Prices in Forex trading are the most unpredictable of any investment class. They change more and faster (commonly) than equities, bonds and even commodities (though they can be crazy too!) This gives non day traders a dilemma - As you can't sit by a monitor all day looking for price moves in real-time you risk losing a lot of money on open trades or not getting into good short window ones. But there is an answer - Use signals and signal services.
Forex signals are buy and sell indicators based on technical analysis. Technical analysis uses historical price and volume data to statistically analyze trends. The aim is to zero in, with a explicit probability, the odds of future price movements.
A signal may be as simple as 'Buy euros now at 1.1901'. Those signals are presented in any number of ways, by email, SMS text message to a mobile phone, IM message etc. Some are just flashing text and/or icons on trader software. The software integrates built-in algorithmic rule sets that use technical analysis formulas and aggregate that data with current market data to produce a trade signal.
For instance, one generally practiced technical indicator is something called MACD (Moving Average Convergence/Divergence). Without getting in particulars here, it uses the moving average - the change in an average price over time. A signal can be triggered when the value of MACD crosses above or below a pre-set trigger threshold. Buy when it moves up over the line, then sell when it crosses below.
Some signal services allow clients to automate the process of Forex trading even further. You can leave standing orders that when a certain signal is generated, carry out the recommendation. You get an email recommending 'Buy euros now at 1.1901' and the broker auto enters the order to do exactly that.
As with any investment instrument, it has to be used intelligently in order to avoid disasters. Totally automating buy and sell instructions is very very risky and can amount to automatically LOSING money. Using a signal service can make your life easier, but never abandon your investments entirely to an automated service.
If you plan to do that, you may as well simply turn your investments over to a broker with the instruction: 'Maximize my returns, but keep the risk down to a reasonable level'. Sensible, but not helpful if you want to control your destiny.
Signal services are certainly useful, however. They can relieve investors of the need to continually monitor prices. They can simplify the sometimes bewildering complexity of charts. They can help the investor make better decisions about when to buy or sell and at what price.
All that comes at a price, of course. Signal services range from $50-$250 per month, though some are cheaper and a few are more. Only the individual investor can decide whether the cost is justified. As with any trading service, if you make more than it costs than you would without it, that's profitable.
But, buyer beware. There are dozens of firms that will be happy to take your money. Whether their analysis, and as a result, their signals, are worth anything is an educational experience in its own right.
At minimum, investors should use order types that help control risk. Stop-loss orders, limit orders and other common types are an essential means of limiting losses and timing buy and sell orders. That technique, commonly employed in stock trading, is even more critical in the volatile world of Forex.
Thursday, January 31, 2008
Tips For Selecting A Forex Broker
Would you like a piece of the largest market in the world? What is it and how do I get it? It is the Currency of Forex Market. To actually start trading Forex one of the first things you will need to commence is select a forex broker. Selecting a forex broker will be a key decision in your future forex trading success. Getting it wrong now may lead to problems down the road.
Before you select an online Forex broker, you as a new investor should carry out your due diligence and carefully check the services offered by a broker and the operational policies by which they conduct themselves.
It is important that you are aware that as with any business there are scammers out there looking to trick you into handing over your money without providing the service they advertise. Do some research into the broker you are looking to use.
There are at least 20 online foreign exchange brokers nowadays. When deciding on who to choose you should try the demos of around 6-8 to get a feel for their trading platform.
Using the demo platform is also a valuable learning tool as is most cases the forex broker's demo uses live data. The only difference is that you are using a paper account and not real money.
Some things to consider when selecting a forex broker include:
* The broker's hours of operation
* the minimum trading unit size
* the bid/ask pip spread on major currency pairs
* the reliability of the forex trading software
* is there a phone line backup to the forex trading software?
To execute trades you will need software that allows you to place by or sell orders. Other forex related software is used for either providing forex trading signals or providing graphical information (charting), which is used to analyse data. The forex trading software provided by your broker is normally free. The forex signal software would typically come on a subscription basis. With forex charting software there are both free and subscription options.
Once you have your trading account opened and have installed the forex trading software you will be ready to place some orders. They would include some of the following:
Market orders - this is an order to buy or sell at the current market price
Limit orders - this order is placed to buy or sell at a certain price as the market price moves up or down
Limit entry orders - this order is executed when the exchange rate touches a specific level without breaking that level
Stop-loss orders - this is a type of limit order linked to a specific order aimed at stopping the order when a loss level is reached
Take profit orders - as the name suggests this order closes an open order when a profit level is achieved
Please remember when entering the world of forex trading do not commit money that you cannot survive without. Before sending money to a broker be sure that it is money that you can live without if you do happen to fail as a forex trader.
I strongly recommend that you have a practice account to test your forex trading software and your trading plans. The last thing you want to do is rush in and suffer losses.
Before you select an online Forex broker, you as a new investor should carry out your due diligence and carefully check the services offered by a broker and the operational policies by which they conduct themselves.
It is important that you are aware that as with any business there are scammers out there looking to trick you into handing over your money without providing the service they advertise. Do some research into the broker you are looking to use.
There are at least 20 online foreign exchange brokers nowadays. When deciding on who to choose you should try the demos of around 6-8 to get a feel for their trading platform.
Using the demo platform is also a valuable learning tool as is most cases the forex broker's demo uses live data. The only difference is that you are using a paper account and not real money.
Some things to consider when selecting a forex broker include:
* The broker's hours of operation
* the minimum trading unit size
* the bid/ask pip spread on major currency pairs
* the reliability of the forex trading software
* is there a phone line backup to the forex trading software?
To execute trades you will need software that allows you to place by or sell orders. Other forex related software is used for either providing forex trading signals or providing graphical information (charting), which is used to analyse data. The forex trading software provided by your broker is normally free. The forex signal software would typically come on a subscription basis. With forex charting software there are both free and subscription options.
Once you have your trading account opened and have installed the forex trading software you will be ready to place some orders. They would include some of the following:
Market orders - this is an order to buy or sell at the current market price
Limit orders - this order is placed to buy or sell at a certain price as the market price moves up or down
Limit entry orders - this order is executed when the exchange rate touches a specific level without breaking that level
Stop-loss orders - this is a type of limit order linked to a specific order aimed at stopping the order when a loss level is reached
Take profit orders - as the name suggests this order closes an open order when a profit level is achieved
Please remember when entering the world of forex trading do not commit money that you cannot survive without. Before sending money to a broker be sure that it is money that you can live without if you do happen to fail as a forex trader.
I strongly recommend that you have a practice account to test your forex trading software and your trading plans. The last thing you want to do is rush in and suffer losses.
How to Decide on the Exact Forex Trading Software for you
Just like with stock trading, there are a large number of software programs you can use to make your venture into the foreign currency exchange markets. You will find that you have two essential choices, either web based or desktop based programs. Which way you prefer to go is totally up to you. If you travel a lot you may want to opt for the web-based diversity instead of having to drag around a laptop and tediously trying to find a good Internet connection for it.
Most of the more reliable Forex brokers recommend software programs to their clients at no charge, however the software they offer is normally very rudimentary at best and you may have to pay more to get the features you truly require. This is another edition to ponder when choosing a broker to handle your exchange business. Many Forex websites have free demo accounts presented which will allocate you to experiment before you get involed with one company or spend your money on something you don't like.
Because the Forex market is constantly changing and evolving you will also want a software program that changes with it. Another edition that is absolutely crucial to your success in the Forex markets is a super fast Internet connection. If you do not have DSL, at least you will have a tough time. I recommend broadband. If you have dial up just forget about it. I will tell you again that you need the fastest Internet connection you can afford.
Another truly important edition when pondering a Forex software program is security. As a rule, web based software programs are much more secure than the ones that you install on your desktop. The difficulty with desktop software is that it opens you up to a broad range of feasible security breaches that could probably leave your private financial information vulnerable. Not only do you have the versions of viruses and Trojans, but you are also opening yourself up to loss of data due to hard drive crashes. When you add the possibility of hackers getting into your system, that adds even more skepticism about with desktop based programs.
With web based software programs the bulk of the security and maintenance editions will be taken care of by the software supplier. Internet based Forex software systems are hosted on secure servers with the most secure encryption technology around. In addition to the security issue is the protection of having all of your information backed up so it won't be lost.
Another great advantage of web-based software is that it is avaiable from anywhere in the world that you can get internet access.
Most of the more reliable Forex brokers recommend software programs to their clients at no charge, however the software they offer is normally very rudimentary at best and you may have to pay more to get the features you truly require. This is another edition to ponder when choosing a broker to handle your exchange business. Many Forex websites have free demo accounts presented which will allocate you to experiment before you get involed with one company or spend your money on something you don't like.
Because the Forex market is constantly changing and evolving you will also want a software program that changes with it. Another edition that is absolutely crucial to your success in the Forex markets is a super fast Internet connection. If you do not have DSL, at least you will have a tough time. I recommend broadband. If you have dial up just forget about it. I will tell you again that you need the fastest Internet connection you can afford.
Another truly important edition when pondering a Forex software program is security. As a rule, web based software programs are much more secure than the ones that you install on your desktop. The difficulty with desktop software is that it opens you up to a broad range of feasible security breaches that could probably leave your private financial information vulnerable. Not only do you have the versions of viruses and Trojans, but you are also opening yourself up to loss of data due to hard drive crashes. When you add the possibility of hackers getting into your system, that adds even more skepticism about with desktop based programs.
With web based software programs the bulk of the security and maintenance editions will be taken care of by the software supplier. Internet based Forex software systems are hosted on secure servers with the most secure encryption technology around. In addition to the security issue is the protection of having all of your information backed up so it won't be lost.
Another great advantage of web-based software is that it is avaiable from anywhere in the world that you can get internet access.
forex
You don’t have the profile of successful trader if some of the above traits don’t sound like you. FOREX trading depends on your skills and not your luck. FOREX is the biggest market today, reaching a daily volume of 3 trillion dollars throughout the globe. That means that there is no single participant in the market; banks and governments included, who can consistently push the price in the certain direction. You need skills to forecast which direction the markets are actually going in the future.
Another important key to successful FOREX trading is to choose a genuine and suitable FOREX trading platform that is easy to manage.
Another important key to successful FOREX trading is to choose a genuine and suitable FOREX trading platform that is easy to manage.
characteristics of successful FOREX trading
Here are the characteristics of successful FOREX trading
1. Successful FOREX traders tend to have absolute control over their emotions – they never get too excited over a win or too depressed over a loss.
2. Successful FOREX traders do not panic – they make evolutionary adjustments rather than revolutionary changes to their trading style.
3. Successful traders treat trading as a business and not a hobby.
4. Successful FOREX traders are prepared for all eventualities on any given trading day. They come to work with a plan that includes many contingencies and not just what they hope will happen.
You should already have solutions to these problems. What happens if…
- Prices open sharply higher or lower?
- The market is very quiet
- The market is volatile?
- The market goes up early and reverses later?
- The market goes down early and reverses later?
5. Successful FOREX traders trade only with money he or she can afford to lose.
6. Successful FOREX traders spend at least as much time focusing on money management as they do on a trading method.
7. Successful FOREX traders “listen” to the markets. Unsuccessful traders attempt to impose their will on the market.
1. Successful FOREX traders tend to have absolute control over their emotions – they never get too excited over a win or too depressed over a loss.
2. Successful FOREX traders do not panic – they make evolutionary adjustments rather than revolutionary changes to their trading style.
3. Successful traders treat trading as a business and not a hobby.
4. Successful FOREX traders are prepared for all eventualities on any given trading day. They come to work with a plan that includes many contingencies and not just what they hope will happen.
You should already have solutions to these problems. What happens if…
- Prices open sharply higher or lower?
- The market is very quiet
- The market is volatile?
- The market goes up early and reverses later?
- The market goes down early and reverses later?
5. Successful FOREX traders trade only with money he or she can afford to lose.
6. Successful FOREX traders spend at least as much time focusing on money management as they do on a trading method.
7. Successful FOREX traders “listen” to the markets. Unsuccessful traders attempt to impose their will on the market.
Opening an account with an online FOREX trading platform account usually consists of four simple steps: selecting an account type
Opening an account with an online FOREX trading platform account usually consists of four simple steps: selecting an account type, registration, account activation and confirmation. Consider opening a mini FOREX account with two or three platforms if you wish and ultimately consolidating your money to the one that seems to work best for you. Take time making decisions on which FOREX trading platform you want to work with and don’t be afraid to ask lots of questions.
Make sure you’re opening a FOREX spot account and not forwards and futures account. Almost everyone uses the spot market as it is easier to rollover your position. Be certain that you feel comfortable with FOREX trading platform policies before registering. Look for these few things
1. Bid/ask pip spread on major currency pairs
2. Amount of margin that is required per trade
3. Minimum trading unit size
4. No hidden commission costs or other trading fees
5. Reliability of the trading platform
6. Charting and technical analysis services
7. Requoting policy
Always look for the most competitive spreads as this will reduce your cost of trading FOREX. If you’re trading heavily, it might cost you a whole lot extra bucks for not getting a great competitive spreads. Competitive spreads range about 3 to 5 pips and if you’re getting a spread of 8 pips or more, just ignore this platform.
Transparency of the trading platform is also important to make sure they never charge you extra. Sometimes, they might make a mistake and charge you extra and this might cost you an extra amount you didn’t want. Choose which online FOREX trading platform wisely before trading currencies. If possible, open a mini-account in 2 or 3 platforms before choosing which platform you want to use in long term. Test it for few days and see which gives you the best offer. Opening account in a wrong online FOREX trading platform can cause you to lose both your time and money.
Make sure you’re opening a FOREX spot account and not forwards and futures account. Almost everyone uses the spot market as it is easier to rollover your position. Be certain that you feel comfortable with FOREX trading platform policies before registering. Look for these few things
1. Bid/ask pip spread on major currency pairs
2. Amount of margin that is required per trade
3. Minimum trading unit size
4. No hidden commission costs or other trading fees
5. Reliability of the trading platform
6. Charting and technical analysis services
7. Requoting policy
Always look for the most competitive spreads as this will reduce your cost of trading FOREX. If you’re trading heavily, it might cost you a whole lot extra bucks for not getting a great competitive spreads. Competitive spreads range about 3 to 5 pips and if you’re getting a spread of 8 pips or more, just ignore this platform.
Transparency of the trading platform is also important to make sure they never charge you extra. Sometimes, they might make a mistake and charge you extra and this might cost you an extra amount you didn’t want. Choose which online FOREX trading platform wisely before trading currencies. If possible, open a mini-account in 2 or 3 platforms before choosing which platform you want to use in long term. Test it for few days and see which gives you the best offer. Opening account in a wrong online FOREX trading platform can cause you to lose both your time and money.
Subscribe to:
Posts (Atom)