Forex Online Trading Software

Almost every online Forex broker has a software package for their clients to make transactions and get information about market prices. Due to the relative maturity of online trading there is a consensus among Forex brokers about what clients need in terms of software tools. There are two main classes of Forex software – web based and client based.

All Forex trading software needs to provide up-to-the-second market information. The fast moving pace of the Forex demands real-time data delivery for making decisions about when to enter and exit the market. Forex dealers claim their software performs well with a minimum of delay, but in fact there can be a number of factors that could delay data transmission.

Internet connection speed and distance from the broker's servers are the two main factors that can slow down data transmission. Forex traders should have a reasonably modern computer and a high speed Internet connection to take full advantage of the Forex software offered by their broker. It may also pay to choose a broker in the same area as you live. Traders in Bangkok who deal with brokers in Ohio may experience delays – especially during volatile market conditions.

Web Based or Client Based?

Web based Forex trading software is on the broker's website – you don't have to install any software on your computer. Client based software requires you to download and install the software package used by your broker. Which is better? More and more brokers are offering web based client software for reasons of convenience, safety and reliability. Web based software allows you to log on to your account from any computer – you can make trades from any location that has an Internet connection. Client based software, on the other hand, restricts you to making trades from just one computer.

Besides the convenience, web based software offers greater security. Data is secured with high-strength encryption making it impossible for outside parties to access during transmission. Client based software is also secured during transmission but there are more possibilities for data loss from the trader's computer. Viruses and hackers may be able to access valuable financial data stored in a home or office computer.

Forex Trading Software Features
Forex software needs to access real-time quotes and offer a means to enter and exit the market. Even the most basic packages offer these functions. Current quotes can be seen for most currency pairs and the software allows you to buy or sell at market prices or enter and exit the market using stops or limits. Ideally, trading software should have integrated charting functions with a variety of viewing functions.

Basic Forex software packages should be offered free of charge, but many brokers also have more advanced packages available for a monthly fee. Some of the features you could expect to see in advanced software include the ability to trade directly from the chart and full analytical functions.

Forex Software Technology
The backbone of Forex trading software Technology is a series of data servers that allow you to connect to your broker's web site and make transactions. Servers operated by the Forex broker need to be reliable and secure for maintaining data integrity and assuring accurate transaction processing. Servers are subject to power outages and natural disasters, so to ensure maximum uptime, the broker should operate at least two sets of servers in separate locations. Brokers should also offer regular data backups to guarantee the integrity of their customer's financial data in case of server failure.




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Go live with a $200 trading fund, amd leverage 200:1

Take the highest leverage possible.
200:1 or higher.
Why?
Your margin requirement will be lower, allowing you to open several trading positions without looking back at the column with available margin and worrying about going out of funds and getting a margin call.

$200 is a mini investment, so there is virtually nothing to protect. Compare it to $200 000 investment: traders take lower leverage of 20:1 to protect their investment in case something goes terribly wrong. Large investors also have enough equity to open several trades and add more traders later. In your case, if you take 20:1 leverage, you'll be able to open 1 or 2 trading positions and that's all, your equity isn't large, so you need to leverage it to be be able to trade comfortably.


The only thing to keep in mind is to keep no ore than 3-4 positions open at one time. 1-2 max in the beginning is even better: you'll be able to control your trades better, learn how balance, equity, margin required and available columns in your account behave and what's most important, you won't be overusing your leveraged account, therefore no worries about getting a margin call.


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Are You a Forex Beginner?

Find Out How to Get Started with Forex Trading

Today’s job market offers little security for employees. For this reason many of them are providing for retirement by earning additional income online. Forex trading offers a business people can run from anywhere in the world with internet access. Furthermore, forex trading does not require a lot of startup capital, so beginners can start trading with little money and grow it into a nice little financial nest egg. This article discusses 3 important tips that will help any forex beginner become successful at forex currency trading.
Getting Startup Capital
Over the years I’ve found that the majority of people that are not familiar with trading or investing of any kind have the misconception that it requires a large sum of money to get started. Even though this holds true for some brokers, most brokers are pretty geared towards entry-level investors. There are variuos brokers that will let you start with as little as $200. There’s even one broker called Oanda that allows you to start with a mere $50! I know times are tough for a lot of people but $50 is doable for everyone. If you’re having problems coming up with this kind of start-up capital you could even sell a couple of things on eBay to get the ball rolling. Everyone has some old junk laying around and remember; one man’s junk is another man’s treasure. Once you have your capital to start trading you will need to choose a broker.
Success Begins with Choosing the Right Broker
There are two types of Forex brokers. The first is called an Electronic Communication Network or ECN for short. ECN’s earn money by charging you a commission for all of your trades placed through them. The other type of forex brokers are called Market Makers. Market Makers may have an interest in seeing you lose money, because they can trade against you with counter-party trading. Opting to trade with an ECN can save you money in the long run and is generally safer.Before depositing any money with any broker, do the necessary research on them. A good up-to-date resource is Google, just type in your broker’s name plus the word “review” and look for forums or other places where site visitors have posted their feedback or vented their frustrations.

Develop Your Plan
After depositing your start-up capital with a broker of your choice you will have to come up with a trading plan. This “blueprint” will act as your road map to success and assist you in achieving your goals. This step is extremely important so be sure to spend enough time on it. Some of the components of every trading plan are financial goals, trading system, trading rules, and money management rules.

Trading as a business is not just a quick way to make money. The best investing advice requires investors to plan and prepare. Whenever you have a business, you have inventory. The inventory in online forex trading is your capital. Manage your capital well so that you can grow your inventory and “expand” your business. Following the rules will help anyone to grow financially in the realm of Forex trading.




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How currency exchange (FOREX) markets work

I bet you are well aware of the existent of Forex trading nowadays. Forex market exists wherever one currency is traded for another. Forex, or Foreign Exchange Market, is generally works as an international currency exchange market. Investors and speculators are allowed to trade currencies from all around the world thru Forex trading.

Forex is a very unique type of trading where traders are buying and selling 'money' in the same time. The trades are done in pairs, such as Euro/JPY, USD/CHF, and CAD/USD. It is the world largest trading market where an average of $1.9 trillion trades is done on a daily basis. The turnover rates in FOREX are nearly 30 times larger than the total volume of equity trades in United States.

Despite its large volume of trades done daily, Forex is relative new to the publics nonetheless. It is only made available to publics in year 1998 where big sized inter-bank units are sliced into smaller pieces and offered to individual traders like you and me. Before that, Forex is a game only for banks, multi national cooperation, and big currency dealers. Only those with large business size and strong financial background were permitted to trade foreign currencies.

Facts about Forex market
As a matter of fact, large international banks are still the major traders in currency exchange market. Deutsche Bank is one of the top currency traders; along with other major banks like UBS, Citi Group, HSBC, Barclays, J. P. Morgan Chase, Coldman Sachs, ABN Amro, Morgan Stanley, and Merril Lynch; these banks are said to be responsible for more than 70% trades in currency market.

When you are trading Forex with currency dealer, the Forex quotes might look a bit different from our previous example. Often, a two-sided quote, consisting of 'bid' and 'ask' price, is listed when dealing with currency brokers. For example, EUR/USD 1.2385/1.2390: 1.2385 is known as the 'bid' price while 1.2390 is commonly known as the 'ask' or 'buy' price. The 'bid' is the price at which you can sell the base currency; while the 'ask' is the price at which you can buy the base currency. As you study the numbers, you might realize that the two-sided currency price is quoted against you.

Traders are forced to buy the currency in a higher price than the selling one. This is done because FOREX trades are done without any commission chargers. Thru quoting currency 'bid & ask' price differently in this way, the currency brokers are manage to make profit without charging their client commission fees directly.

Fundamental analysis and Technical analysis in Forex
Fundamental Analysis refers to the study of the core underlying elements that influence the economy of a particular entity. As in Forex trading, government policies, bank policies, natural disasters, and speculators mood are some of the fundamentals considered to predict the currency market trends. Fundamental FOREX traders will review a country economy's situation base on these fundamental elements and respond accordingly. To gain max, fundamentalists often apply precise method to convert study's results into accurate entry/exit price indicator.

Technical Analysis, on the other hand, is a completely different story. Instead of reviewing on the fundamental issues, traders from the technical side define market movement according to data purely generated from the market. The term 'Technical' is applied in all trading fields, from commodity stocks exchange to option trading, from Forex to futures.

Generally, the purpose of technical analysis is to find potential price reversal or pivotal points. These points basically refer the change of market trends, which then indicates when to enter or exit from the market. It is important to know that as with any other techniques in your trading system, these technical analysis indicators could be used alone or with other indicators. Traders are always recommended to learn more different technical methods to analyze different market data because none of these techniques are 100% accurate and 100% foolproof. Taking example of the 'price' data and the 'time' data, which are widely used by FOREX trader.

There are some techniques consider solely on the 'price' factor, while some solely rely on the 'time' factor. The fact is if you know both technical methods, you can take both price and time into consideration during estimating market future trends. This will of course then reduce the risks of losing money in Forex market. Also, it would be wise if traders combine both technical and fundamental techniques when trading Forex, as a country currency value depends a lot on fundamental variables such as war, change of national leaders, terrorism attacks, as well as natural disasters.

Conclusion
Without a doubt, Forex is gaining its popularity fast against other kind of trading. No limited market access, no liquidity issues-after market hours, zero commission fees, low capital requirements with high leverage rates, and no restrictions on short selling -- Forex can be very beneficial to a variety of people. Like any other trading business, if you are new to it, best advice you can get is to learn and practice more before you test your 'wings'.


Seminars, eBooks, Internet, papers, video courses - all these are helpful to raise your confidence level before you trade with your real hard-earn dollars.



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What is Forex?

FOREX - the foreign exchange market or currency market or Forex is the market where one currency is traded for another. It is one of the largest markets in the world.

Some of the participants in this market are simply seeking to exchange a foreign currency for their own, like multinational corporations which must pay wages and other expenses in different nations than they sell products in. However, a large part of the market is made up of currency traders, who speculate on movements in exchange rates, much like others would speculate on movements of stock prices. Currency traders try to take advantage of even small fluctuations in exchange rates.

In the foreign exchange market there is little or no 'inside information'. Exchange rate fluctuations are usually caused by actual monetary flows as well as anticipations on global macroeconomic conditions. Significant news is released publicly so, at least in theory, everyone in the world receives the same news at the same time.

Currencies are traded against one another. Each pair of currencies thus constitutes an individual product and is traditionally noted XXX/YYY, where YYY is the ISO 4217 international three-letter code of the currency into which the price of one unit of XXX currency is expressed. For instance, EUR/USD is the price of the euro expressed in US dollars, as in 1 euro = 1.2045 dollar.

Unlike stocks and futures exchange, foreign exchange is indeed an interbank, over-the-counter (OTC) market which means there is no single universal exchange for specific currency pair. The foreign exchange market operates 24 hours per day throughout the week between individuals with forex brokers, brokers with banks, and banks with banks. If the European session is ended the Asian session or US session will start, so all world currencies can be continually in trade. Traders can react to news when it breaks, rather than waiting for the market to open, as is the case with most other markets.

Average daily international foreign exchange trading volume was $1.9 trillion in April 2004 according to the BIS study.

Like any market there is a bid/offer spread (difference between buying price and selling price). On major currency crosses, the difference between the price at which a market maker will sell ("ask", or "offer") to a wholesale customer and the price at which the same market-maker will buy ("bid") from the same wholesale customer is minimal, usually only 1 or 2 pips. In the EUR/USD price of 1.4238 a pip would be the '8' at the end. So the bid/ask quote of EUR/USD might be 1.4238/1.4239.

This, of course, does not apply to retail customers. Most individual currency speculators will trade using a broker which will typically have a spread marked up to say 3-20 pips (so in our example 1.4237/1.4239 or 1.423/1.425). The broker will give their clients often huge amounts of margin, thereby facilitating clients spending more money on the bid/ask spread. The brokers are not regulated by the U.S. Securities and Exchange Commission (since they do not sell securities), so they are not bound by the same margin limits as stock brokerages. They do not typically charge margin interest, however since currency trades must be settled in 2 days, they will "resettle" open positions (again collecting the bid/ask spread).

Individual currency speculators can work during the day and trade in the evenings, taking advantage of the market's 24 hours long trading day.



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Candlestick Charts

Japan gave birth to candlestick charts more than five hundred years ago. The technical analysis was first used by the Japanese in late 1600s at Dojima Rice Exchange while trading rice. The first trader who has reached the fortune by forecasting prices using the past price data was Munehisa Homma, a famous trader of this exchange. Homma has created a number of principles that are used in Japan nowadays. The set of data containing open price, high price, low price, and close price is traced in the chart as a candlestick.

The candlestick turns hollow (white or in some cases green) if the close price exceeds the open price. A filled (black or red) candlestick is seen when the open price exceeds the close one. The body (either filled or hollowed) of the candlestick is formed out of the difference between the open price and close price whether the shadows, which are thin lines at the top and at the bottom of the candlestick, give the information about the trading range during the candlestick's period. The upper shadow ends at the level showing the high price of the period and the lower shadow ends at the level of low price.

Technicians use candlesticks. Such popularity of candlesticks can be explained by their pleasant and comfortable outlook unlike any other techniques using bar or line charts. Candlestick chart can give some additional info about the prices concerning the correlation between the high and low and the open and close. Candlestick charts uncover the data of the possible market strength as well as of its overall structure. You should remember only 12 general patterns concerning Candlesticks. There are about 40 patterns of reversal and continuation that can be trading signals for you while using Japanese Candlesticks. Any of these patterns may possibly predict future price movement. This dozen signals are the ones you are likely to remember.

Most investors consider only these signals of Japanese Candlesticks usage enough for planning profitable trading decisions. They are the ones that watched by most of the traders most of the time. But reading this you shouldn't think that other patterns don't worth your attention. You can effectively make profits in case you follow these other signals. But they occur really seldom in actual trading. Their showings are thought to be not as reliable as of the major ones despite they can show very strong possibility of reversal. The pattern when open and close prices are equal of very close is called Doji. In this situation shadows length is not taken into consideration. Japanese explain this situation as the conflict of bears and bulls. Doji indicates the general hesitation of investors. The Gravestone Doji appears when both close and open become the low of the day. This is the sign of possible tops despite it's located in the market bottoms. This signal looks like a gravestone, that's why it is called Gravesone Doji.

When the candlestick has one or two very long shadows, the situation is called the Long-legged Doji. It signalizes that the market has reached its tops. The Rickshaw Man occurs when the open and close are located in the session's trading range middle. It is thought that this situation shows the trend losing its direction. The end of the downtrend forms the Bullish Engulfing Pattern. The white candlestick has its open price below and the close price above the ones of the previous day black candle body. This total exceeding of the previous day's values says that that the enormous pressure of the buyers overcomes the one of the sellers. The Bearish Engulfing Pattern is an opposite process to the bullish one. It occurs when an uptrend comes to an end. The black body of an actual candlestick gets longer than the white body of the previous day one. This process is the sign of the bears winning. When a bearish pattern lasts for two days and reaches the end of an upturn as well as the highest level of an overloaded are of trading, then the Dark Cloud Cover occurs. In this case the first day gives a reliable white candlestick and the second day opening price exceeds any of the values of the previous day.

The bottom reversal may be accompanied by the Piercing Pattern. It consists of two candlestick patterns that are located at the declining market end. The candlestick of the first day is black whether the one of the second day corresponds a long white candlestick. This day has an extreme low opening price that is even lower that any price traded the day before. The patter closes at a price which is higher than the middle of the "black day" candle.

If candlesticks have long shadows at their bottom along with the small size of real bodies, it is called Hammer and Hanging-man. These bodes form high price of the session. A Hammer occurs when the pattern described here takes place when the market trends down. This shows the trends looking for the base. Japanese call this process "trying to gauge the depth" or takuri.

In case the market is trending down, the Shooting Star Formation is a signal of bullish market approaching. This is also called an inverted hammer. Still, you should be patient until the bullish market gets verified. Now after we have learnt about some major signals, it is time to see how useful some other formations may be.


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Trend Lines in Technical Analysis

There are some types of trend lines in technical analysis. They are the followings:

Ascending trend
Descending trend
Reversal trend

As is easy to see, markets tend to trend higher or lower following quite geometrical patterns. In an entire uptrend, it is easy to see a series of higher highs and higher lows. If a joining line is drawn between the rising lows, this is called a trend line and it will often be accurate in projecting where the market will find support on the next hollows, thereby indicating good buying levels. When the price breaks lower through such a trendline, a sharp sell-off will often follow as many Forex market traders will have placed sell stop-orders just below the line for their long positions.The break below an uptrend line is in itself a sell signal, attracting new sellers to the market. It is normally to see the series of lower highs and lower lows in a downwards trending market. The trend line can here be drawn along the descending highs and mirrors the analysis described above.

Technical analysis holds that because every possible bit of information is included in the price of a security, it is not necessary to explicitly analyze the fundamental, economic, political, etc. factors that might influence that price. Because all available information is already included in the current price, only a study of the price movement is required. While it is not explicitly proven that prices must trend, technical analysis relies on empirical evidence and simple common sense to assert that prices do trend. Dow Theory provides much of the empirical time-tested support that prices trend to a technician.

For example, if homeowners believed that interest Forex rate increases will erode the value of their homes, they will be inclined to sell. If there were three similar homes in a neighborhood up for sale, the first house could be sold for $100,000, the second could be sold for $97,500 and perhaps the third could sell for $95,000. Rather than immediately drop down to some formulaic price based on interest rates and other inputs, prices will move consistently over time in one direction. (In a large market like global equities with many participants, prices will move in a zig-zag fashion in one direction.) Prices will continue to decline until there is a balance between buyers and sellers. This gradual (but sometimes quick) directional movement in prices (the trend) is what technical analysis attempts to identify and exploit. If a technical analyst could enter this market, he or she would likely sell short a house because the price trend is downward. A person who does not believe that prices move in trends will find little use of technical analysis. The idea that prices trend is probably the most important concept in technical analysis. Moreover, a person who disagrees with Dow Theory will also likely find fault with technical analysis.

Technical analysis believes that investors en masse display much of the same behavior as the investors that preceded them. "Everyone wants in on the next Microsoft," "If this stock ever gets to $50 again, I will buy it," "This company's technology will revolutionize its industry, therefore this stock will skyrocket,"--these are all examples of investors' attitudes repeating. To a technical analyst, the human characteristics of the market might be irrational but nonetheless they exist. Because investors' attitudes often repeat, investors' actions in the marketplace often repeat as well. I.e., patterns of price movement will develop on a chart that a technical analyst believes have predictive qualities. It is important to understand that the realm of technical analysis is not limited to charting.

Technical analysis is always primarily concerned with price trends. Anything that can influence the price trend is of interest to a technician. As an example, many technicians monitor surveys of investor enthusiasm. These surveys attempt to gauge the general attitude of the investment community to determine whether investors are bearish or bullish. Technicians use these surveys to help determine whether a trend will reverse or whether a new trend will develop. A technician would be alerted that a trend might change when these surveys report extreme investor reactions. When surveys are overly bullish, for example, a technician will look for evidence that an up trend will reverse. The logic being that if most investors are bullish, then they would have already bought the market (anticipating that the market will move higher). But because most investors are bulllish and have invested, it is safe to assume that there are few buyers remaining in the market. With most investors long, there are more potential sellers in the market than buyers despite the fact that the overall attitude of investors is bullish. This implies that the market is set to trend down and is an example of a technical analysis concept called contrarian trading.


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Forex Trading Tips

TIP 1 Read both the books by Mark Douglas which cover trading psychology BEFORE you read or do anything else. If you don’t, I’ll say I told you so when you hit a failure barrier and don’t know why.


TIP 2 Stop loss policy - you MUST have one and practice, more practice and even more practice at sticking to it. It will not be easy but it is an essential discipline to profitable trading.


TIP 3 Trading plan / system. Again, you MUST have one! Then you must practice sticking to it. Do not try and second guess or trade against your indicators - wait until they give you a concise signal before acting on it.


TIP 4 TRADE WITH THE TREND. DO NOT trade against the hourly trend of the market unless you are VERY certain the market has turned. Check this by watching a long term moving average (say 80 SMA on 15 minute chart)


TIP 5 Learn to sit on your hands and not trade! It’s better to wait for good quality trades than take a mediocre one and loose money. A day of no trades is better than a day with one loosing one. If you don’t like the market, just walk away. It will always be there later.


TIP 6 Don’t set yourself false targets and expectations. Trading is not an EXACT science and if you do you will only become frustrated by your failure to meet them. Take what the market gives and be satisfied. Greed will kill you as a trader, both mentally and monetarily. .


TIP 7 The market is rarely your friend in a trade that goes against you. Cut your losses quickly and accept them as an inherent part of trading. You will not be able to trade without some loosing positions. Manage them well!


TIP 8 Try hard not to get out of profitable trades too early. Try operating a trailing stoploss of say 15 to 20 pips behind the trade (on 5 minute timeframe) and maximise your good trades by letting them run. Be patient!


TIP 9 Ensure you fully understand how to generate and use pivot points and camarilla points on your trading platform. These are crucial decision points for daily trading and you will struggle without them.


TIP 10 DO NOT overtrade your account. Read up on money management in trading to make sure you fully understand why this is important and develop a strategy which fits with your personal trading capital. NEVER risk wiping out your account because believe me, it can happen. I’ve done it twice myself!


TIP 11 Learn about FIBONACCI levels and how to apply them to your charts.


TIP 12 Keep your trading system simple. Do not have too much information on your trading screen. It is unnecessary and will only cause you to be confused and delay you making your trading decisions.


TIP 13 Always think in terms of probabilities. Trading is all about thinking in probabilities NOT certainties. You can make all the “right” decisions and the trade still goes against you. This does not make it a “wrong” trade, just one of the many trades you will take which, through probability, are on the “loosing” side of your trading plan. Don’t expect not to have negative trades - they are a necessary part of the plan and cannot be avoided.


TIP 14 Ensure that the candle is fully formed on the timeframe you are trading BEFORE you enter your trade. Trade what you see, not what you would like to see.


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