Forex Blog: it's all about the info, falks
As I already stressed on previous posts, in order to become a successful trader, it is fundamental and mandatory to keep informed and posted about the financial, macroeconomic and political factors.
I don't know whether you are aware of the fact, but there is a specialized team of academic experts that are responsible for defining whether there is a situation of depression based on specific indicators.
Turns out the depression definitions are also a "scientific" business (as finances itself), that is till the day thousands of experts are astonished and taken by surprise by a huge hurricane that took them completely unguarded.
The data collected by this experts is open to everyone through the NBER site (National Bureau of Economic Research) and, among other subject covers the field of "Historical Recessions and Recoveries, the NBER Business Cycle Dating Committee" and "Economic Indicators and Releases".
Just FYI, I have just visited the site and there is still no mention of the present recession (latest event is "The December 2007 peak".
Those definitions are based on a number of factors that include: unemployment, industrial production and output, personal incomes and business sales.
The forex market is, naturally, influenced by the data published on prestigious sites like this, as well as from all additional macroeconomics factors and fundamentals.
But let us remember that always, always there are concealed unexpected factors that cannot be predicted beforehand, and the best example is… have you guessed already? The present recession caused mainly by a group of credit instruments offered widely to the public with the main idea of doing big profits.
Thursday, July 30, 2009
Wednesday, July 29, 2009
Types of Forex Orders
Let's remember that one of the advantages of the Forex market is that it avails traders to follow the "movement and momentum" of the market also when they are AWAY from the computer.
let's remember that the forex market is active 24 hours a day. ORDERS are a trading tool that avails us all to trade while not being there!
Among other things the forex orders will help you to: follow and implement a given trade strategy, limit risks in highly volatile markets, take advantage of short-term changes and currency fluctuations, follow a trading discipline, control and avoid losses, and, protect your profits.
The implementation of orders in currency trading is cardinal, since it will help us to control the impact of adverse movements, the main types of orders are:
a) Take Profit Order – this order permits us to LOCK GAINS when having an open position (i.e. a position that already exists)
b) Limit Orders – the limit orders, are in fact a kind of Take Profit orders, with the onlhy difference that while the first ones require a given open position, the limit orders permit you to open new positions or add to existing positions.
c) Stop Loss Orders – this order permits you to "stop losing money", plainly as it names suggests, they close out an open position that is losing money.
d) Trailing Stop-Loss Orders – a trailing stop loss order is a stop loss order defined at a specific number of pips from the entry rate.
e) One cancels the others (OCO order) – this is a stop loss order combined with a take profit order, the position will stay open till one of the orders levels is reached by the market, closing your position.
In a way, all these forex orders are a kind of "guard" that will allow your positions to spot avoiding you to lose unwanted sums of money.
These orders are also highly recommended for traders that tend to have a "gambling" tendency, i.e. are not able to stop a position when it starts losing, hoping the market will raise again, call it a Forex Baby Sitter if you wish!
let's remember that the forex market is active 24 hours a day. ORDERS are a trading tool that avails us all to trade while not being there!
Among other things the forex orders will help you to: follow and implement a given trade strategy, limit risks in highly volatile markets, take advantage of short-term changes and currency fluctuations, follow a trading discipline, control and avoid losses, and, protect your profits.
The implementation of orders in currency trading is cardinal, since it will help us to control the impact of adverse movements, the main types of orders are:
a) Take Profit Order – this order permits us to LOCK GAINS when having an open position (i.e. a position that already exists)
b) Limit Orders – the limit orders, are in fact a kind of Take Profit orders, with the onlhy difference that while the first ones require a given open position, the limit orders permit you to open new positions or add to existing positions.
c) Stop Loss Orders – this order permits you to "stop losing money", plainly as it names suggests, they close out an open position that is losing money.
d) Trailing Stop-Loss Orders – a trailing stop loss order is a stop loss order defined at a specific number of pips from the entry rate.
e) One cancels the others (OCO order) – this is a stop loss order combined with a take profit order, the position will stay open till one of the orders levels is reached by the market, closing your position.
In a way, all these forex orders are a kind of "guard" that will allow your positions to spot avoiding you to lose unwanted sums of money.
These orders are also highly recommended for traders that tend to have a "gambling" tendency, i.e. are not able to stop a position when it starts losing, hoping the market will raise again, call it a Forex Baby Sitter if you wish!
Monday, July 27, 2009
3 basic keys for Forex Trading
And today in my Forex blog: Some fundamental ideas and speculations about Forex Trading.
Forex is mostly about speculating about the value of a given currency versus another.
"Speculation" is not a bad world when it comes to the world of forex trading, it means to take a risk that involves money while hoping to make a profit.
Yet speculating at the forex is a sort of investment that takes place in a relatively short time (in this aspect it's different from the traditional sort of investment on bonds or the stock market that take place over a longer period of time). And what would make that speculation work?
1. Being Informed.
2. Having a Trading Plan.
3. Not to take things personally.
1. Being Informed – everybody knows that information is the key factor that moves financial market, particularly in the case of Forex markets that involve a mixture and combination of currencies which are all affected by their own economies.
One way of keeping informed is to learn about the "Fundamentals"; fundamentals are defined as the compilation of news and information that make you possible to understand the macroeconomics that affect a given currency, they are based on "dry data" that includes: economic reports, interest rates, international trade tendencies, monetary policies and investment flows.
2. Forging a personal Trading Plan – decide what will be your personal "style" when trading, i.e., schedule your preferred working hours and timeframe, optional currency trading pairs, risk appetite, main trading concept (whether a fundamental or technical trader).
3. Not to take things personally – as in any other business or expertise, if you want to become a professional, you should avoid at all times to take things personally!
Forex is mostly about speculating about the value of a given currency versus another.
"Speculation" is not a bad world when it comes to the world of forex trading, it means to take a risk that involves money while hoping to make a profit.
Yet speculating at the forex is a sort of investment that takes place in a relatively short time (in this aspect it's different from the traditional sort of investment on bonds or the stock market that take place over a longer period of time). And what would make that speculation work?
1. Being Informed.
2. Having a Trading Plan.
3. Not to take things personally.
1. Being Informed – everybody knows that information is the key factor that moves financial market, particularly in the case of Forex markets that involve a mixture and combination of currencies which are all affected by their own economies.
One way of keeping informed is to learn about the "Fundamentals"; fundamentals are defined as the compilation of news and information that make you possible to understand the macroeconomics that affect a given currency, they are based on "dry data" that includes: economic reports, interest rates, international trade tendencies, monetary policies and investment flows.
2. Forging a personal Trading Plan – decide what will be your personal "style" when trading, i.e., schedule your preferred working hours and timeframe, optional currency trading pairs, risk appetite, main trading concept (whether a fundamental or technical trader).
3. Not to take things personally – as in any other business or expertise, if you want to become a professional, you should avoid at all times to take things personally!
Sunday, July 26, 2009
Forex - What exactly is Margin ?
Margin is defined as "the amount of equity required in a trading account in order to keep a position open", as a matter of fact; it is a kind of "faith deposit" or warranty that the trader does in order to ensure him against possible losses.
The margin allows traders to open positions with an higher value that the sum deposited in their account. A margin account is also defined as trading on a leveraged basis.
Today, most online forex sites give the possibility of a 200 times leverage. The equity given above the margin that is requested in a given trading account functions as a security or "warranty" on the trader's behalf.
In case the trade loses on a specific position to the point that the equity is below the minimum margin requirement, then, a margin called will take place. In most of the cases, at the forex arena, the trader will be requested to deposit more funds before the margin call, or else, the position will be closed.
The margin call is usually alleged as a "margin out" call, since no other calls are performed prior to liquidation. Another factor to have in mind is that the possibility of being margined out is proportional to the number of open positions (i.e., the more open positions, the easier is the account to get a margin out call).
Why a Margin? We have to keep in mind that leverage has two sides, on one hand, it can lead to profits and increase the investment return, but, on the other hand, without an appropriate risk management, it may cause rapid and significant losses.
We should remember that most forex online sites offer leverage, yet, the trader should be aware of the perils of "over-trading" and should learn how to manage an overall risk.
The margin allows traders to open positions with an higher value that the sum deposited in their account. A margin account is also defined as trading on a leveraged basis.
Today, most online forex sites give the possibility of a 200 times leverage. The equity given above the margin that is requested in a given trading account functions as a security or "warranty" on the trader's behalf.
In case the trade loses on a specific position to the point that the equity is below the minimum margin requirement, then, a margin called will take place. In most of the cases, at the forex arena, the trader will be requested to deposit more funds before the margin call, or else, the position will be closed.
The margin call is usually alleged as a "margin out" call, since no other calls are performed prior to liquidation. Another factor to have in mind is that the possibility of being margined out is proportional to the number of open positions (i.e., the more open positions, the easier is the account to get a margin out call).
Why a Margin? We have to keep in mind that leverage has two sides, on one hand, it can lead to profits and increase the investment return, but, on the other hand, without an appropriate risk management, it may cause rapid and significant losses.
We should remember that most forex online sites offer leverage, yet, the trader should be aware of the perils of "over-trading" and should learn how to manage an overall risk.
Wednesday, July 22, 2009
Listen forex traders, it's all about contradiction
I thought recently the issue of contradictions and inconsistencies on the financial and economic arena…
Seems that the economic reviews of key financial figures like Ben Bernanke (the president of the Federal Reserve Bank) or Jean Claude Trichet (the president of the Central European Bank) are a bit confusing for the forex traders these days…
Instead of expressing and assessed and found-based view, both these man have given contradictory prognoses relating to the crisis and the expected recuperation time… Seems like our "financial doctors" are giving a dual prognosis….
A clear example of what I am saying is the review that Bernanke gave yesterday at the Congress, where, from one side he stated that he expects the economy to start recuperating on the last part of the present year, and in the other hand, he pointed out the rising unemployment rate in the US economy and tight credit market to which most consumers are not used to…
As a direct result of Bernanke's review in Congress, the dollar began to rise on Tuesday, after beginning the day session with lower rates… We are already acquainted with the typical trend of the dollar going up consequently to non positive reports concerning the US econom.
When the reports are good and Currency trading specialists begin to feel more optimistic, they tend to invert on other currencies that are considered has having a more risk and yielding better gains.
Personally, I find it a kind of paradoxical that negative data affecting the US affects the US dollar in a positive way, but still - there are so many illogical facts on the financial and the forex market.
Anyway, as a result of this dual and contradictory messages coming from key figures, the forex traders are developing an attitude of skepticism and suspicion towards the statements given by, say, the presidents of the major international banks…
Seems that the economic reviews of key financial figures like Ben Bernanke (the president of the Federal Reserve Bank) or Jean Claude Trichet (the president of the Central European Bank) are a bit confusing for the forex traders these days…
Instead of expressing and assessed and found-based view, both these man have given contradictory prognoses relating to the crisis and the expected recuperation time… Seems like our "financial doctors" are giving a dual prognosis….
A clear example of what I am saying is the review that Bernanke gave yesterday at the Congress, where, from one side he stated that he expects the economy to start recuperating on the last part of the present year, and in the other hand, he pointed out the rising unemployment rate in the US economy and tight credit market to which most consumers are not used to…
As a direct result of Bernanke's review in Congress, the dollar began to rise on Tuesday, after beginning the day session with lower rates… We are already acquainted with the typical trend of the dollar going up consequently to non positive reports concerning the US econom.
When the reports are good and Currency trading specialists begin to feel more optimistic, they tend to invert on other currencies that are considered has having a more risk and yielding better gains.
Personally, I find it a kind of paradoxical that negative data affecting the US affects the US dollar in a positive way, but still - there are so many illogical facts on the financial and the forex market.
Anyway, as a result of this dual and contradictory messages coming from key figures, the forex traders are developing an attitude of skepticism and suspicion towards the statements given by, say, the presidents of the major international banks…
Subscribe to:
Posts (Atom)
