FOREX vs FXDD

Technical Analysis USDJPY

noreply@blogger.com (Pikz warrior) — Wed, 04 Nov 2009 06:36:00 +0000

This pair did rebound by resistance level which initiated further downside movement. While resistance level and support line holds, waiting is better option with selling possibilities.

Trend Support Resistance

Long Term Negative 89.55 90.57

forex trading and working with statistics

noreply@blogger.com (Pikz warrior) — Mon, 19 Oct 2009 07:05:00 +0000

Producer Price Index

The (PPI) Producer Price Index is a measure of the average level of prices of a fixed basket of goods received in primary markets by producers. The monthly PPI reports are widely followed as an indication of commodity inflation.

The every PPI is monitored or considered important because it accounts for price changes throughout the manufacturing sector.

The PPI is often followed but excludes the food and energy components as these items are normally much more volatile than the rest of the PPI and can therefore obscure the more important underlying trend.

Studying the PPI allows consideration of inflationary pressures that may be accumulating or receding, but have not yet filtered through to the finished goods prices.

A rising PPI is normally expected to lead to higher consumer price inflation and thereby to potentially higher short-term interest rates. Higher rates will often have a short term positive impact on a currency, although significant inflationary pressure will often lead to an undermining of the confidence in the currency involved.

Trade Balance

the trade balance is a measure of the difference between imports and exports of tangible goods and services. The level of the trade balance and changes in exports and imports are widely followed by foreign exchange markets.

The trade balance is a major indicator of foreign exchange trends. Seen in isolation, measures of imports and exports are important indicators of overall economic activity in the economy.

It is often of interest to examine the trend growth rates for exports and imports separately. Trends in export activities reflect the competitive position of the country in question, but also the strength of economic activity abroad. Trends in import activity reflect the strength of domestic economic activity.

Typically, a nation that runs a substantial trade balance deficit has a weak currency due to the continued commercial selling of the currency. This can, however, be offset by financial investment flows for extended periods of time.

Housing Starts

Housing Starts are a measure of the number of residential units on which construction is begun each month and the level of housing starts is widely followed as an indicator of residential construction activity.

The indicator is followed to assess the commitment of builders to new construction activity. High construction activity is usually associated with increased economic activity and confidence, and is therefore considered a harbinger of higher short-term interest rates that can be supportive of the involved currency at least in the short term.

Fundamental & Technical Forex Trading

noreply@blogger.com (Pikz warrior) — Fri, 09 Oct 2009 16:03:00 +0000

Forex trading system is a set of parameters that predicts the price movement of a currency. Most experienced traders will use a trading system because it helps to determine when to enter a trade, how long to hold it, and when to sell and take a profit or accept a loss. These are decisions that traders make every day in every trade. Using a good trading system will not protect against a losing trade. However, it will help to keep losses to a minimum. It can also maximize the profits on each trade. In short, a trading system takes much of the guesswork out of trading.

Choosing a trading system is not an easy task. When selecting a system, the basic question to determine is what kind of trader you are. Are you a technical trader or a fundamental trader? Do you rely on charts and technical indicators or do you rely on economic data and reports? The answers to these questions are critical because it will help you to determine what type of trading system to adopt.

Many beginning traders reject using a trading system because they believe that trading systems are too restrictive or that they will miss out on good trades because they didn’t fit into the parameters of the system. But experienced traders know that trading systems will discover good quality trades. Of course, no trading system will find every profitable price movement. But it will make the most of their trading funds.

Two Types of Trading Systems

Like Forex traders, there are basically two types of online forex trading systems: Technical and Fundamental. There is another group emerging called the Intermarket trading system, but this type is not yet fully developed or employed by any definable group of traders. Back to the basics, the two types of trading systems are technical systems and fundamental systems. Let’s briefly review each type.

i- Fundamental Trading Systems

A fundamental forex trading system relies on the release of economic reports and the data found in those reports as parameters for entering a forex trade. This type of system is much more dependent on demand factors than technical trading systems. The parameters are the economic reports and their ability to affect the demand for a currency.

A fundamental trading system can have the parameters such as the release of the nonfarm payrolls with the expectation that the payrolls figure will be high, which would create more demand for the USD. Another parameter could be the release of the FOMC minutes in which the Fed makes a decision on interest rates. Any economic report can affect the demand for a currency and fundamental trading systems predict how and when this will happen.

Fundamental trading systems do not usually combine more than one report at one time, but will use only report and its analysts’ expectations to determine if demand will be increased or decreased. Charts are not considered or used by fundamental trading systems.

Technical Trading Systems

Technical online trading systems rely on technical indicators and charting techniques. The parameters for the system are determined solely by certain price movements on charts and the data from technical indicators. For example, a technical trading system could employ a parameter that the currency price must be within five percent of the 20-period moving average line. Another example is that a trading system looking for a strong trending currency could require that the ADX level is above 40.

Technical trading systems often combine technical indicators to determine the parameters. For example, a trading system could require that the currency is moving within the Bollinger Bands and that the ADX is above 40. Alternatively, a trading system looking for an explosive price movement could require that the Bollinger Bands are squeezing the currency pair and that the ADX is below ten.

Technical trading systems are used by both range traders and trend traders. There is so much technical data available that the indicators can be used for a wide variety of price movements.

Forex Trading Benefits

noreply@blogger.com (Pikz warrior) — Fri, 09 Oct 2009 15:55:00 +0000

There are five things give trading the forex market some unique advantages.

i. High Liquidity

In Forex Trading Liquidity is the ability of an asset to be converted into cash quickly and without any price discount. In forex trading this means we can move large amounts of money into and out of foreign currency with minimal price movement.

ii. 24 Hour Market

Since the online forex market is worldwide, trading is continuous as long as there is a market open somewhere in the world. Trading starts when the markets open in Australia on Sunday evening, and ends after markets close in New York on Friday.

iii. Profit Potential from Rising and Falling Prices

The forex market has no restrictions for directional trading. This means, if you think a currency pair is going to increase in value; you can buy it, or go long. Similarly, if you think it could decrease in value you can sell it, or go short.

iv. Low Transaction Cost

In forex, typically the cost for a transaction is built into the price. It is called the spread. The spread is the difference between the buying and selling price.

v. Leverage

Forex Brokers allow traders to trade the market using leverage. Leverage is the ability to trade more money on the market than what is actually in the trader's account. If you were to trade at 50:1 leverage, you could trade $50 on the market for every $1 that was in your account. This means you could control a trade of $50,000 using only $1000 of capital.

US Dollar Index In Forex Trading

noreply@blogger.com (Pikz warrior) — Fri, 09 Oct 2009 15:39:00 +0000

The US Dollar index was created to measure the value of the United States Dollar against a basket of foreign currencies.

The basket of currencies contains the Euro, Japanese Yen, Canadian Dollar, British Pound, Swedish Krona, and the Swiss Franc

Forex Trading vs Day Traiding

noreply@blogger.com (Pikz warrior) — Fri, 09 Oct 2009 15:29:00 +0000

Foreign Exchange or Forex vs Day Trading

Currency or Forex markets are the biggest (most liquid) markets in the world. These articles will explain what these markets are, how they are traded, and what the difference is between the forex and currency futures markets.

On the other hand, long term forex trading strategies are usually implemented by traders for weeks and even months. When long term traders buy, they can decide to hold on to their currency for as long as their long term strategy deems necessary. Long term forex trading strategies are less risky as you have time to plan your moves and to let the market move accordingly then to respond to it.

Risk-Reward In Forex Trading

noreply@blogger.com (Pikz warrior) — Fri, 09 Oct 2009 15:14:00 +0000

Risk is a part of Every Business and online Forex trading too. Every trade carries a certain level of risk. Every Forex trader must know the amount of risk that is being assumed on each trade. Knowing the amount of risk on each trade is one way to limit it and to protect your trading account. The best way to know your risk is to determine the risk-reward ratio. It is one of the most effective risk management tools used in trading.

The risk-reward ratio is a parameter that helps a Forex trader to determine the level of risk in a trade. It shows how much a trader is risking versus the potential reward on Each trade. While this may seem simplistic, many traders neglect taking this step and often find that their losses are very large.

Determine the Risk-Reward Ratio

The very first step is to determine the amount of risk. This can be determined by the minimum amount of money needed to enter the trade. The cost of the currency multiplied times the number of lots will help the trader to know how much money is actually at risk in the trade. The first number in the ratio is the amount of risk in the trade.

The reward is the gain in the currency price that the trader is hoping to earn from the currency price movement. This gain multiplied times the number of lots traded is the potential reward. The second number in the ratio is the potential profit of the trade.

Good Risk-Reward Ratio

The minimum loss in forex trading and risk-reward ratio for a Forex trade is 1:2. However, a larger ratio is better. An acceptable risk-reward ratio for beginning traders is 1:3. Any number below 1:3 is too risky so the trade should be avoided. Never enter a trade in which the risk-reward ratio is 1:1 or the risk outweighs the reward.

Many experienced trader will only enter trades in which the risk-reward ratio is 1:5 or higher. This requires that the trader wait for a trade with this ratio, but the reward is worth it. A higher risk-reward ratio is a good idea in case the currency does not make the anticipated price movement. However, if the trader uses a lower risk-reward ratio, there is very little room for smaller price movements and the amount of risk will increase.

The risk-reward ratio is an important risk management and trading tool. It is important for beginning traders to take the extra time to perform this task because it can help to minimize risk in every trade. Waiting for the right risk-reward ratio can take a long time. However, the benefits of waiting for a higher risk-reward ratio are worth the effort and patience. You will know your risk and know your potential profit. Most importantly, you will know whether the trade is worthy of your money.

Finding a Online Forex Strategy

noreply@blogger.com (Pikz warrior) — Fri, 09 Oct 2009 15:02:00 +0000

Finding a forex strategy is not a simple task. It will depend on many different factors that have to be tailored to the individual trader.

The first question that you have to ask yourself is, what do you want to get out of forex trading?

You Are an investor or a Regular daytrader?

If you are an investor, your goals might be longer term stability rather than short term profits. This means you must have a tight risk management plan and a larger fundamental grasp of what is happening with the currencies that you are investing in. Fundamental trading strategies are most suitable for this type of trading.

If you are a daytrader, you might look for a way to take advantage of daily currency fluctuations regardless of the long term fundamentals. As a daytrader, a system based on technical analysis would probably be the most suitable system

Trading Psychology

No matter what your strategy for trading, the bottom line is that you need to feel comfortable with it. Always spend time testing your strategy out on a demo account. If you are taking a system from another trader, spend time analyzing their trading with the system. If the system you want to use is a technical system that you developed yourself, try backtesting the strategy with a program like metatrader.

Finding a forex strategy is a personal decision. Each trader uses their own discretion when it comes to executing trades. Results may vary between two traders using the same system. Take your time when deciding on trading methods and developing a system. The forex market isn’t going to dissapear, it will still be there when you are ready to commit to live trading. The better you understand the nuances of your trading system and the forex environment, the better your chance for long term success.

Carry Trading in the Forex Trading

noreply@blogger.com (Pikz warrior) — Fri, 09 Oct 2009 14:58:00 +0000

Carry trading is a Good Known popular and simple method of trading in the forex markets. Learn to understand carry trading and the nuances and risk associated with it.

Introduction to Carry Trading

Carry trading is one of the most simple strategies for currency trading that exists In Forex History. A carry trade is when you buy a high interest currency against a low interest currency. For each day that you hold that trade, your broker will pay you the interest difference between the two currencies, as long as you are trading in the interest positive direction.

Online Forex Trading Psychology

noreply@blogger.com (Pikz warrior) — Fri, 09 Oct 2009 13:47:00 +0000

Online Forex Trading psychology is a very important part of online Forex trading. The leverage involved in forex trading can cause emotional swings that can affect your trading decisions.

1. Introduction to Trading Psychology

Trading psychology is the perception change that you go through once you are actively in the markets trading your own money. When trading on a demo account, it seems like it would be easy to make money and there seems to be no reason why you wouldn’t be able to start making money with a live account. Then, you make that first live trade and you start to feel indecisive about when to take profit, or cut your losses. You have just discovered the effects of trading psychology.

2. Trading Anxiety

Online Trading anxiety can be a problem for Forex traders that have suffered from serious losses. Anxiety can cause a loss of confidence, fear of mistakes, and take away your ability to be objective.

Advanced_ Online_Forex-Trading

noreply@blogger.com (Pikz warrior) — Fri, 09 Oct 2009 13:40:00 +0000

Buy cheap and sell expensive. In a perfect world, a forex trader would know exactly what a low price is, and what a high one is. In the real world, prices seem to run around in shades of grey. Add some leverage into that, and there exists the ability to make a lot of money, or lose it all quickly!

Professional traders often use advanced tricks such as hedging, carry trading, and forex options to lower the actual amount of risk they are taking when they make a trade. Advanced forex trading techniques can not only limit some of the risk on the table, but they can also bring in more money with less overall risk.

Learning how to use advanced methods to trade the forex market will set you above the average trader. It will help you to keep your options open when you might otherwise feel like you are in a corner.

Analyzing Currencies In Forex Trading

noreply@blogger.com (Pikz warrior) — Fri, 09 Oct 2009 13:32:00 +0000

Currency analysis can be a complicated process. There are two primary methods for analyzing currencies and their values. Those methods are fundamental analysis and technical analysis.

1- Technical Analysis

Technical analysis has long been used in traditional markets like the stock market. Technical analysis methods rely on price history in order to predict the future. There are numerous methods used in the predicting, but the bottom line is that they always rely on price movements of the past. Technical analysis takes a few different forms and many methods of use.

2- Fundamental Analysis

Fundamental analysis is very important part of learning to understand the markets. In the short run, the results are not always straight forward, they can even seem backwards. In the long run, currencies will always move along with fundamentals. Learning to use fundamental analysis will help you to understand the reasons behind trends and give you insight into currency movements.

Advanced Online Forex Trading - Trade Forex Like A Professional

noreply@blogger.com (Pikz warrior) — Fri, 09 Oct 2009 13:20:00 +0000

Online Trading forex can be as simple or as complicated as a new trader would want it to be. There are many advanced tricks and tips that professionals use to help manage their risk and diversify trading styles.

Advanced Forex Trading Techniques

Forex trading can be as simple or as complicated as you want it to be. In the beginning forex trading seems like it is simple. It seems like your only job as a trader is to pick what direction a currency pair is going to go and collect your profit. If only it were that simple all the time.

i- Hedging

Hedging is a common way to reduce risk by taking both sides of a trade forex at once. If your broker allows it, a simple way to hedge is just to initiate a long and a short position on the same pair. Advanced forex traders sometimes use two or sometimes three different pairs to make one hedge, but that can get very complicated. For example, say you decide that you want to go short on the USD/CHF, because you see it sitting at the top of a recent price range. You decide to initiate your short. After setting up your short, you start thinking that the USD/CHF is looking a little strong and you think that it might break upward and make your short an expensive one. To do an advanced balancing act, you start looking at other USD pairs. You find that the EUR/USD tends to move inversely to the USD/CHF. To complete your hedge, you go short on EUR/USD. The USD ends up breaking resistance and moves strongly against the CHF. Your short EUR trade becomes a winner and your USD/CHF trade is a loser, but your risk is limited because they almost even out.

ii- Scalping

Scalping is making a very short term trade for a few pips usually using high leverage. Scalping typically is best done in conjunction with a news release and supportive technical conditions. The trade can last anywhere from a few seconds to a few hours. Many beginning forex traders start with scalping, but it doesn’t take long to figure out how much you can lose if you don’t have any idea what you are doing. In general, scalping is a risky strategy that does not pay well in comparison it's risk. If you are going to make scalping trades, it is best to do them in conjunction with your overall trading position, not as a primary method of trading.

Advanced forex trading is about seeing all your options when you make a trade. Aside from using masterful risk management and extreme caution, advanced trading can be an alternate way to make profits and control losses. Advanced trading techniques are just about using the markets behavior to your advantage. Learning to use advanced techniques properly is what will give you the edge that will make you stand apart from the average trader.

iii- Position Trading

Position Trading is trading based on your overall exposure to a currency pair. Your position is your average price for a currency pair. For Example, you might make a short trade on EUR/USD at 1.40. If the pair is ultimately trending lower, but happens to retrace up, and you take another short at say 1.42, your average position would be 1.41. Once the EUR/USD drops back below 1.41, you will be back in overall profit.

iv- Forex Options

A forex option is the agreement to purchase a currency pair at a predetermined price at a specified time. For example, say you are long the EUR/USD at 1.40 and you feel that there is a chance that it will fall to 1.38 in overnight trading. Not wanting to risk a deeper reaction, you decide to put a stop at 1.3750, setting up a potential loss of 250 pips. 250 pips sounds really painful, so you decide to use a forex option to lessen the pain. You purchase an option for the overnight hours with a strike price of 1.3750. If the EUR/USD goes up and never touches 1.3750 overnight, you would lose the premium that you paid for your currency option. If the EUR/USD falls and touches your option and your stop loss, you would receive the profit from your option, depending on how much of a premium you paid, and you would realize the loss of your long trade on the EUR/USD. The option profit would make up for some of that loss on your currency trade.

The Basics Of Day Trading

noreply@blogger.com (Pikz warrior) — Fri, 09 Oct 2009 11:40:00 +0000

"Day trading" or trading in general is the buying and selling of many financial instruments, such as futures, options, currencies, and stocks, with the goal of making a profit from the difference between the buying price and the selling price. Day trading differs slightly from other styles of trading in that positions are rarely if ever held overnight or when the market being traded is closed.

Day trading was originally only available to financial companies such as banks or in stock exchanges, because only they had access to the exchanges and market data. But with recent technology such as the Internet, individual traders now have direct access to the same exchanges and market data, and can make the same trades at very low cost.

Styles Of Day Trading

There are several different styles of day trading, suited to different day trader personalities. The styles range from short term trading such as scalping where positions are only held for a few seconds or minutes, to longer term swing and position trading where a position may be held throughout the trading day. Most day trading systems have a lot of flexibility, and can have open positions for anywhere from a few minutes to a few hours, depending upon how the trade is doing whether it is in profit. Some day traders will trade multiple styles, but most traders will choose a single style and only take that type of trade.

Day trading also has different types of trade, such as trend trades, counter-trend trades, and ranging trades. Trend trades are trades in the direction of the current price movement i.e. buying if the price is moving up, and counter-trend trades are trades against the direction of the current price movement i.e. selling if the price is moving up. Ranging trades are trades that go back and forth between two prices, and are used when the market is moving sideways. Most day traders will choose a single type of trade, but some traders will take different types, and choose which one to trade depending upon the current condition of the market.

In addition to the style and type of day trading, there are other variances between day traders. Some day traders like to make many trades throughout the trading day, while others prefer to wait for what they consider the best conditions for their trade, and perhaps only make one trade per day. However many trades are made, the trading process that is used, and the desired goal of making a profit, are the same.

Markets of Day Trading

There are many different financial instruments, or markets, that can be day traded, and they are offered by various exchanges throughout the world. The main types of day trading markets are futures, options, currencies, and stock markets. Within these types, there are groups of markets based on stock indexes such as the Dow Jones, and the DAX, currency exchange rates such as the Euro to US Dollar exchange rate, and commodities such as gold, and oil. Day traders can have access to all of the exchanges and their markets via direct access brokers, so called because they offer direct access to the exchange, which provides faster trade execution at lower cost. Further information about the available markets can be found in the article Which Markets can be Day Traded?, and details of the most popular day trading markets are available in the Market Profiles category.

Its Times to Start Forex Trading

noreply@blogger.com (Pikz warrior) — Fri, 09 Oct 2009 11:31:00 +0000

The online forex markets are great because they are open almost all of the time and there are a wide range of currencies to choose from. This brings up an important question.

The most active hours for forex trading?

The most active hours all around are between the London markets opening around 8:00 GMT and end with the markets in the US closing around 22:00 GMT. The absolute busiest time in the forex markets are during the London to US overlap between 13:00 GMT to 16:00 GMT. These are the hours that are the most liquid or when the most traders are in the markets making trades. If your intention is to do daytrading, these are key hours!

The major sessions for forex trading?

There are 3 major sessions each day in the forex markets. They are the London session, the US session, and the Asian Session.

1. Asian Session

The Asian session is a reasonable quiet session on most days. All pairs are pretty slow moving and it is not a good time to day trade. The only real currency that has noteworthy activity is the JPY and the activity is slow unless a major financial event happens.

2. London Session

The London session starts around 8:00 GMT and winds down around 1600 GMT. The currencies that are the most active during these hours are EUR, GBP, and USD.

3. US Session

The US session starts around 1300 GMT and winds down around 22:00 GMT. The currencies that are the most active during these hours are AUD, EUR, GBP, JPY, and USD.

MetaTrader What Is It?

noreply@blogger.com (Pikz warrior) — Fri, 09 Oct 2009 11:04:00 +0000

MetaTrader on line trading software is an independent trading platform that was developed for online trading forex, options, and futures.

MetaTrader is made by the MetaQuotes company and it was created in 2002. MetaTrader was one of the first truly programmable trading platforms that came complete with its own programming language.

MetaTrader is a software platform that is independent of the forex broker. The brokers that support using the metatrader platform do package their own versions, but the back end software is maintained by the MetaQuotes Software Corporation.

The metatrader platform is most well known for it's diverse technical analysis ability and the ability to run Forex Robots and Expert Advisors.

Three Basic Services Offered by Forex Brokers

noreply@blogger.com (Pikz warrior) — Fri, 09 Oct 2009 10:39:00 +0000

As the maximum number of people trading Forex has risen, countless numbers of new brokers have also flooded on the Forex marketplace. This has created stiff competition among all forex brokers. The resulting competition has forced brokers to take extra measures to attract and retain maximum clients. More services, higher levels of personal attention, and additional trading resources are now offered to Forex clients. When looking for a broker, most traders are happy with the new services they find. Let’s consider these supplementary services offered by various Forex brokers and consider their usefulness in trading Forex.

1. Paper Trading

After a very hard work extensively studying and researching online Forex trading, many people are still hesitant to begin trading currencies. Why? They are afraid to lose money. For this reason, many brokers offer paper trading so people can actually trade Forex using real-time quotes, but not real money. This allows people to learn Forex trading in a real trading environment without the threat of major losses.

i. Perfect for Beginners

For beginning forex traders consider paper trading an excellent service that allows them to “practice” online trading Forex until they are ready to trade using real money. Most traders consider it an important way to learn the mechanics of placing currency trades as well as a good test of their trading knowledge and ability. One downside to paper trading is that beginning traders can get “stuck” in trading without the threat of losses. Be sure to ask whether new clients can paper trade with the broker and how long this service is available to their clients. (Some brokers limit paper trading to 30 days.) A period of 60 to 90 days is usually sufficient to obtain the most benefits from paper trading.

2. Online forex Trading Platform

This tool is essential for allowing people to trade via the Internet. This allows the trader to avoid calling a broker, which would increase fees and limit trading opportunities. If the trader is familiar with basic trading terms like pip, profit, and stop loss order, the trading platform is the best method for trading Forex.

i. Different Types of Forex Platforms

However, all trading platforms are not alike. Some trading platforms contain only the basic entry and exit orders. Others are more sophisticated in that they allow the trader to place stop loss orders, limit orders, and trailing stop orders as well as show account balances, available margin, and profits or losses on each trade. Another consideration is the appearance and layout of the trading platform. This is strictly an individual decision so the trader must personally determine its ease-of-use and accessibility. Always ask a potential broker to see the trading platform and, if possible, place an order using that platform.

3. Charting Packages

A charting service is a collection of charts that traders use for technical analysis. The charts range from the most basic charts that simply track the price of a currency pair to very sophisticated charts offering a wide range of technical indicators and simultaneous chart views. Three to five separate charting services are usually offered by a broker.

i. Charting maximum Costs

A basic chart is usually offered free or for a very low cost. A charting service that includes technical indicators, time frames, real-time data, and simultaneous, multi-chart views will cost a monthly fee. This fee could be quite substantial, often starting at $40 per month, which increases with each additional services provided.

How Forex Traders Make Mistakes

noreply@blogger.com (Pikz warrior) — Fri, 09 Oct 2009 10:29:00 +0000

When you getting started in online forex trading, there are more rare common mistakes to be avoided. This is a list of common forex trading mistakes.

1. Too Much Leverage

One of the biggest advantages of forex trading is the ability to use leverage or trading on margin. One of the most common mistakes that forex traders make is using too much leverage. Using too much leverage is when you have a small account balance, but make a big trade. If the market moves against your position by just a small amount, it can result in large losses. Commonly, the beginning forex trader will get emotional and nervous and close the trade for a sizable loss.

2. Picking Bottoms and Tops

Many of new forex traders attempt to try to pinpoint where a currency pair will turn around and start moving the opposite direction. This is something that is difficult even for professional traders.

3. Over Online Trading

Over online Trading occurs when forex traders try to look for trading opportunities that are not really there. It happens to new traders very often, because they just want to trade. The result is usually a poorly executed trade that results in an eventual loss. Over trading can also result in traders making too many trades at once and using too much margin.

Online Trading Software

noreply@blogger.com (Pikz warrior) — Thu, 08 Oct 2009 17:34:00 +0000

As a 1st day trader, your trading software and your charting software are the pieces of software that you will use the most. The following articles include documentation and tutorials for the most popular trading software and order entry software, including Interactive Brokers' Trader Workstation.

TickTrader

TickTrader is a relatively new piece of software, that is a combination of trading system developement software, charting software, and automated trading software. TickTrader has been designed specifically for creating and testing new trading systems, and then trading those systems automatically (i.e. without any human involvement). TickTrader interfaces with Interactive Brokers' TWS trading software, and can be used to automatically trade futures markets from any region.

As TickTrader's primary purpose is to develop and trade automated trading systems, its features are somewhat different from regular trading and charting software. TickTrader's main features are:

1 Simulation Automated Trading

Simulation Automated Trading - Automated trading in simulation shows how both your trading system and TickTrader itself will perform when trading live. When trading in simulation, TickTrader uses real time data, and displays the profit and loss of your trading system as it would if it were trading live.

2 Visual Algorithm Development

Visual Algorithm Development - Trading systems are developed using a visual display of various technical analysis criteria, which TickTrader calls its four dimensional criteria grid. TickTrader does not require any mathematical knowledge of the indicators being used, nor any computer programming experience.

3 Back Testing

Back Testing - Trading systems can be back tested using historical market data that is included with the TickTrader software. The historical market data is tick data (i.e. every trade is included in the data), so the back testing results will be almost identical to live trading. The markets that are included with TickTrader are the EUR, GBP, and JPY currency futures markets, and the ES, NQ, and ER2 index futures markets.

4 Live Automated Trading

Live Automated Trading - Live automated trading is what TickTrader was designed for. TickTrader will control every aspect of trading your trading system, including the entry, the management, and the exit. When trading live, TickTrader can send SMS messages to keep you informed of trading and system events (such as TWS disconnections, etc.).

5 Combined Bars

Combined Bars - TickTrader's charting includes a custom price bar that is a combination of time frame and range bars (hence the name combined bars). Combined bars appear to provide the greatest number of bars for each type of price movement, so both slow moving sideways markets and fast moving trending markets should be displayed with similar numbers of bars.

6 System Requirements

TickTrader does not require anything extraordinary for its system requirements, so it can be used on any computer that is already being used for day trading. According to the TickTrader web site, the system requirements for TickTrader are as follows:

Operating System: Windows XP or Vista
Memory (RAM): 150 MB for live trading (up to 400 MB for back testing)
Internet Access: ADSL (1 MBit or faster)
Screen Resolution: 1280 x 1024 for back testing (other screen resolutions will work fine)
Brokerage: Interactive Brokers with standalone TWS trading software for simulation and live trading

Online Forex Trading on Margin

noreply@blogger.com (Pikz warrior) — Thu, 08 Oct 2009 17:26:00 +0000

In the World forex, brokers allow online trading of foreign currencies to be done on common margin. Margin is basically an act of extending credit for the purposes of trading. For example, if you are trading on a 50 to 1 margin, then for every $1 in your account, you are able to trade $50 in a trade. This has both its drawbacks and advantages.

Advantages

The advantages of online trading on margin is that you can make a high percentage of gains compared to your account balance. For instance, let’s assume that you have a $1000 account balance and you are not trading on margin. You initiate a $1000 trade that nets you 100 pips. In a $1000 trade, each pip is worth 10 cents. The profit from your trade would be $10 or a 1 percent gain. If you were to use that same $1000 to make a 50 to 1 margin trade giving you a trade value of $50,000, the same 100 pips would net you $500 or a 50 percent gain.

Disadvantages

The most disadvantage of using margin is risk. Let’s make the opposite assumption that we made while discussing advantages. You are still using a $1000 account balance. You initiate a $1000 trade and lose 100 pips. Your loss is only $10 or 1 percent. This is not too terrible, you would have plenty of capital left to try again. If you were to make a 50 to 1 margin trade for $50,000 a loss of 100 pips takes $500 or 50 percent of your capital. One more trade like that and your account is finished. On the first example, you only lost $10 or 1 percent, you could make that same losing trade 99 more times before your account was empty.

Summary

Margin trading is just another tool. You can use it to make impressive gains and simultaneously risk excessive loss. Trading on margin effectively is best done with a reasonable amount of experience and a strict risk management policy.

How to Avoid online Forex Trading Scams

noreply@blogger.com (Pikz warrior) — Thu, 08 Oct 2009 17:20:00 +0000

As online forex trading rises in popularity, forex scams are becoming more common. At beginning forex traders are often considered to be an easy target for these forex scammers because the forex market is not regulated. Find out how to recognize and avoid scams.

Forex Scams

Forex scams can take many forms. Some scams can be compelling or seem to be very legitimate. They take advantage of traders seeking the magic answer to winning in the forex markets. Unfortunately, there are no easy answers. Here is a quick list of some popular general forex scams.

1. Signal Sellers

It seems like a new company springs up every day that has the signal service to beat all signal services. They profess to be able to sell you information on which trades you should make. These signal sellers usually charge a daily/weekly/monthly fee for their service and usually do not offer anything that will help improve your trading. There is no such thing as having a magic key to the market and if there was, why would you sell it?

2. Phony Investment Funds

In the past few years, funds called HYIP(High Yield Investment Program) have popped up all over the place. Most of these(if not all) are scams. They promise you a high level of return for temporary use of your money in their forex fund. It is a type of Ponzi scheme where the investors of yesterday get paid back by the investors of tomorrow. Once the fund runs out of prospects, they usually close down and take whatever money they had with them.

3. Miracle Software

There is no software at all that will figure out the forex market for you. However, a quick google search will turn up plenty of software sellers that say otherwise. Some companies out there are selling their special “packages” for upwards of $5,000 and many times it turns out to be something that you can find on the internet for free. It is generally not advisable to buy any type of forex software that will tell you which trades to make.

Forex Trading Risk Management

noreply@blogger.com (Pikz warrior) — Thu, 08 Oct 2009 13:10:00 +0000

Risk management can make the difference between your survival or sudden death with forex trading. You can have the best trading system in the world and still fail without proper risk management. Risk management is a combination of multiple ideas to control your trading risk. It can be limiting your trade lot size, hedging, trading only during certain hours or days, or knowing when to take losses.

Why is risk management important?

Risk management is one of the most key concepts to surviving as a forex trader. It is an easy concept to grasp for traders, but more difficult to actually apply. Brokers in the industry like to talk about the benefits of using leverage and keep the focus off of the drawbacks. This causes traders to come to the trading platform with the mindset that they should be taking large risk and aim for the big bucks. It seems all too easy for those that have done it with a demo account, but once real money and emotions come in, things change. This is where true risk management is important.

Controlling losses

One form of risk management is controlling your losses. Know when to cut your losses on a trade. You can use a hard stop or a mental stop. A hard stop is when you set your stop loss at a certain level as you initiate your trade. A mental stop is when you set a limit to how much pressure or drawdown you will take for the trade. Figuring out where to set your stop loss is a science all to itself, but the main thing is, it has to be in a way that reasonably limits your risk on a trade and makes good sense to you. Once your stop loss is set in your head, or on your trading platform, stick with it. It is easy to fall into the trap of moving your stop loss farther and farther out. If you do this, you are not cutting your losses effectively and it will ruin you in the end.

History from the Forex First Day

noreply@blogger.com (Pikz warrior) — Thu, 08 Oct 2009 13:03:00 +0000

Forex history can help you get a feel for the personality of currencies and how they interact.

Bretton Woods

The George Bretton Wood's system was monetary management system that established a new monetary order. The name comes from the location of the meeting where the agreements were drawn up, Bretton Woods, New Hamshire. This meeting took place in July 1944. The Bretton Woods agreement was responsible for the set up of the International Monetary Fund. The Bretton Woods System was an attempt to avoid worldwide economic disasters such as the ones experienced in the 1930's.

What was the Purpose of Bretton Woods?

The purpose of the Bretton Woods meeting was to set up new system of rules, regulations, and procedures for the major economies of the world. The main goal of the agreement was economic stability for the major economic powers of the world. The system was designed to address systemic imbalances without upsetting the system as a whole.

The Effect of Bretton Woods on the US Dollar

The Bretton Woods system established the US Dollar as the reserve currency of the world. It also required world currencies to be pegged to the dollar rather than gold. The demise of Bretton woods started in 1971 when Richard Nixon took the US off of the Gold Standard to stem the outflow of gold.

By 1976 the principles of Bretton Woods were abandoned all together and the world currencies were once again free floating. Bretton Woods is an important event for forex traders because it was truly the founding of forex trading

Forex Trading Basics - The Basics of Forex Trading

noreply@blogger.com (Pikz warrior) — Thu, 08 Oct 2009 13:00:00 +0000

If you are a newbie in Online forex trading, this is the place to start. This Blog will help you gain an understanding of the forex market and how it works.

Is Forex Trading Work?

noreply@blogger.com (Pikz warrior) — Thu, 08 Oct 2009 12:57:00 +0000

Forex trading Or Online Trading is typically done through a Forex broker or market maker Or A online Forex Trading Software. As a forex trader you can choose a currency pair that you feel is going to change in value and place a trade accordingly. For example, if I have purchased 1,000 Euros in January of 2009, it would have cost you around $2,200 USD. Throughout 2009 the Euro’s value vs. the U.S. Dollar’s value increased. At the end of the year 1,000 Euros was worth $1,300 U.S. Dollars. If you had chosen to close your trade at that point, you would have made $100.

Forex trades can be placed through a broker or market maker. Orders can be placed with just a few clicks and the broker then passes the order along to a partner in the Interbank Market to fill your position. When you close your trade, the broker closes the position on the Interbank Market and credits your account with the loss or gain. This can all happen literally within a few seconds.