Forex Trading Is For Everyone

Forex trading is done on a much Larger scale than any other kind of market in the world. Over two trillion dollars is traded every single day. About seventy five percent of all Forex trading is done by ten international Banks with names you’re familiar with: Merrill Lynch, and others. National Banks and other financial institutions account for another huge amount of the FX Markets. Forex trading by individuals, people like you and me only accounts for about two percent of all trading.

There are many people who have an interest in trading FX. This is understandable because there is a lot of money to be made and there are many successful traders out there. There are people who want to treat trading as a full time occupation and other people who want to do it part time. The amount of time that you want to put into Forex trading is your choice.

The rise of online FX trading has seen the amount of capital required to open a trading account come down to a level where anyone can start. However the fact is that the majority of all traders lose money at some stage. What is the answer if you want to be successful in Forex trading? Quite simple, make sure that you go through the right process and develop or choose the right system.

A friend once said to me many years ago that investing in Forex wasn’t easy but it was simple and this is very true. It is simple because anyone can learn to trade with the right commitment and education and also be very successful. But it’s obviously not easy because over 90% of traders fail. The good news though is that you can be successful if you understand the right way of trading Forex.

Keeping it simple is the key and the most important point to remember. Not only can you learn an effective trading method but you can do so very quickly. Those traders who try and be clever by designing and using complicated and difficult systems, very often lose money. Why is this? The answer is that complicated and difficult trading systems have too many parts to them and therefore too many opportunities to brake down. A very important point to also remember is that the success in Forex trading is due to effective money management and the ability of the trader to keep losses small.

It goes without saying that it is essential that you know what you are doing when entering the Forex market. There are a number of options for those who want to increase their knowledge about this market. Some of these options are testing the systems that you will be using, tutorials, trading strategies and knowing the terminology.

Most traders fail because they can’t take a losing trade and are psychologically unprepared for the fact that losses are always going to happen. Even the best traders will lose at some time in their trading career. But, instead of getting angry, frustrated and giving up they learn from these setbacks, accept the losses and most importantly, keep these losses small and under control. Keep your equity intact in the losing periods so that when profits come in, you use them to cover the losses that have been incurred.

I know of many traders who lose the majority of their trades and this percentage loss can be as high as 80%. However when they do win, their gains can be very high because they invest their profits and these profits are very large compared to their losses. When you have learnt an effective trading method, all you need to do in order to be successful is to trade with discipline and confidence. Look at losing in the short term as the key to winning in the long term. Make sure that you get a very good Forex education and learn to trade effectively. If you do all this it will not be long before you are making large profits.

The most important fact that differentiates the winners from the losers in the Forex market is quite simple. It is the discipline and ability to trade a winning system and keep the losses low. Traders fail to win because as soon as they start to lose they make the very big and damaging mistake of either changing their system, letting their losses get too big, start revenge trading or simply give up trading.

Learning and using a logical and simple system is the easy part. Developing the right mindset to trade it with discipline is the hard part. If you don’t have the discipline to follow your trading system, you don’t have a system. It is as simple as that.

In short, Forex trading can be very lucrative, but only if you know what you’re doing. Before starting on any investing, study the details of how the market works, what causes the fluctuations in the market, how to interpret the financial indicators, and all the other ins and outs of the market. Forex trading is a serious venture. There is much potential for profit, but there is even great potential for loss, due to inexperience and lack of knowledge.

Adding Leverage To Your Forex Trading

In the foreign exchange markets, it is common to find leverage of 100:1 or even more. However, just because the market maker or broker may offer you leverage as high as 100:1, it doesn’t mean you have to use all the leverage available. In fact, if you are a savvy trader, you will only use high leverage when you can calculate and manage the risks associated with the high leverage to your advantage. We’ll show you how this is profitable without being problematic.

Margin and Leverage Basics

Using money borrowed from a broker/dealer to purchase securities or foreign exchange is known as “buying on margin”. A trader will usually place a certain amount of money in his or her brokerage account and the broker will use that money as a deposit to allow the trader to buy securities or foreign exchange contracts valued at a multiple compared to the deposited amount.

Leverage is the use of other people’s money to buy or sell contracts or securities. If a broker offers a 20:1 leverage, it means he is willing to allow the trader to borrow 20-times the amount of money in the account to make a trade. So, if a contract is worth $10,000 and the broker is offering 20:1 leverage, a trader will only need to have $500 in his or her account to purchase the contract worth $10,000. If the value of the contract goes to $11,000, the trader will make a profit of a $1,000. This would represent a return of 10% on the contract purchase price, but a return of 200% on equity.

The extreme amounts of leverage that are common in the forex markets occur because the forex is the largest and most liquid market in the world, making it very easy to get into and out of a position. This allows a trader to control, with a certain certainty, how much he or she is willing to lose on a trade. Because it is possible to exit a position quickly and efficiently, forex brokers allow their clients to benefit from high leverage.

Forex vs. Stocks and Futures Markets

Leverage in the forex markets is much higher than in most other markets. For example, if you trade equities, you will be able to borrow twice the amount of money you have in your account. In the case of futures, you may be able to borrow 20-times the amount of funds you have in your account. In the forex markets, because the leverage is so high, the broker or market maker will require you to sign an agreement specifying how a losing position will be dealt with. Because a highly leveraged account poses a greater risk for both the market maker and the trader, there is usually a mechanism in the agreement that will allow the market maker to automatically liquidate a trader’s position if it loses 75% of the margin or deposit. To safeguard the broker/market maker and to ensure that the trader does not have to add extra funds to the account, the losing position will be automatically closed at a certain point in time if the losses on that position threaten to be more than the amount of money available in the trading account.

Traders should read the agreements they have with their market makers very carefully in order to understand how a losing leveraged position will be addressed.

Should a Trader Use All the Margin Available?

Generally, a trader should not use all of his or her available margin. A trader should only use leverage when the advantage is clearly on his or her side. For, example, a trader should plan a trade and know exactly where to exit the trade if the market moves in the desired direction. Once the amount of risk in terms of the number of pips is known, it is possible to determine how much money will be lost if the trader’s stop-loss is hit. As a general rule, this loss should never be more than 3% of trading capital. If a position is leveraged too much, so that the potential loss could be, say, 30% of trading capital, then the leverage should be reduced until the potential loss is no greater than 3%. Each trader will have his or her own risk parameters and may want to deviate either more or less than the general guideline of 3%.

Another thing for the trader to note is that the larger the amount of money one has for trading, the easier is it to use leverage safely. Because a leveraged position can lose money just as quickly as it can make money, a trader should have enough funds to act as a cushion against any drawdown or adverse moves without the risk of being automatically liquidated and losing the bulk of his or her trading capital.

The specific risk of leverage is the fact that traders use borrowed money to buy or sell a contract. Unless the market is making a favourable move, losses will be magnified by the amount of leverage employed.

How Should a Trader Calculate How Much Margin to Use?

Suppose that you have $10,000 in your trading account and you decide to trade 10 mini USD/JPY lots. Each move of one pip in a mini account is worth approximately $1, but when trading 10 minis, each pip move is worth approximately $10. If you are trading 100 minis, then each pip move is worth about $100. Thus, a stop-loss of 30 pips could represent a potential loss of $30 for a single mini lot, $300 for 10 mini lots and $3,000 for 100  mini lots. Therefore, with a $10,000 account and a 3% maximum risk per trade, you should leverage only up to 30 mini lots, even though you may have the ability to buy or sell more than that.

Conclusion

Trading in the forex markets offers many potentially profitable opportunities. Using leverage can magnify these opportunities to a very large degree. Using leverage requires a complete understanding of risk management and the use of properly defined stop-loss orders in the market. It also requires that traders be disciplined enough to follow the rules necessary for taking advantage of leveraged markets. Leveraged positions can be a trader’s best friend or his or her worst enemy  – it all depends on mindset and trading habits. Good traders are disciplined and adhere to their risk management rules.

Source: Selwyn Gishen

Six Trading Tips for the Forex beginners

For those of you who are new to the forex market, or even for those of you who are considering becoming a forex market trader, this article is for you. Welcome to forex 101, where you will learn exactly who forex is and what it does. Also for the forex newbie’s, you will find a list of six trading tips that will help you in your transactions.

For those of you who are new to the forex trading market, first you will need to know the meaning of the term “forex” which stands for Foreign Exchange market. This pertains to the international foreign currency exchange market where currencies of all kinds are bought and sold. The forex market got its start back in the early 1970’s when floating currencies and free exchange rates were first introduced. At this time, the forex market traders were the only players on the market to decide upon the value of one type of currency against another, all solely based upon a particular currency’s supply and demand.

The forex market is very unique for a number of reasons. First of all, this is one of the few markets that require very little trading qualifications and is free from any external control and can not be manipulated in any way. As the largest financial market, with trades reaching up to 1.5 trillion U.S. dollars, or USD, the money moves so fast, it’s impossible for a single investor to substantially affect the price of any major foreign currency. In addition, unlike any stock that is rarely traded, forex traders are able to open and close any positions within seconds, because there are always a number of willing buyers and sellers.

1. To open a forex account, all you have to do is simply fill out an application and provide all the necessary identification. The application will include a margin agreement will state if the broker will be allowed to intervene with any trade when it appears too risky. This agreement is made to protect the interests of the broker because most trades are done by using the broker’s money. However, once you have established an account, you can fund it and begin trading in the forex market.

2. In order to become a successful trader, you will need to adapt your own trading strategy. There is no one strategy that will work for all the traders, each individual trader will need to develop their own approach to the market. While some traders may relay solely on technical analysis, others may prefer a more fundamental approach, while the more successful traders use a combination of both. Each individual trader will need to learn the best approach for them selves in order to gain a more comprehensive overview of the forex market in order to prepare for any entry and exit points.

3. Understand that prices move by trends. Forex has a popular saying, “The trend is your friend.” there are certain movements that have been studied over many years in order to identify a pattern in the trend. These trends need to be understood in order to understand a good trading strategy. For small accounts that are $25,000 and under, trading with a trend may help improving your odds when compared to bi-directional trading. Most newbie’s will look to trade in any direction, when they should be trading with a trend.

4. Before you take any position, look over the top five currencies to make sure you’re not missing something. The top five foreign in forex are: USD/Yen, Swiss franc/USD, Euro/Yen, Euro/USD and Pound/USD.

5. For newbie’s, it would be safest to have two accounts because you learn as you play the trading game. Keep one real account, one that you will actually use to trade real money; and the second account should be a demo, one that you can use to test alternative moves in the trading game. You can easily use your demo account to shadow the trades in your real account so you can widen your stops to see if you are being too conservative or not.

6. Always examine the one hour, four hour and daily charts that concern your trades. Although you can trade at 15 and 30 minute time intervals, doing so requires a handful of dexterity.

Source: Mike Sanders

Wise Forex Investment Through Forex Education

With all the investment services being offered in the Internet today, just thinking about all of it will really give you a big headache. Investments like stocks, securities, real estate, bonds, shares, equities, mutual funds, and commodities investments are all good ones to consider, but one of the better investment opportunities that you should be looking into is online Forex currency investing.

You need to start out in the right direction with having a proper education and the correct Forex training to strengthen your confidence and knowledge in currency trading matters.

The Forex market is the largest and most liquid of all existing markets of today, and is one that operates in all major countries in the world. It’s one of the largest sources of income, savings, and investment opportunities open to anyone thanks to the Internet. For decades it has been restricted and primarily dominated by large companies and financial institutions.

Diving in head first into this huge and diverse market, you might want to consider making a bee line for the most appropriate Forex training programs that are available in the Internet. Going ahead in any business without proper knowledge of its basic operating functions is a recipe for a disaster waiting to happen. You can get all the proper training you’ll ever want and need in the form of online classes and tutorials.

One of the best trainings you can avail online is a Forex demo account where you get to play with “fake money” to practice with prior to doing the real deal; it will let you get a feel how it’s like doing currency trading, and you can gauge your performance with the trading system you’re using without actually losing your money in the process. With being properly trained in Forex trading, you’ll be able to adjust to the varying changes of the market – which will be in constant states of fluctuation most of the time.

The really great thing about online Forex currency trading is that it allows you to trade whenever you wish to do so, as it operates in a 24 hour basis, and in 5 days a week you’ll never run out of trades to invest in. Just keep in mind to keep learning as you go along with your day to day trading, and to keep reading all the material you can get about Forex currency trading. With a positive attitude, and self-determination, you’ll go a long way in this industry.

Source: Bart Icles

Fx Trading Secrets: No Magic, Follow The Basics

Why there are hundreds of people trading forex market daily. How they are making money out of it? This particular article tells you the essential tricks for making money in forex market. But trader must keep in mind those whole essential criteria for the profitable trade is consistency when it comes to decision making.

1. Trades Consist of Two Currencies, Not One – You should never undertake a forex trade without considerable knowledge of the both currencies involved. Take the time to research any currencies you are considering prior to pulling the trigger on your trade.

2. Do Your Homework! (FX Trading History) – Before you begin trading, make sure to learn the basics of the forex market. Forex trading is heavily affected by global news, both real and perceived. Knowing how to discern between the two only reinforces your success.

3. Trading for small profits, 10 pips or less: Many a times new traders place very tight orders in order to take small profits. This is not a good approach as one may get profits in the short term but he is surely risking his earning for the long term. Because with tight trades it is not possible for you to recover the difference between the bid and ask price.

4. Plan your strategy: Planning one’s strategy is one of the important aspects of FX trading secrets. One needs to follow whichever strategy he decides. There is hundreds of different profit making strategies so one must choose any one of them whichever suits to your nature and try to stick to it.

5. Business, Never Personal! (Stay Level Headed) – Forex trading, as with most business ventures, is a rational endeavour. If you are experiencing outside stresses or pressures unrelated to forex trading, you should consider taking that day off. Your pockets will thank you.

6.Read Your Technical Analysis – A well prepared analysis can contain key information on when to buy and sell the market. You can determine whether the market is long, short or over extended by paying attention to a technical analysis. Keep abreast of them.

7. Believe in Yourself! (Confidence) – Forex trading is not a “get rich quick” scheme. It takes studying, planning, and most importantly, confidence. When your software says you are up, but your bank account says otherwise, its easy to get discouraged. Make sure to study the basics and master your skills before entering the market. A steady approach can take all of the magic out of “forex trading”, steel your confidence, and earn your the profits you desire!

Source: John Eather

Learn to Develop Trading Discipline

You need to develop trading discipline. If you come to a point in your market analysis in a trading session when you have no confidence on the accurate direction of the market forecast, choose not to trade. Always remember, a lost opportunity is better than lost capital.

You should wait for the market conditions to become clearer before you enter a trade. You should increase the probability of success by trading when the trade setups are strong and risk to reward ratio is not more than 1:2. This is far more important in forex than in stock markets. The forex markets move a lot as compared to the stock markets.

You need to learn that high leverage will give you the opportunity to make a lot more money much quicker. But in case you go wrong, currency markets are ruthless. You can get your account wiped out. You don’t see an opportunity clearly. Try to sit on the sidelines. You don’t have to trade every time. Wait for the market conditions to become clearer. You should learn to be a patient trader. Wait for the market to come to you.

A very conservative yet a very effective trading method would be to never use leverage of more than 20% on your capital. So you should only trade 1 lot with a $10,000 capital in your account. Using good money management rules and trading discipline, you can grow your account realistically in a short period of time.

The compounding factor of money is very powerful. Many people want to get rich quick. They try to take unnecessary risk. Don’t focus on proper trading principles. Develop the discipline in yourself to follow simple money management rules.

If you are trading a mini account, start by trading one position of one tenth of a lot. You will not make much money in the beginning as the position size is only one tenth of a normal lot. But the percentage of returns will compound over time and let you trade a much larger sum of money with the passage of time.

As a trader, you should make realistic goals that can be achieved over time. You should always trade with the money that you can afford to lose! Never ever trade with money that you cannot afford to lose! It is foolish. You should never borrow money to trade. You should not use money that you would use to pay monthly utility bills. You should not use your life savings. You should not think like a gambler.

Source: Ahmad Hassam

Forex Market Update 15-12-09

Market Comments:

The Yen caught a tailwind to open the week on a much stronger than expected Q4 Tankan survey and on assist from Bunds, which rallied strongly in the European session after last week’s rather steep sell-off. An interesting juxtaposition of article on our Bloomberg terminal this morning as one article proclaims “Yen Favored for Carry Trades as Japan Faces Deflation”, while another shouts “Why Japanese Government Bonds Yielding 1.3% Offer World’s Highest Returns”. The former article is rather interesting as it argues that Japan could become the funding currency of choice for carry trades as its Libor rate drops below the US rate. Another potential JPY negative in the New Year is fiscal concern as the government looks to stimulate its way out of a new deflationary rut with heavy spending that will only add to the world’s heaviest public debt burden. This could be a growing theme in 2010 and we may have seen a “distant early warning” of this with the large recent rally in USDJPY. The latter article simply points out that Japanese debt was the world’s best performer in November due to the Yen strength. The flipside of deflation is, of course, that each unit of a currency in a deflationary country becomes more and more valuable over time – and this is the paradox of the carry trade and trying to sell low yielders.

Pound rebounds on Dubai bailout
Abu Dhabi agreed to shovel $10 billion dollars into the real estate black hole of Dubai World, which allowed the latter to make good on debt payments that come due today and to buy time in an effort to renegotiate the terms of other debt. This boosted the pound overnight, with EURGBP trading back below 0.9000 at times in the European session after a weak close on Friday . Tonight we get the RICS House Price Balance from the UK. It is hard to believe that UK housing has come full circle and is actually appreciating in price on YoY comparisons. The RICS balance has fast reached close to the peak of its historical range.

Chart: GBPUSD
Three days in a row of indecision for GBPUSD heading into today. The recent break of the 1.6250 neckline-like area failed to generate a firmer southerly push for the pair, but neither was there a strong upside reversal. The recent low just below 1.6200 was very close to the key 0.618 Fibo, so that level will be in focus on any further weakness.  A break could lead to a test of the 200-day moving average, which is fast rising toward the 1.6000 handle. To the upside, bears would be discouraged by any close back above the 1.6350/75 area.

Looking ahead
The divergence in the old theme of the USD and risk appetite moving in a reflexive lock-step is clearly being challenged of the last week, a very interesting divergence from past behavior. Let’s see if this persists – it certainly makes it easier to believe in a continuation of the greenback rally when we don’t have to fixate on this correlation. To get the strong USD correction fully into gear here, we’d like to see CAD and AUD fail key support levels vs. the greenback as well. AUD remains supported on the recent employment report and continues to enjoy strength from risk appetite. The key support levels in AUDUSD at the moment are 0.9015 and 0.8900. To the upside, the important tactical resistance line is clear at 0.9125.

Key event risks out of the US this week that will help determine whether the USD rally has any legs include  PPI tomorrow and CPI Wednesday ahead of the week’s main even later Wednesday: the FOMC meeting and “rate decision” – i.e., monetary policy statement tweaking.

What are Forex Pips?

Forex is a good way of supplementing your current income, while still maintaining your present work. So it is really important that you familiarize yourself with its terminologies to make you better understand the many events and happenings in the market. One of the most important things you will come across is the term Forex pips.

Now you may ask, what are Forex pips? A PIP is the acronym for the term Percentage In Point. To put it in simple terms, a pip is the least or smallest price increment in Forex Trading. Most currency pairs are priced to its 4th decimal place – with the exception of the Japanese Yen with a pip equal to its 2nd decimal point, or .01 yen. The pip equivalent of a $ 1 is 0.0001 ( or 1/100th of a cent). A pip is how Forex currency traders measure gains or losses.

A major currency pair between a EUR/USD might be bid at 1.1600 and offered at 1.1605, the spread difference or your profit would be 5 pips. The currency market trades in pips to simplify matters, such as when major Forex traders like central banks that trade in the hundreds of millions of dollars, the value for each 0.0001 would be worth thousands of dollars.

To be successful in Forex trading, you need to maximize your pips as much as possible with having more pip gains than pip losses. Although, its not possible to win all the time, its advisable to have better spreads in your long term trading. So its best to buy currency when it is at its lowest value, and then sell it once determining factors point it at its peak or highest value. But with the numerous and complicated factors affecting the rise and fall of currency values, its really easier said than done.

Source: Bart Icles

Choosing a Forex Trading System

One of the biggest trading markets in the world is the foreign currency exchange market. It is also one of the most attractive trading markets as it is open to online trading or trading through the internet. Forex trading can be very profitable and it is important that you do substantial research to have a better understanding of the forex market before you decide to participate in trading.

When participating in forex trading, one of the things that can help you a lot is having a reliable foreign currency exchange trading system. Forex investors, whether large or small, find forex trading systems valuable. There are lots of information that you need to manage when you participate in forex trading. Forex trading systems help you find your way through the minutiae of data involved in the simplest of forex transactions.

Forex trading systems make it easy for investors to monitor outside market factors and indicators of the daily nature of the market, especially with the use of charts, graphs, and report tables. There are many different forex trading systems online, from the simplest to the most comprehensive, from the smallest to the largest.

In choosing a forex trading system to use, try to review testimonials posted by people who have actually used the system. Take note of those who do not like a certain system and list down their reasons for not being satisfied with that forex trading system. However, most testimonials and reviews that you will come across online will often speak of good points and satisfaction with the forex trading system being marketed. Take extra caution in totally believing reviews and testimonials. Always do proper research so you can better understand a system that is new to you.

It is also important that a forex trading system is profitable. There is no point in engaging in forex trading if you are not gaining profits. If you just want to break even, better stop forex trading as all the hassles that you have been through will only prove to be a waste of time. Forex trading systems must help you gain profits, and at the same time not too expensive that you are no longer able to see any return on your investment.

How does one tell if a forex trading system is profitable? Factors like drawdowns and time to profit are typical indicators of the profitability of a forex trading system. A drawdown is the maximum difference in the equity of a forex trading system over a certain period of time. Time to profit is the actual time it takes a forex trading system to achieve a positive result. These two factors help measure the survivability of a certain forex trading system.

Keep in mind that finding the forex trading system that best suits you is a blessing in forex trading. Do substantial research and apply the tips you have gathered along the way. The most popularly used forex trading system might just not be the one that best suits your needs.

Source:Bart Icles

Forex Trading: A Brief History

The foreign exchange or forex market is perhaps the biggest market in the world. With the leverage, high liquidity, and availability it offers – not to mention its low dealing costs, more and more people are becoming interested in engaging in forex trading. Although the forex or currency trading market is largely the sphere of financial institutions, practically anyone who is interested in forex trading can learn the basics, engage in the market activities, and earn the benefits.

So how did the foreign exchange come to be? One can say that it all started with the introduction of minted coins to trading. As years passed, stable governments introduced paper as “I owe yous” and gained popular acceptance during the middle ages. These paper “I owe yous” later became the foundation of what we know today as currencies.

With the rise of banks and central banks came the concept of the convertibility of currencies into gold. Prior to World War I, exchanging paper money for gold did not happen often. On several occasions, the failure to print paper money in proportion with a government’s gold reserves led to inflation that in turn resulted to political instability. To counteract these devastating results and protect local national interests, governments started to agree on foreign exchange controls to keep market forces from reproving monetary irresponsibility.

After World War II, countries faced the biggest challenges on monetary inflation. To address this, governments have reached the Bretton Woods agreement that suggested a currency exchange system built on the US dollar. This resulted in a system that dealt with fixed exchange rates that reinstated the gold standard to a certain degree, fixed the value of the US dollar, and fixed the value of other main currencies to the dollar.

In the 1960s, national economies moved in different directions that placed the Bretton Woods agreement under increasing pressure. For quite some time, several realignments helped keep the system alive but the Bretton Woods agreement finally collapsed in the early 70s when President Nixon suspended gold convertibility in August 1971. However, governments continued to trade currencies based on fixed rates, and even set off regional efforts to stabilize the monetary volatility.

The European Economic Community or EEC introduced another system based on fixed exchange rates. This came to be known as the European System of 1979. Although this modern system almost met its end in 1993, efforts to stabilize currency continued in the region and it has successfully renewed the attempts to fix currencies and replace many of these currencies with the Euro.

Today, the foreign exchange market remains to be one of the most lucrative and dynamic trading markets in the world. It continues to exist not only to facilitate trade and investment, but also to place appropriate value on multifarious international currencies.

The Best Day Trading System – How to Find It?

Day trading in the stock market has become one of the most sought after careers in the world. Many people have tried it with mixed results. While most people fail miserably with their trading system, others get rich with theirs. Regardless of who is trading, you’re not going to get very far without a good system. This is why some people make enough money to do this as their full-time job while others lose some money and go back to their day jobs. So what is the secret to finding a profitable trading system?

The biggest thing that you need to do is research. There are literally thousands of different trading systems out there that you can use. You could try short-term trading, swing trading, or long-term trading. You could deal with penny stocks, well-established companies, or exclusively energy companies. There is really no shortage of possible strategies to pick from.

One popular way to trade is through the use of analysing software. There are many short-term investment vehicles that deals with penny stocks. They look for high reward/medium risk stocks to invest in. They’ll sit and analyse penny stocks every day all day. When they recognize a profitable trade opportunity, they’ll tell you when and what to buy. You’ll get an email that says what to do and you do the rest. In this manner you can get some very profitable trades in your account. You’re only going to get one or two trades per week, but when you get a trade, you can feel safe that it will be a good one.

Overall, there are many great trading systems for people of every kind. If you are just looking for a way to supplement your trading strategy, you can undoubtedly find the method for you. Get out there and start looking for that perfect system today.

Source: Peter Skotnicky

HOW TO READ FOREX PRICE CHARTS?

I admit that reading charts, and interpreting patterns, are more an art than a skill. Base and apply your entry and exit decisions on your own combined methods of technical and fundamental analysis.

Forex charts are easier to interpret and to use. They reflect a slower moving, stable economy of a country, compared to the stock market, with its daily drama of company reports, Wall Street Analysts and shareholder demands.

Unlike stocks, currency charts do not spend much time in trading ranges and have the tendency to develop strong trends. Furthermore, Forex with its 4 Mayor currencies is easier to analyze than tens of thousands of stocks.

(Mayor currencies are: USD/JPY, EUR/USD, GBP/USD and USD/CHF)

Understanding just a few basic points about the technical analysis of currency chart can lead to increased profit potential.

Pricing – Price reflects the perceptions and action taken by the market participants. It is the dealing between buyers and sellers in the Over-The-Counter (OTC) or “interbank” market that creates price movement. Therefore, all fundamental factors are quickly discounted in price. By studying the price charts, you are indirectly seeing the fundamental and market psychology all at once , after all the market is fed by two emotions – Greed and Fear – and once you understand that, then you begin to understand the psychology of the market and how it relates to the chart patterns.

H = Highest Price
L = Lowest Price
O = Opening Price
C = Close Price (or Last Price)

The most common types of price bars, used in Forex trading, are the Bar Chart and the Candlestick chart:

Bars Charts – Price bars are a linear representation (a line) of a period of time. This enables the viewer to see a graphic representation summarizing the activity of a specific time frame. As an example, I use 10 minutes, 60 minutes and daily time interval for my systems. Each bar has similar characteristics and tells the viewer several important pieces of information.

First, the highest point of the bar represents the highest price that was achieved during that time period. The lowest point of the bar represents the lowest price during the same period. Regular bars display a small dot on the left side of the bar which represents the opening price of the period and the small dot on the right side represents the closing price of the period.

Candlesticks

Japanese Candlesticks, or simply Candlesticks as they are now known, are used to represent the same information as Price bars. The only difference is that the difference between the open and close form the body of a box which is displayed with a color inside. A red color means that the close was lower than the open, and the blue color represents that the close was higher than the open.

If the box has a line going up from the box it represents the high and is called the wick. If the box has a line going down from the box, it represents the low and is called the tail.

Many interpretations can be made from these “candlesticks” and many books have been written on the art of interpreting these bars.

Chart Intervals & Time Frames:

A chart Time Scale & Period, or time frame, basically refers to the duration of time that passes between the OPEN and the CLOSE of a bar or candlestick.

For instance, with your broker software, you will be able to view a currency pair, in a 1-hour time frame over a 2-day period, 5-day period, 10-day period, 20-day period and 30- day period.

Most of the short-term time intervals (5-min and 1-min charts) are used for entry and exit points and the longer- term time intervals (1-hour and daily charts) are used to see where the general trend is.

Forex Accounts

Good money management is the key to your long term success in currency trading. Many people ignore this aspect of trading at their own peril. Trading discipline means using a trading system that uses good money management rules to avoid using emotions in making trading decisions.

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.

The minimum amount required to open a standard account with many forex brokers is $2000. You can start with $2000. However, it is recommended by most of the professional traders that you should start with at least $5000 to get good results. A trader with limited capital is always a worried traders 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.

A standard account or a regular account (often also called 100k account), lets you trade a $100,000 standard lot with a $1000 deposit. This $1000 is kept as the margin by the broker. This is a 1% margin. Your account should have more than $1000 if you want to trade a $100k lot.

You can change the margin account to whatever you feel comfortable with. When you open an account with the broker, you must determine what the default margin is. If you start at 2% margin, then it will cost you $2000 to trade one standard lot.

Many brokers offer huge leverage to the new trades. This is done to entice them to trade more. You can get a leverage of up to 200% by some brokers. Using 200% leverage means trading $200,000 with a $1000 deposit. With a small deposit you are controlling a huge amount. Be careful! You will get wiped out in a moment. Dont use more than 4% leverage while trading in the start. Too much leverage is dangerous for you.

With practice and more experience, you can increase the level of leverage in your trading. Its not that leverage is bad. Its just that you need to understand and learn how to use it. You can only do so with practice.

Mini accounts are great for beginners. You can open a mini account with most of the brokers with a deposit of only $300. 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. You only need $50 to control a mini lot of $10,000. This is a leverage of 200%. 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.

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 $500 on a mini account. A mini account is a great way for beginners to practice forex trading. Once you develop the feel of how the currency markets work, you will have to open a standard account. It is on the standard account that you can make good money.

Source: Ahmad Hassam

Forex Trading Simplified

Forex is the world’s most liquid and volatile trading market today. If you are new to FOREX trading, then you should have a good knowledge of its basic principles, and a better understanding of how the market works. 95% of traders who lose do so because they never took the time to learn the basic principles, and from the mistakes of others before them.

Get educated with all the basic fundamental elements and principles of the FOREX Market by getting an online FOREX Training course. Majority of those who fail miserably are those whose knowledge of the market is fairly limited in scope, or have none at all. Getting educated is just one step to having a successful career in currency trading, but it is by no means a guarantee to making sure profits.

Maximize Profits

• Learn how to maximize your profits by adopting various trading methods, and how it fits into your plans and expectations. Be familiar with the various systems applied by other traders to gradually get a basic knowledge of which system works for the various trading deals. Constantly scan for other trade deals done by large corporations, and banks since they are the ones mostly needing a continuous flow of currencies.

Be smart

• Learn and practice good Money and Risk Management skills to make trade decisions based on hard facts, not from emotion. In FOREX, values and rates are always fluctuating – so always keep your smarts on the alert in order to know when to buy or sell a currency. The technical aspects of currency trading is only as good as the trader whose interpreting it, so get a good understanding when to take a risk or when to let it pass by.

Learn as you progress

• Forex evolves in parallel to the developments and advancements of technology. Keep an open mind for new and updated methods and technologies to use in your daily trading activities. And never forget to keep abreast of free learning materials available on the Internet, as well as to read up on any news that might impact the industry.

Be disciplined

• Follow a system based on solid facts and data’s gathered from research, and tips from expert traders. Determine weak and strong points to make decisions based on a valid assessment. Keep a focused mind on your trading business at all times, and most importantly, always follow the rules and regulations of the trade, no matter what.

If you want to be on the winning side most of the time, and become a successful trader, you should follow these essential trading tips.

Source:Bart Icles

Popular Forex Signals

Forex signals or indicators are those series of data points that are used in predicting currency movements. These signals are used by forex investors to evaluate how a certain currency will most likely perform in the future. Using forex signals in forex trading can certainly be to your advantage. They give hints on which currencies are most likely to become profitable and which ones are most likely not to perform as well in the short term.

One of the most popular forex signals is the relative strength index or RSI. It measures the ratios of upward and downward movements of currencies with use of normalized calculations so that indices can be expressed in a range of 1-100. An RSI of 70 and more means that a certain currency is overbought, while an RSI of 30 and less shows that a currency is oversold. A currency is overbought when its price has risen more than what the market has expected and it is oversold when its price has fallen more than what the market has foreseen.

The stochastic oscillator is a forex signal used in showing the overbought and oversold conditions on a scale of 0% to 100%. It is based on observations of currency buying movements. When currency buying moves in an upward trend, the closing prices of currencies would tend to concentrate in the higher part of the range for that period, and when currency buying moves in a downward trend, closing prices of currencies would most likely fall near the extreme low of the range for that certain period.

Another signal used in forex trading is the average true range or ATR. The ATR was developed to give forex traders a feel of the historical volatility of a currency in preparation for actual forex trading. Forex currency pairs that have lower ATR readings suggest lower volatility, while those currency pairs that have higher ATR readings suggest higher volatility and would often necessitate appropriate trading adjustments.

The moving average convergence divergence or MACD indicator is another forex signal that is worth mentioning. This forex signal involves the plotting of the MACD line and the trigger line. The MACD line shows the difference between two exponential moving averages like the buying and selling prices while the trigger line shows the exponential moving averages of their differences. Once the MACD and trigger lines cross, one can say that a change in the movement trend is to be expected.

Source: Bart Icles

Forex Mini Accounts Explained

If you are new to forex trading or have only a small amount of capital available right now, mini forex trading could be the way to go for you. It allows you to trade with real money while limiting your risk to a relatively small amount. Generally the lot size of trades for a mini account is only one tenth of the lot size for a standard account with the same broker.

Mini Forex Trading Or Demo?

Somebody starting out in forex has several options:

1. Start out right away with live trading in a standard brokerage account, investing from $10,000 to $20,000. This would be very risky for a new trader.

2. Begin with live trading in a mini forex account. You need at least $1000

3. Start out with a demo Forex day trading account where you are picking up trading skills without investing any real money at all, then when you are consistently making profits, switch over to either a mini account or full brokerage account depending on your capital and your strategy.

Advantages Of A Mini Forex Trading Account

Most people choose option 3, the demo account. They feel much safer using ‘toy money’ online for several days, weeks or months. A demo account also gives you the opportunity to try out the various different strategies that you are probably reading about.

However there can be problems with running a demo account for too long. Some forex traders and trainers say that it lulls you into a false sense of security. It is much easier to take risks when there is no real money involved, and you will be practicing with strategies that you may be uncomfortable using in real life trading.

So what can happen is that the demo account teaches you to make profits using medium to high risk strategies, but when you are faced with a real cash situation you may lose your nerve. This usually results in poor decisions made on the spur of the moment and ‘strategy hopping’ where you are constantly switching from one plan to another. Losses are almost inevitable in this situation.

For this reason, some experts recommend starting with a mini account and using real money almost from the get-go. You would only use a demo account for a small number of trades to familiarize yourself with the technical side of operating your account and making trades. In this way you are likely to learn strategies that can work for you in the long term.

However you choose to start, you will need to accept that forex trading is high risk by its very nature, like all forms of investment that offer the possibility of large gains in a short time. You should only invest cash that you are prepared to lose if things go against you.

Starting out with a mini Forex account can be a great way for someone who is new to forex to pick up the techniques for real. Mini forex trading could be the best way to find out for sure whether foreign exchange trading is right for you.

The Best Way to Start FX Trading

There are a few misconceptions involving forex trading. Many automatically assume because the trading involves foreign currency, a substantial amount of money is required to start. This is simply not true. One can open what is called a forex mini account which is quite affordable by many standards. Let us examine the different types of accounts.

One type is called the low minimum. This is very convenient for people with a low budget. With just $2000.00, one can open a forex account and begin trading. One of the advantages of this type of account is that the risk factor is low considering that beginners are still learning the techniques of forex trading. One can even consider this their start-up capital.

Trading in pips is also one way one can learn forex trading easily. This allows the trader to minimize the risks involved. Forex trading is also possible with less pressure and low risk. In this type of account, one does not loss everything in the event that there was market downturn. This may call for some discipline and also following the proper forex signals.

It is also recommended that before you embark on a forex account, you conduct some research. Learn as much as you can but do not be overloaded with information. Process information the right way and do not wait too long before you act. Some people are clouded with too much information and are therefore unable to act. Also before you purchase any expensive programs out there, make sure you have “shopped around”. This is because too many people rush to purchase programs which offer information that can acquired for free.

One great way is also to learn to interpret the trading patterns correct. The best forex traders have been able to polish this skill and are able to predict that certain circumstances will affect the state of the stock market. These are sometimes called forex signals. Seasoned trader understands the importance of being able to predict events that hold sway on the forex markets. Admittedly, this is not something that you learn right away but something that you acquire over time.

Forex trading as you have seen need not be complicated. Only misconceptions can render it difficult but if one has the passion and the willingness to learn, they can become successful enough to earn a steady and regular income.

Source: Fred Todle

Forex Trading

The number of traders who have entered the forex market in the last 12 months is staggering. Many have been attracted by the ability to make positive returns while the stock markets plummet. Others are attracted by a market which is open 24 hours a day. Either way, thousands of traders each day are signing up for an account to try out forex trading. In this article we will examine factors which traders need to take into account when choosing a forex trading broker. 

Over the past few years, there have been a number of unregulated forex trading brokers who have been closed by the regulators for defrauding account holders of their accounts. Therefore the most important aspect is to check with your forex trading broker that they are regulated by the relevant authority in the jurisdiction you are based.

Typically, the spread on major currency pairs will be between 3 and 4 pips. Spreads on currencies such as EUR/USD and JPY/USD will be around 3 pips.

The basic aim of hiring a money manager is to have a professional looking over the market for the investor. In Forex, traded spreads are calculated in a special unit known as ‘pips.’ Spreads basically refer to the amount in which a particular currency is bought and sold at a given time. An important thing to understand is that the exchange of currencies does not take place in the central exchange.

Traders from stocks and options who move into forex trading will have a new concept to deal with, called leverage. Each broker will offer varying levels of leverage. Leverage can drastically increase your forex profits, however it can also magnify your losses. For example, if a broker offers 50 times leverage, this means that if you have a balance of $1000, you can trade with a notional $50,000.

The risk of using a lot of leverage means that if your trade is an unprofitable one, then you could get wiped out very quickly, and end up broke.

In the currency market, prices move very fast, in milliseconds, and so it is very important that your forex trading broker can ensure that your trades are executed just as fast, and at the price that you require. So for good measure, before you open a real-time forex account, you should trade with a demo account, and test how good the execution prices are, and whether they reflect the true prices in the foreign exchange market.

Another consideration to bear in mind is that you will need a forex trading broker who offers a comprehensive charting package along with the trading account.. This enables the trader to take a trade directly off the charts, and ensures that the trader gets the best possible price.

Source: Easy Forex

The Ins And Outs Of An Online Forex Trading Platform

If you are as confused as I was when I started trading currency on the foreign exchange (forex), than this article will do wonders for you. From facts on the forex to the best online forex trading platform, your questions will be answered.

Ok, let’s go over some of the basics. What is the forex? Well, forex, the word is simply a combination of the phrase Foreign Exchange. That’s it, you’re ready to trade. Oh, you want more? The forex market is an electronic market where the currency of different countries are traded.

In actuality, you are trading the value of currency A vs. the value of currency B. Although you can combine any two currencies to form a currency pair, there are four currency pairs that are considered the major pairs.

They are:

EUR/USD (Euro/Dollar), GBP/USD (Pound/Dollar), USD/JPY (Dollar/Yen), USD/CHF (Dollar/Franc). You can spend your entire currency trading career trading just one of those pairs.

Now for some interesting facts about the foreign exchange (forex) market. It is over 30 times as large as any other financial market. Remember this fact, we will be touching on it again later. The forex market is open 24 hours a day 5 days a week. This is a great feature as it allows you to partake in the business of currency trading regardless of where in the world you are.

Back to the size of the forex for a second. Due to this attribute, the foreign exchange market provides currency traders with opportunities that do not exist on any other trading tool. Although this article is not being written to get into too much detail about this, I’ll give you an example. There is no slippage on Stop orders during regular trading hours. If you are not sure what this means, I strongly suggest you spend some time looking it up. This is a quality that, by itself, separates the forex from all other markets.

So, now we get to the nuts and bolts of this article. What is an online forex trading platform?

Truth is, whether you are doing your own trading, following some form of forex trading alert or any other sort of forex trading system you are going to need an online forex trading platform.

Regardless of which forex broker you choose, you will be provided with some form of online forex trading platform. Usually, the trading platform will be the same whether you are trading mini contracts or full contracts.

What should an online forex trading platform provide?

Firstly, you should be able to see the value of your account at a quick glance. Also, you should be able to see how much money you have in the market and in what currency pair at any given time.

Secondly, the value of all currency pairs of interest to you should be right at your fingertips. This means that you should be able to define which currency pairs you want to have access to and you should be able to choose the look and feel of the quotes.

Thirdly, an order entering system should be easy to find and easy to use so that you can make quick reactions when you see an opportunity present itself. When you see a 20 pip reward and a 10 pip risk trade, you don’t want to be fumbling around with your mouse or keyboard, you just want to trade.

In a very small nutshell, that’s it. Those are the three things that an online forex trading platform needs to offer. If you have those than currency trading on the foreign exchange (forex) is only a few clicks away.

Source: Eddie Yakubovich

Forex words – What Is Forex Signal Trading?

Designing a forex signal trading system requires technical analysis of market indicators, statistics or trends. Without a forex system, a trader tends to let his/her emotions get in the way. Forex signals are used to take the “emotion” out of the equation.

A new trader can design his own forex signal trading system after getting some education and practicing with a “demo” account. Most websites with trading platforms offer daily newsletters which they post on their sites or send to the traders e-mail address. These newsletters are generally from a professional trader, broker or market analyst and can prove very helpful, whether the trader has a forex system or not. The ultimate goal, of course, is to make successful (profitable) trades by using all available information.

The type of forex trading signal or strategy that a trader uses depends largely on the type of trades that he/she is interested in making. There are short, medium and long-term traders and each have advantages and disadvantages.

A short term or day trader capitalizes on very small changes in rates that they expect to happen each day. The forex system for the short term trader will focus on the study of daily charts, indicators and even time of day. A long term trader needs large amounts of capital to cover daily fluctuations and his forex system will focus on long-term fundamental factors. A long-term forex trading system will be quite different from a short term forex trading system and the indicators that signal each to make a trade will be quite different.

The majority of traders fall in the medium term trader category. These traders have the least risk and generally need less capital than the other types, but their trading opportunities are limited. Forex signal trading for the medium term trader involves all of the indicators used by the day trader and the use of additional indicators and studies to find the best entry and exit points. Generally the more indicators used in a forex system, the more reliable the system should be, but fewer trades will meet the traders criteria.

There is an enormous amount of information available on the web to help new traders design a forex system. There are seminars, newsletters written by pros that include entry and exit signal points, free charts, and much more. There are chat rooms and blogs to get an idea of what current traders are doing and to hear about their successes and failures. Reports say that 90-95% of all new traders will lose their initial investment in the three to six months following their first trade. To reduce that risk, new traders must educate, practice and use forex signal trading to take the emotion out of the equation.