Understanding Your Forex Trades as a Newcomer

Coming into the world of forex is not always easy. You have to make sure that you understand all of these concepts and they can quickly spiral out of control. Learning is not easy, but it’s the steps that you take at the beginning that will really determine everything for you as an investor. What’s the right way to go? Well, that just depends on your goals and dreams. Some people find that they’re going to have to really dig in deep and work hard in order to make gains as a forex investor. But remember — if it really was going to be easy, it wouldn’t be worth having. Everyone would want to do it, and it just doesn’t work that way. If you want to last an investor for the long run when it comes to forex, these terms really do make all of the difference in the world.

So, where do we begin?

Well, you have to understand that when you’re trying to invest in the forex market, what you’re really doing is trading money. Hard currency, though not “hard” in the physical sense. You’re essentially buying currency like you would buy a share in a particular country. The market translates price into a direct reflection of thoughts about the health of an economy. So when you purchase say, the Canadian Dollar, you’re buying a share in that country’s economy. You’re saying that the economy of Canada is going to be fine, and will grow as time passes.

The exchange rate of a currency versus other currencies is the market’s reflection of the condition of both country’s economies. In terms of USD/CAD, it would be how strongly you feel that the US economy is compared to Canada’s economy. That’s essentially why exchange rates fluctuate so much.

Does that make any of those old financial news broadcasts any clearer in your head’ because when we first started traded forex and really saw what the market was capable of, it started to all make sense.

There are major currencies and minor currencies. IF you really want to take it slow as a newbie, it’s a good idea to stick wit the major currencies. They have enough volume to keep you busy, so you won’t mess up things too much.

Major currencies include the USD (United States Dollar, often nicknamed the “Buck”), the EUR (Euro, the currency of all Euro zone countries and nicknamed “Fiber”), the JPY (Japanese Yen, just “Yen”), the GBP (Great Britain Pound, “Cable”), CHF (Swiss Francs, “Swissy”), CAD (Canadian Dollar, “Loonie”), AUD (Australian Dollar, “Aussie”), and the NZD (New Zealand Dollar, “Kiwi”).

Currencies are traded in pairs, so you will see them reflected that way — EUR/USD, USD/JPY, USD/CHF, and so on.

Currency pairs that don’t contain USD are considered the cross currency pairs, or “minor pairs”. Popular minors include EUR/CHF, EUR/GBP, EUR/CAD, and NZD/CHF.

The market for forex is huge — the forex OTC (over the counter) market is running 24 hours a day. It’s spread all over the globe with no central location. That’s a pretty big deal.

We’ll leave it here — you have quite a bit of forex knowledge to digest! Good luck!

What is Forex Currency Trading

Forex currency trading is the process of buying and selling currency to make money. It is imperative that you learn and use the most recent information and be up to date on factors such as foreign politics and oil prices.

In order to learn and properly use strategies in this constantly changing market it is important to be able to pinpoint the different patterns. There is even software that makes this easier to accomplish.

Another important aspect of this market is timing. Forex markets worldwide open and close at various times allowing you to trade at different times of day or night. By studying the market and its patterns you can identify what times are the most profitable. By knowing this you can make more educated decisions in relation to which investments will result in better chances of success.

Forex Currency Trading

One advantage that currency trading has over trading stocks is that with currency trading the market is open and available for trade all the time while stock trading is only open at certain times of day. This is one thing that appeals to many people especially if they keep unusual hours such as being up late at night or very early mornings. They see it as helpful to be able to execute their trades regardless of the times of day.

There are several reasons that people become interested in Forex currency trading. Some of these reasons include:

  • Making a Profit
  • Learning How Currency Trading Works
  • Ensuring Financial Security and Stability

Currency trading is an easy process if you have patience and don’t rush yourself. It is also important to do plenty of research and to be sure you understand exactly what the market is doing. The more you research the more you understand and the more you understand the more profitable the outcome is likely to be. Having the proper knowledge and experience is extremely important to anything but the lack of these tools can be especially detrimental in this type of market as they are almost sure to cause extreme losses fast.

Forex trading is an constant and ever changing market and it is important to keep tabs on these changes in order to make educated and profitable investments that will result in making money because after all that is the ultimate goal behind Forex trading.

Everyone wants to be financially secure and independent but it is important to remember that Forex trading will not be instantly successful. It takes time, training and patience to see a profit and you will likely see many losses before making any serious profits. The key is not to give up and be patient and disciplined about your investments.

Forex Software: What is a Forex Brokers List?

There is a good chance that a forex brokers list is included with certain types of web-based or downloadable forex trading software you may use. The goal of providing this information is to help you make as educated of a decision about trading as possible.

A brokers list helps you make a decision about who would be the best possible firm with which to conduct your forex trading business. It helps you make a decision regarding who to conduct business with based on a variety of attributes.

Information that you can obtain from broker’s lists include as follows:

  • You might be able to find out whether they offer live customer service help or not. You should only deal with firms that are happy to help you when you need it.
  • You might find out a little bit about a firm by what other investors and traders say about it. This info is found in reviews and comments made by foreign currency traders who dealt with specific firms.
  • It helps if the broker you choose offers some type of charting software. Find this out as you view various brokers’ lists. This often is provided free of charge, and you are encouraged to seek out the firms that indicate this possibility.
  • Comparison charts provided with information about various trading firms most likely also will indicate how much of a deposit is required. You can compare minimum deposits required and find a broker that requires as low of a minimum deposit as possible. Usually the lowest minimum deposit required by a reputable company would be about $250.00. The highest would be in the tens of thousands of dollars.
  • When seeking information about qualified firms with whom you hope to trade, you may need to seek out account types. Some brokers may allow you to trade micro or mini-lots which average between $.1 and $1.00 per pip (percentage in point, which is the smallest forex price increment).
  • As you seek info about attributes of different trading firms, check out the advantage offered. The higher the advantage, the less the risk. This pertains to how much you would lose compared to how much you would invest.
  • You may choose a particular firm with who to trade based on spreads. According to the advice of some experts, you would ideally want to work with a broker who offers spreads of about 2 to 3 pips, depending upon which shares are traded. You can in some cases go as high as 4 pips, but you are usually never advised to go any higher than that.

Forex Software: Watch out for Scams!

There are many different types of forex software and trading scams. It is advised that you watch out for them.

One of the most important scams to watch out for right now is the ones where you are offered some sort of “miracle software.” For instance, some software available that people purchase is sold as one that helps figure out the market for you.

Some of these may work, while others may not. Beware of the scams and never invest money unless you know you need to.

Common Examples of Scams

  • Perhaps you might notice some software products for sale, which cost thousands of dollars or more. Yet, they do not do more than say products that you can download for free.
  • Another very popular scam is simply being required to pay for a free trial. Then, some thief decides to steal your credit card number via usage of a money transaction system that is not even encoded or encrypted.
  • Some people seeking forex software may have been duped into purchasing products that are expected to be very effective. However, this information is often based on nothing but false advertising claims.
  • Consumers sometimes purchase products that have not even been properly tested. This often results in two things: disappointment and wasted money.
  • Sometimes advertisers will claim that their automated systems are guaranteed to product high returns. Although this may be possible, sometimes the systems that are used do not produce any results.

Other Trading Frauds

Aside from the frauds and scams associated with forex software, additional scams include those associated with certain online accounts. Sometimes money invested might be embezzled (stolen in large quantities).

Some of these above-mentioned types of fraudulent systems often are recognized by one main characteristic. That is, you end up sending them your money and you do not have to do any work.

Generally, this would be very convenient. However, it of course would not be very “convenient” if someone were stealing all your investment proceeds.

Another huge mistake that can lead to stolen funds is when a trader does not separate their investment account from their general funds. The result is that these accounts are not protected from creditors.

Likewise, one big mistake that often is made is they purchase e-books that are not even written by qualified foreign exchange experts. This leads to great frustrations as they try to invest.

What are the easiest things to trade?

There are many ways to trade. You may like the idea of stocks, bonds, forex or even fancy some binary trading. However, you may prefer something simple and wonder which option is the easiest.

At the end of the day, it is probably easiest to trade the thing that you know the most about. You will feel more confidence in your abilities and your choices then. However, if you know very little, then you may still not know where to invest. It can be a good idea to find out more about your options though. If you learn a little bit about all the different things that you can trade, then you may find that you see a particular type of trading that you think you would prefer. Then learn more about that. It is important to get a grasp of the basics so that you understand what you are getting in to. You may find that some look easier than others and it will very much be down to your own personal opinion and understanding as to which you decide to go with.

It is not just understanding that make things easy or hard to trade though. Some items have a trading platform that is easier to use as well. This is something that needs to be considered as well. There is also a difference in cost between the different trading platforms and it may be that this could be an issue as well.

With the Internet making trading so easy, there is not really one item that is simpler to trade than others. It used to be that you needed to get your bank to help you or that you needed to know the right people. It was quite a difficult thing to get in to. However, how that there are many online trading platforms for all sorts of different items, then there is no way to pick between them in this sense. It can just be a matter of choosing what you are most comfortable with.

William hill day trader allows punters to have a crack at indices, commodities and currency pairs in financial trading.

Does Sentiment Analysis Still Have Any Place in a Trader’s Study?

Forex is fascinating for many reasons, but one of the reasons why it interests us is because there are just so many different perspectives to look at. Maybe that’s something that will frustrate you. Don’t worry — once you really get into forex you’ll find that multiple perspectives is definitely a good thing? The reason why you will want to always think about different things when it comes to forex is that your strategy should represent the different areas of influence. You can’t go wrong that way, and you certainly can’t find yourself worrying about how everything will click into place. When you get into forex, you have to look at minute details as well as macro details in order to stay competitive.

So, where does sentiment analysis fit into things? That’s a great question! First, let’s define sentiment analysis as it relates to forex trading.

Sentiment analysis means looking at how traders generally feel about the market. You can look at what people think about the market by charting — what positions are being taken in the marketplace. If everyone is feeling bearish on the dollar, your feelings aren’t really going to overturn it. But what you have to do is look at how to profit from the current market condition as it stands.

Using sentiment analysis to your advantage is something that’s not always easy. Whenever you’re dealing with emotions rather than hard facts, you’re going to have to be careful not to go overboard. We still think that fundamental and technical analysis are important, and that they shouldn’t be skipped over for any reason. Later on as an investor, you might find yourself trying to use market feelings to your advantage. As a beginner, we would advise thinking about the numbers and building a plan from that angel.

As always, you will want to test new theories in a sandbox rather than in real time. That’s a good way to lose money before you even understand how your system will play out. The only difference between a demo account and the real thing is that your demo account doesn’t run on real money. It will still function like a normal forex account, and this is a very important distinction.

We mention sentiment analysis because it’s something that you will probably see in forex forums, and we don’t want you to be thrown off guard. Never feel like you have to add in something just to get attention or to feel like you’re part of a group. It’s perfectly fine to go at your own space in the world of forex — we won’t tell anyone! 🙂