charge any upfront fees or commission and make their money from the spread in buy and sell prices of the currency and from leveraging.
4) Trading hours
Because the currency market is Global, it is effectively open 24 hours per day, 5 days per week. It opens in Sydney Australia at 22:00 UTC on Sunday evening and closes at 22:00 UTC on Friday afternoon in New York.
5) Risk
Unfortunately, too many people enter the forex market and expect to get rich quick. Forex trading is not gambling, it's a skill which can return good profits if you enter with the correct mindset and are prepared to learn the various tricks and techniques. In any form of investment where the potential profit is high, then so too are the potential losses. Even the most skilled and experienced traders will lose money and should not be put off when you do. The important thing is to make more gains than losses, so start small and learn from your mistakes. Always trade with a stop loss, particularly if you are using any form of automated trading software, this will protect you from huge losses if the market should suddenly turn against you.
6) Strategy and Systems
You need a clear strategy and to develop a profitable system within that strategy. Fear and greed are your worst enemies. Work hard at understanding the markets, study the charts and get a feel for the many factors which influence price movement. Persevere and above all be consistent.
7) You are in control
You are in total control of your investment. Unlike most other forms of investment such as stocks and shares, you are not dependent on the performance of a third party. So long as you learn the currency trading basics and learn to recognise the world events which influence currency prices then you are in a strong position to take advantage of positive trends in currency price movements.
Sunday, May 31, 2009
Foreign Exchange Market and the Five Secrets of its Success
The foreign exchange market or forex market as it is more commonly known used to be the preserve of the big international banks and to a degree they still try to control and manipulate it. However, largely due to the internet and high speed connections, the market has opened up significantly to the smaller traders. The forex market is unique and offers a better opportunity to make money than most other forms of investment for five basic reasons:
1) Global Market
Forex trading is carried out all over the world and whilst it is influenced by domestic events in the countries of major financial importance, the effects are often balanced out between negative influences in one corner of the world and positive influences elsewhere. Forex trading is always between two currencies or forex pairs as they are known and the individual currencies have no absolute value in isolation. The value of a currency can only be measured in comparison with another currency and if one of them falls in value the other will rise in value. This is unique because in other forms of investment such as the stock market, a negative influence in one corner of the world can ripple around the world and create a fall in value in stocks around the world. The current economic crisis is a perfect example of this. The sub-prime lending market in the USA crashed and the effects were soon felt around the world with the biggest stock market crash since the 1930's.
2) Trading Volume
Simply put, this is the amount of money being traded at any given time and within the foreign exchange market the trading volume is immense. A survey carried out a couple of years ago put the amount of money being traded in the forex market at $4 trillion per day. The US Dollar is the single most traded currency involved in 85% of all forex trades, followed by the Euro at 35%. The largest forex trading center is London, followed by New York and Tokyo.
3) Liquidity
The liquidity of an asset is the ease with which it can be turned into cash without loss of value or at least without any significant loss in value. Currency is money and money is cash and is therefore more liquid than any other asset making it very easy to trade.
4) Leverage
Leverage is about controlling something big with something small. The leverage that is achievable in the forex market is one of the highest that investors can obtain. Leverage is a loan that is provided to a trader by the broker handling his or her forex account. When a trader decides to invest in the forex market, he or she must first open up a margin account with a broker. Usually, the amount of leverage provided is either 50:1, 100:1 or 200:1, depending on the broker and the size of the trade. Standard trading is done on 100,000 units of currency, so for a trade of this size, the leverage provided is usually 50:1 or 100:1. Leverage of 200:1 is usually used for trades of $50,000 or less.
To trade $100,000 of currency, with a margin of 1%, an investor will only have to deposit $1,000 into his or her margin account. The leverage provided on a trade like this is 100:1. Leverage of this size is significantly larger than the 2:1 leverage commonly provided on equities and the 15:1 leverage provided by the futures market. Although 100:1 leverage may seem extremely risky, the risk is significantly less when you consider that currency prices usually change by less than 1% during a days trading.
5) 24 Hour Market
Because the foreign exchange market is global, forex trading can carried out 24 hours a day over 5 days per week. The market effectively opens in Sydney, Australia at 22:00 UTC on Sunday evening and closes on Friday afternoon in New York at 22:00 UTC.
1) Global Market
Forex trading is carried out all over the world and whilst it is influenced by domestic events in the countries of major financial importance, the effects are often balanced out between negative influences in one corner of the world and positive influences elsewhere. Forex trading is always between two currencies or forex pairs as they are known and the individual currencies have no absolute value in isolation. The value of a currency can only be measured in comparison with another currency and if one of them falls in value the other will rise in value. This is unique because in other forms of investment such as the stock market, a negative influence in one corner of the world can ripple around the world and create a fall in value in stocks around the world. The current economic crisis is a perfect example of this. The sub-prime lending market in the USA crashed and the effects were soon felt around the world with the biggest stock market crash since the 1930's.
2) Trading Volume
Simply put, this is the amount of money being traded at any given time and within the foreign exchange market the trading volume is immense. A survey carried out a couple of years ago put the amount of money being traded in the forex market at $4 trillion per day. The US Dollar is the single most traded currency involved in 85% of all forex trades, followed by the Euro at 35%. The largest forex trading center is London, followed by New York and Tokyo.
3) Liquidity
The liquidity of an asset is the ease with which it can be turned into cash without loss of value or at least without any significant loss in value. Currency is money and money is cash and is therefore more liquid than any other asset making it very easy to trade.
4) Leverage
Leverage is about controlling something big with something small. The leverage that is achievable in the forex market is one of the highest that investors can obtain. Leverage is a loan that is provided to a trader by the broker handling his or her forex account. When a trader decides to invest in the forex market, he or she must first open up a margin account with a broker. Usually, the amount of leverage provided is either 50:1, 100:1 or 200:1, depending on the broker and the size of the trade. Standard trading is done on 100,000 units of currency, so for a trade of this size, the leverage provided is usually 50:1 or 100:1. Leverage of 200:1 is usually used for trades of $50,000 or less.
To trade $100,000 of currency, with a margin of 1%, an investor will only have to deposit $1,000 into his or her margin account. The leverage provided on a trade like this is 100:1. Leverage of this size is significantly larger than the 2:1 leverage commonly provided on equities and the 15:1 leverage provided by the futures market. Although 100:1 leverage may seem extremely risky, the risk is significantly less when you consider that currency prices usually change by less than 1% during a days trading.
5) 24 Hour Market
Because the foreign exchange market is global, forex trading can carried out 24 hours a day over 5 days per week. The market effectively opens in Sydney, Australia at 22:00 UTC on Sunday evening and closes on Friday afternoon in New York at 22:00 UTC.
Saturday, May 30, 2009
FX Trading: The What, the Who, the Why and the How.
What is FX trading, who can do it, why would they want to do it and how can they do it? In this brief article I will attempt to answer these basic questions.
What is Fx trading?
FX or forex is an acronym for foreign exchange. Therefore, FX trading is foreign exchange trading. In other words it is trading in foreign currency. FX traders will trade in forex pairs with the US Dollar and Euro being the most popular pair. Forex traders will buy and sell currencies and make money from the currency price movements.
Who can do Fx trading?
Anyone can do it. It is no longer a special preserve of the banks and other financial institutions. You do not need a lifetime of knowledge and experience from working in the investment and forex markets in the London Stock Exchange, New York Wall Street or other financial centers around the world.
The internet, particularly with the advent of broadband and high speed connection, has opened up these markets to ordinary people working from the comfort of their own home. They can access real time data in the form of latest currency prices, charts and other data. They can open an account with an online broker and carry out all trading transactions online. Recognising this potential, brokers have made the whole task relatively easy and inexpensive to get started. Of course, to be successful, you need to learn some basic rules and techniques.
At the same time, the ongoing development of special trading software is so sophisticated now that forex robots can automatically do the trading for you. You do not have to understand the market or decide when to open and close a trade - the robot does it all for you on your own computer.
Why become a forex trader?
It is a way of making money from the comfort of your own home and given the current economic climate, many people are choosing or being forced to look at other ways of creating an income. Forex trading can supplement other forms of investment trading on the stock market as an extension of your investment portfolio, thereby spreading the risk. It can be a full time or part time activity and it can be fun too for people who enjoy a challenge. Beware though not to be too casual about forex trading. It's not gambling and should not be viewed upon in this way; otherwise you will make more losses than gains. Of course there are risks and even expert traders will make some losses but with the right mental approach, patience, motivation and commitment to succeed, it can be very rewarding.
How to get started?
It's very easy. You will need to sign up with a broker before you can make any trades. You will find many of them with a simple search on the internet. Shop around and compare fees and other charges. Make sure you understand the basics of how to open and close a trade and how to use stop losses to safeguard your position if a trade should make a sudden adverse movement.
You might want to take advantage of the many automatic Fx trading or forex robot software packages on the market. If so, make sure you understand how they work and trial by 'paper trading' first before letting a robot loose with real money in your Fx trading account. (Forex Megadroid Click Here!).
What is Fx trading?
FX or forex is an acronym for foreign exchange. Therefore, FX trading is foreign exchange trading. In other words it is trading in foreign currency. FX traders will trade in forex pairs with the US Dollar and Euro being the most popular pair. Forex traders will buy and sell currencies and make money from the currency price movements.
Who can do Fx trading?
Anyone can do it. It is no longer a special preserve of the banks and other financial institutions. You do not need a lifetime of knowledge and experience from working in the investment and forex markets in the London Stock Exchange, New York Wall Street or other financial centers around the world.
The internet, particularly with the advent of broadband and high speed connection, has opened up these markets to ordinary people working from the comfort of their own home. They can access real time data in the form of latest currency prices, charts and other data. They can open an account with an online broker and carry out all trading transactions online. Recognising this potential, brokers have made the whole task relatively easy and inexpensive to get started. Of course, to be successful, you need to learn some basic rules and techniques.
At the same time, the ongoing development of special trading software is so sophisticated now that forex robots can automatically do the trading for you. You do not have to understand the market or decide when to open and close a trade - the robot does it all for you on your own computer.
Why become a forex trader?
It is a way of making money from the comfort of your own home and given the current economic climate, many people are choosing or being forced to look at other ways of creating an income. Forex trading can supplement other forms of investment trading on the stock market as an extension of your investment portfolio, thereby spreading the risk. It can be a full time or part time activity and it can be fun too for people who enjoy a challenge. Beware though not to be too casual about forex trading. It's not gambling and should not be viewed upon in this way; otherwise you will make more losses than gains. Of course there are risks and even expert traders will make some losses but with the right mental approach, patience, motivation and commitment to succeed, it can be very rewarding.
How to get started?
It's very easy. You will need to sign up with a broker before you can make any trades. You will find many of them with a simple search on the internet. Shop around and compare fees and other charges. Make sure you understand the basics of how to open and close a trade and how to use stop losses to safeguard your position if a trade should make a sudden adverse movement.
You might want to take advantage of the many automatic Fx trading or forex robot software packages on the market. If so, make sure you understand how they work and trial by 'paper trading' first before letting a robot loose with real money in your Fx trading account. (Forex Megadroid Click Here!).
Thursday, May 28, 2009
Which Forex Pairs to Trade?
Forex pairs are the two currencies involved in currency trading. You exchange or trade one currency say US Dollars for another currency say British Pounds Sterling. The forex pair in this example is USD/ GBP.
Of course it is possible to trade with any pair of currencies from around the world. In practice, however, it is the currencies of the major economically powerful countries which account for most trades. Note that I say economically powerful and not politically powerful. The Swiss Franc is the currency of a small country, physically and politically but because of the special nature of the Swiss banking system it is very economically powerful and therefore a major player in the financial markets.
Around 90% of all forex trading involves just 6 forex pairs, all involving the US Dollar as the most significant trading currency:
1) US Dollar/ British Pound Sterling USD/ GBP (sometimes known as the Cable Pair)
2) US Dollar/ Euro USD/ EUR
3) US Dollar/ Japanese Yen USD/ JPY
4) US Dollar/ Swiss Franc USD/ CHF
5) US Dollar/ Australian Dollar USD/ AUD
6) US Dollar/ Canadian Dollar USD/ CAD
According to a recent study, the US Dollar is involved in 85% of all trades and the Euro 37%, followed by the Japanese Yen, British Pound Sterling, Swiss Franc, Australian Dollar and Canadian Dollar in order of significance.
When first entering the forex trading market, it is advisable to begin with the USD/ Euro forex pair because there is so much more information concerning these currencies which because they tend to me more stable and more easily manageable result in lower costs.
Some currencies can make difficult forex pairs and should be avoided by the beginner to start with. For example, the Canadian Dollar and the Japanese Yen can be a difficult partner in any forex pair because they are both influenced by fluctuations in the price of oil (Canada is a large oil exporter and Japan a large oil importer).
Of course oil as an example is just one of many influences effecting currency movements and the experienced forex trader will know what to look out for. However, for the beginner my advice would be to trade with the USD/ EUR pair for a while to gain experience and then maybe the USD/ GBP (Cable) pair as an alternative before moving on to the more volatile forex pairs.
Of course it is possible to trade with any pair of currencies from around the world. In practice, however, it is the currencies of the major economically powerful countries which account for most trades. Note that I say economically powerful and not politically powerful. The Swiss Franc is the currency of a small country, physically and politically but because of the special nature of the Swiss banking system it is very economically powerful and therefore a major player in the financial markets.
Around 90% of all forex trading involves just 6 forex pairs, all involving the US Dollar as the most significant trading currency:
1) US Dollar/ British Pound Sterling USD/ GBP (sometimes known as the Cable Pair)
2) US Dollar/ Euro USD/ EUR
3) US Dollar/ Japanese Yen USD/ JPY
4) US Dollar/ Swiss Franc USD/ CHF
5) US Dollar/ Australian Dollar USD/ AUD
6) US Dollar/ Canadian Dollar USD/ CAD
According to a recent study, the US Dollar is involved in 85% of all trades and the Euro 37%, followed by the Japanese Yen, British Pound Sterling, Swiss Franc, Australian Dollar and Canadian Dollar in order of significance.
When first entering the forex trading market, it is advisable to begin with the USD/ Euro forex pair because there is so much more information concerning these currencies which because they tend to me more stable and more easily manageable result in lower costs.
Some currencies can make difficult forex pairs and should be avoided by the beginner to start with. For example, the Canadian Dollar and the Japanese Yen can be a difficult partner in any forex pair because they are both influenced by fluctuations in the price of oil (Canada is a large oil exporter and Japan a large oil importer).
Of course oil as an example is just one of many influences effecting currency movements and the experienced forex trader will know what to look out for. However, for the beginner my advice would be to trade with the USD/ EUR pair for a while to gain experience and then maybe the USD/ GBP (Cable) pair as an alternative before moving on to the more volatile forex pairs.
Tuesday, May 26, 2009
Forex Investment - The Risks.
Forex investment is being advertised across all forms of media right now as a great way to make money. The advertisers imply that it is an easy and profitable way to invest your money and let’s face it under the current economic climate we are all looking for an easy low risk option to make some extra cash. So let’s take a closer look at forex, understand what it is and evaluate the true risks.
Forex is an acronym for 'foreign exchange' and forex investment trading is a form of investment by taking advantage of the movements or exchange differences between foreign currencies.
Because the rate of exchange between a pair of currencies is constantly changing, it is possible for a shrewd trader to make a lot of money by accurately predicting these changes. It's very similar to trading in stocks and shares on the stock market, you buy when the price is low and sell when the price is high.
As is common with investing in the stock market, forex traders can take a medium to long term view based on a steady drift in currency prices over a period of time. However, the advertising suggests short term gains and to be fair, this is what most forex traders do. They use trading skills and techniques to make relatively small gains over a short period and repeat the process over and over.
A forex trader will buy a currency when he thinks it will rise in price. This is called opening a trade. A closing trade is when he sells a currency because he thinks it price is about to fall. Often he will open and close a trade within minutes. The skill is in watching the markets and recognising a pattern developing which he knows from experience will lead to an upward or downward trend and thereby chooses to jump in and open or close a trade.
Many traders use a system which either they have developed themselves over many trades or they buy an 'off the shelf' system which can provide a short cut through the learning curve to becoming a successful trader. This is what most of the advertisements are trying to sell and it is necessary to be very wary about some of the claims made with some of these systems. There is also software available which automate the whole process and robots open and close the trades for you based upon parameters built into the software. There are one or two of these robot systems emerging in the marketplace now which look very promising (for example Click Here!).
With the ever increasing accessibility and popularity of the internet, brokers have seized the opportunity to attract a lot of a new breed of investor to the forex investment market - people with relatively small funds can begin with just a few hundred dollars. Many are encouraged to think that they can make a lot of money in a short time and are often disappointed. It is necessary to learn some specific skills and require a lot of self discipline to be successful. It takes time, motivation and commitment.
Some people take up forex investment simply because they are looking for a new challenge. Maybe they already invest in the stock market and are looking at other ways of increasing their portfolio of investments. These people are more likely to succeed because they have a better understanding of the risks and are prepared with sufficient funds to lose from time to time. The skill comes in making more gains than losses over a period of time.
There are many influences on the market and some of them completely unpredictable even to the most experienced trader. Take disasters such as the terrorist attack on the Trade Center in New York on 11 September 2001 for example. It is wise to set up an automatic stop loss if things suddenly turn against the trade. A stop loss is a pre-determined amount your trade is allowed to lose before it is automatically closed. A very sensible precaution.
In summary, forex investment has risk attached to it but it is a risk that can be controlled and managed provided you learn the skills, tricks and techniques required before becoming heavily involved.
Forex is an acronym for 'foreign exchange' and forex investment trading is a form of investment by taking advantage of the movements or exchange differences between foreign currencies.
Because the rate of exchange between a pair of currencies is constantly changing, it is possible for a shrewd trader to make a lot of money by accurately predicting these changes. It's very similar to trading in stocks and shares on the stock market, you buy when the price is low and sell when the price is high.
As is common with investing in the stock market, forex traders can take a medium to long term view based on a steady drift in currency prices over a period of time. However, the advertising suggests short term gains and to be fair, this is what most forex traders do. They use trading skills and techniques to make relatively small gains over a short period and repeat the process over and over.
A forex trader will buy a currency when he thinks it will rise in price. This is called opening a trade. A closing trade is when he sells a currency because he thinks it price is about to fall. Often he will open and close a trade within minutes. The skill is in watching the markets and recognising a pattern developing which he knows from experience will lead to an upward or downward trend and thereby chooses to jump in and open or close a trade.
Many traders use a system which either they have developed themselves over many trades or they buy an 'off the shelf' system which can provide a short cut through the learning curve to becoming a successful trader. This is what most of the advertisements are trying to sell and it is necessary to be very wary about some of the claims made with some of these systems. There is also software available which automate the whole process and robots open and close the trades for you based upon parameters built into the software. There are one or two of these robot systems emerging in the marketplace now which look very promising (for example Click Here!).
With the ever increasing accessibility and popularity of the internet, brokers have seized the opportunity to attract a lot of a new breed of investor to the forex investment market - people with relatively small funds can begin with just a few hundred dollars. Many are encouraged to think that they can make a lot of money in a short time and are often disappointed. It is necessary to learn some specific skills and require a lot of self discipline to be successful. It takes time, motivation and commitment.
Some people take up forex investment simply because they are looking for a new challenge. Maybe they already invest in the stock market and are looking at other ways of increasing their portfolio of investments. These people are more likely to succeed because they have a better understanding of the risks and are prepared with sufficient funds to lose from time to time. The skill comes in making more gains than losses over a period of time.
There are many influences on the market and some of them completely unpredictable even to the most experienced trader. Take disasters such as the terrorist attack on the Trade Center in New York on 11 September 2001 for example. It is wise to set up an automatic stop loss if things suddenly turn against the trade. A stop loss is a pre-determined amount your trade is allowed to lose before it is automatically closed. A very sensible precaution.
In summary, forex investment has risk attached to it but it is a risk that can be controlled and managed provided you learn the skills, tricks and techniques required before becoming heavily involved.
Monday, May 25, 2009
Make Money Online From Home with Forex Trading
The idea of working from home is nothing new and more and more people are doing it in the offline world because a) with modern communication technology many companies are encouraging their employees to work from home because it saves them the cost of office space and b) saves the employee the cost and inconvenience of commuting to an office each day, not being tied to fixed office hours and gives them more time with the family.
An increasing number of people are taking this a stage further and setting up their own online business from home, especially under the current economic climate when good offline jobs are becoming more difficult to find.
Even as a part time activity the idea of earning some extra money online is very attractive. People from all walks of life including the unemployed, retired and disabled are getting in on the act. All that is needed is some basic computer skills and a willingness and motivation to succeed.
Forex currency trading is an ideal way to make money from home but it is important to approach this with the correct mindset in order to be a successful online trader.
Many people start out with the mindset of a gambler and expect rich rewards overnight. As a result, many of them lose money, particularly in the beginning. It is not a game of chance, it a serious form of investment which rely on the skill of a trader being able to recognise a trend or pattern in currency movements and pick the right moment to open or close on a trade. It's not guesswork.
This type of trader has become more prevalent in recent years probably due to the banning of online casinos in the US. They were used to getting a buzz or kick out of the risk associated with a game of pure chance and think that they can achieve the same thing with currency trading which is totally legal simply because it isn't a game of pure chance. Ok, some strike lucky but believe me, as in all forms of pure chance gambling, the majority will lose.
Once you understand that and take time out to learn what is happening in the forex market and train yourself in the application of a few necessary skills, techniques and tactics you have a real chance to make money online from home with forex trading. Don't misunderstand me, there are many systems which traders use and some are profitable and some are not. Whatever system you use you will always have some bad trades. The skill is in developing and using a system which gives you more gains than losses.
So to summarise, before you jump in and start trading, you need to learn and understand the currency market and then concentrate on learning the skills and finding a reliable system before you start. When you have spent this time on your forex training you can look forward to make money online from home with forex trading.
Sunday, May 24, 2009
Forex Trading with Charts and Trends
There are two ways of analysing the foreign exchange markets. One is to study price movements - known as forex technical analysis. The other is to look at outside influences such as economic factors, political climate etc - known as fundamental analysis.
Let's look in detail at forex technical analysis using charts and trends. The idea is to look back in time at historical data and see how prices have moved and identify trends which can be used to predict what might happen in the future. Trading opportunities exist when you recognise a familiar pattern emerging. There are generally three types of chart used for this - line, bar and candlestick charts:
Line charts are simply a line representing the closing price of a currency pair over a period of time which gives a general visual indication of price movement. However, this only shows the closing price and not the price fluctuations within the trading period.
Bar charts on the other hand will show vertical lines or bars spanning the lowest to the highest price in a given time period. The opening and closing price is represented by a short horizontal bar to the left and right of the vertical line respectively. They are sometimes referred to as OHLC charts because they show, open, high, low and closing price positions.
Candlestick charts are similar to bar charts in that they show the same information but presented in such a way that makes it easier to interpret at a glance. Instead of a thin vertical line showing the high and low price, there is a column whose width represents the opening and closing prices. the columns are traditionally coloured white for rising and black for falling prices but colours such as green for rising and red for falling are now becoming more common. This type of chart is preferred by many traders because it is easier to see the turning points where a price has reversed from an upward trend to a downward trend and visa versa.
Currency traders refer to the trend as your friend because the time to trade is when you see a trend forming and a profit is made by trading in the same direction as the trend. Learning how to spot the trend is vital to success in currency trading and candlestick charts make the complex process of forex technical analysis easier.
Of course there are various software programs on the market which claim to make the whole process of forex technical analysis easier, particularly for the beginner and regular readers of my articles will know that there are some very good products emerging in the market place.
See my Forex Magadroid product review dated 21st May.Click Here!
Let's look in detail at forex technical analysis using charts and trends. The idea is to look back in time at historical data and see how prices have moved and identify trends which can be used to predict what might happen in the future. Trading opportunities exist when you recognise a familiar pattern emerging. There are generally three types of chart used for this - line, bar and candlestick charts:
Line charts are simply a line representing the closing price of a currency pair over a period of time which gives a general visual indication of price movement. However, this only shows the closing price and not the price fluctuations within the trading period.
Bar charts on the other hand will show vertical lines or bars spanning the lowest to the highest price in a given time period. The opening and closing price is represented by a short horizontal bar to the left and right of the vertical line respectively. They are sometimes referred to as OHLC charts because they show, open, high, low and closing price positions.
Candlestick charts are similar to bar charts in that they show the same information but presented in such a way that makes it easier to interpret at a glance. Instead of a thin vertical line showing the high and low price, there is a column whose width represents the opening and closing prices. the columns are traditionally coloured white for rising and black for falling prices but colours such as green for rising and red for falling are now becoming more common. This type of chart is preferred by many traders because it is easier to see the turning points where a price has reversed from an upward trend to a downward trend and visa versa.
Currency traders refer to the trend as your friend because the time to trade is when you see a trend forming and a profit is made by trading in the same direction as the trend. Learning how to spot the trend is vital to success in currency trading and candlestick charts make the complex process of forex technical analysis easier.
Of course there are various software programs on the market which claim to make the whole process of forex technical analysis easier, particularly for the beginner and regular readers of my articles will know that there are some very good products emerging in the market place.
See my Forex Magadroid product review dated 21st May.Click Here!
Saturday, May 23, 2009
Forex Fundamental Analysis and The Economy in Forex Trading
There are basically two types of currency exchange trading: forex fundamental analysis and technical analysis. There is a lot of debate about which is better. In fact, both are important.
The simplest way of looking at these two methods of analyzing the market is to say that fundamental analysis considers the world economy while technical analysis looks at charts. In this article we will consider the different fundamental or economic factors and how they can affect your trades.
It will be clear to anybody who has even the most rudimentary understanding of the currency markets that a nation's economic status will have an effect on the value of that nation's currency. A healthy economy means a strong currency, just as a company's stocks will rise in value when that company is doing well.
Any time that a major financial or economic report is due from one of the main players in the world economy, you can expect to see an effect on the foreign exchange markets. This includes reports of the country's Gross Domestic Product, statements of the national debt, inflation, employment levels and trade deficits. Many of these reports are given out regularly at predetermined times and dates, and you will see a lot of volatility in the forex markets around those times.
It is very important to keep track of when these reports are due, not only in your own country but in all of the countries whose currencies you regularly trade. You cannot rely on national newspapers and television for this. They do not carry international economic news at a sufficiently detailed level. You need specialist publications. Many people use the internet for this purpose.
However, it is not only the economy that counts. Social and political forces also have a strong influence on a nation's currency values. Events such as an election, civil unrest, or a natural disaster can cause fluctuations in values.
Some of these events are difficult or even impossible to predict, but you can still base trades around what is likely to happen after the event. You can use historical analysis to see what happened in the currency markets the last time there was a similar event.
If you want to base your trading around fundamental analysis of the forex markets you will need to be the type of person who enjoys following the financial, political and economic news.
The alternative is to use information about upcoming events to avoid trading at those times. People who prefer to rely mainly on technical analysis will do this. But you still need to know what is happening, in order to keep out of the market. So even for somebody who prefers basing their trades on charts, forex fundamental analysis is important.
The simplest way of looking at these two methods of analyzing the market is to say that fundamental analysis considers the world economy while technical analysis looks at charts. In this article we will consider the different fundamental or economic factors and how they can affect your trades.
It will be clear to anybody who has even the most rudimentary understanding of the currency markets that a nation's economic status will have an effect on the value of that nation's currency. A healthy economy means a strong currency, just as a company's stocks will rise in value when that company is doing well.
Any time that a major financial or economic report is due from one of the main players in the world economy, you can expect to see an effect on the foreign exchange markets. This includes reports of the country's Gross Domestic Product, statements of the national debt, inflation, employment levels and trade deficits. Many of these reports are given out regularly at predetermined times and dates, and you will see a lot of volatility in the forex markets around those times.
It is very important to keep track of when these reports are due, not only in your own country but in all of the countries whose currencies you regularly trade. You cannot rely on national newspapers and television for this. They do not carry international economic news at a sufficiently detailed level. You need specialist publications. Many people use the internet for this purpose.
However, it is not only the economy that counts. Social and political forces also have a strong influence on a nation's currency values. Events such as an election, civil unrest, or a natural disaster can cause fluctuations in values.
Some of these events are difficult or even impossible to predict, but you can still base trades around what is likely to happen after the event. You can use historical analysis to see what happened in the currency markets the last time there was a similar event.
If you want to base your trading around fundamental analysis of the forex markets you will need to be the type of person who enjoys following the financial, political and economic news.
The alternative is to use information about upcoming events to avoid trading at those times. People who prefer to rely mainly on technical analysis will do this. But you still need to know what is happening, in order to keep out of the market. So even for somebody who prefers basing their trades on charts, forex fundamental analysis is important.
Friday, May 22, 2009
Finding a Qick and Easy Forex Tutorial
Your first foreign exchange tutorial will cover the basics of what you need to do to get started with forex trading. The aim, of course, is to have you making money by predicting the rise and fall of one currency against another and opening and closing your trades at the right moment.
It takes time to learn to be a successful forex trader but you can cut corners if you have a good introductory program that covers everything you need to know. This includes:
- understanding the principles of currency trading including managing your account, trading margins, and allowing for the cost of the spread.
- technical analysis: discovering how to recognize trends in the markets, the different types of charts and how to interpret them so that you can profit from market movements.
- fundamental analysis: understanding what to do in the face of major national or international economic events that are likely to impact on currency values.
- finding out how to minimize your risk and protect your trades with stops.
- developing the power to apply your system without allowing losses or emotions such as fear to throw you off balance and affect your chances of earning long term profits.
A good place to pick up hints and tips can be a forex trading online forum. There are many of these on the internet and members will comment about all kinds of issues relating to the market and their own trading. This can be a great place to go if you have questions. However, forums have some drawbacks. One is that the advice you get may be very contradictory. There is more than one way to trade forex profitably and it can be confusing to be receiving advice from several different people, each with their own approach. It is usually better to stick to your own system.
The other problem with taking advice on forums is that you do not usually know anything about the people who are posting. Somebody could sound very knowledgeable and then it turns out they have only ever used a demo account and never made a real trade in their lives. Some people spend more time hanging out in forums than trading. Just because somebody is very active in a forum does not mean he or she is an expert.
So do not rely on forums, free guides or untested theories for your trading system. When you are starting out in forex trading you need a solid grounding in the basics and a system that is easy to follow and actually works.
As with most things in life you usually have to pay for the best. So look for a foreign exchange tutorial that is part of a profitable forex system.
It takes time to learn to be a successful forex trader but you can cut corners if you have a good introductory program that covers everything you need to know. This includes:
- understanding the principles of currency trading including managing your account, trading margins, and allowing for the cost of the spread.
- technical analysis: discovering how to recognize trends in the markets, the different types of charts and how to interpret them so that you can profit from market movements.
- fundamental analysis: understanding what to do in the face of major national or international economic events that are likely to impact on currency values.
- finding out how to minimize your risk and protect your trades with stops.
- developing the power to apply your system without allowing losses or emotions such as fear to throw you off balance and affect your chances of earning long term profits.
A good place to pick up hints and tips can be a forex trading online forum. There are many of these on the internet and members will comment about all kinds of issues relating to the market and their own trading. This can be a great place to go if you have questions. However, forums have some drawbacks. One is that the advice you get may be very contradictory. There is more than one way to trade forex profitably and it can be confusing to be receiving advice from several different people, each with their own approach. It is usually better to stick to your own system.
The other problem with taking advice on forums is that you do not usually know anything about the people who are posting. Somebody could sound very knowledgeable and then it turns out they have only ever used a demo account and never made a real trade in their lives. Some people spend more time hanging out in forums than trading. Just because somebody is very active in a forum does not mean he or she is an expert.
So do not rely on forums, free guides or untested theories for your trading system. When you are starting out in forex trading you need a solid grounding in the basics and a system that is easy to follow and actually works.
As with most things in life you usually have to pay for the best. So look for a foreign exchange tutorial that is part of a profitable forex system.
Thursday, May 21, 2009
An Introduction to Currency Trading
Forex, foreign exchange and fx trading are all different names for currency trading, where one currency is exchanged for another in the hope of making money when the exchange rates change. These rates are constantly changing due to market news, national events or a knock on effect from changes in the stock exchange.
At the most basic level, imagine you exchanged some US dollars for British pounds. You might give $100 to buy £65. Then the rate changes in your favor so you exchange them back again. Now with the new rate you get $102 for your £65. You just made $2 or 2% of your investment.
Currency traders do this kind of thing all of the time with the aim of increasing their funds through many small trades. They trade on margins so that they can control larger amounts with only a small investment. In the above example, you might only have to hold $10 in your brokerage account to make the purchase even though the amount is $100. The broker covers the rest on the assumption that the market is unlikely to change by more than 10% in a short time.
Forex trading has been around for over 30 years but until the rise of the internet it was almost entirely in the hands of banks and other institutions with large investment funds. These days ordinary people can get involved on their home computers although the financial institutions are still the major players. When I tell you that around US $4 trillion changes hands every day on the currency trading markets you will understand that only a small part of this belongs to ordinary people like you and me.
Foreign exchange is a worldwide market and because of the different time zones around the world you can trade almost any time. Sydney, Australia is the first currency exchange market to open each day, and by the end of the business day in New York the Sydney market is open
again for the next day's trading. So for 5 days per week this is truly a 24 hour market. It only closes on weekends.
You are not limited to dealing in your own country's currency so if your national economy is in a very unpredictable state you can switch to trading two other currencies that are a little more stable. While it is true that a volatile situation with big fluctuations can give you big profits in a short time, it is extremely risky to get involved in a currency that is experiencing a crisis.
These days brokers are going all out to attract the new type of home investor who does not have a lot of capital, so you can get started with just a few hundred dollars. They will provide you with software that allows you to make trades on your account, and real time market information including charts to show you the direction of movement of the different currency pairs.
With so much money changing hands every day, foreign exchange is a high liquidity market. This means that your capital will not be tied up for the long term as it might be if you bought certain kinds of stocks.
Apart from some funds to invest, the main things that you need to get started with currency trading are good money management skills, self discipline, a profitable system to follow and perhaps a forex robot to apply your system for you. When you have these in place, currency trading can be fun and quite profitable.
At the most basic level, imagine you exchanged some US dollars for British pounds. You might give $100 to buy £65. Then the rate changes in your favor so you exchange them back again. Now with the new rate you get $102 for your £65. You just made $2 or 2% of your investment.
Currency traders do this kind of thing all of the time with the aim of increasing their funds through many small trades. They trade on margins so that they can control larger amounts with only a small investment. In the above example, you might only have to hold $10 in your brokerage account to make the purchase even though the amount is $100. The broker covers the rest on the assumption that the market is unlikely to change by more than 10% in a short time.
Forex trading has been around for over 30 years but until the rise of the internet it was almost entirely in the hands of banks and other institutions with large investment funds. These days ordinary people can get involved on their home computers although the financial institutions are still the major players. When I tell you that around US $4 trillion changes hands every day on the currency trading markets you will understand that only a small part of this belongs to ordinary people like you and me.
Foreign exchange is a worldwide market and because of the different time zones around the world you can trade almost any time. Sydney, Australia is the first currency exchange market to open each day, and by the end of the business day in New York the Sydney market is open
again for the next day's trading. So for 5 days per week this is truly a 24 hour market. It only closes on weekends.
You are not limited to dealing in your own country's currency so if your national economy is in a very unpredictable state you can switch to trading two other currencies that are a little more stable. While it is true that a volatile situation with big fluctuations can give you big profits in a short time, it is extremely risky to get involved in a currency that is experiencing a crisis.
These days brokers are going all out to attract the new type of home investor who does not have a lot of capital, so you can get started with just a few hundred dollars. They will provide you with software that allows you to make trades on your account, and real time market information including charts to show you the direction of movement of the different currency pairs.
With so much money changing hands every day, foreign exchange is a high liquidity market. This means that your capital will not be tied up for the long term as it might be if you bought certain kinds of stocks.
Apart from some funds to invest, the main things that you need to get started with currency trading are good money management skills, self discipline, a profitable system to follow and perhaps a forex robot to apply your system for you. When you have these in place, currency trading can be fun and quite profitable.
Product Review - Forex Megadroid
This Forex Megadroid review examines the expert advisor software which claims it can see into the immediate future with 95.82% accuracy. This is a remarkable claim and is worthy of some close scrutiny. Developed by John Grace and Albert Perrie with a combined 38 years experience working in the forex market, the software was launched in the spring of 2009. Forex Megadroid uses what is called 'market adapting intelligence' to make it flexible enough to achieve a high level of accuracy in a fluctuating market.
The big difference between this Forex Megadroid and other automated forex software used by many traders is that its robot is flexible enough to be able to cope with major changes in the patterns of market fluctuations. Other software relies on the low level of fluctuation of a consistent market which has always been the main criticism of this type of software.
The secret is in the new market adapting intelligence which allows the robot to learn from the changing patterns in the market and refines the trading rules accordingly – the flexibility. This gives your funds a much better chance of survival in a volatile market situation. We’re not talking about predicting movements’ way into the future. The 'reverse correlated time and price analysis' (RCTPA) feature of Forex Megadroid aims to predict market movements only over the next few hours.
Ok, so the proof of the pudding is in the eating and this software has only been on the market for a few weeks but traders using this software are already reporting an amazing 90% or better success rate.
All traders expect to make losses and sometimes 2 or 3 losses on consecutive trades so it is necessary to evaluate the performance of this or any software of this type over a period of time with many trades. So far traders using Forex Megadroid are reporting 10% to 20% gains over a month of trading which in any language is a healthy improvement in profit.
At the start, when the software was first released, traders complained that the robot was only trading 3 or 4 times per week which although profitable was frustrating for ‘beginners’ expecting to make a fortune overnight. More experienced traders know that a slow, long term approach is more sensible. However, with a recent upgrade to version 1.1 of the software, traders are now reporting 10 or more trades per week. At a 90% success rate that is a remarkable performance.
For an incredibly low price of just $97 at the time of writing, this is a complete no-brainer, not just for people starting out with Forex trading but for the more experienced traders too. The product is available through Clickbank who offer a no quibble 100% refund within 60 days of purchase. That’s 60 days to try it out for yourself at no risk!
Forex Megadroid is clearly a leader in a new generation of software being developed for Forex trading and comes very highly recommended.
Click Here!
The big difference between this Forex Megadroid and other automated forex software used by many traders is that its robot is flexible enough to be able to cope with major changes in the patterns of market fluctuations. Other software relies on the low level of fluctuation of a consistent market which has always been the main criticism of this type of software.
The secret is in the new market adapting intelligence which allows the robot to learn from the changing patterns in the market and refines the trading rules accordingly – the flexibility. This gives your funds a much better chance of survival in a volatile market situation. We’re not talking about predicting movements’ way into the future. The 'reverse correlated time and price analysis' (RCTPA) feature of Forex Megadroid aims to predict market movements only over the next few hours.
Ok, so the proof of the pudding is in the eating and this software has only been on the market for a few weeks but traders using this software are already reporting an amazing 90% or better success rate.
All traders expect to make losses and sometimes 2 or 3 losses on consecutive trades so it is necessary to evaluate the performance of this or any software of this type over a period of time with many trades. So far traders using Forex Megadroid are reporting 10% to 20% gains over a month of trading which in any language is a healthy improvement in profit.
At the start, when the software was first released, traders complained that the robot was only trading 3 or 4 times per week which although profitable was frustrating for ‘beginners’ expecting to make a fortune overnight. More experienced traders know that a slow, long term approach is more sensible. However, with a recent upgrade to version 1.1 of the software, traders are now reporting 10 or more trades per week. At a 90% success rate that is a remarkable performance.
For an incredibly low price of just $97 at the time of writing, this is a complete no-brainer, not just for people starting out with Forex trading but for the more experienced traders too. The product is available through Clickbank who offer a no quibble 100% refund within 60 days of purchase. That’s 60 days to try it out for yourself at no risk!
Forex Megadroid is clearly a leader in a new generation of software being developed for Forex trading and comes very highly recommended.
Click Here!
Tuesday, May 19, 2009
What Are The Risks With Forex Managed Accounts?
Forex managed accounts present an attractive opportunity for people who want to make money from the lucrative currency trading markets but cannot or do not want to learn to trade for themselves. With a managed account you do not have to do any trading at all. Instead, you entrust your fund to the management company who will act for you.
There are two basic types of forex managed accounts.
1. Standard accounts
With this type of account, your money is kept in your brokerage account in your own name and the manager simply has control over it so that they can trade with it. You can see how much is there and how it is doing at all times. It remains your money. You have to accept the risk that even a skilled account manager cannot predict the markets 100% and you may have to take some losses. Still, if you are a beginner, he is likely to do better with your money than you would yourself, so it is just a question of whether he can do well enough to cover his fees and make you a good profit.
2. Pooled accounts
Pooled accounts are more risky in that there is more possibility of fraud. Here, your money goes into a pool held by the account manager. You are paid a share of their declared profits.
In theory the pool provides a buffer so that profits and losses are more evenly spread and your income could be a little more predictable than when your money is being managed separately. The problem is that you cannot really know what is happening and an unscrupulous management company could simply be making small regular payments to keep their customers happy while illegally diverting the bulk of your funds into their own pockets.
If you are guaranteed a certain percentage return on investment by a forex account manager using pooled funds, you could be heading for trouble. There are no guarantees with forex trading and any company that makes promises of a 10% return or whatever should be treated with
extreme caution.
Of course there are some well run pooled accounts and they have the advantage of a little more predictability than standard forex managed accounts. However, you should research a company offering pooled accounts even more thoroughly than usual before you decide to invest.
Even if you choose a standard account, you need to shop around. Avoid managers who insist on you signing up with their preferred broker. That usually means that they get a commission on all your trades, so they have an incentive to make a lot of small trades even if that is not the most profitable strategy, simply to increase the broker's earnings from the spread and their own commission rakeoff. Even if their commission is worked on a different basis, you probably will not get the best or cheapest broker that way. It is better to sign up with a company who
will let you choose your own broker for forex managed accounts, even if they charge a slightly higher fee.
There are two basic types of forex managed accounts.
1. Standard accounts
With this type of account, your money is kept in your brokerage account in your own name and the manager simply has control over it so that they can trade with it. You can see how much is there and how it is doing at all times. It remains your money. You have to accept the risk that even a skilled account manager cannot predict the markets 100% and you may have to take some losses. Still, if you are a beginner, he is likely to do better with your money than you would yourself, so it is just a question of whether he can do well enough to cover his fees and make you a good profit.
2. Pooled accounts
Pooled accounts are more risky in that there is more possibility of fraud. Here, your money goes into a pool held by the account manager. You are paid a share of their declared profits.
In theory the pool provides a buffer so that profits and losses are more evenly spread and your income could be a little more predictable than when your money is being managed separately. The problem is that you cannot really know what is happening and an unscrupulous management company could simply be making small regular payments to keep their customers happy while illegally diverting the bulk of your funds into their own pockets.
If you are guaranteed a certain percentage return on investment by a forex account manager using pooled funds, you could be heading for trouble. There are no guarantees with forex trading and any company that makes promises of a 10% return or whatever should be treated with
extreme caution.
Of course there are some well run pooled accounts and they have the advantage of a little more predictability than standard forex managed accounts. However, you should research a company offering pooled accounts even more thoroughly than usual before you decide to invest.
Even if you choose a standard account, you need to shop around. Avoid managers who insist on you signing up with their preferred broker. That usually means that they get a commission on all your trades, so they have an incentive to make a lot of small trades even if that is not the most profitable strategy, simply to increase the broker's earnings from the spread and their own commission rakeoff. Even if their commission is worked on a different basis, you probably will not get the best or cheapest broker that way. It is better to sign up with a company who
will let you choose your own broker for forex managed accounts, even if they charge a slightly higher fee.
Sunday, May 17, 2009
Forex Real Time News Trading
Forex real time news trading is a way of making money on the forex market from international events and upcoming current affairs stories.
Predicting the way that these events will go and their effect on the currency markets can appear to be very profitable, at least in theory.
The problem is that in practice things do not often go the way that you might expect.
The truth is that when it comes to financial news, the major international banks pretty much always make sure that they are the first to hear. When an expected report is released they will have people right there. The trade-from-home little guy, on the other hand, has to wait a
few crucial minutes for the report to appear on the TV news or the internet. Even seconds can make a difference.
At times like this the markets will change so swiftly that you cannot really hope to jump in and make money. The banks will dominate the markets and although you may sometimes be lucky, you could easily be wiped out if the news goes against you.
In practice if you do want to trade on the outcome of an upcoming event such as an election or a financial report, you are more likely to try it by opening a trade before the announcement. You might have a strong belief that it will go one way or the other. However, you cannot
really know for sure. When you think about it, opening a trade at this time is really nothing more than betting on the outcome.
It is at times like this that we tend to be easily carried away by our own ideas, hopes and emotions. It is can be very difficult to make a rational assessment of a situation where so much can ride on the outcome. Therefore, unless you are really in the thick of the financial news
centers, it is probably best to avoid this kind of trading. A system that makes steady profits over a period of time is the best way for most small traders to operate.
Of course you must still keep one eye on the news while you are actively trading, but instead of aiming to make money from current and upcoming events, you are more likely to want to close out on your trades before certain reports are released. Critical times include the
opening of the stock exchange in the countries whose currencies you are involved with, and announcements of interest rate changes in those countries. In addition, the USA is such a major player in the forex markets that events in the USA can affect all currency pairs, even if you
are not trading the US dollar. You will probably want to avoid being caught with an open trade at all of these times.
For this reason, most traders who operate a sound forex trading system will avoid trading altogether in the extremely uncertain times preceding a major announcement or release of forex real time news.
Predicting the way that these events will go and their effect on the currency markets can appear to be very profitable, at least in theory.
The problem is that in practice things do not often go the way that you might expect.
The truth is that when it comes to financial news, the major international banks pretty much always make sure that they are the first to hear. When an expected report is released they will have people right there. The trade-from-home little guy, on the other hand, has to wait a
few crucial minutes for the report to appear on the TV news or the internet. Even seconds can make a difference.
At times like this the markets will change so swiftly that you cannot really hope to jump in and make money. The banks will dominate the markets and although you may sometimes be lucky, you could easily be wiped out if the news goes against you.
In practice if you do want to trade on the outcome of an upcoming event such as an election or a financial report, you are more likely to try it by opening a trade before the announcement. You might have a strong belief that it will go one way or the other. However, you cannot
really know for sure. When you think about it, opening a trade at this time is really nothing more than betting on the outcome.
It is at times like this that we tend to be easily carried away by our own ideas, hopes and emotions. It is can be very difficult to make a rational assessment of a situation where so much can ride on the outcome. Therefore, unless you are really in the thick of the financial news
centers, it is probably best to avoid this kind of trading. A system that makes steady profits over a period of time is the best way for most small traders to operate.
Of course you must still keep one eye on the news while you are actively trading, but instead of aiming to make money from current and upcoming events, you are more likely to want to close out on your trades before certain reports are released. Critical times include the
opening of the stock exchange in the countries whose currencies you are involved with, and announcements of interest rate changes in those countries. In addition, the USA is such a major player in the forex markets that events in the USA can affect all currency pairs, even if you
are not trading the US dollar. You will probably want to avoid being caught with an open trade at all of these times.
For this reason, most traders who operate a sound forex trading system will avoid trading altogether in the extremely uncertain times preceding a major announcement or release of forex real time news.
Saturday, May 16, 2009
How To Find A Forex Trading Broker
One essential that you must have when beginning currency exchange trading is an account with a forex trading broker. The broker is your link into the markets and will cover you to trade margins.
But how do you go about selecting a good one? Here are 5 points to take into account when you are shopping around for forex brokerage accounts.
1. Reliability
This operates on several levels. Firstly, of course, you want a broker that you can trust, who will not suddenly disappear from the internet along with all of your money. The forex market is broadly speaking unregulated, so there are a huge number of brokers and some are more
trustworthy than others. Your first step is to check that the broker is regulated. In the USA this means that you want a broker who is registered with the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA). Look for a forex broker with a clean record in any complaints logged against them on the NFA site. Other countries have their own regulatory bodies.
Then you need to think about whether the broker's platform is reliable. This is their software that you will connect with whenever you want to trade. If it is often offline, it is likely to cause problems for you. You could miss out on either opening or closing a trade at the best time. Check forex trading forums for feedback from users on this point, although be careful not to be swayed either way by a single individual who may have his own reasons for being strongly for or against a particular broker.
2. Services
The forex markets are open 24 hours from Sunday night to Friday afternoon EST. Check that your broker's trading platform is available all of this time (most are) and that they offer 24 hour customer support on trading days too. Check that they cover at least the seven major currencies USD, AUD, CAD, GBP, EUR, CHF, JPY. Again most will, but it is worth being sure.
A broker should offer you charts, technical analysis, and instant execution of your orders at the displayed price.
3. Costs
Forex brokers do not charge commission but make their money from the spread, which is the difference between the buy and sell prices on any currency pair. Spread can be anything from 1 pip or less, up to about 3 pips, depending on the broker and the pair. The size of the slice taken by the spread can make the difference between profit and loss in your trading account in the long term so look closely at this. If you know which pairs you are likely to trade most often, the spread on those pairs will be more important to you than others. At the same time, do not be drawn in by a special offer that may not last long once you have committed your funds.
You also need to consider how much is the minimum that you can invest. Most new traders are best advised to start small, so look for a broker who will let you open an account with $250 or less.
4. Margins
Margin requirements can vary a great deal from broker to broker. A lower margin requirement means higher leverage, and higher leverage gives you greater profits or losses on the same fund size. So low margins seem great when you are doing well, but losses will be bigger if things
go badly.
But how do you go about selecting a good one? Here are 5 points to take into account when you are shopping around for forex brokerage accounts.
1. Reliability
This operates on several levels. Firstly, of course, you want a broker that you can trust, who will not suddenly disappear from the internet along with all of your money. The forex market is broadly speaking unregulated, so there are a huge number of brokers and some are more
trustworthy than others. Your first step is to check that the broker is regulated. In the USA this means that you want a broker who is registered with the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA). Look for a forex broker with a clean record in any complaints logged against them on the NFA site. Other countries have their own regulatory bodies.
Then you need to think about whether the broker's platform is reliable. This is their software that you will connect with whenever you want to trade. If it is often offline, it is likely to cause problems for you. You could miss out on either opening or closing a trade at the best time. Check forex trading forums for feedback from users on this point, although be careful not to be swayed either way by a single individual who may have his own reasons for being strongly for or against a particular broker.
2. Services
The forex markets are open 24 hours from Sunday night to Friday afternoon EST. Check that your broker's trading platform is available all of this time (most are) and that they offer 24 hour customer support on trading days too. Check that they cover at least the seven major currencies USD, AUD, CAD, GBP, EUR, CHF, JPY. Again most will, but it is worth being sure.
A broker should offer you charts, technical analysis, and instant execution of your orders at the displayed price.
3. Costs
Forex brokers do not charge commission but make their money from the spread, which is the difference between the buy and sell prices on any currency pair. Spread can be anything from 1 pip or less, up to about 3 pips, depending on the broker and the pair. The size of the slice taken by the spread can make the difference between profit and loss in your trading account in the long term so look closely at this. If you know which pairs you are likely to trade most often, the spread on those pairs will be more important to you than others. At the same time, do not be drawn in by a special offer that may not last long once you have committed your funds.
You also need to consider how much is the minimum that you can invest. Most new traders are best advised to start small, so look for a broker who will let you open an account with $250 or less.
4. Margins
Margin requirements can vary a great deal from broker to broker. A lower margin requirement means higher leverage, and higher leverage gives you greater profits or losses on the same fund size. So low margins seem great when you are doing well, but losses will be bigger if things
go badly.
Zen And The Art Of Forex Currency Online Trading
It seems to me that we need a little zen in the jungle of forex currency online trading. We especially need it when it comes to one
particular skill. It is a skill that is absolutely vital to successful forex trading and yet people do not talk about it very much.
The reason for this is that it is something that most of us do not really like to hear about. Just the name puts us off. We associate it with dark cold schoolrooms from 100 years ago.
I will tell you what it is if you promise not to stop reading. Do we have a deal? You will read to the end of this article and I will disclose the secret word to you.
OK ... it's discipline. Or more accurately, self discipline. Now, as I said we tend to associate those words with old fashioned educational styles and even punishment. But that is not what it is about.
One dictionary definition of discipline is: behavior according to established rules. Applying this to the forex markets, it means trading according to an established system, and not deviating from that system.In fact, if we want to get around the negative associations of the word, we could describe it instead as being consistent ... acting consistently in accordance with the system that you have selected.
The opposite of self discipline is self indulgence: giving in to every desire without thought for the future. Translated into trading terms, this means acting on your whims ... trading on impulse and on 'feelings'. When you do this, you are leaving your profits in the hands of pure
chance.
In order to be successful at most things in life, you need to act consistently and it is not always easy. Self discipline requires saying no to an immediate temptation for the sake of longer term success or happiness. If we are to reach our goals, future consequences must be more
important to us than current satisfaction.
In everyday life terms, this means turning down dessert because you do not want to gain weight, or passing on the illegal parking spot because you do not want your car to be towed.
In forex currency online trading, it means accepting a loss without losing faith in your system.
It means looking for a reasonable profit in the long term instead of taking huge risks because you want to get rich overnight.
It means not giving into the fears that hold you back from making a larger trade when you know it is the right thing to do.
It means doing your research instead of believing that the latest great technique is going to work for you just because you want it to.
In short, it means seeing that the emotions which can feel overwhelming at times are not really so important. Strong emotion, whether it is fear, anger, greed or desire for pleasure, almost always relates to a short term wish, not a long term plan. We need to get beyond this to be
successful.
Our lives do not have to be ruled by emotion. In fact the bottom line is that if you allow yourself to be constantly diverted by passing feelings like a sail boat in a hurricane, you will find it hard to earn a living in the forex market until you learn to see your fears and desires for what they are: just feelings that will pass, no more important than the itch of a flea bite.
But if you have trouble with this, do not worry. Help is at hand. Try an automated forex system. They are as emotionless as Spock and will do all of your forex currency online trading for you with the discipline of a robot.
particular skill. It is a skill that is absolutely vital to successful forex trading and yet people do not talk about it very much.
The reason for this is that it is something that most of us do not really like to hear about. Just the name puts us off. We associate it with dark cold schoolrooms from 100 years ago.
I will tell you what it is if you promise not to stop reading. Do we have a deal? You will read to the end of this article and I will disclose the secret word to you.
OK ... it's discipline. Or more accurately, self discipline. Now, as I said we tend to associate those words with old fashioned educational styles and even punishment. But that is not what it is about.
One dictionary definition of discipline is: behavior according to established rules. Applying this to the forex markets, it means trading according to an established system, and not deviating from that system.In fact, if we want to get around the negative associations of the word, we could describe it instead as being consistent ... acting consistently in accordance with the system that you have selected.
The opposite of self discipline is self indulgence: giving in to every desire without thought for the future. Translated into trading terms, this means acting on your whims ... trading on impulse and on 'feelings'. When you do this, you are leaving your profits in the hands of pure
chance.
In order to be successful at most things in life, you need to act consistently and it is not always easy. Self discipline requires saying no to an immediate temptation for the sake of longer term success or happiness. If we are to reach our goals, future consequences must be more
important to us than current satisfaction.
In everyday life terms, this means turning down dessert because you do not want to gain weight, or passing on the illegal parking spot because you do not want your car to be towed.
In forex currency online trading, it means accepting a loss without losing faith in your system.
It means looking for a reasonable profit in the long term instead of taking huge risks because you want to get rich overnight.
It means not giving into the fears that hold you back from making a larger trade when you know it is the right thing to do.
It means doing your research instead of believing that the latest great technique is going to work for you just because you want it to.
In short, it means seeing that the emotions which can feel overwhelming at times are not really so important. Strong emotion, whether it is fear, anger, greed or desire for pleasure, almost always relates to a short term wish, not a long term plan. We need to get beyond this to be
successful.
Our lives do not have to be ruled by emotion. In fact the bottom line is that if you allow yourself to be constantly diverted by passing feelings like a sail boat in a hurricane, you will find it hard to earn a living in the forex market until you learn to see your fears and desires for what they are: just feelings that will pass, no more important than the itch of a flea bite.
But if you have trouble with this, do not worry. Help is at hand. Try an automated forex system. They are as emotionless as Spock and will do all of your forex currency online trading for you with the discipline of a robot.
Thursday, May 14, 2009
Using The Forex Trailing Stop With MT4
The forex trailing stop is a stop that you can set in an expert advisor on the Metatrader 4 platform. It is pretty much what you might guess
from the name: a stop loss that moves according to the current prices on the forex market. And a stop loss, of course, is a marker you set
that will cause your MT4 expert advisor autopilot software (EA) to exit the trade when it goes against you to prevent you having any risk of
a large loss.
But there are several things to be taken into account when you consider how to use the trailing stop. It is a little like a ratchet in that
it can move up but not down. When you move into profit, it follows behind, moving up by the same number of pips that the market moved. But if
the market falls, it stays where it is. So the market can rise and rise and you go on making more profit, but when it falls just a little
way, the stop loss comes into effect and exits your trade with whatever profit or loss you made up until that point.
To give an example, you open a trade to go long. Of course at the moment of opening you are at point zero: 0 pips profit or loss. Let's say
you set your trailing stop at minus 30 pips. If you are unlucky and the forex market just falls and falls, the stop loss will kick in and
close the trade for you at 30 pips down. But if the market rises, the stop loss will rise with it.
So when the market is 20 pips in your favor, your stop will have moved to 30 pips below that. If the market then falls and the price hits the
stop, the EA would get you out with a loss of just 10 pips.
If the market rises to 40, the stop moves up to 10 above zero. You then have a guaranteed profit of 10 pips. In fact as soon as the market
rises by the same number of pips as your trailing stop (in this case 30) you cannot lose.
Sure you could monitor the markets and operate this strategy yourself, but there is a risk of you failing to make your exit at the right
moment and taking a greater loss than you planned, or having to exit a trade while the market is still rising because you have to sleep or
whatever. So as long as you can leave MT4 running, an EA on autopilot relieves a lot of the pressure that would otherwise be on you in this
situation.
The volatility of the market is the main factor in deciding where to set the trailing stop. You do not want to take a heavy loss but at the
same time you do not want to have the stop triggered by random fluctuations in the market. A forex trailing stop that is too close to the
starting price will be triggered so often that you could end up making constant small losses.
from the name: a stop loss that moves according to the current prices on the forex market. And a stop loss, of course, is a marker you set
that will cause your MT4 expert advisor autopilot software (EA) to exit the trade when it goes against you to prevent you having any risk of
a large loss.
But there are several things to be taken into account when you consider how to use the trailing stop. It is a little like a ratchet in that
it can move up but not down. When you move into profit, it follows behind, moving up by the same number of pips that the market moved. But if
the market falls, it stays where it is. So the market can rise and rise and you go on making more profit, but when it falls just a little
way, the stop loss comes into effect and exits your trade with whatever profit or loss you made up until that point.
To give an example, you open a trade to go long. Of course at the moment of opening you are at point zero: 0 pips profit or loss. Let's say
you set your trailing stop at minus 30 pips. If you are unlucky and the forex market just falls and falls, the stop loss will kick in and
close the trade for you at 30 pips down. But if the market rises, the stop loss will rise with it.
So when the market is 20 pips in your favor, your stop will have moved to 30 pips below that. If the market then falls and the price hits the
stop, the EA would get you out with a loss of just 10 pips.
If the market rises to 40, the stop moves up to 10 above zero. You then have a guaranteed profit of 10 pips. In fact as soon as the market
rises by the same number of pips as your trailing stop (in this case 30) you cannot lose.
Sure you could monitor the markets and operate this strategy yourself, but there is a risk of you failing to make your exit at the right
moment and taking a greater loss than you planned, or having to exit a trade while the market is still rising because you have to sleep or
whatever. So as long as you can leave MT4 running, an EA on autopilot relieves a lot of the pressure that would otherwise be on you in this
situation.
The volatility of the market is the main factor in deciding where to set the trailing stop. You do not want to take a heavy loss but at the
same time you do not want to have the stop triggered by random fluctuations in the market. A forex trailing stop that is too close to the
starting price will be triggered so often that you could end up making constant small losses.
FX Trading Software - Do You Need It?
FX trading software programs include the automated systems or robots that help you to trade online from the comfort of your own home. They are very popular but are they necessary? What do they really do?
Many people are unwilling to trust their trading decisions to a computer program, especially at first. It is true that it is wise to be cautious in the beginning, because there is always the chance that you will misunderstand something. But you can almost always use the software in demo mode until you are familiar with all of its settings and features.
The main point to remember is that you are controlling the software, not the other way around. You tell it what to do by setting it up in a way that follows your preferred system.
An automated forex trading system can do many things that you cannot. For example, it can trade 24 hours a day. As the currency markets are international and operate in almost every time zone, they are never closed for business from Monday morning in Australia to Friday afternoon in New York. FX trading software can exploit these very long hours and watch the markets all day and all night, never missing a possible trade.
If you join a retail forex trading company online, you will almost certainly be offered software so that you can operate your account from your own computer. This takes the pressure off the company's website. You can use this type of software to check the currency values and operate your account. This is different than a robot, because you are making the trading decisions and simply using the software to put them into effect.
Automated forex robots, by contrast, are not linked in to one particular broker or company. They run on a trading platform and offer historical market analysis and trend data as well as real time currency values. This data can be extremely valuable for identifying patterns. You can look back to see how currency values fluctuated around the time of certain major events such as an epidemic or an election. Even something like an international sports event can affect national confidence and so cause a change in currency values.
As you become more skilled in interpreting the market trends, you will use all of this data to help improve the success of your trades. Of course there is no guarantee that the currency markets will always behave as they did in the past but any expert will tell you that you cannot ignore the historical data. To put it simply, getting information like this from your FX trading software can help you to make more money from your forex trading.
Many people are unwilling to trust their trading decisions to a computer program, especially at first. It is true that it is wise to be cautious in the beginning, because there is always the chance that you will misunderstand something. But you can almost always use the software in demo mode until you are familiar with all of its settings and features.
The main point to remember is that you are controlling the software, not the other way around. You tell it what to do by setting it up in a way that follows your preferred system.
An automated forex trading system can do many things that you cannot. For example, it can trade 24 hours a day. As the currency markets are international and operate in almost every time zone, they are never closed for business from Monday morning in Australia to Friday afternoon in New York. FX trading software can exploit these very long hours and watch the markets all day and all night, never missing a possible trade.
If you join a retail forex trading company online, you will almost certainly be offered software so that you can operate your account from your own computer. This takes the pressure off the company's website. You can use this type of software to check the currency values and operate your account. This is different than a robot, because you are making the trading decisions and simply using the software to put them into effect.
Automated forex robots, by contrast, are not linked in to one particular broker or company. They run on a trading platform and offer historical market analysis and trend data as well as real time currency values. This data can be extremely valuable for identifying patterns. You can look back to see how currency values fluctuated around the time of certain major events such as an epidemic or an election. Even something like an international sports event can affect national confidence and so cause a change in currency values.
As you become more skilled in interpreting the market trends, you will use all of this data to help improve the success of your trades. Of course there is no guarantee that the currency markets will always behave as they did in the past but any expert will tell you that you cannot ignore the historical data. To put it simply, getting information like this from your FX trading software can help you to make more money from your forex trading.
What Is Currency Trading In The Forex Market
What is currency trading? It is something that sounds quite simple and many people speak about it as if the meaning is obvious, but not everybody knows what it really is and how it works.
Currency trading is also known as forex trading. Forex (sometimes written FX) is short for foreign exchange.
You probably know that the value of each country's currency goes up and down according to how well the country is doing compared with others. So for example, the value of the Canadian dollar against the US dollar will be higher or lower depending on reports of the Canadian and US economies. The same thing happens with all other currencies.
Currency values are constantly changing, so a trader can easily deal in them to make a profit. He or she can buy when a currency is worth less and sell when it is worth more, just as a stock trader would do.
The difference is that where stocks have only one value, their value on the stock exchange, a currency has different values compared with each of the other currencies. So for example the Canadian dollar might rise in relation to the US dollar but at the same time it could fall in relation to the Japanese Yen, if the Yen rose even higher.
Principles Of Currency Trading
Most forex market trading is margin trading. This means that instead of buying the whole value of the currency, you can invest in only a percentage. This allows a small deposit to control larger amounts. The principle of it is that a currency is very unlikely to change in value by more than a certain percentage of its value.
To simplify trading, currencies are traded in what is called pips, or price interest point system. These are the units of trading. They give a standard for comparison as the currency values change relative to each other. So you will hear traders talk of a currency gaining or falling by a certain number of pips, rather than talking in dollar terms.
How To Make A Profit With Currency Trading
In order to make a profit with currency trading, you need to have some idea of the likely movements of currencies. This knowledge can be gained by analyzing the markets or by applying a system that experienced traders have figured out from their own analysis.
If you are a beginner it is probably better to be receiving your information and analysis from somebody with more experience at first. You can pick up a lot of different systems online and watch how each one does, or you can work with an automated system. These are known as expert advisers or forex robots, and they will make the trades for you when the time is right according to the settings that you have programmed.
If you use an automated forex system you do not need to know what is currency trading in so much detail, although as with all things, the more you know the more success you are likely to have.
Currency trading is also known as forex trading. Forex (sometimes written FX) is short for foreign exchange.
You probably know that the value of each country's currency goes up and down according to how well the country is doing compared with others. So for example, the value of the Canadian dollar against the US dollar will be higher or lower depending on reports of the Canadian and US economies. The same thing happens with all other currencies.
Currency values are constantly changing, so a trader can easily deal in them to make a profit. He or she can buy when a currency is worth less and sell when it is worth more, just as a stock trader would do.
The difference is that where stocks have only one value, their value on the stock exchange, a currency has different values compared with each of the other currencies. So for example the Canadian dollar might rise in relation to the US dollar but at the same time it could fall in relation to the Japanese Yen, if the Yen rose even higher.
Principles Of Currency Trading
Most forex market trading is margin trading. This means that instead of buying the whole value of the currency, you can invest in only a percentage. This allows a small deposit to control larger amounts. The principle of it is that a currency is very unlikely to change in value by more than a certain percentage of its value.
To simplify trading, currencies are traded in what is called pips, or price interest point system. These are the units of trading. They give a standard for comparison as the currency values change relative to each other. So you will hear traders talk of a currency gaining or falling by a certain number of pips, rather than talking in dollar terms.
How To Make A Profit With Currency Trading
In order to make a profit with currency trading, you need to have some idea of the likely movements of currencies. This knowledge can be gained by analyzing the markets or by applying a system that experienced traders have figured out from their own analysis.
If you are a beginner it is probably better to be receiving your information and analysis from somebody with more experience at first. You can pick up a lot of different systems online and watch how each one does, or you can work with an automated system. These are known as expert advisers or forex robots, and they will make the trades for you when the time is right according to the settings that you have programmed.
If you use an automated forex system you do not need to know what is currency trading in so much detail, although as with all things, the more you know the more success you are likely to have.
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