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Currency Trading: Uderstanding the Basics of Currency Trading

January 14, 2012 By admin

Investors and traders around the world are looking to the Forex market as a new speculation opportunity. But, how are transactions conducted in the Forex market? Or, what are the basics of Forex Trading? Before adventuring in the Forex market we need to make sure we understand the basics, otherwise we will find ourselves lost where we less expected. This is what this article is aimed to, to understand the basics of currency trading. 

 

What is traded in the Forex market?

 

The instrument traded by Forex traders and investors are currency pairs. A currency pair is the exchange rate of one currency over another.  The most traded currency pairs are:

 

EUR/USD: Euro

 

GBP/USD: Pound 

 

USD/CAD: Canadian dollar

 

USD/JPY: Yen

 

USD/CHF: Swiss franc

 

AUD/USD: Aussie

 

These currency pairs generate up to 85% of the overall volume generated in the Forex market.

 

So, for instance, if a trader goes long or buys the Euro, she or he is simultaneously buying the EUR and selling the USD. If the same trader goes short or sells the Aussie, she or he is simultaneously selling the AUD and buying the USD.

 

The first currency of each currency pair is referred as the base currency, while second currency is referred as the counter or quote currency.

Each currency pair is expressed in units of the counter currency needed to get one unit of the base currency.

If the price or quote of the EUR/USD is 1.2545, it means that 1.2545 US dollars are needed to get one EUR.

 

Bid/Ask Spread

 

All currency pairs are commonly quoted with a bid and ask price. The bid (always lower than the ask) is the price your broker is willing to buy at, thus the trader should sell at this price. The ask is the price your broker is willing to sell at, thus the trader should buy at this price.

 

EUR/USD 1.2545/48 or 1.2545/8

 

The bid price is 1.2545

 

The ask price is 1.2548

 

A Pip

 

A pip is the minimum incremental move a currency pair can make.  A pip stands for price interest point. A move in the EUR/USD from 1.2545 to 1.2560 equals 15 pips. And a move in the USD/JPY from 112.05 to 113.10 equals 105 pips.

 

Margin Trading (leverage)

 

In contrast with other financial markets where you require the full deposit of the amount traded, in the Forex market you require only a margin deposit. The rest will be granted by your broker.

 

The leverage provided by some brokers goes up to 400:1. This means that you require only 1/400 or .25% in balance to open a position (plus the floating gains/losses.) Most brokers offer 100:1, where every trader requires 1% in balance to open a position.

 

The standard lot size in the Forex market is 0,000 USD.

 

For instance, a trader wants to get long one lot in EUR/USD and he or she is using 100:1 leverage.

 

To open such position, he or she requires 1% in balance or ,000 USD.

 

Of course it is not advisable to open a position with such limited funds in our trading balance.  If the trade goes against our trader, the position is to be closed by the broker. This takes us to our next important term.

 

Margin Call

 

A margin call occurs when the balance of the trading account falls below the maintenance margin (capital required to open one position, 1% when the leverage used is 100:1, 2% when leverage used is 50:1, and so on.) At this moment, the broker sells off (or buys back in the case of short positions) all your trades, leaving the trader “theoretically” with the maintenance margin.

 

Most of the time margin calls occur when money management is not properly applied.

 

How are the mechanics of a Forex trade?

 

The trader, after an extensive analysis, decides there is a higher probability of the British pound to go up. He or she decides to go long risking 30 pips and having a target (reward) of 60 pips. If the market goes against our trader he/she will lose 30 pips, on the other hand, if the market goes in the intended way, he or she will gain 60 pips. The actual quote for the pound is 1.8524/27, 4 pips spread. Our trader gets long at 1.8530 (ask). By the time the market gets to either our target (called take profit order) or our risk point (called stop loss level) we will have to sell it at the bid price (the price our broker is willing to buy our position back.) In order to make 40 pips, our take profit level should be placed at 1.8590 (bid price.) If our target gets hit, the market ran 64 pips (60 pips plus the 4 pip spread.) If our stop loss level is hit, the market ran 30 pips against us.

 

It’s very important to understand every aspect of trading. Start first from the very basic concepts, then move on to more complex issues such as Forex trading systems, trading psychology, trade and risk management, and so on. And make sure you master every single aspect before adventuring in a live trading account.

Filed Under: Forex Strategies Tagged With: Basics, Currency, Trading, Uderstanding

The Best Forex Trading Robots – How Can I Find the Best One to Make Easy Profits For Me?

January 12, 2012 By admin

The fact is that the best Forex trading robots may not be what it seems easy to find. The most of developers advertise their robots as the best Forex trading robot in their website and post testimonials about them.

 

These Forex robots lose more money than their gain. They don’t live up to the qualities that are listed in their website like they can predict the trend and path of the Forex market, trade with accuracy of 90% or more, double your investment and gain more profit in one month, and trade with less than 1% drawback or loss. With these advertisements it is easy to fall for it especially if you are new to the business. Having these characteristics for only 0 or so could be a great deal…only if it is true for no one has truly done a review on them nor evaluated, examined or run an independent test on the robots to see if the claims on their website are true.

 

Among all the best forex trading robots, one really stood out. This is the one that every trader should have. It is free and is being used by wise and seasoned traders based from their experience and inspired by the experience of other traders as well. It has proven to be reliable based on its track record that’s been running for almost a quarter of a century now. The system that he has developed is simple and follows only one rule which is to buy a new 4 week high currency, hold it, wait for a 4 week low to hit the market and when it does, trade the currency that you have been holding. Repeat this cycle reversing the 4 week highs and 4 week lows. Always keep an open position in the market.

 

It may look very easy but is stands on a very sound Forex market principle. It is essentially a breakout in the trading system and all the major currency trends start from a new market high and continue from it. The market always trend in long terms so you will be able to stay in and be on every major trend with this principle. Traders around the world use this principle to make large and long-term gains. This is called the 4 week rule.

 

The best Forex trading robots may not be the best. It may not deliver what it claims and you can lose instead of gain profit. The best Forex trading robots may not be run by software but by simple principles that is being run by humans.

Filed Under: Forex Strategies Tagged With: Best, Easy, Find, Forex, Profits, Robots, Trading

Trading Online – The New Way To Make Serious Money

January 10, 2012 By admin

Much of the commodities market has been converted to the virtual world, which means that now, even the casual consumer can turn his hours into gold by logging on and investing. Mothers, daughters, sons and fathers – everyone has become the part time or even full time investor and it is time that you get on the bandwagon and start to invest online. The best? Well in many people’s opinion, especially in these troubled times, we have to turn to that which stills make our world go round, which is the Forex market – trading in currencies from all over the world. Market reports have outlined that the investment volumes that have followed the Forex market has doubled of late, with more cash injections being introduced and more brokerage accounts open.

The daily turnover rate has shot past the trillion dollar a day mark and we are still counting. It sounds attractive because it is and before you make the jump to trading online, you should at least know the nature of the Forex market and the commodity that you are trading in. Trading in money means that you are trading in an environment that is quite predictable. Analysts have place it down to the herd or hive mentality when individuals get together. When one person reacts to a situation, it may be different from time to time, but when you group them together to form into a mob, then you get general patterns of prediction. This is what drives the Forex market and this is what makes it a very popular way to make some money. In these terms, investors always look to predict the market one or two steps in front and to do so you need to understand the market psychology which is driven by mob rationale. As countries and entire continents react to a disaster or economic recession, their responses fall into compartments of reactions that investors use to say which currency will fall and which currency will rise.

That’s is how money is made in Forex on a daily basis and you can be a part of this too. Also, the Forex market is also entirely liquid, which means it does not suffer from time delays like other commodities market, which means decisions you make get relayed to the broker and relayed to the market in real time. Opportunities can be pounced on and fatal oncoming bad traffic can be avoided with quick reaction time to your phones. Its all down to studying the price charts and sticking your guns to certain currency pairs. Trading online was turned from casual trading to a very serious ballgame that many people are taking part in.

You can be a part of this too and all you need is an internet account. Look up for some online brokerage companies and open an account. Within moments you will be set up with a systems software and a direct link to the Forex market. Make the right decisions and you could be rolling in the money.

Filed Under: Forex Strategies Tagged With: Money, Online, Serious, Trading

What Do You Need To Know About Forex Brokers To Start Forex Trading Today?

January 8, 2012 By admin

A common question asked by retail currency traders who are new to the forex trading business is that of the commission charged for trading. Whilst there are some Forex brokers that to charge a small commission on the trade, a common practice amongst the forex brokers is to charge what is known as the spread, which is where a forex broker makes his money.


A pip is the smallest price increment, usually the third or fourth decimal place after the unit price. For example, a change from 1.9456 to 1.9458 is a change of two pips. The spread can be described as the difference between what is known as the asked price and paid the price, which refers to the price at which a particular currency is bought or sold at any given time. So if you’re given a quote of 1.9456 as a sale price or bid price and 1.9460 as the buy price or ask price, that is a difference of four pips or a four pips spread.


When you execute the trade, you will start off with a deficit of four pips which is the forex brokers spread. Therefore, each time you trade, you will need to make up usually between two and five pips in order to start going into profits and making money in Forex.


Some people evaluate the broker based on the spreads that they charging across a particular pair or a selection of currency pairs. It is important to check whether the spread is variable fixed because during particularly volatile times in the market, for example important economic announcements/news a variable spread will make it near to impossible to make money during these times.


A forex broker may advertise itself as being under the auspices of a large bank, institution or lending organisation. This is because of the large amounts of money that are involved in trading on the forex markets. If the forex broker is in America, the Commodity Futures Trading Commission is the regulatory body dealing with merchant registration.


The author finds that in addition to evaluating the spread offered and whether or not it is fixed or variable, bearing in mind that one should be finding trades that way outperform what is required to be spread anyway, it is useful also to test a demo account, so that the platform that the broker offers, it additional features and functions, the speed of execution and other factors can be gotten used to. Two weeks should be sufficient time to evaluate the platform.


As stated, and majority of forex brokers do not charge a commission but instead learn from buying and selling, interest on deposits, converting and holding currencies and fees for overnight rollover, i.e. they are active as currency dealers, and this is where their renumeration comes from.


The forex dealer broker acts as a middleman between the retail investor and the interbank markets. As previously stated, the spread is where the broker “makes his bones”. There is arguments amidst disgruntled forex traders on the markets that some Forex brokers are Forex scams and do not operate in a fair manner, so it is important to choose wisely.


Because Forex operates 24 hours a day, your broker should offer 24 hour telephone support. Telephone support is important because the Internet is not completely fail proof and therefore if there is a problem with either your platform or your system and you need to take action on the trade that is currently open, it’s important that you are able to use the telephone brokering to manage your trade in an emergency.

Filed Under: Forex Strategies Tagged With: About, Brokers, Forex, Know, Need, start, Today, Trading

Forex Trading Online

January 6, 2012 By admin

The internet is indeed a gift of today’s advanced technology. It has changed the communication industry and now it is being used for different kinds of tasks. It seems that everything is possible through the internet. Before, the only way to trade in the Forex market is to be there physically. But now, you can trade even in your own home or in the office as long as there is an internet connection.

If you think that only the intelligent individuals are involved Forex trading, you’re wrong because at present, average individuals can already trade in the market, provided they have adequate capital. The behavior of different currencies in the Forex market can be compared to the movements of regular stock. The economies of most countries around the globe are fluctuating. Some currencies are highly priced but there are also currencies which have very low values. The Forex market is alive twenty four hours each day and so you can do your transactions at any time of the day and night. If you have an internet connection at home, you can monitor the Forex market trends and other vital info. Don’t worry if you’re not very familiar with Forex trading because you can find loads of information on the internet. Gather all the possible information you can get about Forex trading; you must read, comprehend, and learn from the information sources because that’s one way to attain success. With the internet in your home or in the office, you can monitor all the real time market information without much difficulty.

Forex trading also have mechanics. For you to understand the trade’s mechanics, you will need some helpful tools. Before you invest in the Forex market, you have to ensure that you’ve already developed the right trading skills to prevent possible loses.

There are some Forex firms that help new traders in becoming more skilled in Forex trading by giving free demos, guidance, and helpful Forex news. You can even start investing in the Forex market with only 0. Starters often feel uncomfortable but as days and months pass, you can get the hang of it. With the aid of the internet, it’s much easier to learn about the current Forex market trends. You can also rely on a good Forex broker especially if you’re new in Forex trading. Brokers can help you in developing trading strategies or in finding efficient trading systems. Aside from that, a good broker can also help you with fundamental and technical analysis of relevant data.

You too can earn promising rewards if you’re willing to assume some risks in Forex trading. However, it is vital that you minimize such risks so as not to lose your investment. Make use of all the possible online tools so that you can make educated Forex decisions.

What are your needs? You must be able to identify your needs so that you can choose a god trading system or perhaps a reliable broker. Take your time when researching about the latest trading systems offered in the market. Don’t forget to check the background of the broker as well.

Forex trading online can be easily carried out and you can expect more profits to roll in once you properly use the tools mentioned earlier. As a trader, you need to be disciplined and you must be very careful with all your trading decisions; being hasty will not get you anywhere.


Filed Under: Forex Strategies Tagged With: Forex, Online, Trading

Online Forex Trading Platform – Strategies For Choosing A Best Online Forex Trading Platform In Less Than 30 Minutes

January 2, 2012 By admin

Online Forex Trading Platform

Let me start with this analogy, before making any major investment in your life like buying a house or a new car

You first have to do research. You can also hire a professional to do research for you in order to make an informed investment decision. What is the forex broker? A forex broker is a company that buy/sell trades for orders according to the traders decisions and charge commissions for their service.

My seven tips for choosing a best online forex broker.

1: I am a big fan of Metatrader 4 forex trading platforms because 65% of online companies proves this types.

Metatrader platforms gives traders a choice to either place their trades automatically using their own preferred expect advisors better known as trading robots or trade place their trades manually.

2: Use a broker which is registered with NFA better known as national futures association or any regulating body in the country that your broker `s main offices are placed. This is very important as you want to do business with a trust worthy company.You do not want to woke up one day and find that your broker has filed for bankruptcy. Online Forex Trading Platform

3:Check better business bureau to see if any complain has been filed against your forex platform you are busy reviewing.If any check how well or bad did the broker handle the resolution.

4:Trust with your broker is always establish over time,therefore use common sense.It is wise to deposit a small amount of money at first.You will increase your investment capital over time if you treated professionally.

5:Is your broker offer both demo account and real trading account? If he only offers only real account look for another broker which is offering both. The advantage of a demo account is that you will use the trading platform for free while learning how to trade without risking your hard earned money.You will use this also when testing a new trading system you just bought or developed.

6:do you receive legitimate correspondence in the form of e-mails from your broker?Are your concerns and questions handle approximately?

7:is your broker offering a fixed or variable spread? What is the spread during volatile market times? For clarity a spread is a price difference between bid and ask price.

Lastly knowing the right questions to ask and doing the necessary research will increase your chances of choosing the right broker for you. Also check out forex broker reviews sites. I hope the article has been useful to you. Those who want to short cut the search you may click here for popular forex brokers I personally use. Online Forex Trading Platform

Filed Under: Forex Strategies Tagged With: Best, Choosing, Forex, Less, Minutes, Online, Platform, strategies, than, Trading

What are the Best Forex Trading Strategies?

December 21, 2011 By admin

Determining which forex trading strategy is best for you can be something of a pain staking process if you are new to the world of financial market trading and investing. There are a few questions you will want to answer before you can attempt to find the best forex trading strategy for you. First off, you will need to determine how much extra money you have available to trade with; this must be money you won’t miss too much if you do lose it all. Next, you must determine how involved you want to be with the market, if you are aspiring to be a day trader than you will want a different trading strategy than if you want to be a longer-term swing trader. Finally, you will need to determine what your long term goals as a forex trader are.

How much money you have available to trade with will directly impact the type of forex trading strategy you decide to implement. Traders with large amounts of money can withstand bigger draw-downs in their trading accounts than traders with smaller sums of money. Thus, traders with larger amounts of money might choose to implement shorter-term trading strategies or perhaps day trading strategies. Traders with smaller amounts of available money to trade with will have a better shot at long-term trading success if they implement longer-term trading strategies. Overall, the best forex trading strategies are those that allow you to set your trade and walk away, which typically means you are holding trades for multiple days or weeks rather than day trading. Setting your trade and walking away is important because you are at your most objective when you are not in any trades, therefore messing around with your trading parameters after the trade is live will decrease your odds of profiting long term.

Your level of involvement with the forex market is the next big issue you will need to address before choosing a forex trading strategy. If you are planning on day trading you may want to look into special day trading training that is geared for lower-time frame charts. If you want less involvement with the market and maybe only wish to look at your charts once a day or a few times a week, you will want a forex trading strategy that is meant for “end of day” prices. This means you look at the charts at the close of the trading day and make your trading decisions at that time, instead of constantly analyzing the the market throughout the day.

Last but certainly not least, you need to know what your long term goals are for trading the forex market. You cannot pick the best forex trading strategy for you if you do not know what you want out of the market. Some people only want to augment their income through forex trading, while others want to become full-time traders and make trading their “job”. Whatever your goals are as a trader, make sure you have them defined before you start trading with real money, this way you can more easily determine what the best forex trading strategies for you are.

Filed Under: Forex Strategies Tagged With: Best, Forex, strategies, Trading

Why Beginners Should Invest in the Best Forex System That They Can Afford

December 15, 2011 By admin

The foreign exchange market is a vital part of the economy as it is a system of exchanging one currency for another to allow international trade. Large corporations, banks, and other financial institutions are all active participants in the foreign exchange market and they all use a forex trading to regulate the exchange of currencies in the industry. But forex is not limited to large corporations; individuals can make money by trading in the foreign exchange market as well. If you want to generate some cash by engaging in the foreign exchange market but you have no experience, then it is highly recommended that you look for the best forex system in the market.

If you are a novice forex trader, the first thing you should do is to learn about the basics of the foreign exchange market and what’s involved in the trading process. Understanding the different aspects of the trade and how it works will help you in choosing a forex software product that best suits you. If possible, get a crash course that would teach you everything you need to know about the foreign exchange market. You cannot get into something that you don’t understand, so you have to know how the trade works.

The key to success in forex is predicting which way the currency prices will trend in. If you can get a handle on this, then you can become quite wealthy trading foreign currencies. However, what most beginners aren’t aware of is that predicting trends without the use of software is incredibly difficult. Without the help of software, you are just guessing. And successful forex traders don’t get that way by just guessing. What they do is make confident trading decisions that are much more likely to be profitable.

And how can they be so confident and profitable with their trading? With the use of the best forex system that they can afford. They don’t make guesses. They use accurate forex software that analyzes past and present currency prices and provides them with a report on which way the currency prices should be trending. No guessing involved. Just statistical data to back up the predictions made my a reliable and accurate forex software.

It’s a catch-22 for beginners. They are generally looking for ways to make additional money and so they tend not to have “extra” money to spend on purchasing forex software products. So they choose not to buy these sometimes expensive tools in order to minimize the money they are risking in being involved in forex. But what they fail to realize is that this decision is what will ultimately cause them to lose all of the money they have invested in their forex trading accounts.

Without years of schooling, the average person just isn’t able to correctly predict which way the currencies will trend. Successful forex traders usually learn this the hard way. But once they have their “aha” moment, they will see how important having the best forex system is to making money trading foreign currencies.

Filed Under: Forex Strategies Tagged With: Afford, Beginners, Best, Forex, invest, Should, System, They

Forex Trading Online

December 13, 2011 By admin

Forex Trading Online

The internet is indeed a gift of today’s advanced technology. It has changed the communication industry and now it is being used for different kinds of tasks. It seems that everything is possible through the internet. Before, the only way to trade in the Forex market is to be there physically. But now, you can trade even in your own home or in the office as long as there is an internet connection.

If you think that only the intelligent individuals are involved Forex trading, you’re wrong because at present, average individuals can already trade in the market, provided they have adequate capital. The behavior of different currencies in the Forex market can be compared to the movements of regular stock. The economies of most countries around the globe are fluctuating. Some currencies are highly priced but there are also currencies which have very low values. The Forex market is alive twenty four hours each day and so you can do your transactions at any time of the day and night. If you have an internet connection at home, you can monitor the Forex market trends and other vital info. Don’t worry if you’re not very familiar with Forex trading because you can find loads of information on the internet. Gather all the possible information you can get about Forex trading; you must read, comprehend, and learn from the information sources because that’s one way to attain success. With the internet in your home or in the office, you can monitor all the real time market information without much difficulty.

Forex trading also have mechanics. For you to understand the trade’s mechanics, you will need some helpful tools. Before you invest in the Forex market, you have to ensure that you’ve already developed the right trading skills to prevent possible loses.

There are some Forex firms that help new traders in becoming more skilled in Forex trading by giving free demos, guidance, and helpful Forex news. You can even start investing in the Forex market with only 0. Starters often feel uncomfortable but as days and months pass, you can get the hang of it. With the aid of the internet, it’s much easier to learn about the current Forex market trends. You can also rely on a good Forex broker especially if you’re new in Forex trading. Brokers can help you in developing trading strategies or in finding efficient trading systems. Aside from that, a good broker can also help you with fundamental and technical analysis of relevant data.

You too can earn promising rewards if you’re willing to assume some risks in Forex trading. However, it is vital that you minimize such risks so as not to lose your investment. Make use of all the possible online tools so that you can make educated Forex decisions.

What are your needs? You must be able to identify your needs so that you can choose a god trading system or perhaps a reliable broker. Take your time when researching about the latest trading systems offered in the market. Don’t forget to check the background of the broker as well.

Forex trading online can be easily carried out and you can expect more profits to roll in once you properly use the tools mentioned earlier. As a trader, you need to be disciplined and you must be very careful with all your trading decisions; being hasty will not get you anywhere.

Click Here For Information About Forex & Forex Software.

Filed Under: Forex Strategies Tagged With: Forex, Online, Trading

Reasons To Use Regulated Forex Brokers

December 11, 2011 By admin

Are you considering a career as a regulated Forex broker? Forex brokers work in the ever changing field of foreign currency, making millions for their customers. They also earn quite a bit of money in commissions for themselves, betting on which countries exchange rates are going to rise or fall in the future.


Who Regulates Forex Brokers?


Since Forex brokers work throughout the world in numerous different countries and cities, no single agency regulates all Forex brokers. Instead, brokers are regulated through the local brokerage regulation agency in their respective home countries. Hence, U.S. Forex brokers are regulated by the Securities Exchange Commission (SEC), the Federal Reserve System, the Federal Deposit Insurance Corporation, or the Office of the Comptroller of that currency.


Forex brokers located in Japan are regulated through the Financial Services Agency, while Forex brokers in Iraq are regulated by the Iraq Securities Commission.


What Rules Cover Forex Traders?


Trading on foreign exchanges is very different than trading on the NYSE or the Nasdaq. The rules for Forex trading are made by the National Futures Association. The majority of trades involve the major currencies: The American, Australian, and Canadian dollars; The Euro, British Pound, the Japanese Yen, and so on.


National Futures Association


Regulations such as these are set forth in the National Futures Association Retail Off Exchange Foreign Currency Rules. Included in these rules is information about assessments as well as dues, requirements for managing a Forex account, obligations of assignees, and an assortment of additional situations that arise throughout the course of trading.


The online website of the National Futures Association carries a wealth of information for the starting Forex broker as well as Forex Investor. There you will learn rules that govern Forex traders; Forex investor alerts; Forex requirements for reporting, notices to Forex members, notice of judgments interpreting the rules, as well as other resources for individuals who wish to learn more about Forex.


The website also furnishes links to resources for electronic filings needed to establish and maintain a Forex brokerage: promotional materials, exemptions, Forex reporting, complaints, and the annual questionnaire.


Be Wary of Unregulated Brokers


An increasingly pervasive problem that investors need to aware of is Forex fraud. The Commodity Futures Trading Commission approximates that customers have lost over 5 million dollars in fraudulent Forex schemes.


For Additional Information


If you are looking to learn more about Forex that can be found on the National Futures Association website, you can find out more Forex trading information by a self study program or by taking a course.

Filed Under: Forex Strategies Tagged With: Brokers, Forex, Reasons, Regulated
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