Saturday, August 23, 2008

Divergence Trading

The term “divergence” is basically used to describe the action of the price that is measure in relation to some sort of oscillator indicator. In all actuality, it does not matter exactly what type of oscillator you choose to use. You may choose to use Stochastic, RSI, CCI or MACD. The best quality that divergences possesses is that you are able to use divergences as your leading indicator after you have gotten some practice in, and it’s also really not that difficult to spot.

With divergences, when properly traded, you can be profitable consistently. The absolute best thing about the divergences is that, because you are normally purchasing a currency near the bottom of a trend or selling a currency near the top of a trend, the risk that is associated with your trades is considered to be relatively small in comparison to your potential award.

Lower Lows and Higher Highs

When it comes to divergences, all you need to think about is lower lows and higher highs. In the event that the price is generating highs, the oscillators should be creating higher highs also. In the event that the price is creating lower lows, the oscillator should be creating some lower lows also. In the event that they are not, this is going to reflect that the oscillator and the price are diverging from one another, which is when divergence comes into play. There are two different types of divergence, regular and hidden.

MACD Charts

The MACD charts, or moving average convergence divergence charts, are technical indicators that are derived from the moving average, which is a lot simpler. These charts are considered to be oscillating indicators, which mean they either move above or below the centerline or the zero point. Just like with any other momentum and oscillating indicators, when there is a extremely high value, that is an indication that the stock has been overbought and that it will more than likely drop soon.

On the other hand, when there is a consistently low value, it is an indication that the stock has been oversold and that it is more than likely going to increase. Even though right now, all of this information may seem like pig Latin, once you begin studying forex trading, you are going to see where all of this comes into play. One thing that you have to remember is that there are several different technical indicators that can be used within the forex market.

You are just going to have to find a technical indicator that works for you and run with it. Once you have became familiar with the technical indicators, you want have any more problems with locating an entry and exit point because all of that information will be provided to you, it will just be left up to you to follow through on these things.

Now that you know about divergence trading, MACD charts and lower lows and higher highs, you are more than half way to beginning your career within forex trading.

Commission Free Forex Trading

Today, there are several forex brokers that sometimes tout all of their services as being completely commission free. By taking a closer glance at the forex market’s inner workings, you will be able to reveal that foreign exchange trading is anything but free. In all actuality, the currency market is considered to be among the most expensive markets to participate in trading in.

Most of the foreign exchange brokers aren’t going to charge a commission just to transact a trade. Often, these forex brokers market all of their services as being completely free of making commission, but this particular claim isn’t true in its entirety and it can often be misleading.

Within the foreign exchange market, similar to any other financial market, there is always going to be a bid price and an ask price. In case you are unfamiliar with these terms, the bid price is going to relate to the price at which you are able to sell a particular currency pair and the ask price is going to be the price at which you are able to purchase a particular currency pair. Keep in mind that the bid and ask prices do fluctuate, or move lower and higher, as there is a fluctuation in the currency pair.

Another term that you need to be aware of as a forex trader is the term “spread”. The term “spread” is used to describe the difference between the bid price and the ask price. As a forex trader, you are going to pay this difference each and every time that you transact a currency pair trade. Bear in mind, that the wider the spread is, the more you are going to pay in order to place the trade.

Most forex brokers offer a spread for the currency pair EUR/USD that amounts to twenty or thirty dollars for one single standard lot. However, it is a lot higher for the currency pairs that are more liquid like the cross rates, such as the currency pair GBP/JPY. The spreads for this particularly famous cross rate can extend upwards of eighty dollars for one single standard lot.

Normally, a standard lot is considered to be around one thousand dollars in equity. Take the time to think about this for a moment, one single trade in the currency pair GBP/JPY is going to cost you around eight percent right off gate. When you put this into another prospective, the moment that you click a trade within the currency pair GBP/JPY, you are going to be down by eight percent right from the very start. One thing that’s definitely true about this trade is it is expensive.

So, in all actuality, foreign exchange trading isn’t commission free. In fact, the spread between the bid and ask prices is basically the commission. The spread is also an extremely high transaction cost or commission, when it is compared to all of the other markets such as mutual funds, stocks, options, bonds and even futures, specifically when you are looking at all of the spreads that are associated with the exotics, cross rates and the other liquid currency pairs.

Tags: foreign exchange trading, forex brokers, spreads, liquid currency pairs, exotics, cross rates,

Friday, August 22, 2008

Never Play Forex with Fake Money

Foreign exchange consists of a simultaneous buying of one currency and selling of another. Currency is traded in pairs, in other words, one currency is traded for another. The major currencies are:

USD — United States Dollar
EUR — Euro members Euro
JPY — Japan Yen
GBP — Great Britian pound
CHF — Switzerland franc
CAD — Canadian dollar
AUD — Australia dollar

There are 2 types of investors involved in the Forex market.The first type of investor is the hedger. The hedger is involved in International trades and utilizes Forex trading to protect their interest in a transaction from adverse currency fluctuations. The 2nd type of investor is the speculator who invests in currency solely for profit.

New Millionaire from Forex Trading

Forex is the world's largest and most liquid trading market. Many consider Forex as the best home business you can ever venture in. Even though regular people have had the opportunity to take part in trading foreign currencies for profit (in the same way banks and large corporations do) since 1998, it is just now becoming the cool, hip, new "thing" to talk about at parties, business events, and other social gatherings.

After all, the currency markets influence
many areas of our daily life. Their
impact extends beyond imports and
exports to factors that have an indirect
effect on us, e.g. the relationship between
interest rates and exchange
rates. These in turn influence economic
decisions that apparently have
nothing to do with foreign trade.

Secret Technique for Forex Trading

The forex market itself is basically a worldwide connection of traders, who make investment moves based on the price of currencies, or their values relative to other currencies. These traders constantly negotiate prices with other traders resulting in the fluctuation or movement of a currency's value. The value of a currency on the forex market also corresponds with supply. If there is greater demand for the Euro, let's say, then there will be less supply of it on the forex market, which means, in time, it will make a Euro more valuable compared to let's say the dollar. In short, in this forex market situation, one Euro would yield more dollars, subsequently weakening the dollar as well. Analyzing the forex market's fluctuations allows investors to make predictions on how a currency will move in relation to another currency. They then can make predictions and buy and sell currency accordingly.

While some people view the forex market as a place to see what their exchange rate will be when they travel abroad, others view it as an opportunity to make great gains in their financial planning and future.

Why Learn To Trading in Forex ?

Even though it has been somewhat of a loosely guarded secret, every day more and more investors are turning to the all-electronic world of Forex trading for income and profit because of its numerous benefits & advantages over traditional trading vehicles, like stocks, bonds and commodities.

But, still, whenever something seems new or is just becoming a part of social conversation, news articles, and water cooler gossip, misconceptions have to be overcome, the mind has to be open and the slate has to be clear for starting out fresh with the CORRECT information.

The forex market is what is called an international exchange currency market, where currencies are exchanged on a daily basis. There are five forex market centers around the world — New York, London, Tokyo, Frankfurt and Zurich. One does not need to be on the trading floor, so to speak to be involved in the forex market. Today, forex trading can be done from home on a computer.

How To do Forex Trading To make Money

First and foremost, you have to understand the basic ways how the forex market works before making any forex trading transactions. Forex market has three markets which allow for the forex traders to trade all day long, 24 hours a day. Though the 24 hour market has some advantages, you should not also neglect the fact that this can be difficult and confusing at some point. The main objective of the forex market is to deal all the different currencies in the world. This exchange causes the rates of the different kinds of money all over the world to fluctuate. A lot of people have earned a lot of money just by trading Forex. However, getting to the top of the Forex market is not that easy that's why you will need the help of different forex trading systems to aid you on how to make trades successfully.With this in mind, here are the different kinds of trading systems that will help you earn a lot of money as far as making forex transactions are concerned.

The myths are ruled out and factual basis in gaining profits from the forex trading were unveiled. Truth is now circulated and there is no way that would not benefit from it. Before a broker would just feed a trader the only the information to convince and not supplementing the entire facts. Brokers may be spoon feeding but not nutritious to the trader.The scenario given is the only situation that the trader would know. Unlike recently, a 'next door' system would really make a trader informed on the fluidity, flow and movements of the currencies. Auto pilot, robots and forex advisory would aid in driving to the best decision that would result to huge income to forex trader.