Forex Trading

Discovered by John Bollinger, the Bollinger Bands is a simple moving average based tool that allows people in Forex trading to estimate the instabilities and trend in the Forex market. Let us have a brief look at the concept of Bollinger bands and how you can use it to improve your Forex trading strategy.

Currency trading

Investors and traders around the world are looking to the Forex market as a new speculation opportunity. But, how are transactions conducted in the Forex market? Or, what are the basics of Forex Trading? Before adventuring in the Forex market we need to make sure we understand the it, otherwise we will find ourselves lost where we less expected. This is what this article is aimed to, to understand the basics of currency trading. What is traded in the Forex market? The instrument traded by Forex traders and investors are currency pairs. A currency pair is the exchange rate of one currency over another. The most traded currency pairs are: USD/CHF: Swiss franc GBP/USD: Pound USD/CAD: Canadian dollar USD/JPY: Yen EUR/USD: Euro AUD/USD: Aussie These six currency pairs generate up to 85% of the overall volume in the Forex market. So, for instance, if a trader goes long on the Euro, she or he is simultaneously buying the EUR and selling the USD. If the same trader goes short or sells the Aussie, she or he is simultaneously selling the AUD and buying the USD. The first currency of each currency pair is referred as the base currency, while second currency is referred as the counter or quote currency. Each currency pair is expressed in units of the counter currency needed to get one unit of the base currency. If the price or quote of the EUR/USD is 1.2545, it means that 1.2545 US dollars are needed to get one EUR. Bid/Ask Spread All currency pairs are commonly quoted with a bid and ask price. The bid (always lower than the ask) is the price your broker is willing to buy at, thus the trader should sell at this price. The ask is the price your broker is willing to sell at, thus the trader should buy at this price. EUR/USD 1.2645/48 or 1.2645/8 The bid price is 1.2645 The ask price is 1.2648 A Pip A pip is the minimum incremental move a currency pair can make. A pip stands for price interest point. A move in the EUR/USD from 1.2545 to 1.2560 equals 15 pips. And a move in the USD/JPY from 112.35 to 113.40 equals 105 pips. Margin Trading (leverage) In contrast with other financial markets where you require the full deposit of the amount traded, in the Forex market you require only a margin deposit. The rest will be granted by your broker. The leverage provided by some brokers goes up to 400:1. This means that you require only 1/400 or .25% in balance to open a position (plus the floating gains/losses.) Most brokers offer 100:1, where every trader requires 1% in balance to open a position. The standard lot size in the Forex market is $100,000 USD. For instance, a trader wants to get long one lot in EUR/USD and he or she is using 100:1 leverage. To open such position, he or she requires 1% in balance or $1,000 USD. Of course it is not advisable to open a position with such limited funds in our trading balance. If the trade goes against our trader, the position is to be closed by the broker. This takes us to our next important term. Margin Call A margin call occurs when the balance of the trading account falls below the maintenance margin (capital required to open one position, 1% when the leverage used is 100:1, 2% when leverage used is 50:1, and so on.) At this moment, the broker sells off (or buys back in the case of short positions) all your trades, leaving the trader "theoretically" with the maintenance margin. Most of the time margin calls occur when money management is not properly applied. How are the mechanics of a Forex trade? The trader, after an extensive analysis, decides there is a higher probability of the British pound to go up. He or she decides to go long risking 30 pips and having a target (reward) of 60 pips. If the market goes against our trader he/she will lose 30 pips, on the other hand, if the market goes in the intended way, he or she will gain 60 pips. The actual quote for the pound is 1.8524/27, 4 pips spread. Our trader gets long at 1.8530 (ask). By the time the market gets to either our target (called take profit order) or our risk point (called stop loss level) we will have to sell it at the bid price (the price our broker is willing to buy our position back.) In order to make 40 pips, our take profit level should be placed at 1.8590 (bid price.) If our target gets hit, the market ran 64 pips (60 pips plus the 4 pip spread.) If our stop loss level is hit, the market ran 30 pips against us. It’s very important to understand every aspect of forex trading. Start first from the very basic concepts, then move on to more complex issues such as Forex trading systems, trading psychology, trade and risk management, and so on. And make sure you master every single aspect before adventuring in a live trading account

Overflow of Forex

On the opening of the market in Sydney (Australia) USD diverse the trade on pace cut anticipations. The currency of United States USD ($) was varied in slender varieties during the early hour of forex market of 11th September’07 trading as conjecture amplified the Federal. Wall Street increased piercingly on Tuesday when investors nurtured so as to the Federal Reserve determines inferior interest rates subsequently week.The market of United States deficit turn down to some extent in the month of July, assisted through record overseas export trades that counterbalance the largest foreign oil invoice in almost a year. However still an epidemic of remembers didn’t stop the shortfall with China as of hiking to the 2nd uppermost stage on record. Wall Street climbed piercingly Tuesday since investors grow supplementary convinced that the Federal Reserve will lesser its interest rates next week. But still chairman of Federal Reserve not gave any clues about the central bank & opposes targets.Forex Gold MarketGold rushed to a sixteen month elevated on previous day on bearish reaction in the direction of the US. Dollar and graph based buying expanding rock-solid profits from previous week. Director of Cite futures perspective (New York) Mr. David Rinehimer states that CFP cleaned several heights of the year involved stronger purchasing attention. Both the smudge gold and gold futures enjoyed nearly 30$ previous week, for the most part ambitious via wounded in the U.S. Dollar. On the closing day of last week, gold futures ended on their peak levels seeing as premature May subsequent a drab U.S. employment statement, although a close to 300 points beat in the U.S. benchmark .Gold is reacting constructively due to the information that the USD will plunge continuously added the unconfirmed interest exchange rates, manufacturing gold and striking substitute to paper support assets. Where as director of Gold & Silver Investments Ltd Mr. Mark O'Byrne states that Geo political threat, the recurrence of a video of Osama Bin Laden with jitters on the 11th September (world trade centre) anniversary is supposed to offer safe sanctuary shore up and proposition to gold.Forex Oil Market Stretched universal inventories as well as increasing command will make oil markets defenseless to unforeseen deliver disturbance throughout 2008, custody oil prices over USD 70 a barrel. According to the monthly statement of Energy Department the Energy Information Administration approaches association of Petroleum Exporting Countries are agreed as previous day to increased up to 500k barrels output of crude oil per day starting from November 1st, in an attempt to quiet the forex trading. Glow, charming crude for Oct. release chop down four cents - 77.45($) a barrel lying on New York Mercantile Exchange.

Updates about Asian Market of Forex

Today i want to tell you some updates about Asian Market of Forex Trading.Asian stocks cut down the most in a week; lead by ‘Mitsubishi UFJ Financial Group Inc’, after ‘Bank of America Corporation’. Said fall-out from U.S. sub-prime-mortgage wounded will hurt earnings. ‘Mitsubishi UFJ’ headed for the major drop in a month and ‘National Australia Bank Ltd’. Slid to a 6 week low on worry about the forex credit crisis, which has encouraged a run on funds at United Kingdom lender ‘Northern Rock Plc’, ‘Toyota Motor Corp’, refused on speculation the U.S. market will slow. Singapore Airlines Ltd. knocks down as the value of crude oil rose to a record.Mr. Shane Oliver, who helps manage about 83 ($) BL at ‘AMP Capital Investors’ (Sydney) states that U.K. has offered a token that the credit crunch remains in place so that the risks are still fairly high when it comes to financials.Financial Shares‘The Morgan Stanley Capital International Asia-Pacific’ Index slid 1.3 % to 149.65. Set for its leading drop since 10 Sept.’07. Financial shares were the major drags among the measure's ten industry liberalization groups, accounting for approximately half the benchmark's retreat.Oil, Gold Section. 'Singapore Airlines Ltd’, the most money-making training carrier in Asia, slid 1.1 % to Singapore Dollar 18.50. Petroleum accounted for more than 37 % of its operating expense for the year ended 31st March. ‘Korean Air Lines Co’, South Korea's largest, lost 2.8 %t to 58,500 won. Crude-oil in New York climbed above ($) 81 per barrel for the 1st time on speculation rising worldwide demand may hamper efforts to store fuel for the 4th quarter. Oil for October deliverance climbed to as much as ($) 81.18 in after-hours trading after gaining 1.9 % to ($) 80.57 on previous day. 'Inpex Holdings’ advanced 0.9 % and up to 1.14 ML JPY. ‘Cnooc Ltd’, China's leading off-shore oil explorer, included 1.2 % to HKD 10.44 in Hong Kong. Australia's largest gold mining company, ‘New-Crest Mining'.

Something about Forex trading

The investor's goal in Forex trading is to profit from foreign currency movements. Forex trading or currency trading is always done in currency pairs. For example, the exchange rate of EUR/USD on Aug 26th, 2003 was 1.0857. This number is also referred to as a "Forex rate" or just "rate" for short. If the investor had bought 1000 euros on that date, he would have paid 1085.70 U.S. dollars. One year later, the Forex rate was 1.2083, which means that the value of the euro (the numerator of the EUR/USD ratio) increased in relation to the U.S. dollar. The investor could now sell the 1000 euros in order to receive 1208.30 dollars. Therefore, the investor would have USD 122.60 more than what he had started one year earlier. However, to know if the investor made a good investment, one needs to compare this investment option to alternative investments. At the very minimum, the return on investment (ROI) should be compared to the return on a "risk-free" investment. One example of a risk-free investment is long-term U.S. government bonds since there is practically no chance for a default, i.e. the U.S. government going bankrupt or being unable or unwilling to pay its debt obligation.
When trading currencies, trade only when you expect the currency you are buying to increase in value relative to the currency you are selling. If the currency you are buying does increase in value, you must sell back the other currency in order to lock in a profit. An open trade (also called an open position) is a trade in which a trader has bought or sold a particular currency pair and has not yet sold or bought back the equivalent amount to close the position.
However, it is estimated that anywhere from 70%-90% of the FX market is speculative. In other words, the person or institution that bought or sold the currency has no plan to actually take delivery of the currency in the end; rather, they were solely speculating on the movement of that particular currency.

What is Forex

What is forex? Now a day we read and listen everywhere on tv,internet and newspapers about Forex. Tried to give a simple defination of Forex below.

The Forex market is a non-stop cash market where currencies of nations are traded, typically via brokers. Foreign currencies are constantly and simultaneously bought and sold across local and global markets and traders' investments increase or decrease in value based upon currency movements. Foreign exchange market conditions can change at any time in response to real-time events.

Home Equity Loans

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