How to earn in Forex

How to earn in Forex

Forex, where the commodity to be traded is currency, and not stocks and shares, is a trading market which gives its investors, returns in the form of the relative value of one currency exchanged against another. Forex trading is therefore, always dealt in currency pairs with the major currency pairs being Euro/US Dollar (EUR/USD) and US Dollar/Japanese Yen (USD/JPY), to name a few.

And it is with concurrent buying and selling of currencies that the trader hopes to make a profit on favorable exchange rate fluctuations. Exchange rates are always fluctuating, going down as well as up, within seconds and the whole art of trading lies in perfectly foreseeing the trend of the variation between two currencies.

Analysis stages in Forex

Analysis stages in Forex

It will not be wrong if we say that Forex traders lead their lives, living on the edge. You never know what’s going to happen the next moment. In this currency world of speculations, instincts, calculations and uncertainties, the market experiences one moment of total harmony, and the next one of absolute commotion.
Amidst such high degrees of speculation and large amount of money at stake, can we precisely foretell the trend this market is going to follow each time? And furthermore, can we bet high capital on it?

For all this, we first need to be clear with the basics. The basics which tell us exactly what causes the market to move in the direction it does? What makes it follow the trend it does? Why are different traders trading with same currency using different strategies? Answers to all these questions can be a little tricky especially knowing that every trader senses different set of indications and warnings each time the market moves.

Every trader has his personal instinct behind his decision of buying or selling a currency, keeping in mind the atmosphere in the market. But there is still something that every sensible Forex trader does, Analysis! Before investing a sum of money in the market, any sensible trader would want to analyze the market, get full knowledge of the situation and be equipped to forecast what movement the market might take in the future. And to do this analysis, a trader must keep in mind the six important stages of analysis in Forex trading, which are:

Who tells us about the people involved with Forex who form the market and bring about action in it.

Why is about comprehending the outlook of the Forex market and the openings or prospects which it provides to its traders.

Where tell us to match our goals with the goals a genuine and professional dealer.

When tells us about the right time when our trades can bring us maximum efficiency.

What is all about choosing a trading medium or currency pair on the basis of your budget and investment principle.

How is about choose a trading toolkit which will help us advance our trading skills and techniques.

Every trader requires building up a fanatical sense of the Forex market and what’s happening in it and around them. Not every move of the currency market can be predicted though, but we can definitely try developing an understanding of the situation and the environment of the market.

What all the above mentioned six stages do is help us in creating more advantageous trading options. With the systematic and balanced use of these stages, we can easily create and execute a complete trading plan, the one that covers all the major trading aspects and angles.

It is important to understand who actually trades Forex? Also needed to be known are the participants, and the reasons for their success and failure. This will help us make use of the points which lead to successful results and avoid the ones which led to a loss.

To know why to trade Forex at the first place is the very reason why we should be interested in trading with it. Only if we know the advantages and disadvantages of this market will we be able to make up our minds for or against trading Forex.

It is also important to know from where we should trade. Always choose the right trading platform or broker who can professionally allow your trading style to mingle with its approach.

For deciding upon what to trade for, we should always choose a currency pair and money management method which will boost your returns.

Deciding on when you should trade is also an important aspect to be kept in mind before you start to trade. Always advisable is to trade when the situation you are in, is most liable to generate the best circumstances for you to execute your trading methods and techniques.

Choosing on how to trade should always be done keeping in mind the usage of those methods that make best use of your skills and also help you follow the previously well-known successful traders of the market.

Why opt for Forex trading?

Why opt for Forex trading?

With more than $1.5 trillion USD being traded daily, the foreign exchange market has managed to become the world's largest financial market, over the last three decades. With the large minimum deal sizes and rigid financial requirements, the Forex market, till recently, was not explored by the common trader or individual investor. But now the average investors can also engage in Forex trading. Some of the advantages of Forex trading are as follows:

24 hours trading
Forex gives its traders a 24 hour trading opportunity. Being a Forex trader, you can trade 24 hours a day from Sunday 5:00 pm (ET) to Friday 4:30 pm. This gives traders an opportunity to trade according to their convenience, going by their own schedule and also a chance to react instantly to any breaking news of the markets.

High levels of liquidity
Also, acting as a huge attraction is the high liquidity. With almost 90% of all the currency transactions consisting of 7 major currency pairs, helps these currencies display price stability, smooth trends, narrow spreads and high levels of liquidity. This liquidity mainly comes from the banks which offer cash flow to companies, investors and market players.

No commission
With “free of commission” trading, Forex trade lets you keep 100% of your trading profits. This makes Forex trading even more attractive as a business opportunity, especially for those who want to deal on a regular basis.

Steady trading prospects
The market is constantly moving and since Forex trading involves buying and selling of currencies, so traders can easily operate in a rising or falling market. This is because, there are always trading prospects, whether a currency is rising or deteriorating in relation to another currency. So there is always profit potential in the Forex market, whether it’s a rising one or a falling one.

Along with these major advantages, the Forex market also has some other merits such as, Forex trading gives its traders, an opportunity to bigger profits as returns on their invested money. Also, since the market is open 24 hours a day, 5.5 days a week, it gives the investors can make their deals anytime they want to.

With such superior speed of the market, and fine liquidity, even the largest of transactions are conducted within a few seconds. You can study the Advantages and Disadvantages of Forex Trading as well on our website.

What is Forex?

What is Forex?

The largest financial market in the world, Foreign Exchange market, Forex or FX market, all the terms are used to describe the business of trading of the world's various currencies, with more than $2 trillion changing hands every day. Being an international foreign exchange market, Forex is a market where money is sold and bought freely. FOREX was launched in the 1970s, to become the biggest liquid financial market today, dealing in more than hundred times the daily trading on the New York Stock Exchange.

FOREX is a perfect market to invest in, as it is free from any external control and free competition. Mostly, all Forex trading are tentative and unlike the stock market trading, the Forex market is not conducted by a central exchange, but on the “interbank” market, which is thought of as an OTC (over the counter) market. The trading takes place between the two dealers, either over the telephone or through Internet, all over the world. The major trading centers are the ones at Sydney, London, Frankfurt, Tokyo and New York, making Forex a 24-hour market.

Forex Trading requires the employing fundamental as well as technical analyses. These analysis help a trader to foresee and determine the development in the price trends of currencies, based on which, he attempts to predict market changes and make profits. Fundamental analysis can be said to use techniques to analyze the value of a state’s currency with the help of its economic indicators, quality markets and political events and associations. Political stability also influences the exchange rate at Forex. Its not just that Forex Trading is intutive, rather its technical

While Technical analysis engages the study of patterns of price trends and movements, making it easier for the trader to predict the path of the future developments in the Forex market. The primary data for a technical analysis are values, be it the highest or the lowest values, the price of opening and closing in a definite period of time, and the amount of transactions taking place. Any factor, be it economic, political or psychological, having little or some influence on the value or the price, has already been measured by the market to be included in the price. We offer some very useful Tips for New Forex Traders.

Forex Tips

Forex Tips

Always use Stop Loss Orders. If you don't use them, it will kill you financially. We recommend stops 30 pips above or below your entry price.

Don't loose more than 5%-10% of your total capital in each trade. Adjust your stop orders and leverage if needed.

Let the profits run, cut the losses. Instead of using Take Profit orders, it's better to use a "Trailing Stop". If your broker doesn't support it, you can do it manually. Set the stop price at 30 pips (or the amount that you have chosen) above/below the maximum/minimum price since your entry. You will have to adjust the stop level continuously, but you will get much better results.

Don't go against the trend. Go with the trend.

Capitalize well. Fund your account with enough money. For standard accounts, at least $5000 (for mini accounts $500).

It's less risky to don't let trades opened overnight.

Are you new to Forex?

Are you new to Forex?

Check out this website and learn about currencies and forex trading systems. There is lot of free content and we will add new content soon. The "Forex"is the abbreviated form of Foreign Exchange; it is also referred as the "Spot FX" market. In Forex trading, the currency of one nation is traded for that of another. Therefore, Forex trading is always traded in currency pairs. The most commonly traded currency pairs are traded against the US Dollar (USD). The major currency pairs are the Euro Dollar (EUR/USD); the British Pound (GBP/USD); the Japanese Yen (USD/JPY) and the Swiss Franc (USD/CHF).

What is Forex fundamental analysis?

What is Forex fundamental analysis?

The forex fundamental analyst identifies and measures factors that determine the intrinsic value of a financial instrument, such as the general economic and political environment, and including any that affect supply and demand for the underlying product or service. If there is a decrease in supply but the level of demand remains the same, then there will be an increase in market prices. An increase in supply produces the opposite effect.

For example, an analyst for a given currency studies the supply and demand for the country's currency, products or services (Merchandise Trade); its management quality and government policies; its historic and forecasted performance; its future plans and the most important for the shorter term, all the economic indicators.

From this data, the analyst constructs a model to determine the current and forecasted value of a currency against an other. The basic idea is that unmatched increases in supply tend to depress the currency value, while unmatched increases in demand tend to increase the currency value. Once the analyst estimates intrinsic value, he compares it to the current exchange rate and decides whether the currency ought to rise or fall.

One difficulty with fundamental analysis is accurately measuring the relationships among the variables. Necessarily, the analyst must make estimates based on experience. In addition, the forex markets tend to anticipate events and discount them in the currency value in advance. Finally, serving as both a disadvantage and even as an advantage (depending upon the timing), the markets often take time to recognise that exchange rates are out of line with value.

Moving Average Convergence Divergence (MACD):

Moving Average Convergence Divergence (MACD):

This indicator involves plotting two momentum lines. The MACD line is the difference between two exponential moving averages and the signal or trigger line which is an exponential moving average of the difference. If the MACD and trigger lines cross, then this is taken as a signal that a change in trend is likely.

Stochastic Oscillator:

Stochastic Oscillator:

This is used to indicate overbought/oversold conditions on a scale 0-100%. The indicator is based on the observation that in a b up trend, closing prices for periods tend to concentrate in the higher part of the period’s range. Conversely, as prices fall in a b down trend, closing prices tend to be near to the extreme low of the period range.

Stochastic calculations produce two lines, %K and %D which are used to indicate overbought/oversold areas of a chart. Divergence between the stochastic lines and the price action of the underlying instrument gives a powerful trading signal.

Relative Strength Index (RSI):

Relative Strength Index (RSI):

This index is a popular indicator of the Forex (FX) market. The RSI measures the ratio of up-moves to down-moves and normalises the calculation so that the index is expressed in a range of 0-100. If the RSI is 70 or greater then the instrument is seen as overbought (a situation whereby prices have risen more than market expectations). An RSI of 30 or less is taken as a signal that the instrument may be oversold (a situation whereby prices have fallen more than the market expectations).

Forex trading margins

Forex trading margins

A margin deposit is not, as many traditional traders suggest, the payment in cash for purchasing market shares. A margin is in fact a guarantee or a trust deposit, providing protection from losses during a deal? It allows traders to open positions on amounts that greatly exceed their account limits and so increase their buying power. ACM offers a 1% margin (or 1:100 leverage), which means you can control 100 times your deposit in the real market.

If the funds in the account, in the course of trading, fall below the prescribed margin, your positions will be closed automatically without prior notice. Using this system, the client’s account cannot go overdrawn even under volatile, fast-changing market conditions.

The formula for calculating margins is as follows: (account balance + profit/loss) : open position = the margin

Forex market working hours

Forex market working hours

The forex market, based on ‘spot’ transactions, is unique in comparison with all other global markets.
This is because trading takes place 24 hours a day, 5 days a week (ACM platform works from Sunday 23:00 to Friday 23:00 CET). Financial centers are open for work, and banks and other organizations exchange currencies in different parts of the world for different purposes.

Therefore, trading never stops apart from a short break during the weekend.
Early closings are possible depending on calendar arrangement such as, for example, Christmas or new year’s eve.

Forex currencies quotation system

Forex currencies quotation system

Currencies are quoted in pairs, for example – EUR/USD or USD/JPY.

The first currency in the pair is called the base currency and the second is called the counter currency.

The base currency is the ‘basis’ for purchases and sales.
For example, if you buy EUR/USD, then you acquire Euros and sell Dollars. You do this if you expect the Euro to grow against the Dollar.

It is also possible for a currency pair to be quoted as USD/EUR, but this method is used extremely rarely.

Each transaction must have 2 sides – a buy and a sell (or a sell and a buy).
By this we mean that it is impossible to buy 100.000 EUR/USD and then exchange it for another currency pair (i.e.: EUR/JPY) without closing the first position.

Also please note that no physical currency delivery will be made. For these purposes banks and exchange companies, which specialize in low-rate currency conversions are available.

How does the foreign exchange market work?

How does the foreign exchange market work?

The forex market allows you to buy and sell currencies against each other and speculate on the differences in exchange rates.

Making a transaction on the forex market is simple: the procedures are identical to that of any other market so switching to trading currencies is straightforward for most traders.

What is Forex (Foreign Exchange, FX) ?

What is Forex (Foreign Exchange, FX) ?

ACM offers online forex trading services for traders wanting to make speculative transactions on the exchange rate between two currencies.

These rates may be influenced by world economic and political events, currency rate differentials, as well as many other factors including extreme weather conditions (hurricanes), acts of terror etc.

Forex is the largest marketplace in the world with more than 3.2 trillion dollars changing hands daily and so making it one of the most attractive and lucrative markets.