Understanding forex trading for beginners

The currency market is one of the largest in the world, with a turnover of over a trillion dollars a day. It involves trading currency pairs by various participants from large investment banks, insurance companies and individuals. This market is filled with persons with diverse experiences from amateur traders to top-notch traders. There are numerous advantages that come with this market. For instance, it allows for 24 hour trading from the exchanges in Sydney to the New York stock exchange. Additionally, it is flexible and traders can adjust their trades depending on their preferences.

Forex trading for newbies can either be a rewarding or frustrating investment. It takes utmost skills and practice in order to learn the market operations. Some of the factors to consider on how to trade with Forex for beginners include the following:

Broker.

Brokers act as intermediaries between buyers and sellers of currency. The best part is the traders do not pay the broker fees directly. Their commission is obtained from the bid – ask spread. Numerous brokerage companies exist around the world. They have easy to use websites through which clients can obtain insightful information and make contact regarding any Forex issues. A good broker is one that is reliable, accessible, competent and trustworthy. Before engaging in trades, a beginner must choose carefully a good broker to avoid cases of scams and frauds lurk in this market.

Trading platform

Trading platforms are mediums through which trade executions are carried out. Most brokers have free platforms through which clients can access services. It is recommended that beginner traders start with the demo accounts to gain the desired level of experience before investing real monies into the market.

Most platforms have various indicators through which traders can predict changes in the bulls and bears. Some of the trends used are moving averages. Candlesticks and charts are also great analysis tools. Risk management is encouraged through the use of take profit or stop-loss.

Signals.

These are factors in the market that affect the demand and supply of currencies. They may be political, social or economical in nature. There are great sites through which beginner traders can obtain valuable information on market signals as they occur.

Automated trading.

Most often than not, Forex trading for newbies involves the use of automated trading strategy. This is when trades are executed on behalf of the individuals. The underlying concept is that highly experienced traders execute trades which are then executed to the amateurs’ accounts. However, this is only done when the trader consents to the terms and conditions associated with automated trading.

Qualities of a good trader.

Forex trading for beginners can be a daunting task. If not carried out properly, the amateur traders are susceptible to losses that can wipe out their initial capital invested. This may leave them feeling disappointed and frustrated. For instance, an ideal trader must be much disciplined in executing preferred trades. The newbie trader must be driven by patience and not greed or selfishness. Hard work, objectivity and integrity are also fundamental principles that must be upheld in this market.

Conclusion

It is imperative to note that loss is inevitable in the currency market. Forex trading has been made easier by the advancement in technology. Different online portals and websites exists that offer tutorial on how to trade with Forex for beginners. These have proven useful in educating the newbie traders and aiding them into being successful traders. Therefore, developing a good trading strategy is paramount in this dynamic market. All it takes is utmost hard work, passion and patience..

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One-Leg Forex Arbitrage

Experienced Forex traders have probably noticed that there is occasionally a slight discrepancy between the quotes for a given financial instrument as displayed by different brokers. Aside from possible manipulation by brokers, this happens as a result of temporary delays in the quotes feed, the smoothening of quotes, etc. The point of an arbitrage trade is to take advantage of these discrepancies. The trader places a buy order with a broker that has a lower price and simultaneously places a sell order for the same security with a broker that shows a higher price. The trade is executed when the profit that can be made from the existing difference in quotes is greater than the expenses incurred in the trade (i.e. the spread and commission that are paid to both brokers). This operation is known as classic (two-leg) arbitrage. The main advantage of classic arbitrage is the absence of risk and drawdowns. If the quotes of one dealer always lag the quotes of another dealer, it makes more sense to apply one-leg arbitrage, where trades are placed only with the lagging broker. The advantage that one-leg arbitrage has over classic arbitrage consists of a greater profit potential; the downside is that this strategy entails drawdowns.

If we study the reasons behind trading situations that make Forex arbitrage possible, we will see that in the majority of cases they are caused by a lag in market quotes of one broker relative to a more timely quotes feed of another broker. The delays happen for a number of reasons: the amount of time it takes for a quote to be transmitted from a liquidity provider through a broker’s server to your trading terminal can be greater for some brokers; as quotes pass through brokers, they may undergo such changes as filtering, smoothening, etc. As a result, when a security goes through significant price movements, the security quote that you see on your trading terminal lags behind the actual market quote as provided by liquidity providers. If the gap between the two quotes is wide enough to cover trading costs, you can place an order through the lagging broker, aiming to capture the difference between the lagging quote and the real quote of the broker with a faster quotation. In that case, you will have a statistical advantage over other traders. If the advantage is properly used, it is possible to achieve a stable growth of profitability.

It should be noted that, with one-leg arbitrage, it is completely unnecessary to hedge your open position with the second (faster) broker as you would when using the classic arbitrage strategy. There are two reasons for this: the profit will accrue to your lagging broker anyway, and hedging will result in higher trading fees in the form of spread and commission that you will have to pay to the second broker. This type of hedge-free arbitrage is referred to as one-leg arbitrage.

It should be apparent that successful application of Forex arbitrage requires access to a source that will provide quotes that do not lag. You can use a broker with a speedier quotes feed. A more reliable alternative involves the use of market quotes provided by a large bank or broker, e.g. LMAX or Saxobank.

The number of opportunities for arbitrage trading may vary widely from broker to broker, from dozens a day to only a couple per month. It depends on the degree to which a given broker’s quotes lag behind real market quotations.

We can conclude by busting a popular myth that one often sees expressed on the Internet. According to a firmly entrenched opinion of some, there is no point in engaging in arbitrage trading, because brokers will not pass on your arbitrage profits to you. They are able to do so because arbitrage advisors available on the market execute ultra-fast trades that are bound to alert brokers to arbitrage activity. Moreover, almost all brokers today require a minimum wait time between the buy and the sale of a position, usually not less than 1-3 minutes. The stipulation falls under brokers’ terms, and brokers have the right to cancel all trades that do not satisfy their terms of trading. However, arbitrage trades do not have to be executed instantly. If you increase the holding time of your position, you should not experience any hassles with your broker. Based on our own experience, if you wait at least 10 minutes before exiting your position, you will have no problems closing it.

Let me explain why arbitrage trading can still be profitable even when there is a wait time between the buy and sale of a position. You always have a small advantage when the quote is delayed and you place an arbitrage order. It is impossible to say where the price will head next after the quotes differential disappears, but if the volume of your trades is large enough, then half of your trades, irrespective of the subsequent price movement, will be profitable, while you will lose money on the other half. That way, when your trading volume is sizeable, the gains and losses incurred during subsequent price movements following the disappearance of the differential will offset each other, leaving you with a small advantage. When this advantage is cumulative, you will secure a stable growth in profitability. Essentially, the increase in the holding period between the entry and exit of your position will lead to an increase in the dispersion on your profitability chart (which will be reflected in the increase of the account drawdown, something that should be taken into consideration when choosing the size of the lot), while the average profitability of your trades will remain unchanged. Keep in mind, however, that this only holds true when you place a large number of trades, as you have the law of large numbers working for you.

The upshot is that Forex arbitrage strategies remain a useful and highly profitable way of investing your money.

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why forex education is very important

If you want to succeed in anything in life, including forex trading, hard work and dedication are mandatory. Even though forex trading may look easy from the outside, it is actually not. There are different techniques as well as terms that you will need to learn in order to trade in the most profitable way. Statistics show that about 95 percent of the people who join the forex trading market lose a lot of money. One of the common reasons why these people fail is lack of forex education.

One of the best ways you can use to get acquainted with forex education is by using demo accounts. Forex brokers usually provide demo accounts that you can use to learn to trade before you start using a live account. The best thing about the demo accounts is that they allow you to trade without using real money. So you will not have to worry about losing your money even when you make mistakes that could have cost you a lot of money if you were using a live account.

You can also take advantage of the forex trading resources such as CDs, books, eBooks as well as software that can be downloaded and installed on your computer. Most of these resources can be easily accessed online free of charge. Even if you have been in this business for quite some time and you are successful, it is important to continue equipping yourself with valuable forex trading education that will help you sharpen your skills even further. You will need to know how to follow trends, study chats and also analyze past trading data if you want to succeed in this business.

You can also sharpen your forex trading skills by learning from experts that have been in this business for long and have established a good reputation for being successful. The experts could be friends or colleagues or even family members. Some people are not so willing to share their winning strategies for free. But even if you will pay a small fee for it, the knowledge you will gain will guarantee you great profits in the long run.

If you have the right information when you join the forex trading market, it will be very easy for you trade with the surety of being successful. It is true that many people lose a lot of money regularly while trading in this market, but you do not necessarily need to be one of them. Forex education will help you gain knowledge about various factors that affect the movement of currencies, and as a result you will be in a good position to make good decisions that will prevent you from making losses.

There are various methods that you can use to get forex education, with every method having its strengths as well as weaknesses. You will need to choose the best one based on your individual needs. For more tips that will help you become an expert in the Forex Education in Malaysia, check out my website today.

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Top five qualities of a successful forex trader

A Forex trader is someone who takes the foreign exchange market to conduct trading of currencies and implements the arts and practices of Forex trading. A Forex trader must know several trading strategies as well as different jargons of foreign exchange trading. The top five qualities of Forex traders are as follows.

01. Discipline and Realistic: The first quality that a Forex trader must hold is discipline. Anyone can make money in Forex by virtue of luck, but not everyone can make money consistently. Moreover, the traders who tend to be anxious and volatile can lose the money in a short space of time. Besides, many traders know the Forex strategies, but they are unable to implement them correctly.

Another thing that goes with discipline is that you must be realistic while trading. You can love a specific currency, but that may not bring the desired level of success. Additionally, the trading strategies are like a compass that will show the path of success, but it is the discipline and realistic decisions that will lead to the glory. So, act like a disciplinarian and make realistic decisions to be a successful trader.

02. Patience and Professionalism: Patience and professionalism walk on the same path and brings optimum level of success. Now, there are plenty of traders that are not patient and lack the professionalism while trading. These traders are bound to lose all the money in the long-run. Take the time to educate yourself about Forex trading and be patient whilst learning the trades of a professional.

Wait for a good opportunity to come and don’t make decisions by emotions. Successful traders wait for a good opportunity and don’t let emotions such as fear, greed, and pride impede their Forex trading. So, be patient and be a professional for becoming a successful trader.

03. Perseverance: Success and failure are complementary things. Many successful Forex traders lose their entire money in the first place and were the prime example of ultimate failure. Conversely, they didn’t get depressed rather they analyzed their mistake and hold perseverance in their character to overcome the failure.

It is a common thing that beginners will fail and lose money, but if you don’t learn from failure, then it’s the biggest mistake. Perseverance and willingness to learn from the mistakes are two important things that successful traders always hold.

04. Rationality: Rational people are more successful than irrational ones and it’s a damn truth for every profession. A Forex trader who takes the Forex trading as a part-time job or thinks it as a hobby will never be successful. In order to be a winner in Forex, you must take the Forex trading seriously and consider this as a business that you must build with utmost care.

Changing the outlook towards the Forex trading makes it easier to succeed and the successful traders always tell that never take things for granted while trading and never treats it as a hobby. So, be rational and take Forex trading as your most important business.

05. Goal Oriented: Objective thinking and a disciplinary approach constantly brings success on board. A successful Forex trader has unique goals to reach that separate them from the rest. There is a saying that ‘a goal without a life is like a ship without radar’ and Forex trading is not different from this logic. It doesn’t matter how big or small the goal is, but you ought to have goals while trading. So, set goals and takes specific actions to reach those goals.

To sum up the article, I would like to say that emulating these traits will not be enough to be a successful trader because everyone is different. However, you can note from these characteristics and implement them in your trading to become a successful trader.

This article reveals the top qualities of a successful Forex Trader. If you follow these qualities and implement in your character, then I assure that you will be a winner. So, read the article carefully and become a successful Forex Trader.

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Getting Smarter With Modern Forex Tools for Technical Analysis of Trends

Every trading industry has its own set of conventions and benchmarks. There are certain key performance indicators in forex, just like any other trading domain. Thousands of Forex traders crash and burn within a few short weeks, because they do not have the valuable traits required to succeed in the long term:

  • Patience
  • Delayed gratification
  • Knowledge

Using technical tools for forex

Currency is all about numbers, so it is pretty important that you be good with calculating rates on the fly without having to think for too long. Forex is a very complex entity and it keeps changing every minute, so you need something to make sense of changes as they happen. This will help you make smarter decisions about your investments in currency.

There are a number of forex tools that are available to traders, but many do not actually bother understanding how they work. Good tools will help you:

  • Understand the key performance indicators
  • See which direction a particular currency is trending
  • Understand forex cycles or periods where currencies gain and lose value periodically

Some important tools

Here are some of the most important tools used by forex traders in order to gain more profit:

  • Relative strength index (as measured between 0-100)
  • Stochastic oscillator (give you some valuable trading signals to buy or sell)
  • Gann numbers – tracks the relation between time and changes in forex rates
  • Elliot wave – shows whether the overall trend for a particular currency is positive or negative over the long term
  • Gaps – these are literally gaps on the bar chart, where you can see if the lowest low rate on a particular date is higher than the highest up rate from the previous day
  • Coppock curve – a helpful tool to predict a bear market and make smarter investments in forex
  • Directional moving indicator – tells you whether a particular pair of currencies is generating movement and is worth investing in.

A purely technical analyst will not be concerned with the larger trends in the forex market, because it is her job to keep monitoring the key metrics using the tools above. However, if you want long term profit, you need to be smart enough to use these tools to your advantage.

If you are just starting out with forex trading, the above tools and terms will make very little sense to you. Pick one tool, observe it over the course of a few days and see how it relates to forex trends. You will gain some understanding of how you can use it to predict forex rates.

Do the same with the others and before you know it you will know them like the back of your hand. More importantly, you will know which tool is the most helpful at any given time.

ForexMinute is one of the leading Forex news sites, and it has helped thousands of traders in making the right decisions at the right time. If you are looking for the best Forex tools to make the right trade strategies, please feel free to visit our website right away.

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How to select the best forex brokers

With over $4 trillion traded everyday, the foreign exchange market is the world’s largest financial market with the most number of investors. However, it is a global market and there is no central place for the Forex market. This is where Forex brokers come in to help investors carry out their trading activity. Naturally, the massive size of the market means there is never going to be a shortage of Forex brokers. However, it is selecting the best Forex brokers that is the most difficult, especially for new buyers and sellers. Here are a few tips that might help you along the way.

Legal regulations – Remember that the process is a highly legally governed one and all brokers are required to be a part of the National Futures Association. Any reputable broker will have this listed in their credentials. Therefore, do not go for a broker even if their website is flashy and it looks like they have a lot of experience. Ask specifically if they are a part of the NFA before moving further, since this eventually ensures legal security as well trading success.

Currencies offered – The best Forex brokers will allow you to choose from a number of currency pairs, and will usually have the ones that you are interested in. Remember that your broker must offer the most popular currency pairs as well as the ones that you need. Pairs of currencies that are neither commonly used nor needed are not impressive, regardless of their quantity.

Helpful customer service – When reading up on the best Forex broker reviews, make sure you look for comments on their customer service. The Forex market works for 24 hours, with constant buying and selling taking place, which is why your broker’s customer service must also be available at all times. Make sure you know the type of customer service they provide, their usual waiting time and their staff’s ability to answer queries concisely. A quick call to the customer service centre should give you a good idea about this.

Trading tools – The best Forex brokers will provide you with trading tools and platforms that are appealing, helpful and easy to use. Look for a well-designed interface, especially one that has clear ‘buy’ and ‘sell’ options as well as an emergency ‘close all openings’ option. These ensure smooth running and managing even if you are not an expert with managing trading software programs.

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Forex pivot point calculator how to make your own or download free

Pivot point calculator is used on a daily basis by many successful traders to pinpoint key support and resistance levels where they can expect price to react.

You can download a free pivot point calculator from some web sites on the net by doing a simple search in your favorite search engine.

However, I like to use a pivot point calculator I can customize according to the exact currency pairs I like trading. Also I like to have additional pivot levels marked for reference.

A Microsoft Excel spreadsheet lends itself very easily to creating your own pivot point calculator. (Or if you wish you can download a free copy of the one I use listed in the resource box below).

The Formula

The formula for creating pivot points is based on 4 figures you need to obtain from your Forex charting software. You just need these values which can be obtained by looking at yesterday’s candle on a daily chart:

  • High
  • Low
  • Open
  • Close

The key figure in your pivot point calculator is the central pivot point. This value is obtained by adding the High, Low and Close figures together and dividing the total by 3. That’s it! You now have your central pivot point.

This pivot point now gives you the basis for calculating the other levels such as R1, R2, S1, and S2.

As the distance between these levels can sometimes be quite significant, many traders also put mid-levels on their charts and refer to them as M1, M2, M3, and M4. They are positioned as follows:

  • M1 – Between S1 and S2
  • M2 – Between S2 and the Central Pivot Point
  • M3 – Between the Central Pivot Point and R1
  • M4 – Between R1 and R2

The formulas for the other levels are:S1: (Central Pivot Point x 2) minus the High

S2: Central Pivot Point minus (R1 minus S1)

R1: (Central Pivot Point x 2) minus the Low

R2: (Central Pivot Point minus S1) plus R1

Once these levels are calculated it is then easy to put the M levels in your pivot point calculator.

M1: S1 minus S2 divided by 2

M2: Central Pivot Point minus S1 divided by 2

M3: R1 minus Central Pivot Point divided by 2

M4: R2 minus R1 divided by 2

In the resource box below is a link to a spreadsheet that is setup for the six major currency pairs. I use this pivot point calculator as part of my preparation for each day’s trading session.

I simply call up my daily chart, hover my mouse over yesterday’s candle which gives me automatically a popup window showing the High, Low, Close and Open values.

I then just type them in to the appropriate cells on the spreadsheet and all the pivot points are automatically calculated for me.

After this I insert horizontal lines to mark the main pivot levels on the 15 minute chart. This enables you to see the general area of price activity for the day.

Sometimes price will go way beyond the average range for the day and exceed R2 or S2. On the spreadsheet referenced below, additional pivot levels are calculated to give some guidance for such trading days.

Pivot points are one of the key tools traders use to determine where price is likely to go and where it is likely to stall. Either use the formulas above to create your own pivot point calculator or use the free download below.

For a free pivot point calculator, Fibonacci calculator and the best free economic calendars click here:

http://www.vitalstop.com/Forex/tools.html

For a free candle & chart pattern recognition reference tool click here:

http://www.vitalstop.com/Forex/Candle-Chart-Patterns

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http://www.vitalstop.com/Forex/Advisor/forex-online-trading-mohammed-ali.htm

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