FOREX TRADING - Basic Rules

If you have just started trading in the FOREX market or your considering it , These five basic rules could save you a lot of money.

The Five Basic Rules for FOREX Trading

Yes it is worrying starting your journey into FOREX trading .The rules and methods of trading can seem like a lot to deal with . Of course you will learn many things along the way , like which currency pairs perform the best and trends in the market.

There is however key rules and methods you should be aware of in order to keep loses to an absolute minimum and maximize profits. You will avoid many pitfalls as well as recognize opportunities that will boost your profits in the FOREX market.

These are the four rules/methods we will cover :
1) Don't Over Leverage Your Investment

2 ) Quit When Your Ahead Know When That Is

3 ) Do your Research Before Making Trades

4) Stop Loss Orders Protect Yourself From Large Losses

5) Consider Getting Trading Robot That Will Save You Time and Money

1-Don't Over Leverage Your Investment
It's so easy to get caught up in the buzz of FOREX trading , However Leverage is a two edge sword. Leveraging is basically trading more money than you have in your portfolio . For example If you have $2000 in you account some brokers will allow you to buy $50,000 of a currency .

Its better to get the know the market over time than take unnecessary risks. Don't get carried away as you need a steady well thought out approach to make a long term consistent income with FOREX trading .

2-There Is A Time to Quit - Know When It Is

When your riding high on a profitable trade ,many people don't want to sell in the hope there profits will just keep on rising . Well values can fall as well as rise so don't get greedy and lose your gains.

However you don't want to cash in to quick and miss those few extra gains. Some trades you make won't be successful. But over time and careful studding the market trends , you will get a feel for when to start and stop trading. Even Experienced traders have a few losses along the way , but over all they have far more wins that losses and you will too.

3-Doing Your Research Before Making Trades

Research is a word many people don't like , because it involves extra work with no apparent benefits . Well in the FOREX Trading market , having an idea of history and current trends can be the difference between winning and losing . Don't treat the FOREX market like a casino because you will lose far more than you win. Do your research.

4-Stop Loss Orders For Protection

Stop loss is part of a system that stops you from losing too much of your investment or profit , basically if the value of the currency falls to the value you set in the stop loss , Stop loss will sell and stop you from losing any more profit .

Stop loss should be st up before you start to trade ,and you need to decide the value that the stop loss activates. The successful traders use this safety method all of the time .

5-Consider Getting Trading Robot That Will Save You Time and Money

Well after reading the four rules above you must be wondering if there is an easier way .

Well yes there is , FOREX automated robot software , not only trades on average better than humans it can also trade night and day with no interaction from you. Real live account studies have shown one particular Robot Doubling Profits every month.

Forex Trading Examples

Example.1

An investor has a margin deposit with Saxo Bank of USD 100,000.

The investor expects the US dollar to rise against the Swiss franc and therefore decides to buy USD 2,000,000 - 2% of his maximum possible exposure at a 1% margin Forex gearing.

The Saxo Bank dealer quotes him 1.5515-20. The investor buys USD at 1.5520.

Day 1: Buy USD 2,000,000 vs. CHF 1.5520 = Sell CHF 3,104,000.

Four days later, the dollar has actually risen to CHF 1.5745 and the investor decides to take his profit.

Upon his request, the Saxo Bank dealer quotes him 1.5745-50. The investor sells at 1.5745.

Day 5: Sell USD 2,000,000 vs. CHF 1.5745 = Buy CHF 3,149,000.

As the dollar side of the transaction involves a credit and a debit of USD 2,000,000, the investor's USD account will show no change. The CHF account will show a debit of CHF 3,104,000 and a credit of CHF 3,149,000. Due to the simplicity of the example and the short time horizon of the trade, we havedisregarded the interest rate swap that would marginally alter the profit calculation.

This results in a profit of CHF 45,000 = approx. USD 28,600 = 28.6% profit on the deposit of USD 100,000.

Example 2:

The investor follows the cross rate between the EUR and the Japanese yen. He believes that this market is headed for a fall. As he is not quite confident of this trade, he uses less of the leverage available on his deposit. He chooses to ask the dealer for a quote in EUR 1,000,000. This requires a margin of EUR 1,000,000 x 5% = EUR 10,000 = approx. USD 52,500 (EUR /USD 1.05).

The dealer quotes 112.05-10. The investor sells EUR at 112.05.

Day 1: Sell EUR 1,000,000 vs. JPY 112.05 = Buy JPY 112,050,000.

He protects his position with a stop-loss order to buy back the EUR at 112.60. Two days later, this stop is triggered as the EUR o strengthens short term in spite of the investor's expectations.

Day 3: Buy EUR 1,000,000 vs. JPY 112.60 = Sell JPY 112,600,000.

The EUR side involves a credit and a debit of EUR 1,000,000. Therefore, the EUR account shows no change. The JPY account is credited JPY 112.05m and debited JPY 112.6m for a loss of JPY 0.55m. Due to the simplicity of the example and the short time horizon of the trade, we have disregarded the interest rate swap that would marginally alter the loss calculation.This results in a loss of JPY 0.55m = approx. USD 5,300 (USD/JPY 105) = 5.3% loss on the original deposit of USD 100,000.

Example 3

The investor believes the Canadian dollar will strengthen against the US dollar. It is a long term view, so he takes a small position to allow for wider swings in the rate:

He asks Saxo Bank for a quote in USD 1,000,000 against the Canadian dollar. The dealer quotes 1.5390-95 and the investor sells USD at 1.5390. Selling USD is the equivalent of buying the Canadian dollar.

Day 1: Sell USD 1,000,000 vs. CAD 1.5390. He swaps the position out for two months receiving a forward rate of CAD 1.5357 = Buy CAD 1,535,700 for Day 61 due to the interest rate differential.

After a month, the desired move has occurred. The investor buys back the US dollars at 1.4880. He has to swap the position forward for a month to match the original sale. The forward rate is agreed at 1.4865.

Day 31: Buy USD 1,000,000 vs. CAD 1.4865 = Sell CAD 1,486,500 for Day 61.

Day 61: The two trades are settled and the trades go off the books. The profit secured on Day 31 can be used for margin purposes before Day 61.

The USD account receives a credit and debit of USD 1,000,000 and shows no change on the account. The CAD account is credited CAD 1,535,700 and debited CAD 1,486,500 for a profit of CAD 49,200 = approx. USD 33,100 = profit of 33.1% on the original deposit of USD 100,000.
Posted by Forex Trading And Currency at 3:35 AM
Labels: Forex Trading and Exchange.

Choosing an Automated Trading System

Automated Trading is the next revolution in trading: a system that can trade Forex and other assets automatically by sending trading signals directly to your account. The good thing is there are a lot of Automated Trading systems available and more on the way. On the other hand, there are a lot of bad systems available. Here are ways to find the best instructions

Step 1
Go to a automated trading exchange, like Collective 2 or Strategy Exchange and review the systems.

Step 2
Pick systems that have long-term success. Anyone can develop an automated trading strategy that makes money for a month and then blows up.

Step 3
Find a system with small rates of slippage. Slippage is when a system loses money before it starts to gain. Too much slippage can wipe out your account.

Step 4
Avoid excessive trading. A system that produces solid returns but conducts a high amount of trades is likely to lose money, or limit your return through trading fees and commissions.

Step 5
Check volatility. If a system’s swings scare you on the chart, imagine what it will do to you in real life. You’ll be spending just as much time watching the trades as you would if you were making the calls yourself.

Forex Trading - source of good income

There is quite a variety of trading options available in this day and age. So many opportunities to make a good income from your own home are out there waiting to be explored. And one of the most successful, practical, and convenient ways is Forex trading - the exchange of foreign currency. If you have capital to invest or are in need of a new career, or if you are in need of a job you can do from home, Forex trading is the best thing for you. Let me explain some reasons.

Forex trading is ideal to do from home, because you can access the market from any computer as long as you have internet access. On top of that, the market is open 24 hours a day, 7 days a week. You trading will fit easily into any time frame that you have. Unlike investing in the stock market, you are not limited to normal business hours. You can spend your day as you like, enjoying the things you like and living your life, without being chained to a desk.

Flexibility And Control

Forex trading is flexible and can be incorporated into whatever lifestyle you have. As well as being time-smart, Forex trading is money-smart. No longer do you have to pay frustrating licensed broker fees. In Forex, you have control over your own account and can make your own decisions and exchanges without having to work through a broker.

But perhaps the greatest advantage of all is the stability and predictability of the Forex market. By using technical analysis, you can foresee changes and fluctuations in the market and act accordingly. Besides, the Forex market does not have such moody swings as the stock market. The only thing that would make the market swing much is if you were to buy and sell only one particular currency for a long time. But since there are hundreds of currencies available in the world, your options are never limited, therefore such swings can be prevented.

Though the benefits far outnumber the negatives, there are some risks in Forex trading. There are certain dangers involved in banks in foreign countries, credit and interest rates, and exchange rates. But if you thoroughly understand the market and are ready to trade, you can prevent many of these risks-get Started For Free

In fact, there are free demo accounts available where you can try your hand at Forex trading without actually risking your capital. This way you can get used to trading and learn how best to make decisions in the account that is designed to be exactly like the real market.

If Forex trading interests you and looks like the smartest choice for you, there are many resources online where you can learn more. There are courses available that teach you the details of Forex trading, how to make profitable decisions and how to succeed. One example of a site where you can find information on Forex is the Federal Reserve Bank's website.

On the whole, Forex trading is the most successful career that you can do from home. It not only allows you to live your life your own way with its immense practicality and convenience, but it opens the door to a whole new world of opportunity and endless potential to make money

Foreign currency market

Foreign Exchange (Forex, FX or currency) will be distributed worldwide sales trading financial instruments. financial centers in the world in trade between the anchor has many buyers and sellers at any time, except weekends.

The course "Forex" is to promote international trade and investment. Foreign currency can be converted into another currency. For example, it allows us operators to import goods and services, wages, although corporate profits in U.S. dollars. Some experts believe, however, that the theory of free movement of money from large financial institutions such participation to improve the global movement of capital account deficit is much more difficult. This trade could lead to a loss of competitiveness abroad.

In a typical exchange pages the same amount of money to pay more money to buy. Modern foreign exchange market started in 1970 when the country finally has a floating exchange rate, which is in the same room as the Bretton Woods system

Global exchange Trade

Target currency currency trader, trading and border to visit the market value in exchange for other currencies, weak sales and earnings strong buy. Currency trend, and that is what attracts Forex speculation want to lock in profits and expected trends. Currency trading in the long term, and many of the trends that can take months or even years, and trends that are less than a week or several days.
Factors that money can not be political or economic interests, and the environment from all sides, reducing the final price will reflect that. international exchange, it seems easy - but to decide what the company is worth millions if the court in the shadow of greed and fear, a little difficult.

Forex Trading - Lose Money

exchange operations have 3 reasons why traders lose money. If you want to see what kind of problems that the winners of the stack, you can join in the great minority.

Here is the trade falls, you lose money:

1. Contrarian disease

Unlike other distributors in the currency market has an opinion - most traders lose money, so they want to act against the common people.

Traders lose because the lack of discipline and money management - but often in the direction of the market. Traders Forex trading opportunities as they are - most of his life with a disability and a trend that is losing money.


Many retailers are trying to ups and downs, and sometimes focus on the next trend. The choice of tops and bottoms is impossible. You can not predict turning points in Forex Trading - should concentrate on the evolution of change can not be predicted.

2. Chartists Trap

Many traders study charts to trade forex to invest in a trap. review of the letter is important - not subjective, but if you lose, you have to stop.

Forms of subjective analysis, Elliot Wave and cycles to avoid - and the indicators moving averages and oscillators for the moment - and examine trends in hunting.

Subjective and objective is currency trading.


3. Ego

Global Forex trading attracts some of the smartest traders are smart people - but also have a big ego. I trade in foreign currency is not a good sign - it means you've always wanted to watch the market wants to see - as in reality it is not.

Operators must take the following questions: Can I make money or do not want to feel smart? Consider the market needs - would make money out.