Do You Need to Learn to Day Trade Forex?

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Day trading Forex has become incredibly popular over the last number of years. With real-time Forex data readily available it is now easy for anyone to have access to the intrady charts necessary for day trading. The advent of automatic Forex trading has also made Forex day trading very popular.

Before we get to the question, “do you need to learn to day trade Forex?” let’s look at what Forex day trading is. In day trading each trade is opened and closed all within the trading day. In other words, no trade is left open until the next trading day.

Many day trade because they feel that it lowers their exposure to moves the market may make against them overnight. To these traders, day trading gives them additional risk control.

Day trading is also popular because the feedback loop is short. What we mean by this is that by closing your trades by the end of the day you get rapid feedback. You know within a relatively short period of time if the trade worked out for you or not. Many people enjoy this type of trading because it feel good to end the day with a profit.

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How to Trade Forex Successfully

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Every beginning trader wants to know how to trade Forex successfully. We are all concerned with how Tamika Proffitt and Forex trading.

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Why Are Traders Interested In The Forex Market

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As the biggest financial market in the world the Forex market draws the attention of millions of potential investors. Currency trading is a very trendy and popular way for traders to grow their investments. Few other methods of investment have grown or continues to grow at the rate that currency trading does. Founded in 1971 as a cash inter-bank and inter-dealer system the Forex market is not a market in the traditional sense of the word. The market does not physically exist in any country or location. The actual buying, selling, and trading of currency is done either by telephone or computer. In that sense it is only a market in name only. Since its founding the Forex market has grown into one of the of the most popular forms of investing worldwide with over 3.5 trillion dollars in turnover every day.

When does the Market Open?

The Forex market is distinctive from other trading markets because it essentiallynever closes. It remains open all day 5 days a week with no breaks from the action. Every country has people who are willing to trade amongst each other at any time of day. This is the reason why the market is so appealing to people. Traders appreciate this aspect of the Forex market and use the flexibility of trading at any time of the day to their advantage. They do not have to worry about the market closing at a certain time every day or what would happen to the market during the overnight hours.

How Exciting is the Market?

While around the clock trading is already a big draw for traders they are also drawn in by the atmosphere of the market. Trading can be very exciting for investors and the Forex market has no shortage on excitement for its participants. There is a great sense of liquidity in the market thanks to trillions of dollars changing hands every day. The amount of money being exchanged each day and the seemingly endless number of traders makes trading in the market thrilling. Any trader or potential trader looking for endless excitement should look into the Forex market. It is set apart from other markets in that you can enjoy it all day long without worry about when the starting or ending bell would ring. That lack of day to day stress over such things adds a certain fun element to the Forex market that cannot be duplicated.

Is the Forex Market for me?

Originally the trading market was only for the rich. A starting trader had to deposit at least a million dollars with their bank to begin trading on the market. Since the amount of the initial investment was so high it was very difficult for anyone but the rich to trade. As time went on the market opened to traders who had less money to invest. The more accessible market allowed many small time traders to begin trading from the comfort of their own homes. The lower margin requirements allowed smaller traders to trade with larger traders on equal terms. This made the Forex market even more attractive to the small investors. The explosive growth of the Internet allowed smaller home based traders to get in on the action via their home computers. It was not until recently that anyone but the larger traders were allowed to access or use of the Forex on any level. Now the Forex market works with all types of investors.

The Forex market is one that clearly offers a number of opportunities, flexible hours, and a high level of excitement. Millions of people are drawn to the Forex market on these reasons. The sheer number of options in the market is what makes it a popular discussion topic in top business schools today. Check for classes about this exciting opportunity at your local college if you’re interested in learning more. Taking a class will help you get informed about the rules and regulations that all traders need to know. Once you learn the rules of the game you can jump right in and begin trading in this exciting marketplace!

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The Lowdown On Day Trading

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Day trading is a style of trading in the currency market, commonly referred to as the forex (short form for foreign exchange) market in which a trader completes his entire trade activity during a single day. This involves quick buying and selling to make profits from the fluctuations in the currency exchange rates during the course of the day. A limited number of transactions are made during the day with the purpose of optimizing gains from the volatile forex market.

The concept of day trading can be confusing depending upon the method or system employed, in the trading process. Currency rates keep fluctuating during the entire day, depending upon many factors like supply, demand, important political or economic decisions and even on rumors. When compared with other markets like stock markets, forex markets are easily affected by rumors. Real-time events, happenings across the world affect the currency rates fluctuations seriously. Mere gossip and rumors can bring the rates down or push them up without any clear logic or reason. An expert trader who is able to analyze these events and trends in an accurate manner can make significant gains through day trading.

The currency market is the premier liquid market in the world involving daily forex trading volumes exceeding 2 trillion US dollars. This enormous daily trading volumes of forex market ensures that it remains as the world s largest and most efficient market. The practice of day trading is the prime reason for some of the liquidity and huge trade volumes of forex market. The key difference between day trading and other forms of trading is that the holding period for the currency is short and nothing is held beyond the close of trading for that particular day.

The currency market is open throughout the day, with no market closing involved, and hence the rule is slightly changed. The currency market remains open from Sunday afternoon to Friday afternoon and trading goes on in a continuous manner, enabling you to pick your convenient time of trade instead of being tied down to a trading time schedule.

HOW TO MAKE MONEY IN DAY TRADING

The superficial difference between a day trader and an investor is the length of time for which each one of them holds on to their trades. The real difference is in their mindsets regarding short term vs. long term and liquidity. An investor buys with an intention to hold on on a long term basis as he is confident of its steady increase in value, resulting in profits over an extended period of time. A day trader is like a surfer who rides the waves of the many price fluctuations in the currency market.

LIMITING OF THE LOSS IN DAY TRADING

Minimizing losses in day trading can be a hard as well as a tricky issue for a new trader. Let’s say you make a trade in a currency with a downward trend, at a point which you presume to be pretty close to the support point. It may be that the currency price bounces up and keeps on rising further down. This can lead to a situation where you re losing money at a point where you were supposed to be reaping profits. The obvious choices in front of you are either to hold on to the trade as per your initial plan or to limit the losses by exiting the trade before it slips further below the permissible loss levels.

If you want to be a winner in day trading, you must maximize your wins and limit your losses. Ensure that you set your stops and stick to them without wavering. Similarly, if your forex trading system dictates, decide in advance regarding the profit you plan to make in a specific trade and set a limit order to exit the trade as soon as the currency hits the preset mark.

YOU MUST KNOW WHAT YOU RE DOING

As in every other business, those who take their time to learn the forex market in an exhaustive manner, so as to accurately analyse its trends, and master the ins and outs of the trade, are more likely to be richly rewarded. Those who jump in without any forethought or without the necessary preparations essential for the forex market, are doomed right from day one and are destined to incur heavy financial losses. You must never forget the fact that high profit potential is always accompanied by higher risks. Ensure that you re doing the necessary ground work by absorbing the correct training. Read as many informative books on the subject before you start with your own trading. Harnessing the key skills, necessary knowledge and expertise in the forex market is very important if you want be successful in this field.

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The Four Traits That Successful Forex Market Traders Share

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The fastest way to get your investment to its maximum potential is by using the Internet to trade in the Forex market. There are certain advantages in the foreign exchange markets that make them more desirable then other markets like options, stocks, and even traditional futures. Small and large traders alike can enjoy the advantages that the Forex market has over those traditional opportunities.

Listed below are the top four reasons why trading in the Forex market on the Internet should be considered for your next investment opportunity. These tips can help you become a very successful Forex market trader.

Reason #1. Trading over a volume of two billion every day the Forex market is by far the largest trading market. The sheer size of this market gives its traders seemingly endless liquidity and flexibility to conduct their trades. The market is five times larger then the futures market and over three times larger then the equity market.

Reason #2. The Forex market is available for business 24 hours a day, 5 days a week, three hundred and sixty five days a year without fail. Trading can fit onto anyone’s schedule because traders do not have to wait for the market to open day after day. The flexibility of the market makes it an attractive option to traders and investors from all backgrounds.

Reason #3. Forex trading is unique from other types of investment options because it involves buying one currency type while selling another. Since you are trading currency pairs as they go up and down you have the opportunity to make a profit no matter how good or bad a particular currency is fairing in the market. The actual market for trading has also been greatly simplified into only fourteen pairs of currency to trade. There are thousands of futures, stocks, and options out there compared to the fourteen pairs of currency on the Forex market. The simplicity in terms of number of things to monitor should be considered when weighing whether or not to go into this market.

Tip #4. Another reason why more investors are coming to the Forex market is because they can gain more leverage on their investments. Open trading accounts in the market are being offered margin ratios up to 200/1 by brokers. $200 mini-Forex accounts can be opened with a 0.5% margin offered. Here $50 in trading capital can control a currency position worth 200 times more.

Trained Forex traders can spot and take advantage of many entry and exit points in the market. This is because the prices for the Forex trend very well as opposed to other markets. Trading Forex on the Internet involves no hidden fees, no exchange fees, and no fees for commissions unlike other options. The only notable fees come from Forex brokers who take the spread as their fee. Since there is no need to calculate commissions or additional fees a trade can be initiated and completed in a matter of seconds. The added speed and convenience of a computer is much speedier than trading with your broker via the telephone.

Newcomers to Forex Trading will need to know the terminology to get a grasp on trading. We have provided a basic list of terms you will need to know to begin trading in the marketplace:

Spot Market – This is the market for exchanging currencies that are usually settled within two business days. An example is the exchange of the US Dollar for the Canadian Dollar which takes one day.

Exchange Rate – The value of one currency compared to another. An example would be the European Euro against the US Dollar having an Exchange Rate of 1.3200. In this case 1 Euro would be worth 1.3200 USD.

Currency Pair – Currencies must be bought and sold in pairs on the Forex market as two currencies make up an Exchange Rate. When one currency is bought another is sold using this method.

Base Currency – The first currency in a Currency Pair.

Counter Currency. The second currency in a Currency Pair. Also known as the ” Terms ” currency.

Broker – A firm that will match up a buyer and seller for a transaction fee.

Sell Quote – Represents the price you can sell the Base Currency for. It is also known as the ” Bid ” price. It is usually displayed on the left side. An example is EUR/USD quoting 1.3200/03. You can sell one Euro for 1.3203 USD.

Buy Quote – Represents the price you can buy the Base Currency for. It is also known as the ” Ask ” price. It is usually displayed on the right side. An example is EUR/USD quoting 1.3200/03. You can buy one Euro for 1.3203 USD.

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Some Key Differences Between The Stock Market And The Forex Market

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There are several reasons why forex trading, rather than trading in stocks, appeals to a lot of people. This is largely because trading in forex can be much more lucrative than trading in stocks. All an investor in forex has to do is to spot a favorable trend in the daily fluctuations in foreign currency, and have a system which will tell him when to start trading and when to quit. Another reason is that there is as much as a one hundred-fold leverage in forex, permitting the trader to make substantial profits with very little working capital.

A great advantage with forex is that the market is open throughout the day while the stock market works only during specific hours in a day. Further, trading in forex requires no commission to be paid to anyone, thus saving significantly on one s investment.

People who have some experience trading in stocks but none in forex trading tend to think that trading in foreign currency not only involves great risks but that the gains may be small or insignificant. They get this impression because compared to other types of trading there is not much information available on currency trading.

Forex traders need to educate themselves and get trained in the business, not just by looking at news items on currency values but by reading newsletters and finding ways to learn about the many ways to profitably trade forex. Being a huge market that is open day and night is a great advantage to a forex trader who can actually work all 24 hours of the day if he wants to, trading across time zones starting with Asia, through Europe and finishing up in America! If you link this with the leverage available in forex trading the chances of making huge profits are astounding.

Trading in the stock market is not without its own advantages. A person could invest in stocks without knowing too much about the business and yet do well. It is considered quite safe for a person to invest in blue chip stocks because they are known to hold their value well. You can do well investing in stocks if you are interested in long term equity growth. However, if you want quick returns for your investment, then forex trading is for you.

It is difficult to visualize the extent of the forex market. It is so huge that no single investor can monopolize the market, as could happen, and indeed has happened, in the stock market, or trading in precious metals and commodities. There are people who feel that forex is risky business. Pension funds are never invested in forex trading.

But if you get proper training and education in forex, you can make a lot of money in this market. Take the case of George Soros, the billionaire, for instance. He made a profit of two billion dollars when he shorted the British pound sterling! He has more than $ 4 billion under management, and takes in more than 60% profits in Quantum funds. Of course, he has a lot of money to invest. But he says that all he does is make huge profits when he can, and keep his losses to the minimum. He also confesses that he is wrong half the time, but does quite well when he is right. Soros studies the stock market of a given country and if current trend in its stock market has overshot its mark, he takes an opposite position and ends up making an enormous profit. When Wall Street crashed in October, 1987, Soros incurred a loss of $ 2 million. He said that the loss was due to an error in his judgment. He had expected the Japanese stock market to crash and was prepared to make a profit from the fall off in the US. But it was the American stock market that crashed. Soros works on the principle that one must pay for one s errors of judgment, but take in the profits when one can, and just keep going without agonizing over losses. Soros is a great example for how one could do well in forex trading, which is not without its risks. If only one would take the trouble to learn all about forex trading, train himself and be courageous enough to take some risks, he could be in a good position to make a great deal of money. But if you are afraid of incurring losses, then forex trading is not for you.

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Basics Of Exotic Currencies

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Exotic currencies are defined as a currency that is both illiquid and thinly traded. This does not mean that it is a exclusively a “minor” or “major” currency compared to others. Some examples of minor currencies are the Australian, Canadian and New Zealand dollar. Some currencies that are considered major are the Japanese Yen, the Euro, the British Pound, the Swiss Franc and the Deutsche (German) Mark. In the eyes of the overall foreign exchange (forex) market, exotic currencies are just as important as these major currencies.

The importance of the forex market is highlighted by the fact that most major banks and central banks like that of the United State’s Federal Reserve depend on it as their sole domain. On an annual basis, these institutions regularly make substantial profits from the fluctuating forex market that is subsequentially extended to citizens and bank account holders.

As a result of the increases in international trade and foreign investments, countries have become gradually more dependant on each other. As such, other countries become sensitive to internal changes in another country’s economic activity which tends to alter and fluctuate the currency’s value and interest rate. As such, the monetary health of a country is linked to this currency and its performance.

Certain banks have been able to buy into foreign currencies with 20-30% of their funds, with the profits being responsible for 40-60% of their total margin. Until recently, the American public has been relatively unable to participate in this market. This is due to two main factors: accessibility to general traders and investors and minimum account requirements. The good news is that instead of the requisite $200,000 to open an account, a member of the public can open the account with less than $10,000, often much less. This has allowed for increased awareness and visibility of the currency market.

Five major currencies dominate the forex market: the U.S. dollar (USD), the British pound (GBP), the Japanese yen (JPY), the European euro (EUR) and the Swiss franc (CHF). These currencies are highly rated for their high volume of trade and market depth, so much that they account for the vast majority of the trading activity in North America alone. Minor currencies like the New Zealand dollar (NZD), Australian dollar (AUD), Canadian dollar (CAD) and the French franc (XPF) still carry a respectable activity rating and account for 3-7% of the total market volume despite the increased difficulty in trading these currencies. Together, minor and major currencies represent the stable currencies that are actively traded in the forex market.

Top three most traded currencies in the world:

The U.S Dollar Index is the rating that describes the relative strength of the Dollar. It is also responsible for reflecting the statistical weaknesses or strengths that the Dollar is trending towards. Simply put, if the index figure is tending towards a large growth the U.S Dollar is getting stronger. Likewise, if the Index drops then the U.S. Dollar is weakening. In the past twenty years, the Dollar has gradually dropped in its Index, reflecting an international mistrust of financial policies that result in large budget deficits.

Europe has taken movements toward what many economists term “Euroland” with the institution of a standard single currency, the Euro. Currently there are eleven nations that participate in the European Union: France, Spain, Belgium, Italy, Portugal, Austria, Finland, Luxembourg, Ireland, the Netherlands and Germany. With a total combined population of 300 million people they account for almost 20% of the world’s economy. Its also America’s largest foreign market, twice the size of Japan and Canada’s combined. Trade activity going back and forth between Europe and the U.S. has been in close balance for nearly a quarter of a century. In contrast, the U.S. runs large trade deficits against Asia.

Japan and its Yen continues to be one of the most stable and undisputed global economic strongholds of today’s market. Since World War II their government has applied all of its resources into developed a strong economy. As a result, the Yen has become the third most traded currency in the worldwide market.

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