Currency Trading – GZMEIDA.COM

What is FOREX?

The Foreign Exchange Market (Forex) is the arena in which a nation’s currency is exchanged for that of another at a mutually agreed rate. It was created in the 1970’s when international trade transitioned from fixed to floating exchange rates, and is now considered to be the largest financial market in the world because of its huge turnover.

Introduction to Forex

All currencies are traded in pairs and each is assigned with an abbreviation. Here are some of them (Table 1):

EUR Euro

USD US Dollar

GBP British Pound

JPY Japanese Yen

CHF Swiss Franc

AUD Australian Dollar

CAD Canadian Dollar

NZD New Zealand Dollar

SGD Singapore Dollar

‘Base’ currency is the first currency in the pair. ‘Quote’ currency, or ‘term’ currency is the second currency in the pair.

USD / JPY = 120.25

Base currency Quote currency Rate

This abbreviation specifies how much you have to pay in the quote currency to obtain one unit of the base currency (in this example, 120.25 Japanese Yen for one US Dollar). The minimum rate fluctuation is called a point or a pip.

Most currencies, except USD/JPY, EUR/JPY, CHF/JPY and GBP/JPY where a pip is 0.01, have 4 digits after the period (a pip is 0.0001), and sometimes they are abbreviated to the last two digits. For example, if EURUSD is traded at 1.2389/1.2391 the quote may be abbreviated to 89/91.

The currency pairs on Forex are quoted as the Bid and Ask (or Offer) prices:

Bid Ask

USD / JPY = 120.25 / 120.28

Bid is the rate at which you can sell the base currency, in our case it’s the US dollar, and buy the quote currency, i.e the Japanese Yen.

Ask ( or Offer) is the rate at which you can buy the base currency, in our case the US dollar, and sell the quote currency, i.e. the Japanese Yen.

Spread is the difference between the Bid price and the Ask price.

Pip is the smallest price increment a currency can make. Also known as a point. e.g. 1 pip = 0.0001 for EUR/USD, and 0.01 for USD/JPY.

Currency Rate is the value of one currency expressed in terms of another. The rate fluctuation depends on numerous factors including the supply and demand on the market and/or open market operations by a government or by a central bank.

1.0 lot size for different currency pairs (Table 2)

Currency 1.0 lot size 1 pip

EURUSD EUR 100,000 0.0001

USDCHF USD 100,000 0.0001

EURUSD EUR 100,000 0.0001

GBPUSD GBP 100,000 0.0001

USDJPY USD 100,000 0.01

AUDUSD AUD 100,000 0.0001

USDCAD USD 100,000 0.0001

EURCHF EUR 100,000 0.0001

EURJPY EUR 100,000 0.01

EURGBP EUR 100,000 0.0001

GBPJPY GBP 100,000 0.01

GBPCHF GBP 100,000 0.0001

EURCAD EUR 100,000 0.0001

NZDUSD NZD 100,000 0.0001

USDSEK USD 100,000 0.0001

USDDKK USD 100,000 0.0001

USDNOK USD 100,000 0.0001

USDSGD USD 100,000 0.0001

USDZAR USD 100,000 0.0001

CHFJPY CHF 100,000 0.01

Spreads & Margins

Alpari (UK)’s mission is to provide innovative Currency Trading technology combined with quality execution, tight spreads and competitive margins.

Margin is the collateral required by Alpari (UK) to open and maintain a position:

*

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+ An open position of less than 3,000,000 USD (3M) nominal value carries a maximum leverage of 1:500.

+ An open position of 3M – 5M USD carries a leverage of 1:500 for the first 3M and a leverage of 1:200 for the remaining 2M.

+ An open position of 5M – 10M USD carries a leverage of 1:500 for the first 3M, a leverage of 1:200 for the next 2M and a leverage of 1:100 for the remaining 5M.

+ For open positions higher than 10M USD, the first 3M carries a leverage of 1:500, the next 2M carries a leverage of 1:200, the next 5M carries a leverage of 1:100. Everything above carries a leverage of 1:33.

For example, a client opens a position of 12 million USD (for example, 120 lots in USDCHF). His margin requirements will be the following:

Nominal value of open position Funds required to open position Maximum leverage offered

First 3 million = 3,000,000 / 500 = 6,000 USD 1:500

Next 2 million = 2,000,000 / 200 = 10,000 USD 1:200

Next 5 million = 5,000,000 / 100 = 50,000 USD 1:100

Remaining 2 million = 2,000,000 / 33 = 60,606 USD 1:33

TOTAL: 12 million = 126,606 USD

Balance is the total financial result of all completed transactions and deposits/withdrawals on the trading account.

Floating Profit/Loss is current profit/loss on open positions calculated at the current prices.

Equity is calculated as balance + floating profit – floating loss.

Free margin means funds on the trading account, which may be used to open a position. It is calculated as equity less necessary margin.

Calculating profit/loss

For example, EUR/USD exchange rate is 1.2505/1.2507 and your leverage is 1:100. You believe that EUR/USD will go up and buy 0.1 lot of EUR/USD at 1.2507 (Ask price) – for the contract size refer to Table 2. As we can see from Table 2, 1.0 lot of EUR/USD is 100,000 EUR, which means that 0.1 lot (our example deal size) is 10,000 EUR.

So, you buy 10,000 EUR and sell 10,000*1.2507=12,507 USD. In fact to fund this position you do not have to have 12,507 USD but only 125.07 USD. The rest of the money (in our example 12,381.93 USD) is leveraged to you by Alpari (UK).

The leverage (or gearing) mechanism allows you to open and hold a position much larger than your trading account value. 1:100 leverage means that when you wish to open a new position, you need to support a deposit 100 times less than the value of the contract you are interested in.

For example, you believe that EUR/USD is moving higher and buy 10,000 EUR and sell 12,507 USD. Assuming you are right and EUR/USD goes up to 1.2599/1.2601 and you decide to close the position: when you close a long position you sell the base currency (10,000 EUR in our example) and buy the quote currency (10,000*1.2599 = 12,599 USD):

Transaction EUR USD

Open a position: buy EUR and sell USD + 10,000 – 12,507

Close a position: sell EUR and buy USD – 10,000 + 12,599

Total: 0 + 92

NB: When you close a short position you buy the base currency and sell the quote currency.

To fund this position you only need 100 EUR (approximately 125 USD) not 10,000 EUR. The profit on this position is 92 pips (1.2599-1.2507=0.0092). A pip or point is a minimal rate fluctuation. For EUR/USD 1 pip is 0.0001 of the price (see Table 2).

This example shows a favourable outcome. If EUR/USD had fallen you would realise a loss and not a profit. This loss will be magnified as a result of leveraging. For example, if you close the position at 1.2419, your loss would be $88. Should you have doubts about your understanding of risks, please consult a qualified financial adviser.

Lot Size is the number of base currency, underlying asset or shares in one lot defined in the contract specifications. For details refer to the Table 2.

Lot is an abstract notion of the amount of base currency, shares or other underlying asset on the trading platform.

Transaction (or deal) size is lot size multiplied by the number of lots.

Long Position is a buy position whereby you profit from an increase in price. In respect of currency pairs: buying the base currency against the quote currency.

Short Position is a sell position whereby you profit from a decrease in price. For currency pairs: selling the base currency against the quote currency.

Completed Transaction consists of two counter deals of the same size (open and close a position): buy then sell or vice versa.

Leverage is the term used to describe margin requirements: the ratio between the collateral and the value of the contract. 1:100 leverage means that you can control $100,000 with only $1,000 (1%).

Rollover / Interest Policy

Foreign exchange trading at Alpari (UK) is dealt on a "Spot" basis only. This means that all trades settle two business days from inception, as per market convention. The settlement date is referred to as the value date. Alpari (UK) does not arrange physical delivery of currencies hence, all positions left open from 10:59:45 p.m. to 10:59:59 p.m. (London time) will be rolled over to a new Value Date.

As a result, positions are subject to a swap charge or credit based on the "Rollover/Interest Policy" webpage.

Please note that since 03 June 2007 Alpari (UK) Limited no longer closes and reopens the positions which are open at 11:00 pm London time. Instead we have introduced a more convenient method of rollover which involves debiting or crediting a customer’s trading account when he/she holds open positions overnight.

The cost of rollover is based on the interest rate differential of the two currencies. Let’s assume that the interest rates in the EU and USA are 4.25% p.a and 3.5% p.a respectively. Every currency trade involves borrowing one currency to buy another. If you have a buy position of 1.0 lot in EUR/USD, then you earn 4.25% on your Euros and borrow USD at 3.5% per year.

In other words:

* If you have a long position (i.e. bought) and the first currency in the currency pair has a higher overnight interest rate than the second currency, then you receive a gain.

* If you have a short position (i.e. sold) and the first currency in the currency pair has a higher overnight interest rate than the second currency, then you lose the difference.

* If you have a long position (i.e. bought) and the first currency in the currency pair has a lower overnight interest rate than the second currency, then you lose the difference.

* If you have a short position (i.e. sold) and the first currency in the currency pair has a lower overnight interest rate than the second currency, then you receive a gain.

Please note that if you open and close a position before 10:59:45 p.m. (London time) you will not be subject to a rollover.

The act of rolling the currency pair over is known as tom.next, which stands for tomorrow and the next day.

NB: When you roll an open position from Wednesday to Thursday, then Monday next week becomes the value date, not Saturday; therefore the rollover charge on a Wednesday evening will be three times the value indicated on the "Rollover/Interest Policy" webpage.

Why trade Forex?

Unlike other financial markets Forex has no physical location, like stock exchanges, for example. It operates through the electronic network of banks, computer terminals or via telephone. The lack of a physical exchange enables Forex to operate on a 24-hour basis, spanning from one time zone to another across the major financial centres (Sydney, Tokyo, Hong Kong, Frankfurt, London, New York etc). In every financial centre there are many dealers, who buy and sell currencies 24 hours a day during the whole business week. Trading begins in the Far East, New Zealand (Wellington), then Sydney, Tokyo, Hong Kong, Singapore, Moscow, Frankfurt-on-Maine, London and ends in New York and Los Angeles. Below there are approximate trading hours for regional markets (London time):

Japan 00:00-06:30

Continental Europe 06:30-13:00

Great Britain 8:30-15:30

USA 14:30-21:30

Forex has some advantages which make it very popular among investors:

* Liquidity. Forex is the largest financial market in the world, with the equivalent of over $3-4 trillion changing hands daily whereas traded volume on the stock markets equates to only 500 billion US dollars.

* Flexibility. Forex is a 24-hour market, which offers a major advantage over other markets, for example, stock exchanges which are only open during regional business hours. You can respond to breaking news immediately if the situation requires it and customise your trading schedule.

* Lower transaction costs. Traditionally there are no commissions or charges on Forex, except for the spread.

* Margin. Our 1:100 leverage (only for deposits below $ 100,000) is a powerful tool. You need to support a deposit of 1,000 US dollars to make a deal with $100,000. Such high leverage combined with rapid rate fluctuations can make this market profitable but at the same time risky: please see Risk Warning below.

Risk Warning

Under margin trading conditions even small market movements may have a great impact on the customer’s trading account. You must consider that if the market moves against you, you may sustain a total loss greater than the funds deposited. You are responsible for all the risks, financial resources you use and for the chosen trading strategy.

richard
http://www.articlesbase.com/currency-trading-articles/intoduction-to-forex-676645.html

What Impact is Automated Forex system Trading having?

Forex trading opportunities have changed dramatically, it was not that long ago when a deposit of $100,000.00 was your entry level to trading. Now you can open up an account with $500 (in some cases even less) and start day trading.  Although the capital traded dropped considerably the trader still had to adhere to the basic rules of trading.

1.       Use a trading system that had a success rate of 60% or more.

2.       Understand risk/reward ratios.

3.       Understand leverage.

4.       Stay with your trading system, have patience, wait for the right time.

5.       Do not change your exit time by holding on for extended profit or holding on to a losing trade waiting for it to turn around.

6.       Sound money management.

7.       Choose the right Broker.

However even this is changing as we have seen the advent of EAs (Expert Advisors or Robots) arriving on the scene. All of a sudden all the qualities needed to be a good trader are no longer needed, “anyone can buy a piece of software download it and start making money, apparently you don’t even need to know anything about the Forex market”.  Naturally, at this point most Traders walk away saying what a load of rubbish.

Most of these systems are used for day trading and scalping .Well I decided if trading can be automated I would be in to try it. Having to watch screens in the middle of the night has always been the downside of trading for me and one of the reasons I prefer swing trading.

I have bought and tried various robots on offer and have had mixed results. Some needless to say were hopeless however with the newer generation ones I have been pleasantly surprised. I would say if you know nothing about trading you are going to find it harder. The more you understand how the market works and in particular the currency pairing you are going to trade in, the more successful you will be. The basic rules relating to money management and understanding the different values of pips and lot sizes is still a large part of trading. The other main point to understand is leverage. One of the attractions of the forex market is being able to gain large profits by using leverage. Unfortunately the down side is if you can trade higher profits you can also have larger losses. Even if the system is 100% automated this does not mean 100% successful. There are going to be losing runs and you must understand how to manage your equity.

My advice is try these automated systems (only look at the ones that are fully guaranteed), trade only using a demo account(paper trading) until you get an understanding of when it is trading and how often and gauge what your true profit is. Don’t forget you are paying your broker for trading (the spread) and this comes out of your profit. The more often the robot trades the more you pay the broker.  I have written a full review on my experiences with the forex automated trading so please visit my site.

Good luck with your trading.

Lyndsay Wilkinson
http://www.articlesbase.com/currency-trading-articles/what-impact-is-automated-forex-system-trading-having-680903.html

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Uncertainties surrounding the results of the EU bank stress test pushed the single-currency to a low of 1.2888 during the European trade, and the exchange rate may push lower going into the North American session as investors maintain a cautious outlook f…
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I’ve gone through many automated foreign currency trading systems as a beginner currency trader. Sometimes the sales pitch selling the products doesn’t live up to its promise. Then along comes this trading system that not only does what it promises on the box but lets a newbie like me feel like I’m in total control of the forex market – Forex Avenger.

I was lost at first with all the terminology it teaches, but it all started to make sense as I kept reading and watching the videos that shows you step-by-step what to do. You will get a PDF that explains the whole system in very great detail. Being told in words by the PDF what to do still left me a bit unsure, but the videos bring everything together and left me with the crystal clear knowledge of how to setup a trade from start to finish.

I never thought I would make any money forex trading because I didn’t have market knowledge. But this Forex Avenger you don’t need any fore trading knowledge at all. In fact, my first thought with every automated trading system would be: “I wonder how much of my money I’m going to lose by the end of the day?” With this system you won’t lose any money as a newbie or a seasoned trader because you don’t have to use your own money to test and learn this trading system. You can setup a demonstration account e.g. $10,000 or even $50,000. So that is just what I did. When I was confident enough to use the system effectively (by that I mean making money consistently), only then did I start using my own real money.

This course has shown me how to hang on to my money instead of taking chances. This course very rightly points out that most people (including professional forex brokers) think about make a profit as their first priority of foreign Currency Trading and not preserving capital.

I valued the videos that showed me how to set and forget a trade most. I was a bit anxious to step away from my pc because when I did this before I lost money with other systems. I decided one day to take a chance. I setup the trade, picked up my work bag and went out the door to work. I must admit I did almost no work because I was worried about the money I was losing and that I had no way of stopping the trade until I returned home. When I arrived home I went straight to my pc. I didn’t even say hello my wife (which was a mistake at the time). I was pleasantly surprised to find that I hadn’t lost any money at all.

That was the first time that happened to me. But best of all, I made 60 pips profit. I had a look at the pattern on the chart on my pc. I must admit that if the system wasn’t automated I probably would have stopped at certain points for fear of losing my money. This forex trading system works mainly because of the 82% accuracy and the fact that it adapts to market conditions.

Dave Curran’s product does works! End of story! I always wanted to make money on the internet and this has so far been my only ticket to success. If you looking for a way of how to make money on the internet with currency exchange – this is the way – Forex Avenger.

Oh, and for those who need to know – this a clickbank product.

This automated forex trading system showed me how to setup trades. How to limit any loses. When shows you how to enter the market. Then shows you when to sell and when I’m ahead and how to manage my account and my money effectively. Trading in foreign currency can be very risky. But I must say that with Forex Avenger I wasn’t any risk. I had sixty days to test the product. Then I could open a demo account to play around and the system. This demo account is very essential to novice traders like me. I start using my own money to trade with only when I had won more than 70% of the trades consistently in my demo account.

I have not used the advanced methods yet. Dave Curran says that these methods will generate lots more money. My profits are just under $4000 at the moment. Hopefully these advanced techniques will put me in the big money. I’ll let you guys know what Forex Avenger’s advanced techniques did for me soon. Watch this space!

Randall Wilson
http://www.articlesbase.com/currency-trading-articles/forex-avenger-newbie-review-698297.html

Trading Systems & FOREX Guides:

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+70 pips in one trade…

How I trade the FOREX markets. In this video I show how I trade Channel Patterns, which is one of the most profitable chart patterns. About 80% Win Percentage, with big gains and many pips

This is one of my most profitable day trading and scalping strategies.

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FOREX TRADING- What are you Risks:

Every single investment comes with some level of risk. We have all seen the odd bank go under which has quiet often being seen as a ‘safe’ investment.  While forex trading there is the risk of loss in trading off-exchange forex contracts can be substantial. It can sometimes be greater than the initial investment when guaranteed stop losses are not in place. Pleas make sure you are using a broker that offers guaranteed stops, click on this link for a recommendation Best Forex Broker. So if you are considering participating in this market, you should understand some of the risks associated with this product so you can make an informed decision before you start trading. So Trader Beware.  What does come with higher risk, that’s right higher returns.

As shown above if you are considering trading foreign Currency Trading there is that element of high level of risk and may not be suitable for all customers. If you cannot take a loss, do yourself a favor and don’t TRADE, as no matter how brilliant of a trader you are you cannot pick the market 100% of the time.

Money Management:

If you have a solid money management plan in place this can help to reduce the risk of forex trading. So when you start trading you should only use funds to speculate in forex trading that you are prepared to loss, or any type of highly speculative investment for that matter, are funds that represent risk capital fore example funds you can afford to lose without affecting your financial situation. So the day to day money that you require to live on, don’t trade with that. There are other reasons why forex trading may or may not be an appropriate investment for you, and they are highlighted below.

This can be a volatile market and it can move against you very quickly. Also remember you are trading with leverage, in some cases up to 400:1 so make sure you use leverage that you are comfortable with.

You have just blown the stack, lost it all that how fast this market can move.

When you start trading, you are required to open the account with a deposit of money (often referred to as a security deposit or margin, which is what you leverage agains) with your forex dealer. This will then allow you to order or simple terms buy or sell an off-exchange forex contract. Above we showed with the leverage (up to 400:1), a relatively small amount of money can enable you to hold a forex position worth many times the account value. So $1000 can be leverage up to $400,000 so it doesn’t take much of movement to lose the initial $1000.  The smaller the deposits in relation to the underlying value of the contract, the greater the leverage. If the price moves in an unfavorable direction, high leverage can produce large losses in relation to your initial deposit. In fact, even a small move against your position may result in a large loss, including the loss of your entire deposit. This is why using a broker that offers guaranteed stops is paramount. THIS MUST BE ONE OF YOUR TRADING RULES: NO EXCEPTION.

Now there is also the flip side to Forex Trading, if you get the trade direction correct it can result in major gains. Maybe this is why we all love Forex Trading.

Now if you have a great trade and make great profits from forex trading, do not get overconfident. If you become over confident it can be dangerous. Also make sure that you do not overtrade remember the currency market is open 156 hours per week, so don’t panic if you miss one trade. If you exit a trade you should not automatically re enter a trade.

Make sure that when you are trading that you have your rules, stick them, follow them. The forex market is doesn’t work on a popularity basis, so need to ask family and friends their opinion on the trade it will only confuse things.

Forex trading can be very rewarding but make sure you go in with your eyes open, as 90% of traders will go broke, mainly through the above reasons. It is always advisable to get some level of knowledge before you start out in the market. There are a host of forex education courses available. The CFD FX Report has recently reviewed a lot of them, and on our homepage is a company that we believe to be outstanding. A lot of students have come out making over 300 pips per week.

Please though do not spend thousands of dollars on these courses as quiet often they don’t guarantee success and a course of a few hundred dollars such as the course above is normally better.

singapore trader
http://www.articlesbase.com/day-trading-articles/forex-trading-we-show-you-the-risks-699662.html

Automated forex trading system based on the Ichimoku indicator. Expert advisor robot trader built for metatrader MT4.

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- Strong gains on Asian and European indices drove advances in the New York session before and just after the opening bell as US traders returned after a three-day long weekend. Risk appetite was inspired by healthy showings in European peripheral auction…
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