Forex Traders Edge

What are all the best forex pairs to trade?

EUR/USD is most popular.
GBP/USD is liked by ppl who are comfortable with increased volatility

RainMaker

what is meant by forex currency business?In textile company they have forex currency buying &selling trading business?

By forex currency business they refer to the fact that you can make money trading currency. For example if the EUR/USD quote is 1.3200, you buy 1 euro at 1.3200 and when the price goes to 1.3300 you sell your euro at 1.3300. This means you sell something you bought cheaper and you make the difference which is measured in pips. In this case you make 100pips. The pip has a value in dollars from 1, 10 etc cents to 1, 10 etc dollars. Depending on the value of the pip you can gain 10 cents or 10 dollars. forex is about speculating if the price goes up or down. You buy cheap and sell for profit and viceversa.
In a textile company most probably they are exporting the clothes and they need to cover the fluctuation of the currency rate.
For example, suppose the firm receives an export order with the delivery date being in 3 months time. The contract is worth, say, $US100,000. At the time the contract is placed, the New Zealand dollar is worth say $US 0.650. Hence the value of the order, when placed, is $NZ 153,850 (100,000 divided by 0.650). But suppose that the exchange rate changes significantly between the date when the order is received and the date the order is paid for (which we will assume is one month after the delivery date). The value of the New Zealand dollar on payment date is $US 0.680, which means that the firm receives only $NZ147,060 rather than $NZ153,850. To insure against this happening, the firm can, at the time it receives the order, take out a forward exchange contract.
A forward exchange rate contract involves contracting to buy or sell a foreign currency at a future data at an agreed exchange rate. Generally this exchange rate will not be the same as the spot rate at the time the contract is signed, although the difference is unlikely to be large. The difference reflects the differential between New Zealand interest rates and foreign interest rates, which in our example above, would be US interest rates.
A forward contract enables an exporter to “lock in” an exchange rate that will apply to its future export earnings, with this locked-in rate being similar to the spot rate at the time the contract is taken out.

Which are the forex brokers offering such low spread?

I m trading EUR/USD with Forex-metal broker with 2 pips

EUR going way down. I want to know what to currency pair/s to choose to bid on USD/EUR

I assume that what you’re trying to do is make money off of the fact that the EURO is going down, but you don’t know how to sell a currency you don’t own yet.

Its simple, just open a forex account with any forex broker, and you can enter a sell trade. You don’t have to own the currency first. You are selling short, which means you’re essentially selling an IOU to deliver the currency later. You then close that position by buying euros.

I suggest you check out a website called:
www.babypips.com

Click on the tab that says "school", and it will walk you through all the steps to start trading currencies. Just be aware that its very risky so only trade with money you can afford to loose.

It seems that USD based currency pairs have the lowest spread. However, I am living on the other half of the earth (12 hours ahead/behind New York), and I am new to such forex trading

It’s not entirely about location, since most financial markets are already integrated across the globe. USD based currency pairs have the lowest spread because the USD dollar remains the primary currency of trade across the planet/ among countries. The US remains the dominant economy in the world and so most other currencies are pegged to the USD, although the Euro and Japanese Yen also stand as major currencies. With that being said, volatility/spreads are lower/tighter because of the liquidity and activity of currency traders.

Let’s shift our attention to a common household item like soap (as if it were the USD). If there are a lot of buyers and sellers of this item, then the price and quantity movements would be shifting all the time at minuscule fluctuations. No one trader (buyer/seller) can effectively influence the price level of the soap because if he sold too high, another trader will simply come in and sell it a lower price (albeit at a fractional discount). This also applies to a buyer, if he quotes a price for a soap another guy may step in and offer to buy that soap at a higher price (albeit only at a fractional premium). Since everyone uses (demand) and sells (supply) soap, you can be sure someone will always be there to handle the soap, therefore higher liquidity, lower volatility, smaller spreads.

Rarely traded currency pairs are usually volatile and have bigger spreads simply because their liquidity is low. Let us again use a substitute item, bird cage. Although soaps are frequently seen in most if not all households, a bird cage is not. This means that not everyone is interested in buying or selling a bird cage. The very fact that a currency is infrequently used in market trade, also means that there is no point in handling too much of it. Sellers of a currency can try to offset the risk of not being able to sell it as easily as more popular currencies by demanding wider spreads. They can’t be sure that they will be making a sale in the next minute or so, but they know that in the next hour, the wait will be worth it (kind of like selling furniture).

Just keep demand and supply in mind. I hope this simplifies the concept!

In USD terms, daily trades top $1.3-3 trillion worldwide. It’s an open market system that works 24 hrs a day, 5 days a week to generate profits for both big banks and retail investors.

In terms of pure volume, currency trading (also called forex trading) is the biggest market in the world.

http://forex.ellsed.com

If you’re new in currency trading and you’re doing all the basic research that you need to do in order for you to get started, then one way or another you may have encountered the term “forex Autopilot”. It is common that you encounter a lot of literature that say this system would be great for beginners. Yet still, a lot of people are reluctant to use it. However, what most people do not know is that this system is pretty much easy to use and could be really helpful in trading. So, here are the essentials that you need to know about Forex Autopilot.

What is it?

Forex Autopilot is actually a program whose system is generally designed to have a script that could function well using the metatrader4 platform. This platform is the most basic suite that is used by people all over the world if they want to engage in currency trading.

The Mechanics?

This programs starts working after you’ve simply installed it to your metatrader4 platform. Once installation is successful, the program would start acting as your expert advisor. It would also start analyzing trends for you. It can also spot opportunities and most of all get you profitable trades.

What Could It Do For You?

The best thing about this program is that it has the ability to work automatically. Hence, it could save you all the effort and inconvenience since it could place all your trades by itself. In fact, it doesn’t need any human intervention at all! Basically, it could save you your most precious time and at the same time give you profit for it!

Is Experience A Prerequisite?

One of the reasons why a lot of people are still reluctant to using such kind of program is because they think this kind of system is pretty complicated. A lot of new traders lack the confidence to use such applications because they think that it’s only for experienced traders. Some also think that they need to have expert knowledge about the market first before they can use such program.

However, what these traders might not know is that the Forex Autopilot doesn’t have such kind of prerequisites. This is simply because its user, which is you, wouldn’t need to do anything at all, but install and configure. It won’t be necessary for you to be an experienced trader at all! All you’ll probably need would be basic knowledge on how to install programs into your computer. In fact, a lot of experts say that this system is actually the best tool that they would recommend for the novice trader.

Capital Issues

If you’re worried that this kind of program would entail you start out with a big amount of capital, then you should probably stop worrying. You could always start with whatever amount you feel comfortable with. Your broker would usually be the one to make that conditions on how much you can start out with. However, experts would recommend that you start out with at least $500 along with small lot sizes. Definitely, you should always start using a demo account first until you’ve familiarized yourself with the system.

How Profitable Is It?

This system has a lot of good reviews and you could find them all over the Internet. Such testimonials are one good indicator that it’s very profitable. The program is so accurate, but not perfect, which means it’s very consistent. Hence, you’d be getting more winning trades compared to losing ones.

Nick Stoles
http://www.articlesbase.com/finance-articles/forex-autopilot-beginners-guide-706400.html

The Currency markets never sleeps and several trillions dollars are traded everyday, making the Foreign Exchange Market the World’s biggest and most exciting investment market. In recent years, mechanical currency trading systems, using technical analysis to predict trend movements have become increasingly popular as a way of locking into, and profiting from the longer term currency trends.

Forex trading systems are ideal for generating profits from longer-term currency trends, and they occur in all currencies. The longer-term trends in Forex markets reflect the state of the economy. As economic cycles are relatively long and take years, so do the currency trends that reflect these cycles. A good Forex trading system can enable traders to lock into, and make profits from these longer-term trends. When choosing currencies to trade, it is important to have good long-term trends, but just as important is liquidity, which enables traders to lock in profits and exit losing trades quickly.

Currencies that offer good trends and liquidity include:

- The US Dollar

- Swiss Franc

- Euro

- Japanese Yen

- British Pound.

Forex trading systems remove emotions from trading, which is the major reason the majority of traders end up losing. There has been plenty of material written about using currency trading systems, and the works below provides informative reading for anyone thinking of using a Forex trading system.

Traders should try to read the following authors:

Edwin Lefeurve, Jake Bernstein, Larry Williams, Ken Roberts, Van Tharpe and Jack Shwager whose books “Market Wizards” and “The New Market Wizards” interview some of the most successful traders of all time, including the turtles. The Turtles are group of traders who had no prior trading experience, but went on to earn hundreds of millions of dollars, using very simple mechanical trading systems.

The developments in recent years in computer software, the growth of the Internet, and online trading, has seen Forex trading systems become more popular than ever. Software Packages such as Tradestation, Supercharts, Omni trader, and many more, allow traders to back test systems, using a variety of technical indicators that include:

- Forex Autopilot (F.A.P. Turbo)

- Stochastics

- Bollinger bands

- RSI

- moving averages

- ADX

And many more.

The Forex trading system picked can then be analyised, to see how it would have performed in the markets with commissions and slippage deducted. Traders, who don’t want to develop a currency trading system, can buy systems off the shelf from vendors.

How do you Choose a Successful forex Trading System?

If you are buying a Forex trading system, there are several things to consider before parting with your hard earned cash:

1. Are you interested in being a day trader, or a trader looking for longer-term trends? You need to pick a system that you’re comfortable with and this is mostly down to personal preference. Some traders like the excitement of day trading others prefer a longer-term approach.

2. Do you want to have any input into the system, or do you want it to be totally mechanical?

3. Do you want to trade just one currency, or a basket of currencies? Using a Forex trading system that trades just one currency can be more profitable but keep in mind, the converse is true, i.e losses and drawdowns can be larger.

4. When choosing a trading system you need to have confidence to trade with it, and follow the system through losing periods. To do this you should know the logic the system is based upon. If you understand the system and its logic, you will derive confidence and be more likely to follow it - in contrast to one where the logic is not revealed.

5. What are the average profits you can expect in relation to drawdowns? All currency trading systems will have periods of drawdown and losses. Generally the larger the profits the bigger the drawdowns tend to be over time - so pick a system that reflects your investment aims and risk tolerance.

6. When you are buying a currency trading system, check out the system seller’s experience, track record, customer support. See whether they have a real-time track record, or a hypothetical one.

A real time track records means the system has performed in the market and made money. Trading systems that simply rely on hypothetical track records mean they have been back tested and with the benefit of hindsight we can all make money.

While hypothetical track records should be treated with a degree of caution, you can find out a lot about whether the system is likely to make money, by knowing the logic the system is based on. When considering a hypothetical track record, look for one where the logic is revealed and not a “black box system” where you have no idea how to system works.

In conclusion, you can make your own Forex trading system, or you can buy one from a vendor. When choosing one from a vendor make sure you do your homework, and remember, if it looks too good to be true, it probably is.

Jason Hamilton
http://www.articlesbase.com/currency-trading-articles/making-money-from-forex-trading-systems-674433.html

 

What is FOREX?

The Foreign Exchange Market (Forex) is the arena in which a nation’s currency is exchanged for that of another at a mutually agreed rate. It was created in the 1970’s when international trade transitioned from fixed to floating exchange rates, and is now considered to be the largest financial market in the world because of its huge turnover.

Introduction to forex

All currencies are traded in pairs and each is assigned with an abbreviation. Here are some of them (Table 1):

EUR Euro

USD US Dollar

GBP British Pound

JPY Japanese Yen

CHF Swiss Franc

AUD Australian Dollar

CAD Canadian Dollar

NZD New Zealand Dollar

SGD Singapore Dollar

‘Base’ currency is the first currency in the pair. ‘Quote’ currency, or ‘term’ currency is the second currency in the pair.

USD / JPY = 120.25

Base currency Quote currency Rate

This abbreviation specifies how much you have to pay in the quote currency to obtain one unit of the base currency (in this example, 120.25 Japanese Yen for one US Dollar). The minimum rate fluctuation is called a point or a pip.

Most currencies, except USD/JPY, EUR/JPY, CHF/JPY and GBP/JPY where a pip is 0.01, have 4 digits after the period (a pip is 0.0001), and sometimes they are abbreviated to the last two digits. For example, if EURUSD is traded at 1.2389/1.2391 the quote may be abbreviated to 89/91.

The currency pairs on Forex are quoted as the Bid and Ask (or Offer) prices:

Bid Ask

USD / JPY = 120.25 / 120.28

Bid is the rate at which you can sell the base currency, in our case it’s the US dollar, and buy the quote currency, i.e the Japanese Yen.

Ask ( or Offer) is the rate at which you can buy the base currency, in our case the US dollar, and sell the quote currency, i.e. the Japanese Yen.

Spread is the difference between the Bid price and the Ask price.

Pip is the smallest price increment a currency can make. Also known as a point. e.g. 1 pip = 0.0001 for EUR/USD, and 0.01 for USD/JPY.

Currency Rate is the value of one currency expressed in terms of another. The rate fluctuation depends on numerous factors including the supply and demand on the market and/or open market operations by a government or by a central bank.

1.0 lot size for different currency pairs (Table 2)

Currency 1.0 lot size 1 pip

EURUSD EUR 100,000 0.0001

USDCHF USD 100,000 0.0001

EURUSD EUR 100,000 0.0001

GBPUSD GBP 100,000 0.0001

USDJPY USD 100,000 0.01

AUDUSD AUD 100,000 0.0001

USDCAD USD 100,000 0.0001

EURCHF EUR 100,000 0.0001

EURJPY EUR 100,000 0.01

EURGBP EUR 100,000 0.0001

GBPJPY GBP 100,000 0.01

GBPCHF GBP 100,000 0.0001

EURCAD EUR 100,000 0.0001

NZDUSD NZD 100,000 0.0001

USDSEK USD 100,000 0.0001

USDDKK USD 100,000 0.0001

USDNOK USD 100,000 0.0001

USDSGD USD 100,000 0.0001

USDZAR USD 100,000 0.0001

CHFJPY CHF 100,000 0.01

Spreads & Margins

Alpari (UK)’s mission is to provide innovative currency trading technology combined with quality execution, tight spreads and competitive margins.

Margin is the collateral required by Alpari (UK) to open and maintain a position:

*

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+ An open position of less than 3,000,000 USD (3M) nominal value carries a maximum leverage of 1:500.

+ An open position of 3M - 5M USD carries a leverage of 1:500 for the first 3M and a leverage of 1:200 for the remaining 2M.

+ An open position of 5M - 10M USD carries a leverage of 1:500 for the first 3M, a leverage of 1:200 for the next 2M and a leverage of 1:100 for the remaining 5M.

+ For open positions higher than 10M USD, the first 3M carries a leverage of 1:500, the next 2M carries a leverage of 1:200, the next 5M carries a leverage of 1:100. Everything above carries a leverage of 1:33.

For example, a client opens a position of 12 million USD (for example, 120 lots in USDCHF). His margin requirements will be the following:

Nominal value of open position Funds required to open position Maximum leverage offered

First 3 million = 3,000,000 / 500 = 6,000 USD 1:500

Next 2 million = 2,000,000 / 200 = 10,000 USD 1:200

Next 5 million = 5,000,000 / 100 = 50,000 USD 1:100

Remaining 2 million = 2,000,000 / 33 = 60,606 USD 1:33

TOTAL: 12 million = 126,606 USD

Balance is the total financial result of all completed transactions and deposits/withdrawals on the trading account.

Floating Profit/Loss is current profit/loss on open positions calculated at the current prices.

Equity is calculated as balance + floating profit - floating loss.

Free margin means funds on the trading account, which may be used to open a position. It is calculated as equity less necessary margin.

Calculating profit/loss

For example, EUR/USD exchange rate is 1.2505/1.2507 and your leverage is 1:100. You believe that EUR/USD will go up and buy 0.1 lot of EUR/USD at 1.2507 (Ask price) - for the contract size refer to Table 2. As we can see from Table 2, 1.0 lot of EUR/USD is 100,000 EUR, which means that 0.1 lot (our example deal size) is 10,000 EUR.

So, you buy 10,000 EUR and sell 10,000*1.2507=12,507 USD. In fact to fund this position you do not have to have 12,507 USD but only 125.07 USD. The rest of the money (in our example 12,381.93 USD) is leveraged to you by Alpari (UK).

The leverage (or gearing) mechanism allows you to open and hold a position much larger than your trading account value. 1:100 leverage means that when you wish to open a new position, you need to support a deposit 100 times less than the value of the contract you are interested in.

For example, you believe that EUR/USD is moving higher and buy 10,000 EUR and sell 12,507 USD. Assuming you are right and EUR/USD goes up to 1.2599/1.2601 and you decide to close the position: when you close a long position you sell the base currency (10,000 EUR in our example) and buy the quote currency (10,000*1.2599 = 12,599 USD):

Transaction EUR USD

Open a position: buy EUR and sell USD + 10,000 - 12,507

Close a position: sell EUR and buy USD - 10,000 + 12,599

Total: 0 + 92

NB: When you close a short position you buy the base currency and sell the quote currency.

To fund this position you only need 100 EUR (approximately 125 USD) not 10,000 EUR. The profit on this position is 92 pips (1.2599-1.2507=0.0092). A pip or point is a minimal rate fluctuation. For EUR/USD 1 pip is 0.0001 of the price (see Table 2).

This example shows a favourable outcome. If EUR/USD had fallen you would realise a loss and not a profit. This loss will be magnified as a result of leveraging. For example, if you close the position at 1.2419, your loss would be $88. Should you have doubts about your understanding of risks, please consult a qualified financial adviser.

Lot Size is the number of base currency, underlying asset or shares in one lot defined in the contract specifications. For details refer to the Table 2.

Lot is an abstract notion of the amount of base currency, shares or other underlying asset on the trading platform.

Transaction (or deal) size is lot size multiplied by the number of lots.

Long Position is a buy position whereby you profit from an increase in price. In respect of currency pairs: buying the base currency against the quote currency.

Short Position is a sell position whereby you profit from a decrease in price. For currency pairs: selling the base currency against the quote currency.

Completed Transaction consists of two counter deals of the same size (open and close a position): buy then sell or vice versa.

Leverage is the term used to describe margin requirements: the ratio between the collateral and the value of the contract. 1:100 leverage means that you can control $100,000 with only $1,000 (1%).

Rollover / Interest Policy

Foreign exchange trading at Alpari (UK) is dealt on a "Spot" basis only. This means that all trades settle two business days from inception, as per market convention. The settlement date is referred to as the value date. Alpari (UK) does not arrange physical delivery of currencies hence, all positions left open from 10:59:45 p.m. to 10:59:59 p.m. (London time) will be rolled over to a new Value Date.

As a result, positions are subject to a swap charge or credit based on the "Rollover/Interest Policy" webpage.

Please note that since 03 June 2007 Alpari (UK) Limited no longer closes and reopens the positions which are open at 11:00 pm London time. Instead we have introduced a more convenient method of rollover which involves debiting or crediting a customer’s trading account when he/she holds open positions overnight.

The cost of rollover is based on the interest rate differential of the two currencies. Let’s assume that the interest rates in the EU and USA are 4.25% p.a and 3.5% p.a respectively. Every currency trade involves borrowing one currency to buy another. If you have a buy position of 1.0 lot in EUR/USD, then you earn 4.25% on your Euros and borrow USD at 3.5% per year.

In other words:

* If you have a long position (i.e. bought) and the first currency in the currency pair has a higher overnight interest rate than the second currency, then you receive a gain.

* If you have a short position (i.e. sold) and the first currency in the currency pair has a higher overnight interest rate than the second currency, then you lose the difference.

* If you have a long position (i.e. bought) and the first currency in the currency pair has a lower overnight interest rate than the second currency, then you lose the difference.

* If you have a short position (i.e. sold) and the first currency in the currency pair has a lower overnight interest rate than the second currency, then you receive a gain.

Please note that if you open and close a position before 10:59:45 p.m. (London time) you will not be subject to a rollover.

The act of rolling the currency pair over is known as tom.next, which stands for tomorrow and the next day.

NB: When you roll an open position from Wednesday to Thursday, then Monday next week becomes the value date, not Saturday; therefore the rollover charge on a Wednesday evening will be three times the value indicated on the "Rollover/Interest Policy" webpage.

Why trade Forex?

Unlike other financial markets Forex has no physical location, like stock exchanges, for example. It operates through the electronic network of banks, computer terminals or via telephone. The lack of a physical exchange enables Forex to operate on a 24-hour basis, spanning from one time zone to another across the major financial centres (Sydney, Tokyo, Hong Kong, Frankfurt, London, New York etc). In every financial centre there are many dealers, who buy and sell currencies 24 hours a day during the whole business week. Trading begins in the Far East, New Zealand (Wellington), then Sydney, Tokyo, Hong Kong, Singapore, Moscow, Frankfurt-on-Maine, London and ends in New York and Los Angeles. Below there are approximate trading hours for regional markets (London time):

Japan 00:00-06:30

Continental Europe 06:30-13:00

Great Britain 8:30-15:30

USA 14:30-21:30

Forex has some advantages which make it very popular among investors:

* Liquidity. Forex is the largest financial market in the world, with the equivalent of over $3-4 trillion changing hands daily whereas traded volume on the stock markets equates to only 500 billion US dollars.

* Flexibility. Forex is a 24-hour market, which offers a major advantage over other markets, for example, stock exchanges which are only open during regional business hours. You can respond to breaking news immediately if the situation requires it and customise your trading schedule.

* Lower transaction costs. Traditionally there are no commissions or charges on Forex, except for the spread.

* Margin. Our 1:100 leverage (only for deposits below $ 100,000) is a powerful tool. You need to support a deposit of 1,000 US dollars to make a deal with $100,000. Such high leverage combined with rapid rate fluctuations can make this market profitable but at the same time risky: please see Risk Warning below.

Risk Warning

Under margin trading conditions even small market movements may have a great impact on the customer’s trading account. You must consider that if the market moves against you, you may sustain a total loss greater than the funds deposited. You are responsible for all the risks, financial resources you use and for the chosen trading strategy.

 

richard
http://www.articlesbase.com/currency-trading-articles/intoduction-to-forex-676645.html