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Saturday, December 26, 2009

Online Forex Trading Easy And Cost-effective

By John Eather

World market share: Foreign Currency markets have the greatest financial market share of all available markets with approximately USS$ 1.5 trillion worth of transactions per day. This is mainly as a result of the worldwide demand for foreign currency. We all contribute to this market by buying or selling International products directly as well as International tourism. Central banks employ international trade as an important income sources especially after the introduction of floating gold prices instead of pegged gold prices having affect on foreign exchange value. Online forex trading has made market access even more attractive and lucrative.

Best Option: Online forex transacting has many great advantage. Firstly being, no commission or brokerage payable to middlemen, making your returns on online investments greater. Secondly, only a few hundred US Dollars is needed to get trading started. Thirdly, trading is open twenty-four hours a day, seven day a week. Most online trade companies offer greater leverage ratio's to clients as added bonus and last but not least Live information in the form of real-time pricing, stock analysis, charting and current news is available via trade software. Demo account options are also available to practice and familiarise yourself with the market without risk.

Less cost: The cost of online forex trading is much less than conventional forex trading due fact that no brokers are involved and thus no brokerage costs or fees-you are your own broker. Possible online foreign exchange fees applicable are admin either yearly, quarterly or monthly, account opening and software cost.

Experience: If you have never played the foreign exchange market is recommended that you do a course or research on the subject as you are exposed to high risks you may not be able to manage with limited experience or a broker. Forex trade has great returns, however the risk must balance with the return.

High risk: Due to the fact that foreign currency trading is conducted over-the-counter, no organised or formal market legislations or regulations are strictly applicable, opening the door for fraud, money laundering or theft. Gearing or leverage effects will have either a positive or negative impact on you as even the smallest of movement in the market will have a possible great impact on your deposit. Orders intended to reduce risk may not always be effective as they may not be executable depending on the market conditions. - 23208

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Forex Trading Tips - Get Your Risk Management Right

By Mark Green

When you trade in the forex market without strict rules to manage your cash-flow, you are not trading but in fact gambling. From time to time traders may fall into the trap of buying or selling way too much of a currency pair and risking way too much of the money in their accounts based solely on hunches, also known as 'feelings'; but this is a sure way to accelerate disappointment in the market. When you start out as a beginning trader it is important to devise a method of calculating how much risk (by default) you would be willing to risk on any position.

Money management rules such as the 2 percent rule are designed to protect us in the long run. You are probably wondering how, and I will explain that in a moment, but first an example. Case and point, Mark decides to make only 10 trades a month, he is what you would call a conservative trader. Mark has a simple rule that stipulates that if he makes four consecutive losses in a row he would pull out of the market until the next month; and for every profitable position he closes, he will risk only a third of his profit in the next trade that he makes; fairly simple rule and very effective in the long run in ensuring that his gains remain consistent.

So what rule can you apply in your trading strategy or how should you go about managing risk? Choosing the right means to protect your capital depends a lot on your style of trading, your account size and even your own personal tolerance for market speculation.

While using a reduced lot size is a good way to start, it will not be very helpful if you have a number of open lots. You must understand relationship between the currency pairs of the forex market; if for example you were to make a short trade on GBP/USD and a long trade on USD/JPY, you are unduly exposing yourself twice to the USD. This equates to having 2 lots of USD in a long position. If the USD price drops, you would lose...twice! Try to keep the lot numbers to a minimum and this is especially encouraged for beginning traders. You can also consider placing only 2 percent of your forex account at risk as mentioned earlier for any opened position, a common technique used by many traders.

Here is an example I hope will show you practically and in a different angle what we have covered here today. With a newly opened forex account 1000 dollars, I risk only 2 percent of that in every trade that means each position is worth 20 dollars of my account. I plan to have only 10 trades a week with a target of 100 dollars profit after all trades; this means I would have to endure the risk of losing 10 trades to suffer a maximum of a 100 dollar loss on my account. Naturally, I do not expect to lose 10 trades consecutively nor lose over 100 dollars in my account, and as fate would have it, I make 6 winning trades but lose 4. The following week I use the gains of my previous trades as risk and consistently repeat this cycle. This example shows you how you can keep your capital safe, and work more on growing your profits and choosing winning trades, I how you found these tips informative. - 23208

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The Importance Of A Forex Pip

By Bart Icles

What are Forex pips? Pips, more popularly known as percentage in points, is a term in which your gains and losses are gauged when trading in the forex market. This is the basic measurement of trading in the forex market that all traders are aware of. Trading in the FX trading market is made more accurate by using Forex pips, since it is the smallest price measurement used. When trading a certain currency, a forex pip is the fourth and last decimal point a certain currency is priced.

For someone who has just started to learn about Forex and forex trading, this information about forex pips might appear to be brain damaging or very hard to understand. Although if you try to listen and read carefully, you will realize that it is actually easy to understand. By understanding the various concepts and terms used in trading, such as Forex pips, you will be able to do your trading quite easily and smoothly. You have to understand all of these so that you will avoid being fooled in trading with other, more experienced forex traders.

So, why is a forex pip important to traders?

Again, it is a must that you have a full understanding of how pips are utilized and valued in forex trading because these are the ones used in computing how much you have already earned or lost in a specific trade. If you have calculated that you have already made around 13 or 16 pips, this could be interpreted as having already earned a lot. However, if you have already lost a lot of pips, then you should be wary of the trades you are getting into because losing pips could be a sign that you might lose an even bigger loss.

Since various international currencies' prices are erratic, it is expected that a pip's value will either go up or down every now and then. While trading, you should always be updated of how much pips you have gained or lost so that you are also aware of how much these are valued in real time, despite the constant price changes.

Learning about trading in the Forex scene could be mind boggling. But if you really want to learn faster, you should be really motivated to learn and keep your interest growing. You should continue to browse through different forex-related information so that you will be equipped with knowledge that will become useful when you start trading. By being motivated and industrious, you could become the best trader that you could be. - 23208

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Become A Forex Trader Help

By John Eather

Forex traders all over the world are making a lot of money. To become a forex trader you will need the specific skills which are to be confident and smart. Don't run around like a chicken with your head cut off, make sure you know what you're getting yourself into before deciding the final decision.

Like I said before in the first paragraph you will need to be confident in your product. So do not be nervous when selling your product or nervous when buying the product you will be re-selling to the world. You must know what you're talking about and have the ability to talk people into purchasing things.

Failures in the forex trading area are found when greedy people only think about how much money they can be making. This is where most forex traders run into debt and trouble issues. I'm letting you know a head of time so that you don't fall into the same idea as most of the forex traders. Do not think about how much money you can be making because you won't be thinking about your product or consumers, the most important things.

Personally I don't know any forex traders, but from what I've read about online, forex trading can be quite deceiving at times. Most people run into debt issues or money problems and are striving for a way out. So make you know what you're doing with your product, have a plan on how you will be successful and remember be confident.

Don't be afraid of forex trading, if you follow my step, which is to be confident and not nervous than you will do find. Also don't think about how much money can be made, think about how many products/currencies you can sell back to the consumers. That's how you will become a forex trader, and a successful one at that.

Knowing the area of the job that you will partake is in a plus. Ask fellow forex traders what is the most successful way to getting what you want out of forex trading. Fellow forex traders are important contacts to have, they will let you know the scoop in forex trading, also what to avoid and what to pounce on. - 23208

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What a Good Forex Managed Trading Account is like.

By Bart Icles

Do you know what a managed Forex account is? This is a Forex account where a different person, called a trader, trades for you, who is the investor, knowing that it is actually your account. It's these people who trade your money. But they won't be able to steal anything from you; rather, they can gain or lose money for you instead. In many cases, the investor only observes the things happening going in his account but the trading goes to the other person. Two passwords are available for a single account.

One password is for the trader, and another is for the investor. The trader's password only gives him access to the power of logging in, getting orders, and trading. The investors' password gives access to everything, but it's usually only used for observing what is happening in the account. Managed accounts are divided into two, the doing-good-account, and the not-so-doing-good account. If your traders, also called account managers, show you (their clients) that they're doing a great job; you have to scout for some losses in the account as well. If you only see winnings and no losses, then there's something not right happening in the account.

Even the best traders in the best trading systems lose at some point in time, right? You have to keep on asking, "Where are the losses going?" To give an impression of what the account has done so far, the losing trades are left open while the winning are closed. The account balance grows when the winning trades alone are closed. This could be misleading because the real amount of money, or equity, in the account could keep on going down instead of the more convenient going up.

The account equity is computed by deducting the negative open trades plus the positive open trades to the account balance. A margin level is also present in the account. The account is in better shape and gets better as the margin level gets higher. The equation for this percentage is figured by dividing the used margin into the equity. By moving the decimal point of the answer twice to the right, you have your percentage.

Usually, when the margin level reaches 50%, they close the biggest open negative trade. To prevent any borrowing of money from the brokerage firms, they make sure that the account doesn't go below zero. This process is called a "margin call." In order to find honest, trustworthy, and faithful account managers to manage your managed account, you had better understand the basic idea of trading. When choosing the right trader for you, you better be smart and accurate. - 23208

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