The ABCs of Forex Day Trading

by admin on March 15, 2010
in Forex Day Trading

It is safe to say that many more people are involved in day trading and investing in the various markets than at any other time in history. The primary reason for this is the wide range of opportunities that the Internet has made available to anyone that uses it. The Internet basically gives anyone, anywhere in the world the ability to get up to the minute information on their investments whether Forex or other. Forex day trading is becoming increasingly popular as is trading on the Forex market in general.

How Does Forex Day Trading Work?
Forex day trading happens when a trading deal both opens and closes all on the same business day.  An example of this would be, if you were to purchase a currency at 10am on a particular day and were to sell it by 4pm the same day. Generally day trades happen all within the same business day. Day traders usually keep a keen eye on up to the minutes news, data and financial figures all throughout a day when they are trading. They will then take advantage of any extreme changes in currency rates that take place. At times, rises in currency can be quite predictable, at other times day traders are simply speculate or stay alert.
Can Day Trading Last for More than One Day?
If you purchase currency while day trading and realize at the end of the day that you are on to a good thing, you can actually allow that transaction to roll over into another day. Most brokerages will make automatic allowances for this. In most cases when this happens, your account will simply be billed for the extra 24 hour period if you have not closed the deal by the end of the day. Everything will automatically be renewed and the deal will continue for another day. Often this can be allowed to go on for several days.
Day trading for the most part takes place online. The trader needs to have a fairly fast computer (a computer with a lot of memory), with a fast, reliable connection to the Internet. This is of huge importance because you do not want to lose connection in the middle of an important transaction. Therefore if you decide that you would like to be a Forex day trader, invest in good equipment and in a good Internet service provider (ISP).
Establishing a Day Trader Account
Forex day traders, like anyone else wishing to invest in Forex need to have an account with a brokerage that handles Forex. This might the biggest challenge for a new investor. Finding a Forex broker takes a fair amount of time and research. Knowing how you want to trade can help you narrow down your options for a broker. If you already know that your primary way of trading Forex will be as a day trader, then find a Forex broker with an excellent Forex Trading Platform and with a brokerage that is best structured to accommodate day trading and web-based traders.

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First Steps in Forex Trading

by admin on February 11, 2010
in Forex Trading Online

The Foreign Exchange market or Forex is an opportunity for people to earn money by buying and selling currency. The currency you buy can be US Dollars, Great British Pounds, Euros or any other currency from any country around the world. The goal of a Forex trader is to earn money by selling a currency for more (or at a higher rate) than what you bought it for.

If you are interested in getting involved in Forex trading you must familiarize yourself with the industry, at least on a basic level. It is important to understand both the positives and the negatives of trading Forex; both the benefits and the risks of trading Forex. When you trade Forex the currency that you buy is your investment. It is the thing that will either make you money or lose you money. Therefore, it is important for you to find out what causes the fluctuations in rates that prevails in Forex trading. It is based on this information that you will be able to predict the direction that a currency might be headed.
To begin trading you must first find a broker before you can begin to trade on the Forex. If you are new to Forex, finding a Forex broker can be extremely difficult and a bit overwhelming if you don’t have someone to help you. After all, the job of finding a broker involves understanding who to trust and who to run from. Not every broker will be the best broker for you. Even if you don’t know the intricacies of Forex trading, at least you can be armed with the right questions and have the right information to make an informed decision.
It is important to know that small details in the agreement between you and your broker could affect the amount that you make from your trades or the amount that your broker makes from your trades. Granted, your broker has to earn an income but it shouldn’t all be made from you! Right off the bat, you should look for a broker that can give you a low spread and that requires the smallest possible deposit. In today’s market, the best deals that you are likely to find on an initial deposit will fall somewhere between $300 and $500.
For your protection, you should look for a broker that is registered with the Commodities Futures Trading Commission (CFTC). Brokers themselves should be registered as Futures Commission Merchant (FCM). Brokers are not required to register with the CFTC, they do this voluntarily. In my view, this is just one indicator of a broker’s credibility and their respect for accountability. In addition to this, it is important to check the references of brokers. Ask for a list of references and be sure to call and talk with each of the references about the experience they have had with the broker. Better yet, if at all possible, try to get a broker referred to you by a friend, family member or associate. This is definitely one of your best chances of getting honest, accurate information on a Forex broker.
Once you have found a Forex broker, the job of trading Forex will be much easier. Your broker should at minimum set you up with all of the systems necessary to begin to buy and sell currencies. These systems should include their policies on buying and selling currencies, providing you with any software that their brokerage uses, advice and training on successful trading as well as a willingness to set you up with any software and trading platforms that their brokerage uses. You will be able to buy and sell currencies at will once you have an account and an online trading tool.

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Forex Robots 101

by admin on January 25, 2010
in Automated Trading

A Forex robot is a software package that is created to trade on the Forex automatically for those that own it.  Forex robots are programmed specifically to analyze the Foreign Exchange market on a constant basis, determine or estimate the direction of a currency and to buy and sell currencies based on the information that they find.  This is all done on autopilot for the person that owns the robot software.  Forex robots usually only need to be fed a few preferences such as a low cap (to limit your losses) and they are able to trade automatically for you.  Programmers of Forex Robots claim that they can make money for you while you sleep.

How do Forex Robots work?
Forex robots work by scanning Forex data and making the most of trading signals that are built into the Forex trading system.  These robots then use the information that they analyze to the advantage of the robot owner.  Forex robots can analyze the fluctuations that take place throughout the day with currencies and are able to calculate the optimal time to buy or sell a currency. 

Although this might all sound like magic, Forex robots don’t actually have a mind of their own.  They trade and make decisions based on the preferences that you enter into the program when you are setting them up.  Your preferences control the bounds and limits of the robots behavior.  Therefore even though Forex robots perform unbelievable tasks, you will need a basic understanding of Forex in order to set them up and get them trading correctly for you.  You will not have to be an advanced Forex trader to use the software but you will at minimum need to understand how to set upper and especially lower limits on trades.  
Benefits of Forex Robots
Trade for you automatically
Able to calculate decisions similar to your own
Can trade for you while you sleep
Can trade at the best moments
Can operate 24 hours a day

The fact that Forex Exchange market is open 24 hours a day and that trading can take place at any hour of the day or night means that the best time to trade could actually be at 4am in the morning or at some other inopportune time.  If this is so, you might always be missing the best opportunities for profit in Forex trading.  Forex robots solve this problem by trading for you at any time day or night based on your preferences and the risk management choices that you enter into the system. 

Risks of Forex Robots
If after reading this article you decide that a Forex robot is the software that you need, there are a few things that you should be aware of and take into consideration before buying one.  First of all, Forex robots are banned by a large majority of Forex brokerages.  If you want to stay within the rules, you will have to ensure that using a Forex robot is within the rules of the Forex brokerage that you work with.  Those that trade using Forex robots against the wishes of their brokerage company run the risk of having their accounts permanently closed or being banned by a brokerage.

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Forex Brokers – Who They Are?

by admin on January 18, 2010
in Forex Brokers

Forex trading involves the buying and selling of foreign currencies.  Forex investors benefit through Forex only when they manage to sell a currency at a rate higher than what they bought it at.  The fact is, the value of currencies can fluctuate tremendously even within as little space of time as a 24 hour period.  By the same token, they can rise or fall suddenly and for long periods of time too resulting either in a significant loss or a substantial profit. 

What is a Forex Broker?
A Forex broker is an individual that is trained to assist you in the process of buying and selling currencies.  A Forex broker receives your order to buy or sell a currency and they execute it.  It is highly likely that if you make a decision to get involved in Forex trading, you will come to know your Forex Broker fairly well.  Ideally, your Forex broker will be a person that will provide you with support, advice and knowledge on the Forex market.  Also, it is quite important to find a Forex broker that offers a low spread.  A broker’s spread basically determines how much commission you will be charged on each of your trades.  The lower the spread, the better off you will be as a trader.

As you go through the process of finding a Forex Broker, there are a few things that you should look out for.  First of all, your broker should be associated with a major financial institution or association.  This should provide you with security and reliability.  Secondly, the Forex broker should be registered with the Commodity Futures Trading Commission (CFTC).  This is a must!  Once those two things have been established, you can begin to discuss other specifics.  

When you meet with brokers, ask questions to find out what level of support the Broker is willing to provide you as a new trader.  They should be able to provide you with software samples of their trading platform and they should be able to guide you towards good resources and research material that will help you to make informed trading decisions.  

Finding the right broker will take some homework on your part.  If you have friends or associates that trade in Forex, getting some advice from them is ideal.  They may or may not like the broker that they work with.  At minimum, they could give you pointers as to what to look for in a broker and on what has worked for them.

Who Pays the Forex Broker?
Forex brokers make money on every trade that they broker.  It is not a percentage-based commission but rather a built in commission that is derived from the difference between what the seller accepts for the currency and what the buyer pays.  These two prices rarely equal the same amount.  The broker makes his money from the difference.  By choosing a broker with a low spread, you can minimize the amount of commission you pay for the lifetime of that relationship. 

As a newbie in Forex trading, it is important for you to use an established institution for Forex trading.  As you gain experience you may choose to work with other brokerages.  Since almost all Forex trading is done online, you will need to ask your broker for trading platform software.  A good broker will guide you through using their Trading Platform software to ensure that you know how to use it.  If you are to find success with Forex, it is important that you are comfortable with your broker, with the software and that you know exactly how to use it.

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