Your Ideal Investment Guide

Start With a Practice Account (Part I)

Aug 20, 2009 Stock Investment

Almost every forex broker offers a free practice account to new clients. This is used as a marketing gimmick by most of the brokers in order to entice new people to forex trading. All you need to do is to sign up with any good forex broker. The best way for new traders to get a handle on what currency trading is all about is to open a practice account.

Practice accounts are funded with virtual money. So you are able to make trades with no real money at stake and gain experience in how margin trading works. Practice accounts give you the great chance to experience the forex market. You can see how the price changes at different times of the day.

You can trade your practice account with real market conditions without any fear of losing money. How various currency pairs may differ from each other? How the forex market reacts to new information when major news and economic data is released.

You can experiment with different trading strategies and see how they work out in the real market conditions without any fear of losing your money. You will also learn using different market orders. How to manage an open position? Improve your understanding of how margin trading and leverage works and start analyzing charts and following technical indicators.

You can test drive almost all the features and functionality of a brokers platform on your practice account. However, one thing you will never be able to simulate on your practice account is the emotions involved in trading. Controlling emotions is important in order to become a successful trader. Emotions will only come into play once you put your real money on the line. Practice accounts are a great way to experience real forex markets first hand.

There are many ways to pull the trigger in the forex market. Pulling the trigger means how to enter or exit a position. You can trade the current price of the market using the click and deal feature of your brokers platform. You can also use market orders like the limit orders or the one cancels the other orders.

Many traders like the idea of opening a position by trading at the market. Most prefer the certainty of knowing that they are in the market. They dont want to leave an order that may or may not get executed.

You just need to specify the amount that you want to trade. Then click on the buy or sell button to execute the trade. The forex trading platform will respond back within a second or two with a pop-up message either confirming or not confirming that the position was opened. Most forex brokers provide live streaming prices. You can deal with these live price feeds with a simple click of your computer mouse.

Attempts to trade at the market can sometimes fail in very fast moving markets when prices are adjusting quickly like after a data release or break of a key technical level or price point.

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Rollovers in Currency Markets

Aug 19, 2009 Stock Investment

Rollovers represent the intersection of interest rate markets and forex markets. When an open position from one value date or settlement date is rolled over to the next value date or settlement date, this is known as Rollover in currency trading. Rollovers are unique to the currency markets.

Keep this in mind what you are trading is in fact the good old cash. Currency is money after all. So when you talk of money, interest rates naturally come into play. Rollover rates depend on the difference between the interest rates of the two currencies in the pair that you are trading.

It is like having a deposit in a bank account when you are long on a currency. Its like take a loan from the bank if you are short. You should expect an interest gain or an interest expense on holding a currency position over time just as you would expect to earn interest on a bank deposit and pay interest on a loan.

The difference between the interest rates between the two currencies is called the interest rate differential. Think of the open currency position as one currency with the positive balance (the currency you are long) and one with negative balance (the currency you are short).

The interest rates of two different countries apply because your accounts are in two different currencies. You should look for the base or benchmark lending rates in each country. You can find the interest rates of different countries from Wall Street Journal Online, Financial Times online or that matter any good financial website.

The larger the impact from rollovers, the larger the interest rate differential! The smaller the impact of the rollovers, the narrower the interest rate differential! If you hold an open position past the settlement date or value date, rollovers are usually carried out by your forex broker.

Some online forex brokers apply the rollover rates by applying the rollover credit or debit directly to your margin balance. Other forex brokers apply the rollover rates by adjusting the average rate of your open position. Rollovers are applied to your open currency position by two offsetting trades that result in the same open position.

Day traders dont have to worry about rollovers. Rollovers do not apply for day traders who usually close their positions at the end of each trading day. Rollovers are not applied if you dont carry a position over the change in the value date. Rollovers only apply to your over night open position carried over to the next day. Rollovers are applied to open position after 5.00 PM EST change in value date.

If you are long the currency with the higher interest rate and short the currency with the lower interest rate, rollover can earn you interest income. If you are short the currency with the higher interest rate and long the currency with the low interest rates, rollovers will cost you money.

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Forex Robots Why We Need Them

Aug 18, 2009 Financial Investment

One common problem with forex trading is that we dont know when to stop, if you are a forex trader you know what I mean. Sometimes we open a deal and suddenly the graph starts to go exactly the way we want it to go. And we start to see the green number getting bigger and bigger. But we are greedy; we start to change the take profit parameter in order to earn more money from this deal.

Then the graph change direction and the green number start to decrease, we hate it when it does that, but we do nothing because we hope it will change a gain, but without even knowing it the green number turns to red and started to increase.

We could earn $50 from that deal but we wanted more and ended up losing a $100. And the possibility of earning make us open a ruche deal again, we want we want to earn our money back. And we lost more.

What makes most of the people loss money with forex is two elements, they dont know when its enough, and they minimize the stop loss to loss as minimum as possible. With forex trading you need to be cold, analyze the data and if you think that the graph will go up; open a deal and give it good range of stop loss, most of the time it will go up and down up and down before making the jump. I am trying to make it simple! Thats why I love software, it cannot feel, get angry or get greedy. It does exactly what I ask it to do and will not make any changes in the way.

We use Forex robots not to have better trading deals, we use them because they can handle what human fails to handle. Some good forex robots can analyze data, and forecast changes, you only need to set the amount and press OK. This makes some robots very easy to use and bring back great results.

If you are losing money with forex trading try to use a good robot to manage the trading for you and you will see the results. However robots cannot do all the trading, you need to be in charge, so even when you are using a robot you must be able to analyze the data and figure out how the graph will behave.

Forex trading is like a sport, training and skills are required to give good results, robots can cover the skills but you need to cover the trainings

There are a lot of software and robots online, and sometimes it will be difficult to tell the difference between them. Some robots were designed by very professional traders, that gives them the advantage of analyzing the data and behave exactly as their designers. Others were designed by marketers only to bring them commission from forex broker that they work with, or by selling these robots to naive traders.

The only way for you to choose is by testing yourself, and it can cost you a lot of money, or by trying to ask others to recommend a robot for you.

I personally work with Forex robot called Fap turbo, its very popular online and very reliable, my experience with this robots shows that it require more understanding of how it works, but it is giving me great results. It plays in the safe zones which result with minimum earnings; but its a lot better than losing. If you can guarantee minimum earnings it great, and thats what this robot does.

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Getting the Right Forex Trading Broker

Aug 18, 2009 Financial Investment

Finding a good forex trading broker can be tough, not because there are too few of them, but because there are so many of them. With all of the choices out there, trying to find the right one can be overwhelming. But, when searching for a forex broker, here are some tips to keep in mind.

* Choose One That Offers a Free Demo Account

A free demo account is something most online forex brokers offer to their new customers today. Why not take use of them?

Not only are demo accounts a great introduction for those new to forex trading, it will also let you take a look at the trading platform used by that broker. You want an interface that is easy to learn and understand, and that you will be comfortable to use.

* Always Ask For References

Yes, you should ask for references! In fact, a good broker may often offer you his references. You need to be able to talk to other people who have used his services, and find out whether or not they are happy with their experiences.

If a broker is unwilling to give you references, he probably is not your choice.

* Check Out the Minimum Deposit Requirement to Open an Account

With different forex brokers, there is a minimum amount you must deposit into your account when you start doing business with them.

If one broker requires a larger deposit than you are willing to make to start, search for one that requires a lower minimum. There are options out there for every investor, no matter how much or how little they have to invest.

* Find Out the Broker’s Credentials

There is no centralised, governing body to regulate the whole forex market over the world. However, the business practices of each forex broker is regulated by institutions in the countries where they are located.

For example, a broker located in the US should be registered as a Futures Commission Merchant (or FCM) with the Commodity Futures Trading Commission (or CFTC). They should also be registered with the National Futures Association (or NFA).

* Examine the Service Charge

Keep in mind that cheaper is not always better.

Compared to their competition, some brokers may charge less for their services. However, they may try to make up for the difference with hidden fees that you may not even be aware you are being charged.

Before going into business with a broker, ask about possible hidden fees, read the fine print, and learn as much about them as you can.

It can be an inevitable (and sometimes painful) experience for most forex players to find a right forex trading broker. With the tips given in this article, you should at least know what to look at. Remember, though, you can still make mistakes but don’t get frustrated. Sometimes, we just grow out of try and error.

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Know These Trading Secrets

Aug 18, 2009 Stock Investment

Trading is not investing. Trading is speculating. Trading can be challenging. Speculating is defined as taking business risk in the hope of profiting from market fluctuations. Successful speculating requires predicting outcomes and analyzing different market situations. It also requires putting your money on the side of the trade on which you think the market is going to go up or down.

Trading can also be the appreciation of the fact that if you apply the correct techniques for analyzing trades, managing your money and protecting your account, you can be wrong 70 percent of the time and still be a successful trader.

Right now forex and gold markets are really hot while the stock market is down. Stock market was a great investment opportunity a few years back. Over time, opportunity keeps on shifting from one market to another. Gold prices are going up. Those investors who entered this trend in the gold market by investing at the right time if they are going to ride the trend till it lasts in the gold market will make a lot of money. At the moment almost everyone is investing in gold as a hedge against likely USD depreciation. Everyone includes countries like China, Russia, India, hedge funds, institutional investors like big corporation and big banks, and retail investors.

This situation may continue for some months or some years but suddenly you will find that crude oil futures have become a great investment opportunity. Many hedge funds had made a lot of money by investing in crude oil futures in the year 2008.

As the global economy recovers and demand for oil increases, oil prices will again go up in a few years time. Timing for entering the market and the timing for exiting the market is very important for a successful trade. In trading it is the timing that is of essence.

A lot of people make the mistake of focusing only on one market. Many people end up spending time on only one market. In reality all the markets are interlinked. Successful trading requires mastering a strategy that enables you to trade multiple markets and multiple time frames. If something happens in one market, you will find the repercussions in the other markets.

They do testing, development, put on a million indicators, go and trade live. They do everything they can while spending all kinds of time trying to figure out one market and one timeframe. But then what almost happens is that market starts to go sideways or the opportunity shifts to another market.

You really have to have the ability to be able to adopt the market conditions and not waste your time to really master one market which is critical. There were so many stocks just a few years ago that were incredible to trade that either dont exist anymore or would not trade successfully today.

Many gurus will teach you that you really need to learn the ins and outs of one market. They will tell you to focus only on one market and then stick with it. But the problem with that philosophy is that opportunity keeps on shifting from one market to another. Mastering different markets is counterintuitive. Always remember a good trader always follows where the money goes. In other words, follow where the opportunity goes.

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You Can Cut Your Investment Losses And Save Your Credit Rating

Aug 18, 2009 Stock Investment

When a lot of people think of investment properties they seem to assume that they are treated much differently from the home that you live in, but that’s not true, especially where issues like payments and foreclosures are concerned. Any investment property that’s facing foreclosure is a serious problem because that will go on a person’s credit like any other foreclosure. The payments on the investment property have to be kept current and that can be hard to do in a recession and a tight credit market where an investor might not know from month to month whether the money to make the payment will be available.

Investment properties were very popular back when the housing market was booming, and everyone was buying and selling them. Flipping them and reselling them was popular, and so was renting them out for the income. There were waiting lists and houses that went to the highest bidder because people were so eager for them.

Now, though, there are some properties that are almost impossible to even give away. Cities like Detroit and others are allowing people to buy property that nobody else wants for amounts only in the hundreds of dollars, not thousands or tens of thousands. If you picked up a lot of investment properties when the market for them was really hot you probably did very well, but what happened when the bottom fell out of the market and you suddenly weren’t doing so well anymore?

If you’re in that ‘I don’t know what to do with this investment property’ situation, you’re definitely not alone, and you’ll find plenty of other people to commiserate with, most of whom have lost a lot of money to an uncertain and very volatile market. You could also be one of the people for whom things have gone from bad to worse and you’re finding that your investment property is costing you so much that you’re getting behind on the payments and can’t make them for much longer. If that’s where you are, you have two choices: you can try to stick it out because the market is showing some slow signs of improvement or you can try to sell the property and get out from under it before it totally destroys your credit rating.

When it comes to your credit rating there might have already been damage done, but lessening that damage by stopping it from continuing will be helpful later on when you’re looking to be approved for credit for something else, so it might be wise to take steps to protect the credit rating that you have left. Cutting your losses is the next best thing to completely avoiding any damages that would otherwise be taking place, and doing damage control by clearing out investment properties is becoming more common today with so many foreclosures out there. When you want to avoid foreclosure, though, you usually have to get rid of your properties quickly, and you can do that through a short sale, a deed in lieu of foreclosure or other methods if your bank agrees - so find out what you owe on these properties, what they’re worth, and what your bank is willing to do to help you.

When you’re honest about the financial problems that you’re having, your lender will be more likely to try to work with you on them, and it’s a very smart thing to do where an investment property is concerned. It’s really better to talk to a lender before any problems get started but a lot of people are embarrassed about financial troubles or don’t want anyone to know, so they just don’t say anything until it’s too late and they’re really stuck. If you want to save your credit rating and your financial future, don’t let your pride get in the way of talking to your lender at the first sign of trouble making your investment property payments.

Being up front shows the lender that you’re making a good faith effort, and that makes most lenders more willing to work with you and try to get you a better rate, a longer term, or something else that will let you keep the property and make the payments. If it’s obvious that the property can’t be paid for, talk to your lender and see what options the two of you can come up with. It’s very important to try to keep an actual foreclosure off of your credit record, so checking with your lender and talking through all issues is vital to your financial life.

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What Are Market Orders? (Part III)

Aug 17, 2009 Stock Investment

In forex trading, stop loss execution policy is somewhat different than in equity trading. If the broker bid price reaches your stop loss order rate, stop loss orders to sell are triggered. Suppose, your stop loss order to sell is 1.2540! The brokers lowest price quote is 1.2540/1.2543. Your stop loss order will be executed. Almost the same goes for buy orders.

There is a lot of volatility in the currency markets when some economic report is released. Most of the forex brokers will never guarantee stop losses around the release of economic reports. However, under normal trading conditions, some brokers will guarantee against slippage on your stop loss order. Definition of the normal trading conditions is again the discretion of the broker. The downside of this is that your stop loss order will be executed earlier and when placing them on your forex trading platform you will have to add in extra cushion.

One-Cancels-the-Other Orders: A one cancels the other order is a stop loss order paired with a take profit order. A one cancels the other order is usually abbreviated as OCO order. Your position stays open until one of the order levels is reached by the market and closes your position. When one order level is reached and triggered, the other order is automatically cancelled. An OCO order is the ultimate insurance policy for any open position!

OCO orders are highly recommended for every open position. Lets make it clear with an example. Suppose you are short USD/JPY at 120.00. You think that if it goes up beyond 120.00, its going to keep going higher. Thats where you decide to put your stop loss buying order.

You believe at the same time that USD/JPY has downside potential to 118.50. So you place your take profit buying order at 118.50. As long as the market trades between 120.00 and 118.50, your position remains open. You now have two orders bracketing the market. Your risk is clearly defined. Suppose 118.50 price is reached first, your take profit order is triggered and you buy back at a profit. However, suppose 120.00 price is hit first, your position is stopped out at a loss.

Contingent Orders: Contingent orders are also referred to as if/then orders. If/then orders require the If order to be done first. Only then the second part of the order becomes active. So they are sometimes also called If done/then orders. A contingent order is an order where you combine several types of orders to create a complete currency trading strategy.

If the trading platform offer rate reaches your buy rate that means your limit order is only executed. Similarly, a limit order is only executed if the trading platform bid price reaches your sell rate. Your order is only filled based on the price spread of the trading platform. This is the key feature of most forex broker order policies.

Suppose you have a buy order to sell GBP/USD at 1.2655. Your brokers spread on GBP/USD pair is 4 pips. If the trading platform price is 1.2655/1.2659, your buy order will be filled. If the lowest price is 1.2652/1.2656, the limit order will not be filled as the brokers lowest rate of 1.2655 does not match your buy rate of 1.2656. Almost the same thing happens with limit orders to sell.

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Four Ways to Learn Forex Online

Aug 17, 2009 Financial Investment

Nowadays, you do not need to have large capitals to enter the Forex (aka foreign exchange) market. This can be exciting news for average investors. However, it is important to learn enough about this type of investment before you get your feet wet. The easiest way to do so is probably to learn Forex online, and you can do so in a number of ways.

* Get Acquainted With the Jargon

As in any specialized area, the forex market is filled with terms and jargon that can be hard for a beginner to understand. Learning these terms will put you at a definite advantage. You can simply go to any search engine and type “forex terms” into the search box. Once you find a good list of terms, spend some time familiarizing yourself with the unfamiliar jargon.

* Free Online Courses

There are many free online courses designed to teach you the ins and outs of forex currency trading. Taking one of these courses will definitely be worth your time. Again, to find a free course, you can go to your favorite search engine and type “free online forex course” into the search box. Or you can go to a message board frequented by investors and ask if anyone there knows of any good, free courses you should try.

* Learn From the Experienced

There are many professionals, with years of experience in forex trading, who offer their teaching services online. The downside of such courses is that they usually are not free. But the upside is that taking such a course is almost like having a personal tutor, or a mentor who will be there to answer any of your questions, and help clear up anything you find confusing.

Check with people in the market and listen to their recommendations for a good paid online course. Often, those who were once in the same boat as you are in now will be more than happy to help you out.

* Make Use of Free Trial

When you feel you have had enough knowledge, you will want to have some real experience. A smart way to go about, without putting your pocket at risk, is to sign up for a demo or test account with transaction sites that offer such, and most of them do. For about thirty days, in most cases, you can actually try your hands at forex trading for free. These demo accounts will not only let you know whether you are ready to risk your money on the real thing, they will also help you gain hands-on experience.

As you can see, there are a number of ways you can learn Forex online. It is true that Forex trading has opened up a whole world of possibilities to average Joe investors, but you should stay calm. There is no short cut to success in any market, and your investment in education can pave the road for you.

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Different Types of Market Orders (Part II)

Aug 16, 2009 Stock Investment

Stop Loss Orders: If you dont use stop loss orders, you are leaving yourself at the mercy of the markets. A dangerous proposition with unlimited downside risk! Stop loss orders are critical to your trading survival. If the market moves against your position, stop loss orders are used to limit losses. The traditional stop loss order does just that. It stops losses by closing out an open position that is losing money.

If you are short, your stop loss order would be to buy but at a higher price than the current market price. Stop loss orders are on the other side of the take profit orders but in the same direction. If you are long, your stop loss order would be to sell but at a lower price than the current market price.

Trailing Stop Loss Orders: A trailing stop loss order is a stop loss order that you set at a fixed number of pips from your entry rate. The trailing stop order adjusts the order rate as the market price moves but only in the direction of your trade.

Suppose you are long on EUR/CHF at 1.2654. You set the trailing stop loss order at 30 pips. The stop will initially become active at (1.2654-30=) 1.2624. The trailing stop loss order continues to adjust itself higher as the market moves higher. The stop adjusts itself and will become active at 1.244 if the EUR/USD rate goes up to 1.2674.

Your trailing stop will be 30 pips below the top when the market puts in the top. The trailing stop loss order will be triggered and your open position closed if the market ever goes down by 30 pips. So in our example, you are long at 1.2654. You set the trailing stop loss at 30 pips and it became active at 1.2624.

If the market never ticks up instead goes straight down, you will be stopped out at 1.2624. If the market first rises to 1.2664 and then declines 40 pips, your trailing stop loss order would have first risen to 1.2664-30=1.2634. Thats where you would be stopped out.

You must have heard the saying: Cut your losses and let your winners run. A trailing stop loss order allows you to do just that. The idea is that when you have a winning trade on, you wait for the market to stage for a reversal and take you out of your trade by using the trailing stop loss order instead of picking the right level to exit on your own.

Using stop loss orders is critical in trading as it helps you in money and risk management. Trading without the stop loss orders is foolish! Never ever do that! So the key to successful trading is to cut losing positions quickly and let winning positions run. This is what a trailing stop loss order does. It helps your winners run and cuts your losses.

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What Are Market Orders? (Part I)

Aug 15, 2009 Stock Investment

Currency traders use market orders to catch market movements when they are not in front of their screens. Just to remind you that forex markets are open 24 hours a day, five days a week. A market move is just likely to happen while you are asleep or in the shower as while you are sitting in front of your computer screen.

Market orders are very critical to your trading success. Think of the different types of market orders as trades waiting to happen. If you enter an order and the subsequent price action triggers its execution, you are in the market so be as careful as possible while playing with the market orders. Trading can be very difficult without these market orders.

Professional currency traders routinely use market orders to capture sharp short term price fluctuations, limit risk in volatile or uncertain markets, implement a trade strategy from entry to exit and preserve trading capital from unwanted loss. Market orders are essential for maintaining trading discipline.

Currency markets can be notoriously volatile and difficult to predict. There can be sudden price swings. Using market orders can help you capitalize on short term price movements while limiting the impact of any adverse price movements.

You probably dont have a well thought out trading plan if you dont use market orders. A disciplined use of market orders will help you quantify the risk that you are taking while there is no guarantee that the use of market orders will limit your losses and protect your profits in all market conditions. It will also give you the peace of mind in trading.

Multiple types of market orders are available in forex markets to forex traders. However, you should know that not all market orders are available at all online forex brokers. So when you open an account with a forex broker, you should add the market orders to the list of questions you need to ask the broker.

Take Profit Orders: When you have an open position in the market, use the take profit order to lock in profits. There is an old market saying, You cant go broke taking profits. Suppose you are short GBP/USD at 1.2354. Your take profit order will be to buy back the position and be place somewhere below 1.2334. Making you a profit of 20 pips! If you are long EUR/USD at 1.2845, your take profit order will be to sell the position somewhere higher close to 1.2875.

Limit Orders: A limit order is any market order that triggers a trade at more favorable levels than the current market price. Dont forget the saying, Buy low and sell high. If the limit order is to buy, it must be entered somewhere below the current market price. If the limit order is to sell then it must be placed somewhere above the current market price.

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