Tag Archives: forex

Forex Trading Articles

The Advantages of Forex Trading

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The foreign exchange market, also known as forex or FX, is a global financial market for trading national currencies. Forex has no single geographical or financial centre. Instead, trades are processed through a number of financial centres globally, including, but not limited to, London, New York, Hong Kong and Tokyo.

Forex is one of the busiest markets in the world, with trading volumes and liquidity levels driven by traders around the world. Forex, like many other financial markets, is affected by external stimuli, which include news events, major political events or speeches, economic indicators and the release of unemployment figures.

With the exception of the weekend, forex is the one market that does not sleep. Also you can normally trade the markets from anywhere in the world, provided you have market access, which at its most basic, means a computer, a good internet connection, a financial trading platform and funds that you can afford to lose.

As the forex markets operate globally, you can trade in the morning, afternoon, evening or even during the night. This means that you can try to fit your trading around other activities, such as work or social events. Although if you are just flitting in and out of the markets then you’ll probably be less successful than someone who is more thorough.

You can trade the forex markets using a leveraged trading product such as forex spread betting . Leverage means that a small initial deposit controls a larger sum of money. Leverage can be useful when trading forex pairs that only move by small amounts in a given time period, it also has its downsides however.

Price fluctuations can happen suddenly and without prior warning, but they can also increase or decrease by small percentages over a period of hours or even days. Leverage, in this context, means that you can create larger profits from small price movements. However, it is important to understand that leverage can work both ways, it carries a high degree of risk to your capital, as potential losses are also magnified. Consequently you can lose more than your initial deposit.

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Before trading, make sure that you are fully aware of the risk. Ensure that spread betting fits your trading objectives as it might not be appropriate for all types of investor. Always ensure that you only spread bet with money you can afford to lose. Request independent financial advice if appropriate.

In contrast to some financial markets, forex traders can potentially profit not only from rising, but also from falling price movements. ‘Going long’ means that you speculate that prices will increase over a period of time. Your potential profit comes as a result of an increased price, while losses, in this context, are the result of falling prices.

‘Going short’ means that you think prices will fall over time. In this case, your potential profit is the result of an accurate prediction of falling prices, while losses are sustained should prices rise.

General Forex

Forex Trading Explained in Simple Language

For those who have heard but don’t know much about forex trading, read further, to know what exactly forex is trading and what are the modalities involved. Forex or Foreign Exchange trading is the trading of currencies of different countries by brokers called forex traders at a market called the Forex market.

Through forex trading a broker, aims to profit, from the fluctuations in the foreign currency. When a forex trader buys currency, he is said to be ‘long’ on that currency and when he sells, that currency he is said to be ‘short’ on that currency. As the value of one currency increases rises or falls, traders decide if they want to sell or buy that particular currency.

In the forex market, currencies are often quoted in pairs, like GBP/USD, or USD/EUR. The first of this currency is base currency and serves as the basis for which you buy or sell. The second is the counter or quote currency. For example when you buy EUR/USD, you have bought EUR, by selling USD.

Forex trading is a very profitable way to make money, but it can be risky as well. You need to be aware of the latest currency rates. There are a number of tools that help you calculate the exchange rate. One such example is the currency calculator, which determines, the value that you would get in return for your investment.

Within the forex market, there are several small forex markets that trade in various currencies. The most commonly traded currencies are the USD, the Australian Dollar, the Japanese Yen, and the European Euro. The values of these would change according to the market that it is trading in. This is a 24 hour market, so the value of dollar can be different according to the market that it is in.

Getting started in forex trade is simple. You need to first choose an online broker who deals in forex trade. This is a very important choice, hence be very careful. Try and avoid the fly by night operators, who would lure you with all sorts of gimmicks. Remember the old adage, if something is too good to be true, it probably isn’t! Choose a broker who has a clean reputation. Figure out how much money are you going to invest in a forex trading account. For those who are new, to the forex trade, you could choose from the many Mini forex trading brokers. Through these platforms you can trade in smaller amounts and thus minimize the risk. They serve as a playground for the real battle ground. The next step is to open a trading account, by completing the requisite formalities.

Although the risk is high, forex trading is a lucrative business.

Forex Trading Articles

Forex Indicators: Bollinger Bands and Fibonacci Retracements

The Forex trading is an enthralling method of make money online, if you are eager to enter into this enthralling Forex trading platform then you must learn about the indicators that will give you information regarding the Forex trading inflows. The two important indicators are “Bollinger Bands” and “Fibonacci Retracements”.

Bollinger Bands interprets that the prices remain in the two specified ranges of upper and lower bands. The distinct feature of Bollinger bands is that the gaps between the bands diverge with the volatility of the price actions.

During high volatility that is extreme price fluctuation, the bandwidth increases and becomes more tolerant.
During low volatility, the band gaps decreases according the price action at that time instant. The bands are drawn based on the simple moving average and two standard deviations above and below one particular moving average are plotted.

These bands suggest about “sell” position when the prices are greater then moving average and close to the upper band and “buy” position when the prices are less then moving average and close to lower band.
These bands are used by Forex traders for analyzing the market position in combination with RSI, MACD, rate of change and CCI etc.

On the other hand “Fibonacci retracement levels” are a series of numbers revealed by the renowned mathematician Leonardo da Pisa in the 12th century. These number series illustrates cycles found all over in nature and when implemented to technical analysis it helps to find the loopholes if any in the Forex trade.

These levels are quite impressive way to look into the future of Forex trade that is it involves predicting changes in the Forex trends as prices close to the lines drawn by the Fibonacci study.

The prices either used to retrace significantly after a significant price action up or downward trending from the original movement.
Because when the price action retraces, resistance and support levels tends to pause closer to the Fibonacci levels.

These levels can be easily shown by relating a trend line from a high point to an apparent low point. The difference between the high and low points and their ratio can be applied to attain required retracts.

The article provides information on the Forex indicators of “Bollinger bands” and “Fibonacci Retracement levels”. These indicators help to find out the Forex trend lines and anticipate the further movement of the Forex trade.

General Forex

Forex Trading Ways For Success

Trading Forex requires good understanding of the basics and some common ways for the trading. Many people enter trades and fail because they ignore the following points although forex trading is open to all people. The important point to notice is that forex trading like any other business requires good understanding of the basics.

Below is presented four tips that must be followed when trading forex:

1. Don’t use forex robots unless Well understanding them: many people that are new to forex trading can buy the forex robots that say that the person can make many bucks per month with it for long lifetime. This can be attractive to new forex traders and buy it with knowledge oh how it woks. Forex robot sellers say that it will make hundreds of points per month. The point here is that the person buying them must know how they work and know also the basics of the forex trading.

2. Use simple Forex Trading System : when beginning to trade, one can depend on many indicators on the charts in addition to the analyzing the news. Actually, analyzing the news is not necessary to be included I the forex trading strategy. Keeping the forex trading strategy simple will help make money with little risk. Two or three techniqual indicators are good. Complicating the analysis with more techniqual indicators will make the matter difficult. The established strategy must be applied for few weeks or months to test if it works well.

3. Trade with discipline :many people after building the strategy can diverge from it when trading. This is because the trader can trade with just a look at the chart and don’t remember the strategy he built when entering a trade. This can be very dangerous and lose extra money for the trader. The strategy that is built and tested to be well must be followed exactly when trading forex. For example, if the strategy includes technical indicators that consists of the pivot point, the stochastic, and the RSI. The trader must see the all above indicator values met to enter a trade. If two are met and one doesn’t reach the value required to enter the trade, the trader must wait it to reach its value.

4. Don’t Fall for the Myths: There are numerous myths but the major one traders fall for is markets move to science or some higher force and the way to make money is to predict in advance – prediction is just guessing because markets cannot be predicted instead, you should focus on trading the reality of price action. If you want a simple strategy that works, trade breakouts, we have covered this timeless ways to make money in other articles so look them up.

5. Mange well Your Money: many people behave with a random manner when going to buy and sell currencies in their account. The money management control how mush to buy or sell relative to the overall value in the account. It controls also how mush profits to take and how mush losses to afford. Money management is very important like the forex trading strategy.

General Forex

Managed Forex Account – an Explanation

Many people are drawn to the forex market due to high liquidity, 24 hour trading, low startup costs, and a number of other attractive reasons. However, some traders are unable to sufficiently learn or trade currency due to a conflicting full time job or other obligation. Also, many investors like to supplement their existing portfolio without having to learn a completely new market. This is where the “managed forex account” comes in. A managed forex account is an established live forex account funded by the investor, and traded by a company or professional. This allows the investor a reasonable rate of return on an account he does not necessarily have to trade himself, and the opportunity to be a part of the largest market in the world.

There are literally hundreds of companies and investment firms that make use of an investor’s money by establishing a managed forex account. Some of these companies and firms specialize in managed forex accounts, and spend all of their time and effort strictly in the currency exchange. This gives the investor confidence their managed forex account is being traded by a professional currency investor, and gives them a better chance of a steady monthly (or yearly) percentage of return. The returns on a managed forex account have been advertised anywhere from 5% to 20%+ monthly, with a 10% to 40% of the profit as a monthly (or yearly) fee to the company or firm. Alternatively, many companies and professionals may take management fees on the managed forex account even if the account is not in profit for the month.

There are obviously many up sides to a managed forex account. The investor is able to achieve a steady rate of growth without having to spend all the necessary time and effort to trade the money himself. The investing firm or company that provides the managed forex account will take a small portion of the profit for the month or year, still assuring that the account is at steady growth. The forex market is a very liquid market as well, giving the investor a much more flexible means of withdrawing funds from the managed forex account. Also, trading currency allows profit potential in both rising and falling markets, giving the experienced money manager more opportunities to grow the investor’s account.

Two of the major types of managed forex accounts are those traded manually, and those traded by an automated “trading bot”. Trading bots are pieces of software that automatically trade currency based on a hard coded set of rules. A coder will write the system and money management rules into a variety of programming languages to produce software that could provide a more regulated steady rate of return for the managed forex account than the manual trader. This gives the ability of the company or professional to advertise a set rate of monthly (or yearly) growth. Some of the more traditional companies and individuals alike prefer to have their funds traded manually, as the human interaction aspect can sometimes yield smaller drawdowns and larger returns.

As a managed account seems like a very lucrative direction to take in the forex market, some people may still be drawn away from it for a few select reasons. Usually, many commercial brokers and investment firms have a minimum for the account to be traded. These minimums are usually around $10,000, and prove a hefty starting cost to the average trader. Also, many of these companies can (and usually do) promise high returns. In spite of these statements, the majority charge a monthly management fee to your managed forex account. If your monthly return is less than the standard monthly charge, your managed forex account will be in the negative even though before the fee, you were positive. Great care must be taken in selecting your forex investment firm, as to minimize your losses due to weak months.