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Best Forex Trading Hours

admin — Thu, 19 Jan 2012 08:48:21 +0000

Are You Actively Involved In The Forex Currency Market During The Power Hours?

The biggest benefit of the forex market is that it remains open throughout the day and thus traders find it convenient to trade the market from any place in the world. As there are a wide range of currencies to choose from, you can maximize your benefits. However, this brings up an important question about which is the best time to trade the forex market. All forex traders trade the market with the aim of reaping bigger returns and using the money in clearing their monetary obligations. Read on to know about the power hours during which you can trade the best policies and guarantee best returns.

The Most Active Currency Trading Hours

Usually, it has been seen that the most active forex trading hours starts at 8.00 GMT, when the London markets open and ends at 22.00 GMT when the US markets close. However, it has been noticed that the busiest time of forex trading is during the London to US overlap time between 13.00 GMT to 16.00 GMT. This span of time is considered to be the most liquid hours and during this time, a large number of traders are trading the market. If you too are interested in day trading, choose the aforementioned hours to get best returns.

Are There Any Major Sessions Of Forex Trading?

Generally, there are 3 major sessions of the forex market, the Asian session, the London session and the US session.

The Asian session is comparatively a quiet session on most days where all currency pairs are slow moving and if you’re concerned about day trade, this is not a good time for you.

The London session starts at 8.00 GMT and wraps up at 16.00 GMT. Some currencies like GBP, USD and EUR are the most active ones during this particular time.

The US session starts at 13.00 GMT and ends at 22.00 GMT. Currencies like EUR, AUD, USD, JPY and GBP are some that remains most active during this session.

Thus, if you’re a forex trader, make sure you’re actively involved in the market during the peak hours to ensure reaping maximum benefits. You can utilize the money that you earn in repaying your other debt obligations.

Compensation Disclosure: This website supports affiliate ads which means if you purchase something from a link on this website, we may get compensated. Perform due diligence before buying from this website or any other website.

Forex Money Management

admin — Thu, 19 Jan 2012 08:47:52 +0000

Forex Money Management Is Fundamental To Trading Success.

It is important to remember that the aim of trading forex is to make money. Therefore irrespective of how good your currency trading strategies are, if you don’t have any money management skills, you are not going to succeed in the long term.

Learning how to manage your money is an important lesson that you must be familiar because it will effect your level of trading risk. To reduce the financial risk you are exposed to you must use a stop loss on every trade. Position size and the number of open positions will also effect the amount of your risk. Although brokers may offer 200:1 and 100:1 leverage doesn’t mean you are required to use it.

You must learn when to exit in a losing trade especially when you are about to reach your loss limit. Forex traders with effective money management skills can live through bad trades without losing all of their capital. You must also learn how to control yourself on instances that you are profiting and avoid over investing.

Determining your money management rules will depend on your risk profile, trading capital and financial goals. It’s up to you to determine how much you are willing to risk. Conservative traders risk between 1% and 2% of their trading capital in any one trade.

There are various money management techniques that traders can formulate to allocate and protect their trading capital. A simple and common money management method that is widely used is explained as follows:

1. Determine what percentage of your trading capital you are willing to lose in any one trade. For example if you are willing to lose 2% and your trading capital is $25,000 then you will limit your loss to $500 for any one trade.

2. Determine where you will set your stop loss order, this is normally a set price in pips away from your entry point. For example a stop loss of 25 pips is about $250 per regular sized contracts of $100,000

3. Determine how many contracts you will purchase. As from step 2 above you are willing to risk $500 and from step 3 your stop loss is $250, therefore dividing $500 by $250 means you can purchase 2 contracts. With a standard account and with 100:1 leverage, 2 contracts will require $2,000 of margin deposit.

A good money management principle is never to leverage more than 1/5th of your trading capital at any one time. For example, with $25,000 of trading capital, you should never use more than $5000 of your margin deposit at any one time, which is about 5 regular sized contracts.

An important concept of forex money management is the application of the risk/reward ratio. Before you enter a trade, you need to work out how much you intend to make from that trade and how much you are willing to risk. Generally a risk/reward ratio of about 1:1.5 or greater is necessary. For example, if your risk/reward ratio is 1:3 and you set your stop loss at 25 pips away from your entry point, then your profit target would be 75 pips. As the trade progresses, suppose you are in profit by 25 pips, you could move your stop loss order to the entry point. This ensures you will not lose any money on that trade, you would ‘break even’ if you were stopped out. You could also move the stop loss order to lock in some profit, for example when you are 25 pips in profit you can move your stop loss to 15 pips above your entry point. This will ensure that you will exit with a 15 pip profit if your stop loss order is triggered. Therefore good forex money management requires monitoring of your open positions and making adjustments to your risk parameters. You must never move your stop loss order except to lock in existing profits

It is important to continually exercise discipline when trading forex. Good traders have taken the time and energy to build up their skills and confidence in the market. A successful forex trader always adheres to their money management rules. Consistent application of effective money management is crucial to surviving in the long term.

Beginner Forex Currency Trading

admin — Thu, 19 Jan 2012 08:47:39 +0000

Basic Forex Currency Trading For Beginners

So you are a beginner and you want to learn how to trade currency on the foreign exchange market? The process of forex currency trading may appear very straight forward, however the beginner will require serious further study to be able to trade successfully. You should always take the time to carefully consider the basics before you get started.

In the beginning, forex currency traders will need to learn the basic concepts and terms that will help them in their currency trading process. This may seem a little confusing for the beginner but it’s really fairly simple. The beginner should also have a basic understanding of how to calculate a profit. The more familiar you are with the forex basics the easier it is for the beginner to get started in forex currency trading.

Currency Pairs: Every currency has a three letter abbreviation. The currency rates are always quoted in pairs and expressed as a five digit number. The first currency in the pair is the base currency and it is always equal to 1. The base currency is the currency you intend to purchase. The second currency in the pair is the counter currency and is the currency you intend to use to purchase the base currency. The price for the currency pair is expressed in terms of the counter currency. For example, if EUR/USD = 1.4100 then every 1 Euro is worth US $1.41.

Pips: currencies are traded on a price interest point (pip) system. The last digit in the currency pair represents one pip. For example if the GBP/USD rate moved from 1.6374 to 1.6375 this represents one pip movement. It also means that the GBP has appreciated by one point and the USD has depreciated by one point. Each currency has its own pip value. Similarly if the USD/JPY rate moved from 130.45 to 130.46 it has appreciated by one pip.

Pip Value: In any currency pair in which the USD is the counter currency, the currency pair has a pip value of $1 per every 10,000 currency units. Therefore for every 100,000 currency units one pip will equal $10.

Bid/Ask Price: The ‘bid’ price is shown at the left side of the quotation and is the price at which the trader can sell the base currency. The ‘ask’ price is shown at the right side of the quotation and is the price at which the trader can buy the base currency. For example EUR/USD is 1.4426/1.4428

Bid/Ask Spread: The spread is the difference between the bid and ask price for every currency pair. The lower the spread the lower the broker’s fees. Forex traders are subject to spreads when opening or closing trades in the buying position. In other words, you are always subject to a spread when you buy, regardless of whether you are opening or closing the trade. The narrowest spreads are quoted on the most liquid currency pairs, the majors.

Margin: The beginner needs to understand that forex currency trading is conducted on margin. This means that you only need to use a small cash deposit to trade a much larger amount of currency. The margin deposit is required as collateral to cover any losses that might be incurred. For example a broker might require only $1,000 in your trading account in order to trade a $100,000 trading position. In effect the broker loans you $99,000 for $1,000 in security.

Lot Sizes: Trading is done in lots, either standard lots or mini lots. A standard lot size is equivalent to 100,000 units of currency. Forex brokers offer leverage to trade lots, for example with 100:1 leverage (and when USD is the base currency in the pair) you will need $1,000 of margin deposit to trade one standard lot. A mini lot size is 10,000 units of currency, with 200:1 leverage you will need $50 to trade one lot.

Rollover: When a trader has an open position at 5.00pm EST it will automatically be rolled over to the next day resulting in your trading account to either earn daily interest or pay daily interest. This is determined by the ‘interest rate differential’ which is the difference between the short-term interest rates of the two economies comprised in the currency pair.

For example, a trader who buys GBP/USD would need to borrow the Dollars to buy the Pounds and will, thus pay interest on the USD and earn interest on the GBP. Hence if Britain’s interest rates are 5.0% and U.S. interest rates are 2.0%, you would earn interest at a net rate of 3.0% per year. If you initially sell GBP/USD you would have to pay interest at 3.0% per year.

Carry Trade: the purpose is to earn extra income from the daily interest payments when you hold on to a currency pair. Selection of the right currency pair is essential for this to work. You will need to buy the currency with the higher interest rate and sell the currency with the lower interest rate. However, unless there is a significant difference between the two interest rates, the net profit or loss will be marginal. While interest rates are set on an annual basis and trading positions are usually opened for short periods will significantly lower any gain or loss on interest rates.

Cross Currencies: currency pairs that do not involve the U.S. Dollar.

Long Position: occurs when a trader initially buys currency with the expectation that the currency will increase in price and then selling it later at a higher price.

Short Position: occurs when a trader initially sells currency with the expectation that the currency will decrease in price and then buying it back later at a cheaper price.

HOW TO TRADE CURRENCY
Illustrated below for the beginner is an example of how to calculate a profit in forex currency trading.

Say for example you believe that the Euro will appreciate in value against the US Dollar in the near future and the current exchange rate is EUR/USD = 1.4210. You then decide to buy 100,000 Euros (1 standard lot).

EUR 1.00 = USD 1.4210
100,000 x 1.4210
Your purchase of 100,000 Euros is US $142,100

At 100:1 leverage your required margin deposit is $1,421

Profit
Later on, as expected, the Euro appreciates by 75 pips to EUR/USD = 1.4285. You then decide to sell your Euros and exchange them back into US Dollars.

EUR 1.00 = USD 1.4285
100,000 x 1.4285

You will get: US $142,850

Your profit = ($142,850 – $142,100) = $750

When starting out with forex currency trading it’s a good idea to begin with some lower amounts until you have figured out exactly what you’re doing as it can be difficult for most beginners. You can always increase the amounts once you gain the experience and skills necessary to make larger trades successfully.

It is also beneficial to take some time to decide what currency pair or pairs you want to trade with. Generally no more than 2 to begin with to allow you ample opportunity to learn how the pairs actually relate to each other and ensure you are able to clearly identify the patterns that they follow. Beginners can increase to more pairs once they have a firm grasp of the basics of forex currency trading.

ForexMentor.com, the most trusted name in forex education is home to Peter Bain’s popular currency trading courses and mentorship program. Courses and services for beginners, development and advanced traders.

Forex Strategy Testing

admin — Thu, 19 Jan 2012 08:47:25 +0000

Forex Trading Strategies Require Testing

The extent of success in trading is decided much before one starts trading. Strategy for trading involves the adoption of mainly three efficient and effective plans. Firstly, diversify your portfolio so it generates regular returns. Secondly, the decisions to buy and sell the currency you hold. Last but not the least is your capability to minimize the risks in trading.

Any trader can enhance their returns by trading in a prescribed format and following the rules of the trading system which they are part of. The most effective technique to efficiently trade is to test the trading strategy. You can test your Forex trading strategy by using a demo account provided by your broker. Another method is to simulate your trading data by using forex strategy testing software.

If you are trading for a while now, you must have observed systems that vendors declare and support their performance results using the reports generated by “backtest” or “forward test”. Some misconceptions cause most people to assume these two tests to be the same, or virtually the same. Nothing can be further from the truth.

The back test method can be used to analyze the performance of a particular strategy adopted in the past. It evaluates the positives and negatives of the strategy by the analysis of its past data. This enables the forecasting of trends based on past events.

The back testing process can be adopted to analyze any kind of value or data that needs analysis and anticipation. Therefore back testing can be done to data comprising of stock patterns. Back testing can be utilized for any type of event, generating any kind of data to prepare charts and trends based on historical numerical figures. This results in measuring the efficiency of a method and also provides for alternative methods to generate higher returns.

Also, this method is used to replicate the situations with the aim of acquiring the most correct result. This indicates that with trading patterns and other associated values, generated outcomes are dynamic and is not necessary that today’s system works tomorrow also. Other situations may need a different strategy.

The major difference between back tests and forward tests, is that precisely backtests collect all the data, optimizes the parameters and then selects the strongest parameters and then starts the trading, but is rarely efficient for moving ahead with the results.

Forward tests, takes a small set of data, analyses all the attributes, generates the optimized set of attributes. This optimized set of values is applied to the other set of unanalyzed data. Every new result generated plays its part in generating the next result and participates until the final result is generated. Forward testing is the real calculator for forecasting the future performance.

Some traders adopt forward testing more as compared to back testing as it results in determining trading systems for the future and forecasting future strategies more accurately for a particular trading environment. If you wish, you can see any past record about the trade transaction, that most importantly and firstly look like real time, true and audited results. Also the data attached with the actual trading can be looked for. No other data can provide you a more realistic image other than this.

As compared to true performances, a forward test will result more positive. The comparison of the test results with the present trend for the strategies can be analyzed using the forex charts for the current variations.

Back tests helps to calculate the most efficient trading systems amongst others by analyzing past trade patterns and activities on the Foreign Exchange platform. Back test results are not that accurate to be trusted blindly and needs verification. At times results generated by back tests are so very intentionally fabricated to misguide the traders strategy for future investment. If you are knowledgeable and you think results are properly optimized, believe yourself.

The factor to be most considered for trading is the study of past performances and patterns. The study of strategies already adopted and to be adopted can be efficiently tested. Prefer the forward tests rather than the back testing.

Forex Currency Trading

admin — Thu, 19 Jan 2012 08:47:05 +0000

Learn All About Forex Currency Trading.

Forex currency trading has rapidly gained popularity around the globe in the past decade as there are very little barriers to entry for the small investor to participate. With the help of forex currency trading resources available online, forex currency trading is something that anyone can do to earn money.

If you are new to forex currency trading, but not to stock investing, then this guide should help you to get a feel for the differences between trading on the foreign exchange market versus trading on the traditional Stock market. If you are new to investing in general, then this site can open your eyes to a world you never knew existed.

What Is Forex Currency Trading?

The term ‘Forex’ or ‘FX’ is short for ‘foreign exchange’. What is being exchanged on this market is not stocks or bonds, but currencies from around the world. In other words, the Forex market is the place where U.S. Dollars, Euros, Yen and other currencies are bought and sold.

It represents the largest financial market in the world by volume. Starting with the simplest example of currency exchange that most people are familiar with is that of exchanging one currency for another when travelling overseas.

Sometimes you get more for every dollar you exchange than other times. You will notice that foreign exchange rates never remain the same and are constantly changing. Fluctuations in exchange rates can enable you to earn sums of money in the forex market with forex currency trading.

The aim of a forex trader is to exchange one currency for another in the expectation that the currency you bought will increase in value compared to the one that you sold. Currencies are traded through a forex broker and the currencies are always quoted in pairs, for example (EUR/USD).

In any currency pair the base currency is the first one displayed and will be the one that is going up in value if the currency pair is going up, and if the currency pair is going down then the base currency is weakening.

The most widely traded currency pairs are known as the ‘majors’ due to their volume and liquidity in the market. They are (EUR/USD) (USD/JPY) (GBP/USD) (USD/CHF)

You will soon learn that it is normally cheaper to trade with these pairs. Currency that trades against the U.S. Dollar is the most popular because it is the most liquid and volatile. There are many different currency pairs to choose from however to get started with forex currency trading, you only need to concentrate on the majors.

Forex Market Explained
In the Forex market, currencies are exchanged through a floating exchange rate system. The Forex market has no central exchange and has no trading floor. It is considered as an ‘over-the-counter’ (OTC) market and is run electronically within a network of banks known as the interbank market. The Forex market runs continuously 24 hours a day from Sunday afternoon to Friday afternoon.

In the past, the Forex interbank market was not available to small investors and only the world’s largest banks were allowed to trade openly. Since the introduction of the internet, forex brokers have emerged to cater for the needs of almost any individual with the use of online forex currency trading platforms. The trading platform is where you will execute all of your trades with your broker with just a few clicks of the mouse.

Individual traders like you and I are known as “Retail Traders”, and must go through retail brokerage firms in order to buy and sell currencies on the foreign exchange market. Today, however, you can buy and sell currencies at the click of a button, in much the same way as you buy and sell stocks. Everything has been automated and linked up electronically. Exchanges in the Forex market happen instantaneously.

You should know up front that online retail trading by individuals (represented by online retail brokers) is still in its infancy. Prior to the Internet, and subsequent availability of real-time market data, it was virtually impossible for the average person to get involved in the foreign exchange market with any degree of success.

Commencing Forex Currency Trading
Although it is now easy to commence Forex currency trading, it can be quite risky and may not be suitable for all investors. Forex currency trading is not as straight-forward as trading stocks on the stock exchange. There are many, many variables to take into consideration when it comes to determining fluctuations in currency values.

Success with forex currency trading requires application of money management skills. While Forex currency trading offers opportunity to make significant sums of money, more than half of Forex traders lose money. You should only trade with money you can afford to lose so only trade with real money when you gain enough confidence.

Before you can commence Forex currency trading you would need to find a regulated forex broker that offers a free demo account which allows you to access the online trading platform. This is an excellent way to learn how to use the platform without trading with real money. It is important to practice before you start trading with real money.

Unfortunately, there are unscrupulous companies out there who take advantage of this ‘learning curve’, and attempt to scam would-be retail traders. Forex opportunity scams are still prevalent. Therefore, it is imperative that you learn the basics of Forex before you get involved with any ‘advanced’ training courses, trading systems or online brokers…

Online currency trading: Get the best trading system and learn how to trade using our training guides.

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Compensation Disclosure: This website supports affiliate ads which mean if you purchase something from a link on this website, we may get compensated. Perform due diligence before buying from this website or any other website.

Forex Brokers

admin — Thu, 19 Jan 2012 08:46:46 +0000

It Is Important To Find The Right Regulated Forex Broker

When selecting a forex broker it is important to do some research to find an efficient and reliable online broker. Care must be taken to avoid any dishonest and fraudulent brokers. A good forex broker must be regulated so choose a broker that has been approved by a government authority in a strong regulated country.

Forex Brokers
Countries such as the United States, United Kingdom, Canada and Australia have their own regulatory authorities that stipulate the regulations that forex brokers must abide by. In the United States regulated forex brokers are governed by the National Futures Association (NFA) and the Commodities Futures Trading Commission (CFTC). Ensure that you verify the registration of the forex broker before opening an account. You can visit the NFA’s website at www.nfa.futures.org to confirm the registration of the broker.

There are several important criteria to consider before registering with a forex broker. Competition between forex brokers is fierce so ensure you take advantage of that by shopping around for the best broker. Take the time to select the right broker for all of your needs so you will be able to use their experience to your benefit. It is beneficial to check their services and any optional extras they provide such as:

* Training material: There are some Forex firms that help new traders in becoming more skilled in Forex trading by giving free demos, guidance, and helpful Forex news. Brokers can help you in developing trading strategies or in finding efficient trading systems. Aside from that, a good broker can also help you with fundamental and technical analysis of relevant data.

* Platform: Each broker has a different trading platform and most are provided for free. Does the platform contain charts, prices and news? You need to make sure that it has charting software with the ability to plot the indicators used in your trading strategies. Trial a few different platforms and find out which one is more comfortable for you to use. Check the reliability of the trading platform by opening a demo account first. An incorrect trading platform can cost you time and money.

* Guaranteed stop loss and limit orders.

* Minimum slippage. Slippage is the difference between your quoted price, and what your order is filled at. You can test the platform with your free demo account to determine how quickly the forex broker will execute your orders after you have pressed the buy or sell buttons. Look for automatic execution.

* Are there any minimums? This is something that tends to be set by the brokers themselves. Ask about their policies on minimum account balances or minimum trading contract sizes. You should always talk to the brokers in order to find someone that will fit your budget and needs. Knowing that you can reasonably afford the minimum is critical. If the minimum that you are told at first is not suitable, always feel free to look for a different broker who can fit all or your needs.

* How competitive are their fees? This is based on the spread width, (the difference between the buy and sell price) is it fixed or variable? Competitive fixed spreads are normally between 2 to 5 pips per currency pair, check whether mini accounts get charged more. The lower the fees the lower your trading costs will be. It’s less crucial for swing trading.

* How much leverage is provided? It is best not to use more than 100:1 leverage for a regular (100k) account and 200:1 leverage for a mini (10k) account. Firms offering much higher leverage may not be acting in your best interest.

* What are the forex broker’s policies on margin lending and interest payments on account balances, and do the margin requirements change under certain circumstances?

* Check for transparency of the transactions and make sure the forex brokers do not overcharge you.

* Does the brokerage firm have financial backing? In the event of financial collapse how secure will your funds be?

* Service: This should be high quality. You want the forex broker to have good 24-hour customer support and enough staff to provide you with prompt support that you need.

Forex Pips Tutorial

admin — Thu, 19 Jan 2012 08:46:21 +0000

Understanding Forex Pips

Pips and ‘pips values’ represent one of the most misunderstood concepts in Forex trading. Beginners, especially, often have trouble grasping the idea behind pips but, a solid understanding of pips is crucial to successful Forex investing.

Hopefully you’re already familiar with the concept of ‘basis points’. One basis point is equal to one-hundredth of one percent, and represents the smallest increment of change measured for any financial instrument. For example, with interest rates, if the rate rises from 9.50 percent to 9.51 percent, then it has risen by one basis point.

Pips are the Forex market’s version of basis points. Let’s say that the exchange rate for the EUR/USD pair move from 1.4465 to 1.4468. This movement represents a shift of 3 Pips, and may be good or bad depending on which currency you are holding.

Here’s the catch, though. Notice that the shift took place on the 4th decimal, which is the ten-thousandths place, or 1/10,000 of a percentage point? You have a shift of one ten-thousandth instead of one one-hundredth.

The reason for this is that most currencies (with the exception of the Yen) are quoted out to four decimal places. This means you get to take advantage of even the most minute shifts as you trade on high volume.

In order to calculate Pips for the common, four decimal currency pairs, you must divide the value of 1 Pip by the exchange rate:

1 Pip = 1/10000th / exchange rate

Now, what happens when you are dealing with the Japanese Yen? In this currency pair, we find an exception to the rule because the Yen is quote out only to the hundreds place, or 1/100.

For the USD/JPY pair (or vice versus), your formula would be:

1 Pip = 1/100th / exchange rate

Now that you know how to calculate Pips for any currency pair, you must look at what an actual Pip is worth to you in real dollar terms. This value is known as “pips value’. In order to do this, we must bring ‘lot size’ into the equation.

If you purchase a standard lot of 100,000 pairs of EUR/USD at 1.4465, your formula will be as follows:

Pip Value = (0.0001 / 1.4465) x 100,000 = 6.91

So, a pip at this exchange rate is worth 6.91 Euro. Don’t look for exact numbers here. What you need to pay attention to is the fact that ’6.91′ represents the average gain or loss per change in pips.

In other words, a fluctuation of 2 pip from 1.4465 to 1.4467 isn’t going to raise your profit or loss by a full Euro or more. Try doing the calculation for a 2 pip rise, and you’ll see that your pips value goes up only to 6.192.

I recommend getting comfortable with these basic calculations first, and then moving on to the calculations of actual profit and loss, which will require you to factor in bid price and ask price.

Also, remember that your online broker usually calculates pip and pips values for you, and you don’t have to know how to do the math. It’s just good business to be able to do it yourself…

Mini Forex Trading

admin — Thu, 19 Jan 2012 08:46:01 +0000

Getting Started With Mini Forex Trading

Mini forex trading was created for new traders entering the forex market. This means new traders do not require a lot of money in order to be able to access this market and start placing trades. The Mini Account uses a different leverage calculation than a regular (100k) account. This means that instead of trading full-size currency lots (100,000 units), you’ll trade in lots that are just 1/10 the size (10,000 currency units), which in turn greatly reduces the amount of money you risk in each trade you enter.

In a Mini Account the smaller lot sizes have correspondingly smaller pip values. Pips in a Mini Account are worth, on average, $1 instead of the $8 to $10 value they have in a regular account. The Mini Forex account offers up to 200:1 leverage, this means that just a $50 margin deposit will allow you to trade lots worth roughly $10,000. The mini forex account is beneficial for new traders to improve their forex trading skills while being exposed to less financial risk on the market.

Success in the forex market and becoming a profitable trader depends on a lot of practice and experience. It is still essential to practice first with the demo trading software to enable you to get comfortable with the trading platform and to get a feel of the real market. Once you get an idea of what to expect in the forex market, it is wise that you should open a mini forex trading account. Now you are dealing with real money.

Although you might risk losing real money, a mini forex trading account only requires a small investment of money. You’ll be profiting less from a successful trade and also losing less if the trade goes bad . For example, while a 20-pip loss on a 100,000 USD/JPY position would be $200, the same loss on a 10,000 USD/JPY position in a Mini account would amount to only $20. Mini forex trading reduces the risk of your loss. You can always make another deposit if you lose. The key to mini forex trading is to enhance your skills until you are ready to trade with the big traders.

To start with a mini forex account, there are some characteristics you should know:

• Required minimum account deposit = $100 – $300 (this is known as margin)
• Recommended account deposit = $2,000
• Traded in 10,000-unit currency lots
• A default margin: set at 0.5% ($50 per mini-lot)
• Leverage up to 200:1

Mini forex trading has little disadvantages than a regular forex account. You will be enjoying all the benefits that full-size Forex account holders enjoy, this can work in your advantage. You will have access to the same trading software, charts, resources, and tools from your broker. Mini accounts are ideal for new Forex traders to develop a proper, disciplined forex trading strategy without the fear of losing money.

Another great feature of using a mini forex trading account is that there is no maximum trade volume and you are not limited to trading one lot. You are able to trade 10,000 units or even 200,000 units even if the standard size of a mini forex account is 10,000 units. This enables you to develop your skills, trading strategy and technique before slowly increasing the size of your trades. The ability to customize the size of the trade will allow you to have a better risk management of your money

The mini forex trading account is ideal for beginners or novices that are just starting to enter the world of forex trading. Here, the risk is real and the money is real. With Mini Forex trading it is easier to develop the confidence needed to be a successful currency trader, without the anxiety and distractions that come with large profit and loss swings.

Forex Swing Trading

admin — Thu, 19 Jan 2012 08:45:17 +0000

The Advantages And Disadvantages Of Forex Swing Trading

Forex trading is one of the hottest investment trends nowadays as it has various advantages and there are various trading options. In forex, swing trading is one of the most implemented strategies in the financial market. This trading strategy is mainly based on the principle of price corrections and it looks to identify the particular currency prices which might have bid up or down as a result of the different ups and downs in the market.

The Advantages Of Swing Trading Are:

1. A swing trader is more of a technical based trader. Thus you may be able to have a specific area which will help you in understanding the signs of the trade which may be working against you. This will help you know if the trade isn’t working at all and thus you may be able to limit the damage which a bad trade can do to your finances.

2. Swing trade allows you in taking the advantage of the gradual and the natural up and down of the market. None of the financial markets ever go in one direction. So, while you are able to take advantage of this situation, you may easily be able to increase the returns on your investment.

The Disadvantages Of Swing Trading Are:

1. Simply because the market is showing support or may be resistance on specific area, doesn’t necessarily mean that it will be respecting it the same day. Other than this, the moment you are placing the trade, you are actually risking your money irrespective of the market situation.

2. You need to have a totally different mindset as opposed to what’s mentally required for long term trading. Swing traders generally run the risk of getting laid off the market mostly because the pullbacks on the smaller ranges seems to be much more violent in comparison to others looking at the weekly charts.

There are various other advantages and disadvantages of swing trading and if you are thinking of making quick money through this trade, it will be better for you to consider and weigh the pros and cons involved in the trade.

Forex Trading Tools

admin — Thu, 19 Jan 2012 08:44:58 +0000

A Brief Overview Of Three Different Forex Trading Tools

Numerous foreign exchange trading tools are available at the market place to assist the forex traders. But it is very much important to find the right type of forex tool. Here we discuss different kinds of commonly used foreign exchange tools.

Trend line

Trend lines can be constructed by drawing a diagonal line between two or more price points. These lines are drawn across significant lows in an uptrend, and significant highs in a downtrend. Trend lines are very useful to judge the timing of entry and exit investment when you are trading Forex. When the price of a currency pair decreases, a support level is constructed. Similarly, when the price of a currency pair increases, a resistance level is formed.

Trend lines are part and parcel of technical analysis to gauge the price movement of a currency pair. If you want to construct a trend line, historical data on the price movement of a currency pair is required. Generally, a trend line is drawn in hand on a piece of chart paper. However, these days, different charting softwares have come to the market. You can draw trend line on computer based charts. Even there are some softwares which draw trend lines automatically. But, generally, the foreign exchange traders are interested to draw the trend lines themselves.

It is important to choose a price interval period that matches with your trading strategy. If you are into short term trade, you may be interested to use that kind of chart which is based on interval periods of say 15 minutes. Long term traders may be willing to trade with trade lines which are based on longer intervals, say one hour, one day, one week, one month or one year.

Moving average convergence/divergence (MACD)

MACD is also an excellent technical analysis indicator which indicates the movement of the price of a currency pair. This smartly captures the fluctuations in the direction, strength and duration in the price movement of a currency pair.

Relative strength index (RSI)

RSI shows the relative change in the price of a currency pair in two different time periods.

The above mentioned forex tools are very useful to judge the timing of the entry and exit of forex investment.

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