Choosing the right Forex Platform

15th January 2012 | Currency Trading, Forex Tips, Forex Trading

A Forex platform is basically software which connects a trader and a broker.  Choosing the right Platform is very important, as it needs to suit the style of the trader in order to maximise success.  A lot of money can be made through Forex however it is important, as in every other trade, to have the correct tools for the job.

The first platform that should be considered when beginning to trade in Forex is a demo platform.  This allows those who are new to trading to practice buying and selling currencies and speculating on market rates, without investing any actual money.  This helps to build confidence and improve skills so that when they do begin investing money for real, they are more likely to succeed in making a profit.

Most brokers provide some sort of trading platform to their clients free of charge.  However there are many factors to be considered when choosing a platform, most involving the capabilities of the platform.  These can include whether it is able to automatically invest when a currency reaches a market rate specified by the trader (enabling the trader to trade 24 hours a day), whether it provides the trader with access to historical data and the ability to back-test strategies.  Such functionality should be balanced against the cost of the platform to help the trader choose the platform that is completely right for them, considering all the circumstances.

Search engines can be invaluable in a search for the right Forex Platform.  One example of a Forex Platform is the CitiFX Pro. Reviews of hundreds of different platforms can be found online.

Elements of the Forex Market

13th January 2012 | Currency Trading, Forex Tips, Forex Trading

There are three distinct elements to the Forex market, which enable new traders to the market learn a great deal about what it involves and how it works.  The main contributing factor to being an effective trader in the Forex market is knowing how it works and perhaps most importantly, obtaining a significant amount of information about the three elements that make up the foreign exchange market; geography, function and participant.

Geography

Foreign exchange is a global market and encompasses many different countries.  In addition, the benefits of its 24 hour accessibility means that there is always someone there ready to make a trade and there are unrestricted boundaries to the market, which makes it a very appealing opportunity for many investors.

Function

The functional element of the Forex market enables the transferring of currency revenue between countries and it can obtain credit for international trade, subsequently enabling the movement of goods between countries. 

Participant

The foreign exchange market consists of two parts, the wholesale market and the retail market.  Within these two components there are five main types of participants, the bank and the non-bank, individuals, commercial and investment firms, speculators, central banks, treasuries and foreign exchange brokers.  The participants within the Forex market facilitate trading but are not partners in transactions; they instead charge a fee for their service based on a commission scale.

About the Forex Currency Market

12th January 2012 | Currency Trading, Forex Tips, Forex Trading

If you are new to the world of forex investing, you might be feeling overwhelmed by the economic terms and procedures of investing.  Learning about the way the forex currency market works can help you navigate the market’s operations easily so that you can begin day trading with confidence.

Forex Market Overview

The forex market, or the foreign exchange market, is a worldwide currency market where national currencies are bought and sold every day.  The foreign exchange market is the largest trading market in the world, with over £2.5 trillion passing through the market each business day.  Unlike the stock markets in most countries, the forex market operates 24 hours a day, six days a week, making it possible for traders to execute transactions at any time of the day or night. 

Currency Trading Basics

On the foreign exchange market, traders buy and sell shares of national currencies.  This means that currencies are always expressed in pairs that show their relative worth compared to another currency.  For example, traders that are interested in purchasing British pounds may see the value of this currency expressed as GBP/USD, which shows the value of the pound against the American dollar.  Generally, traders who expect the value of the pound to go up against the dollar may use dollars to buy pounds.  Later, they may be able to sell the pounds back at a higher rate to make a profit.

Understanding Forex Risk

Like any financial market, the forex market presents a certain amount of risk to investors.  In some ways, trading on the forex market presents a greater risk than traditional investing, because currency rates are subject to extreme fluctuations that cannot be predicted.  New investors can get assistance to perform a risk analysis from a qualified forex broker.

Tracking Forex Currency Rates

10th January 2012 | Currency Trading, Forex Tips, Forex Trading

International currency rates are the driving force behind the forex market.  While national stock markets rise and fall depending on share prices, the currencies in the foreign exchange market gain or lose value according to their current rates.  Since currency rates can be extremely volatile, successful forex traders make a point of tracking forex currency rates to learn when to place their trades.

Why Monitor Rates

International currency rates are prone to extreme volatility.  This risk is increased in the forex market, since the market is open for trading 24 hours a day, six days a week.  Investors who make a profit in forex trading often spend time monitoring rates so that they can execute transactions ahead of situations that can cause losses.

What Causes Fluctuations

Several factors can influence currency rates.  These include economic upheavals, national and international conflicts, and political instability.  Since some of these factors can occur suddenly, it is possible for a currency that was trading high to take an unexpected drop overnight when the market is still open.  The unpredictable nature of external factors that affect currency rates causes the forex market to carry a higher amount of risk than some traditional forms of investing.

How to Track Forex Rates

Thanks to online resources, news organizations, and websites, it has become quite easy for investors to track forex currency rates.  Several financial news websites provide real-time currency rate monitoring for free.  These portals allow investors to look at current rates, exchange values, and the range of each currency’s value over the last year.  Traders can use this information to decide which currencies are best suited for their investing strategy.  Investors who are unable to monitor rates for themselves can use forex trading software that automatically makes trades when rates change by a certain amount.

Can You Trust Advice on Forex Forums?

8th January 2012 | Currency Trading, Forex Tips, Forex Trading

Forex forums are widely available on the Internet.  These portals generally include detailed financial analysis, information about forex news, and advice from experienced forex investors.  While these forums may seem to provide extensive financial assistance, it is wise to evaluate the reliability of the advice before using it.

Online Financial Advice

Online financial advice is easy to find on the Internet, but it can be harder to find reliable analysis and assistance.  Sometimes internet authors have connections to specific forex investing companies that they have not disclosed, so their suggestions or analyses may be skewed to encourage traders to buy certain software.

Deciding if Forum Advice is Reliable

The best way to evaluate the value of advice on a forex forum is to ask a qualified forex broker for his or her input about the suggested strategy.  Since your broker knows your specific financial goals and your available funds, he or she can help you decide if an online recommendation complements your investing approach.  Generally, it is best to use forex forum advice as a component in an overall investing strategy, rather than basing your entire approach on these suggestions.

Understanding Currency Pairs

30th December 2011 | Currency Trading, Forex Tips, Forex Trading

A currency pair is the ‘legal tender’ of the foreign exchange market. Forex traders, brokers and banks deal in currency pairs, which are actually quotations of the relative value of one currency against another. 

Base and Counter Currency

Take as an example EUR/USD 1.5025; one Euro is worth 1.5025 US Dollars. The Euro is the base currency, the one we are looking to value. The US Dollar is the counter currency, which is the reference point for determining the value of the Euro. If the quote were to change from 1.5025 to 1.5100 it would indicate that the Euro has strengthened, the US Dollar has weakened or both. Conversely, if the quotation changed from 1.5025 to 1.5000, the Euro has weakened.

The Majors

Currency pairs are notated according to currency priority. For example, it is widely accepted that the Euro takes precedence as the base currency in all currency pairs using it. Therefore, the currency pair EUR/USD would always be notated in this order. The US Dollar takes precedence as the base currency over the Canadian Dollar, so would be notated as USD/CAD. The priority rankings of the major currencies are, Euro, Great British Pound, Australian Dollar, New Zealand Dollar, US Dollar, Canadian Dollar, Swiss Franc and Japanese Yen

The world’s most traded currency pairs are called the ‘majors’ and make up about 85% of the forex. They are, EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CHF, USD/CAD and NZD/USD

Cross Pairs

Cross pairs are currency pairs that do not involve the US Dollar, e.g. GPB/AUS. Euro crosses are currency pairs that do not involve the US Dollar, but do include the Euro, e.g. EUR/GBP.

Understanding the Forex Market

29th December 2011 | Currency Trading, Forex Tips, Forex Trading

The Forex market is the foreign exchange market, where national currencies are bought, sold, and traded at variable rates. Unlike the stock market, the Forex market is open six days a week, at all hours, since international markets are constantly operating. The overall Forex market rises and falls based on the value of national currencies such as the Euro, the British Pound, and the United States Dollar.

About National Currencies

The value of a country’s currency in the Forex market is often a signal as to whether the country is doing well economically.  When significant events such as an economic crisis, a national or international conflict, or a rise in the price of inflation occur, these factors affect the value of a country’s currency.  As an example, the United States Dollar dropped sharply during the economic crisis of 2008, due to that country’s outstanding debt and ongoing international conflicts.

Currency Pairs

When one country’s currency declines in value, another nation’s currency generally rises. Forex investors use currency pairs, which are the value of one currency compared to another, to exchange currencies within the market. For example, the currency pair GBP/USD expresses the value of one British Pound to one American Dollar.  If investors think the dollar will gain in value, they may purchase a set amount of dollars using pounds.  Later, they can sell their dollars at a higher price and receive more pounds than they paid, resulting in a profit.

Trading in the Forex Market

Full time traders may spend their entire days making trades based on international news developments and the current trend within the market. New traders can get help from Forex brokers and software recommendations such as CitiFX Pro Reviews.