By: Richard Stranberg
FOREX, (FOReign EXchange market) or FX, is an international exchange market where stocks and shares are not traded, but currency. The return for the investor is not in the value of the currency per se, but rather the relative exchange value of one currency against another currency.
Therefore, Forex trading is always expressed in pairs such as Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY).
By simultaneously buying and selling pairs of currencies, the investor, or speculator, hopes to profit from a favorable exchange rate change. Unlike the American stock exchanges, the New York Stock Exchange (NYSE) and the National Association of Securities Dealers Automated Quotation System (NASDAQ), Forex trading is more predictable than stocks.
One strategy that the Forex investor uses is a technique that stems from the assumption that all information about the market and a particular currency's future fluctuations is found in the price chain. In other words, an investor simply looks at what has happened to that currency in the recent past, and predicts that the small fluctuations will generally continue just as they have before. Another strategy for the Forex investor is to analyze the country of the currency's economy, political situation, and other possible rumors. The investor can also anticipate such things as political unrest or change that will also have an effect on the market.
Forex is the largest financial market in the world handling between 1.5 and 1.9 trillion US dollars a day. The combination of rather constant but small daily fluctuations in currency prices, create an environment which attracts investors. Because of the the liquidity of the market, unlike some rarely traded stock, traders are able to open and close positions within a few seconds as there are always willing buyers and sellers.
What are the risks?
Because of the sheer scale of the Forex Market, it ensures greater price stability and greater leverage. Also, with built-in protections such as safety margins, automatic limits for buying and selling, and other risk protection measures, the likelihood of ending up in the red even when the Forex market is volatile is drastically reduced. Furthermore, because of its' size, it is near impossible for a single investor to significantly affect the price of a major currency.
However, all Forex traders should be aware that the market is one of the most liquid around and subject to strong currency trends. While leverage figures of up to100:1 are possible, without adequate risk protection in place the gap between profit and loss can be dramatic. Even veteran Forex traders can be caught out from time to time and take large hits. With this type of investor speculation, the golden rule must be: don't risk more than what you can afford to lose.
FOREX investing is one of the most potentially rewarding types of investments available.
Learn why this form of investing is attractive to traditional investors.
Richard Stranberg is a contributing author to the Forex Trading Guide. Visit the Forex Trading Guide at http://www.forex-trading-guide.us
Tuesday, February 19, 2008
What is Forex Trading?
Monday, February 18, 2008
Forex: The Keep It Simple Stupid Guide
by: Jim Wilson
A wonderful way to diversify your investment portfolio is to learn forex trading. Many new investors have discovered the world of foreign exchange trading to be an exciting new challenge. One that is filled with rewards that are beyond what they were achieving as stock traders. Currency forex trading is a great way to branch out into new investments. Experience a completely new world of investing by stepping outside of the chaotic domestic economy.
The unique thing about the forex market is that it never closes, if you feel like trading at 2am it's not a problem. Unlike with other markets, such as the stock exchange, you can continue dealing with the currency trading market without worries over it closing at the end of the day. Websites give you 24-hour access to monitor what has been happening in the world currency markets at anytime. Through these sites you are able to learn all the basics about the market.
The websites will include tools and tips to guide you through the beginning steps of trading. This is a clear advantage because you can hone your trading skills before laying down your own money in the market.
When you think of it, the forex firms are training you to become skilled at trading for free by providing guidance, demos and news at no additonal cost. In a short while you will start feeling confident in trading and investing in forex. It only takes about $300 to start getting some good returns.
Learning forex does not require that you have a degree in economics or that you study the markets for years. The forex trading websites have made it easier for you to become successful. Forex brokers will give you access to the market for your currency trading.
Just like stock brokers, they can provide you accurate information and advice on how to deal with Forex trading strategies. Advice includes all the aspects of the Forex trading market which extends to research approaches and technical analysis to improve the member's trading performance. Naturally, because this market has apparently been providing a great return on investment, large financial institutions have been proactively monopolizing the market.
However, with the trading firms, small-time individuals also have the opportunity to earn money through Forex trading brokers. As I mentioned earlier, the online firms have been providing powerful website tools to become familiar with the whole idea of the currency market.
Your choice of Forex trading broker will largely depend on your need in the trading market. Many brokerage sites will provide trading simulators and expert advice as well as research and analysis designed for first time traders. Furthermore, these websites typically provide experienced online Forex traders who offer in-depth advice to forex traders of all levels. All of these tools are available to beginners to try out.
You really can earn money by taking the time to learn forex trading. The availability of investment simulators and 24-hour customer support enables new investors to learn quickly. Not only can you be trading in no time, you will also be showing a tidy profit. Start researching forex trading. You might be shocked to see how many large companies are involved.
Article Source: http://www.articlecity.com/articles/business_and_finance/article_8765.shtml
About The Author
Jim Wilson gives you more free information at Alternative Investing Try The Forex Market. Search other helpful articles at- Alternative Investing Try The Forex Market Articles. Click here http://www.forexminitrading.com
Friday, February 15, 2008
Forex Trading Common Mistakes
Author: Jon Provencher
Learning about the common mistakes new foreign currency (Forex) traders make will help you to improve your skills and chances of being successful. Here are some common mistakes and assumptions new traders make:
- Misplacing Stops
Stops are necessary to avoid disastrous losses, however poorly positioned stops can be equally as disastrous. Before placing a trade the trader should calculate the risk to reward ratio for the trade. The stop should be set with the traders money management in mind and should not be too close or too far away from the price. Traders should also calculate shifting their stop as the trade goes in their favor to lock in profits and lower potential losses.
- Abusing Leverage
With Forex brokers providing up to 400:1 leverage, it's easy for new traders to get carried away with the dream of making fast profits. When traders use a high amount of leverage the profits can be astounding, but when the trade doesn't work out the result can be disastrous. Traders should always compute the dollar value of the risk they are taking for each trade and ensure that this is suitable for their investment balance. Experienced traders seldom risk more than 2-3% of their investment balance on any one trade.
- Placing Technical's On A Pedestal
Technical indicators are great tools that help traders to make decisions. However making decisions for trades based only on what the technical indicators are telling us can result in large losses. By considering fundamental information together with technical information you will have a much improved chance at being successful.
- Day Trading
There are successful day traders out there. However, for new traders, trading with the longer term trend will be easier and have a improved chance of making profits. Longer duration trades give the position more time to move in your favor, especially if the market is volatile.
- Blindly Following A System
There are a lot of Forex systems out there that promise miraculous results. But if you begin trading one of these systems without evidence that it really works you could find your investment balance quickly reduced to 0. If you want to use a Forex trading method, a sensible approach is to back-test and forward test it using software or on paper prior to putting any real money at risk.
- Underestimating Emotions
Emotions can have a huge impact on your Forex trading. Keeping a trade diary will assist you to understand how your emotions are affecting your trading, you can then learn to use them to your advantage.
- I Back-tested It So It Must Work
A mistake traders make is to assume a back-tested method will continue to work. Forex markets are constantly changing and are effected by global and political events. Before you begin to use a back-tested method you should calculate if it reasonable to assume that the market conditions the method has been tested on are probable to be similar to market conditions in the future.
About the Author:
We hope that this article has helped you to improve your Forex trading. For more articles on Forex training, please visit http://www.iblogforex.com
2 Steps To Futures Trading The Right Way
By: Halston
Do you know what the great thing about trading futures is? You can't lose!
All right, maybe that's a tiny exaggeration. It is possible to lose your shirt. But, I honestly believe - based on my own trading experiences over a quarter of a century - that anyone will not lose money in the futures markets as long as he or she follow 2 simple tenets:
1 - Have adequate trading capital
2 - Know where you're getting out - and use a stoploss order
First, adequate capital. You don't need tons of money to begin trading futures successfully, but you definitely need some. Here's a good guideline for trading capital - always have at least enough trading capital to cover at least ten times the amount of money that you are willing to risk on an average trade.
So if you normally risk $500 per trade, then you should have a minimum of $5,000 of capital on hand. If on average you expect to riskcloser to $1,000 per trade, then you having $10,000 in trading capital is recommended.
Here's another method of calculation - your total potential loss on three straight losing trades should be equal to no more than one-third of your total trading capital. For example: If you're going to risk an average of $1,000 per trade, then three straight losing trades would amount to a loss of approximately $3,000... therefore, your total starting stake should be at least $9,000 - $10,000.
We've focused a lot on losses, because they are critical to success. Although futures trading is risky, and nobody can be 100% certain of the outcome, the beautiful thing about it is that you can be wrong more than right and still be quite successful, as long as you can manage your risk.
That brings us to our 2nd point - Always use stoploss orders. Now I don't have any actual stats to back me up here, but from my own trading results, as well as from those I've witnessed from clients and peers, I'd wager that 90% of accounts were wiped out because someone "fell in love with" a trade, and instead of taking a calculated loss, people pulled their stoploss, and stayed in a trade hoping it would eventually go their way... unfortunately this usually ended bankrupting their trading account.
It's happened all too often, That's why I have a simple rule... Never cancel a stoploss order. It's as simple as that. I've seen it over and over... Whenever the market is close to stopping anyone out, they can come up with dozens of "reasons" to cancel or move their stop. That would be fine except these are seldom good reasons - they just appear to be at the time. Expect and take your losses... the best time is when they're cheap. This isn't about being right or wrong, it's about profitable trading.
And those are the key foundations of successful trading. I know they're not as sexy as getting fancy entry and exit formulas, but I'd be doing you a huge disservice if I neglected them.
Do you know what the great thing about trading futures is? You can't lose!
Halston Adams is a retired futures broker who learned the keys to generating enviable returns by studying successful traders. Check out more about his trading approach at: http://www.futures-trading-strategy.com today.
Forex Brokers - a Novices Guide to Getting Started
Author: Kelly Price
If you want to trade forex you need a forex broker and there are plenty around, here we will give some tips on picking the best for forex brokers and how to maximize your potential with them.
Many traders see brokers as the enemy who lose them money but the fact is there neither your friend nor your enemy - their simply there to transact your orders in an efficient, cost effective and timely manner and that's it.
The most important points to consider when dealing with a broker are the following:
1. Competitive Spreads
Pay no more than 5 pips on the majors and if you shop around you can get 2 - 3. This is your cost of doing business and needs to be kept low.
2. A Reliable Trading Platform
If you are trading online this is imperative and most trading platforms today are excellent - but make sure you test drive it, for usability via a demo account to prove it to yourself.
3. Leverage
Any broker today will give you more leverage than you will ever need. 100:1 is fine - but many brokers will go up to 400:1.
4. Security OF Funds
Look for well established brokers who use segregated accounts have been in business for years rather than months. The longer they have been in business and and the bigger they are the better.
What You do NOT Want From a Broker
A lot of brokers sell higher fees based upon the service they give you in terms of trading recommendations etc.
Keep this point in mind - if brokers were good at trading they wouldn't be brokers, ignore them and execute your own trading signals.
Useful EXTRA Services
Some brokers give extra services away that are useful such as discounts on trading tools, books and newsletters which a lot of traders like - but there is one service we saw recently which is excellent for novice traders and it's called:
A PROTECTED ACCOUNT
If you are new to forex trading, then you will probably try a demo account to get the feel of trading but useful as they are for learning the mechanics, they don't replicate the feeling of dealing with real money.
Many brokers to help get novices feet wet with limited risk offer Protected Accounts, to act as a bridge between a demo account and a full trading account.
They allow traders to trade with small amounts of money and do as many trades as they like in a set period (normally a couple of weeks) and the trader can still trade even if he is debit!
At the end of the period the broker covers the losses if any and the trader takes the profits.
This means a trade as much as he wants - even when he is debit on a set leverage and has a set risk in advance.
These accounts give the feel of forex trading but have set risk and will show a forex trader his potential, before moving to a full trading account.
Finally ..
Getting the right forex broker is easy and you only have to keep a few points in mind and then you're all set, to enter the exciting and lucrative world of currency trading.
About the Author:
MORE ON PROTECTED ACCOUNTS AND BEST BROKER SERVICES + FREE ESSENTIAL TRADING GUIDES
For more on Protected Limited Risk Forex Accounts and some essential trading guides visit our website at:
http://www.learncurrencytradingonline.com/index.html
Trying Forex Trading with the Best Strategy and Approach
By: Sylita Thomas
With the day things are today, more people are getting interested in investing their money to make them grow faster. The problem is, not too many people are willing to take the risk of investing it because of the risks, so some of them just let their money rut in banks. Not that there's anything wrong with banks, it's just that they have low rates and the money takes a long time to grow. If you want real money, you have to have the guts to risk it. Making money needs money; risks are always involved if you want to have money fast and big.
One of the largest arenas wherein you can invest your savings is the Forex. Forex trading has been around for decades already and is regarded as the largest financial forum in the whole world with an estimated 3.1 trillion dollars of volume everyday. The Forex (Foreign Exchange) trading is open 24 hours and never sleeps. Transactions are done all over the world via telephones and computers, money exchanges hand in the number of millions in just mere seconds. The Forex Trading is composed of thousands of banks and individual Forex trading companies that monitors development all over the world, developments that may influence the value of their currency. Forex trading deals with the exchange of currencies from different countries. The idea is to determine the rise and fall of the value of a certain currency and trade when it is deemed advisable.
For small Forex trading transactions, managed accounts are the ideal, they are for the cautious because they have the least risky participation. Here you entrust your investments along with others to a reliable, honest and ethical seasoned Forex brokers. These Forex brokers use their extensive knowledge and lengthy experience and use their strategy to make your money grow, for a fee of course.
With the rise of the internet, Forex trading can be done in a click of the mouse. Money travels through space and wires all the time. The computers have done a big help in the growth of Forex trading, transactions can now be done anytime anywhere. Since somebody is up at a given time everyday anywhere in the world, you will never lose someone to trade with.
There are two basic and basic ways to analyze and evaluate foreign exchange trading. There is the technical analysis and the fundamental analysis. There is a huge difference between the two. In Fundamental analysis, Forex analyzers and brokers watch out for causes to market fluctuation. These causes may include the political condition of the country, their laws and legislations, financial policies, their growth rate and other factors a direction echnical analysis of Forex trading includes graphs, charts and other method of measuring past data to see the indication of the rise and fall of currencies. They get all the information they need and use them to calculate and forecast the possible direction of a certain currency.
There are lots to learn about Forex trading; even the seasoned broker learns something new everyday. Forex trading has huge returns in an instant if you catch the right moment and transaction. But always remember there is till the risk, Forex trading can be quite a gamblegamblecially if your forecast is wrong. Before investing your money in any firm, try to investinvestigate its record and history in Forex trading.
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With the day things are today, more people are getting interested in investing their money to make them grow faster. The problem is, not too many people are willing to take the risk of investing it because of the risks, so some of them just let their
Mark Atkins is dedicated to helping others and their needs to succeed in life by offering free tips everyday. To learn more about her free tips program, and to sign up for her FREE how-to articles and FREE bonus how-to books and resources, visit www.forexlove.com
Trading Commodities - Commodity Types
Author: Amar Mahallati
There are several different types of commodities. Commodities are categorized so that it's easier to price compare, do research, and to make other trade tasks convenient. If you're an investor who wants to get involved in commodities trading, you need to know the basics. This is indeed one of the riskiest areas to invest in, but it can also be among the most profitable if you know what you're doing.
Energies
This area has been one of the most active in commodities trading recently. This category is comprised of products that are used to provide energy that will heat and power businesses and homes. The most common of these is petroleum and its byproducts, among them crude and heating oil, propane, natural gas, coal and some others, including subtypes or derivatives.
Each commodity has its own defined "tick" or price change; these are set by the exchanges. Each commodity also has a standard contract size. The standard contract size is the amount covered by a standard futures contract. For crude oil, for example, the amount is 1000 barrels. For wheat, it is 5000 barrels.
Grains
Wheat, oats, corn, rice and soybeans (although soybeans are not technically a grain) are agricultural products traded on various exchanges, including the well-respected Chicago Board of Trade, or CBOT for short. The exchanges trade the product as well as the futures and options contracts on these and other derivative products, such as bean oil.
Each of these products has its own tick or price change, standard contract size and unit. Some prices are listed in dollars per ton, such as with soybean meal. In this case, the standard contract size is 100 tons. It should be noted that most traders never see the actual commodity they trade in; you can see by the amount quoted here that there's a reason why.
Softs
Orange juice, cotton, sugar, cocoa and coffee are all what are called "soft" commodities. Many of these are traded on the Coffee, Sugar and Cocoa Exchange, or CSCE. It should be noted that 80% of the oranges grown in the United States are turned into frozen orange juice concentrate, and that it is the juice itself traded as the commodity, not the orange.
There's a relative newcomer on the New York Cotton Exchange, Frozen Concentrated Orange Juice, or FCOJ. This has been actively traded since the creation and widespread use and integration of inexpensive refrigeration, beginning after WWII.
Meats
Pork bellies, lean hogs and live cattle are traded on various exchanges, as are some derivatives. One of these exchanges is the Kansas City Board of Trade, or KCBT, which is the United States' livestock trading historical center.
One very unique commodity here is pork bellies, because the bacon that comes from pork bellies can't be substituted with a similar product. Their prices also usually interdependent with the price of grain, because hogs are fed a diet of corn and other grains. These prices are generally less volatile than they are within many other commodities.
Financials
Most traders invest in commodities futures or options rather than the good itself. Because of this, financial products are often listed on the same exchanges.
U.S. Treasury bonds futures are traded on the CBOT, as well as other places. A few indexes track stocks. The S&P index futures contract is one popularly-traded item.
It should be noted that some sites will list abbreviations showing the expiration month of the futures contract within the prices quoted. For example, these are shown are as follows, listed by quarter:
January - F, February -G, March - H
April - J, May - K, June - M
July - N, August - Q, September - U
October - V, November - X, December - Z
For example, you might see an item listed as PBH07; this is a pork belly contract that is due to expire in March of 2007.
About the Author:
Visit 123OnlineTrading.com - Commodities, Stocks, Forex to find books, tips and advice about online commodity trading. Besides a large selection of free educational articles you can also find powerful books about online trading in general.
Other Resources:
123OnlineCommodityTrading.com - Commodity Trading Links