How to choose a Forex Broker?

Forex brokers need to be associated with a large financial institution such as a bank in order to provide the funds necessary for margin trading. In the United States a broker should be registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) as protection against fraud and abusive trade practices.

Before trading Forex you need to set up an account with a Forex broker. You may feel overwhelmed by the number of forex brokers who offer their services online. Deciding on a broker requires lots of research on your part. There are several areas to examine before you sign on the dotted line with any broker. Here are some things that you need to look for in making your choice:

1. Safety of Funds
   Is the broker regulated? Are client funds insured?
   
2. Order execution
   How fast is the broker’s order execution?
   Will they place you on manual execution?
   Do they offer automatic execution?
   How much can you trade before having to request a quote?
   Do they offset all clients orders?
   Do they trade against their clients?
   
3. Spread
   Is it fixed or variable?
   How tight is the spread?
   Is it larger for mini accounts?
4. Slippage
   How much slippage can be expected in normal and fast moving market conditions?
5. Margin requirements
   What are the margin requirements and how are they calculated? Does the margin change with currency traded? Is it the same for mini accounts and standard accounts?
6. Forex Trading Platform
   Is it reliable during fast moving markets and news announcements?
   How many different currency pairs can you trade?
   Do they offer an Application Programming Interface (API) for automated systems trading?
   What other features does it offer? (One click trading from the chart, trailing stops, mobile trading etc.)
7. Account Size
   What is the minimum account balance?
   Can you trade mini accounts?
   Do you earn interest on the unused equity in your account?
   Can you adjust the standard lot size traded?

Odds and Edge Probabilities in Day Trading

The whole concept of odds and probabilities is a subject that most beginner traders avoid, but is absolutely one of every professional trader’s secrets for success. Trading the financial markets is all about managing risk, nothing is 100% accurate or works 100% of the time. There is always a certain chance, certain odds, certain probability that a trade will work or wont work. Even if a trading system generates 99% chance of success, there is still that 1% chance of failure. Nothing in trading is black or white, everything is somewhere in the gray. It is the job of the trader to determine how gray the trade is, what are odds of success. The trader can then adjust their trading based on the probability of the specific trade and the probability of the trading system that he uses. By figuring out exact odds of success, the trader can figure out his edge and maintain it.

Why Odds and Edge?

Anyone that has ever been to Las Vegas can see the money that the casinos spend to lure the gambler into their casino. The casinos make their money, an enormous amount of money, by maintaining their edge. In the collection of all games that a casino runs, they still maintain around 4.5% edge. That means that out of every dollar that is brought in to the casino, 4.5 cents stay there. Some people hit the jack pots, some people lose everything they have, but the casino, on average, makes 4.5%. For the casinos, it is not gambling, it is a game of odds, probabilities and they know their edge. The more gamblers come in, the more money they bring with them, the more the casino makes, as long as they maintain their edge.

In trading, the trader runs their own casino. If a trader wins 80% of the time, makes $200.00 every time he wins and loses $100.00 every time he loses, on average the trader makes $140.00 per trade. As long as the trader maintains his ratios, his edge, he will make, on average, $140.00 every time he executes a trade.

This is a very important statistic for a trader. Being aware of these numbers allows traders to weather draw downs, stick to their system, eliminating hesitation and managing their trading correctly.

Odds and Your System

Every trader wants to make money. Even the best analysis, best system in the world will have losing trades, it is just part of the business, there is no 100% success. After a long testing period, every trader should evaluate their statistics to find their edge. What percentage of trades are profitable? What is the average winning trade? What is the average losing trade? What is the average profit per day?

Testing a trading system is a gradual process, as many factors can affect results. By paper trading for a long period of time, a beginner trader can evaluate their trading system. The next step is trading minimum size positions and testing system results again. Keeping a trading diary and tracking performance as the system develops can establish the system’s edge and odds of success. These numbers will help the trader become a business and not a gambler.

Odds and Your Individual Trades

Every trading system has certain conditions or parameters that are required before a trade is executed. Depending on the structure of the trading system, there can be more parameters or less parameters. The more conditions are true, the higher the odds of a successful trade. It is almost impossible to find a trade that has all conditions aligned, almost all trades are less than perfect.

Knowing the trade’s odds can help a trader evaluate risk and adjust position accordingly. If only 80% of conditions in the trading system exist, the trade has less odds of success than a trade that has 100% of conditions and should be traded differently.

If all trading conditions exist, if all indicators are lined up, the trade has certain odds of success. If not all indicators are lined up correctly, the trade has lower odds of success. Below a certain level of odds, the trade should not be taken.

Thinking in Odds

Most traders have serious problems thinking in odds because it is against our nature to take on a position without being 100% sure that it will be a success. Losing hurts, it is painful, taking a position knowing that there is a chance of loss is usually avoided. Traders want to "know" what is going to happen and therefore look for the black and white in trading. Black and white do not exist in trading.

A trade can be right and still lose. All indicators can be aligned and the trade can still lose. Even if the system is 99% accurate, there is still a chance that the trade will be a loss. Most traders are unable to accept this and it causes frustration. By learning to think in odds, a trader can both vary their trading according to odds of success and accept losing trades a lot easier.

Shay Horowitz has been a successful day trader advisor for over 10 years. Currently he works as an advisor to other traders and has helped hundreds of clients bring in an average 15% profit per trade.

Achieving Trading Perfection

Achieving Trading Perfection - Trade quality, not quantity. Take the best of the best. Get the big picture. If you haven’t previously come across such advice, or if you have and are not following it, it is time that you take these words to heart. But how?

Trade selection and adequate planning go hand in hand. This is where most would-be professional traders miss the boat.

Much more money is made as a result of proper planning than from sitting and trading everything that comes along or "looks" good.

It’s difficult to fully understand why people think they have to trade so much. It’s difficult to truly grasp why people think that they have to take as many trades as they do.

Just the opposite is true. There is a correct approach to each and every trade. That is what achieving perfection is all about.

It all starts with proper management: planning, organizing, delegating, directing, and controlling.

These facets of management must be woven together into your trading; they do overlap.

Although planning is the major management function involved in achieving perfection, you can’t possibly plan well unless you are organized to do so.

You must have your tools at hand: your trading software, your data, the proper equipment. All of the rudiments for planning must be in place, which in itself is a part of organizing.

You must be physically fit when you plan: well nourished, properly exercised, well rested and mentally alert - all part of having your life organized, all part of achieving perfection as a trader.

To be a winning trader, you have to be among the best. There can be no middle ground. There are only winners and losers, and to be a winner you have to be a champion. And, just like any champion, you must have discipline, self-control, and a willingness to train, train, train.

There are no runners-up in trading, you either get the gold or you give the gold. Often, while others are busy going to parties or watching sports events, you are busy poring over charts, studying, thinking, planning. When others are listening to music or watching TV, you are busy practicing your trading, practicing trade selection, working hard to become a more astute trader.

Part of achieving perfection involves the diligent study of charts. The data, as presented on your screen and preserved as charts, are, for the most part, all you have for making trading decisions. They are a picture, a visualization of what is taking place in the reality of the market. Your job in achieving perfection and becoming an adequate trader is to picture and imagine in your mind what makes prices move and form the way they do. Ask yourself, "How does what I see in front of me relate to the supply and demand for the underlying?" Ask yourself, "Is what I am seeing on the chart even related to supply and demand, or is what I am seeing related to an engineered move by some insider or market mover?"

Supply and demand are not what makes prices move or fail to move most of the time. The sooner you realize that fact, the better off you will be. Markets are engineered, manipulated ¾ you need to know that.

But there’s more to a chart than merely price patterns. Reflected in the chart are the emotional reactions of human beings. Reactions to rumors and news; to national and world events; to government reports - these, too, are on the charts.

You might say that price movement, or the lack thereof, is the net effect of all the perceptions of all the traders who are participating in the market for a particular futures.

There is something else on the charts, something that too few take into account. That something is the manipulations from and by the insiders, the market movers, and by commercials holding large inventories of the underlying you are attempting to trade.

In achieving perfection as a trader, you must train yourself to look for evidence of any and all of these things as you study your charts. It is the cumulative action of all perceptions which causes patterns to form on a price chart.

You must learn to look for the truths in the markets. There are certain truths which are self-evident; they are always true. For instance, take the phenomenon of a breakout. When prices break out, no one can change the fact that they did break out. It is a fact and it is true. The breakout may turn out to be a "false" breakout, but nevertheless it is a breakout. As part of achieving perfection in your trade selection skills, you have to learn to tell which breakouts are most likely true breakouts, and which ones are most likely false. How can you know? By the price patterns on the chart.

And what about trend? Your job in achieving perfection as a trader is to master how to trade a trend. A trend is a trend, is a trend. It is a trend until the end, and part of your job is to know when a market is not trending.

The trend is the trend while it lasts. While a market is trending it is telling the truth. The trend can change, but the truth is the truth. If prices are rising, the trend is up. If prices are falling, the trend is down. The truth can be found in the trend. It is an immutable fact. You are to learn to make my money by trading with the trend. You are to learn what constitutes a trend. You have to learn to spot trends early so that you can make the most out of the market while it is trending. Your job in achieving perfection as a trader is to learn to recognize when a trend will most likely begin, and just as important, to learn to be even more adept at deciphering when a trend is ending.

In achieving perfection, you must learn to recognize "your" trade(s), and to take only "your" trades. Trade the formations and patterns that you can easily recognize and identify.

You must learn to trade using tips and tricks that you are shown and to accumulate and keep a collection of techniques that result in the selection of high probability trades.

How are you to do all this? Practice, practice, PRACTICE. Practice recognition of congestion areas. Practice recognition of high probability breakouts. Practice trend recognition. Practice and more practice. Just like anyone who wants to achieve perfection at anything, there must be total dedication, study, practice and more practice. You are to become a trading virtuoso. You are to practice, yet always realizing that you will never attain true perfection, that there is always room for improvement. There is usually a way to refine: ways that you can do things better, more efficiently, and with greater speed and finesse.

Trading in Partnership

Trading together with a friend can have its advantages. If one of you has more experience and the other more money, you can help your friend through your experience and he can help with margins. Together, you can trade larger size and perhaps make more profits. However, unless you both agree to the same line of action and what the possible contingencies might be, it is essential that you decide which of you is to execute the trades. It is more difficult reaching trading decisions together than on your own.

If you haven’t decided on the contingency measures in advance you’ll find yourself arguing and disagreeing in the middle of a trade going against you when timely action is of the essence. It can be quite disheartening and dangerous.

If you are not absolutely sure about your partner, and you don’t agree with the way he trades, you are better off trading on your own.

Take for example an instance where the order placed was ambiguous and the broker executed it twice. The traders accepted the mistake and then the market moved against them. The partner with the greater margins but less experience was in charge of execution. He placed the order before the market opened to roll the position out. The market moved against him, he covered the position at three times the premium received and then the market corrected. He was unable to get the other side because he couldn’t watch intraday.

Trading is a business! You must be totally prepared in terms of having a business plan, knowing how to place orders, and being on top of them from beginning to end. Even then things can go wrong, but being unprepared can lead to disaster. The smallest details must be thought of and prepared in advance, but mistakes and oversights still happen.

I came across an interesting concept. The path to enlightenment involves conquering five human weaknesses: greed, fear, ignorance, pride and jealousy. We should be all familiar with the first two, which cause much grief to traders, but the last three can be a big problems, too, so it’s worth pondering on them. Human weaknesses always show up to undermine one’s trading.

Greed makes people stay in a trade too long, or trade too big a size. Fear makes one get out of winning trades too early. Ignorance makes people commit innumerable mistakes. Pride doesn’t allow one to admit one is wrong and often, small losses are allowed to turn into huge losses because one doesn’t want to accept one is wrong. Jealousy can make one trade in a subjective manner.

A detached attitude is a great asset in trading. Trading is war and it is essential that you execute a pre-planned line of action flawlessly and unemotionally. You must be flexible and let things (that are now second nature) take their course. Be like an outside passive observer.

That is why it is so important to be at your best when trading. You must have all possible things on your side.

Forex Software - Choosing the Best

When it comes to forex trading the forex software you choose is essential. There are so many forex trading companies all competing for your business that choosing the right forex software can be quite a difficult task. Most of the forex software products available offers live online forex trading platforms but what other components are vital when it comes to your forex software.

Key Elements For Your Forex Software

Before purchasing any forex software there are a few essential items that should be included. The most important is security and your online forex trading software should include a 128 bit SSL encryption which will prevent hackers from accessing any of your personal details and information such as your account balance, transaction history, etc.

Providing the best security for your forex trading will include a company that provides 24 hour technical server support for your forex software, 24 hour maintenance should anything go wrong, daily backups of all information, and a security system that has been designed to prevent any unauthorized access. Along with these security protocols there are also some forex trading companies that use smart cards and fingerprint scanners to ensure that only their employees can have access to their servers.

Another important factor when it comes to choosing your forex software is to check what the company’s downtime is like. When it comes to trading forex and particularly your online forex trading you need to ensure that the forex software you choose is reliable and available 24 hours a day. The forex software you choose for your forex trading should also have technical support available at all times should your session be cut short.

Ensuring that all the above features are listed in the forex software you choose will help to ensure your forex trading success.

What makes a good Trading Strategy?

Ask most NEW traders, and they will tell you about some moving average or combination of indicators or a chart pattern that they use. This is, as the more experienced trader knows, an entry point and not a strategy.

Any trader who is more experienced will say a strategy should also include money management, risk control, perhaps stop losses and of course, an exit point. They might also say that you must let your profits run and cut your losses short. A well-read trader will also tell you that your strategy should fit with your trading personality.

BUT there is one other vital ingredient that many traders forget - and that is to fully understand the "personality" of what you trade. Some traders specialise in say, gold or Brent crude or currencies or they might specialise in a particular index such as the FTSE 100 or the Dow but many traders choose to trade shares. Indeed some traders dabble in a bit of everything. I think this is the area that causes many traders to fail or at least not reach their full potential.

In my view: You absolutely MUST specialise.

I am sure that on the surface most people would say that sounds sensible but here is why it is a MUST!

Superficially, many charts look the same. I bet if you had not seen the charts for some time and someone where to show you a chart of Brent Crude over 6 months and then a chart of Barclays PLC over the same 6 months you would be hard pushed to say which was which purely on the look of the chart.

However, I bet that if you found a trader who trades ONLY Barclays day in and day out and also found someone who trades ONLY Brent Crude day in and day out, both of them would easily identify which was which. WHY?

Because every share, index or commodity has it’s own "personality".

Some will be volatile intra-day, some will follow their sector or the main index (market followers), some will do their own thing, some will spike up and down regularly, some will stop at key moving averages and some will just plough through. Some will move by 5% on average before they retrace and some by 2%. Some will gap up or down regularly, some will not. You get the idea!

Therefore, no matter how good you are at analysing indicators, moving averages, trends and patterns, the same strategy WILL NOT work for everything. I would go so far as to say that a strategy that works well for Bovis Homes, for example, is likely NOT to work for BT Group - they have very different "personalities".

So let’s return to our question: What makes a good trading strategy? Let me answer with a series of ten questions that you need to find answers to, in order to build a REALLY GOOD strategy.

1. What do you want to trade (share, index, commodity, currency, etc)? If your answer is shares (plural) I would urge you to pick one typical share at this stage to really specialise. You can add more later.
2. What "personality" does that share, index etc have?
3. What entry system is the most reliable for that share?
4. What stop loss system is the most effective for that share?
5. What average risk will a typical trade carry?
6. What exit system works well for that share?
7. What is your trading personality (attitude to risk, losses, discipline, how much do you worry etc) and can you trade that strategy without overriding it?
8. What timescale do you want to trade? (Using intra-day or end of day data)
9. How much data do you keep on past trades to help identify strategy weaknesses?
10. How does all this fit with your trading objectives?

Once you have an answer to each question you need to do one final thing. Make sure all those things fit together and complement each other. For example, if the ideal stop loss position represents a big average risk and conflicts with your own attitude to risk, you need to start again. If you will override your exit point because greed makes you hang in for more, you need to think again. Perhaps you shouldn’t trade that stock in the first place - look for one with a different "personality" which will lead to a strategy you can trade comfortably.

It is a long and sometimes painful iterative journey. You might need to go round and round in ever decreasing circles over a long time. Testing and refining, testing and refining before you can truly have a reliable and repeatable strategy that REALLY WORKS for you.

THEN, you can look for other things to trade that have the same "personality" as your specialist stock, index, commodity or currency.

Technical Evaluation

Technical Analysis

Technical analysis is a way to attempt to trade in the forex market by determining previous trends that have led to profitable trade. A technical trader gives more importance to studying the rise and fall of currencies on charts so as to determine the present and future developments of forex trade. This evaluation helps a trader settle on whether to stay entirely out of the market or to buy, sell or hedge a position. This study also helps in making intelligent assessments for future investments; whether to set a position open at a future price or to initiate a trade at the present level, technical analysis helps in recognizing persistent patterns in the forex market. However, a trader should always take into account the risk involved. Following recurring trends in the market do not always guarantee profitable trades as these patterns might not always be exact.

Trader’s kit

Better analysis and predictions about the forex market can be obtained by utilizing different technical indicators and charts. These indicators help interpreting fundamental factors behind rate fluctuations. Technical indicators can help determine the behaviour of the market crowd by taking into account the explosiveness, volume and other aspects of the market. Trends can also be differentiated by various patterns, trend lines, setbacks and support and resistance levels. Although not all patterns are evident, when any one pattern is accurately predicted, a trader can make a decision to wait and watch if the readings were accurate or to start trading immediately.

Although this brings our introduction to an end this still is not the end of your educational process. Online Forex Course is the next step if you want to know more about forex trading. There is a lesson on technical analysis that will help you understand more about frequent chart patterns and trend lines.

We also have technical analysis articles for detailed study of particular indicators and their usage. You may also sign in with our free practice account to experiment with your knowledge about indicators by using MetaTrader 4 ; the award winning trading software platform.

Futures Against Forex

Benefits of Forex Vs. Futures	Forex	Futures
Up to 200:1 Leverage*	Yes	No
Price Certainty †	Yes	No
24-Hour Trading	Yes	Restricted
Commission-Free ‡	Yes	No

More liquidity

The forex market, the largest and most active market in the world, conducts business of about 2 trillion dollars a day worldwide. A total 46 times greater than all of the futures markets combined. worldwide conducts business of about 2 trillion dollars a day which might sum up to be 46 times more than that of all the businesses of the overall futures market. The daily futures volume recorded on the Chicago Mercantile Exchange is about 2 to 3 % of the volume generated in the daily forex trade, making the volume of the forex market stand a significant portion of global capital markets activity. Having such great liquidity is a distinct advantage that forex has over futures.

Rates and execution

Certainty in rates and instant implementation of orders is what you get when you trade forex (under normal conditions), whereas this is not necessarily the case in the futures market. Technology has not advanced the futures market to the point where efficient execution is possible due to the uncertainty in price fills in market orders and the unstable speed. With Ideal World Forex a trader can interact with lives quotes on charts with trades filled without delay. No matter how unpredictable or dynamic the market tends to be there is no change in the quotes you see and the execution price.

Greater leverage

Traders must take into account that leverage can work for or against the trader, and that increasing leverage increases both prospective gains and losses on any given trade. The forex market lets a trader place trades with larger leverage than in most futures contracts. And, as a bonus, degree of leverage used while trading is specified by the client. Ideal World Forex offers you a leverage of up to 200:1. In futures the margin rates for day traders and overnight positions are different depending on the volume of the deal whereas there is no change in margin rates for forex trading.

Commission free

While trading with Ideal World Forex you don’t have to worry about any kind of commission as we are compensated by the spread between the bid and ask prices. The fee futures traders have to pay can weigh down their profits considerably. At Ideal World Forex we also have the facility of opening an account with a low initial deposit amount of $200. We also offer a test account (without any actual investment) for those who are new to this business and want to practice before starting the actual trade.

Access to forex

Unlike any other market including futures, the forex market continues trading 24 hrs a day starting from Monday at 5 pm EST to Friday 5 pm EST meaning you can trade at any time of the day or night. Also, unlike forex, the futures market has overnight contracts which can only be traded sparingly, are tricky to access, and the liquidity is also minimal whereas forex trading can take place at any time. Furthermore, the trading software platform, MetaTrader 4, also has designed custom alerts to keep you updated about any move the forex market makes at any time. We also have an automated trading system that will buy or sell at your specified rate (if the market moves towards that direction), hence executing your order instantly. If you are interested in downloading the software MetaTrader 4 for free, please sign in for our practice account. We can also open up mini accounts with as low as $200 investment.

Fundamental Analysis

Fundamental indicators are the announcements which traders follow to show the strength of a particular currency with respect to others. The value of a currency depends on economic news releases that depict the strength or weaknesses of the economy of a country. This is what fundamental analysis is all about; to scrutinize the value of a country’s currency with the help of daily news feeds.

The reports including statistical data on basic topics such as GDP, international trade, employment, manufacturing, retail sales, housing and interest rates are called fundamental indicators. There may be an effect on the value of a country’s economy in a direct or indirect manner with respect to the growth, stability or decline in any of the above mentioned areas.

Factors involved in forex trading

The responsibility of maintaining the base interest rates of a country lies with the central bank of that country and in this way the bank plays a vital role in the forex market. A central bank attempts to pursue growth in the economy along with curtailing inflation, hence it must manage to maintain a fine balance while setting interest rates. Speculation in the forex market is often fuelled depending on a central bank’s decision to raise, cut or hold the interest rates thus changing the value of a currency or group of currencies.

The rates of essential items such as oil and gasoline are also important indicators as consumer spending and confidence can be hurt by soaring prices which may result in a cut back in certain business activity and government services. Also information about a country’s economy is reflected in national and international political events and changes in government policies related to trade and elections.

Some events such as natural disasters and calamities, terrorism, and military actions in sensitive areas of the globe cannot be predicted and therefore may also cause uncertainty in the market. Events such as these also have an impact on the forex market as they develop.

If a trader follows the forex market and related news feeds one can obtain a very valuable tool through which to identify patterns in macroeconomic signals and also can understand central banks current and future actions.

Feel free to sign up for our free practice account or start trading with real money with a live account

Difference Between Stock And Forex Trading

Equal Potential

No matter whether there is a bull or bear market, in forex there are always opportunities. Unlike the stock market, whether the market is going up or down there is always equal opportunity for profit and loss. Also, there are no limitations on short selling. Forex involves the trading of currency pairs which can gain profit or loss whether the market is rising or falling. It does not matter whether the trader is short or long risk of loss and potential for profit will always exist.

Consummate liquidity

There is no time restriction for forex trading. No matter what time of day it is the trading continues to go on making forex the most liquid market in the world. Forex market trades in one day what Wall Street trades in approximately one month.

More leverage

The most attractive feature of the forex market is leverage. Although it should be noted that trading using leverage can increase the potential risk of loss as well as profit. The maximum leverage for stocks, for example, is 2:1 (i.e. if you invest 1,000 dollars you can buy up to 2,000 dollars of shares). Whereas while trading with us you can get up to leverage of 200:1 which means that if a trader invests 1,000 dollars he can buy up to 400,000 dollars in currency.

Direct trading

Forex trading enables clients to deal directly with the currency market without any worry or hassle. Also spot currency trading helps to remove the middleman which often can make costs higher due to expensive commission and management fees.

No commission

There are no brokerage, exchange, software or clearing fees at Ideal World Forex. We do not charge any commission as we are compensated through Bid and Ask prices (or spread) of a particular currency pair. Although be aware that the bank you are dealing with may have charges or fees for deposit or withdrawal. We are not responsible for this. There may be a fee for fund withdrawals. Please inquire with a Ideal World Forex customer representative for further information.

Technical trading

Forex trading tends to develop strong trends and patterns which a trader may identify for new potential movements, breakouts and chances to enter and exit positions.

Rate fluctuation

The major factors that affect the supply and demand of currencies are the strength of the country’s economy and interest rate policy. As currency rates show the supply and demand of currencies, indicators such as the PPI, foreign investment, CPI, the trade balance and GDP reflect the health of the economy and modify the supply and demand for a currency. Data on interest rates and expert observations on international trade and economic policy are also released on a regular basis.

24/7 trading

When you are using a forex trading platform you are seeing a miniature display of the world economy. A trader can access forex markets from 5 pm EST when trade begins in Sydney and Singapore on Sunday and continue trading till 5 pm EST on Friday.

Less trading options

In forex there are about 8 major currencies and 34 second level currencies to choose from, whereas trading in stocks involves about 8,000 different publicly traded companies. Such a huge range of choices tends to be confusing and complicated.

Best Software

Since the beginning, our team of expert forex professionals has invested long hours improving our software and services to guarantee a basic, wide-ranging system that enables users to decide sensibly. In addition, services include over 100 tools and technical indicators as well as the latest from Reuters News service to cover all important updates that impact the forex market. Our advanced chart-based trading system contains custom alerts, price quotes, as well as the ability to create an automated trading system so you can pre-program your method to buy or sell at specified market events. Users are able to connect directly with the help of MetaTrader 4 with the live currency market on a secure platform.

Forex Dealing

A trader attempts to profit from buying or selling currencies by implementing Fundamental and Technical analysis to help decide which way a currency is likely to move. Countries having secure governments and world renowned banks with robust economies and low inflation are the ones whose currencies are most favoured and are most commonly referred to as the ‘major currencies’. A trader can trade Japanese Yen, European Euro and British Pound in any combination as they are the most common currencies traded along with U.S. Dollar. These currency pairs are known to be the most liquid as well. One can also trade the Canadian, Australian and New Zealand Dollars as well as the Swiss Franc making for 19 total trading instruments when accounting for all the cross pairs. Other smaller world currencies are not offered as they are too illiquid and difficult to trade.

Trading Currencies

Profit and loss can be realized by selling currencies that are vulnerable to drop in value against another other major currency. Similarly, buying currencies which have a tendency to rise in the market against any other major currency can enable a trader to again gain profit (loss).

When a trader buys a currency at a particular rate and intends to sell it at a higher rate this is called a ‘long’ position and when he/she sells at a rate and intends to buy when the rate falls is called a ‘short’ position.

The value of one currency with respect to any other currency shows the economic stability of that country. Trading currencies in respect to the change in political situation is reactive whereas trading with respect to anticipated occurrences is speculative. Generally, forex trading is carried out by sheer anticipation about the shifting of currency rates.

A trader can both opt for a conservative approach and liquidate positions quickly using limit and stop orders to control risks which benefit from the slightest price changes or go for a more risky approach. A trader places a limit order to make certain a position is established once a price level is attained in the market. (Under unpredictable circumstances in the market a limit or stop order might not be executed by the broker at the specified rate given by the trader but we attempt to honour up to 10 lots in size of limit and stop orders.)

To limit loss on a particular trade a stop order is placed to automatically liquidate a position at a chosen price level. A trader might profit hugely by even the slightest change in daily currency rates if he/she places orders in respect to resistance levels and technical support.

Effect of time factor on currency trading throughout the world affects traders

Financial Centers - London, Tokyo and New York City.

Forex is the most liquid international financial market which trades continuously 24/7. The time of day has an impact on liquidity of a particular currency. The only break that occurs in trading is during the weekends.

Traders must contemplate which factors are likely to be in play in the market when they decide to trade as even a slight occurrence anywhere in the world might have a major impact on investments globally.

The major time zones and trading hubs are that of Sydney, New York, Tokyo and London.

As the market remains operational 24/7, forex has a great attraction for traders wanting to trade at any time of the day.

1. What is Forex? Forex; an overview

The foreign exchange market is the world’s biggest financial market regularly experiencing daily transaction volumes in the trillions of dollars. The world economy is made up of a complex balance between the eight major currencies. Depending on which currency we may favour or possess, each of us already automatically plays a role as investors in this mammoth global market.

The Forex market; as it is most commonly known, is a financial market which operates globally. Unlike the stock market, Forex is not located in a central location. Instead, trading occurs via electronic networks of banks, traders, speculators and financial institutions throughout the world. Forex is the most liquid financial market in the world and operates 24 hours a day. Trading occurs at all times of the day and night, beginning and ending with the open and close of each of the world’s major financial hubs’ daily trading sessions.

The Eight Major World Currencies are as follows:

1. Japanese Yen 2. New Zealand Dollar 3. Australian Dollar 4. Euro

5. Swiss Franc 6. English Pound 7. United States Dollar 8. Canadian Dollar

Originally, Forex was restricted to major banks and financial institutions. However, with the development of technology and growing ubiquity of the internet as well as the attraction of high levels of leverage (which increases chances of profit as well as loss), Forex is now available to regular individual investors.

If you have access to a PC with an internet connection, participation in this dynamic and exciting global trading market is easy. It is possible for you to start your new account at Ideal World Forex with a low initial deposit of US$200.

If you are not sure or are unfamiliar with the foreign exchange market, you can also open a practice account for a test run. This does not involve any money or risk. All you have to do is to fill out a form and you will be given a username through which you will be able to download the award winning software MetaTrader 4.

Feel free to continue reading for more information on how forex trading works or you can skip ahead by clicking on Next Page here.