Forex And Forex

U.S. Dollar Rebound Thin, Welcomes Positive Fiscal Policy

2011-12-24T02:46:00.001-08:00

24/Dec/2011 00:02
(Vibiznews-FX) "The indication of positive developments on the U.S. economy re-emerged on the night (23-12).

On this night (GMT) The U.S. Congress agreed to pass an extension of tax cuts policy eight days before the expiration of the policy, signaling the existence of an additional stimulus for the U.S. consumer sector.

The proposal was passed after the Republican party to cancel the objection along with the increasing political pressure.

The policy will be negotiated for extended again early next year.
Analyst Research Vibiz of Vibiz Consulting suggests that an increase in positive signal could strengthen the position of the U.S. dollar.

In the pair USD / JPY exchange rate observed in the range of rolling 78.11, or approximately +0.12% rebound from the lowest range today

(Indra Yudhisthira / IYD / vbn)

By: vbiznews - vbiznews.com

U.S. Dollar Euro. Response Improvement Products Manufacturing Order

2011-12-24T02:34:00.000-08:00

(Vibiznews-FX) - U.S. Dollar currency pair to trade EUR / USD this evening (23-11) rallied and tracked the pair traded in the range of 1.3061.

The U.S. dollar strengthened in line with the presence of positive signal on the American economy Serkat, where it is shown by an increase in performance in the sectors of manufacturing production in the country.

Indicators of Durable Goods Orders m / m were reported to have increased to 3.8% previously forecast to rise to 2.2% from the previous value of -0.5%. It was responded positively by investors in forex trading.

The Census Bureau report said that pesabab long duration of manufactured goods in November increased by $ 7.5 billion USD so worth a total of $ 207.0 billion USD.

Except for product transportation orders rose about 0.3% and the product except defense tool orders increased by about 3.7%.

Analyst Research Vibiz of Vibiz Consulting suggests that the development of better than these estimates lead to potential U.S. dollar on the currency pair EUR / USD is still further strengthened in the range that is not too wide.

Jump 47 Points, JCI Translucent to 3700

2010-11-20T16:59:00.000-08:00

Translates froom : Detikfinance

by: ANGA Aliya - detikFinance

Jakarta - The Composite Stock Price Index (CSPI) closed with a brilliant weekend trade. The index gained 47 points and managed to return to 3700 levels.
Opening trade this morning, stock index rose 16.532 points (0.45%) to the level of 3694.436. The strengthening of global bourses into a positive sentiment towards the increase JCI.
At the close of trading session I, the index rose 20.087 points (0.55%) to the level of 3697.991. Consumer stocks to drive the strengthening of the stock, while banking stocks fell quite deep.
Closing trade on Friday (11/19/2010), JCI rose 47.144 points (1.28%) to the level of 3725.048. While LQ 45 Index rose 9.128 points (1.35%) to a level of 685.111.
Consumer stocks and commodities became the prime mover in the rise JCI this afternoon and entered the ranks of top gainers. Banking stocks still fell so restrain the rate of increase in JCI.
Index climb through its highest level at 3725.048 today at the closing. While today's lowest position at the level of 3678.474.
Trade today went pretty busy with the frequency of transactions in all markets in volume of 123 546 times 9.230 billion shares worth Rp 6.889 trillion. A total of 136 stocks rose, 70 fell and 73 shares of stock to stagnate.
Regional exchanges are not too welcomed the positive sentiment in global stock and move in a mixed until this afternoon. Some exchanges in Asia there is a stumble into negative territory while the rest scored strengthening thin.
The following conditions bourses in Asia until this afternoon:

    * Shanghai Composite Index rose 23.11 points (0.81%) to a level of 2888.57.
    * Hang Seng Index fell 31.68 points, thin (0.13%) to the level 23605.71.
    * Nikkei 225 index edged up 8.76 points (0.09%) to the level 10022.39.
    * Straits Times Index fell 12.84 points (0.40%) to a level of 3202.38.
Stocks that go up significantly and entered the ranks of the top gainers among Multi Bintang (MLBI) rose to Rp 5,000 to Rp 265,000, United Tractor (UNTR) rose Rp 2,750 to Rp 25,650, Indospring (inds) rose Rp 1,900 to Rp 11,600, and Adira (ADMF) increased to Rp 1850 to Rp 12,350.
While stocks are down enough in and entered the Top Losers among other categories of BRI (BBRI) dropped to Rp 200 to Rp 11,900, Telkom (TLKM) dropped to Rp 100 to Rp 8300, Capitalinc Investments (MTFN) dropped to Rp 100 to Rp 1,300, and Indofood (INDF), down USD 75 to USD $ 4925. (Ang / Qom)

Money Management Tips For Trading On The Forex

2010-08-03T19:22:00.000-07:00

What is Money Management: describes strategies or methods a player uses to avoid losing their bankroll.

Money management in the foreign exchange currency market requires educating yourself in a variety of financial areas. First, a definition of the foreign exchange currency or forex market is called for. The forex market is simply the exchange of the currency of one country for the currency of another. The relative values of various currencies in the world change on a regular basis. Factors such as the stability of the economy of a country, the gross national product, the gross domestic product, inflation, interest rates, and such obvious factors as domestic security and foreign relations come into play. For instance, if a country has an unstable government, is expecting a military takeover, or is about to become involved in a war, then the country's currency may go down in relative value compared to the currency of other countries.

The Forex, or foreign currency exchange, is all about money. Money from all over the world is bought, sold and traded. On the Forex, anyone can buy and sell currency and with possibly come out ahead in the end. When dealing with the foreign currency exchange, it is possible to buy the currency of one country, sell it and make a profit. For example, a broker might buy a Japanese yen when the yen to dollar ratio increases, then sell the yens and buy back American dollars for a profit.

There are five major forex exchange markets in the world, New York, London, Frankfurt, Paris, Tokyo and Zurich. Forex trading occurs around the clock in various markets, Asian, European, and American. With different time zones, when Asian trading stops, European trading opens, and conversely when European trading stops, American trading opens, and when American trading stops, then it is time for Asian trading to begin again.

Most of the trading in the world occurs in the forex markets; smaller markets for trade in individual countries. Simply put forex trading is the simultaneous buying of one currency and selling of another. Over $1.4 trillion dollars, US of forex trading occurs daily and sometimes fortunes are made or lost in this market. The billionaire George Soros has made most of his money in forex trading. Successfully managing your money in forex trading requires an understanding of the bid/ask spread.

Simply put the bid ask spread is the difference between the price at which something is offered for sale and the price that it is actually purchased for. For instance, if the ask price is 100 dollars, and the bid is 102 dollars then the difference is two dollars, the spread. Many forex traders trade on margin. Trading on margin is buying and selling assets that are worth more than the money in your account. Since currency exchange rates on any given day are usually less than two percent, forex trading is done with a small margin. To use an example, with a one percent margin a trader can trade up to $250,000 even if he only has $5,000 in his account. This means the trade has leverage of 50 to one. This amount of leverage allows a trader to make good profits very quickly. Of course, with the chance of high profits also comes high risk.

Like many other speculative investments,........

a key part of money management for the forex trader is only using money that can be put at risk. It is wise to set aside a portion of your net worth and make that the only money you use in forex trading. While the chances of good profits are there, if you should have a problem and get wiped out, you'll only have a limited amount of money placed at risk. Also remember that the market is n constant motion. There are always trading opportunities. If a currency is becoming stronger or weaker in relation to other currencies there is always a chance for profit. For instance, if you believe that the Euro is gong to become weak compared to the US dollar then selling Euros is a good bet. If you believe that the dollar is going to become weaker than the yen, or the pound sterling, then selling dollars is wise. Staying current on the news and current events in the countries whose currency you hold is a smart move. Many people reach points where they can predict currency changes based on political or economic news in a given country. Remember though that forex trading is speculation, so be careful when managing your funds and only invest what you can afford to risk.

Please always make sure you check with the pros when dealing in this market unless you are doing this as a hobby and don't have a lot at stake in it. There are a lot of big boys playing here and they won't lose much sleep if you and thousands others lose their shirts...

by David Mclauchlan

Asia Natural Resources Prepare Capex U.S. $ 5 Million

2009-01-16T16:55:00.000-08:00

Indro Bagus SU - detikFinance

Finance- PT Asia Natural Resources Tbk (ASIA) allocates capital expenditure (capital expenditure / capex) of U.S. $ 5 million in 2009. The funds will be used to finance the activities of nickel mining PT Tekonindo, business takeovers children."This year ASIA capex budget of U.S. $ 5 million," said Director & Corporate Secretary ASIA, Stanislaus Say in press release, Friday (16/1/2009).

Stanislaus said Tekonindo PT is a subsidiary of the newly completed diakusisi and expected to start operating early in 2009-II semester. "ASIA recently acquired 65% shares Tekonindo, Tekonindo we hope will start operating early in the second semester of 2009 this," he said.

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PT Tekonindo have a land area of exploration 3335 hectares (ha) in Kabaena Island, Southeast Sulawesi. Based on the results of test exploration, mine has a reserve nickel with 4.7 million tons of nickel content 1.39% of the exploration area of 37.2 ha, or approximately 1.11% of total exploration area permit.

"For the financing Tekonindo will be implemented in accordance with the regulations, while mining activities that may be the acquisition or partnership with other mining," he said. In addition, he also explains the main problems faced by company for several years, mainly related to the settlement of debts to Cargill the impact on the main operational activity stunt company.

"We have successfully reached agreement acquittance of U.S. $ 7.7 million was converted into 829,500,910 shares of restrukturiasi debt and has obtained approval by the shareholders on May 12 2008," he said.

With that agreement,....
Taken from the source: www.Detikfinance.com ........said Stanislaus, since the quarter-II in 2008 the company back on commodity trading activities in accordance main areas of business. Until September 2008, from commodity trading activities of mine, a company has revenue of Rp 72.60 billion with net profit of Rp 2.20 billion.

"We have completed all the problems that cause doubt on our business performance, as do the BEI Suspensi
since 12 March 2006, "he said.

2009-01-16T16:50:00.000-08:00

Jakarta - PT Asia Natural Resources Tbk (ASIA) allocates capital expenditure (capital expenditure / capex) of U.S. $ 5 million in 2009. The funds will be used to finance the activities of nickel mining PT Tekonindo, business takeovers children.

"This year ASIA capex budget of U.S. $ 5 million," said Director & Corporate Secretary ASIA, Stanislaus Say in press release, Friday (16/1/2009).

Stanislaus said Tekonindo PT is a subsidiary of the newly completed diakusisi and expected to start operating early in 2009-II semester.
."ASIA recently acquired 65% shares Tekonindo, Tekonindo we hope will start operating early in the second semester of 2009 this," he said.

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. PT Tekonindo have a land area of exploration 3335 hectares (ha) in Kabaena Island, Southeast Sulawesi. Based on the results of test exploration, mine has a reserve nickel with 4.7 million tons of nickel content 1.39% of the exploration area of 37.2 ha, or approximately 1.11% of total exploration area permit.......

taken from the source: www.Detikfinance.com
"For the financing Tekonindo will be implemented in accordance with the regulations, while mining activities that may be the acquisition or partnership with other mining," he said.

In addition, he also explains the main problems faced by company for several years, mainly related to the settlement of debts to Cargill the impact on the main operational activity stunt company.

"We have successfully reached agreement acquittance of U.S. $ 7.7 million was converted into 829,500,910 shares of restrukturiasi debt and has obtained approval by the shareholders on May 12 2008," he said.

With that agreement, said Stanislaus, since the quarter-II in 2008 the company back on commodity trading activities in accordance main areas of business. Until September 2008, from commodity trading activities of mine, a company has revenue of Rp 72.60 billion with net profit of Rp 2.20 billion.

"We have completed all the problems that cause doubt on our business performance, as do the BEI Suspensi
since 12 March 2006, "he said.

Still Interested In Forex ? You Need Forex Indicators.

2008-12-19T06:15:00.000-08:00

Global crisis currently has confusing the players in the forex market. They are a headache for the current situation. What if you are still interested to play in the forex world, then you should be more caution.

Forex at the time this is still profitable, but also forex will be very detrimental. However, there was not when you want to continue forward, the indicators are in need of forex. But you should also prepare an appropriate indicator for you. Indicators of how the forex? Many Shoftwere Indicators, which traded at the sale. Depending on the indicator you want to select which of you is a fairly accurate indicator. Please hunting Forex Indicators that will provide easy way for you.

More capital to Obtain More

2008-12-04T06:28:00.000-08:00

The initial capital you determine success or not your trading soon. Some beginners to start trading forex investment with the minimum capital may help us understand the forex at the same time prevent big losses for the premiere of their investment. However, they do not realize that the difference is the capital, which could be the beginning for their success is not forever. Why?
Well, like other businesses, forex need capital to grow and generate enough profit for you. Most broker minimum requirements may apply to anyone who wanted to open a real account through them. But of course you can start with the capital more than the minimum required by the broker.

Seen glance seems that this is stupid. Suppress a large amount of funds for investment, which may be a new you know.

Forex different with other investments that may be normal you know. In the forex, active investors behave, and determine their own investment decisions directly. In short, with the calculation of a mature, you can........................ determine the action to buy / sell your own and a profit there. But with a wrong decision, and loss can occur soon in your investment.
Let's do a simple calculation like this:

At the time this article is made, GBPUSD exchange rate is 2.0100. That means opening a position to do as much as 1 lot on the contract size is 10,000 required margin of 1% of insurance capital that is required, we need funds of 2.0110 x 10,000 x 1 / 100 = 201 dollar. To open the position of either Buy or Sell we need a 201 dollar as margin collateral.

Say I start I forex investment with initial capital of $ 250 means that only the remaining $ 250 - $ 201 = $ 49 as a reserve fund to hold the position of the movement opposed to the position I am.

Had the position taken on the Buy rate of 2.0110. Then several hours later in the GBPUSD 2.0061 down to the position of the positions I have exhausted Buy affected the margin call. For those who have not yet know the margin call, it is closing the position we automatically by the system due to lack of collateral we hold for the market movement. A nightmare for a forex trader.

In this case, margin call occurs because of lack of funds, which too have to anticipate the movement of the currency. Remember that we do not know what can happen in the future with 100% accurate. May be after the price down to the 2.0061 price point back up as you expect. Thus, basically, we accurately predicted. Only, we start with a capital that is too small.

Note the picture above. Southerners have been quite explain why we do not recommend you start forex investment is minimal.

If seen from the above cases the margin call may not need to happen in case:

* Position Buy is not at the price of 2.0110 but below that. At 2.0061 for example.
* The initial capital of more than $ 250.

Options first lead analysis capability that is very good and the skill of a proficient trader. Moreover, if you are a beginner. The veteran traders are not able to know the exact price decrease of 100%. We are not fortune is not it?

How much capital and the minimum necessary?

Questions concerning how this type of trading you, and a maximum drawdown of how skilled you predict movements in the currency. The more advanced you are small funds that are needed to start your forex investment. About how to determine the type of trading and what the maximum drawdown, has been written with the full article on the Create a Trading System in the School of Forex.

However start with the simplest of sufficient capital. If you decide not want to install the Stop Loss in bertrading you soon due to the limited amount of Stop Loss determine the exact probability of profit and generate the correct, legitimate, valid only. But of course it is enough capital and avoid over sizing (too many open positions) when bertrading.

With 4 lot of positions open in each of your trading, should be the capital of more than $ 3000 on enough. If the error occurs predict movements in the currency, you can wait until prices turn back the direction and profit targets achieved.

What can be Forex Learn If You Give Opening Real Trading at $ 3000?

Of course, with a suggested opening margin of $ 3000, we are also responsible for your trading progress. Learning Forex provide various facilities to attract your bertrading with a minimum initial capital of $ 3000. Not only help to secure your own trading but also a variety of support you can get. Among them are:

* Bonus CD or Premium Forex Forex Education Learning Journal worth Rp 500,000 which we will send it directly to your address. You do not need to pay anything to get them.
* Trading his help directly to your email for each position Suggest opening of the predicted benefit.
* First class administration process
* Free one-time one on one private training in Jakarta
* Various education program and his help that will be added from time to time.

Interesting is not it? Of course, Learning Forex appreciate the confidence the customers. They are more entitled to infuse more. Thus, you qualify as the Prestige Learning customer FOREX.

So here until we return to you. How it all is your personal decision. If you're ready to get started today, why not click on the image below now?

note: This Article is Translated From http://belajarforex.com/money-management/memulai-lebih-untuk-mendapatkan-lebih.html

What Causes A Currency Crisis? (Page 2 )

2008-10-12T20:36:00.001-07:00

by Brent Radcliffe (Contact Author | Biography)

Forex Since the early 1990s, there have been many cases of currency investors who have been caught off guard, which lead to runs on currencies and capital flight. What makes forex investors and international financiers respond and act like this? Do they evaluate the minutia of an economy, or do they go by gut instinct? In this article, we'll look at currency instability and uncover what really causes forex.

What Is a Currency Crisis?
A currency crisis is brought on by a decline in the value of a country's currency. This decline in value negatively affects forex an economy by creating instabilities in exchange rates, forex meaning that one unit of the currency no longer buys as much as it used to in forex. To simplify the matter, we can say that crises develop as an interaction between investor expectations and what those expectations cause to happen. (Still learning about currencies? Check out Common Questions About Currency Trading and our Forex Special Feature.)

Government Policy, Central Banks and the Role of Investors
When faced forex with the prospect of a currency crisis, central bankers in a fixed exchange rate economy can try to maintain the current fixed exchange rate by forex eating into the country's foreign reserves, or letting the exchange rate fluctuate.

Why is tapping into foreign reserves a solution? forex, When the market expects devaluation, downward pressure placed on the currency can really only be offset by an increase in the interest rate. In order to increase the rate, the central bank forex has to shrink the money supply, forex which in turn increases demand for the currency. The bank can do this by selling off foreign reserves to create a capital outflow. When the bank sells a portion of its foreign forex reserves, it receives payment in the form of the domestic currency, which it holds out of circulation as an asset.

Propping up the exchange rate cannot last forever, both in terms of a decline in foreign forex reserves as well as political and economic factors, such as rising unemployment. Devaluing the forex currency by increasing the fixed exchange rate forex results in domestic forex goods being cheaper than foreign goods, which boosts demand for workers and increases output. In the short run devaluation also increases interest rates, which must be forex offset by the central bank through an increase in the forex money supply and an increase in foreign reserves. As mentioned forex earlier, propping up a fixed exchange rate can eat through a country's reserves quickly, and devaluing the currency can add back reserves.

Unfortunately for banks, but fortunately for you, investors are forex well aware that a devaluation strategy can be used, and can build this into their expectations. If the market expects the central bank to devalue the currency, which would increase the exchange rateforex , the possibility of boosting foreign reserves through an increase in aggregate demand is not realized. Instead, the forex central bank must use its reserves to shrink the money supply, which increases the domestic interest rate.

How To Trade Forex Like A Pro ?

2008-06-28T07:49:00.000-07:00

Forex trading is all active excavation cagey not employed hard. You can occupation equivalent a pro within a few weeks, if you get yourself the hand forex training and take the opportune mindset. Here we give perception at how to line like a professional forex merchant in cordiform steps...Here they are and they testament administer you a leader vantage on the means to presentness trading success.

1. Acquire Responsibility
Block all the gurus and mentors and robots that say they module alter you moneyed they won't.You're on your own and condition to have responsibleness for your actions. You beggary to get the honourable upbringing, make authority in it and lot it with discipline.

2. A Ovate Forex Trading Scheme
Is all you pauperization and they employ outmatch than complicated ones, as they are easy to see, use and know few elements to change.
You should merchandise longer quantity trends not the make term noise (lose forex scalping or day trading) and pore on influence trading and extendible word tendency shadowing.If you're a religionist a echt position to sign is with a escape system - breakouts transmute and testament uphold to process and are a outstanding puppet for profits.

3. Have Attempt Cheerfully
If you don't same attractive risks block forex trading it's venturous and the difference between success and nonstarter is lettered when to assay and how big to bet.Umteen traders try to desist try so overmuch they actually create it, by having their stops to juxtaposed and secure themselves a going - trusty they fuck a shrimpy recede but their warranted to be wiped out.When the opportunity arises bang a bigger try and you give be compartment rewarded, if you spiel the odds.

4. Penalise is the Key
If you don't make penalty you tradition ever win at forex trading and that's why you tally to learn and change yourself as this gives you sureness to force with your trading method finished stumpy statement losses and not depart from your track.Ever reserve in intellectual, if you don't make the punish to penalize a trading grouping - you don't hold one!

5. Eff Your Trading Progress!
If you poverty to win you require a trading slip.This is the supply you tally over the 95% of traders who recede and is peculiar to your forex trading strategy.If you don't undergo what your urgency is you don't hump one and you penury to continue with your forex trading breeding until you do.

6. It Looks Comfortable - But Requires a Unlike Mindset
Forex trading is gentle to study and anyone can do it but most traders break because they don't make the justice mindset for success - you beggary a completely different mindset in forex trading compared with remaining professions.For information, in society the harder you line the author you get out - this is not so in forex trading, also it's optimal to be with the majority in concrete life but in forex trading you require to be with the age.Also you are dealing in a mankind where you create your own rules to live by, that's why you pauperization to do it on your own. In order you just espouse the rules.

Forex trading involves action trustiness for your occurrence and is like no additional jeopardize in position of the demands it makes on your knowledge. If you read this and conceive you can pose on your own and be confident and disciplined, then it's promising you will puddle a majuscule adult forex merchandiser and relish acceptance trading success.

Article Source: http://articlehideaway.com

by a.anies www.trade-4x.blogspot.com www.forex-3arb.blogspot.com
For more info on Finance visit this site.

The Perfect Forex Trading System

2008-03-04T09:41:00.000-08:00

Trading the Forex market has become very popular in the last few years. But how difficult is it to achieve success in the Forex trading arena? Or let me rephrase this question, how many traders achieve consistent profitable results trading the Forex market? Unfortunately very few, only 5% of traders achieve this goal. One of the main reasons of this is because Forex traders focus in the wrong information to make their trading decisions and totally forget about the most important factor: Price behavior.

Most Forex trading systems are made off technical indicators (a moving average (MA) crossover, overbought/oversold conditions in an oscillator, etc.) But what are technical indicators? They are just a series of data points plotted in a chart; these points are derived from a mathematical formula applied to the price of any given currency pair. In other words, it is a chart of price plotted in a different way that helps us see other aspects of price.

There is an important implication on this definition of technical indicators

The fact that the readings obtained from them are based on price action. Take for instance a long MA crossover signal, the price has gone up enough to make the short period MA crossover the long period MA generating a long signal. Most traders see it as “the MA crossover made the price go up,” but it happened the other way around, the MA crossover signal occurred because the price went up. Where I'm trying to get here is that at the end, price behavior dictates how an indicator will act, and this should be taken into consideration on any trading decision made.

Trading decisions based on technical indicators without taking price action into consideration will give us less accurate results. For example, again a long signal generated by a MA crossover as the market approaches an important resistance level. If the price suddenly starts to bounce back off that important level there is no point on taking this signal, price action is telling us the market doesn't want to go up. Most of the time, under this circumstances, the market will continue to fall down, disregarding the MA crossover.

Don't get us wrong here, technical indicators are a very important aspect of trading. They help us see certain conditions that are otherwise difficult to see by watching pure price action. But when it comes to pull the trigger, price action incorporation into our Forex trading system will definitely put the odds in our favor, it will generate higher probability trades.

So, how to create a perfect Forex trading system?

First of all, you need to make sure your trading system fits your trading personality; otherwise you will find it hard to follow it. Every trader has different needs and goals, thus there is no system that perfectly fits all traders. You need to make your own research on various trading styles and technical indicators until you find a concept that perfectly works for you. Make sure you know the nature of whatever technical indicator used.

Secondly, incorporate price action into your system. So you only take long signals if the price behavior tells you the market wants to go up, and short signals if the market gives you indication that it will go down.

Third, and most importantly, you need to have the discipline to follow your Forex trading system rigorously. Try it first on a demo account, then move on to a small account and finally when feeling comfortably and being consistent profitable apply your system in a regular account.

Understanding the Basics of Currency Trading

2008-03-04T09:40:00.000-08:00

Investors and traders around the world are looking to the Forex market as a new speculation opportunity. But, how are transactions conducted in the Forex market? Or, what are the basics of Forex Trading? Before adventuring in the Forex market we need to make sure we understand the basics, otherwise we will find ourselves lost where we less expected. This is what this article is aimed to, to understand the basics of currency trading.

What is traded in the Forex market?

The instrument traded by Forex traders and investors are currency pairs. A currency pair is the exchange rate of one currency over another. The most traded currency pairs are:

EUR/USD: Euro

GBP/USD: Pound

USD/CAD: Canadian dollar

USD/JPY: Yen

USD/CHF: Swiss franc

AUD/USD: Aussie

These currency pairs generate up to 85% of the overall volume generated in the Forex market.

So, for instance, if a trader goes long or buys the Euro, she or he is simultaneously buying the EUR and selling the USD. If the same trader goes short or sells the Aussie, she or he is simultaneously selling the AUD and buying the USD.

The first currency of each currency pair is referred as the base currency, while second currency is referred as the counter or quote currency.

Each currency pair is expressed in units of the counter currency needed to get one unit of the base currency.

If the price or quote of the EUR/USD is 1.2545, it means that 1.2545 US dollars are needed to get one EUR.

Bid/Ask Spread

All currency pairs are commonly quoted with a bid and ask price. The bid (always lower than the ask) is the price your broker is willing to buy at, thus the trader should sell at this price. The ask is the price your broker is willing to sell at, thus the trader should buy at this price.

EUR/USD 1.2545/48 or 1.2545/8

The bid price is 1.2545

The ask price is 1.2548

A Pip

A pip is the minimum incremental move a currency pair can make. Pip stands for price interest point. A move in the EUR/USD from 1.2545 to 1.2560 equals 15 pips. And a move in the USD/JPY from 112.05 to 113.10 equals 105 pips.

Margin Trading (leverage)

In contrast with other financial markets where you require the full deposit of the amount traded, in the Forex market you require only a margin deposit. The rest will be granted by your broker.

The leverage provided by some brokers goes up to 400:1. This means that you require only 1/400 or .25% in balance to open a position (plus the floating gains/losses.) Most brokers offer 100:1, where every trader requires 1% in balance to open a position.

The standard lot size in the Forex market is $100,000 USD.

For instance, a trader wants to get long one lot in EUR/USD and he or she is using 100:1 leverage.

To open such position, he or she requires 1% in balance or $1,000 USD.

Of course it is not advisable to open a position with such limited funds in our trading balance. If the trade goes against our trader, the position is to be closed by the broker. This takes us to our next important term.

Margin Call

A margin call occurs when the balance of the trading account falls below the maintenance margin (capital required to open one position, 1% when the leverage used is 100:1, 2% when leverage used is 50:1, and so on.) At this moment, the broker sells off (or buys back in the case of short positions) all your trades, leaving the trader “theoretically” with the maintenance margin.

Most of the time margin calls occur when money management is not properly applied.

How are the mechanics of a Forex trade?

The trader, after an extensive analysis, decides there is a higher probability of the British pound to go up. He or she decides to go long risking 30 pips and having a target (reward) of 60 pips. If the market goes against our trader he/she will lose 30 pips, on the other hand, if the market goes in the intended way, he or she will gain 60 pips. The actual quote for the pound is 1.8524/27, 4 pips spread. Our trader gets long at 1.8530 (ask). By the time the market gets to either our target (called take profit order) or our risk point (called stop loss level) we will have to sell it at the bid price (the price our broker is willing to buy our position back.) In order to make 60 pips, our take profit level should be placed at 1.8590 (bid price.) If our target gets hit, the market ran 64 pips (60 pips plus the 4 pip spread.) If our stop loss level is hit, the market ran 26 (26 pips plus the 4 pip spread equals 30 pips) pips against us.

It's very important to understand every aspect of trading. Start first from the very basic concepts, then move on to more complex issues such as Forex trading systems, trading psychology, trade and risk management, and so on. And make sure you master every single aspect before adventuring in a live trading account.

How to take a loss

2008-03-04T09:38:00.000-08:00

There are quite a few books written on how to make money in the market. Some of them are even written by people who have made money as traders! What you don't see often, however, are books or articles written on how to lose money. “Cut your losers and let your winners run” is commonsensical advice, but how do you determine when a position is a loser? Interestingly, most traders I have seen don't formulate an answer to this question when they put on a position. They focus on the entry, but then don't have a clear sense of exit—especially if that exit is going to put them into the red.

One of the real culprits, I have to believe, is in the difficulty traders have in separating the reality of a losing trade from the psychological sense of feeling like a loser. At some level, many traders equate losing with being a loser. This frustrates them, depresses them, makes them anxious—in short, it interferes with their future decision-making, because their P & L is a blank check written against their self-esteem. Once a trader is self-focused and not market focused, distortions in decision-making are inevitable.

A particularly valuable section of the classic book Reminiscences of a Stock Operator describes Livermore 's approach to buying stock. He would sell a quantity and see how the stock responded. Then he would do that again and again, testing the underlying demand for the issue. When his sales could not push the market down, then he would move aggressively to the buy side and make his money.

What I loved about this methodology is that Livermore's losses were part of a grander plan. He wasn't just losing money; he was paying for information. If my maximum position size is ten contracts in the ES and I buy the highs of a range with a one-lot, expecting a breakout, I am testing the waters. While I am not potentially moving the market in the way that Livermore might have, I still have begun a test of my breakout hypothesis. I then watch carefully. How are the other averages behaving at the top ends of their range? How is the market absorbing the activity of sellers? Like any good scientist, I am gathering data to determine whether or not my hypothesis is supported.

Suppose the breakout does not materialize and the initial move above the range falls back into the range on some increased selling pressure. I take the loss on my one-lot, but then what happens from there?

The unsuccessful trader will respond with frustration: “Why do I always get caught buying the highs? I can't believe “they” ran the market against me! This market is impossible to trade.” Because of that frustration—and the associated self-focus—the unsuccessful trader does not take any information away from that trade.

In the Livermore mode, however, the successful trader will see the losing one-lot as part of a greater plan. Had the market broken nicely to the upside, he would have scaled into the long trade and likely made money. If the one-lot was a loser, he paid for the information that this is, at the very least, a range-bound market, and he might try to find a spot to reverse and go short in order to capitalize on a return to the bottom end of that range.

Look at it this way: If you put on a high probability trade and the trade fails to make you money, you have just paid for an important piece of information: The market is not behaving as it normally, historically does. If a robust piece of economic news that normally sends the dollar screaming higher fails to budge the currency and thwarts your purchase, you have just acquired a useful bit of information: There is an underlying lack of demand for dollars. That information might hold far more profit potential than the money lost in the initial trade.

I recently received a copy of an article from Futures Magazine on the retired trader Everett Klipp, who was dubbed the “Babe Ruth of the CBOT”. Klipp distinguished himself not only by his fifty-year track record of trading success on the floor, but also by his mentorship of over 100 traders. Speaking of his system of short-term trading, Klipp observed, “You have to love to lose money and hate to make money to be successful…It's against human nature what I teach and practice. You have to overcome your humanness.”

Klipp's system was quick to take profits (hence the idea of hating to make money), but even quicker to take losses (loving to lose money). Instead of viewing losses as a threat, Klipp treated them as an essential part of trading. Taking a small loss reinforces a trader's sense of discipline and control, he believed. Losses are not failures.

So here's a question I propose to all those who enter a high-probability trade: “What will tell me that my trade is wrong, and how could I use that information to subsequently profit?” If you're trading well, there are no losing trades: only trades that make money and trades that give you the information to make money later.

Brett N. Steenbarger, Ph.D. is Director of Trader Development for Kingstree Trading, LLC in Chicago and Clinical Associate Professor of Psychiatry and Behavioral Sciences at SUNY Upstate Medical University in Syracuse, NY. He is also an active trader and writes occasional feature articles on market psychology for a variety of publications. The author of The Psychology of Trading (Wiley; January, 2003), Dr. Steenbarger has published over 50 peer-reviewed articles and book chapters on short-term approaches to behavioral change. His new, co-edited book The Art and Science of Brief Therapy is a core curricular text in psychiatry training programs. Many of Dr. Steenbarger's articles and trading strategies are archived on his website, www.brettsteenbarger.com

STRAIGHT FOREX © 2005, 2006, 2007
Brett N. Steenbarger, Ph.D.

Mistakes in a Trading Environment

2008-03-04T09:34:00.001-08:00

When it comes to trading, one of the most neglected subjects are those dealing with trading psychology. Most traders spend days, months and even years trying to find the right system. But having a system is just part of the game. Don't get us wrong, it is very important to have a system that perfectly suits the trader, but it is as important as having a money management plan, or to understand all psychology barriers that may affect the trader decisions and other issues. In order to succeed in this business, there must be equilibrium between all important aspects of trading.

In the trading environment, when you lose a trade, what is the first idea that pops up in your mind? It would probably be, “There must be something wrong with my system”, or “I knew it, I shouldn't have taken this trade” (even when your system signaled it). But sometimes we need to dig a little deeper in order to see the nature of our mistake, and then work on it accordingly.

When it comes to trading the Forex market as well as other markets, only 5% of traders achieve the ultimate goal: to be consistent in profits. What is interesting though is that there is just a tiny difference between this 5% of traders and the rest of them. The top 5% grow from mistakes; mistakes are a learning experience, they learn an invaluable lesson on every single mistake made. Deep in their minds, a mistake is one more chance to try it harder and do it better the next time, because they know they might not get a chance the next time. And at the end, this tiny difference becomes THE big difference.

Mistakes in the trading environment

Most of us relate a trading mistake to the outcome (in terms of money) of any given trade. The truth is, a mistake has nothing to do with it, mistakes are made when certain guidelines are not followed. When the rules you trade by are violated. Take for instance the following scenarios:

First scenario: The system signals a trade.

Signal taken and trade turns out to be a profitable trade.

Outcome of the trade : Positive, made money.

Experience gained: Its good to follow the system, if I do this consistently the odds will turn in my favor. Confidence is gained in both the trader and the system.

Mistake made: None.

Signal taken and trade turns out to be a loosing trade.

Outcome of the trade: Negative, lost money.

Experience gained: It is impossible to win every single trade, a loosing trade is just part of the business; our raw material, we know we can't get them all right. Even with this lost trade, the trader is proud about himself for following the system. Confidence in the trader is gained.

Mistake made : None.

Signal not taken and trade turns out to be a profitable trade.

Outcome of the trade: Neutral.

Experience gained: Frustration, the trader always seems to get in trades that turned out to be loosing trades and let the profitable trades go away. Confidence is lost in the trader self.

Mistake made: Not taking a trade when the system signaled it.

Signal not taken and trade turns out to be a loosing trade.

Outcome of the trade: Neutral.

Experience gained: The trader will start to think “hey, I'm better than my system”. Even if the trader doesn't think on it consciously, the trader will rationalize on every signal given by the system because deep in his or her mind, his or her “feeling” is more intelligent than the system itself. From this point on, the trader will try to outguess the system. This mistake has catastrophic effects on our confidence to the system. The confidence on the trader turns into overconfidence.

Mistake made: Not taking a trade when system signaled it

Second Scenario: System does not signal a trade.

No trade is taken

Outcome of the trade: Neutral

Experience gained: Good discipline, we only need to take trades when the odds are in our favor, just when the system signals it. Confidence gained in both the trader self and the system.

Mistake made: None

A trade is taken, turns out to be a profitable trade.

Outcome of the trade: Positive, made money.

Experience gained: This mistake has the most catastrophic effects in the trader self, the system and most importantly in the trader's trading career. You will start to think you need no system, you know better from them all. From this point on, you will start to trade based on what you think. Confidence in the system is totally lost. Confidence in the trader self turns into overconfidence.

Mistake made: Take a trade when there was no signal from the system.

A trade is taken, turned out to be a loosing trade.

Outcome of the trade: negative, lost money.

Experience gained: The trader will rethink his strategy. The next time, the trader will think it twice before getting in a trade when the system does not signal it. The trader will go “Ok, it is better to get in the market when my system signals it, only those trade have a higher probability of success”. Confidence is gained in the system.

Mistake made: Take a trade when there was no signal from the system

As you can see, there is absolutely no correlation between the outcome of the trade and a mistake. The most catastrophic mistake even has a positive trade outcome, made money, but this could be the beginning of the end of the trader's career. As we have already stated, mistakes must only be related to the violation of rules a trader trades by.

All these mistakes were directly related to the signals given by a system, but the same is applied when getting out of a trade. There are also mistakes related to following a trading plan. For example, risking more money on a given trade than the amount the trader should have risked and many more.

Most mistakes can be avoided by first having a trading plan. A trading plan includes the system : the criteria we use to get in and out the market, the money management plan : how much we will risk on any given trade, and many other points. Secondly, and most important, we need to have the discipline to follow strictly our plan. We created our plan when no trade was placed on, thus no psychology barriers were up front. So, the only thing we are certain about is that if we follow our plan, the decision taken is on our best interests, and in the long run, these decisions will help us have better results. We don't have to worry about isolated events, or trades that could had give us better results at first, but then they could have catastrophic results in our trading career.

How to deal with mistakes

There are many possible ways to properly manage mistakes. We will suggest the one that works better for us.

Step one: Belief change.

Every mistake is a learning experience. They all have something valuable to offer. Try to counteract the natural tendency of feeling frustrated and approach mistakes in a positive manner. Instead of yelling to everyone around and feeling disappointed, say to yourself “ok, I did something wrong, what happened? What is it?

Step two: Identify the mistake made.

Define the mistake, find out what caused the mistake, and try as hard as you can to effectively see the nature of that mistake. Finding the mistake nature will prevent you from making the same mistake again. More than often you will find the answer where you less expected. Take for instance a trader that doesn't follow the system. The reason behind this could be that the trader is afraid of loosing. But then, why is he or she afraid? It could be that the trader is using a system that does not fit him or her, and finds difficult to follow every signal. In this case, as you can see, the nature of the mistake is not in the surface. You need to try as hard as you can to find the real reason of the given mistake.

Step three: Measure the consequences of the mistake.

List the consequences of making that particular mistake, both good and bad. Good consequences are those that make us better traders after dealing with the mistake. Think on all possible reasons you can learn from what happened. For the same example above, what are the consequences of making that mistake? Well, if you don't follow the system, you will gradually loose confidence in it, and this at the end will put you into trades you don't really want to be, and out of trades you should be in.

Step four: Take action.

Taking proper action is the last and most important step. In order to learn, you need to change your behavior. Make sure that whatever you do, you become “this-mistake-proof”. By taking action we turn every single mistake into a small part of success in our trading career. Continuing with the same example, redefining the system would be the trader's final step. The trader would put a system that perfectly fits him or her, so the trader doesn't find any trouble following it in future signals.

Understanding the fact that the outcome of any trade has nothing to do with a mistake will open your mind to other possibilities, where you will be able to understand the nature of every mistake made. This at the same time will open the doors for your trading career as you work and take proper action on every mistake made.

The process of success is slow, and plenty of times it is attributed to repeated mistakes made and the constant struggle to get past these mistakes, working on them accordingly. How we deal with them will shape our future as a trader, and most importantly as a person.

What a Good Forex Training Program Should Include

2008-03-04T09:32:00.000-08:00

Should new Forex traders take Forex trading courses or join a Forex training program? Definitely yes; by now you have probably heard that only 5% of traders achieve consistent profitable results when trading the Forex market. The main reason for this is the lack of education. Don't get me wrong here, taking a Forex training program or a Forex trading course won't guarantee profitable results, nothing can, but choosing the right Forex training program or Forex trading course will definitely put the odds in your favor.

Before spending any amount of money on any Forex trading course or Forex training program there are some important aspects you need to take in consideration. There are many training programs available, but not every one of them suits the needs of every trader.

The first thing you should be looking in a Forex training program is the content of the material. Unfortunately, most courses or training programs focus or spend most of the time on basic concepts. Though these basic concepts are important, spending most of the course on them won't help the trader to make consistent results.

The following subjects are what I consider the most important aspects of trading and every training program or trading course should address:

Forex trading basics.

Review basic concepts such as: margin, type of orders, a little background, bid/ask, rollover, etc. You need to make sure you understand every single concept to perfection.

Main drawbacks of Forex traders.

Being aware of the common mistakes made by Forex traders and knowing how to handle them will prevent new traders from making those mistakes.

Technical and fundamental analysis.

These are the two main approaches adopted by Forex traders. Knowing how to properly apply each concept will definitely put the odds in your favor.

The three pillars of Forex trading. I consider that these three subjects have the most impact on every trader trading account.

Forex trading system development.

Having the right system is a must if you want to have consistent profitable results. Having a system that doesn't fit you will cause a series of problems that will make your trading account vanish away (second guessing the system, not following your system, etc.)

Money management.

This is considered by many successful traders to be the most important single aspect of trading. Money management helps to increase your profits geometrically and at the same time limit your losses (i.e. a good risk reward ratio of about 2:1 will make you money in a Forex trading system that is right only 38% of the time.)

Trading psychology.

Being aware and knowing hot to handle the psychological barriers that affect every trader decision will put the odds in your favor.

Other important aspects every training program should include are:

Developing habits for success (such as discipline patience, taking responsibility of every action, commitment, etc.,) understanding and taking our trading as a business, risk and trade management.

Another important aspect you should take into consideration when choosing a Forex training program is the mechanics of it, getting to know how the training program works.

A good Forex course will have the following:

A live conference room, to apply everything learned under live market conditions.

One-on-one coaching, every trader has different needs and requires special attention. For instance a trader wanting to improve the system and requires individual feedback from the instructor about it.

Online trading course, a course that could be accessible through internet. A plus is a course where you are able to access the course at the convenient time for you, so you don't have to change your lifestyle.

A forum, where members can talk just about everything related to the Forex market and the Forex training program.

Trading the Forex market is no easy task. It requires a lot of hard work. Making the right decision will definitely put the odds in your favor. Take your time when doing your diligence because it is a big and important step in a trader's trading career.

Trading with Stochastics

2008-03-04T09:30:00.000-08:00

Stochastics are amongst the most popular technical indicators when it comes to Forex Trading. Unfortunately most traders use them incorrectly. In this article we will review the correct way to use this popular technical indicator.

George Lane developed this indicator in the late 1950s. Stochastics measure the current close relative to the range (high/low) over a set of periods.

Stochastics consist of two lines:

%K – Is the main line and is usually displayed as a solid line

%D – Is simply a moving average of the %K and is usually displayed as a dotted line

There are three types of Stochastics: Full, fast and slow stochastics. Slow stochastics are simply a smother version of the fast stochastics, and full stochastics are even a smother version of the slow stochastics.

Interpretation:

Buy when %K falls below the oversold level (below 20) and rises back above the same level.

Sell when %K rises above de overbought level (above 80) and falls back below the same level.

The interpretation above is how most traders and investors use them; however, it only works when the market is trendless or ranging. When the market is trending, a reading above the overbought territory isn't necessary a bearish signal, while a reading below de oversold territory isn't necessary bullish signal.

Trending market

When the market is trending is necessary to adapt the oscillator to the same conditions: When the market is trending up, then the signals with the higher probability of success are those in direction of the trend “Buy signals”, on the other hand when the market is trending down, selling signals offer the lowest risk opportunities.

Thus when the market is trending up, we will only look for oversold conditions (when the stochastics fall below the oversold level [below 20] and rises back above the same level) to get ready to trade, and in the same way, when the market is trending down we will only look for overbought conditions (when the stochastics rise above de overbought level [above 80] and falls back below the same level.

Taking all overbought/oversold signals during a trending market will lead us to many whipsaws. If you are not comfortable with the number of signals given, try expanding your trading to other currency pairs.

Trend-less market

During a ranging market we could use the interpretation explained above to trade off stochastics.

Divergence

Divergence trades are amongst the most reliable trading signals in the Forex market. A divergence occurs either when the indicator reaches new highs/lows and the market fails to do it or the market reaches new highs/lows and the indicator fails to do it. Both conditions mean that the market isn't as strong as it used to be giving us opportunities to profit from the market.

Stochastics can also be used to trade off divergences.

Price behavior

A price behavior can be incorporated into any kind of system or Forex strategy. When using divergences or overbought/oversold condition with a price behavior approach, the probability of success of our signals increases enormously. Why? Because price dictates at the end, how all indicators will behave, it also gives us a lot of information about the probable direction it will take in the future.

I hope this article helps you become a better trader.

Don't forget to read our risk disclaimer.

Choosing between Mechanical and Discretionary Systems

2008-03-04T09:26:00.000-08:00

There are basically two types of Forex trading systems, mechanical and discretionary systems. The trading signals that come out of mechanical systems are mainly based off technical analysis applied in a systematic way. On the other hand, discretionary systems use experience, intuition or judgment on entries and exits. But which one produces better results? Or more importantly, which one fits better your trading style? These are the answers we will try to answer on this article.

We will first analyze the pros and cons about each system approach.

Mechanical systems

Advantages

This kind of system can be automated and backtested efficiently.

It has very rigid rules. Either, there is a trade or there isn't.

Mechanical traders are less susceptible to emotions than discretionary traders.

Disadvantages

Most traders backtest Forex trading systems incorrectly. In order to produce accurate results you need tick data.

The Forex market is always changing. The Forex market (and all markets) has a random component. The market conditions may look similar, but they are never the same.

A system that worked successfully the past year doesn't necessary mean it will work this year.

Discretionary systems

Advantages

Discretionary systems are easily adaptable to new market conditions.

Trading decisions are based on experience. Traders learn to see which trading signals have higher probability of success.

Disadvantages

They cannot be backtested or automated, since there is always a thought decision to be made.

It takes time to develop the experience required to trade successfully and track trades in a discretionary way. At early stages this can be dangerous.

Now, which approach is better for Forex traders? The one that fits better your personality. For instance, if you are a trader that finds it hard to follow your trading signals, then you are better off using a mechanical system, where your judgment won't play an important role in your system. You only take the trades that your system signals.

If the psychological barriers that affect every trader (fear, greed, anger, etc.) puts you in unwanted scenarios, you are also better off trading mechanical systems, because you only need to follow what your system is telling you, go short, go long, close a trade. No other decision has to be made.

On the other hand, if you are a disciplined trader, then you are better off using a discretionary system, because discretionary systems adapt to the market conditions and you are able to change your trading conditions as the market changes. For instance, you have a target of 60 pips on a long trade. But the market suddenly starts trending up pretty strongly, then you could move your target to say 100 pips.

Does it mean that trading a discretionary system has no rules? This is absolutely incorrect. Trading discretionary systems means that once a trader finds his/her setup, the trader then decides what to do. But every trader still needs certain rules that need to be followed, such as the size of the position, conditions that have to be met before thinking to get in the market, and so on.

I am a discretionary trader. The main reason I chose a discretionary system is that my trades are based on price behavior, and as you already know, the price behaves similar to the past, but it is never identical, therefore the outcome of every trade is unknown. However, I do have rigid rules on my system, certain conditions have to be met before I even think in getting in a trade. This keeps me out of trouble, once my setup is present and in accordance with the rules I have set, then I closely watch the price behavior and finally decide whether it is a good opportunity or not.

Whether you choose to be a discretionary or a mechanical trader there are some important points you should take in consideration:

You need to make sure the Forex trading system you are using totally fits your personality. Otherwise you will find yourself outguessing your system.
You also need to have some rules and most importantly have the discipline to follow them.
Take your time to build the perfect system for you. It's not easy and requires time and hard work, but at the end, if done correctly, it will give you consistent profitable results.
Before going live, try it on a demo account or even on a small account (I will go for the second option, since psychological barriers will be present.

Currency Trading: Understanding the Basics of Currency Trading

2008-02-24T00:12:00.000-08:00

What is traded in the Forex market?

The instrument traded by Forex traders and investors are currency pairs. A currency pair is the exchange rate of one currency over another. The most traded currency pairs are:

EUR/USD: Euro

GBP/USD: Pound

USD/CAD: Canadian dollar

USD/JPY: Yen

USD/CHF: Swiss franc

AUD/USD: Aussie

These currency pairs generate up to 85% of the overall volume generated in the Forex market.

The first currency of each currency pair is referred as the base currency, while second currency is referred as the counter or quote currency.

Each currency pair is expressed in units of the counter currency needed to get one unit of the base currency.

If the price or quote of the EUR/USD is 1.2545, it means that 1.2545 US dollars are needed to get one EUR.

Bid/Ask Spread

EUR/USD 1.2545/48 or 1.2545/8

The bid price is 1.2545

The ask price is 1.2548

A Pip

Margin Trading (leverage)

In contrast with other financial markets where you require the full deposit of the amount traded, in the Forex market you require only a margin deposit. The rest will be granted by your broker.

The standard lot size in the Forex market is $100,000 USD.

For instance, a trader wants to get long one lot in EUR/USD and he or she is using 100:1 leverage.

To open such position, he or she requires 1% in balance or $1,000 USD.

Margin Call

Most of the time margin calls occur when money management is not properly applied.

How are the mechanics of a Forex trade?

Incorporating Price Action into a Forex Trading System

2008-02-24T00:07:00.000-08:00

There is an important implication on this definition of technical indicators. The fact that the readings obtained from them are based on price action. Take for instance a long MA crossover signal, the price has gone up enough to make the short period MA crossover the long period MA generating a long signal. Most traders see it as “the MA crossover made the price go up,” but it happened the other way around, the MA crossover signal occurred because the price went up. Where I'm trying to get here is that at the end, price behavior dictates how an indicator will act, and this should be taken into consideration on any trading decision made.

So, how to create a perfect Forex trading system?

Whay Forex Traders Lose - Avoid These Mistakes

2008-02-20T21:55:00.000-08:00

You may have an illusion that forex trading is something very easy and simple but in reality a lot of trader will lose all the money they have. So what are the mistakes they made?

In fact, the number one mistake they make is that they do not prepare well. They will think that they can make money by following a system from others. They may even think that they can predict the forex price. In fact, you should not just follow the others if you want to be successful in forex trading.

Besides, some people lose because they think that there is a formula for them to follow and they can just trade according to this scientific formula. However, the sad fact is that there is no such formula in the world. If such formula really exists, all of us have already become billionaire.

The most serious mistake, according to experiences, is probably being too greedy. Some traders want to make the most money out of the market and they try to predict the highest price they call trade. They will be reluctant to make the deal even if they know they have already made some money. However, they will only find later that they cannot make money or even lose because they have missed the chance.

In fact, discipline is very important if you want to be successful in the forex market. Most traders know that it is important but they are just unable to do so. And this will make them lose money in the market.

You have to do your own research. You have also to study the market yourself. Of course you are also going to make your own decision. You should not just listen to what others say. Instead you should only take the opinions of the others some advices.

Besides, if you have set a target, you should make the deal when it is achieved. You should never think that you will be able to make more money and forget your original target. As discussed, this is the most serious mistake some traders make.

To be honest, forex trading is not easy. However, if you can work hard and do your own research, you will always have the chance to make money. You have to keep learning. Education is probably the most important thing if you would like to make money from forex trading. And if you have the discipline and educate yourself well, there is no reason why you cannot be successful in the marketing.

FOREX is.....

2008-02-03T06:56:00.000-08:00

FOREX (FOReign EXchange market) is an international foreign exchange market, where money is sold and bought freely. In its present condition FOREX was launched in the 1970s, when free exchange rates were introduced, and only the participants of the market determine the price of one currency against the other proceeding from supply and demand.

As far as the freedom from any external control and free competition are concerned, FOREX is a perfect market. It is also the biggest liquid financial market. According to various assessments, money masses in the market constitute from 1 to 1.5 trillion US dollars a day. (It is impossible to determine an absolutely exact number because trading is not centralized on an exchange.) Transactions are conducted all over the world via telecommunications 24 hours a day from 00:00 GMT on Monday to 10:00 pm GMT on Friday. Practically in every time zone (that is, in Frankfurt-on-Main, London, New York, Tokyo, Hong Kong, etc.) there are dealers who will quote currencies.

FOREX is a more objective market, because if some of its participants would like to change prices, for some manipulative purpose, they would have to operate with tens of billions dollars. That is why any influence by a single participants in the market is practically out of the question. The superior liquidity allows the traders to open and/or close positions within a few seconds. The time of keeping a position is arbitrary and has no limits: from several seconds to many years. It depends only on your trading strategies. Although the daily fluctuations of currencies are rather insignificant, you may use the credit lines, that are accessible even to currency speculators with small capitals ($ 1,000 - 5,000), where the profit may be impressive. (You can learn more about it in the section: The main principles of trading.)

The idea of marginal trading stems from the fact that in FOREX speculative interests can be satisfied without a real money supply. This decreases overhead expenses for transferring money and gives an opportunity to open positions with a small account in US dollars, buying and selling a lot of other currencies. That is, on can conduct transactions very quickly, getting a big profit, when the exchange rates go up or down. Many speculative transactions in the international financial markets are made on the principles of marginal trading.

Margin trading is trading with a borrowed capital. Marginal trading in an exchange market uses lots. 1 lot equals approximately $100,000, but to open it it is necessary to have only from 0.5% to 4% of the sum.

For example, you have analyzed the situation in the market and come to the conclusion that the pound will go up against the dollar. You open 1 lot for buying the pound (GBP) with the margin 1% (1:1000 leverage) at the price of 1.49889 and wait for the exchange rate to go up. Some time later your expectations become true. You close the position at 1.5050 and earn 61 pips (about $ 405). For the calculation of 1 pip click

Everyday fluctuations of currencies constitute about 100 to 150 pips, giving FX traders an opportunity to make money on these changes.

In FOREX, it's not obligatory to buy some currency first in order to sell it later. It's possible to open positions for buying and selling any currency without actually having it. Usually Internet-brokers establish the minimum deposit such as $ 2000, for working in the FOREX market, and grant a leverage of 1:100. That is, opening the position at $100,000, a trader invests $1,000 and receives $99.000 as a credit. The major currencies traded in FOREX, are Euro (EUR), Japanese yen (JPY), British Pound (GBP), and Swiss Franc (CHF). All of them are traded against the US dollar (USD).

In order to assess the situation in the market a trader has to be able to use fundamental and/or technical analysis, as well as to make decisions in the constantly changing current of information about political and economic character. Most small and medium players in financial markets use technical analysis. Technical analysis presupposes that all the information about the market and its further fluctuations is contained in the price chain. Any factor, that has some influence on the price, be it economic, political or psychological, has already been considered by the market and included in the price. The initial data for a technical analysis are prices: the highest and the lowest prices, the price of opening and closing within a certain period of time, and the volume of transactions.

A technical analysis is founded on three suppositions:

Movement of the market considers everything;

Movement of prices is purposeful;

History repeats itself.

That is, technical analysis is a statistical and mathematical analysis of previous quotes and a prognosis of coming prices.

A number of technical indicators have been installed into the PRO-CHARTS trading system. Analyzing the indicators one can come to the conclusion about further movements of the quoted currencies. For a more detailed description of the indicators, analyzing price charts and volumes of trading, click

Fundamental analysis is an analysis of current situations in the country of the currency, such as its economy, political events, and rumors. The country's economy depends on the rate of inflation and unemployment, on the interest rate of its Central Bank, and on tax policy. Political stability also influences the exchange rate. Policy of the Central Bank has a special role, as concentrated interventions or refusal from them greatly influence the exchange rate.

At the same time one should not consider fundamental analysis just as an analysis of the economic situation in the country itself. A far bigger role in the FOREX market belongs to the expectations of the market participants and their assessment of these expectations. Various prognoses and bulletins, issued by the participants, have a strong influence on the expectations. Very often an effect of the so-called self-filfilling prophecy occurs when market players raise or lower the exchange rates according to the prognosis. But a deep and thorough fundamental analysis is available only for big banks with a staff of professional analysts and constant access to a wide field of information.

In spite of these different approaches, both forms of analyses complement one another. Traders who act on the basis of a fundamental analysis, have to consider some technical characteristics of the market (the main rates of support, such as resistance and resale), and supporters of the technical approach to the market must track the main news (interest rates, important political events).

The main merits of the FOREX market are:

The biggest number of participants and the largest volumes of transactions;

Superior liquidity and speed of the market: transactions are conducted within a few seconds according to online quotes;

The market works 24 hours a day, every working days;

A trader can open a position for any period of time he wants;

No fees, except for the difference between buying and selling prices;

An opportunity to get a bigger profit that the invested sum;

Qualified work in the FOREX market can become your main professional activity;

You can make deals any time you like.