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Forex

Why Trade the FOREX?

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My purpose for writing this article is to demonstrate to you the advantages of trading on the FOREX market. However, there is one myth that I want to dispel before I go further. The myth is that there is a difference between trading and investing. To dispel that myth I quote from Al Thomas, President of Williamsburg Investment Company, who wrote If It Doesnt Go Up, Dont Buy It. He said Everyone who invests is a trader, only the time period is different. It is a lesson that I took seriously after taking a beating in the stock market in 2000.

So now, lets compare features of currency trading to those of stock and commodity trading.

Liquidity – The FOREX market is the most liquid financial market in the world around 1.9 trillion pounds traded everyday. The commodities market trades around 440 billion pounds a day, and the US stock market trades around 200 billion pounds a day. This ensures better trade execution and prevents market manipulation. It also ensures easily executable trading.

Trading Times The FOREX market is open 24 hours a day (except weekends) which means that in the US it opens at 3:00 pm Sunday (EST) and closes Friday at 5:00 (EST), allowing active traders to choose the times they want to trade. Commodities trading hours are all over the board depending on which commodity you are trading. Including extended trading times US stocks can be traded from 8:30 am to 6:30 pm (ET) on weekdays.

Leverage Depending on your FOREX account size, your leverage may be 100:1, although there are FOREX brokers that offer leverage of up to 400:1 (not that I would ever recommend that kind of leverage). Leverage in the stock market can be as high as 4:1, and in the commodities market, leverage varies with the commodity traded but it can be quite high. Because the commodity markets are not as liquid as the FOREX market, its leverage is inherently riskier. Although I was never shut out of a commodity trade by the day limit, the fear was always in the back of my mind.

Trading costs Transaction costs in the FOREX market is the difference between the buy and sell price of each currency pair. There are no brokerage fees. For both the stock and the commodity markets, there are transaction costs and brokerage fees. Even when you use discount brokers, those fees add up.

Minimum investment You can open a FOREX trading account for as little as 300.00. It took 5,000 for me to open my futures trading account.

Focus 85% of all trading transactions are made on 7 major currencies. In the US stock market alone there are 40,000 stocks. There are just over 200 commodity markets, although quite a few are so illiquid that they are not traded except by hedgers. As you can see, the fewer number of instruments allows us to study each one more closely.

Trade execution In the FOREX market, trade execution is almost instantaneous. In both the equity and commodity markets, you count on a broker to execute your trades and their results are sometimes inconsistent.

While all of these features make trading the FOREX market very attractive, it still requires a lot of education, discipline, commitment and patience. All trading can be risky.

February 10, 2011 · Tagged with , , , , , , , , , , , , , , , , , , ,

Forex

Why I trade Forex?

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Many people ask me why I trade Forex, Well I think like most people when I was introduced to Trading I didnt know about the Forex market. It was just natural to go looking in the stock exchange for trades. However, I found my trading was very limited, by the time I got home from work in the evening all the action was over. I moved to Forex mainly to take advantage of the 24-hour opening hours, I would often be found at my computer in the middle of the night waiting for the next bar to appear.

Unlike Futures, there are no trading exchanges as such. Trading is being done from major banking establishments around the world, With futures you are generally limited to trading only for a few hours that they are open, if major news breaks and the price starts going against you when the market is closed, you could end up losing big time while you are forced to wait for the market to open. With Forex you will always have an opportunity to trade 24 hours per day 5 days a week. As the sun wakes up each country on its journey it also wakes up the markets in New York, London, Europe, Asia, Australia to name a few.

The Currencies of the world are traded against each other, the most popular being the Euro the US and Australian pound, British Pound, Swiss Franc and the Japanese Yen.
Because of 24 hour trading, it is rare to see large gaps in price like stocks have on the opening and you often see prices in currencies trending more than stocks.

There are many advantages in trading Forex rather than Stocks, expensive Data providers that you need with Stocks is exchanged for free charting software offered by many Forex brokers. With over 1.5trillion (thats 46 times bigger than all the future markets put together!) being traded in a single day you are always sure of a trade, With Low transaction costs, no commissions or exchange fees is it no wonder more and more traders are turning to Forex.

Beware though, even with all these advantages trading is a high risk game and should only ever be trading with money you can afford to lose. With a good Trading Strategy and Money Management in place there is no reason not to join many Traders profiting from trading the Forex markets

January 27, 2011 · Tagged with , , , , , , , , , , , , , , , , , , ,

Forex

What is Forex Trading?

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FOREX, (FOReign EXchange market) or FX, is an international exchange market where stocks and shares are not traded, but currency. The return for the investor is not in the value of the currency per se, but rather the relative exchange value of one currency against another currency. Therefore, Forex trading is always expressed in pairs such as EuroUS pound (EURUSD) or US poundJapanese Yen (USDJPY).

By simultaneously buying and selling pairs of currencies, the investor, or speculator, hopes to profit from a favorable exchange rate change. Unlike the American stock exchanges, the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotation System (NASDAQ), Forex trading is more predictable than stocks.

One strategy that the Forex investor uses is a technique that stems from the assumption that all information about the market and a particular currency’s future fluctuations is found in the price chain. In other words, an investor simply looks at what has happened to that currency in the recent past, and predicts that the small fluctuations will generally continue just as they have before. Another strategy for the Forex investor is to analyze the country of the currency’s economy, political situation, and other possible rumors. The investor can also anticipate such things as political unrest or change that will also have an effect on the market.
Forex is the largest financial market in the world handling between 1.5 and 1.9 trillion US pounds a day. The combination of rather constant but small daily fluctuations in currency prices, create an environment which attracts investors. Because of the the liquidity of the market, unlike some rarely traded stock, traders are able to open and close positions within a few seconds as there are always willing buyers and sellers.

What are the risks?

Because of the sheer scale of the Forex Market, it ensures greater price stability and greater leverage. Also, with built-in protections such as safety margins, automatic limits for buying and selling, and other risk protection measures, the likelihood of ending up in the red even when the Forex market is volatile is drastically reduced. Furthermore, because of its’ size, it is near impossible for a single investor to significantly affect the price of a major currency.

However, all Forex traders should be aware that the market is one of the most liquid around and subject to strong currency trends. While leverage figures of up to100:1 are possible, without adequate risk protection in place the gap between profit and loss can be dramatic. Even veteran Forex traders can be caught out from time to time and take large hits. With this type of investor speculation, the golden rule must be: don’t risk more than what you can afford to lose.

January 6, 2011 · Tagged with , , , , , , , , , , , , , , , , , , ,

Forex

Trading Flexibility In The Forex Market

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How does a trader test hisher strategies and abilities without paying (or paying too much) for hisher mistakes ?
I would say there are three possible answers.

One first answer, of course, is by paper trading. Paper trading means that you do not actually execute your orders, but you only “bookkeep” them, testing on paper what their results would be.

At the next level you can trade in a simulated account. This is similar to paper trading, as you are not trading with real money, but just testing the result of your strategies; on the other side with a simulated account you are really using you Broker platform so you are at the same time training yourself in dealing with order execution issues.
Simulated accounts are nowadays offered by many Brokers; in the Forex market it is common to get this feature.

Say you trade your strategy for some time with a simulated account, and everything goes fine; you would expect that real trading should go fine as well. Still, there is an issue you did not deal with: your emotions. These will come into the game only when you trade with your real money. Emotions can do a big difference. They often explain differencies in results between traders that can be absolutely comparable in terms of market know-how and strategy. Why ? because they often force you not to follow the rules of your trading plan. Emotions can make you a hard life in keeping the necessary discipline.

So, how to deal with the emotional issue of trading ? There are ways to learn also in this topic, of course, but in this case your own direct experience is more difficult to replace, in my opinion. However, the experience can be expensive, of course. A possible solution is to trade with real money, but in a very small size. This is always a good idea at the beginning. Start small, gain experience and then increase gradually your trading size.

So the third answer to our first question is: by trading small. You might object that, if the trading size is too small, your emotional involvement will also be small, so the aim of putting emotions into the game is missed. Partly, this is true. However, the difference between using real money and just playing with numbers is there. And the decision about how big the size should be, is just yours.

The forex market gives you big flexibiliy about your trading size.
First, because the minimum required to open an account can be really small, in the order of 300. Trading size of course can be small too. The Forex market offers you a great leverage possibility, but again, how much of it to use is something that only you can decide.
Second, because in the forex market it is common for Brokers not to charge a fix commission to trades. The cost of the trade is generally represented only by the bid-ask spread. This means that small trades are not penalized by fix commissions.
This flexibility can offer an advantage for traders who want to gain experience before moving forward.

Good trading,
Roberto Zarotti

November 4, 2010 · Tagged with , , , , , , , , , ,

Forex

The Philosophy Of Winning In Trading the Forex Market -The

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The Philosophy Of Winning In Trading the Forex Market -The Sure Way To Become A Successful Trader

Everyone who enters into the forex market to trade always starts off with good intentions. They will invariably aim to win. They are there to make gigantic profits in the market. After all, it is a keen interest in trading that has led to their involvement in trading the forex market.

In all my years of trading, I have yet to meet a complete newbie who is in the forex market to trade without spending at least some time to learn how to trade. At worst, the newbie to forex trading has at least learned the technical terms to trading, and has at least entered his trading account to look at the trading platform and the trading interface provided by his broker.

In the quest to become a better trader, most forex traders I know would have learnt the use of many tools, usually technical tools. To them, the tools are their weapons of war. Many use technical trading systems to help them get a more accurate analysis of price movements, and to study price trends. Some use simple trend trading methods such as trendlines, others use price patterns of congestion and outbreaks, some use the more sophisticated Elliot wave counting and WD Gann squaring of price and time, and some even neural networks forecasting and astronomy. Yet, with the help of many trading tools, a big majority of traders are still unprofitable.

Herein lies the problem with many traders.

In forex trading, like in all forms of market trading, the amount of tools you use, whether singly or in synergy, will not guarantee your success. Having a battery of technical indicators to provide you a technical reading will not ensure your success in trading.At best, these technical indicators will help you understand the market trend more, or might even serve to confuse you especially if they generate conflicting signals.

Forex trading, is just like fighting a battle, and the following principle holds true:

“It’s not the sword that wins the battle.

It’s the Warrior whos wielding it.

It’s the warrior who’s wielding the sword that will determine the outcome of the battle. In other words, if you are a forex trader, it is your trading discipline, and the proper use of the trading tool or method that will ensure your success.It is you, the trading warrior, who wields the trading tool correctly that can ensure the battle is won.

Therefore to become a successful trader, you will need to master your self – to follow a set trading method and to execute the trades based on a trading plan, where you will follow stringently to the best trading setups and exit at pre-determined stop losses. Without trading discipline, you will not be able to master your trades, and you will find profits hard to come by.

It is only when you master yourself to conduct discipline trading and also master your trades by following a proven trading methodology with a timely and suitable entry and exit strategy that you can become a profitable trader.

October 21, 2010 · Tagged with , , , , , , , , , , , , , , , , , , ,

Forex

The Forex Market and Its Success Potential

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The Forex market (or Foreign Exchange market) has become one of the most lucrative forms of stock trading in history. Until recently, this market was limited to government banks and lending institutions. Today, any investor can take advantage of this profitable market easily.

The Forex market is a sector of the stock market where someone can buy and sell foreign currency by phone, online or other methods 24 hours a day. It is now one of the most profitable and largest markets in the world, with over 2 trillion worth of currency being traded daily!

In this unique market, currency is bought and sold based on the fluctuation of exchange rates. You’re actually buying one type of currency with another type of currency and profiting from the difference if you buy and sell at the right time.

For instance, someone who buys Euro pounds with U.S. pounds will profit if U.S. pounds are worth even more at the time of selling (exchanging Euros back into U.S. pounds). It works similar to other stock market ventures except the broker makes money from the difference in the buysell amounts for the two countries.

There are three factors that can affect the value of currency and the exchange rate between two countries. Interest rates can change on a daily basis depending on the country’s currency value. These interest rates affect the lending rates used to buy foreign currency when borrowing to do so.

The unemployment rate also affects a nation’s currency value. The economy is usually very weak at times of high unemployment, thus causing the value of the currency to decrease. A third factor is when major political events take place in a country such as elections, national disasters, wars, etc.

These three factors alone can cause the exchange rates among countries to fluctuate tremendously, and they are worth watching if you’re planning to invest in the Forex market.

The Forex market offers plenty of earning potential once you understand how it works. One reason this market is so lucrative is because you are able to trade any time of the day. It’s not limited by corporate schedules or anything else.

Another reason you can profit is because brokers will lend you the money to get started – up to 100 times of your cash on hand! So, you’ll have tremendous trading power right from the start.

The Forex market is a great business opportunity where you don’t have to buy and sell a product, advertise your business or spend endless hours trying to implement new business strategies. You just invest and keep a sharp eye on foreign happenings!

Disclaimer: There is risk involved when you invest in the Forex market as there is with any other stock transaction.

October 14, 2010 · Tagged with , , , , , , , , , , , , , , , , , , ,

Forex

Strategy of Forex trading

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Do you value your time and money? If yes, then Forex is an easy source that will help you to multiply your profit of your business. Forex currency trading is the modus operandi where you can have greater return on your investment. There is no doubt that Forex is considered to be the main player in the financial market. It is the convenient way where one can trade International Currency.

Internet Forex trading

Internet has made the online financial marketing especially the Forex Trading strategy is one of the easiest way for the traders. The forex market has boomed tremendously during the year time. Today you can complete the Forex trading strategy by just sitting at one place or home. In fact, buying and selling in this international market means that one should have knowledge about the present scenario of the foreign exchange market. In such cases, the forex signals plays a vital role by providing information about the time that will be suitable for investing money in the Foreign exchange market which in return would be profit making for the traders.

Forex trading signal

Forex signals are usually the recommendations from the seasoned experts of forex strategy system that will give you real-time advice. This Forex signals will help you to get the records of the present foreign exchange market. Forex trading signals will also help to contrive through the valleys, hills and other malfunction that can occur at any second of time. Forex trading signal will provide Forex signals that will update you about the changes that have taken place in the forex trading system. They will sends forex alerts through the help of emails, phone or messages. But the service of Forex strategy system is not free of cost your have to pay a certain amount or nominal subscription fee for effective functioning.

In forex strategy system, the dealing of foreign currencies are actually in pair that means exchanging one currency over the other. For instance, the Forex trading strategy takes place amongst the four foremost currency pairs i.e. British Pound and USD (GBPUSD), Euro and USD (EURUSD), Japanese Yen (USDJPY) and Swiss Frank (USDCHF) USD.

In fact, there is a requirement for Forex trading strategy in order to dominate the international market. Forex aletrs is one of the vital forex trading strategies that are being applied in the global market. By taking the help of Forex trading strategy you can have a profitable venture and safe a great deal of money.

Forex currency trading needs a lot of understanding, knowledge time and self restraint that will help a forex trader to earn huge profits by applying correct trading tactics. In Forex currency trading, you can avoid the conventional media of advertising and marketing. Forex currency trading is better option available in the financial market than any other stock market. If you are interested in starting any kind of new venture, then forex currency trading will be a good choice as it is reasonable. For more information on Forex, Forex signal, Forex strategy system, Forex trading signal, Forex trading strategy, Forex alerts and Currency trading, log onto www.official-forex-trading-system.com

Tags: currency trading, forex strategy system, forex alerts, forex strategy system, Forex signals, Forex

September 30, 2010 · Tagged with , , , , , , , , , , , , , , , , , , ,

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