Forex robot for dummies
January 20, 2015
If you are just starting to trade with Forex, then you should not be thinking about getting a Forex robot. Forex robots are for the experienced currency markets traders, who already have excellent knowledge of the various terminology and strategies needed for advanced Forex trading. The Metatrader Platform is a very good software for automated robot trading. Best thing is that it is free to use and you can set up demo accounts too.
The Forex robot software that you choose should be robust, tried and tested, with excellent reviews. You should be able to see proof of an excellent success rate with the Forex robot. If not, you will end up making losses or not making the most out of your investments.
Once you have chosen your Forex robot, Dollarsyou then need to set it up so that it will make the trades, just as you would if you could sit in front of Your Forex account for 24 hours a day. Try to choose only a few trading currency pairs when you are setting up the Forex robot. You do not want to confuse yourself, or the robot by using too many different pairs with so many different time frames. Remember to set your stop loss level at a reasonable amount so that you do not lose too much money. You need to be careful that you are not being too optimistic about your stop loss, foolishly believing that the currency price will rise again before it reaches the threshold of your stop loss. You can end up losing lots of money.
You should also remember to set your take profit limit, or else how will the Forex robot know how high to let the price go to. If you forget to set this, you will never make a profit, and if you set it too high, it is likely that the currency will not reach that price before it drops again.
Top reasons why Forex scalping and hedging are so popular
January 20, 2015
The main purpose of this article is to provide you information about two different techniques used in forex trading, one is known as forex scalping and the other is called hedging.
The first technique we will look at is forex scalping in which numerous trades which are of short duration are used and forex trader also uses high leverage during trading. Here the strategy is to take benefit from small variations in prices and have forex leverage higher than normal. Additionally, by leveraging more than a day trader does can help a scalper make similar gains as a day trader makes.
The strategy in forex scalping involves keeping note of the fact that currency pairs act in different manners in different situations and various volatilities are to be kept in mind which have an effect on forex market. A small example will illustrate the point, if you see a 40 pips movement in EURJPY currency pair and a 40 pips movement in USDGBP, then these movements are separate and the strategy is to be developed separately for both the currency pairs.
In addition to it, the strategy should also consider the time during which the trade will occur. Suppose you have a fixed strategy for GBPJPY currency pair for the London market, so this same strategy cannot be used in another market. Scalping strategy will differ based on the time and the forex market it is for. Thus you will have to modify your strategy based on the geographical location it is used in and at which time it is to be used. FXPro is one great broker for scalping. FXPro usually has very tight spreads.
Benefits of Forex Scalping
It is a safe forex trading technique and the reason is that the forex trader maintains position for a very short period of time and thereby has minimal market exposure which consequently reduces the risks of large losses. Additional benefit is that the forex traders involved in forex scalping have to be aware about fewer market details as they are in it for short time periods only.
Let us now look at another technique known as forex hedging which is used for minimizing the risks of losses due to future price fluctuations and changes in forex rates. Hedging includes use of different contracts such as future and forward contracts as well as method known as options for reducing losses and risks associated with changes in forex market rates. It is worth mentioning here that forward contracts have higher transaction costs and lower liquidity as there is no central forex market for this type of contract.
Strategy for Hedging
The fundamental strategy utilized in forex hedging is to have a portfolio of currency assets in long and short positions. This technique helps a forex company compensate losses with gains made in another position and to achieve this various derivatives are utilized that have similar price movements as happening in any spot market.
A Final Note
Thus we can see that both forex scalping and hedging are used for minimizing the risks in forex trading. If the techniques are used properly then it can help forex traders earn profits and keep loses to minimum.
Tips to Excel in Foreign Trading
January 20, 2015
Currency trading occurring in different parts of the world is known as forex where forex traders transact to gain from variations taking place in value of one currency against others. A good definition of Forex Markets is found here. The main thing that attracts many people towards forex trading is the return they can earn by making proportionately much less investment. But it is also a market where it is very easy to lose all your investment as well and therefore having very good knowledge about the forex market is essential for everyone who is part of it.
Become Familiar with the Trading System
To begin with you will have to get acquainted to the various terms used in currency market so that you remain in tuned with what happens in the market. One of the common terms you will find being used in equity markets is spot which refers to a type of trading in which delivery occurs at most in 2 days. Spot transactions also do not have any associated contract and transaction is for cash only with no interest becoming due.
The other type of transaction used in forex markets is forward which stands for transaction which will take place on a future date and helps a forex trading company manage trading risks. Here involved parties decide upon a rate for transactions which will happen on a specific future date and the forex rates at that time will not be used.
Next we look at terms, swap and future with swap being a form of transaction in which involved buyer and seller consent to reverse a transaction on an agreed upon future date. Similarly, future forex trades have predetermined time period for any transaction and is normally of three months duration. Many great trading systems can be found at Forex Factory.
Entities Attached to Forex Capital Markets
It is also important to remain aware of the different entities working in the forex capital market. Some such entities include central banks, NBFCs (Non Banking Financial Corporations), commercial institutions, investment management companies, retail traders and forex fixers.
Forex Rate Determinants
To fully utilize your investments and make profits you need to know what is happening in the market and act in time. The main determinants of international exchange rates are political conditions, economic factors and psychology prevailing in the market. The first one consists of local as well as international events occurring in different parts of the world, how stable the governance is in a country and also countries close to it are factors which play their role in determining how the forex rates behave.
The next factor relates to various economic factors which range from trade balances to fiscal policies, deficits in budgets and inflation in the country. Similarly, psychology in the market also results in variations in forex conversion rates and includes things such as anchoring, trade balances and concepts like flights to quality.
Finally we would like to conclude this article by mentioning that forex market provides several opportunities but it is also full of risks for investors. To succeed in forex trading you need to have the right mind set and knowledge to know what is happening in the market and what steps you should take.