Day Trading

I miss my day trading days !

Especially when I am now in Asia and there is a time zone difference. So that means I have to wake up in the middle of the night which is day time in US to monitor the currency market.

Tiring, but if you want to be in forex, there is no choice. Even with the aid of expert advisors running on ur metatrader platforms..... LOL, you cannot help it but want to monitor your trades opened as you are human after all.

Oh well, I hope my short term trading and scalping strategies will pay off during fundamental news annoucements !

Do let me know what else you want me to write about on currency market or on EAs or even hosting.

I advise checking up on forexfactory news event coverage.

Have fun people ! And happy trading ! Make money !

Mid Month Blues

Howdy people !

How's your trading week so far ?

Any good news and income to share with all my readers ?

Wall Street Journal, forexfactory, forex.com even, have been very good sources of information on currency news around the world, in particular US.

US is a main driving force in the world economy and any announcement will rock the entire worldwide market.

Again, there are many good platforms (saxo, etoro etc) out there eager to earn your money. Make the right move and make money off forex too !

Just remember : There is no such thing as instant riches ! So read all the fine print and not be carried away by promises of 6-7 figure income per month on forex trading. Nothing is free in this world. If everyone can make such money, then no one will be working ! So just be patient and learn from scratch. Use a practice trading account first !

Really Thank You for Coming By

Hey readers,

thanks for coming by !

I have been down with flu, cough, fever, and not be active on blog for 1 plus week.

But I do appreciate your coming by.

Keep the mails coming !

Hopefully I will be better soon and place some stuff which I will collate from forex factory or forex peace army sites.

Do No Go into Forex If You Do Not Have Sufficient Knowledge

I met a friend, Alex over the weekends for coffee and check up on each other's life.

Then he told me that he is venturing into forex trading online. And has started out with a demo account with onanda.com.

So I began to ask him about the basics in forex. And to my shock and horror, he does not even have the slightest basic knowledge at all. All he knows is, he was asked by his colleague at work to sign up for an account and try to make it work in forex for passive income.

I told him, that was very risky as this market is risky and highly volatile. He must at least understand all the terminology as well as what makes the market move. he should follow up diligently on fundamental new releases or at least understand how to do technical analysis before doing this headlong.

Otherwise, he may lose more than what he can chew.

Opening a forex account is easy, making use of it and making the right decision in order to make it profitable, is another thing altogether.

So Want to Trade in Foreign Currency ?

New to forex trading ? Or even thinking of making money online ?

Trying to think of ways to make extra income cool and easy ? Came to my site by chance ?

Well, the hard cold facts. Forex / currency trading is not for the faint hearted.

The forex market is a highly volatile and high risk market. To be able to invest and make money wisely from it, means you need to have a very emotionally stable mindset and be mature to handle or cut losses when the market goes against your favour.

You must also be rational when making forex trading decisions.

Whichever currency pairs (EUR/USD etc) you are looking at, do understand the underlying fundamentals and do some technical analysis for both short term and long term trends to at least get an idea of why the currency pair you are observing is going in this particular fashion.

Trading in forex is definitely not child's play and not for the faint hearted or someone who is fickle-minded in your decisions.

Otherwise, you may end up losing more money in forex trading than gaining from it. Though, the down side is the margin call and you lose the amount you invest.

And do read the disclaimers on any expert advisors (that can be used on metatrader platforms) you come across. If you read them carefully, they will say that they cannot guarantee your earnings. So take all their featured earnings with a pinch of salt as there is no way you can verify if what they claim is real or not. The choice is yours. Expert advisors, are after all, a software and may not be able to change their position or direction based on certain situations as they will just follow the rules you set.

What I want to say is, it is best that you fully understand what the forex market is and the risk involved before hastily jumping into it. Do not be enticed by free bonus money when you sign up with any online broker platform.

Enough said, once you are familiar with everything, and is well acustomed to risk, then you can venture into forex trading !

Great Start to the Week

Hello everyone !

How's your weekend ? Had a good break ?

So now it is the start of a brand new week. Ready for the week's forex challenge ahead ?

Filled with energy and zest to make some awesome money in forex trades ?

Or simply new to forex trading and the use of expert advisors ?

Read my blog, check out all the articles so that you at least know what it entails when jumping into the forex market and do trading :) No time to trade ? Check out expert advisors on MT4 platform :)

Ok, you have fun !

Regarding MetaTrader Hosting

To be able to trade currency online, you will need a meta trading platform.

MetaTrader is one of the leading forex hosting service providers on the market today.

MetaTrader Hosting supports Metatrader on all major operating systems, including Linux, Mac and Windows, unlike some hosting companies which only provide support to Window clients. It will also give you real time support, should you encounter any problems on the server side.

MetaTrader Hosting has robust security arrangements at its facility, and provides a secure and remote access to your MetaTrader broker account.

Hosting your Forex VPS with MetaTrader Hosting gives you real time access to your individual trading account. It enables you the ability to view, manage and trade in real time through your broker. It is also possible to host several MetaTrader Expert Advisors without having to worry about your laptop crashing, power outages, or a failed internet connection.

As an additional benefit, MetaTrader Hosting will not only allow you to monitor your trade on your PC, laptop, Mac or Linux operating system, but you can also monitor your trading account remotely, and on the move with your iPhone.

MetaTrader Hosting was originally created for simple and easy management of your MT4 Expert Advisors and custom indicators and scripts, and has grown to become one of the most popular and robust trading platforms on the market. And with MetaTrader Hosting, it takes less time to install an Expert Advisor on MetaTrader, than it is when MT is running on your own desktop.

Extracted from Google search.

How Does Forex Trading Work ?

A video from Youtube giving a brief introduction of forex trading and how it works. And the market value and why it is so popular with so much currency between transacted everyday.

Also, featured is its brief on the use of expert advisors and auto forex trading robot. A simple comparison overview of auto vs manual forex trading. Watch it if you like ! Another video on a forex trading seminar is also embedded in this post :)

A Forex Trading Seminar video

Short Term Currency Trends

Most of the time, markets don't show any visible clear trend - they bounce back and forth between support and resistance levels. This sideways movement is called a trading range.

Below is a strategy that may help you in identifying entry points on short-term trends, whilst protecting your profits with trailing stops.

Trade Set-up

The strategy uses two charts with different time periods (10-minute and hourly), along with two technical indicators: a 200-bar moving average and a 14-bar slow stochastic study.

1st Step : Identify a Trend

Compare the moving averages on both charts. A trend may be developing when price is consistently above or below the moving averages on both charts.

2nd Step : Pinpoint entry

Once you've identified a trend, look for the following two conditions at the same time on the 10-minute chart:

1. Price is no more than 20 pips above (to buy) or 20 pips below (to sell) the MA.

2. The "fast" stochastic (%K) crosses above the "slow" stochastic (%D) below 20 (to buy), or crosses below the "slow" stochastic above 80 (to sell).

3rd Step : Ride the trend

Set a trailing stop after the trade entry.

On a LONG position, the stop order should be 10 pips BELOW the 200-period MA on the 10-minute chart. You'll RAISE the stop as the trade goes in your favor.

On a SHORT position, place the stop 10 pips ABOVE the MA. You'll LOWER the stop as the trade goes in your favor.

I hope this helps ! Test this out on a demo platform like eToro or ibfx practice accounts before you go live !

Choice of Forex Trading Currency Broker

There is a very wide choice of currency broker companies online and when you are starting out in forex trading it can be difficult to find the best. We tend to be attracted by advertising, assuming they are all working in the same way. In fact this is not true. Foreign exchange brokers have very different business models which affect the way that they operate. In some cases, you may be surprised to hear that they could be working against their clients instead of for them.

Of course traditionally a broker carries out his clients' instructions, placing orders for them in the market. Originally brokers worked with telephone orders and simply placed the order for the best price that they could get through their dealing desk. These days, everything is done online so that clients put in their orders for a certain price. However, you do still need a broker who will connect to the market through their software platform.

Many brokers still work in the old way, placing orders for clients as they are instructed. These are often the brokers who run standard forex accounts with minimum investment of $10,000 and upward. But the internet has opened up forex trading to people with much lower investment funds. More recently, companies have come on the scene to cater for these smaller investors and they do not necessarily follow the pattern of traditional brokers. To cut costs, they usually do not have their own dealing desks and they may operate in some very different ways. This can have important consequences for your funds and how they are managed.

So let's take a look at the types of business model that you may come across in your search for a currency broker.

No Dealing Desk (NDD) Currency Brokers

NDD brokers work in a similar way to brokers with dealing desks, but they use a range of liquidity providers to actually match their clients' orders in the market. Competition between liquidity providers keeps the spread low, even though the broker usually increases the spread to cover their own costs and make some money.

Market Makers

Market makers are not brokers in the true sense because instead of placing your order in the market they will match it themselves and then cover themselves against any loss by taking a position in the ECN or market that offsets their commitment to you either partially or fully. Market makers set their own prices, although of course these will be related to market prices. They often do not like clients to use scalping strategies because the very short term nature of these trades makes it hard for them to offset their risk. Some traders are happy to use market makers but others consider that they have a conflict of interest which may work against you as a trader.

Electronic Communications Network (ECN)

Forex brokers who use the ECN can access an online network where trades are filled. Many market makers work this way, as well as some brokers, banks and other large currency traders. Spread is usually low but you may be charged a fee per trade.

Bucket Shops

Forex bucket shops are like bet takers in that they simply match your trade without necessarily taking any position in the market. They may not even have any connection into the real currency market. They win if you lose, so if you are successful they will probably close your account and return your funds. There is really no point in getting involved with a bucket shop unless you just want experience at very low levels of investment, and plan to lose money. They are illegal in some jurisdictions, and do not deserve to be described as a currency broker.

What are Ticks and Pips ?

Ticks are the smallest amounts of time that exist between any two currency trades. This time frame can be a short time period of a fraction of a second for major currencies, and can also be a time frame of a few hours for less popular currencies. Ticks do not happen in constant intervals, even though the charts used for technical analysis do use specific time rates such as 4 hours of 15 minutes.

Whereas a pip is the smallest change of price for any Foreign Currency. The currency quotes appear as numbers with either two or four decimal places. This means that if the Foreign Currency moves up or down, the smallest move is called a "pip". When you trade in Forex, you monitor how the pips rise and drop and this is what determines your investment.

Take the following example :

If you buy EUR/USD. This pair is quoted four decimal numbers after the point. A pip here is ten thousandth of a Dollar, or 0.0001 of a dollar. The pip is an abbreviation of "Price Interest Point", and this is why another name used for pips is points.

Even though a pip is only a small amount of money, because your foreign currency trading is usually a leveraged investment, a few pips can mean serious cash fluctuations. Each serious trader needs to know how to calculate the change from pips the actual sums invested, and some online Foreign currency trading agents offer such calculators in their account. You should consider these and other advanced functions when selecting the broker you want to use. Pip value can vary, and is usually $1 in mini accounts or $10 in regular accounts.

An important concept that concerns pips is called The Spread. This is the pip difference between the bid price and the ask price done for the currency trading sum. When you buy Foreign Currency it costs you more than to sell it and this is the spread.

Come on back as I provide more forex trading basics.

Full article source, with thanks : www.forexondemand.com

How to Calculate Profit and Loss in a FX Trade

To be in this market, it is certainly useful for you to understand how to calculate the profit/loss of a trading position, even though trading platforms have this done automatically.

Take the following example :

Let's say that the current bid/ask for EUR/USD is 1.4616/19, meaning you can buy 1 euro for 1.4619 or sell 1 euro for 1.4616.

Suppose you decide that the Euro is undervalued against the US dollar. To execute this strategy, you would buy Euros (simultaneously selling dollars), and then wait for the exchange rate to rise.

So you make the trade: to buy 100,000 Euros you pay 146,190 dollars (100,000 x 1.4619). Remember, at 1% margin, your initial margin deposit would be approximately $1,461 for this trade.

As you expected, Euro strengthens to 1.4623/26. Now, to realize your profits, you sell 100,000 Euros at the current rate of 1.4623, and receive $146,230

You bought 100k Euros at 1.4619, paying $146,190. Then you sold 100k Euros at 1.4623, receiving $146,230. That's a difference of 4 pips, or in dollar terms ($146,190 - 146,230 = $40).

Total profit = US $40.

I hope this simple illustration will help you better understand how a FX trade is calculated !

Trading in Currency

Daily turnover in the world's currencies comes from two sources:

• Foreign trade (5%). Companies buy and sell products in foreign countries, plus convert profits from foreign sales into domestic currency.
• Speculation for profit (95%).

Most traders focus on the biggest, most liquid currency pairs. "The Majors" include US Dollar, British Pound, Swiss Franc, Japanese Yen, Euro, Canadian Dollar and Australian Dollar.

In fact, more than 85% of daily forex trading happens in the major currency pairs.

Forex for Beginners

Foreign Exchange or Forex is a globally trusted market used for the trading or exchange of currencies of different countries. It is the world’s largest financial market.

Tons of people from all walks of life are an active part of Forex or foreign exchange market. With the passage of each year, the Forex market is growing in size and becoming more accessible to the common people. It is the market of 21st century and people from all over the world are relaying on it to achieve their financial goals.

With the advancement in the technology and communication science, Forex has become a huge market but still it has more potential of growth and rise. In the years to come, it may become the trade of choice for many traders. The new generation of traders and investors is seeking exciting opportunities in Forex trade.

Foreign Exchange Education

Forex or foreign exchange trading is a very tricky and risky task. Without having proper training and education, one has very limited chances of success. The most important cause for the failure of Forex traders is their lack of Forex training and knowledge. A quality Forex Education or Training helps the Forex traders to improve their trading abilities and skills. Only a well educated or trained Forex trader understands the complexities and subtleties of Forex trade. Proper Forex training teaches the trader a sound trading strategy and an effective approach to currency trading. A qualified Forex trader can explore the opportunities much easily and extensively.

What should be done before forex market opens ?

A quality Forex training focuses on the market timing effect on trading and liquidity. The time when London market starts its proceedings is the busiest time of the market. The forex market’s startup time has a great effect on Forex market. No education or training system can neglect the importance of analyzing the effect of any Forex market’s opening and closing.

There is no hard and fast rule for Forex education. Success with Forex trading comes with experience, practice and learning new skills. With getting experienced, a trader get more disciplined and controlled in his emotions which is a must trait for Forex trader.

FX Basics : Understanding Margin Calls and Contract Size

Margin Calculation

Margin is calculated in 2 ways: Used Margin and Free Margin.

Used margin is the amount of money used to hold open positions whilst free margin refers to the amount of funds available to place additional positions.

Calculating a Margin Call

Fail-safes have been put in place to help prevent a trader from going into the negative and owing their broker additional funds. This is commonly referred to as a Margin Call. In the Forex market, a margin call typically means that their open positions will be automatically closed.

While in other financial markets a client is called upon to send additional funds or the position(s) will be closed at market price.

The margin level is calculated by dividing the current equity in an account by the current amount of margin in use (used margin).

After dividing the equity by the margin move the decimal two places to the right. A trader whose equity is at $1,000 and who is using a $500 of margin would divide 1,000 by 500 which of course equals 2. Then move the decimal two places to the right; this trader's current margin level or percentage is thus 200%. At 100% margin level a trader is essentially using their entire available margin.

When the margin level drops to a certain percentage, trades will automatically be closed.

Understanding Contract Size in the Forex Market

Each standard lot traded in the Forex market is a $100,000 (of the base currency) contract. In other words, when trading one lot in a standard account, a trader is essentially placing a $100,000 trade in the market.

As such, without leverage, most investors would not be able to afford such a transaction. Leverage of 100 – 1 would allow a trader to place the same one lot ($100,000) trade with the post of $1,000 in margin. $100,000 divided by 100 equals $1,000, thus 100 : 1 leverage means that $1,000 of margin is able to control a $100,000 position.

Many retail Forex brokers also offer a mini account option. Mini accounts are essentially 10% the value of standard accounts, meaning that mini contracts are $10,000 (of the base currency). A trade of one mini lot would be a $10,000 trade. Trading with 100:1 leverage would mean that $100 of margin would control a $10,000 contract.

Understanding the basic terminology will help you in your forex trading escapade.

Forex Basics

To be successful in the forex market it is obviously necessary to understand the basics in foreign exchange. Knoing how to analyse charts and trends is one thing but it is equally important to understand the underlying reasons why various currencies around the world are constantly moving relative to each other.

Being able to understand what influences a currency movement and correctly predict a movement in one direction or another is what makes a successful forex trader. Let us look at the major influences :

1. Current Affairs

Be aware of the current affairs around the world especially within the major world economies. like USA, United Kingdom etc Monitor national and international news channels for such events as political unrest, social disorder and in particular financial news and major announcement by world leaders and financial leaders like Bernanke etc.

2. Unpredictable Events

A major natural disaster or significant terrorist activity can influence a sudden currency movement. You should always protect your trades from unpredictable events by using stop losses to minimize the affect of a sudden adverse currency movement.

3. Predictable Events

A political event such as a general election is predictable. A major international sporting event such the Olympic Games is predictable. The important thing here is to be able to understand which currencies are likely to be affected and in which direction they will move. It's not just the events themselves which may influence a currency movement but also the announcement of such an event. So be aware of the timing of such announcements.

4. Financial Reports

Be familiar with the timing of monthly financial reporting from countries of influence like USA . Announcements by world leaders concerning GDP, interest rates, inflation etc., will often influence currency movements. Monitor the financial results for the major international companies, particularly the banks and other major international financial institutions.

5. Rumors

It's difficult to avoid rumors but you should be very careful if making a trade based on a rumor because very often a rumor is simply no more than just a rumor and often a rumor is spread to fool traders into thinking the market will move one way when in fact the opposite happens.

6. Currency Pairs

You should pay particular attention to applying foreign exchange basics in the two countries concerned with your currency pairs. It is a fact that the US dollar has the strongest influence on other currencies particularly if one of the pair is a minor currency.

The problem for any beginner in forex trading is how to apply all this fundamental analysis to successful trading. The best advice I can give is to gain experience with fundamental analysis and how each type of influence effects currency movement before you use it to make real trades.

After a while you will develop a feel which will give you more confidence as you become familiar with the foreign exchange basics.

With these in perspective, welcome to the world of forex !

Forex Trading Overview

Close to $2 trillion is exchanged each day in the forex market and it comprises the largest market in the world. With more than three quarters of deals surviving less than a week forex trading is, for the most part, a high-risk, short-term, highly volatile market. It is a highly fluid market, a good deal more so than equities, with the many traders worldwide and the very high daily turnover rate.

The top ten most active traders, however, are responsible for nearly three quarters of total dealing volume. The trading activity that happens within the interbank market, which is formed by international banks, provide the market with bid and ask prices that are far closer than retail customers can get.

In 1972, at the Chicago Mercantile Exchange, forex futures contracts, that are derivatives, were introduced and now make up around seven percent of the all foreign exchange volume.

Something else that has also taken hold and is another popular hedging strategy is foreign exchange options. Investors often buy these derivatives, which are contracts to purchase currency at a certain price on a future date, to counterbalance the decline in the price of a currency and any possible losses they might endure.

An additional means by which traders are capable of mitigating risk is through an exchange, in which both parties agree to switch one currency for another for a set period of time, and will then reverse the transaction after the period runs out.

Amongst financial markets the foreign exchange market is without competition and is a fast-paced, international currency exchange. International companies, prominent banks and financial organisations will ensure its huge popularity continues and its growth is guaranteed into the future.

Technical Analysis to Predict Price Movements

In brieft, technical analysis attempts to forecast future price movements by examining past market data.

Most traders use technical analysis to get a "big picture" or macro view on an investment's price history. Even fundamental traders will glance at a chart to see if they're buying at a fair price, selling at a cyclical top or entering a choppy, sideways market.

Technical analysts make a few assumptions as below :

• History repeats itself in regular, fairly predictable patterns. These patterns, generated by price movements, are called signals. A technical analyst's goal is to uncover a current market's signals by examining past market signals.
• Prices move in trends. Technical analysts believe price fluctuations are not random and unpredictable. Once an up, down or sideways trend has been established, it usually will continue for a period.
• All market fundamentals are reflected in price data. Moods, differing opinions, and other market fundamentals need not be studied.

Getting in and get out of the FX market at the right time

Traders rely on price charts, volume charts and other mathematical representations of market data to find the ideal entry and exit points for a trade. Some studies help identify a trend, while others help determine the strength and sustainability of that trend over time.

Technical analysis can add discipline and minimize emotion in your trading plan. It can be hard to screen out fundamental impressions and stick with your entry and exit points as planned.

While no system is perfect, technical analysis helps you see your trading plan through more objectively and dispassionately.

Price chart types

Bar charts
The most common type of chart. Each bar represents a period of time - a "period" as short as 1 minute or as long as several years. Over time, bar charts show distinct price patterns.

Point & Figure Charts
Point & figure patterns resemble bar chart patterns, except Xs and Os are used to mark changes in price direction. Point & figure charts make no use of time scale to associate a certain day with a certain price action.

Candlestick Charts
Instead of a simple bar, each candlestick shows the high, low, opening and closing price for that period of time it represents. Candlestick patterns provide greater visual detail as they develop.


Technical Indicator Types

Trend
Trend indicators (moving averages, trend lines) smooth price data out, so that a persistent up, down or sideways trend can be easily seen.

Volatility
"Volatility" (Bollinger Bands eg)refers to the magnitude of day-to-day price fluctuations, whatever their directional trend. Changes in volatility tend to anticipate changes in prices.

Strength
Strength indicators describe the intensity of market opinion on a certain price by examining the market positions taken by various market participants. Volume or open interest are the basic ingredients of strength indicators.

Cycle
Cycle indicators indicate repeating market patterns from recurrent events such as seasons or elections. Cycle indicators determine the timing of a particular market pattern. (Example: Elliott Wave)

Momentum
Momentum indicators determine the strength or weakness of a trend as it progresses over time. Momentum is highest when a trend starts and lowest when the trend changes.

When price and momentum diverge, it suggests weakness. If price extremes occur with weak momentum, it signals an end of movement in that direction. If momentum is trending strongly and prices are flat, it signals a potential change in price direction. (Example: Stochastic, MACD, RSI)

Support/Resistance
Support and resistance describes the price levels where markets repeatedly rise or fall and then reverse. This phenomenon is attributed to basic supply and demand. (Example: Trend Lines)

How Long Have You Been Trading in Forex ?

Well, it is not simply a matter of how long you have been in forex trading.

The important thing still lies in your understanding of the forex market, how the currency pairs move relative to one another. It is not a matter of a "gut feeling" to short sell or buy without a purpose.

Also, how you can make use of fundamental news and technical analysis to aid you in your decision making process. Fundamental news like bank rates, GDP, employment figures etc will have impact on the current movement as in technical charting which will help you determine long term trends.

Going blindly into the forex buy/sell without basic understanding of the highly volatile currency market can prove disastrous for many newbie trader as you can easily lose tons of money within minutes as much as you can earn that much if you understand how it works.