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An Introduction To Forex Trading Strategies

Most people have heard of trading, like the New York Stock Exchange, and Forex trading isn’t far off from that. The difference is, is that Forex trading is the trading of currencies, not stocks.

It also has a larger volume than stock and bond markets combined! As with stocks, it is a high-risk investment, but it can also have an extremely high return, easily doubling investments in minutes.

The best part about Forex trading is that it is done using a margin. You don’t need the full amount to buy a currency. A Forex trader can buy $100,000.00 with just $1,000.00.

This allows traders to make huge profits with minimal investment. And the Forex market is open to all types of investors, not just big organizations and banks.

The best place for an investor to start when considering the Forex market is the Forex community. Research is key to understanding Forex trading. Consulting Forex forums and community boards can be extremely beneficial.

The next thing to do would be to choose a system. A system is a specially designed method, software, or course developed by a professional in Forex trading.

There are many systems out there, so research must be done to make sure the system fits your needs. Before purchasing a system, you should ask them a few questions like, how long have they been in this business and if there is a trial version available. Make sure that they have customer testimonials too.

By going to Forex forums, and chat rooms, one might be able to find out what system others are using or what systems are recommended most. Most professional traders believe that having a trading system is an important factor in establishing a stable revenue in the forex market. Systems tell investors when and what should be done in each trading situation.

Another thing that an investor will need is a broker to assist with transactions. There’s a wide variety of brokers, so be prepared with questions about their credentials. Ask them about their leverage and their spread. As these are both determining factors in how much money the investor can make with each investment. The investor may also choose to handle transactions themselves.

An investor also needs to master analysis, and form a strategy, to get a competitive edge and improve their odds. They need to learn to recognize the different factors that affect the Forex market.

A person has a much better chance of success at trading forex if they do their research and know what to look for. And, in conclusion, it doesn’t matter if a person is experienced or a beginner in the world of Forex.

An Overview Of Forex Investing Strategies

FOREX trading refers to an international, 24/7, over the counter, exchange market where currencies of different nations are bought and sold. Trading is always done in pairs assuming the price of currency bought to go up and that sold to fall down.

It is the largest liquid financial market making it impossible for any single investor to influence the prices of currencies.

There are two kinds of FOREX investing strategies:

TECHNICAL ANALYSIS
FUNDAMENTAL ANALYSIS

TECHNICAL ANALYSIS:

Technical analysis is mostly undertaken by small and medium-size investors.

The technical analysis considers factors that are actually affecting the market rather than factors that can affect it. Thus the price quoted reflects all the factors that have influenced it. The only market-generated facts and figures are taken into account, and factors like fear, hope, expectations, or other changes are not considered. Thus the analysis is generally based on these suppositions:

• Price reflects all actual market movements. That means the price includes everything known to the market like supply and demand of foreign exchange, political factors, trade agreements, etc. It is not concerned with what resulted in change rather deals with actual changes. It works on the assumption that price can take only one of the three directions:

 Upward
 downward
 sideward

• It rests on those market patterns that have been identified as significant. That means those factors which are repetitive in nature or will produce desired results.

• History always repeats itself as human psychology changes very slowly with time. That is, market movements are predictable.

VARIOUS TECHNICAL INDICATORS ARE:

1. RELATIVE STRENGTH INDEX:

It takes into account the ratio of upward and downward movements in an index and expresses it in the range of zero to hundred.

2.CHARTS:

Charts include various hills, slopes, curves that develop on a chart over time and reflect some major and minor changes in pattern. Some of the chart formations include:

• TRIANGLE
• RECTANGLE
• HEAD AND SHOULDERS
• DOUBLE TOP AND BOTTOM
• SAUCERS
• V

3.GAPS:

A gap represents the area on a bar chart where no trading took place.

• UPGAP: it is formed when the lowest price on a particular day is more than the highest price of the previous day.

• DOWNGAP: it is formed when the highest price of a certain day is less than the lowest price on the previous day.

NUMBERS:

Various number theories are used in technical analysis like:

• Fibonacci theory
• GANN

STOCHASTIC OSCILLATOR:

This indicates the overbought or/and undersold condition. It uses a scale of zero to a hundred percent.

FUNDAMENTAL ANALYSIS:

It is the one where the current economic, political, financial situation of the country of currency is studied. A country’s economic and political condition depends upon many factors like the interest rate, unemployment level, exports, and imports, per capita income, percentage of the population living above and below the poverty line, inflation, trade relations with other countries, tax policies, etc.

A fundamental analyst studies and evaluates all these factors before coming to any decision. Thus it helps in long-term decision making and making profits in the short term by extraordinary developments.

Some indicators that help in the fundamental analysis include:

1. GROSS DOMESTIC PRODUCT:

It reflects the total market value of all the goods and services produced in a country during a given year.

2. RETAIL SALES:

This reflects total receipts by all the retail stores in a country.

3. CONSUMER PRICE INDEX:

It reflects a change in the prices of consumer goods.

4. BUSINESS CYCLE:

It reflects various phases through which a business passes. These phases include:

• EXPANSION
• PEAK
• RECESSION
• DEPRESSION

5. MONETARY POLICY:

It controls the supply of money in an economy.

Trading successfully needs knowledge, time, and understanding of a market. You cannot earn continuously in a Forex market due to its volatile nature.

Thus as a trader, you should try to consider both technical and fundamental strategies of forex trading and make a decision based on market expectations and trends.

Try trading with money that you can afford to lose without any regrets. Trade with logic, and if you are not sure, quit and take a rest for some time.

Apply “the Secret” To Forex Trading Success

The Forex market is the largest trading network globally, with $1.8 trillion being exchanged every day. There are dozens of different currencies traded, but the big players to focus on are all traded with the U.S. dollar and include EUR (Euro), GBP (British pound), JPY (Japanese Yen), CHF (Swiss franc), AUD (Australian dollar), NZD (New Zealand dollar), and the CAN (Canadian dollar).

Each of these currencies is exchanged with the currency of other nations at different exchange rates, which are always in a state of flux because the market trades around the clock (Sunday through Friday).

The volatility and sheer size of the market mean that there is ample fluctuation to produce big profits and losses. The challenge for the investor, as always, is to predict which direction the rates of currency pairs will fluctuate.

The beginning point in any investment strategy is determining what you will use as a type of analysis to help guide enter and exit decisions.

Investors who use fundamental analysis look at a nation’s interest rates and other economic indicators when deciding to enter or exit a position. Fundamental investors trade based upon news releases and economic data from the nations involved in the currency pair.

Briefly, technical analysis involves the interpretation of price performance and chart patterns of all historical data. Some technical indicators used in this type of analysis include:

• Moving averages including Simple & Exponential
• Breakout Points
• Lines of Support & Resistance

Technical traders do not believe that the past necessarily predicts the future but that long and short-term trends can be identified and exploited to help guide current entry and exit points on positions.

Technical traders try to identify current trends in the Forex market to determine entry and exit points. If they are correct, they can ride a trend (in either direction) for a profit until an exit point is reached (when the trend is ending).

The most successful traders on the Forex tend to look for long-term trends and favor technical analysis.

Fundamental traders have to enter and exit positions quickly to capitalize on price fluctuations caused by news events (interest rate changes, the release of economic data, etc.) and are therefore more vulnerable because of excessive trading. If there truly was “a secret” to trading success on the Forex, the top investors all agree on the following:

1. Choose currency pairs involving the U.S. dollar (has volume to produce the price fluctuations necessary for big profits and the liquidity to enter/exit positions at will).

2. Find currency pair through back-testing that has the most profit potential (pip movement) and least volatility through the use of technical analysis.

3. After determining trends, set stops and exit points for both protection and maximum profitability.

4. Review charts once per day (overtrading and day trading can hurt your portfolio).

5. Remain patient and exit positions once the technical decision point has been reached.

If there really is a secret to trading success on the Forex, it has to be patience. Trading strategies are never perfect because the market will never be predictable 100% of the time.

There will be times when any strategy fails and stop points are reached before profits are realized. Continuous backtesting, remaining patient, and setting stops are the true secrets of Forex’s success.

Be A Forex Expert

Anyone who has ventured into the real marketplace would definitely know what a Forex is and share the many promises and possibilities this horizon can bring.

What Is Forex?

FOREX stands for the very popular Foreign Exchange Market. Sometimes, though, people associate it or equate it to mean also currencies.

Basically, forex is where people trade. The objects of the trading are the different foreign currencies. People buy and sell the currencies.

The exchange market and the trading as we know it today started in the 1970s. It has no definite place. It has no definite location. The foreign exchange market is found wherever there is a financial center where people conduct constant exchanges and buying and selling.

To ensure definite success in this field, the primary goal has to be kept in mind. The keywords to traders in the foreign exchange market are to ‘buy low and sell high.’ This is the way to get the profits coming in.

Why Are People Trading in the Forex?

More and more people are turning into forex trading now. It has become popular once again, and people want to enjoy the success this can bring.

There are also no strict requirements to join the market. Anybody can enter it and learn how to trade. Some even study beforehand to be prepared for the big trading.

Another good aspect about forex is the absence of too many fees to be able to join in. There are no commissions, no brokerage fees, and no government fees.

The best thing by far is that trading can be done at home. Anyone can start a trade online. This spells big for people who stay at home, especially those who do not feel comfortable engaging in online businesses. With proper training and computer with internet access at hand, success is within the bounds of the home.

How Does One Trade Successfully in the Foreign Exchange Market?

The purpose of ‘to buy low and to sell high’ must be kept in mind when trading in the forex. This will be the main vision of a trader to succeed.

The next task at hand is to know the trends. This means knowing when a particular currency will buy low or sell high. This is not a mere prediction of a turn of events.

Thus, forex requires strategies that have been tested to make sure that a decision will be profitable. There are two basic strategies employed in forex that one can learn from tutorials or from the actual exposure to the market.

The first strategy is technical analysis.

This provides that a particular price chain reflects all the information regarding the market. This entails a close analysis of the various aspects of the currency, like the lowest and highest prices or the opening and closing prices.

The other strategy is the fundamental analysis.

As the name implies, it takes the overall situation. It focuses beyond the currency. It considers the situation of the country, economy, politics, and even the rumors. Thus this requires more exposure and knowledge by the trader.

Conclusion

The foreign exchange market promises so many possibilities to the trader. Many people may be interested in the forex but are only afraid to take the first step. This attitude should be turned around. Just have a good vision, take the necessary steps, and make the forex venture a success.

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Benefits Of Using Forex Software

As the Internet grows in popularity, more and more individuals are learning about the benefits of trading currencies on the Forex market. In recent years, Forex trading has become known as great for investing money.

But if you decide you want part of the action, do some quick research on the Forex software packages on the market. They can help you trade easily and from the comfort of your home and office.

One significant benefit of Forex software is that it can perform many tasks for you and keep you up-to-date on the values of your trading currencies.

If you had to do these tasks manually, you would have to spend many hours fiddling with newspaper reports, charts, and graphs.

But with the push of a button, you can know how and when to trade. With a general knowledge of where the currency is heading, you can allow your trades to run or stop them as your position reverses.

But not only does Forex trading software allow you to manage your funds, but it also provides you with the opportunity to withdraw or deposit money into your Forex account when you need to.

This means you can leave your money in an interest-bearing account until you are ready to trade. This way, you earn interest on your money and avoid having extra money sitting idly in your trading account.

Also, you can set up the Forex software, so when the currency drops to a certain level or has reached a specified value, it will automatically sell it for you. By doing this, you are not only minimizing your risks, but it also means that you do not need to keep a constant watch and control over your profits.

However, the best way of ensuring the software you are buying is right for your needs is to test it before you start investing your hard-earned money.

A good Forex software package will allow you to practice with the software using play money while you learn. Then once you are comfortable trading, you can deposit some of your money into a trading account and start trading.

It is best if you practice as much as possible before. This way, you will be ready for any losses that may occur in the beginning. From the start, it is best if you only invest small amounts of money when trading until you feel more confident with the software.

Forex software comes either as a desktop or Internet-based package. The Internet software systems have several advantages over the desktop versions.

One of these advantages is that you do not need to deal with maintenance issues. The software seller often looks after this technical goings-on. Security is another issue you don’t have to concern yourself with.

The seller will already have in place more security measures than you can afford on a desktop version. The systems offer data encryption on a secure server and will therefore protect you from hackers and thieves.

Plus, Internet-based systems offer you more convenience than a desktop model. You can check your account no matter where you are in the world. All you need to do is key in your login and password information. You can then view your currency trading account in a secured environment.

Currency Trading

When you think about Forex, what do you think of first? Which aspects of Forex are important, which are essential, and which ones can you take or leave? You be the judge.

Let’s talk about FOREX and the advantages of FOREX trading.

The good thing about FOREX is that the amount of money you need to place a trade (known as “margin”) is all that can be lost!

Of course, with the proper self-taught education, you will win more than you will lose, but you should know that despite the high leverage of FOREX trading (200:1 is possible, which means that when you put up $1, the trading vendor will allow you to trade it as if you have $200), it’s still less risky than futures (commodities) trading. And when you trade stocks, you can’t get this type of leverage.

Because of the FOREX market’s liquidity and twenty-four hours of continuous trading, dangerous trading gaps and limit moves are eliminated. Orders are executed very quickly, without slippage. If you do your research and find good brokers, they will automatically close some or all of your open positions if your account’s equity falls below the level required to hold the positions. You’ll never lose more than you have in your FOREX account.

Currencies are traded in dollar amounts called *lots* — One lot is equal to $1,000, which controls $100,000 in currency.
This is the “margin” I talked about above. You can control $100,000 worth of currency for only 1,000 dollars.

Currencies are always traded in pairs. The most popular currencies and their symbols are:

USD – The US Dollar
EUR – The currency of the European Union “EURO.”
GBP – The British Pound
JPN – The Japanese Yen
CHF – The Swiss Franc
AUD – The Australian Dollar
CAD – The Canadian Dollar

A currency can never be traded by itself, so you can’t trade a USD by itself. You always need to compare one currency with another currency to make a trade possible.

The most commonly traded currency pairs are:

EUR/USD Euro / US Dollar
“Euro”

USD/JPY US Dollar / Japanese Yen
“Dollar Yen”

GBP/USD British Pound / US Dollar
“Cable”

USD/CAD US Dollar / Canadian Dollar
“Dollar Canada”

AUD/USD Australian Dollar/US Dollar
“Aussie Dollar”

USD/CHF US Dollar / Swiss Franc
“Swissy”

EUR/JPY Euro / Japanese Yen
“Euro Yen”

The currency on the left is called the base currency. The currency on the right is the counter currency. For example, when you place an order to buy EUR/USD pair, you are actually buying the EUR, and you are selling the USD. When you place an order to sell EUR/USD, you are selling the EUR, and you are buying the USD. Buying or selling a currency PAIR means buying or selling the base currency and doing the opposite with the counter currency.

It might seem a little confusing, but actually, it is easier to treat the currency PAIR as one item. It means when you place trades, you simply sell or buy the pair. The base/counter concept is only important for fundamental analysis.

To decide when to sell or buy, you will need to learn technical analysis and/or fundamental analysis.

In currency trading, you can make both money when the currencies go up or down.

The FOREX currency trading is a great way to work from home in your free time. You can trade any time you want, from Monday to Friday. But you know that you can lose money in FOREX.

So, getting the proper education and trading before making any real trades is a must. Fortunately, you can first practice on a demo account until you get to the point that you win 70% of your trades. Nobody wins 100%. But you can be in profit even with 50% wins.

There are plenty of books and courses to learn currency trading, but be careful with all those $1000+ courses. Usually, you can find courses with the same content for much less.

Day Trading Foreign Currency

Foreign currency trading is a high risk and high-reward business. You need to devise strategies to make profits in the market sustainedly.

Always remember that day trading in foreign currency is not the ideal way if you really want to have a long-term perspective.

Day trading in foreign currency exchange is the same concept as day trading in securities markets. You take a short-term bet on the price movements of various currencies in your portfolio. Thus you gain or lose depending upon the intraday fluctuations in prices of these currencies.

Whether you are long or short at a particular point of time in a day depends upon your assessment of the likelihood of movement of prices later on during the day. Let us explain by a simple example.

Suppose you are short on Yen in the morning session of trading (meaning that you have sold yen at a price). It means that you expect Yen to decline further in the day so that you could buy back Yen at a lower price and make a profit. Here you are taking a bearish outlook of the market.

If you are long on Yen (meaning that you have bought Yen at a price), it means that you are bullish on Yen and expect it to rise further so that you will sell it at a higher price and make money.

Day trading foreign currency thus means taking a very short-term view of the market and is fraught with risks and the possibility of huge capital losses.

It is always advisable to have a long-term outlook, especially in the highly volatile foreign currency market. This way, you are not dependent on the vagaries of intraday shocks and expect your capital to build.

Have an assessment of the economy, performance on the inflation front, policies of central banks of the country, and then make an informed decision, without worrying about short terms movements.

A large number of traders have lost heavily while betting on day trading foreign currency. There is still no foolproof strategy that can shield you from losses if you have an extremely short horizon.

If you really want to start day trading, take smaller bets just to have a feel of the market. Keep your stakes on a limited scale and closeout as soon as you get a chance.

Do not forget to place a stop-loss position if you want to avoid carnage and scalp out at an opportune time. It is a high-risk proposition, and there are better ways to make money than day trading foreign currency.

When you get enamored by so-called success stories of day trading foreign currency, remember that Rome was not built in a day. It takes time to build your fortune. Never allow greed to overcome reason.

ECN Trading Program

The ECN, or Electronic Communications Network, is a computerized system that can allow investors to bypass the major stock exchanges and allow them to trade directly with each other.

This can allow them to reduce transaction costs as they’re not paying brokerage fees to conduct trades. It also gives them the freedom to trade outside of regular stock market trading hours.

While the ECN trading program might be relatively new for smaller investors, it has been around for many years and actively in use by larger players and companies.

While there are a few electronic networks that facilitate trading on the NASDAQ, there are also quite a few smaller ECNs too.

The small order execution system is becoming a favorite of smaller investors as it limits trades to less than 1,000 shares for any company. It also won’t allow any trades for stocks priced at higher than $250 per share.

This can help give smaller investors a chance to compete with the bigger companies and investors as it creates a more even playing field for orders and execution.

Companies offering ECN trading programs hope to change the way regular trading is conducted on the major stock exchanges. After all, with big investors trading millions of stocks at a time, this can give them the advantage, while smaller investors are laden with fees, transaction costs, and smaller trade values.

Perhaps the best benefit to trading via an ECN trading program is the flexibility of being able to place trades at any time of the day or night from any internet connection.

An example of this could be while you’re away from your computer and you receive a text message on your cell phone, alerting you to the price change of a particular stock you’ve been watching.

If you have internet access on your cell phone, you can place that trade immediately, securing the price you were notified about without waiting for regular trading hours to begin. The ECN matches the order for execution automatically.

In order to trade using an ECN trading program, you must have an account with a broker that will provide direct access to trading, or you must be a subscriber.

This is considered an alternative trading system, and you need to remember that you’re not dealing directly with the stock exchange but trading directly with other investors.

ECN trading programs aren’t just for trading stocks, though. Trading on the Foreign Currency Exchange (forex) via an ECN can offer significant advantages.

Forex traders can benefit enormously from the faster processing and higher availability of currencies in the marketplace, along with the reduction of trading fees.

The orders are matched automatically through the computer system, which means the exchange looks instantaneous. This can offer traders a much higher level of liquidity.

Finding The Best Forex Traders

The forex trading market has become the biggest financial market in the world today, and online currency trading is now one of the fastest-growing investments.

There are many ways to find information on forex trading and online currency trading but finding the best forex traders can be difficult if you don’t know where to look.

With the growing popularity of forex trading and the information publicly available on the internet, finding the best forex traders is no longer as difficult as it may have been. The currency analytical reports are now available to the public online, and you can even access live data if you know where to look. Finding the best forex traders has become even easier, and more and more people are beginning to reap these profits.

What Are the Best Forex Traders

Forex traders are the currencies that are traded by investors, and the best forex traders are the currencies that are making the most profit for their investors. Currencies constantly fluctuate, and keeping up to date with the state of these currencies used to be extremely difficult for small-time investors.

The forex traders that are most popular and the ones that should be monitored closely are the “majors.” These are the EUR/USD combination, the USD/JPY, the USD/CHF, and the GBP/USD. These combinations constantly change, and knowing where these forex traders stand will allow you to make the profits you choose from your forex trading.

Forex trading guides and forex training education programs are available for anyone looking to earn money from this extremely lucrative system, and most of these programs are designed with beginners in mind explaining all the technical language in simple easy to follow terms.

Forex trading could help you change your future; why not invest in it now?

Factors that Affect Forex Trading

There are several external factors that affect Forex currency trading. These factors include trade reports, GDP, unemployment, international trade, manufacturing, etc. The growth or decline in these factors affects a country’s currency value.

Foreign exchange is a continuous global market, providing 24-hour market access to its players. Since it is open only five days a week, so the weekend is the closing period.

Although the foreign exchange is the most liquid of all markets, that it is an international market and trading 24-hours a day, the time of day can have a direct impact on the liquidity available for trading a particular currency.

The major centers and time zones are that of Sydney, Tokyo, London, and New York. Therefore, forex alerts must consider which players are in the market since in the modern interconnected financial world, events that occur at any hour, in any part of the globe, can affect some or all parts of the investment community.

In forex trading, you are not ignorant like one remains in stock for a considerable period about the news affecting the liquidity of a stock. In the stock market, you come to know about inside trading, revision in earnings only after the market has reacted upon it. But in forex currency trading, this is not the case.

Here you get various forex signals. Significant information affecting a particular currency becomes known to everyone in the trade instantaneously. There isn’t anything like insider trading in a forex market. There are many online forex trading strategy sites.

They all maintain a global economic calendar. This calendar shows the major forthcoming economic, financial, and business-related events all over the world and which can have an important bearing on the foreign exchange market. What you have to do is to keep track of all important events and news.

Certainly, it will not be a simple task to watch constantly all the factors affecting the foreign exchange trading market. They change in importance over time and condition. But the information is available to anyone and for use to one’s benefit. A currency trader has had time to react immediately to any new information.

Unlike the stock market, another important advantage forex trading offers is that you can do foreign currency trading almost from anywhere in the world. There are so many online forex trading signal platforms available to get instant information and to act within time.

The most important GDP figures that affect forex trading are of USA, Japan, Canada, Australia, and Britain. China is also expected to be a major force in online paper-trading soon.

Central banks play a significant role in the forex market because they have the responsibility of changing the country’s “base” interest rate. A central bank has to maintain growth in the economy under inflation, so it creates a good balance in interest rates.

The bank’s decisions on whether to raise, cut, or hold the interest rate fuel speculation in the forex market, where the value of a currency, or group of currencies, changes in real-time.

Natural disasters, terrorist attacks, and military actions in a sensitive region can have a significant impact on the forex market as they create a disturbance in the world.

An Introduction To Forex Trading Strategies

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An Introduction To Forex Trading Strategies

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