Monday, August 10, 2009

basic forex glossary

Glossary, common terms for forex trading

A

Ask – the price at which a trader will buy a currency. Also known as the offer, it’s the price a seller is willing to sell at.

B

Base Currency – the currency used as the base to quote a pair. For instance in the EURUSD pair, the EUR is the base currency, in the USDJPY, the USD is the base currency.

Bid – the price at which a trader will sell a currency.

Broker – an agent who handles investors' orders to buy and sell currency. In the FOREX business, no commission is charged as the broker makes money through the spread.

C

Call Rate – the overnight interbank interest rate.

Cash Market – the market for the purchase and sale of physical currencies.

Central Bank – the institution that manages a country’s monetary policy.

Convertible Currency – currency which can be freely exchanged for other currencies or gold without special authorization from the appropriate central bank.

Counter party – the customer or the bank with whom a foreign deal is made.

Cross Rate – an exchange rate between two currencies, usually constructed from the individual exchange rates of the two currencies, measured against the United States dollar.

D

Day Trading – refers to opening and closing the same position or positions within one day's trading.

F

Federal Reserve (Fed) – The Central Bank of the United States.

Fixed Exchange Rate – official rate set by monetary authorities for one or more currencies. In practice, even fixed exchange rates are allowed to fluctuate between definite upper and lower bands, leading to intervention.

Flat / Square – to be neither long nor short is the same as to be flat or square. One would have a flat book if he has no positions or if all the positions cancel each other out.

Floating Rate Interest – as opposed to a fixed rate, the interest rate on this type of deal will fluctuate with market rates or benchmark rates. One example of a floating rate interest is a standard mortgage.

Foreign Exchange Swap – transaction which involves the actual exchange of two currencies (principal amount only) on a specific date at a rate agreed at the time of the conclusion of the contract (short leg), at a date further in the future at a rate agreed at the time of the contract (the long leg).

G

GTC – Good Till Cancelled. An order left with a Dealer to buy or sell at a fixed price. The order remains in place until it is cancelled by the client.

H

Hedging – the practice of undertaking one investment activity in order to protect against loss in another, e.g. selling short to nullify a previous purchase, or buying long to offset a previous short sale. While hedges reduce potential losses, they also tend to reduce potential profits.

I

Initial Margin – the required initial deposit of collateral to enter into a position as a guarantee on future performance.

Interbank Rates – the Foreign Exchange rates at which large international banks quote other large international banks.

L

Limit Order –an order to buy at or below a specified price or to sell at or above a specified price.

Long Position – a market position where the Client has bought a currency he previously did not hold own.

M

Margin – customers must deposit funds as collateral to cover any potential losses from adverse movements in prices.

Market Maker – a dealer who supplies prices and is prepared to buy or sell at those stated bid and ask prices. A market maker runs a trading book.

O

Offer – the price or rate that a seller is prepared to sell at.

Open Position – any deal which has not been settled by physical payment or reversed by an equal and opposite deal for the same value date.

P

Pip (or Points) – the term used in currency market to represent the smallest incremental move an exchange rate can make.

R

Resistance –a price level at which you would expect selling to take place.

Risk Capital – the amount of money that an individual can afford to invest, which, if lost would not affect his or her lifestyle.

S

Settlement – actual physical exchange of one currency for another.

Spot – a transaction that occurs immediately, but the funds will usually change hands within two days after deal is struck.

Spread – the difference between the bid and offer (ask) prices; used to measure market liquidity. Narrower spreads usually signify high liquidity.

T

Two-Way Price – rates for which both a bid and offer are quoted.

U

US Prime Rate – the rate at which US banks will lend to their prime corporate customers.

V

Value Date – settlement date of a spot or forward deal.

Volatility – a statistical measure of a market or a security's price movements over time. It is calculated by using standard deviation. Associated with high volatility is a high degree of risk

basic forex 4

FOREX Trading System

Ask yourself, how many traders achieve consistent profitable results trading in the Forex market? Unfortunately, according to statistics, only 5% of traders achieve this goal. One of the main reasons of this is because Forex traders focus in the wrong information to make their trading decisions and totally forget about ‘Price behavior’ factor.

Most Forex trading systems are made off technical indicators. But what are technical indicators? They are just a series of data points plotted in a chart. These points are derived from a mathematical formula applied to the price of any given currency pair. In other words, it is a chart of price plotted in a different way that helps us see other aspects of price.

Trading decisions based on technical indicators without taking price action into consideration will give us less accurate results. If the price suddenly starts to bounce back off that important level there is no point on taking this signal, price action is telling us the market doesn’t want to go up.

How to create a perfect Forex trading system?

You need to make sure your trading system fits your trading personality; otherwise you will find it hard to follow it. Every trader has different needs and goals, thus there is no system that perfectly fits all traders. You need to make your own research on various trading styles and technical indicators until you find a concept that perfectly works for you.

Incorporate price action into your system. So you only take long signals if the price behavior tells you the market wants to go up, and short signals if the market gives you indication that it will go down.

You need to have the discipline to follow your Forex trading system rigorously. Try it first on a demo account, then move on to a small account and finally when feeling comfortably and being consistent profitable apply your system in a regular account.

Forex Demo Account

Forex demo accounts allow you to practice Forex trading without financial losses. Many online Forex brokers offer the possibility to trade in a demo account to familiarize with their platform. A demo account is a simulation of a trading account, sometimes with a sum of virtual money. Traders can try it out to test the trading platform and see if they feel comfortable trading under the broker's conditions before investing any amount of real money in it.

Most demo accounts can be downloaded for free from the internet. With the right Forex demo account software, learning the Forex trading strategies will be much easier. It is also good to hire a broker to give advice and handle many aspects of the foreign exchange trading that you do not understand to practice Forex.

Forex demo accounts can reflect the real-time market movements and allow traders to test the conditions they would be trading with. Forex demo accounts use historical rates during week-ends, when the currency trading markets are closed. A Forex demo account broker will guide you in the right directions and assist in all aspects of the Forex demo account. Learning the market can be very challenging and it is very important to understand the risks involved. Research, ask questions, and make sure you understand the entire concept of foreign exchange before you make any investments.

Generally Forex demo account has the same capabilities of the real account, the only difference between them is that the real account is with real money and the practice account is with virtual money. Once you have sharpened your skills, you can begin to move on to making real money with Forex live accounts.

How To Make Money with Forex

Forex is a new way to make money in the global currency market. Making money in forex is very similar to stocks. You will be provided with a list of currency pairs each is coming along with graphs which you can select and trade. The object of Forex trading is to exchange one currency for another. Currencies are always quoted in pairs, such as GBP/USD or USD/JPY. The reason they are quoted in pairs is because in every foreign exchange transaction you are simultaneously buying one currency and selling another.

Thousands of people trade on the Forex market, not only multinational corporations, governments, banks or other financial institutions but also individuals. You can easily find the basic rules and expert advice on how to make money in Forex on the internet. There are numerous online tutorials which can train you on forex trading. The proper training is the first step towards becoming successful in the forex market. It is important that anyone who is wondering how to make money in Forex seeks a professional Forex training.

The earning potential in forex is limitless, but the entire field can seem confusing to beginners. It is always preferable to start off with demo accounts. Once they gain sufficient knowledge of the field they can then use real account. Patience is the key to making money in the Forex market. With experience and a little bit of help almost anyone can make money in Forex. A lot of help is available through the software technology. There are various software tools helping you read forex charts and helping you make the right decision during Forex trading. There are many online resources that answer the question how to make money in forex.

When you buy a currency in the forex market, you are selling one currency and buying the other. You have known what currency you are betting for/against, as opposed to the stock market where you only need to know one stock. Unlike stock trading, most online forex firms don't charge commission. They make money by giving you a worse spread then they get and by charging you interest on margin. This spread is usually two or three pips.

Margins are huge in currency trading; you can easily be accepted for 200 to margin on-line. Some Forex firms will give you up to 400:1 margin. To be honest, there is very little regulation in this industry. Profits in Forex are measured in "pips" or "points." A pip is 1/1000 of dollar. Buying cheap and selling expensive or selling expensive and buying cheap is the base of making money in Forex. The question is how you can know the best time to buy and how you can know that if you buy, the price will go up and you will make a profit. There are some ways to know the optimum time to buy and sell to make money with Forex. These ways are technical analysis and fundamental analysis.

In technical analysis you analyze the price chart with the help of some special tools that are called Indicators. Forex fundamental analysis is a fundamental strategy of trading widely used by online trader of forex. This strategy contains different basic criteria that are taken into consideration during currency trading. The economic conditions in the currency native country along with a number of other factors are the obligatory elements of the fundamental analyses. There are two schools of thought like in stocks about how to make money in forex trading. On one side you have the technical, which are basically charts and other statistical methods that used to try and guess the market. On the other side you have the fundamentals, which study things like countries domestic product, interest rates, economic output. The best answer is always in the middle, using a combination of graphs and charts along with real world knowledge of political events and economic statistics to make the market more predictable for you.

Many new traders often fail to make money trading Forex because they are confused over the hundreds of indicators and Forex financial terms. With tons of data it can be difficult for new traders to see the trends and that will lead to poor trading decisions. Most new traders often lose sight of the big picture and concentrate on recent trends. They get too caught up with the latest news believing easy money is made by chance. That is not true.

Another mistake some new traders make is believing there are insider secrets or information that can make them rich. In forex market it is almost impossible to have any kind of insider information, there is no chance of even an insider secret. The first thing you need to trade is a broker. Register with any of them and they will provide you a software platform that equip with a list of currency pairs, graph, technical indicators free to use. The broker usually provides you free practices by providing virtual money for you to practice enhance your skills and teach you how ti make money with Forex trading.

Foreign exchange is a great money making opportunity for those who know their way around, for a beginner it can be quite hard. There are a lot of companies and individuals over the internet and offline willing to help you earn money from the Forex trading system but only a few of them can actually help. You will need help initially, and may take some time for you to get to know the forex trading system. To make good profits from foreign currency trading, you need to keep an eye on the foreign currency markets. You need to do your own analysis of foreign currency trading and you need to know what other people are thinking about the emerging trends in foreign currency markets. You also need to keep track of the news items that could move the foreign currency markets.

Now that you have the basics on how to make money with Forex trading you are ready to take the next step. If you still are not comfortable enough to invest there are plenty of online courses to help improve your skills. Now is the time to start making your wealth!


Watch for online offers in this page, you might find some useful info for your advanced forex information, tips from business leader or forex broker or practising trader.

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FOREX Strategy

Here are a few things you should learn about Forex trading if you want to make some real money.

Follow Trends. No matter how many factors you take into account, it still comes down to a degree of guesswork. There is a great deal of money to be made from simply following already existing, reliable trends than jumping in and out as it reverses.

Have a Trading Plan. Your plan doesn't have to be very precise. You have to set some limits for yourself. It takes a great deal of discipline to be a successful FOREX trader. Frequently you'll feel your emotions start to play into and affect your decisions, but you've got to do what's ultimately best, think rationally and sell when you need to sell.

Employ a Trading Program. FOREX trading programs are slowly becoming the new standard of trading, with over 30% of all traders currently using them now in 2009. These are programs which automatically trade for you by analyzing real time market data and reacting accordingly. They are equally as effective for beginners as well as experienced traderss.

FOREX Basics

Successful FOREX trading is a combination of a simple method and having the right mindset to succeed. It is not easy to win at FOREX trading and the facts prove over nine in ten people who attempt to trade FOREX lose. The good news is however that profitable FOREX trading is a learned skill. You don't need to work hard, you just need to learn FOREX trading the right way.

Anyone can learn a system but there is a trait you need to win and that's the discipline to follow the system and preserve equity in losing periods. Trading through periods of losses is hard, the market gives you losses and it hurts your pocket and when this happens, your emotions want to get involved and make you deviate from your system rules.

Any trader can learn to be disciplined but it is based on confidence which comes from the right education and accepting the fact that you have to keep your losses small until you have profits again.FOREX trading success involves having a simple system, combined with the discipline to execute it correctly, run profits and cut losses quickly.

FOREX Tips

Know your risk ratio versus your earnings ratio. The analysis of risk and profits is extremely important for any FOREX trader. Minimum risk you should use is 2:1. If you are trading GBP / USD and you want to gain 50 pips, you should not risk more than 25 pips.

Have a suitable capital. If I lose 50% of my starting capital in a 6 months period, can I still be a trader? Only if the answer is ‘yes’ you can start trading. Your trading freedom must not be influenced by your fear to lose.

Is this a Trend or Neutral? Learn how to analyze the FOREX market. In a market trend, follow the trend, in a neutral market, buy low and sell high, since you are using stop loss, and you control your risk.

Understand how the market thinks. Everybody should accept that any information is already included in the price of a currency pair. You must know the indicators to come, and you need to know what is already anticipated by the market. The vast majority of the publications of the market is already anticipated and prices by the market.

Know why you are in a trade. Keep a journal of your trades and record exactly why you went into each trade. Do not be impulsive and follow your strategy, that way you will learn what strategies work for you long term and which do not work.

Study. Learn new ideas, keep up to date, and do not trade on the ideas of others, you should always know why you are in a FOREX trade.

Common Mistakes in FOREX

In FOREX capital market every trader makes mistakes.

Errors in Order Entry. The quickest way to lose money in FOREX is to make mistakes when you place your orders. Fortunately, every trade entry today has some kind of order confirmation mechanism.

Use Only Risk Capital. The Golden rule of FOREX is to play with small amount of money so even if you lose it, there is still plenty left on account. Risk money should be amount that you would be comfortable to loose.

Start With Enough Capital. If you are considering doing serious business in FOREX, than it is good idea to start with a bigger account. Accounts that are too small have proportionally larger fees and sometimes can even have certain limitation in trading.

Understand the Risks. This is very important factor. FOREX is highly related to different kind sof risks and you have to be aware of them. Sometimes market crushes suddenly and you can not do much about that, but there are some signals like government crisis, officials statements, market trends that troubles might be on horizon and you have to prepare yourself to that.

Take the Time to Learn. The biggest mistake a new trader can make is to start playing unprepared. The basic knowledge of FOREX can save big money.

How to Be Successful In Forex?

A lot of people want to start trading in FOREX and be a success. If you want to be successful in FOREX, you should follow these simple rules.

Have a System. Every successful trader has his own system. That is basic philosophy in FOREX capital market trading to find unique, profitable system and to repeat it constantly. That is a big secret of many millionaires. Without system you could be impacted by unsettled conditions of ever-changing markets.

Trade Small. When you are not certain that it is a good time to trade, try to play with smaller amounts. This will give you a protection from big losses and an opportunity to test the market and discover trends. Constant successful small can bring nice gains. Risking too much money in single trade can easy jeopardize your brokerage business.

Don't Trade Too Often. Maintaining control over emotions is very important for every trader. After a successful trade you can feel that you have found a winning formula and that every other trade will bring large money. That could make you leave, already discovered winning system and try to make some risky trades. Take some time to analyze every trade.

How to Calculate Risks?

Remember that you should stick to trading no more than few mini lots at once. It is highly advised to not use standard lot sizes for mini accounts offered by most of Forex traders, as it is very expensive for a mini account like yours. Aim for a micro lot of 1000 units. This will make your risks in Forex trading reasonable and will allow to achieve some positive performance even if your trading path starts with a consecutive losses.

When you invest $200 with 1:500 leverage, you'll be able to operate with virtual funds of $100 000. As a beginner, if you open 1 standard lot of 100 000 units, you are putting $10 at risk for every pip that goes up and down. How many pips would it require to wipe out your account? Not so much – 20. Also this 20 will already include the spread paid.

If you open 1 mini-lot of 10 000 units, then you will be risking $1 for each pip and your account will lose only $20. That is why it is important to select micro lots in your case. Micro lot of $1000 units will decrease the cost of 1 pip to $0,10. Losing 20 pips would mean losing $2. 10 cents may sound not so attractive in terms of making big profits quickly.

Forex is lucrative business,,, take a look at Forex in Singapore, or trading forex in Jakarta Indonesia or forex trading in Hongkong,, there are lots of opportunities to be made. Forex trading is very promising in today's global market. Where foreign currencies exchange hands.

Thursday, August 6, 2009

what is FOREX ?

What is FOREX?

FOREX is the foreign exchange market or currency market. FOREX is the market where one currency is traded for another. It is the largest market in the world.

Some of the participants in this market are seeking to exchange a foreign currency for their own, like multinational corporations which must pay wages and other expenses in different countries. However, a large part of the market consists of currency traders. They speculate on movements in exchange rates, much like others would speculate on movements of stock prices. Currency traders try to take an advantage of even small fluctuations in exchange rates.

The most traded currencies in FOREX are Euro, US dollar, Swiss Frank, British Pound and Japanese Yen. Trading is not limited to those currencies; FOREX offers variety of currencies one can trade.

FOREX trading is done online. A person finds a FOREX broker, opens a trading account with the broker and deposits money. FOREX broker provides to a trader so called FOREX trading platform. It is an application, a working environment, where a trader buys and sells currencies, dealing online – he speculates to make money on the difference of currency rates.

In FOREX currencies are traded in pairs: EUR/USD, GBP/USD, AUD/JPY, USD/CHF.

Facts

Here are some basic facts to help you understand what FOREX is about.

FOREX is a spot market, where foreign currencies are traded - bought and sold for profit.

FOREX is a worldwide currency speculation arena with no centralized place for trading and exchange.

FOREX is a huge market with trillions dollars turnover a day and the largest investors are banks, hedge funds, investment companies and so on.

FOREX is open to individual retail investors – so-called Forex traders –through the services of FOREÕ brokerage companies that provide an access to the currency exchange market. They buy and sell for their clients.

FOREX is a 24 hour market that is traded every day all year round, except for holidays.

FOREX allows trading over 150 foreign currency pairs, among which the most traded are: EUR/USD, GBP/USD, USD/JPY, AUD/USD, USD/CHF, USDCAD and GBPJPY.

FOREX trading is based on technical (price, charts) and fundamental (news, economic events) analysis.

History

Forex trading can be tracked down to ancient times. Forex trading is actually the longest of all the other markets’ histories as there have always been people trading currencies with each other.

The Gold Standard put their mark in Forex history and changed it forever in 1886. A certain weight of gold was the point of value for foreign currencies. This standard was the fixed trading value. The British pound was defined as 123.27 grains of gold. The British banks defined the exact assessment of the value which aided in setting the UK standard currency as stable.

After World War II the economic status of the biggest nations of the world changed dramatically. The UK suffered insurmountable financial blow. While the US remained unharmed and their financial state stable even after the war. The US dollar then became the new standard of the financial market. This international financial framework leads the dollar to becoming the new global reserve currency. This new settlement started the tracking and monitoring of currencies as well as the International Monetary Fund (IMF), and launched the World Bank. This aimed at setting up the international monetary stability.

The Forex market as we know it today was actually established in 1971. The making of the market was to accommodate the floating exchange rates as they gradually materialized. By the year 1972, major countries had economical difficulties and generated the floating of their currencies. With the Smithsonian agreement, the European market tried to detach them from the dependency on the US dollar. This was possible with the agreements of the currencies' unlimited variety and flexibility. This gave way to the free-floating currency system. This free-floating system was officially mandated in 1978. Since then, prices were floated everyday along with volumes, speed and price volatility.

With advancing technology and computers, cross-border capital movement picked up its pace. This extended the market range all the way through Asian, European and American time zones. Forex trading rose dramatically from $70 billion a day in the 1980s and $1.5 trillion daily only 20 years later.

FAQ

How does Forex trading work?

Forex is traded in pairs: USD/Euro, USD/JPY, Euro/JPY, GBP/CHF, and CAD/USD. It is considered as Over-the-Counter or Inter-bank as trades are done between two counterparts via electronic network or telephone connections. Forex works truly as a 24-hour market. Everyday Forex trade begins when the financial centers in Sydney start their day, and moves around the globe to Tokyo, London, and then New York. Traders can always response to the market regardless of the local time.

What are the major traded currencies?

Major traded currencies are United States dollars, Australian Dollars, Japanese Yens, British Pounds, Swiss Francs, Canadian Dollars, and the Euro Dollars.

What are the working hours of Forex market?

Forex market is open from 22:00 GMT Sunday (opening of Australia trading session) till 22:00 GMT Friday (closing of USA trading session).

How much funds do I need to open an account?

The minimum deposit to open a standard account is US$2,500. A minimum transaction size is US$100,000 with a minimum margin deposit of $2,500 (at 100:1 leverage).

What is margin?

Margin is money you need to have in your broker account to secure your open position. Different brokers require different amount of margin money to keep your positions open.

What is leverage?

Leverage is a loan that is provided to an investor by the broker that is handling his or her Forex account. When an investor decides to invest in the Forex market, he or she must first open up a margin account with a broker.

Who trades Forex?

The trading of foreign exchange has been dominated by the large international banks. Corporations and money managers have always traded their forex with their preferred bank, which then covers the position in the Interbank market. However, with the recent availability of internet based trading systems there has been a rapid growth in the number of private individuals trading forex.

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Brokerage

There are many FOREX brokers to choose from. Here are some things to look for:

Lower spreads save you money. The spread, calculated in "pips", is the difference between the price at which a currency can be purchased and the price at which it can be sold at any given point in time. FOREX brokers don't charge a commission, so this difference is how they make money. In comparing brokers, you will find that the difference in spreads in FOREX is as great as the difference in commissions in the stock arena.

Make sure your broker is backed by a reliable institution. Unlike stock market brokers, FOREX brokers are usually tied to large banks or lending institutions because of the large amounts of capital required (leverage they need to provide). Also, FOREX brokers should be registered with the Futures Commission Merchant (FCM) and regulated by the Commodity Futures Trading Commission (CFTC). You can find this and other financial information and statistics about a FOREX brokerage on its website.

Find a broker who will give you what you need. Forex brokers offer many different trading platforms for their clients - just like brokers in other markets. These trading platforms often feature real-time charts, technical analysis tools, real-time news and data, and even support for trading systems. Before committing to any broker, be sure to request free trials to test different trading platforms. Brokers usually also provide technical and fundamental commentaries, economic calendars and other research.

Choose the appropriate account type. Many brokers offer two or more types of accounts. The smallest account is known as a mini account and requires you to trade with a minimum of $250, offering a high amount of leverage, which you need in order to make money with so little initial capital. The standard account lets you trade at a variety of different leverages, but it requires a minimum initial capital of $2,000. Finally, premium accounts, which often require significant amounts of capital, let you use different amounts of leverage and often offer additional tools and services.

Software

FOREX software is designed for dealing in the trade of foreign currencies. Most FOREX trading software comes with built in signaling capabilities, so you know when it's the right time to buy or sell. Some trading platforms enable traders to execute automatically 24 hours a day.

If you decide to use FOREX trading software, there is no doubt that it will guarantee profits or not result in losses from trading. Trading currencies involves substantial risk and there is always the potential for loss. Your trading results may vary. When it comes to trading, there is so substitute for accurate and instantaneous information.

Software finds price patterns that fulfill user-defined performance statistics and risk/reward parameters by searching historical data in a fully automated way. It is equipped with an intuitive interface where its user can specify data files and the performance criteria the price patterns must fulfill. User is not required to write any code.

There are many companies that create FOREX trading software. This a useful resource to read various FOREX software reviews - http://www.eforexsoftware.org/

FOREX Rules

Here are some simple rules for beginners in FOREX trading.

FOREX traders should use the free demo account to study FOREX trading

Beginners must patiently study. Beginner FOREX traders may first test the demo account where they can study process, develop individual FOREX trading strategy. If their capability of making profit enhances day by day, this indicate that a beginner FOREX trader might draw up the real FOREX trading account.

Use stop loss to reduce risk

FOREX trader must be able to afford taking loss. Using the stop loss will prevent any further loss, the affordable loss depends on the account available margin situation. If there is a stop loss, FOREX traders should not feel upset because he or she has prevented the loss from getting worse.

The account margin must be sufficient

The lesser the trading margin, the bigger the risk, therefore beginners must avoid letting the account margin be too little. Such account amount does not allow any mistake to happen. Even a well-experienced FOREX trader can make mistakes.

Record the trading details

The beginner should record all the trading details, whether there is certain news or other reasons that influence profit and loss. FOREX traders can not remember the history of every trade, therefore recording is helpful in enhancing FOREX trading skills.

Do not enter the FOREX market after making loss

Do not eagerly open a new reverse market position in order to recoup from loss. This will only make the situation worse. Do not play with the FOREX market by guessing.

What is Leverage?

The FOREX deals are accomplished in lots and each lot consists of 100,000 units of any particular foreign currency. To purchase one single lot of foreign exchange is required and that may run into hundreds of thousands of dollars which means the small investors are left out of the fray. For this very purpose the concept of leverage was introduced in the FOREX trade.

Leverage backed with credit, such as a margin account, is very common. Usually the leverage in the margined account is collateralized by the initial deposit made by you in that account. If the value of the trade goes down significantly, the broker may ask you to either deposit more cash, or sell a portion of your holding. Leverage, expressed as a ratio between total capital available to actual capital, is the amount of money a broker will lend you for trading. For example, a ratio of 100:1 means your broker would lend you $100 for every $1 of actual capital. Many brokerages offer as much as 250:1.

Margin requirements and interest vary among broker/dealers. The amount of leverage you use will depend on your broker and what you feel comfortable with. You can get leverage from a high as 1% with some brokers. This means you can control $100,000 with the investment of only $1,000. The broker sets a minimum account size also known as account margin or initial investment. Once you have deposited the required sum you will be able to trade in the FOREX market.

The online FOREX market has further reduced the requirement of the margin amount to a great extent and it is now reduced to couple of hundred dollars from the initial hundreds of thousands dollars. The small investor in a FOREX market can earn due to the presence of the leverage accounts in the online FOREX market. The effect of the leverage accounts actually enables the small investor to earn huge returns like if he invests $300 on 1% leverage he gets to operate the FOREX of $30,000. The leverage is the key to make this FOREX trade profitable for the investors in true sense and till it is there it will continue to attract thousands and thousands of people.

basic forex 1

This site contains information which will allow the novice to develop an understanding of basic trading techniques, risk control, and finally opening and managing a Live trading account.

Do you want to become a successful Forex trader? This site will help you get started with Forex trading from a scratch. Here you will find a lot of information about Forex market for beginners. Read interesting articles about FOREX to help you on your way to become a FOREX trader.

Forex trading must always be considered high risk, but with good Forex risk management it is possible to generate some excellent returns on your investment. It is an ideal alternative investment that has little correlation with the global stock markets. We have a lot of information on the website for you to understand how it works.

This Forex guide is here to help you learn, trade and invest in the Forex market. It is designed to be a one-stop shop for Forex trading, and to provide a wide range of tools, information and resources for all levels of traders and investors. It aims to bring you the best available services in the Forex market.

Aspects of FOREX

There are 5 essential aspects of foreign currency market. Understanding these sides of trading is crucial for arranging your FOREX trading experience.

Fundamental Analysis is the process of market analysis. Fundamental analysis can be a part of any financial planning or forecasting. FOREX fundamental analysis deals with interest rates, central banks decisions, global industrial, economical, political and weather news. Fundamental analysis is the most natural way of making FOREX market forecasts.

Technical analysis relies only on market data numbers - quotes, charts, indicators, volume of supply and demand, etc. The main idea is the dependence of the future market technical data on the past market technical data.

Money Management is a set of rules which you develop to set your own trading style and amount of money you have for trading. Money management plays very important role in getting profits out of Forex.

FOREX Trading Psychology is crucial. You need to master your emotions to keep your trading performance under strict control of mind and intuition. Controlling your emotions in Forex trading is often a balancing between greed and cautiousness. Almost any known psychology practices and techniques can work for Forex traders to help them keep to their trading strategies rather to their spontaneous emotions.

Forex Brokerage is the last essential aspect. Every Forex trader like any other professional needs tools to trade. One of these tools is a Forex broker, or an on-line Forex broker - a company which will provide real-time market information to trader and bring his orders to Forex market.

Fundamental Analysis

Fundamental analysis provides for market depth data in comparison with all limit-based orders available from Forex broker’s clients. Market depth data will only be available if you trade with a reliable broker.

There is no unified way to determine the true market depth of Forex. FOREX is a decentralized market, it has no fixed centralized exchange, where all data could be gathered. Thus, it is impossible to measure the true market depth in currency trading.

The direction of the market - the so-called trend - can be determined. You should switch to the daily charts to identify the main trend. It should be seen without any indicators. In case with a ranging market, you have to seek the answer about the market trend from the higher chart – a weekly chart.

Trading news is recommended to determine the main daily trend. You should also review Forex Economic calendar, especially the Forecast column to analyze market expectations. If after comparison of the forecast and previous data you get the same suggestion about the market direction as the daily trend, you can consider trading it.

Technical Analysis

There is no formula to tell whether tomorrow there will be a trend or not. There are a few things Forex traders may check in order to anticipate certain market behavior on a next day.

Check if there is important news to be released tomorrow for the currencies you'll be trading. If so, you can expect decrease in Forex market activity right before the news, or even starting from the early morning hours. A high increase of activity after the news hours is a result of market being shaken out, a new or an old trend being identified, confirmed or changed, and as a result, every Forex trader would be looking to join in.

Another factor that could help to judge about the market trending conditions tomorrow is a price approaching near major support/resistance level. When this happen, price tend to consolidate, test and try before either turning back or breaking out. During such periods traders find frequent sharp price turns, increased volatility, but without price progressing much in either direction.

Another simple factor could be the angle of the Moving average. If the Moving average is flat, flows horizontally without significant incline to either up or downside, you can pretty much conclude that the market is flat. On this assumption it would be logical to identify price channeling boundaries and avoid trading with trend following strategies until price breaks out of the channel.

Money Management

Trade with Sufficient Capital

One of the worst mistakes that Forex traders can make is attempting to trade without sufficient capital. The trader with limited capital not only be looking to minimize losses beyond the point of realistic trading, but he will also frequently be taken out of the trading game before he can realize any sense of success trading.

Exercise Discipline

Discipline is probably one of the most overused words in Forex trading education. However, discipline continues to be the most important behavior one can master to become a profitable trader. Discipline is the ability to plan your work and work your plan. It is the ability to give your trade the time to develop without hastily taking yourself out of the market simply because you are uncomfortable with risk. Discipline is also the ability to continue to trade the methods and patterns even after you’ve suffered losses. Do your best to cultivate the degree of discipline required to be a world-class trader.

Be Aware

Never follow blindly by entering the market first, figure things out before plunging in. Do not be greedy, be patient and set realistic targets daily. Admit your mistakes and never commit them again. You should be open to learning. Invest your valuable time to truthfully and completely comprehend the complexities and fundamentals of Forex trading.

Trading Psychology

There are some simple principles that are essential keys to unlocking the door toward becoming a millionaire, or at least gaining a little more than losing.

Have a Plan. Many traders do not realize that trading is more complex than it seems. It should not be driven by merely a hunch. A good trader is always ready with a realistic plan. This plan should include sophisticated research and examination of the currencies as well as stop and limit levels of the trade. This prepared plan should have an analysis of the expected upside along with the downside.

Cut your losses at an early stage and bó loyal to your profit earners. Some traders want to believe that their losses might still do well after a good waiting time. But the market moves against these non-profitable positions and makes them lose hundred of points, not recovering enough to sustain even if they do rise again. Do not be caught in the belief that every trade should be profitable.

Play Smart. Don’t let your emotions rule in trading. Always be objective with your decisions. While in the market, do not hope that it will move in a favorable direction just for you. Be sensitive enough to see the factors that may have influences the changes that transpired against the original analysis you had made. If the considerable signs are there, reconsider your losing position.

Do not overtrade. This is one of the most common mistakes traders make. Leveraging your account too high by trading far larger than before puts you in a very vulnerable position. Always analyze the charts correctly and use this information to derive at a sensible trading decision. One good tip is to limit your leverage at 10%; in this way, you won’t be forced to exit a position at a wrong time, before you even get a win.


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