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Learning The Forex Trading Basics For Better Understanding

July 7th, 2010 1 Comment

The forex market, also known as the foreign currency exchange market, has been around for quite some time. The reason it has become only recently popular is because once upon a time only the financial elite had enough assets and access to the foreign currency exchange market. Only major corporations, banks and opulent individuals who possessed great wealth were allowed entrance into these chambers of currency commerce. Alas, the world has evolved and a new entity has come into existence and altered the human way of life. Technology. The greatest invention being the Internet. Now time and space have practically lapsed and we have the ability to contact anyone, anywhere, at anytime. This makes the world quite different from what it used to be.

Today any individual can open up an online forex account and begin trading. He needs no qualifications, no justifications, just a suffice bank account. One can open up an online forex trading account for as little as $5000. Thats incredible. Whereas the New York stock exchange is centered in New York and has specific trading hours, the forex market is global and not tied down to a specific location. An investor may conduct trades from wherever he is on earth, no matter what the local time is. The forex trading day actually commences in Sydney, Australia. From there it progresses gradually east, sweeping through financial centers like a ghost of finest velvet. Barely tangible yet so lucrative. The average daily turnover in the forex trading market is $2 trillion US dollars. To be part of something that is so fantastic must be great, no?

Surely you have already begun to fantasize about the luscious millions you will earn overnight. Thought this is technically possible and there have been quite a few accounts of individuals who have earned great sums in the span of just twenty four hours, one still needs to take the proper precautions when investing money in such a volatile market. As high as the profit is, so is the risk. Thats why its not enough just to know about stocks, bonds and trading strategies. You need an in depth education.

First of all, you need to know basics. Forex trading is an automated system and so you must realize that most of the things youll have to learn will be part of a much greater system of signals and signs. The most basic and primary thing you should be aware of is that you buy and sell currencies, at the same time. Meaning, as you buy one currency, you are selling another. Furthermore, you attempt to purchase a currency when its value is low and sell a currency when its value is high. So far, so good.

Next you need to learn the terminology and currency pairs. You will find them listed in a different chapter on this website and they are explained in laymans terms so that anybody can understand them.

There are so many websites and online tutorials that teach about forex trading. There are also tons of college or university classes that really teach everything you need to know. If you are serious about becoming a forex trader and understanding the automated forex system, you will have to study hard and open your mind to learning.

After abstract theories and learning the nooks, you will be advised to practice forex trading on a dummy account. Trying to become a forex trader without this practice would be like trying to become a lifeguard without ever learning how to swim. It would never work.

The reason there are so many options for dummy forex accounts is simple. Its because any experienced forex trader or broker know that entering the forex trading system, especially the automated forex trading system, is not an easy task if youve never actually done a trade. You would not want to open up a real trading account and spend real money without having any clue how to do so. Thats why there are so many options for these fake accounts and you should put them to good use.

After you feel youve experienced enough fake trading and demos, you need to decide what sort of automated system you would like to use for your trading purposes. The reason you need a system is because you need constant updates about currency values and alerts for trades you would like to conduct. Automated systems allow you to conduct several transactions at one time through creating different trading platforms. The system you choose will present you with the required charts that express the market trends that have happened within a certain time frame. Thats why you need to know not only how to read charts and understand how to manipulate them, but also which type of automated system will serve your trading needs best.

Tags: Exchange Market, Financial Elite, Foreign Currency Exchange, Forex Market, Greatest Invention, Investing Money, Justifications, Life Technology, New York Stock, New York Stock Exchange, Online Forex Trading, Proper Precautions, Sums, Sydney Australia, Time And Space, Trillion, Twenty Four Hours, Volatile Market, Way Of Life, York Stock Exchange

Learn Forex Trading the Right Way

June 30th, 2010 No Comments

Once I starting enjoying making profit on the forex market, the word got out, everyone I know started asking me if I would teach them about the world of forex trading. This is what I tell them:

The first thing is get ready for a life-changing adventure! Once you get a taste of making money by sitting in front of your computer monitor, there is no turning back.

Then after getting them all fired up (I am one of these people who get passionate about things I believe in can help it), I get them into a free demo account as quickly as possible, usually within minutes.

Then, I show them how to use an online trading station (free computer software that allows you to use your demo account to interact with the largest money market in the world with over $1.5 trillion exchanging hands per day HUGE market!). The wonderful thing about these free demo accounts is that they are exactly the same as real trading unlike learning how to invest in the stock market, for example, where you have to pretend that someone will sell to you and that someone will buy from you and that is not real at all! The forex market is so liquid (instant buyers and sellers) that both the demo and real accounts behave exactly the same! What a great way to learn when you switch to a real account, you cant even tell.

Then, I get them to practice, using various proven techniques, with their demo account until they feel comfortable that they are consistently making profits. At first, like anything, you need to learn from experts. You need a mentor to teach you. You cant just do what you think will work you must learn techniques that really work. Trading is both a science and an art, so practice is very valuable before you start to trade for real. I tell them to be patient, the thrills are coming soon!

Then the day arrives, they open a real account and start trading in a mini account (designed for beginners or those who want to do smaller, yet real, trades). Once they see real money being made, they can hardly wait to trade in a regular account but again I tell them to practice because now the trades are real. Because they did their homework and practiced proven techniques with the demo accounts, the transition to a real account is easy the hardest part is learning not to shake in your shoes as they enter into this exciting arena along side the wealthiest people in the world. Keeping calm takes awhile and then they come to the realization that they too are on their way to making more money than they ever imagined.

What amazed me when I first looked into forex trading was the amount of available websites offering endless promises about riches to be made forex trading. Yet, at the same time, I quickly learned from real experts that most people who follow this advice lose all of their investment in the first few months! Wow! So, not wanting to make that huge mistake, I followed the advice I now give to my friends. Start with a demo, then a mini-account and finally move to a regular account all the while being mentored by someone who really knows how to make profits in the forex market.

By following this advice myself, I survived the first few months and now make wonderful profits! I love it!

Doug Gray

Tags: Buyers And Sellers, Computer Monitor, Demo Accounts, Forex Market, Forex Trading, Free Computer Software, Free Demo Account, How To Invest In The Stock Market, Huge Market, Invest Stock, Learning How To Invest In The Stock Market, Mentor, Mini Account, Money Market, Online Trading, Profits, Real Money, Trades, Trillion, Wonderful Thing

Key Benefits of Online Forex Trading

June 20th, 2010 No Comments

In the past, online forex trading was limited to only big financial institutions and banks who were the only ones benefiting out of it. But, now due to the availability of the Internet, brokers, individuals, brokerage firms and governments agencies, we can have an access to online forex trading with ease. Internet technology has enabled every one to reap the benefits of online forex trading. Online forex trading is considered as the largest financial market of the world due to the huge volume of business handled everyday.
Online forex trading has become very popular due to the ability of the computers to make complex charts which was not possible in the past as people could not afford to access the internet and high powered computers in their homes.

Benefits of online forex trading:

With the advent of the online forex trading, forex traders can do business round the clock irrespective of the geographical location they have been placed. This is very important in contributing to the growth of the forex trading industry to the extent that the daily transactions have been increased to two trillion USD.

Opening of an online forex trading account is very easy as there are many people who can offer this kind service to the trader. But they need to be very sure that they too deal with the same kind of currencies which the trader is interested in. There are free practice accounts allowing to test the skills of the trader offered by the provider with the usage of funny money before making transaction with real cash.

The traders can trade in different markets with different currencies at the same time without any problems. This is only possible because of online forex trading. This has brought in lot of flexibility and liquidity in online forex trading. The trader is able to trade and access quotes in real time with online forex transactions.

Another important benefit of online forex trading is that, it has eliminated the bulls and bears of the trade. We can say that the only trade market without the bulls and bears is the online forex trading market.

The most prominent feature of online forex trading is the way it is being operated transparently. There is no hide and seek involved in the process. It makes it easy to compare and spot trends making the decision to buy or sell at the right time with ease. This is only possible due to availability of the information instantly to everyone all over the globe.

Online forex trading does not involve any commission, or exchange fees, or hidden costs etc. The trade is done in a very fast pace as there is no kind of any delay involved in it. It takes only seconds to execute the trade, fill or confirm the same. Also it provides greater leverage to the small traders than any other market could offer them.

Although there is lot of benefits involved in the online forex trading, there is also a flip side to it. Not everyone who had invested their money in online forex trading has become rich. The reason for that is online forex trading is very risky. The trader has to take a decision within a transaction of the second which can end up with a profit or with a loss.

Tags: Advent, Banks, Brokerage Firms, Bulls And Bears, Clock, Currencies, Extent, Financial Institutions, Flexibility, Forex Transactions, Funny Money, Geographical Location, Governments, Internet Brokers, Internet Technology, Liquidity, Online Forex Trading, Real Time, Trading Forex, Trillion

Just Who Trades Forex Currencies?

June 18th, 2010 No Comments

Fifteen years ago, you would not hear about people trading on the Forex marketat least not real people. Until that time, only central banks, large hedge funds, and other financial giants like Warren Buffet could afford to dabble in the currencies markets. Today, however, the Forex is the most fluid market in the world with nearly 2 trillion dollars trading hands from Sunday through Friday afternoon24 hours a day. Investors from all over the world are drawn to the Forex for the following reasons:

Trading occurs 24 hours per day, 5 days a week so investors always have access to brokers and the ability to trade and make profit

Online trading platform makes trading easy and most can be personalized to suit your particular trading style and needs

Very large and liquid market making it easy to enter and exit positions

Volatile market that is prone to rapid price fluctuationsand the potential to make big profitsor take a big loss!

Trading is leveraged but brokers tend to offer very low margins (as little as 1% of the transaction total can be used as capital)

No commission for tradingbrokers make their money on the spread, or the difference between the ask and bid price

Ability to set stop/loss points and limit potential loss while pursuing maximum profit

Basically, the Forex offers the thrill and chase you might find in Vegas along with the technical analysis and detective work people associate with Wall Street. As far as who actually trades on the Forex market, there are two basic groups emerging as the majority players:

1.29-39 yr. old, computer savvy professionals looking for an additional revenue stream with unlimited potential, a convenient and dynamic investment interface, and the ability to limit loss while maximizing opportunities. This group of investors tend to either have a degree or have taken some college courses. While many are putting some of the profits away for retirement, most investors in this demographic are looking for additional income to help pay bills, finance lifestyles, and perhaps pay off mortgages early.

2.Baby Boomers: Thats right, there are nearly 80 million official members of the baby boomer generation nearing 60 and thoughts of retirement. Only 25% report having $50,000 or more set aside for savings aside from their primary residenceand many are looking for a safe, secure way to boost retirement funds. The convenience of the Internet combined with the large potential for profit and limited risk make the Forex an increasingly attractive investment option for baby boomers hoping to add some real money to their retirement account in short order. Baby boomers especially love brokers who offer free demo accounts for the investor to learn the ins and outs of the Forex market before actually risking any money.

Like any investment tool, the Forex market presents risk for any potential investor. It is the risk that creates the opportunity for both profit and loss. And, like most investments, taking the time to do the homework and identify trends helps make more informed and guided decisions. For anyone looking to make a real boost in their income or retirement account, the Forex offers an opportunity to earn unlimited profitsbut the losses can mount too so be sure to place stop/loss orders with any position to limit exposure.

Tags: Additional Income, Central Banks, Detective Work, Dynamic Investment, Fifteen Years, Financial Giants, Forex Market, Hedge Funds, Liquid Market, Margins, Maximum Profit, Rapid Price, Real People, Revenue Stream, Savvy Professionals, Trading Platform, Trillion, Unlimited Potential, Volatile Market, Warren Buffet

Introduction To Forex Trading

June 15th, 2010 No Comments

There are many markets: markets for stocks, futures, options and currencies. These are probably the most accessible markets for everyday traders like you and I. People easily understand the basics of trading shares. I began trading shares first and then I moved on to trading currencies.

If you do not know a lot about currency trading, allow me to introduce it to you. It is what I trade and I believe that it is one of the best markets to trade because of its efficiency. The transaction costs to execute a trade are minimal and most brokers provide you with the tools and data you need to make your trading decisions, they usually provide them for free. The market is open 24 hours a day which allows you to design your trading hours around your daily commitments. It is very volatile, which is great for those people who are looking for day-trading opportunities.

The foreign exchange market is the market in which currencies are bought and sold against one another. People may loosely refer to this market under different labels, including foreign exchange market, forex market, fx market or the currency market.

The foreign exchange market is the largest market in the world, with daily trading volumes in excess of $1.5 trillion US dollars. All transactions involving international trade and investment must go through this market because these transactions involve the exchange of currencies.

It is the most perfect market that exists because it has a large number of buyers and sellers all selling the same products. There is a free flow of information and there are little barriers to participate.

The currency exchange market is an over-the-counter (OTC) market which means that there is not one specific location where buyers and sellers can actually meet to exchange currencies. Instead, transactions are conducted by phone, fax, e-mail or through the websites of brokers who specialize in currency trading.

The major dealing centres at the time of writing are: London , with about 30% of the market, New York , with 20%, Tokyo , with 12%, Zurich , Frankfurt, Hong Kong and Singapore , with about 7% each, followed by Paris and Sydney with 3% each. Because of the fact that these centres are all over the world, foreign exchange traders can execute transactions 24 hours a day. The market only closes on the weekends.

THE MAIN PLAYERS’ IN THE FOREX MARKET

The five broad categories of participants are: consumers, businesses, investors, speculators, commercial banks, investment banks and central banks.

Consumers, including visitors of countries, tourists and immigrants, do need to exchange currencies when they travel so that they can buy local goods and services. These participants do not have the power to set prices. They just buy and sell according to the prevailing exchange rate. They make up a significant proportion of the volume being traded in the market.

Businesses that import and export goods and services need to exchange currencies to receive or make payments for goods they may have bought or services they may have rendered.

Investors and speculators require currencies to buy and sell investment instruments such as shares, bonds, bank deposits or real estate.

Large commercial and investment banks are the price makers’. They are the ones who buy and sell currencies at the bid-and-offer exchange rates that they declare through their foreign exchange dealers.

Commercial banks deal with customers on one hand, and with the Interbank or other banks, on the other hand. They profit by utilizing the bid-and-offer spread. The bid price is the exchange rate that the buyer is willing to buy and the offer price is the exchange rate at which the seller is willing to sell. The difference is called the bid-offer spread. They also make profits from speculating about whether the exchange rate will rise or fall.

Central banks participate in the foreign exchange market in their effective duty as banks for their particular government. They trade currencies not for the intention of making profits but rather to facilitate government monetary policies and to help smoothen out the fluctuation of the value of their economy’s currency.

_____________

This is an excerpt, modified from the book: The Part-Time Currency Trader, featuring examples of how to trade these currency pairs.

Tags: Buyers And Sellers, Commitments, Currency Exchange, Currency Market, Currency Trading, Day Trading, Exchange Currencies, Fax E Mail, Foreign Exchange Market, Free Flow, Futures Options, International Trade, Open 24 Hours, Otc Market, Perfect Market, Phone Fax, Trading Currencies, Transaction Costs, Trillion, Us Dollars

How To Make Money Using The Internet To Trade In

June 5th, 2010 No Comments

How To Make Money Using The Internet To Trade In The Forex Market

It is a fact that the internet is one of the most important tools of modern society. With it, you will be able to communicate with your loved ones, shop for clothes, book your flights, and even do your groceries.

Businesses and companies are taking advantage of the internet to increase their reach to potential customers. Besides, since millions of people are using the internet everyday, it is definitely a great idea to start a home based business and make money through the internet.

One of the most lucrative and also the largest market in the world is FOREX or the Foreign Exchange. This particular market operates 24 hours a day and 7 days a week. With over 1.5 trillion dollars being exchanged in the market every single day, you will see that the FOREX is definitely one of the best markets that you can ever enter.

In the past, the FOREX market was limited to large financial institutions. However, thanks to the internet, even regular people like you will have a chance to get a piece of the market in their hands. If you think that trading in FOREX is attractive and can provide you with more cash than your salary in your company, you can consider trading in FOREX. Making this as your home based business will definitely change your life. Here’s how to start trading in FOREX:

First, you need to have a computer with an active internet connection. Today, there are numerous programs available that is specifically designed for FOREX. All you need is to download these programs and you will notice that your computer screed is instantly converted into a FOREX trading floor. Through this program, you will be able to know what major currency you should invest in.

If you dont know how to trade in the FOREX market, you will see that there are numerous training programs that you can download over the internet. With this program, you will be able to learn the ropes of FOREX trading without actually risking real money. You have to remember that the FOREX market is the largest market in the world. Although there is a great chance for you to earn a lot of money from a small investment, there are also risks involved that you should avoid.

You have to remember that you should never trade in the FOREX market if you are not confident enough to take the risk. You also have to be prepared in case you lose money on your trades.

As a home based FOREX trader, you have to consider using the technical analysis strategy. This particular strategy is the use of past information to predict future market trends. By mastering this strategy, you will be able to spot trends in the FOREX market easily and minimize the risk of you losing a lot of money.

Another kind of strategy is the fundamental analysis strategy. Although this strategy is commonly used by large investors, you can also predict the FOREX market accurately through this strategy. By knowing about a particular country’s economic, and political situation, you will be able to have a better idea on which direction will the currency will go to.

FOREX trading is only one of the many ways to make money at home by using the internet. If you think you are not making it big as a FOREX trader, then you should find another way to make money at home with the use of the internet. You can be sure that with the options available, you will find the home based online business for you.

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FOREX, trading foreign currency

May 23rd, 2010 No Comments

FOREX trading is all about trading foreign currency, stocks, and similar type of products. The currency of one country is weighed against the currency of another country to determine value. The value of that foreign currency is taken into consideration when trading stocks on the FOREX markets. Most countries have control over the value of that countries value, involving the currency, or money. Those who are often involved in the FOREX markets include banks, large businesses, governments, and financial institutions.

What makes the FOREX market different from the stock market?
A forex market trade is one that involves at least two countries, and it can take place worldwide. The two countries are one, with the investor, and two, the country the money is being invested in. Most all transactions taking place in the FOREX market are going to take place through a broker, such as a bank.

What really makes up the FOREX markets?
The foreign exchange market is made up of a variety of transactions and counties. Those involved in the FOREX market are trading in large volumes, large amounts of money. Those who are involved in the FOREX market are generally involved in cash businesses, or in the trade of very liquid assets that you can sell and buy fast. The market is large, very large. You could consider the FOREX market to be much larger than the stock market in any one country overall. Those involved in the FOREX market are trading daily twenty-four hours a day and sometimes trading is completed on the weekend, but not all weekends.

You might be surprised at the number of people that are involved in FOREX trading. In the years 2004, almost two trillion dollars was an average daily trading volume. This is a huge number for the number of daily transactions to take place. Think about how much a trillion dollars really is and then times that by two, and this is the money that is changing hands every day!

The FOREX market is not something new, but has been used for over thirty years. With the introduction of computers, and then the internet, the trading on the FOREX market continues to grow as more and more people and businesses alike become aware of the availablily of this trading market. FOREX only accounts for about ten percent of the total trading from country to country, but as the popularity in this market continues to grow so could that number.

Tags: Banks, Cash Businesses, Changing Hands, Currency Trading, Financial Institutions, Foreign Currency, Foreign Exchange Market, Forex Market, Forex Markets, Forex Trading, Governments, Investor, Liquid Assets, Money, Stock Market, Stock Trade, Trading Currency, Trading Stocks, Trillion, Twenty Four Hours

Forex Trading Vs. Futures What You Should Know

May 13th, 2010 No Comments

There are many financial markets in which to participate in order to make substantially better returns than putting your money in a CD or savings account. Some markets such as a money market or a typical bond market wont usually gain you double digit returns. However, there are some markets that can allow you to achieve double digit returns on your investments and this article will compare a couple of them.

The Forex Market, or FX Market as some term it, is one of those markets where you can make double digit gains. You can also make double digit gains in the Futures market as well. There are distinct differences between the two markets and you will want to know what they are before you enter into either one.

Liquidity:

Forex Trading has the advantage of being more liquid than any other market, including the Futures Market. With the average daily volume in the Forex Market reaching close to 2 Trillion and the daily volume in the Futures Market reaching 30 Billion, there is no comparison. The liquidity in Foreign Currency Trading (Forex) far surpasses that in the Futures Market. This means when it comes time to trade, Forex Trades will be filled much easier than in the Futures Market. This speed means greater potential profit. Couple this with instantaneous trade execution in Forex Trading, and you have the ability to make a lot of trades quickly.

24 Hour Trading:

Another advantage the Forex Currency Trading System (Forex) has compared to Futures is the fact that you can trade 24 hours a day, five days a week if you want. The Forex Market is open longer and for more hours than any other market. If a person is serious about making money in a market, it sure would be nice to have virtually unlimited time each week to make those trades. Whenever some event happens around the world, you can be one of the first to take advantage of the situation. You wont have to wait for a market to open in the morning. You can trade from your computer instantaneously.

Rapid Trade Execution:

When you use a Forex Currency Trading System you receive immediate trade executions. There is no delay like there can be in the Futures or Equity Markets. And your order gets filled at the best possible price instead of guessing at which price your order might get filled.

No Commissions:

Forex or FX Trading is Commission Free because it is an inter-bank market which matches buyers with sellers in an instant. There are no middleman brokerage fees as in other markets. There is a spread between the bid and ask price and this is where Forex trading firms make a little. This means you can save money when you trade Forex compared to Futures trading where there are typically commissions.

Greater Leverage:

Online Forex Trading gives you much greater leverage than playing the Futures Market. However, in the Futures Market, you can also buy or sell options on futures, which increase your leverage. Leverage can be very important when you know what a currency is going to do. You can achieve 200:1 and greater in Forex Trades compared to much less in Futures. This means a lot more potential profit, again if you make the right moves.

Limited Risk is Guaranteed:

Since Forex Traders must have position limits, the risk is limited since the online capabilities of the Forex Trading system automatically initiate a margin call when the margin amount is greater than the value of the account in dollars. This keeps a Forex Trader from losing too much if their position goes the other way. It is a good safety feature that is not always available in other financial markets.

When considering the differences between Forex Trading and Futures Trading, just keep in mind your preferred trading style and the type of risk you dont mind taking. There are definite advantages to FX Trading that may allow you to profit greatly if you develop a good system and stay within your trading limits. If you are ready to go, then begin investigating a good firm with whom to open a Forex Trading Account.

Tags: Advantage, Bond Market, Currency Trading System, Daily Volume, Distinct Differences, Financial Markets, Foreign Currency Trading, Forex Currency Trading, Forex Currency Trading System, Forex Market, Forex Trading, Futures Market, Investments, Liquidity, Money Market, Trade Execution, Trades, Trading Futures, Trillion, Unlimited Time

Forex Trading Psychology The Art Of Mind Control

April 27th, 2010 No Comments

Indeed, you really do need to hone your skills at self-discipline and become a virtual Zen Master if you truly want to succeed in the fluid Forex market. Trading 24 hours per day (the market does close from Friday afternoon until Sunday) thanks to a network of inter-linked computers in financial institutions around the world, the Forex market is by far the largest and literally dwarfs the commodities and futures markets. Nearly 1.8 trillion dollars change hands each day and you can profit from the interchange of currenciesif you can control the four most dangerous emotions that tend to cloud judgment and cost you profits. These four emotions include:

Greed
Fear
Hope
Faith

With the right investment strategy, the Forex market can certainly be very profitable but greed is always a factor in any human endeavorespecially investing. Greed causes perhaps the greatest problem when it comes to investing in the Forexovertrading. When an investor overtrades, there is a greater potential to risk too much and enter too late in the trend. Back testing should identify trends and help you determine whether the window has already passed so be sure to stick with your investment strategy and remember that the market is always rightgreed can cloud our judgment quicker than anything else but self-discipline and homework can help you maintain focus and profits.

Fear is another emotion that has helped drive the markets from the very beginning and will surely continue to do so in the futurepredictably. Fear always leads to panic selling but the market will always correct itself. The best way to combat fear is to learn and understand how the emotions affect the markets and then identify long term trends. These trends will help you plan the best investment strategy so that you can maximize profits but you need to have patience and look at what your charts are telling you.

Hope is something we all need but it can definitely cause some mistaken investment decisionsespecially when it comes to staying with a position too long. Exit points exist for a reason so stick with them because the numbers dont lieperiod.

Unfortunately, we can sometimes have too much faith in our numbers. The short term trend can look fantastic and cause us to invest before we have properly researched all the factslike the long term trends. If these two trends do not agree with one another, it is probably a bad idea to invest in a position.

The market may be driven by emotions but it can also be predictedbecause it has ALWAYS been driven by the same four basic emotions. To keep your head in the game, the profits up, and your analysis accurateuse these simple tips:

Block out noiseshort term factors can affect long term profitability if you make rash investment decisions

Look at what the charts are telling youthe charts are your lifeblood so never ignore what they are saying because the market is always right and ego investing will kill any great strategy

Stick to investment strategythis does not mean ignore the chartssimply continue to back test and refine analysis of charts to improve a strategy where the results have not been panning out as planned

You dont actually have to be a Zen Master to be successful on the Forex market. However, you do need to understand that there is a psychology to investing and that emotions are very powerful forces in any investment marketespecially the very fluid Forex. A good investment strategy will consistently produce profits over the long term if properly followed so be sure to control your emotions, do your homework, and stick with your planand the pieces will fall in place.

Tags: Art Of Mind, Change Hands, Commodities Futures, Dangerous Emotions, Dollars Change, Emotion, Financial Institutions, Friday Afternoon, Futures Markets, Greed, Interchange, Investment Strategy, Judgment, Linked Computers, Mind Control, Patience, Self Discipline, Term Trends, Trillion, Zen Master

Forex Trading Demystified

April 20th, 2010 No Comments

Forex involves the trading of currencies. It is the largest financial market in the world and has an estimated daily turnover of 1.9 trillion dollars. This turnover is larger than all the worlds stock market on any given day.

The forex market does not have a fixed exchange. The forex market is considered an over-the-counter (OTC) market. The forex market is completely electronic and trades are executed over the phone or on the Internet. Until 10 years ago the forex market was the preserve of large financial institutions. Now an ever-increasing amount of individual traders thanks to the advent of the Internet and an increasing amount of online forex brokers are trading forex.

Currencies are always traded in pairs. A typical pair would be EUR/USD (Euro over US dollars). The first currency is the base. The second currency is the counter currency. The pair can be viewed, as the amount of the secondary currency that is needed to buy 1 unit of the first currency. If you were to buy the above pair you would buy Euro and simultaneously selling US dollars. If the pair were sold the reverse would happen you would sell the Euro and buy the US dollar. This might sound confusing but simply think of the pair as one item and you are buying or selling one item. If you think the Euro will go up against the US dollar you buy the EUR/USD pair. If you think the EUR will decrease against the US dollar you sell the EUR/USD pair.

When you see forex quotes you will see two numbers. If we use the EUR/USD as an example you might see 1.2350/1.2355 the first number 1.2350 is the bid price and is the price traders are prepared to buy euros against the US dollar. The second number 1.2355 is the offer price and is the price traders are prepared to sell the EURO against the US dollar. The difference between the bid and the offer price is the called the spread. The spread for the major currencies is usually 3 to 5 pips (explained later).

The most common increment of currencies is the pip. If the EUR/USD moves from 1.2350 to 1.2351 that is one pip. A pip is the last decimal point of quotation. Most currencies quoted to 4 decimal points. The exception is the Yen, which is quoted to 2 decimal points eg 139.41. The term pip is just forex lingo so if a forex trader says the EURO has gone up 20 pips against the US dollar add 20 points to decimal part of EUR/USD pair.

Forex is traditionally traded in lots also referred to as contracts. The standard size for a lot is $100,000. In the last few a mini lot size of 10,000 dollars has been introduced and this has become increasing popular. Forex trading is leveraged with most forex brokers offering 1% margins. This means you can control one standard lot of $100000 with $1000. Typically you would need a minium of $2500 to open a standard size forex account.

A mini account can be opened with $300 with most forex brokers. To trade a one mini lot you need a margin of $100, which in turn controls $10000. If the currency goes up 1% and if you traded one mini lot of $10000 you would make $100 dollars or 100% of your original margin. Forex trading is a very lucrative market to get into and it is suggested that traders new to forex trading trade a mini account for an extended amount of time. Trading a mini account is a low cost entry to the forex market, as only $300 is required to open an account. You can still make money while you become more experienced in forex trading. You can trade one mini lot until you have made your first $100 dollars then start trading 2 mini lots. As you gain more experience you can trade standard sized lots.

Forex trading is becoming increasing popular with traders of other financial products. It can be traded in amounts a lot smaller than other financial products, which makes learning forex trading safer than other markets. Forex trading can be a very lucrative market, which no trader can dismiss.

Tags: 10 Years, Advent Of The Internet, Bid Price, Currency, Financial Institutions, Forex Brokers, Forex Market, Forex Quotes, Increment, Individual Traders, Number 1, Otc Market, Pairs, Pip, Pips, Stock Market, Trades, Trading Currencies, Trillion, Turnover

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