Seven Steps In Forex Trading

Here are seven steps that every forex trader should consider when managing a foreign exchange account:

1. Maximize Your ToolsForex Capital Management provides effective on line tools to help make you a more effective currency trader. This includes free market news and real time charts. Perhaps the single most helpful tool is the FX Demo Account, which enables you to test strategies and learn from the process without risking your cash.

2. Risk Management Every successful trader needs answers to key questions in order to be able to set an acceptable level of risk. How much will the market move? Where should I take my profits? How much am I willing to lose? Where should my stop and limit orders be placed? Forex Capital Management can help you to make the right decisions to manage your risk.

3. Two Ways to Trade What kind of trader are you – fundamental or technical? The fundamental analyst studies the underlying causes of relative movements in price. The technical analyst studies the historic movement of actual prices. Forex Capital Management supports all kinds of traders.

4. Basics for Technical Analysis Sound trading decisions start with trend analysis tools. What is a market trend? How do you classify the different kinds of trends, and how do you plot trends over time? How do you identify price support levels, and how do you find price resistance points? What role do retracements play in your strategy? Forex Capital management helps you to gain a basic understanding of technical analysis.

5. Applying Technical Analysis Charts are available at intervals that are appropriate for the length of the position you intend to hold. Five-, fifteen- and sixty-minute intervals help if you are planning on trading in a few hours. One, four and twenty-four hour intervals are appropriate if you plan on holding the position for a couple of days. Longer-term intervals provide data to support trading decisions based on long term trends.

6. Fundamentals that Every Trader Should Know Supply and demand drives the price of currencies. Interest rates and the overall strength of an economy are two primary factors that influence exchange rates. Indicators such as Gross Domestic Product, foreign investment rates, and the balance of trade reflect the overall health of an economy, and can be responsible for shifts in the demand for that particular currency. A tremendous amount of data is available at regular intervals - statistics related to interest rates and international trade always receive the closest scrutiny.

7. Psychology of Trading The biggest enemy to most traders is not the market, but themselves. Cut your losses early and let your profits run. Always trade based on objective analysis. And always remember that leverage is a double-edged sword - be sure to never bet the mortgage.

Forex Vs. Stocks

In order to maintain a diversified and growing portfolio, stock holdings need to be balanced by foreign exchange positions. Currency rates, economic issues and the health of the company in question compound the impact of stock positions in your portfolio. Forex provides the diversity that is necessary to maintain consistent portfolio growth.

Forex Brings Profit in Bear and Bull Markets

• In the foreign exchange market, there is no short selling restriction. There is potential for profit in currencies regardless of which way the market moves. Forex always involves selling one currency to buy another, so there is no structural bias to the market. Depending on short and long positions, a trader always has an opportunity to profit in a fluctuating market.

Forex Provides up to 50 Times the Leverage of Stocks

• Foreign exchange trading with Forex Capital Management can give you up to 50 times the leverage of your stock trading accounts. For every US$1,000 you invest in stocks, you gain control of at the most US$2,000 worth of shares. But with Forex Capital Management, margin of only US$1,000 gives you control of a currency trade of up to US$100,000 in currencies.

Forex Makes Money on Interest News

• Any significant news regarding interest rates directly impacts the international financial markets. In the past, when a country has raised its interest rate, its currency strengthens relative to other currencies as investors shift assets to gain better returns. The influence of stock markets has changed this equation since increasing interest rates are typically bad news for the stock markets. Investors transfer money out of the stock market when interest rates rise, which can cause the currency of the country to weaken on the broader markets. Determining which effect will dominate can be difficult, but there is typically a consensus in the marketplace as to what a rate change will do. Rate changes are typically anticipated since they usually take place after regularly scheduled meetings of central banks. Indicators that typically have the biggest impact on interest rates are PPI, CPI, and GDP.

Forex Offers Broad Diversity

• The balance of trade between nations is one determinant to the relative value of these currencies. A nation that imports more than it exports has a deficit trade balance, which is considered unfavorable to the value of that currency. Prudent investors know that they should diversify the U.S. Dollar balance in their assets through holding a range of currencies. This is challenging since most U.S. banks do not offer foreign currency accounts. Through foreign exchange trading, you control hundreds of thousands of dollars worth of currencies with up to 50 times more leverage than with your stocks. For every US$1,000 margin deposit, you control up to US$100,000 worth of Euros, or Pounds, or Yen, or the currency you believe will outperform the U.S. Dollar in the future.

Forex – Perfect for Technical Traders

• Currencies rarely spend time in tight trading ranges, and there is a tendency for strong trends to develop. Over 80% of trading volume is speculative in nature, so the market frequently overshoots before correcting itself. A technically trained trader can identify these breakouts, providing a range of opportunities for entering and exiting positions.

Analyze a Nation like a Corporation

• Currencies are always traded in pairs –one currency is purchased with holdings in another. As with stocks, better FX returns are provided by the currency of a country that demonstrates faster growth and is in a better economic condition that others. Currency pricing reflects the amount of available supply and demand. Interest rates and the relative strength of the economy are the two primary factors that determine the availability of a currency. Leading economic indicators reflect the economic health of a nation, and are in large part responsible for shifts. An overwhelming amount of data is available at regular intervals – the challenge is to determine what factors are more influential than others. Interest rates and international trade ratios are typically the most important.

Trade Forex 24-Hours a Day

• Forex trading is a window to the world economy. Trading starts on Sunday at 5:00 PM Eastern Time with the opening of the markets in Singapore and Sidney. A couple of hours later, the Tokyo market is open. Next is London, which opens at 2:00 AM Eastern Time on Monday. And by the time the day catches up to New York, the world currency markets have been at work for fifteen hours. You determine the timing of your trades, instantly reacting to any news or market pressure. Trading stocks when the U.S. markets are closed is not easy and does not provide much liquidity. With forex, you can trade 24-hours a day in the largest and most liquid market in the world.

Forex Vs. Futures

The forex market is approximately 46 times larger than the combined world futures markets. Greater day-to-day price stability enables trades with higher leverage than what is typical with futures.

Forex Provides More Leverage

• You control the degree of leverage you wish to employ in trading. Forex Capital Management automatically sets your leverage level at the most lenient requirement, based on the size of your account. As an example, a US$30,000 account has a margin requirement of US$1,000 for every position held that is approximately equal to US$100,000 worth of currencies. At this account level, 1% of the total value of the currency traded is required to be maintained on margin – a leverage ratio of 100 to 1.

Forex Provides Less Liability

• Forex Capital Management gives investors important peace of mind in the volatile currency marketplace. If the funds in an account ever drop below margin requirements, any open positions will be closed, protecting the account from catastrophic losses. In the event that your strategy proves to be wrong and there is a significant move against you, your liability will never exceed the value in your account.

Forex is Maximum Liquidity

• The forex market is the largest and most liquid in the world, with the spot foreign exchange market accounting for on average US$1.5 trillion in transactions every day. The foreign exchange market can absorb transaction sizes and trading volumes that dwarf the capacity of other markets. Stop-orders and liquidation of positions are executed without slippage.

Forex Trades 24-Hours a Day

• Forex trading is your window to the world economy. Trading starts on Sunday at 5:00 PM Eastern Time with the opening of the markets in Singapore and Sidney. A couple of hours later, the Tokyo market is open. Next is London, which opens at 2:00 AM Eastern Time on Monday. By the time the day catches up to New York, the world currency markets have been at work for fifteen hours. You determine the timing of your trades, reacting instantly to any news or market pressures.

Forex is Firm Prices and Instantaneous Execution

• Forex Capital Management enables price certainty and instant execution on orders up to US$1 million. Your trading is based on real time streaming currency prices so there is no discrepancy between the offered price and the execution price. This remains true even during volatile, fast moving trading sessions. Streaming prices ensure that your orders, stops, and limits are executed without partial fills or slippage.

Forex Enables Automatic Rollovers

• With Forex Capital Management, open positions are automatically rolled over every two days. At 5:00 PM Eastern Time, your account automatically rolls over any open positions, swapping the trade forward to a settlement date two business days in the future. Rolling over a position does include some carrying costs, which is true with futures as well. Rolling over a Forex position can sometimes make you money, since carrying cost is determined by the difference between interest rates for the two currencies. If you are long in the currency with the higher interest rate, you can gain on the spot rollover from the premium relationship of the long currency relative to the short currency. Gain is determined by the differential between the interest rates of the two currencies, and fluctuates with the movement of rates.

Risky Forex

Along with the Profits, which is the main reason for the traders to trade Forex, it is extremely important to be conversant with the Losses as well, which one can encounter while trading. While it can be easily said that all financial investments are capable of offering some risk or another, the risk involved while trading foreign exchange deals and trades can be extensive at times. Forex does have the capacity to make its traders go into tremendous loss or low with their deals, because of it being a highly volatile market.

Hence, if you are taking into consideration, the idea of trading with Foreign Exchange market, it is important for you to think about the risks or at times, the frauds connected to the trading market, to help you in making more sensible and conversant decisions.

It should be made clear to all who are willing to dive into this Forex trading market, that Foreign Exchange is not a place suited for each and everyone who have money to invest. Carrying along with it a substantial amount of risk, trading with Forex should be done rather cautiously. For instance, a specific amount of “Risk Capital” should be kept aside for trading. These should be the only funds to be used while dealing in highly speculative foreign currency trading. “Risk Capital” represents the funds which one can manage to bear a loss with, without upsetting his/her home financial conditions.

There are many reasons due to which a trader might suffer losses in his Forex trade. The most important one being, that in this speculative yet volatile market, no one knows when the markets will turn against you. And while investing huge amounts of money, although everyone is hoping for the market to go in their favor, there are really chances for market to go along favoring all of them together.

Everyone takes the risks, but while some have to bear the loss, others win profits. Not much can be done with the risk percentage involved while trading, but yes, there are some aspects of market trading which if kept in mind, can prepare a trader for worse, as well as alert him to make wiser trading decisions. Some of these aspects are mentioned below.

Your trading platform could crash

If you are trading Forex using an electronic platform like computer, internet or telephone, then there are chances for your system to crash at any hour. This may unable you to get the current and latest of what’s going on the market for a while, till your system gets repaired.

Such a situation may result in making you inaccessible in the market for some while, hence you may not be able to place new orders, carry out existing orders, or close the previously entered orders. Such a situation may result in a loss of orders and the opportunities to close the deals, if any. Opting for Off exchange

If you plan to opt for trading Forex through Off exchange methods, then you are totally relying on your dealer and his honesty. Off-exchange Forex trades are not backed by any clearing group or firm. So, if your dealer goes bankrupt, there are chances that no organization will be willing to back you up as here, you chose to trade with a dealer, out of the market trading. And since no market norms were followed while fixing the price of the currencies to be exchanged, your money is likely to get no insurance cover too.

Since there is no central place for Off exchange trading, it likely, that the trading you do with your dealer outside the Forex market, is not regulated. This is because the dealer is the one here, who is determining the effecting price, so you are solely banking on his honesty for a correct price and fair deal.

The market could go in opposition to you

Forex is a highly volatile market and predicting its movements can be impossible at times. No one can predict entirely how the market will move? That is the main reason why it has a high speculation rate to it. Definitely if you go buy studying the past trends and patterns of the market, you can still make out roughly about the market movements, but certainty is not possible. Fluctuations in the currency exchange prices or rates can affect your trade or deals. The market can move in favor or against you any time, resulting in possible profit or loss.

Frauds or Scams

Forex is a highly potential market for frauds and scam artists. Although the market is significantly safer and cleaner to trade now, than it was a few years ago, care should still be taken while dealing with a broker. Always check the documents before signing any contract and read the terms and conditions fully. Being vigilant is the key to safe trading. Also, always prefer to deal with professional brokers who are attached to reputed financial firms and banks. Also, registered brokers such as those listed with the Commodities Futures Trading Commission or the National Futures Association should be preferred.

Also, beware of any brokers or financial firms offering too good schemes or deals, with very low or no risk trading guarantees. The brokers claiming to offer higher returns should also be thoroughly checked before signing up with them and starting to trade.

All the above mentioned risks can be avoided by keeping into consideration that any of this can happen to you while trading. Keeping this in mind will keep you prepared about the consequences that you can face and hence, help you make wiser and informed trading decisions.

Although we know by now that Forex is a risky business, there are a few measures, which have been created to limit, if not completely stop, a trader’s financial risks.

Firstly, every investor should try and develop his/her own trading strategy. Be it technical, fundamental, or both, every trader needs to follow a strategy which logically backs the trading decisions that he is making. All the market trading should be done using the money which you can afford to lose, not affecting your home finances, in case the market decides to go against you. Also clearly mark your entry and exit points with every deal you make.

Along with the entry and exit points, a trader also needs to posses thorough knowledge about the past trends of the market. How to make graphs, how to study the financial graphs and how to read, understand and aptly interpret the indicators and chart movements correctly is very important.

There is a huge amount of information available easily these days on this 24 hour market, but what needs to be taken into consideration is the information which is relevant, to our trade.

Trading Tips

The Trade Decision

1. Never add to a losing position.

2. Always determine a stop and a profit objective before entering a trade. Place stops based on market information, not your account balance. If a "proper" stop is too expensive, don't do the trade.

3. Remember the "power of a position." Never make a market judgment when you have a position.

4. Your decision to exit a trade means you perceive changing circumstances. Don't suddenly think you can pick a price, exit at the market.

The Market Has Character

5. In a Bull market, never sell a dull market, in Bear market, never buy a dull market.

6. There are times, because of lack of liquidity, or excessive volatility, when you should not trade.

7. Trading systems that work in an up market may not work in a down market.

8. There are at least three types of markets: up trending, range bound, and down. Have different trading strategies for each.

9. Up market and down market patterns are ALWAYS present, merely one is more dominant. In an up market, for example, it is very easy to take sell signal after sell signal, only to be stopped out time and again. Select trades with the trend.

10. A buy signal that fails is a sell signal. A sell signal that fails is a buy signal.

11. It's always easier to enter a losing trade.

12. In the "blowout" stage of the market, up or down, risk managers are issuing margin call position liquidation orders. They don't check the screen for overbought or oversold, they just keep issuing liquidation orders. Don't stand in front of a runaway freight train.

13. You are superstitious; don't trade if something bothers you.
News

14. Buy the rumor, sell the news.

15. News is only important when the market doesn't react in the direction of the news.

16. Read today's paper tomorrow. When you read yesterday's paper each day with the knowledge of what the market already did, you will affirm that this mornings paper with yesterday's news has nothing to do with today's market.

A Time To Trade

17. On the open, never enter a new trade in the direction of a gap. Never let the market make you make a trade. (Closing an existing position is obviously ok.)

18. The first and last tick are the most expensive. Get in late and out early.

19. When everyone is in, it's time to get out.

20. Never trade when you are sick.

Tracking Your Trades

21. Size kills. Only change your unit of trading under a plan of attained goals. Also, have a plan for reducing size when your trading is cold or market volume is down.

22. Confidence kills. Remember, you really don't know anything. Respect the market every second of every day. Expect the unexpected. Always know your position and exit your trade immediately whenever you feel uneasy.

23. Measure yourself by profitable "days in a row," not by individual trades.

24. The best way to break a streak of "losing days in a row" is to not trade for a day.

25. Don't stop trading when your on a winning streak. "When your hot, your hot."

26. Three strikes and your out! Don't turn three losing trades in a row into six in a row. When you’re off, turn off the screen, do something else. "When you’re not, you’re not."

27. Scalpers reduce the number of variables effecting market risk by being in a position only for seconds. Day traders reduce market risk by being in trades for a matter of minutes.

28. If you convert a scalp or day trade into a position trade, by definition you did not consider the risks of the trade.

29. Don't ever fret about a missed opportunity. There is always another one just around the corner. Besides, several just happened that you didn't even know about.

Market Opinions

30. If you look for market secrets you will only find things that no one cares about. Use the conventional tools.

31. Never ask for someone else's opinion, they probably did not do as much homework as you.

32. When the market is going up, say "the market is going up." When the market is going down, say "the market is going down." Say it without qualifications, no "buts" attached. This is a reality check, you'll be amazed at how hard it is to say what is literally going on in front of you when your mind is full of preconceived opinions.

33. THE DAILY MARKET COMMENTARY: I've never had an opinion I didn't like, however, successful day trading requires flexibility. Do your homework not to develop a market opinion, but rather to understand the potential for both sides of the market. This will allow you to make your trades based on what the market is doing at the time of the trade.

34. Here is a quote to remember: "When you wake up, your instincts are wrong."

Some Final Thoughts

35. When you make a mistake of discipline, whine like a fool to anyone that will listen. Errors in discipline are mistakes you will keep on making for many years. Wearing ashes and sack cloth may help extend the time before you do it again.

36. If you squirmed and moaned while you read this list, then you share two obvious characteristics with many of us:

A. You have traded long enough to recognize that you (not the market) make mistakes, and you try to overcome them.

B. Now this is ugly, you have become part of the market and you can never leave.
No matter where life takes you, you will always check the market and always want to continue being a part of it. It's like that first true love, it will always be there no matter what the distance, no matter whether they are alive or dead.

The Basic Things to Remember in starting an Online Business

According to Stephen Campbell ,several things one has to prepare for in establishing an online business venture

Creating a name
Names are of course essential. A large corporation needs a name as much as any small home business. An easy to remember, short and unique name can also act as your website address / link making it easier for your projected market to recall your company.

Keeping Interactivity Alive
Creating a website is good. Creating a working website is even better. Some small home business ventures make the mistake of thinking that a website will do all their work for them. A great website will do more than just flaunt your product or service on the World Wide Web. It should also elicit response from your target market, enticing them to know more by asking questions by checking out the contents of your site. Finally, if your client wants to avail of your product or service, there should be a way for them to reach you via your contact details and / or a working e-mail address.

Seek the services of a reliable Internet Marketing business
Advertising or marketing your online business is extremely important. A great website can only do so much. If you are not at all versed with electronic commerce, it would be wise to seek professional help. Some poorly executed Internet advertising is but a waste of time, and may categorize your company as simply a spam site. An Internet Marketing business can help you with customer service , information management, market research , public relations and sales.

Think as your clientele thinks
Customer satisfaction should be your top priority, aside from earning money of course. Satisfied customers will recommend your site to others. This is the best form of advertising. It also translates to your company delivering all its promises and more. Great public relations will not save a poorly constructed product or a badly done service. Put yourself in your client shoes, and then ask yourself: would you want to avail of this company product or service?

Refine and improve
Continuous improvement in your company means a lot of fine tuning, and a good ear on the ground. When you first start of, make allowances for errors. Be kind to yourself. All businesses undergo errors, some may even be heartbreaking, but it will teach you what needs to be done should such technicalities arise again. Also, a good ear out on new trends will make your company more versatile, but do try to keep base with what your bestsellers are and improve on those as well.

Forex rules for beginers

Forex traders are prohibited to use daily living fund as trading margin

It is prohibited to use daily living fund as trading margin, the fund pressure could mislead a Forex trader's investment strategy this will increase the trading risk, which will cause an even bigger mistake.

Forex traders should use the free demo account to study Forex trading

Beginners must patiently study and not eagerly draws up the real Forex trading account. Beginner Forex traders may first test the demo account, in the demo Forex trading study process, the essential target is to develop individual Forex trading strategy with condition, when the probability of making profit enhances day by day, this indicate that a beginner Forex trader might draw up the real Forex trading account to carry on the Forex trading. But please use the real psychological way while doing demo Forex trading, the faster you enter the condition, the more faster that you may develop a suitable method to do the real Forex trading.

Forex trading cannot only depend on luck and intuitionIf a Forex trader does not have the fixed trading method, then the possibly of making profit is stochastic, namely depends on luck. Such profit making will not last long. In other words, there will always be loss if there is no luck. Intuition in Forex trading is very important, but it is very risky to do trading just depending on the intuition, the most important thing is to understand the reason behind the profit taking and to develop your individual Forex trading technique.



Use stop loss to reduce risk

In Forex trading, Forex trader must be able to afford taking loss, using the stop loss will prevent any further loss, the affordable loss depends on the account available margin situation. If there is a stop loss, Forex traders should not feel upset because he or she has prevented the loss from getting worse.

Act according to own ability

It depends on the margin in the account to decide the trading volume. Generally, all combine trading position should not surpass 10% the account margin based on this rule. It is not wise to over trade, is very easy to have the loss out of control.

The account margin must be sufficient

The lesser the trading margin, the risk will become bigger, therefore must avoid letting the account margin left only suffice 50 undulations levels, such account amount does not allow any mistake to happen, but, even a well-experienced Forex trader could also make mistakes.


Mistakes are unavoidable, but learn from mistakes and do not repeat it

Mistakes are unavoidable, please do not blame yourself, the important thing is to learn from mistakes, avoid making the similar mistake again, the faster you learn to accept loss and remembers the lesson, the days of profit making will be much more closer. Moreover, must learn to control emotion do not be proud after making profit, also do not feel depress after losing money. During Forex trading, the lesser the emotion, the more clearer you can see the market and make the right decision. Forex traders must face the reality calmly, Forex traders must understand that they will not learn from profit taking but they will only learn from loss. After understanding the reason behind every loss, this means that you are approaching the profit making path, because you had found the correct direction.

Oneself is the biggest enemy

The biggest enemy of a Forex trader is oneself - greedy, irritable, the out of control mood, and so on, is very easy to let you neglect the market trend which causes the wrong trading decision. Do not do trading because of bored or it has been a long time of none trading, there is no specific rule saying that a Forex trader must do how many tradings within a period of time.

Record the trading details

Record all the trading details, whether there is certain news or other reasons that influence you to trade, after the trade record and analyze the result of the profit and loss. If the result of the trading is profitable, this indicates that your analysis is correctly, when such similar situation appear again, your trading records will be helpful for you to rapidly makes the correct trading decision; wherelse the loss trading record will help you from making the same mistake again. Forex traders could not remember the history of every trading, therefore record is helpful in enhancing your Forex trading skill and also to look for mistakes.

Follow the trend, never against the trend

Remember the Forex market ancient general rule: Settle the position when it starts to loss, put as long as possible when it is profit making. Another important rules is do not let loss happen when it is making profit, when there is reverse trend in the market, it is better to make profit during the profit making situation then to settle position at the non-profitable situation.

Do not eagerly enter the Forex market after making loss

During the loss situation, do not eagerly open a new reverse market position in order to recoup from loss, this will only cause the situation to become worse. Only when you have agreed that your anticipation and decision in the past was completely wrong, then only you settle the old position and start a new reverse market position. Do not play with the Forex market through guessing, it is better to loss the opportunity then losing money.