Forex? What is it, anyway?

The market

The currency trading (FOREX) market is the biggest and the fastest growing market on earth. Its daily turnover is more than 2.5 trillion dollars, which is 100 times greater than the NASDAQ daily turnover. (click here to read full market background by Easy-Forex™).

Markets are places to trade goods. The same goes with FOREX. The Forex goods (or merchandise) are the currencies of various countries. You buy Euro, paying with US dollars, or you sell Japanese Yens for Canadian dollars. That's all.

How does one profit in Forex?

Very simple and obvious: buy cheap and sell for more! The profit is generated from the fluctuations (changes) in the currency exchange market.

The nice thing about the FOREX market, is that regular daily fluctuations, say - around 1%, are multiplied by 100! (in general, Easy-Forex™ offers trading ratios from 1:50 to 1:200). If, for example, the exchange rate of "your" pair of currencies increased by 0.6% in the last 4 hours, your profit will be 60% on your investment! Such can happen in one business day, or in a few hours, even minutes.

Moreover, you cannot lose more than your "margin"! You may profit unlimited amounts, but you never lose more than what you initially risked and invested.

You can implement your choice (the pair of currencies, the volume amount) under any direction to which the market is moving, and yet make profit. It does not matter whether the exchange rate is going up or down: you can always decide to buy Euro and sell dollar, or vice versa - buy dollar and sell Euro. You don't have to physically possess certain currencies in order to perform "buy" or "sell" with them.

How do I start?

Register (Easy-Forex™ offers the simplest and quickest registration process, no obligation); deposit your first trading "margin" amount (credit cards are welcome, only by Easy-Forex™); start trading.

It can't be simpler or easier than that. Need help? We'll provide you with 1-on-1 training and service, as much as necessary (Easy-Forex™ offers real people service, live, in your own language).

How do I trade Forex?

You select the pair of currencies with which you wish to make a Forex deal. You determine the volume (the amount of the deal). You deposit the "margin" (collateral needed to facilitate the deal. Usually - only a very small portion of the whole deal, say: 1% or 1:100).

Before you finally activate the deal, you can still "freeze" it for a few seconds. That enables you to either change the terms, or accept it as is, or altogether regret the whole idea. The "freeze" feature is a unique service by Easy-Forex™.

When your Forex deal is running (you hold an "open position"), you can monitor its status and check scenarios online, whenever you wish. You may change some terms in the deal, or close it (and cash the profit, if any, or minimize the loss, if any). Moreover, Easy-Forex™ lets you determine a "take-profit" rate, with which the deal will close automatically for you, when and if such rate occurs in the market. Meaning: you do not have to stay near your computer when you hold open positions.

Want to know more? Want to get on-line training? Register here (simple, quick, no obligation), we'll be glad to guide you, every step of the way.

Good luck!

Forex trading involves substantial risk of loss, and may not be suitable for everyone.

Forex trading?

For all those who dont know what Forex is - its nothing but the short form of "Foreign Exchange" !! Well , the world has become a global village now and for people who travel around the world on business trips and vacations Forex is a pretty importatnt concept to know about !! Also other than them , its also imposrtant for people who work abroad and need to send money to their loved ones back home !! In olden days Foreign exchange was done mostly by Forex companies - among which the main one was Western Union !! You had no other options to go to !! But now , you have whole lotta options ! And the important one among this is Online Currency Trading !! But then , many dont know about this form of forex trading ! so inorder to help you out , i have got this fabulous site !! Fab Forex is a guide to online forex currency trading. Now you can invest in foreign currency from your personal computer at low exchange rates. Forex trading can be risky like playing the stock market, but with proper research and dedication there are massive profits to be made on the Forex market. Fabforex.com is your one stop shop for all info that you need abput forex trading ! So what are you waiting for ?!

Stock Trading

Stock Trading
1. Taking responsibility of your capital
2. Cut your losses early and let your Profits Run
3. Discipline
4. Too much information
5. Do not marry your trades
6. Do not bet the farm

1. Taking responsibility of your capital
It is interesting how many people are happy to place their savings and funds in other peoples hands, accept the losses as its easier to blame someone else than to take responsibility of those funds ourselves.

The first step as an individual is believing in yourself and your own abilities. One of the most startling discoveries when you start trading or may have observed from the stock market is how many experts get it so wrong so often. This is a real confidence booster when you begin to understand that with a solid background and knowledge, discipline and a well defined trading plan that you will often outperform many professionals.

You will be in a market place that moves several times faster than any other market and with leverage, the rewards and losses compound many times. The best way to overcome the thought of using your own money and the volumes you will be trading is to forget about money and talk in terms of points. So rather than calculate your profit and losses in terms of dollars talk in terms of gains and losses in points. If you adopt this at a very early stage it will feel the same if you are trading a demo, a mini or 10 contacts of a full account.

Every trader that any member of Team Forex knows talks in terms of gains and losses in points. We don’t refer to the money as the bench mark of our own performance. We equate to other traders in the terms or losses and gains in points, and measure our performance against this.

When trading a demo account most people do very well. They trade without fear. As soon as its real money, even on mini account they suddenly find themselves trading in a manner where they miss many opportunities and accumulate many losses. They quite simply loose their nerve and give into fear and greed. This can happen also when you may go from a mini account to a full account or from trading single contracts to trading multiple contracts.

Try and trade without the thought of how much money you may gain or loose. Trade thinking of points, no matter how many contracts you are trading or even if you are trading a demo account.

2. Cut your losses early and let your Profits Run
This simple concept is one of the most difficult to implement and is the cause of most traders demise. Most traders violate their predetermined plan and take their profits before reaching their profit target because they feel uncomfortable sitting on a profitable position. These same people will easily sit on losing positions, allowing the market to move against them for hundreds of points in hopes that the market will come back. In addition, traders who have had their stops hit a few times only to see the market go back in their favor once they are out, are quick to remove stops from their trading on the belief that this will always be the case. Stops are there to be hit, and to stop you from losing more then a predetermined amount! The mistaken belief is that every trade should be profitable. If you can get 3 out of 6 trades to be profitable then you are doing well. How then do you make money with only half of your trades being winners? You simply allow your profits on the winners to run and make sure that your losses are minimal.

Another good strategy is to move stop losses (the point the trade will be sold if it goes the wrong way) behind the trade to a level where a pull back can be accommodated but a reversal will lock in at least some profit.

3. Discipline
Trade with a disciplined Plan. The problem with many traders is that they take shopping more seriously then trading. The average shopper would not spend $400 without serious research and examination of the product he is about to purchase, yet the average trader would make a trade that could easily cost him $400 based on little more than a “feeling” or “hunch.” Be sure that you have a plan in place before you start to trade. The plan must include stop and limit levels for the trade, as your analysis should encompass the expected downside as well as the expected upside.

4. Too much information
As with many endeavors it is important to keep your trading simple. Many traders start out with a simple strategy that is successful but find themselves chopping and changing trying to find a better system. They also allow themselves to be influenced by other opinions and too much fundamentals. It is not too different from going to a race track where everyone has a sure thing or the information available becomes so confusing you can no longer see the wood from the trees. Trading the stock market is often similar in this regard. A good exercise is to teach a child or teenager a simple trading strategy or set of rules to follow and allow them to trade a demo account. Many traders who have done this have been surprised that their children can actually trade well, consistently and often with spectacular results. The lesson is that they don’t stray from the rules and are not influenced by the media or fundamentals. Many traders pay no attention to fundamentals at all and trade successfully. The rule here is to keep it simple…don’t allow yourself to become confused with too much information and if you’re not sure or not in the right emotional frame of mind, don’t trade.

5. Do not marry your trades
The reason trading with a plan is so important is because most objective analysis is done before the trade is executed. Once a trader is in a position they tend to analyze the market differently in the “hopes” that the market will move in a favorable direction rather than objectively looking at the changing factors that may have turned against your original analysis. This is especially true of losses. Traders with a losing position tend to marry their position, which causes them to disregard the fact that all signs point towards continued losses. Don’t take more trades in the hope that the market will turn in your favour; it will only accelerate your losses.

6. Do not bet the farm
Do not over trade. One of the most common mistakes that traders make is leveraging their account too high by trading much larger sizes than their account should prudently trade. Leverage is a double-edged sword. Just because one lot (100,000 units) of currency only requires $1000 as a minimum margin deposit, it does not mean that a trader with $5000 in his account should be able to trade 5 lots. One lot is $100,000 and should be treated as a $100,000 investment and not the $1000 put up as margin. Most traders analyze the charts correctly and place sensible trades, yet they tend to over leverage themselves. As a consequence of this, they are often forced to exit a position at the wrong time. A good rule of thumb is to trade with 1-10 leverage or never use more than 5% of your account at any given time. Trading currencies is not easy. (if it was, everyone would be a millionaire!)(Stock Trading)

Key to successful forex trading

Accurate information is the secret to success in many areas of our lives and a knowledgeable and informed Forex trader will have a better awareness of how currency markets move and therefore a far better chance of making a good profit from trading. If you do not have the necessary knowledge then you are going to be effectively shooting in the dark and, although you may meet with success occasionally, overall you are virtually guaranteed to lose in the longer term.

There is an almost unlimited quantity of information available on foreign currency trading with thousands of books having been published and hundreds of Internet sites providing advice. Therefore, if home-study is appealing to you, then there are numerous step-by-step guides which will take you through the minutiae of Forex trading.

However, one problem with the information and advice available though Internet sites is that it is often very patchy and may lack any real structure. There is unquestionably a wealth of advice out there, a lot of it excellent and comprehensive, but locating just what you need and following it in a logical order could prove difficult.

If you are serious about learning the finer points of Forex trading then there is little doubt that you will need to arm yourself with a good study course which presents the material in a structured and logical manner. Courses of this nature, of which there are many, vary in cost from those which are free to those costing a thousand dollars or more and, as a rule, you are likely to get just what you pay for.

There are essentially two types of course available.

First, there is an Internet course which generally permits you to follow the course at a time to suit your lifestyle and also at a pace with which your are comfortable. The chief drawback with this type of course is that you are studying alone and it is not always simple to find the assistance you require if you run across something which you do not understand.

Second, there is a old fashioned 'classroom' course. Courses of this nature are held frequently in many major cities and provided you with the advantage of studying with other people and with an instructor who can help guide you through the problem areas. Against this, you will need to travel to your classes and follow a class schedule. Missing a lesson may also present problems as it is not necessarily easy to catch up.

You can also attend typically 2 or 3 day seminars that immerse you in Forex trading and give you an extremely fast introduction to currency trading. Though there are a large number of seminars held, they tend to be aimed at more advanced traders and are only occasionally put on for the benefit of novices.

You will also see a couple of variations of the normal Internet course and these are CD ROM and video training courses. The first will often include several interactive segments and, as it is created to be run on your PC, will use several different Internet sites to help in the learning process. The principal problem with both CD ROM and video training courses is that they frequently provide little support and simply leave you in the dark when you run into a problem.

At the end of the day however and, despite the huge quantity of material available and the ease of taking a home-study course in various different formats, the unquestionable key to success in learning Forex trading is to study at the hands of an experienced trader, or Forex trading mentor.

A course, of whatever type, can certainly provide you with the technical information you need, but the true key to making significant profits from Forex trading is to be found in possessing a knowledge and insight of trading strategies which only years of experience and practice can bring. Trading alongside a master Forex trader will certainly not be cheap but, as long as you can afford it, it will pay off in the long run.

Forex Trading System which works

Summary

1. Trading systems
2. Managing your funds
3. Trader Psychology
4. Summary

There are many different methods, systems and strategies which traders, “newbies” and old “pro’s”, apply to the market to make a profit from the movements in the prices. Each trader will assert that his or her methods are the best and the most profitable, but the truth is that each trading system has its strengths and weaknesses. The real keys to making money from the Forex market are the following:

1. Having and clear and simple trading system, and applying it consistently
2. Managing the funds you are trading with tight disciplines
3. Taking control of your psychology

This article will examine each of these three keys separately and propose some simple guidelines for traders to follow to avoid being trapped by the market during the inevitable periods of volatility which occur daily.

1. Trading systems
There are essentially two types of systems which traders employ. These are:

a. Price following systems
b. Price prediction systems

Let’s examine each one briefly.

Price following systems

These are systems which rely on momentum indicators, oscillators and averaging methods to simply follow the market in the direction in which it is moving. The simplest of these is to find a suitable moving average (MA) and trade in the direction the MA is pointing, with the price on the correct side of that average.

One can add to that a whole variety of other indicators such as MACD, Stochastics, RSI and Bollinger Bands etc. One charting package I use has 29 different indicators, leading to an overload of endless possible combinations to use. Furthermore, there are about 20 different possible time frames to study. Its not hard to see why traders end up with the commonly know “paralysis of analysis” which is recognized by the comatose mouse hand and glazed eyes of someone sitting in front of the screen for 12 hours without taking a trade.

They key is to keep it simple. Decide on the time from you choose to trade from (scalpers may prefer 5 minute or 15 minute charts, whereas session/day traders may prefer 1 hour, 4 hour of day charts) and look for a very simple system which combines no more than 2 or 3 indicators. Such systems may also incorporate simple trend line studies, with the trade direction following the prevailing straight line trend.

When the signals are given by your system, take your trades confidently and consistently. Do not abandon your method and start searching for another after the first loss.

Price Prediction systems

These are systems which are generally longer term systems, applied to session, day or longer periods. They involve deciding the overall direction of the currency pair over a longer time frame and then trading a simple “buy on dips” or “sell on rallies” approach, depending on the direction you have decided on. There are various tools to help the strategy trader, such as horizontal lines, trend lines, Fibonacci retracement levels, moving averages and so on. These will help to a) identify the direction of trade, b) identify a logical entry point and c) identify a logical exit point. These trades can then be programmed into the dealing software and left to take care of themselves, allowing the trader spend his time doing other things. This form of trading requires more skill and experience, but this can be learned with time and practice.

Essentially, price following systems generally tend to be shorter term “scalping” type systems, which involve screen watching for a large part of each day. Price prediction systems tend to involve strategies lasting 8 hours up to several days and allow the trader to get away from the screen and enjoy more free time.

Everyone has their preference but I have found from my own experience and observations that intense screen watching cannot be sustained for very long by most traders, before burning out after several weeks or months. You can recognize these traders immediately by their bagged eyes, short tempers and lack of social skills.

2. Managing your funds
Whilst most traders can invent or learn a reasonable trading system to suit their styles of trading, many cannot manage their account safely enough to prevent large losses and the dreaded margin call. Even the some best traders in the World suffer from temporary lack of sanity in this area (including “yours truly”). Interesting case histories are described, for example, in Jack Schwager’s book “Market Wizards: Interviews with Top Traders”

There are three simple rules which can be applied here:

a) Never leverage over 10:1 and as your account grows larger, reduce this to below 5:1
b) Never risk more than 5% of your equity on a given day, and as your account grows, reduce this to less than 2%
c) Never take a trade where you are risking more than 50% of the projected gains from the trade with your stop loss. In other words, the Win/Lose ratio (profit target in pips/stop loss in pips) should be 2:1 or higher.

Following these simple rules, even with a half baked trading system, will ensure that you can lose 2 out of every 3 trades and still break even on your account.

3. Trader Psychology
All humans are subject to two (often opposing) forces – the mind and the emotions. The key to successful trading psychology is to prevent your emotions from dominating your mind.

The emotions you will experience will fluctuate wildly from fear to greed, to self-doubt and elation. These are all the enemy of the trader and need to be tempered by clear, objective and logical thinking.

Work out your trading strategy based on your previously defined system. Apply the system with safe account management rules, and shut out the emotional noise which will attempt to convince you to close early, over leverage, risk too much, risk too little etc.

4. Summary
It is clear that the best traders aim for small and consistent gains without seeking “the latest” system to produce enormous profits. There simply are no such systems which work reliably day in and day out. Keep your money management tight and keep your emotions in check and you should succeed.

Finally – it is well worth the money spent on good education. Attend a seminar by a truly active trader and teacher, and buy lots of books on the subject. Do not think you can go from “zero to hero” in the FX market without investing time, effort and money in learning from experienced players. The money you might save initially will probably be lost many times over as the market works you over later.

Objectives of forex traders

A difficult lesson for Forex traders to learn is that within the currency market almost anything can happen at any time. Because new traders spend a considerable amount of time learning the mechanics of the market and focusing their attention on finding a method for predicting movements in the market, it is only natural that they also come to believe that there are rules which govern the movement of the market. This is not the case and this catches many traders out.

Forex traders use a number of tools to judge when the time is right to open or to close a position, but the majority of traders will also have one particular tool which is their favorite and which they will rely on more than any other. So, once they have opened a position, they will watch their favorite indicator and base their trading decisions to a large extent on what this single indicator tells them.

This is fine until this indicator begins to tell them one thing while the other indicators are telling them something else. They are now in an open position and their favorite tool is telling them for example to hold that position while everything else is indicating that they should close their position and get out of the market. More often than not the trader will hold his ground and will end up in a losing trade.

The problem is quite simply that the trader has created an expectation in his own mind about the market and is not looking at the market objectively. He is using his favorite tool to reinforce this expectation rather than stepping back and looking at the wider picture. He is also probably being encouraged in this view by the thought that he must be right and by the profit in this trade which is being forecast by his favorite indicator. He is in effect seeing the money rather than the market.

The foreign currency market is, by its very nature, unpredictable and, were it not so, the market would soon collapse as we all made a profit on every trade we opened. Of course there are numerous tools to help us to predict the direction of the market and thankfully they do a pretty good job most of the time. Occasionally however even the best of tools in the hands of the best traders come up against an unexpected turn in the market.

Getting it wrong is a feature of Forex trading and traders need to learn to accept losses as an inevitable part of foreign currency trading. More importantly traders need to learn how to avoid getting into a position where they can be proved right or wrong. To do this you need to understand and accept that the market has a will of its own and have to remain objective and follow market movements, rather than try to get the market to go in the direction you want it to, if you are going to succeed.

Forex Trading Plans

Forex Trading Plans

The following situation happens quite often to many traders. Look it over and see if it has been happening to you:

You have been faithfully following your trading plan and the rules you’ve set for trading. By following them you are now in a trade that doesn’t look so good. At the same time, by following your trading plan, you see that you’ve missed a beautiful move in a different market, one that could have made you a lot of money.

You are in a bad trade and you’ve missed out on a great trade. You become disgruntled. You think to yourself that your trading plan must not be so great. You think there must be a better methodology that you should use that will prevent this from happening. You think to yourself, "Yes! That’s it, I’ll change the way I do things." So you create a new rule or modify an old one so that such a rule would have let you capture the trade you missed and avoid the one you took. Have you been making this mistake?

Here’s another way it can happen: You are in a trade, and your rules cause you to be stopped out with little or no profit. Shortly after you exit the trade according to plan, prices take off and move to where, had you stayed in, you would have made substantial profits. The move leaves you sitting there thinking you are stupid. You reason that there must be something wrong with the way you do things.

Your rules, your plan, or both must not be right. So you change what you are doing, or make a new rule so that the next time this happens, you won’t be left behind.

You have just abandoned all of the hard work you’ve previously done that enabled you to successfully trade futures. You’ve abandoned your education and learning. You’ve abandoned the wisdom that will enable you to be consistently successful as a trader. You’ve just started trading history, and you are supposed to be trading on the future movement of prices. You are trading what happened, not what will happen. By not being willing to be left behind, you are setting yourself up for being left out.

If you’ve been having thoughts, or have been acting as we’ve just described, you have a terrible problem with greed. Why? Because greed can never get enough. You can’t satisfy greed. Greed wants more, and yet more.

Not every trade is your trade. Not every trade has to work out for you. You have to be satisfied with getting a reasonable share of trades that fit your description of a good trade. Some of those trades will turn out to be great trades, others are good trades, and a certain percentage of your trades will be bad. There’s no way around it.

Not every good trade will turn into a great trade. When you enter a trade according to your rules and trading plan, you have no idea whether or not it will turn out to be a good trade, much less a great trade. The reality of trading is that, try as you might, you cannot know the future.

Whenever we miss a big move and then try to find some pattern, indicator, rationale, or modification to make to what we are doing so that the next time we will not miss the "big" move, it is a part of the hunt for something magic ¾ a continuation of our quest for the holy grail of trading.

What a terrible mistake to allow yourself to make. Winning as a trader consists of making some small profits and some larger profits on a regular basis. Obviously, there will be some losses. We regularly want to keep losses small, but there are times when a loss will get away from us and turn out to be bigger than desired.

If adversity causes you to become disgruntled, then you really need to examine your thinking and your approach to trading. Your trading plan must allow for disappointment and loss.

You’ve got to believe in what you are doing and be able to trade from the knowledge that when you follow your rules and your plan, you will make money from your trading.
When you become disgruntled and begin to change your plan, your rules, or both, you are setting yourself up for almost certain failure and the worst thing that can happen to a trader ¾ you will lose the courage of your convictions. Without it you cannot trade with any level of confidence.

This is why we encourage you to write out the reasons and rationale for every trade you make, even if you have to do it after you have completed the trade. You must develop a keen recognition of the trades that are your trades. Write out your trading plan every day and for every trade you intend to make. If you did not have time to plan every trade, be sure to review those you did make without pre-planning. Then you can go back over your trading and be able to see why and when you are successful.

Reminder: Here are some steps to take before the market opens.

· View major formations on the charts of those futures you intend to trade. View potential congestion areas, get the big picture from the longer term charts.

· Write down all potential entries as you see them on the chart.

You need to go through this exercise every day that you trade. This takes discipline. However, doing so will help you develop the kinds of habits that will mold you into a great trader.

If you are too busy to be disciplined, then you are too busy to trade. If you don’t discipline yourself, you will soon disappear from the trading scene.