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Quick Forex Trading Strategies

Forex market or Foreign Currency Exchange market is one of the biggest trading markets in the world, with over USD 1.3 Trillion traded in a day. It is drawing attention ever since it is open to Online trading.

Forex trading can be very profitable if you take your time to do proper research, understanding various options, and choose a system that works for you. The most used Forex trading system may not be the most suitable for your needs.

There are many different kinds of Forex Trading Systems, and you need to know a few facts, as mentioned below, before choosing and funding a system.

1. Testimonials: Is there anyone out there trying to sell a system and show you testimonials from the people who didn’t like the design? Highly unlikely. It would be best if you did proper research before indulging in a system that is entirely new to you.

2. Impression: Do not be over-impressed from a high percentage of winning forex trades because 90-95% of winning trades with an average value of $10 get you $900. If you have a 10% losing trade and unfortunately average losing trade is $200, your account is reduced by $2000. This explains that people often tend to ignore while doing Forex Trading or any trading in general.

3. Profit: Do you want to work with a Forex Trading system that breaks even? Why? If you keep the money in your home, you will still break even, then why take all the hassles of setting up a Forex Trading account and do all the work. Speaking, you should always do some research on how profitable a particular trading system is?

4. Drawdown: The maximum drawdown of a trading system is defined as the most significant peak-to-valley drawdown in a trading system’s equity. Maximum drawdown gives us a measure of the survivability of the trading system.

5. Time to profit: The actual time it takes to achieve the results with a particular trading system. It would help if you planned to have a long and profitable relationship with your trading system.

Try to use a trading system that lets you open a Demo account so that you can practice and learn about Forex Trading without risking any money.

How To Read Currency-Pair Quotes

One of the most challenging things for newcomers to the forex to wrap their heads around is how to read currency-pair quotes.

After all, most of us are used to seeing one price for items-a loaf of bread costs $1.89; a stock sells for $39.50 per share, etc. But in these cases, we are exchanging one currency-U.S. dollars-for physical goods. Of course, buying one currency with another one can be a real head-scratcher, but this article will hopefully ease some of your confusion.

How Currencies Are Traded

Currencies are traded in currency pairs. For example, a standard currency pair is the U.S. dollar (USD) and the Japanese yen (JPY), expressed as USD/JPY. A quote for this currency pair might look like this: USD/JPY 116.01/05. This shows a 116.01 bid price (the first number) and a 116.05 ask price (replace the final two digits of the first number with the number appearing after the slash).

The bid price tells you how many units of the counter currency (the currency listed after the slash) you can get for one branch of the base currency (the money listed first). In this example, you could receive 116.01 Japanese yen for one U.S. dollar. The asking price tells you how many units of the counter currency you need to get one branch of the base currency. Here, the market maker will sell you one U.S. dollar for 116.05 Japanese yen.

If you’ve been paying attention, you’ve undoubtedly noticed that the market maker is buying dollars for 116.01 yen and selling them for 116.05.

This “profit” (the difference between the bid and the ask) is called the spread and is measured in pips. One pip is equal to each decimal-point difference between the bid and ask, so in this case, the spread is four pips.

For another example, let’s look at the Euro-U.S. dollar (EUR/USD) currency pair. First, notice that the Euro is listed first. This means that it, not the U.S. dollar, is the base currency.

Typically, the U.S. dollar is the base currency, but not when compared to the “Queen’s currencies” of the Great Britain pound (GBP), the Australian dollar (AUD), or the New Zealand dollar (NZD), nor when compared to the Euro (EUR).

Common Currency Pairs

There are four “major” currency pairs: EUR/USD, USD/JPY, GBP/USD, and USD/CHF (GCHF = Swiss franc); and three “commodity” pairs: USD/CAD, AUD/USD, and NZD/USD (CAD = Canadian dollar).

That’s eight currencies, which are a lot easier to follow than the over 13,000 stocks actively traded in the U.S. stock market.

You might have also noticed that the currency pairs above all involved in the U.S. dollar. Any currency pair that does not use the USD as either the base currency or the counter currency is considered a cross currency.

An example might be EUR/JPY or GBP/CHF. It’s important to note that not all forex brokers deal in all currency pairs, so if you have particular strategies in mind, it’s essential to make sure your broker deals in the teams you want to trade.

Forex Trading System

No discussion of trading system evaluation would be complete without a discussion of drawdown. Therefore, we must always look at the maximum drawdown of any trading system as it is essential.

The maximum drawdown of a trading system is defined as the most significant peak-to-valley drawdown in a trading system’s equity. For example, we have a trading system that reaches a particular equity peak of $100,000.

Let’s further say that two weeks later, the trading system equity is at $80,000. In this example, let’s say that the $80,000 equity is an equity valley. In that case, the peak-to-valley drawdown would be $100,000-$80,000 equals $20,000. This means that the maximum drawdown is $20,000.

So why is the maximum drawdown such an essential measurement in our evaluation of a trading system? It’s because the maximum drawdown gives us a measure of the survivability of the trading system—a simple measure but a step.

When we look at the maximum drawdown, we can say that this maximum drawdown can happen again throughout the life of the trading system. This is important for evaluating starting account size.

For example, let’s say that you traded the system using an account funded with $10,000. Right off the bat, you can see that this would not be prudent because, as we can see from our maximum drawdown figure, if we went into a drawdown immediately after starting our account, you would logically wipe out our account balance.

We can see from this quick illustration that we need to fund our account with more money than enough to cover the maximum trading system drawdown. So it makes perfect sense to have a buffer of some sort as well.

I would exercise caution if you are looking for a trading system and the recommended account size is the same as the maximum drawdown.

The maximum drawdown is an essential measure that gives us a better idea of what to expect when trading a particular system. A comparison of risk versus reward is vital in successful trading.

To Your Forex Trading Success!

Understanding the Basics of Currency Trading

Investors and traders around the world are looking to the Forex market as a new speculation opportunity. But, how are transactions conducted in the Forex market? Or, what are the basics of Forex Trading? Before adventuring in the Forex market, we need to make sure we understand the basics. Otherwise, we will find ourselves lost where we less expected.

This is what this article is aimed to, to understand the basics of currency trading.

What is traded in the Forex market?

The instrument traded by Forex traders and investors is currency pairs. A currency pair is the exchange rate of one currency over another. The most traded currency pairs are:

EUR/USD: Euro
GBP/USD: Pound
USD/CAD: Canadian dollar
USD/JPY: Yen
USD/CHF: Swiss franc
AUD/USD: Aussie

These currency pairs generate up to 85% of the overall volume generated in the Forex market.

So, for instance, if a trader goes long or buys the Euro, she or he is simultaneously buying the EUR and selling the USD. Likewise, if the same trader goes short or sells the Aussie, she or he simultaneously sells the AUD and buys the USD.

The first currency of each currency pair is referred to as the base currency, while the second currency is referred to as the counter or quote currency.
Each currency pair is expressed in units of the counter currency needed to get one branch of the base currency.
So, for example, if the price or quote of the EUR/USD is 1.2545, it means that 1.2545 US dollars are needed to get one EUR.

Bid/Ask Spread

All currency pairs are commonly quoted with a bid and ask price. The request (consistently lower than the ask) is the price your broker is willing to buy at; thus, the trader should sell at this price. Conversely, the ask is the price your broker is ready to sell at; therefore, the trader should buy at this price.

EUR/USD 1.2545/48 or 1.2545/8
The bid price is 1.2545
The asking price is 1.2548

A Pip

A pip is the minimum incremental move a currency pair can make. A pip stands for price interest point. For example, a move in the EUR/USD from 1.2545 to 1.2560 equals 15 pips. And a move in the USD/JPY from 112.05 to 113.10 equals 105 pips.

Margin Trading (leverage)

In contrast with other financial markets where you require the full deposit of the amount traded, you need only a margin deposit in the Forex market. Your broker will grant the rest.

The leverage provided by some brokers goes up to 400:1. This means that you require only 1/400 or .25% in balance to open a position (plus the floating gains/losses.) However, most brokers offer 100:1, where every trader requires 1% in balance to open a place.

The standard lot size in the Forex market is USD 100,000.

For instance, a trader wants to get long one lot in EUR/USD, and he or she is using 100:1 leverage.

To open such a position, he or she requires 1% in balance or USD 1,000.

Of course, it is not advisable to open a position with such limited funds in our trading balance. If the trade goes against our trader, the situation is to be closed by the broker. This takes us to our next important term.

Margin Call

A margin call occurs when the balance of the trading account falls below the maintenance margin (capital required to open one position, 1% when the leverage used is 100:1, 2% when influence used is 50:1, and so on.) At this moment, the broker sells off (or buys back with short positions) all your trades, leaving the trader “theoretically” with the maintenance margin.

Most of the time, margin calls occur when money management is not applied correctly.

How are the mechanics of a Forex trade?

After an extensive analysis, the trader decides a higher probability of the British pound going up. Therefore, he or she goes long, risking 30 pips and having a target (reward) of 60 pips.

If the market goes against our trader, he/she will lose 30 pips; if the market goes intendedly, he or she will gain 60 pips. The actual quote for the pound is 1.8524/27, 4 pips spread.

Our trader gets long at 1.8530 (ask). By the time the market gets to either our target (called take profit order) or our risk point (called stop loss level), we will have to sell it at the bid price (the price our broker will repurchase our position.)

To make 40 pips, place our take profit level at 1.8590 (bid price.) The market ran 64 pips (60 pips plus the four-pip spread.) If our stop loss level is hit, the market ran 30 pips against us.

It’s essential to understand every aspect of trading. So start first from the very basic concepts, then move on to more complex issues such as Forex trading systems, trading psychology, trade and risk management, and so on. And make sure you master every single aspect before adventuring into a live trading account.

Day Trading Strategies

Investors and traders around the world are looking to the Forex market as a new speculation opportunity. Your expectations of day trading must be realistic.

Day traders want to ride the stock’s momentum and get out of the store before it changes course.

Studies have shown that Day traders should never risk over 2% of their float on any trade.

Therefore, most day traders are looking for trading entries with a very high probability of success. In the simplest terms, day trading is the purchase and sale, or sale and purchase, of security on the same day.

Day traders rapidly buy and sell stocks throughout the day, hoping that their stores will continue climbing or falling in value for the seconds to minutes they own the stock.

Day traders will hold a stock until it goes up to about five or six cents and then sells. Day trading is just a numbers game.

Forex Day Trading: How To Create Massive Wealth From Forex Day Trading Are there effective methods for day-trading? Remember that “educational” seminars, classes, and books about day trading may not be aim.

What is a Pattern Day Trader? This is a day trader who trades four or more times in 5 business days within a single margin account.

 You’ll need to find out for yourself whether you are comfortable with the levels of risk inherent in day trading.

Day trading strategies demand using the leverage of borrowed money to make profits. If you have an account that gets classified as a “Pattern Day Trader Account,” it will require minimum liquidating equity of $25,000.

Establishing Trend And Profitability

FOREX trading, also known as the currency exchange, involves buying and selling of different world currencies. As a currency trader, deals are made when the national currency of one country goes up or down buys low sells high.

Best of all, because you are trading in money, it will never leave you with a product that nobody wants anymore or a company that has gone bankrupt.

If a currency is free-floating, its exchange rate may vary against other currencies and is determined by the market forces of supply and demand.

As a result, exchange rates for such currencies are likely to change almost constantly as quoted on financial markets, mainly by banks worldwide. A movable or adjustable peg system is a system of fixed exchange rates and a provision for the devaluation of a currency.

For example, between 1994 and 2005, the Chinese yuan (CNY, ¥) was pegged to the United States dollar at ¥8.2768 to $1. The Chinese were not the only country to do this; from World War II until 1970, Western European countries maintained fixed exchange rates with the US dollar based on the Bretton Woods system.

1. The Worlds Trading Market

As the largest trading market in the world, the FOREX market processed over 1.2 trillion dollars daily.

2. The Seven World Currencies

– US Dollar

– Japanese Yen

– Swiss Francs

– Australian Dollars

– British Pounds

– Euro Dollars

– Canadian Dollars

3. A Decentralized Market

The currency trading market will never falter. If one country’s gross national product falls, although some traders might lose money temporarily, other traders will quickly buy the now lower-priced currency. If enough people jump on the bandwagon and follow suit, the coin may make a real comeback or even end up higher than before the fall.

4. Day Trading

The market operates 24 hours a day, 365 days a year. So many traders work this market as their employment daily. For instance, if a particular currency price does not make a new high in the late hours of the morning, there are still traders out there who are interested in buying the said currency because of probable high value later in the day.

5. Trade Early

The currency values of a nation are declared in the early morning daily. Thus, as a trader, most if not all trading happens in the early morning, with buyers betting on certain currencies going up more than others.

Day Trading Forex Risk

Day traders should only risk money they can afford to lose. The practice of trading shares daily for profit is called Day Trading. A Day trader begins the day by buying stocks and selling all of them.

They are learning how to day trade is a process that takes time. A day trader must be realistic about the amount of work, discipline, tolerance to risk, and luck needed to succeed. In addition, today’s trade successfully requires good analytical skills, the ability to develop and follow a system, and stamina.

The most important question of a Trading System is how much to invest and how many positions to trade at the same time. Day traders can capture some of the spread through buying access to Direct-Access Broker systems rather than by trading through retail brokers. It would be best if you believe in yourself when day trading.

Don’t believe any claims that trumpet the easy profits of day trading. One cannot expect to make money day trading. Day traders, both institutional and individual, play an essential role in the marketplace by keeping the markets efficient and liquid.

Practice your day trading using a simulated trading system before using real money. Day trading has become an online phenomenon in the last year, which has resulted in manuals and courses on how to successfully day trade. The key to consistently profitable day trading is having lots of different trades available. So, is Day Trading Right For You?

Finding The Best Forex Trading System

Venturing into foreign exchange trading is not easy as it may seem. While capital appears to be the most important consideration, it does not guarantee a successful venture. One of the most important considerations you need to consider is the kind of trading system you will utilize.

The forex market involves the exchange of foreign currencies using brokers. The movement of coins serves as the determinant for market conditions. The primary objective of forex investors is to earn a profit. There are two possible outcomes when engaging in forex trading: gaining an income or losing your investment.

For those who intend to venture into the forex trading business, there are many powerful opportunities they can look forward to, mainly if you focus and invest a lot of money. The key to owning a successful forex trading business lies in gaining knowledge and being responsive. To be successful in the industry, you need to possess some traits, adopt some ideas, and learn new techniques or approaches.

Over the years, there have been many forex trading companies offering the best forex trading systems for their clients. With the technology of the Internet, it is now possible to access these systems online without the need for phones or traveling to another location. Thanks to the advancements in technology, you can conduct your business from the comforts of your home in your own time without reporting to a boss.

Most systems utilize advanced technologies that let you do back checking of previous market trading conditions. In addition, they provide convenience as they allow you to download the software to your PC directly. Aside from that, these programs also come with a tutorial video that will help you enhance your skills in a step-by-step process.

As soon as you have completed the training and downloaded the software, you can now allow yourself to earn profits in one of the most volatile but rewarding industries in the world.

To determine the best forex trading program, you first have to assess your needs. There are two varieties of systems found in the market, namely discretionary and mechanical forex trading systems.
The former utilizes good or bad experiences, direct perception, or immediate apprehension on inputs and outputs. On the other hand, the latter relies on systematic procedures and technical studies. Thus, you first have to determine which of the two systems will cater to your needs.

When choosing the kind of system, your personality as a trader should be your primary consideration. If you think that you can achieve something according to the set standards of your system and are worried about putting yourself in a risky situation, a mechanical system is the right one for you.

On the other hand, if you have the flexibility to adapt to any trading scenario, the discretionary system is the right one for you. However, with this kind of system, you need to lay down your next course of action.

The manner of choosing the system is an important consideration. However, some things need to be considered before choosing one. First, you need to ensure that the system you are considering is compatible with your trading personality. Otherwise, all your efforts will go for naught. Experiment with one, try both trading systems, and then determine which is the one for you.

 

Quick Forex Trading Strategies

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