Forex

Forex Trading Risk Management

2010-05-20T10:21:00.007+05:30

One of the most important thing a successful trader do is systematically plan his Money Management or Risk Management. Money management is about how the traders systematically decide their accepted risk level and how many lots to trade in a single trade. The risk level should be measured based on how many percent of the account you will lose if the open trade is closed. In general, it should be set not more than 3% of the account size.

How to plan the trading lot size?

For example, your trading account is $20,000. The stop loss should be triggered to 3%. Therefore $20,000 X 3% = $600. Let say the stop loss is decided at 30 pips, the pips value is $10. The number of lots to place should be calculated as follow:-

$600 / 30 pips / $10 = 2 lots

You trade 2 lots with the stop loss set at 30 pips.

If traders trade without money management, they are in fact gambling. They are not looking at long term return, instead only hoping for hitting the “jackpot”. Money management rules will make us very profitable in the long run. If we know how to control your losses, we will have a chance at being profitable.

Ready to make some pips from the Forex market? Wait ! Before you go too far, remember It is very important that you define how much you are willing to lose on each trade. A good trader always thinks about what they could potentially lose BEFORE thinking about how much they can win.

Do not forget the Trading rules that we had discussed before.

Choosing A Forex Brooker

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Before start trading Forex, you need to set up an account with an online Forex broker.
Thanks to the Internet, today online trading is so much easier that before. Most of the Forex brokers are very efficient in cost and service. The following are important criteria to consider when choosing a forex trading broker.

1. Customer Service
Since Forex is a 24-hour market, so, 24-hour support from broker is important. We have to ensure that the broker's film can be contacted either by phone, email or online chat at any time. The quality and knowledge of the representative also a key factor to considerate before opening an account.

2. Safety of funds
It is important to use a broker with a strong financial standing and is regulated by a regulatory authority in the country you are located.

3.Type of broker
Is the broker an Electronic communication Networks ( ECNS) or the Market maker.
ECNs brokers route your order and match them with a trader in the real market.
Marker makers are the liquidity-providing brokers who fill your order without routing into the marker.

4. Spread ( Charges )
What spread the broker charge? are there fixed or variable? The broker's charges can greatly affect the earning of the trader. We recommand some where at 3 pips.

5. Commissions
Do the broker charge additional commissions? In general, most broker's commissions are built into the spread

6. User friendly platform
Forex brokers usually allow you to trade over the Internet via their trading platform. Most trading platforms are either Web based, or a client based program.

Web based software is hosted on your broker’s web site. A client-based program which require you to download and install. Usually, this program runs faster than the other.

The broker’s trading platform should also include:

Instant execution of your orders, this is the outmost important feature. Secondly, the common technical indicators, the basic order types , the ability to view real-time currency exchange rate quotes, your account balance with realized and unrealized P/L. margin available, and any margin locked in open positions.

Always be sure to open a demo account and test out the broker's platform before opening a live account!

7. The Broker Policies
Before selecting an online Forex broker, you should examine their features and policies. These include:

>Type of Currency Pairs The seven major currencies such as AUD, CAD, CHF, EUR, GBP, JPY, USD should be available.

>Margin Requirement ( How much you have to deposite to start an account )
The lower the margin requirement the higher the leverage , mean the greater the chance for higher profits and losses. Be careful about margins and remember this is a double edged sword. We recommand USD 250 - USD1000.

>Minimum Trading Size your broker allow
1 standard lot = 100,000 units
1 mini lot = 10,000 units.
1 micro lot = 1,000 units.
Some brokers even offer odd lots allow you create your own unit size.

Last but not least. You need a high speed Internet connection in FX trading.The Forex market is a fast moving market. Make sure you have a high speed Internet connection.

Understanding different type of Trading Order

2010-05-20T10:18:00.002+05:30

Are you ready to trade? How to place an order to your broker? What is Market order, Limit order and stop order? Confuse? Not to worry, let's move on...

The term "order" refers to how you will enter or exit a trade. There are few different types of orders that can be placed into the foreign market.

Market order
A market order is an order indicate to the broker to buy or sell at the current market price. For instant, the currency pair is now trading at 1.230 and you want to buy at this price, you can click buy and your trading platform will execute the order instantly at this price.

Limit order
A limit order is an order placed to buy or sell at a certain price and duration. You specify the price at which you wish to buy/sell a certain currency pair and also specify how long you want the order to remain active. For instant, the currency pair is now at 1.200 and you want to buy when the price reaches 1.207. You can set to buy a limit order at 1.207. Your platform will automatically execute a buy order when the price reaches 1.207.

Stop-loss order
A stop-loss order is a limit order linked to an open trade preventing losses if price goes against you. A stop-loss order remains in effect until the position is closed or liquidated. For example, you bought a currency pair at 1.2230. To limit your maximum loss, you set a stop-loss order at 1.2200. In the event the price drops to 1.2200 instead of moving up, your trading platform would automatically execute a sell order at 1.2200 and close out your position.

These are the basic order types that usually all traders use. There are some other order types which are acceptable by some broker's platform only.

GTC (Good till canceled)
A GTC order remains active until you close it. Your broker will not cancel the order for you.

GFD (Good for the day)
A GFD order remains active until the end of your local trading day.

OCO (Order cancels other)
An OCO order is an combination of both limit and/or stop-loss orders. Two orders with price and duration are placed above and below the current price. When one of the orders is executed the other order will canceled automatically. For example. The price of a currency pair is 1.200. You want to buy at 1.210 in anticipation of a resistance breakout or trigger a selling position if the price falls below 1.1900. If 1.210 is reached, you buy order will be triggered and the 1.1900 sell order will be automatically canceled.

Please be sure that you know which types of orders your broker accepts. Different brokers accept different types of orders.

Forex Leverage

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Experienced traders who want to increase their profits often use leverage. This enables them to use small amounts of capital to gain a large amount of profit. However, leverage is a double edged sword and leverage has its dangers too. Traders must be well advised to understand what those dangers are before actively participating in Fx leverage trading.

The ratio used in fx trading are usually 1:20, 1:40, 1:50, 1:100. Forex Leverage of 100X means that, you only need to deposit 1 of 100th of the contract size. So, when you buy 1 lot of currency pair which is worth let say USD100,000 you only need to use USD1,000 in the trade.

Calculation of leverage :-

If you bought 1 lot of USD/JPY at 121.22 and sold at 121.26.

Without leverage you gain 4 pips. = (0.04/121.22)x100% = 0.033%

With 100x leverage you gain 4 pips = 0.033% x 100 = 3.3%

Now you see the power of leverage! But always remember FX leverage is a double edged sword, it swing both way!

A Forex Pip

2010-05-20T10:16:00.001+05:30

A forex pip is the increment of a certain exchange rate. The forex pip is the difference smallest decimal places of the currency pair. For instant, you are buying a currency pair of 1.9775/1.9770. In this example, 1 pip is 0.0001 of the price. If we buy GBP/USD at 1.9770 and sell it at 1.9798, our profit will be 1.9798-1.9770=28 pips.

The Formula for calculating forex pip value :-

( Decimal Place / Currency exchange rate ) X Trading amount

We use USD/ JPY as an example:

( 0.01/130.46 ) x USD10,000 = USD 0.77
Therefore 1 pip = USD 0.77

The currency exchange rate is always quoted to 2 or 4 decimal places of the price, therefore, 1 pip is either equal to 0.01 or 0.0001. Following is a table listed the forex pip value of some commonly traded currency pairs.

Pip	Currency pair
0.01	USD / JPY
0.01	GBP / JPY
0.01	EUR / JPY
0.01	USD / CHF
0.0001	EUR / USD
0.0001	GBP / USD
0.0001	AUD / USD
0.0001	NZD / USD
0.0001	USD / CAD

Ready to earn Forex pips? How we earn by having USD 0.77 a pip? Ok. Let's move on to the next interesting forex tutorial. The Leverage. Forex capital

Long Trade / Short Trade

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When you said long for EUR/USD currency pair mean you are buying the EUR and selling the USD. In the event, the exchange rate goes up let say from 1.5720 to 1.5760, this trade becomes profitable, unfortunately, if the exchange rate goes down, this trade becomes a losing one.

On the other hand, if you said short to the currency pair EUR/USD, you are selling the EUR currency and buying the USD. Let say the exchange rate from 1.5720 to 1.5700 this trade becomes profitable. If the rate goes up, this becomes a losing one.

At all time, we are focused on whether a certain currency pair will go up or down, If we anticipate that the currency will go up, we conduct a long trade ( Buy ), if our anticipation tells us that it is likely to be go down, we conduct a short trade ( Sell ).

Regardless of long trade or short trade, the first listed currency is always the base currency. For example, in the GBP/JPY currency pair, if we enter a long trade ( buy ) we are buying GBP and selling JPY.

What profit will we make or how much will we lost? How to calculate our P/L? We move on to Forex Pip.

Forex Basic Currency Pairs

2010-05-20T10:14:00.002+05:30

To put it very simple, the forex market or foreign currency exchange is involve in the exchange of one country currency to another based on the certain exchange rate at certain point in time. Traders make profit or losses based on the difference in both currencies pair they sold or bought.

The Currency Pairs

The are many currencies pairs being traded in the market each day, the traders are usually trade those that are high in liquidity. The most common currency pair which the traders trade are EUR / USD , USD/JPY , USD/CHF , GBP/USD , AUD/USD , NZD/USD , USD/CAD , EUR/JPY , GBP/JPY.

Forex Trading Rules & Strategies for Beginners.

2010-05-20T10:09:00.003+05:30

All Forex traders lose money on trades! Yes we mean " ALL "

Unless they follow the right money management rules and having right psychology mind set...

These few forex trading rules in the currency market will prepare you to the sucess forex trader. With the right psychology and trading habit and techniques, forex beginner can also consistently profitable month after month in the forex trading market.

1. Make sure you use only the money that you can afford to. Be sure that you can afford to lose all of them without having affect your daily life. - Forex trading rule 1. If you can not afford to lose this sum of money, you should not trade forex. This is the 1st and most important trading rule.

2. Never put emotional feeling in the game. Do not take revenge on the market in the event that you have make a lost. If your emotions rule you, you will never able to be a successful trader.

3. Keep discipline in mind. If you have a bad trade that day, you cut your loses and keep moving forward by following your trading plan. Lack of discipline is the biggest reason that trader don't find success.

4. Make full use of all your charts. You should read all your yearly, monthly and weekly charts to help identify the support and resistance line. We will cover it the later chapter, move on..

5. Keep your trading system simple. The more complicated a trading system is, the harder it is to trade with. Simple trading rule will helps you make better trading decision.

6. Test out the demo version. Go live only when you acquire enough skill.

7. Good trading is all about knowledge, do not rely too much on news.Technical chart indicator gives you simple way to process data into useful information.

If you think you are ready, you may proceed forward to learn the basic forex trading or else, please leave the site. We can't emphasize further how important having the right psychology mind set is.

Tips to Make Money Fast in Forex

2010-05-17T22:18:00.004+05:30

This is all about making a fortune with Forex. Most traders just go with the flow and make average gains, with this article you will learn what makes some traders stand out and a lot richer than others!

We are going to assume that you know how to trade, and has quite an experience in trading.

With simple changes in your trade selection, money and risk management, and mindset, you can change that average gains into larger ones!

Fast money is in Forex, it is a lifestyle. here is it how its done.

Tip 1 . Embrace Changeability and Risk With a Smile

Forex systems have instability.

If you cannot manage and calculate your risk, then don't ever think about trading in Forex. Many traders back away from forex because of this ( why do you even traded in the first place?). But taking manageable risks has its rewards.

It's just simple, you know what your losing if ever it doesn't work out, yet what you gain is unpredictable but sure is high! That is what I call excitement, my friend.

To a well-educated Forex trader, this is something you shouldn't be afraid of, might as well embrace it.

Tip 2. Trade Less, gain more

Most traders think that if they don't trade, another door has closed, or miss some move. The tendency, they trade frequently. Most of the trades that come big come a few times in a year. Focus on the trades that make the really big gains. Be alert, and informed.

Tip 3. Diversify is a no-no

Most Investors accept the fact that diversification can make money fast - in reality it does exactly the opposite.

Tip 4. Money and Risk Management

This article has been concentrating on the Big gains, because this is your money, so every penny should be controlled, this is where money management kicks in.

Control your risks, but increase your chances of success:

- Give yourself staying power by buying options at or in the money, this prevents you from getting stopped out. Many traders lose not by the market direction, but because they were stopped out by a instable move, and options will give you staying power.

- Keep your stop in its original position - until the move is well in profit, before moving it up.

- Trading fast and selectively - have the courage to trade when you feel it is good. and enjoy the cash.

Tip 5. Compound growth has its benefits

The way to make money fast in forex, is to understand the power of compound growth. For example, if you target 50% a year in your trading, you can grow an initial $20,000 account, to over a million dollars, in under 10 years.

Break the norm, and gain more. Follow some of these tips and make your way into the big gains!

The Pros and Cons, of Trading a Forex Trading Demonstration Account

2010-05-17T22:18:00.003+05:30

Trading is a skill that takes time to learn. Think of it like Boxing it's also a skill that takes time to learn. If you get into a professional boxing ring without any training, you'll get beat up physically! If you get into the Forex ring without any training, you'll get beat up financially!

The similarities are that both the examples are Skills, and both require psychological preparation. The difference is that one is physical and the other is financial.

We can get over a physical beating usually in a few days or weeks, BUT a financial beating can be devastating and easily affect us for the rest of our lives, not only does it hurt our hip pocket but it can cause problems with our relationships and family. So when we get into the Forex ring we have to be prepared.

The Professional Boxer

When a professional boxer gets in the ring he has already been practicing in a safe environment usually for years, this safe environment is where he can make mistakes without having medical treatment. He can also spar with other opponents that have more skills and experience then he does and he learns from them. He also has someone there to watch him and give advice and guidance. Then when he is ready, he gets into the ring and boxes for real, he's accepted the risk and KNOWS that he can get hurt, but he's also studied his opponent and done his home work, so he KNOWS he has a good chance. He can still lose this round but if he wins most of them he will take the money home. BUT! What about the psychological side? Does he fear getting into the ring? Sometimes! But he's aware of it and he can control how it affects him in a way that is beneficial. Will he be thinking about the money he'll make? Or will he be thinking about the fight as is happens and planning his next moves during the breaks? He'll be analyzing the results from the previous rounds and making changes in his strategy for the next round.

The professional Trader

Can you see what's coming next? If so than, you've learnt to analyze what you read and form a projection into the future. (A very valuable skill for the FOREX Trader) A forex trader, like the professional boxer, will not get into the Forex trading ring without being prepared first. He might not spend years practicing in the Demonstration Account, but he will at least have spent a month or two or three, sparing with the Forex Market in a safe environment that he won't get beat up in. He'll practice trading forex against all the other traders and learn from them, and he'll also have someone watching him and giving advice, and guidance. Then when he is ready, he'll get into the Forex trading ring and trade forex for real, he's accepted the risk and KNOWS that he can get hurt, but he's also studied the Forex market and done his home work, so he KNOWS he has a good chance. He can still lose on this trade but if he wins most of the trades he will take the money home. BUT! What about the psychological side? Does he fear getting into the forex trading ring? Sometimes! But he's aware of this fear, but he can control how it affects him, in a way that is beneficial to his forex trading. Will he be thinking about the money he'll make? Or will he be thinking about the things that are influencing the market as is happens and planning his next trades while he waits for the results? He'll be analyzing the results from the previous trades and making changes in his strategy or continuing with the one that's working, and planning for the next Forex Trade.

So it's easy to see that trading with a Forex Trading Demonstration account is something everyone should do before getting into a live Forex Trading account.

The practice account will give the trader MOST of the skills necessary, to be able to trade profitably, giving them the training ring to spar in.

BUT A BIG WARNING!!!

Like the Boxer the Forex trader has learnt to manage his emotions, this is often overlooked by new Forex Traders. BUT is probably what separates the successful investor from the ones that keep getting beat up! If you are considering getting into the Forex trading Ring, then be sure to practice first, and find all the information you can about controlling your emotions. Fear, greed, impatience, are the main culprits of financial bashings, so keep an eye out for them, and learn how to beat them before you get in the ring with them. Understanding these emotions will enable you to use them to your advantage in understanding the market, the market is influence by these emotions and if you understand them you can have them on your side, thus giving you an advantage.

What is Forex?

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FOREX - the foreign exchange market or currency market or Forex is the market where one currency is traded for another. It is one of the largest markets in the world.

Some of the participants in this market are simply seeking to exchange a foreign currency for their own, like multinational corporations which must pay wages and other expenses in different nations than they sell products in. However, a large part of the market is made up of currency traders, who speculate on movements in exchange rates, much like others would speculate on movements of stock prices. Currency traders try to take advantage of even small fluctuations in exchange rates.

In the foreign exchange market there is little or no 'inside information'. Exchange rate fluctuations are usually caused by actual monetary flows as well as anticipations on global macroeconomic conditions. Significant news is released publicly so, at least in theory, everyone in the world receives the same news at the same time.

Currencies are traded against one another. Each pair of currencies thus constitutes an individual product and is traditionally noted XXX/YYY, where YYY is the ISO 4217 international three-letter code of the currency into which the price of one unit of XXX currency is expressed. For instance, EUR/USD is the price of the euro expressed in US dollars, as in 1 euro = 1.2045 dollar.

Unlike stocks and futures exchange, foreign exchange is indeed an interbank, over-the-counter (OTC) market which means there is no single universal exchange for specific currency pair. The foreign exchange market operates 24 hours per day throughout the week between individuals with forex brokers, brokers with banks, and banks with banks. If the European session is ended the Asian session or US session will start, so all world currencies can be continually in trade. Traders can react to news when it breaks, rather than waiting for the market to open, as is the case with most other markets.

Average daily international foreign exchange trading volume was $1.9 trillion in April 2004 according to the BIS study.

Like any market there is a bid/offer spread (difference between buying price and selling price). On major currency crosses, the difference between the price at which a market maker will sell ("ask", or "offer") to a wholesale customer and the price at which the same market-maker will buy ("bid") from the same wholesale customer is minimal, usually only 1 or 2 pips. In the EUR/USD price of 1.4238 a pip would be the '8' at the end. So the bid/ask quote of EUR/USD might be 1.4238/1.4239.

This, of course, does not apply to retail customers. Most individual currency speculators will trade using a broker which will typically have a spread marked up to say 3-20 pips (so in our example 1.4237/1.4239 or 1.423/1.425). The broker will give their clients often huge amounts of margin, thereby facilitating clients spending more money on the bid/ask spread. The brokers are not regulated by the U.S. Securities and Exchange Commission (since they do not sell securities), so they are not bound by the same margin limits as stock brokerages. They do not typically charge margin interest, however since currency trades must be settled in 2 days, they will "resettle" open positions (again collecting the bid/ask spread).

Individual currency speculators can work during the day and trade in the evenings, taking advantage of the market's 24 hours long trading day.

Some good things about Forex

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Forex is an online home based business that doesn’t need referring, recruiting and advertising. You only deal with the currencies through the Internet. So you will not have to reply any email, make any phone call and spend any money on advertising.

If you learn the Forex properly, you can make a lot of money. Forex can be your full time job that makes thousands of dollars for you every month. If you start working on Forex before you learn it properly, it can be risky and you will lose your money. It is like the driving. If you drive a car before you know how to drive, you will hurt yourself and others but if you learn it properly first, it will be pleasant and funny.

You can make a lot of money by spending a small amount of money. Unlike other investments like stock market that you have to invest a lot of money to make a reasonable profit, you can make a good income through investing small amount of money. For example, with a $5000 account, you can make about $5000 per month. Of course it highly depends on the way that you trade and the strategy that you follow but good and experienced traders can double their money every month.

Forex - and of course stock market - are the only businesses that competition has positive effect on them. It is amazing, isn’t it? Competition is the biggest problem in all other businesses but in Forex, it helps the traders to make more money. Why?

Supply and demand are the factors that determine the price in any market. When there are too many buyer and sellers, the price volatility will be much higher and the market will be more dynamic. The price will go up and down more frequently and this is what we need to make money. When the price goes up we buy and when it goes down we sell and make profit.

So if you choose Forex as your business, you will not have to be worried about competition.

Bottom line:

If you are looking for a professional work at home business to make money full time or part time, Forex is the best option. It can make reasonable money for you and on the other hand, you will not have to be worried about the issues like marketing, advertising, referring and recruiting and even you will not have to be worried about competition.

What Is Forex Trading?

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Forex trading is nothing more than direct access trading of different types of foreign currencies. In the past, foreign exchange trading was mostly limited to large banks and institutional traders. However recent technological advancements have made it so that small traders can also take advantage of the many benefits of forex trading just by using the various online trading platforms to trade.

The currencies of the world are on a floating exchange rate, and they are always traded in pairs. About 85 percent of all daily transactions involve trading of the major currencies. Four major currency pairs are usually used for investment purposes. They are: Euro against US dollar (EUR/USD), US dollar against Japanese yen (USD/JPY), British pound against US dollar (GBP/USD) and US dollar against Swiss franc (USD/CHF).

If you think one currency will appreciate against another, you may exchange that second currency for the first one and be able to "stay" in it. If everything goes as you plan it, eventually you may be able to make the opposite deal in that you may exchange this first currency back for that other and then collect profits from it. As a note bear in mind that no dividends are paid on currencies.

Transactions on the FOREX market are performed by dealers at major banks or FOREX brokerage companies. FOREX is a necessary part of the worldwide market, so when you are sleeping in the comfort of your bed, the dealers in Europe are trading currencies with their Japanese counterparts. Therefore, the FOREX market is active 24 hours a day and dealers at major institutions are working 24/7 in three different shifts. Clients may place take-profit and stop-loss orders with brokers for overnight execution. Price movements on the FOREX market are very smooth and without the gaps that you face almost every morning on the stock market. The daily turnover on the FOREX market is somewhere around $1.2 trillion, so a new investor can enter and exit positions without any problems.

The fact is that the FOREX market never stops; even on September 11, 2001 you could still get your hands on two-side quotes on currencies. The currency market is the largest and oldest financial market in the world. It is also called the foreign exchange market or FX market for short. It is the biggest and most liquid market in the world, and it is traded mostly through the 24 hour-a-day inter-bank currency market.

When you compare them, you will see that the currency futures market is only one per cent as big. Unlike the futures and stock markets, trading currencies is not centered on an exchange. Trading moves from major banking centers of the U.S. to Australia and New Zealand, to the Far East, to Europe and finally back to the U.S. it is truly a full circle trading game. In the past, the forex inter-bank market was not available to small speculators because of the large minimum transaction sizes and strict financial requirements. Banks, major currency dealers and sometimes even very large speculator were the principal dealers. Only they were able to take advantage of the currency market's fantastic liquidity and strong trending nature of many of the world's primary currency exchange rates.

Today, foreign exchange market brokers are able to break down the larger sized inter-bank units, and offer small traders like you and me the opportunity to buy or sell any number of these smaller units. These brokers give any size trader, including individual speculators or smaller companies, the option to trade at the same rates and price movements as the big players who once dominated the market.

What Is Rollover Interest In The Forex Market?

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In the spot forex market, all trades must be settled in two business days. A rollover refers to the process of closing open position for today's value date and the opening of the same position for the next day's value date at a price reflecting the difference in interest rates between the two currencies.

In accordance with international banking practices, Forex brokers automatically rolls over all open positions to the next date at 5 PM EST for settlement.

Rollover involves exchanging the position being held for a position expiring the following settlement date. For example, for trades executed on Monday, the value date is Wednesday.

However, if a position is opened on Monday and held overnight, the value date is now Thursday. The exception is a position opened and held overnight on Wednesday. The normal value date would be Saturday; because banks are closed on Saturday the value date is actually the following Monday. Due to the weekend, positions held overnight on Wednesday incur or earn an extra two days of interest.

Trades with a value date that falls on a holiday will also incur or earn additional interest. Forex Traders can earn interest on rollovers, depending on the direction of their positions and interest rate differential between the two currencies involved.

For instance, the primary interest rates in Great Britain are much higher than in Japan, so if a trader buys GBP, he/she will earn interest at 5 PM EST time. on the other hand, if he/she sells GBP in this currency pair, he/she will pay interest at 5 PM EST time.

Overnight Interest/Rollover is automatically paid to a client's account after buying a currency with greater Interest Rate in its country, and charged to a client's account if the country issuing this currency has smaller Primary Interest Rates.

Why Trade the FOREX?

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My purpose for writing this article is to demonstrate to you the advantages of trading on the Forex market. However, there is one myth that I want to dispel before I go further. The myth is that there is a difference between trading and investing. To dispel that myth I quote from Al Thomas, President of Williamsburg Investment Company, who wrote "If It Doesn't Go Up, Don't Buy It". He said "Everyone who invests is a trader, only the time period is different." It is a lesson that I took seriously after taking a beating in the stock market in 2000.

So now, let's compare features of currency trading to those of stock and commodity trading.

Liquidity — The Forex market is the most liquid financial market in the world around 1.9 trillion dollars traded everyday. The commodities market trades around 440 billion dollars a day, and the US stock market trades around 200 billion dollars a day. This ensures better trade execution and prevents market manipulation. It also ensures easily executable trading.

Trading Times — The Forex market is open 24 hours a day (except weekends) which means that in the US it opens at 3:00 pm Sunday (EST) and closes Friday at 5:00 (EST), allowing active traders to choose the times they want to trade. Commodities trading hours are all over the board depending on which commodity you are trading. Including extended trading times US stocks can be traded from 8:30 am to 6:30 pm (ET) on weekdays.

Leverage — Depending on your Forex account size, your leverage may be 100:1, although there are Forex brokers that offer leverage of up to 400:1 (not that I would ever recommend that kind of leverage). Leverage in the stock market can be as high as 4:1, and in the commodities market, leverage varies with the commodity traded but it can be quite high. Because the commodity markets are not as liquid as the Forex market, its leverage is inherently riskier. Although I was never shut out of a commodity trade by the day limit, the fear was always in the back of my mind.

Trading costs — Transaction costs in the Forex market is the difference between the buy and sell price of each currency pair. There are no brokerage fees. For both the stock and the commodity markets, there are transaction costs and brokerage fees. Even when you use discount brokers, those fees add up.

Minimum investment — You can open a Forex trading account for as little as $300.00. It took $5,000 for me to open my futures trading account.

Focus — 85% of all trading transactions are made on 7 major currencies. In the US stock market alone there are 40,000 stocks. There are just over 200 commodity markets, although quite a few are so illiquid that they are not traded except by hedgers. As you can see, the fewer number of instruments allows us to study each one more closely.

Trade execution — In the Forex market, trade execution is almost instantaneous. In both the equity and commodity markets, you count on a broker to execute your trades and their results are sometimes inconsistent.

While all of these features make trading the Forex market very attractive, it still requires a lot of education, discipline, commitment and patience. All trading can be risky.

Why Forex Trading is an Ideal Home Business

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Forex trading should be considered by anyone looking to start their own home based business. In this article, we will define Forex trading; explain its advantages over other business opportunities and discuss some pitfalls to avoid.

What is Forex trading?

"Forex" is short for "foreign exchange", and refers to the trading of monetary currencies.

Many people don't realize that currencies are traded, similar to stock trading. Since the value of each nation's currency is constantly fluctuating in relationship to other currencies, there are opportunities for you to profit.

Advantages of Forex trading as a home-based business.

There are several advantages of Forex trading including:

- You can adapt your participation to your own schedule

The Forex market is open for trading 24 hours per day, Monday through Friday, unlike the stock market or any other business in which you must work around "business hours". With Forex trading, you can work in the middle of the night if you want.

- Large marketplace

Forex trading is the largest marketplace in the world. It shadows all other markets, even the stock market. That means there is opportunity for anyone to participate. The daily trading volume is nearly 4 trillion dollars!

- Low barrier to entry

It takes less than $100 to get started Forex trading. If you can scrape together that amount of cash, even if it takes a garage sale or selling some of your extra stuff on eBay or Craigslist, you can jump into Forex trading.

Some pitfalls to watch out for.

Be aware of these potential problems if you decide to enter the Forex market:

- Investing decisions based on emotion rather than logic

As with any type of investing, it's very easy to get caught up in the prospect of making big money. Place some limits on yourself so that you don't use money you need for living expenses.

- Investing without a solid knowledge of the playing field

No serious athlete would step out onto the baseball diamond or basketball court without thoroughly understanding the "rules of the game", and neither should you venture into any type of investing without the same level of understanding.

- Trading too frequently

Although there are no "commissions" when trading Forex, you will be responsible to pay the "spread", which is the variance between the ask price and the bid price. If you do very many trades, these "spreads" can really add up. Just make sure you understand the cost of your trades before you make them.

Conclusion

Forex can be an ideal avenue for you to make extra money, or even as a foundation for a home-based business. It is wide open for anyone: you don't need to have any specific credentials or background. Why not take a share of this market today?

How to Make Extra Money Online - Online Trading

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Online Trading - Forex:

Online trading information can be confusing with all its terminologies. If you’ve ever changed some money for another currency at the bank for an overseas holiday, then you’ve traded one currency against another. And what happened when you returned home with a surplus of the foreign currency and exchanged it back for your own money? You made either a profit or a loss because exchange rates keep changing.

That’s what forex traders do - they take advantage of the rise and fall of one currency against another and hopefully, make a profit. But instead of using their bank, they work through a broker.

Online trading can be made 24 hours per day. This is because each day begins and ends at different times from one continent to the next, so currency trading never ends – except on weekends.

Stock market crashes and global recessions make no difference - currencies always rise and fall so you can always make money.

Email Marketing:
Email marketing involves nothing more than sending emails to your list of subscribers – to get them to buy products from you. If you do it right, you can make hundreds of thousands of dollars. But it does need a bit of know-how.

What if you have multiple lists and offers all going at the same time? A simple checklist can help you keep on track, and the benefits you reap include:

More product sales
Increases in affiliate income
Increasing backlinks to your website – thus further increasing page rank and web traffic
Increased backend income from multiple sales to existing customers
A never-ending flow of profit from various income streams

Email marketing begins with a list, but take care that you don't fall into the pitfalls of buying or renting lists. With a little work and organization (and persistence) you can grow your own list of subscribers who become repeat customers.

Internet Marketing:
Internet marketing does not promise overnight riches without effort, but it does promise a very lucrative business, freedom from the 9 - 5 grind and your insufferable boss.

It's from the comfort of your own home that you can be selling your services such as writing articles, blogs and forum comments for other people - whilst making money at the same time. You can even start in your spare time. You can also sell affiliate products for large commissions - no shipment costs and hassles, and no customer service worries.

No door-to-door selling needed - the people come to you instead. And it's all happens online. If you set it up really well, much of it will be fully automated - day and night.

You can even use your own ideas for putting together e-books on your favorite subjects and hobbies and sell them for 100% profit. Internet marketing is as limitless as the sky and opens up new horizons.

All About Forex – What You Need To Know

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In order to succeed successfully in Forex trading you need to know what the purpose of trading forex is. Forex trading as you know is the trading of online currency and the key to success is to buy low and sell high just as with any other market. You task as a forex trader is to try to determine the trend of the particular currency you are looking to either buy or sell and to utilise the forex trading strategies to ensure that a profit is made.

Now that you know the purpose of forex trading the next step in knowing all about forex is to understand the codes, definitions and numbers used when trading. All currencies used in forex trading are assigned a three letter code. An example of this is the US dollar which is USD or the Euro EUR. Online currency trading is done in combinations that are known as a cross and these are represented by 6 letter words with the more expensive currency coming first. An example of this is GBPUSD which will show you how many US Dollar you will need to pay for one British pound. These rates are shown as five digit numbers for example GPBUSD = 1.6262 which means that 1 British pound is worth 1.6262 US dollars. When the rate changes the change will be displayed in bold, e.g. GPBUSD = 1.6264 which will mean that the rate has moved by 2 points. Knowing this is the key to successful forex trading and your key to profit.

When you enter the forex trading market you will enter as a buyer or a seller of a particular currency. If you are a seller you price is known as the ASK price and the buyers price is known as the BID. You can only buy currency from a seller with an asking price the same as the BID price.

These are the main beginner’s points to note when it comes to forex trading and knowing what the purpose of trading forex is and knowing all about forex before you enter into the market can make a big difference when it comes to your profits.

Tutorial – Forex PIPS

This tutorial – Forex PIPS covers a term that is a short form of the phrase “Percentage In Point.” Because there is no uniform worldwide currency that puts currencies of all countries on a level playing field, the PIP has become the universally accepted method of measuring tiny price changes in global currencies.

Since the US dollar is so important when trading currencies, you may wonder why the USD isn’t used for this purpose, but the fact is the US dollar is not always involved in currency trade. In such cases the US dollar cannot be used to measure profits or losses.
PIPS not only measure profits and losses, they are also used to measure the “spread” – which is the difference between the bid and ask prices.

This is what Forex brokers base their fee on – the greater the spread, the greater the fee they get out of your profits.

And this is why you should find a broker who offers tighter spreads. This is also why you should do your trading during peak trading times when the trading hours of different countries coincide - brokers compete against each other and charge lower costs.

Forex PIPS - how they work

Forex PIPS vary from one country to the next depending on the currency used. Currencies are all quoted to 4 decimal points – except for the Japanese yen, which is taken to its 2nd decimal place.
Take for example the currency pair EUR/USD – if it was to rise from .9011 to .9012, you would have an increase of 1 PIP – so the PIP's value is .0001.

But if you were to trade in the currency pair USD/JPY, a price rise from 130.28 to 130.29 would also gain you 1 PIP – but in this case the PIP's value is .01. So the PIP’s monetary value differs.
If you decided to bid on the currency pair EUR/USD at .9000 and sell at .9008, your profit is 8 PIPS. You may think this is a very small profit but be aware that many people trade in very large lot sizes of $100,000 or more. In such cases this could result in some very large profits. By now you should be realizing that it’s PIP gains (and not losses) that you want.

In the case of the EUR/USD currency pair – bid price at 1.2640 with ask price 1.2642, the difference (spread) is 2 PIPS. In this case a PIP is 0.01% of a lot. And if you have a lot size of $200,000, 1 PIP would get you $20, whereas in the case of a smaller lot size such as $20,000, 1 PIP would be worth $2.

The above example shows the PIP value when the quote currency (the currency displayed on the right) is in US dollars – i.e. ???/USD. However when there is a different quote currency, 1 PIP is generally 10 units of that particular currency – for example, in the case of USD/EUR or EUR/GBP currency pairs, 1 PIP would be 10 Euros or 10 pounds respectively.

Rather than get caught up in the complexities of PIP calculations when trading currencies, many beginners start off using a Forex robot such as the IvyBot (see IvyBot review). This has the advantage of a “set & forget” system that automatically does your trading for you. It gives you the time to take on a more serious tutorial. Forex training such as offered by the Hector Trader Course is important – the more you know, the better your profits.