Risk and Stock Trading Fees Revealed

You know the old joke:

"How do you make a million in the stock market? Start with two million?"

There is no way around it, risk and stock market fees are a part of trading that you can`t avoid. But, you can manage your risk. You can also manage the brokerage stock trading fees that eat away at your trading float. All it takes is some planning and making good choices.

If you think you`re ready to start trading, look carefully at where you`re getting your money from. Maybe you`ve been considering trading for a while and built up some savings. That`s good planning. Or maybe you`re considering borrowing money. This is generally a bad idea. Maxing out your credit cards is a quick and easy way to get cash, but the effects can be devastating.

It`s hard enough to worry about making trading profits along with the stock market fees you have to pay. But, worrying about the debt servicing on your credit cards builds too much stress. You will be too concerned with making payments to be concerned about good trading. Don Miller talks about this in Trading Markets World Meet the Traders when he tells new traders to worry about trading well, not making money. One of the best ways to learn trading is to begin on a part-time basis. This allows you to hone your skills while you still have an income stream. As a trader, you need to realize the risk you`re taking by simply putting your money into the market.

With good money management, you`ll be able to limit your risk. But, there is a kind of risk that can`t be minimized, and that`s "market risk”. This is the risk that the market might not be there tomorrow. Just by putting money in the market you are putting it at risk, so make sure you only trade with money you are willing to lose. This isn`t to say that you are going to lose all your capital - it`s just to say that you need to be able to focus on trading well, not trading to make money. See, you can only do this if you work with money you can afford to lose.

Once you`ve got your capital together, you can consider the next barrier to trading, stock trading fees. Although there is no perfect amount of capital to start trading with it`s no secret that the bigger the trading float you begin with, the easier it is to trade and the less percentage of stock trading fees you will have to pay. This is because of the single biggest expense in trading - brokerage stock trading fees.

Every broker has many different stock trading fees, but many charge flat stock trading fees per trade. These flat stock trading fees are easier on traders with larger fund sizes. For example, to obtain a better understanding on how stock trading fees work, let`s consider two traders. One is starting with an opening position of $1,000 and the second is starting with an opening position of $10,000. All traders are charged flat stock market fees of $100. So, our first trader, with a position of $1,000 has to make back ten percent of his float on each trade before he breaks even. But, our second trader only has to realize a one percent gain to reach his break-even point. This doesn`t mean that you can`t start trading with a smaller float, but if you do you are at a bit of a disadvantage.

However, you can use your trading float size to help determine your trading system. If you have a very small trading float, it`s recommended that you look at a long-term system. With a long-term system, you will be incurring far fewer stock trading fees. A short-term system, where you are receiving lots of buy and sell signals will chew up your trading float very quickly with the cost of the different stock trading fees.

This is why short-term systems, such as day-trading, are best suited to larger trading sizes - it is easier on the stock trading fees. I actually recommend that when you begin trading that you look at a longer-term system. You can manage a long-term system while still working full-time. Once you are successful with the long-term time frame, you might look at moving to a shorter-term system and focussing more time on your trading.

You can mange both risk and stock trading fees with planning, and by making good choices. Your level of capital will be set by what you can afford, and what you are comfortable risking. How that capital grows will be set by the time-frame of the systems your planning to trade, and the instruments you trade with. from winter's barrenness, they desert us too quickly!

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A Look at Online Forex Brokers

An online forex broker is a firm that facilitates retail trading using Internet technologies. Global Forex Trading (GFT), one of the popular online forex brokers. It provides retail traders with a free demo trading account, allows users to open a live account, gives live help, provides software called DealBook FX 2, and allows viewing of account documents. (DealBook FX 2 can be downloaded for the demo trading account).

Gain Capital Group’s Online Forex offers 200:1 leverage. In some cases, the total return on investment is higher due to leverage. For example, with $1000 cash in a margin account, the investor can control up to $200,000 in notional value. Of course, trading on leverage magnifies both the investor’s profits and losses.

GCI Financial Ltd. offers commission-free online trading in forex. GCI offers Internet trading software, fast and efficient execution, and 0.5% margin requirements. This broker offers USD or Euro denominated trading accounts. The spreads are 3 pips in EUR/USD and USD/JPY, and are 4 to 5 pips for other major commissions. Clients can hedge by opening positions in the same currency in opposite directions. Risk to the investor is limited to the deposited funds. Market analysis and research, real-time charts, and forex trading signals are available at no charge.

ACM, part of the REFCO group, offers 3 pip spreads on all major currencies, which works out to between 0.02% and 0.03% on the dollar value. They also offer commission-free trading, and forex trading with a 1% margin, which means that a trader can control $1,000,000 with $10,000 in his account.

There are many online forex brokers that offer free demo accounts for potential forex traders to practice trading. It is only a matter of registering and starting demo trading to get a feel for forex trading. In addition, at most sites, traders can find free forex news to assist them with their trade strategies.

Forex Brokers Info provides detailed information on forex brokers, forex trading and market makers, and other forex-related topics. Forex Brokers Info is the sister site of Incorporating in Florida Web.

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Forex Profits

The Forex Market—What, When and Why?

Forex, FX and the Forex market are some common abbreviations for the Foreign Exchange market. Actually it is the largest financial market in the world, where money is sold and bought freely. In its present condition the Forex market was launched in the seventies, when free exchange rates were introduced, and only the participants of the market determine the price of one currency against the other proceeding from demand and supply. As far as the freedom from any external control and free competition are concerned, the Forex market is a perfect market.

With a daily turnover of over trillions of dollars, the Foreign Exchange market conducts more than three times the aggregate amount volume of the United States Equity and Treasury markets combined. The Forex market is an over-the-counter market where buyers and sellers conduct foreign exchange business using different means of communication.

Unlike other financial markets, the Forex market has no physical location or central exchange. Since the Forex market lacks a physical exchange, the market trades continuously on a 24-hour basis, moving from one time zone to the next, across each of the world’s major financial centers every day. Trillions of dollars of foreign exchange activity takes place every day. From 1997 to the end of 2000, daily forex trading volume surged approximately from US$5 billion to US$1.5 trillion and more (according to various recent studies it has touched $1.7 trillion per day and dwarfs all other markets for trading in size and volume). It is really difficult, if not impossible; to determine an absolutely exact number because trading is not centralized on an exchange. But one thing is for sure that the Forex market continues to grow at a phenomenal rate.

Before the advent of Internet and ecommerce, only big corporations, multinational banks and wealthy individuals could trade currencies in the Forex market through the use of the proprietary trading systems of banks. These systems required as much as US$1 million to open an account. Thanks to advancements in online technology, today investors with only a few thousand dollars can have access to the Forex market 24 hours a day and around 5 ½ days of a week.

The Forex market is a nonstop cash market where currencies of nations are traded, typically via brokers called forex brokers. Foreign currencies are constantly and simultaneously bought and sold across local and global markets while traders increase or decrease value of an investment upon currency movements. Foreign exchange market conditions can change at any time in response to real-time events so it is also considered to be a highly volatile and fragile market too. Conditions of the Forex market never remain the same they changes every second.

The foreign exchange market dwarfs the combined operations of the New York, London, and Tokyo futures and stock exchanges. According to its size and scope it is many times larger than all other markets. Stats shows that spot transactions and forward outright Forex trading take place in the inter-bank market. 51% of the market is in spot Forex transactions, followed by 32% in currency swap transactions. Forward outright Forex transactions represent another 5% of this daily turnover, with options on ‘interbank’ Forex transactions making up another 8%. Therefore the inter-bank market accounts for 96% of the global foreign exchange market, with the remaining 4% being divided among all the global futures exchanges.

For traders, Forex trading provides an alternative to stock market trading. While there are thousands of stocks to choose from, there are only a few major currencies to trade (the Dollar, Yen, British Pound, Swiss Franc, and the Euro are the most popular). Forex trading also provides a lot more leverage than stock trading, and the minimum investment to get started is a lot lower. Add to that the ability to choose flexible trading hours (forex trading goes on 24 hours a day) and you have the reason why so many stock traders have flocked to day trade currencies.

Anthony Trister is a currency trader and is an owner of OneDayTrades which offers free, mechanical forex signals and an automated trading program for those wanting to trade forex. Free access available here: http://www.onedaytrades.com

Article Source: http://EzineArticles.com/?expert=Anthony_Trister

Forex Brokers - Helping to Maximize Your Success

A Forex broker is a broker dealing in foreign exchange, just like real estate broker who deals in real estate and properties. Simply, a Forex broker is an advisor who advises you about the forex market. However, the Forex market is not the perfect place to play with as a novice and beginner as there are many criticalities involved along with much risk bearing capacities. Novices can very quickly get their fingers badly burnt. But inexperience is not the only reason to consider using a Forex broker to trade in the high-risk international currencies market.

So, the Forex broker is an advisor who advises you about the forex market and allows you to work for 24 hours a day with major currencies like EUR, JPY, GBP, CHF etc against the US dollar on the spot, i.e. according to the current prices on the forex international exchange market. But the level of profits depends only on your abilities as well as your timely decision.

Although the role of the Forex broker is relatively redundant as a result of technological advancement and increased awareness, we cannot completely underestimate his role. The new paradigm shift has had something of a democratizing effect on the financial markets, and in the years that have followed a plethora of banks and brokerages have extended the range of their services to a new market by packaging up their online trading systems for the retail market, enabling the more modest investor to trade from their own computer screen - even on the previously out-of-reach currency markets. This is where the real role of Forex broker starts.

PIP is nothing special but Price Interest Points. In the forex market, currencies are always priced in pairs. The quoted price is the level where we, acting as the market maker, are willing to buy/sell the currency pair. In the wholesale market, currencies are quoted out to four decimal places, with the last placeholder called a point or a pip. A pip in most currencies is one /10,000th of an exchange rate (in USD/JPY, it is one /100th, likewise you can find for others).

Let’s see some more information about Spread. As with all financial products, forex quotes include terms like 'bid' and 'ask”'. The 'bid', in its simplest terms is the price at which a dealer is willing to buy (and clients can sell) the base currency in exchange for the counter currency. The 'ask' is the price at which dealer will sell (and clients can buy) the base currency in exchange for the counter currency. The difference between the bid and the ask price is referred to as the spread. The spread defines the trader’s cost, which can be recovered with a favorable currency move in the market. The value of a pip is determined by the pair of currencies being traded, the rate at which the currency pair is trading and the size of the position being traded.

There are many great Forex brokers, like COESfx, who maintains tight, competitive spreads in the four major currencies against the Dollar, and a total of 17 currency pairs including USD/CAD and AUD/USD. Some of the major features of COESfx are:

Real-time streaming prices

Price certainty on market orders

Competitive pricing

Fixed 3-5 pip spreads

For details, about this forex broker as well as their offerings, please visit: http://www.coesfx.com.

Anthony Trister is a currency trader and is an owner of OneDayTrades which offers free, mechanical forex signals and an automated trading program for those wanting to trade forex. Free access available here: http://www.onedaytrades.com

Article Source: http://EzineArticles.com/?expert=Anthony_Trister

Forex Trading - Advantages and Disadvantages

What is Forex Trading?

Forex, or Foreign Exchange, is the simultaneous exchange of one country’s currency for that of another. This market of exchange has more daily volume, both buyers and sellers, than any other in the world. Taking place in the major financial institutions across the globe, the forex market is open 24-hours a day.

Currencies are quoted in pairs. The first listed currency is known as the base currency, while the second is called the counter or quote currency. In the wholesale market, currencies are quoted using five significant numbers, with the last placeholder called a point or a pip.

The forex market is one of the most popular markets for speculation due to its enormous size, liquidity, and tendency for currencies to move in strong trends. An enticing aspect of trading currencies is the high degree of leverage available.

Advantages of forex trading

Leverage. Huge leverage is available in Forex trading, often up to 100:1 meaning that large profits can be generated from small margin deposits.

Liquidity. The enormous size and global trading of the forex markets means that the markets in the major currency pairs are very liquid making trade executions almost instant with little slippage.

Ability to go short. Since currency trading always involves buying one currency and selling another, there is no structural bias to the market. This means a trader has equal potential to profit in a rising or falling market.

Trends. Fundamentally, the value of a country's currency is determined by interest rates and the strength of the economy in relation to other countries. Currencies, therefore, have a greater tendency to trend until the fundamentals change.

Disadvantages of forex trading

Leverage. With huge leverage available to forex traders the danger is that positions which carry too much risk for the account size can be taken on, leading to margin calls. Effective money management rules must be adhered to.

Brokers. Retail traders must use a broker rather than dealing directly in the interbank market. The broker will be the counterparty in all transactions and is, effectively, making the market. They can, therefore, widen spreads or even refuse to trade during volatile trading conditions. To avoid dealing with brokers an alternative to forex is to use futures. See online futures trading for more details.

Spreads. As the retail trader must use a broker to trade, they cannot deal at the interbank rates. A broker will generally quote a fixed spread of 3-20 pips depending on the currency pair. The underlying interbank rate might be as little as 1 pip.

Forex is a very large market but for most retail traders dealing with brokers the odds are shifted against them. Online futures trading provides a much more level playing field for most traders who want to take part in forex trading.

Tim Wreford operates Online Futures Trading, a website that provides information and resources for traders. Tim also provides an article detailing the development of a day trading system, the results of which are updated daily on the site.

Article Source: http://EzineArticles.com/?expert=Tim_Wreford

Forex Made Easy for Everyone

Forex made easy is as simple as you would want it to be. The foreign exchange market is a worldwide market and according to some estimates is almost as big as thirty times the turnover of the US Equity markets. That is some figure to chew on. Forex is the commonly used term for foreign exchange. As a person who wants to invest in the forex market, one should understand the basics of how this currency market operates. Forex can be made easier for beginners to understand it and here's how.

Foreign exchange is the buying and the selling of foreign exchange in pairs of currencies. For example you buy US dollars and sell UK Sterling pounds or you sell German Marks and buy Japanese Yen. Why are currencies bought or sold? The answer is simple; Governments and Companies need foreign exchange for their purchase and payments for various commodities and services. This trade constitutes about 5% of all currency transactions, however the other 95% currency transactions are done for speculation and trade. In fact many companies will buy foreign currency when it is being traded at a lower rate to protect their financial investments. Another thing about foreign exchange market is that the rates are varying continuously and on daily basis. Therefore investors and financial managers track the forex rates and the forex market it on a daily basis.

Those who are involved in the forex trade know that almost 85% of the trading is done in only US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar. This is because they are the most liquid of foreign currencies (can be easily bought and sold. In fact the US Dollar is most recognizable foreign currency even in countries like Afghanistan, Iraq, Vietnam etc).

Being a truly 24/7 market, the currency trading markets opens in the financial centers of Sydney, Tokyo, London and New York in that sequence. Investors and speculators alike respond to the ever-changing situations and can buy and sell simultaneously the currencies. In fact many operate in two or more currency market using arbitrage to gain profits (buying in one market and selling in another market or vice versa to take advantage of the prices and book profits).

While dealing in forex, one should have a margin account. Quite simply put if you have US$ 1,000 and have a forex margin account which leverages 100:1 then you can buy US$ 100,000 since you only need 1% of the US$100,000 or US$1,000. Therefore it means that with margin account you have US$ 100,000 worth of real purchasing power in your hand.

Since the foreign currency market is fluctuating on a continuous basis, one should be able to understand the factors that affect this currency market. This is done through Technical Analysis and Fundamental Analysis. These two tools of trade are used in a variety of other markets such as equity markets, stock markets, mutual funds markets etc. Technical Analysis refers to reading, summarizing and analyzing data based on the data that is generated by the market. While fundamental Analysis refers to the factors, which influence the market economy, and in turn how it would affect the currency trading. Of course there are other economic and non economic factors which can suddenly affect the trading of the forex markets such as the 9/11 tragedy etc. One needs to have a shrewd acumen and a few number crunching abilities to strike gold in the forex market.

Forex made easy with this amazing forex trading software. Real time signals sent to your desktop, email or mobile phone. Visit http://www.forex-made-easy.biz

Article Source: http://EzineArticles.com/?expert=Brian_Kolewe

Forex Currency Trading

It is possible to buy and sell money from different countries on the foreign exchange market called Forex. Forex currency traders can profit by taking advantage of the dips and swells in the foreign currency market. Capturing these differentials is easier in Forex currency trading than in other trading because the Forex market is open twenty-four hours a day, except for weekends, and it is global, so there are always buyers and sellers available. The traders can be diverse. They can be traders looking for short-term gains, such as day traders or slightly longer investment periods, or they can be foreign investors who are looking to hedge their investments with long term Forex trades.

Forex currency trading is done in amounts of currency called lots, that are usually $100,000 each, and can be purchased on margin. Forex currency trading strategies can be based on technical analysis of the history of the currency price or it can be based on analysis of a particular country’s political climate, tax policy, jobless rate, inflation rate, and other factors of the country. There are many different systems of Forex currency trading.

Forex currency trading is a huge market. Daily trading is estimated at between $1 trillion and $1.9 trillion dollars. Because the amount of money is so huge, it’s hard to imagine that the market can be manipulated the way a smaller market can be. Forex currency trading is also not overseen by one central agency like the Security Exchange Commission, and each country oversees the Forex currency trading activity within it’s own country.

Kevin Anderson is the owner and opperator of http://www.forextradingcenter.info a site developed to give users the most updated information, articles, and news related to the Forex Market.

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Commodity Trading - Advantages and Disadvantages

What Is Commodity Trading?

Commodity futures markets allow commercial producers and commercial consumers to offset the risk of adverse future price movements in the commodities that they are selling or buying.

In order to work a futures contract must be standardised. They must have a standard size and grade, expire on a certain date and have a preset tick size. For example, corn futures trading at the Chicago Board of Trade are for 5000 bushels with a minimum tick size of 1/4cent/bushel ($12.50/contract).

A farmer may have a field of corn and in order to hedge against the possibility of corn prices dropping before the harvest he might sell corn futures. He has locked in the current price, if corn prices fall he makes a profit from the futures contracts to offset the loss on the actual corn. On the other hand, a consumer such as Kellogg may buy corn futures in order to protect against a rise in the cost of corn.

In order to facilitate a liquid market so that producers and consumers can freely buy and sell contracts , exchanges encourage speculators. The speculators objective is to make a profit from taking on the risk of price fluctuation that the commercial users do not want. The rewards for speculators can be very large precisely because there is a substantial risk of loss.

Advantages of commodity trading

Leverage. Commodity futures operate on margin, meaning that to take a position only a fraction of the total value needs to be available in cash in the trading account.

Commission Costs. It is a lot cheaper to buy/sell one futures contract than to buy/sell the underlying instrument. For example, one full size S&P500 contract is currently worth in excess off $250,000 and could be bought/sold for as little as $20. The expense of buying/selling $250,000 could be $2,500+.

Liquidity. The involvement of speculators means that futures contracts are reasonably liquid. However, how liquid depends on the actual contract being traded. Electronically traded contracts, such as the e-mini's tend to be the most liquid whereas the pit traded commodities like corn, orange juice etc are not so readily available to the retail trader and are more expensive to trade in terms of commission and spread.

Ability to go short. Futures contracts can be sold as easily as they are bought enabling a speculator to profit from falling markets as well as rising ones. There is no 'uptick rule' for example like there is with stocks.

No 'Time Decay'. Options suffer from time decay because the closer they come to expiry the less time there is for the option to come into the money. Commodity futures do not suffer from this as they are not anticipating a particular strike price at expiry.

Disadvantages of commodity trading

Leverage. Can be a double edged sword. Low margin requirements can encourage poor money management, leading to excessive risk taking. Not only are profits enhanced but so are losses!

Speed of trading. Traditionally commodities are pit traded and in order to trade a speculator would need to contact a broker by telephone to place the order who then transmits that order to the pit to be executed. Once the trade is filled the pit trader informs the broker who then then informs his client. This can take some take and the risk of slippage occurring can be high. Online futures trading can help to reduce this time by providing the client with a direct link to an electronic exchange.

You might find a truck of corn on your doorstep! Actually, most futures contracts are not deliverable and are cash settled at expiry. However some, like corn, are deliverable although you will get plenty of warning and opportunity to close out a position before the truck turns up.

Tim Wreford operates Online Futures Trading, a website that provides information and resources for traders. Tim also provides an article detailing the development of a day trading system, the results of which are updated daily on the site.

Article Source: http://EzineArticles.com/?expert=Tim_Wreford

Online Futures Trading - Advantages and Disadvantages

What Is Online Futures Trading?

A futures contract is an agreement to buy or sell a commodity at a date in the future. Everything about a futures contract is standardized except its price. All of the terms under which the commodity or financial instrument is to be transferred are established before active trading begins, so neither side is hampered by ambiguity. The price for a futures contract is determined in the trading pit or on the electronic trading system of a futures exchange.

The internet now allows access to those electronic trading systems from anywhere in the world. This increases liquidity in those markets and makes them even more attractive to traders.

Trading on all futures exchanges takes place against a backdrop of statutory regulation and rules as laid down by each exchange and the Commodity Futures Trading Commission (CFTC). Regardless of whether your trading is executed within the trading pit or electronically, it is subject to the same rules, regulations and safeguards.

Advantages of online futures trading

Leverage. Futures operate on margin, meaning that to take a position only a fraction of the total value needs to be available in cash in the trading account.

Commission Costs. Electronically traded futures contracts require no human intervention to match buys and sells unlike a traditional futures pit. This means that commission costs can be cut dramatically, leading to significant savings for the frequent trader.

Liquidity. The involvement of speculators means that futures contracts are reasonably liquid. However, how liquid depends on the actual contract being traded. Electronically traded contracts, such as the e-mini's tend to be the most liquid whereas the pit traded commodities like corn, orange juice etc are not so readily available to the retail trader and are more expensive to trade in terms of commission and spread.

Ability to go short. Futures contracts can be sold as easily as they are bought enabling a trader to profit from falling markets as well as rising ones. There is no 'uptick rule' for example like there is with stocks.

No 'Time Decay'. Options suffer from time decay because the closer they come to expiry the less time there is for the option to come into the money. Futures contracts do not suffer from this as they are not anticipating a particular strike price at expiry.

Automated trading. Electronic futures brokers offer the facility to programmers to interface directly with their trading software. This means that custom written trading software can automatically trade a strategy without any human intervention at all. A system can make buy/sell signals which are automatically routed to the exchange along with any stops and targets.

Almost instant fills. With electronically traded futures there is no need to call up a broker and wait for a fill from the trading floor. Orders are instantly placed on the electronic order book and filled as soon as a match is found - for liquid contracts such as the emini S&P500 this will be within a second.

Level playing field. With traditional pit traded futures the professional in the pit has a major advantage over the retail trader in terms of speed of execution and costs. Electronic futures trading offers all participants exactly the same advantages.

Disadvantages of online futures trading

Leverage. Can be a disadvantage if it encourages trading with too high a risk for a particular strategy. A carefully devised money management plan is essential.

Overtrading. The instant nature of electronic futures trading coupled with low commission costs and tight spreads can encourage a trader to take additional trades to those determined by their trading plan.

Online futures trading offers significant benefits to the retail trader. However, a carefully developed trading plan must be formulated before attempting to enter this extremely competitive business.

Tim Wreford operates Online Futures Trading, a website that provides information and resources for traders. Tim also provides an article detailing the development of a day trading system, the results of which are updated daily on the site.

Article Source: http://EzineArticles.com/?expert=Tim_Wreford

The Major Players in the Foreign Currency Exchange Market - FOREX

Since the US dollar is the centerpiece of the market, it is normally considered the 'base' currency for quotes. In the "Majors", this includes USD/JPY, USD/CHF and USD/CAD. For these currencies and many others, quotes are expressed as a unit of $1 USD per the second currency quoted in the pair. For example, a quote of USD/JPY 123.50 means that one U.S. dollar is equal to 123.50 Japanese yen.

When the U.S. dollar is the base unit and a currency quote goes up, it means the dollar has appreciated in value and the other currency has weakened. If the USD/JPY quote listed above were to increase to 124.01, that would mean that the dollar is stronger because it will now buy more yen than before.

Some exceptions to this rule are the British pound (GBP), the Australian dollar (AUD) and the Euro (EUR). In these cases, you might see a quote such as GBP/USD 1.4366, which means that one British pound equals 1.4366 U.S. dollars. In these three currency pairs, where the U.S. dollar is not the base rate, a rising quote means a weakening dollar, as it now takes more U.S. dollars to equal one pound, euro or Australian dollar.

So if a currency quote goes higher, that increases the value of the base currency. A lower quote means the base currency is weakening. Currency pairs that do not involve the U.S. dollar are called cross currencies, but the premise is the same. For example, a quote of EUR/JPY 127.95 signifies that one Euro is equal to 127.95 Japanese yen.

Chuck Cox is a Technical Writer and Industrial Scientist by professional with a background in statistics. He has used mathematical and statistical methods to invest and trade in the stock, futures, and options markets. Chuck has owned various businesses and presently operates several websites. To investigate a new business idea, visit his website, http://www.earncashathometoday.com/trading-FOREX.htm

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How Currencies are Traded in the FOREX Market

Currencies are traded in dollar amounts called “lots”. At 100:1 leverage, one lot is equal to $1000 which controls $100,000 of a given currency. This leverage is known as “margin” and some brokers will allow traders even higher leverage than 100:1. This superhigh leverage is one of the reasons that Forex trading has become so popular.

Currencies are always traded in pairs. Each pair has unique notation that expresses which currencies are being traded. The symbol for a currency pair will always be in the form ABC/XYZ. ABC/XYZ is not a real currency pair, just an example of how currency pairs are stated in the market. In this particular example, ABC is the symbol for one country’s currency and XYZ is the symbol for another country’s currency.

Listed below are some common symbols used. There are symbols for other currencies as well, but these are the most commonly traded ones.

USD - The US Dollar
EUR - The currency of the European Union "EURO"
GBP - The British Pound
JPN - The Japanese Yen
CHF - The Swiss Franc
AUD - The Australian Dollar
CAD - The Canadian Dollar

As mentioned earlier, currencies are traded in pairs in Forex trading. Thus, a trade always compares one currency to another in terms of how the two currency prices will move relative to each other. Some of the common pairs traded are:

EUR/USD Euro / US Dollar
USD/JPY US Dollar / Japanese Yen
GBP/USD British Pound / US Dollar
USD/CAD US Dollar / Canadian Dollar
AUD/USD Australian Dollar/US Dollar
USD/CHF US Dollar / Swiss Franc
EUR/JPY Euro / Japanese Yen

When you place an order to buy the EUR/USD, 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. You are always doing the opposite of what you did with to base currency with the counter currency. In Forex trading, currencies are traded on a price interest point (know as a “pip”)system. Each currency pair has its own pip value. Since we have a listed currency pair (i.e., EUR/USD, EUR/AUD), we need a way to talk about its associated number or price. When you see a price quote, you'll see something listed like this:

USD/JPY: 118:51/55

The first component (before the slash) refers to the bid price (what you obtain in JPY when you sell USD). In this example, the bid price is 118.51. The second component (after the slash) is used to obtain the ask price (what you have to pay in JPY if you buy USD). In this example, the ask price is 118.55. The difference between the bid and the ask price is referred to as the spread. In the example above, the spread is .04 or 4 pips.

Chuck Cox is a Technical Writer and Industrial Scientist by professional with a background in statistics. He has used mathematical and statistical methods to invest and trade in the stock, futures, and options markets. Chuck has owned various businesses and presently operates several websites. To learn more about trading the markets, visit his website, http://www.earncashathometoday.com/trading-FOREX.htm

Article Source: http://EzineArticles.com/?expert=Chuck_Cox

Welcome to the World of Currency Trading

Indeed large multinational and individual banks and other major financial institutions have dominated FX trading (also known as Forex trading), but there is a paradigm change in the nature and type of investing. According to one estimate, in the new millennium, there are over 6 million online investment accounts, up from 1.5 million in 1997. As a result, start-up firms now compete directly with financial institutions to serve investors in the new technologically driven economy, and the clear winner is the customer. The competition between the brick and mortar institutions and the Internet-based companies has dramatically lowered the costs of investing, and empowered the individual investor to take control of their own investment strategy in Forex trading.

We know Forex trading is direct access trading of currencies. In the past, foreign exchange trading was limited to large banks and institutional traders but recent advancements in technology have allowed small traders to take advantage of the many benefits of Forex trading using online trading platforms to trade. Virtually Forex trading is done 24 hours day and almost 5 ½ days of a week. In the recent times, online trading has revolutionized the currency markets by making it accessible to the small and medium sized investor.

The Forex trading is perhaps the largest financial market in the world, with a daily average turnover of approximately $1.5 trillion. Foreign Exchange is the simultaneous buying of one currency and selling of another. The world's currencies are on a floating exchange rate and are always traded in pairs, for example EUR/USD or USD/JPY or USD/INR etc.

In the new millennium, the Forex trading has become accessible for an individual investor or small group of investors. In the current scenario, investors reap many benefits from Forex trading than stock market, e-mini futures and such other trading. Today mostly traders are choosing Forex trading than stock trading because there are approximately 4,500 stocks listed on the New York Stock exchange. Another 3,500 are listed on the NASDAQ. In spot Forex trading, you have 4 major markets, 24 hours a day 5.5 days a week. If you are so inclined, you have approximately 34 second-tier currencies to look at in your spare time. You can concentrate on the major forex and can find your trade. When you are investing in forex you can spend your afternoon on the golf course or with your spouse watching movie or celebrating holidays—in short it is easy and hassle free than stock/future market.

Not only is it an accessible, easy and less capital-intensive business opportunity, but it is much more cost efficient too to invest in the Forex market, in terms of both commissions and transaction fees. Generally, commissions for stock trades range from a low of $7.95-$29.95 per trade with on-line brokers to over $100 per trade with traditional brokers. Opposite to that, typically stock commissions are directly related to the level of service offered by the broker. At the high end, traditional brokers offer full access to research, analyst stock recommendations, etc. In contrast, on-line Forex brokers charge significantly lower commission and transaction fees.

Anthony Trister is a currency trader and is an owner of OneDayTrades which offers free, mechanical forex signals and an automated trading program for those wanting to trade forex. Free access available here: http://www.onedaytrades.com

Article Source: http://EzineArticles.com/?expert=Anthony_Trister

New Opportunities with Forex Trading

The simplest definition of currency trading is the practice of exchanging one country's currency for another country's currency. Basically, currency trading involves four main variables: currencies, exchange rate, time, and interest rate. The interplay of these variables creates opportunities for small investors to obtain investment returns that are generally unheard of in the traditional investment world. It is also referred to as foreign exchange, FX or Forex, but the essence remains the same that currency trading is the exchange of one currency against another.

Perhaps, in terms of trading volume, the currency exchange market is the world's largest market, with daily trading volumes in excess of $1.5 trillion US dollars (although the figures may differ, but this is just an approximation to show its importance). One thing is for sure that in orders of magnitude it is much larger than the bond or stock markets. For example, the New York Stock Exchange has a daily trading volume of approximately $50 billion. So you can easily imagine its importance in the trading world of today. Moreover, contrary to earlier thoughts, currency trading is not limited to just larger organizations and other large banks and financial institutions, but open to everyone who has enough expertise and determination to hard work.

You can start playing the currency trading market with real market conditions immediately. Trading opportunities in the forex currency trading market are now available to individuals through technology interfaces such as those used by major currency trading brokerage firms (usually large corporations with big tummies). If you decide to hire a professional who takes advantage of this technology, you will be able to view your accounts' closed trades 24 hours per day through a secured, online access portal.

Historically, SMBs and individual investors have had limited access to the forex market. For decades, major banks, multinational corporations and other participants, trading in large transaction sizes and volumes, have dominated this market. However, just like many other business segments technology has lowered the barriers of entry and opened up this attractive marketplace to a new breed of investors and speculators.

Technological advancement, along with liberal market sentiments, has allowed almost everyone to deal in currency trading, unlikely to the past when there were only few organizations that could trade the currency. You also can open a mini account with as little as $300 US although $2000 US is recommended. You can open a regular account with as little as $2000 US although $10,000 US is recommended. Mainly major banks, international organizations and some other are doing well in currency trading.

Anthony Trister is a currency trader and is an owner of OneDayTrades which offers free, mechanical forex signals and an automated trading program for those wanting to trade forex. Free access available here: http://www.onedaytrades.com

Article Source: http://EzineArticles.com/?expert=Anthony_Trister

Forex Broker Involvement Optional

To trade on the forex market, the largest financial market on the planet, one must use a forex broker. Not unlike a stock broker, a forex broker can also makes suggestions about which moves to make when exchanging foreign currency. Some forex brokers even supply technical analysis to some of their clients and offer tips on research to improve their success as forex traders.

Typically in the forex market a forex broker is a banking institution who may buy up large amounts of a certain currency. For years, banks were the only ones who had access to the forex markets. But today with the Internet, any forex trader, who subscribes with a forex broker, can access the market 24 hours a day.

Today, as with stock brokers, the brick and mortar institutions, such as banks, are less of an option for the individual forex trader who works from home, monitoring the news and gaining insight into certain technical information to help with his or her trading decisions.

Choosing a forex broker may depend on your needs. If you are new to the field, there are houses, or online forex brokers who may cater to your needs, providing in-depth research, ample time to demo their product and so on. Other forex brokers are geared toward the experienced online forex trader. They too offer advice, but may be less likely to offer instructional help with the information, assuming that you may already know how it may or may not benefit you when you read it. It is advisable to read about and even run a demo on several different online forex brokers before going with one.

Jay Moncliff is the founder of http://www.goforexonline.info; a blog focusing on the latest Forex news, resources and articles. Get detailed information on forex trading.

Article Source: http://EzineArticles.com/?expert=Jay_Moncliff

The Meaning of FOREX Price Charts and How to Use Them

There is one very important factor that you should consider with great care if you are willing to become a successful, profitable Forex trader. This ever important factor that must be always present in the trader's portfolio, is the ability to read the charts.

The beauty of FOREX charts, as opposed to charts used for, say, daytrading stocks, is that they are pretty easy to interpret and use. They're a reflection of a slower-moving, stable economy (the one of a country) compared to the future and daily drama of company reports, Wall street analysts and shareholder demands.

And, unlike stocks, currency charts rarely spend much time in tight trading ranges and have the tendency to develop strong trends (even though the FX market may be volatile, it's more predictable). And, rather than tens of thousands of stocks to analyze, you only have a few mayor currencies to trade.

The most common types of price bars, used in FOREX trading, are the Bar Chart and the Candlestick chart:

Bars Charts - Price bars are a linear representation (a line)of a period of time. This enables the viewer to see a graphic representation summarizing the activity of a specific time frame. For example they can be one minute or five-minute time intervals depending on the system you are using. Each bar has similar characteristics and tells the viewer several important pieces of information. First, the highest point of the bar represents the highest price that was achieved during that time period. The lowest point of the bar represents the lowest price during the same period. Regular bars display a small dot on the left side of the bar which represents the opening price of the period and the small dot on the right side represents the closing price of the period.

Candlesticks - Japanese Candlesticks, or simply Candlesticks as they are now known, are used to represent the same information as Price bars. The only difference is that the difference between the open and close form the body of a box which is displayed with a color inside. A red color means that the close was lower than the open, and the blue color represents that the close was higher than the open. If the box has a line going up from the box it represents the high and is called the wick. If the box has a line going down from the box, it represents the low and is called the tail. Many interpretations can be made from these "candlesticks" and many books have been written on the art of interpreting these bars ( Visit: http://www.1-forex.com).

So, the main thing to keep in mind between the two types of price charts is this:

Candlestick charts are similar to bar charts in that the top tip of a vertical line represents the high and bottom tip represents the low. However, market activity between the OPEN and the CLOSE is represented differently by the use of candlestick bodies.

Because of their colored bodies, candles provide greater visual detail in their chart patterns than bar charts. Which is why many experts recommend you become intimately familiar with Candlestick charts.

Omar Vargas is a freelance writer with articles published in a number of places. You can learn more about Forex trading and its great advantages over other kind of business at this useful website: http://www.1-forex.com

Article Source: http://EzineArticles.com/?expert=Omar_Vargas

Example of a Profitable Transaction in FOREX

To make a profit, in the FOREX, a trader can enter the market as a *buy position* (known as going "long") or a *sell position*(known as going "short").

For discussion, let's assume you've been studying the EURO.

Your trading methods, rules, strategies, etc., tell you that prices will rise during a particular timeframe. So you buy the EUR/USD pair (or, technically, you will simultaneously buy euros, the base currency, and sell dollars).

You open up your handy trading station software (provided to you for free by the online broker), which resides on your desktop, and you see that the EUR/USD pair is trading at:

<<>>

REMEMBER: the quote to the left of the / (1.3242) refers to the bid or "sell" price (what you obtain in USD when you sell EUR). The quote to the right of the / (1.3245) is used to obtain the ask or "buy" price (what you have to pay in USD if you buy EUR).

So, since you believe that the market price for the EUR/USD pair will go higher, you will enter a *buy position* in the market. For simplicities sake, let's say you bought one lot at 1.3245. As long as you sell back the pair at a higher price, then you make money.

But, no worries. This seemingly elaborate process is handled, and even calculated for you, via the broker's software mentioned above. The chart software and the quote board are in agreement with all sides of the currencies.

To illustrate a typical FX SELL trade, consider this scenario involving the USD/JPY currency pair:

REMEMBER ~ Selling ("going short") the currency pair implies selling the first, base currency, and buying the second, quote currency. You sell the currency pair if you believe the base currency (USD) will go down relative to the quote currency (JPY), or equivalently, that the quote currency (JPY) will go up relative to the base currency (USD).

NOTE: while the Profit Calculations, on the Short-sell trade scenario below, may seem somewhat complicated if you've never been in the FOREX market before, trust us when we say, "this process is nearly seamless through your broker trade station (software). We're just showing you this thought-process below so you can SEE how a PROFIT occurs even when

SELLING a currency pair.

The current bid/ask price for USD/JPY is 105.26/105.30, meaning you can buy $1 US for 105.30 Japanese YEN or sell $1 US for 105.26 YEN.

Suppose you decide that the US Dollar (USD) is overvalued against the YEN (JPY). To execute this strategy, you would sell Dollars (simultaneously buying YEN), and then wait for the exchange rate to rise.

So you make the trade: selling US $100,000 and purchasing 10,526,000 YEN. (Remember, at 1% margin, your initial margin deposit would be $1,000.)

As you expected, USD/JPY falls to 104.26/104.30, meaning you can now buy $1 US for $104.30 Japanese YEN or sell $1 US for 104.26

Since you're short dollars (and are long YEN), you must now buy dollars and sell back the YEN to realize any profit.

You buy US $100,000 at the current USD/JPY rate of 104.30, and receive 10,430,000 YEN. Since you originally bought(paid for) 10,526,000 YEN, your profit is 96,000 YEN.

To calculate your P&L in terms of US dollars, simply divide 96,000 by the current USD/JPY rate of 104.30.

Total profit = US $920.42

Omar Vargas is a freelance writer with articles published in a number of places. You can learn more about Forex trading and its great advantages over other kind of business at this useful website: http://www.1-forex.com

Article Source: http://EzineArticles.com/?expert=Omar_Vargas

A Look at Forex Market Makers

The investor in the currency market takes for granted that a pair of currencies can be bought or sold at a moment’s notice. Once an order is placed with a broker, the trade is executed within seconds. It is, of course, not as easy as that.

Whenever a pair of currencies is bought or sold, there must be someone at the other end of the transaction. It is very unlikely that the investor will always find someone who is interested in buying and selling the same two currencies at the same amount, and at the same time. Hence, the question remains, “How is it possible that the forex investor can buy or sell at any time?” This is where the forex market makers come in.

The forex market maker is a bank or brokerage company that stands ready, every second of the trading day with a firm bid and ask price. This is good for the investor because when the investor chooses to buy and sell a pair of currencies, the market maker will purchase from and sell to the investor, even if they do not have a buyer and seller lined up. In doing so, they are literally “making a market” for the currencies.

Forex market makers ensure that the market is always functional and that the currencies in it will always fetch the market rate. Forex market makers do so by updating their prices at intervals of at least 30 seconds and undertaking to trade if this is requested. Forex market makers must fulfill their obligations irrespective of whether the economic situation is favorable or unfavorable, or whether they lose or profit by doing so.

Typical forex market makers include Gain Capital, CMS Forex, Forex Capital Markets (FXCM), and Global Forex Trading, all of which are regulated by the Commodity Futures Trading Commission (CFTC) of the USA. Another prominent forex market maker is Saxo Bank, which is regulated by the Financial Services Authority (FSA) of Denmark.

Until recently, central banks, commercial banks and investment banks dominated the forex market. Due to the entry of forex market makers, other market players like international money brokers, large multinational companies, registered dealers, global money managers, and private speculators have entered the market in large numbers.

Forex Brokers Info provides detailed information on forex brokers, forex trading and market makers, and other forex-related topics. Forex Brokers Info is the sister site of Incorporating in Florida Web.

Article Source: http://EzineArticles.com/?expert=Eddie_Tobey

Forex Scams: How to Spot Them A Mile Away

In recent years, investors have witnessed increased number of investment opportunities and offerings. While the complexity and success of these investment products vary, technological innovation has made the Forex market one of the fastest growth areas. Many of the leading Forex brokers reported up to 500% rise in the number of new retail customers. However, the growth of the Forex market has been accompanied by a sharp rise in foreign currency trading scams.

Many of these Forex scams are promoted on the radio, television, newspapers and the Internet. Investors who fall victim to these schemes, often lose all of their money.

As an illustration, let’s examine the facts of a recent case involving Forex fraud and its consequences. W learned of a foreign currency trading opportunity through an infomercial on the radio. K, the owner of a Forex asset management firm, spoke during the infomercial, promising viewers significant profits with minimum risk. After seeing the infomercial, W contacted K, and later attended a seminar presented by K and his firm. The seminar was so convincing that W wrote a check to K for $100,000.

Several months later, W received statements (which were false) from K’s firm reflecting significant returns on his initial $100,000 investment. Thereafter, W attended another seminar and decided to invest more money. W took a loan and invested another $800,000 in K’s Forex trading operation. Short while after W’s second investment, the Securities and Exchange Commission filed a complaint against K and his firm for engaging in a scheme to defraud investors. K’s firm’s assets were frozen, including the $900,000 invested by W. A receiver was appointed to distribute the remaining assets of K’s firm to defrauded investors. The assets were distributed on pro-rata basis with no legal preference given to any of the victims. Since K’s firm’s assets were not enough to satisfy all of the defrauded investor’s claims, W received only about $22,000 of the $900,000 he invested.

Since a whole book can be written on the various tactics and methods used by Forex scam artists, in this article, I will focus on the major warning signs that one needs to identify to avoid falling victim to Forex swindlers.

1. Promises of Little or No Risk

If you encounter a Forex firm that claims to have developed a foreign currency trading strategy that carries very little or no risk, stay away. The reason Forex trading can be very profitable is because it also carries a very high risk of loss. The Forex market is very volatile, and, without good money management, an investor can lose most if not all her capital within few days. Thus, individuals and firms who make claims that are far from market realities, as is riskless Forex trading, are really after your money.

2. Guarantees of Large Profits

Beware of firms that guarantee large profits in Forex trading. These so called “guarantees” are mere ploys to entice investors and make them believe that their money is safe and that they will definitely make large profits. Such claims are simply untrue, because even the best professional traders cannot guarantee that they will make a profit any given day. The Forex market, as most financial markets, is very unpredictable. Hence, be suspicious of such claims and those who make them.

3. Employment Ads For Forex Traders

Many Forex trading firms use employment ads to attract individuals with capital to trade using their systems. The employment ads, which often appear in newspapers and on the Internet, state that a foreign currency trading firm is looking for individuals to teach how to trade the foreign currency market using firm capital. Those who reply to the ad are convinced by the firm that they will make a fortune trading currencies if they participate in the firm’s training program. During the training process, which often occurs on a demo system, the novice traders are encouraged and told that their demo trading records show that have made significant profits, that they are ready to make real money and would very successful. Despite the firm’s assessment of the novice trader as a brilliant newcomer, no firm capital is provided to the trader, instead the excited novice is told to use her own capital to trade using the firm’s platform.

In addition to various fees imposed on traders using the firm’s platform, the Forex firm makes money as an introducing broker. Each time the novice trader trades through the firm’s system, a good part of the spread charged by the broker is shared and goes into the firm’s coffers. After few months, the novice trader loses all of her capital and leaves. The Forex firm, having made money during the novice trader’s short stint, moves on to new traders eager to become rich trading foreign currencies.

4. Is the Forex Firm a CFTC or NFA Member

Before you sign a check and give your capital to a Forex company, make sure you investigate the entity. Check to see whether the Forex firm, with which you plan to do business, is registered with the United States Commodity Futures Trading Commission or the National Futures Association. Many scam artists falsely claim that their firms are registered with the CFTC or the NFA to gain a prospective investor’s trust. Do not trust anyone, research the firm and the background of the individuals involved before parting with your hard earned money.

The Internet has paved the way for many new opportunities for retail investors. The Forex market is both exciting and fast paced. Investor’s who are careful and diligent are likely to avoid the perils of this market, and will profit from the opportunities foreign currency trading has to offer.

Please visit http://www.forexweek.com, an informative resource for novice and professional Forex traders.

Article Source: http://EzineArticles.com/?expert=John_Bekian

ISO 4217 in Forex Trading

ISO 4217 is an international standard describing three letter codes to define the names of currencies established by the International Organization for Standardization (ISO).

The first two letters of the code are the two letters of ISO 3166-1 alpha-2 country codes (which are similar to those used for national top-level domains on the internet) and the third is usually the initial of the currency itself. So Japan's currency code becomes JPY—JP for Japan and Y for yen. This eliminates the problem caused by the names dollar, franc and pound being used in dozens of different countries, all with wildly differing values.

The standard also defines the relationship between the major currency unit and any minor currency unit. Often, the minor currency unit has a value that is 1/100 of the major unit, but 1/10 or 1/1000 are also common. Some currencies do not have any minor currency unit at all. Mauritania does not use a decimal division of units, setting 1 ouguiya (UM) = 5 khoums, and Madagascar has 1 ariary = 5 iraimbilanja.

ISO 4217 includes codes for not only currencies, but also codes for precious metals (gold, silver, palladium and platinum; normally measured in troy ounces) and certain other entities used in international finance, e.g. Special Drawing Rights. There are also special codes allocated for testing purposes (XTS), and to indicate no currency transactions (XXX). These codes all begin with the letter "X". ISO 3166 never assigns country codes beginning with "X", so ISO 4217 can use "X" codes for non-country-specific currencies without risk of clashing with future country codes.

Supranational currencies, such as the East Caribbean dollar, the CFP franc, the CFA franc BEAC and the CFA franc BCEAO are normally also represented by codes beginning with an "X". However, the Euro is represented by the code EUR; although EU is not an ISO 3166-1 country code, it was used anyway, and in order to do so EU was added to the ISO 3166-1 reserved codes list to represent the European Union. The predecessor to the Euro, the European Currency Unit, had the code XEU.

More detail about ISO 4217 can be found on wikipedia.org

The author blog: Marketiva Forex Article Source: http://EzineArticles.com/?expert=Dwi_Hermawanto

How to Trade Currency

We all know when you go on a trip to another country; you need to take some travelers checks and some cash in the currency of that country. This can be advantageous because one country’s currency is usually worth more or less than the other. So your 100 USD could be worth 130 Canadian dollars, giving you more purchase power.

Currencies of countries rise and fall in valued over time, similar to the stock market. The reasons are usually economic and political. You may think though that similar to the stock market there is a lot of money that can be made by trading currencies from various nations. You would be right.

The first step in How to trade currencies profitable would be to find your broker. You can trade currencies at a bank but you will usually find their prices to be high and their responses to be slow. If you are serious about currency trading you really need to find a good broker. Shop around; there are many large and small firs that deal exclusively with foreign exchange. Fees and responsiveness are the big factors here; depending on how fast you are trading a few minutes can really make the difference here.

Another thing that should be understood that this will take a good amount of investing initially (depending on what type of return you’re expecting) and usually is not a quick return on your money.

Let’s take a look at the Japanese yen for an example. At the start of the year each USD was worth 102 Japanese yen, but six months later each USD is now worth 112 Japanese yen. So if you were in Japan and in January had traded your currency with USD and today were to trade the currency back, you would have received a ten percent return on your money.

Some people think this is a little slow for that type of return. These are generally the types of investments banks and large firms are dealt in. Most individuals prefer the stock market because it is a quicker buck. But currency exchange is a lot more secure, the currencies will always be around, and when investing a large sum of money can return quite well. Trading currency should be a pat of a well diversified portfolio.

Another tip on how to trade currency is to pick only a few types of currency and trade between those. It is much easier to keep an eye on a few nations than a dozen. And since political and economics shape the value of a currency it is usually suggested that you keep an eye on basic news involving that nation. This is the reason it is usually suggested to pick nations and currencies that mean something or are of interest to you.

With a little political insight and some well planned moves you can make significant money in currency trading. Happy Investing.

Eric Newman is an author for Teanobi.com. All articles may be used and reprinted as long as they have an active link at the bottom pointing to http://www.teanobi.com with the anchored text: Teanobi - Green Tea

Article Source: http://EzineArticles.com/?expert=Eric_Newman

Day Trading A Fool's Game

I received an email this week with a question (below) which caused me to think about the wisdom of pursuing trading as a career. Regardless of your trading time span, the skills and concerns of active short-term trading are relevant to all market particpipants.

Question: “There are a lot of people who say that day trading is for "fools" and that it is very difficult to make a living from Day Trading. What are your opinions?”

Trading is like most business: it requires commitment and perseverance. It is never easy to make money, but people who have mastered a skill make it appear easy. The really successful pit traders that I have known made trading look very easy, tantalisingly easy; but they all had many years of experience behind them. For every successful trader there has probably been a few hundred who have tried and failed.

I think people fail at any business if they approach it without an appreciation and understanding of what is required for success. The majority of traders fail because they have no such appreciation and they have unrealistic expectations of themselves. Any trader who starts with the expectation of becoming an instant success is setting himself up for failure. No one would decide to become a golf pro and assume that they could just pick up a bag of clubs and start winning tournaments. Yet novice traders do this all the time.

Just to start with the understanding that trading is a skill that is developed over time, through experience, puts a novice trader way ahead of the competition.

There are 2 core skills in trading, first the ability to anticipate the market (read the market) and second, having the discipline to execute your plan. To learn to read the market you may as well use a trading simulator and only start to trade when you have demonstrated to yourself that you can anticipate the market. Discipline, though, has to be developed and tested in the real world. Discipline is really the crux of the matter and it is here that most traders fall down. Their failure is mainly due to the fact that they are not really aware of its importance. Just starting out as a trader with the intention of developing your discipline puts you way ahead of the average trader. If you can trade with discipline (i.e. stick to your own rules and limits) you are 95% there!

So I would say that for the average aspiring trader, trading is a fool’s game; but for those of us who approach the business as a business, with a clear understanding of the unique challenges that trading offers, it is a rewarding and fulfilling career.

Malcolm Robinson LIFFE Pit Trader & Electronic Trader InstinctiveTrader.com Article Source: http://EzineArticles.com/?expert=Malcolm_Robinson

Where is the Market Going?

If you ask me whether the market will have moved up or down by this time next year, well I may as well flip a coin, because I don’t know.

If you ask me whether the market will have moved up or down by this time next month, well again, I may as well flip a coin, because I still don’t know.

If you ask me whether the market will have moved up or down by this time next week, AGAIN, I may as well flip a coin, because I don’t know.

And if you ask me whether the market will have moved up or down by this time tomorrow, I am sorry, but I JUST DON’T KNOW!

But… if you ask me whether the market will move up or down in next few minutes, well I will have a definite opinion. Why? Because if I can see the CURRENT state of buying and selling in the market NOW, then I can make a reasoned and fairly accurate estimate of what the market will do in the next few minutes and moments.

My prediction will not be based on some secret formula; it will not be based on some esoteric sounding indicator, nor on some complex mathematical equation. No, it will be based on my evaluation of the current state of supply and demand.

Predicting the long-term movements of the markets is a guessing game. All we have to go on is the past; all we can reasonably do is assume that what has happened in the past will continue to happen in the future. Basically that is what trend following is, making the assumption that the past equals the future.

In my trading world, the only law that works is that of supply and demand: if there are more buyers than sellers then the market will go up; and if there are more sellers than buyers the market will go down.

It matters not one iota the whys and wherefores of the buyers and the sellers. It does not matter that a trader has chosen to sell now because the 9 period moving average has crossed the 14 period; or because he has just lost his shirt; or because he is taking a profit; or because he is just plain bored.

No, I don’t care why a trader has entered a buy or a sell order, I just care that they have, by their act, added to either the buying or the selling pressure.

Malcolm Robinson LIFFE Pit Trader & Electronic Trader InstinctiveTrader.com Article Source: http://EzineArticles.com/?expert=Malcolm_Robinson

What I Learnt Losing £60,000 My First Year as a Full-time Trader

During my first year as a local (independent trader) on the floor of LIFFE, I bought and sold 8804 FTSE futures contracts, about 40 contracts per day on average. The result was a loss of £61,620 or -£267 per trading day. I was profitable on 55% of days with an average gain of £1009, my average loosing day was -£1780. My biggest one day gain was £7730 and my biggest loss -£12,426.

As you can probably imagine, this was a difficult time for me. I was trying to work out how to make money consistently. It was the consistency that seemed so hard to find. As you can see I was having a regular experience of making money, what was killing me were my losses. It seemed that every time I got ahead by £5-6000 over a period of a week or two, I would lose it all and a few thousand more in the space of a couple of days.

At the time I was too unhappy with my performance to be willing to spend any time analysing my results. If I had I would have discovered that during this period all I needed to do to go from a loss of £61,620 to a small profit would have been to avoid just 10 trading days. Those 10 days cost me a total of £69,169!

At the end of this period I was so frustrated, fed up and stuck that I decided to quit trading and return to a more secure career. It only took me a few weeks to abandon this plan and return to trading. I felt sure that I had the raw talent to become a consistently successful trader, what I needed, I reasoned, was some support. Support to stop me having the huge losing days that were crippling me financially.

I approached a firm I knew that backed traders on the floor and they agreed to back me with £20,000 of trading capital. We would split profits 60:40 and I was set an initial daily loss limit of £500. If I hit my £500 limit the firm’s floor manager would come and tell me to go home. The third day trading I lost about £3500 and nothing happened, no one came to ask me to stop trading. I felt very foolish, but continued to trade for the remainder of the week while avoiding any contact with the floor manager. The following Monday (the week’s losses had totaled about £5000) I got a message to meet with the director with whom I had made the agreement (it transpired he had been away the previous week). I was sure that he was going to say that the deal was off. Instead, to my surprise, he told me how important it was that he could trust me, he needed to know that when the market was volatile he could trust me not to be racking up big losses. He suggested that I start afresh. Needless to say I was both relieved and grateful. So I went back to the trading pit that morning with the determined intention to not loose more that £500.

The next two weeks turned out to be one of the toughest periods of my trading career and one of the most rewarding. Stopping when I was down was hard. I realised that what had been at the root of my large losses was my inability to accept loosing at all. To me loosing was unacceptable. Such was my intolerance for loss that I lost for ten consecutive days. But as the days progressed, even though I continued to loose £500 a day, I found my mood lifting. I actually started to feel OK about loosing as long as it was within my limit.

At the end of this 10-day period of losses a seeming miracle happened; I started to make money. My target was to get to +£1000 and then not give back more than 20% of my gain. So when I had a profitable day I was making between £800 and £2000, for an average of about £1200. Not only did I start to make money, I did so for 15 days in a row, three entire weeks without a loss.

This marked the beginning of a new era of trading for me. In retrospect, I believe that I had been trading scared, scared that I was really a looser. The two weeks of rigidly sticking to my loss limit caused me to revaluate myself. I started to feel good about myself for sticking to my limit. Before it was bad if I lost money, now it was only bad if I lost more than my limit. Before, I never knew whether I was going to make £1000 or loose £5000; now I knew that the worst case was a loss of £500 and that was OK. I started to see that sticking to my trading limits was a sign of strength and my confidence started to rise.

Looking back at my first year’s loosing streak, if I had restricted my losing days to -£500 my loss of £61,620 would have turned into a profit of £83,525. Not only that, I think that had I been sticking to a loss limit during that period, my confidence would have been that much greater and my percentage of profitable days would also have been higher.

"Our deepest fear is not that we are inadequate. Our deepest fear is that we are powerful beyond measure. It is our light, not our darkness that most frightens us. We ask ourselves: "Who am I to be brilliant, gorgeous, talented, fabulous?" Actually, who are we not to be? You are a child of God. Your playing small doesn't serve the world. There's nothing enlightening about shrinking so that other people won't feel insecure around you. We are all meant to shine, as children do. We were born to make manifest the glory of God that is within us. It's not just in some of us; it's in everyone. And as we let our own light shine, we unconsciously give other people permission to do the same. As we're liberated from our own fear, our presence automatically liberates others."

Whatever is at the root of our fear, in order to become consistently successful traders, we have to overcome it by developing trust in ourselves, trust that we will always act in our own best interest. When we trade fearfully, we undermine ourselves and end up taking the very action that confirms our fear. The question is how to develop an unshakeable trust in ourselves?

We develop trust in others through repeated experience of them acting in ways that inspire trust. In the same way we develop trust in ourselves as traders by building up a history of action that supports our goal to become consistently successful traders. The more frequently we adhere to our own trading plan and limits the greater our self-trust. Now this sounds like a catch 22 situation, if you find like I did that you cannot help yourself, how do you start to develop self-trust through right action?

In a way I was lucky, my back was against the wall, I knew that if I broke my limit I would be out. So I had to stick to my limit and in doing so I gave myself the opportunity to confront and finally reject my fear of being a loser. To go from being a net loosing trader to a consistently profitable one, we need to set ourselves achievable targets of behavior. My problem was allowing loosing days to turn into huge losing days, so to set myself the objective of stopping trading for the day when I was down £500 was appropriate for me. For others the primary problem can be the resistance to taking a trade when a signal comes up, be it intuitive or mechanical. An appropriate exercise would be to take a simple mechanical trading system (it does not have to be much good, break even would do) and set the goal of taking the next 10 signals without hesitation, regardless of how you feel. We need to build up our trading skills one at a time, when we are confident we can cut our losses we can move onto execution, then we can work on holding on to profitable trades etc. Tennis stars don’t become stars just through competition; they hone their skills one by one on the practice court and they continue to practice throughout their careers. As traders we need to identify the individual skills we need to develop and focus on them one by one. Someone new to tennis does not expect to go out and win competitions straight away, they know they will have to spend a fair amount of time practicing and learning first. Short term trading, like tennis, is skill based, and those skills can be identified, practiced and mastered.

Malcolm Robinson LIFFE Pit Trader & Electronic Trader InstinctiveTrader.com Article Source: http://EzineArticles.com/?expert=Malcolm_Robinson

A Beginner's Guide to FOREX

FOREX is the abbreviation for the Foreign Exchange market. FOREX is basically an international exchange market where currencies from all over the world are bought and sold for profit. The market today began in the 1970’s. FOREX is a very unique market because it is not based in any particular place, and it also has very few qualifications for investing. FOREX is also free of external controls, and the investors (participants in the market) largely determine how much a currency is worth based on demand. Almost anyone can invest in FOREX, and there are strategies for investors who want to have long-term gains, and strategies for investors who desire short-term gains. The vast array of investors makes FOREX quite unique in the financial community.

The Workings of FOREX

FOREX is not centered at one place like the NYSE. The specific hours for FOREX trade are 24 hours a day from Sunday afternoon to Friday afternoon. FOREX transactions can take place at almost any time, anywhere, all over the world. There are FOREX dealers in almost all of the time zones, and it is simple to find them. Many dealers can be found online. All an investor does is decide what currency he or she wants to purchase, contact the dealer, and then makes the purchase. Many investors purchase using a credit line (money they do not have). This is called marginal trading.

What is Marginal Trading?

Marginal trading is a term used for trading with borrowed capital. FOREX investments can be made without actually having the money. All an investor needs to do is borrow the money for a certain currency. The investor wants to choose a currency that will increase in value quite rapidly. Once the currency increases, the investor pays back the money he or she borrowed and makes sheer profit. This is a high-risk investment, but the rewards are great (as with most high risk investments).

Two Types of FOREX Analytics

FOREX traders often have to analyze the market. Like all investments, FOREX involves a certain amount of calculated risk. Two ways to calculate these risks are though Technical Analysis and Fundamental Analysis.

Technical Analysis is based on the idea that trends through history will continue. A FOREX investor will notice that a certain currency is very strong and seems to be rising at a normal rate. The same investor will also suppose that the currency will not decline in value, and will continue to rise, as it has done in the past. The investor then purchases a large amount of that currency and expects to make a profit. This investment entails a large assumption but is relatively safe.

Fundamental Analysis is an analysis of an entire countries situation. Investors utilizing this technique look at the situation of the country in which the currency finds its base. Factors such as the countries economic status, political status, and global status are taken into account. For example, a Fundamental Analysis investor would not invest in currency from a country that just overthrew its leader and is in political shambles. Although this investment seems logical, it does not take into account one of the fundamental elements of FOREX trading. FOREX currency values are largely determined by the investors. That being said, Fundamental Analysis assumes that other FOREX traders will view a countries situation in the same way and respond accordingly.

Benefits of FOREX

FOREX can be very beneficial to a variety of people. FOREX trading can gain investors a large amount of money either over a long period of time, or in a short period of time. Investors who choose to invest in FOREX are generally well informed about the market and understand the current situations in many countries of the world. Investing in FOREX is simple and highly recommended for anyone who wants to enjoy profits from top-notch investments.

Mary McDowski is very interested in investments and finances. Learn more about FOREX at ( http://www.forexreader.com ).

Article Source: http://EzineArticles.com/?expert=Mary_McDowski

What is Forex Trading?

Forex, or Foreign Exchange, is the simultaneous exchange of one country's currency for that of another.

The way it works is an investor who wishes to purchase or sell one currency for another with the hope of making a profit when the value of the currencies change in favor of the investor. This can happen either from market news, or events that happen across the globe. For example, If you bought currency and the price appreciates in value, then you will earn a profit by closing your position. When you do this and sell the currency back in order to lock in the profit, you are in actuality buying the counter currency in the pair. By trading currency pairs, one currency valued against another, a rate of worth has been established. The reason is because a country's currency has value only relative to the currency of another country.

There are many different tools that can help a Forex trader out. Advanced charting programs are a major tool, as well as the FOREX traders guide. Along with these tools, global interactive training rooms with live video feeds, and the daily world bank FOREX report help investors get the most out of FOREX trading.

For more information on FOREX trading check out Forex Resources

Tyler D Falls - Inforesearcher.com Article Source: http://EzineArticles.com/?expert=Tyler_D_Falls

Forex Trading Online - 7 Reasons Why You Should!

Forex trading online is a fast way to use your investment capital to it's fullest. The Forex markets offer distinct advantages to the small and large traders alike, making Forex currency trading in many ways preferable to other markets such as stocks, options or traditional futures. Here are seven reasons why you'll want to look into Forex Trading online.

1 - Forex is the largest market.

Forex trading volume of more than 1.9 billion, more than 3 times larger than the equities market and more than 5 times bigger than futures, give Forex traders nearly unlimited liquidity and flexibility.

2 - Forex never sleeps!

You can execute forex trading online 24/7, from 7AM New Zealand time on Monday morning, to 5PM New York time on Friday evening. No waiting for markets to open: they're open all night! This makes Forex trading online a very attractive component that fits easily into your day (or night!)

3 - No Bulls or Bears!

Because Forex trading online involves the buying of one currency while simultaneously selling another, you have an equal opportunity for profit no matter which direction the currency is headed. Another advantage is that there are only around 14 pairs of currencies to trade, as opposed to many thousands of stocks, options and futures.

4 - Forex Trading online offers great leverage!

You can make the most of your investment resources with Forex trading online. Some brokers offer 200:1 margin ratios in your trading accounts. Mini-FX accounts, which can typically be opened with only $200-300, offer 0.5% margin, meaning that $50 in trading capital can control a 10,000 unit currency position. This is why people are flocking to Forex trading online as a way to highly leverage their investments.

5 - Forex prices are predictable.

Currency prices, though volatile, tend to create and follow trends, allowing the technically trained Forex trader to spot and take advantage of many entry and exit points.

6 - Forex trading online is commission free!

That's right! No commissions, no exchange fees or any other hidden fees. This is a very transparent market, and you'll find it very easy to research the currencies and the countries involved. Forex brokers make a small percentage of the bid/ask spread, and that's it. No longer any need to compute commissions and fees when executing a trade.

7 - Forex trading online is instant!

The FX market is astoundingly fast! Your orders are executed, filled and confirmed usually within 1-2 seconds. Since this is all done electronically with no humans involved, there is little to slow it down!

Forex trading online can get you where you want to go quicker and more profitably than any other form of trading. Check it out and see what Forex trading online can do for you!

Keith Thompson is the webmaster of Forex Trading Today; a blog focusing on the latest Forex news and resources.

Article Source: http://EzineArticles.com/?expert=Keith_Thompson

Ways to Acquire Discipline in Trading

One way to acquire discipline in trading...

“Hey Joe! When you were teaching us at our Forex office in Florida, you stressed discipline. Our head trader stresses discipline. What I want to know is if discipline can be acquired or is it just something you are born with? I’m having trouble finding it in myself.” - trader -

Personally, I believe discipline can be learned, although at times it is very painful. When I began trading, I was a very undisciplined person. But trading and the markets forced me to become disciplined. Was the discipline already there and just needed to be extracted? Or did I actually learn it? I can’t truly be sure.

One of the largest trading firms kept their offices near Yeshivas. A yeshiva is a rabbinical school that produces rabbis of the Jewish religion. The students coming out of the yeshiva were highly disciplined and made excellent traders. Was the discipline innate in those yeshiva students? Or did they learn it under the strict supervision of the rabbis who controlled their lives? I think they learned it.

I’ve mentioned previously that it can help to keep a journal if you want to learn discipline. The journal I kept was very basic and included what trades I made during the day and my reasons for getting into the trade. It is what I did with the journal that helped me to be disciplined. Anyone can make entries into a journal. I let the contents of my journal keep me in line. It became my supervisor. I took to heart what I wrote there. I no longer keep that kind of journal because it has served its purpose in making discipline into a habit in the way I trade.

Joe Ross
Trading Educators Inc.

Joe Ross, trader, author, trading educator is one of the most eclectic traders in the business. His 47+ years include position trading of shares, and futures. He day trades stock indices, currencies, and forex. He trades futures spreads and options on futures, and has written books about it all - 12 to be exact. Joe is the discoverer of The Law of Charts™, and is famous for the Ross hook™ and the Traders Trick Entry™. Trading Educators, Inc. Trading Educators was founded in 1988 by Master Trader Joe Ross. He is the president of Trading Educators and actively supports his customers with his experience of more than 47 years of trading. The Team at Trading Educators is composed of an international blend of experienced traders, all educated and proficient in the Joe Ross methods. Our professional staff trades regularly in the markets. Since its foundation Joe Ross and the Team at Trading Educators have taught thousands of satisfied customers who use Joe’s concepts to produce significant profits in today’s markets. Article Source: http://EzineArticles.com/?expert=Joe_Ross

Creativity in Trading

“Is it important to be creative in your trading?”

I’m not sure I can describe it in terms of importance. The creative process is somewhat of a mystery, even to scientists who study it. There are a few common characteristics that all creative persons possess (such as an openness to a variety of internal and external experiences and a driving need to express one's sense of individualism), but for the most part, exactly how the creative mind makes earthshaking discoveries is unknown. A few prerequisites are necessary, though. The mind must be focused, for example. New ideas must flow through the mind freely, and there must be a wide range of ideas, so that they can be combined and re-combined in new ways. New and creative trading ideas are necessary to stay ahead of the crowd, so doing whatever you can to prepare your mind to brainstorm new ideas will help you develop creative trading strategies that are the foundation of profitable trading.

Many great scientific discoveries were made almost by accident, through a serendipitous observation. Had an untrained eye made the observation, it would have been missed. But because the scientist's mind was continuously running through a wealth of ideas, he or she saw a new discovery in a seemingly ordinary event. Discovering new trading ideas is also a creative, intellectual endeavor. You must get your creative juices flowing in order to see the next new idea. It's essential that you "prime" your thinking processes, get your mind ready to make a creative observation.

In some ways, your mind is like a well. You prime a well to get the water flowing, and once it's started, it flows continuously. You must similarly prime your mind to get ideas flowing. Various ideas in your mind are stored in a hierarchical structure. Information is stored together in a clump, depending on its meaning. When you aren't thinking of a particular topic, it's hard to bring information about that topic into consciousness; it lies their stagnant and hidden. However, when you make a concerted effort to think carefully about a specific topic, or a closely related topic, and start running through a bunch of possibilities, all kinds of new possibilities become apparent. Your mind quickly scans various concepts and ideas, almost unconsciously. Suddenly this wealth of information combines and you see something new.

For example, suppose you develop a vague trading idea about how a set of indicators may forecast the price of a particular stock. Once you get the basic idea in your mind, you can prime your mind to get the creative juices flowing. For example, you can scan a set of charts to back test and find support for your hypothesis. As you look through the charts, the information you see will prime other related information. Soon idea after idea will coalesce, and you'll make a new discovery that will serve as a basis for a new trading strategy. The main point is that you must set your thinking processes in motion to come up with a creative new idea. Some traders even suggest putting on a small trade based on a hunch in order to set your creative processes in motion. When you put on a trade, your adrenalin starts to rush, your attention starts to focus, your senses are heightened, and you suddenly change your perspective until you see new ideas. The more your mind is active, the more likely you'll make creative new discoveries. Knowing about the creative process and how to set it in motion gives you power. Some people are down on themselves because they can't seem to think creatively. But they can. They just need to know how to do it. It's vital to be relaxed and free of anxiety. But it's also essential to prime your mind in order to start the process. So when it's time to think of a new trading idea, think creatively. Set your creative processes in motion. You may come up with a big idea that will make you huge profits.

Joe Ross
Trading Educators Inc.

Joe Ross, trader, author, trading educator is one of the most eclectic traders in the business. His 47+ years include position trading of shares, and futures. He day trades stock indices, currencies, and forex. He trades futures spreads and options on futures, and has written books about it all - 12 to be exact. Joe is the discoverer of The Law of Charts™, and is famous for the Ross hook™ and the Traders Trick Entry™. Trading Educators, Inc. Trading Educators was founded in 1988 by Master Trader Joe Ross. He is the president of Trading Educators and actively supports his customers with his experience of more than 47 years of trading. The Team at Trading Educators is composed of an international blend of experienced traders, all educated and proficient in the Joe Ross methods. Our professional staff trades regularly in the markets. Since its foundation Joe Ross and the Team at Trading Educators have taught thousands of satisfied customers who use Joe’s concepts to produce significant profits in today’s markets. Article Source: http://EzineArticles.com/?expert=Joe_Ross