Can forex trading software realy give you an advantage

Using the best forex trading software online can definitely give you an advantage over other traders in the market because of the efficiency and advanced technology. Even veteran traders are turning to forex trading software online and leaving behind the old ways of manual trading. This software is the most accurate way to track currency pairs by analyzing and interpreting their movements. While there are a lot of platforms available, the one major difference is that they can be computer-based or online-based.

Most users prefer to use the online or web-based versions because of their ability to update in real-time. A lot of users also state that forex trading software online offers more features than its counterpart. Because it is online software, it is much easier to stream the newest real-time information as long as you have a reliable high speed internet connection. The desktop version of this software requires installation to your personal computer and other support for the data. Online versions also offer more security since they use encrypted data servers for their users. When using an offline desktop version your financial and personal data is more exposed and easily accessed by hackers. At the same time, you are also more vulnerable to spyware, adware and malware which can not only destroy your data, but you entire computer as well.

Forex trading software online offers high security because it is a priority. Your data does not need to be worried about and your computer will not be hacked through these websites if you choose a vendor that is reliable. With forex trading software online you will definitely have an advantage over competitors because of its quickness and security. Online software also has mobility which means you can access it from any computer, any time.

Popular Technical Analysis Tools

Technical Analysis is probably the most common and successful method of making trading decisions and analyzing forex and commodities markets.

Technical analysis differs from fundamental analysis in that technical analysis is applied only to the price action of the market, ignoring fundamental factors. As fundamental data can often provide only a long-term or "delayed" forecast of exchange rate movements, technical analysis has become the primary tool with which to successfully trade shorter-term price movements, and to set stop loss and profit targets.

Technical analysis consists primarily of a variety of technical studies, each of which can be interpreted to generate buy and sell decisions or to predict market direction.

Support and Resistance Levels

One use of technical analysis, apart from technical studies, is in deriving "support" and "resistance" levels. The concept here is that the market will tend to trade above its support levels and trade below its resistance levels. If a support or resistance level is broken, the market is then expected to follow through in that direction. These levels are determined by analyzing the chart and assessing where the market has encountered unbroken support or resistance in the past.

Popular Technical Analysis Tools

Moving Averages (MA) : Indicators used to smooth price fluctuations and identify trends. The most basic type of moving average, the simple moving average, is the average of the past x bars ending with the current bar;

Moving Average Convergence Divergence (MACD) : Indicator that utilizes moving averages to identify possible trends and an oscillator to determine when a trend is overbought or oversold ;

Bollinger Bands : Bands that are placed x moving average standard deviations above and below a simple MA line ;

Fibonacci Retracement Levels : Indicator used to identify potential levels of support and resistance;

Directional Movement Index (DMI) : A positive line (+DI) measuring buying and a negative line (-DI) measuring selling pressure;

Relative Strength Index (RSI) : Momentum oscillator that is plotted on a vertical scale from 0 to 100;

Stochastics : Momentum oscillator that measure momentum by comparing the recent close to the absolute price range (high of the range minus the low of the range) over a period of x bars;

Trendlines : Straight line on a chart that connects consecutive tops or consecutive bottoms of prices and is utilized to identify levels of support and resistance;

Technical Analysis By Currency Traders

Technical analysis is a method used by currency traders to predict price movements and future market trends by studying what has occurred in the past using charts. Technical analysis is concerned with what has actually happened in the market, rather than what should happen, and takes into account the price of instruments and the volume of trading, and creates charts from that data as a primary tool. One major advantage of technical analysis is that experienced analysts can follow many markets and market instruments simultaneously.

Technical analysis is built on three essential principles :

1.
Market action discounts everything! This means that the actual price is a reflection of everything that is known to the market that could affect it. Some of these factors are : fundamentals (inflation, interest rates, etc.), supply and demand, political factors and market sentiment. However, the pure technical analyst is only concerned with price movements, not with the reasons for any changes.
2.
Prices move in trends. Technical analysis is used to identify patterns of market behavior that have long been recognized as significant. For many given patterns there is a high probability that they will produce the expected results. There are also recognized patterns that repeat themselves on a consistent basis.
3.
History repeats itself. Forex chart patterns have been recognized and categorized for over 100 years, and the manner in which many patterns are repeated leads to the conclusion that human psychology changes little over time. Since patterns have worked well in the past, it is assumed that they will continue to work well into the future.

Want to learn more about the advantages and disadvantages of Technical analysis? Get complete currency trading eBook FREE Download it NOW!

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Good News For the Dollars

Over the past six months it seems like almost every major finance magazine has published an article related to the weakness of the dollar. If you are a currency trader like I am then this topic is particularly relevant to you because you need to know what the long-term trends of each currency are so that you can make profitable trades.

What you probably have not been reading about in the news are some of the events that have been happening behind the scenes or that will be happening in the near future, and why the American economy will ultimately regain its strength.

The single most significant factor affecting the American dollar is the trade balance, and the biggest portion of this problem is related to our war in the Middle East that should never have been authorized, yet is still costing us billions of dollars every single day. I will not spend a lot of time talking about the horrendous actions of the Bush administration (namely that they defrauded their way into office in order to wage a cultural genocide for the sake of gaining control over oil), but there are truly good things that have been happening behind the scenes and that will be happening in the near future.

You will not hear about many of these things in the mass media news outlets in America such as CNN and ABC, and there is an exceedingly simple reason why these manipulated news networks try to convince the American people that there is a threat of danger when really none exists at all: War is profitable. There are powerful groups in our world today whose agendas are motivated by greed and control, and these people engage in heartless wartime profiteering so that they may satisfy their lust for power. But it is not all bad: I will discuss some of the wondrous events that are causing these groups to rapidly lose their power, and what all of this information means for the currency markets.

The Bush Administration has dropped to single-digit approval ratings, and millions of Americans have gone to websites such as Impeach Bush and spoken out about their opinions of why this man is no longer our leader. Dennis Kucinich, a representative from my home state of Ohio that I have had the pleasure of meeting, is leading the way for the eventual impeachment and forcible removal from office of Bush and his war-mongering cronies.

The Bush Administration has inadvertently caused a global recession with their desire to wage a heartless war, and the signs are strong that the global community has finally come together and told these warmongers “Enough!” They are rapidly losing power as people are becoming more conscious and aware of the fact that they have been lied to by the controlled mass media outlets.
If you are looking for really good forex trading opportunities, I would be willing to bet that when the news releases come out stating things such as Bush’s impeachment or other things that peace-loving people the world over are working to create, there will be a large jump in the value of the dollar in the window of a day or two.

The really good news for the dollar and for the American people is coming from Japan. The Japanese are the largest holders of foreign dollar reserves (around $5 trillion dollars), and they have openly declared that they will no longer fund the American war effort.

The reason why I remain optimistic about the future of the American economy is because of the two main presidential candidates that have come forward to lead our country. In my mind (and in accordance with recent political data), the two main candidates in the 2008 presidential election will be Barack Obama and Ron Paul. Both of these men are benevolent leaders and are sufficiently equipped to rectify the errors of the Bush Administration, and Ron Paul has openly stated that he will abolish the Federal Reserve and the IRS to create a more prosperous America.

In the last paragraph, notice that I said the “American economy” and not the dollar. This is an important point, because many benevolent and powerful leaders are discussing new potential monetary systems for the United States that can lead to greater prosperity. The Federal Reserve system is based upon perpetual debt, and it is not sustainable because it steals wealth from the American people and puts it into the pockets of a few. This is all very good news, and so you may be wondering how this plays into your forex trading.

The dollar will continue to go down so long as our war is not stopped, and so for the next few months until the Bush Administration is forcibly removed from office or until they simply fade away to be replaced by a new leader, there will still be a downwards trend for the USD.
After our war ends due to internal political pressure from our benevolent leaders as well as financial pressure from the Japanese, many Japanese leaders are discussing the possibility of using their foreign dollar reserves to create a global humanitarian mission where they can bring knowledge and modern telecommunications access to countries that have not been able to provide it for themselves.

As this happens the American economy will regain strength because our trade balance will become much more sustainable. So ultimately for your forex trading, the downwards trend for the dollar will continue until these big benevolent changes occur, afterwards the American economy (as well as the global economy as a whole) will regain its stability.

TheCurrencyMarkets.com

Fundamental Anlysis, what its ?

In this section we are going to review the basics of fundamental analysis, examine how it can be broken down into quantitative and qualitative factors, introduce the subject of intrinsic value and conclude with some of the downfalls of using this technique.

The Very Basics

When talking about stocks, fundamental analysis is a technique that attempts to determine a security’s value by focusing on underlying factors that affect a company's actual business and its future prospects. On a broader scope, you can perform fundamental analysis on industries or the economy as a whole. The term simply refers to the analysis of the economic well-being of a financial entity as opposed to only its price movements. Fundamental analysis serves to answer questions, such as :

*
Is the company’s revenue growing?
*
Is it actually making a profit?
*
Is it in a strong-enough position to beat out its competitors in the future?
*
Is it able to repay its debts?
*
Is management trying to "cook the books"?

Of course, these are very involved questions, and there are literally hundreds of others you might have about a company. It all really boils down to one question: Is the company’s stock a good investment? Think of fundamental analysis as a toolbox to help you answer this question. Note: The term fundamental analysis is used most often in the context of stocks, but you can perform fundamental analysis on any security, from a bond to a derivative. As long as you look at the economic fundamentals, you are doing fundamental analysis. For the purpose of this tutorial, fundamental analysis always is referred to in the context of stocks.

Fundamentals: Quantitative and Qualitative

You could define fundamental analysis as “researching the fundamentals”, but that doesn’t tell you a whole lot unless you know what fundamentals are. As we mentioned in the introduction, the big problem with defining fundamentals is that it can include anything related to the economic well-being of a company. Obvious items include things like revenue and profit, but fundamentals also include everything from a company’s market share to the quality of its management. The various fundamental factors can be grouped into two categories: quantitative and qualitative. The financial meaning of these terms isn’t all that different from their regular definitions. Here is how the MSN Encarta dictionary defines the terms :

*
Quantitative – capable of being measured or expressed in numerical terms.
*
Qualitative – related to or based on the quality or character of something, often as opposed to its size or quantity.

In our context, quantitative fundamentals are numeric, measurable characteristics about a business. It’s easy to see how the biggest source of quantitative data is the financial statements. You can measure revenue, profit, assets and more with great precision. Turning to qualitative fundamentals, these are the less tangible factors surrounding a business - things such as the quality of a company’s board members and key executives, its brand-name recognition, patents or proprietary technology.

Quantitative Meets Qualitative

Neither qualitative nor quantitative analysis is inherently better than the other. Instead, many analysts consider qualitative factors in conjunction with the hard, quantitative factors. Take the Coca-Cola Company, for example. When examining its stock, an analyst might look at the stock’s annual dividend payout, earnings per share, P/E ratio and many other quantitative factors. However, no analysis of Coca-Cola would be complete without taking into account its brand recognition. Anybody can start a company that sells sugar and water, but few companies on earth are recognized by billions of people. It’s tough to put your finger on exactly what the Coke brand is worth, but you can be sure that it’s an essential ingredient contributing to the company’s ongoing success.

The Concept of Intrinsic Value

Before we get any further, we have to address the subject of intrinsic value. One of the primary assumptions of fundamental analysis is that the price on the stock market does not fully reflect a stock’s “real” value. After all, why would you be doing price analysis if the stock market were always correct? In financial jargon, this true value is known as the intrinsic value. For example, let’s say that a company’s stock was trading at $20. After doing extensive homework on the company, you determine that it really is worth $25. In other words, you determine the intrinsic value of the firm to be $25. This is clearly relevant because an investor wants to buy stocks that are trading at prices significantly below their estimated intrinsic value. This leads us to one of the second major assumptions of fundamental analysis: in the long run, the stock market will reflect the fundamentals. There is no point in buying a stock based on intrinsic value if the price never reflected that value. Nobody knows how long “the long run” really is. It could be days or years. This is what fundamental analysis is all about. By focusing on a particular business, an investor can estimate the intrinsic value of a firm and thus find opportunities where he or she can buy at a discount. If all goes well, the investment will pay off over time as the market catches up to the fundamentals.

The big unknowns are :

1.
You don’t know if your estimate of intrinsic value is correct; and
2.
You don’t know how long it will take for the intrinsic value to be reflected in the marketplace.

Criticisms of Fundamental Analysis

The biggest criticisms of fundamental analysis come primarily from two groups: proponents of technical analysis and believers of the “efficient market hypothesis”. Technical analysis is the other major form of security analysis. We’re not going to get into too much detail on the subject.

Year after year, key players in the Forex market make a killing by picking the right currencies – now it’s your turn. Access industry gurus Boris and Kathy’s exclusive FREE report, The Five Things That Move the Currency Market – And How to Profit From Them, right now! Put simply, technical analysts base their investments (or, more precisely, their trades) solely on the price and volume movements of securities. Using charts and a number of other tools, they trade on momentum, not caring about the fundamentals. While it is possible to use both techniques in combination, one of the basic tenets of technical analysis is that the market discounts everything. Accordingly, all news about a company already is priced into a stock, and therefore a stock’s price movements give more insight than the underlying fundamental factors of the business itself. Followers of the efficient market hypothesis, however, are usually in disagreement with both fundamental and technical analysts. The efficient market hypothesis contends that it is essentially impossible to produce market-beating returns in the long run, through either fundamental or technical analysis. The rationale for this argument is that, since the market efficiently prices all stocks on an ongoing basis, any opportunities for excess returns derived from fundamental (or technical) analysis would be almost immediately whittled away by the market’s many participants, making it impossible for anyone to meaningfully outperform the market over the long term.

By Cory Janssen, Co-Founder, Investopedia.com; Ben McClure, Contributor - Investopedia Advisor and Investopedia Staff, (Investopedia.com)

Finding Big Profits With Online Forex Trading

Investors want to see a huge return on any investment that they make. With Forex online trading, investors can receive the significant profits on a small outlay. Forex trading requires investors to learn some simple terminology that will help to make their Forex, or foreign exchange, trading much better and easier.

With Forex online trading, the investor stays up to date on the latest news, and on the investments that will turn the biggest profits. Forex trading can be done in the comfort of the investor's own home, and at a time of his or her own choosing. Forex trading on the Internet is a great way to invest money and build a financial future.

Forex online trading services are an excellent way for an investor to get support, advice, and information. Many investors find that being involved in a trading community makes the endeavor much more enjoyable. Foreign exchange online trading introduces investors into the international market, and helps them find a solid trading platform through which they can invest their money. Trading clubs are also the first places to get the latest foreign exchange news, making them an invaluable resource for the investor.

Investors can find information about Forex online trading in many different places, but the best place to start is with a Forex website such as ColtFX.com. They walk new investors through every bit of information needed for successful online foreign exchange trading. They also help with the terminology an investor needs to know in order to understand the Forex market.

Article Source: EzineArticles.com

Forex Trading Education

Forex Trading Education Helps Traders in Achieving Success

An individual who wants to become successful in forex trading should learn and understand the basics. There are many traders who lost a great amount of money in forex trading. It is because they are not properly educated about forex trading and its processes. So, to survive in the forex trading markets, it is imperative that future traders should have a forex trading education.

Forex trading can be the best way to earn huge amounts of money. However, those traders who seriously studied the forex market conditions can be able to achieve success. Proper education enables them to learn different market strategies. Remember, forex trading markets are the largest market in the world where instantaneous exchange happens. It is always a challenge even to knowledgeable forex traders and bankers. So, it is always a plus factor to traders if they thoroughly reviewed every angles and possibilities before performing the trade.

If you are going to read forums and reviews, you will find out that successful traders are those having proper knowledge about forex markets. They have decided to educate themselves on the detailed information vital on trading forex. Thus, every trade that they performed is considered an opportunity to learn new techniques.

Some people would think that they don’t really need education when trading forex. They believe that if they outsmarted the forex market, then they would be able to figure out its conditions to survive. This could be a great attitude however ask yourself if you could sustain it.

It would be very helpful for forex traders to undergo forex trading education from professional traders. There are several important forex trading factors that are being tackled to achieve forex trading success.

1.
Forex trading system is thoroughly discussed. The traders learn the three essential elements of a forex trading system that are profitable. It includes money management, risk management, and proper execution on the entry and exit market points. If the forex trading system is well established, then it can sustain draw backs caused by market fluctuations while retaining the consistent returns of profits. This is the secret equation needs to be mastered by every forex traders. In this case, the traders will stick to the system where it is giving them greater chances of earning larger amounts of money. Money management is considered the most essential factor in determining your success as a forex trader. If you are able to prevent financial hazards then it can increase your chance of becoming successful. The trading account should be adequately funded by the money that you can afford and restricting yourself from entering a trade that can wipe out all your assets. Always remember that it is much better to start trading on small amounts and using stop-loss orders so that your first forex trades will not be the last.
2.
The levels of market are also studied. It does not necessarily mean buying currencies at lower prices enable the traders to sell it on higher prices. Discipline is being taught to traders. Price behaviors are also learned consistently since it can change suddenly. However the traders are taught how to deal with this situation.
3.
They also learn how to emotionally detach themselves when trading forex. Keep in mind that emotions should never rule over your mind. So, forex trading education can guide you through the right direction. The psychology of trading are incorporated so that the traders should always act rationally so that the outcome of the trade will not be affected or altered. They can always make a good decision when entering or exiting a trade.
4.
Forex trading education teaches forex trading methods to the traders. They can acquire proper mindsets on trading forex and learn how to gain positive returns on their invested capital. Some traders concentrate on how they are going to make money rather than having their returns. So, educating yourself about building your wealth via consistent returns is beneficial. It is an advantage if you are properly acquainted with the forex trading environment before plunging into forex trading business.

Make your learning a fun experience. Don’t perceive forex education as a dull or a boring activity. You should enjoy your education and think that it is your first step to discipline your trading habits, wisely manage your money, and attain forex trading success.

Basic Of Trading Forex

Trading forex is a huge business where over three trillion dollars are traded each day. This is a huge market for people to get into. The problem is that most people that get involved end up losing money. There is a small minority of people that end up making all the profits. The reason is that they have the underlining strategies of this business.

The first thing you need to do is set a simple rule for yourself. You're not going to be led down the road of emotion, speculation and feelings with trading. This is the fastest way to lose all your money because it turns a business into a game of roulette. Emotion is the enemy in this business. The proper way to conduct yourself is in a cold calculated way. You should be able to look at numbers and come up with risk and probability of profit. These are all numbers and you make your moves with numbers, not emotions.

Most people that give up think that big banks and huge corporations are the ones that are making all the money. They do make a lot of money, but it comes from the basic fact that they have a lot of money to trade with. There returns aren't that good because they have to play it extremely safe. It's the little guys in this business that answer to no one that make excellent returns.

What separates the little guy that makes money from the little guy that loses money? When the little guy goes to sleep, the market and trades are still being watched. The forex market never closes, so a lot of new people just leave their money on the table while they sleep. If the currency takes a plunge, so does their bank account. It's important to have automated software like Forex Killer running on your computer monitoring market and your trades. They work automatically, so it can automatically sell before you lose any money, and it can also buy if you instruct it to. It is a very valuable tool to help you since you can't watch the market every minute of the day.

These are the basics of forex trading. This is what divides the successful from the failures. You need to make cold calculated moves and you have to have a way to monitor the market 24/7 because you can't do it alone.

Article Source: EzineArticles.com

Forex Caltulating Profit & Order Tipe

As we have specified in earlier page, in order to calculate the pip value or how much is one pip, you have to know some additional information such as: trading size (how many lots), leverage used, and the actual rate of the pair for which you want to calculate the pip value.

Calculation Formula for currencies with USD as quote currency (or X/USD such as EUR/USD, GBP/USD, and AUD/USD)

(Selling Price - Buying Price) x lot size x number of lots = Profit / Loss

Example :

* Buy 3 standard lots EUR/USD at 1.2000
Sell (liquid) 3 lots EUR/USD at 1.2010
Profit = (1.2010 - 1.2000) x 100.000 x 3 = $300
* Sell 1 standard lot GBP/USD at 2.0001
Buy (liquid) 1 lot GBP/USD at 2.0000
Profit = (1.2001 - 1.2000) x 100.000 x 1 = $10

Simple method :
As you can see from example number 1 and 2, for every standard lot (100K) the profit is $10/pip.

How to calculate profit per pip ? Profit/pip = total profit / total pips

* Example number 1 : $300/3 = $10/pip
* Example number 2 : $10/1 = $10/pip

Conclusion : (applies for x/USD Pair only !)

* For every 1 standard lot, profit (loss) = $10/pip
* For every 1 mini lot, profit (loss) = $1/pip
* For every 1 micro lot, profit (loss) = $0.1/pip

Calculation Formula for currencies with USD as base currency (or USD/X such as USD/JPY and USD/CHF).

[ (Selling Price - Buying Price) / Closing (liquidating) Price ] x lot size x number of lots = Profit / Loss.

Example :

* Buy 1 standard lot USD/JPY at 110.00
* Sell (liquid) 1 lot USD/JPY at 110.01
* Profit = [ (110.01 - 110.00) / 110.01 ] x 100.000 x 1 = $9.09

Calculation Formula for mixed currencies (such as EUR/JPY) [ (Selling Price - Buying Price) / USD/JPY Closing Price] x lot size x number of lots = Profit / Loss

Example :

* Buy 1 standard lot EUR/JPY at 162.70
* Sell (liquid) 1 lot EUR/JPY at 162.71 USD/JPY closing price of the previous day is 118.10
* Profit = [ (162.71 - 162.70) / 118.10 ] x 100.000 x 1 = $8.47

Please note :

If you open a Buy position (going Long), you will open with offer price, and will have to use bid price while selling it back (liqudating, closing, stop loss, and taking profit)

If you open a Sell position (going Short), you will open with bid price, and will have to use offer price while selling it back (liqudating, closing, stop loss, and taking profit)

Profit Target, Stop Loss, and Trailing Stop

Profit Target is a target point at which you want to liquidate your position in profit automatically, when the market price hits it. This means, you dont have to monitor your open positions all the time, just set a profit target, and once market price hits it, your position will be closed in profit automatically.

Stop Loss order ensures a particular position is automatically liquidated at a predetermined price in order to limit potential losses if the market moves against an investor's trade.

* If you open a Buy or Long Position, profit target level should be placed Higher than opening price.
* If you open a Sell or Short Position, stop loss level should be placed Lower than opening price.

Example :

* Buy (Long) EUR/USD 1.2000 (offer price)
* Profit Target 1.2050 (50 pips profit target, bid price)
* Stop Loss 1.1950 (50 pips stop loss, bid price)
* Sell (Short) EUR/USD 1.2000 (bid price)
* Profit Target 1.1950 (50 pips profit target, offer price)
* Stop Loss 1.2050 (50 pips stop loss, offer price)

Trailing Stop is an kind of stop loss. This function enables you to automatically set stop loss level whenever the profit you got has exceeded the minimum trailing stop level. If the profit has not exceeded minimum trailing stop level, it will not work ! Please keep in mind that trailing stop usually is executed directly from your computer (client software), not your broker's server so it is highly recommended to put a stop loss besides trailing stop.

The objective of trailing stop is to protect your profit if the market moves against your position so the profit will never go anywhere.

If Trailing stop level is set to 10 pips. Right after your position has reached profit more than trailing stop level (more than 10), then the stop loss will be set to 10 pips away from your open position to protect your profit . Lets say you have already got 10 pips profit, then trailing stop will put a stop loss to 0 (10 pips away from open). If your profit is 20, then stop loss will adjust the stop loss to 10 points profit (still 10 pips awa from open).

Example :

Trailing stop = 10 pips, You open a buy position at 1.2000, suddenly price moves to 1.2010, trailing stop set a stop loss at 1.2000 (Break Even). Market keeps moving to 1.2020, trailing stop level will be adjusted to 1.2010 (10 pips profit), and so on.

Basic Forex Order Types

There are 3 basic order types to trade currencies. They are called Market Order, Stop and Limit Pending Orders.

Market Order is an order to go Long (Buy) or short (Sell) at the current market price. You can't edit these rates.

Example :

Your trading software shows a quote for GBP/USD is at 1.9996 (bid)/2.0000 (ask). This means you can order a buy position at 2.0000 or you can order a sell position at 1.9996 at the moment.

But if you are willing to place an order at different price, you need to use Stop or Limit Pending Orders.

Stop Pending Order :

There are 2 benefits of using Stop Pending Orders :

* Stop Buy Order is used when you want to Buy above the current market price. Example : Current price is at 1.2000, and you want to Buy only if the market hits 1.2050. You can set a Stop Buy at 1.2050.
* Stop Sell Order is used when you want to Sell below the current market price Example : Current price is at 1.2000, and you want to Sell only if the market hits 1.1950. You can set a Stop Sell at 1.1950.

Limit Pending Order :

There are 2 benefits of using Limit Pending Orders :

* Limit Buy Order is used when you want to Buy below the current market price.

Example :

Current price is at 1.2000, and you want to Buy only if the market hits 1.1950. You can set a Limit Buy at 1.1950

* Limit Sell Order is used when you want to Sell above the current market price

Example :

Current price is at 1.2000, and you want to Sell only if the market hits 1.2050. You can set a Limit Sell at 1.2050

What Is Forex

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.

Open your account for free and get $5 cash reward so you can start trading right away!

Trading Strategies to Help You With Forex

To play in the world's largest financial market you need to be well educated and have experience. To succeed in the forex market you will need commitment, discipline and patience. Many buyers and sellers like the fact that this market is all about free competition and free from external control. Everyday a couple of trillion dollars worth of transactions take place in this foreign exchange market which happen in a 24 hour period.

In the forex market, trading successfully is not at all easy. You need have time, market understanding, knowledge and a lot of self restraint. There is no consistency in this fast market. In order to be a successful trader, you have to understand technical and fundamental data and your decisions will be based on your perception of market sentiment. Even if you have to loose sometimes, don't feel defeated because even the experienced trader can not generate returns on every trade.

If you are doubtful about a trade, don't trade. The forex market is very fast paced and can become addicting at times. It invovles money...your money. It would be nice to win at every trade but this doesn't happen. Be prepared for loses at times. Trade with money you can afford to lose and not with the kids meal money. Don't trade if you have limited funds.

Trading without having the entire amount of capital to do so is called margin trading. It allows for large leverage and trading at full margin capacity may result in profits as well as losses. So be very cautious and do not trade in a volume that can totally wipe out your money.

Trading in Forex is all about timing and money. Correct timing or timing your move is a very important factor to make good money. Often, traders are too early or too late when they enter the market and they have to bear the loss. It is important to be aware of the different time periods when many financial centers enter and exit from the market because it has great impact on the market movements.

There are some important trading strategies that take advantage of what other traders use to predict their trades. These tools include the Elliot Wave Theory, the Relative Strength Index (RSI) and Fibonacci retracement. These tools can help you in earning more money.

Learning from others is the best option to get educated in forex trading. Watch what other traders do who are involved in forex trading and also go and find forums about forex. Taking advice from professionals who have expertise in the forex market can be the smartest of forex trading strategies.

Psychology of Trading Strategy (Psycho-Strategy)

What’s the Psychology of Trading Strategy (Psycho-Strategy)?

I’m sure you understand that the Psycho-strategy is a mere metaphor, however we are going to use the same Forex terminology to describe our hypothetical strategy.

The Psycho-strategy is the mind frame you have to set your mind to if you want to make constantly profit in the world of Forex. It’s the way you have to think and feel in the three stages of the trade; before opening a trade, while the trade is running and after closing the trade.

The first thing I have to advice you before reading this article is that you have to to believe that using the Psycho-strategy is not less important than using your technical and fundamental strategies if not important! if you can’t totally believe that I recommend you to skip this article and continue with your favorite technical and fundamental venerable strategies.

The Psychology of Trading Strategy (Psycho-strategy) setup:

The the Psycho-strategy uses three indicators: Discipline indicator, Greedy oscillator and Fear oscillator.We use these indicators not to tell us when to enter the market (there are much better techniques to enter the marker where the Psycho-strategy can help) but we are using them to refine our overall trading practice hence our success in the Forex world.

Let’s start with the most important indicator; the Discipline indicator:

Discipline indicator:

It is unquestionable that nobody could achieve a goal if he have not already set this goal. Give the best archer the best tools and tell him to shot aimless target! what do you think he will do?
In the Forex (and in live un general) you have to define your goal and keep it obvious if you want to achieve it. For example you have to determine how many pips you want to gain daily, weekly and monthly from your trading.

Your goal have to be realistic, attainable and measurable: realistic goal means you have to set a goal that is not impossible for you and anybody to achieve, for example you can be a millionaire from trading Forex for few weeks or months. attainable goal means you can easily achieve the goal for example gaining 100 pips daily is not impossible in Forex trading so it’s a realistic goal but 25 pips per day is more attainable goal, get it?

The goal you have set have to be measurable which means you can easily say I’ve achieved my goal of today or this month. Goals like “I want to be a millionaire or I want to get the maximum pips the market could offer” are not measurable goals.

The first line in the Discipline indicator is the Goal line, the second line in the Discipline indicator is the Rules line.

Any successful person has his set of rules which he extremely bind himself to it, you too have to set you trading rules and obey them to the end, for example one of successful traders rules “Set stop loss before trade”.

You have to discover your trading rules and more important to obey them to the end, of course you can change this rules occasionally (i.e. every six months you have to review your trading rules) but once you have set them you can’t change them “Rules couldn’t’ be changed while playing the game”.

The Discipline indicator now has two lines: Goal line and Rules line; these lines have to be unbreakable, untouchable, you have to limit you trade between these lines and don’ let Greedy or Fear indicators to breaks your Goal and Rules lines.

Fear and Greedy oscillators:

The fear making of loss and Greedy of making more profits are very like bulls and bears that imagined fighting each others and move the market accordingly. Both of the fear and greedy trying to break your Discipline indicators lines.

Fear of losing maybe advising you to ignore setting stop loss for you trade and break one of your trade rules. Fear maybe asking you to close a profitable trade once the market start to move against you for awhile.

Greedy acts the same trying to break your rules but inversely of fear; Greedy will tell you to continue in a profitable trade although you Goal has been achieved seeking more pips. Greedy will advice you to remove your trailing stop hoping o make the maximum of he market.

As long as Fear indicator and Greedy indicator oscillate between the Discipline upper line - Goal line - and lower line - Rules line - you will constantly make profits with the Psycho-strategy!

Trading With Strategy

Trading successfully is by no means a simple matter. It requires time, market knowledge and market understanding and a large amount of self restraint. ACM does not manage accounts, nor does it give market advice, that is the job of money managers and introducing brokers.

As market professionals, we can however point the novice in the right direction and indicate what are correct trading tactics and considerations and what is total nonsense.

Anyone who says you can consistently make money in foreign exchange markets is being untruthful.

Foreign exchange by nature, is a volatile market. The practice of trading it by way of margin increases that volatility exponentially. We are therefore talking about a very 'fast market' which is naturally inconsistent. Following that precept, it is logical to say that in order to make a successful trade, a trader has to take into account technical and fundamental data and make an informed decision based on his perception of market sentiment and market expectation. Timing a trade correctly is probably the most important variable in trading successfully but invariably there will be times where a traders' timing will be off. Don't expect to generate returns on every trade.

Let's enumerate what a trader needs to do in order to put the best chances for profitable trades on his side :

Trade with money you can afford to lose :

Trading fx markets is speculative and can result in loss, it is also exciting, exhilarating and can be addictive. The more you are 'involved with your money' the harder it is to make a clear-headed decision. Money you have earned is precious, but money you need to survive should never be traded.

Identify the state of the market :

What is the market doing? Is it trending upwards, downwards, is it in a trading range. Is the trend strong or weak, did it begin long ago or does it look like a new trend that's forming. Getting a clear picture of the market situation is laying the groundwork for a successful trade.

Determine what time frame you're trading on :

Many traders get in the market without thinking when they would like to get out, after all the goal is to make money. This is true but when trading, one must extrapolate in his mind's eye the movement that one expects to happen. Within this extrapolation, resides a price evolution during a certain period of time. Attached to this is the idea of exit price. The importance of this is to mentally put your trade in perspective and although it is clearly impossible to know exactly when you will exit the market, it is important to define from the outset if you'll be 'scalping' (trying to get a few points off the market) trading intra-day, or going longer term.This will also determine what chart period you're looking at. If you trade many times a day, there's no point basing your technical analysis on a daily graph, you'll probably want to analyse 30 minute or hour graphs. Additionally it is important to know the different time periods when various financial centers enter and exit the market as this creates more or less volatility and liquidity and can influence market movements.

Time your trade :

You can be right about a potential market movement but be too early or too late when you enter the trade. Timing considerations are twofold, an expected market figure like CPI, retail sales or a federal reserve decision can consolidate a movement that's already underway. Timing your move means knowing what's expected and taking into account all considerations before trading. Technical analysis can help you identify when and at what price a move may occur. We will look at technical analysis in more detail later.If in doubt, stay out:If you're unsure about a trade and find you're hesitating, stay on the sidelines.

Trade logical transaction sizes :

Margin trading allows the fx trader a very large amount of leverage, trading at full margin capacity (in ACM's case 1% or 0.5%) can make for some very large profits or losses on an account. Scaling your trades so that you may re-enter the market or make transactions on other currencies is generally wiser. In short, don't trade amounts that can potentially wipe you out and don't put all your eggs in one basket. ACM offers the same rates regardless of transaction sizes so a customer has nothing to lose by starting small.

Gauge market sentiment :

Market sentiment is what most of the market is perceived to be feeling about the market and therefore what it is doing or will do. This is basically about trend. You may have heard the term 'the trend is your friend', this basically means that if you're in the right direction with a strong trend you will make successful trades. This of course is very simplistic, a trend is capable of reversal at any time. Technical and fundamental data can indicate however if the trend has begun long ago and if it is strong or weak.

Market expectation :

Market expectation relates to what most people are expecting as far as upcoming news is concerned. If people are expecting an interest rate to rise and it does, then there usually will not be much of a movement because the information will already have been 'discounted' by the market, alternatively if the adverse happens, markets will usually react violently.

Use what other traders use :

In a perfect world, every trader would be looking at a 14 day RSI and making trading decisions based on that. If that was the case, when RSI would go under the 30 level, everyone would buy and by consequence the price would rise. Needless to say, the world is not perfect and not all market participants follow the same technical indicators, draw the same trendlines and identify the same support & resistance levels. The great diversity of opinions and techniques used translates directly into price diversity. Traders however have a tendency to use a limited variety of technical tools. The most common are 9 and 14 day RSI, obvious trendlines and support levels, fibonnacci retracement, MACD and 9, 20 & 40 day exponential moving averages. The closer you get to what most traders are looking at, the more precise your estimations will be. The reason for this is simple arithmetic, larger numbers of buyers than sellers at a certain price will move the market up from that price and vice-versa.

Creating Profitable Forex Trading Systems

Creating Profitable Forex Trading Systems in Five Easy Steps

One rule of thumb that every aspiring entrepreneur should remember is that to make huge profits, you should know how to do it by yourself—and not rely on other’s efforts. Being independent from other people will help you determine what things are best for your business.

Such rule applies on all types of investments, including foreign currency trading, or mostly known as Forex trading. It cannot be denied that Forex is the largest existing market around the world, which is estimated to have an excess of 2 trillion U.S. dollars worth of foreign currencies are traded each day. It is larger than the magnitude of the New York Stock Exchange, which is approximately 50 billion U.S. dollars. Thus, Forex market exceeds all combined equity markets around the world.

With such huge wealth circulating around the Forex market, one of your financial goals is to grab a major slice of that $2 trillion average daily turnover in the market. How you will be able to get a substantial portion of that average turnover if you do not know how you will handle your Forex business? Although you cannot live in the market alone (you need business partners and/or financial advisers to help you along), only you can determine what the best Forex business there is for you.

To get huge profits out of your Forex trading career, you need to build your own profitable system—a trading system that will bring your not just hundreds but thousands of dollars worth of Forex revenues. Such trading system is available on the market, but as previously mentioned, you need to be independent—and you need to have your own Forex trading system that will help you achieve your financial goals.

For new traders, it is difficult for them to device their own trading system since they do not have too much knowledge about the Forex market. However, even a neophyte trader can device a trading system that will fit on his personal preference and needs—in just five easy steps!

Before we discuss the five easy steps towards a profitable Forex trading system, you need to learn first the three main characteristics of a successful Forex trading system. These are as follows :

1. A successful Forex trading system is simple. There is no need for a complicated trading system with too many rules. It is a proven truth that simple systems work better than complicated ones, and they have higher chances of success despite of the brutal characteristic of Forex trading.
2. A successful Forex trading system cuts losses and runs profits. Keep in mind that you need a trading system that gets the huge possible profits and eliminates losses quickly, if not instantly.
3. A successful Forex trading system follows long-term trends. You will never cover your losses if you are just generating small profits. Keep in mind that the Forex market is worth $2 trillion U.S. dollars, thus there is no point in trading in exchange for just small profits if you have the opportunity to make trades for larger revenues. Focus on long-term trends and you will be able to see better results.

Now, here are the five easy steps in building a profitable Forex trading system :

1. As previously mentioned, your trading system must be as simple as possible. Integrate few yet essential rules and an extensive investment management system.
2. Always look for long-term trends (preferably on a weekly basis), then shift to daily charts and to time entry. This will help you analyze market trends efficiently.
3. The ideal way of trading foreign currencies is through breakout method.
4. Always watch for any break that you will note on your chart, which is commonly confirmed by stochastic crossed with bearish divergence. This will be your great timing tool whether you will enter a certain deal or not.
5. You must integrate effective time management within your system. Time is gold and is one of your precious resources. Design a trading system that is time efficient—where you can maximize the potential of your time resources to generate huge profits.

Get away with complicated systems ; it will just ruin your entire Forex trading career. Build a simpler one and see for yourself how profitable it is.

A quick forex guide for traders

In this Forex course we will review some steps you need to take care before you venture into your trading journey. Most traders venture into the Forex market with little or no experience in the Forex market. This results in painful experiences like loosing most of the risk capital, frustration because it seemed so easy to make money, etc.
The first thing you need to realize is that, it is not easy to make money. As every other endeavor in life, where important rewards are to come after mastering it, you need to work hard. You need to get very well educated and experienced before having the possibility to receive important rewards on it. The key on mastering the Forex market relies on commitment, patience and discipline.
Ok, you have decided you are going to trade the Forex market, you have seen several advertisings featuring how easy is to make money in the Forex market. You might think this is your opportunity to reach your financial freedom, right away, time is money, why waiting any longer if you have the opportunity to make money now. I know, I've been there, but you have a chance now, I didn't, no body told me what I am going to tell you.
We, Forex traders, make transactions based on a set of rules. These sets of rules are what we call a Trading System. Our systems tell us the exact time where we need to get in the market and out the market in order to make a profit (i.e. buy low sell high.)
Creating a system is the first big step you need to take care first. Why is this so important? Because you need to build a system that suits your personality, otherwise you are going to find hard to follow it, thus hard to profit from.
A system can be based on technical indicators or what we called a mechanical system or based on experience and intuition or what we call discretionary systems. I highly recommend using and trying first a mechanical system, because discretionary systems are dangerous during the early stages of a Forex trader (can lead to indiscipline.) With experience, on later stages, you will find out which signals work better and which ones to avoid.
The next step in this Forex course is to try your system on a demo account. Most Forex brokers offer a demo account, an account with virtual money. This is an excellent choice to test your trading system as there is no money at risk. In this step you will figure out if the strategy works for you. If you feel comfortable trading it, then it is most likely to produce good results. How much time should you stay in this step? It varies, but you shouldn't go one step further until your system gets consistent profitable results over a period of time. It can take many months, but remember, you need to be patient.
You must be honest to yourself; you need to take every single signal generated by your system, not only the signals you thought were going to work, otherwise, you are going to have problems in the next two steps.
Ok, by know you had consistent profitable results on your demo account. You might think its time to go full. Nope, nope, nope. There is a big difference between trading a demo and a real account. The most important difference lies on emotions (fear, greed, anger, etc.) These are psychological barriers that affect every single decision made by traders regardless of what he/she is trading (stocks, bonds, Forex, futures, grains, etc.) These emotional factors, in my opinion, are the most determinant factor that separates profitable traders from the others.
The next step in this Forex course is specially designed to deal with emotions and to confirm the results obtained in the prior step (consistent results in a demo account.) At this step you need to trade in a real account with limited funds. Some brokers offer fractional lot trading. Meaning you are able to trade any desired amount (even cents.) The important thing here is that these emotions we've been talking about are present only when there is real money at risk. At this stage, you are going to see if you are really comfortable trading your system and if you are able to trade with such system, remember different systems produce different emotions. If you are able to produce similar results than those obtained in a demo account, then ready for the next step. If you didn't, then you might need to create another system, there is chance your system never fit you. If you created consistent profitable results on this stage, you have a chance to produce similar results in the next one, on the other hand, if you didn't produce good results in this stage, you will not be able to make on the next stage. Remember, you need to do things right, and be honest to yourself.
The last stage is trading in a real account with sufficient funds. If you are at this stage, and have passed successfully every prior stage, then you have a chance to make it, go ahead and try it, you need to be confident in yourself and in your system, your strategy have already produced consistent profitable results, there are reasons to believe you are going to make it. Very few traders fail at this stage (if passed successfully prior stages).
Trading successfully is no easy task, it requires a lot of work, patience, discipline, and education. By completing the steps outlined in this Forex course, you have a chance to produce profitable results. I repeat it again, you need to be honest to yourself about the results obtained in every stage. Some times you might need expert guidance regarding your system development strategies.
source straightforex.com