How to Learn Forex?

October 7, 2014 Forex Analysis

Do you want to Learn Forex?

Forex trading seems so complicated when you take your first look at it. Currency pairs, interest rates, and leverage oh my!

If you take a little time to learn about these things, they become less intimidating. Forex trading can be as simple or as complicated as you want it to be. Some traders like to pour over financial reports and make systems based on those(fundamental forex trading), while other traders prefer to look at forex technical analysis on the chart and make their trades based on visual signals. It’s just a matter of your personal interpretation of what is comfortable.

So, how exactly do you start and learn? I’m so glad that you asked.

Start Reading
The first thing I always recommend is to start reading about trading forex online. Take some time to learn the lingo, check out a forex glossary, hang around a forex forum. In the beginning, just lurk around a bit and get acquainted, don’t try to do any trading yet.

Open a Demo Account
Open a forex demo account with a broker and do some playing around in the market. A demo account will let you get familiar with the forex trading platform and learn a bit about how the market flows. Experiment with some different methods, try some real time forex trading, and consider trying other methods like position trading.

Learn Risk Management
Forex risk management is one of the biggest key skills to learn for forex trading. If you don’t plan on learning to manage your risk, you can just flush your money down the toilet instead of putting it into a trading account, the result will be the same. The best time to learn risk management is when you don’t have any real money at stake. Study up on risk reward ratio and other money management methods and work out your trading plan. It can help to keep a forex trading journal during your demo days to learn where your trading weaknesses are before you put your hard earned money on the line.

Open a Real Account
This is the part that is the most exciting. Open a real account with your chosen broker. For a first time account, I’d recommend opening a micro forex trading account. A micro account will allow you to trade very small to get the hang of live trading. Demo trading will teach you what you need to know about the mechanics of trading, how you can manage risk, how to use the trading platform, etc. Once you go live, a new factor is introduced, fear.

Trading fear creeps it’s way in once you put on a trade with your real money and watch it fluctuate. Usually you feel excited and unsure, and ready to close or change your trade at any minute. This is where the trading mistakes begin. Keeping your trades small will help you to stay afloat while learning to maneuver this new issue.

So at this point, you just need to rinse and repeat. Learning forex trading is as simple as gaining some experience without blowing your account to pieces. Getting a margin call is not pretty, and it can make you want to quit if you started out with a large amount of capital. In the early days, keep it small, and do your learning on the cheap. If you feel like you should be trading larger, increase your trade size gradually and put down some success with a larger trading size before you increase again. If you start to feel nervous about your potential losses, you are trading too large, drop back to a lower lot size.

Unfortunately, you won’t get rich in forex trading overnight. It’s a type of investing similar to many others. It takes time to get acclimated and you have to follow some guidelines in order to make money at it and it isn’t risk free.

Keep your head clear and go slow with your trading and you’ll survive long enough to get things figured out and make some money.

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What is Foreign Exchange

September 29, 2014September 29, 2014 Forex Analysis

Forex Is Foreign Exchange

It may come as a shock to the investment rookie, but Forex is the largest market in the world. Forex is an abbreviated form of the term Foreign Exchange, or simply currency. These terms refer to the monetary value of one country’s money value (as measured by the country’s largest single-value denomination) and is usually measured in comparison to the unit of currency used by the country in which the investor is a citizen.

The measure by which Forex is considered the largest market is in terms of cash value traded, and it is used by every type of investment imaginable, from individuals (who use brokers or banks) to governments to international banking firms. Forex is extremely popular due to its extreme liquidity and its time capacity (with three large stock markets open day long during the week, it is possible to exchange foreign currency at every hour of the day). Liquidity is a term that is short for market liquidity, which refers to the ability to quickly buy or sell without causing a dramatic fluctuation in price. As currency for countries is determined mostly by internal (domestic) factors rather than external ones, Forex is not subject to the fluxes caused by a panicked sell-off.

As the industrial market place and arguably the defining center of the world, the dollar of the United States is used by far the most in Forex transactions. Involved in 89% of transactions, the US dollar was way ahead of other currencies, followed distantly by the euro (37%) and then the yen (20%). Remember that the numbers here do not add up to 100% because every transaction will contain at least two different currencies.

Forex speculators are a controversial topic among economists and politicians alike. One school of thought posits that currency speculation can contribute to a country’s economic downfall, as a lower currency value causes the price of inflation in comparison to imported goods to rise, snowballing the problem. Countries that are primarily exporters to a country with a higher currency value, however, receive benefits when their dollar is lowered in comparison, as their goods are thus inherently easier to purchase. The opposing view to the speculators as instruments of economic downfall is that speculators serve to keep currency regulated according to international agreements, and that their profits are the results of basic economic laws. Those who subscribe to this theory often point out that the opposing view is held all too often by leaders seeking to deflect attention away from their own domestic policies when explaining to a populace why their economy is in the toilet.

Individuals wishing to become involved in the Forex market need to remember that they must do so through a broker or bank, bodies regulated by their governments and international agreements to prevent the unlawful profit resulting in economic damage to a different country. Investing through these bodies inevitably means that the individual will not see the full results of their investment, as they naturally provide some insulation for themselves against loss in the fluctuating market.

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Best Forex Brokers Online

September 5, 2014 Forex Analysis

About Forex Brokers

Best Forex Brokers Online

Trading on the international foreign currency exchange can be complicated and confusing for even an experienced forex trader. It can also take a lot of time to constantly research and review information about foreign country’s economic health, but that is what you will have to do if you do not want to lose your shirt in the foreign currency market. There are many online forex brokers that are experienced in the market and have qualified individuals consistently checking the market, looking for indicators of which way their currency value is headed.

Similar to a person just starting in the stock exchange, you can review company history and future projections trying to determine the value of a company and how economic indicators will affect that company’s share price. Using online forex brokers is like using a stockbrokers that researches the company and presents their finding and opinions on the company’s viability.

On the foreign currency market, online forex brokers are essentially tracking a foreign country’s economic condition and watching internal indicators that may show whether the values of the currency is going to increase or fall. By using online forex brokers to buy and sell foreign currency, you are often getting better information and better indicators on when and where to buy and sell.

Practice Makes Perfect On Foreign Exchange Market

Before investing any real money in the market, most online forex brokers offer new users the opportunity to practice making monetary trades with their play money. This can help newbies in the market as well as experienced currency traders, hone their skills without losing any real cash. Many online forex brokers offer their trading software free for a trial period and expect you to open an account with them at the end of the trial.

Fees for online forex brokers vary by broker, but there is no cost to trade over the counter and usually brokerage fees are tied to high and low bid for the currency in which you trade that day. Keep in mind the trading day on the foreign exchange market is 24 hours and the market never closes.

Many companies that buy and sell inventory from overseas suppliers and then sell the finished product overseas seldom use online forex brokers, having their own in-house experts due to the number of trades they perform on a daily basis. However, individuals are probably best served by dealing with online forex brokers until they are fully acclimated into the currency market.

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What is Forex?

August 11, 2014 Forex Analysis

One of the questions we get asked all the time is “What is forex trading?” When did it start? How big is it? Who are the major players? What makes currency rates change? Here are the answers to all your questions!

About forex

Forex is the international market for the free trade of currencies. Traders place orders to buy one currency with another currency. For example, a trader may want to buy Euros with US dollars, and will use the forex market to do this. The forex market is the world’s largest financial market. Over $4 trillion dollars worth of currency are traded each day. The amount of money traded in a week is bigger than the entire annual GDP of the United States! The main currency used for forex trading is the US dollar.

When did forex start?

As the world continued to tear itself apart in the Second World War, there was an urgent need for financial stability. International negotiators from 29 countries met in Bretton Woods and agreed to a new economic system where, amongst other things, exchange rates would be fixed. The International Monetary Fund (IMF) was established under the Bretton Woods agreement, and started to operate in 1949. All exchange rates changes above 1% had to be approved by the IMF, which had the effect of freezing these rates. By the late 1960’s the fixed exchange rate system started to break down, due to a number of international political and economic factors. Finally, in 1971, President Nixon stopped the US dollar being converted directly to gold, as part of a set of measures designed to stem the collapse of the US economy. This was known as the Nixon shock, and lead to floating rate currency markets being established in early 1973. By 1976, all major currencies had floating exchange rates. With floating rates, currencies could be traded freely, and the price changed based on market forces. The modern forex market was born.

Who trades on the forex market?

There are many different players in the forex market. Some trade to make profits, others trade to hedge their risks and others simply need foreign currency to pay for goods and services. The participants include the following:
• Government central banks
• Commercial banks
• Investment banks
• Brokers and dealers
• Pension funds
• Insurance companies
• International corporations
• Individuals

When is the forex market open?

Unlike stock exchanges, which have limited opening hours, the forex market is open 24 hours a day, five days a week. Banks need to buy and sell currency around the clock, and the forex market has to be open for them to do this. What factors influence currency exchange rates? As with any market, the forex market is driven by supply and demand:
• If buyers exceed sellers, prices go up
• If sellers outnumber buyers, prices go down

The following factors can influence exchange rates:
• National economic performance
• Central bank policy
• Interest rates
• Trade balances – imports and exports
• Political factors – such as elections and policy changes
• Market sentiment – expectations and rumours
• Unforeseen events – terrorism and natural disasters
Despite all these factors, the global forex market is more stable than stock markets; exchange rates change slowly and by small amounts.

What are the advantages of the forex market?

The forex market has many advantages. These include the following:
• It’s already the world’s largest market and it’s still growing quickly
• It makes extensive use of information technology – making it available to everyone
• Traders can profit from both strong and weak economies
• Trader can place very short-term orders – which are prohibited in some other markets
• The market is not regulated
• Brokerage commissions are very low or non-existent
• The market is open 24 hours a day during weekdays

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