- Never invest too much initially, start with smaller amounts
- Use stop loss effectively to limit your losses
- Never use high leverages initially. Stick to x5 to x25 range max. Never leverage 100 or 200 times until you become a pro
- Practice a lot on the practice trading account before putting your real money
- It is better to start trading on Silver or Gold rather than directly jumping into currency trading. The same platform allows you to trade silver/gold.
- Never take emotional decisions. If your pair is loosing, just exit by booking losses. If it’s going up, exit at the pre-decided price rather than waiting for more
Forex Tips as shared by experts
Forex glossary
Base currency: The primary currency that you are trading or interested in. e.g. in aEURUSD currency pair, Euro (EUR) is the base currency and USD is called the quote currency
Counter currency: Same as the quote currency or second currency in a pair
Buy price (Ask rate): The price at which a buyer can buy a pair
Forex: Foreign Exchange or FX
Leverage: Leverage the loan from your broker that allows you to trade 100 or 200 times of your capital. E.g. it is possible for you to buy 10000 USDEUR with even $100 by applying the right leverage size. This can potentially increase your gains multifold but has the risk of loosing as well.
Lot: Lot is the standard unit of trading. Typically the standard lots are 100,000 units, mini-lots are 10,000 units and micro-lots 1000 units.
Open position: Your current holdings or trades that are not closed yet.
Pip: Pip (or Point) is the smallest price change that can be made on a currency pair quote. For most currencies (except for JPY combinations), the pip is usually a basis point or 0.0001. Hence the price movements are always in units of 0.0001 and smaller values than that. It may be noted that most forex quotes are in four decimal places.
Sell price (Bid rate): The price at which a pair can be sold
Short Position: Going short means that you are opening sell order hoping that the prices of a currency pair will fall. Later you can close that position at lower prices thereby booking profit.
Spread: Difference between the current buy and sell prices.
Stop Loss: The automatic closure price specified just in case your pair moves the other direction than expected. The stop loss order makes sure that you are protected from further losses by automatically closing the open positions at that specified stop loss price.
Easy forex trading with eToro
If you Google for ‘forex trading’ you may find plenty of online forex trading platforms. I found that eToro was pretty good due to the following reasons:
- You can open an eToro forex trading account with as low as $50 initial deposit
- On top of your first time deposit (FTD) they will add a welcome bonus of 25%. i.e. if you start an account with $1000, they will add $250 and hence you are already starting on profit. The bonus has a cap of $1000 (There are companies who give even 100% bonus but beware of their hidden costs)
- No hidden costs or brokerage charges
- You get a personal account manager (PAM) assigned to you if you start an account with at least $500. This means that you will get regular phone calls on trading ideas based on global economic and forex news
- Leverage up to 400 times and it allows micro-lots (see Forex terminologies below)
- eToro provides an excellent web based trading tool as well as a fast desktop based trading tool
- You can add or withdraw funds via PayPal. This may be one of the major criteria for bloggers who already have their blog income in PayPal. Many other platforms don’t support PayPal transfer
- Excellent customer support – via phone, email as well as live chat
- The practice account to get used to forex trading is very good and uses realtime data
How to forex trade
In order to trade forex you need to open an account with one of those online forex tradingagencies. There are plenty of them to choose from and I found that eToro is a good platform for the reasons mentioned in the next section. Once you sign up, all that you have to do is to add money to your forex trading account and start trading. Money transfer to the account can be via PayPal, Credit card, bank – wire transfer and many other online money transfer options. Of course, after signing up one still has the option of continuing with the practice account without adding any real money to your account.
It is a matter of couple of minutes before you start trading but wait till you do your homework. All your money can disappear in no time if you are not careful. This is why practice trading accounts are useful. Most trading platforms allow a practice accountwhereby you can trade using virtual money but use real time features such as price quotes, charts etc.
Difference between Forex trading and Stock trading
Many of us are familiar with the stock markets and share trading. The currency trading is slightly different from stock trading because of the following reasons.
- In the stock market, there are too many (thousands) companies and their stocks that you need to track. But in the currency market, you mainly deal with those leading currencies in the world. Fourteen of these major currencies count for majority of the transactions. They include US Dollar (USD), Euro (EUR), Japanese Yen (JPY), British Pound (GBP), Canadian Dollar (CAD), Australian Dollar (AUD), New Zealand Dollar (NZD) and Swiss Franc (CHD). The other currencies are traded as well but these are trader’s favorites and high volume currencies
- The stock market is active only for a certain number of hours per day and you transact in a particular stock market (e.g. NYSE) at a given time. But currency trading is done 24 hours a day in some market or other and you don’t need to worry about where you are trading. The trading system takes care of this part and simplifies things for you
- Because of the leveraging (margin trading), even a small amount such as $50 can get you exposure to buying 1000s of units of a particular pair
- Even a small change (such as 0.0001) in the price can result in a significant return on your investment due to leveraging
- Volume is so high that buy and disposal is easier
- Usually there is no account opening fee or even brokerage charges – the forex company’s commission is only the difference between the sell and buy price at any time (buy price will be always slightly more than the sell price at any time)
- There is no physical shares, documents or dematerialized form of the traded currencies maintained anywhere. The trading system just keeps your buy-sell status
- Due to the huge volume nature and global span, currency market cannot be manipulated by traders where as stocks, sometimes, can be manipulated by insiders and market makers
Make Money Online via Forex Trading (for Beginners)
Forex trading has always been a mystery for me until about couple of weeks ago when I started reading more about it. For most people forex trading is something that is meant for the corporates & banks and perceived as a very complicated thing to do. Now, after doing enough research, I realized that it is the one of the easiest make money online instrument to get started and make money instantly – of course with its associated risks. In this post, let me explain the basics of forex trading and how easy it is for anybody to get started with online forex trading pretty quickly.
Forex trading for beginners – Basics
Forex market or currency market (or simply FX) is the place where currency trading takes place. It primarily facilitates the exchange (buy / sell) of currencies from one to another and is the backbone of international trade and investment between countries – major banks being the main parties involved. For example, if a US company has to import something from Japan, it has to pay in Japanese Yen and and hence need to convert the US dollars into the acceptable currency. This happens on a continuous basis round the clock to help with global trades and hence make a mammoth US $7 trillion daily turnover which is bigger than any stock market turnover.
Forex trading by individuals is nothing but the act of involving in the above process with your small amount of money whereby you buy and sell currencies at the prevailing market price.
Basically, when you buy a particular currency (e.g. US Dollar), it is exchanged against another (e.g. Euro) and hence the entity that is traded is known as a pair. For example USDEUR is a pair whereby you are trading US Dollars against Euro and you buy (or sell) that pair at something like 1.5000 per pair.
Just like the stock market, you buy or sell – not shares but pairs.
Forex Trading Rules
Why Trade in Currencies?
There are 10 major reasons why the currency market is a great place to trade:
1. You can trade to any style - strategies can be built on five-minute charts, hourly charts ,daily charts or even weekly charts.
2. There is a massive amount of information - charts, real-time news, top level research - all available for free.
3. All key information is public and disseminated instantly.
4. You can collect interest on trades on a daily or even hourly basis.
5. Lot sizes can be customized, meaning that you can trade with as little as $500 dollars at nearly the same execution costs as accounts that trade $500 million.
6. Customizable leverage allows you to be as conservative or as aggressive as you like (cash on cash or 100:1 margin).
7. No commission means that every win or loss is cleanly accounted for in the P&L.
8. You can trade 24 hours a day with ample liquidity ($20 million up)
9. There is no discrimination between going short or long (no uptick rule).
10. You can't lose more capital than you put in (automatic margin call)
Fair Warning
This tutorial is designed to help you develop a logical, intelligent approach to currency trading base on 10 key rules. The systems and ideas presented here stem from years of observation of price action in this market and provide high probability approaches to trading both trend and countertrendsetups, but they are by no means a surefire guarantee of success. No trade setup is ever 100% accurate. That is why we show you failures as well as successes - so that you may learn and understand the profit possibilities, as well as the potential pitfalls of each idea that we present.
The 10 Rules1. Never Let a Winner Turn Into a Loser
2. Logic Wins, Impulse Kills
3. Never Risk More Than 2% per Trade
4. Trigger Fundamentally, Enter and Exit Technically
5. Always Pair Strong With Weak
6. Being Right but Being Early Simply Means That You Are Wrong
7. Know the Difference Between Scaling In and Adding to a Loser
8. What is Mathematically Optimal Is Psychologically Impossible
9. Risk Can Be Predetermined, but Reward Is Unpredictable
10. No Excuses, Ever
Trading is an art rather than a science. Therefore, no rule in trading is ever absolute (except the one about always using stops!) Nevertheless, these 10 rules work well across a variety of market environments, and will help to keep you grounded - and out of harm's way. (If you have questions about currency trading you might want to check out, Common Questions About Currency Trading.)
What is Forex?
FOREX — the foreign exchange market or currency market or Forex is the market where one currency is traded for another. It is one of the largest markets in the world.
Some of the participants in this market are simply seeking to exchange a foreign currency for their own, like multinational corporations which must pay wages and other expenses in different nations than they sell products in. However, a large part of the market is made up of currency traders, who speculate on movements in exchange rates, much like others would speculate on movements of stock prices. Currency traders try to take advantage of even small fluctuations in exchange rates.
In the foreign exchange market there is little or no 'inside information'. Exchange rate fluctuations are usually caused by actual monetary flows as well as anticipations on global macroeconomic conditions. Significant news is released publicly so, at least in theory, everyone in the world receives the same news at the same time.
Currencies are traded against one another. Each pair of currencies thus constitutes an individual product and is traditionally noted XXX/YYY, where YYY is the ISO 4217 international three-letter code of the currency into which the price of one unit of XXX currency is expressed. For instance, EUR/USD is the price of the euro expressed in US dollars, as in 1 euro = 1.2045 dollar.
Unlike stocks and futures exchange, foreign exchange is indeed an interbank, over-the-counter (OTC) market which means there is no single universal exchange for specific currency pair. The foreign exchange market operates 24 hours per day throughout the week between individuals with Forex brokers, brokers with banks, and banks with banks. If the European session is ended the Asian session or US session will start, so all world currencies can be continually in trade. Traders can react to news when it breaks, rather than waiting for the market to open, as is the case with most other markets.
Average daily international foreign exchange trading volume was $4.0 trillion in April 2010 according to the BIS triennial report.
Like any market there is a bid/offer spread (difference between buying price and selling price). On major currency crosses, the difference between the price at which a market maker will sell ("ask", or "offer") to a wholesale customer and the price at which the same market-maker will buy ("bid") from the same wholesale customer is minimal, usually only 1 or 2 pips. In the EUR/USD price of 1.4238 a pip would be the '8' at the end. So the bid/ask quote of EUR/USD might be 1.4238/1.4239.
This, of course, does not apply to retail customers. Most individual currency speculators will trade using a broker which will typically have a spread marked up to say 3-20 pips (so in our example 1.4237/1.4239 or 1.423/1.425). The broker will give their clients often huge amounts of margin, thereby facilitating clients spending more money on the bid/ask spread. The brokers are not regulated by the U.S. Securities and Exchange Commission (since they do not sell securities), so they are not bound by the same margin limits as stock brokerages. They do not typically charge margin interest, however since currency trades must be settled in 2 days, they will "resettle" open positions (again collecting the bid/ask spread).
Individual currency speculators can work during the day and trade in the evenings, taking advantage of the market's 24 hours long trading day.
3 Keys to Setting Up Relative Strength Investing
Configuring a relative strength investment strategy to produce profitable investment results requires more than simply picking a method and plugging in typical, common settings. Results that produce safe investing with regular profits, regular gains, requires settings that meet the needs of the group and your objectives.
Three keys to establishing and using relative strength investing include:
Type of Relative Strength analysis
Objectives of the Investments
Testing and Setting
- Type of Relative StrengthThere are different types of relative strength momentum analysis (RSM) and these are often more suited to one type of investment or objective. For example, are your objectives aggressive or conservative or somewhere in-between; short-term or long-term; and are you investing from a group of stocks, ETFs or mutual funds.Testing and SettingsHow you test or back-test your groups of ticker symbols and different types of analysis is critical.If you are more aggressive and willing to trade frequently, almost daily versus weekly or occasionally then you will want to test with shorter time periods. Shorter time periods will give you signals for every twist and turn of the markets and your holdings but result in frequent trading that may or may not produce greater gains than more moderate trading based on weekly or monthly analysis.Using your investment software and back testing you can find strategies based upon gains coupled with drawdown (losses) that meet your goals.
Why Trading With Binary Options Offers Good Profit Potential For Beginners
Trading the financial markets with binary options offers the potential or new traders to make large profits from their trading while taking on limited financial risks. It is because of these two key factors that this trading method has proved so popular since it was launched on a few years ago. As a result of this popularity a great number of strategies have been created with which to trade binary options and therefore it can often be bewildering for new traders who must make a decision on which to use. As a result there are a few simple steps that new traders should work through to help them decide on the most appropriate trading strategies.
The first thing that is vital that a new trader comes to terms with, is the importance of risk control. Any strategy used should always seek to minimise risk in the first instance. It is easy to lose a position and very hard to make up these losses on your account. So at the outset you should always consider a conservative approach and how you can keep hold of your capital first, rather than how you can look to increase it. Don't be taken in by the simple mechanics of binary options. While placing a trade is simple, devising winning strategies is much harder.
In developing a strategy is it is important to understand which method of analysis to use. There are two main types: fundamental and technical. It is not enough to simply follow one school of thought if you want to make money. You need to account for both fundamental and technical factors in your trading to gain the clearest picture of where the price on an asset may head. By learning the basics of both approaches you will be able to make informed decisions which will help you lower your trading risk.
What Does Mid Term Trading Mean in Spread Betting in forex
We cannot explain what mid-term spread betting is without having a reference to both short and long-term trading. Well, this is because there are some traders who think that limiting themselves within the bounds of the trading day is just not for them. In other words, they feel that it does not suit them at all. However, on the other hand, there are also some people who think that long-term would be too risky for them. It is similar to putting one's capital into eternity with lots of uncertainty. Hence, it is not a smart decision at all, even though opportunities are enormous in the long-run. In this regard, by considering both the pros and cons of the two, many traders find their sanctuary in the mid-term betting. This generally solves the problem of trading over the course of a single trading day while not exposing the capital to too much uncertainty.
What Does the Term "Mid" Mean?
Technically the term "mid" in mid-term refers to the period that is between at least a trading and a month or quarter. However, in practice, this is just similar to taking long-term positions. However, their difference is that medium term traders have the intention to cut short earlier than what long-term bettors would do. Hence, since the original intention was to open a position for a quarter, a mid-term trader would then cut it short before that time comes. Of course, this is in order to keep the position on top of any of the uncertainties in the market without dampening the level of potential profits.
What is the main advantage of mid-term over day-trading or long-term betting?
Mid-term spread betting as a strategy is taking a position that is halfway between the short, as well as the long term outlooks. Hence, it means that traders can enjoy the best of both worlds. On the one hand, bettors can enjoy better opportunities for profitability in the mid-term than positioning a bet for the short-term. Of course, potential profits would be nominally higher than what a day trader could have.
Another key advantage of mid-term trading is that it allows the position to have lesser exposure from market risks than what long-term traders would take. Therefore, when there is a greater opportunity to profit while having fewer risks, it would be the perfect combination for a sure win.
Keep in mind, even mid-term spread betting has high levels of exposure to risk. While it may be lower than the long-term trading, traders should never ignore the fact that there is still extreme exposure to risk. In this regard, traders should still be wary when opening a trade.
To learn more about spread betting. Independent Investor is a top online investment resource.
What is the Best Time to Trade Forex
In the 24-hour Forex market, timing is critical. Choosing the best time to trade is a powerful way to maximize the profit potential of every trade. Professional traders know this secret. They carefully choose the timing of their trades to produce the most profits. You can make this same choice — and maximize your profits on every trade. In short, you can choose to trade the Power Hours. Let’s examine what gives the Power Hours their remarkable potency. This can be summarized in two words: volume and volatility.
The Most Promising Sectors:Investing in Portugal
The most promising sectors for investors in Portugal are currently as follows.
Mining of lithium, tungsten, tin, uranium. iron ore, copper, zinc, silver, gold, marble, clay and gypsum has been attracting several investors.
Agriculture and associated industries (wine, olive oil, fruits, canned tomato, fresh vegetables and flowers, beet sugar, sunflower oil and tobacco) is expanding considerably and benefiting in the South of the country from the major Alqueva irrigation system, still being developed. Forests (mainly pine trees, cork trees, holmoaks and eucalyptus) cover about one third of the country. Portugal is the World's leading producer of cork and cork products. The pulp and paper industry, processed wood products and furniture manufacturing are the other main industries associated with the forestry sector.
As regards fisheries and sea-related industries, Portugal has a large Exclusive Economic Zone (1,727, 408 sq km) and the fishing industry is significant, with local fishing by small traditional vessels accounting for the largest part of the total fleet but less than 10% of the total tonnage. The ship building and repair industry is increasing its export quota and some mid-sized shipyards may constitute interesting investment targets.
Other major industries include oil refining, petro-chemistry, cement, automotive, electrical and electronics products, machinery, injection moulding, plastic products, textiles, footwear, leather, ceramics, beverages and food processing. The automotive industry is a key sector and a major exporter and the country is a world leader in the making of precision moulds for the plastics industry. The development of equipment for clean energy production has been gaining momentum. The aerospace industry recently received a boost with an important investment by Brazil's Embraer.
There are 3 Ways to Invest Safely
The three key principles of safe, and profitable investing are:
1. Consistency
2. Proven Analysis
3. Simplicity
These don't sound like today's stock picks, but following these three keys will tell you how to invest safely and profitably, or you could even say "how to invest smartly".
Consistency
This almost sounds silly, but successful investing requires consistency. Just like good dental practice means brushing your teeth every day, profitable investing requires a consistent method, a stick to it process that doesn't change with the blowing of the wind or even a sudden storm.
Elements of Consistency include:
- Regular time - whether you work on managing your investment portfolio once a week or daily or even once a month it should be about the same time day after day or week after week.
Without the consistency of, for example, 30 minutes every Saturday morning, opportunities will be missed or decisions rushed or even forgotten.
- Decision Factors - safe investing decisions requires using the same method each time you sit down to evaluate your portfolio and decide where to place your money.
This means sticking with one investment software program, for example, and not jumping from your program to taking advice from a magazine columnist, newsletter or TV commentator. It's simply one or the other - all the time.
Proven Analysis
There are many ways to analyze the markets or groups of stocks, ETFs or mutual funds.
The key here is to use the same types of analysis that is proven to work with the types of investments you want and for the goals you seek.
Such analysis may include:
- Relative strength momentum
- Alpha analysis
- Return analysis
- Specific charts
- Buy-sell rules
Some of these may work best for stocks while others work best for mutual funds or ETFs. Be that as it may, stick with one or two that do work best for the type of investment you are considering. If, for example your retirement account is all mutual funds, then find stick with alpha or relative strength momentum analysis.
Simplicity
Picking what stocks or funds in which to place your money doesn't have to be complicated. With the right analysis, and perhaps using a comprehensive investment software program this can be a simple process.
Choices can be made from groups of funds, ETFs or stocks that already exist. It isn't necessary to reinvest the wheel or try to figure out which stock from amongst the thousands on the markets is best today.
You can keep you choices simple by pre-selecting existing groups from which your software program then picks the best opportunities and also tells you when to sell and lock in profits.
There are dozens of such pre-existing groups including:
- 'select' funds - like Fidelity Selects
- Sector ETFs or funds
- Asset funds or Etfs
- Large Cap (big companies) stocks
- Dividend paying stocks
If you narrow your search for the best place to put your money to pre-existing groups and then use proven means of analysis coupled with tested buy-sell rules your chances of strong profits with minimal losses will become immense. Couple these principles with consistency and your will have a winning investment portfolio.
Author Raymond Dominick is the designer of Dynamic Investor Pro investment software for stocks, ETFs and mutual funds. He has been investing in the markets since his teenage years. An experienced business manager and journalist, he has been a registered investment advisor representative, also a professional photographer who loves escaping to the wonders of Glacier National Park in Montana.
What is the Right Time of Investment in Portugal?
Despite the sovereign debt crisis, foreign direct investment in Portugal has been growing at a considerable pace. According to the UNCTAD's Global Investment Trends Monitor, FDI increased from USD 2.6b in 2010 to USD 10.3b in 2011, and from USD 2.2b in the first half of 2011 to $7.8b in the first half of 2012. The EU/IMF team that monitors the country's performance under the financial bailout package forecasts a growth rate of 80% in FDI for 2012/2013 due to the attraction to foreign investors of the bargain prices brought about by the crisis.
The Bank of Portugal's statistics indicate that in 2011/2012 the most important countries of origin of FDI were France, Spain, Switzerland and the US, the most sought out sectors having been finance and insurance, manufacturing, services to business and real estate.
Most forecasts point to the high probability that the cost of acquiring businesses or real estate in Portugal may hit rock bottom in 2013/2014, which is proving to be a magnet to cash-rich foreign investors.
Investors wishing to start up operations in Portugal will benefit from an abundance of qualified cheap labour, strong government incentives, a tax regime that is being changed in order to attract investors and possibly the easing out of the traditionally heavy red tape.
