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Thursday, October 8, 2009

Forex Trading Accounts and Forex Education

By Bart Icles

At this point of your forex education, you must already be familiar with how foreign exchange trading works ? it is the buying and selling of different currencies. This significantly liquid marketplace attracts many new investors each day, and these individual investors can readily compete with large banks and hedge funds. The success of any forex investor relies on several different factors, one of which is setting up the appropriate forex account. There are basically three types of trading accounts in the forex market: standard, mini, and managed. Each of these trading accounts has its own advantages and disadvantages. Choosing which trading account to open is typically determined by the investor's tolerance for risk, the size of initial investment, and the amount of time an investor has for participating in forex trading on a day to day basis.

The most common type of forex trading account is referred to as the standard trading account. The name of this kind of trading account is taken from the fact that investors who open this type of account have access to standard lots of currency. You might have learned from your forex education that a standard lot is worth $100,000, and this is pretty much observed by everyone who participates in forex trading. However, having access to a standard lot does not mean giving out $100,000 of capital before you can start trading. It simply means you must have $1,000 in your margin account so you can start trading one standard lot.

Mini trading accounts are simply trading accounts that allow traders to make transactions with the use of mini lots. Most mini lots are equivalent to one-tenth of a standard trading account, which is around $10,000 dollars. Most brokers that offer standard trading accounts typically offer mini trading accounts as well. This is one way of attracting new investors who are still hesitant to trade full lots due to the amount of investment needed.

Another type of forex trading account is called managed trading account. In managed trading accounts, the capital is owned by the investor but decisions whether to buy or sell are made by account managers. These account managers handle the trading account for the forex investors, very much like how stock brokers handle managed stock accounts.

It helps to give time to your forex education so you can learn more about these accounts. Knowing the different advantages and disadvantages of these three different accounts will help you determine which kind of forex trading account to setup so your needs and objectives can be best met. - 23208

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Position Trading Explained (Part II)

By Ahmad Hassam

As a currency trader, you may be confident that the Euro is indicating overall strength while US Dollar is indicating overall weakness for the coming six months after performing the fundamental analysis on both currencies and economies.

The next step for the position trader would be to open a long position in EUR/USD pair. This simultaneously provides the position trader with long Euro position and a short US Dollar position.

This combined trading position fulfills the fundamental outlook of the position trader on both the currencies. So the long term directional bias has been formed by the position trader on the basis of fundamental analysis.

So position trading depends on using fundamental analysis in identifying a profitable position in the currency market. But you still need technical analysis to determine your entry and exit in the market. You will have to use technical analysis in setting up the actual trade. Pinpointing the best time for the trade entry as well as setting risk managed control strategies is best accomplished by using technical analysis.

As all currencies are traded in pairs unlike the stock market or for that matter other financial markets, this concept of strength/weakness fits extremely well with the forex markets. The position trading uses fundamental analysis in pairing strength with weakness.

Trading forex requires a directional commitment on two currencies for each trade, position trading with the strength/weakness model is the most logical fundamental method for approaching long term forex trading.

Buying one currency because it looks like it will become stronger while simultaneously selling another currency because it looks like it will become weaker is a better way to trade as compared to other financial markets.

Your first step as a position trader should be analyze the Central Bank policy statements, economic growth factors of these countries, global economic news etc to identify the currency with the strongest positive future prospects and the currency with the strongest negative future prospects at a given point in time. As a position trader, you will have to do fundamental research and analysis on all major currency pairs.

Suppose you identify AUD and JPY as the strongest gainer currencies in the foreseeable future while CAD and CHF as the strongest loser currencies by performing fundamental analysis. Possible currency pairs for position trading could be long AUD/CAD, long AUD/CHF, short CAD/JPY and short CHF/JPY.

After this, you can enter the trades with the help of technical analysis and hold them as long as they move in the correct direction disregarding minor corrective swings and market noise because the price action is never ever linear. It is always up and down with minor trends superimposed on major trends.

Position trading if done properly can be one of the most effective methods of extracting long term profits from the forex markets. Position trading maybe the most difficult method of approaching forex trading for the beginners! It requires a great deal of patience and faith in ones own analysis to weather the inevitable swings against the trading position. - 23208

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Forex Trading Robot - Be Aware!

By Maggie Clark

For a hundred dollars there are numerous poorly mechanical Forex trading applications that guarantee to make you bucks while you do nothing and without making any effort. There are many for auction; yes, dealers still purchase them even with the clear fact that if they actually effected as assured 95% of dealers would not be losing money. The fact is that if you think automated software operates better than the top fund executives, you will also lose cash.

Essentially Forex trading is a simple method and because they are strong, by having lesser elements to break, east methods surpass difficult systems. In merely some weeks you can accumulate an easy system and make income in merely 30 minutes per day. Also, a few believe that regular dealing provides more potential for gain, the opposite is true.

Dealing regularly results in accepting low chances of marketing and failing. Besides, several believe that because they're clever and hard working dealers they will succeed, this may be true in various professions but not in trading Forex. Successful Forex trading requires you to be tolerant and wait for superior odds of trades, which will earn you money with little effort.

This is what Forex Expert Advisors, Robots and others want you to believe, that the market is moved by some higher power, but since when did science enter the market? Humans make prices and human behavior is anything but predictable with technical accuracy. If there were such a theory that could foresee the future there wouldn't be a market as we would all know the future prices.

Understand that Forex trading is a likely game, you will make losing trades but if you make a run of your profits and slice your losses, you'll make bucks in the long term. Trade the purpose reality of price changes to avoid your forecast being as accurate as a horoscope. - 23208

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Automated Expert Advisors (EAs) Are They Worth Considering?

By Ash Naeck

This is an important question that has had so many mixed opinions and no real consensus.

At the start of my trading career, I spent countless hours looking for what I believe would be a perfect Expert Advisor. One with small draw-downs, good returns and that could make consistent profit in any market conditions. To cut this story short I had set myself for a never ending quest. The word "holy-grail" simply does not exist in the Forex world and it took me a lot of time and a large amount of wasted cash to realize this fact.

What makes Expert Advisors so attractive?

These are the main points why traders use EA's:

- System is on autopilot

- Less emotion

- More time to relax

- Easy to install and use

- Easy to install

- No experience required

- No experience required

The above, outline the main points why traders seek the use of an Automated Expert Advisor. They do look attractive when put that way; however you should also consider the negative aspects as well.

If you have done your home-work, you would know by now that there are numerous automated Forex providers on the net. They all claim the same thing, to make insane money in no time. Some of their famous selling pitches include:

- Make a killing trading with this robot

- No losing Forex Robot that can turn $500 into $5000 in less than a month

- Make a ton of Money with no experience

- Quit your job and make a killing with this robot.

All those sound great to the new comers looking for a mean to make some quick and easy cash, but sadly the reality is that many of them end up losing their hard earned money in the process. Those systems that supposedly can make you thousands of dollars in no time are more than likely going to help you lose money in a relatively short amount of time.

If you are reading this article then consider yourself as one of the lucky ones. Do not get me wrong and am definitely not bragging here, I am simply sharing with you the experience I have had, personally, over those 5 years of trading. I am one of the few who will tell you that 98%+ of the Expert Advisors available on the net simply do not work. If they did work don't you think those major financial corporations would use those systems instead of relying on their FX traders?

Well, the truth is that Banks and the other major institutions rely solely on their experience FX traders to make money on the Forex market. Compared to FX Traders, automated robots do not take into account the changes in market conditions, they simply follow a set of rules whatever the market throws as them. The Forex market is so unpredictable and volatile that trading heuristics do not apply most of the time.

You must have heard of those mathematicians and engineers coming forward and voicing out the fact that they have cracked the code to Forex trading. This is simply B.S. Most, if not all of their data are collected through back-testing or demo testing. I will make this short and simple for you to remember; a system cannot be built on the basis of back-testing only.

Here are some of the points to take into account when investing in a Forex Robot:

- Who developed the system? (make sure he/she is a well-known Forex trader with substantial experience in Forex trading)

- Has the system been tested on a live account? If yes what are the monthly returns.

- How long has the system been in operation?(2+ years)

- What is the maximum risk exposure?

- Maximum draw-down.

If all the above questions are ticked then the product may be worth your time and money.

In my early days, I spent a considerable amount of money searching for the right expert advisor. To cut a long story short I ended up with less money than what was promised by the people selling those robots. I hit rock bottom at that stage and nearly gave up on those so called Expert Advisors when a veteran trader I knew advised me to try a product designed by a guy named Ashkan bolour.

I knew nothing about Ashkan Bolour at this point. I researched the net for more information and learnt that he was a highly successful money manager who was well respected in the Forex world. He had featured in many trading books and had become quite an authority in the foreign exchange arena. I decided to try his product after seeing the nice monthly returns he had on his live accounts.

Well the results were quite amazing. It was not a system making 500% or even 100% return each month but it was making some very consistent profits with small draw-downs. If ever you are looking for a proven system backed by consistent profit made on live accounts, Ashkan Bolour's system, the FXprofit Mountain is a must. - 23208

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Forex Mega Droid Made Simple

By Chris Arribbat

If you have ever wondered what Forex trading is about this article will help you understand. Forex trading is about investing your money into other currencies. Forex Trading can have other assets aswell as currency. The main asset is money on a global scale. Any country and any investor can partake. It can be a short over night investment or a few days, the choice is yours.

Constant trading is done in the forex markets as time zones will vary and the markets will open in one country while another is near closing. What happens in one market will have an effect on the other countries forex markets, but it is not always bad or good, sometimes the margins of trading are near each other.

If you are already involved in trading you should have a good idea what it is all about. Usually the bank is the main investor in foreign trading as the deal with trillions of dollars on a daily basis and all over the world. The trading is created when two markets or more are involved in currency exchange due to a combination of goods, services or a combination.

The stock market involves buying shares of a company, and you watch how that company does, waiting for a bigger return. In the forex markets, you are purchasing items or products, or goods, and you are paying money for them. As you do this, you are gaining or losing as the currency exchange differs daily from country to country. To better prepare you for the forex markets you can learn about trading and purchasing online using free game like software.

When you log on to create an account you will prompted to state your interest and what you would like to do. The game will then allow purchases to be made and trading then begins. It involves different currencies so you can see firsthand what a gain or loss will be like. Remember this is only a game and no real money is involved. As you continue with this fake account you will start to see how to make a decision on trading, whether to buy or sell. - 23208

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