Month: August 2017

Ask any forex trader and they will tell you how important technical analysis is in the forex trading industry. Millions of dollars are traded on the basis of technical analysis, which is actually just about observing charts and graphs. Here, we will see how a small line or a bar can become the basis for traders to invest millions of dollars.

There are many types of forex charts, each having its own pros and cons as well as a few common features. Some of the numerous advantages of using forex charts are:

Easily Available

The first and most popular incentive for using forex trading charts is that they are available on the World Wide Web. Finding reliable and comprehensive forex charts on the internet is as easy as searching the definition of forex itself. And the best part is that a majority of these are available free of cost. This makes forex charts and technical analysis quick, efficient and cost effective. Get the IMMFX real time Trading Chart.

Available in Several Types

Another attractive feature of forex charts is that they are available in many types. Some of the popular forex charts include line graph, bar graph, and candle stick chart. In addition to these, the Heikin-Ashi chart and the Renko chart are used by several forex traders. Every chart has a different application. For example, you can use a line graph to observe the trend of a closing price of an asset over the past decade. By looking at the line graph, you can easily identify the ups and downs of a market.

Conveys Lots of Information

Forex charts provide a lot of information. From historical trends to the seasonal variations, the performance of the asset and the effect of economic and political factors on the market are all conveyed by forex charts.

Less Distortions

Technical analysis is mostly based on one variant and that is the price of the asset. The fact that this is the only dependent variable spares less room for nuisance variables. In short, forex charts summarize the past performance of a currency pair with almost no distortions. With the market price as the only variable, you can easily find out the other independent variables that affected the value of the currency during a specific time.

Bar Charts and Candle Stick

Bar charts and candle stick charts are very useful for arbitrage investors and short-term traders who trade for hours and even minutes. These graphs show the opening price, closing price, high and low value of the stock on a daily basis over the past few years. This makes it pretty easy to guess the time at which the market usually touches its high point.

Conclusion

Technical analysis is all about studying different types of charts. It has made forex trading less risky and more approachable. Even a new trader can predict the future direction of the market by looking at forex charts.

Many people believe that forex trading is an exciting opportunity to make money fast. They assume that all you need is a forex trading account, a small initial deposit and a selection of trading tools, after which point the opportunity to make great sums of money is available directly at your fingertips.

However, online forex trading is not as straightforward as this. In order to be successful, you will need to have a certain level of knowledge about the industry. In addition, you will need to have acquired a decent amount of online trading experience, which you can easily develop from trading through a demo trading account.

Why Set Up a Demo Trading Account?

There are endless websites out there claiming that forex trading is one of the easiest and fastest ways to make money. Although this is true to an extent, it is not true in the sense that absolutely anyone can set up an account and guarantee that they will generate huge returns within minutes.

To be a successful, long-term online trader you need time, patience and knowledge, along with countless other personality traits. Otherwise, you will more than likely be joining the large percentage of people who haphazardly join the market, make a successful trade, gain a false sense of confidence and then end up losing all of their funds on one bad trade, all within a short period of time.

For this reason, it is advised to set up a demo trading account. A forex demo account offers identical trading conditions to a live trading account. The primary difference is that you are trading with false funds as opposed to trading with real funds on a live trading account.

How Does it Work?

A demo trading account gives you plenty of time to familiarize yourself with the world of online trading. Most forex brokers provide unlimited access to the demo account, where you will have the opportunity to test out trading strategies, establish your trading weaknesses, improve your trading strengths and generally acquaint yourself with the ins and outs of FX trading.

You will also have the opportunity to use the forex trading tools available on the platform, which are identical to the ones available through a live trading account.

To Summarize

Though forex trading has the potential to generate substantial returns on invested income, this is only attainable with the right approach to trading. The forex market is here to stay and for this reason, it is important that you first set up a demo trading account to increase your trading confidence and knowledge until you are ready, to begin with real online trading.

Trading forex is not a game of cards where you invest money on the basis of your sixth sense or gaming skills. Trading in the forex market requires analysis of the past trends and its effect on the future value of the currencies. When we talk about analysis, we are referring to the three types of financial analysis: fundamental analysis, technical analysis, and sentimental analysis.Here we will talk about technical analysis, which is also known as ‘charting’ and one of the favorite types of analysis. In simple terms, it involves observing the graphs depicting the past trend of a currency to forecast its future value.

Here we will talk about technical analysis, which is also known as ‘charting’ and one of the favorite types of analysis. In simple terms, it involves observing the graphs depicting the past trend of a currency to forecast its future value. Here are the top-five advantages of technical forex analysis:

One Variant Analysis

Unlike fundamental analysis where a trader takes into account all the economic indicators to forecast the future value a currency pair, technical forex analysis focuses on one variable, which is the price movement. Technical analysts analyze the past trend of a specific currency in order to predict its future value.

Easy Availability of Data

As already mentioned, the technical analysis needs only one type of data and that is the market value of the currency over the past decade. This data can be easily obtained from several online sources. Try it out for yourself. Search for the historical trend or market price of any currency over the last few years and you will find several websites that provide this data free of cost.

Online Tools for Charting

Another lucrative feature of the technical analysis is that it is very easy to perform. You will find several websites that post the past value of a currency in a chronological manner. Just copy the data, paste it into a spreadsheet and generate a graph. This is the most basic and manual way of performing technical analysis. The World Wide Web is full of free online and downloadable technical charting tools. Some of the technical analysis providers are so efficient that they extract the data directly from the forex websites and generate the graphs.

Easy Identification of Trends

The price movement plotted in a technical forex chart or a line graph makes it very easy to identify the past trend. Even an amateur can identify the ups and downs in the graph. This also filters the search and makes it easy to identify the factors affecting the price. Suppose you spotted a sudden steep in the line graph of a specific currency. Since technical charts are plotted against time, you would, therefore, know exactly when the price went down. Now, you just need to research about what happened during that specific time in the past that caused the value of the currency to take a sudden downward trend.

Technical Analysis Is Inexpensive

As previously mentioned, technical analysis can be performed free of cost. You just have to search for the right software.

In a nutshell, technical analysis is the easiest and cost effective way of predicting market movements. With just a couple of clicks online and you can get technical charts for as many currencies as you want.

The forex market is extremely dynamic, fast-paced and in a continuous state of flux. Its prominent usage by millions of traders across the globe means that it is one of the most unique and liquid markets in the world.

The unremitting fluctuations in currency values across the market are a result of a number of factors and as a forex trader, it is essential that you consider these factors before placing your trades. Some of the most fundamental factors that affect the forex market include:

Economics

The forex market is influenced by the economic circumstances occurring in a country at any given time. Through government fiscal and monetary policies (including news about budgets and spending habits, as well as supply and demand of a currency), currencies automatically rise or fall in value, thus having a direct impact on the forex market.

Further economic factors affecting the market include production, international trade, and economic health. The release of employment and trade balance figures, inflation numbers, GDP and retail sales are all hugely influential on a country’s currency and subsequently, on the forex market.

Politics

When trading forex it is important to consider the political circumstances surrounding the currencies that you are trading. If you are largely trading with the US dollar, then it is essential to keep afloat of any major political events, including elections, budget meetings and political uncertainty occurring in the USA. Such activities often have a direct impact on the value of the dollar and therefore on your forex trading.

Psychology

Additional factors affecting the forex market include marketing psychology and trader perceptions. For example, during the major international turmoil, many traders tend to flock to more typically ‘safe haven’ financial instruments, resulting in a greater demand for those currencies.

Economic Growth Expectations

When forecasting the trends of a country’s currency you should look at the country’s economic health and its activities. You need to check the country’s economic indicators such as inflation, gross domestic product (GDP) growth, interest rates and international trade deals, which are all hugely influential on a single currency, and subsequently on the forex market.

Conclusion

Traders use such figures in an attempt to predict price fluctuations. By analyzing such movements and watching forex market news, they can gain a clearer grasp on which direction a currency is heading in, and use this information to influence their forex trading success.

As a frequent trader on the foreign exchange market, it is highly likely that you are drawn towards common currency pairs. If this is the case then it can work in your favor to follow forex trading news as this will enable you to keep up with the economic, political and social releases that represent those currencies (or countries), and execute your currency trading in accordance with those figures.

Forex trading news is released at least seven times a day, five days a week. Such coverage predominantly focuses on the eight major currencies or countries that are closely followed and is released at regular intervals throughout a given day.

The eight major currencies are:

1. US dollar (USD)
2. Euro (EUR)
3. Japanese Yen (JPY)
4. British pound (GBP)
5. Swiss franc (CHF)
6. Canadian dollar (CAD)
7. Australian dollar (AUD)
8. New Zealand dollar (NZD)

Why follow forex trading news?

Forex trading news allows you to keep a close eye on the latest economic goings-on across the globe. Economic data, or forex trading news, appears to hold significant influence over short-term movements in the forex market as it can have a particular impact on currency fluctuations. Even minor economic data can have a temporary impact on a particular currency pair. If you are able to closely follow forex market news, it can work strongly in your favor during your forex trading.

Key factors to bear in mind when trading news

• Learn when news is going to be released at a given time
• Understand how that news affects the markets
• Acknowledge the significant trading news from the less significant
• Thoroughly learn how to trade when processing forex trading news
• Stay up to date with economic news

Disadvantages

Forex trading news can have an incredibly volatile and unexpected impact on currency movements. For example, what may have been predicted can often be far from the truth, resulting in sporadic currency movements that are completely unanticipated, thus throwing off many traders and resulting in major losses.

In addition, some economic releases are less significant than others, depending on which country releases those figures and the significance of those figures in relation to other data released at the same time.

Conclusion

It is therefore advisable to treat market news with absolute caution. If approached incorrectly or with ignorance, trading forex news can also be detrimental to your trading success.

 

If you are familiar with forex trading, then you would know about its classifications “Market Maker” and “ECN”. ECN or Electronic Communications Network provides a trading environment where banks, market makers, and retail traders buy and sell to each other.

In ECN environment, you can get liquidity provider A to fill your buy order. Another liquidity provider that will be regarded as B can then close your order. You can also swap match your trade with another offer or bid that is made by another trader in the same marketplace. You can view the best possible bids and offers along with the depth of the market, which can be termed as a collective volume that is available with every price. Since there are many participants in the market who provide prices to the ECN forex broker, it results in tighter spreads.

Generally, your ECN broker will charge you a certain commission for matching your trades with his liquidity providers and clients. Despite this, using a broker that utilizes an ECN forex platform has many advantages. The most obvious of these are deep liquidity and tighter spreads. If you are a day trader and enjoy tight spreads, then you can use the small movements in price to your advantage. Similarly, if you can get the benefit of deep liquidity, then you can trade large volumes without it significantly affecting the price. So, if the market conditions become volatile or you use an automated forex trading system, then this can be extremely beneficial for you.

Thus, if you consider the net effect of deep liquidity and tight spreads, you will realize that you can benefit from a large number of trading opportunities. Obviously, the more you trade, the more chances there are of you earning a profit.

If you are planning to use an ECN forex trading platform, you should know that you will not be able to take advantage of any of its benefits if you do not implement a proper trading strategy or follow an effective plan. Whichever tactics you choose, be sure to consider your lifestyle, capital outlay and your ability to bear risks. When you have formulated a proper plan, try a variety of forex trading platforms and then choose the one which is most appropriate for your trading style. You should open a demo account and make use of the trial period for about a month, which is enough time to make a decision.

 

We’re very glad to welcome you to trade with IMMFX ECN platform. Feel free to practice on ‘Demo Account’ with unlimited virtual money and open a Real Account when you’re ready to jump on the live financial market.

The booming popularity and the explosive increase in the number of traders worldwide have created a buzz among potential traders about the forex market. Over $5.5 trillion is traded daily, which has made forex the worlds largest and most liquid financial market.

All types of traders, from novice to experienced traders, are now thinking of currency trading. If you are also thinking about it and wondering what are the advantages of trading forex, but at the same time you are uncertain as to whether you should take the leap or not, then don’t you worry!

Read on to find out how you can benefit from opening a forex trading account and speculating on the currency markets.

Forex Trading Overview

When trading forex, you select a currency pair and according to the basic factors that influence the value of the currency, you predict the direction (rise or fall in the value of the currency). These factors include the economic growth of a country (i.e. the value of the currency you are trading), political situation, inflation, interest rate, GDP, and employment.

To understand the mechanics of how this market works, you can open a demo forex trading account and practice trading. This is a good way to learn and devise a flawless trading strategy.

Main Advantages of Currency Trading

Here are the main advantages of trading forex:

Highly Liquid

As compared to the traditional equity markets like the stock and bond markets, the forex market is highly liquid due to its very high daily volume of trading activities. Since the market is highly liquid, you can buy and sell at will anytime.

Set Automatic Close Position

Trading platforms offer you the ability to set automatic close position controls. It enables you to set your desired profit level and loss trading limit. The benefit of this feature is that it keeps emotions like greed and fear at bay. The trade automatically closes when you reach your desired profit level and also closes when the forex trade is going against you. This helps you reduce losses.

Leverage Margin Ratio

The advantage of trading in the forex market is that you can easily leverage your small deposit amount into a large contract value. Leverage margin ratio helps traders multiply profits while keeping the risk to a minimum.

For example, if you are trading forex with a leverage ratio of 1:100 it means you can trade $100 for every $1. Hence, if you raise $50 capital you can control and secure a trade of $5000.

No Geographical or Time Limitations

The currency trading market is an international market with no geographical or time limitations. Traders can trade around the clock, five days a week. The market is only closed on the weekends. This gives traders the opportunity to maximize their returns on the go from any part of the world and engage in forex trading with utmost flexibility.

Equal Opportunity for Long and Short Trades

One of the many advantages of currency trading is that the market offers traders equal profit making opportunities for long and short trades. In this market, the trader has to predict the direction of the value of currencies. Whether the currencies in the pair rise or fall if your prediction is right, you earn profits.

Many people make the mistake of approaching Forex trading with the intention of making a quick profit within a short space of time, only to realize that a disorganized, chaotic approach to trading will ultimately lead to trading failures. Being organized and having a solid plan of action is much more profitable in the long run and is far more likely to result in Forex trading success.

Open a Demo Trading Account

The first step in becoming a successful Forex trader is to open a demo trading account. This will enable you to gain a solid grasp of the intricacies of currency trading, without having to make a genuine deposit. A demo trading account gives you the opportunity to learn the ropes, build up your confidence and understand where your trading weaknesses lie, meaning that when you are ready to begin live Forex trading, you are more likely to make a profit.

Develop a Trading Strategy

The next step is to develop a trading strategy that suits your personal and financial needs. While you should always be educating yourself about the market, it is equally as crucial to develop a trading methodology that combines strict money management with a disciplined approach to trading. For many traders, it is all too easy to get caught up in the excitement of Forex without following a solid plan. By developing a firm set of trading rules that suit your individual needs, you will be able to enhance your profit-making potential.

Keep your trading strategy as simple as possible. Simple strategies are the easiest to follow and implement – you are less likely to waver. Complex strategies take more time to execute.

Start Social Trading

Forex trading can be a lonely and often times overwhelming activity, therefore becoming part of a social trading network could certainly enhance your chances of achieving Forex trading success. By interacting with others, watching traders, following their activity and adopting their innovative strategies, you will be more likely to generate a significant return on investment.

Learn About Risk Management

Risk management is the ability to identify, assess and prioritize uncertainties when making important investment-related decisions. Implementing a good risk management system is fundamental in achieving long-term success and profitability as a trader, and will allow you to take a mediocre trading strategy and turn it into a profitable investment in the longer term.