Financing Your Trading
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Post by Financing Your Trading on Jul 22, 2018 10:42:46 GMT
Trading currency in the foreign exchange market (forex) is fairly easy today with three types of accounts designed for retail investors: standard lot, mini lots and micro lots. Beginners can get started with a micro account for as little as $50.
Before you start jumping in you should familiarize themselves with the market and terminology of the forex market, and if you've already been trading stocks online it should be easy to get started.
Below is a list of terms you should learn.
PIP: The smallest price change that a given exchange rate can make. Since most major currency pairs are priced to four decimal places, the smallest change is that of the last decimal point. A common exception is for Japanese yen (JPY) pairs which are quoted to the second decimal point.
BASE CURRENCY: The first currency quoted in a currency pair on forex. It is also typically considered the domestic currency or accounting currency.
CROSS CURRENCY PAIR: A pair of currencies traded in forex that does not include the U.S. dollar. One foreign currency is traded for another without having to first exchange the currencies into American dollars.
CURRENCY PAIR: The quotation and pricing structure of the currencies traded in the forex market: the value of a currency is determined by its comparison to another currency. The first currency of a currency pair is called the "base currency", and the second currency is called the "quote currency". The currency pair shows how much of the quote currency is needed to purchase one unit of the base currency.
QUOTE CURRENCY: The second currency quoted in a currency pair in forex. In a direct quote, the quote currency is the foreign currency. In an indirect quote, the quote currency is the domestic currency. This is also known as the "secondary currency" or "counter currency".
Now that we've reviewed basic terminology, let's look at some of the differences between trading stocks vs. currencies. In currency trading you are always comparing one currency to another so forex is always quoted in pairs. Sometimes authors of currency research will refer to only one half of the currency pair. For example if an article is referring to the euro (EUR) trading at 1.3332 it's assumed the other currency is the U.S. dollar (USD).
When looking at the quote screen for the first time it may seem confusing at first, however, it's actually very straightforward. Below is an example of a EUR/USD quote.
The quote example shows traders how much one euro is worth in US dollars). The first currency in a currency pair is the "base currency" and the second currency is the "counter currency" or secondary currency.
When buying or selling a currency pair, the action is being performing on the base currency.
For example traders bearish on euros, could sell EUR/USD. Now, when selling EUR/USD, the trader is not only selling euros but is also buying US dollars at the same time. Thus the pair trade.
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Let's say that you sell the EUR/USD at 1.4022. If the EUR/USD falls, that means the euro is getting weaker and the U.S. dollar is getting stronger. You might have also noticed the quote price has four places to the right of the decimal. Currencies are quoted in pips. A pip is the unit you count profit or loss in. Most currency pairs, except Japanese yen pairs, are quoted to four decimal places. This fourth spot after the decimal point (at one 100th of a cent) is typically what traders watch to count "pips".
Every point that place in the quote moves is 1 pip of movement. For example, if the GBP/USD rises from 1.5022 to 1.5027, the GBP/USD has risen 5 pips.
Now depending on the lot size (standard, mini, micro) the monetary value of a pip can vary according to the size of your trade and the currency you are trading.
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The most common lot size is to trade in increments of 10,000 (mini). A lot size of 10,000 for the EUR/USD is worth $1.00 per lot. If you were trading 3 lots or 30,000, each pip is worth $3 in profit or loss. A full size lot, or standard lot, is 100,000 where each pip is worth $10, and a micro lot size is 1,000, were each pip is worth $0.10.
Some currency pairs will have different pip values. Be sure to check with your broker.
One of the nice things about trading currencies is there is no commissions. Looking at the quote image above, notice the small number of pips between the two quoted currencies: the difference in prices is 2.5.
This is known as the spread. The spread is how the broker makes their money and acts similar to the bid/ask in stock trading. Not all spreads are created equal. The spread differs between brokers and sometime the time of day can cause volume to be light and the spread to increase at some brokers.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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Post by Maclin Broya on Jul 22, 2018 10:46:02 GMT
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Forex is short for foreign exchange, but the actual asset class we are referring to is currencies. Foreign exchange is the act of changing one country's currency into another country's currency for a variety of reasons, usually for tourism or commerce. Due to the fact that business is global, there is a need to transact with other countries in their own particular currency.
After the accord at Bretton Woods in 1971, when currencies were allowed to float freely against one another, the values of individual currencies have varied, which has given rise to the need for foreign exchange services. This service has been taken up by commercial and investment banks on behalf of their clients, but it has simultaneously provided a speculative environment for trading one currency against another using the internet.
[ While forex trading is largely carried out by larger financial institutions, it is also an excellent trading opportunity for individual investors. With very low commissions and fees, forex trading is accessible for all investors and presents both short and long term trading opportunities. If you're interested in learning how to start trading on the forex market, check out Investopedia Academy's Forex Trading for Beginners course. ]
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Forex Trading Online
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Post by Forex Trading Online on Jul 22, 2018 10:47:34 GMT
Forex as a Hedge
Commercial enterprises doing business in foreign countries are at risk due to fluctuations in the currency value when they have to buy or sell goods or services to another country. Hence, the foreign exchange markets provide a way to hedge the risk by fixing a rate at which the transaction will be concluded at some time in the future.
To accomplish this, a trader can buy or sell currencies in the forward or swap markets, at which time the bank will lock in a rate so that the trader knows the exact exchange rate in order to mitigate his or her company's risk. To some extent, the futures market can also offer a means to hedge currency risk, depending on the size of the trade and the actual currency involved. The futures market is conducted in a centralized exchange and is less liquid than the forward markets, which are decentralized and exist within the interbank system throughout the world.
Forex as Speculation
Since there is constant fluctuation between the currency values of countries due to varying supply and demand factors such as interest rates, trade flows, tourism, economic strength and geopolitical risk, an opportunity exists to bet against these changing values by buying or selling one currency against another in the hopes that the currency you buy will gain in strength or that the currency you sell will weaken against its counterpart. (For additional reading, see "Top 6 Questions About Currency Trading.")
Currency as an Asset Class
There are two distinct features to currency as an asset class:
You can earn the interest rate differential between two currencies.
You can gain value in the exchange rate.
Why We Can Trade Currencies
Until the advent of the internet, currency trading was limited to interbank activity on behalf of their clients. Gradually, the banks themselves set up proprietary desks to trade for their own accounts, which was followed by large multinational corporations, hedge funds and high net worth individuals.
With help from the internet, a retail market aimed at individual traders has emerged, providing easy access to the foreign exchange markets, either through the banks themselves or brokers making a secondary market. (For more on the basics of forex, check out "8 Basic Forex Market Concepts.")
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Post by Admin on Jul 22, 2018 10:49:28 GMT
Forex Trading Risks
Trading currencies can cause some confusion related to risk due to its complexities. Much has been said about the interbank market being unregulated and therefore very risky due to a lack of oversight. This perception is not entirely true, though. A better approach to the discussion of risk would be to understand the differences between a decentralized market versus a centralized market and then determine where regulation would be appropriate.
The interbank market is made up of several banks trading with each other around the world. The banks themselves have to determine and accept sovereign risk and credit risk, and for this they have many internal auditing processes to keep them as safe as possible. The regulations are industry- imposed for the sake and protection of each participating bank.
Since the market is made by each of the participating banks providing offers and bids for a particular currency, the market pricing mechanism is derived from supply and demand. Due to the huge flows within the system, it is almost impossible for any one rogue trader to influence the price of a currency. In today's high-volume market, with between $2 trillion and $3 trillion being traded per day, even the central banks cannot move the market for any length of time without the full coordination and cooperation of other central banks. (For more on the interbank system, read "The Foreign Exchange Interbank Market.")
Attempts are being made to create an Electronic Communication Network (ECN) to bring buyers and sellers into a centralized exchange so that pricing can be more transparent. This is a positive move for retail traders who will gain a benefit by seeing more competitive pricing and centralized liquidity. Banks of course do not have this issue and can, therefore, remain decentralized.
Traders with direct access to the forex banks are also less exposed than those retail traders who deal with relatively small and unregulated forex brokers, which can (and sometimes do) re-quote prices and even trade against their own customers. It seems that the discussion of regulation has arisen because of the need to protect the unsophisticated retail trader who has been led to believe that forex trading is a surefire profit-making scheme. (See also "Why It's Important to Regulate Foreign Exchange.")
For the serious and educated retail trader, there is now the opportunity to open accounts at many of the major banks or the larger, more liquid brokers. As with any financial investment, it pays to remember the caveat emptor rule – "buyer beware!" (For more on the ECN and other exchanges, check out "Getting to Know the Stock Exchanges.")
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Post by Currency Trading on Jul 29, 2018 4:58:40 GMT
Trading currencies can cause some confusion related to risk due to its complexities. Much has been said about the interbank market being unregulated and therefore very risky due to a lack of oversight. This perception is not entirely true, though. A better approach to the discussion of risk would be to understand the differences between a decentralized market versus a centralized market and then determine where regulation would be appropriate. Forex trading |
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Post by Forex Treading on Aug 1, 2018 16:25:42 GMT
The foreign exchange market is the "place" where currencies are traded. Currencies are important to most people around the world, whether they realize it or not, because currencies need to be exchanged in order to conduct foreign trade and business. If you are living in the U.S. and want to buy cheese from France, either you or the company that you buy the cheese from has to pay the French for the cheese in euros (EUR). This means that the U.S. importer would have to exchange the equivalent value of U.S. dollars (USD) into euros. The same goes for traveling. A French tourist in Egypt can't pay in euros to see the pyramids because it's not the locally accepted currency. As such, the tourist has to exchange the euros for the local currency, in this case the Egyptian pound, at the current exchange rate.
The need to exchange currencies is the primary reason why the forex market is the largest, most liquid financial market in the world. It dwarfs other markets in size, even the stock market, with an average traded value of around U.S. $2,000 billion per day. (The total volume changes all the time, but as of August 2012, the Bank for International Settlements (BIS) reported that the forex market traded in excess of U.S. $4.9 trillion per day.)
One unique aspect of this international market is that there is no central marketplace for foreign exchange. Rather, currency trading is conducted electronically over-the-counter (OTC), which means that all transactions occur via computer networks between traders around the world, rather than on one centralized exchange. The market is open 24 hours a day, five and a half days a week, and currencies are traded worldwide in the major financial centers of London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris and Sydney - across almost every time zone. This means that when the trading day in the U.S. ends, the forex market begins anew in Tokyo and Hong Kong. As such, the forex market can be extremely active any time of the day, with price quotes changing constantly.
Spot Market and the Forwards and Futures Markets
There are actually three ways that institutions, corporations and individuals trade forex: the spot market, the forwards market and the futures market. The forex trading in the spot market always has been the largest market because it is the "underlying" real asset that the forwards and futures markets are based on. In the past, the futures market was the most popular venue for traders because it was available to individual investors for a longer period of time. However, with the advent of electronic trading and numerous forex brokers, the spot market has witnessed a huge surge in activity and now surpasses the futures market as the preferred trading market for individual investors and speculators. When people refer to the forex market, they usually are referring to the spot market. The forwards and futures markets tend to be more popular with companies that need to hedge their foreign exchange risks out to a specific date in the future.
What is the spot market?
More specifically, the spot market is where currencies are bought and sold according to the current price. That price, determined by supply and demand, is a reflection of many things, including current interest rates, economic performance, sentiment towards ongoing political situations (both locally and internationally), as well as the perception of the future performance of one currency against another. When a deal is finalized, this is known as a "spot deal". It is a bilateral transaction by which one party delivers an agreed-upon currency amount to the counter party and receives a specified amount of another currency at the agreed-upon exchange rate value. After a position is closed, the settlement is in cash. Although the spot market is commonly known as one that deals with transactions in the present (rather than the future), these trades actually take two days for settlement.
What are the forwards and futures markets?
Unlike the spot market, the forwards and futures markets do not trade actual currencies. Instead they deal in contracts that represent claims to a certain currency type, a specific price per unit and a future date for settlement.
In the forwards market, contracts are bought and sold OTC between two parties, who determine the terms of the agreement between themselves.
In the futures market, futures contracts are bought and sold based upon a standard size and settlement date on public commodities markets, such as the Chicago Mercantile Exchange. In the U.S., the National Futures Association regulates the futures market. Futures contracts have specific details, including the number of units being traded, delivery and settlement dates, and minimum price increments that cannot be customized. The exchange acts as a counterpart to the trader, providing clearance and settlement.
Both types of contracts are binding and are typically settled for cash for the exchange in question upon expiry, although contracts can also be bought and sold before they expire. The forwards and futures markets can offer protection against risk when trading currencies. Usually, big international corporations use these markets in order to hedge against future exchange rate fluctuations, but speculators take part in these markets as well.
Note that you'll see the terms: FX, forex, foreign-exchange market and currency market. These terms are synonymous and all refer to the forex market.
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Post by Forex Treading on Aug 1, 2018 16:29:04 GMT
The foreign exchange market is the "place" where currencies are traded. Currencies are important to most people around the world, whether they realize it or not, because currencies need to be exchanged in order to conduct foreign trade and business. If you are living in the U.S. and want to buy cheese from France, either you or the company that you buy the cheese from has to pay the French for the cheese in euros (EUR). This means that the U.S. importer would have to exchange the equivalent value of U.S. dollars (USD) into euros. The same goes for traveling. A French tourist in Egypt can't pay in euros to see the pyramids because it's not the locally accepted currency. As such, the tourist has to exchange the euros for the local currency, in this case the Egyptian pound, at the current exchange rate. Best Forex RobotThe need to exchange currencies is the primary reason why the forex market is the largest, most liquid financial market in the world. It dwarfs other markets in size, even the stock market, with an average traded value of around U.S. $2,000 billion per day. (The total volume changes all the time, but as of August 2012, the Bank for International Settlements (BIS) reported that the forex market traded in excess of U.S. $4.9 trillion per day.) One unique aspect of this international market is that there is no central marketplace for foreign exchange. Rather, currency trading is conducted electronically over-the-counter (OTC), which means that all transactions occur via computer networks between traders around the world, rather than on one centralized exchange. The market is open 24 hours a day, five and a half days a week, and currencies are traded worldwide in the major financial centers of London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris and Sydney - across almost every time zone. This means that when the trading day in the U.S. ends, the forex market begins anew in Tokyo and Hong Kong. As such, the forex market can be extremely active any time of the day, with price quotes changing constantly. Spot Market and the Forwards and Futures Markets
There are actually three ways that institutions, corporations and individuals trade forex: the spot market, the forwards market and the futures market. The forex trading in the spot market always has been the largest market because it is the "underlying" real asset that the forwards and futures markets are based on. In the past, the futures market was the most popular venue for traders because it was available to individual investors for a longer period of time. However, with the advent of electronic trading and numerous forex brokers, the spot market has witnessed a huge surge in activity and now surpasses the futures market as the preferred trading market for individual investors and speculators. When people refer to the forex market, they usually are referring to the spot market. The forwards and futures markets tend to be more popular with companies that need to hedge their foreign exchange risks out to a specific date in the future. What is the spot market?
More specifically, the spot market is where currencies are bought and sold according to the current price. That price, determined by supply and demand, is a reflection of many things, including current interest rates, economic performance, sentiment towards ongoing political situations (both locally and internationally), as well as the perception of the future performance of one currency against another. When a deal is finalized, this is known as a "spot deal". It is a bilateral transaction by which one party delivers an agreed-upon currency amount to the counter party and receives a specified amount of another currency at the agreed-upon exchange rate value. After a position is closed, the settlement is in cash. Although the spot market is commonly known as one that deals with transactions in the present (rather than the future), these trades actually take two days for settlement. What are the forwards and futures markets?Unlike the spot market, the forwards and futures markets do not trade actual currencies. Instead they deal in contracts that represent claims to a certain currency type, a specific price per unit and a future date for settlement. In the forwards market, contracts are bought and sold OTC between two parties, who determine the terms of the agreement between themselves. In the futures market, futures contracts are bought and sold based upon a standard size and settlement date on public commodities markets, such as the Chicago Mercantile Exchange. In the U.S., the National Futures Association regulates the futures market. Futures contracts have specific details, including the number of units being traded, delivery and settlement dates, and minimum price increments that cannot be customized. The exchange acts as a counterpart to the trader, providing clearance and settlement. Both types of contracts are binding and are typically settled for cash for the exchange in question upon expiry, although contracts can also be bought and sold before they expire. The forwards and futures markets can offer protection against risk when trading currencies. Usually, big international corporations use these markets in order to hedge against future exchange rate fluctuations, but speculators take part in these markets as well. Note that you'll see the terms: FX, forex, foreign-exchange market and currency market. These terms are synonymous and all refer to the forex market. |
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Post by Mnutan jojak on Aug 7, 2018 19:01:42 GMT
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The Weight Loss Scam
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Post by The Weight Loss Scam on Aug 15, 2018 7:20:13 GMT
I am literally impressed! The fact that this particular forex trade is not a get rich quick thing, I am all sold. Thank you for teaching this absolutely free. A big eye opener. I now see myself trading at the comfort of my own home. Thank you again. I will come back with a feedback on how I do on the trade.
Last week I asked you to give me an update on how the first half of your trading year went and the overwhelming majority of you said: "not as I expected." This reminded me of a video I shared with you a few months ago where I asked: "What's Your Trading Philosophy?" With the general response being "I don't really have one."
If you don't have grounded philosophy to base your trading off of it's going to be nearly impossible to perform the consistent analysis. And the less consistent you are in your analysis, the less consistent your trade execution will be. And this is what's leading to your inconsistent trading results
In today's Trading Edge video, I share with you the centerpiece of my trading philosophy & what I believe should be present in every trader that uses technical analysis to trade the markets.
In the end, we'll also take a deeper look into m year to date trading stats along with a few takeaways.
Lastly, if you're new or struggling and you need some help with creating or recreating your trading philosophy, make sure you check out this FREE 4-Part video training series from Jason Graystone Called "The Truth About Trading" where he walks you through what's needed in order to trade, how to REALLY create wealth through trading and what tools are needed in order for you to earn success
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Post by Hasyew msakaw on Aug 15, 2018 7:21:49 GMT
Last week I asked you to give me an update on how the first half of your trading year went and the overwhelming majority of you said: "not as I expected." This reminded me of a video I shared with you a few months ago where I asked: "What's Your Trading Philosophy?" With the general response being "I don't really have one." If you don't have grounded philosophy to base your trading off of it's going to be nearly impossible to perform the consistent analysis. And the less consistent you are in your analysis, the less consistent your trade execution will be. And this is what's leading to your inconsistent trading results In today's Trading Edge video, I share with you the centerpiece of my trading philosophy & what I believe should be present in every trader that uses technical analysis to trade the markets. In the end, we'll also take a deeper look into m year to date trading stats along with a few takeaways. Lastly, if you're new or struggling and you need some help with creating or recreating your trading philosophy, make sure you check out this FREE 4-Part video training series from Jason Graystone Called "The Truth About Trading" where he walks you through what's needed in order to trade, how to REALLY create wealth through trading and what tools are needed in order for you to earn success |
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Post by Hasyew msakaw on Aug 15, 2018 7:24:37 GMT
Last week I asked you to give me an update on how the first half of your trading year went and the overwhelming majority of you said: "not as I expected." This reminded me of a video I shared with you a few months ago where I asked: "What's Your Trading Philosophy?" With the general response being "I don't really have one." If you don't have grounded philosophy to base your trading off of it's going to be nearly impossible to perform the consistent analysis. And the less consistent you are in your analysis, the less consistent your trade execution will be. And this is what's leading to your inconsistent trading results In today's Trading Edge video, I share with you the centerpiece of my trading philosophy & what I believe should be present in every trader that uses technical analysis to trade the markets. In the end, we'll also take a deeper look into m year to date trading stats along with a few takeaways. FOREX TRADINGLastly, if you're new or struggling and you need some help with creating or recreating your trading philosophy, make sure you check out this FREE 4-Part video training series from Jason Graystone Called "The Truth About Trading" where he walks you through what's needed in order to trade, how to REALLY create wealth through trading and what tools are needed in order for you to earn success |
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Post by Hasyew msakaw on Sept 2, 2018 18:16:08 GMT
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Post by Alex Barca on Sept 5, 2018 6:28:42 GMT
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