The presented article is intended for those who just turned their eyes toward FOREX. Beginning traders who are still learning the basics of the foreign exchange market may also find something of interest here. While experienced traders won’t gain anything worth their time reading this article.
Basically there are 4 steps which can be defined as “must do“ for those who wish to start trading FOREX. Though, their order is not particularly important, the more important part is their content, to which the great attention and responsibility must be paid.
First step is finding a right FOREX broker which will be your main tool in trading. You can have a great strategy, good technical analysis skills or an outstanding intuition but you will eventually fail if you choose a bad broker. A good FOREX broker is one that will not still your money, will be doing real trading with your positions, supports your preferred deposit/withdraw methods and has fast and helpful user support service. It is nice if a broker is registered with some sort of governmental financial commission. One of the most important aspects of the broker is it’s trading platform – but for a new trader this part is not so important as for expert traders. Still you’ll probably want to trade with some powerful and informative platform as a MetaTrader or its analogs. For new traders the more important is a demo account which can be used to trade virtual money while you are training your FOREX skills. If you are new trader, start only with the demo account! Don’t lose your money on your first mistakes!
Second step is learning the basics of FOREX trading. If you already found your FOREX broker, you will easily get all information from its website or user support. There are many articles and websites dedicated to FOREX basics in the World Wide Web. All you need to do is just google for “forex trading basics” and you’ll find everything you wanted and even more. This step shouldn’t be underestimated, because trying to trade without even understanding how the market works is not only very risky, it will also become boring very soon.
Third step is about education. FOREX trading education is not similar to any other education you probably have got in your life. FOREX market is very chaotic, so is the education – there are no fixed rules and all time laws, it is unstable and dynamical. So, to be on the top you must learn new things about FOREX regularly and constantly. Try to read as many books, articles other traders’ opinions as you can. The more you learn, the more educated you will be. And with good FOREX education you will be able to create very sophisticated and effective trading strategies.
Fourth step is a final one; at least I consider it to be a final one. To achieve the successful results in the FOREX market you need to develop your own strategies. While you are learning you’ll be satisfied with known strategies and probably even FOREX signals. But true goal which leads to successful FOREX trading is to develop your own strategies. Not one strategy, but to follow the market day by day, developing new strategies and improving those which began to fail. And this comes not only to the trading strategy (this part is obvious), but also to the money management strategy (this part is often underestimated). While you gain experience in trading you’ll inevitably build such strategies that will fit your trading style, you character and your life as best as they can. And after that, trading will become a real pleasure, which will eventually lead to your financial freedom.
Kamis, 17 Juni 2010
Rabu, 16 Juni 2010
How To Handle A String Of Investment Losses
Everybody hates to lose and unfortunately no one is blessed with the ability of foresight, therefore losses are an unavoidable part of trading. When we enter a trade we will either be right, or wrong, and even if we broke-even we'd still be classed as being wrong - as nobody enters into a trade just to break-even! When unsuccessful traders encounter a string of losses they begin to engage in self-destructive patterns that help them escape the pain they are experiencing.
Bring to light these self-destructive actions that can help you realize what you are doing before it takes hold of your physical health. If you find yourself already engaged in these patterns hopefully this article can help you to get you back on track as quickly as possible.
What are the destructive patterns?
If you find yourself caught in a string of losses or a bad performing week/month be sure to monitor your behavior. It is during this time that you will be at your most vulnerable. You will begin to indulge in activities that at first seem harmless, but upon excessive use (or in time), begin to cause physical damage to your health.
Ask yourself the following question: during drawdown periods do I find myself over-indulging in these activities:
Food (especially junk food - e.g. chocolate, ice-cream, chips)?
Sex (includes viewing pornography)?
Alcohol?
Drugs (includes excessive smoking)?
Laziness (find it difficult to wake up in the morning)?
Entertainment?
All of the above taken in excessive doses can be detrimental to your own physical health (some even in small doses!).
These activities above during your losing period are only covering up the pain of confronting the true issue, and your body tries to rid the emotional pain by trying to "fix" it with physical pleasures. Unfortunately it is going about it in the wrong way, so what should you do?
Firstly... REALIZE WHAT YOU ARE DOING AND STOP IT!
You need to realize what you're doing and you need to STOP doing it immediately! You can either decide to stop, or you'll be forced to stop when your body eventually breaks down and prevents you from any form of movement. It will be much more beneficial to you in the long-term if you can decide to stop *NOW*.
Once you have stopped you now need to figure out a way to solve the pain - not by cutting out or neglecting it, but by staring it in the face. Bring your problems out into the light, be honest with yourself. There can be no growth without pain; you are experiencing the emotional pain, now it is time to find the error and therefore your growth.
Begin Your Review
The review process begins in two separate areas: You & Your System. Here are some checklists for you to go through to find out where the problem could lie:
"YOUR SYSTEM" CHECKLIST
Was your system thoroughly tested prior to trading it (or paper traded if you do not have the capacity to program your system into back testing software)?
Did you test with out-of-sample data?
Do you even have a system???? If you do not, how do you even know if the method that you are trading is even profitable??
Is your system's code correct?
Did you over-optimize your system? (What have we discussed about over-indulging?)
Did you paper trade your system prior to placing capital on it?
Did you trade with a small amount of capital prior to placing the rest of your funds on it?
Do you know the system's limitations?
Did you properly drill your system? (See our blog article on why I am the system designer from hell)
"YOU" CHECKLIST
Is the current drawdown you are exhibiting with your system normal?
Are you comfortable with your system's historical drawdown performance?
Are you fully aware of the risks involved with your system and the instrument(s) you are trading?
Are you trading with funds that you are comfortable risking?
Are you relying too heavily on your performance?
Have you set realistic goals?
As you can see there are generally two areas that you need to explore: the mechanical aspect - your system - and the emotional aspect - you. Both can be responsible for making the way you feel the way you do. It will either be an error on the system's side with how the system was tested and/or programmed, or it can be your own psychological profile not being comfortable with the system's performance.
Your Answers = Change = Your Growth
What steps should we now take? Now that we have begun a corrective process where we have stopped the evil nature of our over-indulging ways to take control we should continue our "corrective nature" by invoking our findings and taking ACTION in correcting our errors.
If the problem was mechanical - fix it, if the problem was emotional either go about setting up new thought patterns, or change your current system. The answers lie in whether you need to expand your knowledge in system development, or whether you need to grow emotionally as a person.
Unfortunately there is no easy road, and even if there was everybody would be doing it. Hopefully this article has made you ponder over some of your behaviors during drawdown periods, be sure to keep an eye on yourself and as always take care of your body, because there's no use in making all the money in the world when you don't have the physical capacity to enjoy it
Bring to light these self-destructive actions that can help you realize what you are doing before it takes hold of your physical health. If you find yourself already engaged in these patterns hopefully this article can help you to get you back on track as quickly as possible.
What are the destructive patterns?
If you find yourself caught in a string of losses or a bad performing week/month be sure to monitor your behavior. It is during this time that you will be at your most vulnerable. You will begin to indulge in activities that at first seem harmless, but upon excessive use (or in time), begin to cause physical damage to your health.
Ask yourself the following question: during drawdown periods do I find myself over-indulging in these activities:
Food (especially junk food - e.g. chocolate, ice-cream, chips)?
Sex (includes viewing pornography)?
Alcohol?
Drugs (includes excessive smoking)?
Laziness (find it difficult to wake up in the morning)?
Entertainment?
All of the above taken in excessive doses can be detrimental to your own physical health (some even in small doses!).
These activities above during your losing period are only covering up the pain of confronting the true issue, and your body tries to rid the emotional pain by trying to "fix" it with physical pleasures. Unfortunately it is going about it in the wrong way, so what should you do?
Firstly... REALIZE WHAT YOU ARE DOING AND STOP IT!
You need to realize what you're doing and you need to STOP doing it immediately! You can either decide to stop, or you'll be forced to stop when your body eventually breaks down and prevents you from any form of movement. It will be much more beneficial to you in the long-term if you can decide to stop *NOW*.
Once you have stopped you now need to figure out a way to solve the pain - not by cutting out or neglecting it, but by staring it in the face. Bring your problems out into the light, be honest with yourself. There can be no growth without pain; you are experiencing the emotional pain, now it is time to find the error and therefore your growth.
Begin Your Review
The review process begins in two separate areas: You & Your System. Here are some checklists for you to go through to find out where the problem could lie:
"YOUR SYSTEM" CHECKLIST
Was your system thoroughly tested prior to trading it (or paper traded if you do not have the capacity to program your system into back testing software)?
Did you test with out-of-sample data?
Do you even have a system???? If you do not, how do you even know if the method that you are trading is even profitable??
Is your system's code correct?
Did you over-optimize your system? (What have we discussed about over-indulging?)
Did you paper trade your system prior to placing capital on it?
Did you trade with a small amount of capital prior to placing the rest of your funds on it?
Do you know the system's limitations?
Did you properly drill your system? (See our blog article on why I am the system designer from hell)
"YOU" CHECKLIST
Is the current drawdown you are exhibiting with your system normal?
Are you comfortable with your system's historical drawdown performance?
Are you fully aware of the risks involved with your system and the instrument(s) you are trading?
Are you trading with funds that you are comfortable risking?
Are you relying too heavily on your performance?
Have you set realistic goals?
As you can see there are generally two areas that you need to explore: the mechanical aspect - your system - and the emotional aspect - you. Both can be responsible for making the way you feel the way you do. It will either be an error on the system's side with how the system was tested and/or programmed, or it can be your own psychological profile not being comfortable with the system's performance.
Your Answers = Change = Your Growth
What steps should we now take? Now that we have begun a corrective process where we have stopped the evil nature of our over-indulging ways to take control we should continue our "corrective nature" by invoking our findings and taking ACTION in correcting our errors.
If the problem was mechanical - fix it, if the problem was emotional either go about setting up new thought patterns, or change your current system. The answers lie in whether you need to expand your knowledge in system development, or whether you need to grow emotionally as a person.
Unfortunately there is no easy road, and even if there was everybody would be doing it. Hopefully this article has made you ponder over some of your behaviors during drawdown periods, be sure to keep an eye on yourself and as always take care of your body, because there's no use in making all the money in the world when you don't have the physical capacity to enjoy it
Selasa, 15 Juni 2010
Forex
Money. We all need it. We all want it. Trillions and trillions of dollars, pesos, euros, pounds, levs, francs, and more change hands every day for goods and services around the world. Most of us are only familiar with the money that is exchanged for goods and services in our own country and are only concerned with getting more of that.
But there is a lot more to money than that. What is the relationship between the currency in your country and the currency of some other country and why should it matter to me? I’m glad you asked. In this article we will explore some of the currencies around the world and answer some questions you may not even know you had.
First, if we are going to discuss currency and it’s relationship to other currency, we have to talk about Forex. That’s short for foreign exchange or the exchange of currency for a different type of currency.
There is no market in the world, including Wallstreet that can compare to Forex in volume of cash traded daily. Retailers, Governments, Currency Speculators, Banks, Corporations, and other financial institutions engage in forex or foreign currency exchange to the tune of trillions of dollars and other currency each day.
It is a truly amazing thing to see. People making money just by trading one country’s currency for another. Keeping up with the latest news in each country, economic trends and indicators, real-time monitoring of current currency values in comparison to another currency are all things required if you are going to speculate in this arena.
More than that, some forex speculators will tell you is, you have to have a good feel for it. You have to understand economies and be able to recognize the events and conditions that will cause people to lose confidence in one currency or another. You have to know when to hold em and when to fold em, as the Kenny Rogers song goes.
If you would like to check the exchange rates for each of these currencies against other currencies, you can open a new browser window and put this url into your address bar. It’s a Forex Calculator. http://uk.finance.yahoo.com/currency-converter?u
The following is a list of world currencies. It may not be every currency in the world, but it will give you an idea of the complexity of forex.
Albanian Lek, Algerian Dinar, Aluminium Ounces, Argentine Peso, Aruba Florin, Australian Dollar.
Bahamian Dollar, Bahraini Dinar, Bangladesh Taka, Barbados Dollar, Belarus Ruble, Belize Dollar, Bermuda Dollar, Bhutan Ngultrum, Bolivian Boliviano, Brazilian Real, British Pound, Brunei Dollar, Bulgarian Lev, Burundi Franc.
Cambodia Riel, Canadian Dollar, Cayman Islands Dollar, CFA Franc, Chilean Peso, Chinese Yuan, Colombian Peso, Comoros Franc, Copper Ounces, Costa Rica Colon, Croatian Kuna, Cuban Peso, Cyprus Pound, Czech Koruna.
Danish Krone, Dijibouti Franc, Dominican Peso. East Caribbean Dollar, Ecuador Sucre, Egyptian Pound, El Salvador Colon, Eritrea Nakfa, Estonian Kroon, Ethiopian Birr, Euro.
Falkland Islands Pound, Gambian Dalasi, Ghanian Cedi, Gibraltar Pound, Gold Ounces, Guatemala Quetzal, Guinea Franc, Haiti Gourde, Honduras Lempira, Hong Kong Dollar, Hungarian Forint, Iceland Krona, Indian Rupee, Indonesian Rupiah, Iran Rial, Israeli Shekel,
Jamaican Dollar, Japanese Yen, Jordanian Dinar, Kazakhstan Tenge, Kenyan Shilling, Korean Won, Kuwaiti Dinar, Lao Kip, Latvian Lat, Lebanese Pound, Lesotho Loti, Libyan Dinar, Lithuanian Lita.
Macau Pataca, Macedonian Denar, Malagasy Franc, Malawi Kwacha, Malaysian Ringgit, Maldives Rufiyaa, Maltese Lira, Mauritania Ougulya, Mauritius Rupee, Mexican Peso, Moldovan Leu, Mongolian Tugrik, Moroccan Dirham, Mozambique Metical.
Namibian Dollar, Nepalese Rupee, Neth Antilles Guilder, New Turkish Lira, New Zealand Dollar, Nicaragua Cordoba, Nigerian Naira, Norwegian Krone, Omani Rial.
Pacific Franc, Pakistani Rupee, Palladium Ounces, Panama Balboa, Papua New Guinea Kina, Paraguayan Guarani, Peruvian Nuevo Sol, Philippine Peso, Platinum Ounces, Polish Zloty, Qatar Rial, Romanian Leu, Romanian New Leu, Russian Rouble, Rwanda Franc.
Samoa Tala, Sao Tome Dobra, Saudi Arabian Riyal, Seychelles Rupee, Sierra Leone Leone, Silver Ounces, Singapore Dollar, Slovak Koruna, Slovenian Tolar, Somali Shilling, South African Rand, Sri Lanka Rupee, St Helena Pound, Sudanese Dinar, Surinam Guilder, Swaziland Lilageni, Swedish Krona, Swiss Franc, Syrian Pound.
Taiwan Dollar, Tanzanian Shilling, Thai Baht, Tonga Pa'anga, Trinidad&Tobago Dollar, Tunisian Dinar, U.S. Dollar, UAE Dirham, Ugandan Shilling, Ukraine Hryvnia, Uruguayan New Peso, Vanuatu Vatu, Venezuelan Bolivar, Vietnam Dong, Yemen Riyal, Zambian Kwacha, Zimbabwe Dollar.
Can you imagine sorting out all of the relationships between each of those currencies and precious metals. Forex is not for the faint of heart it would seem, but it does make a facinating topic. In some of the currency names you can see how it relates to world history.
I hope you find this article has helped you with at least an explanation of what Forex is and how it works. There is a lot more out there about Forex. Learn more!
But there is a lot more to money than that. What is the relationship between the currency in your country and the currency of some other country and why should it matter to me? I’m glad you asked. In this article we will explore some of the currencies around the world and answer some questions you may not even know you had.
First, if we are going to discuss currency and it’s relationship to other currency, we have to talk about Forex. That’s short for foreign exchange or the exchange of currency for a different type of currency.
There is no market in the world, including Wallstreet that can compare to Forex in volume of cash traded daily. Retailers, Governments, Currency Speculators, Banks, Corporations, and other financial institutions engage in forex or foreign currency exchange to the tune of trillions of dollars and other currency each day.
It is a truly amazing thing to see. People making money just by trading one country’s currency for another. Keeping up with the latest news in each country, economic trends and indicators, real-time monitoring of current currency values in comparison to another currency are all things required if you are going to speculate in this arena.
More than that, some forex speculators will tell you is, you have to have a good feel for it. You have to understand economies and be able to recognize the events and conditions that will cause people to lose confidence in one currency or another. You have to know when to hold em and when to fold em, as the Kenny Rogers song goes.
If you would like to check the exchange rates for each of these currencies against other currencies, you can open a new browser window and put this url into your address bar. It’s a Forex Calculator. http://uk.finance.yahoo.com/currency-converter?u
The following is a list of world currencies. It may not be every currency in the world, but it will give you an idea of the complexity of forex.
Albanian Lek, Algerian Dinar, Aluminium Ounces, Argentine Peso, Aruba Florin, Australian Dollar.
Bahamian Dollar, Bahraini Dinar, Bangladesh Taka, Barbados Dollar, Belarus Ruble, Belize Dollar, Bermuda Dollar, Bhutan Ngultrum, Bolivian Boliviano, Brazilian Real, British Pound, Brunei Dollar, Bulgarian Lev, Burundi Franc.
Cambodia Riel, Canadian Dollar, Cayman Islands Dollar, CFA Franc, Chilean Peso, Chinese Yuan, Colombian Peso, Comoros Franc, Copper Ounces, Costa Rica Colon, Croatian Kuna, Cuban Peso, Cyprus Pound, Czech Koruna.
Danish Krone, Dijibouti Franc, Dominican Peso. East Caribbean Dollar, Ecuador Sucre, Egyptian Pound, El Salvador Colon, Eritrea Nakfa, Estonian Kroon, Ethiopian Birr, Euro.
Falkland Islands Pound, Gambian Dalasi, Ghanian Cedi, Gibraltar Pound, Gold Ounces, Guatemala Quetzal, Guinea Franc, Haiti Gourde, Honduras Lempira, Hong Kong Dollar, Hungarian Forint, Iceland Krona, Indian Rupee, Indonesian Rupiah, Iran Rial, Israeli Shekel,
Jamaican Dollar, Japanese Yen, Jordanian Dinar, Kazakhstan Tenge, Kenyan Shilling, Korean Won, Kuwaiti Dinar, Lao Kip, Latvian Lat, Lebanese Pound, Lesotho Loti, Libyan Dinar, Lithuanian Lita.
Macau Pataca, Macedonian Denar, Malagasy Franc, Malawi Kwacha, Malaysian Ringgit, Maldives Rufiyaa, Maltese Lira, Mauritania Ougulya, Mauritius Rupee, Mexican Peso, Moldovan Leu, Mongolian Tugrik, Moroccan Dirham, Mozambique Metical.
Namibian Dollar, Nepalese Rupee, Neth Antilles Guilder, New Turkish Lira, New Zealand Dollar, Nicaragua Cordoba, Nigerian Naira, Norwegian Krone, Omani Rial.
Pacific Franc, Pakistani Rupee, Palladium Ounces, Panama Balboa, Papua New Guinea Kina, Paraguayan Guarani, Peruvian Nuevo Sol, Philippine Peso, Platinum Ounces, Polish Zloty, Qatar Rial, Romanian Leu, Romanian New Leu, Russian Rouble, Rwanda Franc.
Samoa Tala, Sao Tome Dobra, Saudi Arabian Riyal, Seychelles Rupee, Sierra Leone Leone, Silver Ounces, Singapore Dollar, Slovak Koruna, Slovenian Tolar, Somali Shilling, South African Rand, Sri Lanka Rupee, St Helena Pound, Sudanese Dinar, Surinam Guilder, Swaziland Lilageni, Swedish Krona, Swiss Franc, Syrian Pound.
Taiwan Dollar, Tanzanian Shilling, Thai Baht, Tonga Pa'anga, Trinidad&Tobago Dollar, Tunisian Dinar, U.S. Dollar, UAE Dirham, Ugandan Shilling, Ukraine Hryvnia, Uruguayan New Peso, Vanuatu Vatu, Venezuelan Bolivar, Vietnam Dong, Yemen Riyal, Zambian Kwacha, Zimbabwe Dollar.
Can you imagine sorting out all of the relationships between each of those currencies and precious metals. Forex is not for the faint of heart it would seem, but it does make a facinating topic. In some of the currency names you can see how it relates to world history.
I hope you find this article has helped you with at least an explanation of what Forex is and how it works. There is a lot more out there about Forex. Learn more!
Senin, 14 Juni 2010
Are you prepared to currency trade?
Currency trading is the most popular way to earn to money and it is without doubt a very profitable market. However few are familiar with its unpleasant intricacies and most ignore a very important aspect: risk. It is not enough only to be given the chance to invest your money successfully, you have to be careful because Currency trading can be an efficient trading system or it can ruin you. Why is Currency trading risky?
- Currency trading is very unstable. It is the subject of rapid and overwhelming changes. The market is volatile and it is influenced by political events.
- One can loose at any time especially when he has just ventured into Currency trading. Experience, information and attention are necessary.
- Some unexpectedly loose the Risk Capital which sometimes consists of College money, the retirement funds or some other substantial sum that shouldn’t have been considered as Currency trading capital in the first place.
- Fluctuations in currency prices, discrepancies between interest rates in two different countries, insolvency of financial institutions that take part in transactions and limited flow of exotic currencies will most likely lead to loss.
- Large profits and minimal losses are impossible to predict with 100% certainty.
- The Currency trading market has great winning potential, but it also has loss potential.
- Misinformation and the emotional baggage are most of the time cause of loss. Use facts, not hope or fear, when Currency trading.
- Sometimes trends can lead to money loss.
- Huge leverage is available to traders. This leads to dangerous positions that risk too much in comparison with the size of the account.
- Lacks of money management and of back testing plans are the mistakes that currency traders make sometimes.
- Using brokers is sometimes inefficient because this counterpart can refuse to trade during volatile market conditions affecting the retail trader. They can even widen spreads. However it is recommended to collaborate with a broker, because he can deal in the interbank market and he surely knows more about Currency trading making it safer from other points of view.
- Scams were very common years ago when dealing with a broker. However, one can be confident with the person he is working with by checking their background and the Institutions he is associated with (large banks, important insurance companies).
Don’t be frightened! It isn’t all about risks. And don’t start trading in fear! You will loose this way. You just have to keep in mind all possibilities and avoid unwanted situations only you can get yourself into. All Currency traders have to be very well informed about their activity. They have to know technical analysis and how to read and interpret charts, they have to develop effective strategies and minimize risk. The financial exposure has to be limited and this can be done in many ways available to currency traders who inform themselves.
So, educate yourself, be prudent, take risks only when you can handle loss and always be prepared for anything. And have this in mind: If Currency trading isn’t profitable then why are so many financial investors, banks, international institutions and important players that obtain huge amounts of cash by simply turning their own money into other currencies?
- Currency trading is very unstable. It is the subject of rapid and overwhelming changes. The market is volatile and it is influenced by political events.
- One can loose at any time especially when he has just ventured into Currency trading. Experience, information and attention are necessary.
- Some unexpectedly loose the Risk Capital which sometimes consists of College money, the retirement funds or some other substantial sum that shouldn’t have been considered as Currency trading capital in the first place.
- Fluctuations in currency prices, discrepancies between interest rates in two different countries, insolvency of financial institutions that take part in transactions and limited flow of exotic currencies will most likely lead to loss.
- Large profits and minimal losses are impossible to predict with 100% certainty.
- The Currency trading market has great winning potential, but it also has loss potential.
- Misinformation and the emotional baggage are most of the time cause of loss. Use facts, not hope or fear, when Currency trading.
- Sometimes trends can lead to money loss.
- Huge leverage is available to traders. This leads to dangerous positions that risk too much in comparison with the size of the account.
- Lacks of money management and of back testing plans are the mistakes that currency traders make sometimes.
- Using brokers is sometimes inefficient because this counterpart can refuse to trade during volatile market conditions affecting the retail trader. They can even widen spreads. However it is recommended to collaborate with a broker, because he can deal in the interbank market and he surely knows more about Currency trading making it safer from other points of view.
- Scams were very common years ago when dealing with a broker. However, one can be confident with the person he is working with by checking their background and the Institutions he is associated with (large banks, important insurance companies).
Don’t be frightened! It isn’t all about risks. And don’t start trading in fear! You will loose this way. You just have to keep in mind all possibilities and avoid unwanted situations only you can get yourself into. All Currency traders have to be very well informed about their activity. They have to know technical analysis and how to read and interpret charts, they have to develop effective strategies and minimize risk. The financial exposure has to be limited and this can be done in many ways available to currency traders who inform themselves.
So, educate yourself, be prudent, take risks only when you can handle loss and always be prepared for anything. And have this in mind: If Currency trading isn’t profitable then why are so many financial investors, banks, international institutions and important players that obtain huge amounts of cash by simply turning their own money into other currencies?
Jumat, 11 Juni 2010
An Overview Of Forex Trading
Forex, is an exchange that allows investors to trade national currencies through the foreign exchange. This is the worlds largest market for currency, based on the Dollar, anywhere between 1 – 2 TRILLION dollars are traded upon this market on a daily basis. This type of trade is typically performed online or on the telephone. By taking advantage of the world wide web, you are enabling yourself to make your investments in a reliable, easy, safe and fast way.
Some investors are able to enjoy returns of around thirty percent on a monthly basis, this takes a great deal of experience to gain this type of enormous return on your investment. The Forex market does not have one specific place of trade like many of the other markets do, for this reason alone is why most of the trade is performed by internet, fax, or telephone. In the beginning for currency trade was not all that popular, they were bringing in only about seventy billion dollars on a daily basis, with the invention of Forex, that number grew massively.
Of course, the currencies do not only deal with the American dollar, these currencies can be translated to over 5,000 currency institutions world wide, which include, commercial companies, large brokers, international banks, and government banks. Many major countries have forex trading centers such as, Frankfurt, London, New York, Paris, Hong Kong, Tokyo, and Bombay to name a few.
When trading online there are many benefits such as, the ability to trade or track your investments at anytime day or night, from anywhere within the world that offers an internet connection. Another added benefit, is that some online exchange sites allow you to start with a small investment, known as a mini account, some with as little as two-hundred dollars. With online trading, the trade is instant. When you trade offline you have to deal with paperwork, with online trading there is no paper work involved.
The world of the internet, has allow us to do many things with just a click of a button, where else can you bank, trade, talk to your family and friends, research your investments and earn money all at the same time? Make the internet work in your best interest by implementing online trading into your portfolio. There’s a whole world of money waiting for you to earn with your online investments, and it’s all available at the click of your mouse button.
Some investors are able to enjoy returns of around thirty percent on a monthly basis, this takes a great deal of experience to gain this type of enormous return on your investment. The Forex market does not have one specific place of trade like many of the other markets do, for this reason alone is why most of the trade is performed by internet, fax, or telephone. In the beginning for currency trade was not all that popular, they were bringing in only about seventy billion dollars on a daily basis, with the invention of Forex, that number grew massively.
Of course, the currencies do not only deal with the American dollar, these currencies can be translated to over 5,000 currency institutions world wide, which include, commercial companies, large brokers, international banks, and government banks. Many major countries have forex trading centers such as, Frankfurt, London, New York, Paris, Hong Kong, Tokyo, and Bombay to name a few.
When trading online there are many benefits such as, the ability to trade or track your investments at anytime day or night, from anywhere within the world that offers an internet connection. Another added benefit, is that some online exchange sites allow you to start with a small investment, known as a mini account, some with as little as two-hundred dollars. With online trading, the trade is instant. When you trade offline you have to deal with paperwork, with online trading there is no paper work involved.
The world of the internet, has allow us to do many things with just a click of a button, where else can you bank, trade, talk to your family and friends, research your investments and earn money all at the same time? Make the internet work in your best interest by implementing online trading into your portfolio. There’s a whole world of money waiting for you to earn with your online investments, and it’s all available at the click of your mouse button.
Rabu, 09 Juni 2010
Advantages of Floor Traders - and How to Get Them
Traders who make their living on the floor of an exchange have some things that I think are advantages. You see floor traders can draw from their senses. What I mean by this is they can use sight, sound, and speech. These are advantages that they add to their arsenal when trading. The pit on a trading floor looks very chaotic but there is a simplistic ebb and flow to what is going on there. I will explain how this is an advantage.
When you trade on a computer you are only watching the price movements on a chart and you base your trading decisions accordingly. On the floor the action of people moving around can often tip traders to which markets are about to go higher. Just like all people, traders will gravitate to where the action is happening.
Trading on a computer does not allow for the noise of the action to influence you. Traders who are on the floor can hear the crowd noise rise and fall. This is much like a football game. If you were busy and not watching the game you could still have an idea of how it is going by listening to others in the crowd who are cheering or not according to the action on the field. This is particularly an advantage if you are in a position and looking for a good place to exit. You can judge momentum of the current market direction and get a feel for when to exit.
The advantage of speech is obvious. You are spending your day surrounded by others that make a living in the same business. Information and strategy can be discussed with peers and better understood. When breaking news hits you will hear first hand what other market movers think about it.
These are a few of the advantages that I feel the floor trader has on his side. some of these can be replicated and taken advantage of by traders based at home.
When you trade on a computer you are only watching the price movements on a chart and you base your trading decisions accordingly. On the floor the action of people moving around can often tip traders to which markets are about to go higher. Just like all people, traders will gravitate to where the action is happening.
Trading on a computer does not allow for the noise of the action to influence you. Traders who are on the floor can hear the crowd noise rise and fall. This is much like a football game. If you were busy and not watching the game you could still have an idea of how it is going by listening to others in the crowd who are cheering or not according to the action on the field. This is particularly an advantage if you are in a position and looking for a good place to exit. You can judge momentum of the current market direction and get a feel for when to exit.
The advantage of speech is obvious. You are spending your day surrounded by others that make a living in the same business. Information and strategy can be discussed with peers and better understood. When breaking news hits you will hear first hand what other market movers think about it.
These are a few of the advantages that I feel the floor trader has on his side. some of these can be replicated and taken advantage of by traders based at home.
Selasa, 08 Juni 2010
Accepting Losses With Grace
The lack of a proper trading plan which includes precise rules for entering and exiting a trade will most certainly guarantee failure over the long term. Beginners usually suffer from the same common ailments. They abandon trading plans purely on impulse because things are not going exactly as how they had envisioned. Repeatedly they use unreliable methods that fail to produce a profit. Many traders hold on to losing positions telling themselves “it is going to turn” when every indicator says otherwise because they cannot bear the thought of a loss.
Why do they torture themselves? Why don’t they just identify what’s going wrong and make a change? For some people recognizing that a trade or even a trading method is not working and making a change is easy, but for others it’s very difficult. They have to look at their limitations admit that they have made a mistake and that’s hard because it hurts our ego. Psychologically it’s risky, it’s often easier to fool ourselves. Just keep going, living in a state of denial until your account is depleted. If you recognize any of these traits in yourself you must stop trading immediately.
Take a good look at what has been happening, try and identify the problem. If you look close enough you may see a pattern. This is why it is vital to record every trade and as much information about it as possible. You have to break out of old patterns and see things in a new light.
You will never be a successful trader if you continue to live in a state of denial. What can be done to return to reality? There is a lot you can do. First of all make sure you are not trading under stress. When stressed out you can’t see clearly, you become rigid and unable to see alternative views. One of the easiest solutions is to trade smaller. The smaller the trade the less the stress, especially for the beginner. If you are experienced and in a loosing streak reduce your contracts until you get your confidence returns. Some people need to take a break altogether. Get away from it all. Take your mind off the trading.
The second thing you can do is to make sure you have a life. Trading can be addictive especially when you are winning. Do not put all your emotional eggs in the trading basket. You need to have other roles that give your life meaning and purpose. By defining your identity in a variety of ways, you will not place un-natural importance on trading events. Therefore, you will be able to take losses in stride and look at your trading more objectively.
Finally, radical acceptance is a key mental strategy for coping with market uncertainty. Many traders make the mistake of thinking they can control the markets. Nobody can control the markets. We must learn to accept anything that comes our way and to trade accordingly. Adopt the attitude that trading is a journey and that all we can do is go where the markets take us.
To succeed on this journey you cannot afford to lose too much. Manage risk and just accept what you get and enjoy the ride. This way you will trade more freely and creatively. Don’t live your life in denial. Accept your limitations, work around them, and become a winning trader. Write out your trading plan with precise entry and exit points. Most important set your stops and mentally decide you will not break them. Test your system on paper and when confident test in real time with the minimum contract size. You will have losing trades, accept them with grace and go on to the next trade.
Why do they torture themselves? Why don’t they just identify what’s going wrong and make a change? For some people recognizing that a trade or even a trading method is not working and making a change is easy, but for others it’s very difficult. They have to look at their limitations admit that they have made a mistake and that’s hard because it hurts our ego. Psychologically it’s risky, it’s often easier to fool ourselves. Just keep going, living in a state of denial until your account is depleted. If you recognize any of these traits in yourself you must stop trading immediately.
Take a good look at what has been happening, try and identify the problem. If you look close enough you may see a pattern. This is why it is vital to record every trade and as much information about it as possible. You have to break out of old patterns and see things in a new light.
You will never be a successful trader if you continue to live in a state of denial. What can be done to return to reality? There is a lot you can do. First of all make sure you are not trading under stress. When stressed out you can’t see clearly, you become rigid and unable to see alternative views. One of the easiest solutions is to trade smaller. The smaller the trade the less the stress, especially for the beginner. If you are experienced and in a loosing streak reduce your contracts until you get your confidence returns. Some people need to take a break altogether. Get away from it all. Take your mind off the trading.
The second thing you can do is to make sure you have a life. Trading can be addictive especially when you are winning. Do not put all your emotional eggs in the trading basket. You need to have other roles that give your life meaning and purpose. By defining your identity in a variety of ways, you will not place un-natural importance on trading events. Therefore, you will be able to take losses in stride and look at your trading more objectively.
Finally, radical acceptance is a key mental strategy for coping with market uncertainty. Many traders make the mistake of thinking they can control the markets. Nobody can control the markets. We must learn to accept anything that comes our way and to trade accordingly. Adopt the attitude that trading is a journey and that all we can do is go where the markets take us.
To succeed on this journey you cannot afford to lose too much. Manage risk and just accept what you get and enjoy the ride. This way you will trade more freely and creatively. Don’t live your life in denial. Accept your limitations, work around them, and become a winning trader. Write out your trading plan with precise entry and exit points. Most important set your stops and mentally decide you will not break them. Test your system on paper and when confident test in real time with the minimum contract size. You will have losing trades, accept them with grace and go on to the next trade.
Sabtu, 05 Juni 2010
A Comprehensive Forex Broker Register
A comprehensive forex broker list includes investment banks with dealing rooms, commercial banks with treasury operations, and online brokerages that serve a larger market. The investment banks with forex trading capabilities include Morgan Stanley, Merrill Lynch, Goldman Sachs, Salomon Smith Barney, Lehman Brothers, Credit Suisse First Boston, Deutsche Bank, JP Morgan, Prudential Securities and Bear Sterns.
Some of the brokerage services are not directly accessible for all customers. For example, inter-bank market dealers and treasury operations in commercial banks handle large customer orders themselves.
The top commercial banks in the Forex Broker List, having inter-bank and treasury operations, are JP Morgan Chase Bank, Bank of America, CitiBank, Wachovia Bank, Wells Fargo Bank, Fleet Bank, US Bank, HSBC Bank, Sun Trust Bank, Bank of New York, State Street, Chase Manhattan Bank, Key Bank, Branch Bank, PNC Bank, Lasalle Bank, South Trust Bank, MBNA America Bank, Fifth Third Bank.
The online forex broker list of smaller forex accounts sees new entrants almost on a daily basis.
The online forex broker list includes Forex Capital Markets, MG Financial Group, CMS Forex, Global Forex Trading, GCI Forex Direct, Forex.com, GAIN Capital, Real time Forex SA (Geneva), Global Forex, Commerce Bank and Trust, FX Solutions, Forex MHV, swissDirekt (Swiss), Goetz Financial Forex, NY Broker Borsentermin AG, Act Forex, Online Trader, Shield FX Online Currency Trading, Forex Trade Signals, CMC Group PLC, Foreign Currency Direct Limited (UK), FX Advantage, FXCM, Forex Millenium, ACM REFCO, REFCO Spot, Easy Forex, Online Forex Trading Inc., Lincoln Corporation, Global Trade Waves, Ltd., and CIBC FX Web Dealing.
Some of the brokerage services are not directly accessible for all customers. For example, inter-bank market dealers and treasury operations in commercial banks handle large customer orders themselves.
The top commercial banks in the Forex Broker List, having inter-bank and treasury operations, are JP Morgan Chase Bank, Bank of America, CitiBank, Wachovia Bank, Wells Fargo Bank, Fleet Bank, US Bank, HSBC Bank, Sun Trust Bank, Bank of New York, State Street, Chase Manhattan Bank, Key Bank, Branch Bank, PNC Bank, Lasalle Bank, South Trust Bank, MBNA America Bank, Fifth Third Bank.
The online forex broker list of smaller forex accounts sees new entrants almost on a daily basis.
The online forex broker list includes Forex Capital Markets, MG Financial Group, CMS Forex, Global Forex Trading, GCI Forex Direct, Forex.com, GAIN Capital, Real time Forex SA (Geneva), Global Forex, Commerce Bank and Trust, FX Solutions, Forex MHV, swissDirekt (Swiss), Goetz Financial Forex, NY Broker Borsentermin AG, Act Forex, Online Trader, Shield FX Online Currency Trading, Forex Trade Signals, CMC Group PLC, Foreign Currency Direct Limited (UK), FX Advantage, FXCM, Forex Millenium, ACM REFCO, REFCO Spot, Easy Forex, Online Forex Trading Inc., Lincoln Corporation, Global Trade Waves, Ltd., and CIBC FX Web Dealing.
Rabu, 02 Juni 2010
“How To” Start Trading The Forex Market ?
How Currencies are quoted and what moves individual currencies?
ONE of the best advantages in FOREX Trading is
The amount of money you need to place a trade (known as "margin") is all that can be lost !
You have to know, that despite the super-high leverage offered by some Forex brokers up to (400:1); meaning if you put up $ 1000 the broker will allow you to trade like you really have $400.000).
Forex trading is still less riskier than Stock or Futures Trading, where you can loose more than you have deposited in your account.
This type of LEVERAGE does NOT EXIST in the equities or futures market
In the Equities or Futures markets, very often, sudden and dramatic moves occur, against which you can’t protect yourself, even by having placed your protective stops.
Your position may be liquidated at a loss, and you’ll be liable for any resulting deficit in the account.
But because of the FX market’s deep liquidity and 24-hour, continuous trading, dangerous trading gaps and limit moves are almost eliminated.
Orders are executed quickly, without slippage or partial fills. And finally, there are no margin calls. For your protection, the broker will automatically close out some or all of your open positions if your account equity falls below the level required to hold the positions.
Think of this as a final, automatic stop, always working on your behalf to prevent a debit balance.
Currencies are traded in dollar amounts called “ LOTS”
In Forex trading, with most Brokers, you have the choice between 2 different lot sizes.
Standard Lots or Mini Lots.
One Standard lot is equal to $100,000 in currency. The margin requirements, using a 400:1 Leverage, would be US$ 250, in other word you control $100,000 worth of currency for only 250 US dollars.
You mean, depositing $250 with a broker, I could trade 100,000$ worth of currency ???
NO, be aware, that your account size has to be more than the required margin of US 250. For example, if you place an order to buy 1 Standard lot ( @100,000) of USD/JPY and USD/JPY is quoted as 112.10/112.13, you buy USD/JPY at 112.13.
Your account balance would be $220, because you paid 3 pips or $ 30 for this trade.
If you would close this trade immediately, you have to sell it at 112.10 (the bid price) , for a loss of $ 30.
In fact you could not get executed on this trade, as the brokers trading platform would reject your order, for the reason of having insufficient funds in your account).
So, your account balance has to be minimum $280. $250 for margin and $30 for the trade.
BUT....IF, after you have initiated the trade to buy USD/JPY at 112.13, and the USD/JPY falls the next second 1 pip ( approx. $8), your position would be closed automatically, because of margin deficit.
I will explain later about having an adequate account size to trade the Forex Market.
Currencies are always traded in pairs in the FOREX. The pairs have a unique notation that expresses what currencies are being traded.
The symbol for a currency pair will always be in the form ABC/DEF. ABC/DEF is not a real currency pair, it is an example of a symbol for a currency pair. In this example ABC is the symbol for one countries currency and DEF is the symbol for another countries currency.
Some of the most common symbols used in Forex are:
USD - The US Dollar
EUR - The currency of the European Union "EURO"
GBP - The British Pound or cable
JPY - The Japanese Yen
CHF - The Swiss Franc
AUD - The Australian Dollar
CAD - The Canadian Dollar
There are symbols for other currencies as well, but these are the most commonly traded ones.
A currency can never be traded by itself. So you can not ever trade the USD by itself. You always need to BUY one currency and SELL another currency to make a trade possible.
Some of the most traded currency pairs are:
EUR/USD Euro against US Dollar
USD/JPY US Dollar against Japanese Yen
GBP/USD British Pound against US Dollar
USD/CAD US Dollar against Canadian Dollar
AUD/USD Australian Dollar against US Dollar
USD/CHF US Dollar against Swiss Franc
EUR/JPY Euro against Japanese Yen
The currency left of the / is called the base currency.
The currency right of the / is called the counter currency.
When you place an order to buy the EUR/USD, for instance, you are actually buying the EUR and selling the USD.
If you were to sell the pair, you would be selling the EUR and buying the USD. So if you buy or sell a currency PAIR, you are buying/selling the base currency.
The best way to remember is, by just thinking of the entire currency pair as one item.
If you buy it...you buy the first currency and sell the second currency. If you sell it...you sell the first currency and buy the second currency.
That means you would to be able to short-sell with no restrictions so you could make money when the market drops as well as when it rises.
The problem with traditional stock market or commodity trading is that the market has to go up for you to make money. With FOREX trading you can make money in all directions.
ONE of the best advantages in FOREX Trading is
The amount of money you need to place a trade (known as "margin") is all that can be lost !
You have to know, that despite the super-high leverage offered by some Forex brokers up to (400:1); meaning if you put up $ 1000 the broker will allow you to trade like you really have $400.000).
Forex trading is still less riskier than Stock or Futures Trading, where you can loose more than you have deposited in your account.
This type of LEVERAGE does NOT EXIST in the equities or futures market
In the Equities or Futures markets, very often, sudden and dramatic moves occur, against which you can’t protect yourself, even by having placed your protective stops.
Your position may be liquidated at a loss, and you’ll be liable for any resulting deficit in the account.
But because of the FX market’s deep liquidity and 24-hour, continuous trading, dangerous trading gaps and limit moves are almost eliminated.
Orders are executed quickly, without slippage or partial fills. And finally, there are no margin calls. For your protection, the broker will automatically close out some or all of your open positions if your account equity falls below the level required to hold the positions.
Think of this as a final, automatic stop, always working on your behalf to prevent a debit balance.
Currencies are traded in dollar amounts called “ LOTS”
In Forex trading, with most Brokers, you have the choice between 2 different lot sizes.
Standard Lots or Mini Lots.
One Standard lot is equal to $100,000 in currency. The margin requirements, using a 400:1 Leverage, would be US$ 250, in other word you control $100,000 worth of currency for only 250 US dollars.
You mean, depositing $250 with a broker, I could trade 100,000$ worth of currency ???
NO, be aware, that your account size has to be more than the required margin of US 250. For example, if you place an order to buy 1 Standard lot ( @100,000) of USD/JPY and USD/JPY is quoted as 112.10/112.13, you buy USD/JPY at 112.13.
Your account balance would be $220, because you paid 3 pips or $ 30 for this trade.
If you would close this trade immediately, you have to sell it at 112.10 (the bid price) , for a loss of $ 30.
In fact you could not get executed on this trade, as the brokers trading platform would reject your order, for the reason of having insufficient funds in your account).
So, your account balance has to be minimum $280. $250 for margin and $30 for the trade.
BUT....IF, after you have initiated the trade to buy USD/JPY at 112.13, and the USD/JPY falls the next second 1 pip ( approx. $8), your position would be closed automatically, because of margin deficit.
I will explain later about having an adequate account size to trade the Forex Market.
Currencies are always traded in pairs in the FOREX. The pairs have a unique notation that expresses what currencies are being traded.
The symbol for a currency pair will always be in the form ABC/DEF. ABC/DEF is not a real currency pair, it is an example of a symbol for a currency pair. In this example ABC is the symbol for one countries currency and DEF is the symbol for another countries currency.
Some of the most common symbols used in Forex are:
USD - The US Dollar
EUR - The currency of the European Union "EURO"
GBP - The British Pound or cable
JPY - The Japanese Yen
CHF - The Swiss Franc
AUD - The Australian Dollar
CAD - The Canadian Dollar
There are symbols for other currencies as well, but these are the most commonly traded ones.
A currency can never be traded by itself. So you can not ever trade the USD by itself. You always need to BUY one currency and SELL another currency to make a trade possible.
Some of the most traded currency pairs are:
EUR/USD Euro against US Dollar
USD/JPY US Dollar against Japanese Yen
GBP/USD British Pound against US Dollar
USD/CAD US Dollar against Canadian Dollar
AUD/USD Australian Dollar against US Dollar
USD/CHF US Dollar against Swiss Franc
EUR/JPY Euro against Japanese Yen
The currency left of the / is called the base currency.
The currency right of the / is called the counter currency.
When you place an order to buy the EUR/USD, for instance, you are actually buying the EUR and selling the USD.
If you were to sell the pair, you would be selling the EUR and buying the USD. So if you buy or sell a currency PAIR, you are buying/selling the base currency.
The best way to remember is, by just thinking of the entire currency pair as one item.
If you buy it...you buy the first currency and sell the second currency. If you sell it...you sell the first currency and buy the second currency.
That means you would to be able to short-sell with no restrictions so you could make money when the market drops as well as when it rises.
The problem with traditional stock market or commodity trading is that the market has to go up for you to make money. With FOREX trading you can make money in all directions.
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