Forex is a market where exchange of one currency with another currency takes place. It’s the market which provides accessibility and liquidity to the traders to buy and sell one foreign currency in exchange of another.
Forex traders seek profit in buying currencies low and selling them high. This kind of trading became more popular with the widespread of the on-line Forex brokers. There is a lot of information available about Forex on the web. However there also many myths surrounding the foreign exchange market:
Forex trading is easy: Many people that want to dive into the world of the foreign exchange market believe that the Forex trading is easy — you just read a book or two and then you will be able to earn daily profits with just 2-3 hours trading daily. Others think that they can buy a profitable strategy and it will make them rich in Forex. In reality that’s just a myth. Succeeding in Forex isn’t easier than mastering any other profession — it takes time, money and a lot of practice.
"I will make money in Forex, if I can trade stocks successfully" Success in stock market doesn’t imply that you will get success in Forex market — there are many differences between trading stocks and the spot currencies. First of all, Forex market requires a lot of hard work and dedication as this market is open for 24 hours a day. You cannot just sit in front of your computer for the whole day and night, so the best way is that you should find the most suitable time periods for trading. Second, “buy&hold„ strategy simply won’t work in Forex market. Third, you don’t have that much information about currencies as you can get from the companies’ reports and statistics.
"I can make profit whenever I want if Forex market is open 24 hours a day" Once again, you won’t be sitting in front of your PC for the whole day to be able to trade 24 hours. You’ll have to develop automated trading software to get the advantage of 24 hours a day working schedule.
"I can be a successful Forex trader just following someone else’s signals" Many beginning traders get burned by the blind signal-following. That’s like putting away the whole responsibility for your actions to someone else. That may sound cool, but in reality you end up with the huge losses. Learn to rely on your own knowledge and skills. Remember that there were no great signal-followers in any financial market.
No commission is to be paid in Forex market: You only have to pay the spread, but you don’t have to pay the commission. And what’s spread? It is the difference between the buy and sell price of the currency pair at the same moment. You may end up with the major part of your profits in the broker’s hands if you plan to rely on the short-term trading.
Forex is a scam: Some skeptics and disappointed traders think that Forex is just some new fad to scam people for their hard earned money. Although there are many scams that are hiding behind the "brand" of Forex, that doesn’t mean that the Forex itself is a scam. There are many institutional Forex brokers, regulated Forex account managers and other solid companies in the market to whom you can trust.
"I need to exactly predict the market outcome to be profitable in Forex" There is no scientific method to know something in advance in the market with a 100% certainty. There would be no Forex market if you could know the exact currency rates beforehand. Trading is not the game of certainties; it’s a game of odds. One of the first things that new traders learn is to think in the terms of probabilities and risk-to-reward ratios.
"I need to use a very complex strategy to be successful in Forex" It’s a popular myth, in which many on-line sellers would want you to believe. The main requirement to be successful in Forex is a self-discipline and money management. There are many traders that make consistent profits with rather simple and old strategies.
"I need to have a lot of starting capital to get profit in Forex" Big capital investment won’t help you in Forex. You don’t need a lot of money to diversify in currencies and you can’t move the currency rates with your trading orders (you’d need billions of dollars to do that). Actually you can trade with a very a little capital, because Forex trading is almost always leveraged with the broker’s money.
Forex is gambling because it’s completely random: Although there is no certainty in Forex (as in any financial market) it doesn’t mean that it’s completely random. And it’s certainly not a gambling, since your success in this market depends mostly on your skills and experience, not on your luck.
Wednesday, December 16, 2009
Saturday, December 12, 2009
Forex Automated The Key To Trading Flexibility.
Forex Automated The Key To Trading Flexibility Expert Traders often use the automated trading methodology to execute market orders when they are not able to be in front of their computer. The Forex market, like its counterparts (Stock and Bonds) does not have a central exchange. All trades are conducted online through a trading software 24 hours a day and 5 days a week.
It maybe 3 in the morning, but a trader using the automated technology will not miss a trade. All he has to do is input the currency pair and targeted amount that he wants to buy or sell. To execute the trade, he has to set a deadline, which if hit, executes the trade.
One can limit automated trading sessions according to their needs. It can be a 24 hour period or even longer if required. It depends upon the opportunity and the trading strategy. As a follow up, a trader can setup multiple set of trades, all on automation.
Automated trading kills trading indecisions
In trading, indecision is a common element. A trader may see an opportunity, but maybe weary of executing it, regardless of how good it maybe. Using the right software, the trader can avoid the volatility of the mind. The trader can set the right rules and can also edit any of the trades he manually set. Automated trading at times offers peace of mind.
Online trading is virtual. There is nothing tangible bought or sold. Since a country’s economy can change due to extreme external influences like natural disasters, Geo-political wars, etc, it is not recommended to take part, unless experienced in the market behavior. The initial account opened should be a test account to understand and test automated trading.
Automated trading, while offering peace of mind and emotionless trading, can be disastrous in certain conditions. Since it cannot sense and judge external events, it can, many of the times, lead to heavy capital losses.
Lastly, it is all about experience. Once you have gained enough understanding as well as confidence in your automated strategy, you can take the risk of trading while you sleep, or even if you are out of town celebrating your big wins.
It maybe 3 in the morning, but a trader using the automated technology will not miss a trade. All he has to do is input the currency pair and targeted amount that he wants to buy or sell. To execute the trade, he has to set a deadline, which if hit, executes the trade.
One can limit automated trading sessions according to their needs. It can be a 24 hour period or even longer if required. It depends upon the opportunity and the trading strategy. As a follow up, a trader can setup multiple set of trades, all on automation.
Automated trading kills trading indecisions
In trading, indecision is a common element. A trader may see an opportunity, but maybe weary of executing it, regardless of how good it maybe. Using the right software, the trader can avoid the volatility of the mind. The trader can set the right rules and can also edit any of the trades he manually set. Automated trading at times offers peace of mind.
Online trading is virtual. There is nothing tangible bought or sold. Since a country’s economy can change due to extreme external influences like natural disasters, Geo-political wars, etc, it is not recommended to take part, unless experienced in the market behavior. The initial account opened should be a test account to understand and test automated trading.
Automated trading, while offering peace of mind and emotionless trading, can be disastrous in certain conditions. Since it cannot sense and judge external events, it can, many of the times, lead to heavy capital losses.
Lastly, it is all about experience. Once you have gained enough understanding as well as confidence in your automated strategy, you can take the risk of trading while you sleep, or even if you are out of town celebrating your big wins.
Sunday, November 15, 2009
Some Ways To Safe Yourself From Forex Scams.
Do not let your hard-earned money go to individuals who do not deserve any part of it. If you are into Forex trading or any other marketing ventures or trade schemes, be very careful. Of course, this must be applied in every aspect of your life. But when it involves money and your future, study your way through all the paths of the venture to avoid mishaps along the way.
Scams Everywhere
Did you know that fraudulent acts in Forex trades are becoming more and more common? This is because this kind of trading is also becoming more prominent. So as the number of individual traders increases, so does the group who commits fraud to such people who want to increase their savings.
Be vigilant, if you do not want to end up having nothing left in your accounts. You can find some help through reading and asking around. But the trick will all depend on you. If you don't succumb easily to acts that seem to be good to be true, then you are on the right track to becoming a successful trader.
The Preventive Measures
The most useful tip that you may be getting from the traders themselves is to educate yourself further before you become too involved in the trading system. But the scammers are also improving as time passes. The technology is evolving so fast that they are also benefiting from it.
Your only hope as the trader is that the Forex trade also comes up with high-tech solutions to prevent such bad acts. But while they are still thinking of such, you can opt for some measures to protect your claims and stocks.
The CTFC
There are warnings and additional explanations that can be read through the Commodity Futures Trading Commission (CTFC) Forex Fraud. Read those carefully and apply what's applicable when entering into any negotiation.
The NFA
The National Futures Association (NFA) can also be your ally on this task. Before trading with a group, check with the NFA to see if they are a member of this organization. This way, you can be assured of the companies, groups and individuals that you're dealing with before you are fooled into any scams.
The Better Business Bureau
In Forex Trading, you can also check the group or company that you'll be dealing with at the Better Business Bureau. This way, you can investigate on them first, research about their background and decide on your own if they are worthy to be trusted.
Scams Everywhere
Did you know that fraudulent acts in Forex trades are becoming more and more common? This is because this kind of trading is also becoming more prominent. So as the number of individual traders increases, so does the group who commits fraud to such people who want to increase their savings.
Be vigilant, if you do not want to end up having nothing left in your accounts. You can find some help through reading and asking around. But the trick will all depend on you. If you don't succumb easily to acts that seem to be good to be true, then you are on the right track to becoming a successful trader.
The Preventive Measures
The most useful tip that you may be getting from the traders themselves is to educate yourself further before you become too involved in the trading system. But the scammers are also improving as time passes. The technology is evolving so fast that they are also benefiting from it.
Your only hope as the trader is that the Forex trade also comes up with high-tech solutions to prevent such bad acts. But while they are still thinking of such, you can opt for some measures to protect your claims and stocks.
The CTFC
There are warnings and additional explanations that can be read through the Commodity Futures Trading Commission (CTFC) Forex Fraud. Read those carefully and apply what's applicable when entering into any negotiation.
The NFA
The National Futures Association (NFA) can also be your ally on this task. Before trading with a group, check with the NFA to see if they are a member of this organization. This way, you can be assured of the companies, groups and individuals that you're dealing with before you are fooled into any scams.
The Better Business Bureau
In Forex Trading, you can also check the group or company that you'll be dealing with at the Better Business Bureau. This way, you can investigate on them first, research about their background and decide on your own if they are worthy to be trusted.
Wednesday, November 11, 2009
How To Turn Off Investment Swindlers?
After discussing about who are investment swindlers and the techniques they use to cheat the investors, lets talk about some techniques that one can use to turn off these swindlers and save himself/herself from the upcoming fraud. Ive been reading this article about 'Questions That Can Turn Off An Swindler', the article was so good so i am posting some of the major points of that article.
The first line of defense against investment fraud is your inalienable right to ask questions and--until you get the right answers--to say "No." And mean no. Not surprisingly, this is usually an investment swindler's first point of attack. To keep you from asking questions, he asks them! Invariably, the questions have "yes" answers, such as "You would at least be interested in hearing about such a fantastic investment opportunity, wouldn't you?" or "You would like to make a large amount of money in a short period of time with little or no risk, right?"
1. Where did you get my name?
If the response is that you were chosen from a "select list of intelligent and prudent investors," that select list may be the telephone directory, or a purchased list of persons who've bought certain types of books, subscribed to particular magazines, or responded to newspaper ads. If you have made ill-advised investments in the past, you can be pretty sure your name is on someone's alumni list. It's the list swindlers prize most: Easy preys who are eager to recoup (but are doomed to repeat) their earlier losses.
2. Can you send me a written explanation of your investment so I can consider it at my leisure?
For someone peddling fraudulent investments, that can be a double turnoff. For one thing, most crooks are reluctant to put anything in writing that might cause them to run afoul of postal authorities or provide material that, at some point, might become evidence in a fraud trial. Secondly, swindlers don't want you to do anything at your leisure. They want your money now.
3. Would you mind explaining your investment proposal to some third party, such as my attorney, accountant, investment advisor or banker?
If the answer goes something along the lines of "normally, I'd be glad to, but there isn't time for that," or if the salesman snaps back by asking "can't you make your own investment decisions?" these are virtually certain clues that your final answer should be an emphatic "No."
4. Can you give me the names of your firm's principals and officers?
Although some persons who establish and operate dishonest firms change their own names as often as they change their firms' names, even the hint that you are the kind of investor who checks into things like that can be a fast turn-off for a swindler.
5. Can you provide references?
Not just another list of other investors who supposedly became fabulously wealthy (the names you get may be the salesman's boss or someone sitting at the next phone), but reputable and reliable recommendations such as a bank or well-known brokerage firm that you can easily contact.
6. Are the investments you are offering traded on a regulated exchange, such as a securities or futures exchange?
Some bona fide investments are and some aren't, but fraudulent investments never are. Exchanges have strict rules designed to assure fair dealing and competitive price determination. There are also in-place mechanisms to provide for rule enforcement and to impose severe sanctions against those who fail to observe the rules.
7. How long has your company been in business?
In any kind of business activity, there can be advantages to dealing with a known, established company. This isn't to say that new businesses aren't starting up all the time or that the vast majorities aren’t perfectly reputable. But if you find yourself talking with someone who doesn't seem to have a past, it can be worthwhile to find out why. Many swindlers have been running scams for years but understandably aren't anxious to talk about it.
8. What has your track record been?
Before you accept a salesman's assurance that he can make money for you, you have the right to know what his performance has been in making money for others. And ask to have the information (if there is any) in writing. Boasting over the phone is one thing; putting it down on paper is quite another. In any case, even if you are able to obtain a documented performance record, don't lose sight of the fact that past performance in itself provides no assurance of future performance.
9. When and where can I meet with you or with another representative of your firm?
Chances are a crooked operator--particularly if he is operating out of a telephone boiler-room--isn't going to take
the time to visit with you and even more certainly doesn't want you to see his place of business.
10. Where, exactly, will my money be? And what type of regular accounting statements do you provide?
In many investment areas, such as futures trading, firms are required to maintain their customers' funds in segregated accounts at all times. Any mingling of investors' funds with those of the firm or its principals is prohibited. You might also want to find out what, if any, routine outside audits the firm's account records are subject to.
The first line of defense against investment fraud is your inalienable right to ask questions and--until you get the right answers--to say "No." And mean no. Not surprisingly, this is usually an investment swindler's first point of attack. To keep you from asking questions, he asks them! Invariably, the questions have "yes" answers, such as "You would at least be interested in hearing about such a fantastic investment opportunity, wouldn't you?" or "You would like to make a large amount of money in a short period of time with little or no risk, right?"
1. Where did you get my name?
If the response is that you were chosen from a "select list of intelligent and prudent investors," that select list may be the telephone directory, or a purchased list of persons who've bought certain types of books, subscribed to particular magazines, or responded to newspaper ads. If you have made ill-advised investments in the past, you can be pretty sure your name is on someone's alumni list. It's the list swindlers prize most: Easy preys who are eager to recoup (but are doomed to repeat) their earlier losses.
2. Can you send me a written explanation of your investment so I can consider it at my leisure?
For someone peddling fraudulent investments, that can be a double turnoff. For one thing, most crooks are reluctant to put anything in writing that might cause them to run afoul of postal authorities or provide material that, at some point, might become evidence in a fraud trial. Secondly, swindlers don't want you to do anything at your leisure. They want your money now.
3. Would you mind explaining your investment proposal to some third party, such as my attorney, accountant, investment advisor or banker?
If the answer goes something along the lines of "normally, I'd be glad to, but there isn't time for that," or if the salesman snaps back by asking "can't you make your own investment decisions?" these are virtually certain clues that your final answer should be an emphatic "No."
4. Can you give me the names of your firm's principals and officers?
Although some persons who establish and operate dishonest firms change their own names as often as they change their firms' names, even the hint that you are the kind of investor who checks into things like that can be a fast turn-off for a swindler.
5. Can you provide references?
Not just another list of other investors who supposedly became fabulously wealthy (the names you get may be the salesman's boss or someone sitting at the next phone), but reputable and reliable recommendations such as a bank or well-known brokerage firm that you can easily contact.
6. Are the investments you are offering traded on a regulated exchange, such as a securities or futures exchange?
Some bona fide investments are and some aren't, but fraudulent investments never are. Exchanges have strict rules designed to assure fair dealing and competitive price determination. There are also in-place mechanisms to provide for rule enforcement and to impose severe sanctions against those who fail to observe the rules.
7. How long has your company been in business?
In any kind of business activity, there can be advantages to dealing with a known, established company. This isn't to say that new businesses aren't starting up all the time or that the vast majorities aren’t perfectly reputable. But if you find yourself talking with someone who doesn't seem to have a past, it can be worthwhile to find out why. Many swindlers have been running scams for years but understandably aren't anxious to talk about it.
8. What has your track record been?
Before you accept a salesman's assurance that he can make money for you, you have the right to know what his performance has been in making money for others. And ask to have the information (if there is any) in writing. Boasting over the phone is one thing; putting it down on paper is quite another. In any case, even if you are able to obtain a documented performance record, don't lose sight of the fact that past performance in itself provides no assurance of future performance.
9. When and where can I meet with you or with another representative of your firm?
Chances are a crooked operator--particularly if he is operating out of a telephone boiler-room--isn't going to take
the time to visit with you and even more certainly doesn't want you to see his place of business.
10. Where, exactly, will my money be? And what type of regular accounting statements do you provide?
In many investment areas, such as futures trading, firms are required to maintain their customers' funds in segregated accounts at all times. Any mingling of investors' funds with those of the firm or its principals is prohibited. You might also want to find out what, if any, routine outside audits the firm's account records are subject to.
Tuesday, November 10, 2009
Some Techniques Swindlers Use.
Their techniques are as varied as their methods of establishing contact. If there is a common denominator, however, it is their ability to be convincing. The skills that make them successful are essentially the same skills that enable any good salesperson to be successful.
But swindlers have a decided advantage: They don't have to make good on their promises. In the absence of this responsibility, they have no reluctance to promise whatever it takes to persuade you to part with your money.
The first line of defense against investment fraud is your inalienable right to ask questions and--until you get the right answers--to say "No." And mean no. Not surprisingly, this is usually an investment swindler's first point of attack. To keep you from asking questions, he asks them! Invariably, the questions have "yes" answers, such as "You would at least be interested in hearing about such a fantastic investment opportunity, wouldn't you?" or "You would like to make a large amount of money in a short period of time with little or no risk, right?"
But swindlers have a decided advantage: They don't have to make good on their promises. In the absence of this responsibility, they have no reluctance to promise whatever it takes to persuade you to part with your money.
The first line of defense against investment fraud is your inalienable right to ask questions and--until you get the right answers--to say "No." And mean no. Not surprisingly, this is usually an investment swindler's first point of attack. To keep you from asking questions, he asks them! Invariably, the questions have "yes" answers, such as "You would at least be interested in hearing about such a fantastic investment opportunity, wouldn't you?" or "You would like to make a large amount of money in a short period of time with little or no risk, right?"
Sunday, November 8, 2009
Investment Swindlers( Who they are, what they do?).
They are a faceless voice on a telephone. Or a flashy web site on the Internet. Or a friend of a friend. hey may have no apparent connection to the investment business or they may have an alphabet-soup of impressive letters following their names. They may be glib or fast-talking or so seemingly shy and soft-Forex Scamspoken that you feel almost compelled to force your money on them. The first rule of protecting yourself from an investment swindle is thus to rid yourself of any notions you might have as to what an investment swindler looks like or sounds like. Indeed, some swindlers don’t start out to be swindlers. There are case histories in which individuals who held positions of trust and esteem—accountants, attorneys, bona fide investment brokers and even doctors—have sacrificed their ethics for the fast buck of running an investment scam. In still other cases, investment programs that began with legitimate intentions went sour through happenstance or poor management, leading the promoter to mishandle or abscond with investors’ capital. Whether an investment is planned as a scam or simply becomes one, the result is the same. This is why protecting your savings against fraud involves at least three steps. Carefully check out the person and firm you would be dealing with. Take a close and cautious look at the investment offer itself. And continue to monitor any investment that you decide to make. No one of these precautions alone maybe sufficient.
Who are the Victims of Investment Fraud?
If you are absolutely certain it could never be you, the investment swindler starts with a
big advantage. Investment fraud generally happens to people who think it couldn’t happen to them. Just as there is no typical profile for swindlers, neither is there one for their victims.
While some scams target persons who are known or thought to have deep pockets, most swindlers take the attitude that everyone’s money spends the same. It simply takes more small investors to fund a large fraud. In fact, some swindlers deliberately seek out families that may have limited means or financial difficulties, figuring such persons may be particularly receptive to a proposal that offers fast and large profits. A favorite pitch is that small investors can become rich only if they learn and employ the investment strategies used by wealthy persons. Naturally, the swindler will teach them! Although victims of investment fraud can differ from one another in many ways, they do, unfortunately, have one trait in common: Greed that exceeds their caution. They also possess a willingness to believe what they want to believe. Movie actors and athletes, professional persons and successful business executives, political leaders and internationally famous economists have all fallen victim to investment fraud. So have hundreds of thousands of others, including widows, retirees and working people—people who made their money the hard way and lost it the fast way.
Who are the Victims of Investment Fraud?
If you are absolutely certain it could never be you, the investment swindler starts with a
big advantage. Investment fraud generally happens to people who think it couldn’t happen to them. Just as there is no typical profile for swindlers, neither is there one for their victims.
While some scams target persons who are known or thought to have deep pockets, most swindlers take the attitude that everyone’s money spends the same. It simply takes more small investors to fund a large fraud. In fact, some swindlers deliberately seek out families that may have limited means or financial difficulties, figuring such persons may be particularly receptive to a proposal that offers fast and large profits. A favorite pitch is that small investors can become rich only if they learn and employ the investment strategies used by wealthy persons. Naturally, the swindler will teach them! Although victims of investment fraud can differ from one another in many ways, they do, unfortunately, have one trait in common: Greed that exceeds their caution. They also possess a willingness to believe what they want to believe. Movie actors and athletes, professional persons and successful business executives, political leaders and internationally famous economists have all fallen victim to investment fraud. So have hundreds of thousands of others, including widows, retirees and working people—people who made their money the hard way and lost it the fast way.
Saturday, November 7, 2009
Forex Scams.
Despite many brokers claims to the contrary, trading foreign exchange successfully is not an easy thing to do. FX trading is at best a risky business and at worst, a scammer’s dream come true. The Commodities Futures Trading Commission (CTFC) has seen a marked increase in the amount of foreign exchange scams over the last few years as FX trading has become more and more popular. Here is a quick list of some popular general forex scams:
Signal Sellers
It seems like a new company springs up every day that has the signal service to beat all signal services. They profess to be able to sell you information on which trades you should make. These signal sellers usually charge a daily/weekly/monthly fee for their service and usually do not offer anything that will help improve your trading. There is no such thing as having a magic key to the market and if there was, why would you sell it?
Phony Investment Funds
In the past few years, funds called HYIP(High Yield Investment Program) have popped up all over the place. Most of these(if not all) are scams. They promise you a high level of return for temporary use of your money in their forex fund. It is a type of Ponzi scheme where the investors of yesterday get paid back by the investors of tomorrow. Once the fund runs out of prospects, they usually close down and take whatever money they had with them.
Miracle Software
There is no software that will figure out the forex market for you. However, a quick google search will turn up plenty of software sellers that say otherwise. Some companies out there are selling their special “packages” for upwards of $5,000 and many times it turns out to be something that you can find on the internet for free. It is generally not advisable to buy any type of forex software that will tell you which trades to make.
Signal Sellers
It seems like a new company springs up every day that has the signal service to beat all signal services. They profess to be able to sell you information on which trades you should make. These signal sellers usually charge a daily/weekly/monthly fee for their service and usually do not offer anything that will help improve your trading. There is no such thing as having a magic key to the market and if there was, why would you sell it?
Phony Investment Funds
In the past few years, funds called HYIP(High Yield Investment Program) have popped up all over the place. Most of these(if not all) are scams. They promise you a high level of return for temporary use of your money in their forex fund. It is a type of Ponzi scheme where the investors of yesterday get paid back by the investors of tomorrow. Once the fund runs out of prospects, they usually close down and take whatever money they had with them.
Miracle Software
There is no software that will figure out the forex market for you. However, a quick google search will turn up plenty of software sellers that say otherwise. Some companies out there are selling their special “packages” for upwards of $5,000 and many times it turns out to be something that you can find on the internet for free. It is generally not advisable to buy any type of forex software that will tell you which trades to make.
Wednesday, November 4, 2009
Most Traded Currencies.
When people hear of currencies changing, they are often confused. When they hear of the dollar gaining or losing on other types of currency, that do not realize that the currency is actually being bought, sold, and traded. The forex market, also known as the foreign exchange market, is a way for companies, banks, and individuals to trade currencies to try to gain on their initial investments. The forex market is different and unique; the three markets (US, Europe, Asia) have at least one running at all times during the weekdays; this makes this a 24 hour a week-day market, working constantly on the week days to make sure currencies can be traded. All currencies have the opportunity to be traded, but there are obviously major players that are traded the most on the forex market.
In general, the eight most traded currencies (in no specific order) are the U.S. dollar (USD), the Canadian dollar (CAD), the euro (EUR), the British pound (GBP), the Swiss franc (CHF), the New Zealand dollar (NZD), the Australian dollar (AUD) and the Japanese yen (JPY).
A currency can never be traded by itself. So you can not ever trade a EUR by itself. You always need to compare one currency with another currency to make a trade possible. Some Of the common pairs are:
EUR/USD Euro / US Dollar "Euro"
USD/JPY US Dollar / Japanese Yen "Dollar Yen"
GBP/USD British Pound / US Dollar "Cable"
USD/CAD US Dollar / Canadian Dollar "Dollar Canada"
AUD/USD Australian Dollar/US Dollar "Aussie Dollar"
USD/CHF US Dollar / Swiss Franc "Swissy"
EUR/JPY Euro / Japanese Yen "Euro Yen"
In general, the eight most traded currencies (in no specific order) are the U.S. dollar (USD), the Canadian dollar (CAD), the euro (EUR), the British pound (GBP), the Swiss franc (CHF), the New Zealand dollar (NZD), the Australian dollar (AUD) and the Japanese yen (JPY).
A currency can never be traded by itself. So you can not ever trade a EUR by itself. You always need to compare one currency with another currency to make a trade possible. Some Of the common pairs are:
EUR/USD Euro / US Dollar "Euro"
USD/JPY US Dollar / Japanese Yen "Dollar Yen"
GBP/USD British Pound / US Dollar "Cable"
USD/CAD US Dollar / Canadian Dollar "Dollar Canada"
AUD/USD Australian Dollar/US Dollar "Aussie Dollar"
USD/CHF US Dollar / Swiss Franc "Swissy"
EUR/JPY Euro / Japanese Yen "Euro Yen"
Monday, November 2, 2009
How To Trade Using Pivot Points.
Breakout Trades:
The pivot point should be the first place you look at to enter a trade, since it is the primary support/resistance level. The biggest price movements usually occur at the price of the pivot point.
Only when price reaches the pivot point will you be able to determine whether to go long or short, and set your profit targets and stops. Generally, if prices are above the pivot it’s considered bullish, and if they are below it’s considered bearish.
Let’s say the price is hovering around the pivot point and closes below it so you decide to go short. Your stop loss would be above PP and your initial profit target would be at S1.
However, if you see prices continue to fall below S1, instead of cashing out at S1, you can move your existing stop-loss order just above S1 and watch carefully. Typically, S2 will be the expected lowest point of the trading day and should be your ultimate profit objective.
The converse applies during an uptrend. If price closed above PP, you would enter a long position, set a stop loss below PP and use the R1 and R2 levels as your profit objectives.
The Pullback Trade:
This is one of my favorite set ups. The market passes through S1 and then pulls back. An entry order is placed below support, which in this case was the most recent low before the pullback. A stop is then placed above the pullback (the most recent high - peak) and a target set for S2. The problem again, on this day was that the target of S2 was to close, and the market never took out the previous support, which tells us that, the market sentiment is beginning to change.
Breakout of Resistance:
As the day progressed, the market started heading back up to S1 and formed a channel (congestion area). This is another good set up for a trade. An entry order is placed just above the upper channel line, with a stop just below the lower channel line and the first target would be the pivot line. If you where trading more than one position, then you would close out half your position as the market approaches the pivot line, tighten your stop and then watch market action at that level. As it happened, the market never stopped and your second target then became R1. This was also easily achieved and I would have closed out the rest of the position at that level.
The pivot point should be the first place you look at to enter a trade, since it is the primary support/resistance level. The biggest price movements usually occur at the price of the pivot point.
Only when price reaches the pivot point will you be able to determine whether to go long or short, and set your profit targets and stops. Generally, if prices are above the pivot it’s considered bullish, and if they are below it’s considered bearish.
Let’s say the price is hovering around the pivot point and closes below it so you decide to go short. Your stop loss would be above PP and your initial profit target would be at S1.
However, if you see prices continue to fall below S1, instead of cashing out at S1, you can move your existing stop-loss order just above S1 and watch carefully. Typically, S2 will be the expected lowest point of the trading day and should be your ultimate profit objective.
The converse applies during an uptrend. If price closed above PP, you would enter a long position, set a stop loss below PP and use the R1 and R2 levels as your profit objectives.
The Pullback Trade:
This is one of my favorite set ups. The market passes through S1 and then pulls back. An entry order is placed below support, which in this case was the most recent low before the pullback. A stop is then placed above the pullback (the most recent high - peak) and a target set for S2. The problem again, on this day was that the target of S2 was to close, and the market never took out the previous support, which tells us that, the market sentiment is beginning to change.
Breakout of Resistance:
As the day progressed, the market started heading back up to S1 and formed a channel (congestion area). This is another good set up for a trade. An entry order is placed just above the upper channel line, with a stop just below the lower channel line and the first target would be the pivot line. If you where trading more than one position, then you would close out half your position as the market approaches the pivot line, tighten your stop and then watch market action at that level. As it happened, the market never stopped and your second target then became R1. This was also easily achieved and I would have closed out the rest of the position at that level.
Saturday, October 31, 2009
Understanding Pivot Points Using Charts.
Generally speaking, the pivot point is seen as the primary support or resistance level. The following chart is a 5 minute chart, where:
The green line is the pivot point (P).
The red lines are resistance levels (R1, R2, R3).
The blue lines are support levels (S1, S2, S3).
The green line is the pivot point (P).
The red lines are resistance levels (R1, R2, R3).
The blue lines are support levels (S1, S2, S3).
Monday, October 26, 2009
Using Pivot Points In Trading.
You are going to love this lesson. Using pivot points as a trading strategy has been around for a long time and was originally used by floor traders. This was a nice simple way for floor traders to have some idea of where the market was heading during the course of the day with only a few simple calculations.
The pivot point is the level at which the market direction changes for the day. Using some simple arithmetic and the previous days high, low and close, a series of points are derived. These points can be critical support and resistance levels. The pivot level, support and resistance levels calculated from that are collectively known as pivot levels.
Every day the market you are following has an open, high, low and a close for the day (some markets like forex are 24 hours but generally use 5pm EST as the open and close). This information basically contains all the data you need to use pivot points.
Daily pivot points give a structure to each new trading day in the currency market. With these values you can use traditional support and resistance techniques to enter and exit trades. But before I get to the strategy, I'll show you how to calculate pivot values.
Pivot Point (PP) = (High + Low + Close) / 3
Resistance 1 (R1) = (2 x Pivot Point) - Low
Support 1 (S1) = (2 x Pivot Point) - High
Resistance 2 (R2) = Pivot Point + (Resistance 1 - Support 1)
Support 2 (S2) = Pivot Point - (Resistance 1 - Support 1)
(Pivot values for several different currency pairs are posted on the TradingMarkets web site every day.)
The pivot values are plotted as horizontal levels which, in turn, serve as support and resistance. The pivot point itself can be thought of as the day's mid-point, or fulcrum. It's where the buyers and sellers meet to determine the day's trend in a currency pair. The support and resistance levels that are plotted around the pivot point are just that: potential support and resistance.
A daily pivot point (in green), S2, S1, R1, and R2 values are plotted on the chart below of the EUR/USD FX future. The chart is a 5-minute interval. Notice how the Euro broke above the pivot point early in the day, and then proceeded to trade up to R1, where it met resistance and gyrated for the rest of the day. There are many sites providing facilities to calculate pivot points, like the following site:
http://www.earnforex.com/pivot_points_calculator.php
The pivot point is the level at which the market direction changes for the day. Using some simple arithmetic and the previous days high, low and close, a series of points are derived. These points can be critical support and resistance levels. The pivot level, support and resistance levels calculated from that are collectively known as pivot levels.
Every day the market you are following has an open, high, low and a close for the day (some markets like forex are 24 hours but generally use 5pm EST as the open and close). This information basically contains all the data you need to use pivot points.
Daily pivot points give a structure to each new trading day in the currency market. With these values you can use traditional support and resistance techniques to enter and exit trades. But before I get to the strategy, I'll show you how to calculate pivot values.
Pivot Point (PP) = (High + Low + Close) / 3
Resistance 1 (R1) = (2 x Pivot Point) - Low
Support 1 (S1) = (2 x Pivot Point) - High
Resistance 2 (R2) = Pivot Point + (Resistance 1 - Support 1)
Support 2 (S2) = Pivot Point - (Resistance 1 - Support 1)
(Pivot values for several different currency pairs are posted on the TradingMarkets web site every day.)
The pivot values are plotted as horizontal levels which, in turn, serve as support and resistance. The pivot point itself can be thought of as the day's mid-point, or fulcrum. It's where the buyers and sellers meet to determine the day's trend in a currency pair. The support and resistance levels that are plotted around the pivot point are just that: potential support and resistance.
A daily pivot point (in green), S2, S1, R1, and R2 values are plotted on the chart below of the EUR/USD FX future. The chart is a 5-minute interval. Notice how the Euro broke above the pivot point early in the day, and then proceeded to trade up to R1, where it met resistance and gyrated for the rest of the day. There are many sites providing facilities to calculate pivot points, like the following site:
http://www.earnforex.com/pivot_points_calculator.php
Friday, October 23, 2009
How To Place A Forex Order.
Whether you are trading in a demo account or a live "real money" account, when you are ready to make a trade, you will need to place an order with your Forex broker. You will place an order to start a new trade or to end a trade. So now, we'll talk about the types of orders that apply to the Foreign Exchange Market.
Market Order – It is an order where you can buy or sell a currency pair at the market price the second that the order is processed. Customers utilizing ACM's online currency trading platform click on the buy or sell button after having specified their deal size. The execution of the order is instant; this means that the price assured at the exact time of the click will be given to the customer. Setting a market order by phone is quite similar but normally takes a few seconds more time.
Entry order – It is an order where you can buy or sell a currency pair when it attains a certain price target. In theory, this can be any price. You can set an entry order for the low price of a time period or the high price of a time period. The entry order is also studied by university students under forex trading education.
Limit Orders - A limit order is an order placed to buy or sell at a certain price. The order essentially contains two variables, price and duration. The trader specifies the price at which he wishes to buy/sell a certain currency pair and also specifies the duration that the order should remain active.
GTC (Good till cancelled): A GTC order remains active in the market until the trader decides to cancel it. The dealer will not cancel the order at any time therefore it is the customer's responsibility to remember that he possesses the order.
GFD (Good for the day): A GFD order remains active in the market until the end of the trading day. Since foreign exchange is an ongoing market the end of day must be a set hour.
For ACM the end of the trading day occurs at exactly 23:00 CET.
Stop orders - A stop order is also an order placed to buy or sell at a certain price. The order contains the same two variables, price and duration. The main difference between a limit order and a stop order is that stop orders are usually used to limit loss potential on a transaction whilst limit orders are used to enter the market, add to a pre-existing position and profit taking. The same variations are used to specify duration as in limit orders (GTC and GFD). Let's take the following example:
Example: Trader x Buys EUR/USD 100'000 @ 0.9340, he's expecting a 60 to 70 pip move in the market but he wants to protect himself in case he has overestimated the potential strength of the Euro. He knows that 0.9310 is a b support level so he places a stop loss order to sell at that level. Trader x has limited his risk on this particular trade to 30 pips or USD 300.
Another usage of a stop order is when a trader is expecting a price breakout to occur and wishes to grasp the opportunity to 'ride' the breakout. In this case a trade will place an order to buy or sell 'on stop'. To illustrate the logic behind this let's review the following scenario:
Example: Trader x sees EUR/USD breaking through the 0.9390 resistance level. He believes that if this happens, the price of EUR/USD could be headed to 0.9450 or over. At this point the market is at 0.9350 so trader x places an order to initiate a buying position of 500'000 at 0.9392 'on stop'.
OCO - An OCO (order cancels other) order is a mixture of 2 limit and/or stop orders. 2 orders with price and duration variables are placed above and below the current price. When one of the orders is executed the other order is cancelled. To illustrate how an OCO order works let's take the following example:
Example: The price of EUR/USD is 0.9340. Trader x wants to either buy 500'000 at 0.9395 over the resistance level in anticipation of a breakout or initiate a selling position if the price falls to 0.9300. The understanding is that if 0.9395 is reached, he will buy 500'000 and the 0.9300 order will be automatically cancelled.
Market Order – It is an order where you can buy or sell a currency pair at the market price the second that the order is processed. Customers utilizing ACM's online currency trading platform click on the buy or sell button after having specified their deal size. The execution of the order is instant; this means that the price assured at the exact time of the click will be given to the customer. Setting a market order by phone is quite similar but normally takes a few seconds more time.
Entry order – It is an order where you can buy or sell a currency pair when it attains a certain price target. In theory, this can be any price. You can set an entry order for the low price of a time period or the high price of a time period. The entry order is also studied by university students under forex trading education.
Limit Orders - A limit order is an order placed to buy or sell at a certain price. The order essentially contains two variables, price and duration. The trader specifies the price at which he wishes to buy/sell a certain currency pair and also specifies the duration that the order should remain active.
GTC (Good till cancelled): A GTC order remains active in the market until the trader decides to cancel it. The dealer will not cancel the order at any time therefore it is the customer's responsibility to remember that he possesses the order.
GFD (Good for the day): A GFD order remains active in the market until the end of the trading day. Since foreign exchange is an ongoing market the end of day must be a set hour.
For ACM the end of the trading day occurs at exactly 23:00 CET.
Stop orders - A stop order is also an order placed to buy or sell at a certain price. The order contains the same two variables, price and duration. The main difference between a limit order and a stop order is that stop orders are usually used to limit loss potential on a transaction whilst limit orders are used to enter the market, add to a pre-existing position and profit taking. The same variations are used to specify duration as in limit orders (GTC and GFD). Let's take the following example:
Example: Trader x Buys EUR/USD 100'000 @ 0.9340, he's expecting a 60 to 70 pip move in the market but he wants to protect himself in case he has overestimated the potential strength of the Euro. He knows that 0.9310 is a b support level so he places a stop loss order to sell at that level. Trader x has limited his risk on this particular trade to 30 pips or USD 300.
Another usage of a stop order is when a trader is expecting a price breakout to occur and wishes to grasp the opportunity to 'ride' the breakout. In this case a trade will place an order to buy or sell 'on stop'. To illustrate the logic behind this let's review the following scenario:
Example: Trader x sees EUR/USD breaking through the 0.9390 resistance level. He believes that if this happens, the price of EUR/USD could be headed to 0.9450 or over. At this point the market is at 0.9350 so trader x places an order to initiate a buying position of 500'000 at 0.9392 'on stop'.
OCO - An OCO (order cancels other) order is a mixture of 2 limit and/or stop orders. 2 orders with price and duration variables are placed above and below the current price. When one of the orders is executed the other order is cancelled. To illustrate how an OCO order works let's take the following example:
Example: The price of EUR/USD is 0.9340. Trader x wants to either buy 500'000 at 0.9395 over the resistance level in anticipation of a breakout or initiate a selling position if the price falls to 0.9300. The understanding is that if 0.9395 is reached, he will buy 500'000 and the 0.9300 order will be automatically cancelled.
Some Forex Quotations.
Now i'm going to post some famous forex quotes, this might sound off-topic but m going to post it anyways, :D
1.“If you get in on Jones’ tip; get out on Jones’ tip”. If you are riding another person’s idea, ride it all the way.
2. Run early or not at all. Don't be an eleven o'clock bull or a five o'clock bear.
3. Woodrow Wilson said, "a governments first priority is to organize the common interest against special interests". Successful traders seek out market opportunities capitalizing on the reality that government's first priority is rarely achieved.
4. People who buy headlines eventually end up selling newspapers.
5. If you do not know who you are, the market is an expensive place to find out.
6. Never give advice-the smart don't need it and the stupid don't heed it.
7. Disregard all prognostications. In the world of money, which is a world shaped by human behavior, nobody has the foggiest notion of what will happen in the future. Mark that word-nobody! Thus the successful trader bases no moves on what supposedly will happen but reacts instead to what does happen.
8. Worry is not a sickness but a sign of health. If you are not worried, you are not risking enough.
9. Except in unusual circumstances, get in the habit of taking your profit too soon. Don't torment yourself if a trade continues winning without you. Chances are it won't continue long. If it does console yourself by thinking of all the times when liquidating early preserved gains you would otherwise have lost.
10. When the ship starts to sink, don't pray-jump!
11. Life never happens in a straight line. Any adult knows this. But we can too easily be hypnotized into forgetting it when contemplating a chart. Beware of the chartist's illusion.
12. Optimism means expecting the best, but confidence means knowing how you will handle the worst. Never make a move if you are merely optimistic.
13. Whatever you do, whether you bet with the herd or against, think it through independently first.
14. Repeatedly reevaluate your open positions. Keep asking yourself: would I put my money into this if it were presented to me for the first time today? Is this trade progressing toward the ending position I envisioned?
15. It is a safe bet that the money lost by (short term) speculation is small compared with the gigantic sums lost by those who let their investments "ride". Long term investors are the biggest gamblers as after they make a trade they often times stay with it and end up losing it all. The intelligent trader will . By acting promptly-hold losses to a minimum.
16. As a rule of thumb good trend lines should touch at least three previous highs or lows. The more points the line catches, the better the line.
17. Volume and open interest are as important to the technician as price.
18. The clearest and easiest way to determine a trend is from previous highs and lows. Higher highs and higher lows mark an uptrend, lower highs and lower lows mark a downtrend.
19. Don't sell a quiet market after a fall because a low volume sell-off is actually a very bullish situation.
20. Prices are made in the minds of men, not in the soybean field: fear and greed can temporarily drive prices far beyond their so called real value.
21. When the market breaks through a weekly or monthly high, it is a buy signal. When it breaks through the previous weekly or monthly low, it is a sell signal.
22. Every sunken ship has a chart.
1.“If you get in on Jones’ tip; get out on Jones’ tip”. If you are riding another person’s idea, ride it all the way.
2. Run early or not at all. Don't be an eleven o'clock bull or a five o'clock bear.
3. Woodrow Wilson said, "a governments first priority is to organize the common interest against special interests". Successful traders seek out market opportunities capitalizing on the reality that government's first priority is rarely achieved.
4. People who buy headlines eventually end up selling newspapers.
5. If you do not know who you are, the market is an expensive place to find out.
6. Never give advice-the smart don't need it and the stupid don't heed it.
7. Disregard all prognostications. In the world of money, which is a world shaped by human behavior, nobody has the foggiest notion of what will happen in the future. Mark that word-nobody! Thus the successful trader bases no moves on what supposedly will happen but reacts instead to what does happen.
8. Worry is not a sickness but a sign of health. If you are not worried, you are not risking enough.
9. Except in unusual circumstances, get in the habit of taking your profit too soon. Don't torment yourself if a trade continues winning without you. Chances are it won't continue long. If it does console yourself by thinking of all the times when liquidating early preserved gains you would otherwise have lost.
10. When the ship starts to sink, don't pray-jump!
11. Life never happens in a straight line. Any adult knows this. But we can too easily be hypnotized into forgetting it when contemplating a chart. Beware of the chartist's illusion.
12. Optimism means expecting the best, but confidence means knowing how you will handle the worst. Never make a move if you are merely optimistic.
13. Whatever you do, whether you bet with the herd or against, think it through independently first.
14. Repeatedly reevaluate your open positions. Keep asking yourself: would I put my money into this if it were presented to me for the first time today? Is this trade progressing toward the ending position I envisioned?
15. It is a safe bet that the money lost by (short term) speculation is small compared with the gigantic sums lost by those who let their investments "ride". Long term investors are the biggest gamblers as after they make a trade they often times stay with it and end up losing it all. The intelligent trader will . By acting promptly-hold losses to a minimum.
16. As a rule of thumb good trend lines should touch at least three previous highs or lows. The more points the line catches, the better the line.
17. Volume and open interest are as important to the technician as price.
18. The clearest and easiest way to determine a trend is from previous highs and lows. Higher highs and higher lows mark an uptrend, lower highs and lower lows mark a downtrend.
19. Don't sell a quiet market after a fall because a low volume sell-off is actually a very bullish situation.
20. Prices are made in the minds of men, not in the soybean field: fear and greed can temporarily drive prices far beyond their so called real value.
21. When the market breaks through a weekly or monthly high, it is a buy signal. When it breaks through the previous weekly or monthly low, it is a sell signal.
22. Every sunken ship has a chart.
Wednesday, October 21, 2009
How To Trade Trend Lines?
Only one of two things can happen when a price approaches support or resistance: the price can break through it, or it can bounce off and reverse direction. The same is of course true for trend lines.
Trading on a Pullback
If a chart is trending in a clear direction, and a trend line can be drawn connecting a series of relative highs or relative lows, trading opportunities exist when the price approaches the trend line. If the price bounces off the trend line and resumes the trend in the original direction, this can be an excellent opportunity to enter the market in the direction of the dominant trend. This is often referred to as buying on a pullback in an up trend or selling into strength in a downtrend.
Buying on a bounce off such a support line can be done through a limit order just above the support.
Trading a Break of the Trend
The second possible trade is the break of the trend line, which can be traded just as any other broken support or resistance line. If a candle closes through a trend line to the downside, as in the example below, the proper entry point would be to sell once the price moves below the low of the breakthrough candle.
This ensures that the short term force is in the direction of the break lower. The opposite would be true for a break above a resistance line.
Trading on a Pullback
If a chart is trending in a clear direction, and a trend line can be drawn connecting a series of relative highs or relative lows, trading opportunities exist when the price approaches the trend line. If the price bounces off the trend line and resumes the trend in the original direction, this can be an excellent opportunity to enter the market in the direction of the dominant trend. This is often referred to as buying on a pullback in an up trend or selling into strength in a downtrend.
Buying on a bounce off such a support line can be done through a limit order just above the support.
Trading a Break of the Trend
The second possible trade is the break of the trend line, which can be traded just as any other broken support or resistance line. If a candle closes through a trend line to the downside, as in the example below, the proper entry point would be to sell once the price moves below the low of the breakthrough candle.
This ensures that the short term force is in the direction of the break lower. The opposite would be true for a break above a resistance line.
Monday, October 19, 2009
Understanding Trend Lines.
Trend Lines are the most powerful technical analysis tools. They allow you to gauge the trends direction, identify potential reversal levels and enter trades with low risk and high reward. In this article, you will learn how to use trend lines indicators in FOREX trading
An uptrend creates a series of trends that have higher lows and highs. A trend line drawn between the rising lows can often be fairly accurate in determining where the market can find greater support during the next low trend and indicate fairly good buying levels. In the Up Trend, Forex trend line that connects at least two lowest low (Low open/Close) will create a trend line. In the uptrend a trend line acts as Support.
Many Forex traders will choose an area below the trend line at which stop orders are are placed resulting in a sharp sell off. New sellers are generally attracted by breaks below the uptrend line. It's quite normal to see a series of lower lows and lower highs during a downward trend in the market.In this case, the trend line is drawn in alignment with the descending highs and will mirror the analysis as described above. In the Down Trend Forex trend line that connects at least two highest highs (High Open/Close) will create a trend line. In the downtrend a trend line acts as Resistance.
An uptrend creates a series of trends that have higher lows and highs. A trend line drawn between the rising lows can often be fairly accurate in determining where the market can find greater support during the next low trend and indicate fairly good buying levels. In the Up Trend, Forex trend line that connects at least two lowest low (Low open/Close) will create a trend line. In the uptrend a trend line acts as Support.
Many Forex traders will choose an area below the trend line at which stop orders are are placed resulting in a sharp sell off. New sellers are generally attracted by breaks below the uptrend line. It's quite normal to see a series of lower lows and lower highs during a downward trend in the market.In this case, the trend line is drawn in alignment with the descending highs and will mirror the analysis as described above. In the Down Trend Forex trend line that connects at least two highest highs (High Open/Close) will create a trend line. In the downtrend a trend line acts as Resistance.
Sunday, October 18, 2009
Leading And Lagging Indicators.
The term “indicator” refers to a metric whose main task is to point towards a certain situation/aspect etc - in short: to “indicate” something. For example the metric “cost-per-click” indicates how much one has to pay for one click at a certain time on a certain link.
Leading Technical Indicators are the indicators that help to predict possible future trend. Many trading systems use these types of indicators to generate trend reversal signals. However, there is no guarantee that the analyzed security, index or market will reverse its trend after a signal is generated. The common problem with this type of technical studies is that in some cases a trade could be opened too early and the signal could be ignored (no reversal). Examples of such indicators could be volume based technical indicators. Examples of these would be:
1. number of booked impressions for a certain ad position for the coming quarter (e.g. 100000 ad impressions for REC booked for Q2 2007)
2. budget for specific keyword groups for the next quarter (e.g. 100.000 USD for keyword-group “fitness” booked for Q2 2007)
3. number of leads referred by affiliate partner campaigns to a certain product (e.g. 500.000 leads monthly referred by campaign “X” to product “Y”)
Lagging Technical Indicators are the technical indicators that would rather follow a trend then predict its reversal. These studies are more reliable than the leading technical indicators. However they have other problem: in many cases a trade could be opened and closed when it is too late and the trend already in reversal movement. Example of these studies could be MACD, Moving Averages, etc. Examples
1. number of page impressions for a specific product within the past month (e.g. 1 million page impressions for product “X” in August 2006)
2. number of unique users for a specific site (e.g. 100.000 unique users for the sports special “FIFA WM” in June 2006)
3. amount of revenue generated with a specific product
Leading indicators mostly refer to the beginning of the value chain and reflect the drivers and/or causes of value whereas lagging indicators mostly refer to the end of the value chain and reflect the effect certain measures, decisions, actions had.
Leading Technical Indicators are the indicators that help to predict possible future trend. Many trading systems use these types of indicators to generate trend reversal signals. However, there is no guarantee that the analyzed security, index or market will reverse its trend after a signal is generated. The common problem with this type of technical studies is that in some cases a trade could be opened too early and the signal could be ignored (no reversal). Examples of such indicators could be volume based technical indicators. Examples of these would be:
1. number of booked impressions for a certain ad position for the coming quarter (e.g. 100000 ad impressions for REC booked for Q2 2007)
2. budget for specific keyword groups for the next quarter (e.g. 100.000 USD for keyword-group “fitness” booked for Q2 2007)
3. number of leads referred by affiliate partner campaigns to a certain product (e.g. 500.000 leads monthly referred by campaign “X” to product “Y”)
Lagging Technical Indicators are the technical indicators that would rather follow a trend then predict its reversal. These studies are more reliable than the leading technical indicators. However they have other problem: in many cases a trade could be opened and closed when it is too late and the trend already in reversal movement. Example of these studies could be MACD, Moving Averages, etc. Examples
1. number of page impressions for a specific product within the past month (e.g. 1 million page impressions for product “X” in August 2006)
2. number of unique users for a specific site (e.g. 100.000 unique users for the sports special “FIFA WM” in June 2006)
3. amount of revenue generated with a specific product
Leading indicators mostly refer to the beginning of the value chain and reflect the drivers and/or causes of value whereas lagging indicators mostly refer to the end of the value chain and reflect the effect certain measures, decisions, actions had.
Wednesday, October 14, 2009
Forex Trading In India: Legal Or Not?
Still i can see debates going on this topic that whether forex trading is legal in india or not? People are still in doubt. Those who are against the trading in india say that forex trading is illegal in india is that Only corporates are allowed to trade in forex - subject to the condition that they can use only their free dollar reserves. i.e. they cant purchase dollars by converting rupees into dollar, they can use only the existing dollars they have earned in normal business. Also another condition is that they cannot use leaverage of more than 10 times. Forex trading for indivisual is strictly not allowed for indians, forex trding is explicitly banned in FEMA and is non-bailable offence.
Well lets talk about what i feel that if you are intersted in forex trading Open an online share trading or forex trading or currency trading account whose registered Regulatory office is based anywhere out side Indian Jurisdcition. Then open an International Personal Banking Account in the same country bank where you hold trading account and I would like to say that it is allowed as per the LRS scheme FAQ point number 36 mentioned on http://www.rbi.org.in/scripts/FAQView.aspx?Id=53
Once you open a trading account AND also an international personal banking account in jurisdiction which falls outside India, then you can first of all send the money to you international personal banking account using the LRS scheme. And once it's remitted the powers of Indian jurisdiction is over. Then from that bank account simply transfer to your trading account which is also in the same country and does not falls in Indian Jurisdiction. This is the way and legal way to do forex trading using the LRS scheme and within legal limits.
In simple words select a broker online first then you just need to deposit funds in your online account with your credit card, or Paypal and do trading. You can also withdraw your funds through Paypal. Your bank won't even care where you spent your money, or from where you even got it.
HAPPY TRADING!
Well lets talk about what i feel that if you are intersted in forex trading Open an online share trading or forex trading or currency trading account whose registered Regulatory office is based anywhere out side Indian Jurisdcition. Then open an International Personal Banking Account in the same country bank where you hold trading account and I would like to say that it is allowed as per the LRS scheme FAQ point number 36 mentioned on http://www.rbi.org.in/scripts/FAQView.aspx?Id=53
Once you open a trading account AND also an international personal banking account in jurisdiction which falls outside India, then you can first of all send the money to you international personal banking account using the LRS scheme. And once it's remitted the powers of Indian jurisdiction is over. Then from that bank account simply transfer to your trading account which is also in the same country and does not falls in Indian Jurisdiction. This is the way and legal way to do forex trading using the LRS scheme and within legal limits.
In simple words select a broker online first then you just need to deposit funds in your online account with your credit card, or Paypal and do trading. You can also withdraw your funds through Paypal. Your bank won't even care where you spent your money, or from where you even got it.
HAPPY TRADING!
Friday, October 9, 2009
Candelstick Reversal Patterns.
Candlestick patterns can consist of just one candlestick or couple of them, usually not more than six, some reversal patterns are described below:
Hammer And Hanging Man Patterns
This is a one candlestick pattern with small body and long lower shadow (and no upper shadow). The hammer occurs in a downtrend and hanging man in the uptrend. The smaller the body is and the longer the long lower shadow is, the better is the actual signal. Also, hanging man with a black body is more bearish and hammer with white body more bullish.
Engulfing Pattern
It consists of two bodies ( two candlesticks ) of which one is filled and one is empty. The second day’s body should be engulfing the first day’s body like you can see on the picture. Shadows are not important. This pattern predicts end to the previous trend. The first day’s color should reflect the trend (filled for downtrend and empty for uptrend).Note that in order to make any conclusions from this pattern, there must be a previous trend. The bigger the second day’s engulfing is, the more likely signal it is.
Bullish: when a white, real body totally covers, "engulfs" the prior day's real body. The market should be in a definable trend, not chopping around sideways. The shadows of the prior candlestick do not need to be engulfed.
Bearish: when a black, real body totally covers, "engulfs" the prior day's real body. The market should be in a definable trend, not chopping around sideways. The shadows of the prior candlestick do not need to be engulfed.
Stars make up part of four separate reversal patterns:
Morning Star: This is a bullish reversal pattern that consists of long filled body which is followed by small body (and a gap between them), followed by a long empty body. It’s good if there’s a gap both after and before the middle body. Like with most reversal candlestick patterns, the first body should be according to the previous trend. Note that in case of the second body it is not important whether it is filled or empty.
Evening Star: A bearish top reversal pattern and counterpart to the Morning Star. Three candlesticks compose the evening star, the first being long and white. The second forms a star, followed by the third, which has a black real body that moves sharply into the first white candlestick.
Doji Stars
When a doji gaps above a real body in an uptrend, or gaps under a real body in a falling market, that particular doji is called a doji star. Two popular doji stars are the evening star and the morning star.
Evening Doji Star: A doji star in an uptrend followed by a long, black real body that closed well into the prior white real body. If the candlestick after the doji star is white and gapped higher, the bearishness of the doji is invalidated.
Morning Doji Star: A doji star in a downtrend followed by a long, white real body that closes well into the prior black real body. If the candlestick after the doji star is black and gapped lower, the bullishness of the doji is invalidated.
Hammer And Hanging Man Patterns
This is a one candlestick pattern with small body and long lower shadow (and no upper shadow). The hammer occurs in a downtrend and hanging man in the uptrend. The smaller the body is and the longer the long lower shadow is, the better is the actual signal. Also, hanging man with a black body is more bearish and hammer with white body more bullish.
Engulfing Pattern
It consists of two bodies ( two candlesticks ) of which one is filled and one is empty. The second day’s body should be engulfing the first day’s body like you can see on the picture. Shadows are not important. This pattern predicts end to the previous trend. The first day’s color should reflect the trend (filled for downtrend and empty for uptrend).Note that in order to make any conclusions from this pattern, there must be a previous trend. The bigger the second day’s engulfing is, the more likely signal it is.
Bullish: when a white, real body totally covers, "engulfs" the prior day's real body. The market should be in a definable trend, not chopping around sideways. The shadows of the prior candlestick do not need to be engulfed.
Bearish: when a black, real body totally covers, "engulfs" the prior day's real body. The market should be in a definable trend, not chopping around sideways. The shadows of the prior candlestick do not need to be engulfed.
Stars make up part of four separate reversal patterns:
Morning Star: This is a bullish reversal pattern that consists of long filled body which is followed by small body (and a gap between them), followed by a long empty body. It’s good if there’s a gap both after and before the middle body. Like with most reversal candlestick patterns, the first body should be according to the previous trend. Note that in case of the second body it is not important whether it is filled or empty.
Evening Star: A bearish top reversal pattern and counterpart to the Morning Star. Three candlesticks compose the evening star, the first being long and white. The second forms a star, followed by the third, which has a black real body that moves sharply into the first white candlestick.
Doji Stars
When a doji gaps above a real body in an uptrend, or gaps under a real body in a falling market, that particular doji is called a doji star. Two popular doji stars are the evening star and the morning star.
Evening Doji Star: A doji star in an uptrend followed by a long, black real body that closed well into the prior white real body. If the candlestick after the doji star is white and gapped higher, the bearishness of the doji is invalidated.
Morning Doji Star: A doji star in a downtrend followed by a long, white real body that closes well into the prior black real body. If the candlestick after the doji star is black and gapped lower, the bullishness of the doji is invalidated.
Thursday, October 8, 2009
Candelstick Patterns.
Marubozu
Marubozu may sound like voodoo magic. Luckily, Marubozu is not voodoo and no one will cast a wicked spell on you. This term means that the real bodies do not have shadows at all. When a Marubozu forms, the high and low are similar to the opening and closing prices. The diagram below will show you the two different kinds of Marubozu.
The white Marubozu will show a long body without shadows. This means the open price is equivalent to the closing price. It also means that the highs and lows are also equal.
When you see this candle, this means there is bullishness in the market as buyer take command of the entire season. This is also the first step of a continuing bullish trend or a pattern of bullish reversal.
The black Marubozu will show a long bodied filled candle without shadows. This indicates that the opening price is equivalent to the high while the closing price is equivalent to the low.
There is a bearish mood at the market if a black Marubozu appears showing that sellers are taking command. This is also an indication of continuing bearishness or a bearish reversal.
The Spinning Tops Pattern
Spinning tops are characterized by candlesticks with small real bodies, long upper shadow, and long lower shadow. Real body color is not really important. This pattern means that buyers and sellers are reluctant to decide.
Hollow or filled, the small real bodies indicate little activity from open to close. The upper and lower shadows show the struggle between buyers and seller. However, no one can really gain the top position.
The prices can move higher and lower for a time even if the opening and closing prices shows insignificant changes. There is essentially a standoff between buyers and sellers because no one is gaining.
When you spot a spinning top during an upswing, it could mean that there is a dearth of buyers. A reversal in that direction is likely to happen.
When a spinning top emerges on a downswing, sellers are lacking and you should watch out for a reversal in the other direction which could occur soon.
The Doji Candlestick Pattern
Doji sticks have the same open and close price. Obviously in fluctuating currency markets, identical open and close prices may be rare, but if they are close enough then the candlestick can be said to be a Doji.
A Long-Legged Doji has long shadows protruding from it, indicating that there is considerable fluctuation on both sides of the open price, during the course of the trading period. Ultimately the period ends with the close price retracting back to the open price. It is a good signal of market indecision.
A Dragonfly Doji has only one long shadow, on the lower end of the open and close price. This indicates that all price activity during the trading period is on the lower side of the open price, but by the end of the trading period the price has moved back up to the open price. It is a good signal of a bearish trend reversal, i.e. price should now move upwards.
A Gravestone Doji is the opposite of a Dragonfly and again has one long shadow, to the high side of the open and close price. It indicates that during the price period all price activity is at the upper end, but that the price retracts back to open price by the end of the trading period. It is a good signal of a bullish trend reversal, i.e. price should now move downwards.
A 4-Price Doji is a rare event, in that for the prescribed trading period, the open, close, high and low price points are the same. Such an event is rare in currency trading and normally only happens when trading is suspended.
Marubozu may sound like voodoo magic. Luckily, Marubozu is not voodoo and no one will cast a wicked spell on you. This term means that the real bodies do not have shadows at all. When a Marubozu forms, the high and low are similar to the opening and closing prices. The diagram below will show you the two different kinds of Marubozu.
The white Marubozu will show a long body without shadows. This means the open price is equivalent to the closing price. It also means that the highs and lows are also equal.
When you see this candle, this means there is bullishness in the market as buyer take command of the entire season. This is also the first step of a continuing bullish trend or a pattern of bullish reversal.
The black Marubozu will show a long bodied filled candle without shadows. This indicates that the opening price is equivalent to the high while the closing price is equivalent to the low.
There is a bearish mood at the market if a black Marubozu appears showing that sellers are taking command. This is also an indication of continuing bearishness or a bearish reversal.
The Spinning Tops Pattern
Spinning tops are characterized by candlesticks with small real bodies, long upper shadow, and long lower shadow. Real body color is not really important. This pattern means that buyers and sellers are reluctant to decide.
Hollow or filled, the small real bodies indicate little activity from open to close. The upper and lower shadows show the struggle between buyers and seller. However, no one can really gain the top position.
The prices can move higher and lower for a time even if the opening and closing prices shows insignificant changes. There is essentially a standoff between buyers and sellers because no one is gaining.
When you spot a spinning top during an upswing, it could mean that there is a dearth of buyers. A reversal in that direction is likely to happen.
When a spinning top emerges on a downswing, sellers are lacking and you should watch out for a reversal in the other direction which could occur soon.
The Doji Candlestick Pattern
Doji sticks have the same open and close price. Obviously in fluctuating currency markets, identical open and close prices may be rare, but if they are close enough then the candlestick can be said to be a Doji.
A Long-Legged Doji has long shadows protruding from it, indicating that there is considerable fluctuation on both sides of the open price, during the course of the trading period. Ultimately the period ends with the close price retracting back to the open price. It is a good signal of market indecision.
A Dragonfly Doji has only one long shadow, on the lower end of the open and close price. This indicates that all price activity during the trading period is on the lower side of the open price, but by the end of the trading period the price has moved back up to the open price. It is a good signal of a bearish trend reversal, i.e. price should now move upwards.
A Gravestone Doji is the opposite of a Dragonfly and again has one long shadow, to the high side of the open and close price. It indicates that during the price period all price activity is at the upper end, but that the price retracts back to open price by the end of the trading period. It is a good signal of a bullish trend reversal, i.e. price should now move downwards.
A 4-Price Doji is a rare event, in that for the prescribed trading period, the open, close, high and low price points are the same. Such an event is rare in currency trading and normally only happens when trading is suspended.
Wednesday, October 7, 2009
Introduction: Candlestick Charts.
Candlestick charts were derived over 200 years ago by the Japanese, who used them for the purpose of doing analysis of the rice markets. The technique evolved over time into what is now the candlestick technique used in Japan and indeed by millions of technical traders around the world. They are visually more attractive than standard bar and line charts and they make for a clearer market reading, once understood. Now the question arises that why to use these candlestick charts in forex trading so here is the answer:
Why Use Japanese Candlestick Charting
Candlestick charting utilizes the same information that appear on the bar chart and used primarily as visual aid. This method is adopted internationally by traders, investors and premier financial institutions because of the following advantages:
a. Can be easily interpreted/understood. Beginners as well as seasoned traders, can easily figure out the trading movement in candlestick analysis because it employs the same data (high, low, open, close) required in plotting a bar chart
b. Powerful tool in pinpointing market turning points. Reversal signals (uptrend to downtrend and vice versa) are visible in candlestick chart after a few sessions unlike in the traditional bar chart. Most likely, market turns with the candle charts are advance thus the trader can send out and exit the market with better timing.
c. Provide unique market insights. Unlike the bar chart, Candle charts showed not only show the trend of the move but the force underpinning the move as well.
The information in the candlestick chart and the bar chart are the same, however, candlestick chart is pleasant to look at because of its graphical format.
Candlestick bars show the high-to-low ranges with a vertical line. The top of the block is the opening price and the bottom is the closing. The middle block is the range indicator showing the opening and closing prices.
If the closing price is higher than the opening price, the middle block will be hallow or white, and if the concluded price of the currency is lower than its opening price, then middle block is filled or colored.
Why Use Japanese Candlestick Charting
Candlestick charting utilizes the same information that appear on the bar chart and used primarily as visual aid. This method is adopted internationally by traders, investors and premier financial institutions because of the following advantages:
a. Can be easily interpreted/understood. Beginners as well as seasoned traders, can easily figure out the trading movement in candlestick analysis because it employs the same data (high, low, open, close) required in plotting a bar chart
b. Powerful tool in pinpointing market turning points. Reversal signals (uptrend to downtrend and vice versa) are visible in candlestick chart after a few sessions unlike in the traditional bar chart. Most likely, market turns with the candle charts are advance thus the trader can send out and exit the market with better timing.
c. Provide unique market insights. Unlike the bar chart, Candle charts showed not only show the trend of the move but the force underpinning the move as well.
The information in the candlestick chart and the bar chart are the same, however, candlestick chart is pleasant to look at because of its graphical format.
Candlestick bars show the high-to-low ranges with a vertical line. The top of the block is the opening price and the bottom is the closing. The middle block is the range indicator showing the opening and closing prices.
If the closing price is higher than the opening price, the middle block will be hallow or white, and if the concluded price of the currency is lower than its opening price, then middle block is filled or colored.
Tuesday, October 6, 2009
Advantages Of Using Support And Resistance.
The importance of studying support and resistance levels in multiple timeframes cannot be overestimated. Starting from the longest term chart (monthly), traders need to establish the important support and resistances and then transfer them to the medium term chart (weekly) of the same market. Then, having added any new medium term support and resistances that can be discovered, transfer all levels to a short term chart (daily). To summarise:-
1) The study of support and resistance is vital for controlling a position: where to cut risk and where to take profit.
2) trends, patterns and Fibonacci constructions all give rise to support and resistance levels in a single chart.
3) Multiple timeframes give rise to still more levels.
4) The supports and resistances derived from all these timeframes can be simplified by assessing their importance and proximity to any given position.
6) The most important thing is that you will never get a sense of confidence from oscillators. The problem with oscillators is they tell you what happened in the past, and they’re derived from price, Oscillators don’t tell you very much about the future. The way most traders use them, they’re not much better than flipping a coin.
1) The study of support and resistance is vital for controlling a position: where to cut risk and where to take profit.
2) trends, patterns and Fibonacci constructions all give rise to support and resistance levels in a single chart.
3) Multiple timeframes give rise to still more levels.
4) The supports and resistances derived from all these timeframes can be simplified by assessing their importance and proximity to any given position.
6) The most important thing is that you will never get a sense of confidence from oscillators. The problem with oscillators is they tell you what happened in the past, and they’re derived from price, Oscillators don’t tell you very much about the future. The way most traders use them, they’re not much better than flipping a coin.
Thursday, October 1, 2009
Determining Support And Resistance Levels.
Determining support and resistance levels are somewhat different for the day trader than the position trader. This is because support and resistance levels for the day trader must be closer to the current market price that they are for the long term or position trader. Markets can only drop so far in one day, and as such the determination of support and resistance levels by the day trader must be realistic in terms of what can be expected – however this does mean that day traders must be willing to use technical support and resistance levels to establish their positions.
The following rules may appear very simple, but they are very effective at isolating support and resistance levels and can be applied in any market:
1. Follow a 3-day simple moving average of the lows, and a 3-day moving average of the highs.
2. Take the 3-day moving average of the lows to define your support level, and the 3-day moving average of the highs to define your resistance level.
3. Draw a line at the support of the lows, if the trade has made a 3-day high in say the last 3 days (you can use four or five days, depending on your trading method) This means that you will only draw in the 3-day moving average of the highs if the stock has made a 3-day low in the last three days – this means that you only want to sell when the short term is down.
This is a very simple method of trading stocks and commodities on a daily basis, and if calculated correctly they will work. Combine this with the insight that candlestick charts give you and you can create a system that works for you. Let me give you a example:
The above chart for Halliburton (HAL)[HAL] shows a large trading range between Dec-99 and Mar-00. Support was established with the October low around 33. In December, the stock returned to support in the mid-thirties and formed a low around 34. Finally, in February the stock again returned to the support scene and formed a low around 33 1/2.
After each bounce off support, the stock traded all the way up to resistance. Resistance was first established by the September support break at 42.5. After a support level is broken, it can turn into a resistance level. From the October lows, the stock advanced to the new support-turned-resistance level around 42.5. When the stock failed to advance past 42.5, the resistance level was confirmed. The stock subsequently traded up to 42.5 two more times after that and failed to surpass resistance both times.
The following rules may appear very simple, but they are very effective at isolating support and resistance levels and can be applied in any market:
1. Follow a 3-day simple moving average of the lows, and a 3-day moving average of the highs.
2. Take the 3-day moving average of the lows to define your support level, and the 3-day moving average of the highs to define your resistance level.
3. Draw a line at the support of the lows, if the trade has made a 3-day high in say the last 3 days (you can use four or five days, depending on your trading method) This means that you will only draw in the 3-day moving average of the highs if the stock has made a 3-day low in the last three days – this means that you only want to sell when the short term is down.
This is a very simple method of trading stocks and commodities on a daily basis, and if calculated correctly they will work. Combine this with the insight that candlestick charts give you and you can create a system that works for you. Let me give you a example:
The above chart for Halliburton (HAL)[HAL] shows a large trading range between Dec-99 and Mar-00. Support was established with the October low around 33. In December, the stock returned to support in the mid-thirties and formed a low around 34. Finally, in February the stock again returned to the support scene and formed a low around 33 1/2.
After each bounce off support, the stock traded all the way up to resistance. Resistance was first established by the September support break at 42.5. After a support level is broken, it can turn into a resistance level. From the October lows, the stock advanced to the new support-turned-resistance level around 42.5. When the stock failed to advance past 42.5, the resistance level was confirmed. The stock subsequently traded up to 42.5 two more times after that and failed to surpass resistance both times.
Wednesday, September 30, 2009
Support And Resistance On Chart.
Support
A support level is the price at which buyers are expected to enter the market in sufficient numbers to take control from sellers.
The market has a memory. When price falls to a new Low and then rallies, buyers who missed out on the first trough will be inclined to buy if price returns to that level. Afraid of missing out for a second time, they may enter the market in sufficient numbers to take control from sellers. The result is a rally, reinforcing perceptions that price is unlikely to fall further and creating a support level.
Resistance
A resistance level is the price level at which sellers are expected to enter the market in sufficient numbers to take control from buyers.
When price makes a new High and then retreats, sellers who missed the previous peak will be inclined to sell when price returns to that level. Afraid of missing out a second time, they may enter the market in numbers sufficient to overwhelm buyers. The resulting correction will reinforce market perceptions that price is unlikely to move higher and establish a resistance level.
Role Reversal
Support levels, once penetrated, frequently become resistance levels and vice versa.
The market logic is fairly simple: buyers who purchase near a support level, only to see price fall, are likely to sell in order to recover their losses, when price rallies to near their break-even point. The support level then becomes a resist
ance level.
Likewise, stockholders who sell when price approaches a resistance level will be disappointed if price penetrates the level and continues to rise. They will be inclined to buy if price returns to near the support level, fearing that they may miss out a second time. The resistance level thus becomes entrenched as a support level.
A support level is the price at which buyers are expected to enter the market in sufficient numbers to take control from sellers.
The market has a memory. When price falls to a new Low and then rallies, buyers who missed out on the first trough will be inclined to buy if price returns to that level. Afraid of missing out for a second time, they may enter the market in sufficient numbers to take control from sellers. The result is a rally, reinforcing perceptions that price is unlikely to fall further and creating a support level.
Resistance
A resistance level is the price level at which sellers are expected to enter the market in sufficient numbers to take control from buyers.
When price makes a new High and then retreats, sellers who missed the previous peak will be inclined to sell when price returns to that level. Afraid of missing out a second time, they may enter the market in numbers sufficient to overwhelm buyers. The resulting correction will reinforce market perceptions that price is unlikely to move higher and establish a resistance level.
Role Reversal
Support levels, once penetrated, frequently become resistance levels and vice versa.
The market logic is fairly simple: buyers who purchase near a support level, only to see price fall, are likely to sell in order to recover their losses, when price rallies to near their break-even point. The support level then becomes a resist
ance level.Likewise, stockholders who sell when price approaches a resistance level will be disappointed if price penetrates the level and continues to rise. They will be inclined to buy if price returns to near the support level, fearing that they may miss out a second time. The resistance level thus becomes entrenched as a support level.
Monday, September 28, 2009
Support And Resistance Trading.
The concepts of support and resistance are undoubtedly two of the most highly discussed attributes of technical analysis and they are often regarded as a subject that is complex by those who are just learning to trade. This article will attempt to clarify the complexity surrounding these concepts by focusing on the basics of what traders need to know. You'll learn that these terms are used by traders to refer to price levels on charts that tend to act as barriers from preventing the price of an asset from getting pushed in a certain direction.
Support And Support Levels:
Support level is defined as the price level at which point the demand level is strong enough to stop the trading price from declining further. When prices reach this support level it is more likely to bounce off this level, than to break through this level.
The support level indicates the point at which the trading price becomes cheaper and traders become more interested in buying, giving way to a support level where sellers become less interested in selling.
When prices reach the support level it is proved that the increase in demand will outweigh the supply and prices will be stopped from falling below the level of support. When prices decline below the level of support, there is an indication of new willingness to sell. This may also be the case if there is a new unwillingness to buy.
Once the level of support breaks, the cycle will repeat from the start – A decrease in price will awake new interest in buying and a new level of unwillingness to sell -giving way to a new level of support This will form the new lower-level support level.
Support trading can usually be found below the current price, but it is not impossible to trade at or very near support. Support levels are not always easy to identify due to various factors. Price movement is by nature volatile and prices may briefly dip through the support level, before returning upwards. Predicting the point, at which a price is considered to be breaking through the support line, comes with experience and research. Some will only consider this breakpoint if the price closes 1/8 below the current established support level.
Resistance and Resistance Level:
Resistance level is defined as the level at which selling is considered strong enough to hamper the price from increasing any further. The level of resistance theory defines that as a price moves towards resistance, sellers become more willing to sell, and buyers in turn become more unwilling to buy. When the price reaches the level of resistance, supply will outweigh demand and the price will be prevented rising through the resistance level. A break above the resistance level predicts a new willingness to buy and a new lack of interest in selling.
Resistance will not always be strong enough to hold and a breakout might not always be able to break. The bulls must win the bears over before a breakout can be formed. Once the current resistance level has been broken through, the process will repeat and a new higher level of resistance is establishes.
Support And Support Levels:
Support level is defined as the price level at which point the demand level is strong enough to stop the trading price from declining further. When prices reach this support level it is more likely to bounce off this level, than to break through this level.
The support level indicates the point at which the trading price becomes cheaper and traders become more interested in buying, giving way to a support level where sellers become less interested in selling.
When prices reach the support level it is proved that the increase in demand will outweigh the supply and prices will be stopped from falling below the level of support. When prices decline below the level of support, there is an indication of new willingness to sell. This may also be the case if there is a new unwillingness to buy.
Once the level of support breaks, the cycle will repeat from the start – A decrease in price will awake new interest in buying and a new level of unwillingness to sell -giving way to a new level of support This will form the new lower-level support level.
Support trading can usually be found below the current price, but it is not impossible to trade at or very near support. Support levels are not always easy to identify due to various factors. Price movement is by nature volatile and prices may briefly dip through the support level, before returning upwards. Predicting the point, at which a price is considered to be breaking through the support line, comes with experience and research. Some will only consider this breakpoint if the price closes 1/8 below the current established support level.
Resistance and Resistance Level:
Resistance level is defined as the level at which selling is considered strong enough to hamper the price from increasing any further. The level of resistance theory defines that as a price moves towards resistance, sellers become more willing to sell, and buyers in turn become more unwilling to buy. When the price reaches the level of resistance, supply will outweigh demand and the price will be prevented rising through the resistance level. A break above the resistance level predicts a new willingness to buy and a new lack of interest in selling.
Resistance will not always be strong enough to hold and a breakout might not always be able to break. The bulls must win the bears over before a breakout can be formed. Once the current resistance level has been broken through, the process will repeat and a new higher level of resistance is establishes.
Saturday, September 26, 2009
Fibonacci Retracement:Golden Ratio.
This function calculates the Fibonacci retracement 61.8% level, also referred to as 'the golden ratio'. It uses simple vector-based functions to do this. The function accepts one parameter which is the lookback period to use to define the highest and lowest close prices.
Fibonacci retracement is a very popular tool used by many traders. It is based on the key numbers identified by mathematician Leonardo Fibonacci to calculate the Fibonacci ratios. These ratios levels are then used to identify critical points that could cause an asset's price to reverse.
First of all we need to determine the difference between the highest and lowest close prices for the defined lookback period. We store this data into a variable whose name is (dif). The second step is to try to determine which of the highest or lowest close price occurred first; this is done using the (BarsSince) formula. Depending on the last result, we calculate the 61.8% level. In case the highest close price happened before the lowest close price, the variable 'dif' (calculated previously) is multiplied by 0.618. In the other case, the same variable 'dif' is multiplied by (1 - 0.618). We finally add the lowest close price value to the 61.8% level value and plot the resulting time-series.
We can create a bar chart that displays the difference between the current price and the 61.8% Fibonacci level by subtracting this level to the close price.
In order to create a time-series that plots other Fibonacci ratio levels like the 23.6% ratio or the 38.2% ratio, you just need to change the "level" variable. For the 23.6% level, just replace the value (0.618) by (0.236). You can also easily tweak the code and offer the possibility to define the Fibonacci ratio level by adding another parameter to this function.
Fibonacci retracement is a very popular tool used by many traders. It is based on the key numbers identified by mathematician Leonardo Fibonacci to calculate the Fibonacci ratios. These ratios levels are then used to identify critical points that could cause an asset's price to reverse.
First of all we need to determine the difference between the highest and lowest close prices for the defined lookback period. We store this data into a variable whose name is (dif). The second step is to try to determine which of the highest or lowest close price occurred first; this is done using the (BarsSince) formula. Depending on the last result, we calculate the 61.8% level. In case the highest close price happened before the lowest close price, the variable 'dif' (calculated previously) is multiplied by 0.618. In the other case, the same variable 'dif' is multiplied by (1 - 0.618). We finally add the lowest close price value to the 61.8% level value and plot the resulting time-series.
We can create a bar chart that displays the difference between the current price and the 61.8% Fibonacci level by subtracting this level to the close price.
In order to create a time-series that plots other Fibonacci ratio levels like the 23.6% ratio or the 38.2% ratio, you just need to change the "level" variable. For the 23.6% level, just replace the value (0.618) by (0.236). You can also easily tweak the code and offer the possibility to define the Fibonacci ratio level by adding another parameter to this function.
Thursday, September 24, 2009
Fibnacci Extension Levels.
In this article we are going to throw ligh ot the Fibnacci Extension Levels. Three most used Fibonacci extension levels are 0.618, 1.000 and 1.618. Also 1.382 extension can be applied as well.
In the above picture we are in the uptrend. Lowest swing — point A — is 120.75;
highest swing — point B — 121.44.
To calculate retracement levels and enter Long at some point C we do next:
Calculations for Uptrend and Buy order:
B — A = ?
121.44 — 120.75 = 0.69
0.382 (38.2%) retracement = 121.44 — 0.69 x 0.382 = 121.18
0.500 (50.0%) retracement = 121.44 — 0.69 x 0.500 = 121.09
0.618 (61.8%) retracement = 121.44 — 0.69 x 0.618 = 121.01
Fibonacci retracement levels formula for an uptrend:
C = B — (B — A) x N%
Now we need to calculate extension levels:
0.618 (61.8% ) extension = 121.44 + 0.69 x 0.618 = 121.87
1.000 (100.0%) extension = 121.44 + 0.69 x 1.000 = 122.13
1.382 (138.2%) extension = 121.44 + 0.69 x 1.382 = 122.39
1.618 (161.8%) extension = 121.44 + 0.69 x 1.618 = 122.56
Fibonacci extension levels formula for an uptrend:
D = B + (B — A) x N%
Our next example is downtrend:
Highest swing — point A — is 158.20; lowest swing — point B — is 156.44.
Calculations for downtrend and Sell order:
A — B = ?
158.20 — 156.44 = 1.76
Because of the downtrend we need to add to the lowest point B to find retracement.
0.382 (38.2%) retracement = 156.44 + 1.76 x 0.382 = 157.53
0.500 (50.0%) retracement = 156.44 + 1.76 x 0.500 = 157.32
0.618 (61.8%) retracement = 156.44 + 1.76 x 0.618 = 157.11
Fibonacci retracement levels formula for downtrend:
C = B + (A — B) x N%
Now let's find Fibonacci extension levels (downtrend):
0.618 (61.8%) extension = 156.44 — 1.76 x 0.618 = 155.35
1.000 (100%) extension = 156.44 — 1.76 x 1.000 = 154.68
1.382 (138.2%) extension = 156.44 — 1.76 x 1.382 = 154.01
1.618 (161.8%) extension = 156.44 — 1.76 x 1.618 = 153.59
Fibonacci extension levels formula for downtrend:
D = B — (A — B) x N%
In the above picture we are in the uptrend. Lowest swing — point A — is 120.75;
highest swing — point B — 121.44.
To calculate retracement levels and enter Long at some point C we do next:
Calculations for Uptrend and Buy order:
B — A = ?
121.44 — 120.75 = 0.69
0.382 (38.2%) retracement = 121.44 — 0.69 x 0.382 = 121.18
0.500 (50.0%) retracement = 121.44 — 0.69 x 0.500 = 121.09
0.618 (61.8%) retracement = 121.44 — 0.69 x 0.618 = 121.01
Fibonacci retracement levels formula for an uptrend:
C = B — (B — A) x N%
Now we need to calculate extension levels:
0.618 (61.8% ) extension = 121.44 + 0.69 x 0.618 = 121.87
1.000 (100.0%) extension = 121.44 + 0.69 x 1.000 = 122.13
1.382 (138.2%) extension = 121.44 + 0.69 x 1.382 = 122.39
1.618 (161.8%) extension = 121.44 + 0.69 x 1.618 = 122.56
Fibonacci extension levels formula for an uptrend:
D = B + (B — A) x N%
Our next example is downtrend:
Highest swing — point A — is 158.20; lowest swing — point B — is 156.44.
Calculations for downtrend and Sell order:
A — B = ?
158.20 — 156.44 = 1.76
Because of the downtrend we need to add to the lowest point B to find retracement.
0.382 (38.2%) retracement = 156.44 + 1.76 x 0.382 = 157.53
0.500 (50.0%) retracement = 156.44 + 1.76 x 0.500 = 157.32
0.618 (61.8%) retracement = 156.44 + 1.76 x 0.618 = 157.11
Fibonacci retracement levels formula for downtrend:
C = B + (A — B) x N%
Now let's find Fibonacci extension levels (downtrend):
0.618 (61.8%) extension = 156.44 — 1.76 x 0.618 = 155.35
1.000 (100%) extension = 156.44 — 1.76 x 1.000 = 154.68
1.382 (138.2%) extension = 156.44 — 1.76 x 1.382 = 154.01
1.618 (161.8%) extension = 156.44 — 1.76 x 1.618 = 153.59
Fibonacci extension levels formula for downtrend:
D = B — (A — B) x N%
Wednesday, September 23, 2009
Understanding The Term Fibonacci Retracement.
Fibonacci retracements are percentage values which can be used to predict the length of corrections in a trending market. Most popular retracement levels used for the forex trading are 38.2%, 50%, and 61.8%. In a strong trend you can expect the currency prices to retrace a minimum of 38.2 percent; in a weaker trend corrections may go as far as 61.8 percent. The 50 % is the most widely monitored retracement level and is a common area to buy in the up trends or sell in the down trends. If a correction exceeds one of the retracement levels - look for it to go to the next (e.g. to 50% after the 38.2% level or to 61.8% after the 50% level). Whenever the prices retrace more than 61.8% of the previous move (on a closing basis) you can expect them to return all the way back to the beginning of the trend.
Tuesday, September 22, 2009
Fibonacci Trading Introduction.
Fibonacci theory as we know it today originated from a 13th century Italian mathematician by the name of Leonardo of Pisa, otherwise known as Leonardo Fibonacci. His work that eventually led to such mainstream technical analysis standards as Fibonacci retracements originated from a sequence of numbers that led to the discovery of the Golden Ratio, approximately 1.618. This ratio can be found in many areas of nature, science, music, and, very importantly, the financial markets. This includes the forex market.
The so called Fibonacci number sequence first appeared as the solution to a problem in the Liber Abaci, which was a book written by the mathematician in 1202 and introduced the Arabic numerals presently used to Europe when it was limited to Roman numerals.
The actual problem that was solved with this famous numerical series dealt with the propagation of rabbits, of all things.
The question to be solved was essentially, starting with only one pair of rabbits, how many pair could be generated if each mature pair "delivers" a new pair each month, which itself becomes productive in the second month.
The solution starts with a 0 and 1, and each new number is the sum of the previous two numbers
(0 + 1 = 1; 1 + 0 = 1; 1 + 1 = 2; 1 + 2 = 3;
3 + 2 = 5; etc). Or as a more acceptable expression
in the world of mathematics:
Fn+1 = Fn + Fn-1.
This leads to the following infinite series: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc.
Fibonacci found that this series of numbers and their ratios to each other surprisingly are prevalent throughout nature and can be found even in human nature.
The ratio of any number to the next larger number in this series (e.g., 55 to 89), approaches 0.618, or 61.8 %, and this as well as its inverse (0.382 or 38.2 %) become important Fibonacci retracement numbers which will be further discussed in the next article.
Likewise, the ratio of the next larger number to any number in the series (e.g., 89 to 55) approaches 1.618, and this very significant number is known as the "golden ratio", "golden mean", and "divine proportion", among other names.
This number was highly significant to both Greek and Egyptian cultures and had important implications in areas of art and science. It was also utilised in the construction of many buildings in those cultures, including the pyramids and the parthenon.
This ratio can even be found in the Holy Bible. Two such examples are the ratios in the proportions of the Ark of the Covenant (Exodus 25:10) and the construction of Noah's Ark (Genesis 6:15).
This ratio (1.618), also known as "phi", is found all around the world today.
For instance, in the human body, the proportion of the distance from the head to the finger tips vs the total body height has this ratio. Likewise, the distance from the navel to the elbows vs. the distance from the head to the finger tips.
Even the program for all life on this planet, the DNA molecule, is based on this same ratio. It measures
34 Angstroms (a very small unit of measurement) long by 21 Angstroms wide for each full cycle in the double helix spiral. As can be seen in the series shown above, 34 and 21 are successive Fibonacci numbers with their ratio approaching phi.
One final, galactic example is in recent (2003)studies based on data taken from NASA's Wilkinson Microwave Anisotropy Probe (WMAP) on cosmic radiation background that suggest that the universe is finite and shaped like a dodecahedron. This geometric shape is based on pentagons, which are based on phi.
Many more examples could be given which demonstrate how the world and our lives are impacted by the applications of Fibonacci numbers but I think you get the point in the few examples that were given here.
Sunday, September 20, 2009
Understanding The Forex Lingo(2).
Measuring the Transaction Cost:
The important aspect of the bid-ask spread is that this is used to measure the transaction cost of a round turn trade. A round turn is defined as both a buy trade and an offset sell trade having the same size of similar currency pair. In the example using the EUR/USD exchange rate of 1.2812/15, the transaction cost will be equal to three pips.
Here is the formula for calculating the transaction cost:
Transaction cost = Ask Price – Bid Price
Knowing the Cross Currency:
When you refer to cross currency, it means any pair where the U.S. Dollar is absent. If you trade in cross currency, you might experience erratic behavior or movement of price. That’s because you triggered an action which actually involves two USD trades.
Here is an example: a long Buy EUR/GBP is equals to buying EUR/USD while selling GBP/USD. The transaction cost for cross currency trades are normally higher.
Recognizing the Margin
If you open a new margin account with any Forex broker, you will be required to deposit a minimum amount in your account. The minimum deposit varies from broker to broker. This could be as low as $100 or can be higher up to $100,000.
When you execute a trade a percentage of the balance in you account will be allocated by the broker. This is called initial margin requirement. The basis of this margin requirement are underlying currency pair, existing price, and lots traded. The size of the lots is based always on the base currency.
If you have a mini account with a leverage of 200:1 or 5 percent margin, you will trade in mini lots. 1 mini lot will be equivalent $10,000. You will only need $50 for this mini lot ($10,000 x .5% = $50).
Recognizing the Leverage:
Leverage in Forex allows increasing trading accounts values by literally allowing traders operate with virtual money. For each real dollar trades fund their account with, Forex brokers ad more funds, increasing traders buying/selling capabilties on the currency market. A leverage of 200:1, for example means that for each dollar invested a broker adds 200 dollers on top, making the trading account 200 times larger. Thus, funding your account with $1000 at 200:1 leverage would enable you to oprate a $200 000 account.
Only traders with really large accounts may afford trading Forex without leverage. For all other traders leveraging their investments is often the only way to participate in Forex currency trading and be able to operate large trading lots while make reasonalbe profits from trading forex.
Understanding the Margin Call:
You have to be ware of margin call because all traders fear this. A margin call occurs when the broker tells you that you do not have sufficient balance in your account. This could be a result of losing an open position.
Margin trading is profitable. However you need to understand its risks. Be very sure that you thoroughly understand your margin account. You also have to read the margin agreement of the broker. You should ask your broker about this before you agree to anything.
If your account falls below the required security margin, some or all of your open positions will be closed and liquidated. There are cases when a margin call will not be received before the open positions are liquidated.
You can avoid margin calls by monitoring your existing balance. You also have to employ stop loss orders on all positions. This will minimize your risk.
The important aspect of the bid-ask spread is that this is used to measure the transaction cost of a round turn trade. A round turn is defined as both a buy trade and an offset sell trade having the same size of similar currency pair. In the example using the EUR/USD exchange rate of 1.2812/15, the transaction cost will be equal to three pips.
Here is the formula for calculating the transaction cost:
Transaction cost = Ask Price – Bid Price
Knowing the Cross Currency:
When you refer to cross currency, it means any pair where the U.S. Dollar is absent. If you trade in cross currency, you might experience erratic behavior or movement of price. That’s because you triggered an action which actually involves two USD trades.
Here is an example: a long Buy EUR/GBP is equals to buying EUR/USD while selling GBP/USD. The transaction cost for cross currency trades are normally higher.
Recognizing the Margin
If you open a new margin account with any Forex broker, you will be required to deposit a minimum amount in your account. The minimum deposit varies from broker to broker. This could be as low as $100 or can be higher up to $100,000.
When you execute a trade a percentage of the balance in you account will be allocated by the broker. This is called initial margin requirement. The basis of this margin requirement are underlying currency pair, existing price, and lots traded. The size of the lots is based always on the base currency.
If you have a mini account with a leverage of 200:1 or 5 percent margin, you will trade in mini lots. 1 mini lot will be equivalent $10,000. You will only need $50 for this mini lot ($10,000 x .5% = $50).
Recognizing the Leverage:
Leverage in Forex allows increasing trading accounts values by literally allowing traders operate with virtual money. For each real dollar trades fund their account with, Forex brokers ad more funds, increasing traders buying/selling capabilties on the currency market. A leverage of 200:1, for example means that for each dollar invested a broker adds 200 dollers on top, making the trading account 200 times larger. Thus, funding your account with $1000 at 200:1 leverage would enable you to oprate a $200 000 account.
Only traders with really large accounts may afford trading Forex without leverage. For all other traders leveraging their investments is often the only way to participate in Forex currency trading and be able to operate large trading lots while make reasonalbe profits from trading forex.
Understanding the Margin Call:
You have to be ware of margin call because all traders fear this. A margin call occurs when the broker tells you that you do not have sufficient balance in your account. This could be a result of losing an open position.
Margin trading is profitable. However you need to understand its risks. Be very sure that you thoroughly understand your margin account. You also have to read the margin agreement of the broker. You should ask your broker about this before you agree to anything.
If your account falls below the required security margin, some or all of your open positions will be closed and liquidated. There are cases when a margin call will not be received before the open positions are liquidated.
You can avoid margin calls by monitoring your existing balance. You also have to employ stop loss orders on all positions. This will minimize your risk.
Saturday, September 19, 2009
Understanding Forex Lingo.
As a novice or newbie trader, you have to learn the lingo of Forex before you ever think first ever trade. Some of the lingo or Forex terms you have learned already. Still, have a look to understand these terms:
Learning the Major and Minor Currencies:
There are eight commonly traded currencies at the Forex Market. USD, EUR, JPY, GBP, CHF, CAD, NZD, and AUD. These currencies are called the Majors or major currencies.
The rest of the currencies are commonly called as minor currencies. You do not have to worry about these minor currencies. They are there for professional use only.
Base Currency:
In foreign exchange markets, the base currency is the first currency in a currency pair. The second currency is named the quote currency (counter currency, terms currency). Exchange rates are quoted in per unit of the base currency. Note that FX market convention is the reverse of mathematical convention.
Currently the euro has first precedence for base currency; as a result, all currency pairs involving it should have the euro as the first currency. For example, between the US dollar and the euro the exchange rate will be identified as EUR/USD; the number is the amount of US dollars that can be traded for one euro.
The currency hierarchy for the majors is as follows:
* Euro
* Pound sterling
* Australian dollar
* New Zealand Dollar
* United States dollar
* Canadian Dollar
* Swiss franc
* Japanese Yen
Quote Currency:
In foreign exchange markets, the quote currency is the second currency in a currency pair.
The quote currency is also known as the counter currency.
If looking at the EUR/USD currency pair, the U.S. Dollar is the quote currency, and the Euro is the base currency.
Understanding The Pip
A pip is the smallest price increment in forex trading - pip stands for percentage in point.
Prices are quoted to the fourth decimal point in the forex market - for example EUR/USD might be bid at 1.1914 and offered at 1.1917. In this example we can see that the spread is 3 pips wide. The Japanese Yen (JPY) is an exception - it is quoted only to the second decimal point.
There is an exception for quotations for Japanese Yen against other currencies. For currencies in relation to Japanese Yen a pip is 0.01 or 1 cent. Then if you are trading USD/JPY in $100 000 lots, one pip will be equivalent to $1000.
Knowing the Bid Price
Bid simply means the price that the market is willing to buy for a particular currency pair. At this price, you will be able to sell the base currency. It is shown on the left of the quotation.
To illustrate, the quote for GBP/USD is 1.8812/15. Bid price is set at 1.8812. This simply means that you can sell 1 British Pound for 1.8812 U.S. Dollars.
Identifying the Ask Price
On the other hand, the ask is the selling price that market is willing to take for a particular currency pair. In this case, you will be able to buy the base currency. It is shown on the right of the quotation.
Here we will quote EUR/USD at 1.2812/15. The ask price set is 1.2815. Basically, you will be able to buy 1 Euro for 1.2815 U.S. Dollars. This is also commonly known as the offer price.
Knowing the Bid/Ask Spread
The difference between the bid and ask prices is called the spread. A dealer expression called “the big figure quote” refers to the first few digits of a specific exchange rate. These digits are not included in the dealer quote.
To give you an example, the USD/JPY exchange rate could be at 118.30/118.34. Dealers however will verbally quote this in terms of 30/34.
Continued....
Learning the Major and Minor Currencies:
There are eight commonly traded currencies at the Forex Market. USD, EUR, JPY, GBP, CHF, CAD, NZD, and AUD. These currencies are called the Majors or major currencies.
The rest of the currencies are commonly called as minor currencies. You do not have to worry about these minor currencies. They are there for professional use only.
Base Currency:
In foreign exchange markets, the base currency is the first currency in a currency pair. The second currency is named the quote currency (counter currency, terms currency). Exchange rates are quoted in per unit of the base currency. Note that FX market convention is the reverse of mathematical convention.
Currently the euro has first precedence for base currency; as a result, all currency pairs involving it should have the euro as the first currency. For example, between the US dollar and the euro the exchange rate will be identified as EUR/USD; the number is the amount of US dollars that can be traded for one euro.
The currency hierarchy for the majors is as follows:
* Euro
* Pound sterling
* Australian dollar
* New Zealand Dollar
* United States dollar
* Canadian Dollar
* Swiss franc
* Japanese Yen
Quote Currency:
In foreign exchange markets, the quote currency is the second currency in a currency pair.
The quote currency is also known as the counter currency.
If looking at the EUR/USD currency pair, the U.S. Dollar is the quote currency, and the Euro is the base currency.
Understanding The Pip
A pip is the smallest price increment in forex trading - pip stands for percentage in point.
Prices are quoted to the fourth decimal point in the forex market - for example EUR/USD might be bid at 1.1914 and offered at 1.1917. In this example we can see that the spread is 3 pips wide. The Japanese Yen (JPY) is an exception - it is quoted only to the second decimal point.
There is an exception for quotations for Japanese Yen against other currencies. For currencies in relation to Japanese Yen a pip is 0.01 or 1 cent. Then if you are trading USD/JPY in $100 000 lots, one pip will be equivalent to $1000.
Knowing the Bid Price
Bid simply means the price that the market is willing to buy for a particular currency pair. At this price, you will be able to sell the base currency. It is shown on the left of the quotation.
To illustrate, the quote for GBP/USD is 1.8812/15. Bid price is set at 1.8812. This simply means that you can sell 1 British Pound for 1.8812 U.S. Dollars.
Identifying the Ask Price
On the other hand, the ask is the selling price that market is willing to take for a particular currency pair. In this case, you will be able to buy the base currency. It is shown on the right of the quotation.
Here we will quote EUR/USD at 1.2812/15. The ask price set is 1.2815. Basically, you will be able to buy 1 Euro for 1.2815 U.S. Dollars. This is also commonly known as the offer price.
Knowing the Bid/Ask Spread
The difference between the bid and ask prices is called the spread. A dealer expression called “the big figure quote” refers to the first few digits of a specific exchange rate. These digits are not included in the dealer quote.
To give you an example, the USD/JPY exchange rate could be at 118.30/118.34. Dealers however will verbally quote this in terms of 30/34.
Continued....
Friday, September 18, 2009
Mini Forex Account.
As we discussed in the last article there is two types of account that a trader can open, but for a new trader it is advisable that he should open Mini Forex account first and gain some knowledge before opening a regular account. Mini forex account trading is a great method for investors with small amount of capitals to understand and join in the forex market. With a deposit of only $ 100, you can control a currency position of $ 10,000 as the majority of the forex brokers offer a 100 : 1 leverage.
Mini forex account can also give the beginner forex traders some ideas of trading, find out the tricks, and discover the strategies in order to be successful in the forex trading with no need to risk too much money. As what the most of today’s experienced and successful forex traders had implemented, you also should begin your forex trading with mini forex account.
The mini forex account obviously suitable for the beginner forex traders as it is beneficial to assist the traders to train and develop their trading, with less worry of achieving the targeted gain or loss.
In this type of forex account, the traders still will be able to access to all the features in the regular and full size of forex account. When you trade in the mini forex account, you can get the same tools, information, alerts, charts, graphics, indicators, and others. By having exactly the same features, it can contribute towards implementing successful strategies without the fear of missing out any big chance to make profit in the forex market.
There are other advantages when you trade in forex mini account. The forex mini account is available in small size of 10,000 units. You can start trading with a small amount of money of around $ 100 - $ 300. This will be useful before you start trading in regular or full size of forex account. You can try to trade in a forex mini account by dealing with one mini size lot only, and soon after that you can opt to place more mini lots.
The forex mini account traders are not restricted to trade only one lot at a time. Therefore, it is a perfect for you to enhance your experience in forex trading as well as build up your confidence. If you want to make a regular lot trade, you can just simply make ten mini lots trade.
Every forex trader interprets the forex market in their own ways, therefore they ask for numerous prices in accordance to their various chances and benefits. The broker will then shows the highest bid and the lowest ask price.
As you know the forex mini account entails a high leverage, which is 100 to 1 obviously because this is a normal application in the forex mini account trading and it is a normal degree of leverage. In addition to that, the risk for the forex mini account traders is counterbalance by the small loss risk that they may be made in forex mini account trades.
Normally, the average loss in forex mini account is only one tenth of the similar amount that traders could be losing in the forex regular account. For this reason, it is easier to apply a better self discipline in your forex trading strategy, as it is not so hard to allow a small amount of loss to go, in comparison to a larger amount of loss which could influence the traders to keep much longer and that is not so good forex trading strategy.
Another advantage of the forex mini account is that, due to the high degree of leverage in the forex mini account trading, you can make a series of small lots trades. This way, you can have more choices available and apply different forex trading strategies which is crucial for your forex trading learning and practices towards success.
When your risk is obviously cut down, so does your chance of incurring loss due to the low capital employed in contrast to the forex regular account trades.
Once you are gaining profit in your forex mini account trades consistently and your winning trades are much more than the losing trades, thenit is time to apply this knowledge, and experience to get in into the challenging forex market by trading in the forex normal account with bigger capital and bigger lot sizes.
However, just like any other type of trading, the forex mini account also has some drawbacks. There were some forex mini account traders who have made big amount losses which have caused by the incorrect leverage selection, interpreted wrongly the news announcement, short technical failures of forex trading technical tools, graphs, and charts, placed gutless points as well as less protection and unreasonable thought of forex trading.
You should set up in the beginning and then keep to your principles of risk management in your forex trading strategies and hold onto your stop loss points in order to maintain the safety trades. It is recommended that you can only lose around $ 200 when you trade in the forex mini account.
Mini forex account can also give the beginner forex traders some ideas of trading, find out the tricks, and discover the strategies in order to be successful in the forex trading with no need to risk too much money. As what the most of today’s experienced and successful forex traders had implemented, you also should begin your forex trading with mini forex account.
The mini forex account obviously suitable for the beginner forex traders as it is beneficial to assist the traders to train and develop their trading, with less worry of achieving the targeted gain or loss.
In this type of forex account, the traders still will be able to access to all the features in the regular and full size of forex account. When you trade in the mini forex account, you can get the same tools, information, alerts, charts, graphics, indicators, and others. By having exactly the same features, it can contribute towards implementing successful strategies without the fear of missing out any big chance to make profit in the forex market.
There are other advantages when you trade in forex mini account. The forex mini account is available in small size of 10,000 units. You can start trading with a small amount of money of around $ 100 - $ 300. This will be useful before you start trading in regular or full size of forex account. You can try to trade in a forex mini account by dealing with one mini size lot only, and soon after that you can opt to place more mini lots.
The forex mini account traders are not restricted to trade only one lot at a time. Therefore, it is a perfect for you to enhance your experience in forex trading as well as build up your confidence. If you want to make a regular lot trade, you can just simply make ten mini lots trade.
Every forex trader interprets the forex market in their own ways, therefore they ask for numerous prices in accordance to their various chances and benefits. The broker will then shows the highest bid and the lowest ask price.
As you know the forex mini account entails a high leverage, which is 100 to 1 obviously because this is a normal application in the forex mini account trading and it is a normal degree of leverage. In addition to that, the risk for the forex mini account traders is counterbalance by the small loss risk that they may be made in forex mini account trades.
Normally, the average loss in forex mini account is only one tenth of the similar amount that traders could be losing in the forex regular account. For this reason, it is easier to apply a better self discipline in your forex trading strategy, as it is not so hard to allow a small amount of loss to go, in comparison to a larger amount of loss which could influence the traders to keep much longer and that is not so good forex trading strategy.
Another advantage of the forex mini account is that, due to the high degree of leverage in the forex mini account trading, you can make a series of small lots trades. This way, you can have more choices available and apply different forex trading strategies which is crucial for your forex trading learning and practices towards success.
When your risk is obviously cut down, so does your chance of incurring loss due to the low capital employed in contrast to the forex regular account trades.
Once you are gaining profit in your forex mini account trades consistently and your winning trades are much more than the losing trades, thenit is time to apply this knowledge, and experience to get in into the challenging forex market by trading in the forex normal account with bigger capital and bigger lot sizes.
However, just like any other type of trading, the forex mini account also has some drawbacks. There were some forex mini account traders who have made big amount losses which have caused by the incorrect leverage selection, interpreted wrongly the news announcement, short technical failures of forex trading technical tools, graphs, and charts, placed gutless points as well as less protection and unreasonable thought of forex trading.
You should set up in the beginning and then keep to your principles of risk management in your forex trading strategies and hold onto your stop loss points in order to maintain the safety trades. It is recommended that you can only lose around $ 200 when you trade in the forex mini account.
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