Posts Tagged ‘Forex Market’

Why Trading The Forex Is A New Trend

October 19th, 2010 232 Comments

The foreign exchange market, otherwise known as the forex, was first established in 1971. Despite being in existence for over 35 years, the forex just recently started to become a new and popular trend; a popular trend that many are hoping to become a part of.

Around the late 1990s, the forex market reached a critical point in its history. It was then that forex brokerage firms first opened to the general public. This opening gave everyone the opportunity to trade the forex. Before that point, the foreign exchange market was only for large financial institutions, corporations (particularly those that did business overseas) and central banks. Since the opening of forex brokerage firms to the public, a large number of individuals, from all walks of life, have started trading the forex. This alone has made trading the forex one of todays hottest trends.

In conjunction with brokerage firms opening to the general public, the low-cost of trading on the foreign exchange market is just another one of many reason why trading the forex market is a new trend, especially among those who never imagined themselves trading. Although brokerage firms and brokers vary, you will find that a large number of forex brokers, in the United States, do not charge transaction fees. These transaction fees are also commonly referred to as commissions. The forex also has minimal trading requirements. This not only means that you can trade as often as you would like to, but it also means that you can trade with much less money than you would in other markets. This is great for those who are interested in experimenting with the forex market without risking large amounts of capital.

Another reason why forex trading is considered a new trend is because of around-the-clock trading. The foreign exchange market has markets all around the world. For instance, markets can be found in London, the United States, and Hong Kong. Due to different time zones, the forex is open for trading twenty-four hours a day, five days a week. In the Untied States and all around the world, many individuals work a traditional nine to five job. A nine to five job makes it difficult, if not impossible, to trade the stock market. With around the clock trading, time isnt an issue with the forex. The ability to trade on your own schedule, whether it be early in the morning or late at night, is one of the many reasons why trading the forex market is being considered one of the hottest, new trends today.

Of course, the ability to make money or yield a profit is the greatest reason as to why trading the forex is a new trend. The foreign exchange market or the forex involves the exchange of foreign currencies. With leveraging floating exchange rates, the potential to yield a profit is high. As previously mentioned, the forex market has very small trading minimums. That is why many individuals decide to test the forex market waters. To their surprise, many are able to make a small profit. That small profit often leads to more trades and the opportunity to yield even large profits. While there are risks associated with trading the forex, as with the stock market, many of the risks can be mitigated as long as you and other traders know what you are doing.

Speaking of knowing what you are doing, forex training courses are another one of the many reasons why forex trading is a new trend. Forex training courses, although they come in a number of different formats, are designed to educate hopeful traders, like you. Many training courses, such as the training courses offered by Fxcenter.com, rely on different approaches or phases, such as online forex training, onsite forex training, and live market training. Extensive training courses, similar to the ones offered by Fxcenter.com, are ideal as they allow you to examine and explore trading the forex at your own pace. With most forex training courses at least twenty-hours long, there is more than enough time to adequately familiarize yourself with forex trading. This familiarization is what gives many hopeful traders the confidence needed to trade the forex, which only further increases its popularity, making it a trend.

Since it is apparent to see that trading the forex is a new trend, are you capitalizing on that trend? If not, you are urged to examine trading the forex. After a close examination, you will not only see the many reasons as to why you should, but the many rewards of doing so.

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Why Trade the FOREX?

October 17th, 2010 73 Comments

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

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

Liquidity – The FOREX market is the most liquid financial market in the world around 1.9 trillion 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.

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Why I trade Forex?

October 8th, 2010 No Comments

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

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

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

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

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

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Why Forex Trading Is So Popular

October 6th, 2010 No Comments

The Forex market is often more appealing to people that like to live on the edge. There is more uncertainty by far and the rewards of knowing when to buy and sell can be immense.

For those of you who dont know, the Forex stands for, Foreign Exchange Market. The Forex deals in all different types of currencies and pits them all against each other. For example: the English pound might be worth more than the American dollar but if there is a natural disaster or a nasty political event, then the pound could drop below the value of the American dollar and thus would make money for the individual who had bought the English pound, when they sell.

The people who trade on the Forex market are known as day traders. The reason for this is that the day trader buys at the beginning of the market for that day and then sells off all that he or she had bought by the end of the day. This type of trading is not for the inexperienced. There is potential to make a lot of money on the Forex market, but it takes a person knowledgeable in all the different facets of this slippery exchange to make money. A neophyte to this market can easily be wiped out in a matter of minutes!

The Forex market is also a liquid market with currencies exchanging hands moment to moment. Since transactions are handled electronically around the world, it only takes moments for funds to transfer to different accounts. It is easy to make some trades, watching news events in the country of the currency bought, and then sell it all, in order have money in your bank account by dinner time.

The Forex market is also open twenty-four hours a day since it encompasses the larger markets all over the world. Theoretically, a trader can work all day and all night. This makes the foreign exchange market very popular since people can trade any time they wish. A person can be trading on the Paris exchange until they close at which time the New York exchange is just opening up for the day. There are five major foreign exchange market around the world. They are New York, London, Frankfurt, Paris, Tokyo, and Zurich.

Many people like to invest in the Forex market since there is a lot of leverage available to the day trader. For instance, five thousand dollars can be leveraged to purchase five hundred thousand dollars through margins. What this means is that individual investors can trade with much more money than they actually have. However, one must be careful; it is quite easy to lose the money and thus has to pay much more than is actually in the bank account.

The Forex market is a challenging market to understand and can be hazardous to those not experienced in day trading. Nevertheless, for those who are experienced and can see the patterns of the market, it can be thrilling and extremely lucrative.

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Why Forex is a great trade

October 5th, 2010 No Comments

The Forex market seems to be one of the hottest markets right now.

Lets take a look why

It takes small amount of capital to get going and you get leverage with it.

This is important because a lot of people entering the market are looking for ways to make money and not just to invest their spare cash.

Leverage means that you can use other peoples money to make your investment bigger. Not to try to scare you but this also introduces greater chance for Loss. This is not for the faint hearted or people not willing to learn how to trade, understand their trading phycology and follow money management rules. Having been duly warned please keep reading about the great potential and positive aspects of Forex trading.

Leverage is a very powerful tool to make money very quickly.

The Forex Market is the largest in the world worth more than a Trillion dollars a day. This is important for many reasons:

It provides amazing liquidity. There are always people ready to buy and sell so you can always enter and exit your position easily. Smaller markets may not always give you the ability to exit your trade so easily.

It is difficult for larger players to influence the market. In the stock market the larger players can influence a particular stock and cause movement just by their trades.

The sun is always shining somewhere.

There is always trading going on 24 hours a day Monday to Friday. It goes from city to city following the sun. Plus you still get your weekends of to relax. With stocks the markets closes and news is released and the stock can gap at the open leaving you in a worse position. When you can trade a very liquid market open 24 Hours it makes it a whole lot easier to manage your positions and relax.

You are trading so that you can have a better life right?, not just stuck in front of a computer. It is important to get clear on why you are trading or you can just be just swapping one situation for another and not really improving your life. Pep talk over with lets get on with it.

Volatility

Stocks may go in sideways movements and suddenly rush up or down and there are a lot of stocks to choose from. Sure there is some stocks renown for being volatile but it is easier to find consistent volatility in the Forex market. The market is always moving so there are always plenty of opportunities for day trading

So I obviously think that the Forex Market provides great opportunity for people to enrich their lives. It gives people willing to learn a little a great lifestyle that many will envy.

I hope that you enjoyed that simple summary. There are many more great reasons to trade forex.

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Where To Find A Good Forex Trading Education

October 2nd, 2010 No Comments

Forex or Foreign Exchange is the most liquid and the largest financial market in the world. Unlike other financial market, the Forex market doesnt have a centralized location. Exchanges are done through electronic network and the whole world participates in the trade.

Forex trading involves buying and selling of different currencies. As with most trades, to make a profit in Forex, you need to buy low and sell high. Forex isnt really complicated. However, there are things that you need to consider in order to successfully make some profit out of this very liquid financial market.

Forex trading can really give you a chance to earn large amounts of money. In fact, people who traded in Forex became instant millionaires almost overnight. However, you need to realize the fact that aside from the earning potential you can get when trading Forex, there are also risks involved and many people suffered huge financial losses trading in Forex.

This is why it is important for you to get an education on Forex trading. You have to get a proper education and not just a crash-course-read-articles kind of education.

In most business schools in the United States, there are courses that specialize in trading in the financial market such as Forex. These schools can really give you that proper skills and knowledge you need in order for you to successfully trade in the Forex market. Not only that. Getting a proper education from good business schools about Forex prepare you when you enter the Forex market to trade.

A good Forex trading school will educate you on how to read charts effectively and how to spot trends. Since knowing how to read the Forex market charts can give you an idea on where a particular currency is heading, you will have an idea on which currency you want to buy and sell. Knowing how to read the charts is one of the most important skills you need to have when you enter the Forex market. This skill will substantially minimize the risk of losing money and maximize the chances of earning.

As much as possible, you should look for a school that offer real-time trading with dummy accounts and real accounts. Since the best teacher is experience, schools should require you, as their students, to set up dummy accounts for practice and also real funded accounts to trade currencies in the actual Forex market. However, the real funded accounts should be in mini Forex accounts to avoid risking and losing a lot of money in case you made a mistake in the trades.

Another benefit that you can gain if you trade in real or dummy accounts for practice is experience. Once you enter the Forex market, you will have a better idea on how Forex markets work. The school should also have different trading systems to allow you to choose which trading system you are most comfortable with. Also, you will get a first hand feel on how to use these systems and avoid making mistakes in the real world.

Since trading Forex today is widely available for all kinds of people with a computer and an active internet connection. Most people dont realize that Forex requires you to have skills and considerably, a high amount of money to invest. Forex doesnt guarantee that everyone will win; you should know that Forex is a very risky financial market to invest in and having the proper knowledge and skills is essential for your success in trading in the Forex market.

You should know about the risks involved in Forex and you should also know that many people have suffered financially because they entered the Forex market without having the knowledge and skills required to be successful. Therefore, it is very important for you to get the proper education first before you enter the Forex market.

Always remember, with the proper knowledge about trading Forex, the better your chances will be to profit in this financial market.

There are different schools available that teaches all about the basics in Forex and allow you to experience trading in Forex with a trial account. Look for the things mentioned above and you can be sure that you will obtain all the things you need in order to start trading in the Forex market.

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What You Didnt Know About The Psychology Of Forex Market

September 27th, 2010 No Comments

What You Didnt Know About The Psychology Of Forex Market Trading And How It Might Bankrupt You

When it comes to trading on the Forex market, winning is a matter of the mind rather than mind over matter. Any trader whos been in the game for any length of time will tell you that psychology has a lot to do with both your own performance on the trading floor and with the way that the market is moving. Playing a winning hand depends on knowing your own mind and understanding the way that psychology moves the market.

Studying the psychology of the market is nothing new. It doesnt take a genius to understand that any arena that rides and falls on decisions made by people is going to be heavily influenced by the minds of people. Few people take into account all the various levels of mind games that motivate the market, though. If you keep your eye on the way that psychology influences others including the mass psychology of the people that use the currency on a daily basis but neglect to know what moves you, youre going to end up hurting your own position. The best Forex coaches will tell you that before you can really become a successful trader, you have to know yourself and the triggers that influence you. Knowing those will help you overcome them or use them. Are you saying Huh? about now? Believe me, I understand. I felt the same way the first time that someone tried to explain how the mind games we play with ourselves influence the trades and decisions that we make. Let me break it down into more manageable pieces for you.

Anything involving winning or losing large sums of money becomes emotionally charged.
All right. Youve heard that playing the market is a mathematical game. Plug in the right numbers, make the right calculations and youll come out ahead. So why is it that so many traders end up on the losing end of the market? After all, everyone has access to the same numbers, the same data, the same info if its math, theres only one right answer, right?

The answer lies in interpretation. The numbers dont lie, but your mind does. Your hopes and fears can make you see things that just arent there. When you invest in a currency, youre investing more than just money you make an emotional investment. Being right becomes important. Being wrong doesnt just cost you money when you let yourself be ruled by your emotions it costs you pride. Why else would you let a loser ride in the hope that it will bounce back? Its that little thing inside your head that says, I KNOW Im right on this, dammit!

Bottom line: You cant keep emotions out of the picture, but you can learn not to let them control your decisions.

To most people, being right is more important than making money.
Heres the deal. The way to make real money in the forex market is to cut your losses short and let your winners ride. In order to do that, you have GOT to accept that some of your trades are going to lose, cut them loose and move on to another trade. Youve got to accept that picking a loser is NOT an indication of your self-worth, its not a reflection on who you are. Its simply a loss, and the best way to deal with it is to stop losing money by moving on and really move on. Moving on means you dont keep a running total of how many losses youve had thats the way to paralyze yourself. This brings us to the next point:

Losing traders see loss as failure. Winning traders see loss as learning.
Not too long ago, my twelve year old son told me that before Thomas Edison invented a working light bulb, he invented 100 light bulbs that didnt work. But he didnt give up because he knew that creating a source of light from electricity was possible. He believed in his overall theory so when one design didnt work, he simply knew that hed eliminated one possibility. Keep eliminating possibilities long enough, and youll eventually find the possibility that works.

Winning traders see loss in the same way. They havent failed theyve learned something new about the way that they and the market work.

Winning traders can look at the big picture while playing in the small arena.
Suppose I told you that last year, I made 75 trades that lost money, and 25 that made money. In the eyes of most people, that would make me a pretty poor trader. Im wrong 75% of the time. But what if I told you that my average loss was $1000, but my average profit on a winning trade was $10,000? That means that I lost $75,000 on trades but I made $250,000, making my overall profit $175,000. Its a pretty clear numbers game but how do you keep on trading when youre losing in trade after trade? Simple just remember that one trade does not make or break a trader. Focus on the trade at hand, follow the triggers that youve set up but define yourself by what really matters the overall record.

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Whats Fibonacci Forex Trading?

September 24th, 2010 No Comments

Fibonacci forex trading is the basis of many forex trading systems used by a great number of professional forex brokers around the globe, and many billions of dollars are profitable traded every year based on these trading techniques.

Fibonacci was an Italian mathematician and he is best remembered by his world famous Fibonacci sequence, the definition of this sequence is that its formed by a series of numbers where each number is the sum of the two preceding numbers; 1, 1, 2, 3, 5, 8, 13 …But in the case of currency trading what is more important for the forex trader is the Fibonacci ratios derived from this sequence of numbers, i.e. .236, .50, .382, .618, etc.

These ratios are mathematical proportions prevalent in many places and structures in nature, as well as in many man made creations.

Forex trading can greatly benefit from this mathematical proportions due to the fact that the oscillations observed in forex charts, where prices are visibly changing in an oscillatory pattern, follow Fibonacci ratios very closely as indicators of resistance and support levels; maybe not to the last cent, but so close as to be really amazing.

Fibonacci price points, or levels, for any forex currency pair can be calculated in advance so that the trader will know when to enter or exit the market if the prediction given by the Fibonacci forex day trading system he uses fulfills its predictions.

Many people tries to make this analysis overly complicated scaring away many new forex traders that are just beginning to understand how the forex market works and how to make a profit in it. But this is not how it has to be. I cant say its a simple concept but it is quite understandable for any trader once he or she has grasped the basics and has had some practice trading using Fibonacci levels along with other secondary indicators that will help to improve the accuracy of the entry and exit point for every particular trade.

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What Is Forex Trading? Is It Right For Me?

September 22nd, 2010 No Comments

What Is Forex Trading? Is It Right For Me?

Foreign Currency Exchange (FOREX) Trading is an exhilarating way to trade foreign currency in a market that runs 24 hours a day, five days a week. The Forex market is also the most volatile financial market in the world. It doesnt have a physical location, trading floor or central exchange like the NYSE or futures market does, but instead it functions and operates amid a global network of banks with trades taking place over an electronic network or by phone. With its nearly nonstop currency market where Forex brokers trade in the currencies of the world, profits are made or lost depending on how various nations currencies increase or decrease relative to each other. Current, real time events can influence currency prices and thus Forex trading brokers typically keep track of worldwide events on a minute by minute, hour by hour basis each day.

Even though Forex trading is volatile, there are many things to like about it. Since the Forex Trading System is open 24 hours a day, the majority of each week, it allows for ample time and numerous trading opportunities around the clock. This means Forex Brokers are not under as much pressure to initiate a trade as quickly as if they were playing the stock market. Also, since world government currencies are very liquid, they are much easier to trade than other securities. As with the stock and option markets, profits can be made either way, whether in a rising or falling market. And since Foreign Currency Trading is volatile by nature, it can afford even more profit opportunities than other markets.

Of course a persons Forex Trading Strategy should be to profit from the movement in currency values. As with any financial market, the more times a person gets it right, the more money they will make. In Forex or FX Trading, currency pairs are always used. FX Traders will try to determine, for instance, if the U.S. Dollar will rise in value over the British Pound, or vice versa. This is called a Currency Pair. Another trader may have some Forex information that informs them that the Euro will increase in value against the Dollar. They would then pay X amount of Dollars for X amount of Euros. As time went on and the Euro did strengthen against the Dollar then they could sell the Euros for even more Dollars than they had invested originally. Foreign Currency Exchange is essentially the simultaneous buying of one currency and the selling of another.

There is no doubt that the Forex Currency Trading System is unique. It has its own set of rules and opportunities. It can be as fast moving or slow as a trader would like. A big advantage is the number of hours in a week that a trader can place and execute trades. It can be volatile just as with any market. If a person studies their options and does their homework, a great deal of profit making opportunities exists in Foreign Currency Trading. As with any financial markets, a good Forex Trading Strategy will go a long way in determining what kind of profits you will make.

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