Posts Tagged ‘Forex Traders’
Forex trading platforms are the special technologies on which Forex traders conduct their activities. (Forex is the world’s largest currency trading market). There are several platforms available, and each has its own strengths and weaknesses. It is helpful to understand how the platforms differ and which platform features might benefit you in your specific situation
The World’s Most Popular Forex Platform is Metatrader
Metatrader is head and shoulders above its competitors in terms of popularity. The current version is MetaTrader 4, usually known as MT4, and version 5 will be released shortly.
How do we Account for MT4’s Popularity?
MT4 has significant strengths that traders appreciate. It is an efficient platform that permits the trader to perform a number of jobs quickly and easily. These jobs include trading, doing charting analysis, accessing built-in indicators and even running other trading models including automated bots.
MT4’s power comes from its ability to let the trader use the MQL4 language to build her personal trading models and customized indicators. Traders who develop their own personal system have the option of selling their models to other traders. Since other traders are likely to be using Metatrader as well, given its popularity, they can readily install models developed by other traders.
Another advantage to Metatrader is that it gives you the option of doing your Forex trading on your PDA, smartphone or other wireless device. Therefore, you have the freedom to conduct your trading activities while you are on the road or otherwise away from your computer.
You can only use Metatrader if your broker has installed the proper Metatrader infrastructure on the server. Given Metatrader’s universal popularity, it is likely that this is the case. However, there are exceptions to the rule. Some brokers have gone another route.
Custom, In-House Trading Platforms
Rather than use Metatrader, certain Forex brokers have created a proprietary, in-house platform. By using their own proprietary platforms, these brokers have complete control of the trading environment and can customize it to suit their tastes. Similarly, they can issue bug fixes, create upgrades and respond to customer feedback regarding desired additions or changes. Therefore, modifications and updates can happen faster than you might find with Metatrader, and can appear to be more sensitive to customer requirements.
The down side to these custom Forex platforms lies in the fact that traders are unable to use bots and other applications that are designed for the MT4 systems. Traders opting to use these MT4 applications with a custom platform must execute orders by hand rather than relying on automation.
Also, since that some of these custom platforms run on software such as Java or Adobe Air, their performance may be less reliable than you find with Metatrader.
Some traders question the wisdom of using an in-house platform, given the enormous popularity of MT4. However, there are cases when it makes good sense to go the custom route.
Accommodating Special Trading Needs
Despite the advantages to using Metatrader, you may find a broker with a platform that offers certain features that appeal to you. As one possibility, a broker might offer a web version of their platform. A web version may allow you to conduct your trading from behind a corporate firewall, an activity that a MT4 installation does not allow. Other custom platforms may allow you to start trading for as little as $100. This can be an important consideration for a beginner or for someone who plans to trade on a low budget.
Your choice of platform depends on your unique requirements. It is always a good idea to research your broker’s platform before signing up, and choose the one that best suits your needs.
More About Forex Trading
Persons unfamiliar with Forex trading may benefit from additional information. Forex is the largest currency trading market on the globe. Forex traders, including day traders, conduct their business in a manner similar to trading on a stock exchange.
By: June Campbell
Leverage is a major component of forex trading and is one of the main reasons why so many people are drawn to forex trading in the first place. Leverage basically allows you to trade positions far in excess of your initial trading capital which means you can potentially make vast profits from forex trading.
However it should be pointed out that leverage works both ways. Whilst you can earn a lot of money very quickly by making winning trades, you can also lose money very quickly by using leverage. This is not uncommon either. There are lots of forex traders who have blown their account completely just through one single losing position, and all because they over-leveraged themselves.
Let me explain in more detail how leverage actually works when trading forex and why it is potentially so dangerous.
If you visit the website of any forex broker you will usually be presented with appealing offers such as ‘trade forex with 1:200 leverage’ or ‘open an account with us and enjoy 1:400 leverage’. These offers are designed to appeal to forex newbies who are drawn to brokers who offer high leverage rates because it means they can trade large positions whilst only risking a small amount of capital. In these examples 200 and 400 times their trading capital respectively. In other words $1000 can be used to trade a position worth $200,000 or $400,000.
Of course ultimately it’s the forex brokers themselves that benefit from such leverage because they know that the majority of forex traders will end up losing money, and by enabling their traders to overcommit themselves it means they make more profits in the long run. Plus even if they do not overcommit themselves they know that even a small move can result in large losses for highly leveraged traders.
So as a forex trader, you should be wary of signing up to brokers who offer high levels of leverage. It usually ends up benefiting them more than it benefits you. Your major concern should be finding a top quality reputable company that is reliable even during busy periods of the day, offers tight spreads, and is fully licensed and regulated by the relevant authorities. Leverage should not really be an issue at all.
Your aim is to make money so to do this you should use strict money management rules. This means employing a tight stop loss and only risking a very small percentage, ie 2 or 3%, of your trading capital on any one trade. This will mean that any losses you may incur are kept small in relation to your total bankroll which means you can stay in the game and live to fight another day.
The thing to remember is that you can still make substantial profits from forex trading without over-leveraging yourself. High leveraged positions should be reserved for gamblers and we all know that gamblers using end up losing money in the long run.
By: James Woolley
It is important to choose your Forex trading strategy. Two basic areas of strategy are fundamental analysis and technical analysis. This is the same in the equity market as it is the Forex market. For most Forex traders, the most widely used strategy is technical analysis. The following article is explains how each strategy basically works and how they are used in Forex trading:
Technical Analysis
Since technical analysis is the most common, we’ll start with it. Technical analysts in the Forex market analyze price trends, exactly like in the equity market. There is only one real difference between using it in the equity market and using it in Forex. This difference is that the Forex market is open 24 hours a day, changing the time frame.
On account of this, your technical analysis has to be changed a bit so it can function in the 24 hour Forex market. Generally, the forms of technical analysis used in Forex are:
- The Elliott Waves
- Fibonacci studies
- Parabolic SAR
- Pivot points
To make more accurate predictions, a lot of technical analysts will combine these studies. The most popular combination is Elliott Waves and Fibonacci studies. However, others do choose to create trading systems in an attempt to continually locate related buying and selling conditions.
Fundamental Analysis
Valuing one company is difficulty enough. Imagine valuing an entire country. Because it is often very challenging, fundamental analysis in the Forex market is normally just used to make long-term predictions of trends. Some traders do use it to trade short term, though. There is quite a variety of fundamental indicators of currency value. Some of them are: – Retail Sales
- Purchasing Managers Index (PMI)
- Non-farm Payrolls
- Consumer Price Index (CPI)
- Durable goods
However, there are more fundamental factors that you have to keep an eye on than just these. A lot of different meetings are available where you can get quotes and commentaries that sometimes affect the markets just as much as the reports. In these meetings, you can discuss inflation, interest rates, and other matters that can have an influence on the Forex market. Merely taking a look at commentary and reading reports can be very beneficial to Forex fundamental analysts in grasping a better comprehension of the long-term market trends as well as help short-term traders to survive tremendous fluctuations in the market.
Choosing Your Strategy
Choosing a strategy and working on it until it is perfected down to the details is how most successful, experienced traders operate. There are many options for your style and methods. Some traders will concentrate on one certain calculation or study, and others focus on a broader analysis of trends. A combination of technical and fundamental analysis is what most professional Forex traders will advise. But everything is up to your decision and what you think fits your way of trading best.
A great way to develop your individual strategy is to create a demo account and trade “virtual money” until you get the hang of it. This way you don’t have to risk your money in an investment until you are absolutely sure that you know what you are doing.
Because the Forex market is the largest in the world and the number of traders keeps increasing, it is crucial that you make sure you know your trading strategy and are ready to execute it.
By: Ferris Malone
From the start of consumer Internet usage, people have looked for ways to make money online. One of the newest of these is forex trading. Forex, or foreign exchange, trading was formerly a venue only for banks, institutional investors and the very wealthy. It wasn’t until 1997 that this opened up to smaller investors and the Internet played a large part in that event.
Forex trading online has revolutionized the currency trading market by giving everyone with Internet access real time access to the forex market. You can see how the currencies are being traded anywhere in the world. You can execute trades day or night. The forex market closes only on weekends, opening up again on Friday night for the next 5 24-hour days. Before this advent, regulations prevented certain short trades, however, a globalized forex market has forced the relaxation of these rules so Americans can compete internationally.
Another significant impact of the Internet on forex trading is the widespread proliferation of forex courses, advice and training to be found there. Of course, some of them are junk. But there is a great deal of useful programs that will guide and assist you in all aspects of your forex trading venture. Some things available that you may want to look for are in-depth analyses of forex trading systems, demo software to try out your training trades, availability of historical charts and online libraries, the opportunity to ask expert advice via live chat, video training and maybe even live seminars. Many courses will run online discussion boards, affording you the opportunity to learn from fellow forex traders.
And finally, online forex analysis software can be a great tool for the beginner and experienced trader alike. These programs identify and analyze emerging trends, showing the user how to execute the proper trades to capitalize on these events. In this way, a new trader can learn how the market operates and gradually gain the trading experience to start formulating his own trading rules, or system. And of course, they can retrieve this analysis, apply the rules of whatever system they are using and execute trades all online without ever leaving the house.
These three things combine to make a unique opportunity for making money online. A person could be a complete beginner knowing next to nothing about forex trading. He could find a good training course with all the right tools for the beginner. With practice and access to expert advice, he’ll start to make money. He’ll expand his account as he becomes more successful and will start to execute more and/or bigger trades as his income allows. With the right kind of training and experience, it would be entirely possible to set your sites on a career change, doing forex trading for a living completely from home.
Many people now depend on forex trading for their livelihood and maybe you too, will soon find your calling! The important thing is to get your education first. Practice with paper trades to gain confidence. Keep your good money management skills at the forefront and you could find a good source of income using the Internet to do forex trading.
By: Michael Russell
The stochastic Forex oscillator tool is a popular indicator employed by all kinds of traders in their Forex trading analysis. Momentum is the most important employ of this indicator. Traders in general make use of three types of stochastic indicators. They are made up of the slow stochastic, fast stochastic plus the full stochastic tool.
They operate very similarly. However, the most common kind utilized is the slow stochastic indicator. Stochastic indicators are based on the theory that prices normally close in the higher trading ranges when in an uptrend.
The reverse is also assumed where prices will close in the lower trading ranges in a down trending financial market. Momentum remains strong when this happens. There are two main indicator lines in the stochastic tool. These two lines are the %D in addition to the %K lines.
This is another oscillating banded indicator just like the RSI Forex indicator. A range of 0 to 100 is where the two %k in addition to %D lines range. The 80 in addition to the 20 line signify extreme trading ranges.
As mentioned earlier, this tool can also be utilized to spot oversold plus overbought conditions. Making it similar to the RSI indicator yet again. Should the indicator breach the 80 line, this is a sign that conditions are overbought. If the indicator trades below 20, the financial instrument is oversold.
Forex traders also apply the stochastic oscillator to verify if market momentum is diminishing. If the indicator is in an opposite trend than the market then momentum has weakened.
Stochastic oscillators also offer the trader the alternative to employ cross over systems. It involves a cross of the faster %K over or above the slower %D line. Should it cross above the %D line, this is an indication that it may be a good time to buy. The reverse would suggest a sell signal.
As with moving average indicators, traders should avoid using the stochastic oscillator when the markets are ranging. It is mostly applied with a variety of other Forex indicators for its true benefit to be seen.
By: Prema Laga
Forex, which is short for Foreign Exchange ordinarily points to the Forex Market where currencies are bought in addition to sold. 1.2 trillion pounds are traded every single day in the foreign exchange market, making it the biggest market in the world by way of cash amount of trades as a measurement tool.
The New York Stock Exchange on the other hand, merely trades a cash amount of about 27 billion British pounds each day. Which makes the NYSE look very tiny in comparison.
The two markets differ in size to a great extent. Through the years, more as well as more persons are turning their attention to the forex market. This is because the forex market is so easily reached by any person with a broadband connection as well as a computer. have begun to capitalize on this by educating attracted people for free through their a range of seminars along with online courses.
This is done to persuade the client that they are the perfect company to conduct with. Unfortunately, a large amount of these free seminars touch very lightly on the significant information and instead concentrate on the possible earnings one can make with forex trading.
The forex markets are available on all hours of the day enabling traders to buy as well as sell currency pairs as they see fit. No one market encompasses the foreign exchange. Several large along with smaller markets from a variety of financial centers around the globe link up together to form the market. Important global financial centers get the majority of the traffic. These financial centers consist Tokyo, London, Zurich in addition to New York.
The vital requirements of major financial centers are political stability, a strong base of professional talent plus readily accessible capital. There are many products intended to trade the financial instruments on the markets. The three primary products used by traders are forex futures, options along with spot forex trading.
The most popular product among online forex traders is undeniably spot forex. The forex markets end the day in New York (North America) while starting life in Asia. This happens 5 days out of the week, barring major holidays. The weekends are when traders rest as they are not allowed to trade during those days. Online currency brokers will typically offer a especially high leverage on even the smallest trading accounts. As such, traders can trade in volumes far surpassing their accounts funds. If the leverage is abused by beginners, this commonly means a balance of zero soon enough.
By: Indran Manickam
Each and every single day, millions of traders all over the world trade Forex. But not all of them trade it at the same time or during the same session.
In each 24 hour cycle, there are namely 3 sessions. The Asian session, the European (or the U.K session) and the U.S session. The Asian session is the first to kickstart each day. As you can imagine, if we were to stereotype or generalise, each trading session would have their own temperaments and styles. More technically put, they would exhibit different ranges and behaviour.
We’ll be taking a brief look at just the Asian session this time round. The major trading cities for the Asian session include Sydney, Tokyo and Singapore. Oh and who can forget Hong Kong?
These cities contribute most of the trading volume experienced during the Asian session.
Within this trading session, the most popular pairs traded include USDJPY, EURJPY and EURUSD of which USDJPY would tend to be the most active since the Japanese yen is a major international currency.
Most forex traders tend to focus their trading efforts on the European session and the U.S session though because that’s where most of the action takes place and that’s also where most of the trading range is produced.
When trading the Asian session, some would describe it as watching the paint dry because it moves a lot slower than when the European cities are trading.
With that said, some traders I know enjoy trading the Asian session because they are able to consistently pick good and reliable moves so much so that they do not need to be trading the other 2 sessions.
By: Kelvin Chan
Some traders regard MACD divergence as a Forex signal to enter a high probability trade. They almost suggest you get straight in to a trade as soon as you see MACD divergence.
Is this Forex signal that reliable? To be fair, it certainly has a place in a successful trader’s kit of strategies, but as with any Forex signal, there are certain precautions that have to be observed to make any trade high probability.
At this time there doesn’t appear to be any Forex signal that offers anywhere near a 100% success rate.
So if you are tempted to trade on the basis of MACD divergence, what other factors should you keep in mind?
MACD Divergence Defined
First let’s just spell out exactly what is meant by MACD divergence.
MACD (Moving Average Convergence Divergence) comes as a standard Forex signal on all the main charting packages. Some show MACD by itself with two lines, one a combination of a 12 and 26 Exponential Moving Average, and the other line based on a 9 Exponential Moving Average.
Some charting packages also include what is called a Histogram in the same charting area as MACD. The histogram merely represents in a different way what is happening between the two MACD lines as to market momentum. The wider the gap between the MACD lines, the higher or lower the height of the histogram bars.
To identify MACD divergence, simply draw a line across the highs if MACD is above the zero line, or draw a line across the lows if MACD is below the zero line.
Now go to the price action section of the chart, the candlesticks, and draw a line across the highs directly above where the line is drawn on the MACD highs, or draw a line across price lows directly above where the line is drawn on MACD lows.
If they are going in opposite directions you have MACD divergence. In other words, when MACD is making lower highs and lower lows but price is making higher highs and higher lows, this negative MACD divergence forms a Forex signal indicating price could well start to drop.
If MACD is making higher highs and higher lows but price is making lower highs and lower lows, this positive MACD divergence forms a Forex signal indicating price could well start to rise.
MACD Divergence Precautions
Be aware that MACD divergence on a smaller time frame is not so significant. When it is seen on a 15 minute chart it may or may not be very important.
If seen on a 60 minute, 4 hour, or daily chart, start doing more analysis.
If you see MACD divergence on two or more of the higher time frames, then definitely sit up and take notice and start looking for other factors to indicate when price may react to the divergence.
This brings us to a key point when trading MACD divergence as a Forex signal to enter a trade. On a higher time frame, MACD divergence can be a fairly reliable indicator of a change in price direction. However, the big question is: WHEN?
Many traders get caught out by entering a trade too soon when they see MACD divergence. In many cases, price has still got some muscle to continue in the current direction. The trader who has jumped in too soon can only stare at the screen in dismay as price shoots through his stop taking him out.
How Can This Scenario Be Avoided
Before pulling the trigger when you see MACD divergence on the higher time frames, be sure to look for other key Forex signals to confirm that the divergence has really kicked in.
For example, if you see a distinctive candle pattern such as a tweezer top or a hanging man on the higher time frame it may appear price has topped out and is now ready to move in the other direction.
If at the same time the distinctive candle pattern is at a key level of previous support or resistance, or at a pivot level, or a Fibonacci retracement or extension level, you have added reason to believe this could well be a turning point and put an entry order in at this level to get taken in.
At the same time, you will want to consult your trading calendar to make sure you are not entering a trade near a significant Fundamental Announcement. Even though the MACD divergence may kick in soon, the Fundamental Announcement could cause a major spike in price and take out your stop.
So in summary, is MACD divergence a high probability Forex signal?
Answer: By itself NO!
How can MACD divergence be used safely?
Answer: Check to see if MACD divergence is seen on one or more higher time frame charts such as the 60 minute, 4 hour, or daily.
Then look for other Forex signals such as candle patterns, support or resistance levels, or Fibonacci retracement extension levels.
In other words, use MACD divergence as a confirmation Forex signal that you are going in the right direction rather than a stand-alone Forex signal.
By: Michael A Jones
Basically, foreign exchange trading or simply FOREX trading is just the buying and selling of the world’s currencies. Money today is not the same as money tomorrow. Money has time value. The worth of a currency can go up or down.
There is one secret that FOREX traders live by. And it is buy low, sell high. Don’t ever forget that rule.
However, the trick is to know when to buy and when to sell. In FOREX trading, everything is by speculation. Sure, there are graphs to aid decisions. Business pages also give out strategies for the day. But the next step is always a guess based from the previous actions.
FOREX traders like to call their speculations as smart guesses. Usually, patterns on the currency values can be derived from how the politics of a specific country is running.
For example, if there is a plan to oust the president, most probably the value of that country’s currency will go down-how low, we don’t know. Usually. Because there are still a lot of factors to consider why a currency is going strong or not.
Improvement on the tourism sector can mean more foreign investments. This will be good for a particular currency, but this may affect how the other countries are doing.
These are just trade scenarios. As the cliche goes, one man’s medicine may be another man’s poison. One country’s good tidings may be another country’s, well, downfall.
That is why in FOREX trading, another secret to live by is to be aware of the national news in the country concerned.
Current events have a say on the economics of a country. Money makes the world go round, so to speak.
But, if one is truly serious in earning their first million in FOREX trading, another secret is-it might be a good idea to invest in a FOREX trading training school. Learn from the pros and conquer the world afterwards.
Let me leave you one last secret I learned from my father. If everyone is going in this direction, go the other way. This applies to FOREX and other areas of life. You won’t ever get rich by following the crowd.
Besides buying low and selling high, follow that last secret and you might just join the ranks of the millionaires and billionaires.
By: Rose Basile
Forex strategies are essential for a forex trader to profit from the market. Forex trading strategies make a trader more sophisticated and confident by helping him in making right calculations about the market. In a market with always changing exchange rates it is foolishness to trade hysterically by just following the emotions or advices from unreliable sources.
There are lots of forex trading strategies followed by forex traders. They can be broadly classified in to two type of strategies are profit maximizing strategies and risk minimizing strategies. The strategy differs with individuals as each trader has unique needs and has unique trading abilities. A trader must design a forex trading strategy according to many factors such as his or her initial investment, account size, trading ability, risk tolerance, currency pairs trading, geographical limitations/advantages, the broker to which he is affiliated, the trading system he/she uses, the profit goal (short-term profit or long-term profit), etc.
The most followed forex profit maximizing strategy is the leverage. Leverage allows forex traders to trade with more funds than in his or her account. The leverages are provided by the forex brokers to their clients. The usual leverage is 100:1 – i.e., for $1 in account the trader can borrow $100 from his broker. Day traders get much more leverage than other traders and the ratio leverage differ with brokers and also with the account minimum, type of contract trading etc.
The most popular forex risk minimizing strategy is the stop loss order. Stop loss orders help traders to limit their loss by stopping a trade at a preset price. Forex trading systems allows traders to set their stop loss order prices. One related strategy is the trailing stop losses, which are proportional stop loss prices that come into play only when the prices are falling. There are also many other types of stop loss orders available which mainly depends on the broker to which the trader is affiliated to.
One another related strategy is the automated order entry. Automated order entry enables a trader to enter into a trade at a preset price rate automatically. The trader can set the price at his trading platform. Automated order entry methods help traders to enter the market at most favorable time. Apart from these strategies forex traders can use forex futures and forex options to cover the loss and well as to cover the profit. These contracts help forex traders to buy or sell currencies at a predetermined rate at a point of time in future.
Apart from these trading strategies, forex trader follow many other strategies for choosing currency pairs, trading hours, entrance and exit prices etc. Irrespective of the type of the strategy, all forex strategies involve risks. The success of a forex strategy depends on many factors like the market condition and the discipline of the trader.
By: Praveen Ortec
