21st January 2012

The Trading platform in the Forex Market

The tool used to buy and sell the foreign exchange is known as the trading platform, the Forex platform or sometimes the trading station and investors who are involved in Forex trading will provide their own trading hub.  These trading hubs use highly sophisticated pieces of software, which can provide deep levels of Forex trading analysis.  In addition, the software is also capable of gathering and collating data into comprehensive reports.  Forex platforms or trading stations have a real time ticker line, which is constantly updated and provides up to date information on currency rates. Credit Worthiness This is a concept that is important when discussing the Forex trading platform.  The higher level the trader is, the more information they have access to and their prices can be more competitive.  Currency trade software is extremely beneficial, because it allows traders to view real time profit and losses they have made in their transactions.  This is not only useful when tracking progress and to assess how well or otherwise trades are going, but it can also be an indicator of how well the trader is performing in the wider foreign exchange market.

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14th January 2012

A Beginner’s Introduction to Forex

Forex is also known as the foreign exchange or currency market, it involves the trade of one currency for another.  For example, traders in the Forex market may exchange Pounds for Dollars or Euros for Japanese Yen, with an aim to making profit from fluctuating exchange rates.  It has become one of the fastest-growing global markets; many people are entering it for the first time with a view to increasing the value of their savings.

There are two types of people/corporations who may be involved in the foreign exchange market.  Firstly, some participants aim to just trade their own currency for another, for example to pay wages in other countries.  Secondly, some participants may trade simply with a view to making a profit.  They will speculate on exchange rates using past market data and intuition, aiming to buy and sell the currency at the optimum time in order to maximise their profit.

Forex is one of the largest global markets in the world.  It is available for trade 24 hours a day, via the internet.  Some traders may trade using a broker, and some chose to trade individually.  Whichever method is used, they will need a trading Platform, such as CitiFX Pro Reviews of various trading platforms can be helpful when deciding which to choose.

Forex is extremely flexible; traders are able to invest as much or as little as they like.  It is also extremely fast paced – currencies may be bought and sold within a matter of minutes.  It is therefore important that traders have mobile, high-speed internet access so that they are able to buy and sell immediately.

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10th January 2012

Following Forex News

Many successful forex investors use market events, news, and movements to direct their trading activity.  Keeping up with forex news can help traders anticipate potential market risks and fluctuations in time to adjust their investing strategies.  Forex news websites and forums are resources that investors can use to monitor the market.

Why Keep up With Forex News

The forex, or foreign exchange market, is subject to extreme fluctuations.  Since the market is driven by the currency rates of multiple countries, a sudden event such as an international conflict, a bad economic report, or a political upheaval can have a significant impact on the value of a national currency.  Traders who monitor forex news throughout the day may be able to make adjustments in time to avoid increased risk or losses.

Forex Forums

A common way for traders to keep up with forex news is on a forex forum such as Forex Factory.  These forums provide information about new events, blog posts that detail market analyses, and advice from qualified financial professionals.  Before taking information from an online forex forum, it is best to carefully examine the source.

Forex News Websites

Forex news websites offer a wealth of financial information for traders who want to keep an eye on market happenings.  These websites offer real-time international currency market news, technical analysis, and assistance for new traders.  Some sites also provide detailed forex walkthroughs for investors, for an additional fee.

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2nd January 2012

Getting Started in Forex Currency Trading

New investors who are interested in forex currency trading may have several questions about the process of executing a successful trade.  Before jumping into trading, it is wise for novice traders to learn the basics to get started in forex trading.

Do Plenty of Research

One of the best things new forex market investors can do is to find out as much as they can about how the foreign exchange market operates.  Understanding the day-to-day operations of the currency market can help investors decide the type of investing strategy they want to pursue, how much risk they are willing to carry, and which national currencies are the most reliable.  Since forex trading carries a significantly higher level of risk than traditional investing, traders may wish to get the assistance of a qualified forex professional.

Decide Whether to Hire a Broker

While many forex investors are comfortable performing their own trades, others may benefit from the experience and expertise of a forex broker.  These financial professionals can advise new traders about how to select an investing strategy, how to perform their first trades, and how to read investing charts.  Brokers can also help investors to learn how to evaluate external factors that may have a bearing on currency rate fluctuations.

Begin With a Demo Account

Demo accounts are like test accounts for forex investing.  Many financial institutions and brokers offer demo accounts that include 30-day trials of trading software.  During the trial period, investors can use these demo accounts to perform real-time trades and learn the ropes of the software without risking real money.  Once traders become comfortable with investing through the demo account, they may decide to open a real account and begin executing trades with their own funds.

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20th December 2011

Regulating Forex

When choosing a forex broker, it makes sense to get as much sound advice as possible.  In the United Kingdom, the Financial Services Authority (FSA) is the regulator for all companies providing financial services. It is an independent body with the power to set standards and to take action against any companies that fail to meet these requirements.  When looking for a broker, therefore, check their standing with the FSA.  After all, the regulations are in place as a way of ensuring a safe trading environment.

Another sensible step to take is to practise forex trading in a virtual environment before venturing into the real forex market.  This can be done via a free trial account, also known as a demo account.  The demo simulates the real marketplace and allows traders to invest at no risk in order to see how well their strategy works. Brokers will offer one or more forex platforms, and potential investors should acquaint themselves with exactly how the platform works and test out their own strategies on it to gauge its performance.

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8th December 2011

What is Forex Factory?

As a forex trader, you will already know that obtaining the latest forex news, trends and strategies can mean the difference between breaking even and making a profit, but where do you get your forex information?  One place that many forex traders are turning to is Forex Factory. 

In essence, Forex Factory is a one-stop shop for forex market investors.  It is an online forum that provides a plethora of information, ranging from trader opinions, details of forex systems, currency pairs and invaluable feedback.  It is a place where forex traders can go to interact, trade strategy ideas and discuss current forex trends.

Just as with any online forum, Forex Factory has rules relating to where you can share advice and whom you can get it from.  However, once you find a reputable connection on the forex forum, it has plenty of benefits, which include:

•    Reduction in confusion about long-term and short-term market direction.
•    Trading information and ideas about the forex market, found in books, research and seminars.
•    Learn how others read forex charts, interpret forex signals and use online forex systems.
•    Learn how other forex traders think and why they make some of the moves they do.
•    Enhance your overall knowledge about the forex market.

Remember, the forex market is often limited in the amount of interaction you can have with other people.  Forex Factory provides an ideal platform to connect with other traders, experts and investors, to make the most of your forex trading experience.  Many newcomers to the market also visit forex forums, in order to gain a little knowledge before they actually begin trading.

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1st December 2011

Forex Day Trading – what is it?

Forex

Forex, or the foreign currency exchange market, is traditionally associated with large financial institutions, such as central banks, commercial banks, hedge funds and multinational corporations.  It is an over the counter (OTC) market, which means it does not have a central exchange.  Trades are instead executed directly between the two trading parties.  Traditionally, this involved professionals or their brokers.

Nowadays, forex has become increasingly attractive to private individuals and access is enabled by the internet.  In principle, all you need to start trading forex is a personal computer, an internet connection and the services of a personal forex broker.

Forex Day Trading

Forex day trading involves opening and closing positions on the same currency trading day.  The main advantage of this form of trading is that it allows you to concentrate on one or more trades in a relatively short time span.  Also, as forex is a 24-hour market, the trading day can start at any time; you are not confined to the 24-hour clock as it applies in your geographical location.  This makes it an attractive option for traders who have other commitments during the day or night.

Risk Management

Although forex day trading may be limited in terms of time, it does not mean that potential profits or losses are similarly restricted.  Forex trends can be sudden and sharp, even over a matter of minutes, especially when you consider the value of the trading position after leverage.  Guarding against losses can be achieved by constantly monitoring open positions and by closing losing positions as soon as soon as they are recognised.

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20th November 2011

The Origins of Forex

If you don’t know the origins of the forex market don’t feel bad; even some of the most experienced forex traders don’t know any of the history of the market.  However, knowing the history of any market tends to make for a more efficient and educated investor.

The forex market, also known as the foreign exchange market, was established in 1971.  It is a cash-bank market and was formed when the United States went off the gold standard, which was adopted in the early 1930s.  The U.S. abandoned the gold standard after the 1929 stock market crash and the British Pound (GBP) became stronger than the American dollar (USD).

Before the forex market came about, there were other times when paper money (like the USD) could be traded for gold.  Known as the Classical Gold Standard, this period lasted throughout much of the 19th century and ended around the onset of World War I.  The gold standard simply means that the value of the local currency is set based on the value of gold.

The gold standard period allowed unrestricted capital mobility.  It also contributed to the stability of the traded currency pairs.  During this time, any countries that participated were required to abide by various rules and restrictions.

Under the gold standard model, the central banks would back their paper money with gold.  In theory, the currencies backed in this manner would maintain a certain level of stability and not fall prey to inflation.  As we all know, this hasn’t always been the case.  As the years went by, investors and financial experts developed the forex market as we know it today.

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16th November 2011

Why Forex Rates Fluctuate

Currency Rate Changes

The currency rates in the foreign exchange market change daily, and can often change several times during the day.  There are several reasons for the fluctuations, but professional and private forex traders make their profits by basing their trades around changes in currency valuations.  Since the forex market is a 24-hour global market, currency rates are subject to frequent changes, according to the economic, political, and social conditions in each country that participates in the market. 

Market Conditions

Conditions within the forex market are one factor that may affect currency rates.  If one country’s currency rises or declines sharply during trading, this can influence the relative value of other currencies.  As an example, if the Japanese Yen grows in value overnight due to the strength of the Asian markets, the value of Western currencies such as the United States Dollar (USD) and the British Pound (GBP) may decline simultaneously.  Conversely, if the British Pound’s value rises suddenly, this may cause the value of other currencies to decrease. 

Economic Indicators

A nation’s economic outlook also has a strong impact on the value of its currency.  The country’s gross domestic product, the national unemployment rate, the amount of debt a country owes to other nations and the projected future for the economy all influence the worth of the national currency. 

National Stability

Countries that are experiencing strong political or social upheavals generally have weak currency values during these times of change.  Areas of the world where the government or the financial industry is in turmoil may be considered high-risk environments in which forex traders may not want to invest.  When these events happen, traders who are holding currencies in these countries may sell their shares quickly, causing the value of the currency to go down. 

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13th November 2011

Analysing the Forex Market

When analysing the Forex market, there are two main options – traders can choose between using a technique known as fundamental analysis or the alternative option, technical analysis.

Fundamental Analysis

Fundamental analysis involves the exploration and investigation of multifaceted aspects of global culture. For example, the focus here is on the political, economic and social forces that have an impact on supply and demand worldwide. Large-scale and general economic indicators are used to make assumptions and judgements, leading to trading decisions based on the fullest possible available information. These include data on unemployment, interest rates, the rates of economic growth and inflation. Usually, it is possible to access much of this information for free. For example, CitiFX reviews outline the excellent quality of Forex news and information available via Citigroup, which is behind the CitiFX Pro trading platform.

In terms of how this information is interpreted, the short answer is that this is highly subjective – individual traders will consider the different types of data in different ways and weight their importance and relevance accordingly.

Technical Analysis

Traders who engage in technical analysis study the movement of currency prices and often use historical data to try to predict future outcomes. The theory at work here is that the price of a currency already reflects the relevant and available market data and a simple study of price movements will enable traders to make informed and sound trading decisions.

This is where charts become important tools of the trade, as they are employed to establish patterns and identify as a route to securing opportunities for profit. Technical analysts search the Forex markets for recognisable trends and advocate the identification of these trends as early as possible as the route to success.

Which is Best?

There is no right answer. Technical Analysis is generally preferred by most traders because it involves following trends and charts and is capable of covering a good number of currency pairs, as opposed to Fundamental Analysis which can mean wading through a considerable amount of market data that is relevant to a lesser number of currency pairs.

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