0Posted by Michael Glass on September 1, 2012 at 2:18 pm
Understanding Forex
What are the Advantages
of Trading Forex?
The Foreign Exchange Market (Forex) is market where currencies are actively bought and sold by banks, funds and investors. The Forex Market facilitates the conversion of one currency for another. It is the relative value of the base currency vs the value of the quote currency.
Today we are going to discuss the advantages of Trading Forex
Forex market is open 24 hours – Most brokers actually close for 30 minutes to reset their backend systems.
High Volume provides Liquidity – Liquidity is important when it comes to entering and exiting your trades. Remember, there has to be someone else on the other side of your trades.
Leverage – In states, regulations states we can have up to 50:1 leverage. International, I’ve seen up to 1000:1 leverage.
Ability to Scale in and out of positions – When you trade a stock, you have to sell the whole share; however, with Forex, you can sell off portions at a time.
Profits from moves in any direction
Low Transaction Cost – Most brokers offer a no commission plan for clients.
Market Transparency – The market is 100% electronic. No market makers to manipulate the market.
0Posted by Michael Glass on August 11, 2012 at 10:43 am
Understanding Forex Series
What is a Standard Lot
The Foreign Exchange Market (Forex) is market where currencies are actively bought and sold by banks, funds and investors. The Forex Market facilitates the conversion of one currency for another. It is the relative value of the base currency vs the value of the quote currency.
Today we are going to talk about what is a standard lot. A Standard Lot is the standard unit size of a forex transaction. Typically, one standard lot is equal to 100,000 units of the base currency. In other words, 1 standard lot controls $100,000 of the base currency. Many brokers allow you to break your transaction into smaller sized lots. For example, you might consider a Mini Lot which represents $10,000 or even a Micro Lot which represents $1,000.
100 Micro Lots = 10 Mini Lots = 1 Standard Lot
The lot size you choose primarily deals with position sizing. It also is one major advantage of Forex. When you attend to example a stock position, you cannot sell 1/2 a share. The same can be said for a futures contract; however, you can sell 1/2 a position in forex. Which makes your position size decisions very important. Watch the video above fore more information about the importance of understanding what is a standard lot in Forex.
0Posted by Michael Glass on July 25, 2012 at 12:42 pm
Understanding Forex Series
Interesting Facts About Forex
The Foreign Exchange Market (Forex) is the market where currencies are actively bought and sold by banks, funds and investors. The Forex Market facilitates the conversion of one currency for another. It is the relative value of the base currency vs the value of the quote currency.
To start our video series on Understanding Forex, we have compiled a list of Interesting Facts about Forex.
* Forex market is open 24 hours a day 5.5 days a week
* The forex market is the largest market in the world
* There is no floor in the forex market. Most trades are executed electronically
* There are no commission in Forex
* Leverage in forex starts @ 50:1
0Posted by Michael Glass on July 16, 2012 at 4:09 pm
Understanding Forex
What is a Pip
The Foreign Exchange Market (Forex) is market where currencies are actively bought and sold by banks, funds and investors. The Forex Market facilitates the conversion of one currency for another. It is the relative value of the base currency vs the value of the quote currency. The major currencies of the world are:
* US Dollar
* Austrailian Dollar
* British Pound
* Canadian Dollar
* Japanese Yen
* Swiss Franc
These are the most liquid currencies in the world. The US dollar is involed in 90% of Forex Transactions. Currencies fluctuate in fractions of a dollar called a Pip (Price Interest Point) A Pip is the last decimal of a quote
0Posted by Michael Glass on June 25, 2012 at 8:15 pm
What is a Forex
Currency Quote?
A Forex currency quote shares the relative value of a currency unit against the unit of another currency in the foreign exchange market. Being able to properly understand the pricing structure of a forex currency quote is critical to being a successful forex trader. The currency that is used as the reference is called the counter currency or quote currency and the currency that is quoted in relation is called the base currency or transaction currency. Currencies are traded electronically in fixed contract sizes called lots. The standard lot size is 100,000 units of the base currency. Many brokers also offer 10,000 unit (mini lot) trading accounts and a few even 1,000 unit (micro lot).
The most traded currency pairs in the world are called the Majors. They involve the currencies euro, US dollar, Japanese yen, pound sterling, Australian dollar, Canadian dollar, and the Swiss franc. The most traded pairs of currencies in the world are called the Majors. They constitute the largest share of the foreign exchange market, about 85% and therefore they exhibit high market liquidity. The Majors are: EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CHF and USD/CAD.
The primary source for research was found on WikiPedia – Click Here to read the article.
0Posted by Michael Glass on June 14, 2012 at 7:39 pm
The Advantages of
Forex Trading
Do you have a significant amount of money sitting in your bank account, and want to start investing, but don’t know much about the stock market? Why not consider going into Forex trading? The Forex market remains as one of the most popular investment options despite the number of trading markets out there, and here are some reasons why.
Low Investment Capital
This is among the main factors and advantages of Forex trading that continually draw in new investors. With Forex, you don’t need a lot of capital to get started on trading as compared to other investment markets. You can even put in an initial investment of as low as US$300, depending on the broker’s leverage offer. Low capital means low investment risk, so you can start trading and pull out if things don’t go well without losing your life savings.
Trading (Almost) Anytime and Anywhere
Forex is a round-the-clock market, so you can trade 24 hours a day if you wanted to – except for weekends, that is. The market opens at 3pm EST on Sunday and closes Friday 3pm EST. Apart from that, you can trade wherever and whenever is convenient for you, which is a very attractive option for those who work full-time jobs and can’t adjust or check their portfolio 24/7. You can even use Forex trading software that’ll handle your transactions even when you’re not physically available.
High Level of Liquidity
Forex is one of the most liquid financial markets, with trades averaging 3 to 4 trillion dollars every day. The size and volume of transactions also make the Forex market less susceptible to being cornered or manipulated by a single entity over extended periods of time.
Fewer Investment Options
It’s all too easy for neophyte investors to experience information overload when they look into trading in the stock market. With Forex, you can easily narrow down your investment choices to 20 or so currency pairs, and from there, narrow it down further to the 7 major currencies: US dollar, Euro, Canadian dollar, British Pounds, Australian dollar, Japanese Yen, and Swiss Franc.
Less Trading Costs
Another factor that makes Forex investment and trading advantageous is that you can conduct business without paying a broker’s commission for every trade he places. Unlike in other markets, Forex brokers just earn the difference between the “spread”.
All these things and more make Forex trading an attractive investment option. However, it is not without risks, as it is still an investment, after all. Make sure you exercise caution in your trades, and do your currency and market research before you open an account and get into the game.
0Posted by Michael Glass on May 16, 2012 at 2:53 pm
Introduction to Forex
What is Forex
The Foreign Exchange Market (forex) facilitates the process of exchanging one currency for another. It is the place where currencies are traded and converted for one and another. The forex market, which is all electronic, was created around the mid-1970s. The exchange rate is established by the consensus of buyers and sellers. It is the relative value of the base currency vs the value of the quote currency. Forex is traded in currency pairs: Base Currency vs. Counter Currency (Quote)
The Forex market is the largest and most liquid financial market in the world. The daily volume of transactions in the forex market ranges between 1-3 trillion dollars. One of the reasons the Forex Market is so liquid is that it is open 24 hours a day, five and a half days a week. Although Forex is traded worldwide, the largest financial centers are London, New York and Hong Kong. The US Dollar is involved in approximately 90% of all forex transactions.
0Posted by Michael Glass on January 29, 2012 at 12:36 pm
What is the Best Time-Frame
to Trade Forex?
Different Forex traders prefer different time frames and the simples answer is that you should trade those time frames that you are most comfortable with and you have had the most success with. But let us take a look at the time frames in more detail and look at the advantages and disadvantages of each.
The main difference in the time frames (whether from a tick-chart, which represents the real-time movement of the price of a currency pair, all the way up to a daily chart, which represents 24 hours time, or even larger windows also) is how much time is being measured by the charting software. What is going on with the currency is always at work and the price is always moving, only the time window that is selected will compile the data and tell you how much the move has been during that amount of time. A five minute bar, for example, will give you the details on what has happened with the price over the last five minutes and represent it as either an increase or a decrease, and then also what the total move up or down is.
Generally, it is not advisable to trade time frames less than 5 minutes simply because the moves are happening too quickly to plan for and roll out a trade plan on. On the other end of the spectrum, some traders will prefer to use daily charts. So what is the big difference? For starters, the amount of ‘money’ that can be made or lost will be larger on the larger timeframes. This is because the larger timeframes take more time into account and the price has the opportunity to move further in a longer period of time. On the shorter time frames the price action is more muted because there is generally only so far that the price can move in a relatively small amount of time.
Most traders will test out using a number of different time frames and then find themselves setting into some patters. Other traders, however, may look at multiple timeframes on each currency pair to open up the greater number of options. Regardless of which approach is chosen, opportunities about each and every market-open day in the Forex market. Select the best time frames for you according to the Forex trading strategy and method you are employing.
0Posted by Michael Glass on November 4, 2011 at 6:55 pm
The Ideal Trading Time
for Major Forex
Currency Pairs
According to most professional traders, there are three time windows that are most ideal for trading the Forex market. These times correspond with the times that the different financial markets are opening and overlapping. Here are the general times listed:
Asian Session, which corresponds with the city of Tokyo, Japan: 19:00 PM – 04:00 AM & 00:00 AM – 09:00 AM. (Sydney, Australia also corresponds with these times, another of the major financial centers of the world.)
European Session, which corresponds with the city of London, England: 02:00 AM – 12:00 PM& 07:00 AM – 17:00 PM.
North American Session, which corresponds with the city of New York, New York, United States: 08:00 AM – 16:00 PM & 13:00 PM – 21:00 PM.
Because there are these three major financial markets opening each day at different times, the level of financial activity rises and falls based on the volumes traded during the openings and closings of each center (the openings and closings are the two most active trading times in each market). Because there is so much activity at any given time throughout the world, the Foreign Exchange Market is known as a 24 hour market and trades may be executed at any time beginning at 5pm EST (New York Time) on Sunday Evening, and going through to 5pm EST Friday Evening for the end of the trading week.
It is important to note these times as a day trader because these hours will help give insight into the busiest and most active times when the greatest volume of trading is being carried out. These times, and their increased volumes, will create greater liquidity in the corresponding major pair that is being traded. Knowing this you can anticipate when the typical best times of the day will be for the type of major pair that you are trading.
It is always recommended to bear these market overlaps in mind. You will notice, as you are trading actively, that there are certain times of the day where each currency pair is more active (more volatile) and the price-action jumps about more. This is due to the increased amount of trading going on during these market overlaps and should be planned into your trading schedule for best results.
