e- Forex Trading

Learn How to trade with Pivot point ?

2007-09-02T07:46:00.001-07:00

How to make deal ?

2007-09-02T07:44:00.000-07:00

Broker or Trader

2007-09-02T07:42:00.000-07:00

Spot and Swap Trading

2007-09-02T07:41:00.000-07:00

Currency Pair

2007-09-02T07:38:00.000-07:00

How to use Stop Loss and Take Profit ?

2007-09-02T07:37:00.000-07:00

What is Long OR Short ?

2007-09-02T07:35:00.000-07:00

How to buy and sell ?

2007-09-02T07:32:00.001-07:00

What is Currency Pairs ?

2007-09-02T07:29:00.000-07:00

Types of Exchange

2007-09-02T07:26:00.000-07:00

What is Foreign Exchange ?

2007-09-02T07:24:00.000-07:00

Introduction to Forex Trading

2007-06-16T08:46:00.000-07:00

Technical Indicators

2007-05-03T06:27:00.000-07:00

There are many different types of technical indicators; however they can be grouped into five types.

1. Trend Indicators:
As mentioned before trends show the persistence of price directions, either upwards, downwards or side wards. Trend indicators smooth out the historical prices to show market direction. The most common of these are Moving Averages. Simple trend lines can also be used to the same affect by drawing a line that joins the low and high points over a section of time; these are also used to form tunnels and triangles as popular analysis. Trend lines are also used to pick support and resistance levels.

2. Strength Indicators:
This is essentially a volume indicator and more popular in futures markets then foreign exchange. The most popular of these is Volume.

3. Volatility:
Measures and shows fluctuations over a section of time. These indicators help to pinpoint support and resistance levels, the most popular of these is Bollinger Bands.

4. Cycle:
These indicators tend to find patterns or more correctly repetitious cycles. Once again more popular in other financial markets. The most popular Cycle indicator is the Elliot Wave.

5. Momentum or Oscillators:
These indicators map the speed at which prices move over a given section of time. Momentum indicators determine the strength or weakness of a trend as it progresses over time. Momentum is highest at the beginning of a trend and lowest at trend turning points. Any divergence of directions in price and momentum is a warning of weakness; if price extremes occur with weak momentum, it signals an end of movement in that direction. If momentum is trending strongly and prices are flat, it signals a potential change in price direction. The most popular momentum indicators are the Stochastic, MACD and RSI.

Technical Analysis – an Introduction

2007-05-02T15:39:00.001-07:00

Technical analysis is the study of market data such as historical and current price data and volume in an effort to forecast future market activity. Historical price data is the most commonly used available data that is implemented into the analysis.
Historical market data is saved and forms charts over various periods of time. The technical trader can analyze varying periodical charts over a specific length of time for the basic purpose of picking the entry and exit levels of a trade. By studying the chart the chartist is able to get information at a glance that will hopefully represent the direction of the instrument in the future.
There is a never ending argument between fundamentalists and technical analysts about which method of analysis will show the best results. Technical analysts will claim that all the fundamentals are already built into the price, and so apart from natural disasters and unexpected world events the current price shows the market's expected value taking all the known information into consideration. The chartists are in fact looking for patterns or repetitions in price movements to guess the likely outcome of future prices – in a word they are looking for trends.

Technical analysis assumes three main points,
1. Fundamentals are already built into the price
2. History has a habit of repeating itself – find what happened in the past and project it into the future.
3. Trends are key – establish whether the instrument is moving in a trend, and then follow it. Typically there are three variations upward, downward or side wards. Once the type of trend is established an entry point is picked for the commencement of the trade.
Over the years various mathematical manipulations were placed upon market prices and volumes. Theses manipulations (known as studies) helped the technical analyst focus on identifying the trend and the entry and exit levels.
As with any analysis, discipline is the most important aspect of the study. If your studies showed that something was to occur, then follow your studies – do not let the market change your plan. If you were wrong then you were wrong, but stick to your game plan.

Guide to Trading

2007-05-02T07:54:00.000-07:00

1. Set a Stop Loss:
Before entering any trade, decide beforehand the amount you are willing to lose and stick to it, set a stop loss on the trade before you enter. Do not fluctuate your stop loss if you are in a losing trade.

2. Let your profits run:
Do not be emotional about a trade, you will lose some and win some – just know it. Know the reason why you entered a trade and stick to those reasons. The less emotional you are the more successful you will be. Stick to your game plan, move your stop loss as the market moves in your favor and let your profits run.

3. Don't be influenced:
You have your own game plan stick to it. If you are influenced by others you will constantly be changing your mind, learn to insulate external sources once you have made up your mind. You will always find someone who will give you a logical reason to do the opposite.

4. Keep your position sizes within your limitations:
Successful traders know that in order to profit you trade for the long term. Trading is a game of probabilities, and over the long run as long as you stick and implement sound strategies and stay consistent – success is much more likely to come. To be a successful trader you should never take a position that puts substantial capital in jeopardy. In actuality you will rarely find successful traders who risk more than 10% of their account in any trade. For instance, if you deposit USD 25,000 your maximum loss should be USD 2,500 on a margin of 5% and a EUR 100,000 minimum trade that works out at about 2.5 figures or 250 pips (on a EUR/USD trade) as a maximum. Normally trade with a stop loss of under 50 pips and a maximum stop loss of one-figure or 100 pips and trade sizes of 100,000 to 200,000 base units (the leading currency), thereby risking substantially less then 10% and more like 2-5% of the deposit on hand. You might want to start small and increase your trade sizes as your confidence grows.

5. Know your risk vs. reward ratio:
The minimum ratio you should be using is 2:1, so if you are successful on 50% of your trades you are doing well. For instance, if you are long GBP/USD and you want to earn 30 pips you should not risk more than 15 pips. You should never risk 30 pips in order to make 10 pips, For if you do you’ll make more a lot more successful deals then unsuccessful ones, but the poor ones will ruin any your chances for profit. Your risk vs. reward analysis is extremely important to trading successfully.

6. Have adequate capital:
You should never trade with money that you cannot afford to lose. Always make sure that you have enough credit, for example you should can ask yourself the following question: “if I were to lose 50% of my opening balance in 6 months will I still be able to afford to trade?” Only if the answer is yes should you start trading. One of the keys to successful trading is mental independence, which means your trading freedom must not be influenced by your fear of losing.

7. Trending or Neutral:
Learn to analyze the market; is it a trending market or a neutral market? In a trending market then follow the trend in a neutral market buy on lows and sell on highs as long as you use stop-losses you are controlling your risk.

8. Don’t fight the trend:
Don’t try to buy on dips and sell on highs on a trending market. The old saying "the trend is your friend" is a good one, why fight it go with it!

9. Averaging – don’t do it:
One of the most common mistakes traders make is the continuing adding of a losing position. Averaging will be the death of short-term trades. For short-term trades, preserving capital is the most important thing, and putting too much capital at risk will jeopardize success. In short term trading, if a strategy is right the market should move in the correct direction within a relatively short period of time, however if it's wrong, the short-term traders should realize that they traded incorrectly, they should take the loss and move on. There is not much room for pride in short term trading. You should never add to a losing position.

10. Chasing a bad idea:
Happens all the time, you see a potential trade - decide to wait till the next day to see if it sets up, when you see that it did exactly what you thought it may be too late. Review your reasoning for the trade, make sure your initial reason is still there if not forget about the trade. There will always be trading opportunities be patient and strike.

11. Understand the way the market thinks:
You should understand that all the information (except for newly released information which the market adjusts too within a short moment) is already built into the price of the cross. You should know what indicators are coming; particularly the majors and you should know what is already anticipation by the market. There are many publication of market anticipation for major indicators.

12. Trading - a game of probabilities:
You will not be correct 100% of the time, it’s a fact. Good experienced traders roll know this, it’s a numbers game, and you’ll make some and lose some the idea is simply to win more than you lose, not to catch all the fish in the pond. Understand trading is a game of probabilities and if you do the right thing in the long run, you will come out ahead. Learn from mistakes, when you start trading you may well lose more in the beginning than you make, think about what you did wrong, try not to be emotional about the trades, if you stick to your game plan and learn hopefully your profits will out weight your losses.

13. Know why you are in the trade:
Keep a trading log, and write down why you entered a trade. Don’t be impulsive have a plan, this way you will learn which strategies work for you in the long run and which don’t. If trading before or after releases work for you, look for them and trade those.

14. If the logic goes you go:
If the reason you entered the trade disappears then so does your reason to remain in the trade. If you think you’re at a low and it breaks through, get out, then reevaluate and decide once more.

15. Have a maximum run:
If you have 4 or 5 bad trades in a row, take a break, something isn’t working, go away regroup, don’t be afraid to take a break.

16. Study:
Learn new ideas, keep up to date, and don’t trade other people’s ideas, you should always know why your in the trade.

17. Have Fun:
Enjoy what you do, keep calm, stay as unemotional as possible - you will be more successful.

What is Margin (Laverage) ?

2007-04-28T06:35:00.000-07:00

Margin is the amount of equity that must be maintained in a trading account to keep a position open. It acts as a good faith deposit by the trader to ensure against trading losses. A margin account allows customers to open positions with higher value than the amount of funds they have deposited in their account.
Trading a margin account is also described as trading on a leveraged basis. Most online forex firms offer up to 200 times leverage on a mini contract account. The mini contract size is usually 10,000 currency unit, 1/200th of 10,000 equals to 50 currency unit, meaning only 0.5% margin is required for open positions. Compare to future contracts, which require 10% margin for most contracts, and equities require 50% margin to the average investor and 10% margin to the professional equity traders, foreign exchange market offers the highest leverage among the other trading instruments.
The equity in excess of the margin requirement in a trading account acts as a cushion for the trader. If the trader loses on a position to the point that equity is below the minimum margin requirement, meaning the cushion has completely worn out, then a margin call will result. Generally, in online forex trading, the trader must deposit more funds before the margin call or the position will be closed. Since no calls are issued before the liquidation, the margin call is better known as ‘margin out' in this case. The account will be margined out, meaning all the positions will be closed, once the equity falls below the margin requirement.

What is a spread?

2007-04-28T06:31:00.000-07:00

In margin forex trading, there are two prices for each currency pair, a "bid" (or sell) price and an "ask" (or buy) price. The bid price is the rate at which traders can sell to the executing firm, while the ask price is the rate at which traders can buy from the executing firm.

Bid/Ask
For example, when you see the price quote of EUR/USD is 1.2881/1.2884, the bid is 1.2881 whereas the ask is 1.2884. That means traders looking to sell must do so at 1.2881, those looking to buy must do so at 1.2884.
The difference between the bid and ask price is the spread, which constitutes the cost of the trade. In fact, all traded instruments - stocks, futures, currencies, bonds, etc. - have spread. If a trader buys at 1.2884 and then sells immediately, there is a 3-point loss incurred. The trader will need to wait for the market to move 3 points in favour of his/her position in order to break even. If the market moves 4 points in your favour, he/she starts to profit.
Many online trading firms like to promote margin forex trading as an almost cost-free instrument - commission free, no service charge, no hidden cost, etc. Traders should know that spread is the cost of trading, and in fact, it also represents the main source of revenue for the market maker, i.e. the forex trading company. The spread may appear to be a minuscule expense, but once you add up the cost of all of the trades, you will find it can eat away quite a portion of your account or your profit. If you check the price tag of a T-shirt before you buy it, do the same thing when you trade forex, look into the spread before you decide to trade. Your trade needs to surmount the spread (the cost) before it profits.
Know your expense: the spread
Spread is the cost to a trader. On the other hand, it is a revenue source of the firm who executes the trade. In the foreign exchange market, the spread can vary a lot depending on the executing firm and the parties involve. Inter-bank foreign exchange can have spread as tight as 1-2 pips, while the bank can widen the spread to 30-40 pips when dealing with individual customers. If you check out the spread of those small exchange shops nearby the tourists' sights, you may find the spread can go up to 400 to 600 pips.
Thanks to keen market competition, the spread of online forex trading is getting tighter in the past few years. For major online forex companies, their spreads are essentially the same. The table shows the typical spread of four major currencies of online forex trading at the time being:
Currency pairs Spread
EUR/USD 2-3 pips
USD/JPY 3-4 pips
USD/CHF 5 pips
GBP/USD 5 pips
It is important for a trader to find the tightest spread as possible, but anything that is far lower than the typical spread is skeptical. The spread is the main source of revenue of a forex trading firm, if the firm cannot earn enough from the spread, there maybe some other hidden cost in the transaction.
Another point to note is that many market makers often widen the spread when market conditions become more volatile, thus increasing the cost of trading. For instance, if an economic number comes out that is off expectations, thereby creating a flood of buyers or sellers, the market maker may often widen the spread to restore the balance between buyers and sellers. As a result, traders should inquire about the execution practices of their clearing firm; firms with poor execution of orders and a tendency to widen spreads will ultimately result in higher trading costs for the end user.

Orders - Stops and Limits

2007-04-22T02:20:00.000-07:00

As in other financial markets, one can enter the foreign exchange markets at the market or deal rate (this is often known as a Market Order) or at a future rate this is known as a Stop (often known as a Stop Loss) or Limit Order. However as opposed to other financial markets, placing orders in the FX market is much easier, gives far better results and has many more opportunities and variations on the order placed.
When you wish to enter into a trade at current market conditions one simply executes a buy or a sell market order. Often a trader may wish to either limit the loss of the position that he has open (in which case he is able to set a stop order) or he may wish to enter a trade but at a rate that is more attractive then the current market (in which case he can place a limit order).
As discussed above, a stop order can be placed on an existing open position to limit the possible loss on the open trade. For instance say if a trader is long 100,000 EUR/USD at 1.2820, he is obviously expecting that the EUR/USD rate will rise where he will be able to get out at a profit. However the trader may wish to limit the loss that he is willing to take on the trade. If the maximum loss the trader is willing to take is $1,000 and he knows that every pip is worth $10 in this case, calculated by 100,000 EUR*0.0001= $10, then he will want to set his stop order 100 pips from his execution price in this case 1.2720. At 1.2720 the client will lose $1,000 if it is not closed earlier and the AVA platform will execute the order if and when the Bid (since in this case the stop order is a sell order) reaches the stop rate of 1.2720.

Calculating your Profit & Loss

2007-04-22T02:16:00.000-07:00

As per our previous discussion the foreign exchange rate represents the value of one unit in the major currency in the terms of a secondary currency. Since when opening a trade you exercise the trade in a set amount of the major currency and when closing the trade you do so in the same amount, the profit or loss generated by the round trip (open and close) trade will be in the secondary currency.
For example if a trader sells 100,000 EUR/USD at 1.2820 and then buys 100,000 EUR/USD at 1.2760, his net position in EUR is zero (100,000-100,000) however his USD is not. The USD position is calculated as follows 100,000*1.2820= $128,200 long and -100,000*1.2760= -$127,600 short. The profit or loss is always in the second currency. For simplicity's sake the P&L statements often show the P&L in USD terms. In this case the profit on the trade is $600.

Bid and Ask or Buy and Sell

2007-04-22T02:12:00.000-07:00

There are always two numbers given after the currency pair, the first always has a smaller numerical value then the second. This can once again be shown using the same example (EUR/USD 1.2660 1.2663). The first number is known as the "Bid" or "Sell" and the second number is known as the "Ask", the "Offer" or "Buy".
The smaller number or the Bid (Sell) (1.2660) represents that price where one can sell the major currency and buy the secondary currency; sell the EUR and buy the USD. The second price the Ask (BUY) (1.2663) represents the price where one can buy the major currency and sell the secondary; buy the EUR and sell the USD.
In the trading window below the trader is able to buy the EUR against the USD at 1.2847 or sell the EUR and buy the USD at 1.2844. The trader is also able to buy the USD against the JPY at 117.60 and sell the USD and buy the JPY at 117.57.

Currency Pairs

2007-04-22T02:05:00.000-07:00

Currency Pairs:
Each currency is recognized by a three letter code. For example EUR (is the EURO and refers to the European currency), USD (is the United States Dollar). The worlds leading currencies (often referred to as the majors) are the EUR, USD, JPY (Japanese Yen), GBP (the British Pound or Sterling), CHF (the Swiss franc), AUD (the Australian Dollar) and the CAD (the Canadian Dollar).
Currencies are traded in pairs and are displayed as such. There is always the three letter currency code a slash and another three letter currency code. The first currency displayed refers to the "base", "leading" or "primary currency"; the second currency refers to the "secondary currency".
For instance when looking at the EUR/USD the EUR is the leading currency and the USD is the secondary currency. The "currency pair" or "currency cross" is then followed by a number; this is typically a five digit number with a decimal point after the first, for instance 1.2660.
The number represents the ratio of one currency against the other, and can be read as "the amount of the secondary currency needed in order to have one unit of the major currency". In the example just given, EUR/USD 1.2660, one would require 1 Dollar and 26.6 cents to exchange for 1 Euro.

Symbol	Country	Currency	Nickname
USD	United States	Dollar	Buck
EUR	Euro members	Euro	Fiber
JPY	Japan	Yen	Yen
GBP	Great Britain	Pound	Cable
CHF	Switzerland	Franc	Swissy
CAD	Canada	Dollar	Loonie
AUD	Australia	Dollar	Aussie
NZD	New Zealand	Dollar	Kiwi

Trading Tips:
1) Follow the trend - If the trend up place "Buy", if the trend down place "Sell".

Good Luck

Basic Concepts of Forex Trading

2007-04-02T07:13:00.000-07:00

The term Foreign Exchange means the transferring of one currency into another simultaneously. Since currencies are traded in pairs, to profit from an exchange rate move you need to buy the currency that you expect will strengthen and sell the other. For example if you believed that the Euro (EUR) was going to appreciate against the dollar (USD) you would buy the EUR/USD; or in other words buy the EUR and sell the USD. Alternatively, if you believed that the EUR was going to depreciate against the USD then you would sell the EUR/USD; or sell the EUR and buy the USD.

As can be seen there is no need to wait for a bullish market to profit, for at any given moment, one currency will be strengthening against another. The FX market is therefore constantly producing opportunities to invest.

Charts - Types

2007-03-27T06:37:00.000-07:00

There are three main types of charts, line, bar and candle.
1) Line chart :

basic and simply join one period closing price to another.

2) Bar chart

Each period is represented by a bar to shows price movements from one period to the next, and also show price movements within the period itself.

3) Candlestick chart

Nearly similar to bar charts except there colored bodies are able to give the viewer greater detail in movements within the period at a glance.Each period is made up of a candlestick as below.

Time Frame or Periods
Charts are viewed as a sequence of periodical prices. The period is usually a 1 minute chart and then periodically higher 5 min, 15 min, 30 min, 1 hour, 4 hour, daily, weekly and monthly.The longer the period the slower the chart, longer period charts tend to show more stable trends, shorter period charts tend to be used to pick entry and exit points.

Choose your own time frame when trade depend on your profit and loss setting.

Technical Analysis – an Introduction

2007-03-26T06:54:00.000-07:00

What we get from Technical analysis : -

Historical data
Current price
Trade Volume

Why we need Technical analysis :-
To be use for analysis in order to forecast future market activity and historical price data is the most commonly used available data that is implemented into the analysis. Basic purpose is for picking the entry and exit levels of a trade. By studying the chart the chartist is able to get information at a glance that will hopefully represent the direction of the instrument in the future.

Which one is better - Technical Vs fundamental

There is a never ending argument between fundamentalists and technical analysts about which method of analysis will show the best results. Technical analysts will claim that all the fundamentals are already built into the price, and so apart from natural disasters and unexpected world events the current price shows the market's expected value taking all the known information into consideration. The chartists are in fact looking for patterns or repetitions in price movements to guess the likely outcome of future prices – in a word they are looking for trends.

Technical analysis assumes three main points,

1. Fundamentals are already built into the price

2. History has a habit of repeating itself – find what happened in the past and project it into the future.

3. Trends are key – establish whether the instrument is moving in a trend, and then follow it. Typically there are three variations upward, downward or side wards. Once the type of trend is established an entry point is picked for the commencement of the trade.

Over the years various mathematical manipulations were placed upon market prices and volumes. Theses manipulations (known as studies) helped the technical analyst focus on identifying the trend and the entry and exit levels.

As with any analysis, discipline is the most important aspect of the study. If your studies showed that something was to occur, then follow your studies – do not let the market change your plan. If you were wrong then you were wrong, but stick to your game plan. (see Technical Trading Tips and Guide to Trading for helpful hints to trade).

Using A Strategy to Trade (Beginner2)

2007-03-26T03:58:00.000-07:00

Try another trading system created by Baby-PIP.com

Setting up the Platform:

Add a 5-period Exponential moving average(EMA) ,10-period Exponential moving average(EMA), Stochastics and 14 period RSI(relative strength indicator) on a daily candlestick Chart.

When to enter

BUY

When the 5 period EMA line Cross over 10 period EMA line.
RSI is greater than 50 (Above center line).
Stochastics headed up and not in overbought territory

SELL

When the 5 period EMA line Cross under 10 period EMA line.
RSI is less than 50 (Below center line).
Stochastics headed down and not in oversold territory.

Your Stop
Set your stop order 30 pips away from your entry price

When to Exit
Exit when the price move 30 pips in your favor.

Usually, the higher the timeframe, the more pips you should be willing to risk because your gains will typically be larger than if you were to trade on a smaller timeframe.