Trading education » Currencies

Forex Day Trading Success For Idiots

admin — Sat, 29 May 2010 02:52:12 +0000

Forex day trading is one form of trading forex investors can participate in. This type of investing involves making many short sells and trades in a single day, trading one currency for another within a matter of hours, or even minutes. Multiple currencies are bought and sold in a single day. The main purpose of forex day trading is to have no total variation at the end of the day. So, for every currency purchased, there is one currency sold.

Many advantages adorn Forex day trading, as opposed to stock day trading. For one, since forex is open 24 hours a day, trades are not limited being made within a certain time frame. No split second selling decisions must be made before the market closes. Decisions can be thought out and executed in a timely manner. Since forex is a 24 hour market, there is no closing price for the end of the day. There are no drastic jumps or declines of the value of a currency between trading periods. A major incentive of forex day trading is the ability to lessen the burden of maintaining a position during the night. To see a profit or deficit, the difference between the values of a currency being sold to the purchase amount.

Though forex day trading is appealing to many forex investors, experts say almost 90% of forex day traders lose profit. Why? Forex day trading may not be as dangerous as other types of forex trading, but the use of margin purchases, like utilizing funds on loan, increases deficits and profits. Shortfall and returns happen in very little time. So in order to be a successful forex day trader, it is vital to learn the basics of day trading. Learn the market from professional traders, workshops, books, and personal experience.

Know that forex day trading is course oriented. In other words, day trading focuses on development. Day traders must be able to determine what makes a winning trade. Once you are able to determine good outlines of trades, you will be more confident when good investing opportunities arise. You’ll make wise investments without guilt.

Remember, though, that 90% of day traders will lose profits. You are bound to lose profits before you are able to gain when day trading. In fact, these experts say most day traders lost large amounts of profit before becoming successful. If you decide to take the plunge into forex day trading, be prepared to soak up a few losses. The key is to speculate positively. You will lose, but keep positive and do what you feel you must to win. Besides, with day trading, losses are fairly small. It will only take you a few minutes to make errors. Risk will be involved, but profits are waiting to be made. Fail if you must, particularly if you feel failure is inevitable. Remember, speculate positively to be successful in forex day trading.

By: Peter Flemming

Highly Successful Forex Trading Systems

admin — Sun, 28 Mar 2010 18:32:25 +0000

Forex trading systems are key to turning a profit in the foreign exchange market. Forex trading systems are strategies used to determine how the market will treat a currency. They are formed around companies and investors from around the world, and most are systems that are tried and true. Some systems are strictly about exchanging one currency for another, while others exchange currency as well as invest in stock from around the world. Following a trading system is a wise way to break into forex trading.

While a forex investor will be able to create their own forex trading systems as they learn about trading through book study, courses, workshops, and personal experience, most begin their investing following a mechanical system devised by an experienced forex trader. These mechanical systems are built around forex signals that a successful trader has come to recognize. Many of these professional forex trading systems are built into automated computer programs that will indicate to a trader when it is wise to sell or purchase a currency. Experienced traders will sell these systems to beginning forex traders so that they too can make a profit with forex.

Automated forex trading systems are popular because they are known to help beginners earn money while simultaneously teaching them how the market works. The systems, based on how stock exchange works, are constructed around the actions of global investors, companies, and currencies. They are reactive, judging how stocks and currencies will grow or shrink when they act a certain way. Though it isn’t always certain, systems assume that when a commodity does a particular action, it will follow trends other commodities have done in the past. The stock market calls traders who rely on these trends momentum players. Momentum players rely on their systems to always be true, otherwise they will face a financial loss. Be wary of fully automated forex trading systems. Though they offer a way to get into forex, the course of the forex market can’t be accurately predicted by a computer program. Your own intuition and insight are necessary to make worthwhile trades.

Automated forex trading systems are not the only type of trading systems available. There are also discretionary systems available. These systems allow more freedom. Though they show signals of when to buy and sell stocks and currencies, they allow personal judgment, intuition, and experience to play a more dominant role in trading than automated forex trading systems do.

As stated above, there are traders that will give or sell their forex trading systems to beginning traders as they learn the market for themselves. New investors can pick apart systems to discover why they work. It helps quicken the understanding of the forex market. In time, a successful investor will be able to create their own systems in hopes of gaining even larger profits.

By: Peter Flemming

Get A Forex Education

admin — Tue, 16 Mar 2010 01:51:10 +0000

The forex market allows traders to buy and sell and profit through commissions, spreads, or both. An excellent forex education is required in order to succeed.

Foreign exchange is also known as FX. Today, plenty of FX trading goes on via online systems. Any two currencies in the world market and their exchange rate can be speculated by a trader. Both technical and fundamental data affect these rates. Bear that in mind as it is very vital.

The forex market procedures are quite the same as trading in other markets, though it is the biggest in the world. It’s highly profitable with almost two trillion dollars changing hands each day. Traders can buy and sell currencies against each other.

A trader starts with a currency pair with the leftmost one being the base currency. For a short position, he can opt to sell the base currency. Buying the base currency opens a long position. Once you’ve chosen a position, your system will notify you that the order has been made. Most systems would let you know if the prices changed before that happens, enabling you to change your mind. You also should be educated with other order types.

Because many financial institutions are open at any given hour around the world, the forex market thrives on spot transactions and trading takes place around the clock. There’s a break during the weekends, however, so it only takes place 5 days a week. The forex market’s availability may also be affected by holidays from certain parts around the world.

To protect him from losses, a trader can have a trust or margin deposit that enables him to open positions that exceed the deposit’s real value. An account can’t be overdrawn because positions are automatically closed without notice when funds are below a specific amount. This is required for fickle market conditions.

Just bear in mind that forex trading is far from an easy matter. It needs further training and a lot of time. One thing to remember is to use self-restraint. Trade with a system and stick to its parameters. Don’t trade because of a desire to break even or a gut feel. A set of steps towards profitability is how forex trading is summarily. You will not always win a trade. But your job is not to win every trade. Your duty is to gain more wins than losses. By using a clear methodology, you can maximize profits. And a way to do this is to increase your forex education.

By: Tyler Green

Forex Trading Terms Simplified

admin — Sun, 07 Mar 2010 18:42:10 +0000

If you are a beginning trader in the foreign exchange (FOREX) market, you may be initially mystified by the terminology associated with this type of investing. In some cases the terms utilized do not seem to be even remotely related with the concept involved. Let’s take a look at a couple of basic terms which may help you better understand the fascinating area of currency trading.

Going Long

After you have gained a proper trading education and formulated a well-tested trading plan via your demo account, you will begin walking down the serious path of trading real money. Eventually, you will take a position as determined by your strategy. One possible position involves going long. This means that you have decided to buy a particular currency based on your belief that the price of the same will increase, allowing you to make a profit when you close out the position. Going long, therefore, is the same as buying the currency.

Because currencies are traded in pairs, it is important to note that when you say that you are going long on the EUR/USD, for example, you are really saying that you are going long on the Euro rather than the U.S. Dollar. That is because the reference as to the position taken is made specifically to the base currency, i.e. the currency that appears in the first position of the pair, as does the Euro in this case. Incidentally, the currency occupying the second position in the pair is known as the quote or cross currency.

Going Short

This term is perhaps a bit more difficult to understand at first than the previous one. Fortunately, as you might guess, going short is the opposite of going long. Here, the trader is selling a particular currency. Confusion may occur here in trying to understand how you can sell something you haven’t previously purchased. One way to clear your thinking about this is to think of purchasing the “right” to sell as opposed to selling the actual currency you do not have in hand. Although not necessarily a perfect analogy, let’s borrow from the real estate investment arena, particularly regarding the technique of house-flipping. Many real estate investors involved in house-flipping may contract to buy a house, but before the actual purchase, an arrangement will be made with a new buyer to whom the house will be ultimately flipped or sold very quickly. In the FOREX market, the broker is responsible for facilitating the bringing of the buyer to the transaction in which you are simultaneously selling the same currency.

Trading Tip

In the event you utilize charts to view the movement of the currency pair you are trading, remember that when the line graph moves upward, the base currency is going up in value as against the cross or quote currency. Obviously, when the line goes downward the opposite is true. By way of example, if you go long on the EUR/USD and the graph line thereafter moves upward past your entry point, then you are in the profit zone. If you go short on the same pair and the line graph goes downward past your entry point, you are likewise experiencing profitability.

Sandy Robinson, J.D., Copyright 2007

By: Sandy Robinson, J.D.

Forex Education – Forex Blogs

admin — Sat, 20 Feb 2010 08:05:09 +0000

If you are planning to start trading currencies, it is important that you learn more about the different concepts associated with currency or foreign exchange trading. You might already be aware that foreign exchange refers to the simultaneous buying and selling of different types of currencies. This is pretty basic information but if you want to learn more about advanced concepts, where do you go to aside from online courses, e-books, business journals or finance books? One way to learn more about the foreign exchange market and trading is through frequenting forex blogs.

A forex blog can contain loads of information about the different concepts about and associated with the forex market. From the most basic concepts to the most advanced ones, a forex blog will – more often than not – have the information you are looking for. There are even forex blogs that can allow you to download trading systems which you can use in practice trading. They can also contain links to other websites that can give you more in-depth information about the currency trading or foreign exchange topic you want to know more about.

Forex blogs are usually maintained and developed by seasoned traders so they will most likely contain tips and techniques from which you can learn different trading lessons. You can even use these tips and techniques while trading, hoping that they will also bring you success.

With all the different forex trading blogs out there, you might end up confused when you come across conflicting information. To help you determine which information is more accurate, try to make cross references with other blogs and websites. You should also keep in mind that changes in the market happen all the time so it is not unusual to come across conflicting information. What is important is you are able to deeply understand the different concepts you learn so you can apply them to various actual market situations.

Also, keep in mind that forex trading blogs might contain personal opinions about foreign exchange topics so keep your mind open and be objective as to the kinds of information you are able to pick up. Following these blogs is just one way of enriching your forex education, and your education should not totally rely on them. At the end of the day, it still helps to confirm what you have read from them with experts in currency trading or with seasoned foreign exchange traders.

By: Bart Icles

Beginner’s Education in Forex Trading

admin — Tue, 19 Jan 2010 22:32:18 +0000

The Forex market may seem like an unfriendly, intimidating environment to the new trader; however, there are more than enough resources available on the Internet for one to complete his own beginner’s education in Forex trading. As with any market, the main principle behind making profits by trading is buying low and selling high. In this particular case, the traded goods are currencies.

As part of the beginner’s education in Forex trading, the first thing that you will learn about this market is that it is the world’s largest and most liquid financial market. Trillions of dollars’ worth of currency are exchanged on a daily basis.

The currency market holds the promise of large profits – however, the beginner’s education in Forex trading also covers the risks involved in this type of trading. The risks are associated most of the time with the market’s extreme volatility – that is to say, the prices can change abruptly and without notice. In case the price rises, the lucky trader has just made an unexpected fortune; on the contrary, if the price drops, it is likely that quite a few traders have just lost a large part of their investments.

Before you even consider starting to trade on the currency market, it is strongly recommended that you start reading and collecting information regarding the market’s nature and the basics of trading. This information is of the utmost importance for the would-be trader.

Next, you will need to find yourself a broker. Apart from offering valuable advice and performing a vast number of operations on your behalf, the broker will also provide you with the most important piece of equipment every trader should posses: an automated Forex trading system. These are specially designed programs which can greatly help with the beginner’s education in Forex trading, mainly by means of providing information as needed.

Also, most of these programs posses one very important feature: they allow their users to test their trading strategies and systems in a fully functional, yet safe, simulation. No real money is involved in the simulated transactions. Apart from the above and depending on the program, the automated software may provide a host of additional benefits to the owner – such as real time trading and flexibility due to the software’s autonomy, as well as numerous other functions.

The beginner’s education in Forex trading should also include information regarding one of the trader’s worst advisors – his own emotions. If the trader cannot control his emotions, he will not be able to make the best trading decisions.

It is hard to become successful on the currency market. A lot of factors contribute to one’s trades, including skill, knowledge, and luck. However, armed with the beginner’s education in Forex trading, you are better prepared to take one step further towards becoming a Forex trader.

By: Zachary Bradford

Forex Trading Education – What Is A Carry Trade?

admin — Sun, 10 Jan 2010 19:59:46 +0000

You’ve read about it in the newspapers, and you see it in almost every financial trading magazine… but what exactly is a carry trade? And why is it so popular?

Before I go into what happens in carry trades, allow me to briefly share with you why “carry trade” is an important concept to understand…

Throughout most of 2006 and 2007, carry trades have played a major role in influencing the major trends of various currency pairs. Just take a quick look at the EURUSD, USDJPY, AUDJPY, CADJPY or NZJPY trading charts during this period and you’ll see what I mean. You’ll notice a major uptrend across these currency pairs, and this is mainly due to the effect of carry trades. If you were in-the-loop during this period, you’d undoubtedly be a very rich trader by now! All you had to do was to trade in the direction of the trend and you’d be winning big most of the time.

Simple Carry Trade Theory

Thankfully, the concept of a carry trade isn’t difficult to understand. Let me use an example to illustrate:

Imagine there are two banks. Bank A charges an interest rate of 8% a year, and Bank B charges an interest rate of 2% a year.

If you’re a quick thinker (and I’m sure you are), you’ll realize that you can just borrow money from Bank B, and deposit that money in Bank A (to earn interest) for a sure profit!

And this simple technique is basically what carry trades are about. The difference is that instead of exploiting the interest difference between Bank A and Bank B, institutional traders and fund managers exploit the difference between the interest differences between countries.

Carry Trades In Reality

In reality, people like to borrow the Japanese Yen (JPY) to purchase other ‘higher interest rate’ currencies such as the New Zealand Dollar (NZD) and the Australian Dollar (AUD).

This is because the Yen typically charges a relatively low interest rate of 0.5%, compared to the NZD and AUD which interest rates are roughly 6-8%

By: Harold Hsu

Electronic Currency Trading – an Opportunity For Wealth For All

admin — Sun, 10 Jan 2010 17:23:15 +0000

Electronic currency trading has bought the vast potential of this market to anyone with an internet connection and a computer and some small seed capital. Here we will look at how anyone can learn to trade currencies and enjoy success if they follow some basic guidelines.

The first point to make is that over 95% of traders who try electronic currency trading lose their money and the reason is they either get the wrong education or do not have the mindset for success. So what do you have to do to be successful?

First let’s take a look at the advantages trading currency online gives you and here are just a few.

- Anyone can learn currency trading and succeed – no special education is required

- You only need an internet connection and some seed capital

- You can trade for big profit opportunities every day

- There is never a recession, as one currency rises another must fall and vice versa

- You can trade in around 30 minutes a day or less

- You can leverage your investment by 200:1 or more!

As you can see there are many advantages of currency trading but you need to know how to use them and use them wisely especially leverage. Leverage is the key to big gains but it also wipes out more trading accounts than any other factor.

Leverage is simply the ability to invest more than you have in your trading account. If you have $500.00 in your account and leverage by 200:1, you have the potential to trade $100,000!

Be Careful With Leverage

The reason most traders lose is they don’t understand how to use leverage. While 200:1 is tempting to use, on small accounts it leads to a swift wipe out of equity. If you have a small account 20:1 is plenty to use.

Be Patient

The other point to keep in mind with electronic currency trading is that while there are opportunities to trade each day, you only want to trade highs odds trades and this means being patient and trading infrequently.

Another reason novice traders lose is they simply trade too much and trade low odds scenarios.

If you want to make money at electronic currency trading, trade high odds set ups and they come around only every few weeks but remember you don’t get rewarded for trading often, you get rewarded for being right.

I know traders who trade less than 20 times a year yet make triple digit gains and you can to!

Discipline is the Key

The key to currency trading profits is to have a robust simple currency trading system you have confidence in and can apply with discipline.

You must be able to apply your system with discipline through losing periods, until you hit a home run (which you will if your system is based on sound logic), in currency trading you have to lose to win and not lose discipline.

The Road to Currency Trading Success

Currency trading looks easy but of course appearances can be deceptive and while anyone can learn to trade currencies, you need to get the right forex education and mindset and apply your trading system with confidence and discipline.

Electronic currency trading, if you prepare yourself correctly can be the gateway to a lucrative second or even a life changing income. Its exciting, its fun and if you put in a bit of effort, you can enjoy currency trading success.

By: Kelly Price

Day Trading Stocks – The Advantages of Trading Volatile Stocks

admin — Thu, 26 Nov 2009 18:18:06 +0000

My hunch is that if you’re a novice or inexperienced trader, you will have heard and may have been advised to stay well clear of any stocks that are volatile, or highly volatile. Well, this advice is not necessarily wrong, but you need not overlook these stocks altogether.

Correctly traded, the possibility of higher returns, or returns over a shorter period of time, is a key feature they have, over the less volatile stocks. Because of their nature, their price will move both quite erratically, and further, in any given time frame than their more slowly moving cousins.

Commodities and currencies for example serve to show the characteristics of volatile stocks, and it probably best to trade them of software that allows dual functionality, in that it has both data feed and a trading platform. The advantage of this is that the data feed is real time.

With most end-of-day static trading data feeds, the closing price for the day is downloaded after the market close, and you see it on a static chart. But real time feed is exactly that, and you can open and close your positions literally based on the price movement you see happening in front of you.

Most real time software allows you to zoom in on your position too. You may prefer to trade in a time frame of as little as five seconds, if you wish, so it’s really easy to macro-analyse your trades.

Although I wouldn’t necessarily advise it, but because you are following your trade face to face so to speak, you could omit using a stop loss facility, which most day traders use, since once they’ve opened a position they tend to close down and allow the stop loss to do it’s work for them.

As said, trading volatile stocks requires close attention, but the advantage of this is there’s more potential to gain more from your trade in a shorter time frame. You may only need to be exposed for twenty minutes or sometimes a few seconds. Taking a currency trade like the US Dollar against the UK pound or USD/GBP, for instance, you should be aiming for a maximum gain of say 3 points, no more. This gives your capital the minimum exposure for the maximum return.

By: Ian C Jackson

WD Gann – Time and Price Analysis In Forex Trading

admin — Thu, 05 Nov 2009 16:06:15 +0000

One of the earliest masters of time-price analysis in trading was the legendary trader WD Gann.

I started off my trading career in stocks and shares and it was when I discovered the world of trading commodities and futures that I heard of WD Gann.

The most important teaching of WD Gann that I personally learnt came from his famous statement:

“When time and price is squared ( or meet ), change is inevitable”

I have found this to be true in many, many cases…too many to enumerate, and this occurs across all freely traded markets in the world, irregardless of whether it is stocks and shares, forex, commodities and futures or e-currencies.

With time-price analysis, it is possible for you to compute the time day for a possible change in trend, and to forecast the possible price – once both the time and price “meet” accordingly, a turning point is forecasted.

In forex trading, specific variations of time-price analysis is used by many of the forex traders who are making good money in their trades. One specific variation is the use of PRICE-ACTION analysis, where you do not need any indicators, but by studying the price action of the currency pair you are trading, you are able to take IMMEDIATE action on your trade.

How can price action help you?

1. There is no battery of confusing indicators that you need to study to take any trading action- only price is involved- so you can quickly KNOW what trading action to take.

2. Every trading signal is CLEAR, and without doubt- no maybe it will go this way or that way, so there is no wondering whether you should be in the market or not.

3. Can be applied as long as there is a price chart- so no expensive trading software required

4. Can be applied across all time frames – it is easy to maintain price charts across several time frames.

5. Know the exact projected price levels to trade off- so you can very often get very near to the lows and sell very near to the tops, taking the sweetest part of the moves.

In the world of trading, what we need is really clear cut trading signals that can tell us the turning points of the trades…and price action analysis helps us do just that.

So if you are trading forex, knowing when time and price meets for the projected change in trend in accordance to WD Gann teachings will help you in a great way to pinpoint turning points in the forex market. The use of price-action analysis has proven to be useful to many forex traders and it can help you too.

By: Peter Lim