Jun 2, 2011

Forex Glossary - earnforex.com

Here are some of the most common terms used in FOREX trading.

Ask Price — Sometimes called the Offer Price, this is the market price for traders to buy currencies. Ask Prices are shown on the right side of a quote — e.g. EUR/USD 1.1965 / 68 — means that one euro can be bought for 1.1968 UD dollars.

Bar Chart — A type of chart used in Technical Analysis. Each time division on the chart is displayed as a vertical bar which show the following information — the top of the bar is the high price, the bottom of the bar is the low price, the horizontal line on the left of the bar shows the opening price and the horizontal line on the right of bar shows the closing price.

Base Currency — is the first currency in a currency pair. A quote shows how much the base currency is worth in the quote (second) currency. For example, in the quote — USD/JPY 112.13 — US dollars are the base currency, with 1 US dollar being worth 112.13 Japanese yen.

Bid Price — is the price a trader can sell currencies. The Bid Price is shown on the left side of a quote — e.g. EUR/USD 1.1965 / 68 — means that one euro can be sold for 1.1965 UD dollars.

Bid/Ask Spread — is the difference between the bid price and the ask price in any currency quotation. The spread represents the broker's fee, and varies from broker to broker.

Broker — the intermediary between buyer and seller. Most FOREX brokers are associated with large financial institutions and earn money by setting a spread between bid and ask prices.

Candlestick Chart — A type of chart used in Technical Analysis. Each time division on the chart is displayed as a candlestick — a red or green vertical bar with extensions above and below the candlestick body. The top of the extension shows the highest price for the chart division and the bottom of the extension shows the lowest price. Red candlesticks indicate a lower closing price than opening price, and green candlesticks indicate the price is rising.

Cross Currency — A currency pair that does not include US dollars — e.g. EUR/GBP.
Currency Pair — Two currencies involved in a FOREX transaction — e.g. EUR/USD.

Economic Indicator — A statistical report issued by governments or academic institutions indicating economic conditions within a country.

First In First Out (FIFO) — refers to the order open orders are liquidated. The first orders to be liquidated are the first that were opened.

Foreign Exchange (FOREX, FX) — Simultaneously buying one currency and selling another.
Fundamental Analysis — Analysis of political and economic conditions that can affect currency prices.

Leverage or Margin — The ratio of the value of a transaction to the required deposit. A common margin for FOREX trading is 100:1 — you can trade currency worth 100 times the amount of your deposit.

Limit Order — An order to buy or sell when the price reaches a specified level.

Lot — The size of a FOREX transaction. Standard lots are worth about 100,000 US dollars.

Major Currency — The euro, German mark, Swiss franc, British pound, and the Japanese yen are the major currencies.

Minor Currency — The Canadian dollar, the Australian dollar, and the New Zealand dollar are the minor currencies.

One Cancels the Other (OCO) — Two orders placed simultaneously with instructions to cancel the second order on execution of the first.

Open Position — An active trade that has not been closed.
Pips or Points — The smallest unit a currency can be traded in.

Quote Currency — The second currency in a currency pair. In the currency pair USD/EUR the euro is the quote currency.

Rollover — Extending the settlement time of spot deals to the current delivery date. The cost of rollover is calculated using swap points based on interest rate differentials.

Technical Analysis — Analysis of historical market data to predict future movements in the market.
Tick — The minimum change in price.

Transaction Cost — The cost of a FOREX transaction — typically the spread between bid and ask prices.
Volatility — A statistical measure indicating the tendency of sharp price movements within a period of time.

By Norman Fleming or email us at support@arundel.net

May 29, 2011

Online Forex - earnforex.com

Q1: When you consider that the foreign exchange market has become the world's largest financial market, with over $1.5 trillion USD traded daily, where does it go from here?

A1:The FX market is unique, in the UK there is no central exchange, we trade via the inter bank market. With more and more private individuals taking up margin trading and new forex brokers setting up, I can only see the market grow in the near future.

Q2: Other than great liquidity, what are the principal benefits attached to the forex market?

A2: There is less to consider when trading the forex markets, there are only a number of variables that affect the pricing.
Main advantages include
Forex Market allows 24 hour trading
Greater leverage — with most brokers offering 100 — 1,
Less starting capital required,
More Liquidity — day trading has to have enough volume to make it worth our while. The currency market is more liquid than all the world stock markets put together. Currencies are always in action,
Free trading systems
Better for shorting — There are artificial controls built into the market to prevent it from going down too fast. The reason is that we live in a biased world that likes to see things go up instead of down. One of these artificial contraptions is the "uptick rule," which comes into play when shorting stocks, making it more difficult to sell a stock short than to buy it. This is unheard of in the currency market. Selling currencies short while day trading is just as easy as buying them.
Ideal for Short Term Traders —

Q3: Limited market access, liquidity issues-after market hours, commission fees, capital requirements and short selling/stop restrictions are just some of the issues investors face when considering other markets. Given that the forex market removes many of these traditional barriers and therefore does not restrict the forex traders' ability to make a trade at the right time, are we likely to see an increase in trading volumes this year?


A3: With all these advantages, traders are finding it hard not to trade currencies, online trading volumes across all products is increasing at a substantial rate, however FX trading, predominantly amongst retail investors is becoming very popular.
Q4: There is stiff competition amongst online forex service providers for retail forex traders with some claiming to offer the same degree of technical analysis enjoyed by the world's largest banks and institutional traders. Is this possible?

A4: Technical Analysis has come a long way, more and more forex provides now have partnerships with firms who provide analysis. However the banks still have an advantage, the markets are still not under perfectly competitive economic model. The banks will always have access to information that is not readily available, ISX FX currently sources its information from a number of banks to fill this gap.

Q5: Do you subscribe to the theory that forex is less volatile than stocks because the market is much deeper?


A5: As a bet on the direction of a national economy, no currency has ever dropped 25 percent in a day, or imploded as rapidly and completely as an Enron or a Parmalat. In the wake of those scandals, many companies are meting out information more cautiously, making it harder to get the real "scoop" on stocks one problem of trading with too-high leverage is that one piece of surprise news can wipe out one's capital. If you treat forex trading like a business, including proper money management, you have a better chance of success."


Q6: U.S. interest rates-decade lows; global trade wars and terrorism fears have dominated the headlines recently. What impact has this had on retail volumes?

A6: The above factors have all led to a decline in the dollar. This coupled with tighter regulation of brokers has given investors more confidence in brokers. Also the stock market crash has driven individuals to look at the profit opportunities offered by forex.

Q7: Stateside the Commodity Futures Trading Commission (CFTC) has brought 58 actions against firms, since its new powers were awarded in 2000. Given that certain brokers continue to abuse the system, with investor money sometimes not being traded in the markets promised. What can investors do protect themselves?

A7: The retail forex market is in essence betting, as with any bookmaker there is always a risk that you will not get your winnings, or the odds will be highly stacked against you. With tighter regulation and increased competition, this risk of default has largely disappeared. The risk of price manipulation still exists and this will never really go away. Investors need to ensure that they have an independent price source and trade with a broker who offers true one click dealing. Most brokers work on the basis of the law of large numbers, acting like the bucket shops of 50 years ago, they do not hedge any positions and are directly competing against there clients. This will always lead to price manipulation and further actions by authorities will inevitably be taken.

Q8: What is this best way for "currency rookies" to get involved in the market?

A8: Like with any new form of trading you need to know what you are doing, especially as there is margin involved. Take all the time you need to learn this new trading skill well -- practice everything you learn with a demo account before you consider going 'live' with your own money. Investors should read books, attend seminars and paper trade until they are comfortable with there strategy.

By Rafik Patel

May 16, 2011

Forex Trading — Understanding Commissions, Spreads and Trading Costs - earnforex.com

The forex market is quickly becoming one of the most popular markets for trading.
Not only are the experienced traders looking to this market to maximize their trading returns, but many new, individual investors are now able to trade the Forex market — just as they do stocks and futures.
More and more individuals are seeing Forex not only as a new way to diversify their portfolio, but are also finding that it is becoming the most profitable component of their investments.

And that's because of the many advantages Forex offers over other markets like stocks or commodities. Here's what you will typically see advertized about Forex:
— Unparallelled liquidity. It is the largest financial market in the world by far. Almost $2 trillion being traded daily!
— Excellent leverage potential. Individual investors have access to leverage of 100:1 and even 200:1
— No Commissions (more on this later on)
— Low trading costs.

And yes, the Forex market really does offer all these advantages.
But the last two points above talk about costs, and that's what we'd like to focus on in this article.
Like any trading, there are costs involved, and, while these may be much lower than they used to be, it is important to understand what those are.

Let's start by looking at stock trading, something that most of us investors are pretty familiar with.
When trading stocks, most investors will have a trading account with a broker somewhere and will have investment funds deposited in that account.

The broker will then execute the trades on behalf of the account holder, and of course, in return for providing that service, the broker will want to be compensated.
With stocks, typically, the broker will earn a commission for executing the trade. They will charge either a fixed dollar amount per trade, or a dollar amount per share, or (most commonly) a scaled commission based on how big your trade is.

And, they will charge it on both sides of the transaction. That is to say, when you buy the stock you get charged commission, AND then when you sell that same stock you get charged another commission.
With Forex trading, the brokers constantly advertise "no commission". And, of course that's true — except for a few brokers, who do charge a commission similar to stocks.

But also, of course, the brokers aren't performing their trading services for free. They too make money.
The way they do that is by charging the investor a "spread". Simply put, the spread is the difference between the bid price and the ask price for the currency being traded.

The broker will add this spread onto the price of the trade and keep it as their fee for trading.
So, while it isn't a commission per se, it behaves in practically the same way. It is just a little more hidden.
The good news though is that typically this spread is only charged on one side of the transaction. In other words, you don't pay the spread when you buy AND then again when you sell. It is usually only charged on the "buy" side of the trades.

So the spread really is your primary cost of trading the Forex and you should pay attention to the details of what the different brokers offer.

The spreads offered can vary pretty dramatically from broker to broker. And while it may not seem like much of a difference to be trading with a 5 pip spread vs a 4 pip spread, it actually can add up very quickly when you multiply it out by how many trades you make and how much money you're trading. Think about it, 4 pips vs 5 pips is a difference of 25% on your trading costs.

The other thing to recognize is that spreads can vary based on what currencies you're trading and what type of account you open.

Most brokers will give you different spreads for different currencies. The most popular currency pairs like the EURUSD or GBPUSD will typically have the lowest spreads, while currencies that have less demand will likely be traded with higher spreads.

Be sure to think about what currencies you are most likely to be trading and find out what your spreads will be for those currencies.

Also, some brokers will offer different spreads for different types of accounts. A mini account, for example may be subject to higher spreads than a full contract account.

And finally, because the spreads really are the difference between bid prices and ask prices as determined by the free market, it is important to recognize that they are not "guaranteed". Most brokers will tell you that there may be times during periods of low demand, or very active trading when the spreads widen and you will be charged that wider spread.

These do tend to be rarer situations because the Forex market really is so large and demand and supply are generally quite predictable, but they do occur, especially with some of the lesser traded currencies. So it's important to be aware of that.

In summary then, when trading Forex, understand that the "spread" is truly your most important consideration for trading costs.

Spreads can vary significantly between brokers, account types and currencies traded. And small differences in the spread can really add up to thousands of dollars in trading costs over even just a few months.
So be sure to understand what currencies you are going to be trading, how frequently, and in what type of account and use those factors to help decide which broker can offer you the best trading costs.

By Rich Cochrane

Apr 22, 2011

Investing in Forex - earnforex.com

Investing in foreign currencies is a relatively new avenue of investing. There are considerably fewer people are aware of this market than there are people aware of several other avenues of investing. Trading foreign currency, also known as forex, is the most lucrative investment market that exists. There are several factors that make this true among which, successful forex traders earn realistic profits of one hundred plus percent each month. Compared to some of the better known investment markets such as corporate stocks, this is an unheard of return on investment. It's very necessary to mention here that a person who invests in forex must, without exception, make it a point to learn the detailed, but simple strategies and information surrounding the market. This very fact is what makes the difference between successful forex traders and other traders.
A few additional points, which create such powerful leverage for investors within the forex market are: The amount of capital required to begin investing in the market is only three hundred dollars. For the most part, any other investment market is going to demand thousands of dollars of the investor in the beginning. Also, the market offers opportunities to profit regardless what the direction of the market may be; In most commonly known markets investors sit and wait for the market to begin an up trend before entering a trade.

Even then, investors, as a rule must sit and wait some more to be able to exit the trade with a nice profit. Given that the forex market produces several up, down, and sideways trends in a single day, it can easily be seen that forex stands head and shoulders above other markets. Additionally there are trading strategies, which are taught that provide for compounded profits; these are profits on top of profits. In addition, free demo accounts are available within the industry of forex trading, which facilitate the sharpening of skills without the risk losing any capital. And the advantage regarding the time factor in trading foreign currency is a very attractive point for any investor. Compared to one of the most sought after avenues of investing, which often requires forty or more hours each week, namely in the real-estate market, the forex market requires a much smaller demand on the investor's time. Forex trading requires approximately ten to fifteen hours each week to earn a full time income. It's easy to see that the advantages and great leverage that exist in the forex market, make it among the most lucrative, time liberating, and easy to enter by far.

I hope this information gives you a clear understanding of how you can turn your investing into a true method of making your money work harder for you.

By Joe Clinton

Mar 13, 2011

Top Forex Trading websites

 Here are some forex trading sites that can be used as a reference or added to your bookmarks, based on our search :

Babypips ( www.babypips.com)

Forex Factory ( www.forexfactory.com)

Learn To Trade The Market (www.learntotradethemarket.com)

Bloomberg (www.bloomberg.com )

Reuters (www.reuters.com)

Forex Peace Army (www.forexpeacearmy.com)

eToro (www.etoro.com)

Forbes (www.forbes.com)

CME Group(www.cmegroup.com)

NYSE (www.nyse.com)

Nikkei e.nikkei.com)

Nasdaq (www.nasdaq.com)

Han Sheng (www.hsi.com.hk)

Oanda (www.oanda.com)

Easy Forex (www.easy-forex.com)

iForex (www.iforex.com)

Forex inc (www.forex.com)

Forex CM(www.fxcm.com)

Daily FX  (www.dailyfx.com)

FX Street (www.fxstreet.com)

Forex Auto Pilot (www.forexautopilot.com)

Forex Microlot (www.forexmicrolot.com)

AC Markets (www.ac-markets.com)

CMS Forex (www.cmsfx.com)

GFT Forex (www.gftforex.com)

Forex Yard (www.forexyard.com)

Ava Forex (www.avafx.com)

FX Pro (www.fxpro.com)

Action Forex (www.actionforex.com)

Hot Stock Markets (www.hotstockmarket.com)

Forex DD (www.fxdd.com)

Saxobank (www.saxobank.com)

Forex News (www.forexnews.com)

Trades Log (www.traderslog.com)

Finotec (www.finotec.com)

DB Forex (www.dbfx.com)

Informed Trades (www.informedtrades.com)

Hymarkets (www.hymarkets.com)

OZ Forex (www.ozforex.com.au)

Earn Forex (www.earnforex.com)

Forex TV (www.forextv.com)

Marketiva (www.marketiva.com)

FX Fisherman (www.fxfisherman.com)
 
Forex Rate UK (www.forexrate.co.uk)
 
FX Sol (www.fxsol.com)
 
MIG Forex (www.migfx.ch)

Forex Blog (www.forexblog.org)

Forex Forum (www.forexforum.net)

DailyForex (www.dailyforex.com)

Monex Investindo Futures (www.mifx.com)

Forex Ratings (www.forex-ratings.com)

DAX (deutsche-boerse.com)

ASX ( www.asx.com.au)

BSE ( www.bseindia.com)

BEI ( www.idx.co.id)

TDD - Stock Exchange World Wide (www.tdd.lt)

Source : Monex, ChannelNewsAsia, Euronews, Forbes, CNN, CNBC, The WallStreet, DW-World