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

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.

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

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 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.

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.

Advantages of Forex Trading

Foreign exchange trading involves buying and selling different currencies. It works on the theory that is similar with share market. As we know that to make the profit, you have to buy at lower price and sell at higher price, or we can also sell at higher price first and buy at lower price. But its not as easy as it sounds. By studying certain market conditions, you can actually make profits in forex. All you have to do is to analyze the forex in a correct way and do the good trade.

Why to go for Foreign exchange trading? There is an option to invest in stock market also but here are a few important advantages of currency trading over stock market.

24-hour Trading

Forex trading is done on 24-hours basis. This market is open throughout day and night as somewhere in the world, there must be this buy and sell trading is going on. Traders involved in forex trading strategy can always get that first hand information and can act accordingly. The currency rate is actually run through telecommunication all over the network of banks 24 hours a day from 00:00 GMT on Monday to 10:00 pm GMT on Friday. There are ECNs (Electronic Communication Networks) which bring together buyers and sellers.

Greater Liquidity

There is a superior liquidity in the market as there are always buyers and sellers to purchase and sell foreign currencies. Forex trading market size is 50 times bigger than the New York Stock Exchange and liquidity of such large market ensures price stability. Forex trading stop orders could be carried out more simply. This makes Forex trading signal more liquid and permits Forex traders to take benefit of trading opportunities as they happen rather than waiting for the market to open the next day.

100:1 High Leverage in forex trading

100 to 1 leverage is commonly available from online forex dealers, which substantially exceeds the common 2:1 margin offered by equity brokers. This gives them a huge leverage in their trading and presents the potential for extraordinary profits with relative small investments. Leverage can also go the opposite way and may lead to huge losses if you are not careful.

Forex trading transactions have no commissions. Forex Brokers can earn money by fixing their own speculation between what a currency could be bought at and what it could be sold at. In difference, Forex traders have to pay a commission fee or brokerage fee for every futures transaction they come in to the view. The forex market is so large that no one individual, bank, fund or government body can influence it for a long period of time. In forex trading strategy, you can trade between seven currencies but not everyone trade in all.

There are certain trading signals that give indications to the trade. These forex signals are delivered by email, instant messenger or direct to your desktop.

How Does an Online Forex Broker Work?

Before you begin trading in the FOREX markets you will need to set up an account with what is called a Forex Broker. Once you start your search for the perfect broker, you could feel overwhelmed by the number of them who extend their services online. Deciding on a broker requires a little bit of research on your part, but the time spent will give you a much better idea of the services that are accessible and the fees charged by several of this brokers.

Properly speaking, a forex broker is an individual or a company that buys and sells the orders placed by the trader according to his decisions. This way brokers earn money by billing a commission or a fee for their services.

All serious brokers need to be connected with a large financial organization such as a bank in order to provide the amount of funds necessary for margin trading. These credentials will ensure you have peace of mind, knowing that you have security against any case of fraud and abusive trade exercises.

What you’ll always want will be to find a broker who carries out orders quickly and with minimum slippage. All reputable online brokers will extend automatic execution of orders and will let you know their policies regarding slippage. An effective broker should be able to tell you how much slippage can be expected in both normal and volatile markets.

Margin accounts are the foundation of Forex trading, so you better be sure you clearly understand the broker’s margin terms before setting up your trading account. You also need to acknowledge the margin requirements and how margin is calculated. It may be the case that margin change according to the currency traded; or maybe the margin is the same every day of the week or perhaps not; so you have to check and get all this information pretty clear.

Additionally some brokers could offer different margins depending on what kind of account you are trading, i.e. a mini or standard account.

One more thing that you should consider is that the trading station software available to you from your broker is really important for your success as an online forex trader. You should get a feel for the options that are available by examining a demo account at a few of the available online brokers. Always keep in mind that above all, you are looking for reliability and the ability to execute well in fast-moving markets.

How To Trade Forex?

How to trade Forex? Trading Forex is actually quite simple. Forex trading involves merely choosing a currency pair, the amount of the base currency and the buy or sell action. Next you place your order and wait for the favorable time to perform a counter transaction to derive profits. How to trade Forex and make profit? Learn to place your orders correctly by trading on a demo account for a period of time.

Each currency quote consists of two currencies. The first currency in the pair is called the base currency and the second one is called the counter currency. The value of the first currency always equals one, while the value of the second currency is calculated against the first currency. Forex prices are expressed in pips, being the fourth decimal of the price. Understanding quotes is vital in order to learn how to trade Forex.

Margins and Leverage in Forex trades

In order to safeguard your capital, learn how to trade Forex without taking leverage from a broker. If you can put down a small amount of your own money (called margin), the dealer will provide you with more money (called leverage). Leverage will allow you to trade with more lots. Is margin trading good or bad? Same as bank loans and mortgages, margin trading may be both good and bad. While providing you with more opportunities, it will also tremendously increase the possibility of losses.

Demo Account

Trading with a demo account is definitely one of the easiest ways to learn how to trade Forex. A Demo account will safeguard you from incurring any real losses while making mistakes at the time of your trading. At first, you will most likely often make mistakes when selecting the time of entering and exiting the trades, such as you may be too late or too early. Mistakes that you make while trading on a demo account will not cost you a dime. However, if you skip this essential step, you may join the 90% of failing Forex traders.

Understanding Currency Pairs

There are lots of different currency pairs, and you should choose the right one. It is a good idea to choose the most traded currency pair, when you are just starting to learn how to trade Forex. This currency pair is USD/EUR. No matter what currency pair you select, you should try to learn its distinctive features well, before proceeding to trading other currency pairs. This is very important because every currency pair will have its own distinctive features as well as the reasons behind the fluctuations of this currency pair, such as various fundamental factors.

Currency Quotes in Forex trades

Learn to understand the currency quotes, because Forex trades are done in terms of quotes. Quotes are two-sided, and involve two prices: Bid price (price at which base currency will be sold, simultaneously buying the counter currency) and Ask price (price at which base currency will be bought, simultaneously selling the counter currency). Understanding of Bid/Ask is one of the first steps in learning how to trade Forex.

Unfortunately brokers, just like banks do not really care whether you win or lose in your Forex trades. You will still have to pay them back. If you lose the money that they gave you. It is better not to trade on margin at all, and to only trade with your own money.

It’s very easy to learn how to trade Forex. However, how to trade Forex with a profit? Allow enough time to train on a demo account before proceeding to real-life trading.

Source: Steve Maenshel

Understanding How To Scalp The Forex Market

When it comes to trading the forex market, there is one thing that really stops a lot of traders, and it involves greed. Because there are millions of traders out there who think that making money in the forex market is easy. This has to do with the fact that a lot of traders buy courses that promise to make them millions, only for them to realize they have been scammed.

Most people end up losing money on a daily basis because even though the forex markets move everyday, the fluctuations are barely visible. Only a huge movement can be predicted, which is a rarity.

Only, and make money using my system of foreign exchange earnings are expected to be small in the day to day fluctuations in these very small. Your small, rather than the daily earnings, are trying to homer daily. The higher low, fluctuating from 50 Pip Forex market is 80 percent of the time. Not earn enough money in these market conditions following a system intrusion methods and trends.

Since it is easy to make 20-30 pips a day, my sincere advice to you would be to switch off the screen as soon as you are done for the day. You will be only paying your broker if you turn out to be over ambitious. So please protect your profits.

Don’t make the same mistakes that so many other people make. They think they will become a millionaire by the end of the first week. Your job should be to make money in a steady manner. Trading is a lot like a marathon, not a sprint.

Most of the break-out or trend following systems only gives you advice on huge movements in the forex markets. My scalping system is not like that. Using this system you can trade everyday for less than 3 hours. You are setting up a successful home based business, making a lucrative profit, having a great life style and it is good money too.

Unfortunately many of you have been cheated by Get rich quick schemes in the forex markets. On the net even I have seen may unbelievable schemes which claim to make $250 with only $100 software. If only that were true!

Source: Mike Hardaway

Top 8 Tips To Help You Start With Forex Trading

1. Educate yourself.

As mentioned, the money market can be a profitable venture but it can also be full of financial risks. Before getting too excited to trade, one of the very important currency trading tips that you must follow is to educate yourself about the forex industry. Of course, it is always a wise move in every venture you get into. Among the important things you have to learn is market analysis and analyzing the factors that affect the value of a country’s currency. It would help a lot to have a background in macroeconomics, international trade, in-depth understanding of the financial market as well as understanding on how a nation’s economic policies as well as political situations affect your main concern – the currency.

2. Plan and make a strategy.

In the money market, it is important to be a quick decision maker and be able to take action, but you also have to make a plan and strategy. It is also

3. Be aware of the high risks.

Currency trading indeed involves a high level of risk, so before you decide to participate in forex market, you have to determine if you can handle the big risk that comes along with it. Experts often say that forex trading is not for everyone. In currency trading, you must be able to determine how much money you are willing to lose, and if you are wiling to lose a part or all of your investment.

4. Choose the best currency trading software.

In deciding for your forex trading software, make sure that you are also making a wise choice. Make sure that your software provides security of your data as well as personal information. Also make sure that you choose a software that has round-the-clock support services especially when it comes to server support and backup. These currency trading tips are indeed important to help you have a secure transaction online.

5. Choose a reliable and trustworthy broker.

In forex trading, you can also get a broker to help you deal with sellers and buyers in the money market. In choosing one, make sure also that you getting a reliable and trusted one. They can also be a factor in your success in forex trading.

6. Practice.

Indeed, if is one of the most important currency trading tips to keep in mind. Do not to jump into forex without practice. This is essential to help you learn the tools o the trade. You can make use of demo accounts to practice your strategy in forex.

7. Beware of forex scams and frauds online.

In dealing online, make sure also that you are not dealing with fraudulent individuals and companies. Always check track records as well as company or individual backgrounds. If they are giving you too-good-to-be- true offers, you might want to think twice about it. If they are giving you a risk-free forex trading, that could be a warning that you are not dealing with some legitimate services.

8. Be extra careful in transferring funds.

Whether online or by mail, always make sure you are sending money or transferring funds securely. This of course is a must in anything you do online that involves money, especially if it involves a large amount.

Keep in mind these currency trading tips before you get yourself involved in forex trading. Keep in mind that forex is involves high risk and indeed, is not for everyone.

5 Ways to Improve your income from Forex Trading

Forex Trading or Currency Trading today is a $3 trillion industry, and I am not talking about the yearly investments or revenues of this trade, I am talking about the daily investment stats of this monstrous industry.

This means that trades of over $3 trillion occur each day across Forex exchanges throughout the world. If you have been trying to get a bigger slice of this magnanimous industry then these tips would surely help you to earn more with the same amount investments and time.

1. Be Flexible:

By flexibility I mean that you need to trade in a cross culture environment if you want to get the max out of Forex trading. This means that you cannot restrict yourself to a particular exchange centre such a London or New York. You need to diversify your investments and give ample time to investments in different exchange centres. This is because of the fact that a particular exchange may have its lull times when the trading is slow, so instead of investing in theses exchanges at this time try to invest in exchange that are livelier at the same time.

2. Be confident:

Confident is a very big factor when it comes to Forex trading. If you are not confident about your decisions, then you are not going to make profit. You should try to have faith in your abilities and should never get pressured into taking decisions that you would not like to take. Confidence can improve your ability to take risks and thus give you more profit.

3. Take good care of leverage:

One of the basic rules of Forex trading is manage your leverage amount very carefully. You may get tempted to leverage 10 to 20 times the amount of money you have in your account but this should be avoided at all costs. Everyone knows that larger the amount leveraged, larger is the risk of loss and the debt arising from it. Expert traders never leverage more than twice the amount they have in their account.

4. Avoid large trades:

Instead of focussing on a single large trade, one should try to play it safe by investing into many small trades. This will reduce the risk of you losing all your money in case a trade goes wrong. Also smaller trades can generate better profits than a single large trade, this is because of the fact that for a small trade you may not be afraid of losing money and can hence put it in the market for a longer time, whereas for a large trade you would try to get your money out of the market at the slightest change in currency value in order to avoid any major loss.

5. Get a good Forex Broker:

This is the aspect that is ignored by almost all traders, but an expert trader knows that this is one thing that matters a lot and can be controlled. The correct way to choose a Forex broker is by the task of research. Never choose a Forex broker because of the fact that he is providing you with some incentives. Always try to look into the working policies of a broker before choosing to invest with him or her. Try to go in for brokers who offer demo accounts, so that you can test a broker’s interface before opening a real money account with the broker. Always choose a broker who is compatible with your style of trading and allows you to implement your strategies.

These are some of things, which if followed religiously would enable a Forex Trader to earn more profit than he would earn without the use of these strategies.

Understand Forex Accounts

For trading success, good money management is the key. Many traders ignore this aspect of trading at their own peril and get their account blown in a few weeks of trading. Trading discipline means using a trading system based on money management rules that limit your risk and avoid making trading decisions based on emotions.

One of the worst blunders that trades can make is to try to trade without sufficient capital. This does not mean that you should have a lot of money before you start trading; it only means that you need to have enough capital in your account to take advantage of the movements in the markets. Low capital increases your chances of getting blown out.

Many forex brokers fix the minimum amount required to open a standard account as $2000. However, it is recommended by most of the professional traders that you should start with at least $5000-10,000 to get good results. A trader with limited capital is always a worried trader. He is always looking to minimize losses beyond the point of realistic trading. Never ever trade live without practicing on the demo account for a few months. First, try to double your account at least three times in a row on the demo account.

A regular account or a standard account often also called 100k account lets you trade a $100,000 standard lot with a $2000 deposit. This $2000 is kept as the margin by the broker. This is a 2% margin.

Dont use more than 4X leverage while trading in the start. Too much leverage is dangerous for you.

Its not that leverage is bad. It is a double edged sword that cuts both ways. It increases your profit but at the same time wipes you out in case of a slight miscalculation on your part. Its just that you need to understand and learn how to use it. You can only do so with practice. With practice and more experience, you can increase the level of leverage in your trading.

Mini accounts are great for beginners. You can open a mini account with most of the brokers with a deposit of only $1000. The mini account was developed to accommodate investors who were looking for bringing more diversification to their stocks portfolios. This small dollar requirement allows many small investors to participate in the forex markets. Many were previously unable to do so. Some brokers offer micro accounts as well.

One lot on a mini account means $10,000. On a mini account, you have a different lot size as compared to the standard account. Pip size on a mini account is also small as compared to the standard account. A pip size on the mini account is equal to $1 instead of $10 as on a standard lot.

A mini account is a great way for beginners to practice forex trading. If you lose 100 pips on a mini account, it means losing only $100 as compared to losing $1000 on a standard lot. You can say a mini account reduces your risk by 10%. But it also reduces the amount of profit that you can make. Start with at least $1000 on a mini account.

Source: Ahmad Hassam

Mini Forex Trading – For Small Scale Investors and Beginners

Any one planning to invest in the Forex market can start doing so by first opening a mini Forex account before actually getting a standard Forex account. Many people are under the impression that online Forex currency trading involves a large quantity of money. This isn’t correct. With a mini Forex account, first-time investors can begin with small amounts ranging from $ 1000 to $ 2000, where the value of a pip will be $ 1 thus reducing the risk of losing a large sum of money.

In the standard Forex account, a broker may allow a leverage of 100-1 with a deposit amount of $ 10,000 and can trade up to $ 1,000,000. In terms of losses, a 10 pip loss on a standard trade of $ 100,000 would mean a loss of $ 100, whereas in a mini Forex account would mean a $ 10,000 equals $ 10 only.

Free demo platforms are now being offered online by Forex brokers to let you practice and get familiar with an online Forex trading account for lesser manageable amounts. Beginners will then have the chance and confidence to practice efficiently their trading skills and strategies without having to worry about their losses or balances, and worry about a margin call.

Take note that almost 90% of people who trade in Forex end up losing their investments – and these are just the beginners. With too many people who are unfamiliar with what Forex currency really is all about quickly get disappointed, frustrated, and angry when rushing in blindly, hoping to gain a quick and easy profit.

A mini Forex trading account offers a alternative to small scale investors to get a chance to do actual trading without exposing a huge monetary amount.

Forex Trading Tips

Tip 1. Gamblers go to casino. All unproved, spontaneous actions in Forex trading — are a part of pure gambling. Any attempt to trade without analysis and studying the market is equal to a game. Game is fun except when you are losing real money

Tip 2. Never invest money into a real Forex account until you practice on a Forex Demo account!Allow at least 1 month for demo trading. Consider this: 90% of beginners fail to succeed in the real money market only because of lack of knowledge, practice and discipline. Those remaining 10% of successful traders had been sharpening and shaping their skills for years before entering the real market.

Tip 3. Go with the trend!Trend is your friend. Trade with the trend to maximize your chances to succeed. Trading against the trend won’t “kill” a trader, but will definitely require more attention, nerves and sharp skills to rich trading goals.

Tip 4. Always take a look at the time frame bigger than the one you’ve chosen to trade in. It gives the bigger picture of market price movements and so helps to clearly define the trend. For example, when trading in 15 minute time frame, take a look at 1 hour chart; trading hourly would require obtaining a picture of daily, weekly price movements. If a trend is hard to spot — choose a bigger time frame. Up and down market patterns are always present. Always make sure you know the dominant trend, unless you are a scalper. Scalpers have no need to spend their time studying big trends, what’s happening in the market here and now (during 5-10 minute time frame) should be of only importance to a Forex scalper.

Tip 5. Never risk more than 2-3% of the total trading account.

One important difference between a successful and an unsuccessful trader is that the first is able to survive under unfavourable conditions on the market, while an unsuccessful trader will blow up his account after 5-10 unprofitable trades in the row.Even with the same trading system 2 traders can get opposite results in the long run. The difference will be again in the money management approach. To introduce you to money management, let’s get one fact: losing 50% of total account requires making 100% return from the rest of money just to restore the original balance.

Tip 6. Put emotions down, trade calm. Don’t try to revenge after losing the trade. Don’t be greedy by adding lots of positions when winning.

Overreaction blocks clear thinking and as a result will cost you money. Overtrading can shake your money management and dramatically increase trading risks.

Tip 7. Choose the time frame that is right for you. Choosing wise means that you are comfortable and have time enough to analyse the market, place and close orders etc. Some people can’t wait for hours for the price to make a move; they like action and therefore prefer smaller time frames. On the contrary, for others 10-15 minutes is a hustle to be able to make the right decision.

Tip 8. Not trading or standing aside is a position. When in doubt — stay out. If it is not clear where the market will move — don’t trade. In this case saving present capital is and absolutely better choice than risking and losing money.

Tip 9. Learn to use protective stops. Respect them and don’t move.

Hoping that market will turn in your direction is a very delusive hope. By moving a stop loss further a trader increases his chances to end up with much bigger loss. When holding to a losing trade too long, and even if funds permit, traders as a rule are very reluctant to accept big losses, thus often continue “hoping for best”. In the mean time invested money is stuck in the open trade for unknown period of time (weeks and even months) and cannot be used for opening new positions. Not working money — dead money. Also this will result in constant interest payments for holding open positions.

Tip 10. “Keep it simple, stupid” — applies to indicators, signals and trading strategies. Too much information will create a controversial picture of when to trade and when not to. To avoid lots of confusion create a simple but working method of trading Forex.

Tip 11. Think about risk/reward ratio before entering each trade.

How much money can you lose in this trade? How much can you gain? Now, make a decision if the trade is worth entering. Example: if trader is looking for possible 35 pips gain and possible 25 pips of loss, such conditions are not worth trading. Compare it with the situation when a trader has 100-120 pips of potential gain and only 10-20 pips of possible loss. This is the trade to open!

Tip 12. Never add positions to a losing trade. Do add positions when the trade has proven to be profitable. Don’t allow a couple of losing trades in a row become a snowball of losing trades. When it is obviously not a good day, turn the monitor off. Often not trading for one day can help to break a chain of consecutive losses. Trying to get revenge can often make things worse.

Tip 13. Let your profits run. Let your position be open for as long as the market wishes to reward you. Of course, for this traders need a good exit strategy, otherwise they risk to give all profits back… Running two or more open trades gives an option to close some positions earlier and keep others running for higher profits.

Tip 14. Cut your losses short. It’s better to finish unprofitable trade quickly than wait for the situation to get worse. Don’t put a stop loss too far — it’s your money you risk. Better calculate the best spot to enter when a potential loss would be minimized. Again: respect your stop and don’t move it “cherishing hopes”.

Tip 15. Trade currency pairs in respect to their active market hours.

Learn about overlapping market hours: when two markets are open and highest volume of trades is conducted.For example, Australian and Japanese trading sessions are overlapped from 8pm to 1 am EST. At that time trader can successfully trade AUD/JPY currency pair.

Tip 16. Choose the right day to trade. This recomendation is often wrongly taken as an optional thing, because everyone knows that Forex market is open 24 hours a day 7 days a week. Yet, choosing the time to trade can make a difference between successful and hopeless trading. It’s proved and highly recommended not to trade on Mondays, when the market has recently awaken and is making first “probation steps” to form a new or confirm a current trend; and on Fridays afternoon, during the huge volume of closing trades. The best days to trade are Tuesdays, Wednesdays and Thursdays.

Tip 17. Learn about Fibonacci levels and how to use them for trading.

Fibonacci can be very helpful in trading, even partially using the study, for example, to determine the best exit, can bring traders to a new edge of trading.

Tip 18. Always ensure that a signalling bar/candle on the chart is fully formed and closed before you enter a trade.

A golden rule of trading: “Always trade what you see, not what you would like to see” is the best explanation here.

Tip 19. If you ask for someone else’s advice as about how and when to trade

in other words, choose to rely on live trading signals from other traders, make sure you do it for your benefit, not for disaster. If you use such signals to discover how other traders do analysis and study on the price — you are on the right track and soon you’ll be able to do analysis yourself.

But if you’re just blindly following recommendations and your only task is to push the correct button… think again.

Tip 20. Using a highly leveraged account comes at a cost. It will, of course, give a trader more financial gear to trade, but for inexperienced traders high leverage, and, in fact, any Forex leverage can be disastrous. When a trader signs up for a high leverage without knowing how to accurately use it to own advantage, he simply signs up for additional risks that multiply with higher leverage in a tight “friendly” proportion.

Tip 21. Learn to measure trading success by the end of the day, week and then month and year. Do not judge about your trading success on a single trade. To be successful traders don’t need to win every trade, they also don’t become rich in one trade — they need to be profitable in a long run.

Tip 22. There is no such thing as a secret approach to understanding the market. Take the time to develop a solid trading system and find out that the secret to trading success lies in hard work and constant learning.

The 8 Economic Factors That Affect The Forex Market

Where economic theory will affect the Forex market on a long-term basis, the affect of changes in economic data is much more immediate. Oftentimes, the biggest companies in the exchange market are the various countries that participate in market activities and there currency is likened to shares in that country. It follows then that the country’s economic data is analogous to the earnings data of a company or business entity.

News and information regarding a country’s economy can have a direct impact on the direction that the country’s currency is heading in much the same way that current events and financial news affect stock prices, hence the importance of economic factors. The following eight economic factors will directly affect a currency’s movements in the Forex market.

Factor 1 – Employment Data

Non-farm payrolls is the name given to the data that pertains to the number of people who are employed within the US economy, and it is released the first Friday of every month by the Bureau of Labor Statistics. Strong decreases in employment indicate a contracting economy, while strong increases are perceived indicators of a prosperous economy.

Factor 2 – Interest Rates

This is always a major focus in the Forex market. Since the central banks mandate monetary policy and supply, they are the prime focus of investors and the various market participants.

Factor 3 – Inflation

This is the measure of increases or decreases in pricing levels over a period of time. Due to the immense number of goods and services available in a country, usually a grouping of these goods and services are used to measure changes in the pricing. Increases in pricing indicate an increase in the inflation rate which in turn can devalue that country’s currency.

Factor 4 – Gross Domestic Product

This is the measurement for goods and services that were finished over a period of time. The GDP is broken down into 4 categories:

1. business spending

2. government spending

3. private consumption

4. total net exports

Factor 5 – Retail Sales

The measurement of sales recorded by retailers over a period of time is a reflection of either increased or decreased consumer spending, depending on whether sales are up or down for the comparative period a year ago. This indicator gives market participants an idea as to how strong or weak the economy is.

Factor 6 – Durable Goods

Goods that have a lifespan of three or more years are considered durable goods and they are measured in quantities that are ordered, shipped, or unfilled over a period of time. These are also an indicator of economic spending or the lack of it.

Factor 7 – Trade and Capital Flows

Currency values can be significantly impacted by monetary flows that result from certain interactions between countries. When imports exceed exports, there is a tendency for the currency value to decline. Increased investments in a country can lead to the opposite result.

Factor 8 – Macroeconomic and Geopolitical Events

Elections, financial crises, monetary policy changes, and wars can influence the biggest changes in the Forex market. These events can either change and/or lead to reshaping of a country’s economy

Top 10 Currencies Traded On The Forex Market

The FX market, also known as the foreign exchange market, is a way for companies, banks, and individuals to trade currencies to try to gain on their initial investments. The Forex market is different and unique; the three markets (US, Europe, Asia) have at least one running at all times during the weekdays; this makes this a 24 hour a week-day market, working constantly on the week days to make sure currencies can be traded.

All currencies have the opportunity to be traded, but there are obviously major players that are traded the most on the FX market. There are 10 players on the market that find themselves a part of a majority of the trades that happen on the Forex market.

The Norwegian Krone, the Hong Kong Dollar, and the Swedish Krona

The Norwegian Krone is the number 10 most traded currency in the Forex market, as it is a part of nearly 1.5 percent of the daily transactions that happen. The Hong Kong dollar is the number 9 most traded currency as far as the forex market is concerned. Hong Kongs Dollar is a part of nearly 2 percent of the daily transactions. The Swedish Krona is a part of over 2 percent of the daily trades on the forex market.

The Canadian Dollar, the Australian Dollar, and the Swiss Franc

The Canadian Dollar finds itself at number 7 on the forex most traded list with over 4percent of the daily transaction on the forex market. The Australian Dollar finds itself with over 5 percent of the daily forex transactions and at number 6 on the list, and the Swiss Franc finds itself at number 5 with over 6 percent of the daily transactions.

The British Pound and the Japanese Yen

The British Pound, often compared to the US dollar, finds itself at number four on the forex most traded list by being apart of nearly 17 percent of the daily transactions. The Japanese Yen comes in at number 3. The Yen is featured in slightly over 20 percent of the daily transactions on the forex market.

The Euro and the United States Dollar

The Euro is an interesting currency, as it is the currency for multiple countries. This includes countries like Germany. Germany has the bank that does the most trading in the forex market. The Euro is the number two most traded currency on the forex market, as it is a part of nearly 37 percent of the daily transactions. The United States Dollar is easily the most powerful currency on the market, as it is a part of nearly 90 percent of the transactions that occur daily. As the number one most traded currency, it has 5 of the top 10 most active traders on the forex market.

The 8 Economic Factors That Affect The Forex Market

Where economic theory will affect the Forex market on a long-term basis, the affect of changes in economic data is much more immediate. Oftentimes, the biggest companies in the exchange market are the various countries that participate in market activities and there currency is likened to shares in that country. It follows then that the country’s economic data is analogous to the earnings data of a company or business entity.

News and information regarding a country’s economy can have a direct impact on the direction that the country’s currency is heading in much the same way that current events and financial news affect stock prices, hence the importance of economic factors. The following eight economic factors will directly affect a currency’s movements in the Forex market.

Factor 1 – Employment Data

Non-farm payrolls is the name given to the data that pertains to the number of people who are employed within the US economy, and it is released the first Friday of every month by the Bureau of Labor Statistics. Strong decreases in employment indicate a contracting economy, while strong increases are perceived indicators of a prosperous economy.

Factor 2 – Interest Rates

This is always a major focus in the Forex market. Since the central banks mandate monetary policy and supply, they are the prime focus of investors and the various market participants.

Factor 3 – Inflation

This is the measure of increases or decreases in pricing levels over a period of time. Due to the immense number of goods and services available in a country, usually a grouping of these goods and services are used to measure changes in the pricing. Increases in pricing indicate an increase in the inflation rate which in turn can devalue that country’s currency.

Factor 4 – Gross Domestic Product

This is the measurement for goods and services that were finished over a period of time. The GDP is broken down into 4 categories:

1. business spending

2. government spending

3. private consumption

4. total net exports

Factor 5 – Retail Sales

The measurement of sales recorded by retailers over a period of time is a reflection of either increased or decreased consumer spending, depending on whether sales are up or down for the comparative period a year ago. This indicator gives market participants an idea as to how strong or weak the economy is.

Factor 6 – Durable Goods

Goods that have a lifespan of three or more years are considered durable goods and they are measured in quantities that are ordered, shipped, or unfilled over a period of time. These are also an indicator of economic spending or the lack of it.

Factor 7 – Trade and Capital Flows

Currency values can be significantly impacted by monetary flows that result from certain interactions between countries. When imports exceed exports, there is a tendency for the currency value to decline. Increased investments in a country can lead to the opposite result.

Factor 8 – Macroeconomic and Geopolitical Events

Elections, financial crises, monetary policy changes, and wars can influence the biggest changes in the Forex market. These events can either change and/or lead to reshaping of a country’s economy

Forex Trading Tips – Top 3 Money Management Rules to Succeed in Forex Trading

Most of the people whom I have met are only interested in searching for a great FX trading system but neglected on the money management part. You could find yourself in dead end if there is a lack of discipline in following the money management rules even if you know how to trade FX successfully.

Money management is what full time and professional Forex traders seen as one of the most important factor to succeed in Forex trading.

Below are the 3 proven techniques that FX trading experts ALWAYS practice:

1. Only Risk Maximum Of 5% of capital Per Trade

Capital Preservations are very important; it can determine whether you are able to survive in the long run in the Forex market. The reason for risking only maximum of 5% is that you still have ample capital to trade even if you loose a few trades. I risk only 1% of my capital per trade.

Never put all the eggs in one basket. Although you might have Forex trading signals which gives you good probability trades, but this #1 rule should form a general part of your trading system, so that you don’t risk too much on a trade.

2. Have a Healthy Risk to Reward Ratio

A lot of Forex traders only care about making profits in the market. Some don’t mind making small profits although their risk for that particular trade is higher. This is a huge mistake. Never risk more than what you can potentially make. For example, you should have a reward of at least 60 pips when you risk 30 pips, this is a healthy risk to reward ratio of 1:2.

This rule ensures you to be profitable, winning more than you loose. So let’s say out of 5 trades, if you loose 3, which is total of 90 pips (30 pips lost per trade), you win the other 2 trades (60 pips per trade), you will still make 30 pips net(120 pips – 90 pips).

3. Do Not Open Multiple Positions Until First Trade Is In Profits

You may be confident that the first Forex trade that you opened will be profitable, but do not open a second position until you see the profits from the first trade. This helps you to keep calm if the first position is in loss, and you don’t have another burden from the second trade.

Those above may seem simple but actually require much discipline in real fact. That is what makes the difference between professional traders and retail traders, you need the right Forex education.