Posts Tagged ‘day trading’
Wednesday, April 29th, 2009
by Hass67
The choice of the right currency pair in forex trading is very important. Many traders make the mistake of shaping opinion around only one currency, ignoring the other currency in the pair.
USD is the most important currency in the world economy. USD is heavily traded against other currencies. Many trader trade currency pairs like USD/EUR, USD/GBP, USD/JPY, USD/CHF etc. Many make the mistake of only studying USD while ignoring the other currency in the pair.
In the forex market, this neglect of the foreign economic conditions can greatly hinder the profitability of the trade. It also increases the odds of a loss. You need to understand a little bit of fundamental analysis when you make your choice of the currency pair.
The chances of failure are more when you trade against a strong economy. The weak currency in the pair could tank badly while the strong currency in the pair may become stronger than what you calculated.
While choosing a currency pair to trade, one should study the economies of both the currencies. Finding the strong economy/weak economy pairing is the best strategy to use when maximizing returns.
For example, when FED announced its intention of containing inflation in March 22, 2005 FOMC meeting; most of the other currencies tanked against the dollar. A string of other positive economic data also reinforced the dollar.
When the initial market reaction was over, GBP rebounded and recovered its lost strength, due to the consistent economic growth shown by the British economy at that time. However, JPY kept on depreciating due to the week performance of the Japanese economy during that time. Dollar almost gained more than 300 pips in two weeks against the Yen after March 22, 2005.
Therefore, USD strength had a much higher impact on the struggling Yen as compared to the consistently strong GBP.
When you choose a currency pair, study the economies of both the currencies in the pair. You also need to examine the behavior of various crosses. In nutshell, the best choice is always choose the strong economy/weak economy currencies.
About the Author:
Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading; stocks and forex. Read about Trend
Forex System. Best
Forex Signal Service. Download
Forex Scalping Cheat Sheets!
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Tuesday, April 28th, 2009
by Hass67
There are two types of forex traders. One type of traders depends on fundamental analysis in trading forex. The second type of traders depends on technical analysis in trading forex. Whether you are a fundamental trader or a technical trader, you should not underestimate the importance of economic data in shaping trading strategies.
US Dollar is the most important currency in the global economy. More than 90% of currency trades are done in US Dollar. In most of the currency trades, US Dollar is either the base currency or the counter currency.
Since majority of the currency trades involve USD, you as a forex trader will also most probably trade USD most of the time. Release of certain economic data has significant and lasting impact on currencies like USD.
With experience, you will understand that currency markets reaction to the release of different economic data with time also changes. A few years back, US GDP figures used to be important for USD but they dont have much impact now.
EUR/USD is the most liquid pair in the forex market and is heavily traded. The release of Nonfarm Payrolls (NFP) data on the first Friday of each month has become important in recent years. These figures makes EUR/USD and other pairs involving US Dollar highly volatile for some time until the markets digest the importance of these figures.
Similarly, a few years back the release of US housing sales number every month was not important for the currency markets. But it has become very significant for USD in the recent years. Currency markets used to give more importance to US Trade Balance in the past but they dont react to these figures much now.
If you are a range trader who likes to scalp for a few pips every trade, you should avoid trading on the day NFP data is released. Release of NFP figures makes the markets jittery and highly volatile.
However, as a breakout trader, understanding of which economic data is expected to be released can help you in your trading. You should plan your trades in accordance with the importance of the economic data to be released.
In short, knowing what economic indicators move the forex markets most is very important for you as a trader. It is important for you to understand which data the market deems important at any point in time.
You should also know which data causes knee jerk reaction in the markets and which pieces of data will have lasting reaction in the forex markets.
Tags: business;finance, c, commerce, credit, Currency trading, day trading, e, entrepreneurs, f, forex, home business, investment, l, loans, mutual funds, p, personal finance, real estate, retirement, Small Business, stock market, wealth building, work at home
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Monday, April 27th, 2009
by Hass67
Many forex traders depend on either fundamental analysis or technical analysis in their trading. The savvier among them try to combine both in making predictions about the direction a particular currency is going to follow in the future.
Fundamental analysis uses study of economic forces whether they are financial or socio political that affect currency markets in the long run. Technical analysis also know as Charting studies the past price action charts to make predictions about the future price action in forex markets.
There is something known as, The January Effect. Many stock traders must be familiar with this term. This effect is based on a simple observation that during the last day of December and the fifth trading day in January stock prices tend to rally.
The explanation of the January Effect is simple. During the last few days of the year, many investors are concerned about their tax returns. They try to realize capital gains or losses to file their tax returns. Many corporations also use the end of the year to face lift their balance sheets favorably at the end of the year.
Seasonality is not peculiar to the stock markets. In fact forex markets also tend to exhibit strong seasonal effects. Seasonality can be defined as a pattern that occurs at a particular period of the year.
The January Effect also takes place in forex markets due to the same reasons. Many investors who are adjusting their stock positions try to convert their local currencies into dollars at that time.
However, the January Effect is more pronounced in certain currency pairs as compared to others. For example, dollar shows pronounced January Effect against some currencies but not other. The Summer Effect also takes place when dollar shows a summer seasonality when it tends to rise in USD/JPY and USD/CAD in the beginning of July and give back its gains by August.
There are other seasonal patterns that have been studied in other parts of the year. Now, it does not mean that these seasonal effects take place exactly the same way every year.
Seasonality only shows that there are strong probabilities that during a particular period of the year, the chances of a certain currency pair going up or down are more pronounced.
In some years, the effect may be pronounced. In others, not so pronounces. As a forex trader, you should keep these seasonal effects at the back of your minds while trading during that time of the years. You need to just understand these seasonal patterns.
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Sunday, April 26th, 2009
by Hass67
Carry trading is done by forex traders to take benefit of the basic economic fact that money will flow where it will get high returns. This constant flow of capital between the different markets is what makes carry trading possible.
Carry trading is quite popular among professional forex traders. Hedge funds and investment banks also do leveraged carry trading to make profits. You as a retail forex trader can also benefit from carry trading.
Carry trading strategy entails going long or buying a high yielding currency and simultaneously going short or selling a low yielding currency. Carry trading tries to take advantage of the interest rate differential between two currencies.
Lets use a simple example to make it clearer: lets assume, New Zealand dollar is offering an interest rate of 4.75% whereas the Japanese yen is offering an interest rate of 0.25%.
An investor will want to benefit from this interest rate differential. He/she will buy New Zealand dollars (NZD) and sells Japanese Yens (JPY). He/she can earn a profit of 4.75-0.25=4.5% so long NZD/JPY exchange rate does not change. If the investor can handle leverage and uses a leverage of 20:1, this 4.5% return will be magnified into 90%.
The good thing is if the currency pair NZD/JPY appreciates, the investor can get a capital appreciation as well as a yield on the investment. Most of the time, the currency pair will tend to appreciate as many investors will jump on the bandwagon when they see a good carry trading opportunity. The more investors carry trade, the more the currency pair appreciates.
It depends a lot on the mood of the investors as a group. If investors as a group have low risk aversion, carry trading will be profitable. But if the investors as a group suddenly develops high risk aversion, carry trading will become unprofitable.
However, if the low interest currency appreciates to some extent for different reasons, carry trade will become unprofitable. In such a scenario, the more the low interest currency appreciates, the more unprofitable carry trading that currency pair will become.
So it essential when you determine a currency pair for carry trading, you also identify the current trend of the currency pair to see whether it is moving in the right direction.
MACD (moving average convergence divergence) indicator can help you in this regard. You should enter the trade when MACD crosses the zero line from below. You should exit the trade when it crosses the zero line from above.
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Friday, April 24th, 2009
by Hass67
Forex trading allows you to have the best of both worlds. When stock prices go up, you can benefit from forex trading. When stock prices go down, you can profit from forex trading.
Inflation goes up, you can profit from forex trading. Inflation goes down, you can profit from forex trading. Similarly, interest rates can go up or down, you will profit from forex trading.
You have to pay a capital gain tax for any investment in financial markets. Capital gains will be considered short term if it is less than one year. Short term capital gains are taxed at your current tax rate.
And in case, you hold the security for more than one year before you take profit, you will have to pay long term capital gain tax, taxed at a rate of 15% only.
But if you invest in forex markets, 60% of your profits will be taxed as long term capital gains and only 40% will be taxed as short term capital gains whether you hold a currency for one minute, one hour, and one month or more.
Lets use an example to make it clear. Suppose you buy stocks worth $10,000 and forex worth $10,000 simultaneously. Further suppose youre in 33% tax bracket. Lets further suppose that you make $10,000 profit in stock and $10,000 in forex each in six month.
Since, you are in 33% tax bracket and you took profit within six months on stocks, your profits will be taxed as short term capital gain. That means you will have to pay $3,300 as tax and your profit after taxes will be only $6,700.
In case of forex, even though you took profit within six months, 60% of your profit will be treated as long term capital gain and 40% will be treated as short term capital gains. That means 60% of $10,000 will be taxed at only 15%. This is (0.6) (10,000) (0.15) =$900.
40% of your profits will be taxed as short term capital gains at your current tax rate of 33%. This is (0.4) (10,000) (0.33) = $1,320.
The total tax that you pay on forex investment will be $900+$1,320=$2,220. Compare this with $3,300 that you paid on stock investments.
Tax savings on forex investment like that can add up fast. Profits can accumulate quickly by investing in the Forex market within your IRA or other tax-deferred retirement account.
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Friday, April 24th, 2009
by Forex Trading
We all want to make money from trading, and we all want to make millions from the stock market of the forex market. However it is a well know fact that over 90% of traders will in fact go broke and not become successful. So if we are to look at who does become successful there is a group of people that tend to become more successful than others.
There is a group of individuals who tend to make the better traders and their non mathematicians or College educated, they have a skill that anyone can actually learn and their very successful. The group of individuals I am referring to are…
Professional card players who are great at Blackjack and poker and the exact same skills you need in these games are the ones you need in Forex before we explain why lets dispel one of the greatest myths about Forex Trading:
One reason for this is if you watch all great card players, they will all have one common trait, which is patience. They also realize that they cannot win every hand, and as traders we cannot win every trade. If we understand this we are increasing our chances of success as a trader.
We also must realize there is more trading days to come, as there is more cards to be dealt. So if we miss a trade, don’t trade for trades sake.
Forex Trading is Complicated
To enjoy Forex trading achiever does not take you have a college education or have a complex Forex trading strategy or knowledge of maths and the reason is simple – Forex trading is simple and if you get a system to Complicated it will break in the ever changing brutal world of Forex Trading. Also as humans we like to complicate things and we believe that if they are complicated, then we are smarter therefore it makes us feel better. Quiet often though simple things will make us a lot of money. This can be also looked at with trading strategies, keep them simple.
Mathematics doesn’t aid, because markets don’t move to certainties, you are only trading with odds and probabilities and that’s why card players are so great at Forex trading.
Here are the reasons card players make such great Forex traders.
1. They are Patient
They wait for the right hand and only play when the odds are in their favour. Contrast this with the bulk of Forex traders who are always in the market or trying losing strategies like scalping. In Forex Trading you don’t get rewarded for trading often, you get rewarded for being right.
2. The Ability to Fold
A fabulous card player will pass hands by when the betting odds are non in his favour and he is also happy to fold when in a hand, if he doesn’t think he will win. He keeps his losses tight and he doesn’t mind dealing them, as he knows his time will follow.
Most Forex traders on the opposite hand simply can’t do this and run losses or get disappointed, as their emotions get involved.
3. Courage at the right Time
The fabulous card player knows when a great hand comes up, he needs to maximize his potential and will milk as much money from it as he can. They are prepared to bet huge amounts and hold on with discipline and win.
Contrast this with the average Forex trader who banks his profit early or bets 2% and thinks he is going to make a lot of money. In Forex trading, you need to hold and profit from long term trends and have enough riding on them to make a great profit.
4. discipline discipline discipline!
You have heard about how serious it is in Forex Trading and it is to take loss after loss as the market hurts your ego and makes you look stupid is hard. Most traders cant do – Professional card players know it’s the key to success and are mentally prepared to do this and know they will hit a home run.
Keep it Simple.
Forex trading is simple and always has been and the huge difference between winners and losers is the correct to keep losses small and bet big amounts when the time is right.
That’s why card players often become multimillionaire traders – there not interested in ego, being clever or Complex – but being able to make money and that’s why this group enjoy Forex trading success.
Now that we have the patience and are ready to trade we need to find the Best Forex Broker which broker has most of the aces? Well visit us at CFD FX Report and we can show you who we recommend. Or you can email us at support@cfdfxreport.com
Happy Trading
About the Author:
CFD FX REPORT is the forex report and cfd report that traders need. We help our members with stock market education, finding a forex broker, finding a cfd broker. If your not using the best your costing yourself money!
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Wednesday, April 22nd, 2009
by Steve Halladay
Making money with a small business has become a lot easier now that almost everyone has internet access. There’s a lot of different choices to choose from. Many people have set up online stores or begun selling items on ebay. However, one of the best business doesn’t involve setting up any type of store. If you’re serious about earning money online, take a close look at forex trading.
Forex trading means that you engage in buying and selling currency pairs so as to make a profit. If you want to make money doing so, you’ll need to be able to predict how one particular currency in a currency pair is going to do against the other. This isn’t easy to do if you’re new to it, but it can be quite easy to learn.
One way to do this is to read up on currency trading, which can take a lot of time. Of course, you should learn what you can, but you should do so by spending your time most effectively. Following are two reasons why currencies might go up or down in value.
First, changes in the interest rates in a country will affect that country’s currency. As an example, suppose that the USA raises interest rates. This makes US bonds more attractive to investors all over the world. This causes extra demand for US dollars which results in the dollar rising in value.
Another example of a reason for a currency’s change in value is that a country’s key exports can rise or fall in value. One example of that is Canada. Canada is a major oil exporter. When oil prices go up, the Canadian dollar rises in value because of Canada’s oil exporting capabilities. This was true recently as oil prices rose markedly. Now, oil prices are going down, so that the Canadian dollar, too, is also going down in value when compared to some other currencies.
These are just two examples as to why currencies can change in value. This is a topic that can be quite complex.
It’s fortunate that you don’t actually have to know all the intricacies of the market before you can profit by trading. Those who have been professional traders have developed many Forex trading software programs. These programs will determine trends and signals so that you can find profitable trades that will help you make money. You need an Internet connection, and you need to install this software on your computer. The computer then takes real-time data and helps you generate trades with it.
These programs are perfect for beginners because it allows them to make money while they also learn more about currency trading. As you become more knowledgable, you will begin to make trades based both on what the software spots and as well your own intuition.
When you begin to scope out these programs, be cautious about the high-priced ones. Many of these programs ask for literally thousands of dollars. You don’t need to pay that kind of money for good quality software. Instead, look for software that you can get for about $100. This will give you a reliable, proven program that will help you make money in Forex trading.
The company that sells the software should also offer a moneyback guarantee. If the program is a good one and it really works, they’ll be happy to back it up with a moneyback guarantee. This also helps give you peace of mind and some additional security that the program you’re getting is a good one.
Even if you haven’t considered forex trading in the past, it’s a worthwhile business to look into. It’s easy to start and you can quickly start generating good money with it. And at the risk of sounding like a geek – I also think it’s a lot of fun! All the best!
Tags: Currency trading, day trading, finance, forex trading, home business, Homebased Business, internet business, make money, make money from home, online business, stock trading
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Monday, April 20th, 2009
by Andrew Michael
Send me $7 and I show you how to be a forex trading millionaire. So screams nearly every forex blog that you find online. The problem is that most of these claims are untrue and are likely to be a forex trading scam.
For a few years now, there has been an avalanche of forex products that claim to be able to turn a pauper into an instant forex millionaire. The idea behind all this is that once you buy into their latest currency trading system, you are assured of instant riches with no sweat.
Nearly every forex trader has believed these promises. A majority however, have not been able to replicate any of these profitable forex trading results and have ended up losing a large amount of money. It does not have to be that way.
If you decide to take trading forex like any other business, you are likely to be profitable. Taking trading forex like a business means that one takes time to learn the best trading methods. It also means that one learns how to avoid get rich quick forex systems.
The great thing about forex trading is that you learn something new every day. It is impossible to find two professional traders who think exactly the same way about a trade setup. The forex scammer of course will have nothing new to add and is likely to just copy what he found in another website.
It is true that there are some forex trading terminology that you may have to learn. That however does not mean that you blindly follow a forex blogger who cannot speak in plain English. A good forex trader should be able to explain to anyone how they came to make a decision to make a trade.
You should be very wary of fake forex trading results. Unfortunately technology has made it very easy for anyone with Photoshop to create fake forex trading profits. There are some forex traders who are so adept at it that they can create fake forex trading videos.
There are many more forex scamming tricks out there. Some fake forex traders are so good that they have a habit of creating other websites to promote their own fake forex blog. One is so adept at this that he has become a household name using this method.
You are bound to have periods when you just cannot seem to make any profits. What is untrue is a forex trader who never seems to make losses. Believe me, such a trader would be head hunted by George Soros. So be wary of forex blogs that show winning trades each and every day.
Once one gets rid of the idea of how to make easy money trading forex, you are on the path of becoming a successful forex trader. Being honest with yourself will encourage you to take the time to learn all that you can about the forex market. From managing your forex capital to your forex trading psychology. Once you do that, you will learn that forex can be a very profitable adventure.
About the Author:
Forex trading can be fun. Before you start forex trading, visit Tony Mwendwa at his
forex blog. You will find easy
forex trading systems that anyone can profit from.
Tags: business, day trading, finance, forex, forex trading, futures, home business, Homebased Business, investing, investment, online trading, personal finance
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Sunday, April 19th, 2009
by CFD FX REPORT
The following report includes some fascinating information about forex broker–info you can use, not just the old stuff they used to tell you. So what is forex broker really all about. Because of the global nature of the business, there is a diverse range of financial regulatory environments depending on where the forex broker is based. Forex Broker Introductory forex brokers are generally, existing traders who have solid experience and sound knowledge of the forex market. All Forex Brokers – a detailed list of all on-line Forexbrokers with descriptions without breaking down into specific categories. However, inexperience and over enthusiasm can only do bad and bring in losses so, youll need an experienced forex broker to help you put your money in the right place at the right time.
Forex Markets
Forex markets are the most liquid and accessible markets in the world. Forex trades do not involve commissions, but they do have what are known as spreads, which is the difference between the price a currency can be purchased and the price for which it can be sold at a given point in time. The webs’s most complete Forex broker isting, managed Forex accounts, institutional Forex accounts and much more – Forex News Search for a Broker by Product Offering, Name, Title using the search box below:. Make sure to check the spread of the forex broker as thats where they earn their money, read their terms of service carefully and check the services offered.
FOREX brokers have many different trading platforms for their clients, just like brokers in other markets. Forex (FX) trades executed through Most Forex Broker are commission free. Foreign currency trading with us is simple, safe and open to every forex trader and investor.
Finding the Best Forex Broker
Forex Brokers can be gauged according to four main criteria:Reliability. FOREX Broker FOREX BrokerWhat to consider when selecting a FOREX broker. Forex Brokers and Bonus Types Online forex trading attracts thousands of investors daily and almost every forex broker offers bonuses iberia online banking for new traders. So, on one of the major forex broker review sites I typed in a few other companies we have personally traded forex with and have been very happy with and I was quite surprised to see that they too scored very poorly. In the past it was pretty easy to decide which Forex broker was the best for you as there were not many around. Since the rise of internet use in recent years, Forex trading has experienced tremendous growth and so too has the number of Forex brokers.
The sheer number of Forex brokers out there can be pretty overwhelming, but with a bit of research you should be able to choose the Forex broker that is right for you. Finding a Forex Broker you can trust to act in your best interest is important to Foreign Currency Investors. The easiest way to make Forex broker comparisons is on the basis of their spread charge
About the Author:
Forex broker looking for the best broker, visit us a CFD FX report and we give an unbiased opinion on who is the best forex broker, we also offer free forex reports, stock market education.
Tags: business and finance, Currency trading, day trading, finance, forex, home business, Homebased Business, investing, investment, make money, risk management, stocks and shares, wealth building
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Sunday, April 19th, 2009
by Forex Broker
Determining a Forex broker is a tough process to navigate through and for most people, the necessity of outside help is needed. Trying to trade in the Forex market without a broker could lead to damaging results for the normal trader. Similarly, hiring the wrong Forex broker can lead to the same result as trying to muddle through it alone. It is highly important that you be diligent in researching any future brokerage firms to handle your financial portfolio.
A serious Forex broker will provide you with clients that were successful and can attest to the specific broker’s qualifications and achiever account. Put yourself in that position, would you testify to someone’s strengths if they did a poor job for you? Client story Testimony should be present in any potential Forex broker and plentiful to indicate a solid background with trading. You can tentatively assess a lot from a Forex broker with a list of clients that will speak up for the brokerage firm or individual broker. It should be noted that all word of mouth Testimony should be taken with a grain of salt and dissected to collect the pertinent information. Testimony should be used in your research to find a Forex broker but should not be the determining factor.
Another good morsel to test the dependability of any possible Forex broker is the amount of information, literature and lessons that they are willing to give to you. Most Forex brokers are of a high reputation and a solid background however, there are many out there that don’t have a great account or no history and it is wise to steer clear of these brokers. You are trying to find a trusted financial advisor and settling for second best, just won’t do. The more a prospective Forex broker is willing to do for you in the area of helping you understand the Forex trading system, the better quality trader they will be for you.
A great avenue to travel down when seeking a good Forex broker is to ask your acquaintances about Forex brokers and how they met. This can not only give you potential referrals to fantastic Forex brokers but will also equip you with ideas and resources that you may not have located. If you get a referral from friends, be sure to still research that specific broker and his qualifications before giving to any official agreement.
The other factor in Determining a serious Forex broker is the margin of return that is offered. A Forex trading margin used to influence your money and many Forex brokers offer different margins. Determining a Forex Broker, who gives a margin of ten to one isn’t a very fantastic find so it’s worth the time to reinvest in research. Remember that this industry is all about customer service and catering to the clients so if your future Forex broker doesn’t return your calls within a fair time frame it would be advisable to keep exploring.
Recently the CFD FX Report has researched all the Forex Brokers in the market using the above methods if you would like to see the Best Forex Broker feel free to visit us or email us at support@cfdfxreport.com
About the Author:
CFD FX REPORT helps you find the best forex broker. They also offer free forex and cfd trading reports, see who the experts recommend.
Tags: business and finance, Currency trading, day trading, finance, forex, forex trading, home business, Homebased Business, investing, make money, money and finance, money and investing, stock market, stocks and shares
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