iShares are Expanding Single-Country ETF Offerings

iShares has a long list of single-country exchange traded funds (ETFs). Now the provider is getting ready to expand their popular lineup even further. The proposed funds cover everything from the United States to the Philippines.

More single-country ETFs are on the way for iShares, which already touts an impressive list of single-country ETFs. Cinthia Murphy for Index Universe reports that the latest group of proposed funds covers a some areas that are already backed by ETFs, along with some first-of-their-kind funds.

The ETFs are:

iShares MSCI USA Index Fund: The U.S. fund is a diversified ETF that will essentially be a mid- and large-cap portfolio that tracks an index investing in securities from companies in the top 85% of the domestic space by market capitalization.

iShares MSCI Brazil Small Cap Index Fund: iShares’ take on Brazil’s small-cap market is perhaps an attempt to replicate the success Van Eck has had in that segment with its version of a Brazil small cap fund, Market Vectors Brazil Small-Cap (NYSEArca: BRF).

iShares MSCI Egypt Capped Investable Market Index Fund: The Egypt ETF will track an index of 41 companies, with most sector allocations dedicated to financials, industrials and telecommunications services.

iShares MSCI Ireland Capped Investable Market Index Fund: The Ireland fund’s benchmark held 21 names as of October, and focused primarily on consumer staples, financials and materials.

iShares MSCI Russia Capped Index Fund: This will track an index that is a variation of the MSCI Russia Index, the MSCI Russia 25/50 Index. While the new fund will invest in the top 85% of Russia-listed companies by market capitalization, it will also take into account investment diversification requirements that apply to regulated investment companies (RICs), under U.S. law. This fund would go head-to-head with the Market Vectors Russia (NYSEArca: RSX).

iShares MSCI Philippines Investable Market Index Fund: The Philippines ETF will replicate an index of 28 companies, mostly in utilities, telecommunications and financials.

The debuting ETFs focused on Ireland, Egypt and the Philippines could be the first country-specific funds available to investors for each of those economies .

Know Your Forex Terms – The PIP

If you plan to go into Forex trading and learn Forex basics, one of the first Forex terms you will be introduced to will be the Forex Pip. As you get more involved in Forex currency trading, you will continually encounter it, so you will essentially have to know and understand this important term, and many others like it, in order to learn how to trade Forex successfully.

PIP is the acronym for Percentage In Point, or Price Interest Point, which is used to measure profits and losses in Forex Trading. This is comparable to the term used in the stock market referred as a “point”. Basically, the PIP is the unit of measurement for the smallest value (price) change of a currency.

The PIP serves as an easy alternative for measuring the rise of fall foreign exchange currency values in the form of a percentage number. Forex spreads, or the difference between the bid and ask price (buy and sell quote), is measured in PIP’s, and is the major cost of Foreign currency trading. This amount is also used to pay the broker facilitating the trade. A lower spread means a lower the payment for the broker, and the trader gets to keep more profits.

The PIP is used in currency trading since the values in foreign exchange is not based on a universal currency, and its monetary value changes accordingly to the currencies involved with each individual trade. The dollar (USD), even though considered to be the most widely traded currency, is not and cannot be involved in all currency trades. For example, if there is trading of two common currency pairs such as the EUR/GBP, the profit and loss margins cannot be measured against the USD, simply because it does not make sense. Thus, Forex trade utilizes the PIP to simplify matters.

Most of the major Forex currencies are marked or quoted to the fourth decimal point, except the Japanese Yen. As an example, let’s assume you are quoted a bid for the EUR/USD quoted at 1.0090 and the ask price is 1.0095, the spread is 0.0005 or 5 PIP’s. In percentage terms, a PIP is 0.01% of a lot. Take for example the lot size of $100,000, 1 PIP is then worth $10. This is the value of PIP’s when using the USD is used as the quote currency.

Trading in one Forex pair, such as the EUR/USD is advisable if you’re a beginner. As you get more adept doing this, you’ll get a clearer picture of how the PIP measures your gain or losses.

Source: Bart Icles

Advantages of CFD Trading For Traders

CFD means Contract for Difference.

There are various advantages of CFD Trading for traders.

Main benefits of this Trading are:

1. Trading on Margin: By using margins, CFD Trading gives an opportunity to the individuals involved to hold more value than they actually contribute. Contract for Difference allows the traders to get higher returns on the investment.

2. No purchase of assets is involved: In Contract for Difference Trading, traders are not required to purchase the assets. This trading involves an agreement between the broker and the trader. This agreement is related to the value of the asset and no purchasing is done.

3. Stamp Duty not required: In case of CFD Trading, stamp duty is not required. This is because there is no purchase involved.

4. Traders get Dividend: Another advantage for traders involved in this trading is that time to time they earn relevant dividends as well. This is possible only when you hold CFD position in an organisation at the time of the dividend pay out. When the stock of the product or the company will rise, the traders involved will also get benefits from it. With this principle, CFD gives trader an opportunity to earn dividend.

5. Interest gets credited: Brokerage firm pays interest to the trader on the money tied up in short position CFD.

6. Short shares ability: If traders are able to predict the movement of the shares i.e. that the share’s value will go down and the same thing happens, traders earn money. It is simple In case of CFD as in this situation; the trader has not actually purchased any shares. The trader earns money even when the share’s value goes down as they predicted something and it actually happened.

7. After hour facility: There are several CFD companies that allow its traders to actually purchase Contract for Difference even after the time is over. This plays a very important role for people who are in this trading for second source of income.

Best Forex Indicators

Forex is defined as the foreign exchange market where professionals trade currencies in an attempt to make money. Many traders, most notably George Soros, have made a ton of money in this way. By exploiting the fluctuations in the price of currencies relative to one another, traders can effectively buy low and sell high many times over and make money on the difference.

While Forex trading can be a highly risky proposition, there are certain fundamental things about the market as a whole that help Forex traders try to predict what the price of currencies will do. These are called indicators, and while they don’t predict the future 100% of the time, many times these events play out as expected and are a big help to the trader.

One such indicator is the Simple Moving Average (SMA). This indicator was developed early on, and it’s still one of the most widely used gauges today. A moving average is a set of data, in that for each day, the average price of the currency is calculated over a previous number of days. So for example, to calculate a 10 day moving average, today’s average is calculated by averaging the prices for the previous 10 days. Yesterday’s average is then calculated by taking the average price for the 10 days before yesterday, and so on. Each average is then plotted to where the set of data becomes a line on a graph of prices. In effect, this line “smoothes” the market action, taking out a lot of the daily fluctuations that can confuse the trader. This makes it much easier to notice the overall trend of which direction the currency price is headed.

Another widely used indicator is the Relative Strength Index (RSI). This number is found by calculating the ration of the number of up moves to the number of down moves of the currency price over a given period. Simply put, an up move is when the price rises that day, and a down move is when the price closes lower than where it opened. A RSI of 70 or over tells the Forex trader that the currency may be overbought, and might be due for a price drop. Likewise, a RSI of 30 or below can indicate an oversold currency, which may be due for a jump in price.

The Moving Average Convergence Divergence (MACD) is another indicator that is referenced a lot by traders. This one is a bit more complicated than the previous two, although the moving average is one component of the calculation. This indicator makes use of two lines, the first being a 26 day exponential moving average minus a 12 day exponential moving average. The other line, known as the “trigger line”, is usually a 9 day moving average. These two lines will continuously cross each other as the price of the currency fluctuates, and when the MACD line crosses above the trigger line, it’s considered a good time to buy the currency. When the trigger line then crosses above the MACD line, this indicates a good time to sell.

By making use of these and many other indicators, technical Forex traders can give themselves a better chance to make money than the average person. While trading in currency is not without a great deal of risk, it is these indicators that can give the trader a leg up and also make Forex trading an enjoyable experience.

Types of Traders

There are many different types of traders out there, before entering the market for yourself, you may want to consider what type of trading you would be comfortable with. The different types of traders are:

1. Trend Traders

These traders attempt to buy a stock that is going up and hold onto it until it starts going down. The best part about this strategy is that it takes a relatively short amount of time to manage it. Trend traders could be in a stock for days or years, depending on how well the stock is doing, the idea here is, why kill a good thing.

2. Swing and Day Traders

Both swing and day traders attempt to catch the short movements in the stock market. It involves being much more active in your account and having to pay closer attention to patterns and other short term indicators. The great thing about these strategies is that you make a profit or loss fast and it can add up over time.

3. Option Trading

Similar to swing trading option trading attempts to make money from the stock market in a short term time period. The only difference is that with options you have the potential to explode your profits. A relatively small move in the price of the stock could mean a huge move in the option.

4. Option Seller

Option sellers on the other hand attempt to sell options that they believe will become worthless over time. This way they collect the premium up front and when the option hopefully expires in the future they are in no obligation to do anything. Option sellers do not attempt to hit the huge home runs, but try to make a good return over time by compound interest. These are the most popular ways to trade stocks. All traders will have to find out which strategy fits them the best.

Forex Trading Strategies

Forex trading strategies are essential for a trader to know exactly when to sell or buy a currency pair. The time of purchase or sale of foreign currency pairs is the most important point of a trade. The better that the trader is able to determine the time of entry / exit, the more profitable is a potential transaction. This can be achieved with sound Forex trading strategies.

Forex trading strategies in combination with technical analysis is usually used, especially to determine the time of entry / exit. Most often, a decision is made within seconds or hours.

Main Forex trading strategies are:

1. Support and Resistance

Sound Forex trading strategies, similar to this one, remain profitable, even though they started to be used long ago. When Resistance is broken, it can serve as a good sign to buy. This new position can be secure with the aid of a stop-loss placed directly below the level of a break. The level of a break now will become a level of support. New positions can also be opened, when in a descending trend the prices rise up to the Resistance line. New positions can also be opened, when in an uptrend the prices fall down to the Support line.

2. Scanning for the intersection of trend-lines

If you are very confident in a particular trend line (i.e., if you checked it many times), the intersection of this line by prices would be a perfect time to enter into a trade or to get out of it sooner. And, of course, do not forget about the other technical indicators. In the case where the trend-line is used as Support and Resistance: buy, when prices reach an upward trend line; sell, when prices reach a downward trend-line. This can become one of your Forex trading strategies, based on the intersection of the trend-lines.

3. Trading in the break

Three Forex trading strategies for trade at the time of breaks:

- Open a position in advance, in the anticipation of a break;

- If you see an unfolding break, open your position at the time of its occurrence;

- Wait for the inevitable roll-back after the break, because in the market after a break, there is usually a correction.

There is also a 4th option for Forex trading strategies based on break – open position in each of the phases described above. One position – before a possible break, second position – immediately after this break and the third position should be traded in the hope of the expected price correction, which is likely to happen.

4. Trading with positions of various time frames

1). Forex trading strategies, based on long positions, i.e., ranging from several days to several months. It is best to use this tactic in the presence of strong trends. At the same time, analyze short-term scales. Be sure to use in addition to technical analysis also the fundamental analysis, which is perfectly suited for long timescales.

2). Holding a position of a medium length – a few days (the safest of the Forex trading strategies, based on time-frames). It is also desirable to ensure yourself by looking at shorter trends. Analysis of the medium length position is more complex, but such positions are much more stable for profit. Of course you need to choose the right moment to open / close a position. Again, these positions require the use of both – technical and fundamental analysis.

3). Holding a short position – minutes or hours (the least safe of all the Forex trading strategies, based on time-frames). The advantage of short positions is that they have virtually no risk on the impact of fundamental news, as well as the price will not change while you were absent because you’ll be watching the prices the whole time. The disadvantage is that the risk of loss is great, as well as you have to constantly monitor prices during trading until closing. To make the right decisions, it is best to be armed with data on the volume of sellers and buyers. This will allow you to much more precisely determine the subsequent direction of the market. Such ultra-short-term trading can also be used at the time of breaks as well as in the rollback of prices after the break. Basically, such positions are better suited for traders with extensive experience, while for beginners such positions hold too much risk. The second strategy (trading in medium-term trends, with duration of up to several days) is most suitable for the novice trader.

Forex trading strategies based on technical analysis indicators will help you achieve the best results. Forex trading strategies are especially useful for choosing the right time to enter and exit the trades.

Source: Steve Maenshel

How to Profit by Swing Trading

It’s not exactly breaking news. A buy and hold strategy hasn’t worked for the last decade. You probably know as much if you’ve opened your retirement account statement lately. The Dow, S&P 500, and NASDAQ are all flat or down over the last 10 years.

It’s time to face facts, the old-time buy a few large-cap blue chips and hold them forever strategy has gone the way of the Dodo bird.

So, what’s the answer for this particular market?

Personally I swing. Swing trade that is.

I like swing trading for this market because it takes advantage of momentum… or trading in and out of stocks and sectors that are seeing a temporary boost. There’s no ‘buy and hope’ strategy at play here.

Let’s take a look at how swing trading works.

In a nutshell swing trading is… buying the lows and selling the highs. Ok, I know what you’re thinking… how do I consistently buy the lows and sell the highs? It seems like it is easier said than done.

Although there’s a lot of different ways to approach it, my favourite is looking for technically-based short-term trends. And taking a position to profit from the trend.

Here’s something you might not know; swing traders don’t care why a stock is trending. If the technical’s show there’s a trend, it’s not your job to figure out why. You just want to profit from it.

But here’s the catch… the stock market isn’t just flat over the last 10 years. It’s flat over the last few months too. Lots of volatility but no real trends.

You may be happy to see a flat market – especially after last year. But for swing traders like me a flat market is worse.

So how do you overcome a flat US market?

By not limiting yourself to just the stock market.

Here’s why. You won’t always find a trend in the US stock market. So I’ll trade foreign markets, bonds, commodities and even currencies. Until recently, access to these markets was difficult and often required separate trading accounts.

In the past, many individual investors found it hard to trade these markets. This helped give rise to the notion that a buy and hold strategy is the best way to invest.

Now, there’s an easy way to trade ASX stocks, foreign stocks, bonds, commodities, and currencies using momentum. It’s quick, cheap, painless and you can do it all from one trading account.

Want to know what it is?

That’s right, ETFs (Exchange Traded Funds). These are the one investment that can give you exposure to all of these markets. Today’s ETFs are revolutionizing the ability to trade currencies, commodities, and foreign markets. You can now really drill down and focus on specific subsectors of all these markets.

As I said… follow the trend. If you can’t find it in the US stock market, you now have easy access to an entire array of markets with ETFs.

I believe that the big money over the next few months and years will be found in the ’specialty’ ETFs that are popping up. The value of these ETFs can be derived from commodities like gold, currency pairs, corporate bonds, and any specific subsector you can think of. The list goes on and on.

And now you can go long or short with two or even three times leverage. Talk about spicing things up!

And remember as a swing trader you don’t care why the ETF is trending. The patterns and trends you use as a swing trader hold up regardless of the asset being traded. So you can apply the same technical analysis principles that you use with stocks.

Combining technical analysis, momentum trading, and specialty ETFs isn’t a bad way to trade this market right now. And it sure beats the heck out of buying a few blue chips and holding on for dear life!

Day Trading CFDs

Discover how you can generate the highest returns over the shortest timeframe when Day Trading CFDs.

Today we’ll be looking at several ways to identify the best time frame for you when trading CFDs.

Uncover the secrets to finding your best time frame

Using Multiple time frames when doing your charting analysis is going to be essential to your success as a Day Trader. Maximising your entry will stem from using a short, medium and long term chart to focus on the best entry on your time frame.

As an example you may trade a 15 minute chart, so use a daily chart, 4 hourly chart and then the 15 minute to time your entry. Your challenge initially is to find the 3 charting timeframes that consistently locate winning trades.

How big will your CFD wins be?

The next major component is determining how big your wins need to be compared to your losses and this is referred to as your risk:reward ratio. CFD Day Traders normally have similar size wins to losses and traders need to be careful if the average size of a loss is greater than their wins. In order to be profitable you will need to ensure your percentage win rate is well over 60%.

What you need to concentrate on when Day Trading CFDs

A huge challenge for short term traders is overtrading. Many CFD Day Traders feel the need to be active even when opportunities do not line up offering the best risk:reward. By focusing your efforts on a risk reward ratio of 1.5 to 1 or even 2 to 1 you can build a brilliant edge in the markets that will definitely reward your efforts.

Overtrading is the fastest way to the poor house so avoid this detrimental activity at all costs.

Forex Market: Currency Pairs and Forex Quotes

If you are new to the forex market, you might find forex quotes confusing. Do not allow yourself to be overwhelmed with forex quotes. In fact, reading forex quotes can be quite easy.

In reading forex quotes or currency pairs, there are two important things that you must keep in mind. First is that the currency being quoted first is what we refer to as the base currency. Second is that the value of base currency always equals to 1.

The centrepiece or focus of the forex market is the US Dollar. It is also often quoted as the base currency for a lot of pairs. A currency pair that has the US Dollar as the base currency is what we call “major”. Examples of major currency pairs are USD/JPY, USD/CAD, and USD/CHF. In major currency pairs, quoted currencies are expressed as the US Dollar, specifically, one (1) US Dollar for every, or a fraction of the, unit of the second currency quoted in the pair.

As an example, let us take the US Dollar and the Swiss Franc. In the currency pair USD/CHF, the base currency is the US Dollar. In the quote USD/CHF = 1.0806, one unit of the US Dollar is equivalent to 1.0806 units of Swiss Francs.

If a currency goes up, you must take note of the base currency. In the aforementioned pair, the US Dollar is the base currency. If the quote goes up, it simply means the value of the US Dollar has increased compared with the value of the Swiss Franc. If the quote goes down, then one can easily conclude that the value of the US Dollar has depreciated to a certain degree.

There are cases when the US Dollar is not the base currency. We often see the US Dollar as the quoted currency when it is paired with the Australian Dollar (AUD), British Pound (GBP), and Euro (EUR). Let us take the AUD/USD currency pair quoted at 0.8044. This shows that one unit of Australian Dollar is equivalent to 0.8044 or less than one unit of US Dollar. One can conclude that the Australian Dollar is weaker than the US Dollar. If the quote goes up, then it means that the US Dollar has weakened against the Australian Dollar.

Currency pairs do not always involve the US Dollar. These currency pairs are referred to as cross currencies. Examples of which are EUR/AUD, EUR/JPY, CHF/JPY, and EUR/SGD. Let us take the currency EUR/SGD pair quoted at 2.0373. This shows that one unit of Euro is equivalent to more than two units of Singapore Dollar or 2.0373 Singapore dollars.

Source: Bart Icles

Forex Option Trading to Diversify Your Forex Trading

Forex option trading is a hedging instrument, used not only by big financial institutions, but also by many individual Forex traders. Forex option trading is a great tool for implementing both, hedging and speculating strategies. Forex options are among the most liquid options in the world. The buyer in this case becomes a holder of a foreign currency option. The seller becomes the writer, or the granter.

The forex option holder receives the right to exchange a predefined amount of currency at a predefined date and price. The option buyer is obligated to pay a premium to the seller of the option. In fact, this is the only liability of the buyer, making Forex option trading a field with very limited liabilities. The forex option seller has two ways to precede with his/her option – to buy the contract back or to hold it until its expiration.

Forex option trading requires buying at a fixed price, in a fixed amount as well as at a fixed expiration date. All of this unties you from the dangerous market fluctuations.

Do Forex options always get exercised? As a matter of fact, most of the time the options are not exercised by their purchaser with the Forex option trading; options are often offset until they expire. If the option gets exercised, a spot position is assigned to the option holder. There also is a threat of an option expiring worthless, if at the expiration time the strike price is lower than the purchase price.

As mentioned above, you only pay a fixed price for the transaction when you buy a Forex option. Forex option trading will safeguard you against losing more than you have invested into the option. In the event of the final strike price on the market being higher than the purchase amount, you will instantly profit. In the event of the final strike price on the market is lower than the purchase price, you will lose. However, you will never lose more money due to this fixed price, in case your transaction becomes worthless.

Forex option trading is applied strictly at the international exchanges, since it is a hedging instrument. While being probably riskier than regular Forex trading due to its uniqueness, Forex option trading is also potentially much more profitable.

There are two types of options in Forex option trading- call options and put options. Call options give the right to buy currency, and put options give the right to sell currency. Both these options generally change in respond to the change in volatility, i.e. if the volatility falls, the prices of both options also fall. There are common and customized Forex options, respectively called “plain vanilla” and exotic.

In order to shield yourself from potential losses, it is better to follow general safety with Forex option trading:

1. Do not place a large chunk of your total capital into Forex option trading.

2. Do not try to trade at all times. It is better to patiently wait for the proven signals.

3. Trade on a Forex option trading demo account prior starting to trade live.

Forex option trading is a good way to learn and understand more about the Forex market. Forex option trading is a risky but also potentially very profitable Forex trading instrument.

Source: Steve Maenshel

Tips For Day Trading Online

Day trading signifies buying and selling stock within the market day. The market day is the time period between the opening and closure of markets. Traders find this activity extremely profitable because of the financial leverage and rapid returns that accompany day trading.

Online day trading requires good dependable equipment. A good computer for trading, with a memory capacity of 1024mb RAM is required. Experts are divided about the number of monitors required for this activity. Some believe that 2 -3 monitors are needed for effective online transactions while others believe a single large size monitor is sufficient. A high speed broadband internet connection is required for speedy inflow of real time quotes and charts. A good UPS or unlimited power supply is also required for effective trading at the computer. Direct access software will help the trader to place orders and get the orders executed faster.Online day trading requires a good broker who gives instant information.

The online platform of the broker should be dependable and all services should be instantly accessible. Access to the account of the trader should be easy and the response should be quick and efficient. The trader should be able to place orders and get results before the market closes. The website of the broker should be easy to use and constant updates should be available to the trader. The broker should execute orders instantly with small margins and low spreads. All transactions should be secure online transactions that are encrypted and password protected.

Stock Market Report 3-2-10

US stocks rose on Tuesday after United Parcel Service (UPS) and DR Horton released encouraging earnings reports.

Gains were broad based on Tuesday, with 28 of 30 Dow stocks rising.

UPS reported a drop in fourth-quarter profit, but forecast a sharp increase in 2010 earnings. Its stock rose over 1%.

The National Association of Realtors’ pending home sales index rose 1%, in line with expectations. The index fell 16.4% in the previous month. DR Horton, one of the top five US home builders, reported its first-quarterly profit in almost three years and its stock jumped 11%. Pulte Homes and Lennar Corp rose over 7%.

Amazon.com slid for a second straight day, falling 2%, and limited the Nasdaq’s advance.

The S&P 500 industrial sector rose over 1%. Cummins and Emerson Electric rose between 7% and 8%. Cummins is a US manufacturer of diesel engines and other power generation equipment. Emerson is an industrial conglomerate that produces technology used by the oil and natural gas industries.

Major automakers, including Ford Motor, General Motors and Nissan all reported improved January sales. Toyota, however, saw a bigger-than-expected decline in January sales, impacted by a major recall.

Credit card companies rose after analysts upgraded companies within the industry. American Express, Discover Financial Services and Capital One Financial rose between 2% and 3%.

So far, 48% of the S&P 500 companies have reported results. Analysts expect earnings to have tripled from the prior year, although the improvement is mostly due to cost cutting and easy comparisons to the fourth quarter of 2008. The financial sector is expected to lead the advance.

In other news, Moody’s Investors Service said the outlook for the US’ AAA credit rating remains stable even with the effects of the credit crisis and recession on government debt and fiscal flexibility.

Commodities

Forex Markets

The five most traded currencies in the world are US Dollars, Japanese Yen, British Pound, Swiss franc and the Euro. Country specific scenarios like unemployment, higher inflation, and political uncertainties in a country usually cause a decline in the value of the currency of that country. The US Dollars participation in more than eighty percent of world transactions makes it undoubtedly the most significant currency in forex markets.

Currency Markets

The fluctuation in the value of a currency is solely based on demand and supply parameters. For example, the more the number of transactions made with a currency, the more it becomes valuable. So a currency having less demand would devalue fast, and that would have an impact on its rate value. Of course all this depends on a country’s economic standing i.e. whether the people have the most employment, and whether there are more needs for commodities and supplies. If a currency is valuable, it definitely attracts other investors to take a chance on buying it. Therefore a powerful currency would have a consistent price rate that doesn’t devalue for a long period of time.

With the advent of globalization, currency exchanges constitute some of the biggest transactions in the world money markets. To understand the value of a home currency you would have to compare it with another currency foreign to it. For example, you could express 1 US $= 0.694 British Pound Sterling at current values.

One way of understanding forex markets better is by comparing it with the stock markets. Just as you would buy stocks of different companies in the stock market and make a profit when the prices rise, in forex markets the only difference is that you buy currencies and book a profit when the currency becomes more valuable. You could become a small investor in the forex market with a capital as little as $1000 or invest big, because there are a wide variety of forex brokers to cater to all your needs.

There are many kinds of trading methods that will help you analyse current market conditions so that you could predict future trends. To be successful, you have to predict the trends before it occurs, so you could buy currencies and sell them when the prices rise. In some cases, it would mean buying a currency that was dropping in value and then profit from the currency when it takes an upward trend. What does all this mean? It simply means you have to always keep abreast of what is happening in forex markets, by analysing the markets thoroughly.

As explained in earlier articles, there are two ways to analyse forex markets in terms of trends and make a prognosis on future opportunities. These methods are known as technical analysis and fundamental analysis.

A person using fundamental analysis would look at the current economic climate, political events and a variety of economic indicators to try and predict currency moves. Generally it is the large institutional players who look to fundamentals for predicting price moves. As a day trader you should be looking at technical analysis more. However technical analysis which uses historical price patterns in economic data to predict future moves takes into reckoning three major assumptions.

They are:

The fact that all market forces are taken into account in price movement. In other words, technical analysis does not take into account economic conditions, because it presumes that the market has already accounted for that.

It presumes that currency price movements form market patterns that follow predictable paths.

It further presumes that there are historical trends in price movements. What this means is that, when circumstances are similar the same pattern would likely be repeated.

Is technical analysis necessary?

Yes for a day trader it is very important provided he learns to supplement it with fundamental analysis. The greatest advantage of technical analysis is, it could be used for a wide range of currencies and markets in different parts of the globe almost simultaneously. Although it may look complicated to a beginner, technical analysis is a very important tool for the day trader.

How does technical analysis go about doing what it does?

Technical analysis goes about its business by interpreting charts that are constantly updated in real time and could be viewed in different ways—as for example, you could see in the charts price movements over certain periods in time, interfaced with analytical features that help you predict future trends. Most often the charts are to be found in the broker’s online trading platform. Truly there is no substitute for charts in forex trading.

Learn To Day Trade Forex

The most important thing that you should make very clear and understand is that Forex is not a get rich quick scheme. Skilled Forex Traders can and in fact do make good profits in Forex Trading. However like any other business whether small or big, success just doesn’t happen overnight, in a few weeks or in a few months. You should use this great formula for success: Profits = Patience+Practice+Persistence.

As they say there is no substitute for hard work and diligence. Practice trading on a demo account and pretend that virtual money is your own real money. Do not open a live trading account until you become profitable on your demo account. Stick to the plan and you can be successful.

In the beginning, just choose two major currency pairs that you will trade. It becomes very difficult to keep tab on the all four. You need to start with a major currency pair because the spread is the best and they are the most liquid. The EUR/USD pair is the most commonly traded pair and usually has the best spread because of its liquidity.

The USD/CHF is the most volatile and moves the most during the trading week. The USD/JPY moves a lot on the news out of Japan. GBP/USD is the most stable of the above three pair.

You should follow and understand the daily forex news and analysis of the professional currency analyst. It is important for you to get a birds eye view of the currency markets and the news that affects the prices of the major pair that you want to trade. You should also know and understand what the key technical support and resistance levels are in the currency pair that you want to trade.

Support is the predicted level when buying pressure overcomes the selling pressure. It is at this point the currency pair moves up on the charts. Buy at the support level. Resistance is the predicted level when selling pressure overcomes the buying pressure. It is where the currency pair moves down on the charts. Sell on the resistance level.

All the best forex news and analysis is available freely online. Most of the forex brokers provide this information on daily basis if you open an account with them. Read the technical news and analysis. Write down on a piece of paper the direction the analyst is saying about the currency pair you are trading. Also note the key support and resistance level for that pair.

Learn how to use technical indicators and always trade with stop losses. It is worth your time to be patient and learn how to use technical indicators on the charts that you will be reading shortly.

Learn to be disciplined when you are trading. Avoid emotions in trading! Stick to a good system and a plan. Depending on your risk appetite and strategy, set your stop losses accordingly when you trade. Try not to trade your gut feeling.

CFD Broker -Direct Market Access

Top 3 Reasons to Use a Direct Market Access Broker When Day Trading CFDs

Day Trading CFDs requires a fast platform, the ability to execute your orders quickly and no requotes, especially if you are going to make any money. Today we are going to take a look at the top 3 reasons why you would want to use a Direct Market Access (DMA) CFD broker in order to day trade the markets.

1. No requotes

Since the introduction of Contracts for Difference around the world the Market Maker model has been dominating and one of the greatest frustrations of all traders is the annoying requotes that you get regularly. A requote is when you want to buy at say $2.40 but the CFD broker comes back and says ‘Sorry, that price isn’t available, would you like to deal at $2.42? Now you might be running a direction from the ASX and you can see there is volume there buy your Market Maker CFD broker won’t let you have it. This is incredibly annoying.

When you deal through a Direct Market Access CFD broker you never get any requotes as you are dealing straight into the liquidity of that local exchange. So when you go to buy at $2.40 and the volume is there then that is the price you get. Plain and simple.

2. Speed of getting orders set in the market

Another vital criteria when placing Day Trades online is the ability to execute quickly. Every second can mean a good deal of money, either won or lost, and can make the difference between a winning or losing trade. In order to ensure speed into the market you want to be using a Direct Market Access broker as they have what is known as ‘Straight Through Processing’ or STP which means you orders go direct into the market, not through a broking desk. These valuable seconds are critical to your success as an online day trader.

3. Transparency

Lastly you want to be able to see exactly what is going on and this is what we refer to as transparency. With a DMA CFD broker you can see exactly what is available in the market on both the buy and sell side and you can trust those figures to be real. That means when you want to buy 2,000 CFDs and there are 2,000 available, then you are able to get them, providing no-one else hits that price at the same time. You have the option of seeing all the individual buy and sell orders and you can see your order moving up and down the ASX queue too.

10 Forex Trading Tips to Help You to Succeed in Currency Trading

So many people fail in trading Forex. But you don’t have too, some people ask me if there any rules to become a successful trader. When I think about my trading I clearly see 20 rules that if followed can make you consistently profitable trader. Some of them you probably know. The only thing is left is to implement them in your trading.

1. Plan your trades and trade your plan.

It is absolutely necessary to have a plan so you know what you will do in such and such market situation. In fact the lack of planning ahead probably the biggest reason of failure of most traders.

2. Fear and hope are the two worst enemies for trader.

You need learn to control your emotions. Not to get rid of them. They are actually engines that keep you going. However engines that go out of control are very dangerous.

3. Always keep the records of the results for your trading.

If you want to repeat your successful trades over and over, if you want to avoid failure you went through, then you need to keep track of your decisions and actions. That’s why you need to record all your trading results.

4. Keep the positive attitude regardless of the results of your trading.

Result of a single trade mean very little. The long term result is what you are looking at. Therefore keeping the positive attitude no matter what the result of a current single trade will help you to move over it to the next more profitable one.

5. Think about Forex only when you are trading.

In order to succeed in FX you need to learn to focus. Whatever you do focus on it. That means if you are not trading focus on whatever you do and forget about the market.

6. Stop-loss is the key to your success in trading. Always cut your losses.

The golden rule of traders states: never-ever trade without stop loss orders. If you do it’s a surest way to lose your trading account entirely.

7. Always devote your time to study the market.

Set up aside certain amount of time to go through the price charts and economic news to better understand the price movement.

8. Always set your profit limit in each trade.

The same as with stop loss orders you need to know your profit target for each trade. I had so many potentially winning trades that turned into a losers just because I didn’t have a clear plan for taking profit.

9. Trust your own opinion before entering the market.

Facts are priceless. Opinions are worthless. Those who follow so called “gurus” in trading will never be able to make a significant profit. Take the full responsibility for your actions don’t hunt for opinions just because you are afraid to act upon your own opinion.

10. Keep your stop losses untouched during the trade.

It comes back to the rule number one. Once you have planned your potential risk and placed the stop loss, don’t touch it until price reaches the profit target or stop loss. By moving the stop loss you are changing a significant parameter of your trading system. That is the way to turn a winning into a losing one.

Everyone knows that currency trading is a good opportunity to make significant amount of money. At the same time it is the best opportunity to lose even bigger amount of money. I hope the above tips will help you to preserve your trading capital and gradually to grow it.

CFD Trading vs Traditional Share Dealing

 Many investment groups and hedge funds have found a great deal of success with CFDs for more than ten years in the ASX stock market as an alternative means of investment to traditional share trading.

If, for example, the margin on a Stock you are interested in was 10%, establishing a position of $100,000 would only require a deposit of $10,000. Any running profits that you make can actually be used as margin to esablish new positions but any losses would require extra funds.

While stamp duty on shares has in the opinion of some traders reduced the cost effectiveness of ‘day-trading’ traditional stocks and shares, CFDs are exempt and this seems to have added to their appeal. CFDs are liable to capital gains tax but losses can be offset against future profits for the purposes of tax. In the same way that you would buy shares, when you trade in CFDs the contract purchase is the same.. So if you wanted exposure to 1,000 shares in a company, youd have to sell 1,000 contracts .

 With CFDs the charges and commissions involved in a trade are not part of the spread, because of this, the CFD spread quote will be very close to the underlying price of the share or commodity that you are following. CFD’s also mimic almost every aspect of actually owning the underlying share or market, so if you hold a position long enough, you receive the benefit of any dividends being paid on the underlying shares.

CFDs will appeal to different trading styles. It’s important to note that they should not be regarded as substitutes for long term investment or saving, as more citizen try to take control of their financial destiny, theres been a growing realisation that going short is a legitimate means of trading in market.

Trade Futures With CFDs

Contracts for difference or CFD trading is a type of trading where traders can trade on a short term basis and get some profits out of it. CFDs profits or loss normally arise from the disparity in the charge of the future when and at the end of the buying period. Hence, the outcome depends on the performance of a share in the market. This is usually a contract between two people and depending on the position you have taken, you can either gain or lose. When trading CFDs you have two options in that you can trade long or short. Trading long means that you anticipate the prices will rise while trading short is when you expect the prices to fall.

When you decide to trade CFDs, you have to give a certain amount of money as commission for the trade. The commission normally depends on the value of the asset in question since it is a percentage of the value of the asset. CFD trading accounts give the advantage of being able to trade day and night. These trading accounts come with different features which make it very important for any trader to compare Cfds trading accounts to find the most efficient.

One way to compare CFD trading accounts is to look at the commissions involved when buying and selling. The other is to find any other underlying fees you may be required to pay for all your trades if any. You can also compare Contracts for difference trading accounts based on whether it is possible to trade on other investment options apart from futures and whether the account provides all the tools you will need in the trading process. The one thing that should give you more reason to trade Cfd is the fact that you get all advantages associated with leveraging.

13 Quick Tips for Forex Trading Success

#13: Back-test, but be logical. Back-testing a given strategy can prove priceless when done correctly, but remember to take the results with a grain of salt. Be especially wary of trade results shown on websites claiming astronomical gains since most of these results simply are not attainable under live market conditions for many reasons.

#12: Always analyse similar pairs in the forex market before placing any trade. Similar pairs can be defined as any tradable currency pair containing 1 of the 2 currencies you are about to trade. For example, by looking at no less than 4 US Dollar pairs before trading, one can determine if the pair will be moving based mostly on the US Dollar or the opposing currency. This can easily be done with the Japanese Yen and others as well.

#11: Be wary of trade ideas coming from other individuals or groups in the many online trading forums, blogs, or chat rooms. Only evaluate trade recommendations from trusted parties who have a proven track record of success. Remember this is your business, and to have a consistently profitable business, you need to execute reproducible trades based on your own strategies and ideals. Don’t build your house on sandy soil; lay a good foundation of continuing education and the rewards will come many times over.

#10: Longer-term charts (ie. monthly, weekly, daily) have logarithmically more importance upon technical analysis than shorter-term charts (ie. 1 minute, 5 minute, 15 minute). For example, a support or resistance level on a daily chart will hold much more importance than a similar line than a 5 minute chart. Most reputable traders will recommend trading on longer term charts, especially for those who are new to trading or have limited time to trade due to other commitments. Find your comfort zone and stick with it until you become consistent; even a slight edge in this market can set you free financially.

#9: Do not use any trading robots, expert advisors, or other “black box” automated trading software until you learn how to trade on your own first. Educating yourself is the key to success; deep roots will equal a tall tree that can weather any storm.

#8: Trade with a friend, group, partner, or mentor when you begin your journey of learning the forex market. Many of the glamorous ideologies of forex traders showered in riches come from high-risk, difficult to reproduce strategies. The way to often become most profitable in this market is to have consistency, be disciplined, and to repeat this over and over and over again. Forex trading, done properly, is not intended to be flashy.

#7: Be sure to use a forex broker with great service and support, along with low spreads. With the recent regulations we are much more protected against possible broker-related issues, but many traders are still paying much higher spreads than average when placing trades. Do your research on forex brokers to analyse not only the safe, financially sound companies, but also those that allow the lowest fees. Paying the bid/ask spread in the forex market is just one of the costs of doing business, but with the extreme level of competition in today’s marketplace there is no need to accept paying even 1 pip more than you should elsewhere.

#6: Have a backup power supply and internet access available at all times when you are trading. This can be as simple as a battery-powered laptop with a wireless access card. Don’t rely solely on the phone number of your broker as if there is a company-related trading issue; their lines will likely be slammed busy. Bottom line: be sure to have some redundancy incorporated into your trading plan; treat this like a true business and it will reward you like one.

#5: Break your trade order into 2 or 3 smaller orders to give yourself more control, both actual and psychological. As most forex brokers do not charge commissions to trade this market, they earn their fees through the bid/ask spread; you have no extra cost of placing 3 small orders rather than 1 single large one. Doing this allows you to place tighter stops on some orders, while adjusting the profit taking on others. Closing part of an order will give the same effect, but by having a few live at the same time, it is easier psychologically to set them and let them run.

#4: Trading profit comes from 1/3 psychology, 1/3 money management, and 1/3 trading strategy. It’s easy to get caught up in the “next best thing” or the potential of finding a “holy grail” system, but remember that most of your profits come from learning the things that are not quite as exciting. Trading psychology and money management are critical to any success in the forex market; without them you will be grouped with the 95% of those who lose their capital time and time again. Money management is the key to unleashing potential for compounding profits; it is an absolute necessity to learn. Do your research on the most highly coveted trading psychology texts and dig in ASAP.

#3: Be aware of world news releases. Even if you prefer to not trade news events, be certain to know when the major events are planned to take place. As a second line of asset protection to your business, a good live news feed is also recommended when you are trading. Knowing what is going on in the world is one of the most critical keys to forex trading success; without this knowledge, your chances of success are limited.

#2: Always use a well planned stop loss when placing any trade and never, ever, move it further from your entry point for any reason. Although it is a simple rule to put on paper, it’s often difficult to follow…always follow this rule.

#1: Always trade any new strategy in a demo account before going live in a real money account. Many traders simply become gamblers by placing trades live without the proper testing and education necessary to place the odds in their favour. It is also all too common for traders to have excellent results in a demo account or with paper trading, then lose all their capital once they go live in a real money account. Be realistic and treat your demo trades as real funds; that is the only way for a demo account to work over time. If you begin to have a winning pattern in the demo account, be 100% certain to follow all the rules exactly in your live account. Often, a good transition is to begin with a demo account, then go to a live mini or micro account where very little capital is risked before trading your regular sized account. Many times one can make the transition in trading psychology from demo to live when taking the added step of testing the proven system by trading very small lot sizes first.

Although these few trading “nuggets” are only the tip of the iceberg, I hope that they can pique your interest enough to warrant further research and attention. I wish you the best in your trading!

Source: Jason Gospodarek

Weekly Commodity Update

China once again showed its importance as another attempt to rein in lending led to selling of commodities and a switch to the perceived safety of government bonds and the dollar.

Commodity prices fell to their lowest levels this year as China took fresh measures to cool its galloping growth. Banks were temporarily told to halt lending in an attempt to reduce the frantic levels of activity during the first few weeks of 2010. Given Chinas and other emerging economies importance in driving commodity prices this move had an adverse impact on markets from oil to metals.

The CRB commodity index which one week into January trading showed a gain of 4 percent have since then been struggling and this week moved back to levels last seen in December 2009 and thereby putting a lot of new established long positions under pressure. Technically the uptrend since March 2009 is in danger of being broken so the next few days will be very important in deciding the near term direction of commodities.

Another piece of bad news has been the renewed strength of the dollar, especially against the Euro, which fell to a five month low this week over continued concerns about Greece’s fiscal problems. The speculative positions recently have heavily been favouring a weaker dollar and this turnaround has forced a lot of selling in order to limit losses.

Stock markets could be the next focus point as Presidents Obama’s proposed overhaul of the banking sector saw equity markets falling through previous support levels. Five failed attempts to crack the USD 1,150 resistance level on the S&P 500 index was followed by a drop through previous support at USD 1,130. This has now opening up for a potential move back towards USD 1,085.

Crude oil for March delivery reached a low at USD 75.6, a 10.50% drop from the recent highs. On top of the factors already mentioned the speculative long position in crude had reached a new record high leaving the market exposed to stop loss selling while OPECs compliance in adhering to agreed production cuts continue to slip.

Adding all these up energy prices had to come lower but considering the amount of unfriendly news prices have held up pretty well. Continued range trading around USD 80 seems to be the most likely trading pattern going forward.  For now though it is pretty clear that commodity markets are not ready to decouple from the dollar and the moves there has to be watched closely.

Technically near month crude is in a wide USD 73 to USD 88 upward sloping channel and the month long uptrend is still intact. Additional support can be found at USD 75.25 being the 100 day moving average while resistance is located at USD 77.80 followed by USD 80.70.

Platinum raced to a 12 percent gain this week before selling drove it lower from overbought levels. The dramatic rise seen so far has been due to the January 8 successful launch of a Platinum ETF. To keep up with demand this fund bought 195,000 ounces of platinum during a ten day period, more than 10 times daily global production. Platinum is primarily used in jewellery and catalytic converters in autos and China has again been mentioned as a reason for buying it given the forecast for 17.2 million new cars on the road this year. Look for support on the April contract at USD 1,515 to hold for now.

The gold market also got caught by the resurgence of the dollar dropping back towards the December lows at USD 1,075. Support was found at 100 day moving average at USD 1,086 ahead of USD 1,075 and the crucial trend line support at USD 1,060. The bull market for gold is still intact and the fundamental factors that have been driving gold are still there but for now the dollar is in the driving seat so we have to advise caution on gold for the next few weeks. Relative value trades like gold/silver or gold/platinum ratio trades should perform pretty well during this correction