Forex Brokers Are Essential To Forex Trading

By Bart Icles

If you are planning to invest in the Forex market, you will have to get the services of a Forex Brokers to handle your trade transactions. The kind of broker will largely depend on the type of your investment structure. Majority of brokers represent a brokerage company, and they are entrusted to buy and sell foreign currencies. Their services are vital for doing Forex trading, so don't think twice on hiring them to help you.

Forex Brokers that operate in the Forex market are duly licensed, and they have passed some hard testing to achieve this. Any one who wants to become a licensed Forex Broker needs to have a Bachelors or Masters Degree in the Business or Finance, better in both subjects.

Forex Brokers differ from a Forex Analyst. A Forex Analysts' sole job is to analyze or come up with a specific set of conclusions based on market trends, data's, and other pertinent information. They usually give Forex "signals" or predictions of fluctuations of the currencies, but at most times, the signals are done by software analysis programs. A Forex broker is just an authorized agent of a financial institution that will follow your instructions and preferences regarding your Forex trading deals and transactions, as dictated and limited with the type of account you have with them.

Forex Brokers earn their money by commissions on the sales of a Forex account, and as they do trading in your behalf, they also earn a something from it. Brokers usually charge a flat fee for the services they render.

Forex Brokers fall into two types, the Discount Brokers, and the Full Service Brokers. Discount Brokers are limited to soliciting Forex trade advising and they only charge lower commission rates. They offer fewer products; so their fees are much lower in scope. Full Service Brokers provide investment advices and do the most of the researching, so their services are much higher. They also get commissions that come from any trade deals done in your steed. Determine well before hand the kind of Forex Broker that is most suited to your trading system, as they will be vital to your survival and protection of your investment.

New investors should get the Full Service Broker to help protect their investments, as well as maintain a good Forex investment account - if they have the financial resources for it. They have all the needed skills and knowledge about the market, which you obviously lack. If otherwise, get a discount broker to make your trade deals in your behalf. - 23200

About the Author:

Finding a good online forex broker starts with a desire to learn and a drive to become a great trader. But learning forex trading online takes dedication and a good teacher. But once you learn how to trade and do so successfully your life will change and you have options and financial resources you never had before.

Learn Currency Trading (Part II)

By Ahmad Hassam

The most active traded crosses focus on the three non USD currencies (EUR, JPY and GBP). These crosses are known as the euro crosses, yen crosses and the sterling crosses. The most actively traded cross currency pairs are: EUR/CHF, EUR/GBP, EUR/JPY, GBP/JPY, AUD/JPY and NZD/JPY. Crosses enable currency traders to directly target trades to specific individual currencies to take advantage of news or events.

For a new traded there are some surprises in currency trading. You may notice that the currencies are combined in a seemingly strange way when you look up at the currency pairs. For example, if euro-yen (EUR/JPY) is a euro-yen cross, why it is not being also referred to as yen-euro (JPY/EUR)? The answer is these conventions have been designed to reflect traditionally strong currencies versus traditionally weak currencies with the strong currency coming first. Those quoting conventions were evolved over the years.

The first currency in the pair is known as the base currency. It is the base currency that you are buying or selling when you buy or sell a currency pair. The second currency in the pair is known as the counter currency. So if you buy 100,000 EUR/JPY. You have just bought 100,000 Euros and sold the equivalent amount in Japanese Yen.

So currency trading involves simultaneously buying and selling. Going long in currency trading means having bough a currency pair! When you are long, you are looking for the prices to go higher. So you can sell at a higher price that where you bought.

Going short in currency trading means selling a currency pair! It means that you have sold the currency pair, meaning you have sold the base currency and bought the counter currency. When you anticipate the price of a currency pair going down, you go short in anticipation of the price going further down. This will make you a capital gain later when you exit your position. In currency trading going short is as common as going long. Unlike stock trading where you had to observe the up tick rule before you could go short. In currency trading there is no such rule.

Its called squaring up if you have an open position and you want to close it. You need to buy or go long to square up if you are short. You need to sell or short to go flat if you are long. Having no position in the market is known as being square or flat. Selling high and buying low is the standard currency trading strategy just like in any other trading.

A clear understanding of how P&L works is especially critical to online margin trading. Profit and Loss is how traders measure success and failure. You will need to pony up cash as collateral to support the margin requirements established by your broker when you open an online currency trading account.

Profit and Loss calculations are pretty straight forward and are based on position size and the number of pips you make or lose. A pip is the smallest increment of price fluctuation in currency pairs. Pips are also referred to as points. Most of the currency pairs are quoted up to four decimal places. Suppose EUR/USD quote is 1.2853. If the price moves from 1.2853 to 1.2873, it has gone up by 20 pips. Pip is the increase or decrease in the fourth decimal digit. - 23200

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Learn Currency Trading. First Trade Your Forex Demo Account!

Why You Should Have A Forex Mentor

By Peter Kimber

Forex trading is alarming to some new investors. You have to know the terms and the language of investing. And you have to be sure of what youre doing in order to make your first trade successful. Knowledge and understanding of your product is very helpful. There are many websites on the web waiting to help you, but it can stress you out trying to find the right one that will make you money. Having an education on the matter will help.

For the new ones - Forex means Foreign Exchange. The paper and coin money of one country is exchanged with the same from another country. This kind of exchange is not done on Wall Street, but is done online or via telephone through banks, currency traders or brokers. One thing you must do, is get the timing right in order to make a profit in this type of trading.

You have to do your homework in order to learn this type of forex trading. But once you learn it, it can be a very lucrative business.

The things you have to learn for this type of business are risk control and management in trading. You have to know the craft before you take the risk, otherwise you will become discouraged at your failure and you wont even want to continue to trade. As you begin, keep a record of what you do. Be aware that you will lose money at first; this is part of the learning process. Set a financial limit and try not to go beyond that limit. This will help minimize the amounts you lose during the learning process.

You must pay attention to opening and managing an account as part of your training process. Learn by opening a dummy account to trade with virtual money. This will help you feel confident when you begin trading with real money.

You can search online for various websites that offer demonstration accounts for free. This would be the best place to go to get your education in trading forex.

Always ask questions. Thats the only way you will be able to learn this trade. Look online for any free seminars being given in your city. Attend them if possible and learn as much as you can before actually using your money to invest in forex.

Heres to your education in forex trading and hopefully you will be able to learn much about forex trading and can make a lot of money trading in the future. - 23200

About the Author:

If you want find out more about getting a forex trading training, then you should check out this website: learning day trading.

Money Management in Automated Forex Trading

By Mike Ashford

Automated forex trading can be profitable for even new forex traders. A good forex trader in addition tries to increase his chances of profitability by looking for forex trading robots that also include money management techniques.

A good forex trading robot should enable the forex trader to take profits, limit loses and even trail their stops. In other words, other than just being profitable, the automated forex system should also increase his trading exposure in winning periods and reduce trading exposure during losing periods.

Money management in automated forex trading is very crucial for the following reasons.

1. Preserving Capital

A forex trader who does not learn how to preserve trading capital is bound to lose it. Many forex robots only allow you to trade a system. Few are able to protect a traders capital even when they are in a drawdown. A good forex robot should be able to have trading parameters that allow the forex trader to preserve his capital when the market is not in tandem with the automated forex system.

2. Adequate Capital

Other than preserving your capital during slow forex trading periods, a good forex robot should also ensure that the trader has adequate capital to trade the system.

There is nothing worse than a forex trader entering a trade without adequate capital. It is like going to a fast food restaurant without the proper change to buy a burger. Sooner or later the under capitalized forex trader will probably lose any trading funds they might have in their account. A good automated forex system will alert you to this scenario.

3. Set Reasonable Goals

A good automated forex system will have money management techniques that will allow the forex trader set reasonable forex trading goals. Forex trading is a profitable endeavor but most traders give up when they do not achieve trading profit goals that were unrealistic.

A forex trading robot will allow the forex trader to have reasonable expectancy for their trading dependent on how much capital they have and also the performance of their robot.

4. Predetermine Loses

Many times a forex trader gets paralyzed when trying to exit a losing trade. It is common for the forex trader to exit winners too early but exiting loses is more difficult. Traders hold on to a losing position in the expectation that it will soon turn in their favor. My very first trades consisted of losing trades that were some 100 pips while my wins were in their teens.

A good forex robot will ensure that this does not happen and exit your trades at predetermined levels thus letting you conserve your trading capital. Letting the forex robot determine when you should exit a losing trade is probably one of the most important reasons to use automated forex software.

Good forex traders make it a habit to apply money management techniques especially when they are trading automated forex systems. I have realized that my best performing forex trading robots all have money management techniques built into them. Over time, even a mediocre forex robot becomes very profitable with good money management techniques. - 23200

About the Author:

If you want to find out this "secret" and start making a nice income with forex, click here.

How to Backtest Automated Forex Systems

By Mike Ashford

Automated forex systems are a great boon for forex traders. The ability to always be trading without the need of your presence is a great way to increase your profitability when trading forex. However, getting the wrong automated forex system to trade can cause major lose.

That is why it is important to backtest your automated forex system before you use your trading capital. However, you need to be able to do proper back testing for you to get the most out of your system.

1. Use Proper Forex Software for Backtesting

If you are going to risk thousands of dollars in forex trading, then you can afford getting proper forex back testing software. It is not enough to get software that is does basic testing. A forex trader needs to invest in forex software that is reliable and whose results can be verified. Get the proper forex trading tools and you may never need to worry about the viability of your forex trading system.

2. Get enough Forex Trading Data

The forex market is ever evolving and there is a need to test your automated forex strategy in different forex trading environments. There are a lot of forex data providers who provide such data for free. Your forex broker can also be a good source for such data.

Other than just the quantity of the data, make sure that your source also has quality data. If you test your automated forex system on quality and enough data, your chances of your back testing results being replicated are higher.

3. Do not Over-Optimize

Every time you change the parameters of your forex robot, you are likely to get unreliable results. Over optimizing or curve-fitting a forex system to give you better results on unrealistic parameters will give you a forex trading system that only works on paper but not in the real world.

Curve fitting normally occurs when the forex trader is using too many parameters. Try and keep the automated trading system as possible. If you create a simple forex robot and it shows profitable results on back testing, then it is more likely to work than a curve fitted forex system.

4. Adequately Test Your System

I have seen automated trading system that only work in one currency market. Most of the time such trading systems have been curve fitted. Before you trade your own funds in any forex robot, ensure that you have back tested the system on different time frames and also different currency markets.

The more time frames an automated forex system is profitable, the more likely it will work in a real environment. I have found that the best automated systems are the once that confirm that a trade is on in a higher time frame as well as in a lower time frame.

Take your time when back testing. Do not be lazy about it as it is crucial to making you a better forex trader. I never trade an automated forex system without back testing it thoroughly first. - 23200

About the Author:

I know a way to make thousands a month thanks to forex robots. I found a site called forex robot advice but don't want to reveal their "secrets" here.