Making money in forex market became no longer difficult as it was few years ago. with the all new trading techniques and high speed internet connections and the appearance of the so many brokers who give the opportunities to every one to participate in the forex trading market regardless his capital volume.
Forex trading signals are the by-product for all technical and fundamental analysis methods and strategies, every forex trader need to get the basic analysis knowledge in order to generate winning forex signals. This requires him or here to learn a lot about technical analysis strategies and create his or here own forex trading system in order to be able to pick the available trading opportunities all the time.
For novice traders starting their first steps in the forex market, automated forex signals are a good training to start with. This should be the starting point of all your dealings as every trade relies on the types of signals it transmits to traders. The use of these signals represents the entire movement and behavior of the forex market.
Fortunately, the chance to make profit in the forex market is still available to many straggling traders, there are many signals providers which can be employed through a monthly subscription and provide a high quality entry signals. Also you can create your own signals using a software program. This does need any monthly fees for you to purchase it given a one time payment term.
How you can benefit from forex signals:
Many novice traders who try some of the forex signals providers and end with losses in their first few trades so they believe that this signal providers is unreliable service and start seeking another alternate service. The secret to success with such business is the consistency, in order to make a fair judgment on any service, you should try it for several weeks. In forex market there are no thing predictable 100%, and there always will be a percent of losses. So in order to succeed with such systems you should create your own money management rules to work along with the trading signals and make your calculations at the end of the testing period to check whether you made total profits or total losses.
Regardless how good the generated forex signals are, you should never depend on only one service to decide when and how you trade. You should look at several exit and entry strategies along with developing your own system for trading. Putting all of these together in a harmony can produce a profitable forex trading system which can make you a lot of money on the long term.
Thursday, July 9, 2009
Tuesday, July 7, 2009
How to calculate risks with high leverage in Forex
With $200 on balance, no matter how high you are leveraging yourself, you should stick to trading no more than few mini lots at once.
It is highly advised to not use standard lot sizes for mini accounts (1 standard lot = 10,000 units) offered by most of Forex traders, as it is very expensive for a mini account like yours. Aim for a micro lot of 1000 units at stake; this will make your risks in Forex trading reasonable and will allow to achieve some positive performance even if your trading path starts with a strip of consecutive losses.
When you invest $200 with 1:500 leverage, you'll be able to operate with virtual funds of $100 000.
As a happy novice trader, if you open 1 standard lot of 100 000 units (theoretically, because on practice it would mean draining down an account in few minutes), you're putting $10 at risk for every pip that goes up and down... think quickly, how many pips would it require to wipe out your account? The answer is 20. Not so much. Also this 20 will already include the spread paid.
Now, if you open 1 mini-lot of 10 000 units, then you'll be risking $1 for each pip. With -20pips on the position, your account will lose only $20.
(Yet even this is too much for $200 investment, because losing 1/10 of the investment just in one trade means than potentially under unfavorable conditions, where you always lose, you'll be able to trade on total only 10 times or less...)
That is why it is important to opt for micro lots in your case. Micro lot of $1000 units will decrease the cost of 1 pip to $0,10; and losing 20 pips would mean losing $2.
10 cents may sound not so attractive in terms of making big profits quickly... My advice to traders looking for high quick profits, it is better to think about investing more money in the first place.
http://forexbeginners.net
It is highly advised to not use standard lot sizes for mini accounts (1 standard lot = 10,000 units) offered by most of Forex traders, as it is very expensive for a mini account like yours. Aim for a micro lot of 1000 units at stake; this will make your risks in Forex trading reasonable and will allow to achieve some positive performance even if your trading path starts with a strip of consecutive losses.
When you invest $200 with 1:500 leverage, you'll be able to operate with virtual funds of $100 000.
As a happy novice trader, if you open 1 standard lot of 100 000 units (theoretically, because on practice it would mean draining down an account in few minutes), you're putting $10 at risk for every pip that goes up and down... think quickly, how many pips would it require to wipe out your account? The answer is 20. Not so much. Also this 20 will already include the spread paid.
Now, if you open 1 mini-lot of 10 000 units, then you'll be risking $1 for each pip. With -20pips on the position, your account will lose only $20.
(Yet even this is too much for $200 investment, because losing 1/10 of the investment just in one trade means than potentially under unfavorable conditions, where you always lose, you'll be able to trade on total only 10 times or less...)
That is why it is important to opt for micro lots in your case. Micro lot of $1000 units will decrease the cost of 1 pip to $0,10; and losing 20 pips would mean losing $2.
10 cents may sound not so attractive in terms of making big profits quickly... My advice to traders looking for high quick profits, it is better to think about investing more money in the first place.
http://forexbeginners.net
Are there currency pairs that go the same way?
Yes, there are currency pairs that move the same direction. They are called correlated pairs. The level of correlation determines the similarity in the currencies' moves.
There are pairs that move in the same direction almost mirror-like:
EUR/USD and GBP/USD
AUD/USD and EUR/USD
And pairs that move mirror-like, but in opposite directions:
EUR/USD and USD/CHF
GBP/USD and USD/JPY
By knowing which currencies have the highest chances to reflect each other moves traders can diversify the portfolio, instead of putting all eggs in one basket.
Further reading and examples of other currency pairs at:
There are pairs that move in the same direction almost mirror-like:
EUR/USD and GBP/USD
AUD/USD and EUR/USD
And pairs that move mirror-like, but in opposite directions:
EUR/USD and USD/CHF
GBP/USD and USD/JPY
By knowing which currencies have the highest chances to reflect each other moves traders can diversify the portfolio, instead of putting all eggs in one basket.
Further reading and examples of other currency pairs at:
Friday, July 3, 2009
Winners and losers in Forex
Hi I heard that if I earn 100$ in Forex so there is some who had lost it so I won, is that correct? My second question is I heard that 90% of trader lose their whole money in Forex and only 10% get successful in this business. I want to know is this data is only for beginners or all experienced traders?
Yes, it is correct. There are buyers and sellers in Forex. If you sold currency and won, there were traders who bought that currency from you and so they lost.
The data of 90% to 10%, which is only an approximate estimation refers to each and every trader attempting to profit from Forex trading during their first year of trading. After 1 year, those who don't lose money or quit (90% of traders) AND are able to carry on successful trading make up the wining 10% of Forex investors.
Yes, it is correct. There are buyers and sellers in Forex. If you sold currency and won, there were traders who bought that currency from you and so they lost.
The data of 90% to 10%, which is only an approximate estimation refers to each and every trader attempting to profit from Forex trading during their first year of trading. After 1 year, those who don't lose money or quit (90% of traders) AND are able to carry on successful trading make up the wining 10% of Forex investors.
Thursday, July 2, 2009
What currency pairs to trade in Forex?
Although there is lots of currency pairs offered to Forex traders, if you are a beginner it is easier to start with major currency pairs:
EUR/USD
GBP/USD
USD/JPY
There are several good reasons for that:
1. These currency crosses are widely traded, thus providing liquidity which is needed in order to benefit from price changes.
2. They have tight spreads, except may be for GBP/USD, which most of the time receives higher spread quotation from Forex brokers as it is more volatile (e.g. has wider price ranges than other pairs).
3. They all are traded against US dollar, which automatically suggest that the most active trading hours would be during New York trading session – the session with the highest volume of trades.
4. And finally, there are many Forex trading systems that are developed for trading those pairs and can be found online.
What currency pairs to avoid?
Exotic and uncommon currency pairs should be avoided by novice Forex traders as some further knowledge is needed to trade such pairs successfully.
Here is the list of major currencies beginner traders should focus on:
Euro (EUR)
US Dollar (USD)
British Pound (GBP)
Swiss Franc (CHF)
Japanese Yen (JPY)
Australian Dollar (AUD)
Canadian Dollar (CAD)
Also novice Forex traders should try to avoid currency pairs which have high spreads. Spreads vary from broker to broker. The information about spreads can be found at brokers’ websites, or at the special column called “Spread” on the trading platform itself, or from the Ask/Bid table (found also on the trading platform) by subtracting Bid price from the Ask.
Currencies that have high spreads are more volatile, e.g. have wide price ranges and longer price spikes, which unprepared traders may find difficult to trade.
Also a common mistake done by many beginner traders is that they try to monitor too many currency pairs at once. Not only it makes trading hectic and more difficult to manage, it also prevents deeper analysis of the currency pairs and actually learning their “behavior” over the time.
Currency pairs do have their unique ways to move, react to economical events, form trends etc.
By studying one currency pair at the time, Forex traders have the ability to observe its behavior and learn the ways to trade the pair even more effectively.
EUR/USD
GBP/USD
USD/JPY
There are several good reasons for that:
1. These currency crosses are widely traded, thus providing liquidity which is needed in order to benefit from price changes.
2. They have tight spreads, except may be for GBP/USD, which most of the time receives higher spread quotation from Forex brokers as it is more volatile (e.g. has wider price ranges than other pairs).
3. They all are traded against US dollar, which automatically suggest that the most active trading hours would be during New York trading session – the session with the highest volume of trades.
4. And finally, there are many Forex trading systems that are developed for trading those pairs and can be found online.
What currency pairs to avoid?
Exotic and uncommon currency pairs should be avoided by novice Forex traders as some further knowledge is needed to trade such pairs successfully.
Here is the list of major currencies beginner traders should focus on:
Euro (EUR)
US Dollar (USD)
British Pound (GBP)
Swiss Franc (CHF)
Japanese Yen (JPY)
Australian Dollar (AUD)
Canadian Dollar (CAD)
Also novice Forex traders should try to avoid currency pairs which have high spreads. Spreads vary from broker to broker. The information about spreads can be found at brokers’ websites, or at the special column called “Spread” on the trading platform itself, or from the Ask/Bid table (found also on the trading platform) by subtracting Bid price from the Ask.
Currencies that have high spreads are more volatile, e.g. have wide price ranges and longer price spikes, which unprepared traders may find difficult to trade.
Also a common mistake done by many beginner traders is that they try to monitor too many currency pairs at once. Not only it makes trading hectic and more difficult to manage, it also prevents deeper analysis of the currency pairs and actually learning their “behavior” over the time.
Currency pairs do have their unique ways to move, react to economical events, form trends etc.
By studying one currency pair at the time, Forex traders have the ability to observe its behavior and learn the ways to trade the pair even more effectively.
Money management and tolerance for losses
Forex trading is not always about wins, losses are part of the trading process.
Managing losses on 5 min time frame would be the easiest thing to do. Firstly, because a trader is able to monitor charts all the time, secondly, because losses are usually small due to the nature of 5 minute trading: price ranges are smaller and it is easy to tell when the market starts turning against your position.
Hourly charts have wider price ranges and therefore require wider stops to be placed, and in case of being wrong on a trade, larger losses to be taken.
If to speak about daily charts, losses there if occur are even larger as the market requires wider space to swing the price.
So here you have: smaller profit targets and smaller losses or larger profit targets and larger risks. Making profits with more price action and more trading opportunities, but also a lot of time spent in front of the monitor every day, or making profits with less price action and opportunities and less time spend trading Forex.
Managing losses on 5 min time frame would be the easiest thing to do. Firstly, because a trader is able to monitor charts all the time, secondly, because losses are usually small due to the nature of 5 minute trading: price ranges are smaller and it is easy to tell when the market starts turning against your position.
Hourly charts have wider price ranges and therefore require wider stops to be placed, and in case of being wrong on a trade, larger losses to be taken.
If to speak about daily charts, losses there if occur are even larger as the market requires wider space to swing the price.
So here you have: smaller profit targets and smaller losses or larger profit targets and larger risks. Making profits with more price action and more trading opportunities, but also a lot of time spent in front of the monitor every day, or making profits with less price action and opportunities and less time spend trading Forex.
Profit goals
The smaller the time frame the smaller the profit goals set by traders for each trade. E.g. while on 5 minute charts Forex traders would see reasonable targets at the next support/resistance level 15-30 pips away from the entry point, on the daily time frame profit goals will be extended several days into the future with expectations of banking 200-400 or more pips in one trade.
A trader can make same 200-400 pips trading 5 min time frame, but it would require a lot of trades to be taken, hours of price monitoring, which is not an easy task.
A trader can make same 200-400 pips trading 5 min time frame, but it would require a lot of trades to be taken, hours of price monitoring, which is not an easy task.
Wednesday, July 1, 2009
Timing
Are you willing to monitor charts every 5 minutes for several hours a day?Are you comfortable taking decisions fast and like quickly changing prices?If yes, try trading 5 minutes charts.
Or may be you prefer a slower pace at 1 bar per hour. You also believe that hourly charts are more reliable in the way they depict the market since much of the noise produced on smaller time frames can be eliminated.Then 1 hour time frame might be your winner.
Or it might be the case that you don’t have time watching the charts during the day because you have a full time job and/or you believe that intraday changes do not have much effect on the market and summary results can be best observed by the end of the day. You may also find out that you want to hold your trading positions open overnight, means that your money will work even when you sleep; and at the same time you want to be confident that your Forex analysis wasn’t based on short term momentum.`Then daily charts would be just right for you.
Tuesday, June 30, 2009
What time frame to trade? It will depend on your next expectations:
What time frame to trade? It will depend on your next expectations:
A. Timing
B. Profit goals
C. Money management and tolerance for losses
http://forexbeginners.net/what-time-frame-to-trade
A. Timing
B. Profit goals
C. Money management and tolerance for losses
http://forexbeginners.net/what-time-frame-to-trade
What is FOREX
Abbr. "FOREX" stands for Foreign Exchange, an exchange of currencies. When a person comes to trade currencies, e.g. buy one currency and sell another one - it is called currency exchange trading, or simply known as Forex.
Because the value of each currency always on the move, it fluctuates depending on the local and global economic factors, there is always an opportunity to profit on those changes/fluctuations - it is called currency speculation.
Euro, US dollar, Swiss Frank, British Pound and Japanese Yen - these are the most traded currencies in Forex. Of course, trading is not limited to those currencies, Forex offers variety of currencies one can trade.
If to describe in simple words how individuals trade Forex it would look next way:
Forex trading in its prevailing volume is done online.
A person finds a Forex broker, opens a trading account with the broker and deposits money.
Forex broker provides to trader so called Forex trading platform - an application, a working environment, where trader buys and sells currencies, dealing online - in other words he speculates to make money on the difference of currency rates.
In Forex currencies are traded in pairs.
EUR/USD, GBP/USD, AUD/JPY, USD/CHF and so on.
The first currency in the exchange pair is referred to as the base currency and the second as the quote currency.
For example, EUR/USD exchange rate = 1.400
Here the price of the Euro is expressed in US dollars: 1 euro = 1.400 dollars
The exchange rate tells to trader how much of the quote currency should be paid to obtain one unit of the base currency.
http://forexbeginners.net/whatisforex
Because the value of each currency always on the move, it fluctuates depending on the local and global economic factors, there is always an opportunity to profit on those changes/fluctuations - it is called currency speculation.
Euro, US dollar, Swiss Frank, British Pound and Japanese Yen - these are the most traded currencies in Forex. Of course, trading is not limited to those currencies, Forex offers variety of currencies one can trade.
If to describe in simple words how individuals trade Forex it would look next way:
Forex trading in its prevailing volume is done online.
A person finds a Forex broker, opens a trading account with the broker and deposits money.
Forex broker provides to trader so called Forex trading platform - an application, a working environment, where trader buys and sells currencies, dealing online - in other words he speculates to make money on the difference of currency rates.
In Forex currencies are traded in pairs.
EUR/USD, GBP/USD, AUD/JPY, USD/CHF and so on.
The first currency in the exchange pair is referred to as the base currency and the second as the quote currency.
For example, EUR/USD exchange rate = 1.400
Here the price of the Euro is expressed in US dollars: 1 euro = 1.400 dollars
The exchange rate tells to trader how much of the quote currency should be paid to obtain one unit of the base currency.
http://forexbeginners.net/whatisforex
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