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FOREX Trade Execution

My purpose for writing this article is to demonstrate to you the advantages of trading on the FOREX market. However, there is one myth that I want to dispel before I go further. The myth is that there is a difference between trading and investing.

To dispel that myth, I quote from Al Thomas, President of Williamsburg Investment Company, who wrote, “If It Doesn’t Go Up, Don’t Buy It.” He said, “Everyone who invests is a trader, only the time period is different.” It is a lesson that I took seriously after taking a beating in the stock market in 2000.

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

Liquidity: The FOREX market is the most liquid financial market globally, with around 1.9 trillion dollars traded every day. The commodities market trades around 440 billion dollars a day, and the US stock market trades around 200 billion dollars a day. This ensures better trade execution and prevents market manipulation. It also ensures easily executable trading.

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

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

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

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

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

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

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

Why Trade The U.S. Dollar?

The Forex is an informal marketplace where investors worldwide come to exchange one currency for another. In truth, the investor is buying one currency while simultaneously selling another. Dozens of currencies are exchanged and all at varying rates that fluctuate constantly.

There is the potential for unlimited profits for investors that can accurately predict how the rates will fluctuate for a given period. Before investors can realize any gains, they must first decide which currency pairs to invest their money in.

To begin with, an investor does not necessarily lose money when the exchange rates are falling. Just as with equities, investors can profit on the Forex whether prices go up or down—so long as they predict correctly. The greater the fluctuation (regardless of direction), the greater the profit potential. Now the Forex market as a whole is considered to be very volatile and very fluid, meaning that prices fluctuate substantially, but investors can buy and sell positions easily.

While the Forex market as a whole may be both volatile and liquid, this does not mean that all currency pairs are equal. Some currency pairs, for instance, are traded in such low volumes and are so consistent in the exchange rates that they are both unprofitable and hard to liquidate should problems arise.

The U.S. dollar backs or finances almost 90% of all transactions on the Forex. The daily volume alone creates the large moves investors like to see because they can capitalize and make large profits if they play the game correctly. Plus, the liquidity of the U.S. dollar allows investors to unload positions easily when they become unprofitable. For these reasons, investors are advised to stick with only currencies that trade with the dollar when investing in the Forex.

Dozens of currencies are exchanged with dollars, but not all are as profitable as others. Seven other currencies trade with the U.S., which account for the bulk of the transactions on the Forex, and they include:

1. Euro (EUR)
2. British Pound (GBP)
3. Swiss Franc (CHF)
4. Canadian Dollar (CAN)
5. Australian Dollar (AUD)
6. New Zealand Dollar (NZD)
7. Japanese Yen (JPY)

The best currency pair will include the USD and the currency that produces the greatest price movement with the least volatility. To determine this currency pair, an investor will need to use analysis (fundamental or technical) to identify the best opportunities along with entry and exit points. However, because of its volume and liquidity, investors should find currency pairs that include the USD as they have the greatest profit potential. It is easy to enter and exit positions at will.

Why Trading The Forex Is A New Trend

The foreign exchange market, otherwise known as the forex, was first established in 1971. Despite being in existence for over 35 years, the forex just recently started to become a new and popular trend, a popular trend that many hope to become a part of.

Around the late 1990s, the forex market reached a critical point in its history. It was then that forex brokerage firms first opened to the general public. This opening allowed everyone to trade the forex. Before that point, the foreign exchange market was only for large financial institutions, corporations (particularly those that did business overseas), and central banks. Since the opening of forex brokerage firms to the public, many individuals from all walks of life have started trading the forex. This alone has made trading the forex one of today’s “hottest” trends.

In conjunction with brokerage firms opening to the general public, the low cost of trading on the foreign exchange market is just another one of many reasons why trading the forex market is a new trend, especially among those who never imagined themselves trading. Although brokerage firms and brokers vary, you will find that many forex brokers in the United States do not charge transaction fees.

These transaction fees are also commonly referred to as commissions. The forex also has minimal trading requirements. This not only means that you can trade as often as you would like to, but it also means that you can trade with much less money than you would in other markets. This is great for those interested in experimenting with the forex market without risking large amounts of capital.

Another reason why forex trading is considered a new trend is around-the-clock trading. The foreign exchange market has markets all around the world. For instance, markets can be found in London, the United States, and Hong Kong. Due to different time zones, the forex is open for trading twenty-four hours a day, five days a week.

In the United States and worldwide, many individuals work a traditional nine to five job. A nine-to-five job makes it difficult, if not impossible, to trade the stock market. With around-the-clock trading, time isn’t an issue with the forex. Whether it be early in the morning or late at night, the ability to trade on your schedule is one of the many reasons why trading the forex market is being considered one of the “hottest,” new trends today.

Of course, making money or yielding a profit is the greatest reason why trading the forex is a new trend. The foreign exchange market or the forex involves the exchange of foreign currencies. With leveraging floating exchange rates, the potential to yield a profit is high. As previously mentioned, the forex market has very small trading minimums.

That is why many individuals decide to test the forex market waters. To their surprise, many can make a small profit. That small profit often leads to more trades and the opportunity to yield even large profits. While there are risks associated with trading the forex, as with the stock market, many of the risks can be mitigated as long as you and other traders know what you are doing.

Speaking of knowing what you are doing, forex training courses are another one of the many reasons why forex trading is a new trend. Although they come in several different formats, Forex training courses are designed to educate hopeful traders like you. Many training courses, such as the training courses offered by Fxcenter.com, rely on different approaches or phases, such as online forex training, onsite forex training, and live market training.

Extensive training courses, similar to the ones offered by Fxcenter.com, are ideal as they allow you to examine and explore trading the forex at your own pace. With most forex training courses at least twenty hours long, there is more than enough time to familiarize yourself with forex trading adequately. This familiarization gives many hopeful traders the confidence needed to trade the forex, which further increases its popularity, making it a trend.

Since it is apparent to see that trading the forex is a new trend, are you capitalizing on that trend? If not, you are urged to examine trading the forex. After a close examination, you will see the many reasons you should and the many rewards of doing so.

Why You Need To Adopt A Forex Trading System To Make Money With Forex

Trading in currency can be very exciting and rewarding, but before rushing in, find out why you need to adopt a Forex trading system to make money with Forex. There isn’t one right system, but you need to have a system that you stick to so your strategies make sense.

Currency markets are different than stock markets, and you will need to spend a little time determining what system works best for you, which is why you need to adopt a Forex trading system.

You could adopt a Forex technical approach or a more fundamental approach. Both are successful trading systems, but combining the two results in a much more powerful trading system, so you need to adopt a Forex trading system. You can plot a very specific trading course while having a look at the bigger picture.

There are many analytical tools that you can use, and that is why you need to adopt a Forex trading system. In addition, as you gain more experience, you will get to understand better each of those tools and how to get the maximum benefit. You’ll suddenly be a pro at trading with Forex.

Consider watching for resistance levels which are prices that are much higher than where the currency generally trades. Just a couple more reasons why you need to adopt a Forex trading system. If a currency price manages to break through either the resistance level or the support level, the prices usually continue in that direction. They are seen as bullish and usually continue on this trend.

Moving averages is another Forex tool that you need. SMA is the simple moving average that shows the average price during a selected period which is usually either 7 or 14 days for which it is plotted against. Moving averages are commonly used to eliminate short-term price fluctuations and help give a clearer picture of how the currency prices will move. If you know when and why you need to adopt a Forex trading system, you’ll be ahead of the game.

Fundamental analysis is also a helpful tool because it can reinforce the indications that come from your technical analysis. Another reason why you need to adopt a Forex trading system Whatever your trading system, this is why you need to adopt a Forex trading system that works for you.

Why You Should Be Trading The Forex

Have you heard of the forex market before? The forex market is a term that is often used to describe the foreign exchange market. If you are unfamiliar with the forex or the foreign exchange market, you are urged to take the time to familiarize yourself with it. After a close examination, you will see an unlimited number of reasons why you should be trading the forex if you aren’t already doing so.

The foreign exchange market was first established in 1971. It revolves around the exchange or the trading of foreign currencies. Forex traders, or foreign exchange market participants, exchange one nation’s currency for another nation’s currency. The foreign exchange market grew in popularity as it was learned that the exchange rates for foreign currencies regularly floated or changed. This is where the potential of making a profit came in. Fast forward to today, and several developments have helped increase the popularity of the forex, developments that have made the forex the largest financial market in the world.

Now that you know the basics concerning the forex market, you may be wondering if it is right for you. What you may not know is that the forex has evolved. As was mentioned above, several developments had a profound impact on the foreign exchange market. One of those developments was forex brokerages, which started opening to the general public in the 1990s.

With the assistance of brokers, many “everyday” individuals saw an opportunity to trade the forex. For many, this was something that once was viewed as being out of their reach. Whether you are an experienced trader, such as someone who has dealt with the stock market daily, or even if you didn’t fully understand what the foreign exchange market was until today, you can still trade the forex. If properly executed, you may even be able to make a substantial profit doing so.

Unlike the stock market, the foreign exchange market is open for trading twenty-four hours a day, five days a week. This is because of marketplace locations; trading occurs in locations such as the United States, Switzerland, Hong Kong, Japan, and the United Kingdom. Due to different time zones, the forex market is open twenty-four hours a day. That twenty-four-day ability to trade on the forex is just another one of the many reasons why you should be trading the forex if you aren’t already doing so. Essentially, there is no exchange center or clearinghouse. Instead, forex traders and their brokers deal directly with other brokers, banks, and interbank.

In addition to the ability to trade whenever you have the time to do so or the ability to seek assistance from a forex market brokerage firm or broker, you should also be trading the forex because once you learn how the foreign exchange market works, trading may become a regular source added income for you. Before you go searching for a forex brokerage to work with, it is advised that you examine forex training courses.

Brokerage firms typically offer forex training courses, but those now offer several training courses without hidden agendas. Many brokerage firms offer you free or discounted forex training courses, most of which are sub-standard, only with the hopes of acquiring you as a client. While the price is nice, you shouldn’t let a free or discounted training course choose your forex market broker or brokerage firm for you.

When searching for a forex training course or program, you are urged to examine Fxcenter.com. The goal of FxCenter.com is to prepare you for forex trading. As a training center, not a brokerage firm, you are given the utmost level of training and education available, without any hidden agendas. The only goal of FxCenter.com is to prepare you for trading on the foreign exchange market adequately.

When doing this, FxCenter.com staff go by the belief that quality learning is better than rushed learning. For that reason, you will see that many training courses require at least a minimum of twenty hours’ worth of initial lessons. Completing each training course in phases that also includes live marketplace trading should help you feel comfortable trading on the foreign exchange market. This comfort will be critical when placing your trades and also helping you avoid some unnecessary risks.

Why You Should Trade FOREX Over Other Investments

Everyone has heard of stocks and shares, probably even the futures market, but trading the FOREX (Foreign Currency Exchange, or FX) market is a relatively new phenomenon. Until recently, FOREX was the domain of the banking fraternity (large banks can trade billions of dollars daily) and the elite in financial and business circles. 

But now the average person can be a part of this incredible and very profitable way of making a living, thanks to the personal computer and an internet connection. All done electronically and considered an over-the-counter (OTC) market; trading is far easier and less risky than the futures or the stock markets. Money can be made both on a rising and falling market, unlike the stock market, which relies on shares increasing in price to create profit.

More and more astute internet entrepreneurs are shunning the traditional financial markets and turning to FOREX trading. They know that it is possible to earn a full-time income from part-time effort – if you’d like to make $200 to $3,000 for as little as ten minutes’ work, and with minimal risk, then FOREX is for you.

FOREX, the spot (cash) market for buying and selling currency, is the largest financial market in the world. Every day more than $1.5 trillion (yes, trillion) is traded globally, and, unlike the stock market, which has fixed hours, it is a market that never sleeps. Somewhere in the world, at any time of day or night, FOREX is open for business, six days a week. The market starts each day in Sydney and moves around the globe as other FOREX financial centers open: first to Tokyo, London, and New York.

In simple terms, currencies are traded in pairs, for example, the Euro and the US dollar (EUR/USD). The first currency, in this case, the Euro, is known as the base currency; the second currency (here, the US dollar) is the counter-currency. 

All trades result in the simultaneous buying of one currency and the selling of the other. Thus, in this example, if you place an order to buy the EUR/USD, you buy the Euro and sell the US dollar. If you were to sell the pair, you would sell the Euro and buy the US dollar. There are many other currency pairs, such as USD/JPY, GBP/USD, EUR/GBP, USD/CHF, etc.

What makes trading FOREX an incredible way to make money online is that price movements are highly predictable, creating trends that can be anticipated when it comes to deciding when to buy and sell. Contrasting with stocks and shares, FOREX trading through brokers is commission-free. It is also possible and recommended to open a demo (practice) account with a broker first, where you can learn to trade and gain experience before you part with a cent of your own money.

Will Forex Trading Be Right For You?

When it comes to Forex currency trading, some basic character traits and lifestyle elements need to be in place to make a go of this type of trading.

Here are some examples of traits and conditions that should exist in your life before you embark on a round of currency trading.

Many people are looking for a way to get rich overnight.

Many scams out there that continually lure people in with wild promises of instant wealth are easily demonstrated by watching television or checking the bulk folder of your email account.

While some people attempt to make ridiculous promises about the money to be made in currency trading, the fact is that for many, it is just like any other type of work.

You must be prepared to put in your time, have some success, and experience some failures now and then.

If you are looking for instant success and have visions of spending the rest of your life on the beach after making a killing with currency trading, then you need to do some serious rethinking.

In like manner, you will need to possess patience if you are to get anywhere with currency trades.

While you may indeed experience incremental success with your transactions, your gains will come over time and usually will be rather small in and of themselves.

You may need to hang on to a currency for some time rather than trading it off, with an eye to the way you believe things will look a week or a month from now.

Make sure you can keep your cool and allow your better judgment to come into play. Patience tends to be rewarded handsomely.

The state of your finances also is a big factor in deciding on getting involved with currency trading.

As with any investment, you need to make sure you can afford to lose what you invest without creating any problems maintaining your current standard of living.

While some people like living on the edge, the fact is there is no glory in going for a deal and ending up having to sell the house to cover what turned out to be a bad deal.

If you cannot keep your head when it comes to only using your disposable resources to fund your currency trading, you need to rethink the whole idea.

There is a lot of money to be made with currency trading. However, it is not a venture that is right for everyone.

If you are looking for a get-rich-quick scheme, have a problem thinking decisions through with a cool head, or tend not to take care of your basic financial needs before you invest, then Forex currency trading is not the right choice for you.

If you are business-minded and can make good logical decisions, I am sure you will love trading currencies.

It should be noted that Forex trading involves a substantial risk of loss and is not suitable for all investors.

Will I Get Rich Trading?...Probably Not

I was hoping you wouldn’t throw that coffee cup at your screen; I’m only honest. Do some people get rich trading?… Absolutely. The internet is filled with talented advertisers that can excite anything from watching the stars to the latest and greatest make you rich on auto-pilot software programs for your trading signals. (but the stars thing does work great with my wife)

Here today, on the World Wide Web, I will reveal the Holy Grail of trading. The surprise is it won’t be found sold on the ‘net; it is not a trading system at all. It is (drum roll please) being honest with yourself. My goodness, that’s not very exciting after all the hype the gurus have fed us.

The truth is many trading systems work, but there are precious few people who can be honest enough with themselves to pick a system correctly. Most people that want to trade start by looking for that system that will beat the market. Now I know that some systems outperform others and by all means, you should seek the best one. Many struggling traders miss the boat because they don’t understand the best system that matches your personality. If one trader has good discipline, he may not need a very rigid system.

On the other side of the discipline spectrum, a trader would need many rules to protect him. If either of these traders tries to trade with another’s system, they would probably fail. When you try to trade a system that does not align with your need for discipline as an individual, you are destined to fight the same system your trading. The holy grail that many seek is the ability to identify their strengths and weaknesses correctly.

This sounds simple, but you would be surprised at how many people will disregard certain weaknesses that they do not want to admit to anyone, even themselves. If more traders would first be brutally honest with themselves and then design a system tailored to their attributes, we would have many more Rich traders.

Will you get rich trading? If you have the honesty to choose the correct system and the discipline to follow it, it may be possible.

Winning Strategies With Forex Charts

As you read forex charts, remember that the two fundamental approaches for online forex trading: fundamental analysis and technical analysis.

Fundamental analysis doesn’t rely on forex charts. It scrutinizes political and economic indicators to determine trades. Charts here are deployed as used as a secondary reference.

On the other hand, technical analysis attempts to predict price swings by analysis of historical price activity. Those who use technical analysis study the relationship between price and time.

The most actively traded pair of currencies is the Euro, and the US dollar uses them in our example. The dollar is on the right-hand side of the chart, and the Euro is on the left-hand side. The currencies are expressed about each other in pairing. Forex charges will always display how much of the currency on the right-hand side is necessary to buy a currency unit on the left side.

Looking at the typical EU-USD, the chart you will notice the last price displayed per the given date. This number is always emphasized. The time is tabbed horizontally across the bottom of a chart, and the price scale is displayed vertically along the right-hand edge of the chart. The time and the price are set in all caps to help the trader remember that technical analysis rests upon the relationship between time and price.

The trader observes the price and time movement on a chart. These include bars, lines, point and figure, and Japanese candlesticks– the most favored method. With the candlestick method, there is a large, red section that is the candlestick’s body. Lines protrude from the top and bottom, and they are the upper and lower wicks. When you look at all the candles on a chart, it is apparent that bodies come in different sizes. Sometimes nobody exists at all.

The same is true with wicks. Candle wicks come in many different sizes; there may be no wick at all. The price range determines the length of the body and the length of the wick for the candle. Longer candles will have had more price movement during the time that they were open.

The top of a candle wick is the highest price for that currency, while the wick’s bottom is the lowest price. A currency is bullish when the close of the candle is higher than the open. In simple terms, this means that there were more buyers than sales during the opening period. Sometimes the candles will not have wicks. The price opened, and it dropped off until it closed.

Forex charts don’t offer bulletproof trading hints, but they can help a trader. Past trends do have their place in forex trading, as most traders will admit, and using the charts to track historical trends can assist a trader in making a snap decision.

The online investor typically joins a service that provides real-time charts that update on currency activity. Charts can be checked on a minute-to-minute basis. Those who primarily do their trading based on historical accuracy can ease the burden of prediction.

Most forex traders, however, use a combination of fundamental and technical analysis. They may chart historical trends, but they will also pay close attention to political, cultural, and economic indicators within a region. They might use charts and other techniques to check the correlation between political climate and currency fluctuations. But even the most sophisticated technical analysis software or tool has its limitations. A trader must be prepared to take risks… and invest money that is not needed for the immediate future.

Why Technical Analysis Works Well In The Forex Market

If you are considering currency trading in the Forex market, or you are already involved in Forex currency trading, here’s a money-making lesson that we can borrow from investors who use technical analysis to help them make investment decisions in the stock market.

Performing technical analysis when currency trading is to predict profitable currency pair movements by analyzing price trends. The principles of technical analysis in the equity markets are the same as those in the Forex currency trading markets. The only real difference between the two is that the Forex market is open 24 hours a day while the equity markets are not.

This means that certain analytics that considers periods will need to be adjusted for Forex currency trading. Other than that, any of these common forms of equity technical analysis methodologies can be used when currency trading:

Elliott Waves: Developed by Ralph Nelson Elliott, this methodology is based upon the theory that market performance can be predicted by studying wave patterns that develop over time.

Fibonacci Studies: Developed by 12th-century mathematician Leonardo Fibonacci, this methodology is based upon the theory that changes in trends can be predicted based upon prices interacting with lines based upon certain sequences of numbers.

Parabolic SAR: Developed by J. Wells Wilder, this methodology is based upon examining prices compared to “stop and reversal” (SAR) numbers that indicate entry and exit points for a trade.

Pivot Points: A mathematical formula to determine when to exit a trade based upon the numerical average of the high, low, and closing prices.

As I mentioned earlier in this article, the key difference between technical analysis in the equities market and technical analysis in the Forex currency trading market is that it is possible to participate in Forex trading 24 hours a day, seven days a week. That key difference is also the primary reason that technical analysis works so well in currency trading.

For technical analysis techniques to deliver maximum results, there need to be extended periods available for patterns to develop and repeat. Because the Forex market never closes, and currency pairs are traded around the clock, definable patterns develop more quickly. The technical analyst has a plethora of Forex currency trading data available to work with.

Because more data means more accurate forecasting results, technical analysts can see better results quicker when combining technical analysis and Forex currency trading.

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