General Guides for FOREX Trading Newbie

September 10, 2010 · Posted in Currencies · Comments Off 

Being new to FOREX trading? Don’t worry, getting started in FOREX trading is easy and you can always test your skills first in a demo account before you go ‘live’ with real money. To get started in FOREX trading, we have to get to know what FOREX is. For the inexperienced, FOREX trading involves buying and selling the different currencies of the world. A FOREX deal is made when one buys one currency and sells another at the same time. It is always traded in pairs, Euro/USD, CHF/USD, USD/JPY…you get ‘short’ in a currency every time to buy another and the profit is made when you buy-low and sell-high.

FOREX market is the largest trading market in the world. It yields an average turnover of $1.9 trillion daily and the figure is nearly 30 times larger than the total volume of equity trades in United States. FOREX trading is very unique as the trades are done between two counterparts via electronic network or telephone connections. There is no centralized location as stocks or futures markets and trades are done around the clock. Everyday FOREX trade begins when the financial centers in Sydney start their day, and moves around the globe to Tokyo, London, and then New York. Traders can always response to the market regardless of the local time.

Although FOREX trading involves such a big volume of trades nowadays, it is not made available for the publics until year 1998. In the past, the FOREX market was not offered to small speculators or individual traders due to the large minimum business sizes and extremely strict financial requirements. At that time, only banks, big multi-national cooperation and major currency dealers were able to take advantage of the currency exchange market’s extraordinary liquidity and strong trending nature of world’s main currency exchange rates. Only until the late 90s, FOREX brokers are allowed to break huge sized inter-bank units into smaller units and offer these units to individual traders like you and me. Nowadays with the rapid growth of Internet and communications technology, FOREX trading has become one of the hottest make-money-at-home-businesses for those who wish to avoid conventional 9-5 day job.

As a fact in FOREX trading, FOREX is mainly traded in large international bank. According to Wall Street Journal Europe, 73% of the trade volume is covered by the major ten. Deutsche Bank, topping the table, had covered 17% of the total currency trades; followed by UBS in the second and Citi Group in third; taking 12.5% and 7.5% of the market. Other large financial cooperation in the list is HSBC, Barclays, Merril Lynch, J. P. Morgan Chase, Coldman Sachs, ABN Amro, and Morgan Stanley. For market participants segment, approximately half of the transactions done were strictly between dealers (i.e. Bank, or large currency dealer); others are mainly between dealer and non-financial institutions.

To start trading on FOREX, one must first learn how to read FOREX quotes. Foreign exchange quotes are always listed in pairs (e.g. USD/JPY 109.2): the first listed currency is known as the base currency with a constant value of 1 unit; while the currency listed in the second is known as counter. In our given example, USD/JPY 109.2 means a dollar of United States Dollar is equal to 109.2 Japanese Yen. In other words, the quote shows the relative value of one currency compare to the other. It means the value USD had been increased when USD/JPY quote goes up

However, a two-sided quote (e.g. EUR/USD 1.2435/1.2440) consisting of a ‘bid’ and ‘ask’ is often seen. The ‘bid’ price is the price at which you can sell the base currency; while the ‘ask’ price is where you can buy the base currency. The different of ‘bid & ask’ price is commonly known as ‘spread’. In the example of EUR/USD 1.2435/1.2440, this means you can buy 1 Euro Dollar with 1.2440 USD or sell 1 Euro 1.2435. Currency brokers make their profit through these differences of ‘bid & ask’ price and this is how they manage to provide their services to individual investors without charging them commission fees.

You don’t need much tools to trade in FOREX market. A computer with Internet access, a funded FOREX account with foreign currency exchange broker, and a trading system should be sufficient to get things started.

To reduce the risks of losing money, some basic charting knowledge is as well recommended before you start trading FOREX. FOREX charts assist the investor by providing a visual representation of exchange rate fluctuations. Many variables affect currency exchange rates, such as interest rates, bank policies, geopolitics, and even the time of day may affect exchange rates. As stated by expert FOREX trader Peter Bain, charting is an essential tool in FOREX trading. In his newsletter, he reveals that daily charts, hourly charts, and 15-minute charts are used while trading in FOREX. As quoted from his informative newsletter — “Daily chart will help you define the overall trend from a position trading point-of-view, and the hourly (one hour) chart will give you a feel for the intraday trend. The 15-minute chart is used for entry and exit – with assistance from the five-minute chart, where price is moving quickly, and you need to be closer to the action.”

Being one of the technical method, FOREX charting is based on the principal ‘history repeats itself’. FOREX traders who study charts predict the market future by evaluating past market performance. The time frame used for charting might differs for different traders, some analyze the past one week, some prefer six months analysis, and there are also traders who analyze the market for the past five to ten years before getting involved in a FOREX trade. A huge variety of FOREX charts are available in the market. Some charting methods are very simple, using a few FOREX indicators to show trading direction; other charts may include up to forty indicators and those are mainly for advance traders that are more skillful. MACD Divergence, RSI, RSI range, and price are some of the well-known indicators in charting.

As the article is meant for FOREX rookies, you are probably one of those who are looking forward to get involved in the FOREX market. However, there is no shortcut to be success in FOREX trading. Trading in FOREX is not as simple as it seen from outside. Especially there’s margin involved in FOREX trading, you might lose a lot of money in the beginning and learn your lessons in a hard way. Take all the time you need to learn this new trading skill well — practice everything you learn with a demo account before you consider going ‘live’ with your own money. Seminars, eBooks, Internet, papers, as well as video courses are all your needs to get involved. I wish you good luck and good profit making in your FOREX trades.

Author: Teddy Low
Article Source: EzineArticles.com
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A Beginner’s Guide to Forex Currency Trading – Try Before You Buy!

March 3, 2010 · Posted in Currencies · Comments Off 

Forex currency trading (or Foreign Exchange trading) is one of the most lucrative forms of stock trading today. The Forex market was once limited to lending institutions and government banks, but is now open to all investors. If you are currently a stock investor or are interested in stocks, then you don’t want to miss the amazing opportunity the Forex market offers. More than $2 trillion dollars in currencies are being traded daily with Forex currency trading!

This brief beginner’s guide will explain what Forex currency trading is and how it can benefit you. Also, the guide will show you how to avoid the pitfalls of Forex currency trading.

Explanation of Forex Currency Trading

If you’re familiar with the stock market, then you already know how much research it takes to keep up with the thousands of companies in the market. You could spend hours per day trying to find stocks with the most profit potential and the least amount of risk. With Forex currency trading, this element of trading is almost non-existent. Why? Because Forex currency trading focuses on one type of stock – foreign currency exchange rates.

Buying and Selling in the Forex Currency Trading Market

With Forex currency trading, you are actually buying or selling a “pair” of foreign currencies online, by phone or other methods. “Pair” means two currencies that are being compared by pip, or a common denominator between the two currency values. Bids are placed for the pair based on what buyers are willing to pay. An asking price is what sellers are willing to take at any given time.

For example, you might buy Euro dollars with your US dollars, so you are actually buying the EUR/USD pair. The pair will either increase or decrease, depending on what buyers are willing to bid, giving you a gain or loss for your investment.

The rise and fall of pips in Forex currency trading will depend on each country’s foreign exchange rate. The exchange rates can be affected by interest rates, unemployment rates, inflation, national events or disasters. If you have ever traveled to a foreign land, then you understand that your own currency could either be worth more or less than the currency of that nation.

Forex Currency Trading Leverage

Many Forex currency trading firms will allow you a leverage of 100:1 for your trading. Some will offer even more. If you have a 100:1 leverage, you can invest $1,000 of your own money, but trade $100,000! You can actually double your money with an increase of only one pip. However, you can also lose your entire investment with a decrease. This could equal big profits or losses, so be sure to consider the risks before jumping in with both feet.

Major Benefits of Forex Currency Trading

There are several major benefits of Forex currency trading. The Forex market is non-stop. You can trade 24 hours a day easily online from your own home computer. Though the risk is high, the profits can be tremendous. There is also a very high leverage with Forex currency trading, giving you more trading freedom than ever. There are no brokerage or commission fees to pay, and no restrictions on short selling.

Avoid Pitfalls in Forex Currency Trading

There are a few things to watch out for as a new investor. Be sure to choose a dependable registered broker. Be sure to research the company before you commit. Avoid trading mishaps by trying out a Forex currency trading demo first. There are some great demos available on the Web to help you become familiar with the Forex market and how it works. Most Forex currency trading brokers will allow you to have a free 30 day trial of their software making “paper” transactions to see what you can do. Beware of those companies or websites that promise “untold riches” with the Forex market. As with any investment, there is always risk no matter what their claims.

Forex currency trading is a fabulous business opportunity, but without the usual headaches of running a company. Understand your risks, start small with your investments, and watch your portfolio grow with Forex currency trading!

Author: Gust Lenglet
Article Source: EzineArticles.com
Provided by: Beading Necklace

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Forex Trading 101: Learning Guide for FX Beginners

February 9, 2010 · Posted in Currencies · Comments Off 

Being new to FOREX trading? Dont worry, getting started in FOREX trading is easy and you can always test your skills first in a demo account before you go live with real money. To get started in FOREX trading, we have to get to know what FOREX is. For the inexperienced, FOREX trading involves buying and selling the different currencies of the world. A FOREX deal is made when one buys one currency and sells another at the same time. It is always traded in pairs, Euro/USD, CHF/USD, USD/JPYyou get short in a currency every time to buy another and the profit is made when you buy-low and sell-high.

Facts on FOREX market

FOREX market is the largest trading market in the world. It yields an average turnover of $1.9 trillion daily and the figure is nearly 30 times larger than the total volume of equity trades in United States. FOREX trading is very unique as the trades are done between two counterparts via electronic network or telephone connections. There is no centralized location as stocks or futures markets and trades are done around the clock. Everyday FOREX trade begins when the financial centers in Sydney start their day, and moves around the globe to Tokyo, London, and then New York. Traders can always response to the market regardless of the local time.

Although FOREX trading involves such a big volume of trades nowadays, it is not made available for the publics until year 1998. In the past, the FOREX market was not offered to small speculators or individual traders due to the large minimum business sizes and extremely strict financial requirements. At that time, only banks, big multi-national cooperation and major currency dealers were able to take advantage of the currency exchange market’s extraordinary liquidity and strong trending nature of world’s main currency exchange rates. Only until the late 90s, FOREX brokers are allowed to break huge sized inter-bank units into smaller units and offer these units to individual traders like you and me. Nowadays with the rapid growth of Internet and communications technology, FOREX trading has become one of the hottest make-money-at-home-businesses for those who wish to avoid conventional 9-5 day job.

As a fact in FOREX trading, FOREX is mainly traded in large international bank. According to Wall Street Journal Europe, 73% of the trade volume is covered by the major ten. Deutsche Bank, topping the table, had covered 17% of the total currency trades; followed by UBS in the second and Citi Group in third; taking 12.5% and 7.5% of the market. Other large financial cooperation in the list is HSBC, Barclays, Merril Lynch, J. P. Morgan Chase, Coldman Sachs, ABN Amro, and Morgan Stanley. For market participants segment, approximately half of the transactions done were strictly between dealers (i.e. Bank, or large currency dealer); others are mainly between dealer and non financial institutions.

Why FOREX is popular?

There are several reasons why FOREX had became such a popular investment among world wide speculators.

In FOREX trading, you can always use technology for your own advantage. The FOREX market has made an amazing transformation since the advent of the internet. Technology has now made it possible for smaller investors to play on the same level as larger corporations and banks. Anyone with a computer and a will to succeed can start trading currencies from the privacy of their home or office. Online FOREX trading has changed the way that investors do business. With access to your portfolio 24-hours a day, it is really very simple to get started. You can choose whether to hire a professional to handle your transactions, or you could choose to do them yourself.

Also, FOREX trading provides relative large leverage rates to individual traders. FOREX traders can do business with up to 200 to 1 leverage rates. With this advantage, ROI is escalated dramatically and traders can always start up small with capital as little as $1,000.

Getting started in FOREX trading

You dont need much to get started with FOREX trading. A computer with Internet access, a funded FOREX account with foreign currency exchange broker, and a trading system should be sufficient to get things started.

To reduce the risks of losing money, some basic charting knowledge is as well recommended before you start trading FOREX. FOREX charts assist the investor by providing a visual representation of exchange rate fluctuations. Many variables affect currency exchange rates, such as interest rates, bank policies, geopolitics, and even the time of day may affect exchange rates. As stated by expert FOREX trader Peter Bain, charting is an essential tool in FOREX trading. In his newsletter, he reveals that daily charts, hourly charts, and 15-minute charts are used while trading in FOREX. As quoted from his informative newsletter — Daily chart will help you define the overall trend from a position trading point-of-view, and the hourly (one hour) chart will give you a feel for the intraday trend. The 15-minute chart is used for entry and exit with assistance from the five-minute chart, where price is moving quickly, and you need to be closer to the action.

Being one of the technical method, FOREX charting is based on the principal history repeats itself. FOREX traders who study charts predict the market future by evaluating past market performance. The time frame used for charting might differs for different traders, some analyze the past one week, some prefer six months analysis, and there are also traders who analyze the market for the past five to ten years before getting involved in a FOREX trade. A huge variety of FOREX charts are available in the market. Some charting methods are very simple, using a few FOREX indicators to show trading direction; other charts may include up to forty indicators and those are mainly for advance traders that are more skillful. MACD Divergence, RSI, RSI range, and price are some of the well known indicators in charting.

Choosing the right FX dealer is a way to avoid unnecessary risks. FOREX dealers are not all regulated the same way. Although FOREX dealers must be regulated by law, firms and individuals can solicit retail accounts for FOREX dealers and manage those accounts without being regulated. As a trader you should take up the responsibility of finding out if your FOREX dealers are regulated. If they are not, you may be exposed to additional risks.
Also, beware of dealers with investment schemes that sounds too good to be true. Pay extra cautions to dealers that you first knew and always look into the investment offers. If you are from United States, you can always refer to CFTF (at http://www.cftc.gov) or NFA (at http://www.nfa.org) for further information.

Conclusions

You come to this article probably because of you are new to FOREX and were looking for some readings on the Internet. To be frank, FOREX can be very profitable but the risk lie beneath is equally great. Remember to always trade with proper investment plan and strategy. Read books, attend courses, watch video seminars, read papers, or even practice first with a dealers demo account to get yourself ready. Trade smartly, and gain the maximum out of FOREX good luck!

Author: Teddy Low
Article Source: EzineArticles.com
Provided by: Import duty tariff

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