There are always risks to FOREX trading, even if your broker is quite reputable. All investments and transactions meet the whole set of risks because of sudden rate changes, changing market conditions and different political events.
Many factors are the reason for these risks. Just a few examples are: the main company's goals; the scheme how these goals are reached; the successful company's administration that guarantees its long functioning and at last ability to oppose any force-majeure with company's own resources.
Other constituents such as - the company's "age", the building in the center of the town, spacious impressive office and the polite staff - are not so important for success. Forex market started functioning quite lately, approximately 20 years ago and since then stands independently from other markets, first of all because it is out of the exchange. Banks made up its primary participants. As communication facilities and automation were developing banks started trading "directly" without any intermediaries such as stock exchanges. Many "classical" financiers criticize and disregard Forex as there's not a single chance of limiting and regulating it legislatively inside one state - from the very start this market became a global phenomenon. However many European and North American banks withdraw their main income in particular from speculative operations on Forex market whereas the number of the staff working in other market sectors is permanently decreasing.
Forex market's broker doesn't need any licenses and certificates for his activity as he is considered to be just a legal person. That's why Forex market on the whole also doesn't run into any "legislative limits" inside countries, and in many states is equated to the games' organization.
So it's important to mention that there are no regulations for Forex market, even despite of great number of complicated problems and risks - such as the risk connected with market prices' changes. Confidence and conscientiousness of carrying out the operations, a lucidity and marketing of Forex brokers are only some of the problems, managed of Forex risks. However, first of all, it's important to know, that broker companies can't operate in a single stock exchange in compliance with all problems and risks, in contrast to quite adaptable exchange markets.
It's absolutely necessary for any FOREX trader to know at least the main rules of technical analysis and reading financial charts, to have experience of studying chart changes and indicators and interpreting of these very charts. This is a certain way of decreasing risk and financial exposure.
However each FOREX transaction should be transmitted using all existing tools specially designed to reduce loss as even the most professional traders can't exactly predict market's future behavior. Many ways to minimize risks when placing an entry order were elaborated. Among them are different types of stop-loss orders. A stop-loss order is a special code of rules explaining how one can leave his position if the currency price amounts to a certain point. A stop loss order is placed below current market price if a person takes the so-called long position and expects the price to go up. On the contrary, stop-loss order is placed above current market price if a person takes the so-called short position and expects the price to go down.
As an example, if you take a short position on USD/CDN it means you expect the US dollar to fall against the Canadian dollar. The quote is USD/CDN 1.2138/43 - you can sell US$1 for 1.2138 CDN dollars or sell 1.2143 CDN dollars for US$1.
You place an order in the following way:Sell USD: 1 standard lot USD/CDN @ 1.2138 = $121,380 CDNPip Value: 1 pip = $10Stop-Loss: 1.2148Margin: $1,000 (1%)
You are selling US$100,000 and buying CDN$121,380. Your stop loss order will be executed if the dollar goes above 1.2148, in which case you will lose $100.
However, USD/CDN falls to 1.2118/23. You can now sell $1 US for 1.2118 CDN or sell 1.2123 CDN for $1 US.
Still no existing institution is able to control this market for long on account of the huge volume of FOREX. Whatever you do in the end market forces will still be stronger, making FOREX one of the most open and fair investment opportunities available.
Usually one comes across prices of foreign exchange by FOREX quotes in pairs of currencies where the first currency is the 'base' and the second is the 'quote' currency, for instance: USD/EUR = 0.8419. Here we find out that 1 US dollar costs 0.8419 Euros. Why? The foregoing currency pair "transfers" US dollars (USD) into European Euros (EUR). The base currency always stands in the first place and the second, quote, currency shows the price for one unit of the base currency.
And on the contrary, the pair EUR/USD = 1.1882 clearly indicates that 1 Euro costs 1.1882 US dollars today.
With the help of these quotes it's quite easy to follow the changes in the financial market. If the base currency is becoming stronger, the price of the quote currency rises and this fact indicates that one unit of the base currency will buy more of the quote currency. However, if the base currency loses scores, the quote currency immediately goes down.
Usually one counts FOREX quotes as "demand and supply" - in the so-called "bid" and "ask" prices. The amount of money demanded for the base currency - while selling the quote currency - is called "bid" and the price expected for the base currency - while buying the quote currency - is "ask" price.
How to define in the cross-currency charts which currency - the base or the quote - is on the top and which on the side? If that's the case, the broker should know at least one pair of currencies and which one of the pair values more.
Stop and limit orders will definitely help yon to minimize your Forex risks
Monday, April 13, 2009
Forex New Pattern
I have to confess that I don't trade trade the forex markets during important economic announcements and news releases as I've never personally found it to be profitable. However that's not to say that there aren't people who do make decent profits from trading the news.
For those of you who are interested in trading news announcements, I've recently come across what appears to be a very useful site. It shows you what happened to the price of the major currency pairs after previous announcements, so the theory is that you can use this information as a guide to determining how the major pairs are likely to react to forthcoming announcements.
I'm not totally convinced that you can use past price moves to indicate future reactions but it's an interesting site nevertheless. Here's the link so you can check it out yourself:
For those of you who are interested in trading news announcements, I've recently come across what appears to be a very useful site. It shows you what happened to the price of the major currency pairs after previous announcements, so the theory is that you can use this information as a guide to determining how the major pairs are likely to react to forthcoming announcements.
I'm not totally convinced that you can use past price moves to indicate future reactions but it's an interesting site nevertheless. Here's the link so you can check it out yourself:
Forex Trading Made EZ Review
I was browsing through several forex websites yesterday looking for a potential short-term strategy I could use to compliment my current longer term strategy. Anyway I happened to stumble across a product called Forex Trading Made EZ which was getting a lot of positive comments from people who had purchased the system, so I thought I would buy it myself and see if it was any good.
I have to say that I can see why Forex Trading Made EZ was getting so many rave reviews. It really is a great short-term trading system.
The creator of the system is a man called George Smith who is a retired airline pilot who now spends a few hours a day trading the forex markets with the aim of achieving 20-25 points a day.
He does this by targeting several winning trades of 5 or more points, which when combined gives you this daily target and it seems to work very well. All he does is identify the longer term trend on the 15 minute chart and then takes small chunks out of this trend using the 5 minute and 1 minute charts.
It really is very effective. He favours the EUR/USD pair but I personally prefer trading the GBP/USD pair as it has slightly bigger price moves and have so far had 3 winners out of 3 since yesterday afternoon giving me an overall profit of 26 points after deducting the spread. I've even had success trading the FTSE 100 using this method via my spread betting account.
So if you are looking for a short-term trading system, I can definitely recommend you check out the Forex Trading Made EZ system. When you buy the course, you receive an 80-page ebook and several accompanying videos so it is very simple to learn and despite the fact that is doesn't use many technical indicators, it does seem to be extremely effective and it's certainly a method that I plan on using quite a lot in the future.
If you want to find out more about this Forex Trading Made EZ system, you can do so by clicking here.
I have to say that I can see why Forex Trading Made EZ was getting so many rave reviews. It really is a great short-term trading system.
The creator of the system is a man called George Smith who is a retired airline pilot who now spends a few hours a day trading the forex markets with the aim of achieving 20-25 points a day.
He does this by targeting several winning trades of 5 or more points, which when combined gives you this daily target and it seems to work very well. All he does is identify the longer term trend on the 15 minute chart and then takes small chunks out of this trend using the 5 minute and 1 minute charts.
It really is very effective. He favours the EUR/USD pair but I personally prefer trading the GBP/USD pair as it has slightly bigger price moves and have so far had 3 winners out of 3 since yesterday afternoon giving me an overall profit of 26 points after deducting the spread. I've even had success trading the FTSE 100 using this method via my spread betting account.
So if you are looking for a short-term trading system, I can definitely recommend you check out the Forex Trading Made EZ system. When you buy the course, you receive an 80-page ebook and several accompanying videos so it is very simple to learn and despite the fact that is doesn't use many technical indicators, it does seem to be extremely effective and it's certainly a method that I plan on using quite a lot in the future.
If you want to find out more about this Forex Trading Made EZ system, you can do so by clicking here.
Forex Trading Machine Review
Avi Frister's Forex Trading Machine is essentially an ebook package consisting of three profitable forex trading systems that the author uses to great success, and best of all they are all price-driven, which means that no technical analysis is required.
It sounds impressive but can you really be a profitable forex trader using only price as your leading indicator?
Well Avi Frister has spent many years studying hundreds of technical indicators, systems and strategies, and finally came to this exact conclusion, that the only indicator you really need is price.
The 180-page Forex Trading Machine package is basically the result of his studies, and includes three unique strategies that you can use to successfully trade forex currencies. So what are these trading strategies?
Well without wanting to give too much away, they are as follows:
1) Forex Cash Cow Strategy
This is a great strategy for less experienced traders and those who have full-time jobs because it doesn't require you to be constantly watching the market all day, and is completely mechanical. It basically requires a few minutes of your time at the end of the trading day to look for possible set-ups and then place your orders if the criteria are met.
This is more of a long-term strategy as you will have to be patient and wait for suitable entries (you may only get a handful of set-ups per month), but when you do get good set-ups it's proven to be a very profitable method, yielding 100+ pips profit, and is fairly low risk as well.
2) Forex Runner Strategy
If day trading is more your thing then you may well find this method (and the next one) more suitable. This is another mechanical system that again does not use any technical indicators, but this strategy produces far more set-ups.
Indeed I've had great success using this method just trading the GBP/USD pair during the day, and although not perfect (what system is?), it is a profitable system because it keeps your losses to a minimum and aims to produce a far greater profit with each trade.
3) Forex Flip And Go Strategy
Another day trading method, this is arguably my favourite strategy as it aims to produce consistent profits of around 40 pips and limits your losses to around 15 points or less.
It focuses on the EUR/USD pair, and generates profits by taking a slice of the daily trading range of this pair, and takes advantage of the pair's unique behaviour.
So to conclude this review, I should state that this ebook package detailing three profitable forex trading strategies is of course not the holy grail which so many are looking for (it doesn't exist), and you will still incur occasional losses whichever method you use.
However, in the long run, with losses deliberately kept small, each of these strategies should produce consistent profits over time, and the best thing is that you don't have to use any technical analysis at all. Price is the only indicator you will need.
Overall, I can highly recommend this product as each strategy is easy to follow and implement,
and more importantly is capable of producing regular profits.
It sounds impressive but can you really be a profitable forex trader using only price as your leading indicator?
Well Avi Frister has spent many years studying hundreds of technical indicators, systems and strategies, and finally came to this exact conclusion, that the only indicator you really need is price.
The 180-page Forex Trading Machine package is basically the result of his studies, and includes three unique strategies that you can use to successfully trade forex currencies. So what are these trading strategies?
Well without wanting to give too much away, they are as follows:
1) Forex Cash Cow Strategy
This is a great strategy for less experienced traders and those who have full-time jobs because it doesn't require you to be constantly watching the market all day, and is completely mechanical. It basically requires a few minutes of your time at the end of the trading day to look for possible set-ups and then place your orders if the criteria are met.
This is more of a long-term strategy as you will have to be patient and wait for suitable entries (you may only get a handful of set-ups per month), but when you do get good set-ups it's proven to be a very profitable method, yielding 100+ pips profit, and is fairly low risk as well.
2) Forex Runner Strategy
If day trading is more your thing then you may well find this method (and the next one) more suitable. This is another mechanical system that again does not use any technical indicators, but this strategy produces far more set-ups.
Indeed I've had great success using this method just trading the GBP/USD pair during the day, and although not perfect (what system is?), it is a profitable system because it keeps your losses to a minimum and aims to produce a far greater profit with each trade.
3) Forex Flip And Go Strategy
Another day trading method, this is arguably my favourite strategy as it aims to produce consistent profits of around 40 pips and limits your losses to around 15 points or less.
It focuses on the EUR/USD pair, and generates profits by taking a slice of the daily trading range of this pair, and takes advantage of the pair's unique behaviour.
So to conclude this review, I should state that this ebook package detailing three profitable forex trading strategies is of course not the holy grail which so many are looking for (it doesn't exist), and you will still incur occasional losses whichever method you use.
However, in the long run, with losses deliberately kept small, each of these strategies should produce consistent profits over time, and the best thing is that you don't have to use any technical analysis at all. Price is the only indicator you will need.
Overall, I can highly recommend this product as each strategy is easy to follow and implement,
and more importantly is capable of producing regular profits.
Here' s 3 Strategies You Can Use To Trade Forex Breaksouts....
One of the most popular methods traders use to trade the markets is breakout trading. This is where you wait for a price consolidation in a tight trading range and take a position when the price breaks out of this range. So with that in mind, here's 3 simple strategies you can use to trade forex breakouts:
1. Price Consolidation
This is the simplest form of breakout trading because it doesn't involve any technical indicators. You simply wait for a period of low volatility where the price is stuck in a very tight range. Then you go long when it breaks upwards out of this range and vice versa.
One way of doing this is by plotting a bar or candlestick chart and waiting until a sequence where you get 1 large bar and 4 subsequent bars that all lie within the initial bar's high and low point. Then you simply wait until the high or low point of the initial larger bar is broken and trade in the same direction.
2. Bollinger Bands
Bollinger bands are also a useful tool for identifying breakout situations. All you do is wait until the outer two lines of the Bollinger Band indicator narrow, and then take a position when one of these lines is breached.
3. Exponential Moving Averages (EMA's)
A method I like to use sometimes involves multiple EMA's, namely the 5, 20, 50 and 200 period EMA's. All you do is wait until all of these indicators are all very close to each other , and then wait for the shorter-term EMA, ie the EMA (5) to lead the breakout one way or the other.
(If you would like details of my main trading strategy, please subscribe to my newsletter by filling in the short form above).
1. Price Consolidation
This is the simplest form of breakout trading because it doesn't involve any technical indicators. You simply wait for a period of low volatility where the price is stuck in a very tight range. Then you go long when it breaks upwards out of this range and vice versa.
One way of doing this is by plotting a bar or candlestick chart and waiting until a sequence where you get 1 large bar and 4 subsequent bars that all lie within the initial bar's high and low point. Then you simply wait until the high or low point of the initial larger bar is broken and trade in the same direction.
2. Bollinger Bands
Bollinger bands are also a useful tool for identifying breakout situations. All you do is wait until the outer two lines of the Bollinger Band indicator narrow, and then take a position when one of these lines is breached.
3. Exponential Moving Averages (EMA's)
A method I like to use sometimes involves multiple EMA's, namely the 5, 20, 50 and 200 period EMA's. All you do is wait until all of these indicators are all very close to each other , and then wait for the shorter-term EMA, ie the EMA (5) to lead the breakout one way or the other.
(If you would like details of my main trading strategy, please subscribe to my newsletter by filling in the short form above).
What Are The Different Types Of Technical Indicators ?
If you open up any charting package and attempt to put some form of technical indicator alongside the price, you will usually be presented with endless different technical indicators to assist you with your trading.
This can be slightly overwhelming when you first start using technical analysis, because you don't know which indicators are best, what information they are conveying, or how to interpret the data. So in today's article I'm going to briefly discuss the different types of technical indicators available to you.
There are basically four different types of technical indicators:
1. Trend indicators.
These indicators are used to indicate the direction of a trend. These are very useful because the basic rule is that you should always trade with a trend and not against it. Some examples of trend following indicators include Parabolic SAR, MACD and Moving Averages.
2. Momentum indicators.
Momentum or strength indicators are used to indicate the speed or strength of a move in price and are best used to determine a change in direction. They tend to be oscillating indicators showing overbought and oversold positions. Examples include CCI, RSI and Stochastics.
3. Volatility indicators.
These indicators, as the name suggests, show a change in volatility, which often leads to a change in price. Examples include ATR, Bollinger Bands and Envelopes.
4. Volume indicators.
Volume indicators are used to show the volume of trading in a particular currency. These are useful to confirm the direction of a trend or to signal a breakout. For example, if the pair trades in a narrow range and then breaks out on high volume, then this is a very bullish signal. Examples of volume indicators include Chaikin Money Flow, Demand Index and OBV.
The ideal charting set-up should have at least one indicator of each kind, but it's also important to remember that technical analysis is not foolproof. It's there to help you make trading decisions, but no indicator or set of indicators will give you a 100% success rate.
I've only touched on some of the technical indicators in this article and will discuss each one in more depth at a later date.
For more forex tips and strategies, including full details of my main 4 hour trading strategy, simply sign up to my newsletter by filling in the short form above.
This can be slightly overwhelming when you first start using technical analysis, because you don't know which indicators are best, what information they are conveying, or how to interpret the data. So in today's article I'm going to briefly discuss the different types of technical indicators available to you.
There are basically four different types of technical indicators:
1. Trend indicators.
These indicators are used to indicate the direction of a trend. These are very useful because the basic rule is that you should always trade with a trend and not against it. Some examples of trend following indicators include Parabolic SAR, MACD and Moving Averages.
2. Momentum indicators.
Momentum or strength indicators are used to indicate the speed or strength of a move in price and are best used to determine a change in direction. They tend to be oscillating indicators showing overbought and oversold positions. Examples include CCI, RSI and Stochastics.
3. Volatility indicators.
These indicators, as the name suggests, show a change in volatility, which often leads to a change in price. Examples include ATR, Bollinger Bands and Envelopes.
4. Volume indicators.
Volume indicators are used to show the volume of trading in a particular currency. These are useful to confirm the direction of a trend or to signal a breakout. For example, if the pair trades in a narrow range and then breaks out on high volume, then this is a very bullish signal. Examples of volume indicators include Chaikin Money Flow, Demand Index and OBV.
The ideal charting set-up should have at least one indicator of each kind, but it's also important to remember that technical analysis is not foolproof. It's there to help you make trading decisions, but no indicator or set of indicators will give you a 100% success rate.
I've only touched on some of the technical indicators in this article and will discuss each one in more depth at a later date.
For more forex tips and strategies, including full details of my main 4 hour trading strategy, simply sign up to my newsletter by filling in the short form above.
What Are The Most Treded Forex Currencies?
If you have a look at the currencies available to trade via your chosen forex broker you will probably come across lots of different currencies you can trade, some of them quite obscure. However most traders ignore a lot of these smaller currency pairs and focus on the most popular pairs as these conform the best to technical analysis as well as having the tightest spreads.
The most popular currencies are the The most popular currencies are the USD, EUR, GBP, JPY, CAD, CHF, AUD and NZD, and the most traded currency pairs are as follows:
EUR/USD
USD/JPY
GBP/USD
USD/CAD
AUD/USD
USD/CHF
EUR/JPY
GBP/JPYI personally only tend to focus on the top three pairs in this list as they give me the most success, although I sometimes trade the GBP/JPY as well. The trick is to find those pairs that give you the most profits from your preferred trading method.
(For full details of my trading strategy, plus regular news updates, tips and strategies, please sign up to my newsletter by filling in the form to the right).
The most popular currencies are the The most popular currencies are the USD, EUR, GBP, JPY, CAD, CHF, AUD and NZD, and the most traded currency pairs are as follows:
EUR/USD
USD/JPY
GBP/USD
USD/CAD
AUD/USD
USD/CHF
EUR/JPY
GBP/JPYI personally only tend to focus on the top three pairs in this list as they give me the most success, although I sometimes trade the GBP/JPY as well. The trick is to find those pairs that give you the most profits from your preferred trading method.
(For full details of my trading strategy, plus regular news updates, tips and strategies, please sign up to my newsletter by filling in the form to the right).
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