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Archive for the ‘Forex’ Category

Forex robot trader – is it something new and revolutionary in the forex trading? To answer this question let`s first find our what is the forex robot trader. Forex robots are the computer programs, which are able to implement automatic forex trading. They are also known as expert advisors (EA).

The main question about forex automatic robot trading is about it`s efficacy. At different forex forums and blogs you may find a lot of contradictory reviews about forex robots work. Now I`ll try to summarize their pros and cons to give you more clear understanding of the subject.

The most significant advantage of the forex robot trader (EA) is that human trader is able to save about 90% of his time using the FX expert advisor. If you have some experience in forex you might know, that at the current moment there are developed a lot of indicators and different strategies of trading. So it is pretty difficult for the human brain to create the right decision basing on all of his knowledge, because there are too much calculations to be implemented. On the other hand “computer brain” is able to create the correct decision just in a few milliseconds.

So now you see the main advantages of forex robot traders. Very important is that you don`t overtrade your forex trading account using automatic FX systems. Because in this case you`ll have a large risk to face serious drawdowns. The best forex automatic systems come with build in money management to lower the trading risk.

I hope this short review will help you to get more reliable knowledge about forex automatic robot trading and avoid making any mistakes.

The fact is, the majority of traders lose because they cannot control their emotions – and their emotions cause them to make nonrational trades and lose. Trading psychology is one of the keys to investment success, but its affect is not understood by many investors, who just think they need a good trading method, but this is only part of the equation for winning at currency trading The influence Of Hope and Fear In currency trading psychology, two emotions that are constantly present are: Hope and fear. One of the traders who recognized this was the legendary trader W D Gann. Hope and fear are destructive emotions and all traders are influenced by them, they are part of all traders’ psychology. Hope and fear can make traders act irrationally, they know what they should do, but they simply can’t do it. Executing a trading method with discipline is the only way to overcome destructive emotions. Human Nature Is Constant, exploit It for Trading Success It doesn’t matter what market you trade: Commodities, stocks, currencies, or what type of trader you are, a day or position trader, the fact is, trading psychology influences the majority of traders. If you can control your emotions and trade with a disciplined plan you can gain a trading edge. A Disciplined Plan for Big Profits You need to control your emotions by having a specific plan, which if followed will gain you the correct currency trading psychology. Having the correct currency trading psychology is just as important as having a good trading method. Emotion is part of human nature. We cannot avoid them. All we can do is control it and not make the mistakes the majority of traders do and adopt the right currency trading psychology. If a trader can adopt the right psychology, they will gain a significant edge in their quest for long-term currency trading success.

Internet Technology has brought about many changes in the way that we conduct our lives and our personal business. We can pay our bills online, bank online, shop online, and even date online! We can even buy and sell stocks online. Traders love having the ability to look at their accounts whenever they want to, and brokers like having the ability to take orders over the Internet, as opposed to the telephone.

Most brokers and brokerage houses now offer online trading to their clients. Another great thing about trading online is that fees and commissions are often lower. While online trading is great, there are some drawbacks. If you are new to investing, having the ability to actually speak with a broker can be quite beneficial. If you aren’t stock market savvy, online trading may be a dangerous thing for you. If this is the case, make sure that you learn as much as you can about trading stocks before you start trading online.

You should also be aware that you don’t have a computer with Internet access attached to you. You won’t always have the ability to get online to make a trade. You need to be sure that you can call and speak with a broker if this is the case, using the online broker. This is true whether you are an advanced trader or a beginner. It is also a good idea to go with an online brokerage company that has been around for a while. You won’t find one that has been in business for fifty years of course, but you can find a company that has been in business that long and now offers online trading.

At the best of times  Forex trading can be a risky business with huge potential for profit or loss. As a full-time trader, i have seen the best and worst that the forex market has to offer, the dizzying high of big wins, or make people become bankrupt.

You might be a forex trader yourself, or maybe you are just curious about how forex markets work, whomever you are, you need to learn how to seperate the legit forex brokers from the scam merchants. The internet has a great deal of genuine forex dealers offering quality services, it is also unfortunately infected with just as many thieves dressed up as companies who will gladly take your money and then dissapear. This fear of being taken advantage of puts a lot of people off the idea of trading forex, this shouldn’t be the case.

Now there are a few key differences between stock markets and forex markets that you are going to have to learn:

1. Forex has no centralised exchange house.

2. Forex trading is 24/7.

3. Forex is a largely unregulated market.

Looking at that list, it kind of seems that the forex market is akin to a wild west town full of outlaws and gunslingers. In this market there is noone to complain to, noone who will hold your hand. So how can you find the genuine dealers amid all the garbage? Do not trust any broker whose reputation cannot be confirmed, and whose company is not tied to the forex market.

The attraction of the forex market can be overwhelming. The scent of huge profits often overpower the common sense of the average person. They enter eagerly, just waiting to invest their life savings. Lying in wait are the scammers with huge promises, they capture the new investors money, and suddenly dissapear.

The good news is, is that many genuine forex brokers do actually exist.  Also a word on looking for reviews about brokers online. You can find honest reviews on forex brokers online, however there seems to be a habit of late of competing forex companies, and/or traders engaging in negative marketing of each other. Dig deeper and you will usually find an honest answer.

So remember:

1. Validate the companies reputation.

2. Make sure they are tied to the forex legitimatly.

3. If the company is small and unheard of, stay away.

4. Finally if the broker has a proven online track record, a legitimate financial institution affiliation, and a few good reviews, give them a try.

My ultimate advice is, if unsure, invest the smallest amount you can, and find out for yourself. This is how i usually used to find brokers, and it worked for me.

Once you become somewhat familiar with how the forex market works, and you understand to a point what is involved in trading on the Foreign Exchange Market, you would want to start to gauge market trends in order to profit from your business ventures on the open market.
The name of the game is statistics, and the first rule is that you must be aware there is no such thing as a sure thing on the forex market. While you can never be 100% sure at any given time of the next move that will be made on the market as a whole, being able to read statistics and interpret them will place you ahead of the pack in regards to “guessing” what will happen next.
Forex trading is a lot like gambling. If you can keep track of the cards that have already been played, you are more informed, statistically, regarding what is likely to be dealt next, meaning you can place a bet with greater insight than someone who has no clue what has already been played. With the forex market, if you have information as to what has already occurred over the past few days, months, or even years, you are again placed in a better position to more logically conclude what will happen next. You simply learn the pattern and follow it to the end, reaping the financial rewards.
Charts And Chartists
Wait, did you think you were going to have to research and map out the market’s past all by yourself? Of course not! There are people who get paid to do that sort of work. They monitor the market hourly, daily, weekly, monthly, and yearly so that they can provide big-time traders with the same knowledge mentioned before. The more a trading company knows about the market, the more money they can make.
The best part of this is that you have access to the same information as these VIP clients. Chartists, who are essentially market analysts that publish their findings in easy to read charts, produce what is referred to as a candlestick charts. These charts are basically a combination of a line graph and a bar graph that show the trend of various stocks, indexes, or other interests over a specified period of time. Therefore, you can easily determine if the currency is on an uptrend or if it is taking a downturn, when the last major change occurred, and how long it is predicted that the currency pair will continue on the current path.
If your broker does not supply you with these charts, then you should easily be able to draw them yourself with the modern day charting software or trading platform that you get from your broker. These software platforms can draw most charts for you by entering a couple of parameters and viewing the result.
It is recommended however that you learn at least the basics of charting and statistics before you start trading live.

What is FOREX?

FX Trading, also known as Currency Forex Trading is an alternate way you can make money in a trading environment. Everyone has heard of the New York Stock Exchange (NYSE) or the Chicago Mercantile Exchange (CME), each featuring either stock trading or options and futures trading. Forex or FX Trading involves the buying and selling of currencies instead of stocks, bonds, options or futures.

FOREX stands for the FOReign EXchange market, which is the international financial market where currencies are traded. The foreign exchange market began in the 1970s and is now the largest financial market in the world, with an average daily turnover of US $1.9 trillion. That’s 30 times the amount of daily activity on all of the US stock exchanges combined.

FX trading is also very different, in that, there is no physical floor or exchange area like there is in New York or Chicago where the Currency Market is located. The Foreign Exchange Market(Forex) or FX Market can only be accessed by phone or by electronic network.

Forex Market Hours

The advantage of not having a central location, but instead having an electronic network, is that Currency Forex Trading can operate 24 hours a day. In fact, the Currency Exchange is open for trading all day and night during work days, roughly 5 days a week.

Forex Market hours begin at 7:00 pm each Sunday, New York time, currency forex online trading begins as markets open in Tokyo, Japan. Next, Singapore and Hong Kong currency markets open for FX trading at 9:00 pm EST, followed by the European markets in Frankfurt (2:00 am), and then the currency trading begins in London at 3:00 am. By 4:00 am, all European currency forex trading markets are in full swing, and Asia has concluded their currency trading day. Then the U.S. markets open first in New York around 8:00 am Monday, just as Forex market hours in Europe wind down. Australia will take over with the start of their currency trading around 5:00 pm, and by 7:00 pm Tokyo is ready to re-open. All of the Forex market hours above were quoted in Eastern Standard Time (New York). And so you can see that the trade of World Currencies takes place round the clock basically from Sunday evening until late Friday night.

FX Trading: Buying and Selling Currencies

Since the FX Trading Market is the largest financial market in the world, it is also the most liquid. This means it is easy to get in and out of a position whenever you want. The more liquid a market is, the easier it is to initiate and fulfill a transaction. Of course, the objective when currency trading in any market is to buy low and sell high. With Forex Trading available online, a person buys and sells the currencies of other nations from his or her computer. For instance, if one believes the U.S. Dollar will strengthen against the EURO they can buy Dollars now and sell them later at a profit.

Traders are able to take advantage of intra-day volatility thanks to the low spreads and enter positions for short time periods, such as minutes and hours. Unlike equity trading, where restrictions limit a trader’s ability to profit from a market down turn, there are no such constraints on currency trading. Currency traders can take advantage of both up and down trends thus increasing their profit potential.

FX Trading Market Symbols

The most commonly traded currencies are The US Dollar (USD), the EURO (EUR), the Japanese Yen (JPY), the Pound of Great Britain (GBP), the Swiss Franc (CHF), Canadian Dollar (CAD), and Australian Dollar(AUD).

All currencies are traded in currency pairs and each currency is represented by a 3 letter code. Therefore, a rate, which consists of a pair of currency codes, will end up being a 6 letter code. For instance, USD/GBP is considered a currency pair with each containing three letters for a total of 6 in a rate. The most commonly traded currency pair is EUR/USD.

All Forex trades result in the buying of one currency and the selling of another (currency trading), simultaneously.

Your objective when Trading Currency options is to make sure you can correctly identify the current trend in the currencies you are trading and to make sure you are buying a currency which is appreciating in value and selling a currency which is depreciating.

“Going Long” and “Going Short” in Forex Day Trading

Buying or “going long” the currency pair implies buying the first, base currency and selling an equivalent amount of the second, quote currency (to pay for the base currency). It is not necessary to own the quote currency prior to selling, as it is sold short.

You would buy a currency pair if you believe the base currency will go up relative to the quote currency, or equivalently that the corresponding exchange rate will go up.

Selling or “going short” the currency pair implies selling the first, base currency, and buying the second, quote currency.

You would sell a currency pair if you believe the base currency will go down relative to the quote currency, or equivalently, that the quote currency will go up relative to the base currency.

An open trade or position is one in which you have either bought or sold one currency pair and have not sold or bought back an adequate amount of that currency pair to effectively close the trade.

When you have an open trade or position, you stand to either profit or lose from fluctuations in the price of that currency pair.

Forex Currency Trading Software

Different than stock trading, you will trade using special software programs which allow you to participate in Online Forex Trading. These Forex Trading systems are often referred to as Forex Robots.

Most traders agree that Forex Trading Robots give you an advantage as it removes all “emotion” from the Forex trading platform. The robots rely on proven, tested and quite highly accurate Forex signals to govern their FX trading.

In addition, most of these Forex trading platforms allow you to test your Forex Strategies in a “practice mode” before you actually use your own money.

Currency Forex Online Trading

Forex trading is the backbone of all international capital transactions. Compared to the slim profit margins rendered in other areas of commercial banking, huge profits are generally produced in a matter of minutes from minor currency market movements. Some banks generate as much as 60% of their profits from trading aggressively.

Trading volume has been growing at a rate of 25% per year since the mid-1980s and therefore it makes it true that the currency market is one of the world fastest growing industries.

Technology is having a huge effect on the FX market and millions of Dollars are moved from one currency into another every second of every day by banks and financial institutions through computers and, for the savvy investor, with the touch of a computer key.

Currency Trading can be an exciting alternative to the stock, bond, option or commodities markets. To some, it is a simpler way to trade and profit. To others it is a welcome break from disappointing corporate news that can drive a stock down dramatically within a few short minutes, even in seconds.

Whatever your reason, Forex currency trading may be just the break you need from other investments you are tired of watching do nothing or, worse yet, continue to decline in value. After all, this is money! You like money, don’t you?

Five Reasons For Choosing Forex
Here are five reasons are for foreign exchange trading than stock trading, unless you consider the long-term investment.
1. Liquidity
Currency is liquid by definition, if liquidity measures the ease of converting an asset into cash. More often it is taken as the amount of money in a market. On this, too, currency scores very high.
Turnover in the forex market was almost $4 trillion per day on average according to a survey by the Bank For International Settlements in December of 2007. It has probably exceeded that now.
This is considerably more than is traded on all of the stock markets in the world added together. In forex you are not limited to trading in your own country or on your own country’s currency, so the advantage to this trader of being part of this huge market is clear. You have a much better chance of getting the price that you see or the price that you want.
2. 24 Hour Market
One practical advantage of the forex market is that it is open for trading 24 hours a day Monday through Friday. This is because of the global nature of the market and the fact that it is always business hours somewhere in the world, excluding weekends and holidays. So a forex trader can work a day job and trade in the evenings or early mornings.
3. Leverage
Leverage is the trader’s most essential tool in that it allows a small fund to control a large position size, resulting in a massive proportional return on investment, assuming that you are profitable. The leverage offered by forex brokers tends to be higher than in stock trading.
In forex, 100 times leverage is seen as standard or low, 200 times is common and 400 is possible in some circumstances. Of course this makes forex trading extremely risky but for a successful trader it is a significant advantage because it means that more money can be made from less.
4. Openness
Another advantage stemming from the sheer amount of money in this market and its high trading volume, is the openness of the market. There is very little opportunity for insider trading in a market which deals with the economic performance of whole nations and involves every major financial institution in the world. This means that the retail trader is not at a disadvantage to the extent that might be true in the stock market and lends more weight to our forex stock argument.
5. Trade Both Directions
When you trade forex, you are always dealing with a currency pair, exchanging one currency for another. This means that you can trade in both directions. For example if you are trading EUR/USD, you can start by investing in either euros or US dollars depending on which one you think will rise. So you can buy or sell the pair (go long or go short).
In a sense this is like trading stock options or futures, but with more flexibility. The flexibility comes from the fact that currency values are relative to each other. They can never all fall at the same time, as stocks can. So this is another point for forex in the forex stock comparison.

The old battlefields of the middle ages are not gone, they have merely changed form. Hundreds of years ago normal men would set out to build their empires by conquering lands through the force of arms. Today, normal men like you and i set out to build our financial empires by conquering markets throught the force of self. The blood soaked battlefields of yesterday have made way for the cash soaked commercial battlefields of today, with the large private armies of Family warlords making way for large pools of  family capital. Just as armies were needed to shape empires of the past, so too is capital needed today in order to put modern commercial plans of conquest into action.

In there, lies the reason as to why many forex traders fail. They go into battle risking too many soldiers (capital) and without the knowledge of tactics needed to win the fight.

Lets look at that again. 1. They risk too much capital, 2. They do not understand Forex markets.

Many traders both successful and miserable have made these mistakes, the main reason for me writing this article is so you can learn this lesson here and do not have to make this mistake and lose money, or at the very least be cautious enough to minimise your losses.

No general will risk a majority of his men in a battle that he has no plan for and where he has no idea about his enemy. So my question to you is, why would you risk your capital in market conditions you know nothing about? Luckily two remedies exist for the forex general who finds himself in this situation.

1. Make it a rule to only risk 1% of your capital in any one trade. This is to minimise your losses.

2. Educate yourself so you can recognise your chance to strike but also recognise when it is neccessary to withdraw. Learn to read the conditions of the forex battlefield. Great generals of the past would spend years learning battlefield tactics, luckily we can achieve this in a couple of months.

So in summary only risk 1% of your capital in any trade, and educate yourself about how forex markets work.