indicator forex

March 9, 2010 by Forex Trading Staff in Foreign Currency Trading | 1 Comment

indicator forex
indicator forex

Forex Exchange Rate - How Does It Get Calculated?

In the Forex market the value of two separate currencies and how they relate to one another is what is known as the Forex exchange rate. Usually the Forex rate is how much of one currency is needed to buy a unit of another. Knowing the basics regarding the Forex exchange can help you get started in understanding it even better.

Just to give you an example of how the Foreign exchange rate can work and to help you better understands it we can compare the United States dollar with the Japanese yen. Let's say that on a certain day the US dollar is able to buy one hundred and ten Japanese yens, this would indicate that the exchange rate for that day is 1:110 or a one to one hundred and ten ratio. This ratio in the exchange rate is also known as pairing. When you take it vice versa you can use it to indicate how many US dollars a single unit of Japanese yen can buy. Another term that is used in the Foreign exchange rate is 'cross rates'. This term however is only used when it does not involve US dollars; it is only used when relating two foreign currencies.

A few other terms used in the Forex exchange are pips or basis points, which are actually two terms used for the same thing. These terms are used to indicate Forex rates that are calculated up to four decimal points and whether or not these are negative or positive movements. An example of this would be if you were to exchange euros with yen at a value of 135.1030, but then the euro rate goes up to 135.1035, it is called a five-pip improvement.

In using the Forex exchange rate you are required to use two currencies and this means they are quoted as 'two tier' rates. Also in the Forex market its price basis is called a bid/ask. Using the previous ratio between the yen and the US dollar in the Forex market, if this trade is made it is called a ten pip 'spread' and is secured. This term means it indicates the difference between the buying and actual selling price.
A lot of things can change the spread and affect it. These things include market conditions and traders' instincts about the strength of certain currencies, which can fluctuate greatly from day to day. One thing you should remember however when it comes to the Forex is that only Forex traders who are licensed can access official quoted rates. This means therefore that smaller investors may not receive their currency at a very good rate, because they usually receive them from commercial banks.

One last thing concerning the Forex exchange rate is that it is independently determined. This is why it thrives so well, because solely buyers and sellers and their supply and demand of certain currencies determine it. In the end individual governments and banks cannot decide the values.

With the benefits and knowledge of how the Forex exchange works you can decide if entering the Forex market is the right move for you. But with all the advantages of Forex, why wouldn't you want to?

About the Author

Check out
http://www.forex-made-ez.com/
for more articles on
mini forex trading
and
managed futures
.

What is a good method to daytrading in forex?

Please give some detailsm about indicators or moving averages to use and time frames

There are plenty of good methods out there being sold by a lot of traders and scam artists alike - all cashing in on the greed that people have. Some work, others are just exaggerated.

At least you are looking into it... other traders just simply gamble away their money.

My suggestion is, once you've found a method that works for your trading style - stick to it. There are so many ways to skin a cat as there are to trade - there is no one "right" way to trade.

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Forex Trading with the Stochastics Indicator

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forex quotations

February 25, 2010 by Forex Trading Staff in Forex Mentor | Leave a comment

forex quotations
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Significant Facts About Forex Currency Pairs

One of the primary elements when it comes to trading forex currencies is that it necessitates trading in pairs of currencies like EUR/USD in which Euro trades over the US dollars. This is a characteristic pattern of forex currency pairs.

In the instance of the Euro which is the initial currency it is recognized as the base currency whereas the second currency or the dollar is regarded as the counter or quote currency. What it actually means is in case of these two forex currency pairs, if you want to purchase the currency pair, then you have to buy the Euro currency and sell US dollars at the same time.

Complete Comprehension

Hence, to have success when trading in forex currency pairs, you need to have a full and comprehensive understanding about currency pairs especially when going into a forex trade, you must know what currency you are selling or buying. For success in forex currency pairs, you should have a very complete knowledge about the major currencies such as the US Dollar, Euro, German deutshe mark and so on.

For a very long time, the US dollar has been the major currency throughout the world. It was used as a primary currency to assess other currencies that were being traded on forex and because of this all the currencies needed to be quoted in terms of the how it related to the US dollar.

Because all Forex trading deals in foreign currencies and the full extent of such trade is stupendous and ultimately amounts to well over a trillion dollars, to become a success at trading in them requires a full understanding of forex currencies pairs.

Simultaneous Transactions

As elaborated on, traders purchase and sell currencies by exchanging one type of currency to another and in the hopes of turning a profit from doing in the process. The market quotations as far as Forex is concerned, is specified as forex currency pairs which is denoted as the base currency which is then followed by the quote currency.

Amongst the most usual types of currency pairs are the GBP/USD (British pound vs. US dollar), EUR/USD (Euro vs. US dollar) USD/JPY (US dollar vs. Japanese Yen) and USD/CHF or US dollar vs. Swiss franc.

As far as forex currency pairs go, it is common to have the base currency listed first which is then followed by the quote currency or counter. Moreover, the base currency is a single energetic monetary unit, for instance 1 EUR, 1 USD or 1 GBP, and is implied and not shown necessarily.

Finally, forex currency pairs ordinarily represent the 'bid' and 'ask' price and the former of the two make reference to the price that the broker wishes to pay whereas latter means the price in which the broker wants to sell the currency.

About the Author

Listen to Corbin Newlyn as he shares his insights as an expert author and an avid writer in the field of finance and investment. If you would like to learn more go to Forex Signal Software advice and at Forex Charting Software tips.

Does anyone know where forex brokers get their exchange rate quotation from? I mean which bank they refer to.?

In forex, there is no centralised location to trade and extract the rates from. The market is so large and involves many participants, that no single player, including banks and governments, can directly control or make any significant influence over the resulting exchange rates. Central banks, commercial banks, international corporations, money managers, speculators, and private individuals are all involved in forex.

For further info on forex, you may register to this site and download a Free Forex Ebook to boost your knowledge.

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How to read Forex quotes?

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forex lot sizes

February 16, 2010 by Forex Trading Staff in Forex Trading Platforms | 1 Comment

forex lot sizes
forex lot sizes

How Forex Currencies Are Quoted And What Makes Them Move

If you are new to FX online trading you have been introduced to a lot of new lingo. So let just review some of the common jargon. The amount of money you need to place a trade is known as a "margin". Currencies are traded in dollar amounts known as "lots". There are mini lots and standard lots. Here is another term to throw into the mix, forex pip. A forex price quote price/point (pip) system; it will look something like this EUR/USD 1.2210/13

 

Lets take a look at each of these forex components.

 

Buying On Margin

 

A margin is borrowed money that is used to purchase securities or foreign currencies. This practice is commonly referred to as "buying on margin".  As a forex trader, you can buy a large sum of foreign currency with actually paying only for a fraction of the investment. Here is an example:  If you deposit $1000 in a margin account you will have a leverage ratio of 1:1000. In other words you potentially have $100,000 for your forex trading transactions.  The advantage of a margin trading account; is that with margin trading you can increase your buying power and have bigger profits.  Sounds good right!!

 

Here is the bad news. If a currency drops, even by one pip, you are essentially losing 100 times the drop.  With a  "margin account", a drop in the currency can liquidate your account and also leave you owing money.  You have to be willing to lose the money you are trading. There are tools to assist you with you stop losses. That is another discussion.

 

Standard, Min and Micro Lots

The "forex lot" is a representation of a trade size. These trade sizes come in different formats. A standard lot is equal to 100,000 units of the base currency. E.G The pip value  $10 for EUR/USD.

A Forex Lot is the amount of currency you buy or sell.

Mini Lot represents 10,000 and a Micro Lot represents 1,000.

So essentially 10 Mini Lots make 1 Standard Lot and 10 Micro Lots make 1 Mini Lot.

100 Micro Lot   =  10 Mini Lot   =    1 Standard Lot

When you place orders online you should know what type of account you have. Also ask your forex broker what type of trades he or she allows. Some forex brokers allow you to trade standard lots and mini lots. Some brokers only allow Standard Lot trades. 

PIP - Percentage In Point

A "PIP" represents the smallest value of currency measurement. Unlike dollars and cents which are calculated up to two decimal places, the currencies on the forex market are calculated up to the fourth decimal point.  The smallest move that a PIP can have is .0001. This represents 1/100th or commonly referred to as 1 basis point.  The one exception to the fourth decimal point is the Japanese Yen, which is only calculated up to two decimal places.

Unlike stocks and futures, forex currencies are traded on a price / point (pip) system. Each currency pair has its own pip value. Some common symbols used in Forex are:

USD - The US dollar                                                                                                      EUR- The currency of the European Union "the euro "                                                  GBP- The British Pound or Cable.                                                                                              JPY- The Japanese Yen                                                                                                      CHF- The Swiss Franc                                                                                                          AUD- The Australian Dollar                                                                                          CAD - The Canadian Dollar

The currency left of the / is called the base currency.                                                      The currency right of the / is the counter currency.

When you place and order to buy GBP/ CAD you are actually buying the British Pound and selling the Canadian dollar.  If you were to sell the pair, you sell the GBP and buy the CAD. When you buy or sell currency, you are buying/selling the base currency. 

Just remember the entire currency pair as one item.  For a buy transaction, you buy the first currency and sell the second currency.  For a sell transaction, you sell the first currency and buy the second currency.

The down fall with traditional stock trading; is that the market has to go up for you to make money. With FOREX trading you can make money in all directions. Regardless of the direction of a currency you can still make a profit via forex day trading. 

http://www.forex-money-exchange.com

About the Author

This website is jammed packed with forex articles, audios, tool and much more.

http://www.forex-money-exchange.com

How to calculate % profit in forex?

I've seen a service which reported approximately $50,000 profit for the last month. They say their performance is based on 5 Lots trade size.
I know one lot is 100,000, so does it mean they have made 10% profit for that month?

It really depends on what they are trading. For example 5 British pound contracts require initial margin of $7500. So your investment could be that limited if you trade every move correctly which is impossible. Any position at the close of trading is marked to the market and either generates excess margin (profit) or requires additional capital (loss). Won't they tell you what the return is?

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Forex: How to determine your Lot Size by Account balance and Risk management: traing video 4

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forex hours sunday

January 29, 2010 by Forex Trading Staff in FX Online Trading | Leave a comment

forex hours sunday
forex hours sunday

Basics of Forex Trading

This article gives an introduction about the basics of trading Forex online, a brief explanation of the markets and the major benefits of trading forex online. Foreign exchange or forex are all terms used to describe the trading of the world's many currencies. The forex market is the largest market in the world, with trades amounting to more than 1.5 trillion dollars every day. The foreign exchange market has no central clearing house or exchange and is considered an over-the-counter (OTC) market. Forex traders are generating incredible wealth day after day from the comfort of their home. Foreign exchange is normally traded on margin. A relatively small deposit can control much larger positions in the market.

Forex trading takes place directly between the two counterparts necessary to make a transaction, whether over the telephone or on electronic brokerage networks all over the world. This is a trade that includes simultaneous buying of one currency and selling of another one. There are two reasons to buy and sell currencies. About 5% of daily turnover is from companies, and governments that buy or sell products and services in a foreign country must convert profits made in foreign currencies into their domestic currency. The other 95% is trading for profit, or speculation. The currency combination used in the trade is called a cross (for example, the Euro/US Dollar, or the GB Pound/Japanese Yen.).

The market is called the spot market because trades are settled immediately, or ?on the spot?. One of the major benefits of trading forex is the opportunity to trade 24 hours a day from Sunday evening (20:00 GMT) to Friday evening (22:00 GMT). Unlike stock trading, currency trading on the Forex market is not cut short at the "close" of each day's trading. The benefit of Forex being a 24 hour a day market is that there are little or no gaps in the market, meaning there is no chance that prices will close one day and reopen the next day. The fact that forex is often traded without commissions makes it very attractive as an investment opportunity for investors who want to deal on a frequent basis.

Since the market is always moving, there are always trading opportunities, whether a currency is strengthening or weakening in relation to another currency. When you trade currencies, they literally work against each other. Different currencies pay different interest rates. The interest rate differential doesn't usually affect trade considerations unless you plan on holding a position with a large differential for a long period of time. This is one of the main driving forces behind foreign exchange trends. You can have both a positive and a negative interest rate differential, so it may work for or against you when you make a trade. It is inherently attractive to be a buyer of a currency that pays a high interest rate while being short a currency that has a low interest rate. Fortunately, there are no daily limits on foreign exchange trading and no restrictions on trading hours other than the weekend. This means that there will nearly always be an opportunity to react to moves in the main currency markets and a low risk of getting caught without the opportunity of getting out.

A forex trading method with a high winning percentage is rewarding psychologically, keeps your morale high and is enjoyable to trade. A string of profits will build your confidence. Losses have to be kept small and wins should be larger than losses. You can make big money working only a few hours a day or week on your computer. You can trade from anywhere in the world where there is an internet connection.

About the Author

Andrew Daigle is the owner, creator and author of many successful websites including ForexBoost, a free Forex educational site to learn Forex trading strategies and a ForexBoost blog for keeping online Forex trading records.

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