Tuesday, December 4, 2007
LEARNING ONLINE CURRENCY (FOREX) TRADING
The global marketplace has evolved over the past several years. Coming up with more and new strategies that are essential in this dynamic environment.The dawn of technology has seen trades being taken from the trade floors to home computers, which makes it all the more convenient for just about anybody who has a good intuition for business. Exchanges such as the stock market, futures and options market are now being traded online.But the most popular of these electronic trade instruments is FOREX which is why you would probably want to learn online FOREX or currency trade.FOREX or currency trade is the synchronized purchase of one currency and disposition through sales of another. Currencies are always traded in pairs.Majority of trade participants in online FOREX or currency trade are there to make a profit. A minor group, mostly companies and governments are there to convert profits or currencies made in foreign currency into their domestic legal tenders.For most FOREX traders, the safest investments are with the most commonly traded currencies, primarily due to its high liquidity. These currencies include the US, Canadian and Australian Dollars, Euro, Swiss Franc, Japanese Yen and the British Pound. Since these are commonly traded, demand are always high therefore raising higher the chances to earn a profit from any of these currencies.In Learning inline Forex (currency) trade, you must know that it is an all day market, beginning in Australia, it moves across the globe to all the financial centers in the world. This gives investors the ability to response to any currency movement caused by economic, social or political events as they happen.This is also easily accessible as transactions are not limited to the trade floor but rather through a network of banks, telecommunication and the Internet. As opposed to the stock or futures market where a specific place, also called an “exchange” is necessary.Also, unlike other trade instruments, learning online FOREX (currency) trading will maximize your investments as it allows leveraged trading. In other words, it is not necessary for you to put up the full value of the position, which makes this more cost-effective for some compared to stocks and futures.FOREX trading actually allows you leverage up to 200 times the value of your account. The reason for this is the low susceptibility of the major currencies to change on a daily basis. Volatility is actually less than one percent much, much lower than stocks which can move anywhere from 4% to 12% in one day.Leverage is very important in the FOREX trade as it allows you higher returns on a smaller market movement. Therefore proving to be more cost-effective for most traders.To start delving into FOREX, you begin by opening a bank account with a broker. Go through the market to find out the best deal for you.Also, learning FOREX (currency) trading online is not a problem! A number of providers offer services to help cultivate your chances of succeeding in FOREX trade. Some financial institutions offer trainings or seminars on how to trade.Online, there are also ebooks or even simulations, tools that help enrich knowledge about the market. There are also downloadable softwares that will guide you through the basics of trading, and some even throwing in valuable tips about the market.But the most important thing to remember is to buy when the prices are low and sell when they are high. Good timing and judgment are the main tools that will give you what you aspire for, which is of course maximized profit
Trading Forex Futures
Foreign exchange and futures trading are becoming more and more popular all over the world mainly because of the promise of the great rewards that go with it.In the past, only major corporations and government institutions were able to cope with it due to the huge volume of trades that take place. Individual and small investors had been unable to participate because it was too overwhelming.However, with the arrival of the Internet and the advancement of various tools of communication and correspondence, foreign exchange and futures trading have become within arms reach of many private movers and small timers. The Internet has allowed greater access to financial information that enables even individuals to make speculative investments, often without having to pay a single cent.Forex trading, no matter what Web sites tell you about the behavior of currencies and futures, is not free from risks. As with anything in this world, particularly those that involve the exchange of value and money, there are certain pitfalls.For instance, because currencies rise and fall nearly every second, what may be of maximum value at one time might suddenly transform into something nearly worthless at another.Currency values in the foreign exchange market are highly volatile, so you must always be on your toes by keeping yourself updated with the changes every minute of the day. And since the forex market operates 24 hours a day, the monitoring could take quite an effort on your part.You must also note that whenever one currency falls, another one surely goes up, because that’s how it goes. Currencies trade against each other.Therefore, in order for you to be on the safer side (note that we said ’safer’, but not ’safe’), trade currencies that belong to the list of ‘majors’, such as the US dollar, the Japanese yen or the British pound. These monies are less likely to move too drastically because they are the most heavily traded currencies in the market.A word of caution: do not engage in currency trading unless you’re truly prepared to do so. The lures of high returns might cause you to want to jump into the industry without so much as a bat of an eyelash, but you have to get yourself in-the-know first before you proceed.Failure to adequately understand how the system works will cost you a lot of energy and mountains of money, if you’re not careful.You can avoid getting into currency trading traps by keeping yourself up to date with the latest industry news and movements at all times. You can do this yourself, or you can hire an expert to do it for you (which, of course, entails an additional cost on your part).Once you’ve already mastered how the foreign exchange and futures markets operate, you will also be able to prevent yourself from being duped into buying or selling currencies at inappropriate times. Knowledge allows you to make speculations and forecasts about what happens with currency values next.
LEARNING ONLINE CURRENCY (FOREX) TRADING
If you are in the Forex trading business, your main goal is to become successful, like in any endeavor man sets his eyes into. You search for useful information in the Internet, read books, and evaluate market charts just to find the best strategies on Forex trading.However, this may tend to become a greater problem because you can get confused and become unsure of the entry system where in you may find it difficult to stay organized and make entry decisions. You could get frustrated and quit doing your business later on.As a trader, make sure that you stick to a platform which sticks to the best bankable trades so that you would be able to obtain success. You should not just develop a new strategy but analyze the trends to become a successful trader.There is an online Forex trading platform called the What You Click Is What You Get or WYCIWYG. The execution of prices is guaranteed provided on every type of order. You don’t need to worry because there are no slippage whatever the condition of the market is. This platform honors all executions that are valid even if the market is volatile.There are also three different online currency platforms which provide the costumers with a unique level of flexibility.- Trading platforms that are FLASH based. Flash is used to power a software where in the customers are shed completely with the possibility of firewall problems. They can rapidly and easily access the trading session of foreign currency and able to trade to other computer that has Internet connection worldwide.The clients have the options of trading whether they are at home, using a laptop, office or transact business in an internet café. This is a client friendly trading platform and easier to use because descriptions are not needed for you to start forex trading. In some websites, you don’t need to download a trading platform where you can securely login live.- Trading platforms that are JAVA based and WAP based. It contains eleven languages however it does not provide the same web based advantage compared to Flash Platforms. But it has multiple advantages including increased stability, it requires minimum memory usage upon installations or downloads, there are additional types of order such as “trailing stop” and “if done” orders, position liquidation are selective, and it automatically updates the platforms.WAP is a service being added to a JAVA based platform where in the trader can trade in his account using a PDA or a mobile phone. The disadvantage is that WAP has a low speed showing only indicative prices.- Trading platforms that are HTML based. Functions and portability are beautifully combined in this type of platform. You don’t need to download and you can trade wherever you are. It contains all the JAVA based order types. The advantages are light consumption of memory, stability are increased, and provides customizable professional layout.These types of platforms offered by some forex websites can help customers trade their currency online via online dealing room that is open 24 hours on working days. It offers management order, integrated technical analysis, and back office or deal on their clients using a telephone with available languages such as French, English, German, Italian, Greek, and Russian. They also offer support to assists the customers in answering their questions with the mentioned languages.The secret to become a successful trader depends on the knowledge, techniques and platforms used by the trader. Use it for your own advantage.
Malaysian forex receipts expected to rise
The value of a particular currency should theoretically reflect demand for that currency. Accordingly, diligent forex traders scrutinize trade data and capital flows in order to identify trends in the movement of foreign exchange. Malaysia, for instance, recently announced that it expects tourism to double in the next five years. Because tourism represents one of Malaysia’s largest exports, the country will witness significant inflows of foreign exchange. While this activity should buoy Malaysia’s currency, the Malaysian Central Bank will likely continue to ‘manage’ the Ringgit and prevent it from appreciating too much. The Business Times reports:The Ministry of Tourism has projected RM59.4 billion in tourist receipts in 2010 from 24.6 million tourists. This compares to RM29.7 billion spent by a total 15.7 million foreign holiday makers in Malaysia last year.
Indonesia to mitigate currency crisis
Supported by booming economies, most Southeast Asian currencies have soared in recent years. Indonesia’s currency, the Rupiah, unfortunately has not fared well, declining recently to a 45-month low against the USD. The cause is not economic malaise, but rather the rising price of oil. For whatever reason, Indonesia expends a great deal of effort and money on artificially lowering the cost of fuel, typically by meting out fuel subsidies to consumers and businesses. As the price of oil has risen, so have Indonesian fuel subsidies, which now consume nearly 1/3 of Indonesia’s budget. This has exerted a tremendous strain on Indonesia’s money supply and credit markets, to the point where economists now reckon the Central Bank needs to raise interest rates by 100 basis points (1 percentage point) in order to prevent a full-scale currency crisis. The Financial Times reports:Should the currency slide further and remain below Rp11,000-12,000 to the dollar for a quarter, they say, it would lead to corporate defaults and put pressure on the banking system.
Oil makes a splash in forex markets
The price of oil is one of the most important variables in the global economy. Traders and investors in capital markets, credit markets, commodity markets, and to a certain extent, forex markets, all incorporate oil prices into their models and strategies. Specifically, as the price of oil has soared, the currencies of resource-rich economies have predictably risen in tandem. The reasoning behind such a trend is as follows: when the price of oil rises, the total value of oil exports rises proportionately. In order to purchase oil from Canadian and Norwegian sources, (whose currencies are thriving), one must first exchange domestic currency for Canadian or Norwegian Currency, which creates demand for those currencies and their exchange rates to appreciate. The Wall Street Journal reports:Indeed, the close tracking of oil prices and the Canadian dollar has been among the only predictable trends in currency markets in recent weeks as most other major currencies have drifted within ranges, moved more by positioning and technical trading than any fundamental story.
Currency trading based on deficit losing steam?
Currency trading based on the trade deficit MAY be losing steam (but, I wouldn't hold my breath). According to FXStreet.com:"People have grown tired of the deficit issue and are looking for something else to trade on, like interest rates," said Toshihiro Azuma, forex manager at Sumitomo Trust and Banking. "But, if the trade data is worse than expected, dollar selling could resume."He added that even if the data is within expectations, the dollar could push down to around 102 yen -- a level last seen at the end of last year -- given that a round of dollar short-covering by hedge funds appeared to have been comple
Currency trading based on deficit losing steam?
Currency trading based on the trade deficit MAY be losing steam (but, I wouldn't hold my breath). According to FXStreet.com:"People have grown tired of the deficit issue and are looking for something else to trade on, like interest rates," said Toshihiro Azuma, forex manager at Sumitomo Trust and Banking. "But, if the trade data is worse than expected, dollar selling could resume."He added that even if the data is within expectations, the dollar could push down to around 102 yen -- a level last seen at the end of last year -- given that a round of dollar short-covering by hedge funds appeared to have been comple
China's forex reserves soar to new heights
China's foreign reserves soared to a record 609.9 billion dollars in 2004 from 403.3 billion dollars in 2003 on the back of strong fund inflows and an "Andy Hagans-sized" trade surplus. Channelnewsasia.com reports:The mainland holds the world's second highest foreign currency reserves after Japan, which in December hit a record 844.54 billion dollars.The sharp rise in China's 2004 reserves highlights the seriousness of the speculation on the currency, Yi Xianrong, a researcher at the Chinese Academy of Social Sciences, was quoted as saying by the newspaper.
Forex Currency TradingForex Currency Trading
Forex currency trading is a great way for use to be able to easily double the currency in the forex market. Investing currency in the forex is the easiest way to earn substantial profit, because this is one of the few ways of entering into forex currency trading. We have to learn more about the currencies where we are going to invest our money.
Make sure you take the time to study about the currency you plan to put your money in. The companies we are going to be investing it in will be based on other currency, so we will have to exchange your money into that currency before investing in the stocks and forex. We have to understand about the forex currency trading market and companies in which we are going to invest before we place our money into it.
People always invest money in the stocks and forex to make money. To invest in the forex we are allowed directly to invest in the market or through a forex broker. In forex many of them will be the investing currencies in the forex currency trading and the traders will approach in the market, but it will be first time for the investors and it can appear at times daunting and this influences us to use the interactive forex currency trading. The dollar will change to some other currencies which are equal to the opportunities to purchase some additional stocks. Now even banks and the financial institution will help us by giving some currency for the low investment investors who are all involved in stocks and Forex.
The bank will provide us online services. The majority of the banks and financial institutions have clients who are all in high level trading. It tells that if someone opens a small account in forex marketing then he will have the ration of one to one hundred. There is a large investment in the trades which make up the forex market. The forex investing involves in making high profits with low amounts of investment. In today's world most of them invest some level of currencies or transaction to be made, for trading on the stock market, futures and options, or any other market, foreign exchange is almost always involved. This has created a diverse market in the forex investing. The investors are based on the offer of forex trading online. The forex investor will receive various choices for investing in stocks and forex. This service is offered by the forex markets. A forex currency investor is also like a regular employee in the office. We can learn more about the markets and the forex trading companies, and about the value of foreign currencies
Make sure you take the time to study about the currency you plan to put your money in. The companies we are going to be investing it in will be based on other currency, so we will have to exchange your money into that currency before investing in the stocks and forex. We have to understand about the forex currency trading market and companies in which we are going to invest before we place our money into it.
People always invest money in the stocks and forex to make money. To invest in the forex we are allowed directly to invest in the market or through a forex broker. In forex many of them will be the investing currencies in the forex currency trading and the traders will approach in the market, but it will be first time for the investors and it can appear at times daunting and this influences us to use the interactive forex currency trading. The dollar will change to some other currencies which are equal to the opportunities to purchase some additional stocks. Now even banks and the financial institution will help us by giving some currency for the low investment investors who are all involved in stocks and Forex.
The bank will provide us online services. The majority of the banks and financial institutions have clients who are all in high level trading. It tells that if someone opens a small account in forex marketing then he will have the ration of one to one hundred. There is a large investment in the trades which make up the forex market. The forex investing involves in making high profits with low amounts of investment. In today's world most of them invest some level of currencies or transaction to be made, for trading on the stock market, futures and options, or any other market, foreign exchange is almost always involved. This has created a diverse market in the forex investing. The investors are based on the offer of forex trading online. The forex investor will receive various choices for investing in stocks and forex. This service is offered by the forex markets. A forex currency investor is also like a regular employee in the office. We can learn more about the markets and the forex trading companies, and about the value of foreign currencies
Forex Trading Accounts
Forex trading is nowadays a home business opportunities. Anyone with an internet connexion can make money online trading the forex market. Well that's not completely true. You need an internet connexion, some dollars (few hundreds to start), and some trader skills.
So if you don't want to learn the forex basics and how to manage the risks, you shouldn't even think of trading currecies yourself. Of course you can practice. Almost all of the Forex brokers online will allow you to open a demo account, or practice account. You will get something like $10,000 or more and see how you are doing.
Demo accounts is the first account you should register if you're new to forex trading. It's risk-free. You're trading the real-time forex but the money is not real. You may practice for three or six monthes, maybe a year before trading a "live" account. Of course you can buy a book, teaching you some techniques. You should also look for forex tutorials on the internet. You will find really good informations, just use Google.
If you have enough money you can also invest open a forex managed account. This kind of account is managed by a professional trader. Lot of brokers now offer this feature. You don't need any particular skill since you don't trade yourself. The broker will take a percentage of your net profit. I have personnally noted that a 20% is generally taken by the broker. You may think that this percentage is high, but you are not taking any risk. You are not spending hours in front of the charts waiting for the biggest opportunity of the day.
Automated forex trading accounts. I was interested at a moment. I never really tried this kind of accounts. Well actually, this option can be offered in two ways. You download a software that analyses the market, then trades when it detects good opportunities. Again, you don't have anything to do, except setting it up with your own parameters. If you decide to try this, set the software to trade your practice account first.
The second way in automated forex trading accounts doesn't involve you to download a software. All you have to do is to transfer your funds to the broker. The broker then uses his own autotrading software. We can suppose that their software will trade with trading signals, signals sent by another software...
Trading signals are very valuable. If you decide to trade the forex, signals can really help you. Subscription for trading signals can be from $100 to $600 depending of the subscription lenght, and the broker or signals provider. Signals tell you he exact entry and exit points. You know which pair to trade, when to trade, and the estimated profit.
Signals are a great resource for every trader. May be you can see how much profit you make from them.
Forex trading is a real money making opportunity. But it's not a game. Risk management and emotions control are the main skills of a trader. If you decide to try forex trading, you must read and practice a lot. Don't invest what you can't afford to lose. If you or your family need money, don't risk it.ForexBO.com gives more helpful informations about these different kind of forex trading accounts. You can also find a list of brokers who are offering the different options I told you about.author:Thomas Leroy is an article writer and internet marketer. He writes articles about various topics, particularly about making money online and created several websites. You can find more forex resources and links on his Forex Trading Information website
So if you don't want to learn the forex basics and how to manage the risks, you shouldn't even think of trading currecies yourself. Of course you can practice. Almost all of the Forex brokers online will allow you to open a demo account, or practice account. You will get something like $10,000 or more and see how you are doing.
Demo accounts is the first account you should register if you're new to forex trading. It's risk-free. You're trading the real-time forex but the money is not real. You may practice for three or six monthes, maybe a year before trading a "live" account. Of course you can buy a book, teaching you some techniques. You should also look for forex tutorials on the internet. You will find really good informations, just use Google.
If you have enough money you can also invest open a forex managed account. This kind of account is managed by a professional trader. Lot of brokers now offer this feature. You don't need any particular skill since you don't trade yourself. The broker will take a percentage of your net profit. I have personnally noted that a 20% is generally taken by the broker. You may think that this percentage is high, but you are not taking any risk. You are not spending hours in front of the charts waiting for the biggest opportunity of the day.
Automated forex trading accounts. I was interested at a moment. I never really tried this kind of accounts. Well actually, this option can be offered in two ways. You download a software that analyses the market, then trades when it detects good opportunities. Again, you don't have anything to do, except setting it up with your own parameters. If you decide to try this, set the software to trade your practice account first.
The second way in automated forex trading accounts doesn't involve you to download a software. All you have to do is to transfer your funds to the broker. The broker then uses his own autotrading software. We can suppose that their software will trade with trading signals, signals sent by another software...
Trading signals are very valuable. If you decide to trade the forex, signals can really help you. Subscription for trading signals can be from $100 to $600 depending of the subscription lenght, and the broker or signals provider. Signals tell you he exact entry and exit points. You know which pair to trade, when to trade, and the estimated profit.
Signals are a great resource for every trader. May be you can see how much profit you make from them.
Forex trading is a real money making opportunity. But it's not a game. Risk management and emotions control are the main skills of a trader. If you decide to try forex trading, you must read and practice a lot. Don't invest what you can't afford to lose. If you or your family need money, don't risk it.ForexBO.com gives more helpful informations about these different kind of forex trading accounts. You can also find a list of brokers who are offering the different options I told you about.author:Thomas Leroy is an article writer and internet marketer. He writes articles about various topics, particularly about making money online and created several websites. You can find more forex resources and links on his Forex Trading Information website
12 Tips for Currency Trading Success
Here are 12 tips for currency trading success if you are new to trading each point is explained more fully in our other material, but these are the basics that can lead you to successful forex trading.
Use them in your trading plan, your chances of currency trading success will be increase dramatically.
1. You are responsible
You need to take responsibility for your actions only you can give yourself success. Don't follow anyone else blindly.
2. Desire to Succeed
All the great traders have a burning desire to succeed and learn the right way to succeed and this involves getting a trading edge.
3. Work Smart - The amount of effort you put into currency trading has no bearing on how successful you will be and you can easily do all your trading in under an hour a day which leads onto:
4. Simple Systems are best
Many traders think the more complex a system is the more better it will perform, but the opposite is true.
Most of the top trading systems are simple. Why?
Because they are more robust in the fact of brutal market conditions.
5. Don't day trade
This is the biggest myth of currency trading. You will lose the odds are against you read our other articles and you will see why this is a guaranteed way to lose.
6. Don't follow the herd
Most of your most successful trades will be uncomfortable as the majority will not agree with. Keep in mind that's no bad thing as most currency traders lose
7. Discipline
Many traders have good trading methods but they lack discipline to apply the method this is normally because they are following someone else's system without having confidence in it. Which leads on to, you guessed..
8. Confidence
You must have confidence in your ability to make money longer term from the method you are using which means knowing exactly how and why it works.
9. Patience
Many traders think they always need to be in the market and want the excitement but there is no correlation between this and making money.
The big trends only come a few times a year so be patient wait for them and hold them
10. Risk Management
All traders know that money management is one of the keys to trading so you need a money management system that allows you to maximize risk and reward.
11. Be Realistic
Don't be in to much of a hurry to make money or you will lose it quickly be patent and realistic in your trading aims.
12. What's your edge?
By a trading edge we mean, what makes your system likely to succeed when 90% of traders fail to make money?
If you don't know what your edge is you don't have one and will lose.
Currency trading success looks easy to achieve but it is not. Of course you can succeed but you need to approach it in the right way, with the right method and have the confidence and discipline to succeed.
Use them in your trading plan, your chances of currency trading success will be increase dramatically.
1. You are responsible
You need to take responsibility for your actions only you can give yourself success. Don't follow anyone else blindly.
2. Desire to Succeed
All the great traders have a burning desire to succeed and learn the right way to succeed and this involves getting a trading edge.
3. Work Smart - The amount of effort you put into currency trading has no bearing on how successful you will be and you can easily do all your trading in under an hour a day which leads onto:
4. Simple Systems are best
Many traders think the more complex a system is the more better it will perform, but the opposite is true.
Most of the top trading systems are simple. Why?
Because they are more robust in the fact of brutal market conditions.
5. Don't day trade
This is the biggest myth of currency trading. You will lose the odds are against you read our other articles and you will see why this is a guaranteed way to lose.
6. Don't follow the herd
Most of your most successful trades will be uncomfortable as the majority will not agree with. Keep in mind that's no bad thing as most currency traders lose
7. Discipline
Many traders have good trading methods but they lack discipline to apply the method this is normally because they are following someone else's system without having confidence in it. Which leads on to, you guessed..
8. Confidence
You must have confidence in your ability to make money longer term from the method you are using which means knowing exactly how and why it works.
9. Patience
Many traders think they always need to be in the market and want the excitement but there is no correlation between this and making money.
The big trends only come a few times a year so be patient wait for them and hold them
10. Risk Management
All traders know that money management is one of the keys to trading so you need a money management system that allows you to maximize risk and reward.
11. Be Realistic
Don't be in to much of a hurry to make money or you will lose it quickly be patent and realistic in your trading aims.
12. What's your edge?
By a trading edge we mean, what makes your system likely to succeed when 90% of traders fail to make money?
If you don't know what your edge is you don't have one and will lose.
Currency trading success looks easy to achieve but it is not. Of course you can succeed but you need to approach it in the right way, with the right method and have the confidence and discipline to succeed.
forex trade
Why trade Forex?24 hour trading One of the major advantages of trading forex is the opportunity to trade 24 hours a day from Sunday evening (20:00 GMT) to Friday evening (22:00 GMT). This gives you a unique opportunity to react instantly to breaking news that is affecting the markets.Superior liquidityThe forex market is so liquid that there are always buyers and sellers to trade with. The liquidity of this market, especially that of the major currencies, helps ensure price stability and narrow spreads. The liquidity comes mainly from banks that provide liquidity to investors, companies, institutions and other currency market players. No commissionsThe fact that forex is often traded without commissions makes it very attractive as an investment opportunity for investors who want to deal on a frequent basis.Trading the “majors” is also cheaper than trading other cross because of the high level of liquidity. For more information on the trading conditions of Saxo Bank, go to the Account Summary on your SaxoTrader and open the section entitled "Trading Conditions" found in the top right-hand corner of the Account Summary. 100:1 LeverageLeverage (gearing) enables you to hold a position worth up to 100 times more than your margin deposit. For example, a USD 10,000 deposit can command positions of up to USD 1,000,000 through leverage. You can leverage the first USD 25,000 of your investment up to 100 times and additional collateral up to 50 times. Profit potential in falling marketsSince the market is constantly moving, there are always trading opportunities, whether a currency is strengthening or weakening in relation to another currency. When you trade currencies, they literally work against each other. If the EURUSD declines, for example, it is because the U.S. dollar gets stronger against the Euro and vice versa. So, if you think the EURUSD will decline (that is, that the Euro will weaken versus the dollar), you would sell EUR now and then later you buy Euro back at a lower price and take your profits. The opposite trading scenario would occur if the EURUSD appreciates. Brief history of Forex tradingInitially, the value of goods was expressed in terms of other goods, i.e. an economy based on barter between individual market participants. The obvious limitations of such a system encouraged establishing more generally accepted means of exchange at a fairly early stage in history, to set a common benchmark of value. In different economies, everything from teeth to feathers to pretty stones has served this purpose, but soon metals, in particular gold and silver, established themselves as an accepted means of payment as well as a reliable storage of value.Originally, coins were simply minted from the preferred metal, but in stable political regimes the introduction of a paper form of governmental IOUs (I owe you) gained acceptance during the Middle Ages. Such IOUs, often introduced more successfully through force than persuasion were the basis of modern currencies.Before the First World War, most central banks supported their currencies with convertibility to gold. Although paper money could always be exchanged for gold, in reality this did not occur often, fostering the sometimes disastrous notion that there was not necessarily a need for full cover in the central reserves of the government.At times, the ballooning supply of paper money without gold cover led to devastating inflation and resulting political instability. To protect local national interests, foreign exchange controls were increasingly introduced to prevent market forces from punishing monetary irresponsibility.In the latter stages of the Second World War, the Bretton Woods agreement was reached on the initiative of the USA in July 1944. The Bretton Woods Conference rejected John Maynard Keynes suggestion for a new world reserve currency in favour of a system built on the US dollar. Other international institutions such as the IMF, the World Bank and GATT (General Agreement on Tariffs and Trade) were created in the same period as the emerging victors of WW2 searched for a way to avoid the destabilising monetary crises which led to the war. The Bretton Woods agreement resulted in a system of fixed exchange rates that partly reinstated the gold standard, fixing the US dollar at USD35/oz and fixing the other main currencies to the dollar - and was intended to be permanent.The Bretton Woods system came under increasing pressure as national economies moved in different directions during the sixties. A number of realignments kept the system alive for a long time, but eventually Bretton Woods collapsed in the early seventies following president Nixon's suspension of the gold convertibility in August 1971. The dollar was no longer suitable as the sole international currency at a time when it was under severe pressure from increasing US budget and trade deficits.The following decades have seen foreign exchange trading develop into the largest global market by far. Restrictions on capital flows have been removed in most countries, leaving the market forces free to adjust foreign exchange rates according to their perceived values.But the idea of fixed exchange rates has by no means died. The EEC (European Economic Community) introduced a new system of fixed exchange rates in 1979, the European Monetary System. This attempt to fix exchange rates met with near extinction in 1992-93, when pent-up economic pressures forced devaluations of a number of weak European currencies. Nevertheless, the quest for currency stability has continued in Europe with the renewed attempt to not only fix currencies but actually replace many of them with the Euro in 2001.The lack of sustainability in fixed foreign exchange rates gained new relevance with the events in South East Asia in the latter part of 1997, where currency after currency was devalued against the US dollar, leaving other fixed exchange rates, in particular in South America, looking very vulnerable.But while commercial companies have had to face a much more volatile currency environment in recent years, investors and financial institutions have found a new playground. The size of foreign exchange markets now dwarfs any other investment market by a large factor. It is estimated that more than USD1,200 billion is traded every day, far more than the world's stock and bond markets combined.
Forex Trend Following - The Basics For Making Big Profits
Forex trend following can be very lucrative as for the technical trader forex markets offer some great long term trends and profits for those who trend follow correctly.
Lets look at the basics of forex trend following.
Trend following means longer term
Before we start we are going to look at long term trend following and this means catching trends that last for weeks or months.
Were not interested in day trading here, the odds are against you doing this and short term moves are random so don't try it - you will lose your money.
Spotting the trend
For forex trend following start with the weekly chart this will give you the big picture and you can spot trends that last for weeks months or years here.
Next move to the daily chart and try and spot support and resistance that is on both charts. The weekly chart gives you the big picture and the daily gives you entry levels.
Methods for trend following
Perhaps the best place to start is with a breakout method.
It's a fact that most major currency moves start from new highs and the advantage of a breakout method is that you can trade with confirmation of a trend in motion.
We have written about breakout methods in other articles simply look them up, there is not enough room here to explain in detail.
You can use just charts but we like to use a couple of timing indicators to judge the strength of the breakout and for this look no further than the stochastic indicator which is the ultimate timing indicator in our view.
It's available free on internet charting services and is easy to understand and apply.
Be very selective
Don't trade just for the sake of trading.
In forex trend following the big moves only come a few times a year so wait for them.
It's these trades that make the big profits, so be patient.
Money management.
A breakout method makes money management fairly easy.
Breakouts are either false and fail quickly, or you get a strong trending move.
When setting stops in long term trend following, don't trail it to quickly to lock in profits.
Your looking to hold these trades for weeks or even months, so be prepared to suffer the emotions of seeing large dips in open equity and keep the bigger picture in mind.
If you are new to trading long term forex trend following is a good way to start. If you get it right you can make some really big profits and that after all is the aim of all forex traders.
Lets look at the basics of forex trend following.
Trend following means longer term
Before we start we are going to look at long term trend following and this means catching trends that last for weeks or months.
Were not interested in day trading here, the odds are against you doing this and short term moves are random so don't try it - you will lose your money.
Spotting the trend
For forex trend following start with the weekly chart this will give you the big picture and you can spot trends that last for weeks months or years here.
Next move to the daily chart and try and spot support and resistance that is on both charts. The weekly chart gives you the big picture and the daily gives you entry levels.
Methods for trend following
Perhaps the best place to start is with a breakout method.
It's a fact that most major currency moves start from new highs and the advantage of a breakout method is that you can trade with confirmation of a trend in motion.
We have written about breakout methods in other articles simply look them up, there is not enough room here to explain in detail.
You can use just charts but we like to use a couple of timing indicators to judge the strength of the breakout and for this look no further than the stochastic indicator which is the ultimate timing indicator in our view.
It's available free on internet charting services and is easy to understand and apply.
Be very selective
Don't trade just for the sake of trading.
In forex trend following the big moves only come a few times a year so wait for them.
It's these trades that make the big profits, so be patient.
Money management.
A breakout method makes money management fairly easy.
Breakouts are either false and fail quickly, or you get a strong trending move.
When setting stops in long term trend following, don't trail it to quickly to lock in profits.
Your looking to hold these trades for weeks or even months, so be prepared to suffer the emotions of seeing large dips in open equity and keep the bigger picture in mind.
If you are new to trading long term forex trend following is a good way to start. If you get it right you can make some really big profits and that after all is the aim of all forex traders.
Learn Forex - 6 Reasons To Trade Forex
Trading forex is a home based business for many people all around the world. But why invest your own money and risking it ? Here are 6 reasons and there are more !
Low-cost
Of course I am not talking about the fact that you have to fund your trading account. No I am talking about the management of your account and the fees involved. You will never have to pay anything for your trades. If you make a profit or loss, you don't have to pay a commission to the broker.
Your forex broker make his profit with the margin between the two exchange rates (buy and sell). This is the spread.
When you want to sell a currency, you may have seen that the selling price is lower than the current price. The broker automatically apply a 2 or 3 pips spread (or more depending of the pair traded). These 2 or 3 pips are the profit of the broker. With all the transactions every day, the broker makes a nice profit.
So you are not asked to pay for trading.
Trade anytime of the day.
The forex market is open 24 hours a day, from monday to friday. You can trade one all day long if you decide to get in that business or just a few hours after your day job.
Trade big volumes with low volume.
This is called leverage. You can trade 100 or 200 times more the money you want to use. If a broker offers you a 100:1 leverage, you can use $200 only to trade $20,000.
Micro accounts
You can open an account with $300 only. Although it's better to start with $1,000 to be more comfortable, your budget may be small. And you can go as slowly as you want, as long as you are making profit.
Demo accounts
Not all businesses allow you to practice for free. That's true, if you had to launch another kind of business, you would have to buy and resell goods. You can practice forex trading, for free, in a demo account, and see if this business is for you. You will have $50,000 or more to trade, of course this is fake money, but you are using the real time market, datas and statistics.
You can even open a demo account with different brokers. This will allow you to find the most convenient for you.
Making Money
This is the main purpose of trading forex. Making money online takes various forms. Trading forex is maybe the one offering the highest profits, if done correctly. Educate yourself, practice a lot, trade slowly, earn pip after pip and you will gain the trader skills to success.We may add a seventh reason to our list : "working" from home. You are the boss
Low-cost
Of course I am not talking about the fact that you have to fund your trading account. No I am talking about the management of your account and the fees involved. You will never have to pay anything for your trades. If you make a profit or loss, you don't have to pay a commission to the broker.
Your forex broker make his profit with the margin between the two exchange rates (buy and sell). This is the spread.
When you want to sell a currency, you may have seen that the selling price is lower than the current price. The broker automatically apply a 2 or 3 pips spread (or more depending of the pair traded). These 2 or 3 pips are the profit of the broker. With all the transactions every day, the broker makes a nice profit.
So you are not asked to pay for trading.
Trade anytime of the day.
The forex market is open 24 hours a day, from monday to friday. You can trade one all day long if you decide to get in that business or just a few hours after your day job.
Trade big volumes with low volume.
This is called leverage. You can trade 100 or 200 times more the money you want to use. If a broker offers you a 100:1 leverage, you can use $200 only to trade $20,000.
Micro accounts
You can open an account with $300 only. Although it's better to start with $1,000 to be more comfortable, your budget may be small. And you can go as slowly as you want, as long as you are making profit.
Demo accounts
Not all businesses allow you to practice for free. That's true, if you had to launch another kind of business, you would have to buy and resell goods. You can practice forex trading, for free, in a demo account, and see if this business is for you. You will have $50,000 or more to trade, of course this is fake money, but you are using the real time market, datas and statistics.
You can even open a demo account with different brokers. This will allow you to find the most convenient for you.
Making Money
This is the main purpose of trading forex. Making money online takes various forms. Trading forex is maybe the one offering the highest profits, if done correctly. Educate yourself, practice a lot, trade slowly, earn pip after pip and you will gain the trader skills to success.We may add a seventh reason to our list : "working" from home. You are the boss
The Forex Market
For the last three decades Foreign Exchange market, - briefly Forex or FX, had integrated into the world's biggest financial market. The volume of daily transactions is about 1-3 trillion of US dollars. The trading instruments on this market are the currencies of different countries, so the fluctuation of currency's rates allows to gain a real profit.
Of course monetary assets of different countries exchanged since the term money appeared as well as an idea to obtain profit from currency's rates difference. Now it is not a new idea, but the transformation of foreign exchange market to the modern stage with an opportunity to conduct conversional operations of such volumes arose only after an introduction of floating rates regime by the state-members of IMF. Within this regime's framework the rate of one currency to another is defining only by the supply and demand on the market.
Presently Forex market is a global telecommunication network of banks and different financial organizations. It does not have any fixed trading place and time restrictions - the trade starts on Monday morning in New Zealand and closes on Friday evening in USA
The advantages of Forex market are:
Round-the-clock trading access: the ability to trade for 24 hours a day;
Liquidity: the market works with a huge money and gives the customers complete freedom to open or close their position of different volume;
Leverage: an ability to use leverage. It decreases requirements to the sum of the initial deposit (margin trade). So in case you deposit 10 000 USD into your account you'd have an opportunity to work with 1 000 000 USD (leverage 1:100);
Objectivity: no exterior regulated structures, so the currency's rate is establishing in accordance with current supply and demand on the market;
Globality: everyone can become a market participant irrespective to the living place, as trading requires only your skills and Internet access.
At present mostly all the operations on the market are conducting only to obtain profit. With the development of Internet and other means of communication this sector of the financial markets becomes more accessible and attractive for the investors of different levels.
Of course monetary assets of different countries exchanged since the term money appeared as well as an idea to obtain profit from currency's rates difference. Now it is not a new idea, but the transformation of foreign exchange market to the modern stage with an opportunity to conduct conversional operations of such volumes arose only after an introduction of floating rates regime by the state-members of IMF. Within this regime's framework the rate of one currency to another is defining only by the supply and demand on the market.
Presently Forex market is a global telecommunication network of banks and different financial organizations. It does not have any fixed trading place and time restrictions - the trade starts on Monday morning in New Zealand and closes on Friday evening in USA
The advantages of Forex market are:
Round-the-clock trading access: the ability to trade for 24 hours a day;
Liquidity: the market works with a huge money and gives the customers complete freedom to open or close their position of different volume;
Leverage: an ability to use leverage. It decreases requirements to the sum of the initial deposit (margin trade). So in case you deposit 10 000 USD into your account you'd have an opportunity to work with 1 000 000 USD (leverage 1:100);
Objectivity: no exterior regulated structures, so the currency's rate is establishing in accordance with current supply and demand on the market;
Globality: everyone can become a market participant irrespective to the living place, as trading requires only your skills and Internet access.
At present mostly all the operations on the market are conducting only to obtain profit. With the development of Internet and other means of communication this sector of the financial markets becomes more accessible and attractive for the investors of different levels.
ALL ABOUT FOREX
Advantages of the Forex Market What are the advantages of the Forex Market over other types of investments? When thinking about various investments, there is one investment vehicle that comes to mind. The Forex or Foreign Currency Market has many advantages over other types of investments. The Forex market is open 24 hrs a day, unlike the regular stock markets. Most investments require a substantial amount of capital before you can take advantage of an investment opportunity. To trade Forex, you only need a small amount of capital. Anyone can enter the market with as little as $300 USD to trade a "mini account", which allows you to trade lots of 10,000 units. One lot of 10,000 units of currency is equal to 1 contract. Each "pip" or move up or down in the currency pair is worth a $1 gain or loss, depending on which side of the market you are on. A standard account gives you control over 100,000 units of currency and a pip is worth $10. The Forex market is also very liquid. When trading Forex you have full control of your capital. Many other types of investments require holding your money up for long periods of time. This is a disadvantage because if you need to use the capital it can be difficult to access to it without taking a huge loss. Also, with a small amount of money, you can control Forex traders can be profitable in bullish or bearish market conditions. Stock market traders need stock prices to rise in order to take a profit. Forex traders can make a profit during up trends and downtrends. Forex Trading can be risky, but with having the ability to have a good system to follow, good money management skills, and possessing self discipline, Forex trading can be a relatively low risk investment. The Forex market can be traded anytime, anywhere. As long as you have access to a computer, you have the ability to trade the Forex market. An important thing to remember is before jumping into trading currencies, is it wise to practice with "paper money", or "fake money." Most brokers have demo accounts where you can download their trading station and practice real time with fake money. While this is no guarantee of your performance with real money, practicing can give you a huge advantage to become better prepared when you trade with your real, hard earned money. There are also many Forex courses on the internet, just be careful when choosing which ones to purchase. Investing in Forex Investing in foreign currencies is a relatively new avenue of investing. There are considerably fewer people are aware of this market than there are people aware of several other avenues of investing. Trading foreign currency, also known as forex, is the most lucrative investment market that exists. There are several factors that make this true among which, successful forex traders earn realistic profits of one hundred plus percent each month. Compared to some of the better known investment markets such as corporate stocks, this is an unheard of return on investment. It's very necessary to mention here that a person who invests in forex must, without exception, make it a point to learn the detailed, but simple strategies and information surrounding the market. This very fact is what makes the difference between successful forex traders and other traders. A few additional points, which create such powerful leverage for investors within the forex market are: The amount of capital required to begin investing in the market is only three hundred dollars. For the most part, any other investment market is going to demand thousands of dollars of the investor in the beginning. Also, the market offers opportunities to profit regardless what the direction of the market may be; In most commonly known markets investors sit and wait for the market to begin an up trend before entering a trade. Even then, investors, as a rule must sit and wait some more to be able to exit the trade with a nice profit. Given that the forex market produces several up, down, and sideways trends in a single day, it can easily be seen that forex stands head and shoulders above other markets. Additionally there are trading strategies, which are taught that provide for compounded profits; these are profits on top of profits. In addition, free demo accounts are available within the industry of forex trading, which facilitate the sharpening of skills without the risk losing any capital. And the advantage regarding the time factor in trading foreign currency is a very attractive point for any investor. Compared to one of the most sought after avenues of investing, which often requires forty or more hours each week, namely in the real-estate market, the forex market requires a much smaller demand on the investor's time. Forex trading requires approximately ten to fifteen hours each week to earn a full time income. It's easy to see that the advantages and great leverage that exist in the forex market, make it among the most lucrative, time liberating, and easy to enter by far. Why Trade the FOREX? 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. The Benefits of Trading The Forex Market Historically, the FX market was available most to major banks, multinational corporations and other participants who traded in large transaction sizes and volumes. Small-scale traders including individuals like you and I, had little access to this market for such a long time. Now with the advent of the Internet and technology, FX trading is becoming an increasingly popular investment alternative for the general public. The benefits of trading the currency market: It is open 24-hours and it closes only on the weekends; It is very liquid and efficient; It is very volatile; It has very low transaction costs; You can use a high level of leverage (borrowed money) with ease; and You can profit from a bull or a bear market. Continuous, 24-Hour Trading The currency exchange is a 24-hour market. You may decide to trade after you come home from work. Regardless of what time-frame you want to trade at whatever time of the day, there would be enough buyers and sellers to take the other side of your trade. This feature of the market gives you enough flexibility to manage your trading around your daily routine. Liquidity And Efficiency When there are a lot of buyers and a lot of sellers, you can expect to buy or sell at a price that is very close to the last market price. The currency market is the most liquid market in the world. Trading volume in the currency markets can be between 50 and 100 times larger than the New York Stock Exchange (Source: Oanda.) When you are trading stocks, you may have experienced events where one piece of news accelerates or decelerates the price of the underlying stock you may have bought into. Perhaps a director has been kicked out by the shareholders of a company or the company has just released a new product and big investors are buying the shares of a particular company. Share prices can be drastically affected by the actions or inactions of one or a few individuals. So if you are relying on television reports and newspapers to get your news, most of the opportunities or warnings will have come too late for you to take advantage by the time you get them. The value of currencies on the other hand is affected by so many factors and so many participants that the likelihood of any one individual or group of individuals drastically affecting the value of a currency is minute. Because of its sheer size, the currency market is hard to manipulate. The ability for people to engage in 'insider trading' is virtually eliminated. As an average trader, you are less disadvantaged. You are likely to be playing on relatively equal ground along with all the other traders and investors whom you are competing against. Note about price gaps: For those people who have already traded other markets, you probably know about price 'gaps'. 'Gaps' occur when prices 'jump' from one price level to another without having taken any incremental steps to get there. For example, you may be trading a share that closes at $10 at the end of today but due to some event that happens overnight; it opens tomorrow at $5 and continues to go downwards for the rest of the day. Gaps bring about another degree of uncertainty that may meddle with a trader's strategy. Probably one of the most worrying aspects of this is when a trader uses stop-losses. In this case, if a trader puts a stop-loss at $7 because he no longer wants to be in a trade if the share price hits $7, his trade will remain open overnight and the trader wakes up tomorrow with a loss bigger than he may have been prepared for. After looking at a couple of forex charts, you will realize that there are little price 'gaps' or none at all, especially on the longer-term charts like the 3-hour, 4-hour or the daily charts. Volatility Trading opportunities exist when prices fluctuate. If you buy a share for $2 and it stays there, there is no opportunity to make a profit. The magnitude of level of this fluctuation and its frequency is referred to as volatility. As a trader, it is volatility that you profit from. Large volume transactions and high liquidity combined with fewer trading instruments generate greater intra-day volatility in the currency market that can be exploited by day-traders. The high volatility of the currency market indicates that a trader can potentially earn 5 times more money from currency trading than trading the most liquid shares. Volatility is a measure of maximum return that a trader can generate with perfect foresight. Volatility for the most liquid stocks are between 60 to 100. Volatility for currency trading is 500. (Source: Oanda.) In this respect, currencies make a better trading vehicle for day-traders than the equity markets. Low Transaction Costs A currency transaction typically incurs no commission or transaction fees. For a forex trader, the spread is the only cost he or she needs to cover in taking on a position. In addition, because of the currency market's efficiency, there is little or no 'slippage' costs. 'Slippage' is the cost involved when traders enter the market at a price worse than the level they wanted to get into. For example, a trader wants to buy a share at $2.00 but by the time, the order gets executed, his gets to buy the shares at $2.50. That fifty cents difference is his slippage cost. Slippage cost affects large-volume traders a lot. When they buy large quantities of a commodity, it oversupplies the market with buy orders. This applies a pressure for the price to go up. By the time they get to buy all the quantities they wanted, the average price they got their commodities would be higher than the price they intended to get them for. Conversely, when they sell large quantities of a commodity, they oversupply the market with sell orders. This applies a pressure for the price to go down. By the time they finish selling all their commodities, their average selling price is less than what they initially intended to sell them for. Due to lower transaction costs, minimum slippage and strong intra-day volatility, individuals can trade frequently at small costs. As an approximate, you may only expect to have a spread of 0.03% of your position size. To give you an example, you can buy and sell 10,000 US Dollars and this will only incur a 3-point spread, equivalent to $3. Leverage There are not a lot of banks or people who would lend you money so that you can use it to trade shares. And if there are, it would be very hard for you to convince them to invest in you and in your idea that a certain share is going to go up or down. Therefore, most of the time, if you have a $10,000 account, you can only really afford to buy $10,000 worth of stocks. In currency trading however, because you use 'borrowed money', you can trade $10,000 of a currency and you only need anywhere between fifty (For a margin lending ratio of 200:1) to two hundred dollars ( For a margin lending ratio of 50:1) in your trading account. This makes it possible for an average trader with a small trading account, under $10,000 to be able to profit sufficiently from the movements of the currency exchange rates. This concept is explained further in The Part-Time Currency Trader. Profit From A Bull And Bear Market When you are trading shares, you can only profit when the price of a stock goes up. When you suspect that it is about to go down or that it is just going to be moving sideways, then the only thing you can do is sell your shares and stand aside. One of the frustrations of trading shares is that an individual cannot profit when prices are going down. In the currency market, it is easy for you to trade a currency downward so that you can profit when you think it is going to lose value. This is easy to do because currency trading simply involves buying one currency and selling another, there is no structural bias that makes it difficult to trade 'downwards'. This is why the currency market has been occasionally referred to as the eternal bull market.
Forex 1
Forex options, are another component that draws similarities with the stock market, they offer traders more security in being able to limit riskand increase profit when trading in the market. There are generally two types of options an investor can choose from, the first being a traditional option. This gives the buyer the right but not the obligation to purchase a currency at a set or agreed price and time. If a trader has taken advantage of Forex options and during the agreed time the currency being bought appreciates, the trader can sell this currency at a profit.However, if the currency depreciates the trader loses only the premium paid for the option. The second type of Forex options available is known as SPOT- Single Payment Options Trading. The Forex trader dictates this type of option, it is a prediction from the trader on what they forecast will occur on the Forex market. If the trader is successful the profit potential can be unlimited and if the SPOT is not a success only the premium is lost. Forex options give investors another tool with which to limit losses and increase profits, they are particularly popular at periods of economic reporting.Transactions in options on FOREX carry a high degree of risk. Purchasers and sellers of options should familiarize themselves with the type of option (i.e. put or call) which they contemplate trading and the associated risks. You should calculate the extent to which the value of the options must increase for your position to become profitable, taking into account the premium and all transaction costs.The purchaser of options may offset or exercise the options or allow the options to expire. The exercise of an option results either in a cash settlement or in the purchaser acquiring or delivering the underlying interest. If the option is on a leveraged position, the purchaser will acquire a FOREX open position with associated liabilities for margin. If the purchased options expire worthless, you will suffer a total loss of your investment which will consist of the option premium (transaction costs on FOREX are usually zero - no commission). If you are contemplating purchasing deep-out-of-the-money options, you should be aware that the chance of such options becoming profitable ordinarily is remote.Selling ("writing" or "granting") an option generally entails considerably greater risk than purchasing options. Although the premium received by the seller is fixed, the seller may sustain a loss well in excess of that amount. The seller will be liable for additional margin to maintain the position if the market moves unfavourably. The seller will also be exposed to the risk of the purchaser exercising the option and the seller will be obligated to either settle the option in cash or to acquire or deliver the underlying interest.If the option is on a leveraged position, the seller will acquire an open FOREX position with associated liabilities for margin. If the option is "covered" by the seller holding a corresponding position in the underlying interest or a future or another option, the risk may be reduced. If the option is not covered, the risk of loss can be unlimited.Certain brokers in some jurisdictions permit deferred payment of the option premium, exposing the purchaser to liability for margin payments not exceeding the amount of the premium. The purchaser is still subject to the risk of losing the premium and transaction costs. When the option is exercised or expires, the purchaser is responsible for any unpaid premium outstanding at that time.Many people think of the stock market when they think of options; however, the foreign exchange (FOREX) market also offers the opportunity to trade these unique derivatives. Options give retail traders many opportunities to limit risk and increase profit. Here we discuss what options are, how they are used, and which strategies you can use to profit.
China may loosen forex controls for individuals
he State Administration of Foreign Exchange (SAFE) is researching further reform on individual foreign exchange management amidst expectations of further loosening of individual foreign exchange under capital account regulations, said Deng Xianhong, deputy administrator of the SAFE.
The research includes individual direct investment and securities investments. When China will open individual overseas direct investment is still uncertain, said Deng. That mainly depends on the results of the research and consideration of whether effective supervision can be achieved, according to the China Securities News.
Individual foreign exchange purchases increased 259.42 percent year-on-year during the period from February to June this year.
Currently there are many investment options for domestic residents' foreign exchange, including investment in B-shares, foreign exchange financial products issued by commercial banks and various products from the qualified domestic institutional investors.
The research includes individual direct investment and securities investments. When China will open individual overseas direct investment is still uncertain, said Deng. That mainly depends on the results of the research and consideration of whether effective supervision can be achieved, according to the China Securities News.
Individual foreign exchange purchases increased 259.42 percent year-on-year during the period from February to June this year.
Currently there are many investment options for domestic residents' foreign exchange, including investment in B-shares, foreign exchange financial products issued by commercial banks and various products from the qualified domestic institutional investors.
Friday, November 30, 2007
What is forex Trading
Foreign Exchange Market, or Forex as it is commonly called, is an international exchange market to buy and sell different currencies from around the world. An investor has the ability to buy and sell these currencies in order to create gains from small movements in the value of one currency over another. The forex market is open from Monday at 0:00 GMT until Friday at 10:00 GMT. For this reason Forex traders are not limited to the general time constraints of the New York Stock Exchange or NASDAQ.This versatility attracts many investors to become Forex traders. The liquidity of the Foreign Exchange Market is also very attractive for the Forex investor as trades range from 1 to 1.5 trillion dollars on a daily basis. These massive amounts of trades make it extremely difficult for any one trader to affect the market.Foreign Exchange Trading is simply the purchase and sales of currency based on the strength of the currency and the fluctuation in the value of that currency. For example, if one were to invest $1,000 against the British pound at 1.7999 with a 1% margin and anticipate the exchange rate to climb. If that occurs and you close the exchange rate at 1.8050 you would earn roughly $400. Forex is giving you a 40% return on your investment.Forex offers the possibility of huge profits in relatively short periods of time. The stock exchange is very different in that positions are generally maintained over a longer period of time. Although there are day traders, Forex traders have much shorter hold times on positions. Similar to the stock market marginal accounts can be obtained in the Foreign Exchange Market as well.Forex marginal accounts are very engaging as they allow Forex traders to take large positions without having to make a large deposit. In many circumstances one can fund a marginal account with .05% the necessary funds. In other words, $500 would allow a $100,000 position. In order to trade Forex effectively and profitably, one must have some type of method to follow. There are two methods used in determining what Foreign Exchange trades one should make. There are two methods, fundamental Forex analysis, and technical Forex analysis.Technical analysis is the most commonly used practice and uses the assumption that the changes that occur in the Foreign Exchange Market happened for a reason and are accurate. The belief is that if a currency has been trading towards a high then that currency will mostly continue towards that high with the adverse being true as well. The technical Forex view does not try to make long term predictions about the market but instead simply tries to take advantage of what has already been seen in the past.The fundamental Forex method takes into account all aspects of the country in which the currency is traded. Things such as the economy, the countries prime interest rates, war, poverty level, and other factors are taken into account. If there is a sharp rise in the prime interest rate a Forex trader may take a position based on that information.Online Forex trading has the potential of being extremely lucrative. One can learn to trade by creating an online Forex Account and begin by using a learning account without real funds. This will help you to understand the Forex trading process and how currencies are affected by different things that are happening on a global scale
How To Get Started In Forex Trading
The foreign exchange market (FOREX) offers many advantages to investors. But you need to know where to begin. This short guide will give you the FOREX basics, so you can quickly start participating in this fast growing market.In the past, foreign exchange trading was limited to large players such as national banks and multi-national corporations. In the 1980’s the rules were changed to allow smaller investors to participate using margin accounts. Margin accounts are the reason why FOREX trading has become so popular. With a 100:1 margin account, you can control $100,000 with a $1,000 investment.A Learning Curve FOREX is not simple, though, so you’ll need some knowledge to make wise investment decisions. Although it is relatively easy to start trading on the FOREX, there are risks involved. Your first move as a beginner should be to find out as much as possible about the forex market before risking a dime.Find A Forex Broker FOREX traders usually require a broker to handle transactions. Most brokers are reputable and are associated with large financial institutions such as banks. A reputable broker will be registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) as protection against fraud and abusive trade practices.Open an Account with a forex borker Opening a FOREX account is as simple as filling out a form and providing the necessary identification. The form includes a margin agreement which states that the broker may interfere with any trade deemed to be too risky. This is to protect the interests of the broker, since most trades are done using the broker’s money.Once your account has been established, you can fund it and begin trading.Many brokers offer a variety of accounts to suit the needs of individual investors. Mini accounts allow you to get involved in FOREX trading for as little as $250. Standard accounts may have a minimum deposit of $1000 to $2500, depending on the broker. The amount of leverage (how much borrowed money you can use) varies with account type. High leverage accounts give you more money to trade for a given investment.Trades are commission-free, meaning that you can make many trades in one day without worrying about incurring high brokerage fees. Brokers make their money on the ’spread’: the difference between bid and ask prices.Paper Trading Forex Market Beginning traders are strongly advised get accustomed to FOREX by doing "paper trades" for a period of time. Paper trades are practice transactions that don’t involve real capital. They allow you to see how the system works while learning how to use the various software tools provided by most FOREX brokers.Most online brokers have demo accounts that allow you to make free paper trades for up to 30 days. Every new FOREX investor should use these demo accounts at least until they are consistently showing profits.FOREX Software Each forex broker has its own set of software tools for making transactions, but there are a few tools that are common to all FOREX brokers. Real-time quotes, news feeds, technical analyses and charts, and profit-and-loss analyses are some of the features you can expect to see on most online brokers’ web sites.Almost every broker operates on the Internet. To access a broker’s online services you’ll need a reasonably modern computer, a fast Internet connection, and an up-to-date operating system. Once your account is set up, you can access it from any computer just by entering your account name and password. If for some reason you are unable get to a computer, most brokers will allow you to make trades over the phone.There are lots of ways to make money. FOREX trading is just one more potential stream of income — if you are prepared to learn and practice.
Understanding the Basics of Currency Trading
Investors and traders around the world are looking to the Forexmarket 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 it, 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:USD/CHF: Swiss francGBP/USD: PoundUSD/CAD: Canadian dollarUSD/JPY: YenEUR/USD: EuroAUD/USD: AussieThese six currency pairs generate up to 85% of the overall volume in the Forex market. So, for instance, if a trader goes long on 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 SpreadAll 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 1.2645/48 or 1.2645/8The bid price is 1.2645The ask price is 1.2648A 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 112.35 to 113.40 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 forex 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
Forex Technical Analysis
The difference between forex technical and forex fundamental analysis is that forex technical analysis ignores fundamental factors and is applied only to the price action of the market. Forex technical analysis primarily consists of a variety of forex technical studies, each of which can be interpreted to predict market direction or to generate buy and sell signals. The technical analysis works by correlating the results and moves of current markets to create a short-term outlook for currencies. The rolling data that is produced throughout the trading day creates the interest in the markets and informs traders of the strong markets to back.The Trend is Your Friend Forex technical analysis is largely based around forex market movement trends, thus creating the widely used phrase ’the trend is your friend’ amongst traders. Buying and selling at the right time is the key in maintaining good levels of profits, following a trend is also about knowing where to entry a trade and more importantly where to exit.Support and Resistance Support and resistance is the basic of forex technical analysis. Support and resistance levels are points where a chart experiences recurring upward or downward pressure. A support level is usually the low point in any chart pattern (hourly, weekly or annually), whereas a resistance level is the high or the peak point of the pattern. Buying and selling at the support and resistance points makes a greater profit margin as long as they remain unbroken.History Tends To Repeat Itself Another important idea in technical analysis is that history tends to repeat itself, mainly in terms of price movement. The repetitive nature of price movements is attributed to market psychology; in other words, market participants tend to provide a consistent reaction to similar market stimuli over time. Forex technical analysis uses chart patterns to analyze forex market movements and understand trends. Although many of these charts have been used for more than 30 years, they are still believed to be relevant because they illustrate patterns in price movements that often repeat themselves
Technical Analysis Explained - Chart Patterns
Technical analysis is the study of financial market action. The technician looks at price changes that occur on a day-to-day or week-to-week basis or over any other constant time period displayed in graphic form, called charts. Hence the name chart analysis. A chartist analyzes price charts only, while the technical analyst studies technical indicators derived from price changes in addition to the price charts. Technical analysts examine the price action of the financial markets instead of the fundamental factors that (seem to) effect market prices. Technicians believe that even if all relevant information of a particular market or stock was available, you still could not predict a precise market "response" to that information. There are so many factors interacting at any one time that it is easy for important ones to be ignored in favor of those that are considered as the "flavor of the day." The technical analyst believes that all the relevant market information is reflected (or discounted) in the price with the exception of shocking news such as natural distasters or acts of God. These factors, however, are discounted very quickly. This is not the book by Martin J.Pring.
Encyclopaedia of Trading Strategies
In this book is the knowledge needed to become a more successful trader of commodities. As a comprehensive reference and system developer’s guide, the book explains many popular techniques and puts them to the test, and explores innovative ways to take profits out of the market and to gain an extra edge. As well, the book provides better methods for controlling risk, and gives insight into which methods perform poorly and could devastate capital. Even the basics are covered: information on how to acquire and screen data, how to properly back-test systems using trading simulators, how to safely perform optimization, how to estimate and compensate for curve-fitting, and even how to assess the results using inferential statistics. This book demonstrates why the surest way to success in trading is through use of a good, mechanized trading system.
For all but a few traders, system trading yields some profitable results than discretionary trading. Discretionary trading involves subjective decisions that frequently become emotional and lead to losses. Affect, uncertainty, greed, and fear easily displace reason and knowledge as the driving forces behind the trades. Moreover, it is hard to test and verify a discretionary trading model. System based trading, in contrast, is objective. Emotions are out of the picture. Through programmed logic and assumptions, mechanized systems express the trader’s reason and knowledge. Best of all, such systems are easily tested: Bad systems can be rejected or modified, and good cntes can be improved. This book contains solid information that can be of great help when designing, building, and testing a profitable mechanical trading system. While the emphasis is on an in-depth, critical analysis of the various factors purported to contribute to winning systems, the essential elements of a complete, mechanical trading system are also dissected and explained
How Currencies Are Traded, Understanding FOREX Quotes, and Market Structure- Part Two
A currency can never be traded by itself. So you can not ever trade a EUR by itself. You always need to compare one currency with another currency to make a trade possible.Some of the common PAIRS are:EUR/USD Euro / US Dollar "Euro"USD/JPY US Dollar / Japanese Yen "Dollar Yen"GBP/USD British Pound / US Dollar "Cable"USD/CAD US Dollar / Canadian Dollar "Dollar Canada"AUD/USD Australian Dollar/US Dollar "Aussie Dollar"USD/CHF US Dollar / Swiss Franc "Swissy"EUR/JPY Euro / Japanese Yen "Euro Yen"The listed currency pairs above look like a fraction. The numerator (top of the fraction or "left" of the / however you want to SEE it) is called the base currency. The denominator (bottom of the fraction or "right" of the /however you want to SEE it) is called the counter currency. When you place an order to buy the EUR/USD, for instance, you are actually buying the EUR and selling the USD. If you were to sell the pair, you would be selling the EUR and buying the USD. So if you buy or sell a currency PAIR, you are buying/selling the base currency. You are always doing the opposite of what you did with to base currency with the counter currency.If this seems confusing then you can always get by with just thinking of the entire pair as one item. Then you are just buying or selling that one item. Thinking like this will still enable you to place trades. You only need to be aware of the base/counter concept for Fundamental Analysis issues.So why is it important to know about the base/counter currency now? The base/counter currency concept illustrates what is actually taking place in a FOREX transaction. Some of you reading this know that short-selling was restricted in the stock market *(Shortselling is where you sell a stock/currency/option/commodity first and then try to buy it back at a lower price later). But in the FOREX you are always buying one currency (base) and selling another (counter). If you sell the pair you are simply flipping which one you buy and which one you sell. The transaction is essentially the same. This allows you to short-sell with no restrictions!You want to be able to short-sell with no restrictions so you can make money when the market drops as well as when it rises. The problem with traditional stock market trading is that the market has to go up for you to make money. With FOREX trading you can make
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