Essay on Forex Trading. Composition Writing on Forex Trading
Managing Risk in the Forex Market
You're in the market to make money, but you realize there's some risk involved. Perhaps you even enjoy the thrill of the game – the bigger the risk, the bigger the rush. Unless you have limited funds, though, you won't be in the market for long. So how can you balance your need for the excitement for a big trade versus the need to make some money? Develop a trading plan that addresses both risk and reward, as shown below.
Utilize stop orders
Even before you make that first trade you should clearly define your limits. Don't wait until you're sitting down late at night in front of your computer waiting to place trades on your Forex system platform. Jot down on your trade journal (or whatever recording system you use) your limits for both buying and selling different currencies. If you buy USD/EUR at a certain rate, then know when to place your stop order (maximum limit) to sell. Suppose you buy USD/EUR at .6436 and you place a stop order to sell at .6422. What you've just done is to remove the “emotion” factor from the equation – you're pulling yourself out of the market before you even lose more by trying to make up for the loss. Essentially, your pride is taken out of the picture.
Consider OCO (one-cancels-the-other) orders
If you want exercise control on the flip side as well (protecting your profits), then consider using the OCO order. Basically, this type of order keeps you positioned within a pre-defined range. It limits your losses while also protecting your profits. It's used when you feel less confident in controlling your need to earn bigger and bigger profits. Here's an example how it works.
Let's say you buy EUR/USD at 1.5568. You want to limit your losses while at the same time protect your gains so you place the following OCO order: a sell-stop order at 1.5548 (sell euro when it reaches this rate) and a sell-limit order at 1.5589 (sell euro at this upper limit). By placing an OCO order, you've kept within your pre-determined guidelines.
Discipline and realistic expectations
It takes time, patience, and discipline to succeed in the Forex market. Unless you'll really lucky, it won't happen overnight. Be realistic with your return on investment expectations as well and you'll have a more enjoyable experience investing in the Forex market.
Invest in the Forex market on one of the many online Forex trading system platforms available on the web today. Placing orders is extremely convenient and most online brokers don't charge commissions outside the quoted spread.
An Introduction to Forex Trading
Welcome to the first part of my forex course. What I want to achieve with this is to enable a “non-trader”, someone with absolutely no experience of trading, to follow a simple set of steps that leads to them becoming a competent, confident and profitable trader with the least amount of fuss.
I want to keep this really, really simple. Trading is complicated by the “experts” to make people believe that they need to listen to their advice and analysis. The truth is that there is no need to complicate things with obscure technical indicators and “advanced” analysis. I’ll set out now exactly what it is that traders do. Traders buy when they think the price will go up so that they can sell later at a higher price for profit. Traders sell when they think the price will go down so they can buy later at a lower price for profit. In a nutshell that’s all we do as traders. It is only a fraction more complicated than that. The key question is “how do we know when to buy or sell and when to take our profit?” That’s the question I hope to answer as simply as I can.
I’ve broken the stages we need to go through down into steps. The first step is to get our head around some basic concepts. Questions such as “what is forex?” There are hundreds of websites that will provide the answers to these questions with varying degrees of clarity but I have set out below the best definitions I can find of the concepts that I need you to study and understand before we go on to discuss the method in full. I’m in the process of writing out these definitions in my own words but for the moment let’s use the resources we’ve got available for sake of ease.
Once we’ve got the basic concepts down I want to spend 5 or 10 mins on yahoo/msn/whatever to check that you’ve understood everything so far. There are some ideas in there that may not be obvious to everyone.
1) Learn the basic concepts
2) Chat with me to check full understanding
3) Outline the basic method
4) Skype call with me to go through setting up the charts and price action.
5) Ongoing discussion on UKBT, yahoo/msn sessions and follow up skype calls if required.
It will definitely take you some time, maybe 6 months, maybe longer to be comfortable with setting the charts up and spotting trading opportunities from them but I firmly believe that once you get the hang of it you’ll be taking small but steady profits from the markets month after month.
Nb: Don’t open an account with anyone yet, that’s coming soon.
I’ve looked all over the internet and can’t find a better introduction to forex than this website…
Not all of the information there is relevant but to get you started I would like you to read the following sections…
1) Forex Basics
2) Japanese Candlesticks
3) Support and Resistance
5) Important chart patterns
6) Multiple time frames
7) Elliott Wave Theory
8) Money Management
Another book on candlesticks and patterns is here…
Also read this…
That should get you up to speed pretty quickly with what you need to know before we go any further. Don’t forget we’ll be going through all of this together to make sure you understand everything and are ready to proceed. If you have any questions you can always email or pm me and I’ll answer them as we go along.
Once you’re ready to go on to the next stage then email or pm me again and I will send you the next bit.
Thanks for reading, Ted.
Forex Trading Strategy
The Foreign Exchange Market is an inter bank spot market for currency. It is run, bound to a network of banks, electronically, all through the day. It is commonly known as the market closest to absolute ideal competition, which is affected by any alteration in rates made by the central banks.
About ten years back, currency trading had high obstacles to function, so the access to the tools and systems required to trade in the forex market was only provided to large banking and institutional firms. But now, technology has been developed to this level that any individual investor can jump into the trade with any of the online platforms.
Forex trading is carried in currencies of different countries and the instances of buying or selling are carried out in spots and futures. While using spots trading, currencies are delivered and paid for immediately after a sale and that futures are contracts for assets (shares).
The business of currency trading is very profitable, if done with proper intelligence. Forex is usually traded based on a Forex trading signal or Forex alerts.
The foreign trading signals help to build up the forex strategy system, which are sent for two types of currencies; Western and Asian. Trading Signals for Asian countries are sent out in the night, where as for western countries, they are sent in the day.
Forex trading is always done in currency pairs. Two currencies that make up an exchange rate are called currency pair. Investors who trade currency pairs require rapid buy and sell Forex signals. External factors like trade reports, GDP, unemployment, manufacturing, international trade etc. affect the forex currency trading.
Forex currency trading has an advantage over stock market. Statistical information affecting a particular currency becomes known to everyone in the trade. Also there are many forex trading signal platforms online to get information and act within time.
To become a successful trader, all you must know is how to limit risks, while making the best constructive moves and you can do wonders with forex.
Exchanging one currency for another is known as currency trading and the quoted price is now many of one currency is worth one of the other currency. The forex has to play an essential role in world economy and the need for forex will always be deific. It encourages international trade with technology and communication. Japan sells its products in the United States and is able to receive Japanese Yen in exchange for US Dollar. It is all possible only because of forex trading.
Right trading techniques and tactics help the traders make immense profits in forex market. The main foreign exchange market turnover is broken down as spot transaction, outright forwards, forex swaps and gaps in reporting. The foreign trading signals help to formulate forex strategy system. Forex trade can be carried out easily based on daily foreign trading signals offered by foreign trading internet portal. Central banks have a significant role to play in the forex market as they are responsible to change the country's "base" interest rate. A central bank maintains the rise in the economy in harmony with inflation, thus creating a good equilibrium in interest rates. It is the bank's decision whether to increase, cut, or hold the interest rate.
For more information about forex strategy system, forex forex alerts, forex signal, currency trading, forex trading signals, visit:
Introduction to Foreign Exchange Trading
This is an exciting world. There is hardly anything like foreign exchange trading which provides round the clock home based business opportunity.
Working 24 hours a day from anywhere in the world, working with just a computer, with no boss, no employees, no office, no infrastructure and no big capital, online forex trading furnishes endless work from home facility.
Forex trading is a $2.5 trillion a day industry. Any other market like stock trading has much less volume, restricted hours of business and numerous factors to deal with.
As against stock trading, in forex trading, one has to concentrate just on 4 major currency pairs and pure technical analysis. The average daily range of 104 pips for all four pairs far surpasses that of any stock trading market.
Though there are risks associated with forex trading, if learned properly, there is potential for big profits. Given the vastness of this industry, there are numerous experts in this field revealing their strategies for success.
We had heard of mini accounts, but now we have even super mini accounts. With this, one can start forex trading with as little as $50, with little risk and within five minutes of registering with an online forex trading company.
No other type of online trading offers such a huge potential. Take stock market alone, one will need thousands of dollars to start trading.
Leverage factor in currency exchange trading is very huge. With just $1,000, you can have the capacity of doing hundred times more business, i.e. $100,000. Using a $1000 to buy a forex contract worth $100,000 is leveraging. In this case only $1000 is at risk, but the potential for gains is immense.
The beauty of forex trading is that here one can operate in all major markets of the world. With different time zones, one can virtually do trading in 24 hours a day. Forex market never sleeps.
One important strategy of profiting from forex market is to follow technical analysis. This strategy alone predicts peaks and troughs. If one can catch a trend, this may bring in substantial profits to any forex player.
There are numerous online brokers. While selecting one, main factors to be kept under consideration are the ease of doing trading, online tutorials, instructional material, easy transfer of funds, facility of trading in major markets and currencies, expert advice, low transaction fees, flexible accounts, availability of mini accounts etc.
One has to be careful in selecting an online forex broker. He should take care of novice and professional traders alike. A new forex trader should be able to find the ease of trading and timely guidance.
One main benefit of forex trading is that it is simple to follow unlike stock trading where one has to study thousands of stocks. This market meets the test of highest liquidity. With currency trading, one can trade and exchange millions of dollars in seconds.
Online forex trading is really thrilling. It is always live. You can not overstretch in this market. It has a relatively straightforward and short learning curve.
If you are seriously interested in any online home based business, then you must consider forex trading option. Many forex trading platforms offer mock trading. You can do free live mock trading and test your skills. Once you feel comfortable, you can start real trading.
There is no cost associated in joining any online forex trading system and testing their services. This can be a highly profitable internet business.
Forex currency trading is one of the fastest growing industries in the world. Under this system, 24 million dollars of business is done every second.
You can also participate in this amazing venture within 5 minutes of joining. For more information and details, please follow the following link.
The author has background in business, economics and finance. He is presently researching in finding ways to make money and working on the following website and blogs:
Forex Trading Course
Forex is an abbreviated name for "foreign exchange." The Forex trading market is an around-the-clock cash market where the currencies of nations are bought and sold, typically via brokers. For example, you buy Euros, paying with U.S. Dollars, or you sell Canadian Dollars for Japanese Yen. Forex trading market conditions can change at any moment in response to real-time events, such as political unrest or the rate of inflation. The purpose of this article is to give you an introduction to Forex trading.
Here are some of the unique features of Forex trading that attract private investors just like you:
Accessibility: The Forex trading market is open 24 hours a day, 6 days a week. You have non-stop online access to global Forex dealers through your home computer. This enables you to log in to your account and trade anytime, from anywhere.
Low margin requirements: Margin is referred to as the collateral needed to facilitate a deal. In Forex trading, this is usually a very small portion of the entire deal, say 1% or 1:100. For example, if your margin is $100 (1% of the entire Forex deal in this case), you could control $10,000 of currency contracts. However, margin is a "double-edged sword." Without the proper use of risk management tools (that is, stop-loss and take-profit orders), you can experience substantial losses as well as gains.
Risk management tools: Essential for any successful Forex trading system, these tools include "stop-loss" and "take-profit" orders. A stop-loss order is a market order to close a Forex position if or when losses reach a pre-determined threshold. A take-profit order is a market order to close a Forex position if or when profits reach a pre-determined threshold.
Zero commission trading: Unlike equities or futures trading, you pay no commissions on the Forex deals that you make.
Liquidity: Forex is the most liquid market in the world, thus making it easy to trade most currencies.
Here are some more facts about Forex trading:
According to The Wall Street Journal Europe, the most actively traded currencies on the Forex trading market are the U.S. Dollar (USD), the Japanese Yen (JPY), the Euro (EUR), the British Pound (GPB), the Swiss Franc (CHF), the Canadian Dollar (CAD), and the Australian Dollar (AUD).
The most heavily traded "currency pairs" are the U.S. Dollar and the Japanese Yen (USD/JPY), the Euro and the U.S. Dollar (EUR/USD), the U.S. Dollar and the Swiss Franc (USD/CHF), and the British Pound and the U.S. Dollar (GBP/USD).
Ten financial institutions account for nearly 73% of the total Forex trading market volume. The Top 10 most active traders include Deutsche Bank (17.0%), UBS (12.5%), Citigroup (7.5%), HSBC (6.4%), Barclays (5.9%), Merrill Lynch (5.7%), J. P. Morgan Chase (5.3%), Goldman Sachs (4.4%), ABN AMRO (4.2%), and Morgan Stanley (3.9%).
The five major Forex trading centers are London, New York, Tokyo, Sydney, and Frankfurt. The three major Forex trading countries are the United Kingdom (32.4%), the United States (18.2%), and Japan (7.6%).
Forex traders generally plan their trading strategies around two types of Forex analysis: fundamental and technical.
A fundamental analysis uses economic and political factors, such as unemployment rates, interest rates, or inflation, as a means of predicting currency movements. Fundamental analysis is concerned with the reasons or causes for currency movements.
A technical analysis uses historical data as a means of predicting currency movements. The technical analyst believes that history repeats itself over and over again. Technical analysis is not concerned with the reasons for currency movements (for example, interest rates or inflation). Instead, it believes that historical currency movements are a clear indication of future ones.
Some Forex traders depend on fundamental analysis while others depend on technical analysis. However, many successful Forex traders use a combination of both strategies. However, the important point to remember here is that no one strategy or combination of strategies is 100% certain.
As with stocks and mutual funds, there is risk in Forex trading. The risk results from fluctuations in the currency exchange market. Investments with a low level of risk (for example, long-term government bonds) often have a low return. Investments with a higher level of risk (for example, Forex trading) can have a higher return. To achieve your short-term and long-term financial goals, you need to balance security and risk to the comfort level that works best for you.
Gregory DeVictor is a consultant who has been developing and marketing web sites since 1999. You can learn how to profit trading Forex and how to set yourself apart from 95% of all Forex traders at: [http://www.forex-trading-system.name/forex_trading_courses_online.htm]