By; Anne at http://annefonda.multiply.com/
I have seen many times peoples always ask why I should trade in forex. Forex trading has different offers for small and large investors. Here I would like to solve this puzzle a bit and would try to give some valuable reasons why should people go to trade in forex.
Forex trading is immediate: Forex market is superbly fast. Your order gets filled and gets executed within 1-2 seconds. Since all the things are done automatically with no humans involved. Forex trading online proves to be more profitable than any other form of trading.
Free from bulls or bears: As forex trading is buying one currency while simultaneously selling another you probably have an equal opportunity for profit. And another advantage is there are quite a less number of currencies in comparison of thousands of stock, options, futures.
By far Forex is the largest market: Forex market has touched the mark of 3 trillion 4 times larger than the market of equity 6 times bigger than futures which facilitates unlimited flexibility and liquidity.
Forex trading offers leverages: Some online forex broker offers 200:1 margin ratios in your trading accounts. Mini forex account normally opened with $200-300. That’s why more and more people are moving towards forex trading.
24 hours trading: You can trade forex online 24*7. No waiting for market to get opened. This is the most amazing feature of online forex trading.
Forex prices are conventional to know: Prices of various currencies are predictable though volatile. Forex experts have that extra bit of knowledge through which they can predict the entry and exit points.
There is no commission charged in forex trading: No commission, no exchange fee or no hidden charges. This is very transparent market and the broker takes a small percentage of bid/ask spread. Forex trader does not require calculating commissions and fees on the trade
Friday, November 28, 2008
Tuesday, November 25, 2008
Forex Money Management
Written by FX Master
Money management is a critical point that shows difference between winners and losers. It was
proved that if 100 traders start trading using a system with 60% winning odds, only 5 traders
will be in profit at the end of the year. In spite of the 60% winning odds 95% of traders will lose
because of their poor money management. Money management is the most significant part of
any trading system. Most of traders don't understand how important it is.
It's important to understand the concept of money management and understand the difference
between it and trading decisions. Money management represents the amount of money you are
going to put on one trade and the risk your going to accept for this trade.
There are different money management strategies. They all aim at preserving your balance from
high risk exposure.
First of all, you should understand the following term Core equity
Core equity = Starting balance - Amount in open positions.
If you have a balance of 10,000$ and you enter a trade with 1,000$ then your core equity is
9,000$. If you enter another 1,000$ trade, your core equity will be 8,000$
It's important to understand what's meant by core equity since your money management will
depend on this equity.
We will explain here one model of money management that has proved high annual return and
limited risk. The standard account that we will be discussing is 100,000$ account with 20:1
leverage . Anyway, you can adapt this strategy to fit smaller or bigger trading accounts.
Money management strategy
Your risk per a trade should never exceed 3% per trade. It's better to adjust your risk to 1% or
2%
We prefer a risk of 1% but if you are confident in your trading system then you can lever your
risk up to 3%
1% risk of a 100,000$ account = 1,000$
You should adjust your stop loss so that you never lose more than 1,000$ per a single trade.
If you are a short term trader and you place your stop loss 50 pips below/above your entry
point .
50 pips = 1,000$
1 pips = 20$
The size of your trade should be adjusted so that you risk 20$/pip. With 20:1 leverage, your
trade size will be 200,000$
If the trade is stopped, you will lose 1,000$ which is 1% of your balance.
This trade will require 10,000$ = 10% of your balance.
If you are a long term trader and you place your stop loss 200 pips below/above your entry
point.
200 pips = 1,000$
1 pip = 5$
It's very important to understand these 2 strategies.
The size of your trade should be adjusted so that you risk 5$/pip. With 20:1 leverage, your
trade size will be 50,000$
If the trade is stopped, you will lose 1,000$ which is 1% of your balance.
This trade will require 2,500$ = 2.5% of your balance.
This is just an example. Your trading balance and leverage provided by your broker may differ
from this formula. The most important is to stick to the 1% risk rule. Never risk too much in one
trade. It's a fatal mistake when a trader lose 2 or 3 trades in a row, then he will be confident
that his next trade will be winning and he may add more money to this trade. This is how you
can blow up your account in a short time! A disciplined trader should never let his emotions and
greed control his decisions.
Diversification
Trading one currency pair will generate few entry signals. It would be better to diversify your
trades between several currencies. If you have 100,000$ balance and you have open position
with 10,000$ then your core equity is 90,000$. If you want to enter a second position then you
should calculate 1% risk of your core equity not of your starting balance!. It means that the
second trade risk should never be more than 900$. If you want to enter a 3rd position and your
core equity is 80,000$ then the risk per 3rd trade should not exceed 800$
It's important that you diversify your orders between currencies that have low correlation.
For example, If you have long EUR/USD then you shouldn't long GBP/USD since they have high
correlation. If you have long EUR/USD and GBP/USD positions and risking 3% per trade then
your risk is 6% since the trades will tend to end in same direction.
If you want to trade both EUR/USD and GBP/USD and your standard position size from your
money management is 10,000$ (1% risk rule) then you can trade 5,000$ EUR/USD and 5,000$
GBP/USD. In this way, you will be risking 0.5% on each position.
The Martingale and anti-martingale strategy
-Martingale rule = increasing your risk when losing !
This's a startegy adopted by gamblers which claims that you should increase the size of you
trades when losing. It's applied in gambling in the following way Bet 10$,if you lose bet 20$,if
you lose bet 40$,if you lose bet 80$,if you lose bet 160$..etc
This strategy assumes that after 4 or 5 losing trades, your chance to win is bigger so you should
add more money to recover your loss! The truth is that the odds are same in spite of your
previous loss! If you have 5 losses in a row ,still your odds for 6th bet 50:50! The same fatal
mistake can be made by some novice traders. For example, if a trader started with a a balance
of 10,000$ and after 4 losing trades (each is 1,000$) his balance is 6000$. The trader will think
that he has higher chances of winning the 5th trade then he will increase the size of his position
4 times to recover his loss. If he lose, his balance will be 2,000$!! He will never recover from
2,000$ to his starting balance 10,000$. A disciplined trader should never use such gambling
method unless he wants to lose his money in a short time.
-Anti-martingale rule = increase your risk when winning& decrease your risk when losing
It means that the trader should adjust the size of his positions according to his new gains or
losses.
Example: Trader A starts with a balance of 10,000$. His standard trade size is 1,000$
After 6 months,his balance is 15,000$. He should adjust his trade size to 1,500$
Trader B starts with 10,000$.His standard trade size is 1,000$
After 6 months his balance is 8,000$. He should adjust his trade size to 800$
High return strategy
This strategy is for traders looking for higher return and still preserving their starting balance.
According to your money management rules, you should be risking 1% of you balance. If you
start with 10,000$ and your trade size is 1,000$ (Risk 1%) After 1 year, your balance is
15,000$. Now you have your initial balance + 5,000$ profit. You can increase your potential
profit by risking more from this profit while restricting your initial balance risk to 1%. For
example, you can calculate your trade in the following pattern:
1% risk 10,000$ (initial balance)+ 5% of 5,000$ (profit)
In this way, you will have more potential for higher returns and on the same time you are still
risking 1% of your initial deposit.
Disclaimer: Trading any financial market involves risk. This course and the website
www.fxmaster.net and its contents is neither a solicitation nor an offer to Buy/Sell any financial
market. The contents of this course are for general information purposes only. The information
provided in this course is not intended for distribution to, or use by any person or entity in any
jurisdiction or country where such distribution or use would be contrary to law or regulation or
which would subject us to any registration requirement within such jurisdiction or country. We
reserve the right to change these terms and conditions without notice.
Money management is a critical point that shows difference between winners and losers. It was
proved that if 100 traders start trading using a system with 60% winning odds, only 5 traders
will be in profit at the end of the year. In spite of the 60% winning odds 95% of traders will lose
because of their poor money management. Money management is the most significant part of
any trading system. Most of traders don't understand how important it is.
It's important to understand the concept of money management and understand the difference
between it and trading decisions. Money management represents the amount of money you are
going to put on one trade and the risk your going to accept for this trade.
There are different money management strategies. They all aim at preserving your balance from
high risk exposure.
First of all, you should understand the following term Core equity
Core equity = Starting balance - Amount in open positions.
If you have a balance of 10,000$ and you enter a trade with 1,000$ then your core equity is
9,000$. If you enter another 1,000$ trade, your core equity will be 8,000$
It's important to understand what's meant by core equity since your money management will
depend on this equity.
We will explain here one model of money management that has proved high annual return and
limited risk. The standard account that we will be discussing is 100,000$ account with 20:1
leverage . Anyway, you can adapt this strategy to fit smaller or bigger trading accounts.
Money management strategy
Your risk per a trade should never exceed 3% per trade. It's better to adjust your risk to 1% or
2%
We prefer a risk of 1% but if you are confident in your trading system then you can lever your
risk up to 3%
1% risk of a 100,000$ account = 1,000$
You should adjust your stop loss so that you never lose more than 1,000$ per a single trade.
If you are a short term trader and you place your stop loss 50 pips below/above your entry
point .
50 pips = 1,000$
1 pips = 20$
The size of your trade should be adjusted so that you risk 20$/pip. With 20:1 leverage, your
trade size will be 200,000$
If the trade is stopped, you will lose 1,000$ which is 1% of your balance.
This trade will require 10,000$ = 10% of your balance.
If you are a long term trader and you place your stop loss 200 pips below/above your entry
point.
200 pips = 1,000$
1 pip = 5$
It's very important to understand these 2 strategies.
The size of your trade should be adjusted so that you risk 5$/pip. With 20:1 leverage, your
trade size will be 50,000$
If the trade is stopped, you will lose 1,000$ which is 1% of your balance.
This trade will require 2,500$ = 2.5% of your balance.
This is just an example. Your trading balance and leverage provided by your broker may differ
from this formula. The most important is to stick to the 1% risk rule. Never risk too much in one
trade. It's a fatal mistake when a trader lose 2 or 3 trades in a row, then he will be confident
that his next trade will be winning and he may add more money to this trade. This is how you
can blow up your account in a short time! A disciplined trader should never let his emotions and
greed control his decisions.
Diversification
Trading one currency pair will generate few entry signals. It would be better to diversify your
trades between several currencies. If you have 100,000$ balance and you have open position
with 10,000$ then your core equity is 90,000$. If you want to enter a second position then you
should calculate 1% risk of your core equity not of your starting balance!. It means that the
second trade risk should never be more than 900$. If you want to enter a 3rd position and your
core equity is 80,000$ then the risk per 3rd trade should not exceed 800$
It's important that you diversify your orders between currencies that have low correlation.
For example, If you have long EUR/USD then you shouldn't long GBP/USD since they have high
correlation. If you have long EUR/USD and GBP/USD positions and risking 3% per trade then
your risk is 6% since the trades will tend to end in same direction.
If you want to trade both EUR/USD and GBP/USD and your standard position size from your
money management is 10,000$ (1% risk rule) then you can trade 5,000$ EUR/USD and 5,000$
GBP/USD. In this way, you will be risking 0.5% on each position.
The Martingale and anti-martingale strategy
-Martingale rule = increasing your risk when losing !
This's a startegy adopted by gamblers which claims that you should increase the size of you
trades when losing. It's applied in gambling in the following way Bet 10$,if you lose bet 20$,if
you lose bet 40$,if you lose bet 80$,if you lose bet 160$..etc
This strategy assumes that after 4 or 5 losing trades, your chance to win is bigger so you should
add more money to recover your loss! The truth is that the odds are same in spite of your
previous loss! If you have 5 losses in a row ,still your odds for 6th bet 50:50! The same fatal
mistake can be made by some novice traders. For example, if a trader started with a a balance
of 10,000$ and after 4 losing trades (each is 1,000$) his balance is 6000$. The trader will think
that he has higher chances of winning the 5th trade then he will increase the size of his position
4 times to recover his loss. If he lose, his balance will be 2,000$!! He will never recover from
2,000$ to his starting balance 10,000$. A disciplined trader should never use such gambling
method unless he wants to lose his money in a short time.
-Anti-martingale rule = increase your risk when winning& decrease your risk when losing
It means that the trader should adjust the size of his positions according to his new gains or
losses.
Example: Trader A starts with a balance of 10,000$. His standard trade size is 1,000$
After 6 months,his balance is 15,000$. He should adjust his trade size to 1,500$
Trader B starts with 10,000$.His standard trade size is 1,000$
After 6 months his balance is 8,000$. He should adjust his trade size to 800$
High return strategy
This strategy is for traders looking for higher return and still preserving their starting balance.
According to your money management rules, you should be risking 1% of you balance. If you
start with 10,000$ and your trade size is 1,000$ (Risk 1%) After 1 year, your balance is
15,000$. Now you have your initial balance + 5,000$ profit. You can increase your potential
profit by risking more from this profit while restricting your initial balance risk to 1%. For
example, you can calculate your trade in the following pattern:
1% risk 10,000$ (initial balance)+ 5% of 5,000$ (profit)
In this way, you will have more potential for higher returns and on the same time you are still
risking 1% of your initial deposit.
Disclaimer: Trading any financial market involves risk. This course and the website
www.fxmaster.net and its contents is neither a solicitation nor an offer to Buy/Sell any financial
market. The contents of this course are for general information purposes only. The information
provided in this course is not intended for distribution to, or use by any person or entity in any
jurisdiction or country where such distribution or use would be contrary to law or regulation or
which would subject us to any registration requirement within such jurisdiction or country. We
reserve the right to change these terms and conditions without notice.
Thursday, November 20, 2008
What Is MARKETIVA?
Marketiva is a financial services corporation specialized in providing traders with high quality online spot forex trading services. With a team of dedicated financial specialists and technical support personnel, Marketiva operates globally as a market maker and principal counterparty to retail clients trading in the foreign exchange market. Marketiva has established itself as an industry leader by relying on its groundbreaking internet trading platform and its superior customer service.
Just only two step to register it.
First click this banner link to Register MARKETIVA
Just only two step to register it.
First click this banner link to Register MARKETIVA
Register/sign up in MARKETIVA is very easy, just like when you register/open new email account. follow all the prosedure after finish you may ready for trading.
Second click this banner link to Register Liberty Reserve
Recomended for you to use this e-payment when deposit or withdrawall in MARKETIVA, It esay , simple and secure. Register now it soo easy also, same like when ou register/sign on new email account. after you get the account in Liberty Reaserve (LR) now you can buy and sell LR in many merchant in the world that provide Liberty Reserve.
Tuesday, November 18, 2008
Rise in U.S. Industrial Production Beats Expectations
Industrial production (IP) rose a robust 1.3% in October, which was considerably stronger than the 0.2% rise expected within financial markets. However, the unexpected strength largely reflected the fact that the decline in activity in September was revised to show an even deeper 3.7% drop (compared to an originally reported -2.8%). The increase in October allowed the capacity utilization rate to rise to 76.4% from 75.5% in September, although the rate is considerably down from the 78.5% that prevailed in August.
The large swings in industrial production in recent months are largely a reflection of the transitory effects of the hurricanes that struck the Gulf region in September. The impact was clearly evident in the 8.5% drop in mining activity in September along with a 3.7% decline in manufacturing output. The October data were expected to show a sizeable reversal of this weakness as the fallout from the hurricanes subsided, although tempered by indications of underlying weakness in manufacturing. This was largely evident in the October data with mining activity up 6.1% while manufacturing output only managed to rise 0.6%. The third main component of IP, utilities output, rose 0.4% in October after a 2.4% gain in September.
Although the 1.3% rise in industrial production was larger than expected, it still only modestly retraced the hurricane-related 3.7% drop that occurred in September. That activity did not result in more of a bounce-back is an indication of underlying weakness in the manufacturing sector. This sector had earlier been supported by solid export growth, but this strength is being eroded by weakening activity externally and the recent appreciation of the U.S. dollar.
With the original weakness in residential investment now spreading to other key sectors of the economy as recessionary conditions deepen, the Fed will be pressured to keep policy accommodative. We are assuming that Fed funds will be maintained at a current very stimulative 1.00% through next year supplemented by central bank actions to inject liquidity into specific markets as pressures emerge. As well, there is the growing likelihood that the new Obama administration will opt for a second fiscal stimulus package.
RBC Financial Group
The large swings in industrial production in recent months are largely a reflection of the transitory effects of the hurricanes that struck the Gulf region in September. The impact was clearly evident in the 8.5% drop in mining activity in September along with a 3.7% decline in manufacturing output. The October data were expected to show a sizeable reversal of this weakness as the fallout from the hurricanes subsided, although tempered by indications of underlying weakness in manufacturing. This was largely evident in the October data with mining activity up 6.1% while manufacturing output only managed to rise 0.6%. The third main component of IP, utilities output, rose 0.4% in October after a 2.4% gain in September.
Although the 1.3% rise in industrial production was larger than expected, it still only modestly retraced the hurricane-related 3.7% drop that occurred in September. That activity did not result in more of a bounce-back is an indication of underlying weakness in the manufacturing sector. This sector had earlier been supported by solid export growth, but this strength is being eroded by weakening activity externally and the recent appreciation of the U.S. dollar.
With the original weakness in residential investment now spreading to other key sectors of the economy as recessionary conditions deepen, the Fed will be pressured to keep policy accommodative. We are assuming that Fed funds will be maintained at a current very stimulative 1.00% through next year supplemented by central bank actions to inject liquidity into specific markets as pressures emerge. As well, there is the growing likelihood that the new Obama administration will opt for a second fiscal stimulus package.
RBC Financial Group
Thursday, November 13, 2008
3 months : Yen=90-->100, Euro=1.20->1.45
Goldman Expects Yen to Rise 6% Against Dollar on Carry Unwind
By Candice Zachariahs
Enlarge Image/Details
Nov. 13 (Bloomberg) -- The yen will strengthen 6 percent against the U.S. dollar, and the greenback will advance 4 percent against the euro, because of the unwinding of bets on higher- yielding assets, Goldman Sachs Group Inc. said.
The dollar will weaken to 90 yen in three months, before gaining to 100 yen six months from now, Goldman said. The greenback will trade at $1.20 per euro in three months, before weakening to $1.30 in six months. The previous three-month forecast was for the dollar at 112 yen and $1.45 per euro.
``Deleveraging and funding constraints have likely created a new source of foreign-exchange demand and supply,'' wrote a team of Goldman Sachs analysts including New York-based Jen Nordvig and London-based Thomas Stolper, Fiona Lake and Themistoklis Fiotakis, in a research note. ``We expect deleveraging patterns to continue into year-end, driving the dollar and yen stronger and putting pressure on higher-yielding currencies.''
The yen is the only gainer over the past three months among the 16 most-traded currencies against the greenback, rising 15 percent to
95.67 yen as of 10:06 a.m. in Tokyo. It traded at 119.16 per euro, falling for the first day in three.
The dollar rose for a third day to $1.2455 per euro from $1.2505 yesterday.
Benchmark interest rates of 0.3 percent in Japan and 1 percent in the U.S. prompted investors to use low-cost funds from these countries to invest in higher-yielding assets. Rates are 3.5 percent in the euro region, 12 percent in South Africa, 7.5 percent in India and 5.25 percent in Australia. The risk in such carry trades is that currency market moves will erase profits.
Lehman Collapse
Investors exited bets in higher-yielding assets and fled to the safety of the dollar and yen after the collapse of Lehman Brothers Holdings Inc. on Sept. 15 paralyzed money markets and sent equities tumbling.
The cost of borrowing dollars overnight in London rose to a record
6.88 percent in September before falling to 0.38 percent yesterday after central banks around the world offered financial institutions unlimited dollars to thaw lending. The MSCI World index has plunged 35 percent since September.
``We have been in a multi-year process where leverage has been built,'' wrote the analysts. ``This process is now reversing and is likely to have some inertia, especially now that it has an additional catalyst from pronounced economic weakness.''
The International Monetary Fund this month forecast that the U.S., Japan and Europe will enter their first simultaneous recessions in the post-World War II era. The World Bank expects world trade volumes to contract 2.5 percent in 2009.
`Key Driver'
Past links between foreign-exchange movements and interest- rate differentials, macroeconomic news and balance-of-payment flows have broken, said Goldman. Deleveraging has become the ``key independent driver'' and will continue to ``dominate other forces in the remainder of 2008,'' wrote the Goldman team.
State Street Global Markets estimated in an Oct. 24 report that U.S.
investors alone hold $5 trillion of foreign equities.
A widespread recession in the developing world will hurt emerging markets as foreign investors repatriate funds, making it difficult and costly for countries to fund current-account deficits and domestic investments, the Goldman analysts wrote.
Goldman now expects the South African rand, which was trading at 10.3650 per dollar, to slip to 11 per dollar in three months, from a previous call for 9.50. The Indian rupee is now forecast to fall to 50.50 per dollar from an earlier projection of 46.10. Australia's dollar will trade at 64 U.S. cents in three months.
To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net Last Updated: November 12, 2008 21:11 EST
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