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    • Month: January 2017

    There Is Always a Chance to Profit with Forex

    Remember that thing called the stock market? We were all taught at some point in time that when prices go up, we make money, but when prices come down, we lose money. In essence, aside from a few small changes in this area over time, it is exactly right.

    The reality is that making money on the stock market is, in general, a one-way street. Unless you are an advanced trader, and hence able to short the market, you will rely on prices to increase so that you realize a capital gain when you sell your stocks.

    Unlike the stock market, foreign-exchange markets are different. Indeed, you are able to profit regardless of where the price goes. For example, let’s say that the currency pair EUR/USD – the most popular currency pair in the world, trades higher. If this was the case, people who had bought the Euro at lower levels would have profited, whereas people who had bought US dollars would have lost.

    The opposite is true if the currency pair fell. For example, people who owned the Euro would have lost money, and people who owned the US dollar as part of its currency pair would have gained. Overall, the actual figure quoted for this currency pair can go up or down – but in each case, someone is able to make a profit.

    Confused?

    If you are confused by the examples we gave above, it is clear that you need to do a little bit more research before you get into the foreign exchange industry. Unfortunately, using such financial instruments can be dangerous if you do not have the right set of skills available to place such trades.

    Many new traders lose money at first, simply because they have not done adequate training to ensure their success.

    Fortunately, however, there are many courses and instructional programs available through the Internet which can teach you the ins and outs of everything to do with foreign exchange.

    We have even recommended one on this website, so that you are able to instantly move on to the educational failures, rather than being stuck trying to find an education provider in the first instance.

    You will find a recommendation on the front page of the site. Take a look, and if you are interested sign up. You have nothing to lose, but a wealth of knowledge to gain.

     

    Mental Anguish from Forex Trading

    Experts believe that it takes 6 months to fully grasp all of the concepts in the Forex world. However, statistics point out that even with knowledge, 95% of traders in the Forex market, in particular, will fail and lose their account money within the first 365 days of their trading careers.

    Dismal statistics, right? 95 out of 100 traders losing all of their money and dropping out of the Forex market within 1 year? That’s got to be a worse success rate than any other financial market in the world.

    Forex Plays on the Mind

    Forex markets process a whopping $5,000,000,000,000 per day. That is five trillion dollars. Every day – five days per week. Just think of how much money people can make from such an incredibly liquid market.

    Because of its size, people often fall into the trap of entering the market too quickly. When we say “entering” – we don’t mean placing entry orders or initiating trades. We are referring to getting involved in the live trading of currencies too quickly.

    At the end of the day, it’s a mind game. And if you are looking for a financial market which is the most demanding on the mind – the Forex market is it.

    How to Overcome the Mind Games

    So far, you’ve probably thought that we seemed a bit doom and gloom about Forex trading. In reality, if you can get the emotional side of trading out of the way – the light at the end of the tunnel is definitely there.

    Whilst Forex has made some people lose all of their money, at the same time it has made a number of people extremely wealthy. The key differences between these lots of people are:

    • Some can get their emotions under control and others can’t.
    • Wealthy traders learn continuously and never give up.
    • Risk management is a huge part of some trader’s strategies.

    It’s all about strategy. Whichever strategy you choose to use, make sure that it is a robust, successful one. In other words, if you are currently losing more money than you are making, think long and hard about why you are in the Forex market, to begin with.

    Are you treating it like a game? Are you there for the long haul? Do you need to revise your trading style to better suit your desired outcome? Answer all of these questions, reposition yourself, and aim higher than you ever imagined before.

    How Does Volatility Affect the Forex Markets?

    Foreign exchange markets, like all other financial markets in the world, are affected by volatility to a great extent. On some days, trading can be a bit of a “bore” – as volatility is low. Alternatively, on other days, volatility could be high – and therefore prices in the FX world could fluctuate wildly.

    But what actually is volatility, and who creates it? Furthermore, how do we predict volatility, and are there times where volatility is known to be higher than others?

    Let’s take a look at the answers to these questions.

    What is Volatility?

    Essentially, volatility is a gauge of the degree to which prices are changing. For example, let’s take a currency pair – the EUR/USD – and see how volatility might appear.

    • Day One: EUR/USD trades between 1.3000 and 1.3100
    • Day Two: EUR/USD trades between 1.3000 and 1.3020

    As you can see, the EUR/USD currency pair has traded in a 100 pip range on the first day, and then a 20 pip range on the second day. Which is the more volatile day? Obviously, the first day is. This illustrates exactly what volatility is – in its most basic context.

    However, there is also one other consideration that volatility calculations take into account. That is – how quickly the price changes. For example, going back to day one – if the currency pair gradually rose between 8 am and 5 pm from 1.3000 to 1.3100 – this wouldn’t be particularly volatile. However, if it traded from 1.3000 to 1.3030 in the first 5 hours of the day, and then suddenly went from 1.3030 to 1.3100 in the last hour of the day – this would indicate a high level of volatility.

    Hopefully, this illustrates how volatility is created, and why it has important implications for traders in all financial markets.

    How to Predict Volatility

    Volatility is somewhat difficult to predict because even the slightest piece of news or rumor in the market can cause currency pair prices to escalate or fall dramatically. Hence – it is best simply to not try to put too much weight on predicting where volatility will go.

    However, there are times where volatility is known to be higher on average than others. One of these times is when a major piece of news is about to be released to the market. Take, for example – the non-farm payroll release which comes out on the first Friday of every month. Before this data piece is released, the markets usually see a spike in volatility as last minute trades are placed before the announcement. In this manner – you could actually profit from increased volatility if you are on the right side of the trade.

     

    Professional Forex Trading, What is It Anyway?

    Trading Forex like a professional is easier than one would expect. The professionals take their time, use their patience and skills to make money. They do their research and make educated trades based upon the long term expectancies of the Foreign Exchange Market. They focus on what could be lost rather than what can be gained and avoid the high-risk moves that could go either way very quickly.

    What Novice Traders do?

    The professional traders operate in direct contrast to how many of the novice traders operate. Most novice traders use short term charts and graphs that make it difficult to determine the actual market trends. In addition, most novice traders are focused on the potential profit, rather than the potential loss. This spurs them onto making riskier trades and potentially losing a lot of money.

    Patience does matter

    The novice trader often does not have the patience to develop and follow through with the strategies that the professional traders have. This lack of patience causes the novice trader to enter into and pull out of trades faster than the professional trader. The novice trader may also find that they are doing more trades than the professional trader. This is not an indication that they are doing better than the professional, but simply an indication that they are working harder than the professional.

    Learn to trade like Professionals

    A great way to learn to trade like to professionals is to learn and study like the professionals. Take your time and read the different articles about trading. Take your time and practice with the different demo programs that enable you to see the long-term effects of trading without risking your money. These demos are often free to use and are offered by many of the larger trading firms.

    Another way to learn to trade like the professionals is to take courses in trading. There are many different websites that offer trading courses and seminars. These seminars and courses are designed to help not only the professional but the novice trader learn how to be a better trader. These seminars help you to understand how the market works, the different factors that affect the market and the how to predict what the market will do.

    Learn to trade Forex to limit your losses

    Ask any Forex trader how much he is willing to earn or lose and he will never reply in the negative. Everyone enters the market with big dreams of only earning profits. But reality soon sets in and you realize that the losses are an integral part of the Forex trade. You need to learn how to trade be able to limit your losses. Given below are a few tips that will help you to learn currency trading.

    Discipline – The first thing that you need to learn is discipline where you read the charts and follow your established system of trading. Technically analyze the charts to help you decide the entry or exit points that seem to be the best.

    Technical analysis – This is one of the basics of Forex that every trader has to learn. It involves understanding the trend of the market by using charts. By understanding the support level and resistance level, you will know when to enter the marker and when to exit it. They can also help you to decide upon a series of small trades rather than a single big one. The benefit of this is that you will be earning smaller profits and the chances of a big loss are reduced.

    Reward to risk ratio – The next part is establishing a reward to risk ratio. You can begin with a 2:1 ratio and proceed to 3:1 when you are more comfortable with trading. When you are well versed with the technical side of the market, the possibility of a big loss will act as a reason to exercise more self-control.

    The reward to risk ratio will tell you where to place your entry, exit and stop loss orders. You also need to create a strategy for trading and stick to it so that you can be a successful trader.

    Don’t chase the market – Your stop loss order can be too tight or too big resulting in your having to lower or raise the order so that you do not get hit. Placing the stop – loss order correctly ensures that even if you do get hit, you do not lose anything.

    An inexperienced or emotional trader can turn a good profit to loss when he chases the market. Learning how to trade properly will help you to maximize the profits and reduce the losses.

    Why you should consider trading forex

    In these difficult times, many people find themselves looking for more opportunities to earn money. And most people are used to doing jobs that require their full attention and physical energy. But, there’s another way of earning money on your free time forex trading.

    You arrive home from work. What will you do next? Maybe you will sit on the couch and switch the television on or perhaps go to your social network sites and catch up on friends and what’s the latest. This loses you time, the time you could have spent on gaining money. Instead, why not trade currency in the comfort of your home? It is open 24 hours so you fix your time. Yes, after you work for the day, you could still earn money while practically relaxing as the day ends. Forex doesn’t slave you, you do business with it anytime you wish and anywhere you want. That means you could do your business according to your schedule. If you don’t feel like doing it today, you could still do it tomorrow. In currency trading, you are the boss, and not otherwise.

    You might be thinking, “Well, just how large is this market anyway?” Simply put this way, it is the largest, even larger than stocks and futures. With such a size, there is a guarantee of more success in the field. Aside from being the largest, it is also the most liquid. That means you could easily get cash from it.

    Many people also don’t know that it is quite easy to enter the business. This is important because before you start earning, you should know first how to enter the business. It is like a fridge packed with foods inside. You have to open the door so you could have access to the bounty. But, did you know that entering Forex is literally as easy as opening the door of a fridge? Yes, it is. You could even open your account for just a dollar! And with a hundred more dollars, only you could destine your future with the business.

    Further, forex online can even overcome your full-time job, so why not consider making passive income from it. Then again, starting can be tough so it necessitates to keep yourself abreast with forex news or currency trading news. Give yourself a pocketful with latest releases only at immfx.com

    Factors affecting the value of Forex trade currency

    Every day, many traders who work in the Wall Street market race against time to compete for premium stocks to gain the most benefits. Since foreign currencies determine which value is worth the brawn, more and more commodities accumulate and decline within the scope of the fiscal transaction to reflect the demands of buying-selling ratio. Whatever we spend or purchase in the market affects the country’s economic status and at the same time drifts a change in the exchange rate.

    The reality in foreign exchange is unpredictable if you impractically take things for granted. To be one of the smart dealers in forex trading, traders have to see to it that the trends will not always remain at one stationary point. Any supply and demand transactions that come and go is influenced by several elements. That is why forex trading parameters fluctuate over time. However, consider these essential factors in the world of forex trade.

    Majority of the country’s economy is depended upon the movement of supply and demand. The impact of exports and imports affect the value of currency in such a way that the demand is expected to rise than the forex trade supply. As much as possible, the country targets a good balance in trade surplus rather than impose shortages in trade demands. A great indicator to determine the economic growth of the country is by outlining its Gross Domestic Product (GDP).

    Employment also tends to change the economic status of the country. If there are more unemployed workers, chances are their expenditure decreases because they anticipate less money that they earn. Most likely if more workers seek a better future in the field, the country’s currency may elevate to a lucrative status.

    International and local banks also help optimised the stability of the country’s economy. Banks are always associated with the forex trading market to foster interest rates at their own exclusive rights. When there is an increase of inflation rate, interest rate eventually alters by raising its figure. On the other hand, if the country’s economic flow slackens, banks would reduce the interest rates.

    The cycle to reveal new trends in the market contains unexpected prophecies whether investments should demand greater expectation in selling and buying. Notice how unforeseeable currencies vary according to their stipulation of business development. In fact, if the value of that currency is higher than the other, it is simply because they take more risks investing trades in the long run.

    Using Moving Averages in Forex Trading

    The moving average has been a staple of the Forex trader’s arsenal since it was first described in statistics textbooks in the early twentieth century. The visual representation of several averaged price points, the moving average provides a smooth line that makes it easy to see at a glance whether the price is trending upwards or downwards. So critical is the moving average to Forex trading that its calculation is at the heart of several indicators, including the Bollinger Bands and the MACD.

    Why Moving averages?

    Moving averages are useful because they lag the price. That is, a moving average will always appear either above or below it. If it is above the price, this indicates that the price has been falling. If it is below, it has been rising.

    How to use Moving averages

    Forex traders use the moving average in many ways, the most basic of which is a simple trading system. When the price moves upward through the moving average, they buy, and when the price moves downward through it, they sell. This system has drawbacks, however, in that the price will often move through the moving average only to immediately reverse. This false signal is known as a ‘whipsaw’. To get around this problem, Forex traders devised another use for the moving average: the filter.

    To create a filter, they apply a second moving average to the chart of a much higher periodicity. For instance, if the moving average that the trader is using as a signal is 14 periods, they might apply a second moving average of 100 periods. This second indicator lags the price much more than the first, and it gives the trader an instant insight into whether or not the price is in an uptrend, downtrend, or range. If the price is in an uptrend, then, the trader will not accept any sell signals from the 14 periods moving average.

    Creating a more complex moving average system

    Forex traders can create a more complex moving average system with a built-in filter by applying three moving averages with periods such as 14, 28 and 56, where each proceeding instance of the indicator is twice as much as the last. In this way, the price can fall through or rise above the first, then the second and finally the third moving average. At that point, the trader can be fairly confident that a change in trend is occurring and can trade in the new direction.

    Another way that traders use the moving average is to plot two of them, one slower than the other. For instance, one may be set to 12 periods while the other is set to 26. The result is that a signal is generated when the slower moving average falls through the longer. This is the basis of the MACD, or Moving Average Convergence Divergence indicator, which chart technicians use to determine trend strength, momentum, and direction.

    Conclusion

    The moving average, humble as it is, is often the first learned but is generally quickly discarded when more complex indicators are encountered. This tendency may be to the trader’s detriment as many more complex indicators are simply using moving averages in their calculations and displaying the results in various ways. These more complex data presentations, while potentially useful, can also make it more difficult to analyze the market efficiently.