Wednesday, February 17, 2010

How To Get Success with the Forex

Every one can get success in forex market.Its easy and risk free.

Currency trading success can be achieved by anyone, as everything about trading currencies can be specifically learned, by any trader wishing to put it in the time and effort to do so.

Trading currencies successfully is a combination of two factors:

Firstly, you need a successful trading method for long term currency trading success to predict market direction and these systems fall into two categories:

1. Fundamental analysis

A currency trader who makes trades based upon fundamental analysis, will look at the supply and demand situation relevant to the particular currency studied, and try and predict the impact of such factors as:

· The health of the economy · Interest rates · Balance of payments · Employment · Trade deficit · Other factors

In today's markets with the all-fundamental information available in seconds anywhere in the world, fundamental news is quickly reflected in the price.

Traders therefore, can have difficulty acting quickly enough to position themselves in the market in relation to breaking news.

In light of this, more traders looking for currency trading success are using a technical approach to the markets.

2. Technical analysis

Technical analysis is the study of a currency, based strictly on using only the price history of the currency.

Technical analysis uses no information about the currencies supply and demand situation - it simply focuses on price action.

The common belief is that the currency price reflects all the known information about the currency as it is immediately discounted in price action.

Technical analysis however does something more - it indirectly studies human psychology.

Since price patterns reflect shifts in human psychology, one can assume that certain patterns, cycles and trends, will repeat themselves again, as human nature has remained constant over time.

Technical analysis takes into account both the fundamentals and the market participants psychology and this gives us a simple equation:

All known fundamentals + human psychology = Price action

The fundamentalist studies the cause of market movement, while the technician studies the effect.

For currency trading success, you need to catch the longer-term trends that yield the big profits. The technical trader does not care how and why these trends develop; all they want to do is make money from them when they occur.

Look at any currency price chart over time and you will see long-term trends and many of them last for years.

The secret of currency trading success is using technical analysis to spot them.

Long Term or Short Term Trading

For long term currency-trading success, is it better to be a long term trader, rather than a short-term trader.

While traders can, and do make money with short-term methods of trading, the fact is, currencies trend longer term and these are the trends that yield the biggest profits.

The reason for this is obvious:

Currencies reflect the underlying health of the economy.

These cycles of expansion and contraction, tend to last for many months or even years and a long term position trader has huge profit potential, if they can lock into and hold these longer term trends.

There is the choice between long term, and short term trading is subjective, but generally the longer-term price trends tend to be easier to predict, and offer better risk / reward, so a long-term approach is the one to focus on.

Two Important Advantages in the Forex Market

In this forex news reviews article i am going to brief the most important advantages for traders.
Day trading with a small account If you want to daytrade with stocks and you have less than $25.000 on the account, you are likely to have a hard life. The reason is that a rule called "pattern day traders" allows you to daytrade freely only if you have that amount or more on your account. If you have less, your daytrades (positions entered and exited the same day) are limited to three in any five trading days period. Your broker should monitor your activity and make sure you do not execute trades that are not allowed under the "pattern day traders" rule. This regulation applies for stocks and stock options. The Forex market at the time of this writing is not involved.

The Forex market has two characteristics that may translate in a better risk control on your trades. What I mean by risk control, is the possibility to define your maximum loss should the market move agains you. If we do not consider the use of options or other tools as a hedge, the way to take control of losses is by using a stop loss order. Nothing new, up to here. The problem that at times traders face is that a stop order can be executed at a price much worse than the one intended and originally set.

Generally, there are two situation where this can happen.

The first has to do with the liquidity of the market. Within this article, we can consider liquidity as a synonymous of trading volume. If liquidity is poor in a market, there might be a significant price difference from one execution to the next one. You can notice this easily in any intraday chart of a small volume security: the price does not move in a continuous an harmonic way, like it does in a very liquid market; rather, it has a tendency to "jump" from one level to the next. This can affect the execution of your orders in a negative way. The phenomenon is also referred to as "slippage". Here we consider in particular the exit order, but slippage can affect your entry order as well, and this could translate in for example in a buy order executed at a higher price than the one you wanted to buy. The Forex market does not fear competitors about liquidity. 1.5 Trillions dollar are traded in Forex every day. The other markets follow at a big distance.

The second factor that gives trouble to risk control is in the occurence of price gaps. Say your stock closes today at 63, and your stop order is at 61.5. In theory, your maximum risk is 1.5 points per share. But the stock for any reason tomorrow opens for trading at 57, and you will be stopped out at that price, so the actual loss will be 5 points per share. Gaps are common in stocks whenever an important news is announced when the market is closed. Sometime an important news can cause a gap even intraday, especially in a not so liquid market. Some other times, the trading in a stock is suspended just in the wait of an important pending news. A gap in almost assured when the news is released. Of course, your position can also benefit from a gap, if the gap direction is in your favour. But the point here is that the occurrence of gaps reduces your power to control risk with a stop loss order. The Forex market is virtually always open from Monday to Friday. There can be wild intraday moves caused by news, but the occurence of gaps is very rare within the week.

These are just two of the potential advantages the Forex market offers to traders. There are many others that I will not cover here, from the cost of trading (commissions are often zero), to the amount necessary to open an account (which can be very low). All these factor explain why the Forex market is attracting more and more traders.

Thursday, February 4, 2010

Latest Forex Trading Tips and Tricks

Now a days every one wants to earn especially online,for this Forex is the best choice.Forex trading in essence is about buying and selling currencies. The aim of the game is like all business is to buy low and sell high. The main thing, there are actually no physical goods involved during the transaction process. You are actually trying to exchange one currency for another with the aim of profiting from the exchange, hence the name "Foreign Exchange". As simple as it may sound, there are also the intricacies of the Forex market. For example, it has its own language and its own protocols. Currencies traded are denoted in symbols like USD/JPY and words like "Long" or "Shorts" have an entirely different meaning in the context of Forex trading. Thus for beginners, below are some Forex trading tips to help get you on the right footing.

Be Cautious Of Scams Like all businesses, the Forex market has its own fair share of unscrupulous people trying to fleece honest would be traders. Always be cautious of those who promise you amazing profits with no risk. The Forex market is undeniably a high risk market and it is due to this high risk factor that investor has the chance to reap high profits.

Asking the experts There is no short cut in getting around this. Until you acquired the necessary knowledge regarding Forex, you have to ask the experts. Maintain a good relationship with your broker or signal service provider. At times, their insight into the market can prove to be extremely profitable to you.

Research The Forex market is a fast paced world. Trends are always changing and current news will always be affecting the market. To stay on top of things. Forex traders must devour the latest news by doing research on the financial market. The fundamentals of the market can only be obtained through education and research. In addition, know the currencies that you are trading in well.

Proper Timing To trade well, it is also crucial that you time your trades properly. Most fluctuation in prices in the market occurs when the news is released. Economic indicators and data about the economy are often released the central banks periodically. Thus, by timing your trade to coincide with the release of these information, you will be well positioned to take advantage of the changes in prices. In addition, peak hours trading occurs during the overlapping of the Asian market with the opening of the European market as well as the UK market with the New York market. Hence, these two overlapping trading times are considered the best time for a Forex trader to trade in.

Utilizing The Tools It is important that a trader make use of all the tools that are available to him to help him make his investment decisions. The market is 90% a speculative market and the majority of the Forex traders use the same tools to help them forecast price movements. Hence their collective conclusions and actions will actually drive the market in the direction that they think the market will move, a self-fulfilling prophecy.Now its up to you to get benefits from above mentioned tips