Day Trading Forex
Word Count:
470
Summary:
This is a fascination. Here is a wide open field that almost anyone can take advantage of. It use to be only for the mega rich people, the big corporations and banks. They are trading foreign currency's..
Keywords:
Forex trading learn to free strategies
Article Body:
This is a fascination. Here is a wide open field that almost anyone can take advantage of. It use to be only for the mega rich people, the big corporations and banks. They are trading foreign currency's..
Can you imagine this is a 1.2 trillion dollar a day being traded. Thats 1.2 TRILLION a day.
Now with the Internet you you too can trade the foreign currency's. You can set up a account with as little as $300.00 up to whatever. Regular accounts usually start with $3000.00. You are able to leverage you funds 100 to 1. SO you will be controlling 10,000.00 or one lot in currency's for $1,000.00 and for every pip on movement you can make $100.00. With the mini account you will control 1 tenth of a lot. $1000.00 for $100.00 and your pip is worth $1.00. Just so you will understand a pip is what an increment movement in a currency is.
You buy it if you think it will go up and sell it if you think it will go lower. Of course there are charts and all kinds of ways to tell what is going to happen. It just takes learning the in's and out's, ups and downs.
There are a lot of different currency's but here are the main ones that are traded.
USA/YEN USA / Japanese GBP/USA British Pound
USA/EURO USA/ Euro is European USA/CHF Swiss Franc
USA/CAD USA/ Canadian EURO/YEN
There are no commissions and no fees only narrow Dealer spreads. These spread vary depending on the trades. Major pairs are 3 to 5 pips. You will learn more about all of this when you start out. The wisest thing to do is to start out with a demo account or what we call a paper account where you do everything as if it was real money but it is only on paper. So you get to learn the in's and out's and learn to read the charts and how to understand the fundamentals. These are the world events that effect the currency's.
There are many different strategies. Each have their strength's and weaknesses. They each deal with different ways at looking at the charts and their movements. Want some ideas? There are Scalping
trades, surfing charts, sailing and many more. It fun and exciting, and sometimes a drag. Sometimes you will win 100 to 500 pips. Then there are times you will lose pips too. YOU will never win all the time. But thats where there account management comes in. You learn to control your risk taking.
Usually the biggest sin or failure comes when you let your emotions become involved. EVEN the big shots sometimes let their emotions get involved. Most the time it doesn't work and will cost you.
So with good account management understanding the various charts you can take $300.00 and turn it into $6000.00 in 6 months or less.
Currency Trading: Understanding the Basics of Currency Trading
Word Count:
833
Summary:
Investors and traders around the world are looking to the Forex market as a new speculation opportunity. But, how are transactions conducted in the Forex market? Or, what are the basics of Forex Trading? Before adventuring in the Forex market we need to make sure we understand the basics, otherwise we will find ourselves lost where we less expected. This is what this article is aimed to, to understand the basics of currency trading.
Keywords:
currency trading, forex trading, forex training, forex trading education, forex trading course
Article Body:
Investors and traders around the world are looking to the Forex market as a new speculation opportunity. But, how are transactions conducted in the Forex market? Or, what are the basics of Forex Trading? Before adventuring in the Forex market we need to make sure we understand the basics, otherwise we will find ourselves lost where we less expected. This is what this article is aimed to, to understand the basics of currency trading.
What is traded in the Forex market?
The instrument traded by Forex traders and investors are currency pairs. A currency pair is the exchange rate of one currency over another. The most traded currency pairs are:
EUR/USD: Euro
GBP/USD: Pound
USD/CAD: Canadian dollar
USD/JPY: Yen
USD/CHF: Swiss franc
AUD/USD: Aussie
These currency pairs generate up to 85% of the overall volume generated in the Forex market.
So, for instance, if a trader goes long or buys the Euro, she or he is simultaneously buying the EUR and selling the USD. If the same trader goes short or sells the Aussie, she or he is simultaneously selling the AUD and buying the USD.
The first currency of each currency pair is referred as the base currency, while second currency is referred as the counter or quote currency.
Each currency pair is expressed in units of the counter currency needed to get one unit of the base currency.
If the price or quote of the EUR/USD is 1.2545, it means that 1.2545 US dollars are needed to get one EUR.
Bid/Ask Spread
All currency pairs are commonly quoted with a bid and ask price. The bid (always lower than the ask) is the price your broker is willing to buy at, thus the trader should sell at this price. The ask is the price your broker is willing to sell at, thus the trader should buy at this price.
EUR/USD 1.2545/48 or 1.2545/8
The bid price is 1.2545
The ask price is 1.2548
A Pip
A pip is the minimum incremental move a currency pair can make. A pip stands for price interest point. A move in the EUR/USD from 1.2545 to 1.2560 equals 15 pips. And a move in the USD/JPY from 112.05 to 113.10 equals 105 pips.
Margin Trading (leverage)
In contrast with other financial markets where you require the full deposit of the amount traded, in the Forex market you require only a margin deposit. The rest will be granted by your broker.
The leverage provided by some brokers goes up to 400:1. This means that you require only 1/400 or .25% in balance to open a position (plus the floating gains/losses.) Most brokers offer 100:1, where every trader requires 1% in balance to open a position.
The standard lot size in the Forex market is $100,000 USD.
For instance, a trader wants to get long one lot in EUR/USD and he or she is using 100:1 leverage.
To open such position, he or she requires 1% in balance or $1,000 USD.
Of course it is not advisable to open a position with such limited funds in our trading balance. If the trade goes against our trader, the position is to be closed by the broker. This takes us to our next important term.
Margin Call
A margin call occurs when the balance of the trading account falls below the maintenance margin (capital required to open one position, 1% when the leverage used is 100:1, 2% when leverage used is 50:1, and so on.) At this moment, the broker sells off (or buys back in the case of short positions) all your trades, leaving the trader “theoretically” with the maintenance margin.
Most of the time margin calls occur when money management is not properly applied.
How are the mechanics of a Forex trade?
The trader, after an extensive analysis, decides there is a higher probability of the British pound to go up. He or she decides to go long risking 30 pips and having a target (reward) of 60 pips. If the market goes against our trader he/she will lose 30 pips, on the other hand, if the market goes in the intended way, he or she will gain 60 pips. The actual quote for the pound is 1.8524/27, 4 pips spread. Our trader gets long at 1.8530 (ask). By the time the market gets to either our target (called take profit order) or our risk point (called stop loss level) we will have to sell it at the bid price (the price our broker is willing to buy our position back.) In order to make 40 pips, our take profit level should be placed at 1.8590 (bid price.) If our target gets hit, the market ran 64 pips (60 pips plus the 4 pip spread.) If our stop loss level is hit, the market ran 30 pips against us.
It’s very important to understand every aspect of trading. Start first from the very basic concepts, then move on to more complex issues such as Forex trading systems, trading psychology, trade and risk management, and so on. And make sure you master every single aspect before adventuring in a live trading account.
Many people ask me why I trade Forex, Well I think like most people when I was introduced to Trading I didn’t 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 dollar, 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 (that’s 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
Suggest to the average American that he or she might benefit by owning a foreign bank account and you'll more than likely get a questioning look and a response such as, "Why on Earth would I want to do that?" Americans, you see, tend to have an extremely parochial attitude when it comes to their money — and they also tend to have an almost unnatural suspicion of foreign banking activities. After all, the media have exposed them to an unending series of foreign banking tales involving political shenanigans, financial fiascoes and criminal capers. Yet, the simple fact is, most Americans could benefit by owning a foreign bank account. Already, foreign banking — or, as it is more popularly known today, "offshore banking" — has become an important tool for thousands of legitimate and highly successful businesses and individuals. And in today's high tech computerized satellite communications world it is easier than one could ever of believed . Who would of believed even 5 years ago that standard simple transactions as talking to an American Express agent that the person demanding a cheque stub number could be half way around the world in India speaking better English than most Americans. To top it off this person was probably born in a low tech mud hut and 15 years ago did not even have access to electricty and running water . In practice, a foreign bank account gives the prudent investor the opportunity to synchronize the benefits of various banking activities and blend them into a unique profit-making and tax-saving financial strategy. For the careful and conscientious investor, it is one of the most pragmatic ways of expanding the realm of financial opportunity, because it is one of the most creative ways of diversifying assets. Since offshore banks don't operate within the United States (hence their name), accounts held in them are rarely subject to our state and federal laws and regulations. Offshore banks can also offer a wide range of services well beyond the legal ability of domestic banks. Through aggressive use of these services, investors can increase their profits, reduce their tax burdens and raise capital at lower interest rates — all without the restrictive maze of red tap often encountered in the United States. There are approximately 45 jurisdictions around the world that bill themselves as offshore financial centers or banking havens. Many of these centers are remote, lack adequate support facilities or have flaws in their banking or tax laws that could affect your privacy or your rate of investment return. That does not necessarily mean you should avoid banks in these jurisdictions when shopping for a location for your foreign bank account. However, it does mean that you should exercise additional caution, making sure the bank is well managed and offers the services, experience and security you are seeking. As a means of increasing your wealth by diversifying your investments , minimizing your tex load and increasing your investment profit you should seriously look at obtaining one or more offshore bank accounts. Didn't your grandmother ever tell you not to place all your eggs in one basket ?
If you are considering currency trading in the Forex market, or you are already involved in Forex currency trading, here's a money-making lesson that we can borrow from investors who use technical analysis to help them make investment decisions in the stock market. The goal of performing technical analysis when currency trading is to predict profitable currency pair movements by analyzing price trends. The principles of technical analysis in the equity markets are the same as those in the Forex currency trading markets. In fact, the only real difference between the two is that the Forex market is open 24 hours a day while the equity markets are not. This means that certain analytics that take time periods in consideration will need to be adjusted for Forex currency trading. Other than that, any of these common forms of equity technical analysis methodologies can be used when currency trading: Elliott Waves -- Developed by Ralph Nelson Elliott, this methodology is based upon the theory that market performance can be predicted by studying wave patterns that develop over a period of time. Fibonacci Studies -- Developed by 12th century mathematician Leonardo Fibonacci, this methodology is based upon the theory that changes in trends can be predicted based upon prices interacting with lines based upon certain sequences of numbers. Parabolic SAR -- Developed by J. Wells Wilder, this methodology is based upon the examination of prices in comparison to "stop and reversal" (SAR) numbers that indicate entry and exit points for a trade. Pivot Points -- A mathematical formula used to determine when to exit a trade based upon the numerical average of the high, low and closing prices. As I mentioned earlier in this article, the key difference between technical analysis in the equities market, and technical analysis in the Forex currency trading market, is the fact that it is possible to participate in Forex trading 24 hours a day, seven days a week. That key difference is also the primary reason that technical analysis works so well in currency trading. In order for technical analysis techniques to deliver maximum results, there needs to be extended periods of time available for patterns to develop and repeat. Because the Forex market never closes, and currency pairs are traded around the clock, definable patterns develop more quickly and the technical analyst has a plethora of Forex currency trading data available to work with. Because more data means more accurate forecasting results, technical analysts can see better results, in quicker time, when combining technical analysis and Forex currency trading.
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 Doesn’t Go Up, Don’t 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, let’s 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 dollars traded everyday. The commodities market trades around 440 billion dollars a day, and the US stock market trades around 200 billion dollars 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.
Everyone has heard of stocks and shares, probably even the futures market, but trading the FOREX (Foreign Currency Exchange, or FX) market is a relatively new phenomenon. Until recently, FOREX was the domain of the banking fraternity (large banks can trade billions of dollars daily), and the elite in financial and business circles. But now it is possible for the average person to be a part of this incredible – and very profitable – way of making a living, thanks to the personal computer and an internet connection. All done electronically and considered an over-the-counter (OTC) market, trading is far easier and less risky than either the futures or the stock markets. Money can be made both on a rising and falling market, unlike the stock market, which relies on shares increasing in price to create profit. More and more astute internet entrepreneurs are shunning the traditional financial markets and turning to FOREX trading. They know that it is possible to earn a full-time income from part-time effort – if you’d like to make $200 to $3,000 for as little as ten minutes’ work, and with minimal risk, then FOREX is for you. FOREX, the spot (cash) market for buying and selling currency, is the largest financial market in the world. Every day more than $1.5 trillion (yes, trillion) is traded globally and, unlike the stock market, which has fixed hours, it is a market that never sleeps. Somewhere in the world, at any time of day or night, FOREX is open for business, six days a week. The market starts each day in Sydney and moves around the globe as other FOREX financial centers open: first to Tokyo, then London and New York. In simple terms, currencies are traded in pairs, for example the Euro and the US dollar (EUR/USD). The first currency – in this case the Euro – is known as the base currency; the second currency (here, the US dollar), is the counter-currency. All trades result in the simultaneous buying of one currency and the selling of the other. Thus, in this example, if you place an order to buy the EUR/USD, you are buying the Euro and selling the US dollar. If you were to sell the pair, you would be selling the Euro and buying the US dollar. There are many other currency pairs, such as USD/JPY, GBP/USD, EUR/GBP, USD/CHF and so on. What makes trading FOREX an incredible way to make money online, is that price movements are highly predictable, creating trends that can be anticipated when it comes to decide when to buy and sell. Contrasting with stocks and shares, FOREX trading through brokers is commission free. It is also possible – and definitely recommended – to open a demo (practice) account with a broker first, where you can learn to trade and gain experience before you part with a cent of your own money. Do you want financial freedom? With huge advantages over other more conventional money markets, why not experience the excitement of pips, rollovers, leverage, lots, long and short positions, limit orders etc. and start to trade FOREX. Good luck! Penelope Housden.