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If you want to learn Forex you can, trading is a specifically learned skill and anyone can become a winner but the fact is most traders lose. So why do so many people lose at Forex? The reason is they underestimate the one key trait you need for success which we will look at in this article...
Forex trading is more to do with mindset than method and a simple example will illustrate my point.
A professional football player will kick a penalty easily in training but let's take the penalty kick 5 minutes before the end of a game, where if the kicker scores the team will win the cup. Is there any difference between these two kicks?
Of course there is, the second scenario involves pressure, the kick by its nature is still the same but much harder as pressure is involved. Forex trading is the same.
You can have a method which is logical and can win but you have to apply it under pressure.
Forex trading is not just about learning a method that's easy, the hard part is applying it through losing periods when the market takes your money and makes you look stupid. Don't believe it won't happen to you, it happens to all traders.
You have to trade with discipline in losing periods and keep your losses small. Just like the pro football player, has to keep his emotions in check as he steps up to kick so does the trader when he's losing.
When you are trading Forex, your success depends on you trading with discipline. Keep in mind, if you can't trade your system with discipline, you don't have a system!
In terms of Currency trading success, it's your mindset which is the key to winning. Anyone can learn a method for success but very few traders have the discipline to apply there method.
2009. február 23., hétfő
2009. február 21., szombat
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2009. február 20., péntek
The Currency Trading Current Trend
The central banks of emerging countries are sparing no efforts to the fall of their currencies in this period of high risk aversion, which could further increase if the plan to revive it adopted less than two hours by the U.S. Senate does not pay off quickly. Thus, the central bank of Mexico has sold in the currency markets more than 1000 billion dollars to halt the decline of the peso, which fell to a low address to the U.S. currency on 3 February. While the peso was worth about 10 pesos to the dollar in mid-2008, it now evolves around 14 pesos to the dollar.
It is not certain that this success in halting the collapse of the peso since the aversion to risk could even accelerate in the coming weeks. The traders are very disappointed with the relaunch plan presented this afternoon by the new Treasury Secretary, Tim Geithner. Indeed, although they are broadly aware of the need for a public mass, they do not believe the administration Obama could quickly reverse the current trend of the U.S. economy. If these fears are confirmed, the dollar could see a sharp rise, benefiting from its safe haven status.
Meanwhile, it was the single European currency that benefited today from a technical adjustment between the euro and the pound sterling to move a little against the dollar. Indeed, the three currencies are closely linked. While the British pound Monday appears on the rise, it dropped today facing the European single currency due to the earnings of investors. These buildings massive bet on a rebound of the British currency, based on the observation that although the UK economy is not ready to face the risk of implosion of the pound sterling is totally excluded.
Forex Trading System – Which One Should You Choose?
A “forex trading system” in webspeak is a program designed to enable you to engage in forex trading online. Basically, it is a program or software that you can use to build a forex business.
Think of a forex trading system, or platform, as the diving board that launches you into the online forex trading pool.
Be forewarned before you take the plunge, however, that the Internet waters are filled with alligators. So make sure you exercise extreme caution in selecting a forex trading system.
The first thing you need to do is determine what kind of forex trader you are.
Do you need to stay on top of your trading and be right in front of the computer at all times?
Or do you trust your knowledge of forex enough to invest in a system that enables you to trade using a more portable communications device such as a cell phone or a Blackberry?
There also are web-based trading platforms that enable you, in case your computer crashes, to have access to your account through a different computer.
When you’re looking for a reliable forex trading platform, there are a few things you should look for:
** Does the system offer you the ability to see current market news that keeps you in the know?
This is an important feature because what’s being talked about in the market news often influences the way the market behaves.
** The forex trading system you choose should allow you to place an order quickly and easily without making you jump through hoops. Always look for a system that exhibits ease of use.
** Ask whether the trading platform you’re interested in offers you technical analysis so you can make informed decisions.
** A reliable system should allow you to be able to see your profit and loss.
** Look for a forex trading system that will give you price alerts. This just means you’ll be notified via your cell phone or through some other communication device about changes going on in the currency exchange.
** Also, look for a platform that offers you a speedy withdrawal and one with no commissions or fees to pay.
** And you want a forex trading system that has low spreads and one that will give you a 24-hour live customer service and not one that offers automated help only.
** Finally, see whether the company allows potential buyers to take the forex trading system they’re offering for a test drive. This way, you can try out a few platforms and see which one works best with your trading skills and knowledge.
Of course, there are alternative systems as well. One in particular has gained a considerable following among forex traders.
Think of a forex trading system, or platform, as the diving board that launches you into the online forex trading pool.
Be forewarned before you take the plunge, however, that the Internet waters are filled with alligators. So make sure you exercise extreme caution in selecting a forex trading system.
The first thing you need to do is determine what kind of forex trader you are.
Do you need to stay on top of your trading and be right in front of the computer at all times?
Or do you trust your knowledge of forex enough to invest in a system that enables you to trade using a more portable communications device such as a cell phone or a Blackberry?
There also are web-based trading platforms that enable you, in case your computer crashes, to have access to your account through a different computer.
When you’re looking for a reliable forex trading platform, there are a few things you should look for:
** Does the system offer you the ability to see current market news that keeps you in the know?
This is an important feature because what’s being talked about in the market news often influences the way the market behaves.
** The forex trading system you choose should allow you to place an order quickly and easily without making you jump through hoops. Always look for a system that exhibits ease of use.
** Ask whether the trading platform you’re interested in offers you technical analysis so you can make informed decisions.
** A reliable system should allow you to be able to see your profit and loss.
** Look for a forex trading system that will give you price alerts. This just means you’ll be notified via your cell phone or through some other communication device about changes going on in the currency exchange.
** Also, look for a platform that offers you a speedy withdrawal and one with no commissions or fees to pay.
** And you want a forex trading system that has low spreads and one that will give you a 24-hour live customer service and not one that offers automated help only.
** Finally, see whether the company allows potential buyers to take the forex trading system they’re offering for a test drive. This way, you can try out a few platforms and see which one works best with your trading skills and knowledge.
Of course, there are alternative systems as well. One in particular has gained a considerable following among forex traders.
2008. december 31., szerda
Why Hedge Foreign Currency Risk
International commerce has rapidly increased as the internet has provided a new and more transparent marketplace for individuals and entities alike to conduct international business and trading activities. Significant changes in the international economic and political landscape have led to uncertainty regarding the direction of foreign exchange rates. This uncertainty leads to volatility and the need for an effective vehicle to hedge foreign exchange rate risk and/or interest rate changes while, at the same time, effectively ensuring a future financial position.
Each entity and/or individual that has exposure to foreign exchange rate risk will have specific foreign exchange hedging needs and this website can not possibly cover every existing foreign exchange hedging situation. Therefore, we will cover the more common reasons that a foreign exchange hedge is placed and show you how to properly hedge foreign exchange rate risk.
Foreign Exchange Rate Risk Exposure - Foreign exchange rate risk exposure is common to virtually all who conduct international business and/or trading. Buying and/or selling of goods or services denominated in foreign currencies can immediately expose you to foreign exchange rate risk. If a firm price is quoted ahead of time for a contract using a foreign exchange rate that is deemed appropriate at the time the quote is given, the foreign exchange rate quote may not necessarily be appropriate at the time of the actual agreement or performance of the contract. Placing a foreign exchange hedge can help to manage this foreign exchange rate risk.
Interest Rate Risk Exposure - Interest rate exposure refers to the interest rate differential between the two countries' currencies in a foreign exchange contract. The interest rate differential is also roughly equal to the "carry" cost paid to hedge a forward or futures contract. As a side note, arbitragers are investors that take advantage when interest rate differentials between the foreign exchange spot rate and either the forward or futures contract are either to high or too low. In simplest terms, an arbitrager may sell when the carry cost he or she can collect is at a premium to the actual carry cost of the contract sold. Conversely, an arbitrager may buy when the carry cost he or she may pay is less than the actual carry cost of the contract bought. Either way, the arbitrager is looking to profit from a small price discrepancy due to interest rate differentials.
Foreign Investment / Stock Exposure - Foreign investing is considered by many investors as a way to either diversify an investment portfolio or seek a larger return on investment(s) in an economy believed to be growing at a faster pace than investment(s) in the respective domestic economy. Investing in foreign stocks automatically exposes the investor to foreign exchange rate risk and speculative risk. For example, an investor buys a particular amount of foreign currency (in exchange for domestic currency) in order to purchase shares of a foreign stock. The investor is now automatically exposed to two separate risks. First, the stock price may go either up or down and the investor is exposed to the speculative stock price risk. Second, the investor is exposed to foreign exchange rate risk because the foreign exchange rate may either appreciate or depreciate from the time the investor first purchased the foreign stock and the time the investor decides to exit the position and repatriates the currency (exchanges the foreign currency back to domestic currency). Therefore, even if a speculative profit is achieved because the foreign stock price rose, the investor could actually net lose money if devaluation of the foreign currency occurred while the investor was holding the foreign stock (and the devaluation amount was greater than the speculative profit). Placing a foreign exchange hedge can help to manage this foreign exchange rate risk.
Hedging Speculative Positions - Foreign currency traders utilize foreign exchange hedging to protect open positions against adverse moves in foreign exchange rates, and placing a foreign exchange hedge can help to manage foreign exchange rate risk. Speculative positions can be hedged via a number of foreign exchange hedging vehicles that can be used either alone or in combination to create entirely new foreign exchange hedging strategies.
Each entity and/or individual that has exposure to foreign exchange rate risk will have specific foreign exchange hedging needs and this website can not possibly cover every existing foreign exchange hedging situation. Therefore, we will cover the more common reasons that a foreign exchange hedge is placed and show you how to properly hedge foreign exchange rate risk.
Foreign Exchange Rate Risk Exposure - Foreign exchange rate risk exposure is common to virtually all who conduct international business and/or trading. Buying and/or selling of goods or services denominated in foreign currencies can immediately expose you to foreign exchange rate risk. If a firm price is quoted ahead of time for a contract using a foreign exchange rate that is deemed appropriate at the time the quote is given, the foreign exchange rate quote may not necessarily be appropriate at the time of the actual agreement or performance of the contract. Placing a foreign exchange hedge can help to manage this foreign exchange rate risk.
Interest Rate Risk Exposure - Interest rate exposure refers to the interest rate differential between the two countries' currencies in a foreign exchange contract. The interest rate differential is also roughly equal to the "carry" cost paid to hedge a forward or futures contract. As a side note, arbitragers are investors that take advantage when interest rate differentials between the foreign exchange spot rate and either the forward or futures contract are either to high or too low. In simplest terms, an arbitrager may sell when the carry cost he or she can collect is at a premium to the actual carry cost of the contract sold. Conversely, an arbitrager may buy when the carry cost he or she may pay is less than the actual carry cost of the contract bought. Either way, the arbitrager is looking to profit from a small price discrepancy due to interest rate differentials.
Foreign Investment / Stock Exposure - Foreign investing is considered by many investors as a way to either diversify an investment portfolio or seek a larger return on investment(s) in an economy believed to be growing at a faster pace than investment(s) in the respective domestic economy. Investing in foreign stocks automatically exposes the investor to foreign exchange rate risk and speculative risk. For example, an investor buys a particular amount of foreign currency (in exchange for domestic currency) in order to purchase shares of a foreign stock. The investor is now automatically exposed to two separate risks. First, the stock price may go either up or down and the investor is exposed to the speculative stock price risk. Second, the investor is exposed to foreign exchange rate risk because the foreign exchange rate may either appreciate or depreciate from the time the investor first purchased the foreign stock and the time the investor decides to exit the position and repatriates the currency (exchanges the foreign currency back to domestic currency). Therefore, even if a speculative profit is achieved because the foreign stock price rose, the investor could actually net lose money if devaluation of the foreign currency occurred while the investor was holding the foreign stock (and the devaluation amount was greater than the speculative profit). Placing a foreign exchange hedge can help to manage this foreign exchange rate risk.
Hedging Speculative Positions - Foreign currency traders utilize foreign exchange hedging to protect open positions against adverse moves in foreign exchange rates, and placing a foreign exchange hedge can help to manage foreign exchange rate risk. Speculative positions can be hedged via a number of foreign exchange hedging vehicles that can be used either alone or in combination to create entirely new foreign exchange hedging strategies.
The Forex Market and Understanding Foreign Exchange Rates
Unlike the stock exchange, the Forex Market (foreign exchange market) is a relatively new player to the investment world. Today's current Forex market model started in the early 1970's, and today it represents the biggest financial market around, even surpassing the stock market. With trading surpassing $2 trillion dollars per day, the Forex market attracts more and more investors all the time. Before an investor starts trading on the Forex market, he should grasp the fundamentals of how exchange rates work.
Exchange rates
Basically, the exchange rate represents the rate of exchange between two currencies. Most currencies are traded, or paired up against the dollar. The five most common currencies traded on the market are the dollar (USD), euro (EUR), the yen (JPY), the British pound (GBP), and the Swiss franc (CHF). Some other currencies that are traded are the Australian dollar, the Canadian dollar, and the Hong Kong dollar.
In the exchange rate or ratio, the numerator represents the quote currency and the denominator the base currency, which always equals one.
Let's say that an investor wants to exchange euros for dollars. In this case, the euro currency is the quote currency, or how much currency you have to exchange. The base currency is the dollar. The investor researches the current exchange rate (euros converted into dollars) either on the Internet, through the bank, broker, etc., and then multiplies that amount by the number of euros to exchange. Let's say that the exchange rate is 1.57959. That means that 1.57959 euros must be paid to receive one dollar. If he has 1000 euros to exchange, then he can receive $1,579.59 (1000 x 1.57959).
On the flip side, the exchange rate can also tell the investor how much he'll receive if he converts dollars back into euros. If he has $1000, he can either divide that amount by the same euro to dollar exchange rate ($1000/1.57959 = 633.07 euros), or look up the conversation rate for dollars to euros on the Internet, etc. (i.e. .633072) and multiply it by the amount of dollars to exchange ($1000 x .633072 = 633.07 euros).
Once the exchange rate concept is understood, the investor can feel more confident in investing in the Forex market.
Exchange rates
Basically, the exchange rate represents the rate of exchange between two currencies. Most currencies are traded, or paired up against the dollar. The five most common currencies traded on the market are the dollar (USD), euro (EUR), the yen (JPY), the British pound (GBP), and the Swiss franc (CHF). Some other currencies that are traded are the Australian dollar, the Canadian dollar, and the Hong Kong dollar.
In the exchange rate or ratio, the numerator represents the quote currency and the denominator the base currency, which always equals one.
Let's say that an investor wants to exchange euros for dollars. In this case, the euro currency is the quote currency, or how much currency you have to exchange. The base currency is the dollar. The investor researches the current exchange rate (euros converted into dollars) either on the Internet, through the bank, broker, etc., and then multiplies that amount by the number of euros to exchange. Let's say that the exchange rate is 1.57959. That means that 1.57959 euros must be paid to receive one dollar. If he has 1000 euros to exchange, then he can receive $1,579.59 (1000 x 1.57959).
On the flip side, the exchange rate can also tell the investor how much he'll receive if he converts dollars back into euros. If he has $1000, he can either divide that amount by the same euro to dollar exchange rate ($1000/1.57959 = 633.07 euros), or look up the conversation rate for dollars to euros on the Internet, etc. (i.e. .633072) and multiply it by the amount of dollars to exchange ($1000 x .633072 = 633.07 euros).
Once the exchange rate concept is understood, the investor can feel more confident in investing in the Forex market.
Learn Forex Trading
Gone are the days, when people with small bundles of notes surely would draw your attention at the airports/ international bus terminus/ important office areas, who are ready to exchange your currency to your desired foreign exchange at a commission. The literacy, the spread, the entrants of various professionals, automated software, revolutionary online forex trading companies have been able to put a control over the entire unorganized sector to pave the way for complete professionalism and to offer a much more convenient and systematic way of Forex trading.
At the inception phase, people, mainly the large corporations used to perform their Forex trading through various banks or major financial institutes, who used to operate at the international level. The overwhelming popularity of Forex of today's modern world due to the liberalization and global economic polices is empowered by the telecom boom, the immense reach of Internet and the unimaginable advantage of advanced technology. The instantaneous effect and up-to-date news provided by the Online Forex Software exchange trading platform in the regime of online Forex, have given you the classical opportunity of taking decisions and immediate implementation. Online Forex trading has been standardized over the years after the initial teething problems, and today's Forex participants get an almost secured access through various online Forex trading companies, which is free from all encumbrances. The technology, its application in case of online Forex has been drastically improved with the increasing awareness of people at large. The success lies in bringing a wider gamut of people into Forex trading platform and in turn the entire Forex Software exchange trading platform has become commercially viable.
If we want to look into the current Foreign Exchange market, we can find a reasonable number of stakeholders beyond the predominated traditional Multi National Companies or MNCs, banks, brokers and the final impetus has given by the wide acceptance of a large number of commoners, who get engaged in Forex trading due to various reasons including even as a mere hobby. The latest encryption methodologies and plenty of guide and trend analysis will make you secured and comfortable even if you are a first timer dabbling into online Forex trading.
The concept of margin trading, implying the traded on margin, saves you for a huge amount of deposit in the Forex. The margin deposit varies between banks and it is always in percentile terms of the original amount, which the bank allows you to play. A simple example will show you the actual potential. Suppose a bank has kept the margin deposit as 2%, which implies that you need to deposit only $20000 USD to trade two million dollars and also you may gear up your profit by 200%. As the coin has got two sides, the 2% margin deposit in Forex may also take you to the road of losses by 200%. The rule remains same, when the offline Forex trading changes it face to online Forex trading.
As every investment carries the potential risk of both profit and loss, the luck of an aggressive online Forex trader may sway anywhere between 2 to 25% on a daily basis on an average. Just for the knowledge base, the beginner in Forex trading must be aware of that the interest rates on your deposit varies greatly depending upon the currencies and the prevailing practice is to play in multiple currencies, popularly known as Base currency and variable currency in the world of Forex both in traditional platform and in online Forex platform. Your awareness level, your analytic power, your intuition are the key driven forces to transform you to an informed Forex trader and to optimize your Return on Investment (ROI) in the most prospective financial market of today's economic world.
At the inception phase, people, mainly the large corporations used to perform their Forex trading through various banks or major financial institutes, who used to operate at the international level. The overwhelming popularity of Forex of today's modern world due to the liberalization and global economic polices is empowered by the telecom boom, the immense reach of Internet and the unimaginable advantage of advanced technology. The instantaneous effect and up-to-date news provided by the Online Forex Software exchange trading platform in the regime of online Forex, have given you the classical opportunity of taking decisions and immediate implementation. Online Forex trading has been standardized over the years after the initial teething problems, and today's Forex participants get an almost secured access through various online Forex trading companies, which is free from all encumbrances. The technology, its application in case of online Forex has been drastically improved with the increasing awareness of people at large. The success lies in bringing a wider gamut of people into Forex trading platform and in turn the entire Forex Software exchange trading platform has become commercially viable.
If we want to look into the current Foreign Exchange market, we can find a reasonable number of stakeholders beyond the predominated traditional Multi National Companies or MNCs, banks, brokers and the final impetus has given by the wide acceptance of a large number of commoners, who get engaged in Forex trading due to various reasons including even as a mere hobby. The latest encryption methodologies and plenty of guide and trend analysis will make you secured and comfortable even if you are a first timer dabbling into online Forex trading.
The concept of margin trading, implying the traded on margin, saves you for a huge amount of deposit in the Forex. The margin deposit varies between banks and it is always in percentile terms of the original amount, which the bank allows you to play. A simple example will show you the actual potential. Suppose a bank has kept the margin deposit as 2%, which implies that you need to deposit only $20000 USD to trade two million dollars and also you may gear up your profit by 200%. As the coin has got two sides, the 2% margin deposit in Forex may also take you to the road of losses by 200%. The rule remains same, when the offline Forex trading changes it face to online Forex trading.
As every investment carries the potential risk of both profit and loss, the luck of an aggressive online Forex trader may sway anywhere between 2 to 25% on a daily basis on an average. Just for the knowledge base, the beginner in Forex trading must be aware of that the interest rates on your deposit varies greatly depending upon the currencies and the prevailing practice is to play in multiple currencies, popularly known as Base currency and variable currency in the world of Forex both in traditional platform and in online Forex platform. Your awareness level, your analytic power, your intuition are the key driven forces to transform you to an informed Forex trader and to optimize your Return on Investment (ROI) in the most prospective financial market of today's economic world.
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