General Guides for FOREX Trading Newbie
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Frederick Eddy
Nov 30, 2009, 12:37:39 PM11/30/09
to Forex Pivots and Trading
Being new to FOREX trading? Don't worry, getting started in FOREX
trading is easy and you can always test your skills first in a demo
account before you go 'live' with real money. To get started in FOREX
trading, we have to get to know what FOREX is. For the inexperienced,
FOREX trading involves buying and selling the different currencies of
the world. A FOREX deal is made when one buys one currency and sells
another at the same time. It is always traded in pairs, Euro/USD, CHF/
USD, USD/JPY...you get 'short' in a currency every time to buy another
and the profit is made when you buy-low and sell-high.
FOREX market is the largest trading market in the world. It yields an
average turnover of $1.9 trillion daily and the figure is nearly 30
times larger than the total volume of equity trades in United States.
FOREX trading is very unique as the trades are done between two
counterparts via electronic network or telephone connections. There is
no centralized location as stocks or futures markets and trades are
done around the clock. Everyday FOREX trade begins when the financial
centers in Sydney start their day, and moves around the globe to
Tokyo, London, and then New York. Traders can always response to the
market regardless of the local time.
Although FOREX trading involves such a big volume of trades nowadays,
it is not made available for the publics until year 1998. In the past,
the FOREX market was not offered to small speculators or individual
traders due to the large minimum business sizes and extremely strict
financial requirements. At that time, only banks, big multi-national
cooperation and major currency dealers were able to take advantage of
the currency exchange market's extraordinary liquidity and strong
trending nature of world's main currency exchange rates. Only until
the late 90s, FOREX brokers are allowed to break huge sized inter-bank
units into smaller units and offer these units to individual traders
like you and me. Nowadays with the rapid growth of Internet and
communications technology, FOREX trading has become one of the hottest
make-money-at-home-businesses for those who wish to avoid conventional
9-5 day job.
As a fact in FOREX trading, FOREX is mainly traded in large
international bank. According to Wall Street Journal Europe, 73% of
the trade volume is covered by the major ten. Deutsche Bank, topping
the table, had covered 17% of the total currency trades; followed by
UBS in the second and Citi Group in third; taking 12.5% and 7.5% of
the market. Other large financial cooperation in the list is HSBC,
Barclays, Merril Lynch, J. P. Morgan Chase, Coldman Sachs, ABN Amro,
and Morgan Stanley. For market participants segment, approximately
half of the transactions done were strictly between dealers (i.e.
Bank, or large currency dealer); others are mainly between dealer and
non-financial institutions.
To start trading on FOREX, one must first learn how to read FOREX
quotes. Foreign exchange quotes are always listed in pairs (e.g. USD/
JPY 109.2): the first listed currency is known as the base currency
with a constant value of 1 unit; while the currency listed in the
second is known as counter. In our given example, USD/JPY 109.2 means
a dollar of United States Dollar is equal to 109.2 Japanese Yen. In
other words, the quote shows the relative value of one currency
compare to the other. It means the value USD had been increased when
USD/JPY quote goes up
However, a two-sided quote (e.g. EUR/USD 1.2435/1.2440) consisting of
a 'bid' and 'ask' is often seen. The 'bid' price is the price at which
you can sell the base currency; while the 'ask' price is where you can
buy the base currency. The different of 'bid & ask' price is
commonly known as 'spread'. In the example of EUR/USD 1.2435/1.2440,
this means you can buy 1 Euro Dollar with 1.2440 USD or sell 1 Euro
1.2435. Currency brokers make their profit through these differences
of 'bid & ask' price and this is how they manage to provide their
services to individual investors without charging them commission
fees.
You don't need much tools to trade in FOREX market. A computer with
Internet access, a funded FOREX account with foreign currency exchange
broker, and a trading system should be sufficient to get things
started.
To reduce the risks of losing money, some basic charting knowledge is
as well recommended before you start trading FOREX. FOREX charts
assist the investor by providing a visual representation of exchange
rate fluctuations. Many variables affect currency exchange rates, such
as interest rates, bank policies, geopolitics, and even the time of
day may affect exchange rates. As stated by expert FOREX trader Peter
Bain, charting is an essential tool in FOREX trading. In his
newsletter, he reveals that daily charts, hourly charts, and 15-minute
charts are used while trading in FOREX. As quoted from his informative
newsletter -- "Daily chart will help you define the overall trend from
a position trading point-of-view, and the hourly (one hour) chart will
give you a feel for the intraday trend. The 15-minute chart is used
for entry and exit - with assistance from the five-minute chart, where
price is moving quickly, and you need to be closer to the action."
Being one of the technical method, FOREX charting is based on the
principal 'history repeats itself'. FOREX traders who study charts
predict the market future by evaluating past market performance. The
time frame used for charting might differs for different traders, some
analyze the past one week, some prefer six months analysis, and there
are also traders who analyze the market for the past five to ten years
before getting involved in a FOREX trade. A huge variety of FOREX
charts are available in the market. Some charting methods are very
simple, using a few FOREX indicators to show trading direction; other
charts may include up to forty indicators and those are mainly for
advance traders that are more skillful. MACD Divergence, RSI, RSI
range, and price are some of the well-known indicators in charting.
As the article is meant for FOREX rookies, you are probably one of
those who are looking forward to get involved in the FOREX market.
However, there is no shortcut to be success in FOREX trading. Trading
in FOREX is not as simple as it seen from outside. Especially there's
margin involved in FOREX trading, you might lose a lot of money in the
beginning and learn your lessons in a hard way. Take all the time you
need to learn this new trading skill well -- practice everything you
learn with a demo account before you consider going 'live' with your
own money. Seminars, eBooks, Internet, papers, as well as video
courses are all your needs to get involved. I wish you good luck and
good profit making in your FOREX trades.
Long Candle Forex Trading Course Teaches Technical Analysis Techniques
- http://www.longcandle.tk/
trading is easy and you can always test your skills first in a demo
account before you go 'live' with real money. To get started in FOREX
trading, we have to get to know what FOREX is. For the inexperienced,
FOREX trading involves buying and selling the different currencies of
the world. A FOREX deal is made when one buys one currency and sells
another at the same time. It is always traded in pairs, Euro/USD, CHF/
USD, USD/JPY...you get 'short' in a currency every time to buy another
and the profit is made when you buy-low and sell-high.
FOREX market is the largest trading market in the world. It yields an
average turnover of $1.9 trillion daily and the figure is nearly 30
times larger than the total volume of equity trades in United States.
FOREX trading is very unique as the trades are done between two
counterparts via electronic network or telephone connections. There is
no centralized location as stocks or futures markets and trades are
done around the clock. Everyday FOREX trade begins when the financial
centers in Sydney start their day, and moves around the globe to
Tokyo, London, and then New York. Traders can always response to the
market regardless of the local time.
Although FOREX trading involves such a big volume of trades nowadays,
it is not made available for the publics until year 1998. In the past,
the FOREX market was not offered to small speculators or individual
traders due to the large minimum business sizes and extremely strict
financial requirements. At that time, only banks, big multi-national
cooperation and major currency dealers were able to take advantage of
the currency exchange market's extraordinary liquidity and strong
trending nature of world's main currency exchange rates. Only until
the late 90s, FOREX brokers are allowed to break huge sized inter-bank
units into smaller units and offer these units to individual traders
like you and me. Nowadays with the rapid growth of Internet and
communications technology, FOREX trading has become one of the hottest
make-money-at-home-businesses for those who wish to avoid conventional
9-5 day job.
As a fact in FOREX trading, FOREX is mainly traded in large
international bank. According to Wall Street Journal Europe, 73% of
the trade volume is covered by the major ten. Deutsche Bank, topping
the table, had covered 17% of the total currency trades; followed by
UBS in the second and Citi Group in third; taking 12.5% and 7.5% of
the market. Other large financial cooperation in the list is HSBC,
Barclays, Merril Lynch, J. P. Morgan Chase, Coldman Sachs, ABN Amro,
and Morgan Stanley. For market participants segment, approximately
half of the transactions done were strictly between dealers (i.e.
Bank, or large currency dealer); others are mainly between dealer and
non-financial institutions.
To start trading on FOREX, one must first learn how to read FOREX
quotes. Foreign exchange quotes are always listed in pairs (e.g. USD/
JPY 109.2): the first listed currency is known as the base currency
with a constant value of 1 unit; while the currency listed in the
second is known as counter. In our given example, USD/JPY 109.2 means
a dollar of United States Dollar is equal to 109.2 Japanese Yen. In
other words, the quote shows the relative value of one currency
compare to the other. It means the value USD had been increased when
USD/JPY quote goes up
However, a two-sided quote (e.g. EUR/USD 1.2435/1.2440) consisting of
a 'bid' and 'ask' is often seen. The 'bid' price is the price at which
you can sell the base currency; while the 'ask' price is where you can
buy the base currency. The different of 'bid & ask' price is
commonly known as 'spread'. In the example of EUR/USD 1.2435/1.2440,
this means you can buy 1 Euro Dollar with 1.2440 USD or sell 1 Euro
1.2435. Currency brokers make their profit through these differences
of 'bid & ask' price and this is how they manage to provide their
services to individual investors without charging them commission
fees.
You don't need much tools to trade in FOREX market. A computer with
Internet access, a funded FOREX account with foreign currency exchange
broker, and a trading system should be sufficient to get things
started.
To reduce the risks of losing money, some basic charting knowledge is
as well recommended before you start trading FOREX. FOREX charts
assist the investor by providing a visual representation of exchange
rate fluctuations. Many variables affect currency exchange rates, such
as interest rates, bank policies, geopolitics, and even the time of
day may affect exchange rates. As stated by expert FOREX trader Peter
Bain, charting is an essential tool in FOREX trading. In his
newsletter, he reveals that daily charts, hourly charts, and 15-minute
charts are used while trading in FOREX. As quoted from his informative
newsletter -- "Daily chart will help you define the overall trend from
a position trading point-of-view, and the hourly (one hour) chart will
give you a feel for the intraday trend. The 15-minute chart is used
for entry and exit - with assistance from the five-minute chart, where
price is moving quickly, and you need to be closer to the action."
Being one of the technical method, FOREX charting is based on the
principal 'history repeats itself'. FOREX traders who study charts
predict the market future by evaluating past market performance. The
time frame used for charting might differs for different traders, some
analyze the past one week, some prefer six months analysis, and there
are also traders who analyze the market for the past five to ten years
before getting involved in a FOREX trade. A huge variety of FOREX
charts are available in the market. Some charting methods are very
simple, using a few FOREX indicators to show trading direction; other
charts may include up to forty indicators and those are mainly for
advance traders that are more skillful. MACD Divergence, RSI, RSI
range, and price are some of the well-known indicators in charting.
As the article is meant for FOREX rookies, you are probably one of
those who are looking forward to get involved in the FOREX market.
However, there is no shortcut to be success in FOREX trading. Trading
in FOREX is not as simple as it seen from outside. Especially there's
margin involved in FOREX trading, you might lose a lot of money in the
beginning and learn your lessons in a hard way. Take all the time you
need to learn this new trading skill well -- practice everything you
learn with a demo account before you consider going 'live' with your
own money. Seminars, eBooks, Internet, papers, as well as video
courses are all your needs to get involved. I wish you good luck and
good profit making in your FOREX trades.
Long Candle Forex Trading Course Teaches Technical Analysis Techniques
- http://www.longcandle.tk/
Frederick Eddy
Nov 30, 2009, 12:37:38 PM11/30/09
to Forex Pivots and Trading
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