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General Forex

Forex Broker Terms You Might Need to Know

When dealing with a Forex broker, you are introduced to a whole new trading jargon. Therefore, it seemed fitting to present to you a variety of Forex broker terms that you will need to know.

No Dealing Desk (NDD) Broker-This is a broker who does not have his own dealing desk. He instead outsources persons who would interact with the clients, providing them with price and liquidity information. These liquidity providers are the ones responsible for sending in all bids to the trading platform. The best bid is then presented to the client.

Forex ECN Broker-ECN stands for Electronics Communication Network. Therefore, an ECN broker is an Electronics Communication Network broker. All the trades are done in the name of this professional without the use of a dealing desk but rather via the use of a marketplace. This marketplace is flooded with market makers, banks, and traders who are making offers. This is a form of anonymous trading.

Market Maker-This is an individual that provides pricing and liquidity for currency pairs. This professional would then stand by waiting for the chance to buy or sell a currency at a specific price. A variety of strategies are used in order to provide traders with opportunities to make the most profit.

Agency-A professional establishment that provides intermediary services to both buyers and sellers is known as this. This outfit employs agents who make commissions off any gains made. Sometimes a small commission is charged regardless of how the financial transaction turns out.

STP-This is the acronym for Straight Through Processing. It is simply a term to indicate that an entire trading transaction is fully automated. There may be a person overseeing the automated transaction system. However, there is no intermediary taking care of your trade you just made. It is all done using web-based or downloadable software.

Margin-This is the amount of equity contributed by a trader. It is a percentage of the current market value of securities which are held in a special account.

PIP-This is the smallest unit of money that is used to accurately calculate Forex rates. This is a more precise determination of how much profit has been made or how much profit could be made.

Spread-Difference between the bid and ask price is referred to as this. This is another calculation of gain or loss as a transaction is made. It also is part of what is used to create statistical graphs and charts for a Forex broker to use as a guide.

Leverage-Market participants use this method of increasing potential gain of a Forex transaction made. It involves the use of various financial instruments (foreign currency in this case) or borrowed capital (usually money).

Lot-A pack of trading units that are sent to the market are often referred to as this. There are three different types-the micro (1,000 units), mini (10,000 units), and regular (100,000 units). This is done to help accommodate Forex broker accounts created by traders within varying budgets.

Forex Trading Articles

Day Trading Systems – 2 Things You Must Know to Survive And Win

The forex market is considered to be the largest trading post around the world Indeed, a great number of traders used different marketing techniques to earn money. The process is about buying and selling a stock on the same day. Day trading seems to be a tough competition since most traders watches the movement of trades every second or minute which is a crucial factor. Day trading is really a tough challenge to face, that’s why I’ll be providing you some pieces of advice to help you handle your trades using the right strategies for day trading.

The Proper Timeframe to Trade

Since the forex market operates the whole day, every trader will encounter difficulty determining the flow of market and to identify which suitable response to take. Time is an important factor when it comes to trading currency pairs. I would recommend that you consider the 10 minute time frame but the results would be dependent on the system that you’re using. Once you’re familiar with your system, you’ll surely know when the best time to trade.

Like for instance, if the price does not seem to blend on your trading system( rare systems), the range between 3-5 minutes will likely suit fast time frames. For instance, if you’re engage to trading with systems such as grid trading and hedging. When you trade on a fast pace movement, this can have two results- either you gain money or lose everything.

In addition, the price and any technical analysis are no longer important in fast time frames. On the other hand, if you’re using a system that utilizes technical analysis, you’ll definitely want to go with a slower time frame. Moreover, you need to let your system fit in. I’d recommend the 30 minute chart.

I want to emphasize that it you may have the option to go bigger or smaller, this would depend on your system. For instance, the Fibonacci retracements who fits in a 15 minute chart. Thus, you need to grasp every inch of detail about your system so that you would identify which is the appropriate time to trade.

The Right Time to Trade for Individual Currency Pairs

If you want to figure out the best time to trade individual currency pairs, well you need to be familiar with on the geographical location and macroeconomic factors. Once you’ll familiar on particular time for its peak, then you can surely hit the profits. Let’s take forex trading in Asia as an example, particularly (Tokyo 7P.M.-4 A.M. EST). One of the market giants in forex is Tokyo, no wonder it has been competitive through the years when it comes to trading individual currency pairs.

If you’re target is 90 pips, a good choice of currency pairs would be USD/JPY, GBP/JPY and GBP/CHF. This is the real picture so it is suggested that you gather up relevant information for you to formulate the best strategies for day trading.

Tons of day trading strategies are available in the market though you need to keep in mind that the result would rely on how you handle your system effectively.

Market Analysis

Forex Live Chart – What You Ought to Know About Charts

Forex live chart is a necessity if you are planning to do your own market analysis. ‘Live’ here means the service that provide it will use current actual market data to create the chart. Basically, it is a very useful information tool to have even if you don’t do your own analysis.

First of all, you have to pick the currency pair that you want to analyze; it usually comes in the form of a drop down menu. Once you get the one that you want, select the chart type, it typically is available in four forms: Line, Bar, Candlestick, and Table. If you are a beginner, I suggest to begin with a Bar type. Once you select the type, choose a time frame such as one minute, five minutes, daily, weekly, etc.

In a bar chart, every vertical bar which you see signifies a time frame. The top of the bar is the highest price and the bottom of the bar is the lowest price during that particular time frame. For each vertical bar, there are two horizontal bars, one to the left and the other to the right. The left bar represent the opening price and the right bar represent the closing price for that time frame. Note: Utilize the zoom feature to see it in detail.

If you are going to use forex live chart, you should at least know these things:

Understanding Support and Resistance

The market volatility can bring it anywhere and no one can predict it 100%. But based on historical data, there are some condition where the price doesn’t exceed or below a certain price for a period of time.

Instance:

-From July to December, the EUR/USD prices never go beyond 1.645, that means 1.645 is the resistance for EUR/USD during that time period.

– From January to May, the USD/JPY prices never fall under 90.070, that mean 90.70 is the support for USD/JPY during that period of time.

Entry and exit point can be decided based on these support and resistance data. An orthodox approach is buy at support and sell at resistance. There is also more advanced strategy such as buying at resistance breakout and sell at higher price; it is all depend on the currency, circumstances, and your trading system.

Note: A time when the price has moved passed support or resistance line is called breakout.

Indicators

A good chart software also allows you to add various indicators. Indicator is a mathematical calculation based on prices which you can use to help you come up with decision. For instance: MVA indicator can present you the average price for a particular period, EMA show you the weighted price calculation for a certain period, etc.

Forex live chart can be used in various other ways to support a trader and understanding the basic function is a good start for your trader career.

Forex Trading Articles

Key Factors in Forex Day Trading That You Must Know

In the world of Forex Trading, day trading is not always a sure thing. However, your success will solely depend on the information that you have, especially when it comes to the basics of day trading. To help you with learning the basics, here are some strategies that you can consider:

Practice liquidity and volatility – Being liquid simply means that you could get in or get out with a relatively good price, since a liquid currency pair is usually something that most investors are willing to buy and sell at the same time. This could also mean that there will be a smaller spread, and that there will be a little difference between the bids to the asking price. On the other hand, be very volatile when it comes to measuring how far the currency pair could fall or rise in a certain day.

Know your entry points – When determining what would be the best time to get in to a trade, three things must be considered. First, is by knowing the candlestick patterns display and the reversal trends in the price. Next is to look for the volume, on whether the buyers were supporting the currency pair on this certain level, and finally, consider the prior price support, which is the level where the price usually bottoms before it reverse back.

Decide for the best strategies – Scalping and fading are two of the best approaches when it comes to the day trading. Scalping is the most preferred strategy among the two which involves closing the position when it becomes profitable. On the other hand, fading is the practice of getting out of the trade as soon as the price begins to rise.

Apply the “stop-loss” – Setting up a stop-loss is the best way of avoiding to lose a big amount of money when it comes to the day trading. As soon as the trade takes a turn for the worse, which you are not expecting at all, it is best that you get out while you still can. Applying the stop-loss simply means that you should discontinue trading for that certain day, instead of taking more risks in trying to make up for your losses.

Focus on your chosen strategy – Instead of focusing on earning more, shift your focus towards your strategies instead. Be open to the idea of tweaking your strategy if something is not right with it. Never be afraid if anything goes wrong, because you still have good chances of becoming successful in the coming days.

Bear in mind that there are people who don’t get much profit with day trading, and as a matter of fact, more than fifty percent of day traders actually fail. The best thing to do in order to learn the basics of day trading is to do more practice while re-evaluating your strategies at the same time. More importantly, be dedicated and be patient so that all your hardships will pay-off.

Forex Trading Articles

Foreign Exchange Markets – What You Should Know

The foreign exchange markets are located worldwide. Currency trading is a global activity. Every country in the world spends money and needs to change their money into other currencies to trade or interact with other nations.

Exchange happens at all levels of society. As an individual you have changed money when you travel for business or vacation. Or maybe you have sold something on eBay to someone in another country. Their payment comes in to your account in its own currency, and the bank or payment processor such as PayPal changes it for you. This is currency exchange at the root level.

Exchange or Forex trading has a different purpose, however. When you act on the foreign exchange markets, you do not purchase a different currency because you need it. You are now in the hope that it will rise in value, so you can return and finish with more money than you started with.

Of course it is risky. Price movement could go against you and you’d end up with less money instead of more. So you will want to gather plenty of information about currency trading before you actually begin trading.

Forex trading began in the 1970s when the major currencies were liberalized so that their values were no longer fixed. The banks and large investors quickly saw the potential for profit from changing prices.

The main Forex markets are the major financial centers worldwide. London sees the highest activity with New York second and third Tokyo. Other major players are Sydney, Zurich and Frankfurt.

Originally you had to be in one of these major centers to trade money, or at least have a telephone connection with a broker who was there. It was very difficult for someone who was not on site to act quickly enough to react to sudden fluctuations in price that can happen in the Forex markets.

But modern technological advances have changed all that. Since the advent of Internet it has been possible to act on your own account from anywhere. This means that it has become easier and easier for the little man to trade in the foreign exchange markets.

While some people never think of foreign currency from one instance of travel to the next, others are studying charts and financial information or even use automated software in the form of Forex robots that make money on the rising and falling prices. They do this in order to become financially free through trading in foreign exchange markets.