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“How To” Start
Trading The Forex Market? ( Part 2)
Why is FOREX trading so popular?
Because you can trade from anywhere. From your kitchen
table, bedroom, garage or from the nearest Starbucks
coffeehouse ( most of them have wireless Internet
connection).
If you have or like to travel, take
your laptop with you and you can trade the FOREX
anywhere in the world where you have an Internet
connection.
When you want to start trading the
Forex Market nobody is asking you for a diploma, a
formal license or a proof of how ma...
online
foreign curreny trading forex, online forex brokers,
forex managed accounts,broker assisted a
Why is
FOREX trading so popular?
Because you can trade
from anywhere. From your kitchen table, bedroom, garage
or from the nearest Starbucks coffeehouse ( most of them
have wireless Internet connection).
If you have
or like to travel, take your laptop with you and you can
trade the FOREX anywhere in the world where you have an
Internet connection.
When you want to start
trading the Forex Market nobody is asking you for a
diploma, a formal license or a proof of how many hours
you have spent studying the Foreign Exchange Market
and/or Banking Industry.
FOREX Trading is
Economical and Start-up Costs are Low!
You can open
an account to trade Forex with as little as US$ 200 at
he most brokerage firms.
I personally do recommend
Fenix Capital Management, LLC, which offers a state of
art Trading platform, that allows you to place orders
directly by clicking on the chart.
The Main
Benefits of Trading the FX Spot Market are:
YOU
don't pay commissions or fees!
YOU can trade 24-hours
a day !
YOU can trade up to 400:1 Leverage !
YOU
can have FREE Streaming executable Price quotes and live
charts!
It is important to know the differences
between cash FOREX (SPOT FX) and currency futures.
In currency futures, the contract size is
predetermined.
With FOREX (SPOT FX), you may
trade electronically any desired amount, up to $10
Million USD.
The futures market closes at the end
of the business day (similar to the stock market).If
important data is released overseas while the U.S.
futures markets is closed, the next day's opening might
sustain large gaps with potential for large losses if
thedirection of the move is against your position.
The Spot FOREX market runs continuously on a 24-hour
basis from 7:00 am New Zealand time Monday morning to
5:00 pm New York Time Friday evening.
Dealers in
every major FX trading center (Sydney, Tokyo, Hong
Kong/Singapore, London, Geneva and New York/Toronto)
ensure a smooth transaction as liquidity migrates from
one time zone to the next.
Furthermore, currency
futures trade in non-USD denominated currency amounts
only, whereas in spot FOREX, an investor can trade in
almost any currency denomination, or in the more
conventionally quoted USD amounts.
The currency
futures pit, even during Regular IMM (International
Money Market) hours suffers from sporadic lulls in
liquidity and constant price gaps.
The spot FOREX
market offers constant liquidity and market depth much
more consistently than Futures.
With IMM futures
one is limited in the currency pairs he can trade. Most
currency futures are traded only versus the USD.
With spot FOREX, you may trade foreign currencies vs.
USD or vs. each other on a 'cross' basis, for example:
EUR/JPY, GBP/JPY, CHF/JPY, EUR/GBP and AUD/NZD
More and more well informed investor and entrepreneurs
are diversifying their traditional investments like
stocks, bonds & commodities with foreign currency
because of the following reasons: (will be continued)
RISK WARNING:
Risks of currency trading:
Margined currency trading is an extremely risky form of
investment and is only suitable for individuals and
institutions capable of handling the potential losses it
entails. An account with an broker allows you to trade
foreign currencies on a highly leveraged basis (up to
about 400 times your account equity). The funds in an
account that is trading at maximum leverage may be
completely lost if the position(s) held in the account
experiences even a one percent swing in value, given the
possibility of losing one's entire investment.
Speculation in the foreign exchange market should only
be conducted with risk capital funds that, if lost, will
not significantly affect the investors financial
well-being.
“How To” Start
Trading The Forex Market? (part 3)
More and more well informed investor and
entrepreneurs are diversifying their traditional
investments like stocks, bonds & commodities with
foreign currency because of the following reasons:
online foreign curreny trading forex, online forex
brokers, forex managed accounts,broker assisted
10 REASONS TO START TRADING FOREX!
More and more
well informed investor and entrepreneurs are
diversifying their traditional investments like stocks,
bonds & commodities with foreign currency because of the
following reasons:
1) FOREX is the largest
financial market in the world.
With a daily
trading volume of over $1.5 trillion, the spot FOREX
market can absorb trading sizes that dwarf the capacity
of any other market. In fact, when compared with the $50
billion daily market for equities or the $30 billion
futures market, it becomes quickly apparent this gives
you, and millions of other FOREX traders, almost
infinite trading liquidity and flexibility.
2)
FOREX is a True 24-hour market.
The FOREX Market
never sleeps. Trading positions can be entered and
exited at any moment around the globe, around the clock,
5.5 days a week. There is no waiting for an opening bell
as in the case of trading stocks. It is a 24- hour,
continuous electronic (ONLINE) currency exchange that
never closes. This is very desirable for you if you want
to trade on a part-time basis, because you can choose
when you want to trade: morning, noon or night.
3) There is never a Bear Market in FOREX.
You can
have access to a seamless exchange of currencies.
Currencies trade in "pairs" (for example, US dollar vs.
JPY (YEN) or US dollar vs. CHF (Swiss franc), one side
of every currency pair (for example, USD/CHF) is
constantly moving in relation to the other. Thus, when
you buy a particular currency, you are actually
simultaneously selling the other currency in that
particular pair. As the market moves, one of the
currencies will increase in value versus the other. Of
course, it is up to you to choose the correct currency
to be long ( you bought) or short( you sold).
4)
High Leverage - up to 400:1 Leverage.
You are
permitted to trade foreign currencies on a highly
leveraged basis - up to 400 times your investment with
Fenix Capital Management, LLC and with some other
brokers.
Standard 100,000- US$ currency lots can
be traded with as little as 0.25% margin, or $250.
Mini FX accounts are permitted to trade with just
0.25% margin, meaning, just $25 allows you to control a
10,000-unit currency position.
Futures traders,
who are accustomed to margin requirements generally
equal to 5-7%-8% of the contract value, will immediately
recognize that the FOREX market provides much greater
leverage, and for stock traders, who must post at least
50% margin, there’s no comparison. If you’re looking for
an efficient use of trading , trade the Forex Market.
5) Price Movements might be Highly Predictable.
Currency prices in the FX market generally repeat
themselves in relatively predictable cycles, creating
trends. The strong trends that foreign currencies
develop are a significant advantage for traders who use
the "technical" methods and strategies.
Unlike
stocks, currencies have the tendency to develop strong
trends. Over 80% of volume is speculative in nature and,
as a result, the market frequently overshoots and then
corrects itself. As a technically-trained trader, you
can easily identify new trends and breakouts, to enter
and exit positions.
6) YOU don't pay commissions
or fees to trade FOREX
When you trade FOREX,
through Fenix Capital Management LLC (FCM) you can do it
totally FREE of commissions and fees , regardless of
your account size.
Fenix Capital Management LLC,
requires a very low minimum amount to open a brokerage
account, only US$ 200 and they do not charge commissions
or fees to trade or to maintain an account, regardless
of your account balance or trading volume.
7)
YOU don't have to pay trading fees or exchange fees.
There are none of the usual fees, which futures and
equity traders are accustomed to pay:
NO exchange
or clearing fees,
NO NFA or SEC fees.
Because
currencies trade over-the-counter (OTC), via a global
electronic network, in FOREX, what you see on your
trading screen, is what you get, allowing you to make
quick decisions on your trades without having to worry
or account for fees that may affect your profit/loss or
slippage.
In the equity and commodity markets,
you must pay both a commission and exchange fees. The
over-the-counter structure of the FX market eliminates
exchange and clearing fees, which in turn lowers
transaction costs.
8) HOW to Forex brokers make
money if they don't charge commissions?
Like all
traded financial products, over-the-counter currency
trading involves a bid/ask spread, which represents the
prices at which your counterpart is willing to trade.
Your broker will receive a part of this bid/ask spread.
Because the currency market offers round-the-clock
liquidity, you receive tight, competitive spreads both
intra-day and night. Stock traders can be more
vulnerable to liquidity risk and typically receive wider
trading spreads, especially during after-hours trading.
9) Market Transparency.
Market
transparency is highly desired in any trading
environment. The greater the market transparency, the
more efficient the market becomes. Unlike other markets
where transparency is compromised (like in the many
recent scandals), FOREX markets are highly transparent
(i.e., analyzing countries, and having access to
real-time research / news, is easier than analyzing
companies).
Because of this transparency, as an
FX trader, you will be able to apply risk management
strategies in accordance to your fundamental and
technical indicators.
10) Instantaneous Order
Execution
The FX market offers the highest level
of market transparency out of all the financial markets.
Because of this, order execution and fill confirmation
usually occur in just 1-2 seconds.
In Forex,
order execution is all-electronic and because you'll be
trading via an Internet-based platform, instantaneous
execution is routine.
There are no exchanges, no
traditional open-outcry pits, no floor brokers, and
consequently, no delays.( will be continued )
“How To” Start
Trading The Forex Market ? (Part 4 )
How Currencies are quoted and what moves
individual currencies?
ONE of the best advantages
in FOREX Trading is
The amount of money you need
to place a trade (known as "margin") is all that can be
lost !
You have to know, that despite the
super-high leverage offered by some Forex brokers up to
(400:1); meaning if you put up $ 1000 the broker will
allow you to trade like you really have $400.000).
Forex trading is still less riskier than Stock or
Futures Trading, w...
forex trading, forex
exchange, online currency trading
How Currencies
are quoted and what moves individual currencies?
ONE of the best advantages in FOREX Trading is
The amount of money you need to place a trade (known as
"margin") is all that can be lost !
You have to
know, that despite the super-high leverage offered by
some Forex brokers up to (400:1); meaning if you put up
$ 1000 the broker will allow you to trade like you
really have $400.000).
Forex trading is still
less riskier than Stock or Futures Trading, where you
can loose more than you have deposited in your account.
This type of LEVERAGE does NOT EXIST in the equities
or futures market
In the Equities or Futures
markets, very often, sudden and dramatic moves occur,
against which you can’t protect yourself, even by having
placed your protective stops.
Your position may
be liquidated at a loss, and you’ll be liable for any
resulting deficit in the account.
But because of
the FX market’s deep liquidity and 24-hour, continuous
trading, dangerous trading gaps and limit moves are
almost eliminated.
Orders are executed quickly,
without slippage or partial fills. And finally, there
are no margin calls. For your protection, the broker
will automatically close out some or all of your open
positions if your account equity falls below the level
required to hold the positions.
Think of this as
a final, automatic stop, always working on your behalf
to prevent a debit balance.
Currencies are
traded in dollar amounts called “ LOTS”
In Forex
trading, with most Brokers, you have the choice between
2 different lot sizes.
Standard Lots or Mini
Lots.
One Standard lot is equal to $100,000 in
currency. The margin requirements, using a 400:1
Leverage, would be US$ 250, in other word you control
$100,000 worth of currency for only 250 US dollars.
You mean, depositing $250 with a broker, I could
trade 100,000$ worth of currency ???
NO, be
aware, that your account size has to be more than the
required margin of US 250. For example, if you place an
order to buy 1 Standard lot ( @100,000) of USD/JPY and
USD/JPY is quoted as 112.10/112.13, you buy USD/JPY at
112.13.
Your account balance would be $220,
because you paid 3 pips or $ 30 for this trade.
If you would close this trade immediately, you have to
sell it at 112.10 (the bid price) , for a loss of $ 30.
In fact you could not get executed on this trade, as
the brokers trading platform would reject your order,
for the reason of having insufficient funds in your
account).
So, your account balance has to be
minimum $280. $250 for margin and $30 for the trade.
BUT....IF, after you have initiated the trade to buy
USD/JPY at 112.13, and the USD/JPY falls the next second
1 pip ( approx. $8), your position would be closed
automatically, because of margin deficit.
I will
explain later about having an adequate account size to
trade the Forex Market.
Currencies are always
traded in pairs in the FOREX. The pairs have a unique
notation that expresses what currencies are being
traded.
The symbol for a currency pair will
always be in the form ABC/DEF. ABC/DEF is not a real
currency pair, it is an example of a symbol for a
currency pair. In this example ABC is the symbol for one
countries currency and DEF is the symbol for another
countries currency.
Some of the most common
symbols used in Forex are:
USD - The US Dollar
EUR - The currency of the European Union "EURO"
GBP - The British Pound or cable
JPY - The Japanese
Yen
CHF - The Swiss Franc
AUD - The Australian
Dollar
CAD - The Canadian Dollar
There are
symbols for other currencies as well, but these are the
most commonly traded ones.
A currency can never
be traded by itself. So you can not ever trade the USD
by itself. You always need to BUY one currency and SELL
another currency to make a trade possible.
Some
of the most traded currency pairs are:
EUR/USD
Euro against US Dollar
USD/JPY US Dollar against
Japanese Yen
GBP/USD British Pound against US
Dollar
USD/CAD US Dollar against Canadian Dollar
AUD/USD Australian Dollar against US Dollar
USD/CHF US Dollar against Swiss Franc
EUR/JPY Euro against Japanese Yen
The currency
left of the / is called the base currency.
The
currency right of the / is called the counter currency.
When you place an order to buy the EUR/USD, for
instance, you are actually buying the EUR and selling
the USD.
If you were to sell the pair, you would
be selling the EUR and buying the USD. So if you buy or
sell a currency PAIR, you are buying/selling the base
currency.
The best way to remember is, by just
thinking of the entire currency pair as one item.
If you buy it...you buy the first currency and sell
the second currency. If you sell it...you sell the first
currency and buy the second currency.
That means
you would to be able to short-sell with no restrictions
so you could make money when the market drops as well as
when it rises.
The problem with traditional stock
market or commodity trading is that the market has to go
up for you to make money. With FOREX trading you can
make money in all directions.