Author Archives: Forex

Information about Forex Signals

Posted on by

What is a Forex Signal?

In essence, a Forex Signal is an indicator that alerts a FX trader on the nature of the market in terms of profits and losses while also giving directive guidance on whether to invest, withdraw or stay stagnant in the Forex market. Forex signals enable traders to settle on the best time possible to enter or exit a trade.

Basic Information on Forex Signals

Forex signals constitute a short message or an email which is sent through a signal system to traders. From these signals, we can obtain:

A currency pair.

An entry level – a currency value where a trader is advised to get into a market.

Take profit – a currency value where a trader is advised to leave the market with a profit.

Stop loss – a currency value where a trader is advised to leave the market with a loss.

The nature of trading currencies based on the Forex signals is shaky and one should keenly study market trends and not just rely on projections from the technical analysts. There are some exploitative people who may pose with Forex signals which entice people then quickly sink with many people aboard. This is, especially, based on the ever increasing number of con artists who pretend to be genuine analysts of the market and relevant signals to take when they are simply fake people trying to swindle you of your hard-earned money.

Three Useful Actions in a Forex Signal

Based on the above mentioned Forex signals, the three actions below emerge:

Buy action – These are signals that indicate to a person to buy a currency pair. With this action comes TARGET which signals to take profit, STOP signifying stop loss and @ which indicates entry. This type of action normally occurs in a market which is in an upward trend.

Sell action- These are signals that indicate to a person to sell a currency pair. And just like in the buy action, with this action also comes the TARGET, STOP and @ numbers. The action normally occurs when the when a market is in a downward spiral.

Standby action- These are signals telling a trader not to take any action. This generally happens when the market is in an unstable position to conduct a successful trade.

Final Pointers

The next time you receive your Forex signals, act intelligently not just based on what the signals say, but also based on professional guidance from experts in the world of currency trading.

Tapping Into the Rich Potentiality of Forex Charts

Posted on by

Forex charts are pictorial representations of figures/words/values of trades conducted in the currency market. The price is normally placed on the Y-axis while the changes in time on the X-axis.

These representations of Forex charts are based on data collected from all over the world thus are deemed to be accurate and. The information on these Forex charts is analyzed by professionals in two ways: fundamentally and technically.

Forex Analysis

Fundamental analysis is done by correlating trends in the charts and the events that happen in the market e.g. political, social, economic events and others.

Technical analysis is done by correlating the actual occurrences in the market and the established trend of operations.

Both ways of analysis have always ensured that traders have relative ease in interpreting the immense data from the ever changing currency market.

With the right analysis from these experts, you don’t have to rely on guesswork to make your trade in the currency market; by just looking at the Forex charts, you are able to make informed decisions. In addition, best interpretations are amassed to be based on facts and logic.

Types of Forex Charts

The Forex charts are normally tailored in various forms to suit the different needs of its targeted users. Some forms of the Forex charts commonly used include single currency charts (only one currency represented in the chart) and combination charts (two or more currencies in one chart). Examples of the above include line charts and candlestick charts.

image: Forex Promos

It is based on the heavy reliance of traders on the Forex charts that they come in weekly, monthly or even yearly durations to quench the never ending thirst by these traders. This mainly helps traders by noting valuable trends that are vital for avoiding losses or ensuring profits.

Online Charts

The increasing developments in technology have further simplified the once painstaking duty of drawing Forex charts. With just a mouse click, you can easily access real-time data from the internet and feed them into the computer software which in turn translates them into valuable charts.

In as much as the charts can be easily created and accessed, a trader should go further and keep a keen eye on the Forex charts. Most big movements in the Forex market start from minimal market breakouts so when you see some trend starting to crop in the charts whether to the positive or negative, take note and act knowledgeably.

Through the Forex charts, we are also able to know the real-time prices of currencies. This makes it very easy for buying and sales to occur thus increasing good circulation in the currency markets. As a final point, once you have proved that a tool works, keep on using it and avoid those that prove shaky and prone to losses.

Factors to Consider When Choosing Forex Brokers

Posted on by

Forex brokers are an integral part in the normal trading of the Forex market. They act as the agents who link the buyer to the seller. If you are a new trader, it is important for you to know what to look for in a Forex broker.

Types of Forex Brokers

Market Makers

Market makes are Forex brokers who offer traders the means to trade with and against the broker. Market makers provide liquidity to aspiring traders by taking the opposition position on their traders. They are responsible for offering traders a single bid per currency pair. Market makers can easily manipulate the market prices.

ECN Brokers

ECN (Electronic Communications Network) brokers provide a medium for the buyer and the seller to contact each other. They are responsible for matching the buyers to the sellers. The ECN allow traders to post their own bids and even see the multiple bids made by other traders.

What to Look for in a Forex Broker?

Below are some of the factors one should consider when choosing the appropriate Forex broker:

Transaction fees

In Forex trading, transaction fees are normally calculated in pips. Choose a Forex broker that offers as low as possible transaction fees.

Customer service

A good Forex broker should provide different options to contact him/her in case of any problem. You should be able to contact him via phone or email with ease. Before you open and fund a real money account – especially in online Forex trading – make sure you are guaranteed of getting good 24-hour customer service.

Minimum account size

Different brokers have different size of lots you can trade on. The minimum trading size ranges from 1000 units to about 100,000 units, depending on the broker. Depending on your amount of money, select a broker that offers the proper units for you to trade.

Research and trading tools

A good Forex broker provides the necessary research tools that help account holders to make serious decisions before trading. Before employing the services of a Forex broker, ensure there are some specific research tools such as the market analysis, indicators and Forex chart patterns that can allow you to get the market information which will give you a basis of smart trading decisions.

Online trading platform

Before choosing a Forex broker, ensure they have an online platform that is secure and easy to use.

Leverage options

A good Forex broker should give you numerous leverage options. You should have different leverage ratios to choose from. Low leverage ratios can be advantageous to you.

If you consider the guidelines above, sure you will get the right Forex broker who will ensure your investment is safe. They will assist you to grow your investment and reap better benefits.

Fixed vs. Floating Exchange Rates

Posted on by

Are you interested to get acquainted with essentials of forex trading? Do you want to have your share out of this huge international money making market? If yes, then you have reached at right place because before you invest even a dollar into this huge lucrative business you must have understanding about fixed and floating exchange rates, which cause unpredictable fluctuations resulting in colossal profit or loss.

image: stock.xchng

What is the Meaning of Exchange Rate?  

Before we delve deep into comparing fixed and floating rates, it is imperative to understand the meaning of exchange rate first off. Exchange rate is rate used to exchange respective currency with another currency. It depicts the value of one currency in relation with any other currency. It acts like a standard price for specific currency you want to buy for certain use. For instance, you want to buy Egyptian pound for some reason and have dollars as your main currency then you’ll see the exchange rate which is almost 1:5.5. It indicates that you can but 5 and half Egyptian Pounds for 1 dollar only. Same rule applies for other currencies and their trading depending upon their current exchange rate.

Fixed Exchange Rates

Fixed rate is also known as pegged rate set and maintained by government’s central bank. Usually price is set against USD which is main currency, but it can be set for other major currencies as well like Euro and Yen etc.

Floating Exchange Rates

As the name indicates this rate floats or fluctuate depending upon its demand and supply. It is also known as ‘fluctuating’ or ‘self-correcting’ rate which can alter anytime during the day. This rate is determined by private markets which keep track of demand and supply. If demand of any currency decreases, it leads to expensive imports which creates extra room for local jobs and services. In this way it corrects itself automatically by changing scenario.

image: stock.xchng

Why Peg or Fix Exchange Rate for Currency?

The difference between two exchange rates is simple but here a question arises that what is the rationale behind pegging local currency when it can correct itself according to its demands and supply? The rationale behind pegged exchange rate is that:

  1. Central bank which has high level of foreign reserves is considered responsible for maintaining local currency exchange so it buys or sell it at fixed rate without any concern with fluctuating rate in private market. This thing ensures a balance in the supply and demand of local currency.
  2. Currencies are pegged to create a stable environment in local market not only to avoid unhealthy impact of changing rate in private market, but also to welcome foreign investments. In this way the investor knows the value of his investment with no fear of momentary changes in exchange rate in private markets.
  3. Pegged currency also proves helpful in lowering the inflation issue which leads towards generating demands of local currency resulting in more stability in country’s economic state.

Is It Possible to Maintain Pegged Currency in Long Run?

After this above discussion, another question comes to mind that if it is so easy to bring stability to the economic condition of a country then why we see countries experiencing financial collapse, why inflation and unemployment are major financial issues today? So the reason is that pegged currency can’t be maintained for longer time period. Sometimes government itself fails to cope with its pegged rate and then review it to change accordingly by assessing the value of influencing factors.

 

How to Make Money Trading Forex?

Posted on by

Forex trading is one of most lucrative businesses for making money today. It involves trading currencies of different countries. Currencies are traded in pairs and most important pairs contain USD in them. The value of various currencies in foreign exchange market fluctuates many times in a day due to different factors relevant with respective country. Due to such fluctuation in currency value traders make money by selling or buying currencies. Currencies are bought at lower rate and sold at higher rate. If you are also interested to make money by trading forex then you have to follow the simple steps given below:

image: stock.xchng

Forex Trading Making Money Tips

Learn Forex –

The very first thing you need to focus upon before entering the vast world of forex trading is to get acquainted with its basics and essential forex trading strategies. For this purpose, you can read online articles and guides written for beginners intending to explore the complicated, fluctuating and lucrative world of forex trading.

Practice with Free Demo Account

After getting enough knowledge about forex trading, now it’s time to apply those strategies in actual sense. For this purpose, you have to open demo account with reliable trading platform. Here you will practice trading forex in real time and will make no investment in fact. Major trading currencies include EUR/USD, GBP/USD, USD/JPY and EUR/JPY. So you have to practice with these pairs in your free demo account. This practice session will make you able to trade forex in real sense with actual capital investment and will minimize the ratio of risk in your future trades.

Use Forex Trading Software or Hire a Professional Broker

If you think that you have got enough knowledge to trade forex yourself then you can facilitate your trading experience by using software. Yes many traders prefer to use forex trading software to add automation to their forex trading venture. And if you think that you are not prepared to play this risky game yourself then it’s better to hire professional broker who can take care of your trading venture and will take his commission on successful trades.

Things to Ponder Over before Heading towards Making Money with Forex Trading:

After going through the above discussion you’ll be feeling excited to start making money with forex trading but before you move ahead to invest your time and money into this profit generative business you have to keep certain thing in mind. It’s true that forex trading has great earning potential and it can even change your financial state into few minutes if traded properly but thing can go in opposite direction as well. So in an excitement of earning hundreds times more profit over your actual investment, always keep an eye on other side where you can lose more than your expectation as well. Therefore it is recommended to go with small trades to become an experienced trader who not only enjoys colossal profit upon small investment but can also tolerate unexpected downturn possible in risky money making game of forex trading.

Forex Exchange Rates

Posted on by

Forex is an acronym for Foreign Exchange, which involves exchanging currencies of various countries of the world either for business needs or for profit making due to the fluctuation in their values. So the rate at which one can buy or sell a currency is called exchange rate for that currency which shows its value as compared to currency being used in its exchange. This exchange rate represents the amount of currency you want to buy or sell in exchange of amount of currency you are having at the moment. For example, you want to buy Egyptian Pounds by paying in USD then you will see its exchange rate which is around 1:5.5, which means that you will get 5 and half Egyptian Pounds for 1 US dollar.

image: dreamstime.com

Forex exchange rate doesn’t stay the same. It experiences continuous fluctuations depending upon various factors important in determining the value of certain currency. On the basis of these fluctuation and stability in forex exchange rate, it can be divided into a couple of categories: fixed and floating exchange rate.

 Fixed Forex Exchange Rate (Pegged)

As the term indicates, this type of forex exchange rate stays the same for longer time period and also called pegged exchange rate. Its value is set by central bank of government which is considered responsible for stabilizing demand and supply of its currency. The exchange rate is calculated in relation to USD mostly.

The purpose for keeping the exchange rate fixed, is to maintain a balance between supply and demand of a currency. Central bank sells or buys its own currency for this purpose. As it holds high foreign reserves, therefore it is convenient to absorb extra currency from forex market or supply required amount in order to keep the business running smoothly. This rate stays unaffected by ever-changing exchange rate of forex market.

Floating Exchange Rate (Self-Correcting)

Floating or fluctuating exchange rate changes many times during the day depending upon its demand and supply in forex market. These fluctuations make traders come to invest in forex business so that they can generate profit by buying currencies at lower rate and selling at higher rate. Private market not central bank is considered responsible for setting floating exchange rate.

This kind of exchange rate is also called self-correcting as it has ability to correct itself according to the changing scenario in the market. Suppose if demand for a certain currency decreases in forex market, it influences the value of imports and increases their overall cost. In such situation, the demand for local products increases to compensate the inability to invest into expensive imports. This leads towards creating employment opportunities. So the whole setup adjusts with the change in the demand or supply of currency.

 

So if you are intending to invest in forex business then you need to keep a vigilant eye over floating exchange rate which will determine the potential of profit you can generate by investing certain amount into the money making venture of forex trading.

Forex Trading Strategies

Posted on by

Forex trading is a huge money making venture involving exchanging currencies over the counter with no centralized exchange. Investors from all over the world enter everyday in this mega profit generating market with an expectation to generate profit by investing whatever they can. Small individual investors to large enterprises all participate in this vast money making game irrespective of their geographical position. They just need to have access to internet as the whole business of forex trading is carried out through the network of computers for connecting traders all over the world. Before you also feel excited to dive into this vast profit making pool to earn colossal profit for small investment you need to understand forex trading strategies in order to play at safer end.

Leverage

Leverage is the most important strategy in trading forex. It involves borrowing money from broker to invest into certain trade in forex. This strategy is used to make profit out of momentary fluctuations in currencies values. As this amount is provided by broker so investor first opens a margin account with him after that he can get amount of leverage by the ratio of 50:1 100:1, 200:1 or even more. Mostly standard trading is carried out on 100,000 units so in order to trade $100,000 an investor has to deposit only $1000 in his account. After that he will get be able to trade $100,000 by having leverage of 100:1. This ratio seems really larger than 2:1 ratio offered in case of equities but the reason is that currency fluctuation during intraday remains less than 1% unlike equities. So Forex brokers are able to offer such huge leverage to invest in.

Though leverage can maximize the profit potential up to 100 times or even more, but it also carry equal chances of causing unexpected upsets if currency values fluctuate to an extent an investor is not expecting. That is why other strategies of limit entry, stop entry or stop loss are used to avoid intolerable losses.

Limit Entry Order

This strategy is used to enter the market for placing trade at most desired price or level. Limit entry orders are placed at specified price or even better. In this strategy, a trader either buys a currency below the market or sells it above the market. This type of strategy is applied in an anticipation of reversal in price hike after reaching your desired level.

Stop-Entry Order

This strategy works in reverse of limit entry order where an order is placed to sell below the market or buy above the market at reaching certain price.

Stop Loss Order

As the name indicates, this strategy is used to stop further loss after reaching at certain level. If prevents further loss if prices fluctuate against your predictions or expectations. It works until canceled by the trader itself.

Stop loss order strategy is considered really useful particularly for those who can’t sit before computer to observe each and every fluctuation in currency prices.

Market Order

Market order involves buying or selling a currency pair at best possible current price. As the best price becomes available the investor places order via broker to buy or sell. Depending upon the current available price, investors decided to sell or buy certain currency pair.

So, after having a look at aforementioned forex trading strategies, if you think that you are also having potential to convert your investment into profit then go and have your share today by using these strategies timely and prudently.

What is Forex Trading?

Posted on by

Forex Stands for FOReign EXchange, which deals in exchanging foreign currencies not by the way of centralized exchanging platform but conducted over-the-counter (OTC) electronically. It involves currency trading from different countries of the world. According to an analysis, almost $3 trillion or even more are traded everyday in foreign exchange markets which reveal the vastness of this trading venture. Everything is done via computers between traders sitting in different corners of the world. Major financial exchanges of developed countries (located in London, NY, Tokyo, Hong Kong, Singapore etc.) control this mega trading game during their specific trading hours.

image: stock.xchng

Forex exchange is 24 hours market with huge trading volume of $3 trillion plus every day. The reason is need for exchanging currencies for certain reasons or for enjoying profit generated after value of your currency increases in the market. That is why only 5% trade is done by companies/individuals for getting buying another currency for business needs while 95% trading is done just for making money due to the fluctuating value of various currencies possible throughout the day. Forex market carries highest liquidity due to its immense potential of generating profits within few minutes. Even stock market with around $2 trillion turnover everyday seems dwarf due to the huge volume of FX market.

Top Currency Pairs in Forex

Currencies are traded in pair in forex. The most traded currencies are called majors which are given below:

*US Dollar (USD)
* Japanese Yen (JPY)
* Euro (EUR)
* British Pound (GBP)
* Canadian Dollar (CAD)
* Australian Dollar (AUD)
* Swiss Franc (CHF)

For representing a currency pair, their abbreviations are used. Top currency pairs which are traded mostly throughout the world are given below in their abbreviated forms.

1. Euro and US Dollar (EUR/USD)

2. US Dollar and the Japanese Yen (USD/JPY) (The Gopher)

3. British Pound and US Dollar (GBP/USD) (The Cable)

4. USD/CAD

5. US Dollar and Swiss franc (USD/CHF) (The Swissie)

6. AUD/USD (The Aussie)

Forex trading is usually done by hiring a broker who places trade according to your preferences. Placing trades with the help of broker does not take more than few minutes. You just make preference and broker passes it to Interbank Market to create your position. As you close trades, your broker also closes your position in the market and credits the forex account with gain or loss of amount traded on that specific day.

Traders or investors interested in exchanging foreign currencies from all corners the world respond to fluctuations in major currencies and buy or sell currencies in an anticipation of generating instant profit for their investment. An investor prefers to buy a currency at lower rate and sells it with an increase in its value in market. In this way forex exchange becomes the most lucrative, huge money making market with immense potential of earning profit within a game of few clicks on approaching the desired value of certain currency.