Trading Forex- why trader currencies? (part 2 of 2.)

by Mike P. KulejIn the previous article we covered some of general attributes of trading Forex. Those included liquidity, long term trends, availability of information or fundamental news, 24 H access and Forex as a tool for diversification. Here we are going to look at some very trading specific aspects advantages of getting involved in this market.Demo accounts- all of forex brokers offer demo accounts. These are virtual accounts, with no real money, which simulate live trading. On most platforms these accounts track live prices tick by tick. You can practice trading, test your strategies and hone your skills without risking real money. Except for emotional impact, trading in these accounts is exactly like live trading. Fantastic tool, not just for beginners, but also for seasoned traders. Outside of Forex, very few brokers offer something like that.Technical tools- all currencies trading platforms contain a wide range of technical analytical tools. Vast majority of these services are free with an account. Some will be more complex, some less, but in most cases there is more than an average trader will ever use. These tools are getting increasingly more complex. It's not unusual for a trader to have the possibility to write very complex automated trading strategies right into their trading platform. Generally speaking there is no need to have any paid for, stand alone software package. Brokers' free offerings are more than adequate.Leverage- Forex trading accounts are margined. Trader can use leverage to increase his buying power. While most other financial instruments can be bought and sold using leverage, nothing comes close to currencies markets. Industry standard is leverage availability of 100:1, but even 400:1 can be found. While it's not advisable to use extreme leverage, it's good to have the choice. This way account size can be fine tuned with position size. Once a trader is comfortable in his/her trading, there is nothing wrong with using reasonable leverage.No slippage- this is something unique to Forex markets. Some brokers go as far as to GUARANTEE no slippage on all limit and stop orders. This means that you always know precisely your risks and potential gain. No slippage guarantees are simply unavailable, and even illegal in other markets. From practical standpoint, during fast moving markets one might experience an occasional slippage on market orders. Comparing to futures or even stocks, active trader will experience far less, if any slipped trades.No additional liability- an average retail trader has no financial liabilities, outside of the money already on deposit. What does it mean? For example, in futures markets, events like "limit days" will halt trading, making it impossible to get out of loosing position. That can lead to losses far in excess of money on deposit. Trader can not only loss all the money in the account, but even be liable for more. In Forex markets brokers take this unlikely risk, in affect indemnifying retail traders from additional losses. Most people don't even know about it, but look on your brokers website carefully.Large daily moves- currencies can, and often do, move a lot on intraday bases. That, of course changes and is not constant, but as of this writing JPY crosses have wild daily swings. Over last couple of weeks, for example, average daily range in EUR-JPY has been more 200 pips. Current JPY pip value is about $8.50 trading standard 100K lot. This translates to daily moves approaching $2000 in value. GBP-JPY moves even more. There is plenty of good daily opportunities if short term trading is your thing.This is not a complete list, as every participant in Forex markets has his/her own reasons for trading here. Depending on what person looks for in trading instruments, currencies offer some advantages over more traditional financial vehicles, as well as a few unique opportunities. While there is always a possibility of loss, no wonder more and more traders gravitate towards this fascinating frontier.About the AuthorMike Kulej is a Chief Forex Strategist for Spectrum Forex LLC., and a creator of highly effective "Rainbow" trading system. He specializes in mechanical trading systems as explained on www.spectrumforex.com . Spectrum Forex LLC offers numerous services to individual traders. With questions and comments e-mail him at kulej@spectrumforex.com.

Tips for Online Stockmarket Trading

by Mike EstreyTraders in shares, indices, forex or commodities should always have a backdrop of basic rules, which revolve around going with the trend, limiting losses and good money management. In other papers, we have covered these items extensively, together with how to avoid mistakes and other important factors to watch when trading CFDs. There are, however, some commonsense rules that do not have to be applied to rigorously, but add another level of comfort within what can be a very stressful process.A simple first rule - watch the costMarket makers and other brokers are not stupid, and the setting of prices and spreads (or slippage) depends on several factors including time of the day, volatility and before and after news items. If you have a system that is not tailored to quick, intra-day moves, and your chosen timeframe is to look for results within anything up to a month, then minute by minute timing is less important than getting the overall picture correct.On that basis you need to reduce your slippage costs as much as possible, so the time to place trades should be when the spreads are narrowest. After a while you should be used to the normal minimum spreads on most shares, and unless there is a pressing need to immediately deal (maybe on a profits warning or takeover news), then it pays to always ensure the spread is at the minimum before dealing.This means not trading in the first few minutes of the trading day as buyers and sellers position themselves for the session. Sometimes the whole market may not only be marked down, for instance on a heavy fall in Far Eastern stocks overnight, but spreads might be wider because of the frenetic nature of early dealing. After a while though the spreads should usually return to normal, and you can deal more comfortably.Example: You have a system that uses 3% targets and 2% stops, and say you normally buy and sell Royal Bank of Scotland shares with a minimum 1p spread, which represents a 0.05% or 5 basis point spread. From time to time the spread widens and can be as much as 5p after an outside event or early in the morning. This means that if applied to both sides of the trade, dealing on this wider spread would cost an additional 0.4% or 40 more basis points and effectively negates almost half of the edge of your system, which is fairly serious.Moving on from this, it pays to stick to the biggest and most liquid stocks for the majority of your trading and this is a quick list of the leaders in the UK and which have the narrowest spreads:Banks: Barclays, HBOS, HSBC, Lloyds, Royal Bank of Scotland, Standard Chartered Beverages: Diageo, SAB Miller Food producers: Unilever Food retailing: Tesco Household Goods: Reckitt Benckiser Insurance: Aviva, Prudential Mining: Anglo American, BHP Billiton, Rio Tinto, Xstrata Oils: BP, Royal Dutch Shell, BG GroupPharmaceuticals: Astra Zeneca, Glaxo Smithkline Telecoms: BT, Vodafone Tobacco: BAT Industries Utilities: National GridRule 2: Get to know a few stocks very closely and increase your knowledgeMany market professionals focus on one area of the market, and some simply trade a handful or even just one issue, be it a particular commodity, Treasury bond or stockmarket index. You will probably find that you become accustomed to the ebbs and flows of certain shares, and if you feel you are on the boil with these companies, then you have an edge.If you decide to focus on say ten UK shares, you should get to know their trading ranges, average daily volume, sentiment to their particular sector, previous support and resistance levels, the tone of previous management comments and when news is due.Furthermore, it goes without saying that when trading commodity stocks including miners and oil companies, you need to be aware of movements in the price and direction of principal metals and crude oil. Because there are other factors in play when institutions buy or sell in the market, such as dividend payments, overall market action or takeover hopes, share price movements can sometimes lag a rise or fall in the underlying commodity, but this is very important to each company's overall profitability. Likewise, overall retail sales figures are important to the retail sector, which is obvious, and the health of the housing market and interest rates affect financial stocks.A couple of extra rulesThe 'trend is your friend' is a valid theme throughout swing trading, but it pays to only go long when the price offers further upside potential, or there is another volume and/or candlestick signal, otherwise you risk buying at the top. The aim is to ride an established trend, so while it is OK to miss the first part of a move, you should not buy when a trend may be about to reverse.Broker upgrades and newspaper tips are a waste of time, because they are usually already factored into the market by the time it is your turn to place a trade. Whilst some analysis can be excellent and thought provoking, the persons giving the advice may sometimes have a different agenda. Price and volume action is the key when trading, but of course for longer term decision making the fundamentals must be examined as well.About the AuthorMike Estrey is the Head of Research for Blue Index, the Day Trading specialists in Contracts for Difference. Foreign Exchange Trading also forms part of their extensive services.

FIIs raise stake in real estate stocks

by propertiesmlsThe booming real estate market has caught the fancy of foreign investors and they have raised their stake in a majority of realty firms listed on the bourses. However, some analysts believe these stocks are among the most expensive in the world.An analysis of the holding pattern of foreign institutional investors (FIIs) in 22 major realty firms shows a majority of them raised stake in the April-June quarter compared with their stake in the previous three-month period.FIIs increased their stake in 15 companies, including Unitech, Ansal Housing, DS Kulkarni and Indiabulls Real Estate. However, they decreased their holding in seven companies -- DLF, Atlanta, Era Construction, Lok Housing, Mahindra Gesco, Madhucon Projects and Unity Infrastructure.The real estate sector in India has witnessed a boom in recent times led by an increase in purchasing power of people, relaxed lending norms by banks and housing finance companies and the growth in retail and IT sectors.The buying of shares by FIIs in these companies comes at a time when a few analysts believe the country's realty stocks are among the costliest in the world.Global investment services firm Standard & Poor's has said real estate stocks in India are the most expensive and give lower returns than most emerging and developed markets such as China, Singapore, Hong Kong and Australia.A comparison of price to earnings (P/E) ratio of stocks from various countries showed that valuation of property stocks from the US and the UK moved lower, while those from emerging markets such as India continued to grow.The P/E ratio is considered a valuation benchmark of a stock, where a higher ratio indicates an expensive stock, while a lower P/E ratio signifies a cheaper stock.FIIs consolidated their stake by an average of 1-2 per cent, except Indiabulls Real Estate, in which their holding jumped 6 per cent to 44.96 per cent as on June 30 from 37.34 per cent at the end of the previous quarter.FII holdings in Ansal Housing increased by more than 2 per cent to 17.53 per cent, while in IVRCL Infrastructure their stake jumped by 3 per cent to 61 per cent. Other realty companies such as Unitech, Simplex Infrastructures, Nagarjuna Construction, MSK Projects and GMR Infrastructure witnessed a marginal rise in FII holdings.FIIs generally sold shares of that company, which is around its all-time high, while they purchased shares around their low levels, an analyst said.The current analysis confirms the trend as the seven companies, where FIIs decreased their stake, were trading at higher levels than their March quarter price, except Mahindra Gesco, whose price decreased in the June quarter.The Bombay Stock Exchange benchmark index Sensex has risen by 1,578.41 points and FIIs poured in over Rs 200 crore during the April-June quarter this year, according to the data available on the Securities and Exchange Board of India (Sebi) website.For more information on Real Estate Agents, MLS visit Propertiesmls.comSource: IndiaRealEstateblogAbout the AuthorNone

Learn Forex Trading to Expand Opportunities

Capitalize on the opportunity to learn forex trading so you can begin the process of branching your portfolio out of domestic stocks and into the global market. Any financial advisor worth his weight will tell you that it is important to diversify your investment portfolio and this is by far the largest volume market in the world. Daily, it does nearly four times the volume of trading than the New York Stock Exchange does. Anyone who holds a basic understanding of how money is converted and exchange rates work can learn forex trading. The sale or trading of currency is at the heart of what forex is. Using one currency to buy another means that your counterpart is using their currency to buy yours. As exchange rates fluctuate and the economies of nations surge and recede, these investments in cash behave in value very much like a traditional stock. As with any new venture, you will need to master the vocabulary that is an inherent part of forex. When you begin to learn forex trading you will be introduced to terms like pip, spread, cross, base currency and trade currency. Foreign exchange trading does have some unique terminologies. While they may be new to you, you will learn them quickly because they describe certain parts of forex quotes that you will need to understand in order to trade. There are quite a few resources available to those who wish to learn forex trading. The reliability of internet access has opened the door to online forex trading, which means that more investors have the ability to participate in trading activity. Since the foreign exchange trade is considered a spot market, the ready availability of internet access is crucial. Business is done on the "spot," thus the name. You can capitalize on many benefits when you learn forex trading. The availability of a 24-hour a day market is one. Since forex involves the trade of currency at banks across the globe, the market never closes. The market is also remarkably liquid, meaning that you will never have trouble finding trading partners. Since most of your trading partners are banks and the medium is cash, you will never be at a loss for customers. Another benefit is the lack of commissions. Since you make the trades on your own, you don't have to spend part of your profit on brokerage commission fees. Taking the time to learn forex trading opens one more investment door for you. As you continue to realize the importance of diversifying your investment portfolio, it may be a good idea to begin looking at what kinds of opportunities are available to you in foreign exchange trading. You may be surprised to see who else is capitalizing on this market and just how easy it is.

Why Trade the Forex Market

Trading the Forex market has become very popular in the last years. Technology advances like the internet have spawned this new trading craze, where anyone with a secure internet connection prepared to undertake a small amount of training can engage in trading foreign exchange on the forex market. Before the Internet, only corporations and wealthy individuals could trade currencies in the Forex market through the use of proprietary trading systems of banks, often through private banking. The foreign exchange market is one of the largest in the world if not the largest. It is more than 3 times larger than the stock/equities market and more than 5 times bigger than futures, give Forex traders nearly unlimited liquidity and flexibility. It has been estimated that approximately $2 trillion USD of currency exchanges hands each and every day. The foreign currency markets are very liquid because worldwide, the most powerful international banks provide a market around the clock. The Global foreign exchange market daily averages of the Bank for International Settlements in 1998 were $660 billion and now have increased to $2.3 trillion (2006). There is really no insider information in the forex markets. Since exchange rates are calculated by actual money flow as well as by the outlook of financial flowage, which takes into consideration such things as inflation, GDP changes, trade and budget deficits and surpluses, as well as interest rates, it would be difficult to come across so-called 'insider information'. All of these factors are self-evident, though different projected outlooks may prove more accurate than others. There is less room for market manipulation is there may be for thinly traded stocks. A equally important property of forex market is the fact that trends in forex market last longer and are more clearly defined than in any other trading instrument. Analysis of forex market charts also often displays identifiable chart patterns of price movement and once a pattern is established, the trend or pattern becomes the most probable course of future price action until the market changes. Because the FOREX market is so huge, there is no possibility of someone controlling the market price for a long time. When there are a lot of buyers and a lot of sellers, you can expect to buy or sell at a price that is very close to the last market price. The market maker in the forex market is usually a bank or brokerage company that provides during the trading day a bid and ask price. Example of forex market makers include CMS Forex, GFS, Forex, Forex Capital Markets (FXCM), and Global Forex Trading, all of which are regulated by the Commodity Futures Trading Commission (CFTC) of the USA. Brokers offer clients access to online FX trading system, platform or software that can make it easy and fun to trade the market and usually there are usually no commission charges. With these trading systems and platforms you can trade the forex markets for free using the same state-of-the-art software packages that professional Forex traders use to help them make real-time, live currency trades. So individuals with a few hundreds of their own currency hope to buy and sell something for a smiling profit. Speculators trade to make a profit by purchasing one currency and simultaneously selling another. In conclusion I think the FOREX market is one of the best investment opportunities around today. There are great opportunities in the FOREX market because of the constant movements of the exchange rates. There is no surprise that more and more traders are turning to the foreign currency market to take advantage of the fluctuation in exchange currency rates as a way to speculate and trade to increase their capital and wealth.

Perks of Automated Forex Day Trading

Are you interested in automated forex day trading? There are many things that you should know about automated forex trading, and this is a great place to learn about it. The idea of automated forex day trading is recently getting more and more popular. Futures exchange was the first to adopt this system and later on, the FX market followed suit and employed automated forex day trading.- EfficiencyThis system is very efficient and successful because of its capability to carry out a deal or a trade - real time. This means that there are no lags and fewer complications when trading and these results to more income generated. Achieving this level of efficiency is very hard to do by manual means especially if the decision to trade or not to trade can only be done in a time window of a few seconds. There are even instances wherein the window of opportunity is just a few milliseconds! There are instances wherein the trader is not in his desk and the opportunity suddenly presents itself, while sometimes a trader will skip deals for a while if he recently came from losing deals. These factors are eliminated by an automated system.- VersatilityAn automated system allows you to trade in diverse fields. It makes it possible for you to trade in varying markets as well as an array of time zones. Many trading models can be used by the trader since the system will be the one managing each trading model. Short term data can be analyzed by the system and this provides you with an advantage since you can use the data analyzed for making decisions based on what is currently happening in the market. Analyzing where the market will go in the next 15 or so minutes is impossible without using an automated forex trading system.- Improved liquidityLiquidity is greatly improved by the use of automated trading systems. This can be deduced by observing the behavior of the futures exchange market after employing an automated forex trading system.- SetbackTraders are foreseeing that a problem may arise when the time comes that all traders will adopt the automated system. The volume of orders may be so great that the existing bandwidth as well as current equipment used may not be able to accommodate this influx of information in real time. Existing systems might be able to carry the load and crash which will result to chaos in the market. As of now, safety controls have been created and set in place to prevent this scenario from happening.- Risk ManagementAnother big issue that concerns forex traders is risk management. Even automated forex trading systems require a risk management tool to ensure that there are no errors while trading. Risk management tools requires that before opening a position, checks should be conducted to ensure that no excessive correlation is present in already existing positions. To be 100% sure that the check is accurate and free of error, the whole system must first be synchronized. But as the technology used in forex trading progresses and evolves, these will no longer be issues to be concerned about.There are even instances wherein the window of opportunity is just a few milliseconds! There are instances wherein the trader is not in his desk and the opportunity suddenly presents itself, while sometimes a trader will skip deals for a while if he recently came from losing deals. These factors are eliminated by an automated system.These are some of the things that you should know about automated forex day trading. The information provided here will give you a better grasp and knowledge about this topic. Hopefully this will be helpful when you are deciding to try this kind of business

How to Find a Broker for the FOREX Trading Market

It's not always easy to know what to look for in a broker in any market, much less a market as complex as the FOREX. But, if you want to trade in FOREX you need a broker. While it might be tempting to simply ask the brokers what they can do for you, you can't always depend on them to give you a straight answer. Here are a few things to consider when choosing your broker. You will want a broker that has low spreads. Since FOREX brokers don't charge a commission, this difference is how they make money. Low spreads will save you money. Along with this, you should be looking for a broker attached to a reputable institution. Unlike equity brokers, FOREX brokers are usually attached to large banks or lending institutions. The broker should also be registered with the Futures Commission Merchant (FCM) as well as regulated by the Commodity Futures Trading Commission (CFTC). Once you've narrowed your choices down to brokers that won't cost you too much, and that are reputable, consider the trading tools that they are offering you. FOREX brokers have many different trading platforms for their clients, just like brokers in other markets. These often show real-time charts, technical analysis tools, real-time news and data, and may even offer support for the various trading systems. Before you commit to any one broker, request free trials of their tools. Brokers generally provide technical as well as fundamental commentaries, economic calendars, and other research to help you make good trades. Shop around until you find a broker who will give you what you need to succeed. The next item that you will need to evaluate carefully is the number of leverage options your potential broker has. Leverage is a necessity in FOREX trading because the price deviations in the currencies are set at fractions of a cent. Leverage is expressed as a ratio between the total capital that is available to be traded and your actual capital. For example, when you have a ratio of 100:1, your broker will lend you $100 for every $1 of actual capital you have. Many brokerage firms will offer you as much as 250:1. If you have low levels of capital you will need a brokerage with high levels of leverage to make reasonable profits. If capital is not a problem, any broker that has a wide variety of leverage options would be a good choice for you. A variety of options will let you vary the amount of risk you choose to take. For example, less leverage (and therefore less risk) may be preferable if you are dealing with highly volatile (exotic) currency pairs. Along with different levels of leverage, look for brokers that offer different types of accounts. Many brokers will offer you two or more types. The smallest account is known as a mini account and it requires you to trade with a minimum of around $300. The mini account also generally offers a high amount of leverage. The standard account allows you to trade at a variety of different leverages, but it requires minimum initial capital of $2,000. And finally, there are premium accounts, which often require significant amounts of capital. They also generally have different levels of leverage available to the traders who use them, and often offer additional tools and services. You will need to make sure that the broker you choose has the right leverage, tools, and services for the amount of capital that you are able to work with.

Early Morning No Trade

So I got up at 4:40 this morning my time to be part of an announcement at 5:00 AM. It ended up being a no trade for me. The variance to expected results for the Canadian announcement was insignificant, and although there was a shift it was not great enough to matter.

Welcome!

The pupose of my blog is three fold: First to share my stories of success and failure in Foreign Currency Trading. Second, to provide insight and information for other traders. Finally, to hopefully get insight and information from other traders. So if you are a foreign currency trader, or if you want to become one, please read along and check back often. If you are not a foreign currency trader, then I suggested you stick around and read more because I have a theory that the next big investing thing is going to be Forex Trading, but I'll talk about my theories in a separate entry.

My Initial Experience

So I started in January with an fx game account on oanda.com. They give you $100,000 to start with, so I started playing. First thing I learned was that all forex trading is or can be leveraged. My initial settings were 20:1. I bought a couple thousand dollars worth of something like USD/AUD or JPY/AUD because I had read a post about how good they have been. I had good success initially. everything I bought was going up. So I sold some things and bought more. I would sell once soemthing went up 20-40 pips. (First I learned what a pip was). Then I started figuring things out. I changed my leverage ratio to 50:1. So for every dollar I bought of something I was actually trading $50. assuming 10 pips equals 10 cents, I was earning 10 cents on one dollar. I realized, hey this is good stuff. If I could earn even 2% a day because my investments are leveraged I could end up with something like 40-45% return a month. At 1% a day I'm looking at returns of 20-25% a month. This is the greatest thing ever. So I opened a real account. I put in $1,000, leveraged it 50:1 and bought a few things. The first two weeks were great. I was up $200 in two weeks. Thoughts of quitting my day job entered my mind.

My Personal Theory for the future of Forex Trading

I have two theories: First, there are sophisiticated investors out there in the world. Years ago those investors were targeting stocks some got into short trading, others researched financial information and made calculated bets on long positions. These sophisticated investors also know when to sell. Enter the common investor, unfortunately this common investor usually gets the memo about what is working and what isn't working a few years too late. Once the common investor enters the sophisticated investor leaves. When you have a theory or methodology that works on a small scale in a large public market, chances are that once the larger public market figures it out and implements it as there own the returns become minimalized. The sophisticated investor moves on before any real damage is done. The next place the sophistacted investor looked was real estate. At the time cap rates were high, and investments were good. Again, the common investor catches on too late. Today everyone fancies themself a real estate expert. Cap rates are at all time lows, and returns are not as great as they once were. Appreciation will continue, but based on today's press about bankruptcy and excess inventory the short-term looks marginal at best. So where does the sophistated investor go next? Enter my second theory; Foreign Currency Trading. I'll Tell you why later.

My Initial Experience - Continued

So I'm up $200 off of $1,000 in the first 2 weeks. Then something happened. The bottom fell out of the JPY. All of my positions went negative. My broker margin called me. I ended up with $500 in my account. I lost $700 because of leverage in 3 days. That hurt. How did that happen. What did I do wrong. Well first of all my picks are based on a one day chart. If it looks high based on the last few months I'll short the trade. If it is low, I'll buy. My problem is that I haven't been patient at all. I read on a post that you should trade around 5% of your account value on each trade. Initially I thought that is a great idea. Problem is that I was too impatient. Something that looks really high I would go in more like 20-30% of NAV. The other problem is that I don't like having money in the account that isn't in a trade. What are your thoughts and how do you trade?

starting over

So I got out of all my trades and decided to start over. I'm down $500. I do however have something on my side. The reason I got into foreign exchange trading is because a friend of mine is developing software that will click you into trades based on news announcements. I got to preview the software yesterday for the NZD announcement. It was awesome. I went all in and I'm up $160 from $500. The greatest part about it is that the software will not get you into a bad trade. I'm excited to get my copy of the software. I'll keep ya'll posted on how it is going based on this software.

Forex - You Need A Real System!

Forex - You Need A Real System!
Although it has been some years since I was actively involved in trading, I have just returned to the markets and have begun to trade a small account on my own behalf. This has perhaps given me a slightly skewed perspective of the markets, almost like a new entrant, but one with a lot of experience.There have been some big changes whilst I have been inactive, not least in the number of online brokerages fighting for every dollar.But many things stay the same, at the heart of which is one, I guess, unbreakable truth. Trading is basically a very simple business, with any trading stocks, options, FOREX, whatever only really involving three steps:1. Find several possible trades evaluate them and decide which to go for,2. Calculate how much to trade, and decide at what points to enter and exit the market3. Keeping an eye on, or monitoring, open market positionsNow, these three steps were basically all there was to it a few years ago, and they still And, guess what, people are still getting totally bogged down right here, at this early stage of the trading process, generally, for one of two reasons.The first possible reason is that they simply are not aware that these are the steps involved in the trading process, or (the second reason) they have no clearly defined rules for actioning these steps. Thus, less experienced, more nervous, traders can often take hours to evaluate a small number of potential trades.Experienced day traders, on the other hand, are fully aware that, with little time available to execute their trading, they must have a process plan and they must stick to it.
A day trader will set out his (or her) plan of action something like this:1. Recognize the opportunity, enter the market2. Stay in the trade for as long as possible if it is going for him or3. Get the heck out of there with minimum losses, as soon as it is clear it is going to go the wrong wayThat s it! That s essentially what a day trader in any market was doing years ago, and that is what a day trader is still doing today, with little or no change to their working practices brought about by the vastly more advanced technology of today.Savvy day traders learn very quickly that they must plan ahead of time, so that they are in prime position to take full advantages of the opportunities that occur in real time.Thus, day trading, which on paper at least is a pretty dangerous and risky manner of working markets is, in fact, one of the most disciplined trading schools! By the nature of market movements and the way they operate, day traders simply cannot afford to run their trading business on a wing and a prayer!

How You Make Money Trading Forex

How You Make Money Trading Forex
How You Make Money Trading Forex

In the FX market, you buy or sell currencies. Placing a trade in the foreign exchange market is simple: the mechanics of a trade are very similar to those found in other markets (like the stock market), so if you have any experience in trading, you should be able to pick it up pretty quickly.The object of Forex trading is to exchange one currency for another in the expectation that the price will change, so that the currency you bought will increase in value compared to the one you sold

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- Forex Fundamental Analysis

The two primary approaches of analyzing Forex markets are technical analysis and fundamental analysis. Fundamental analysis comprises the examination of economic indicators, asset markets and political considerations when evaluating a nation’s currency in terms of another. The focus of fundamental analysis lies on the economic, social and political forces that drive supply and demand. There is no single set of beliefs that guide forex fundamental analysis, yet most fundamental analysts look at various macroeconomic indicators such as economic growth rates, interest rates, inflation, and unemployment.Here we look at some of the major Forex fundamental factors that play a role in the movement of a currency:Economic IndicatorsEconomic indicators are reports released by the government or a private organization that detail a country’s economic performance. These economic indicators can be released on a weekly basis, but the more common report is monthly. Indicators are based around a number of economical situations, of which the two primary factors are that of International trade and Interest. Subsidiary factors also include Consumer Price Index (CPI), Purchasing Managers Index (PMI), Durable goods orders, retail sales and Producer Price Index (PPI).Currency’s Interest RatesOne of the major indicator factors, Interest rates, are a key economic function of any nation. Generally, when a country raises its interest rates, the country’s currency will strengthen in relation to other currencies as assets are shifted to gain a higher return. Interest rates hikes, however, are usually not good news for stock markets. This is due to the fact that many investors will withdraw money from a country’s stock market when there is a hike of interest rates.International TradeThe trade balance portrays the net difference (over a period of time) between the imports and exports of a nation. A trade deficit can be an economic disaster for a government and a currency. A deficit may appear when a country is importing more than it is exporting, meaning that more money is leaving and less is coming in. In some ways, however, a trade deficit in and of itself is not necessarily a bad thing. A deficit is only negative if the deficit is greater than market expectations and therefore will trigger a negative price movement.

Learn Forex

How do I begin? Please give it to me SIMPLY.1. The best advice on how to learn to trade profitably is to learn from experts with proven track records. Many learning styles are available to beginners at all levels: books, CDs, online courses, group seminars, even one-on-one mentors who will come right your home for a few days. We outline our Forex-Trader picks in Learning Forex Trading. Learning to trade from experts is worth every penny and has saved us untold thousands in mistakes.We would not recommend starting forex trading without any training. It is not hard to learn, nor difficult to trade successfully, but you must first provide yourself with a basic functioning knowledge of ’the game you’re in’.2. While you are learning you will need charting software to practice reading the Market. Charting is an indispensable tool that shows you in real-time data what the market is doing moment by moment and also what the market has done in the past. As you learn to analyze these charts you can determine what trades to enter and exit, where to set your stop losses, limits etc. There are several good charting software services that you can subscribe to online monthly. See our Forex-Trader tested Charting Software picks in Tools of The Trade.3. Then, to perform your actual trades online you need a real-time ’trading platform’ to execute your ’buys’ and ’sells’ directly in the Foreign Currency Market. You obtain a trading platform from a Forex Clearinghouse that is connected real-time to the interbank market. There are many good Clearinghouses (also confusingly called Brokerage Firms, Market Makers, etc.) that provide you with the trading platform to trade the funds in the account you have opened with them. Before you begin trading your ’real’ money, while you are learning, you will practice on your own ’demo account’ with play-money in it, which will be provided to you by the clearinghouse you plan to trade through. The contractual relationship you enter into with your Clearinghouse is a very important one because the Clearinghouse you choose determines many trading features and financial advantages to you both as a trader and as an investor. Forex-Trader tested Clearinghouses are reviewed in Tools of The Trade.We have outlined a Getting Started path with uncomplicated steps. This is the path that we would take if we were beginning trading over again today with ’what we know now’. The products and services we mention in these steps are all ones that we have personally used for some time with consistent success. As always you are free to forge your own path, and if you do, happy hiking. There is a mountain of products and services try out, and if you find ones you like better we would love to compare notes with you.Explain More About Charting ServicesTo trade successfully you also must have good charting software and instantaneous data feeds critical to helping you analysis and interpret the movement of currencies moment to moment so you know when/why to buy or sell — this you subscribe to monthly. You can get a 2 week or more demo to familiarize yourself with one that has the features you like. The costs also vary, and some companies require a year commitment. There are some free charting services offered through the clearinghouses, but they tend to lack the tools to be truly useful. There are also some costly proprietary Specialty Software charting ’hybrids’ which are market forecasters tools that look more like video games than charts.Explain More About How Clearinghouses WorkA good clearinghouse (i.e.. your computer access/link to the live Forex Exchange Market) is the partner with which you trade the money you have deposited with them in your trading account. After trying and demo-ing many we have found a small handful that are truly excellent for the beginner (and continue to be excellent as you grow) — meaning user friendly, legally accountable to regulatory bodies, and offering fair costs (spreads) for their services/trading software platforms. There still are many worrisome ones practicing in this closing era of unregulated forex trading (new Commodities laws are imminent).The topic of matching the right clearinghouse for your needs is discussed more in Tools of the Trade, because it depends on a number of factors — how much you can open an account with, how much the clearinghouse profit spread, what your liquidity needs are, your minimum/maximum stop loss and margin requirements, even where you live and how much time you have to give to trading in a 24 hr. day.How Much Does it Cost to Begin to Trade?Learning to trade will entail the cost of books and whatever traiining method you choose. It will also include a reliable computer with a minimum 128 Mb of memory to run the charting software and trading platform. Ongoing ’costs of operation’ include the monthly costs of high-speed internet, charting software, the email forecasting subscriptions — plan on spending $150./mo. up for ongoing costs.What about Pooled Clearinghouse Accounts to Trade with More Leverage?We strongly do not recommend pooled accounts in any circumstance. Perhaps you are considering self-trading a pooled- together family account because it would give you a perceived advantage of more leveraged funds to trade (50:1 up to 100:1 leverage) — any risks of loss represent a potential risk to family relationships, and for this reason alone we do not recommend aggregating with family or friends.However much worse are the too-numerous negative experiences of people allowing their investment funds to leave their control to become part of a ’managed’ pooled account. Not only is it a very risky investment idea, it is illegal for anyone to ’pool’ accounts without compliance with SEC (a USA Securities Exchange Commission) or international equivalent license. Never relinquish direct control over your money/trading account to anyone (i.e.. the ability to make withdrawals, deposits etc. directly by your own authority into your own account).A good fund manager, if you do choose to go the (legitimate) Managed Account route rather than the Self-Trader route, will make certain you have your own ’segregated account’ in your own name in a bank or brokerage firm. These individual segregated accounts can still be traded together as though they were in a single account by a designated trader as long as the clearing house uses a trading platform that allows it. You, as the investor/account holder, have direct access online to your account activity at all times, and direct control over your own account in your own name (just like a bank account). The importance of this, for the safety of your funds, cannot be over emphasized.

Free Forex Trading Courses: Are They Worth It?

There are some who will tell any investor that free Forex trading courses are just as good as any paid Forex course. Then there are some who will be adamant in saying the exact opposite. Finding out the truth that lies somewhere in the middle is not an easy task to accomplish. Before any prospective investor makes the final decision on any Forex trading courses, it is advisable to ask a few fundamental questions as the search continues.

Finding a good quality Forex trading course that is free is not impossible. A good source will provide information that is not readily found all over the internet. If the Forex trading courses include the information that comes up time after time in a search, that is the first red flag. The potential Forex trading course is not worth the time it will take to read it and practice some of the techniques. Leave it behind and keep researching until a suitable Forex trading course is located as this is the best defense against suffering a financial loss. There is not a bigger risk than that of starting out with an incorrect set of skills and knowledge as that pretty much cements in financial failure.Forex trading courses that are given away free are done so for a reason. It is wise to find out that reason before committing any significant time or energy on them. The idea behind the free give away is to get a potential investor to sign up to that specific company. Finding out if that specific company will benefit your interests is the best move to make in this situation. A company that deals largely in futures trading will offer a Forex trading course as a trap to get investors to sign up. If Forex is what the mission is, settle for nothing less than strictly Forex brokerages or companies.Don't take unnecessary risks when it comes to finding suitable Forex trading courses, as these are the mistakes that generate bad financial decisions later on. Ask questions about the free offer and why it is free. Do the research into any said company and find out if they are a exclusively Forex company or if their interests lie in another financial market. Most of all, if the free Forex trading courses are claiming that it can make you a millionaire overnight. Flag it! Move on because that scam won't get anyone further except the one who is collecting the money. Forex cannot give anyone independent wealth in a short time period especially to any investor who is new to the scene. Be diligent in seeking the answers to all questions and in dissecting the answers. It could be the very key to Forex financial success!About the AuthorTroy Degarnham is the author and webmaster of http://www.forex-trading-brokers.info, an informative website about Currency Trading. Extensive help and tips on systems, software, signals, trading, forex brokers, forex trading courses, and other secrets to help you gain financial freedom.

Using Elliot Wave Theory to Analyze the Stock Market

Some market technicians that use technical analysis to look for a nearing market bottom or market top have noticed over the past several years that the stock market will consistently move in a 5 wave pattern which is based on concepts from Elliott Wave Theory. When the stock market is trending upward a 5 wave pattern consists of 3 separate moves upward and 2 separate moves downward before a top occurs. Meanwhile when the stock market is trending downward a 5 wave pattern consists of 3 separate moves downward and 2 separate moves upward before a bottom occurs.Let’s take a look at the Nasdaq and S&P 500 and analyze their one year charts using concepts from Elliot Wave Theory. Notice how both the Nasdaq and S&P 500 made a bottom in late July of 2002 (points A) and then made 3 separate moves upward (A to 1, 2 to 3 and 4 to 5) followed by 2 separate moves downward (1 to 2 and 3 to 4) before topping out in late August after completing a 5 wave pattern.Now notice what happened from late August until early October of 2002 as the Nasdaq and S&P 500 made 3 separate moves to the downside (5 to 1, 2 to 3 and 4 to 5) and 2 separate moves to the upside (1 to 2 and 3 to 4) before making a bottom in early October after completing a 5 wave pattern.Meanwhile lets continue using Elliot Wave Theory an trace out the 5 wave pattern from early October of 2002 until early December of 2002 when the stock market made a top. Notice there were 3 separate moves to the upside (5 to 1, 2 to 3 and 4 to 5) and 2 separate moves to the downside (1 to 2 and 3 to 4) as well.After the Nasdaq and S&P 500 topped out in early December they formed another 5 wave pattern as they made a bottom in mid March of 2003. Once again there were 3 downside moves (5 to 1, 2 to 3 and 4 to 5) and 2 upside moves (1 to 2 and 3 to 4) before the 5 wave pattern was completed in mid March.Now I’m not an expert in Elliot Wave Theory but it looks to me that the Nasdaq and S&P 500 may be nearing the completion of another 5 wave pattern with a potential stock market top coming into play. Notice there have been 3 upside moves (5 to 1, 2 to 3 and 4 to 5) and 2 downside moves (1 to 2 and 3 to 4) since mid March through late May of 2003.

Forex Trading Systems

You should build your own trading systemA trading system on the Forex market is a type of strategy that allows traders to trade with a set of rules. There are many free trading systems and strategies printed in trading articles, journals, books and on trading-related websites. I would have to say that if you are not inclined to learn how to develop your own trading methodology, then perhaps you should consider giving your money for someone else to invest. Give it to someone who is trading a system that he developed and tested himself because he is more likely to have the confidence and courage to follow his own trading system.Why you need a forex trading system?It’s easy to trade with a system.A good system provides consistent result. What makes a good trading system?It’s simple. Forget complicated systems with lots of rules - it’s a proven fact that simple systems work better - and are less likely to fail, in the brutal world of trading.A trading system with profitable expectation.It provides good ratio of reward/risk.A system of comprehensive risk management including market exposure weightings, stop-loss provisions and capital commitment guidelines that preserve capital during trend-less or volatile periods. Once you learn how to develop trading systems and strategies, you can then be better equipped to test them as well. By this point you might even find that the system created by yourself is the best one for you, because it becomes the system more suited to your profit objectives while operating within your risk tolerance levels. It is likely that once you develops this level of competence, you will simply acquire other trading systems only to dissect them, grab the parts you likes and add them to your own system. To me, the irony is that for a trader to know which system to purchase, you must first learn how to create a system. And after knowing how to create a system, he will no longer have the need to buy one.

Learn Forex Trading - How To Create An Income By Forex Trading Part Time From Home

Can you really make a living trading forex as a business from the comfort of your own home? Can you really create a replacement income as a part time trader and then retire young?

Of course, the answer depends on how much is your current income or the desired amount of income you wish to obtain from forex trading before you wish to quit the rat race and be a professional trader, either part time or full time.But there are many traders who are quietly making 5 figure incomes monthly trading from the comfort of their homes, and some of these are part time traders.So before you embark into forex trading as a part time trader, here are some guidelines you ought to consider:1. Your devotion of time - how much time are you going to devote to trading forex? Contrary to popular opinion, you do not need to be glued to your trading monitor to watch the prices of forex or currency pairs all the time. The larger part of your time is spent on finding those trading setups based on your trading system and the execution is fast, and you can also pre-set your stops and profits or give instructions to your broker.In fact, it is the learning process that will take time. So budget sufficient time to learn how to trade, and that time allocation is actually required before you even place a live trade.2. Your allocation of capital - again, if you trade the mini forex the amount of capital is not large. Contrary to popular opinion, you can start a mini forex account with around $500 and can start to trade. With a mini forex account you can leverage off the system and be profitable.3. Your Risk Profile and Trading Discipline - you need to consider your risk profile. Are you aggressive in trading, so that you will prefer day trading the forex and thereby assume more risks? Or are you happy enough swing trading the forex over a few days? This will determine the methodology and trading system you will want to follow.4. Advancing as a Forex Trader - to advance further as a forex trader, you will need to constantly improve your trading skills and see increase profits in your trading. Good traders always keep a trading log and review whatever trades they have executed and consider the outcomes. In this way, they learn from their errors and know whether they have obediently followed their trading strategies and had kept and maintain discipline in their trading.In making the transition into a forex trader, the learning process is the most important. Many forex traders have muddled along the way by a self learning process without guidance, with the end result that while they may be profitable, they are not consistently profitable. Many of them are seeking ways to unlearn some of their bad trading habits. You can avoid such a situation by understanding your own risk profile, and seeking out a professional trader who can become your mentor and to pass on his trading skills to you.By: Peter LimArticle Directory: http://www.articledashboard.comDiscover for free how a professional trader creates his 5 figure income by trading forex using 3 powerful proven trading Price-Action trading strategies involving No-Indicators, and how you can personalise these same systems for your own use today. Visit Forex Trading For Massive Wealth or visit forex-trading.cashflowpc.biz

Forex FAQ

What is Foreign Exchange?The Foreign Exchange market, also referred to as the "Forex" or "FX" market, is the largest financial market in the world, with a daily average turnover of approximately US$1.5 trillion. Foreign Exchange is the simultaneous buying of one currency and selling of another. The world’s currencies are on a floating exchange rate and are always traded in pairs, for example Euro/Dollar or Dollar/Yen.Where is the central location of the FX Market?FX Trading is not centralized on an exchange, as with the stock and futures markets. The FX market is considered an Over the Counter (OTC) or ’Interbank’ market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network.Who are the participants in the FX Market?The Forex market is called an ’Interbank’ market due to the fact that historically it has been dominated by banks, including central banks, commercial banks, and investment banks. However, the percentage of other market participants is rapidly growing, and now includes large multinational corporations, global money managers, registered dealers, international money brokers, futures and options traders, and private speculators.When is the FX market open for trading?A true 24-hour market, Forex trading begins each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, then London, and New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night.What are the most commonly traded currencies in the FX markets?The most often traded or ’liquid’ currencies are those of countries with stable governments, respected central banks, and low inflation. Today, over 85% of all daily transactions involve trading of the major currencies, which include the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and the Australian Dollar.Is Forex trading capital intensive?No. FXA requires a minimum deposit of $250. FXA allows customers to execute margin trades at up to 200:1 leverage. This means that investors can execute trades of $10,000 with an initial margin requirement of $50. However, it is important to remember that while this type of leverage allows investors to maximize their profit potential, the potential for loss is equally great. A more pragmatic margin trade for someone new to the FX markets would be 20:1 but ultimately depends on the investor’s appetite for risk.What is Margin?Margin is essentially collateral for a position. If the market moves against a customer’s position, FXA will request additional funds through a "margin call." If there are insufficient available funds, FXA will immediately close out the customer’s open positions.What does it mean have a ’long’ or ’short’ position?In trading parlance, a long position is one in which a trader buys a currency at one price and aims to sell it later at a higher price. In this scenario, the investor benefits from a rising market. A short position is one in which the trader sells a currency in anticipation that it will depreciate. In this scenario, the investor benefits from a declining market. However, it is important to remember that every FX position requires an investor to go long in one currency and short the other.What about terms like "bid/ask", "spread", and "rollover"?FXA has an extensive Glossary that provides detailed definitions of all Forex related terms.What is the difference between an "intraday" and "overnight position"?Intraday positions are all positions opened anytime during the 24 hour period AFTER the close of FXA’s normal trading hours at 4:30pm EST. Overnight positions are positions that are still on at the end of normal trading hours (4:30pm EST), which are automatically rolled by FXA at competitive rates (based on the currencies interest rate differentials) to the next day’s price.How are currency prices determined?Currency prices are affected by a variety of economic and political conditions, most importantly interest rates, inflation and political stability. Moreover, governments sometimes participate in the Forex market to influence the value of their currencies, either by flooding the market with their domestic currency in an attempt to lower the price, or conversely buying in order to raise the price. This is known as Central Bank intervention. Any of these factors, as well as large market orders, can cause high volatility in currency prices. However, the size and volume of the Forex market makes it impossible for any one entity to "drive" the market for any length of time.How do I manage risk? The most common risk management tools in FX trading are the limit order and the stop loss order. A limit order places restriction on the maximum price to be paid or the minimum price to be received. A stop loss order ensures a particular position is automatically liquidated at a predetermined price in order to limit potential losses should the market move against an investor’s position. The liquidity of the Forex market ensures that limit order and stop loss orders can be easily executed.What kind of trading strategy should I use?Currency traders make decisions using both technical factors and economic fundamentals. Technical traders use charts, trend lines, support and resistance levels, and numerous patterns and mathematical analyses to identify trading opportunities, whereas fundamentalists predict price movements by interpreting a wide variety of economic information, including news, government-issued indicators and reports, and even rumor. The most dramatic price movements however, occur when unexpected events happen. The event can range from a Central Bank raising domestic interest rates to the outcome of a political election or even an act of war. Nonetheless, more often it is the expectation of an event that drives the market rather than the event itself.How often are trades made?Market conditions dictate trading activity on any given day. As a reference, the average small to medium trader might trade as often as 10 times a day. Most importantly, by not charging commission, FXA customers can take positions as often as necessary without worrying about excessive transaction costs.How long are positions maintained?As a general rule, a position is kept open until one of the following occurs: 1) realization of sufficient profits from a position; 2) the specified stop-loss is triggered; 3) another position that has a better potential appears and you need these funds.I am interested in foreign exchange trading, but would like some additional information. Any suggestions?In The Forex Market section we describe the foreign exchange market in some detail. In order to gain a practical understanding of foreign exchange trading, there is no better way than to open a demo account, where you can experience what it’s like to trade the Forex market without risking any capital.