forex trading

What Makes FOREX Trading So Popular?

What Makes FOREX Trading So Popular?

If you are not investing on the FOREX market yet, you’d better get started– there are countless moneymaking opportunities everydaywith FOREX, the largest and most liquid market in the world. Today, around 5 trillionAmerican dollars are traded every day on the FOREX exchange. There are numerous playersin this market: large banks, central banks, multinationals, hedge funds and private investors.

So, why has trading currencies become so popular?

What is the FOREX Market?

FOREX stands for Foreign Exchange and is where market participants can buy and sell currencies. Depending on the country’s currency, you can find different types of currency pairs: majors, minors, and exotics.

Brokers, like UFX.COM, often apply different spreads depending on the liquidity and volatility of the particular currency pair you’re trading. It’s thus always better to know in advance the trading conditions with whichthe broker you’re using can provide you (spread, margin, leverage effect, etc.).

Why is this market so popular?

  • Flexibility: The FOREX market is open from Monday to Friday, 24 hours a day. It’s thus very convenient, as you can trade whenever you want.
  • High leverage: When investing on currencies, you are using a leveraged account, which allows you to open trades worth more money than you’ve actually invested.
  • Size of the position: Many brokers offer different lotsfor trading currencies, depending on the size of the position you wish to open. 1 standard lot is 100,000 units. A mini-lot is 10,000 units, while a micro-lot represents 1,000.
  • Liquidity and Volatility: This is one of the most volatile and liquid markets around. A well-informed and experienced trader can take advantage of a sizable profit, thanks to volatilityover short periods of time.
  • Scalping and Day Trading:For private traders,trading currencies is often done with the short term in mind, as it’s easier for a day trader or a scalper to make money on short price movements and have all their positions closed at the end of the trading day.
  • Advanced platforms and trading tools:The increasing accessibility of platforms and state-of-the-art tools help inform your trading decisions. You can really profit from everything that your brokers put at your disposal.

How forex Trading Benefits a Trader but be Cautious

Forex trading can be very beneficial and takes skill and practice to become an expert.  Forex traders utilize numerous trading tools to increase their ability to earn winning trades.  Some of the tools and strategies which a forex trader utilizes are leverage, technical analysis, fundamental analysis, technology and the list goes on.  When trading forex the trader has an advantage in their industry which other traders don’t.  With forex trading the trader has the ability to utilize a great deal of leverage when placing his/her trades.  When utilizing leverage or margin there is not only huge upside but there can also be a great deal of downside.  Forex traders must understand how margin trading works prior to them leveraging their trades and should completely understand how the leverage that they use will invariably affect their earnings.

What is margin trading?  When using the term margin the forex trader should also think about the term leverage.  Margin trading and leverage go hand in hand when it comes to conceptualizing the practice.  Typically, when a forex trader places a trade, it is necessary for the forex trader to shell out a minimum amount of the position in good faith.  When a forex trader puts up a small amount of their trade with capital, the forex trader’s position is considered to be leveraged.  The cost in terms of dollars which is required to be placed is deemed as the margin requirement. Financial_planning

Again, when a forex trader is thinking to themselves what is margin trading he/she should be thinking of the minimum amount of money they need to pony up to maximize their position.  A different way to think about margin can be described in terms of when a forex trader opens a contract.  When a forex trader opens a contract they are putting down a portion of the positions value as margin.   The dollar amount which forex traders have to put down to leverage their trade varies from 2 percent to ½ of a percent.  Also, the amount of leverage that a forex trader can utilize can also vary from 1:100 to 1:200 (one hundred to one or two hundred to one).

Another very important aspect related to margin within the forex markets is to open a forex trade the margin is deemed a requirement of trading not a cost of trading.  If/when a forex trader utilizes margin dollars to place a trade and his/her position moves against them, the losses incurred will be much greater if the forex trader was to not use margin dollars.  This concept and aspect of margin trading must be fully recognized by the forex trader before they start leveraging their positions.  The dollar amount of margin utilized by the forex trader magnifies not only their potential gains but also their potential loses.  If a position goes against a forex trader they must understand on how to handle the trade or they could lose their shirts.

The amount of margin which a forex trader can utilize is always a topic of conversation.  Invariably, the amount of margin which a forex trader can utilize is directly correlated to the country in which the forex trader lives in.  Typically, the forex broker which the forex trader is utilizing to conduct their transactions has the margin that can be utilized posted within the line of the trade on the forex broker’s platform.

Unlike the equity and bond markets the forex market allows the forex trader to utilize a tremendous amount of leverage.  Once again this can have its pluses and minuses which all depend on the direction in which the trade that the forex trader has placed is headed.

In closing, when a forex trader thinks what is margin trading the first thing that should come to mind is the maximum amount of dollars they can leverage against their trading position.  When taking advantage of margin the forex trader has the opportunity to exponentially grow the value of the trade they have placed.


Brief History of the Foreign Exchange Market

With the global nature of forex trading, it is crucial to first study some of the significant historical events related to currencies and currency exchange before investing. In this article, you will learn the international monetary system and how it influenced the current forex platform.

The Gold Standard System

The establishment of the gold monetary system in 1875 is an important historical milestone in the foreign exchange market. Without a standard system in place, countries would often use gold and silver for payments. The primary concern in using this system is that the value is influenced by the external supply and demand. For instance, a discovery of a new gold mine will result in lower prices.

The basis of the gold standard was that the government of each country will guarantee the conversion of currency into a particular vGold Pricesalue in gold. Hence, governments require a considerable amount of gold reserve to meet the demand for the trade. In the 19th century, primary economic countries agreed the value of a currency to an ounce of gold. Eventually, the exchange rate was based on the price difference of gold between two currencies. This was the first international standard for currency exchange.

But when the First World War broke out, the gold standard gradually demised. Because of political turmoil with Germany, most countries in Europe needed to complete important military projects. Many of these projects require substantial financing, that the gold reserves was not enough to guarantee all the excess currency that the governments were producing.

Even though the gold standard was revived after the war, many countries had dropped the system completely at the beginning of the Second World War. But still, gold continues to be the ultimate form of money.

Bretton Woods System

The Allied countries believed that there is a need to establish a new monetary system to replace the gold standard system. In 1944, the representatives from the Allied nations gathered at Bretton Woods in New Hampshire to come up with a new system that they have referred as the Bretton Woods System of international monetary standard.

Aside from establishing a method of fixed exchange rates, the convention at the Bretton Woods also recognized the US Dollar as the replacement of gold standard to become a main reserve currency. It also created three international finance organizations to manage the global economic activity – the General Agreement on Tariffs and Trade (GATT), International Monetary Fund (IMF), and the International Bank for Reconstruction and Development.

The US dollar became the only currency that is guaranteed by gold, which turned out to be the main reason that this system failed. The United States had to implement a series of balance deficits to sustain its gold reserve. In 1970s, the US gold reserves dwindled that they cannot cover all the US dollars that other central banks hold.

As a result, US President Richard Nixon closed the gold reserves, and he announced that it will no longer exchange gold for the dollars. This marked the demise of the Bretton Woods system.

Floating Exchange Rates

With the failure of the Bretton Woods System, international economies had to use floating foreign exchange rates as agreed during a convention in Jamaica in 1976. This resulted in the permanent establishment of the gold standard.

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Forex trading: Are you aware of the ways to succeed here?

If you are ready to explore the world of Forex trading anytime soon then let us tell you that Forex is not only about acquainting yourself with the basics of trading or constant practice. The way you manage your money will be as crucial to your success as a trader as learning the basics is. Today, we will be offering a few tips with which you can expect to etch out a successful career in account forex trading. Read on to find out more in this regard.

Success in Forex: All you need to know

Learn about the basic of trading and practice it on a regular basis. There is no substitute for diligence. You might as well be blessed with enviable trading acumen in general, but practice makes you perfect. In-born power of analysis will not deliver any result if you are not serious about practicing your trade. The more you practice the more your ability to devise trading strategies is sharpened. The online brokers give you a chance to practice trading for a month or so with the help of a demo account. This demo account is absolutely free and lets you practice trading under real market conditions. You will have the opportunity to study real marketing charts and place your bets in accordance. Only the money involved here is fake – so that even if you end up making losses it doesn’t hurt you. And there is more room for you to experiment with your trading moves and weigh the pros and cons of each move in order to perform better when you are trading with real money later.

forex-analyst

Choose a forex trading professional with due care

It is very important to make sure that you are selecting the online broker very carefully. Account forex trading is one of the riskiest business ventures one can think of. At times, it becomes very difficult for newbies to manage their accounts without the help of professionals. This has led to the rise of major corporates that make trading a lot easier for you by providing you detailed reports of market trends and guiding you as to where exactly you should buy or sell.

Select a single currency pair

Do not commit the mistake of jumping from one currency pair to the other. This does not really allow you the time to focus on one currency pair and analyze it properly. You can choose a maximum of two currency pairs to start off with. Study these pairs properly and try to maximize your profit in accordance. Focus on analyzing these two currencies and see how they work as per evolving market trends. Once you become adept at handling these currency pairs go on to choose other ones.

Learn to manage your finances properly

Proper finance management is key to attaining success in Forex as well. You might as well go on winning move after move. However, a single bad move can wipe out all your profits. Never enter a trade without setting the target profit and stop loss features properly.

 


My Favorite Investments: One Year Later

I’ve only been investing seriously for about a year. So why am I qualified to write about this at all? Well, I would never call myself an investment expert, but I do have practical experience that only comes from doing. I’ve managed to make a handful of investments and gain some real money in just a year. So I’d like to share how I did it. I do this because I understand how intimidating it can be to start investing. You’re worried about making the wrong choices, losing money, or watching the stock market collapse right when you put your first money into it. While these concerns are real, they’re also exaggerated in the minds of most non-investors. I think that the best way to learn about investment is to simply start doing it. That’s the strategy I started with a year ago, anyway, and it has gotten me this far. Here’s how I did it.

  • I Bought My House. This one was huge for me. I had to buy a very, run down house. I could have afforded a mortgage more than double the one I took out, but I wasn’t comfortable taking on that much debt, even though my mortgage lender would have let me. I was thrilled to find out that my monthly mortgage payment was less than I was paying in rforex-broker-feeent for the same-sized space. With appreciation on my property (increased by a nearby development) as well as improvements I’ve made inside, my house appreciated more than 20% in a single year! I don’t know if I’ll ever have another investment quite this good (your second home is not nearly as well subsidized as your first) but I’ll take it for now!
  • I Got an IRA. I didn’t get my first IRA till I was 28, which is inadvisably old for starting to invest in mutual funds. That’s not exactly true. Any time is a good time to start, but you’ll see more benefit if you give your money a long, long time to grow. I wish I had started when I was 18. But I didn’t. So today I’m making monthly contributions to get to my yearly contribution limit of $5,500. I think I picked the right mutual funds and ETFs because I’ve already seen some real growth in the little time I’ve had my money in this account.
  • I Started using Forex. Forex Trading is really cool. It’s almost like a game, letting you make investments on how you think currencies are going to change in value over time. If you’re right, and the currency gains or loses a lot of value in your chosen direction, you’ll gain a lot of money. This ones tricky, because it’s risky and it’s easy for beginners to lose a lot of money quickly. But if you do your homework and practice, Forex can be one of the best investments you ever do, just like it has been for me.

These have been my main investments. I chose them carefully and I’m using what I learned to make more good investments in the future.

Image Source: http://www.gettingmoneywise.com/2014/08/the-complete-guide-to-forex-brokers-fees.html


A low spread forex broker is meant to help all traders – Know more

The forex trading market defines the spread as the price gap depicted by various buying and selling propositions that involve all currency pairs. The forex traders need to develop the spread prior to checking their trading profit. The lower spreads play a key role when the trades are drawn by the positive column. Low fixed spreads of forex trading are considered to be beneficial for forex traders by all forex traders that are dominating the market. That’s one reason why these fixtures are more proudly advertised by these market leaders.

Low spreads are likely to bring down much of the financial losses. The basic principles that any trader follows sees a contrast here. Earning profits and securing personal funds are the primary aims of all his moves. The internet will help you find a low spread forex broker that shows specific values for floating as well as fixed spreads. You may choose either the minimum level or the medium level for setting the values. There’s always this possibility of making big deposits, but you’ll find brokers that indulge in bits-n-pieces trading by allowing you to use mini as well as micro accounts. The fixed spreads don’t yield any real advantage; these spreads are bound to undergo tactics like widening, which are followed by a number of forex brokers.

A low spread forex broker usually seems more attractive to the scalping supporters

They would mostly find this strategy to be more attractive as it opens a variety of deals as a matter of fact. It’s under these conditions that commissions are given; commissions wear a cap of 100 pips. Cost of Forex operations are lowered by the low spread desks; dealing with these desks is also much simpler for traders. A few good traders will consider this to be a key selection component.

The ECN trading model doesn’t show traders with any fixed spread. When it comes to buying and selling, a specific rate is shown by each currency pair. The spread thus offered will show an accurate reflection of this rate. All of the trading investors will be able to explore the actual trading conditions within the forex market.Forex Trading System

Some traders choose a fixed spread when they consider a heavier supply and demand. This doesn’t let you defy the fact that all fixed spreads are only usable when the market doesn’t show any favorable trading conditions. The actual buying and selling rates for a specific currency pair don’t have anything to do with it. Clients availing the ECN are able to access the retail as well institutional forex trading participants directly. A quality forex trading platform neither indulges in any form of competition against clients nor does it trade against them.

Tight or low spreads are yielded by certain brokers while dealing with small accounts. Initial deposits are paid to these brokers by small traders who find them very attractive. For every trader, it’s good to opt for lower spreads and trading commissions. You may enjoy such an environment under a suitable broker.

Clients may avail competitive rates and effective spreads via any quality trading platform. They would usually pick a reputable and loyal liquidity provider to establish a powerful bond by making quality investment. Like the majors who explore these platforms, the forex zone is also experienced by the participating clients.


Forex: Is It the Right Business for You?

The foreign exchange market remains a very attractive business proposition, in spite of the fact that there are certain obvious risks involved. The chances of winning big are also there. However, those of you are who take little time in relating “big wins” or “big losses” to “luck” and “gambling”, might think once again. Forex isn’t really the place to be— for you—in that case. As a potential trader, you must understand that forex is much more than the proverbial “pure luck”. In order to succeed here, you need to educate yourself and gain a thorough understanding of the marketing in the process. If you’re not ready to do that, then forex is not for you. Let us find out which kind of people is not cut out for stocks or the foreign exchange market or currency trading.

Forex Trading SystemForex is not for you!

It can be easily claimed that if traders or investors were a bit more serious about conducting some substantial self-study before trading, then the market would have seen fewer losses. It is advised that you refrain from trading if you don’t have the qualities mentioned below:

Patience

Forex is not meant for those who lack one of cardinal qualities (as far as forex is concerned). There are times when you would have to sit for long in front of the computers to watch charts and determine your entry point. Impatience leads many a traders to start trading before studying the chart thoroughly and getting an appropriate signal. Therefore, they are bound to close in a wrong position and lose a substantial amount of money in the process. One of the unmistakable attributes of successful traders is that they know very well when they want to enter or exit trades.

You need to exercise similar patience before you start trading as well. For instance, you have to practice with a demo account, for months before you start trading. Acquaint yourself with terms such as forex affiliates, conversion rate, commodity pairs, counter currency cross rate etc.

Ability to Control Greed

As already mentioned above, successful traders know when to enter the trade and the exit it. Yes, they exit trades after they secure the expected returns, without continuing for bigger gains. On the other hand, its greed, that leads most of the unsuccessful traders to hold on for too long, after initial success— thereby triggering risks of losing big, as well.

Ability to Control Emotion

Traders, who are primarily driven by emotions, should seriously consider their chances of getting in to forex. Emotion is one of the major factors influencing your standing as an investor. Exercising a firm control over your emotions irrespective of whether you’re winning or losing, is important. For instance, the situation highlighted above— when traders keep on betting even after securing their expected returns— is partially driven by emotions besides greed.

It’s the same emotion which leads them to hold on after suffering losses initially. Any successful or experienced trader would generally like to opt for a safe exit when they start suffering losses in a trade. They are quick to understand that it’s not their day and it’s only wise to resign for the day so as to keep the losses within control. The more emotional traders, on the other hand, hold on, expecting that they would end up winning, finally, even after the initial losses— thus, ending up losing a huge amount of money in the process.


Forex Trading Basics

Forex trading has become one of the most popular investments in the market today. All over the world, people are eager to jump on the bandwagon, hoping to reap great profits quickly and easily.

But Forex trading is not as simple as brokers make it out to be. And many traders end up losing their shirts in a very short span of time.  Therefore, it is vital to learn Forex trading basics before even opening an account with a Forex broker.

ID-100221719ID-100221719ID-100221719Forex is short of foreign exchange markets and trading Forex means dealing with global currencies whttp://www.canadianbinaryoptions.ca/here one currency is pegged against the other in a specific ratio. What attracts people to Forex is its seemingly scaled down interpretation of what currency trading is all about. Forex brokers attract would-be investors by focusing on the quick turn-around of their money. Buying a currency pair can take only a minute; selling can be done a few minutes later. Quick profits. Quick losses.

Most Forex traders, even those who have been trading for years, don’t fully understand the nature of Forex markets and they are simply gambling their money, hoping for a lucky hit rather than an unlucky miss. This is where learning the basics of Forex trading course is essential.

Prudent traders, including Forex traders, appreciate the need for at least some in depth understanding of what they are trading. And to accommodate these vigilant investors, many Forex brokers do offer online seminars which provide a certain degree of information about what the world of Forex is all about. Most of the time these tutorials are insufficient and the novice trader opens an account and commences to trade with barely a smattering of comprehension of what it is all about.

Learn Forex Trading Basics

There are several efficient and insightful ways to learn all you need to know about Forex trading.

There are many online tutorials that cover most Forex trading basics and provide a clear understanding of what Forex entails. The novice trader should choose one that starts with the basic concepts and moves on to advanced classes down the line. FX Acadamy, for example, offers the student over 25 lessons, written by professional brokers and financial experts, starting with an explanation of why someone should trade Forex and continues into more advanced topics. Other online, as well as offline, courses are available, each with its own character and professional expertise.

A good way to become familiar with Forex is by seeking advice from skilled Forex traders who have profited from their trades and can provide you with up-to-date information on the direction of the markets.

Learning to interpret price signals and properly read the financial graphs showing Forex prices and their movements is an essential tool for apprising you chances of emerging profitably when you place a trade.

An important step to practicing how to trade Forex is to set up a demo account with a reputable online Forex broker. Through this account, a trader can place trades on live Forex markets using virtual funds.These trial accounts are perfect for gaining experience in how to trade without sacrificing real money.  Some brokers offer demo accounts for as long as six months which is a good period of time to become familiar with the ins and outs of Forex trading.

Forex trading is more complicated than it appears at first and in order to be profitable it is best to start small and go slowly. Designating a set amount of money (usually the minimum required by the broker to open an account) is essential and a new trader should not be tempted to go beyond that. Trades should be placed in small amounts at first, just enough to get a feel for the market. Pulling out too quickly when price is reached, or staying put too long in anticipation of an even greater profit can result in a loss.

Image courtesy of pong of FreeDigitalPhotos.net


How To Get Started In Forex Trading?

How to Get Started in Forex Trading?

Forex Trading SystemThe key to trading in foreign currencies is staying calm. Foreign exchange or forex traders speculate on movements in exchange rates, much like others would speculate on movements of stock prices. Even small exchange rate fluctuations can make a big difference to a forex trader. Market volatility is the place where traders make their money.

How to Trade FX

As a result of the unpredictability of currency markets, clever forex traders – who also call themselves investors – need to develop a plan. They have to set targets as to when they want to sell and buy their currency and, even more fundamentally, they need to adhere to it.

Forex trading has been gaining in popularity over the years, with forex brokers reporting a growth in clientele, especially over the past few years, as the Euro zone, the US and Chinese markets have slowed and governments have tried to spur growth by injecting cash into the economy.

Forex traders, who deal on their own personal accounts, follow the news closely. Their common warning is against playing with large sums of money. The uncertainty in the largest markets in the world enables forex traders the elbow room for playing around with global currencies.

There are indicators to keep a lookout for, such as the US Federal Reserve’s decisions, and trader reports from the European Central Bank. It is mainly at times of economic policy announcements that high volatility fluctuations – leading to high returns – happen.

Disasters, notably the Japanese earthquake and tsunami in 2011, also generate moneymaking opportunities by sparking market volatility.

What Platform to Trade on

To learn about forex there are companies providing access to the best trading software. One example is the Vantage FX MetaTrader 4 program which is also available on apple – and MT4 for Mac is becoming more and more popular by the day.

A web-based platform for forex, this provides the education, the low spreads, and other tools that traders need to come confidently into the market.

This sort of online forex trading platform offers customer care and attention as well as a choice of packages to suit the individual – seasoned trader or beginner.

At Vantage, for example, clients are provided with an account manager, meaning there’s just one point of contact for each trader, backed with support on hand 24/7.

Many people start out dabbling in forex trading in their spare time but the sort of success that can come with experience and an understanding of how the market works can lead many of these retail traders to give up their day jobs and concentrate on forex. Successful trading can give people the sort of cash flow, flexibility and even security that is difficult to find in the conventional world of work.

Plus, with the kind of software available today, forex traders no longer have to sit glued to their computers. If you would like learn digital trading read the binary options reviews. It’s possible for them to set stop limits, say at £1, $1.45 or €1, or a profit limit — say at £1.20, $1.65 or €1. But the most vigilant forex traders need to keep a very close watch on news, politics and even the weather.

Article by Robert Berkeley
Robert has successfully built Vantage FX UK Trading Limited, into one of the key players in the FX market across Europe with significant growth year on year.
Robert regularly blogs about forex trading and comments on major fx new events.


Understanding Fundamental Analysis

Forex Trading SystemWhen it comes to trading, whether you are dealing in options or forex trading, you will have two different options in terms of analysis. These options are technical analysis or fundamental analysis. There are many traders who have experienced success using either (or both) of these options; however, some experts believe that one is better than the other but in the technical vs. fundamental debate you will find opinion fairly equally split between the two. In this article it is fundamental analysis that I wish to examine in greater detail.

What is Fundamental Analysis?

According to Investopedia fundamental analysis is the evaluation of a security by trying to measure its value by taking into account related financial , economic and other factors. For example, in forex trading the security in question might be a particular currency and traders would perform a continual analysis of relevant information about that country in order to determine its currency’s intrinsic value. Some of the key indicators that would be examined during fundamental analysis in this case might include:

  • Interest Rates – interest rates are the driving force behind any currency and as a result they are examined closely by traders.
  • Gross Domestic Product (GDP) – this is a good indication of the overall economic health of a nation. If the GDP declines below expectations the value of currency will also fall.
  • Inflation – inflation is bad news for the economy. It is usual to expect an inflation rate of 2 to 3 percent, but anything above this then the currency of that country will also rise.
  • Unemployment Figures – economic growth in any country is driven by the people, especially the workforce. This means that if unemployment levels increase interest rates are cut which can devalue the currency.
  • Consumer Demand – as noted above, people are the backbone of a country’s economy. This means that a healthy economy requires a healthy level of consumer demand. When consumers are looking to spend money the economy grows and the value of currency grow with it.

Fundamental Analysis And Options Trading

payroll_functionsFundamental analysis is not just for forex trading, it can also be applied to options trading. Like with currency, there are a huge number of factors which can have an impact on the market price regardless of what you are trading in. There are also a number of different ways to source this information. Fundamental analysis means taking a lose look at all of this information in order to predict market trends. The more information you have, the more accurate your prediction will be.

The rules of fundamental analysis are not set in stone, in fact traders using this method are often considered to be ‘discretionary’. The analysis of this type of information is highly subjective and different traders will interpret it very differently. This is why you should not go to another trader for his or her advice, but instead make your own decisions when determining how the market will react to the latest company shake up or natural disaster.

Traders will find that their ability to predict market trends should improve over time as they learn more about the market and gain experience in fundamental analysis.

Liam Ball is a frequent contributor to finance blogs all around the globe. He enjoys options trading with epsilonoptions.com and finds that the more he learns the more successful he is.


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