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| Bizwrite Home Page Here's some Forex trading training for you! How
risky is forex trading?
Let me tell you about one of the best advantages of Forex Trading. The amount of money you need to place a trade (known as "margin"**) is all that can be lost ! Despite the very high leverage associated with Forex trading (200:1 is possible; meaning if you put up $1 the trading vendor will allow you to trade as though you really have $200), it's still arguably less risky than futures (commodities) trading. Futures markets are often prone to sudden and dramatic moves, against which you can't protect yourself, even by trading with protective stops. Your position may be liquidated at a loss, and you'll be liable for any resulting deficit in the account. But because of the Forex market's deep liquidity and 24-hour, continuous trading, dangerous trading gaps and limit moves are eliminated. Orders are executed quickly, without slippage or partial fills. And finally, there are no margin calls. Easy-Forex will automatically close out some or all of your open positions if your account equity falls below the level required to hold the positions.Think of this as a final, automatic stop, always working on your behalf to prevent a debit balance. In fact, if you use Easy-Forex, you'll never lose more than you have in your Forex account. **Currencies are traded in dollar amounts called "lots" One lot is equal to $1,000, which controls $100,000 in currency. This is the "margin" - so you can control $100,000 worth of currency for only $1,000. But with Easy-Forex you can start with not $1,000, not $100 - currently not even $50 - but as little as $25! So this is ALL you can lose if you follow their system. Easy-Forex? The best trading platform available today. Forex trading involves substantial risk of loss, and may not be suitable for everyone. How do I make a profit? Buying (going "long") and selling (going"short") in the FOREX market - how to do it and calculate your profit or loss (you won't win ALL the time, but most of the time YES, if you've got a good trading method). Let's be frank - YOU WILL HAVE LOSING TRADES. We all do. Every Forex trader does. The key to being a consistent, predictable, reliable trader is at the end of the day to add up more wins than losses. And, when you KNOW (based on your trading rules), that YES, indeed you are in a losing trade, don't keep losing money (lowering your stop loss) just to prove you are right Remember - before EVERY trade you MUST place a STOP-LOSS ORDER. When you place a STOP order, right along with your ENTRY order, via your online trading platform, you've just automatically prevented a potential loss from "running" too far. To make a profit in Forex you can enter the market as a "buy position"(known as going "long") or a "sell position" (known as going "short"). Let's assume you've been studying the EURO (which is paired first with the U.S. dollar or USD. Since it is paired first, it is the base currency). Your trading methods, rules, strategies, etc., tell you that prices will rise during a particular timeframe. So you buy the EUR/USD pair (or, technically, you will simultaneously buy euros, the base currency, and sell dollars). With your Easy-Forex system you see that the EUR/USD pair is trading at: << EUR/USD: 1.3242/45 >> REMEMBER: the quote to the left of the / (1.3242) refers to the bid or "sell" price (what you obtain in USD when you sell EUR). The quote to the right of the / (1.3245) is used to obtain the ask or "buy" price (what you have to pay in USD if you buy EUR). So, since you believe that the market price for the EUR/USD pair will go higher, you will enter a *buy position* in the market. For simplicity's sake, let's say you bought one lot at 1.3245. As long as you sell back the pair at a higher price, then you make money. Don't worry if it all seems complicated. It's all handled, and even calculated for you, by your Easy-Forex trading system. Click on this banner:  Should I learn Forex by using a Demo account? Using a Demo account is one way you can learn to trade in Forex. Once you sign up for your demo account, you will need to try out one of the trial charting packages. Any of these will do because they all have most or all of the necessary indicator tools. You can then set up your demo account and start drawing trendlines, marking support and resistance levels, monitoring moving averages, etc. This is quitea good way to get used to the mechanics of trading. Once you have a real trading account you will already know how to do all of these things from all of your practice. Everyone makes mistakes placing orders. If you experiment in a demo account you can of course make your mistakes without losing ANY money. However, many people think a demo account is not the best way to learn. This is because deep down, you know it's not for real. So you don't have the same attitude to risk-taking and stopping your losses and when you start doing it for real, you will be more reckless. With Easy-Forex you have the best of both worlds. You do it for real, but by starting with only $25 in your trading account, that is ALL you risk until you have learnt the ropes. Click the banner to learn more.  Is Forex trading hard to understand? Forex trading seems hard to understand at first because of all the technical terms. Talking like that makes some people feel good!! You will learn very quickly and you'll soon be talking that way yourself! PAIR means any two currencies you are trading in. In Forex you don't trade in a single currency - you buy one and sell the other at the same time. So if you are buying Euros and selling US dollars, the "pair" is EUR/USD. SCALPING is a strategy of buying at the bid price and selling at the offer price as quickly as possible to minimize the risk. SPOT means the buying and selling of currencies where the settlement date is two business days ahead MARGIN is the amount you hold as collateral for your trade. If you hold $100 you are allowed to trade $10,000, (or $20,000 with Easy-Forex) so $100 is your margin. What is Fibonacci trading? Fibonacci is a very special trading technique based on number theory. It's not really for the newcomer, but once you've got used to the basics of trading you will find it a pretty amazing method. You have probably heard of the "Fibonacci sequence", especially if you've read the novel The Da Vinci Code. Fibonacci was a medieval Italian mathematician who discovered that this number sequence runs throughout nature and many systems of thought. In the sequence, each number is the sum of the previous two - 1,1,2,3,5,8,13,21,34 ... etc. However what's really significant for Forex trading is the Fibonaccit ratios derived from this sequence: .236,.50,.382,.618 ,.. etc. This is because the oscillations observed in Forex charts follow Fibonacci ratios very closely as indicators of resistance levels (peaks) and support levels (troughs) This enables you to calculate Fibonacci price points in advance so that you know the right time to enter or exit a trade. For instance: to find the 0.382 ratio level, you measure the size of the rise or fall over the period in which you are interested, then multiply this value by 0.382. Then add this value to the total drop, or subtract this value from the total rise. The answer is 0.382 ratio level. You can use this to work out your strategy for making a profit - as this value will be a highly probable peak or trough. There will be lots of other technical terms you will come across but they're only words! You'll learn them in no time! What
is meant by a "spread"?
When
you see the quoted price for a currency "pair" - e.g. USD/JPY - you
will notice it
looks something like this: 105.26/105.30
That
means you can BUY $1 US for 105.30 yen or you can SELL $1 US for 105.26
yen. The difference here is 4 yen - that is the "spread". It is usually
expressed in "pips" - (a "pip" is the last digit after the decimal
point) - this is a 4-pip spread.
At any
given moment, the amount that will be received in the counter currency
- the yen in this case - when selling a unit of the base currency (the
dollar here) will be lower than the amount of the counter currency
which is required to BUY a unit of base currency. So if you buy a
currency and immediately sell it, you will lose money because there has
been no time for the exchange rate to move.
When Forex
trading you will find a smaller spread is a better prospect
than a large spread because it only requires a small movement in
exchange rates before you can profit from a trade.
The
smaller a spread is, the more competitive it is. Easy-Forex uses
very competitive spreads and this is why they are able to allow you to
trade commission-free.
As
you know, in the financial markets, as in most markets, prices are
driven by supply and demand. Over-supply drives prices down, and
over-demand drives prices up. Support and resistance represent the
junctures where the forces of supply and demand meet. What do the terms "support" and "resistance" mean? SUPPORT is the price level at which demand seems to be sufficiently strong to prevent the price from falling further. The lower the price gets, the more people are inclined to buy and the less they are willing to sell. When the price reaches support level, it appears that demand will overcome supply. This should prevent the price from falling any further. However, support levels don't always hold and there is sometimes a drop below support level. This signals that sellers have lowered their expectations and are willing to sell at new lows. So new, lower support levels will have to be set. RESISTANCE is the price level at which selling, and thus demand, seems to be sufficiently strong to prevent the price from rising further. The higher the price gets, obviously sellers have more desire to sell and there is less temptation to buy. When the price reaches resistance level, it appears that supply will overcome demand. This should stop the price from rising any further. However, again, resistance levels don't always hold. The easiest way to identify support and resistance levels in on a chart. On a Forex trading bar chart that details the changes in the currency over time, you can see that it is possible to draw a horizontal line at the lowest place the graph reaches, and at the highest place it reaches. So with a falling graph, after it has fallen several times, it reaches a point below which it never drops. This is the support level. Similarly, with a rising graph, after it has risen a number of times, it reaches a point above which it never rises - this is the resistance level. Obviously this is a very simple explanation but I hope this has given you the idea. You can learn much more about support and resistance, AND about charting, with Easy-Forex. I don't understand about Mini Forex Mini Forex refers to the size of the trade you are making - often called the "face value". The standard unit size of a transaction - usually referred to as a "lot" - is equal to 100,000 units of the base currency. If you are in a mini trade you will be trading a "mini lot" which is usually 10,000 units of the base currency. With the normal leverage of 1:100 which most brokers and platforms allow, this allows you to trade with just 100 of the base currency. So assuming the base currency is USD, you can trade with just $100 to control $10,000. However, Easy-Forex gives you a leverage of 1:200 so trading with $100 allows you to control $20,000. A mini account is ideal for people who are just learning the ropes, or who can't afford a big initial deposit. Just remember that while a high leverage can mean spectacular profits, it can also mean spectacular losses, so never forget your money management principles. |