Tag Archives: forex

Forex Trading Articles

Dealing With Forex Brokers

Forex trading can be very intensive. If you want to learn about how the forex market operates then this article is something that you should read. There are plenty of elements that come into play in the forex market from the spreads to the pricing to the liquidity. Here in forex trading, being able to find the best price can make a difference when it comes to profiting from the trade. Slippage is the deterioration in price that can occur between the moment an order is placed and its execution. According to some, slippage does not exist but it does, they are just clouded by the amount of money being traded daily. Sadly, the truth is that, although trillions are traded, forex markets do suffer from a degree of slippage caused by lack of liquidity at key price levels.

The way slippage is controlled in listed equity and futures markets is by allowing the participants to have equal access when it comes to the liquidity pool. Any transaction that is conducted in the forex market is not displayed for any participant to see and this is why the slippage is normally hidden through spreads and undisclosed volume numbers. Slippage can be minimized if the correct bank or broker is working on the exchanges.

Other kinds of trading take place on an exchange while the forex trade happens in the interbank market. Here, two main electronic broking systems are working to satisfy the trading needs of the interbank market which is primarily composed of large commercial and investment banks. There are traders which also utilize a direct telephone based system when it comes to this market.

Here, there is an exclusive club based on credit lines that comes into play and there happens to be electronic exchanges among banks in this case. The exchange rates on these two platforms are known as the official interbank rates and are normally not published anywhere.

What forex liquidity is in this case is the total amount of available currency in the trade. Buying or selling is normally done by brokers and traders after this information is obtained. Elements like the time of the day, important support and resistance levels, and news flow announcements are essential when it comes to the transactions that are being made here.

Sometimes, traders trade on multiple positions and this involves various currencies and for each of these it is necessary that the net exposures be obtained by the trader. To save money on spreads, what you need to do is get this particular information so that you will be able to close your multiple exposures in a single trade. Here is where some sense of control is advantageous to the trader.

It is important that you use technical analysis techniques to your advantage when it comes to this market. Sessions are more efficient when traders are able to computerize their strategies allowing the system to do the manipulating for them. Trading is best done when things are automated.

Trading is always better when this particular system is put to use. Before trading, do a simulation and see if your plans will lead to earnings. This feature allows you to test your plans before trading any real money.

Forex Trading Articles

Forex Market Orders

The Forex market order is an order to buy and sell currencies at the current market prices. The order execution is immediate. Forex orders can be placed through phones or online.

Process of placing Forex orders-

The trader states the chosen currency pair and the size of deal to the trading dealer.

The dealer states the put and call price of the selected currency pair.

The trader selects one of the two prices and sometimes, traders may ask for re-quotes.

The dealer verifies the deal and conveys the confirmation message to the trader.

Note – Always confirm for two-way quotes before making the deals. If the traders do not ask for the bid and ask quotes, the firms will take advantage of the traders’ unawareness.

There are three types of orders limit order, stop orders and order cancels other.

Limit Order –

The limit order is an order put to buy or sell the currencies at a specific price. This order has two variables one is price and other one is duration.

The investor states the price that is suitable for him to trade the currency pair and defines the duration up to which the order will remain active.

Good Till Cancelled –

A GTC is an order that remains live in the trading market until the investors do not want to cancel the order.

The dealer cannot cancel the order at any instance of time so investors have to remember that they are having the order or deal to trade.

Good for the Day –

A GFD remains live in the trading market until the trading day ends. As the FX is a continuous trading market, so the end of the day is the set time hour.

Stop Orders-

It is an order that is put to trade currency at a specified price. This order has the same two variables.

The difference lies between the limit and stop order is that the stop order is placed to bound loss possibilities on the trading deal and the limit order enters in to the pre-existing positioning of the FX market and fetch good returns.

The same GFD and GTC variables are used to specify the duration of the orders.

Order Cancels Other –

This order is an amalgamation of the two limit orders or two stop orders, the two orders are placed with the specified prices and duration variables mentioned above and below the current prices. When the one order executes the other, one is cancelled.

General Forex

Get to Know The Factors That Affect Forex Trading

Foreign exchange or Forex is a complicated and challenging business especially if you have a very little background on how it really works. You can almost say that Forex or FX trading is only for people with background on financial, economic or business courses. But just like any other type of goal, there is always a way through proper awareness and willingness to learn. With patience and hard work, you can master the best techniques to prosper in this kind of business and you don’t need to acquire degrees on courses related to business or the Forex market.

Foreign exchange or Forex trading is a type of business which is based on the currency market. It is usually abbreviated as FX or FX trading. Forex trading involves the exchange or trading of one type of currency for another. You can encounter a lot of terms and names which refer to the same business such as currency exchange, Forex trading, FX trading etc. Usually, the parties involved in a Forex trading depend on the type of currency and the country. The participants usually include governments, banks, large corporations, currency speculators and other financial establishments.

The currency market or the Forex market can be described as a huge network of global companies and individuals involved in the business of selling and buying different types of currency or money. Forex trading is based on a spot market where participants can trade at the current market rate as dictated by the laws of supply and demand. This means that you are trading money for money at the current market price. But there are also other options especially in the United States where you can trade a contract price for delivery in the future. Forex is becoming more and more popular as people are more aware on how it works and how it is being driven by multinational corporations, travelers, and government actions. As a result, Foreign exchange has become one of the fastest growing markets nowadays.

If you’re planning to engage into such form of business, you have to be aware of the basic factors related to a country’s economy and how movements of other countries’ economies can affect currency rates. You may need to understand some basic financial concepts and principles to learn how Forex trading or FX trading works. There are a lot of factors that can affect currency exchange rate in a certain economy. Forex usually depends on the stability of a certain country and factors that include political developments, economic policies, movements made by banks or other financial institutions and the reaction of the currency market to unavoidable circumstances brought by calamities, social problems, economic issues etc. An FX trader should know when to trade and predict the next behavior of the currency market. It is also important to always consider fundamental factors of Forex trading and not always rely on technical observations from analysts.

Overall, a Forex trader must be very observant and aware of the behavior of the economy and the currency market to know when to make a move and benefit from his investments.

Forex Trading Articles

Partial Close – Technique for Preserving Forex Profits

Partial close is one of the forex exit strategies that are available at the disposal of forex traders. Partial close is a forex exit strategy that a trader can use to exit his trade in a piecemeal fashion instead of just exiting the trade at one time. It is used to close a portion of a trade as the profits start to roll in so as to secure some level of profit no matter what could happen later. Partial close helps ensure, at least, small amount of profit when trading is favorable.

The Problem with Partial Close

There is, however, a big downside to partial close is that there is no balance between risk and reward. The risk that a trader decides to take up when a trade is opened is seldom the same as the profit that could be realized. As vital as partial close is, it could also affect a trader’s profit in a negative manner.

Partial Close Example

An example would be helpful in demonstrating here. Imagine a case where a trader, utilizing a 40 pip stop loss, he would then have risk 40 pips as his total amount risk for that single trade. Let us now say that the he decides to perform partial close when his trades are in 20 pips profit.

If the trader decides to partial close fifty percent of his trading positions, he would have, thus, covered 20 pips out of the 40 pips risk. To maintain a 1:1 risk-reward ratio, the trader would have to close out the remaining positions at a higher profit level than 40 pips due to the fact that the remaining positions are traded with a lower contracts sizes.

The problem that partial close could give rise to is sometimes aggravated by the actions of trader. There are some traders that do shift their stop loss to break even immediately after they have used partial close to secure some profits.

The implication of this, based on the earlier example, is that they have put 40 pips at stake in any single trade to gain 20 pips should the remaining position close out at break even. Not only that, should the next trade stop out for the total initial 40 pips, it then means they have to make up for another 20 pips in the trade that comes after, that is, if the trader continues to trade on the same amount of contract size.

Partial Close Protect Profits Reduce Rewards

The fact that there is a disparity between risk and reward indicates that the trader who uses partial close must record a greater success rate relative to another trader that does not use partial close at all. This is because a single loss is capable of reversing whatever profits a trader has realized. The discrepancy in the risk-reward ratio requires a forex trader who uses partial close to record large number of winnings. Else, it would be better for the trader not to use partial close technique at all.

General Forex

How A Manager Can Benefit From The Use Of The Forex Signal EA

A successful Forex trading career demands a thorough knowledge of trading strategies and the factors influencing the global fluctuations in the rates of Forex commodities and currencies. Accurate predictions and good money management are very essential to build up a profitable trade scenario. However, predicting the rise and fall of prices precisely is not cakewalk since it involves a lot of interpolation, statistical analysis, combined with experience and skill. To simplify the process of making investments, softwares such as Forex Signal EA are used. Forex managers can use these softwares to send predicted market scenario to the clients and help them make profitable investments.

The currency quoted in Forex trading is in the form of relative currency fluctuation ratios. Forex trading softwares can be used in order to obtain a mechanically generated report while taking into consideration all the factors affecting the currency value or can be manually generated by expert professionals based on their experience-backed calculations.

When the process of signal generation is complete, the generated signals can be transmitted to the customers. Customers with any kind of account can access this information. When Forex Signal EA is used to generate signals, the signals can be sent to your website with the help of the HTTP GET protocol. The signals can also be sent to the email account of the Forex manager.

However, the process of signal generation works on a one-on-one basis. Only one website can be serviced using one licensed EA. EA works in conjuncture with Metatrader. So, installing a Metatrader account is the first step in the process of using Forex Signal EA. Once this is done, signals can be sent from one Metatrader account to another.

A transfer software directs signals to the Metatrader account. The big advantage of sending signals through HTTP GET protocol is that it works with Perl, PHP, ASP to name a few and so, your server can read the signals without a problem. Once the signals are transferred to your website, you can begin the process of sending signals to you customers.

If a Forex manager needs to change certain features in the Forex software, he can do so by adding extra feature to help him handle the load of his customer base. Sending signals is a two level process. First, Sendweb congregate all the relevant information like predicted prices, the swing in the market prices, the amount of stock bought, account number and balance. In the next step, SendEmail is used to dispatch the congregated results to your email account.

The different statistical values related to trading can be represented graphically using these softwares. Graphical representations give a correct idea about the swinging rates and the general trend of the market. A trader can trade using a selected set of trades and keep the EAs functional. Currency fluctuations can also be represented graphically.

The sophisticated software help the trading manager guide his or her customers in the right direction of trading. A Forex trader can make a profitable career out of trading by adhering to the prediction sent by the trading firm. Since Metatrader is gaining massive popularity, the use of these softwares help a trader and the trading firm help each other in making profits.