Month: October 2010

By Jon Jacoba

The foreign exchange market is also known as FX or it is also found to be the FOREX. These terms all have the same meaning are one and the same, that is the exchange between various governments, institutions, corporations that are located in different countries. This financial market is in a state of constant flux having a wide range of trades to be executed. There are many fraudulent sites that hve bee launched too. Orgnaizations as well as individuals are setting up online to take advantage of people who don’t realize that foreign trade must take place through a broker.

Cash, stocks, and mony is traded thru the foreign-exchange markets. The currency market will be present and exist when one currency is traded for another. Think about a trip you will take to a different nation. The place or situation you are going to be able to ‘trade your cash ‘ for the value of the money that’s in that other country? This is currency trading basis, and it’s not found in all financial exchange institutions, and it’s unavailable in all money centres. Foreign exchange is a specialized circumstance.

Foreign Exchange, a. K. A foreign exchange, is conditional on a number of factors like the current economic and bilateral relationship between two countries, natural disasters, elections, and so on. Currency exchange can be defined as the calculation of rate of exchange between the currencies of a few nations. This is simpler with auto trading software.The calculation needs to be accurate and prompt to have an error free exchange. There is a big majority of people that are impacted by forex

Emerging business and people often hoping to make serious coin, are the sufferers of scams when it comes to finding out about foreign exchange and the foreign trade markets. As forex is seen as the easiest way to make a fast buck or two, folk don’t question their participation in such an event, but if you’re not investing money thru an agent in the currency market, you might easily end up parting with all that you have put in the transaction.

Like any other industry that flourishes, the online forex industry has also had to cope with the bad boys. A currency exchange sting is one that involves trading but will turn out to be a fraud ; you’ve no possibility of getting your money back when you have invested it. If you were to invest money with a company saying they’re involved in forex trading you need read closely to learn if they’re allowed to do business in your country. Many companies aren’t permitted in the currency market, as they have deceived speculators in the past.

Over the last five years, with the help of the Net, currency trading and the awareness of forex trading has become all the rage. Banks are the number 1 source for foreign exchange trading to take place, where a trained and licensed broker is going to complete transactions and necessities you set forth. Commissions are given out on the exchange and this is the usual.

Another sort of scam that’s plentiful in the foreign exchange markets is software which will aid you in making trades, in finding out about the foreign markets and in practicing so you can ready yourself for following and making trades. You wish to be in a position to depend on a programme or software that is truly intending to make a difference. Consult with your fiscal broker or your bank to discover more about foreign exchange trading, the foreign exchange markets and how it’s possible for you to avoid being the victim while investing in these circumstances.

About the Author

Where can you find valuable references to currency trading on the web? You can read more articles and get quality information about forex trade from forexbud.com and its associated web2.0 artifacts.

By Jim Mathew – Recent developments in the value of the currencies are exciting and significantly varying from its historic performances. Recent economic crisis generated a movement to risk that overvalued US dollar against almost all of its trade partners. This process has started to reverse as trade flows picks-up and GDP growth trend becomes positive globally. But a jobless recovery in the United States, with global growth generated mainly by emerging markets had resulted in drastic variations in the values of the currency. Countries endowed with natural resources and raw materials have benefited from the rise of China, the booming demand for these materials from developing countries lead by China, Inda and Brasil.

In comparison with period of March – June 2009 with June- July 2010, the New Zealand Dollar and the Australian Dollar have done well respectively 32% and 30% versus the Euro. Agriculture and Mineral was 37.6% and 4.6% of export from Australia. In 2009 Australia exported $42.5B to the Chinese, resulting in China becoming their largest export market.

Among the developing nations there are many other currencies that have shown appreciation in value. These include – South African Rand, Colombian Peso, Canadian Dollar, as well as the Brazilian Real. Canada is known for having the second most oil reserves of oil and gas globally – 179 billion of barrels, and is the number 1 exporter of crude to America (satisfying 22% of the US demand) and the safer, least volatile maker in the list of the other top producers (Mexico, Saudi Arabia and Venezuela). Not only do they provide oil , but Canada is also a leading provider of farming fertilizers to the developing countries. The Canadian dollar has appreciated 21% versus the Euro in the mentioned period.

Brazil for its part has recently found an sea reserve of oil with 3-5 billion barrels, the largest oil find since the 2000 12 billion discovery in Kazakhstan. Brazil is also a leader in green energy – predominantly bio-fuel. Farming has also caught up in growth with production in soya using advanced genetic engineering showing good results. They are giving the developed nations a real run for their money and even winning some of the battles. Naturally, the overall value of the Agriculture sector has more than double over the last 10 years. Brazil is now the biggest exporter of Beef, poultry, sugar cane and ethanol.

About the Author

Searching for valueable foreign exchange help on the web? Forexbud.com presents forex trading system which would give you and opportunity to achieve successful trading decisions.

By Warren Seah

Using fixed stop loss is one way traders try to control their potential losses for a given trade. The other way to do that is position sizing – the decision of how large or small a position is taken. Trading forex market at a higher time frames will require that a forex trader set a greater stop loss level.

However a greater stop loss level will mean that the trader take on a greater amount of risk. With proper position sizing, the forex trader will be able to trade on higher time frame like he used to do in smaller time frames.

Position sizing helps a trader to limit the amount of loses made in trading. It forms part of an investment strategy which helps the trader decides how much contract size to enter in each trade.

Usage of this forex investment concept is what differentiates the professional forex traders from average traders. This article will explained position sizing in simple terms, the benefits and the ways in which to incorporate into your forex trading.

Getting the right position size to enter a trade isn’t as complicated as you would imagine. You will first need to decide how much money as a percentage of the account you are willing to lose on a single trade.

The amount varies for every trader, depending on the amount of risk the trader is willing to take on, but generally speaking, 2 to 5 percent is a typical number. The more money you risk on each trade, the faster your account will be damaged if you lose more than one trade consecutively.

Second, you will need to calculate how many pips is your stop loss away from your presumed entry price. Using the following position sizing formula which only applies for the forex market):

(Account balance X Acceptable risk per trade %) / (Number of Pips stop loss away from presumed entry price) = ( value denominated in mini lot )

($20,000 X 3%) / (75) = 8 mini lots

Using this calculation, we have determined the proper position size for this trade to be eight mini lots. It is important to note the leverage ratio and the margin required for trading 8 mini lots.

Position sizing to keep risk around 2 percent per trade may work well with a $25,000 account, but what if you only have $1,000 is only $20, it doesn’t leave you much risk capital to work with. With micro accounts, a $20 risk will usually fit your position into a 100 pip stop loss, which is sufficient for almost any trade.

The problem with micro accounts is that your gains will be less than exciting. The reality is trading require money, it will take small money to make small returns and big money to make big returns. Without proper money management, a trader is doomed for failure regardless of how much is his trading capital.

The rule is to take proper money risk money management by controlling risk with with position sizing. Practise and keep practising. Think in terms of percentage you made and not on the dollar terms you made. Investors think in percent while employees think in monetary terms. Be an investor, think percentage and forex will be a market you can extract profits in the long term.

About the Author

Warren Seah

“Introducing 11 Exit Strategies, What Every Disciplined Traders Need … Go Without It You Could End Up Being A PIP VICTIM Just Like Thousands Of Traders Out There.”

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Happy weekend stock market enthusiasts! The US market or at least the NASDAQ ended this week with a bang after a magnificent performance by Google. In case you missed it, the shares of Google (GOOG) soared by 11.19% following a jump in the company’s net income. Net profit expanded by 32% to $2.17 billion, which translates to $6.72 per share, from $1.64 billion during the previous year. Given this figure, the web search giant is proved to be benefiting very well from its advertising channels which now includes display and mobile. Internet advertising, by the way, has risen by $6.15 billion or 11.8%  in the US alone from a year earlier.

Technically, GOOG made a bullish gap soon after the company’s third quarter income result hit the news. In the process, the stock broke above its previous high near $600.00, converting this level to support. But given its present overbought condition, it may move sideways for awhile before resuming its journey towards its next target around $630.00. If it ranges, the support at $600.00 should keep it from falling. A break below, however, could send it back to the bottom of the gap. Nonetheless, the momentum in a breakaway gap is usually strong that the stock will most likely continue its move north.

More on LaidTrades.com …

Expert explains how to choose the best forex trading system when you are a novice. Beginners should start with long-term forex trading system and keep learning not only the system by itself, but also the trading fundamentals. Doing otherwise would be like learning about cars and driving with no interest in road conditions or other driver’s behavior.

There is one very important issue about finding really good forex trading system. As the majority of e-books and training approaches this subject in a very mechanical way, the result of trading is a usually severe loss.

“Very few materials put emphasis on comprehensive mastering of a particular forex trading system, practically none analyzes more than 50 trades. Good forex trading book should analyze over 50 trades, ideally close to 100 in different market conditions. In effect traders try to use a forex trading system they don’t understand. In addition, beginners are being told that their losses are caused by emotions. It is not the whole truth.” says Dariusz Swierk, Ph.D., the author of groundbreaking book “Conversations With Forex Market Masters” from www.ForexInstitute.eu.

“Having examined dozens of forex trading systems, we found several that are suitable for beginners. One of them really stands out, and I would recommend it.”

Read more in a new report issued by ForexInstitute:

“Forex trading millionaires – how to repeat their success fast? Conclusions from the study.”

Inside: almost illegal ways to achieve record trading results, how did some beginning traders get to enormous profits, what types of forex trading systems bring traders best profits?

You will get the report on www.ForexInstitute.eu. Number of copies is limited.

By James McKee

The AUD is now twenty percent overvalued against the dollar, many speculate that this has to do with the rising value of gold and the fact that Australia is the world’s third largest producer of it. This twenty percent over value is something that will correct itself in the near future and is therefore definitely something to keep your eye on. This is not an overnight development but definitely something, which will come up in the near future in one way or another. Does this mean I’m telling you to bet against the Australian dollar in the short term? Certainly not, you really need to consider every angle on this pair and for now I would still bet against the dollar.

This would be a good time to utilize the tools of the trade by maintaining whatever system you currently have in place alongside quality software such as MT4. Currency values may change in a heartbeat but you don’t necessarily need to maintain that pace, instead watch this pair for trends. The lesson here is to be cautious with your money and don’t place all your eggs in one basket on this one without testing the waters, thoroughly.

I’ve been noticing a good deal of economic upheaval in Europe, America and Japan, any currency paired with the currency of these countries (from the majors anyway) is going to be showing some healthy pip spreads over the next couple weeks (I’m guessing 50 pips or so). Make sure to use every tool at your disposal to keep a handle on what’s going on in the Forex Currency Market and please whatever you do don’t jump the gun, this is not a time to be a cowboy. For all the new traders out there this is definitely a time when you need to develop your “sixth sense” when it comes to Forex and not just rely on charts and data alone. Sometimes all you are going to have is your intuition and if your trade does not perform the way you had hoped just remember that the market is not going anywhere.

That being said it is truly crucial that those of you out there who have not already learned the basics of Forex need to do so immediately. My earlier articles outline the basics but there is so much more to it. If this is truly your chosen career YOU need to make the effort and read until your eyes hurt, and then read some more. If nothing else always remember that there is a whole community of people on Forex forums and message boards who are there to give you a helping hand. Happy trading.

About the Author

Author is a Forex trader and financial analyst residing in Denver, Colorado with 5 years of experience in trading with an attitude of cooperation through education. It is vital to remain in the loop where new technologies are concerned, make sure to stay up to date on the latest developments and always make the most of your ability to utilize the best forex exchange rates as much as possible when trading!

By James McKee

Yes it is true, the US Dollar has not exactly been the most stable currency for more than a decade now, but as new government regulations take shape in America the US dollar is fast becoming an even greater symbol of instability. There is a lot of political debate about how to fix the ailing economy in the United States and around the world but as time goes on the two overwhelming schools of thought seem to be that of extreme regulation and aid on one hand and on the other hand you have those who believe that the answer is to let the market correct itself. Regardless of which political ideology you subscribe to one cannot deny the fact that the US Dollar has been and will be in trouble for some time to come.

Among these regulations are those which attempt to place restrictions and regulations upon banks which operate within the housing market. These restrictions are due to the fact that government officials believe that contracts signed by banks are actually signed in bulk when it comes to the housing market, this in turn means that these contracts are not reviewed and are in fact irresponsible to issue as a lending institution. Due to new regulations sales of foreclosed houses has been put on hold indefinitely via a moratorium for Bank Of America foreclosures.

It’s not clear yet whether or not this moratorium will be emulated at other banks, but that is the current consensus of many financial analysts. This could spell out immense trouble for the US currency because if banks are forced to sit on large assets such as homes there will definitely be adverse consequences. This is one of those times I am going to sit back and examine the behaviors of other banks with regard to how they manage their foreclosed properties before I apply current events to my analysis, but it is most definitely something I will be keeping an eye on.

I do not presume to know everything about Forex or even investments in general but I would like to think I can spot a change in the market. My previous articles in regard to spotting current events applicable to the market (such as political tension between Japan and China) are on par with this article. As with anything else take what I say with a grain of salt and do your own investigation before calling your forex broker. Happy Trading!

About the Author

Author is a Forex trader and financial analyst residing in Denver, Colorado with 5 years of experience in trading with an attitude of cooperation through education. It is vital to remain in the loop where new technologies are concerned, make sure to stay up to date on the latest developments and always look for the best forex broker possible when trading!

Market News Video

The dollar is under pressure amid bets that the US Federal Reserve will institute monetary policy to help stimulate the economy. The price of gold continues to rise.

By Owen Trimball – Bull call spreads are option trading strategies involving the simultaneous purchase of call options at a lower strike price and shorting (selling) the same amount of call options at a higher strike price. Both long and short positions will have the same expiry date.

They are called “bull call spreads” because you enter them on the understanding that the outlook for the underlying financial instrument is bullish and you’re creating an overall debit position in your account using call options.

Being a vertical debit spread, the bull call spread will enable you to enter a position much cheaper than simply going long the call options, as well as allowing greater flexibility if the underlying share price should not proceed in the anticipated direction.

To place a bull call spread, do the following:

1. Search the market or analyze your watchlist for a stock you expect to be modestly bullish. Look at a chart showing trends and price action for at least the past year, to determine where the stock is in its overall price cycle.

2. Ensure there are options available for this stock and that there is sufficient liquidity to enter and exit the trade easily, without being at the mercy of market makers.

3. Bull call spreads are most effective for options with at least 90 days to expiry, so check option premiums for strike prices with at that timeframe. You may even wish to consider using LEAPS options for this purpose.

4. Check the implied volatility in the option prices you are considering, to see if any are overpriced or underpriced. Overpriced options for the short leg of the trade give you an advantage, but they are not essential to a successful trade. Beware of overpriced premiums for the long (bought) leg of the spread.

5. Decide which lower and higher strike prices are most appropriate for your spread. You should consider at least 10 percent of the current market value of the share price as a basis for your strike price difference.

6. Consider the following before deciding which spread is best:

(i) Limited Risk – the net debit to place the trade is your maximum loss (ii) Limited Reward – the difference in strike prices minus the net debit to place the trade. (iii) Breakeven – the net debit plus the lower strike price (iv) Return on Investment – the maximum potential reward divided by the amount risked.

7. Create a risk graph to visually represent the trade’s potential. You can use freely available downloadable software such as from Peter Hoadley for this purpose.

8. Make a note in your trading journal of the details of the trade and the reasons why you chose it.

9. Plan your exit strategy before placing the trade. For example, you may consider exiting half the trade once its overall value has doubled, leaving the remainder as a risk-free trade, which you could let run without stress for greater profit potential. Or you may simply wish to set a target such as 80 percent profit for your exit. Option prices work in such a way that the last 20 percent usually takes much longer to realize in a verticial debit spread, so your money would be better used elsewhere.

10. Contact your broker or go online and place your trade. Make sure you do it as a limit order to minimize the cost of the trade.

11. Watch the market in the ensuing days. If it falls below the breakeven but you believe it will rise again, you may wish to consider waiting till the (higher) short position is very cheap and closing it out. This will leave your long position still current – and even if the stock only returns to its original price before expiry date, will usually make you a profit. This strategy is best suited for a stock that has already made a sustained downwards move before you place the trade. Otherwise, go to the next step.

12. Decide when to exit based on what happens to the underlying stock.

(i) If it rises above the short strike price – the maximum profit becomes available and more so with the passing of time as option theta (time decay) goes to work.

(ii) If it rises above the breakeven but not as high as the short strike price – close out the entire position for some profit.

(iii) If it remains below the breakeven but above the long strike price – there may still be a small profit in it, if time value or implied volatility works in your favour. Decide whether to close the trade or risk waiting until expiry date and then sell the long call while letting the short call expire worthless.

(iv) If the underlying stock falls below the long call strike price – consider the strategy in point 11, or close the entire position if you think the stock won’t recover.

About the Author

Visit Owen’s site to understand the advantages of Option Trading and how strategies like Bull Call Spreads can provide an income stream for the rest of your life.

By Warren Seah

Answer these 5 questions and you have the core components of a trading system. You are on the way to having your edge:

1. Which currency pair and at what time frame(Asian/UK/US) to trade? 2. Your Position Sizing and how much risk per trade? 3. How does the system determines when to buy or sell? 4. When to get out of a losing trade? 5. When to get out of a winning trade?

1. Which currency pair to trade and at which time-frame?

One of the first decisions any trader makes is what to trade. It will depend on your personality and preference.

Majors (with USD) Trend more than ranging conditions

Commodity Pairs If you want to participate in trading gold and oil, you can participate in market movements by trading on AUD/USD or USD/CAD. The Aussie has a positive correlation with gold and the loonie has a positive correlation with Oil.

Cross Pair (Does not involve USD) -Ranged bound more than trending

Trading the above currency pairs provide you with high liquidity and instant execution. You will be able to sell or buy at your determined price.

2. Your position size and how much risk per trade?

Position sizing is also called money management. It is the critical component to trading success as Gibbon Burke of MarketHistory.com Observes:

“Money management is like sex: Everyone does it, one way or another, but not many like to talk about it and some do it better than the others.”

The essence of managing your risk is making a decision about how much to buy or sell whenever a trading signal is generated. If you are using metatrader 4, this is the figures you enter into the volume contract.

1.00 (1 standard contract ie 100 000 of base currency, 1 pip = $10 USD) 0.10 ( 1 mini contract ie 10 000 of base currency, 1 pip = $1 USD) 0.01 ( 1 micro contract ie 1 000 of base currency, 1pip = $0.10 USD)

FXEaReview believes that for beginning traders, 2% risk per trade is the maximum risk the trader should undertake in any of his trades. A maximum of 6% risk per month should also applies. How do you calculate how much to buy/sell?

total amount equity X %risk per trade / No of pips from entry price to stop loss / 10 = You will get the volume (formula only applies for majority of MT4 brokers)

Using this formula, you ensure that you are risking 2% in any of the trades.

3. When do you buy or sell?

You buy or sell when certain conditions are met. It depends on how you trade in the market. A trader can use fundamental analysis or technical analysis to trade the market. The common method between the 2 analysis is that the trader will establish his personal trading philosophy. Based on the philosophy, he defined the conditions he wants to trade. When all the conditions are met, a buy or sell signal will be generated.

4. When do you get out of a losing trade?

The time to think most clearly about why and when to exit is before getting in. In any trading system, the most important thing is to preserve your capital.

Before you ever start trading, you already know you will have losses. You also know that small losses do not go on forever with a profitable system. Favourable conditions will eventually emerge at the time you are about ready to throw in the towel. Ways of exiting a losing trade includes:

Time Stop – Trade exited if it did not move in the favourable direction after x number of days ( period can be hrs )

Equity Stop – Trade exited if it reached X% of your account equity

Volatility Stop – Trade exited if price move X times of the Average True Range (10)

5. When do you get out of a winning trade?

Exiting a winning trade can be a challenge since you have to be comfortable letting the profits run as far as it can and then begin to decline before considering an exit with profits. Different systems will use different ways to exit a winning trades. For scalping and ranging systems, they will usually employed a fixed take profit level. Trend following systems will use a trailing stop. That will mean trailing the price by moving average or the 2 bar high/low.

If you answered the 5 questions above, you have mechanised a system for your personal use. These rules will serve you very well when you are in the heat of the trading battle, your rules must be clear, precise and established in advanced. It also helps to be n the defensive:

“We approach markets backwards. The first thing we ask is not what can we make, but how much can we lose. We play a defensive game.” – Larry Hite

About the Author

Warren Seah

Warren examines commercial trading systems and has researched and analysed systems to uncover systems which bring in consistent profits.

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