The Foreign Exchange Market Differs From The Stock Market

The alien interchange market is likewise known as the FX market, and the forex market. Syndication that takes place amongst two regions with dissimilar currencies is the basis for the fx market and the background of the Syndication in this market. The forex market is over thirty years old, traditionalistic in the early 1970's. The forex market is one that is not grounded on any one business or laying out money in any one business, but the retail and retail of currencies.

The divergence amongst the stock market and the forex market is the tremendous retail that occurs on the forex market. There is millions and millions that are traded daily on the forex market, almost two trillion dollars is traded daily. There is is much higher than the cash traded on the daily stock market of any country. The forex market is one that involves governments, banks, financial foundations and those similar types of foundations from other countries. The

What is traded, purchased and sold on the forex market is a thing that can easily be liquidated, meaning it can be turned back to cash fast, or often times it is really going to be cash. From one currency to another, the accessibility of cash in the forex market is a thing that can take place fast for any investor from any country.

The divergence amongst the stock market and the forex market is that the forex market is worldwide, worldwide. The stock market is a thing that takes place only within a country. The stock market is grounded on businesses and products that are within a country, and the forex market takes that a step farther to include any country.

The stock market has set business hours. In general, this is going to follow the business day, and will be closed on banking holidays and weekends. The forex market is one that is open in general twenty four hours a day because the tremendous number of countries that have part in forex retail, buying and retail are located in galore dissimilar times zones. As one market is opening, another countries market is closing. This is the continual method of how the forex market retail occurs.

The stock market in any country is going to be grounded on only that countries currency, say as an illustration the Japanese yen, and the Japanese stock market, or the United States stock market and the dollar. However, in the forex market, you're involved with galore types of countries, and galore currencies. You will find references to a variety of currencies, and this is a big divergence amongst the stock market and the forex market

source: http://www.forexarticlecollection.com/forex-trading/the-foreign-exchange-market-differs-from-the-stock-market.html

Forex Money Management

Forex money management is one of the most important things you can learn before you actually begin making live trades.

The money management principles discussed here will teach you how to avoid the costly mistakes many new traders make, often to the degree that they lose their entire investment on the first handful of trades.

Why do some forex traders fail while just a handful succeed?

Why do so many new and intermediate traders blow up their accounts (again and again?)

How can you prevent blowing out yours?

It's not the answer you likely want to hear.

The answer is not to have the best strategy. You should be well aware that there are many, many forex strategies that work well - technical strategies, trending strategies, price action strategies, scalping strategies, and even discretionary strategies and so on.

So why does one trader trade a strategy successfully and another trader trade the same exact strategy unsuccessfully?

The answer is this: The successful trader uses good money management.

Trade With Sufficient Captial

One of the worst blunders that forex traders can make is attempting to trade without sufficient capital.

The trader with limited capital not only will be a worried trader, always looking to minimize losses beyond the point of realistic trading, but he will also frequently be taken out of the trading game before he can realize any sense of success trading the method(s) or patterns.

Exercise Discipline

Discipline is probably one of the most overused words in forex trading education. However, despite the cliché, discipline continues to be the most important behaviour one can master to become a profitable trader.

Discipline is the ability to plan your work and work your plan.

It’s the ability to give your trade the time to develop without hastily taking yourself out of the market simply because you are uncomfortable with risk. Discipline is also the ability to continue to trade the methods and patterns even after you’ve suffered losses. Do your best to cultivate the degree of discipline required to be a world-class trader.

Employ Risk-to-Reward Ratios

The following shows you possible risk-to reward ratios, and the win ratios required to break even in a trading system.

Risk-to-Reward Ratio (in pips)and Win Ratio Required to Break Even(%)

40/20 (2 to 1) = 67%, 40/40 (1 to1) = 50%, 40/60 (1 to 1.5) = 40%,

40/80 (1 to 2) = 33.5%,

60/20 (3 to 1) = 75%,

60/60 (1 to 1) = 50%,

60 /90 (1 to 1.5) = 40%,

60/120 (1 to 2) = 33.5%

When dealing with leverage, you must make it work for you and that means cutting your losses and running your profits. All the great football teams have great defense and they know if they don't concede points, there offense will get the chances to win the game and it's the same in Forex.

Lose 50% and you have to make 100%, just to break even and the moral is:

If you lose money, you have to work even harder to get it back so let's look at how to keep your equity intact.

1. All Trades are Equal in terms of Risk

Never make the mistake of calculating your target minus your stop as your risk reward! This is just an opinion and in terms of money management always assume the worst and things can only get better. All trades are the same in there potential to lose money.

On risk per trade you will hear a lot of people tell you that you should only risk 2% but on small account you need to risk more so do 5 - 10% and also don't diversify, do one trade at a time.

2. Trade Breakouts

Breakout trading, means buying new breaks to chart highs and lows all trades start and continue from these breaks, good breakouts offer the best risk to reward in Forex trading. Your stop, is simply behind the breakout point, so it's tight and on the best breakouts, you see huge moves so you have great risk to reward.

3. Place Stops Outside of Random Volatility

A key mistake by many traders is to place there stops inside random volatility and day traders do it and lose. Why do they lose? Because all volatility in daily time frames is random so you may as well flip a coin. Focus on the bigger trends and bigger profits so your stop can be further away but the odds of a triple digit gain are higher.

To make money you need to give the market room to breathe so don't try and restrict risk so much you create it - its no point in having a stop close, if its odds on to be hit.

4. Do a 50 - 50

This is my favourite money management trick. We all know the big trends last for weeks, months or years but it's very hard to sit on a long term trend as they always recoil back into open equity profit and eat it. Try this, as soon as the market moves to over bought in a bull trend bank 50% and leave 50% in the market. Then wait for the next breakout or pullback to support, to put the other 50% back in and keep doing it.

source: http://www.forexmarkettrader.net/forex_money_management.html

New Forex Tips

Are you new to the foreign exchange market? Have you tried dipping into the trade but have not yet succeeded? Then these forex trading tips are for you... Read on and learn what you ought to know to be a successful and earning foreign exchange trader.

Time and research are very important, but the one thing that can give you an extra edge are reliable Forex trading tips. They do not only refer to the good deals and the good bets, and which the good investments are, but also refer to how to set yourself up and then stay calm, efficient and cool through the whole process which can be nerve wracking if you are not organized enough. So let us take a look at some of the easy and simple but essential things that you can do - some very simple Forex trading tips.

1. Trade pairs, not currencies - Like any relationship, you have to know both sides. Success or failure in forex trading depends upon being right about both currencies and how they impact one another, not just one.
   
   
2. Knowledge is Power - When starting out trading forex online, it is essential that you understand the basics of this market if you want to make the most of your investments.
   
   The main forex influencer is global news and events. For example, say an ECB statement is released on European interest rates which typically will cause a flurry of activity. Most newcomers react violently to news like this and close their positions and subsequently miss out on some of the best trading opportunities by waiting until the market calms down. The potential in the forex market is in the volatility, not in its tranquility.
   
   
3. Unambitious trading - Many new traders will place very tight orders in order to take very small profits. This is not a sustainable approach because although you may be profitable in the short run (if you are lucky), you risk losing in the longer term as you have to recover the difference between the bid and the ask price before you can make any profit and this is much more difficult when you make small trades than when you make larger ones.
   
   
4. Over-cautious trading - Like the trader who tries to take small incremental profits all the time, the trader who places tight stop losses with a retail forex broker is doomed. As we stated above, you have to give your position a fair chance to demonstrate its ability to produce. If you don't place reasonable stop losses that allow your trade to do so, you will always end up undercutting yourself and losing a small piece of your deposit with every trade.
   
   
5. Independence - If you are new to forex, you will either decide to trade your own money or to have a broker trade it for you. So far, so good. But your risk of losing increases exponentially if you either of these two things:
   Interfere with what your broker is doing on your behalf (as his strategy might require a long gestation period);
   Seek advice from too many sources - multiple input will only result in multiple losses. Take a position, ride with it and then analyse the outcome - by yourself, for yourself.
   
   
6. Tiny margins - Margin trading is one of the biggest advantages in trading forex as it allows you to trade amounts far larger than the total of your deposits. However, it can also be dangerous to novice traders as it can appeal to the greed factor that destroys many forex traders. The best guideline is to increase your leverage in line with your experience and success.
   
   
7. No strategy - The aim of making money is not a trading strategy. A strategy is your map for how you plan to make money. Your strategy details the approach you are going to take, which currencies you are going to trade and how you will manage your risk. Without a strategy, you may become one of the 90% of new traders that lose their money.
   
   
8. Trading Off-Peak Hours - Professional FX traders, option traders, and hedge funds posses a huge advantage over small retail traders during off-peak hours (between 2200 CET and 1000 CET) as they can hedge their positions and move them around when there is far small trade volume is going through (meaning their risk is smaller). The best advice for trading during off peak hours is simple - don't.
   
   
9. The only way is up/down - When the market is on its way up, the market is on its way up. When the market is going down, the market is going down. That's it. There are many systems which analyse past trends, but none that can accurately predict the future. But if you acknowledge to yourself that all that is happening at any time is that the market is simply moving, you'll be amazed at how hard it is to blame anyone else.
   
   
10. Trade on the news - Most of the really big market moves occur around news time. Trading volume is high and the moves are significant; this means there is no better time to trade than when news is released. This is when the big players adjust their positions and prices change resulting in a serious currency flow.
    
    
11. Exiting Trades - If you place a trade and it's not working out for you, get out. Don't compound your mistake by staying in and hoping for a reversal. If you're in a winning trade, don't talk yourself out of the position because you're bored or want to relieve stress; stress is a natural part of trading; get used to it.
    
    
12. Don't trade too short-term - If you are aiming to make less than 20 points profit, don't undertake the trade. The spread you are trading on will make the odds against you far too high.
    
    
13. Don't be smart - The most successful traders I know keep their trading simple. They don't analyse all day or research historical trends and track web logs and their results are excellent.
    
    
14. Tops and Bottoms - There are no real "bargains" in trading foreign exchange. Trade in the direction the price is going in and you're results will be almost guaranteed to improve.
    
    
15. Ignoring the technicals- Understanding whether the market is over-extended long or short is a key indicator of price action. Spikes occur in the market when it is moving all one way.
    
    
16. Emotional Trading - Without that all-important strategy, you're trades essentially are thoughts only and thoughts are emotions and a very poor foundation for trading. When most of us are upset and emotional, we don't tend to make the wisest decisions. Don't let your emotions sway you.
    
    
17. Confidence - Confidence comes from successful trading. If you lose money early in your trading career it's very difficult to regain it; the trick is not to go off half-cocked; learn the business before you trade. Remember, knowledge is power.
18. source: http://www.forexmarkettrader.net/forex_tips.html

Forex Strategy

As a Forex trader, you should not adopt strategies that are complicated. We believe you should look into those strategies that are simple and easy. Once you come up with the Forex strategy (or strategies) you will be using, you should implement as soon as you can in order to enjoy those results.

Forex trading has become very popular recently. Unfortunately discussing the developing a winning Forex strategy is not so popular. Instead Forex trading is presented as a way to earn money quick.

If you are serious about this market, first thing you need is to realize that it is not a "get-rich-quick" scheme. There is a lot of things to learn to be successful in this market.

Nobody in their right mind would just jump into the forex market blindly. That would be even worse than attempting to pilot a 747 jet if you have never had flying lessons. Jumping in without a good understanding of the forex market is reckless at best, and you would save yourself a lot of time by simply lighting a match under your money. In order to get the gains and rewards that are very possible in the forex market, you need to study, lean, and understand how the market works, the ins and outs of forex currency trading, and the various factors that go into making an informed and intelligent trade decision.

Here are some steps that can help you develop a winning Forex strategy:

- Learn the basics. Do not rush through the process. There is really a LOT to learn. There are good resources online and offline that can help you with that.

- Learn about yourself. What kind of trader are you? Are you a risk-tolerant person? Can you psychologically accept losing money? Are you a disciplined person? Can you follow your own tested strategy while in a losing period? These are some things you need to understand so you'll be able to develop a strategy that fits your profile.

- Decide what timeframes you want to trade. This should be based on your risk profile and the amount of risk capital that you have.

- Develop a strategy using a combination of different indicators. Incorporate money management and risk management techniques into your strategy; determine entry and exit points. Place all the indicators on your chart and visually evaluate how well the strategy is doing. If it does reasonably well, consider automated it through using the programming language of your trading platform. You can also outsource this part.

- Now you need to backtest it. You need to run your strategy software (also known as expert advisor on the MT4 platform) several years back to see how it is performing. If it does relatively well, you need to test it in real time in a demo account. Do not take short cuts here. Trade in a demo account for as long as it takes till you feel comfortable to trade in real time.

source: http://www.forexmarkettrader.net/forex_strategy.html

Traits of a Great Forex Broker

One thing you cannot avoid in the Forex game is the middle man for your investing ideas. He or she will come either from the bank or brokerage that you have attached yourself with and this usually means that they will be the person that you will be liaising with at all times. The whole function of the broker is to introduce you to the Forex market and guide you along so that you do not make any glaring mistakes and lose a lot of your hard earned money.

Of course this is the perfect situation, in a sense that not all brokers that you encounter might have these gleaming qualities about them. In reality, some of the brokers out there are under qualified, under trained and some of them have intentions other than helping you to circumnavigate the Forex market – helping both you and them make some money from the paper trade. There are some traits of a good Forex broker that you should look out for when thinking about this topic and this article will help to list some of them. One of the most important traits out there is open communication and the broker that you are attached with must be in constant dialogue with you at all times.

In every sense of the word, he must be the person that you are either chatting with or on the phone for every investing day that is. There cannot be a bridge of silence between the broker and you, and this is not a bridge at all. It is a cavernous hole in the ground that you will fall into when you realise that you are making mistakes in the market that could have been avoided if your broker had warned you about them. Let us reiterate this one more time – it is the broker’s job to talk to you in the initial stages and ensure that your time in the market is all well and good. It is his job to make sure you at least know the basics and have a foothold in the trading theorems before anything happens. It is their job to make sure that the foundations of investing know how and basics are there.

That is what you are paying for. They are suppose to guide you along the way and make sure that things go according to the step by step beginners plan before he or she allows you to make hay on your own. A broker is one that always gives you advice because it is in their bet interests to keep you in the game as long as possible. So this is really one of the most, if not most important trait that you need to look out for when finding a broker. It is all about that chemical connection the first time you meet them and understanding that there is a potential for an emotional, intellectual and technological grounds for open communication. This is the key that will lead you to some good money later on.

source: http://www.money-ex.com/Art/3136/268/Traits-of-a-Great-Forex-Broker.html

Making A Killing With Forex Day Trading

Forex day trading allows a trader to open an account for themselves for as less as 250$. The amount that is needed to open an account varies from one company to company. There are several agencies that have brokers mediating a firm or an individual to the market. Brokers are people who educate individuals and firms to work there way through the market. The work of a broker is to help traders to get through the market without suffering much loss. Certain forex agencies also provide traders with forex software's. This software's show's the ups and down's of the currency values in the form of graphs, chart diagrams and data flow diagrams. They are very efficient in bringing out the current statistics of the currencies. In a forex day trade currencies are often traded in fixed pairs, the main currencies traded being dollars, pounds, euros and yen. These are normally traded against dollars.



Only after the internet forex trading becoming so popular, was there an opportunity for even commoners to trade. Until then only co-operate firms and large financial institutions was able to trade in the forex market. Forex now has become so simple that certain traders have taken it as a hobby. With the help of the vast number of software's available they are able to predict the changes in the market and make alterations in there trade accordingly. The forex day trading is similar to what is called as the future's market. The advantage here is that the liquidity that is offered here is higher and the risk factor is lower due to the lesser investments. Forex can be a very serious carrier option for those who can invest high amounts and can play the market well. The profits that can be obtained depend on an individual's skill and the experience that they have obtained by being in the market.

source: http://www.money-ex.com/Art/378/24/Making-A-Killing-With-Forex-Day-Trading.html

The Ins And Outs Of Trying Out A For-ex Demo Account

Trying your hand at For ex in way of a demo account is used by thousands of traders and investors trying to determine if For ex is for them. Demo accounts are available widely on line, where an interested person can see how the whole thing works. Playing with a demo is along the same lines as the Pentagon generals playing war games. You basically have an account, with no real money in it, to buy, sell and trade the same way you would in reality. This allows you to see what is involved without risking any real money. The software for the demo accounts is deeply rooted in reality and you are able to see, at the end of the day, if you have made wise choices or need to keep practicing.

The idea behind the program is quite simple. The investor would have a pretend margin account with $10,000 in it. After studying the data from markets, they think the US dollars will have increased value when compared with the Japanese yen. The program allows purchases on margin, so one hundred thousand US dollars are purchased while selling one hundred thousand dollars worth of Yen. The difference, or spread, is what the pretend profits are.

So why spend your time with pretend accounts? Why not just jump right into it?
Well, it is much safer to learn how to do this complex trading when no real money is risked. While you may not have thought about it, a lot of people will spend hours on top of hours getting their feet wet as it were, before going swimming. A pilot, for example, will spend several hours in a flight simulator before actually taking off in a real plain. A person just learning to drive will practice before going out and driving on the highway.
Practicing with the demo software is the same principal. You have to know what you are doing before taking risks. Spending time on the For ex simulator allows you to gain knowledge, skills and instincts that will be needed when you go out there and risk ten thousand dollars for real.

You can find these demo accounts through most brokerage companies that trade in For ex. The demo may be free or there may be a small fee associated with it. If there is a fee, don't just assume it is not worth your money. Even if a fee is assessed, it is most likely worth your money to practice. You have to have an idea what you are doing before you just jump right in. Spend all the time you can practicing with the demo account. If you deal directly with a broker, an account can be set up quickly. You can go on line to find a wide array of companies ready to set up an account for you to help fine tune your skills. It cannot be stressed enough that time must be spent in the demo account.

Besides making yourself feel at ease, it may help your spouse as well. Mike Marley opened a demo account after months of study. Convinced he could make a healthy profit as a day trader in For ex, he spoke to his wife. She was not convinced it was a good idea. After all, with the kids' after school activities and retirement to think about, not to mention the mortgage and other monthly bills, there wasn't a lot of extra money to play with. But after Mike found a brokerage company he felt he could trust, he set up a demo account and handled it just like a live account. After practice, and several days, Mike was able to make a nice pretend profit. He took that information to Mrs. Marley. After she looked it over and understood more about what was happening, she agreed to let Mike give it a whirl. Today, Mike has become quite successful in trading For ex and the two believe this will continue to happen. Oh, sure, there were a few times that Mike made the wrong call and they lost a little, but overall, they are on the plus side. By using a demo account before using real money, Mike was able to overcome his wife's objections and is an active trader today.
source: http://www.money-ex.com/Art/281/44/The-Ins-And-Outs-Of-Trying-Out-A-For-ex-Demo-Account.html