31st August 2010 | Forex, Forex Tips, Forex Trading
Forex automation and Forex robots are two topics that many investors love to debate. There are many traders and software companies offering complete and total Forex investment automation, typically citing dozens of success stories. While many tried and true veteran traders feel a machine cannot replace their decision making and others have fully automated their investments, neither philosophy is completely correct. With truly successful traders so unwilling to share their secrets, these systems quickly become peddled by shady businessmen and are used by unskilled traders who take significant losses in their quest for automation. Proper use of Forex robots and Forex automation is entirely possible, however their capabilities are limited in certain ways.
The most important fact regarding Forex robots and Forex Automation is that they almost never improve the return on investment beyond what a human decision maker can. An automated system is no more powerful than the investor’s predefined decisions dictating its actions. These Forex systems distil the trader’s philosophy, speculation and expectations into a few sets of commands that a machine will follow. It is impossible for a Forex robot to truly understand the ebb and flow of the market, spotting all peaks and valleys along the way.
Human traders make the best decisions regarding any investment market. While a machine might make a purchase at a predefined price, a human trader’s experience might suggest that the currency will drop lower. While Forex robots do exist, and it is possible to see a return with them, they still require human input and effort to be successful in the long term.
27th August 2010 | Forex, Forex Tips, Forex Trading
What is forex? Forex is the name given to the foreign exchange market (also referred to as the currency market or even simply as FX) which uses financial centres around the globe in a way which allows traders all over the world to do business with one another by determining the relative value of their differing currencies in relation to one another. Understandably, it is one of the largest markets in the entire world and is made up of many different people with many different goals.
Some are in the market solely in order to exchange currencies, with forex allowing businesses, for instance, to import goods from one country and pay in that currency, even though their own currency is completely different. Other people using forex, however, are actually ‘currency traders’, which means that they are people who actually speculate on how the different exchange rates are going to shift and change in order to try and make money by correctly estimating which currencies are going to be most favourable to them.
The forex market is one of a kind for a number of reasons including both the global nature of the market and its continuous trading across twenty four hours of the day (excluding weekends), as well as factors such as all the issues that can cause fluctuation in the exchange rates between currencies. The forex market is currently the largest and the most liquid financial market in existence today, and is likely to remain as such for the foreseeable future.
26th August 2010 | Forex, Forex Tips, Forex Trading
While some potential forex traders consider entering the market as part of a team, the majority of independent traders prefer to trade currency as a lone venture. This is because there are many advantages to going it alone.
First of all, when you are trading alone you have the responsibility for the entire decision making process. This means that you do not have to explain your rationale for any trading decisions. It is a well-known fact that one of the most critical elements of trading forex is effort. When you trade alone this effort can be concentrated solely on studying the market and reacting accordingly.
Another benefit of trading alone is the freedom to experiment. When you have to ask the permission of others you are restricted, but when you are in it for yourself only then you can experiment and learn accordingly. This means that your successes are your own, as are your failures. As an individual you can chalk your failures up to experience, but if you are working as part of a team you have to justify your actions and take responsibility for the effect they have on others. Effectively, you can bask in the glory of you actually make a success of forex trading since you did it all by yourself.
Even if the idea of trading as part of a team still sounds like an attractive option, it is definitely worth gaining some experience trading as an individual before taking this step.
23rd August 2010 | Currency Trading, Forex Tips, Forex Trading
Forex, or foreign currency trading, is becoming a favourite of both seasoned and relatively new investors. However, just as with other types of investments, if you want to be successful you must spend the time to develop a trading strategy.
One way to develop and perfect your strategy before investing any funds is to use forex trading software. Spend the time to develop your initial strategy, and then practice it in the safe environment of the software’s quasi-market practice area. You’ll make trades as if they are real – though they’re not – and then note not only your profits or losses, but any difficulties you had with the trade.
For example, if you decide on a strategy as a short-term trader, but find that watching every second of price fluctuation for your currencies is enough to drive you mad, then perhaps you should reconsider a longer-term approach. If you hate crunching numbers, then try using fundamental analysis as your research method, and try to get an excellent grasp of the political and economic indicators that can affect your currencies. If you find just following one or two currencies boring or not challenging, study other currencies and consider adding them to your portfolio.
But above all, determine entrance and exit points for your trades, whether it’s for just a few hours or several months. Base your price points on your preferred method of analysis and historical data, and understand how broker fees, leverage and tax implications will affect any profits. A paper profit that gets erased by fees and taxes isn’t much of a profit in the end!
With a strategy that fits you and your needs firmly in place, and emotion removed from the trading picture, you have the bedrock to a customised path toward profits.
20th August 2010 | Currency Trading, Forex, Forex Trading
The forex market is a global trading environment that is open 24 hours a day, every day, apart from the weekend. The major forex trading centres globally are London, New York, Hong Kong and Tokyo.
In recent decades, the major changes that affected the forex market, often dramatically, were the introduction of technology in the 1980s and 1990s and the spread of capitalism globally as the financial framework of the world. The spread of capitalism was generated mainly, although not exclusively, by US market policies and trading behaviour.
In the US, the main regulator of the forex market is the Federal Reserve. The main instrument it regulates is the over-the-counter market. The over-the-counter market has a wide range of buyers and sellers, who, although they can originate from anywhere in the world, are bound by US laws in their trading.
Given the ubiquity of online forex platforms and the ease with which forex news is communicated, US forex rates can change very fast and at any time. The rise of internet communications can mean that forex online traders react to macroeconomic news as it comes in, in comparison to a slower news cycle in past decades (let alone earlier in the 20th century).
The main currency traded in the US is, naturally, the US dollar. The US dollar is part of both the major pairs and the commodity block currencies (major forex market areas), which means that the US forex market is highly active.
19th August 2010 | Forex, Forex Tips
Anyone who wishes to become a forex trader will need some understanding of the many terms and expressions commonly used in the industry, for which the following provide a brief explanation.
Nickel is the expression used in the United States to refer to five basis points.
Narrow market is a market which is experiencing only light trading, also sometimes referred to as a ‘thin market’.
Off shore refers to a business which operates under regulations outside of a country, even when sometimes it has physical locations within it.
Old Lady is the slang term used for England’s Central Bank.
Par refers to the official value of a particular currency, while Parities refers to the value of a currency in reference to that of another.
Pegged refers to a situation where two countries’ currencies are tied together (albeit with some minor wiggle room), e.g. the US dollar and the Chinese Yuan.
Quantitative Analysis refers to the method of using mathematical and statistical modelling, research and measurement to analyse the behaviour of the market.
Quantitative Easing is a method by which the central banks of a particular nation can encourage spending within their own economy.
A Rainbow Option refers to an option that has a minimum of two – and possibly more – core assets. These options only pay when all the core assets perform as expected.
Rally refers to a period on the forex market when prices are rising upwards.
Short Put refers to an option in which the buyer is obliged to purchase the core asset from the seller.
16th August 2010 | Currency Trading, Forex Tips, Forex Trading
The forex market is the largest trading market in the world. It offers 24 hour trading from Monday morning to Friday late afternoon, with forex traders active globally. Day trading in this week long market environment is simply defined as your own determined schedule that falls within a one day period, whether this is at night or during daylight hours.
Choosing the right hours to trade depends on your forex trading strategy. Given the ubiquity of forex news and forex forums, you may find it advisable to review various resources before beginning to trade; observe the market, follow news and chat with others on forums. All of this can help you decide which day trade is most suitable for you.
Deciding on the hours depends on which time zone you operate in, how free your time is (you may not be able to trade if you have a full time job, for example), and which forex traders are most active during which hours. Asian forex traders are most likely to trade early in the day (if ‘day’ is UK time), whereas US forex traders become most active in the later afternoon.
On a short term time scale, you can observe forex trends in your chosen trading market on one day and then decide at which point you want to join in the following day. Peaks in forex trading can be observed, which make it possible to predict when most buying/selling is possible.
13th August 2010 | Currency Trading, Forex, Forex Tips
There are a number of common types of order that are available on the forex market. They include market orders, entry orders, stop loss orders and take profit orders.
Before setting out to trade on the forex market, it is highly advisable to acquaint yourself with the nature of these. They may be suitable for your own forex trading strategy. If not, it may be worthwhile to know the types of orders that other market participants are relying on.
A market order is a buy or sell order in which a forex brokerage firm or financial middleman is ordered to execute at the best current price. In the case of a generally decreasing trend in prices, for example, a market order can be executed to cut your losses. In case of a rising trend, you may come to the conclusion that the trend will not last and cash in your profits before the turn of the tide.
An entry order is an order to buy or sell at a predefined price. Once this price is achieved within the forex market, your currency is bought or sold. This price can be achieved in a week or in a year: future trends are not always predictable.
A stop loss and a take profit order are typically placed to limit losses or gain profits at a predetermined price. It depends primarily on the price you are comfortable with buying or selling at, and also depends on your total funds invested.
10th August 2010 | Forex, Forex Tips, Forex Trading
The website known as Forex Factory is essentially the number one website in the world for information on forex trading. It has what is believed to be both the most advanced and the most reliable forex calendar anywhere in the world, the largest forum dedicated to forex trading, and a massive forex news feed, the accuracy and reliability of which is constantly monitored by users.
Any forex trader, be they brand new or massively experienced, simply cannot operate without constantly updated news on the forex trading market. Everything from exchange rate fluctuations to status changes on the economic index to fiscal reports and general events happening all over the world are vital pieces of information without which trading cannot be performed with any degree of confidence. This fact only underscores just how essential a place where this news can be easily accessed and guaranteed to be constantly and quickly updated really is to the forex trader, and helps explain the phenomenal popularity and success of the Forex Factory website.
Of course, Forex Factory is not the only place from which this information can be gathered. Indeed, many forex brokers or forex brokerage sites themselves offer similar forex charts and services (at least to a degree). Perhaps the one downside of Forex Factory is linked to its primary advantage – how comprehensive it is. Because one could spend much time reading all the statistics and latest news, they might never get around to their primary reason for accessing the site to begin with – the actual trading.
6th August 2010 | Forex Tips, Forex Trading, Online Forex Trading
More commonly known as simply forex or the currency market, the foreign exchange market is a financial market that deals with the trading of currency against a worldwide, decentralised, over-the-counter market, with centres around the world acting as headquarters for the trading between buyers and sellers. Transactions take place, 24 hours a day, Monday to Friday, with forex brokers and forex traders being some of the most influential types of traders in the market. This makes the forex market ideal for budding individual dealers who can become involved in online currency trading at any time, to suit them. It is the foreign exchange market that dictates the value of currencies around the world at any given time, with its primary purpose being to assist international markets in trades and investments by allowing businesses and individuals to convert currencies on an international level.
Forex currency trading is part of currency trading as a whole and the basic example of how the system works is that a vendor in Europe could purchase and import goods from the United States and pay for them in dollars, despite the fact that their businesses’ income is in Euros. In many ways, forex acts like a futures and exchange market and facilitates both speculation and trade in which investors borrow low currencies and trade high. This practice has led to certain countries complaining that a loss of competitiveness has occurred due to currency devaluation, but that is simply a hazard of being on the public, over-the-counter market. Forex is one of the most common types of trading outside of the stock market and there are a number of forex traders working around the world at any given time.
