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Forex Trading Information
Calculating FOREX Profits and Losses
FOREX currencies are traded in much smaller divisions than cash. Whereas the smallest division in US cash is the penny ($0.01), US currency can be traded on the FOREX in divisions of $0.0001. This smallest division is called the PIP (acronym for Price Interest Point - sometimes just called 'points'). Since currencies are traded in large lots of (say) $100,000 - small movements in value can generate substantial profits and broad losses. In a lot of US $100,000 one PIP is worth $10 so an increase in 40 pips (4/10 of one cent) can generate a profit or loss of $400.
Currency Option Marketplace
A foreign currency option is a contract giving the option holder the right, but not the obligation to buy or sell a specified currency during a specific time period. It can be used to hedge a FOREX transaction and are a favored method of reducing trade risk in firms which that trade goods overseas.
FOREX Brokers
Most Global Forex traders use a Commodity Broker to handle their account transactions. What exactly is a broker? Strictly speaking, a broker is an individual or a company that buys and sells orders according the investor's decisions. Forex brokers earn money by charging a brokerage commission or a fee for their services.
FOREX Glossary
Here are some of the most common terms used in FX FOREX trading.
Ask Price - Sometimes called the Offer Price, this is the market price for traders to buy currencies. Ask Prices are shown on the right side of a quote - e.g. EUR/USD 1.1965 / 68 - means that one Euro can be bought for 1.1968 US Dollar.
FOREX Signals
One of the disadvantages of FOREX trading is the time investment needed to monitor the global-forex markets for advantageous trade entry and exit points. It's possible to sit in front of a computer monitor for hours watching the financial markets trade.
Of course, you can use automated orders such as limit orders and stop-losses. These allow you to walk away from your computer with the knowledge that your losses will be kept to a minimum, but by doing so, you may miss out on potential profits because your limit order may kick in too soon.
FOREX Tools
There are many tools available to the FOREX trader for analyzing the market as well as for buying and selling currencies. Software tools are a necessary part of FOREX because of its volume and volatility. Software can be used to automate some of the trading procedures and safeguard against losses.
FOREX Trading Philosophy
Many beginning FOREX traders are captivated by the allure of easy money and profitable trading. FOREX websites offer 'risk-free' trading, 'high returns' 'low investment' - these claims have a grain of truth in them, but the reality of FOREX is a bit more complex.
FOREX Trading Strategies
To be a successful FOREX trader you need a forex trading strategy. There is no one set strategy that is good for all traders; rather, each trader needs to develop their individual approach to the FOREX. Some traders rely solely on technical analysis while others prefer fundamental analysis, but many successful FOREX traders use a combination of both to get a broad overview of the forex market and for plotting entry and exit points.
FOREX Trading Systems
Almost every online FOREX broker has a software package for their trader clients to make transactions and get information about market prices. Due to the relative maturity of online trading there is a consensus among FOREX brokers about what clients need in terms of software tools. There are two main classes of FOREX software - web based and client based.
FOREX Training
Knowledge is the key to successful FOREX FX trading and a profitable forex trading system. The knowledgeable forex trader has greater awareness of how the Forex Market moves and more chances of making profitable trades. Without trading knowledge it's like shooting in the dark. You may succeed on a few trades but the odds are that you are going to lose at your forex trading in the long run.
Forex Trading News
Kenya: Dollar Demand Buoys Trading At Forex Market (AllAfrica.com) - Wed, 02 Jul 2008 21:09:13 GMT
There was active trading at the forex market yesterday as the local unit gained 10 cents from the previous trade following an end month dollar demand. (AFX UK Focus) 2008-07-04 09:40 Forex - Euro settles into range as US holiday subdues trading (Interactive Investor) - Fri, 04 Jul 2008 08:45:55 GMT
LONDON (Thomson Financial) - The euro steadied after sharp losses against the dollar on Thursday, as the July 4 holiday in the U.S. and a lack of economic data are expected to keep trading volumes to a minimum. Forex: FxSpyder LLC Introduces First Independent, API Driven Forex Trading Platform (PRWeb via Yahoo! News) - Wed, 02 Jul 2008 07:01:00 GMT
FxSpyder LLC completes program integration to offer API trading to the retail forex spot trader through OANDA CORPORATION. The first software developer to offer an independent, trader controlled forex trading platform to the marketplace, FxSpyder LLC hopes to eventually make its universal platform available to any trader trading with and through forex dealers offering API access. (AFX UK Focus) 2008-07-04 13:56 Forex - Euro on back foot as market digests ECB rate stance (Interactive Investor) - Fri, 04 Jul 2008 13:31:36 GMT
LONDON (Thomson Financial) - The euro continued its slow slide against the dollar the, falling below the $1.56 level in holiday thinned trading as markets continued to digest the the European Central Bank's interest rate stance. How do I calculate forex pivot points? (Investopedia) - Wed, 02 Jul 2008 08:14:59 GMT
How do I calculate forex pivot points? Pivot points were originally developed by floor traders in the equity and commodity exchanges. They are calculated based on the high, low and closing prices of previous trading sessions, and are used by traders to predict support and resistance levels in the current or upcoming session.
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RELATED ARTICLES
Calculating FOREX Profits and Losses
FOREX currencies are traded in much smaller divisions than cash. Whereas the smallest division in US cash is the penny ($0.01), US currency can be traded on the FOREX in divisions of $0.0001. This smallest division is called the pip (short for Price Interest Point - sometimes just called 'points'). Since currencies are traded in large lots of (say) $100,000 - small movements in value can generate substantial profits and losses. In a lot of US$100,000 one pip is worth $10 so an increase in 40 pips (4/10 of one cent) can generate a profit or loss of $400.
FOREX Brokers
Most FOREX traders use a broker to handle their transactions. What exactly is a broker? Strictly speaking, a broker is an individual or a company that buys and sells orders according the investor's decisions. Brokers earn money by charging a commission or a fee for their services.
FOREX Signals
One of the disadvantages of FOREX trading is the time investment needed to monitor the markets for advantageous entry and exit points. It's possible to sit in front of a computer monitor for hours watching the markets.
FOREX Trading Strategies
To be a successful FOREX trader you need a trading strategy. There is no one set strategy that is good for all traders; rather, each trader needs to develop his or her individual approach to the FOREX. Some traders rely solely on technical analysis while others prefer fundamental analysis, but many successful FOREX traders use a combination of both to get a broad overview of the market and for plotting entry and exit points.
FOREX Training
Knowledge is the key to successful FOREX trading. The knowledgeable trader has greater awareness of how the market moves and more chances of making profitable transactions. Without knowledge you are shooting in the dark. You may succeed on a few deals but the odds are that you are going to lose in the long run.
FOREX versus Stocks
Stocks have been a popular investment for hundreds of years. Companies issue stocks to raise capital for expansion and new projects, and each share of the stock represents a partial ownership in the company.
How to Read FOREX Quotes
Currency prices are determined by a number of factors, the most important of which are economic and political conditions in the issuing country. Political stability, inflation, and interest rates are all factored into the price of any currency. In addition, governments can try to control the price of their currency by either flooding the market (to lower the price) or buying extensively (to raise the price).
Introduction to Fundamental Analysis
FOREX traders almost always rely on analysis to make plan their trading strategies. There are two basic types of FOREX analysis - technical and fundamental. This article will look at fundamental analysis and how it used in FOREX trading.
Risks of FOREX Trading
Despite the claims you may see on some FOREX web sites, FOREX is not risk-free. You are trading with substantial sums of money and there is always a possibility that trades will go against you. There are several trading tools, however, that can minimize your risk, and with caution, and above all education, the FOREX trader can learn how to trade profitably and while minimizing losses.
Trading Currencies on Margin
The key to FOREX popularity is margin. Without margin, the FOREX would be beyond the reach of the average investor. So, what exactly is margin and how does it work?
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