The best and most efficient way for the traders to make money is through the internet in the Forex Trading by using the online forex trading system. The forex market is the most liquid trading market and an unpredictable market in the world. But still this forex market is the best for expert traders to amass huge profits. But it doesn’t mean that a trader should be an expert to make profits in the forex markets, it is enough if he knows the basics of forex trading and a little common sense along with the knowledge of the present economy of the countries world wide. Getting started with forex has become easy, due to the advances in technology.
1. The first and foremost aspect is that a person who wants to do forex trading should choose a good Forex Broker, the forex broker should help the forex trader to have a practice account, great customer support, good charting packages and news feeds. To analyze the forex brokers, there is a report called CFD FX REPORT which reviews forex brokers and give its rankings.
2. The second aspect is that, the forex trader must fund and deposit money in his newly acquired account. Due to modernity, these days many Forex Broker Platforms make it very easy for transactions, the trader can deposit via Credit Card, direct debit, check. It is always recommended by most advisors to start with only little amount of money and after a little experiences the forex trader can increase his leverage rates later.
3. The third step is the forex broker should help to move in the right direction that suits the trader’s trading style. There are several quality Free forex charts available to indicate the trend and also there are many sites that update the Fx Rates everyday. It is important to use them regularly.
Monday, October 26, 2009
Use Of Forex Trading System
While several novel forex trading systems are dependent on difficult mathematical market analysis forms, a few of the most successful forex trading strategies are as well the simplest. One of these easy and very much successful strategies is trend trading, where you just observe which way the forex market is trending in and next you trade in that trend.
If you were trading the euro to dollar currency pair, the method that you could recognize the course of the trend is to start up the daily forex charts and cover an easy moving average on the chart. If the way of the moving average is high, next the pair is placed in an uptrend; if the moving average line is downward, there is a downtrend; and if the line is horizontal next there may possibly be no trend.
Trend trading is a verified method to make profits in the forex market as it is a recognized truth supported by decades of market investigation that currency pairs go in trends.
If the trend is on high next it creates logic to purchase, if the trend is downward next it creates logic to sell, and if there is no trend after that it may possibly not be a best time to trade. The most excellent method to obtain an exact sense of the on the whole trend is to glance at a long-term price chart like a daily, weekly, or monthly chart and observe which way the moving average line is pointing.
Non-bank Foreign Exchange Companies
Non-bank foreign exchange companies offer currency exchange and international payments to private individuals and companies. These are also known as foreign exchange brokers but are distinct in that they do not offer speculative trading but currency exchange with payments. I.e., there is usually a physical delivery of currency to a bank account. Send Money Home offer an in-depth comparison into the services offered by all the major non-bank foreign exchange companies.
It is estimated that in the UK, 14% of currency transfers/payments are made via Foreign Exchange Companies. These companies' selling point is usually that they will offer better exchange rates or cheaper payments than the customer's bank. These companies differ from Money Transfer/Remittance Companies in that they generally offer higher-value services.
It is estimated that in the UK, 14% of currency transfers/payments are made via Foreign Exchange Companies. These companies' selling point is usually that they will offer better exchange rates or cheaper payments than the customer's bank. These companies differ from Money Transfer/Remittance Companies in that they generally offer higher-value services.
Types of financial markets
Capital markets which consist of:
Stock markets, which provide financing through the issuance of shares or common stock, and enable the subsequent trading thereof.
Bond markets, which provide financing through the issuance of bonds, and enable the subsequent trading thereof.
Commodity markets, which facilitate the trading of commodities.
Money markets, which provide short term debt financing and investment.
Derivatives markets, which provide instruments for the management of financial risk.
Futures markets, which provide standardized forward contracts for trading products at some future date; see also forward market.
Insurance markets, which facilitate the redistribution of various risks.
Foreign exchange markets, which facilitate the trading of foreign exchange.
The capital markets consist of primary markets and secondary markets. Newly formed (issued) securities are bought or sold in primary markets. Secondary markets allow investors to sell securities that they hold or buy existing securities.
Trend Analysis
The world of investment is flooded with excellent ideas of growing your money, but you are required to make use of geometrical patterns, diagrams, statistical analysis and other similar tools to reach a definite conclusion for efficient investments. The hugest trading market called forex is also not spared from in-depth study of market trends to earn profits and avert losses. Forex trend lines serve the purpose, as these patterns help to extract most rewarding information and plan your course of action for investing in various currencies.
Usefulness of Forex Trend Lines
The forex trend lines are helpful in introducing the most vital entity required by an investor and this entity is called information. How can one expect to make worthy investment, without adjudging the highs and lows existing in the market? Here is the list of most prominent benefits of forex trend lines:
- These lines help to depict the support and resistance levels, which are of great importance in deciding the sale or purchase of various investments.
- The trend lines help the investors to decide their entry and exit points to the forex trading market.
- These patterns make you familiar about nature of forex market; the sharp turns taken by trends and unwarned movements of different investments.
- In a nutshell, these lines fuel technical analysis of this investment market, which is certainly the most appreciable tool for making an investment.
Important Types of Forex Trend Lines
The forex trend lines are available in different popular forms, as summarized below:
- Simple trend lines consist of straight lines drawn vertically, horizontally as well as diagonally.
- Fibonacci trend lines have gained popularity in recent times and are excellent tools of understanding current market trends in forex trading. There are different variations of these lines in the form of Fibonacci Arc, Fibonacci Fan and Fibonacci Retracement.
- Pivot trend lines are drawn on the basis of fluctuations in the market during previous time frames.
- Speed trend lines are similar to Fibonacci trend lines, with the only replacement of Fibonacci numbers with calculations by thirds.
Drawing and Studying Forex Trend Lines
As you grow old in terms of experience of dealing with forex trading, you are able to play with forex trend lines. But, at the very onset of your investments in the forex market, you are required to seek the guidance of forex market experts in drawing as well as interpreting information from the trend lines. For instance, you must be capable of identifying the situation in advance, if the forex market is expected to move in an opposite direction. It could be a sudden turn and you must catch the signals generated by forex trend lines for this behavior of the market. Thus, initial understanding of these trend lines can provide benefit to an investor for rest of his age of investment.
It is the simplest and most convenient in all the technical analysis to draw a trend line on the forex chart. Upward trend:
Downward trend:
Sideways trend:
The market trend is consisted of three stages:
The first is the initial stage where the market trend is shaped up.
The second one is the developing stage where the trend is strongly kept as it is.
The last one is final stage where the forex market begins to suggest the next new trend on a certain turning point.
You can find the clear trend nearing to the final stage as long as you make use of the moving average, because it is coming later than the market movement. It might be fear that you would buy at the highest or sell at the lowest if you missed capturing the market trend accurately.
Forex Trend Lines Tools
There are many online websites, dedicated to introduce automated tools for drawing forex trend lines. These tools are part of automated software systems, available in large quantity over internet. You must evaluate all these systems on the basis of various factors and finally take a decision of choosing one of these tools. Make sure that you choose a reputed resource for accessing these tools.
For becoming a good player of the game of forex trading, you must consider trend patterns as right game gears. Also, keep your knowledge updated about various methods of drawing forex trend lines and switch over to a new system, if you find it more suitable. At a later stage, you will definitely experience the building up of your knowledgebase for forex trading trends and trend lines.
Central banks
National central banks play an important role in the foreign exchange markets. They try to control the money supply, inflation, and/or interest rates and often have official or unofficial target rates for their currencies. They can use their often substantial foreign exchange reserves to stabilize the market. Milton Friedman argued that the best stabilization strategy would be for central banks to buy when the exchange rate is too low, and to sell when the rate is too high—that is, to trade for a profit based on their more precise information. Nevertheless, the effectiveness of central bank "stabilizing speculation" is doubtful because central banks do not go bankrupt if they make large losses, like other traders would, and there is no convincing evidence that they do make a profit trading.
The mere expectation or rumor of central bank intervention might be enough to stabilize a currency, but aggressive intervention might be used several times each year in countries with a dirty float currency regime. Central banks do not always achieve their objectives. The combined resources of the market can easily overwhelm any central bank. Several scenarios of this nature were seen in the 1992–93 ERM collapse, and in more recent times in Southeast Asia.
The mere expectation or rumor of central bank intervention might be enough to stabilize a currency, but aggressive intervention might be used several times each year in countries with a dirty float currency regime. Central banks do not always achieve their objectives. The combined resources of the market can easily overwhelm any central bank. Several scenarios of this nature were seen in the 1992–93 ERM collapse, and in more recent times in Southeast Asia.
Currency Risk
A form of risk that arises from the change in price of one currency against another. Whenever investors or companies have assets or business operations across national borders, they face currency risk if their positions are not hedged.
For example, if you are a U.S. investor and you have stocks in Canada, the return that you will realize is affected by both the change in the price of the stocks and the change in the value of the Canadian dollar against the U.S. dollar. So, if you realize a 15% return in your Canadian stocks but the Canadian dollar depreciates 15% against the U.S. dollar, this will amount to no gain at all.
Academic studies of currency risk suggest - although without absolute certainty - that investors bearing currency risk are not compensated with higher potential returns, meaning it is essentially a needless risk to bear.
For example, if you are a U.S. investor and you have stocks in Canada, the return that you will realize is affected by both the change in the price of the stocks and the change in the value of the Canadian dollar against the U.S. dollar. So, if you realize a 15% return in your Canadian stocks but the Canadian dollar depreciates 15% against the U.S. dollar, this will amount to no gain at all.
Academic studies of currency risk suggest - although without absolute certainty - that investors bearing currency risk are not compensated with higher potential returns, meaning it is essentially a needless risk to bear.
Forex - FX
The market in which currencies are traded. The forex market is the largest, most liquid market in the world with an average traded value that exceeds $1.9 trillion per day and includes all of the currencies in the world.
There is no central marketplace for currency exchange; trade is conducted over the counter. The forex market is open 24 hours a day, five days a week and currencies are traded worldwide among the major financial centers of London, New York, Tokyo, Zürich, Frankfurt, Hong Kong, Singapore, Paris and Sydney.
The forex is the largest market in the world in terms of the total cash value traded, and any person, firm or country may participate in this market
There is no central marketplace for currency exchange; trade is conducted over the counter. The forex market is open 24 hours a day, five days a week and currencies are traded worldwide among the major financial centers of London, New York, Tokyo, Zürich, Frankfurt, Hong Kong, Singapore, Paris and Sydney.
The forex is the largest market in the world in terms of the total cash value traded, and any person, firm or country may participate in this market
Learning Forex!!
Calculating Profit and Loss
For ease of use, most online trading platforms automatically calculate the P&L of a traders' open positions. However, it is useful to understand how this calculation is formulated:
 | ||
 | To illustrate an FX trade, consider the following two examples.Let's say that the current bid/ask for EUR/USD is 1.46160/190, meaning you can buy 1 euro for 1.46190 or sell 1 euro for 1.46160. | |
Tuesday, October 6, 2009
Currency Trading Pips and Ticks
A pip is the smallest change of price for any Foreign Currency. The currency quotes appear as numbers with either two or four decimal places. This means that if the Foreign Currency moves up or down, the smallest move is called a "pip". When you trade in Forex, you monitor how the pips rise and drop and this is what determines your investment.
An example of this is if you buy EUR/USD. This pair is quoted four decimal numbers after the point. A pip here is ten thousandth of a Dollar, or 0.0001 of a dollar, meaning 1/100 of a cent. The pip is an abbreviation of "Price Interest Point", and this is why another name used for pips is points.
Even though a pip is only a small amount of money, because your foreign currency trading is usually a leveraged investment, a few pips can mean serious cash fluctuations. Each serious trader needs to know how to calculate the change from pips the actual sums invested, and some online Foreign currency trading agents offer such calculators in their account. You should consider these and other advanced functions when selecting the broker you want to use. Pip value can vary, and is usually $1 in mini accounts or $10 in regular accounts.
An important concept that concerns pips is called The Spread. This is the pip difference between the bid price and the ask price done for the currency trading sum. When you buy Foreign Currency it costs you more than to sell it and this is the spread.
Ticks are the smallest amounts of time that exist between two currency trades. This time frame can be a short time period of a fraction of a second for major currencies, or can also be a time frame of a few hours for less popular currencies. Ticks do not happen in constant intervals, even though the charts used for technical analysis do use specific time rates such as 4 hours of 15 minutes.
Currency Trading Leverage and the Margin
Leverage is when your invested cash is used to buy or sell foreign currencies that are worth far more that the investment. Simply put, leverage gets you more currency than you pay for.
When you buy\sell a leveraged currency, the sum you invest is called the Margin. The margin is used by your broker as a deposit for the currency you buy or sell.
A Leverage investment works as the following example:
- You buy/sell foreign currencies for $100
- You receive a leverage with a ratio of 100 to 1
- Your investment is now worth $10,000
Foreign currency trading companies have various criterions for opening a margin trading account, and there are different margin accounts availablefor you. usually moving from one to two thousand dollars deposit for each trading day. Upon opening an account the trader gains overwhelming leverage – up to 0.5%! In example - in order to execute a 200,000 dollar transaction you'll need only 1000 dollars in your margin trading account, thus minimizing the personal funds invested in every transaction.
With leverage you not only win big, but lose big - It's very important to remember that a margin account can enlarge your profits as well as your losses. So while you are upscaling your currency trading profits, any losses will also become greater for leveraged foreign currency. If you get a margin call, it means you've lost 75% of your initial investment, and you need to invest more to continue having the leveraged currency.
Leverage allows more people to trade - As a result of the size of the forex market (more than 1.9 trillion dollars each day), most of the trade is being made in $10,000 lots. This could have blocked the small forex traders, who are reluctant to risk such sums, out of the forex market. Fortunately the forex market provides extensive leveraging options that are far better than you can find in any other financial market.
The initial margin requirement is the minimum investment you need to make in a foreign currency trading action. Your margin account is very much like your regular bank, where you can deposit and withdraw your capital. All of the margins accounts are closed at the end of the trading day and all gains and losses are assessed into the end balance. This is called the Rollover.
Understanding Foreign Currency Trading Quotes
Foreign currency trading quotes always show up in pairs of two currencies. This means a currency quote is made of two pairs of currencies. An example of this is the quote EUR/USD. With this example the first currency is called the Base Currency, and the second currency is called the Pricing Currency.
When trading foreign currencies, you are always buying and selling the base currency. Let's say you buy one unit of USD/JPY. This means you are buying 1 dollar and selling at the same time 118.42 JPY (the current Yen value).
The US dollar is usually the base currency, meaning the standard currency which is used when evaluating other currencies. For most major currency the first to appear, the base currency, is the USD. Examples of the currency trading quotes of the "major" currencies will then be USD/CAD (Canadian Dollar), USD/JPY (Japanese Yen) or USD/CHF (Swiss Mark).
In all the previous currency trading quotes you see that a currency is measured against the US dollar. The Euro, British pound and Australian dollar are exceptions. So the EUR, GBP and the AUD are shown before the dollar, and are considered base currencies. In this case you will see a currency trading quote such as GBP/USD or AUD/USD, meaning the base currency for them is not the USD.
The major currency trading quotes are presented like so:
- USD/CHF (Swiss Franc)
- USD/JPY (Japanese Yen)
- USD/CAD (Canadian Dollar)
- EUR/USD (Euro)
- GBP/USD (British Pound)
- AUD/USD (Australian Dollar)
- NZD/USD(New-Zealand Dollar)
Here are some examples of foreign currency trading quotes:
- In currency trading quote of USD/CHF 1.4566, you buy 1.4566 Swiss Marks with 1 Dollar.
- A quote of GBP/USD 1.784, means you buy 1.784 dollars with 1 British pound.
While you trade foreign currencies you will hear the terms rising quote orweakening quote quite a lot. A rising currency trading quote means that the base currency has appreciated, as you can buy more currency with it. A weakening quote means the exact opposite. So while the direction of the rising quote is up, the direction of the weakening quote is down.
Currency trading quotes that do not involve the dollar are referred to as cross currencies. You might also see a double quote, one marked as 'ask' and the other as 'bid'. The 'bid' quote represents the price you can sell the base currency for and the 'ask price' represents the price you can sell the base currency.
Cyborg Automated Forex Trading System
This part human - part machine currency trading strategy trades a dozen different Forex strategies with the parameters set by us each and every day! It's very hard to create an automated Forex trading system as markets constantly change so we tell it everyday at what zones to LOOK for Forex currency buys & sells and WHEN to look for counter trend trades!
A computer can not do multi time frame Forex analysis as well as a professional trader can and that's why so many Automated Forex Systems fail miserably as online Forex markets are constantly changing. They just can't adapt, but our Cyborg FX System automatically adapts each day as we read the market and make changes to it!
Forex Software Example #2: Heat Map Currency Trend Intensity Indicator
The chart below shows one of our newest and most powerful trading tools. It shows you how strong or weak the Euro is compared to the Pound, Swiss Franc, Japanese Yen and Canadian Dollar. Underneath the Chandelier Stop Trend Direction tool we show how strong or weak the US Dollar is compared to all the main currencies. This tool allows you to adjust the colors to see how the strength or weakness of the US Dollar affects the Euro. For example when the US Dollar is strong the Euro / Dollar will fall. To keep things simple we simply reverse the colors so that its super simple to know which way to trade the Euro !
The chart below shows one of our newest and most powerful trading tools. It shows you how strong or weak the Euro When the Euro is weaker than the Pound, Swiss, Yen and Canadian Dollar and the US Dollar is strong (We color code it red on the chart to show it will cause the Euro to fall) you have a VERY high probability of shorting and making a lot of pips!
The chart below shows one of our newest and most powerful trading tools. It shows you how strong or weak the Euro The last heat map on the chart shows you Gold's impact on the currency. Gold is a leading indicator and when Gold is going up the US Dollar falls causing the Euro to go up. When Gold is falling the US Dollar gains strength and the Euro will fall!
The chart below shows one of our newest and most powerful trading tools. It shows you how strong or weak the Euro> To Recap this tool show you
- Which Currencies to trade (Buy the strongest ones, short the weakest ones)
- Strength or Weakness of US Dollar and its impact on each currency you trade!
- Strength or Weakness of leading indicator Gold and its impact on each currency you trade
- Know how much profit to take - Dark Green / Red can lead to HUGE moves while light colors show mild trends
- Know when your trade will turn into a loser and get out with much smaller loss! When you are long and see some red coming into the market you should immediately exit your trade and minimize your loss. We teach taking small 3 to 10 pip maximum losses.
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