As you advance your knowledge of forex trading, you'll have no need to switch to another software program since FXe Trader is fully adaptable to meet your needs, no matter what level of trader you are or will become as you gain trading experience.
Active forex traders choose FXe Trader for many of the same reasons as everyone else. They know that our innovative software leads the industry when it comes to analysis, functionality and dependability with rapid order execution
Sophisticated active traders also choose TIFX's FXe Trader for its wide range of features and benefits. You'll enjoy our advanced charting capabilities, wide range of orders types, and a full-blown technical analysis package within our order-entry system.
Tuesday, October 19, 2010
Forex analysis — covering all aspects of forex market analysis
In this section we will handle the subject of forex analysis in much greater detail, with the hope of providing you a framework with which you can create your own approach and style of analysis.
We will attempt to provide general principles to be adhered to while performing the two types of analysis — fundamental and technical — and then we will look at the indicators and news releases in detail. The golden rule is that the trader should always aim to create a holistic picture from the patchwork of data that he has to go through on a daily basis. He should create models, and test them in light of market developments and the fundamental changes occurring in the analyzed nation’s economy. A mere knowledge of the data, without the power to evaluate and reconstruct it to suit our purpose, is unlikely to be very beneficial. The successful trader succeeds because he understands, while the unfortunate one fails because his attention span is too short to evaluate the information.
We will attempt to provide general principles to be adhered to while performing the two types of analysis — fundamental and technical — and then we will look at the indicators and news releases in detail. The golden rule is that the trader should always aim to create a holistic picture from the patchwork of data that he has to go through on a daily basis. He should create models, and test them in light of market developments and the fundamental changes occurring in the analyzed nation’s economy. A mere knowledge of the data, without the power to evaluate and reconstruct it to suit our purpose, is unlikely to be very beneficial. The successful trader succeeds because he understands, while the unfortunate one fails because his attention span is too short to evaluate the information.
Forex analysis — covering all aspects of forex market analysis
In this section we will handle the subject of forex analysis in much greater detail, with the hope of providing you a framework with which you can create your own approach and style of analysis.
We will attempt to provide general principles to be adhered to while performing the two types of analysis — fundamental and technical — and then we will look at the indicators and news releases in detail. The golden rule is that the trader should always aim to create a holistic picture from the patchwork of data that he has to go through on a daily basis. He should create models, and test them in light of market developments and the fundamental changes occurring in the analyzed nation’s economy. A mere knowledge of the data, without the power to evaluate and reconstruct it to suit our purpose, is unlikely to be very beneficial. The successful trader succeeds because he understands, while the unfortunate one fails because his attention span is too short to evaluate the information.
We will attempt to provide general principles to be adhered to while performing the two types of analysis — fundamental and technical — and then we will look at the indicators and news releases in detail. The golden rule is that the trader should always aim to create a holistic picture from the patchwork of data that he has to go through on a daily basis. He should create models, and test them in light of market developments and the fundamental changes occurring in the analyzed nation’s economy. A mere knowledge of the data, without the power to evaluate and reconstruct it to suit our purpose, is unlikely to be very beneficial. The successful trader succeeds because he understands, while the unfortunate one fails because his attention span is too short to evaluate the information.
Forex Strategy
Forex strategies involve the combination of indicators and price patterns for the derivation of tradeable signals. There are also fx trading strategies based on fundamental factors, but all short term trading strategies must include some technical component. In this section we aim to explain in detail the various aspects of forex trading strategies.
Final Word
Whether you will use forex signals or not will mostly depend on your character and your plan in trading. If you're a highly active individual with little time to spend on analysis and study of the market, forex signals constitute an alternative to manual trading. If you want to learn the mechanics of trading, you will receive but a modest benefit from subscribing to forex alerts. A major discouraging factor about forex signals is the high price tag.
Forex Signals Can Be Classified Into Three Groups.
News Trading Signals: This is the fundamental approach to forex signals, and the purpose is getting at the news release as early as possible, and exploiting it to maximum profit in the short period of time after the release. Such signals often come with some commentary and analysis on weekly and daily bases, and require a fast connection to the web to be exploited in a timely manner. In some rare cases, such as the manufacturing PMI, there are ways of acquiring the headline number before the rest of the market, in such cases the information received may indeed provide exceptional value. In other situations, the forex alert service will try to pass the data release to its subscribers at much faster pace than TV presenters or public sources, creating opportunities.
Technical Signals: Technical trading signals are just trading tips on the basis of technical analysis. You trust the background and track record of the company or person issuing the signals, so you choose to trade on that basis instead of entering your own orders.
Technical forex signals are often issued along with various risk management strategies to ensure minimal losses if the plan does not work out as expected. The vast majority of online forex signals belong to this category, which makes sorting the wheat out from the chaff a bit of a difficulty.
General Trade signals: This kind of service provides general trading tips for traders. Their alerts often employ a multi-pronged approach combining both fundamental and technical analysis.
Technical Signals: Technical trading signals are just trading tips on the basis of technical analysis. You trust the background and track record of the company or person issuing the signals, so you choose to trade on that basis instead of entering your own orders.
Technical forex signals are often issued along with various risk management strategies to ensure minimal losses if the plan does not work out as expected. The vast majority of online forex signals belong to this category, which makes sorting the wheat out from the chaff a bit of a difficulty.
General Trade signals: This kind of service provides general trading tips for traders. Their alerts often employ a multi-pronged approach combining both fundamental and technical analysis.
Forex Signals
A forex signal is a trade alert for the currency market. Forex signals can be obtained from companies that specialize in this service, and also from a number of brokers who provide them for traders of standard or V.I.P accounts. The price of this service can be anywhere from free if you receive it from your broker, to a daily average of $5-10 and higher depending on the individual or company providing it. There are also some packages that offer long term access for a one time subscription fee. In this case the floor is at around $100-150, reaching up to several hundreds.
Services that you receive upon signing up with a forex signals provider differ from firm to firm. You may expect to receive anything from performance trackers, sms, email, and online alerts, to customer support via email or phone, and advanced analysis in some of the more sophisticated offers. Since signals providers must protect their strategies, trading with them involves some degree of blind trust in the company or individual behind the issued signals.
The credibility of the many choices on the web varies widely, as it is often the case with anything related to the lucrative forex market. It is perhaps a good idea to approach any claims about 80-90 percent success rates with a pinch of salt, in spite of their ubiquity in the world of online trading. But there do exist some firms that provide genuinely valuable information and alerts to clients.
Keep in mind that your ability to successfully exploit received forex signals depends greatly on the efficiency of your broker's service. Especially with forex news based trading, you must act quickly, while being sure that any issues related to misquotes and slippage shall be minimal.
Services that you receive upon signing up with a forex signals provider differ from firm to firm. You may expect to receive anything from performance trackers, sms, email, and online alerts, to customer support via email or phone, and advanced analysis in some of the more sophisticated offers. Since signals providers must protect their strategies, trading with them involves some degree of blind trust in the company or individual behind the issued signals.
The credibility of the many choices on the web varies widely, as it is often the case with anything related to the lucrative forex market. It is perhaps a good idea to approach any claims about 80-90 percent success rates with a pinch of salt, in spite of their ubiquity in the world of online trading. But there do exist some firms that provide genuinely valuable information and alerts to clients.
Keep in mind that your ability to successfully exploit received forex signals depends greatly on the efficiency of your broker's service. Especially with forex news based trading, you must act quickly, while being sure that any issues related to misquotes and slippage shall be minimal.
Forex Broker Reviews
Our forex broker reviews list only the most reputable and best online forex brokers. There are currently dozens of forex brokers on the internet, with more becoming available every day. The choice of which forex broker to choose can be very confusing, especially for inexperienced traders. Our broker reviews focus on what really matters to traders; what is the minimum account size, what leverage is offered, what trading platform does the broker offer and much more.
FOREX PLATFORM
Straighthold Investment Group, Inc. offers its clients the most popular and powerful forex trading platform - SIGTrader 4 Forex trading system - developed by MetaQuotes Software Corporation.
The client terminal SIGTrader 4 is an online Forex trading broker system intended for online trading and technical analyses on the Forex, CFD and Futures markets.
Some types of installed orders let you manage your trading activity flexibly.
Beside a number of technical indicators and online instruments, this Forex trading platform terminal is also equipped with MetaQuotes Language 4, a customized language for forex trading strategy programming. This language will help you to develop Advisers and Expert Advisors - mechanical Forex trading platform (system), Custom Indicators and Scripts. Advisers analyze the current market situation online and take decisions, place forex trading orders and open positions without trader participation. Custom and technical forex indicators can analyze market conditions and generate different signals. And Scripts are intended for one-time executed actions.
The client terminal SIGTrader 4 is an online Forex trading broker system intended for online trading and technical analyses on the Forex, CFD and Futures markets.
Some types of installed orders let you manage your trading activity flexibly.
Beside a number of technical indicators and online instruments, this Forex trading platform terminal is also equipped with MetaQuotes Language 4, a customized language for forex trading strategy programming. This language will help you to develop Advisers and Expert Advisors - mechanical Forex trading platform (system), Custom Indicators and Scripts. Advisers analyze the current market situation online and take decisions, place forex trading orders and open positions without trader participation. Custom and technical forex indicators can analyze market conditions and generate different signals. And Scripts are intended for one-time executed actions.
OPEN FOREX ACCOUNT. START FOREX TRAINING
The first step to successful Forex trading lies in understanding the Forex market structure with its advantages and disadvantages, appreciating its reefs, studying analysis methods, market predicting and trading principles and creating personal Forex trading strategies.
A brief excursus into the Foreign Exchange market - Forex, as well as a description of trading principles, analysis and predicting methods can be found on our site, in the pages: Introduction to Forex, Understanding Forex, Forex Techniques, Forex Glossary, Forex Trading FAQ. Unfortunately, the information you find on our site is only a small portion of the vast volume of information available nowadays. But this information will help you get started.
The second step is implementing the acquired knowledge in practice - studying and using the Forex trading platform, placing, deleting and modifying orders, opening and closing positions and so on.
At this stage you need to practice on a Forex Demo Account. A demo account lets you develop your skills without financial risk as you do not need to invest. Demo accounts are free. Instructions for opening Forex demo accounts can be found on the page "Open Demo Account".
After the first positive results, many forex traders enter the real Forex trading market and do not succeed. That's why you need to get positive results that are stable first. The knowledge you gain, through correct trading with your own system, following your rules, developing steel logic and psychological stability, in absence of greed and following a money management system will all be determinant at this stage.
To assist traders in accomplishing this difficult task, our company has prepared two special types of accounts - LITEForex and REALForex.
LITEForex accounts offer Forex beginners the possibility of starting real trading on Forex with real deposits. But keep in mind that profits and losses on this account will be minimal. Even stable profits cannot cover your Internet expenses.
A small starting deposit, which any Forex trader could lose absolutely painlessly, will help you overcome the very complex transitional stage of going from a demo account to a live account.
Since all LITEForex group accounts are in cents, Forex traders will practice working with amounts that have more and more zeros, like in US dollars. This helps prepare traders for the future and escape psychological pressure when trading on professional accounts.
Moreover, the LITEForex Forex account can be used by skilled Forex traders for testing different mechanical trading systems
REALForex type accounts belong to the "professional" category and are aimed for skilled forex traders, working with big amounts of money. All operations on this account type are made in US dollars; maximal deposit is unlimited.
A brief excursus into the Foreign Exchange market - Forex, as well as a description of trading principles, analysis and predicting methods can be found on our site, in the pages: Introduction to Forex, Understanding Forex, Forex Techniques, Forex Glossary, Forex Trading FAQ. Unfortunately, the information you find on our site is only a small portion of the vast volume of information available nowadays. But this information will help you get started.
The second step is implementing the acquired knowledge in practice - studying and using the Forex trading platform, placing, deleting and modifying orders, opening and closing positions and so on.
At this stage you need to practice on a Forex Demo Account. A demo account lets you develop your skills without financial risk as you do not need to invest. Demo accounts are free. Instructions for opening Forex demo accounts can be found on the page "Open Demo Account".
After the first positive results, many forex traders enter the real Forex trading market and do not succeed. That's why you need to get positive results that are stable first. The knowledge you gain, through correct trading with your own system, following your rules, developing steel logic and psychological stability, in absence of greed and following a money management system will all be determinant at this stage.
To assist traders in accomplishing this difficult task, our company has prepared two special types of accounts - LITEForex and REALForex.
LITEForex accounts offer Forex beginners the possibility of starting real trading on Forex with real deposits. But keep in mind that profits and losses on this account will be minimal. Even stable profits cannot cover your Internet expenses.
A small starting deposit, which any Forex trader could lose absolutely painlessly, will help you overcome the very complex transitional stage of going from a demo account to a live account.
Since all LITEForex group accounts are in cents, Forex traders will practice working with amounts that have more and more zeros, like in US dollars. This helps prepare traders for the future and escape psychological pressure when trading on professional accounts.
Moreover, the LITEForex Forex account can be used by skilled Forex traders for testing different mechanical trading systems
REALForex type accounts belong to the "professional" category and are aimed for skilled forex traders, working with big amounts of money. All operations on this account type are made in US dollars; maximal deposit is unlimited.
FOREX EXCHANGE & MARKET INTRODUCTION
Foreign Currency Exchange (Forex) Trading allows an investor to participate in profitable fluctuations of world currencies. Forex trading works by selecting pairs of currencies and then measuring profit or loss by the fluctuations of one one currency's market activity compared to the other. For example, fluctuations in the value of the $ U.S. Dollar are measured against another world currency such as the British Pound, Eurodollar, Japanese Yen etc. Being able to discern price trends in forex market activity is the essence of all profitable forex trading and this is what makes foreign currencies so exciting, currencies are the world's 'best trending' market. This gives Forex investors a profit making edge that is unavailable in most other markets.
Forex trading is being called 'today's exciting new investment opportunity for the savvy investor'. The reason is that the Forex Trading Market only began to emerge in 1978, when worldwide currencies were allowed to 'float' according to supply and demand, 7 years after the Gold Standard was abandoned. Up until 1995 Forex Trading was only available to banks and large multinational corporations but today, thanks to the proliferation of the computer and a new era of internet-based communication technologies, this highly profitable market is open to everyone. The Forex Trading Market's growth has been unprecedented, explosive, and continues to be unequaled by any other trading market.
Unlike traditional trading which brings buyers and sellers together in a central location (trading floors) in Forex Trading there is no need for a centralized location. Forex is a market where worldwide traders conduct business by high-speed Internet connections with the Interbank Foreign Currency Exchange via Forex Clearinghouses (also called Forex Brokerage Firms). Forex has not only become the fastest growing trading market, but also the most profitable trading marketplace in the world.
Simply stated, Forex is the most profitable because it is the world's largest marketplace. The Foreign Currency market as a whole accounts for over 1.2 trillion dollars of trading per day (as determined by the fourth Central Bank Survey of Foreign Exchange and Derivatives Market Activity, 1998. This figure is understood to be significantly higher today). To put this into perspective, on any given day the Foreign Currency Exchange Market activity is vastly greater than the Stock Market. It is 75 times greater than the New York Stock Exchange where the average total daily value (using 1998 figures) of both foreign and domestic stocks is $16 billion, and much greater than the daily activity on the London Stock Exchange, with $11 billion.
Furthermore, in addition to being the world's largest and most profitable market, The Foreign Currency Exchange Market (forex) is the world's most powerful and persistent trading market regardless of negative economic indicators. This is because currencies 'trend' better than every other market due to their macro-economic nature. Unlike many commodities whose supply and demand fundamentals can literally change overnight (as we found in the sudden dot com 'market adjustment' and even more abruptly on September 11, 2001), currency fundamentals are much less random, and far more predictable. This is well illustrated in the way interest rates are changed gradually and only in small increments.
Other examples of fundamental predictability are illustrated by the following statistics. Of the $1.2 trillion day trading in Foreign Currency Exchange, 83% of spot foreign exchange activity and 95% of swap activity involves US Dollars. The Euro is the second most active currency at 37%. The Japanese Yen (24%) and the British Pound Sterling (10%) are ranked third and fourth. The Swiss Franc is 7%, and the Canadian and Australian Dollars account for 3%.
Spot Forex is the type of forex trade in which self-traders concentrate most of their investment activity for reasons that are self-explanatory. By definition, a Spot Forex transaction is a currency trade transaction that has a settlement (liquidation) within a maximum of 2 working days following the closing of the trade. Therefore Spot Forex allows the self-trader high liquidity. Another popular feature for well-advised Spot Forex self-traders is the strong profit potential from continual market fluctuations by buying a specific currency when it is weaker and selling it when it is stronger, and the continual pairing of strong currencies against weak ones. This potential for profit or loss is amplified by the effect of leverage. Leverage is a term that describes what can be achieved when a smaller amount of money controls a much larger amount of money. With regards to Forex Trading for example, a leverage-factor of 100 can allow the trader to hold a 100,000 US Dollar position with a modest 1,000 US Dollar margin deposit. Online Forex day trading focuses its investment activity largely on Spot Forex because of the 'risk manageability' of in-and-out trading plus the potential to generate excellent and highly liquid profits.
"Few financial industries generate as much excitement and profit as currency exchange. Traders around the world enter trades for weeks, days or split seconds, generating explosive moves or steady flows, and money changes hands quickly at a staggering daily average of a trillion US dollars. Forex profitability is legendary. George Soros of Quantum Fund realized a profit in excess of 1 billion dollars for a couple of days work in September 1992. Hans Hufschmid of Soloman Brothers, Inc. netted $28 million for 1993. Even by Wall Street standards, these numbers are heartstoppers".*
Despite its high trading volume and its fundamental role in the world, the Forex Market is rarely in the media limelight because its method of trading transaction is less visible than the Floor of a Stock Exchange. However, trading on the Foreign Currency Exchange Market is today surging into the public awareness, as flocks of internet traders are attracted by the market's inherent profitability and risk manageability. Add to this the absence of geographic or temporal boundaries and vibrantly active Forex market is open to all players.
Forex trading is being called 'today's exciting new investment opportunity for the savvy investor'. The reason is that the Forex Trading Market only began to emerge in 1978, when worldwide currencies were allowed to 'float' according to supply and demand, 7 years after the Gold Standard was abandoned. Up until 1995 Forex Trading was only available to banks and large multinational corporations but today, thanks to the proliferation of the computer and a new era of internet-based communication technologies, this highly profitable market is open to everyone. The Forex Trading Market's growth has been unprecedented, explosive, and continues to be unequaled by any other trading market.
Unlike traditional trading which brings buyers and sellers together in a central location (trading floors) in Forex Trading there is no need for a centralized location. Forex is a market where worldwide traders conduct business by high-speed Internet connections with the Interbank Foreign Currency Exchange via Forex Clearinghouses (also called Forex Brokerage Firms). Forex has not only become the fastest growing trading market, but also the most profitable trading marketplace in the world.
Simply stated, Forex is the most profitable because it is the world's largest marketplace. The Foreign Currency market as a whole accounts for over 1.2 trillion dollars of trading per day (as determined by the fourth Central Bank Survey of Foreign Exchange and Derivatives Market Activity, 1998. This figure is understood to be significantly higher today). To put this into perspective, on any given day the Foreign Currency Exchange Market activity is vastly greater than the Stock Market. It is 75 times greater than the New York Stock Exchange where the average total daily value (using 1998 figures) of both foreign and domestic stocks is $16 billion, and much greater than the daily activity on the London Stock Exchange, with $11 billion.
Furthermore, in addition to being the world's largest and most profitable market, The Foreign Currency Exchange Market (forex) is the world's most powerful and persistent trading market regardless of negative economic indicators. This is because currencies 'trend' better than every other market due to their macro-economic nature. Unlike many commodities whose supply and demand fundamentals can literally change overnight (as we found in the sudden dot com 'market adjustment' and even more abruptly on September 11, 2001), currency fundamentals are much less random, and far more predictable. This is well illustrated in the way interest rates are changed gradually and only in small increments.
Other examples of fundamental predictability are illustrated by the following statistics. Of the $1.2 trillion day trading in Foreign Currency Exchange, 83% of spot foreign exchange activity and 95% of swap activity involves US Dollars. The Euro is the second most active currency at 37%. The Japanese Yen (24%) and the British Pound Sterling (10%) are ranked third and fourth. The Swiss Franc is 7%, and the Canadian and Australian Dollars account for 3%.
Spot Forex is the type of forex trade in which self-traders concentrate most of their investment activity for reasons that are self-explanatory. By definition, a Spot Forex transaction is a currency trade transaction that has a settlement (liquidation) within a maximum of 2 working days following the closing of the trade. Therefore Spot Forex allows the self-trader high liquidity. Another popular feature for well-advised Spot Forex self-traders is the strong profit potential from continual market fluctuations by buying a specific currency when it is weaker and selling it when it is stronger, and the continual pairing of strong currencies against weak ones. This potential for profit or loss is amplified by the effect of leverage. Leverage is a term that describes what can be achieved when a smaller amount of money controls a much larger amount of money. With regards to Forex Trading for example, a leverage-factor of 100 can allow the trader to hold a 100,000 US Dollar position with a modest 1,000 US Dollar margin deposit. Online Forex day trading focuses its investment activity largely on Spot Forex because of the 'risk manageability' of in-and-out trading plus the potential to generate excellent and highly liquid profits.
"Few financial industries generate as much excitement and profit as currency exchange. Traders around the world enter trades for weeks, days or split seconds, generating explosive moves or steady flows, and money changes hands quickly at a staggering daily average of a trillion US dollars. Forex profitability is legendary. George Soros of Quantum Fund realized a profit in excess of 1 billion dollars for a couple of days work in September 1992. Hans Hufschmid of Soloman Brothers, Inc. netted $28 million for 1993. Even by Wall Street standards, these numbers are heartstoppers".*
Despite its high trading volume and its fundamental role in the world, the Forex Market is rarely in the media limelight because its method of trading transaction is less visible than the Floor of a Stock Exchange. However, trading on the Foreign Currency Exchange Market is today surging into the public awareness, as flocks of internet traders are attracted by the market's inherent profitability and risk manageability. Add to this the absence of geographic or temporal boundaries and vibrantly active Forex market is open to all players.
CALCULATING FOREX PROFIT AND LOSS
Forex market, is an around-the-clock cash market where the currencies of nations are bought and sold. Forex trading is always done in currency pairs. For example, you buy Euros, paying with U.S. Dollars, or you sell Canadian Dollars for Japanese Yen. The value of your Forex investment increases or decreases because of changes in the currency exchange rate or Forex rate. These changes can occur at any time, and often result from economic and political events. Using a hypothetical Forex investment, this article shows you how to calculate profit and loss in Forex trading. Let's push your Forex trading education to a new level together.
To understand how the exchange rate can affect the value of your Forex investment, you need to learn how to read a Forex quote. Forex quotes are always expressed in pairs. In the following example, your pair of currencies is the U.S. Dollar (USD) and the Canadian Dollar (CAD). The Forex quote, USD/CAD = 170.50, means that one U.S. Dollar is equal to 170.50 Canadian Dollars. The currency to the left of the "/" (USD in this example) is referred to as base currency and its value is always 1. The currency to the right of the "/" (CAD in this example) is referred to as the counter currency. In this example, one USD can buy 170.50 CAD, because it is the stronger of the two currencies. The U.S. Dollar is regarded as the central currency of the Forex market, and it is always treated as the base currency in any Forex quote where it is one of the pairs.
To understand how the exchange rate can affect the value of your Forex investment, you need to learn how to read a Forex quote. Forex quotes are always expressed in pairs. In the following example, your pair of currencies is the U.S. Dollar (USD) and the Canadian Dollar (CAD). The Forex quote, USD/CAD = 170.50, means that one U.S. Dollar is equal to 170.50 Canadian Dollars. The currency to the left of the "/" (USD in this example) is referred to as base currency and its value is always 1. The currency to the right of the "/" (CAD in this example) is referred to as the counter currency. In this example, one USD can buy 170.50 CAD, because it is the stronger of the two currencies. The U.S. Dollar is regarded as the central currency of the Forex market, and it is always treated as the base currency in any Forex quote where it is one of the pairs.
FOREX BEARS AND THE BULLS
Once (you have) started your Forex education, you will constantly see the terms "Bears" and "Bulls" in Forex books and chat rooms. These are terms that describe the general mood of the market. A "bear" forex market, is when the general mood of the market is down, i.e. when there are more sellers than buyers in the marketplace. A "bull forex market" is the opposite, when there are more buyers than sellers and the general mood of the market is up. Forex is a place where bulls and bears struggle, and if you can identify who is gaining the upper hand, then you can identify the direction of the price. Easier said than done, of course. There are many more areas to cover, this should help those only starting Forex trading education.
FOREX SPREAD
The difference between stock markets and the Forex market brokers, is that in the Forex market, broker commissions are either very low or zero. So how do the ?? make money? They make it from the "spread" - difference between the actual price and the offered price through a broker. On the right you can see a typical board of currency pairs and their spreads. This one is taken from our feed this morning, and you can see the difference between the Offer (the price you can place on a sell order) and the Bid (the price you can place on a buy order) is 3 pips (the spread).
What does this mean to you though? Well, let's look at the board. If you bought the EUR/USD at 1.2158 as it is offered under the Offer column, and immediately sold it again before the price moved, you would only get 1.2155 as is shown in the Bid column. So the net result is -3 pips, or a loss to you, and a profit to the broker. Remember to always take the spread into account when placing a trade, setting targets and stop losses.
What does this mean to you though? Well, let's look at the board. If you bought the EUR/USD at 1.2158 as it is offered under the Offer column, and immediately sold it again before the price moved, you would only get 1.2155 as is shown in the Bid column. So the net result is -3 pips, or a loss to you, and a profit to the broker. Remember to always take the spread into account when placing a trade, setting targets and stop losses.
FOREX LONG AND SHORT
There are 2 different ways to trade on the Forex market and many beginners (or those who continue their Forex trading education) are surprised to learn that they can actually make as much money when currency price moves down as when it goes up. Let's start with the most logical movement, when the price moves up.
Most people are very familiar with the concept of buying something at a low price and selling it when the price increases. So the concept of buying the EUR/USD at 1.2150 and selling it at 1.2160 for a 10 pip gain should seem logical. This process is called going long. You can also do this in reverse! If you know that the currency price is more likely to go down rather than up, you can go short. This is just the opposite of the above transaction, selling it first and buying it back later in the hope that the price will go down for you to make forex profit.
This may seem strange at first, but the concept remains the same either way. You always want to buy something at a low price, and sell it expensive. The consecution of actions doesn't matter. You must both buy and sell; as long as you sell at a higher price than you buy you make profit. Let us continue our Forex trading education.
Most people are very familiar with the concept of buying something at a low price and selling it when the price increases. So the concept of buying the EUR/USD at 1.2150 and selling it at 1.2160 for a 10 pip gain should seem logical. This process is called going long. You can also do this in reverse! If you know that the currency price is more likely to go down rather than up, you can go short. This is just the opposite of the above transaction, selling it first and buying it back later in the hope that the price will go down for you to make forex profit.
This may seem strange at first, but the concept remains the same either way. You always want to buy something at a low price, and sell it expensive. The consecution of actions doesn't matter. You must both buy and sell; as long as you sell at a higher price than you buy you make profit. Let us continue our Forex trading education.
FOREX LEVERAGE
Leverage is a simple concept of Forex education. If you have $10,000 to trade with, your Forex broker will let you borrow money from him so that you can trade in larger quantities. They will let you borrow as much as 400 times (400:1) what you put up in a trade. Most forex brokers allow between 50:1 and 100:1 margin. So, if you put up $1,000, and your broker allows 100:1 margin, then you'll be trading $100,000 worth of currency (instead of $1,000).
That's important, because every pip equals a certain dollar amount. When you trade $10,000, each pip movement equals $1. The chart below shows how it goes from there. If you trade 10,000 worth of currency, each movement would be equal to $1. So if you bought at 1.1445 and sold at 1.1545, you would make 100 x $1, or $100. If you trade $100,000, each pip movement would equal $10 and so on.
That's important, because every pip equals a certain dollar amount. When you trade $10,000, each pip movement equals $1. The chart below shows how it goes from there. If you trade 10,000 worth of currency, each movement would be equal to $1. So if you bought at 1.1445 and sold at 1.1545, you would make 100 x $1, or $100. If you trade $100,000, each pip movement would equal $10 and so on.
FOREX PIP
Once you start your Forex education, you will learn to love this word because it is what you will be seeking for the rest of your Forex career. A pip is the smallest denominator of a particular currency pair, so for the above example, if the EUR/USD moves from 1.2150 to 1.2155 then it has moved up 5 pips.
FOREX EDUCATION: FOREX PIP, LEVERAGE AND MORE
Forex trading education helps you to get fundamental information about forex market peculiarities.
FOREX CURRENCY PAIR
Reading a foreign exchange quote may seem confusing at first. However, it's really quite simple if you remember 2 things when starting your Forex trading education:
1) The first currency listed is the base currency
2) The value of the base currency is always 1
The US dollar is the centerpiece of the Forex market and is normally considered the 'base' currency for quotes. In the "Majors", this includes USD/JPY, USD/CHF and USD/CAD. For these currencies and many others, quotes are expressed as a unit of 1 USD per the second currency quoted in the pair. For example, a quote of USD/JPY 120.01 means that one U.S. dollar is equal to 120.01 Japanese yen. When the U.S. dollar is the base unit and a currency quote goes up, it means the dollar has appreciated in value and the other currency has weakened. If the USD/JPY quote we previously mentioned increases to 123.01, the dollar is stronger because it will now buy more yen than before.
The 3 exceptions to this rule are the British pound (GBP), the Australian dollar (AUD) and the Euro (EUR). In these cases, you might see a quote such as GBP/USD 1.4366, meaning that one British pound equals 1.4366 U.S. dollars. In these three currency pairs, where the U.S. dollar is not the base rate, a rising quote means a weakening dollar, as it now takes more U.S. dollars to equal one pound, euro or Australian dollar. In other words, if a currency quote goes higher, that increases the value of the base currency. A lower quote means the base currency is weakening.
Currency pairs that do not involve the U.S. dollar are called cross currencies, but the premise is the same. For example, a quote of EUR/JPY 127.95 signifies that one Euro is equal to 127.95 Japanese yen. When continuing your Forex trading education, you will often see a two-sided quote, consisting of a 'bid' and 'offer'. The 'bid' is the price at which you can sell the base currency (at the same time buying the counter currency). The 'ask' is the price at which you can buy the base currency (at the same time selling the counter currency).
FOREX CURRENCY PAIR
Reading a foreign exchange quote may seem confusing at first. However, it's really quite simple if you remember 2 things when starting your Forex trading education:
1) The first currency listed is the base currency
2) The value of the base currency is always 1
The US dollar is the centerpiece of the Forex market and is normally considered the 'base' currency for quotes. In the "Majors", this includes USD/JPY, USD/CHF and USD/CAD. For these currencies and many others, quotes are expressed as a unit of 1 USD per the second currency quoted in the pair. For example, a quote of USD/JPY 120.01 means that one U.S. dollar is equal to 120.01 Japanese yen. When the U.S. dollar is the base unit and a currency quote goes up, it means the dollar has appreciated in value and the other currency has weakened. If the USD/JPY quote we previously mentioned increases to 123.01, the dollar is stronger because it will now buy more yen than before.
The 3 exceptions to this rule are the British pound (GBP), the Australian dollar (AUD) and the Euro (EUR). In these cases, you might see a quote such as GBP/USD 1.4366, meaning that one British pound equals 1.4366 U.S. dollars. In these three currency pairs, where the U.S. dollar is not the base rate, a rising quote means a weakening dollar, as it now takes more U.S. dollars to equal one pound, euro or Australian dollar. In other words, if a currency quote goes higher, that increases the value of the base currency. A lower quote means the base currency is weakening.
Currency pairs that do not involve the U.S. dollar are called cross currencies, but the premise is the same. For example, a quote of EUR/JPY 127.95 signifies that one Euro is equal to 127.95 Japanese yen. When continuing your Forex trading education, you will often see a two-sided quote, consisting of a 'bid' and 'offer'. The 'bid' is the price at which you can sell the base currency (at the same time buying the counter currency). The 'ask' is the price at which you can buy the base currency (at the same time selling the counter currency).
Bring your friend!
If you have lots of friends or acquaintances who are interested in the Forex market or have been actively working on it for a long time, you can advise to them your broker LiteForex. As a result, your friend registers with a really solid broker and you are rewarded for your high appreciation of our work and your recommendations. The Company values its most faithful clients, that’s why you can get a bonus up to 50% of your friend’s deposit.
«"One who has many friends never needs a full purse" – this saying is a true one for everyone who takes part in the "Bring your friend!" program of the LiteForex Company.
«"One who has many friends never needs a full purse" – this saying is a true one for everyone who takes part in the "Bring your friend!" program of the LiteForex Company.
WhiteLabel
LiteForex has a special offer for business professionals who have first-hand knowledge of the Forex market and can operate a company representative office. If you can and want to become LiteForex official representative in your region, our company will be happy to cooperate with you for we deem developing a wide net of representative offices prospective. You receive a unique "WhiteLabel" status and a flawless reputation as a representative of such a well-known brand as LiteForex, a company with a bright history. You’ll be responsible for promoting the LiteForex brand and taking care of all company clients in your region or even your country territory. Your compensation will correspond to such a responsible job; details are to be discussed individually.
Internet-Partner
If your purpose is to spread information about Forex, the most important thing is to choose a serious solid broker with a good reputation. Choosing LiteForex you solve this problem and can find time for making analytics, promoting and supporting your informational resource or doing other important things. Helping others to navigate in the ocean of information about Forex, you render them a big service and should be rewarded. The LiteForex Company, that develops online-trading and the Forex industry by all means, will be happy to encourage its clients: 1 pip for each transaction made by an attracted client will reward you for your efforts. Taking into consideration a current volume of transactions made by LiteForex traders, you’ll understand that your final compensation depends on your business activity only and can be considerable enough.
Monday, October 18, 2010
Forex Scalping
Forex scalping, sometimes referred to as quick trading, is a method used by some traders to make a high volume of trades for very small profits. In most cases, a scalper will hold on to a currency for less than one minute in an attempt to make a very small profit. The sheer volume of trades however allows them to make potentially big profits throughout the trading day.
The main benefit to the scalper is that whilst the potential returns are very minimal, just a few points at best, the risk is also minimised. By acting quickly when a currency is showing a clear upwards trend, the scalper is taking the best step possible to ensuring some form of return. By hanging onto a currency for longer, he risks the possibility of that currency dropping.
For example, if a scalper begins with a trading position of 100 000 units with GBP/USD, he will earn around $10 for each pip. If he closes at a 3 pip profit, his return is $30 - all within less than a minute.
Whilst scalping isn’t prohibited or illegal in any way, many brokers do take a dim view on it. After all, they don’t want to be paying out on almost every trade that an individual makes and some brokers will ask traders who they suspect of scalping to “change their trading habits”, or close their account down in more extreme cases. Other brokers have introduced a delay to the initiation of an order and its actual filling. This allows them to offset that trade and ensure that the broker does not lose out on a trader that closes in profit.
The main benefit to the scalper is that whilst the potential returns are very minimal, just a few points at best, the risk is also minimised. By acting quickly when a currency is showing a clear upwards trend, the scalper is taking the best step possible to ensuring some form of return. By hanging onto a currency for longer, he risks the possibility of that currency dropping.
For example, if a scalper begins with a trading position of 100 000 units with GBP/USD, he will earn around $10 for each pip. If he closes at a 3 pip profit, his return is $30 - all within less than a minute.
Whilst scalping isn’t prohibited or illegal in any way, many brokers do take a dim view on it. After all, they don’t want to be paying out on almost every trade that an individual makes and some brokers will ask traders who they suspect of scalping to “change their trading habits”, or close their account down in more extreme cases. Other brokers have introduced a delay to the initiation of an order and its actual filling. This allows them to offset that trade and ensure that the broker does not lose out on a trader that closes in profit.
Dealing with Debt Issues
As any forex trader will tell you, staying on top of your finances is crucial to turning in a profit. But quite often this doesn’t happen and many traders will, at some point in time, find themselves in debt. Sometimes getting in debt is the result of circumstances beyond our control such as losing a job… but often it is as a result of being over-ambitious with forex trading or chasing a loss. Sometimes it is because we have not properly understood the long term implications of trading beyond our means; or enjoying a lifestyle that really we can’t afford.
But what ever the reason we have for finding that we owe too many people or organisations more money than we can find a way to repay, please understand that you are not alone. There are a great many people who are in precisely the same situation as you and thankfully there are people whom you can approach who will help you find your way through the nightmare of debt that currently you are enduring.
In order to take control of your debts you need to find a way of managing them. So where do you go for debt management help?
Debt managers’ day job is managing debt, so it makes sense that they are they people to whom you should talk.
Yes, it is difficult to pick up that phone and talk to a stranger about your current situation of which you might feel ashamed. Even when people find themselves in debt due to matters entirely out of their control, events such as losing a job, the most common emotion is one of shame and embarrassment.
Being in unaffordable debt is extremely painful. At least nowadays you do not get arrested and carted off to some hell hole of a dungeon, though emotionally it can feel like that. All you need to do in order to get some debt management help is pick up the phone and speak to a specialist
But what ever the reason we have for finding that we owe too many people or organisations more money than we can find a way to repay, please understand that you are not alone. There are a great many people who are in precisely the same situation as you and thankfully there are people whom you can approach who will help you find your way through the nightmare of debt that currently you are enduring.
In order to take control of your debts you need to find a way of managing them. So where do you go for debt management help?
Debt managers’ day job is managing debt, so it makes sense that they are they people to whom you should talk.
Yes, it is difficult to pick up that phone and talk to a stranger about your current situation of which you might feel ashamed. Even when people find themselves in debt due to matters entirely out of their control, events such as losing a job, the most common emotion is one of shame and embarrassment.
Being in unaffordable debt is extremely painful. At least nowadays you do not get arrested and carted off to some hell hole of a dungeon, though emotionally it can feel like that. All you need to do in order to get some debt management help is pick up the phone and speak to a specialist
Mini Forex Accounts
If you are just dipping your toe into the world of Forex, you might be a little apprehensive about starting out in a completely new form of trading with a full-blown trading account.
A number of brokers have started to introduce Mini Forex accounts, designed to provide a less daunting introduction to Forex trading and introduce new traders by removing a significant proportion of their potential liability.
In essence, a Mini Forex account is simply a cut-down version of a standard Forex account that allows the trader to enter positions that are one-tenth the size of the standard lot of 100,000 units. That means that a one-pip change in a currency pair (based in U.S. dollars), is equal to $1 when trading a mini lot, compared to $10 for a standard-lot trade. This obviously reduces a trader’s potential profitability but crucially, it also limits their liability on a trade.
Mini Forex traders are not limited to only trading one lot at a time, making the accounts ideal for increasing exposure as an individual’s trading confidence builds. If a Mini Forex Trader feels confident enough to make an equivalent trade to one standard lot, a trader can just trade 10 mini lots.
A number of brokers have started to introduce Mini Forex accounts, designed to provide a less daunting introduction to Forex trading and introduce new traders by removing a significant proportion of their potential liability.
In essence, a Mini Forex account is simply a cut-down version of a standard Forex account that allows the trader to enter positions that are one-tenth the size of the standard lot of 100,000 units. That means that a one-pip change in a currency pair (based in U.S. dollars), is equal to $1 when trading a mini lot, compared to $10 for a standard-lot trade. This obviously reduces a trader’s potential profitability but crucially, it also limits their liability on a trade.
Mini Forex traders are not limited to only trading one lot at a time, making the accounts ideal for increasing exposure as an individual’s trading confidence builds. If a Mini Forex Trader feels confident enough to make an equivalent trade to one standard lot, a trader can just trade 10 mini lots.
World Forex Trader
As any forex trader will tell you, staying on top of your finances is crucial to turning in a profit. But quite often this doesn’t happen and many traders will, at some point in time, find themselves in debt. Sometimes getting in debt is the result of circumstances beyond our control such as losing a job… but often it is as a result of being over-ambitious with forex trading or chasing a loss. Sometimes it is because we have not properly understood the long term implications of trading beyond our means; or enjoying a lifestyle that really we can’t afford.
But what ever the reason we have for finding that we owe too many people or organisations more money than we can find a way to repay, please understand that you are not alone. There are a great many people who are in precisely the same situation as you and thankfully there are people whom you can approach who will help you find your way through the nightmare of debt that currently you are enduring.
In order to take control of your debts you need to find a way of managing them. So where do you go for debt management help?
Debt managers’ day job is managing debt, so it makes sense that they are they people to whom you should talk.
Yes, it is difficult to pick up that phone and talk to a stranger about your current situation of which you might feel ashamed. Even when people find themselves in debt due to matters entirely out of their control, events such as losing a job, the most common emotion is one of shame and embarrassment.
Being in unaffordable debt is extremely painful. At least nowadays you do not get arrested and carted off to some hell hole of a dungeon, though emotionally it can feel like that. All you need to do in order to get some debt management help is pick up the phone and speak to a specialist
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