Margin Makes Foreign Exchange Trading Exciting

By John Eather

Margin is one of the key features that makes foreign exchange trading so exciting a prospect. Without a factor like margin, trading in this area would be completely out of reach for the ordinary man in the street who wants to invest in this area. However, what exactly does "Margin" mean?

Margin is a factor which allows foreign exchange traders to control large sums of currency while making relatively small deposits. This works by establishing a "margin Account". This has to be conducted through a forex broker and it will enable the new trader to control what they call currency lots. A currency lot is generally worth in the region of $100 000.

Your borrowing power in the margin account allows you leverage which is expressed in the form of a ratio. For example a leverage ratio of 100:1 allows the trader to control foreign exchange assets of 100 times the amount of their deposit. This means that with a 1% margin, a standard lot of $100 000 may be controlled with a deposit of $1 000.

The trader is able to access large profits when trading on a margin, but this also means that losses can also be incurred. Money likes speed so although the risk of losses exists, safeguards are generally put in place to limit these losses. A broker will generally terminate any transaction before it goes above the deposit margin, but in some instance more than the initial deposit may be lost.

Cash is traded in far larger units than foreign exchange. A good example of this is the USD, this currency trades down to 4 decimal places. In other words, what might be $1.35 in normal currency; in forex would be $1.3576. The smallest currency exchange unit is the pip. In a $100 000 lot the pip equals $10. and while $10 might have some meaning to a tourist from the US going on holiday, it has little meaning to an investor. So if the currency of exchange increases say to $1.457, it would either mean a loss or profit of $10. - 23218

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Learn more about foreign exchange trading. Stop by John Eather's site where you can find out all about forex trading systems and what it can do for you.

Online Forex Trading - What You Need To Know

By John Eather

We probably are not the first ones to admit that our technology has come a long way throughout the years. Take online forex trading, as an example, years ago, no one, except those high up institutions were able to use it. Now, here we are today, using it like never before. Today, normal people just like you are able to enjoy forex trading and that is all thanks to the Internet and some other technology advancements. Within this article, we are going to talk about online forex trading and what you need to know about it.

Computers are able to create some charts that are complex, which is one of the reasons as to trading has become very popular on the Internet. In the past, there were individuals that were not able to pay the price to have high powered computers and access the Internet in their home. Did we mention that there are so many benefits in trading?

There are many of the trading websites online that will give you the opportunity to try forex trading out before you jump into it. They will allow you to register a practice account for free. That practice account will give you the feel of how it feels to trade on the Internet.

The best thing about this practice account is the fact that it is free. It is also going to give you the opportunity to see the options that are available on the online forex trading platform.

Online forex trading does not involve any type of exchange fees, commission or hidden costs. The trade will be conducted at a fast pace and there will be no type of delay involved in it. You will be able to execute the trade in only a matter of seconds. - 23218

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Learn more about online forex trading. Stop by John Eather's site where you can find out all about forex trading systems and what it can do for you.

Foreign Exchange Trading, High Risk And Reward

By John Eather

Definition- Foreign exchange trading also known as FX or Forex, is defined as the trading of one currency in exchange for another. The foreign exchange market is the biggest, most lucrative and liquid market on earth, trading 24 hours a day, 7 days per week. Up to US$1.5 trillion dollars worth of trades are conducted everyday. Central Banks, Corporations, Individuals and speculators form part of the forex participant base. 5 % of daily volumes consist of Government and commercial currency conversions, the other 95% is made up of speculation and trading.

Pro's- The pro's to foreign exchange trading are incredible including immense liquidity, non-stop trading due to overlapping trade sessions, traders can take advantage of market, economical and political events by imminently trading in accordance, very low transaction cost and margin trade opportunities.

Risk- It is very important to understand the risk involved with foreign exchange trading. The rewards are high but the risk is just as significant. If you plan to trade with capital you are unwilling to loose you are going to encounter pretty big problems should the market turn on you with the possibility of losing both initial investment and profits. Make sure that you know all there is to know about the trade type as there are many tricks, tips and pitfalls you can encounter along the way, requiring immediate handling of the situation. If you feel even the slightly uncertain- avoid trading and the market as a whole. Take a course in foreign exchange trading to make sure that you understand the market thoroughly before attempting trade.

Spot and rollover's- Forex is normally traded on spot, meaning that trades are completed on at spot rate and settled within 2 business days. However, rollovers may sometimes occur where positions remain open and roll-over onto the next settlement day, expire and settle at next rate.

Quoting- Quoting refers to the bid and asking price for the currency pair. The bid price is usually on left hand side and asking price on the right hand when indicated. - 23218

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Want to find out more about foreign exchange trading, then visit John Eather's site on how to choose the best forex trading robot for your needs.

Tips for Trading Rectangles Short

By Jeff Cartridge

Rectangles have been very popular with traders over the years trading the chart pattern when it breaks out in either direction. A rectangle is defined by two lines, one on the upper boundary of the price movement and one on the lower boundary, both of which are horizontal. The lines are parallel. These can be referred to as consolidations or channels, or the well known Darvas Box, used by Nicolas Darvas to make $2 million in the markets.

Rectangles Can Be Traded Short

The rectangle can be traded both long and short and when it does break down, historically 46% of the time, it can be profitable. A rectangle breakout to the downside is not as reliable as a breakout to the upside with only 42% of the trades profitable. The average profits is not even positive at just -0.03% in 10 days.

Specific Setups to Improve Profitability

A break to the downside requires certain market conditions to be effective. Avoid falling markets, so look for markets that are consolidating or rising. By using filters that require the stock to be in consolidation and the sector to be in a trend, either up or down, you can improve the results.

The best results are achieved when the pattern does not have an outside day candle prior to the breakout. Also patterns with equal closes or higher highs before the breakout perform poorly.

Ensure that the volume is supportive of the breakout, i.e. volume as the stock falls is greater than volume as the stock rises.

Rectangles Can Be Profitable

When trading rectangles short these filters are very important to get good results, making this an extremely difficult pattern to trade short. With these filters in place, an average return per trade of 1.07% in 13 days and a hit rate of 63%. There are better patterns to trade short.

Statistics for this article have been provided by Patterns Trader after analyzing over 60,000 chart patterns on the Australian market from 2000 - 2008. - 23218

About the Author:

Jeff Cartridge is a private trader and created the website LearnCFDs.com A Simple Timeless Method for Huge Gains

Forex Tutorial: Where You Should Start

By Aruba Nelson

The Foreign Exchange Market can be very profitable given the right tools and grasping some of the basic concepts in what knowledge is required to make sound decisions. Before you know it, you will be ready to leap right in and start participating and evaluating the market trends. The more you study these trends the more profitable you will become with your ventures.

One of the first rules is to never believe anything is a ?sure thing?. That?s right there are no guarantees in the open market but we can minimize the risks and feel good about making some excellent business choices as we follow the statistics of the varied markets.

Studying the numbers and statistics, having factual data and analyzing this data with each market will by far put us ahead of the competition. When you make a given choice based on the data, there will be less doubt in your mind and you won?t feel like you made a choice based on guessing what might happen. You will walk away feeling very confident about your decisions. Remember, there are never any 100% guarantees in anything we do.

We could compare Forex trading with gambling as much as we could compare it to real estate. When you purchase a piece of real estate, you think you are making a sound decision based on location and the appreciation over a given time period. As sound as we think our decision might have been, there is no guarantee that the market might take a turn for the worse as it has in the past.

You basically make the same kind of sound decision with the Forex market. You evaluate the ups and downs of a particular investment over a given time. No matter how good the data is you are provided with, it is always possible that a hiccup could occur causing a fall in the investment. The up side to all of this as in real estate that the soundness of the investment is always a lesser risk if you do your homework. The more data and statistics you have at your fingertips, the more likely your choices will have a positive affect which will lead to greater financial rewards.

So, how does one go about getting the appropriate data? Feel relieved you won?t have to watch the numbers and plot these on a chart or map yourself. There are companies that monitor this data hourly, weekly, monthly, yearly, etc. Is the data accurate? Of course! The more accurate these statistics are the more money the companies make that provides the data. The accuracy of this data is just as important to the provider as it is to the provider.

In order to decide on which markets to invest in, we have to have factual data. This data is provided by companies who have gained their success by gathering this data. These companies capture this data on hourly, weekly, monthly and even on an annual basis. The company?s profits come from the accuracy of these statistics.

By glancing at these graphs without further analysis you can immediately notice an uptrend or downtrend. You can visualize when these trends occurred and how long on ?average? it took the trend to recover.

If you have any trouble receiving these charts from your broker or financial advisor, keep in mind there is software available, that by just putting in some numbers it will create these graphs for you ?on the fly?. - 23218

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