Foreign Exchange Trading: Making Money With Cash

forex market

Foreign Currency Trading Software: Shop Around For Best Results

There is a wide choice of foreign currency trading software for the forex market. When you are just getting started with forex trading you will need to shop around to find the platform that will suit you best. But what types of program are available and what features should you look for?

Online brokerage accounts are always run through forex software. Your broker may either give you access to a platform that runs on their server or you may have something that runs on your own computer.

Brokers may have their own custom forex trading platform or they may use a generic platform which they can have tailored to their company. This should provide you with many features including a wide variety of charts, tools and analytical capabilities that can indicate changing patterns and trends in the price movements. There may also be a forex alert feature or a running commentary on the financial news.

In some cases you can customize your desktop view of the software. This is more useful than you may realize at first. It can save a lot of time to have your preferred settings or combination of tools and charts load automatically when you log in.

If you choose to use automated foreign currency trading software, otherwise known as a forex robot, this will need to connect to your brokerage account to make the trades. Most robots use the platform Metatrader 4.

If you are running a program yourself, be aware that this usually means that your computer must be switched on and connected to the internet at all times while you have open trades, stop losses or orders to open a trade at a certain point. If your internet connection is often broken by storms or other factors, or if your internet provider automatically cuts the connection any time there is no activity from your machine for more than a certain time, you will not be able to trade effectively unless your instructions have already been passed to your brokerage account and are stored there.

The software should be simple to access and use. Clear instructions plus an FAQ page or manual that you can go to for reference are essential. Beyond that there should be some kind of support, either live or by email, when you need more detailed help or cannot find the answer to your question in the documentation.

Forex trading is risky and you can make losses as well as gains. In this very fast moving market it is vital to have all of the information that you need at your fingertips, plus the power to make your selected trades fast. Automated foreign currency trading software can help you massively and you need the best that you can get your hands on.

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Tuesday, June 30th, 2009 fx trading software No Comments

The FX Market: The Facts

The forex or FX market is the currency trading market where foreign currencies are exchanged. It is not located in just one place. By its very nature it is a global market and trading happens all over the world.

In a sense there is a separate market for each currency pair. Every possible combination of currencies has its own price. Although these are related in some ways there is not necessarily a direct connection between them. Obviously if a country is doing very badly in economic terms, then its currency is likely to fall in comparison with most other countries. But another country might be doing even worse and then the opposite would show on that particular currency pair market. For example the dollar could be falling against the euro while at the same time it is rising against the yen.

The biggest participants in the FX market are banks and other large financial institutions who have a lot of money to invest. They employ professional currency traders who do this for their job. But the markets are so huge and access is so easy that anybody can get involved these days.

All you need is a computer with a high speed internet connection. Do not try trading over a dial up connection! You will find it very frustrating. Prices will change too fast for you to act and you will probably lose money.

You will also need access to a broker who will cover your trades by offering you leverage. This means that with say $100 of your funds you can control $10,000. The broker handles this amount, but you can get started with just a few hundred dollars in a mini FX trading account.

The forex market is highly liquid and very volatile. Liquidity is a measure of how easy it is to turn an investment to cash. Currency is already cash so it has high liquidity. What this means for you is that you can buy and sell at any time. You do not have to wait to find a buyer as you often do with stocks.

The high volatility of the forex market means that prices are constantly changing. This makes it a very risky investment but also potentially very profitable. The possibility of gaining or losing a lot of money in a short time is very attractive for people who are prepared to take the risks. Forex trading is exciting and can be very lucrative for the skilful trader.

Traders use charts and graphs to indicate trends in the movement of the prices. The aim of course is to predict whether the price will continue to move in its current direction or when there will be a reversal. These charts and graphs are normally provided by your broker.

At the same time it is important to stay alert to world events that might affect the financial markets. Many brokers also provide a live feed of forex news. This can be very useful if only to remind you to leave the FX market by closing your trades before major financial announcements are expected.

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Sunday, June 28th, 2009 Introduction No Comments

Forex Market Analysis: Which Type Is Better?

There are two types of forex market analysis: fundamental analysis, which considers economic, social and political forces and how they influence the currency markets, and technical analysis which uses charts to identify trends and patterns in the movement of prices.

So which one is better? If you check out forums and websites you will find many traders strongly supporting one or the other. Those who like to rely on charts will tell you that the only way to make money with forex trading is to identify trends and jump onto them as early as possible.

At the same time the advocates of fundamental analysis will argue that it is the economic factors that drive the changes in currency prices and this is undoubtedly true, at least most of the time. From that position they will reason that any patterns you might find on a chart are nothing more than coincidental.

But logically this does not necessarily follow. Even though economic changes have a huge impact on the currency markets, it may still be possible to identify patterns in the way that the markets react after an announcement or in times when there are no major announcements.

If on the other hand you rely solely on your charts, you are likely to be caught out when a major financial event such as an interest rate change is suddenly announced. You were not paying attention to the financial news and left a trade open at the wrong moment. That could result in disaster.

So the bottom line is that there are economic events behind the larger scale rises and falls in the market, but there are also common patterns that can be identified in the short term. Finding these patterns and trends, while keeping one eye on the economic and political news, is the best way to predict future price movements. And predicting future price movements, of course, is the way to make money with forex trading.

Foreign exchange market movements are a little like elastic that can stretch in one way or another and then fall back, although not always to its starting position. The fundamentals are the forces that cause it to stretch. Technical analysis predicts how far it will go in each direction before reversing.

So when you want to profit from forex trading it is better not to allow your attention to become fixed on either one. You need to learn to balance the use of both types of forex market analysis to make consistent profits.

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Wednesday, June 24th, 2009 Strategy No Comments

Want To Make Money Online From Home? Try Forex Trading

More and more people want to make money online from home these days. Having no commute is so convenient. Having no boss is even better. You are not tied to regular hours and you can be at home with the family. Plus of course in the current economic climate it is harder and harder to find a good job. All of this makes the idea of making money on the internet very attractive.

Learning forex currency trading is one way of earning money online that a person can do from the comfort of his or her own home. Some of us start in our spare time while holding down a full time job, others may be retired, unemployed or disabled. We soon get hooked and want to make this our full time career.

We all start out with big dreams and while these may come true for a few people, we must face the facts. The truth is that the majority of traders starting out will lose money with online currency trading. Why is this, and how can we avoid falling into this unlucky crowd?

One problem with forex trading is that many people approach it as if it were a game. They have a gambling mindset. They may open and close trades almost as if they were playing roulette, hoping to be lucky this time.

This type of trader has become more and more prevalent in the last few years since online casinos were outlawed in the USA. People who got a kick from risking (and probably losing) their money had to find a new way to do it, and many of them came into the forex market.

But forex trading is not a game of chance. There may be some similarities in the way that you view gains and losses but exchanging currency is still a form of investing, even if you are trading on the probability of a rise or fall in the interest rates. There are skills to be learned, techniques and tactics, systems that are profitable and some that are not.

In fact the most important thing to remember when you are starting out as a forex trader is that you must completely get rid of the idea of relying on luck and intuition. Stop using words like ‘playing’ when you are talking or thinking about making a trade.

Instead, concentrate on finding a reliable system and understanding the market thoroughly before you jump in. I know you probably do not want to hear this but you do have to spend some time on your forex exchange training if you want to make money online from home with forex trading.

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Tuesday, June 23rd, 2009 Introduction 1 Comment

How To Make Money From Forex Trends

Identifying and profiting from forex trends and patterns is the way that most forex traders make money. Your main aim when you are trading the foreign exchange market will be to identify a trend as it is forming and jump in so that you can profit from it.

Trends are very simple to see in hindsight when we look at a chart. A candlestick chart shows them most clearly but you can see them on any type of chart.

If you draw a line above the low points of the candlestick shadows while prices are generally rising you will see the slope of the uptrend. Similarly if you draw a line above the high points of the shadows while prices are generally falling, you will see the slope of the downtrend.

There are also sideways trends when the prices are fluctuating up and down between two points but not breaking beyond them. In this case the lines drawn above and below the shadows will be just about horizontal.

Where you have a horizontal line, you could expect a breakout going in one direction or the other eventually. Some traders will set up orders to enter the market when the price goes to a certain point either above or below the line.

Other traders will use sideways forex trends to indicate a change in the main movement of the prices. For example if the sideways pattern follows a pretty much regular upward movement, it may indicate resistance to the price moving any further. You could surmise that the upper line is a resistance line and a downturn will follow to bring the prices back within the band that is supported by the market.

Before using any of these methods to create a system, however, you should do extensive testing. Backtests will help you decide whether the system is worth investigating further. Then always run real time tests using a demo account before you back your system with real money. Remember that forex is very risky and even the best of systems have their failures or what may be called losing runs.

If trend lines are drawn correctly they can be just as accurate a way of predicting breakouts or major changes in the direction of price movements as any other method. However you have to be careful to be objective, especially when dealing with the real time market.

When we are waiting for certain conditions to be fulfilled so that we can place an order, it is tempting to jump the gun and assume that a pattern is forming when really it is too early to be sure. So watch out. When drawing lines for forex trends it is deceptively easy to draw what you want to have happen, instead of what is happening.

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Friday, June 19th, 2009 Strategy No Comments