FOREX Trading For Absolute Beginners

FOREX Trading For Absolute Beginners

by Yusoff Allian

The FOREX market, or Foreign Exchange market, is the largest financial market in the world, with roughly two trillion dollars worth of transactions taking place daily. The source of all this activity is the buying and selling of money - specifically the currencies of countries from around the world. To give you an idea of just how popular FOREX trading is, the volume traded daily on the FOREX market is three times that of the stock market and futures market combined!

Until recently only traders with huge amounts of capital available could participate in FOREX trading -minimum requirements upwards of $10 million were required before you were allowed to trade, so naturally the little guy was shut out completely. With the coming of the internet, however, opportunities arose for FOREX trading firms to offer accounts to everyday traders with limited start-up funds.

So what exactly would you be trading on the FOREX market? As mentioned above, the simple answer is money, but it's a little more complicated than that. If you look at a FOREX quote you'll notice that the currencies are quoted in pairs. What this means is that you're actually buying one currency while selling another currency at the same time. For example, you will see quotes for the U.S. dollar and the Euro listed as USD/EUR, or the Japanese Yen and the Canadian dollar as JPY/CAD.

One of the chief advantages to FOREX trading is the ability to trade 24 hours a day, and almost seven days per week. Because there is no physical exchange, transactions occur electronically every second around the world. And due to the huge volume of transactions that take place every day there is never a worry about filling your order or selling your currency - there's always someone willing to sell to you or buy from you, no matter what time of day it is.

Another advantage of FOREX trading is the ability to leverage your investment funds. What this means is that you can control large amounts of money with relatively small amounts of actual cash. FOREX brokers typically offer a 200:1 leverage ratio, meaning you can control $20,000 worth of currency with $100 worth of capital. Used wisely, leverage can catapult the average FOREX trader into the next level of FOREX trading. Keep in mind, however, that although leverage can provide the FOREX trader with the ability to trade in levels unreachable in other areas of investing, rushing in without enough knowledge can cause you to quickly lose your investment capital.

So how do you best prepare for profitable FOREX trading? Fortunately, most FOREX brokers offer demo accounts along with FOREX news, reports, and up-to-date charts. Patience is most definitely a virtue when it comes to FOREX trading, and taking the time to practice trades and learn how to read FOREX charts effectively can make the difference between huge profits and losing it all. The information is out there, and in most cases it's free, so read until you become confident enough to turn your practice trades into real FOREX trades.

FOREX Trading Signals - Are They Worth It?

FOREX Trading Signals - Are They Worth It?

by Yusoff Allian

Someone new to FOREX trading may be tempted by the promise of easy profits made by companies that offer FOREX trading signals as a paid service. Indeed there are signal providers out there that do consistently provide decent profits over the long term, but the vast majority of FOREX signal providers are unable to live up to their promises. A new FOREX trader is much better served by learning how to identify entry and exit points themselves, but if they do choose to employ the services of a FOREX trading signal provider there are a few points they should be aware of before handing over their hard earned money.

Keep in mind that FOREX signal providers can charge anywhere from $50 per month to $500 per month, so you'll want to be sure that you get your money's worth. The mere fact that providers are charging money for their signals is usually enough for most professional traders to avoid their services - the thinking being that if their signals were any good they'd be keeping them to themselves and making a bundle from trading alone.

Still, as mentioned above, there are some good signal providers out there so you want to be able to determine the honest providers from the less reputable ones. An easy way to shorten your list of candidates is to focus only on the FOREX signal providers that offer you a free trial. Any provider worth their salt will allow you to try their signals out for a month without any financial obligation. While you're trying out their free service take a look at their past results - have they been consistently profitable over the long term? Any legitimate FOREX signal provider will not hesitate to show you their past results.

Let's assume at this point that you've found a FOREX signal provider that has given you a free month trial, shown positive results in the past, and offers their services at a reasonable monthly rate. Take advantage of their demo account (any broker you use should offer free demo accounts that let you use real data with fake money) and apply their signals to your fake trades. How is it performing? Are the entry and exit signals yielding generally positive results? No signal will ever be 100% accurate, so what you're looking for is a positive result over the long term. Try the signals out for the month and if you're consistently seeing profits then you've likely found yourself a winner.

It's important to realize that although you can pay others to send you FOREX trading signals you'll be much more profitable in the long run if you understand the concepts yourself. Take the time during your free month trial to fine tune your trading strategy and focus on building up your trading discipline.

FOREX Trading Software Reviews

FOREX Trading Software Reviews

by Yusoff Allian

Success in FOREX trading is all about timing - knowing when to get in and when to get out can make the difference between huge profits or heartbreaking losses. There are many companies offering their services as signal providers, and for a modest monthly fee they'll send you real-time signals (even via your cell phone) letting you know when to buy or sell a currency pair.

Ideally you'd like to be able to identify trends by yourself without having to rely on a signal provider, but this will take time to master. By all means begin your education in recognizing trends and in-depth technical analysis, but in the meantime you can make use of some personal FOREX trading software to aid you in your FOREX trades.

As mentioned above, there are plenty of signal providers out there, but finding a reputable one can be a tricky task and can cost several hundred dollars per month. Fortunately there's an alternative - FOREX trading software that you can download and run on your home computer. There are two pieces of software out there right now that are quite popular and offer excellent FOREX signal notification, so no matter if you're a short term trader, swing trader, or long term trader one of these FOREX software programs should be part of your trading arsenal.

FOREX Killer is a FOREX trading software program designed to run on Windows. FOREX Killer can take data from any FOREX broker that can export historical data in a .csv format. Once imported into the program, FOREX Killer allows the user to select a time frame and currency pair. Enter your desired stop loss and take-profit level and start the calculation. FOREX Killer generates two sets of signals, short term and long term, and lets you know whether you should buy or sell based on current market prices. This particular FOREX software program supports most of the common currency pairs, as well as gold, stocks, and futures.

The next FOREX software program to consider is called Prophet1 Expert Advisor. This program bases its signals on two popular indicators, moving averages and MACD's. This allows the user to make use of this software for day trading purposes, but it's certainly not limited to that time frame. Based on back-testing this FOREX software program boasts an admirable 90% win rate, and this is using its default settings. As with FOREX Killer, alerts can be sent via email or to your cell phone.

No matter what software you end up using, don't rely on it solely to make you money. It can be a powerful tool to help you succeed in FOREX trading, but it's very important that you take the time to educate yourself on the inner workings of FOREX technical analysis. It can seem daunting at first, but once you understand how signals are generated you'll be in a much better position to adapt to the ever-changing world that is the FOREX marketplace.

How To Choose The Best FOREX Broker For You

How To Choose The Best FOREX Broker For You

by Yusoff Allian

Until recently it was a fairly simple process to figure out which FOREX broker was best for you as there were only a handful available. With the rise of the internet and the explosive growth of FOREX trading, the number of FOREX brokers has skyrocketed. It may seem overwhelming given the sheer number of FOREX brokers available to you, but by carrying out some simple research and doing your due diligence you will be able to pick a FOREX broker that's right for you.

It might be a good idea at this point to back up a bit and understand what a FOREX broker actually does. Basically, a FOREX broker is a person or group of people that carry out trades for an investor. The nice thing about using a FOREX broker is that they don't charge any commission per trade like you see with the stock market. Instead, FOREX brokers make their money by taking the difference between the bid price and the ask price of the currency. Be wary of brokers that take too much of that spread as their fee as it can affect your profit margin. Ideally you want a FOREX broker that charges 2-3 pip spreads, and definitely avoid any that charge anything higher than 5-pip spreads.

Probably the most important factor to look for when choosing a FOREX broker is whether or not they're regulated. Any U.S. based FOREX broker should be registered with the Commodity Futures Trading Commission (CFTC) and should also be a member of the National Futures Association (NFA).

You can visit the NFA's website at http://www.nfa.futures.org/basicnet and look up any FOREX broker you're interested in. Make sure you deal with a broker that has a clean record and has solid company financials. Any FOREX brokers that don't meet either of these criteria should be stricken off your list of candidates!

Customer service is an absolute must when deciding on a FOREX broker. The FOREX market never sleeps, meaning you can trade any time of the day or night. It's very important that any FOREX broker you choose have customer support staff that can be reached at any time, and provide assistance on very short notice. Take note of any positive testimonials on their site that reference the speed and reliability of their customer service, but also visit search engines and try to find other sources that may have written about their experiences with customer service. Good customer service can make a huge difference in your online experience with FOREX brokers, so it pays to do your research.

Find a FOREX broker that offers a trading platform you're comfortable with. The vast majority of brokers offer both web-based applications and downloadable applications. The web-based platform allows you to connect from any computer in the world that has internet access, but can be slower than its downloadable counterpart. The latter has speed on its side, but can only be run from the computer it's installed on. Whichever you choose, make sure the platform offers at least the basics, such as real-time quotes and up-to-date account information.

The criteria listed above are the essentials to choosing the right FOREX broker for you. Other services offered by the broker can be considered icing on the cake, but depending on your situation may also be viewed as critical to your decision making process. Some other factors you may want to consider are the minimum account opening deposit, timely execution of your orders and free charts and analysis.

The 3 Most Profitable FOREX Charts

The 3 Most Profitable FOREX Charts

by Yusoff Allian

A basic understanding of technical analysis can propel the novice FOREX trader from a micro account to the big leagues in record time, and it really isn't that difficult to master once you comprehend the basics. At first glance all these charts and acronyms can seem daunting and can quickly scare the average novice trader away, but it's really not as complicated as it looks. Let's take a look at the three most popular FOREX charts out there right now.

The Line Chart.

This is the kind of chart that even non-traders are familiar with. It plots closing prices from one day to the next and connects the two points with a line, forming a jagged line with peaks and valleys from left to right. The general trend of a currency pair is very easy to identify as the price will either trend up, down, or remain relatively stagnant.

The Bar Chart.

The bar chart is a glorified line chart that not only shows the closing price, but also shows the opening price that day and also the high and low that the currency pair reached that day. Picture a vertical line, with the top point of the line representing the high price traded that day, and the bottom of the line indicating the low price traded that day. Each vertical line also has a horizontal line on the left side that indicates the opening price that day, and a horizontal line on the right side that represents the closing price that day. This FOREX chart is particularly useful as it's easy to identify the long term trend of a currency pair while also seeing what kind of daily variation it typically experiences.

You'll often see bar charts referred to as "OHLC" charts - Open, High, Low, and Close, for the reasons explained above.

The Candlestick Chart.

Candlestick charts are probably the most popular type of FOREX chart used by professional FOREX traders. It combines the best elements of the line chart and bar chart and adds its own unique twist. A candlestick has a vertical line, just like the bar chart, but instead of having horizontal lines on either side that represent the open and close prices it has a rectangular box in the middle of the vertical line. The inside of this box is typically white if the price closed higher than it opened, and black if the price closed lower than it opened, although you'll see various color schemes used from site to site.

Candlestick charts don't contain any extra information than a bar chart, but visually they're much easier to understand at a quick glance. You'll find that you'll be able to identify trends much quicker and recognize market reversals much easier than if you were using a bar chart.

As candlestick charts tend to be the most popular of the FOREX charts you'll find that there tends to be a lot more information available online about them, including information on candlestick patterns. These patterns have been tweaked many times over and are very handy in identifying emerging trends in a currency or stock, and it's highly recommended that you familiarize yourself with some of the more well known candlestick patterns if you want to realize some serious profits in FOREX trading.