Why The Forex Experts Can Win

Why The Forex Experts Can Win Even With A Common Forex Day Trading Strategy?

If you are looking for some Forex day trading strategies, then you should continue reading this article to find out why the Forex experts can win in the Forex market even with a very common Forex trading strategy. In this article, we will discuss about 3 major points, mentality of an Expert, the way an Expert trades, and how you can become an expert. After reading this article, you should be able to understand why the experts are so successful and what are the differences between the experts and a common trader.

Firstly, we should explore the mentality of a Forex expert. A Forex expert already has an extensive knowledge in Forex trading and the market. The difference between an expert and a common trader is discipline. Unlike a common forex trader who seeks fast return in a day, an expert is able to identify which currency will be profitable in the long run and can afford to place his position for few days before seeing profit. With strong discipline, the expert is able to apply any common Forex day trading strategy to yield profit.

Generally, an expert trades with patience and calm. Many new Forex traders will just rush towards certain signals. But an expert will not do so. An expert is very patient and calm when deciding his investment. This is to ensure most of his investment will yield a profit instead of loss. When it comes to an urgent decision, he will be able to make the decision calmy and accurately.

If you want to become an expert in Forex market. Besides learning how to apply the Forex day trading strategy, you should have the following virtues - discipline, patience and calm. Forget about different sophisticated day trading strategy. By applying these virtues and slowly developing your trading experience, in no time, you will be an expert in this high liquidity market and win even with a simple and easy strategy.

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Automatic Forex Trading Software Program to Make Good Profits

Automatic Forex trading deals with the use of a computer software program to perform trades on behalf of the user in the foreign currency market. It is very useful because of the reason that Forex trading markets are operating for 24 hours a day. It is open for 24 hours, because Forex markets are situated around the globe.

Being a world market area creates this business chance a good profit generator. The reason that this market is world around and operates for 24 hours a day builds the prospect of an automated trading remedy which much better enticing. These factors doubled with the latest technology have created automatic Forex trading more famous so lot of people cannot check the markets for some period of time. An automatic system allows you trade at any time both day and night and you need not want to sit in front of the computer.

When you know the fundamental steps involved in the Forex trading, you don't want to sit and do the trades in the computer. The best advantages which you can see from these trading program is that it eliminates the two aspects which most of the trader used in foreign exchange trading, they are fear and greed. By removing these two main emotions from the people, trades are permitted to be done in the fast way. Greed has the character to make the traders to keep the positions too long searching for more profits than they are found. Fear will make the traders to miss the plenty of chances in foreign exchange market. But traders must keep in mind that automated Forex trading program are beneficial tools for the traders if used properly.

Trading software has become more popular among many traders. Only in the olden days, traders do trading by manual, but now the latest technology has been given good chance to use the automatic software program to perform Forex trading well and to gain profit in the better way. It is also important to look for the best Forex software to make good profits. Before buying any kind of automatic Forex software, it is better to check whether the software has been already tested. Today almost all kinds of software are found with some kind of evidence. Some company will allow you to log in to live account. Trading software company which does not provide a money back warranty on their goods will be have the aim to push the program to you. So you have to be careful while buying best automated Forex trading program for you.

All types of Forex software is simple to set up and if there is any support section is available, then it will be good. Automatic trading software is also called as "Trading robots". You can get two kinds of Forex trading software. One is fully automated and another type is single generating software. But even though, if the trader has trading software program, it is important to know the basic principles of currencies to trade well.

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The Best iPhone and Mobile Phone App for Forex Traders

If you are a serious forex trader you will have soon realized that there are times in your busy life when you simply can't be in front of your computer. You can lug around a laptop when you are away from your trading desk but that can become tiresome. Luckily Forexyard have created an iPhone and mobile phone app just for Forex Traders!

They have made an app that is for your iPhone as well as an adaptation made for both BlackBerry as well as Nokia and Windows Mobile. Forexyard realized that in the world of traders today that they aren't always staying in their offices in order to make their trades and more and more traders are starting to be a lot more mobile and on the go than they use to be. So this is why they created their new forex trading app.

This is a great mobile trading app that is quite intuitive and is an easily accessible trading platform that will deliver some of the fastest and probably some of the most convenient trading service to all traders who download it onto their phones. The platform is offered in 16 different languages as well and it will tie right into your trading platform that you have on your home or office computer. There is no need to sync it either cutting down on all kinds of problems.

This app will let traders trade with their state of the art forex trading system with comfort, ease and speed of the traders smartphone. All live account holders can easily do all the things they would normally do when they are in front of their computer and it's all done through a very friendly interface and has all the backing of Forexyard's charts. Below are some of the things this app can do for someone who is a forex trader:

View their account information and see what their current status is while on the go.
Market Orders where they can buy and sell any kind of stock at any time of the day.
Entry Orders where they can place their orders directly over their phone.
Stop and Limit Orders lets them make sure to manage their risks as they go.
Change and Remove Orders if there is a need to modify their positions with an order they made.
Real Time quotes.
Full Functional Charts that can be used in helping to make trading decisions with trends.
Charting Indicator that will validate the different moves going on in the market.

Those who own an iPhone can easily download this particular app at the iTunes app store by searching for Forexyard's Trading App.

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Pyramid Positions in Forex

Buying and selling the Forex market is one of the most exciting, fast paced trading decisions you will ever make. Currency prices are well known for swinging wildly in a particular direction by 100 to 200 pips, at a moment's notice, sometimes for no exact reason in particular.

So how do you capitalize on this type of market? How do you ensure that you are following the proper trading ideals - i.e. maximizing profits whilst minimizing losses? We have some solutions which might help to achieve just this.

Building on Winning Trades

There is literally nothing better than buying a particular currency, and then within minutes seeing the pair surge upwards on a wave of optimism. You know that you had the right idea at the right moment, and the decision you took to buy that currency was the right one.

This is where we should mention the "trend". It is a statistical fact that when a currency moves in one direction, it is more likely that at any given point, it will continue to move in that direction rather than reversing. This is why people who try to pick bottoms and tops often fail miserably in their trading.

So - if you are sitting on a winner, what is the logical thing to do? One of the ideas might be to add to your existing position, and hope that the currency continues on the positive course.

Here is an example of how such a trade might pan out:

You buy EUR/USD at 1.3200 and it rises to 1.3300 shortly after the trade.
Instead of closing the trade for a 100 pip profit, you buy another 2 lots of the currency.
Because of the trend, EUR/USD continues to rise to 1.3350.
You close your position at this point.
Your profit is the 150 pips on initial position + 50 pips on both secondary positions.

Here, you have clearly benefited from the prevailing trend in the market and have capitalized on a position where the intuitive feeling may have been to just take the profit at 100 pips.

Building on Losing Trades

It should be noted that building a pyramid strategy for losing trades is absolutely not the same as the above. Staggering your entries should only be used by people who are experts in the field - and for position traders who want to balance and average out their average cost at a "better" price.

Remember, whilst pyramid trading can be hugely beneficial to profits, it also magnifies any losses if the market was to reverse - so careful monitoring needs to be done at all times to ensure that the position is safe and guarded.

Pyramid Positions in Forex

Trading Forex in a Tight Market

Unlike most other markets out there, Forex is a 24/5 operation - meaning that from Monday to Friday, you can trade at any time of the day or night. This is perfect if you are one of those people wanting complete flexibility as to the times you trade. However, it can also be a bit of a nightmare for those who are followers of the news.

Fundamental trading strategies (or news trading) is basically the basis on which people use the news to base their trading decisions. For example, any of the following events might trigger a trade if someone was carefully following the news:

Surprise interest rate increase or decrease.
Surprise economic data.
News that a currency is being artificially tampered with by authorities.

This is just a selection of the possible news stories which could turn a relaxed, off duty Forex trader in to a raging financial mogul in a matter of seconds.

Why the Forex Market Gets Tight

When we talk about a "tight Forex market" we are usually referring to a lack of trading on a particular currency pair, and therefore a very small amount of price movement over a given period.

For example, if we said that the USD/JPY was trading "tightly", it would imply that the daily range of the currency pair was extremely small - perhaps a matter of 30 to 50 pips.

There are other times when we would say that the market is tight also. In some cases, we might refer to the entire market as being "tight". This usually happens on a select few occasions at about the same time each year - with one of these periods of course being: summer.

Summer Trading is Tight Trading

Even though the Forex market is still open each week day during summer, because many finance companies and banks choose to send their employees on holiday during these times - the liquidity of the entire market is often low. In other words, it's not just one single currency pair which is affected, but all the currency pairs.

If you are trading during summer or if the American summer happens to be your winter - you need to adjust your trading strategy to incorporate this decrease in liquidity. Perhaps consider more position trades, rather than swing or scalp trades, to attempt to mitigate the additional risk of the low liquidity during the major holiday breaks.

Trading Forex in a Tight Market

Forex Trading Styles - Position Trading

In Forex, the term "position trading" is somewhat misleading. That's because both of the terms involved are the total opposite of each other. Traditionally, "position" investments are those which are held for the longer term. Traders wait for the market to move significantly before closing out their "position".

On the other hand, trading is often the quick movement of money. In Forex, a "trade" could be a buy and sell executed on the same currency pair within about 20 minutes of each other. In other words, "traders" are cyclically trading in and out of different currencies in order to scalp as many pips as they possibly can, as quickly as possible.

Benefits of Position Trading

Position trading often sets the trader up for significant profits, and a greater chance of realizing a winning trade. This is because short term market moves are completely disregarded, with the overall sentiment of the market in the long run being the only focus.

To illustrate this, let's give an example of a position trading strategy:

Trader believes that EUR/USD will appreciate in the long run.
Based on a weekly chart, the trader goes LONG the EUR/USD.
Within 2 months, the pair has reached the target (after many other short term moves).
The trade is closed based on a signal from the weekly chart.

The concept is simple. Many people will have heard of "buy and hold" strategies. Position trading is essentially the same, except for the fact that you can "sell and hold" also.

Effects of Overnight Interest

One of the concerns for position traders is whether they are on the positive or negative side of the trade. Overnight interest is the cost of holding an open Forex position after the close of trade - i.e. the financing cost of that position.

Therefore, before entering a position trade, it is important that you calculate the costs of carry (overnight interest) - to ensure that this won't eat in to your long term profits. The last thing you want it to have a profitable trade which is completely disintegrated by the overnight financing costs after 2 months of holding the trade open.

Most brokers are open and transparent in this respect, so check with them to see whether you will be receiving or paying interest on open positions in your chosen currency pair.

Forex Trading Styles - Position Trading

Forex Trading Robots

Wouldn't it be great if you could make money in your sleep? Wake up in the morning and discover an additional $200 or $500 in your account? Furthermore, what if this happened on a near nightly occurrence - so that every morning, a bonus was credited to you without fail?

Queue the Forex Trading Robot. Have a quick search around the internet, and you'll be sure to find hundreds of FX Trading programs, all of which promise to make you money on a daily basis, with little human intervention. Do they really work? Well - that's the key question that we wanted to find out.

Is it Too Good To Be True?

They say that if it's too good to be true - it probably is. As the logic goes with Forex Trading Robots, if a system did exist which constantly generated profits on a daily basis, wouldn't everyone be using it?

Surely, as soon as someone discovered the program, they would have their family and friends signed up quicker than quickest? Usually - we don't see this happening. In fact, at best, we often see people resorting to another Forex Trading Robot after a month or so of no success from the previous one.

However, as many FX Trading Robot websites point out - maybe it's the user which causes this failure? After all, a tool is only as good as the person who is using it. Could it be that FX Trading Robots are actually 100% foolproof, if only the end user could be?

The User is in Control

One of the key points to take away from this article is that if you are thinking of using a Forex Trading Robot - you need to look at yourself in the mirror. Why are you using it? Do you already have experience trading Forex? Do you understand the possible pros and cons of utilizing such a system?

Unfortunately, many Forex Trading Robot programs tend to market their software products to people who are new to FX. This is wrong. Shouldn't it be that such robots should only be used by people who already have a solid grasp of the industry? In our opinion - FX Trading Robots are only for those people who have had years of experience, and can therefore take the appropriate measures to ensure that the "set and forget" strategy genuinely works.

Avoiding the Forex Trading Robot Scams

Another issue of contention where Forex Trading Robots are concerned is whether or not they are scams. Do they really work, or are they as accurate as the flip of a coin? Ultimately, picking the right FX robot is also an important step in generating a regular income.

We can't be entirely sure which program is a scam and which is not. Neither can you for that matter. However, reputable Forex Trading Robots do exist - and many of them have been vouched for by professional traders.

To conclude, it would appear that FX Trading Robots are really only as successful as their commanders. The moral here? Learn your stuff before investing in a trading robot.

Forex Trading Robots

Successful Forex Trading with Ease

The biggest problem that most novice investors have is that they are impatient for the profits. This causes novices to lose money, miss out on profits and get discouraged very soon. One of the most difficult lessons that a successful trader has to learn is to have patience and when to and not to trade. Great success can be had by simply staying calm.

There is this misconception that the stocks that are good will always be good and the stocks that are bad will always be bad. This can lead to a frequency to buy into and bail out of stocks as they shift throughout the day. This causes a flux within the currency value that does not actually reflect the actual value of the currency. This shifting is what people who are impatient often see when they begin to trade within the Foreign Exchange Market. This is because they frequently use short term charts that show only the immediate happenings rather than the long term effects of the currency.

By using better and longer charts, the professionals are able to relax and appear to do nothing at all as they watch their profits increase. This is because they have learned the art of patience and how to make that patience work for them. This appearance of doing nothing at all is not a sign that they are not working hard, but rather one that shows that they are working smart. They have placed their money where they want it and are watching it increase in value.

This does not mean that the currencies that the professionals pick will always increase in value. There are many times when the professionals will watch their positions drop in value. This drop will be monitored, but will not spur on immediate action because the professionals are aware of the margins they have set and the potential for the decrease to become an increase. The professional will ride out the drop and wait for it to increase in value again.

This appearance of doing nothing helps to ensure that the professional trader achieves the profits that they predicted. By doing nothing as the currency prices plummeted, they were able to ride the wave towards an increase again. If the investor would have pulled out, the increase would have been missed and the profits would not have been had. This would have resulted in a loss.

Patience is a virtue in most cases, and with the Foreign Exchange Market, it is a prized quality. By doing nothing when the Market begins to shift, the professional and novice can help to stabilize the markets and economy of nations and make a profit on this stability. This quickly becomes a win/ win situation for everyone involved.

Successful Forex Trading with Ease

Professional Forex Trading – What is It Anyway?

Trading Forex like a professional is easier than one would expect. The professionals take their time, use their patience and skills to make money. They do their research and make educated trades based upon the long term expectancies of the Foreign Exchange Market. They focus on what could be lost rather than what can be gained and avoid the high risk moves that could go either way very quickly.

The professional traders operate in direct contrast to how many of the novice traders operate. Most novice traders use short term charts and graphs that make it difficult to determine the actual market trends. In addition, most novice traders are focused upon the potential profit, rather than the potential loss. This spurs them onto making riskier trades and potentially losing a lot of money.

The novice trader often does not have the patience to develop and follow through with the strategies that the professional traders have. This lack of patience causes the novice trader to enter into and pull out of trades faster than the professional trader. The novice trader may also find that they are doing more trades than the professional trader. This is not an indication that they are doing better than the professional, but simply an indication that they are working harder than the professional.

A great way to learn to trade like to professionals is to learn and study like the professionals. Take your time and read the different articles about trading. Take your time and practice with the different demo programs that enable you to see the long term effects of trading without risking your money. These demos are often free to use and are offered by many of the larger trading firms.

Another way to learn to trade like the professionals is to take courses in trading. There are many different websites that offer trading courses and seminars. These seminars and courses are designed to help not only the professional but the novice trader learn how to be a better trader. These seminars help you to understand how the market works, the different factors that affect the market and the how to predict what the market will do.

Professional Forex Trading – What is It Anyway?

Educate Yourself on Forex Matters for Easy Success

Learning from your mistakes is a good way to learn how to be successful. However, learning from your mistakes when you are handling thousands of dollars of your money as well as other people's money is not a good way to learn. Obtaining a Forex education before you begin to trade makes good sense and is a great way to experience success.

There are many classes that you can take on how to trade on the Forex market. These classes are often held by the large firms and corporations, but that does not mean that you cannot attend them. Ask permission first and register in advance so that they know you are coming and they will most likely allow you to attend the classes. There are also paid classes that you can attend that deal with the Forex directly.

Out of class education is also vital to the success of the individual when dealing with the Forex system. The person should continue his or her education by reading up on the latest news regarding the Forex. Following the global economy and politics is another way to remain educated and up to date as to what to expect within the Forex market. Watching graphs and charts that show the values of the currencies over a long period of time will help you to make good decisions regarding the market.

One of the biggest and under used methods of learning how to obtain success within the Forex is the demo programs. These programs allow you to trade and track changes within the market without actually risking any money. These programs work off of the current market conditions and react the same way that the market would react to the trades that you make.

Only about 5% of the investors use the demo systems before they attempt to trade in life. It is interesting that there are about 5% of the traders who experience real success within the Forex market. While there is no statistics regarding how many of those 5% successful people have used the demo systems, the fact that the percentages are the same is suspicious as an effective means of education.

Failing to obtain a solid education before entering the Forex market will insure a prompt failure in trading and a loss in funds. While there is the potential for a person to be lucky with the trading and make money based solely upon their instinct and luck, this will eventually fail. Education is not a guarantee of success, but it definitely helps the odds of experiencing success.

Educate Yourself on Forex Matters for Easy Success

Gaining an Edge in Forex Trading

As with all investment opportunities, staying ahead of the game is only achieved by proper research. These research tasks help to avoid allowing people to take advantage of you and help to provide you with the information you need to reap rewards for your work rather than losses. There are many different ways to go about this research and by completing the research well and taking proper notes on what you find; you will be able to achieve success within the Foreign Exchange Market.

The first thing to research is the broker. Brokers to avoid are the ones that promise success and immediate wealth. This is an unreasonable promise and one that cannot be kept. Using measures like these promises can help you to identify those brokers that you want to avoid. While checking the brokers, look at different reviews and ask for references. By using these references and reviews you can find those brokers who are honest and are good within the market.

The next thing to research is the market itself. The Forex market is huge and handles a lot of money, which makes sense since it is a currency driven market. The charts to use to determine the potential growth of your funds are the long term charts. Look for information that spans at least a week, but the longer the better. This will help you to determine the long term values of the currency and the chances of it shifting in the proper direction.

While you are busy looking for new ways to make profits, look for ways to limit your losses. This can include stable accounts and currencies that do not change much. These will be from countries with a stable economy and government. The government is a major factor in the stability and value of the currencies that are on the market and keeping with stable countries will help you to maintain a stable worth.

As stated, the governments and economy standings of the countries that you are investing in greatly affects the value of their currency. Keep an eye on what is happening in the global economy and political spheres. If you did not care about who ruled Argentina before, now is a good time to start caring. You are investing in money of different countries, so picking stable and strong economies and political systems is essential.

Gaining an Edge in Forex Trading

No More Bad Forex Decisions

There is a lot of risk involved with trading on the Foreign Exchange Market. A person can quickly and easily lose all of the money that they had prepared for investing in a single day. Avoiding these very costly decisions can mean the difference between success and failure on the trading market. You can get immensely successful or even lose a fortune in no time.

The best way to avoid bad Forex decisions is to do your research. Do not rely upon very short charts that show the activity for the past hour. Be more interested in investing for the long haul, rather than the short term. This will help you to be more effective as an investor and make more money, risking less and limiting your losses. By doing your research you can invest a lot of money with the expectation of reaping great rewards.

Limiting the amount of money you invest is another very good practice that can help you to avoid bad decisions. Locking all of your money into a single currency may seem like a good idea if you believe that currency will increase in value. It is important to remember that the currency can change in value very quickly and you can lose a lot of money that way. Limit your trading amounts to an amount that you can handle losing and reap smaller rewards rather than trading large amounts and losing everything.

Practice makes perfect, or at least better. While there is rarely a perfect environment and perfect risk on the Forex, there is the potential for a perfect trade. This can be achieved through proper research and plenty of practice. When practicing the trading methods, it is important to not use real money. Instead, use a demo program. These programs use the current market values and trends. These demos help you to learn what the market will do and will allow you to invest in a fictional world where you do not have to worry about losing your money. This way when you do enter the trading sphere for real, you know what you are doing and how to avoid those bad decisions that plague so many people.

Attend seminars and classes on trading on the Forex market if possible. These seminars are frequented by professionals as well as novice traders. The market is always changing and the frequent re-education of the market can help to ensure that the bad decisions are avoided while good profits are reaped. These seminars are often held by larger marketing firms and do act as advertising for them in most cases. None the less, they do offer a lot of vital information on the market and how to handle the market.

No More Bad Forex Decisions

4 Tips for Forex System Trading

So you've found the perfect Forex system that you want to trade, but you're simply unable to stay up 24 hours per day for 6 days a week to execute each trade as it is recommended? Join the group. Obviously - Forex system trading requires different tools than those which are used by full time or part time traders.

If you're wanting to have a Forex system traded for you automatically, here are the top 4 tips to help you get things going - without the needs for a costly trial and error period.

Tip 1: Find An Automatic-Execution Broker

When it comes to automated system based Forex trading, it is essential that you find a broker allowing automatic execution. This means that instead of sitting in front of your computer for the entire day, you are able to let the system automatically trade itself.

Not all brokers allow automatic execution, and even fewer provide you with the right tools to be able use a Forex system properly. Ensure when you sign up that your Forex broker meets your requirements.

Tip 2: Run the Forex System Server-Side

If you are serious about Forex system trading - you'll want to look in to the possibility of running the system server-side. This means that in order for your system to place trades and close out existing positions, you won't need to have your own computer running.

This is pivotal - because imagine what would happen if you had a power cut or an outage with your Internet service provider. Should a trade already be open, the system wouldn't be able to monitor price movements, and therefore wouldn't be able to close the trade if it wanted to. A server-side Forex system however would continue to operate, regardless of the state of your home computer.

Tip 3: Constantly Monitor the System

It might be easy to set and forget your Forex system - but it is absolutely vital that you continuously monitor it. Whilst many systems limit the potential draw down of an account, it is up to you to ensure that you have enough capital in your account to meet your Forex broker's requirements.

Tip 4: Ensure you have enough Account Capital

A margin call is the last thing you need when trading with a Forex system. Ensure that you have enough capital in your account at all time, and furthermore be sure that you do not run close to having your open trades closed by the broker as a result of insufficient funding.

4 Tips for Forex System Trading

3 Things You Should Ask Your Forex Broker

Every Forex broker is different, but because you will be trading on the Forex market with any broker you choose - there are a few questions you need to have answered before signing up. All too often, people go through the entire application process with a Forex broker, only to find out that in actual fact, the services and features offered do not suit the individual trader.

To prevent yourself from falling in to this problem, take a look at the top 3 things you should ask your Forex broker before signing up, below.

Question One: What Trading Software is Available?

There are many options when it comes to FX trading software. Brokers might have their own proprietary software, or they might use third party programs such as Metatrader. Because the trading software is the most pivotal part of the Forex trading experience, you need to ensure that you select the right application.

It's no good signing up to a new broker, only to find that the trading software is targeted at beginner users - or alternatively that you have to pay to use the more advanced version of the software.

Question Two: What is your policy on Slippage?

Slippage can occur under conditions where the market is moving quickly. Essentially, it happens when the price at which your trade executes is not the same as the price that you were quoted. Obviously - this presents an issue because quoted rates should be the ones used to execute trades.

Every broker has a different policy of slippage. Some refund any losses to you, whereas others look at is as a natural downside to Forex trading. It pays to find out beforehand what your broker's policy is - especially if you are looking to trade during busy times.

Question Three: What Are The Actual Spreads?

It's all very well for a broker to quote spreads when they are advertising their services, however the likelihood of these advertised spreads being the real, actual spreads are somewhat low. Therefore - to get an accurate picture of how competitive your Forex broker is on price, you need to ask them what the average spreads are for particular currency pairs that you wish to trade.

Having an idea of this should better position you to account for costs further down the track. Furthermore, there won't be any nasty surprises when it comes down to placing and executing your trades.

3 Things You Should Ask Your Forex Broker

How Does Your Forex Broker Make Money with No Commissions?

When it comes to turning a profit, the FX trading industry is slightly different to many other financial markets. Most Forex brokers advertise themselves as not charging a commission for Forex trading, and in almost all cases - this is completely true.

But we all know that Forex brokers wouldn't be providing us with the facility to trade Forex for absolutely no reason. There still has to be a profit for them in some respect. Indeed - even thought it might not be obvious at first, your FX broker is earning money on every trade that you place. Continue reading below to find out how.

Spreads instead of Commissions

Many traders who started out in equity trading will be well familiarized with the profit model that equity brokerage firms employ. This model is applied as follows:

The equity broker charges a fixed amount (commission) for every trade that you place
Alternatively, a more modern commission structure is that you pay a set cost per share traded - i.e. 1000 shares at $0.015 per share commission = $15.00 commission.

Traditionally, this model has worked well. However, for Forex trading, the model is more difficult to apply. This is because of the vastly varying amount of money which can be traded in an individual trade. For example - one trader might be trading a mini lot - of 10,000 currency units, whereas another trader might be using 10 standard lots for a total of 1,000,000 currency units.

To get around this problem, Forex brokers use a spread-based profiting scheme.

How The Forex Trading Spread Works

The spread is the difference between the bid and ask prices shown when a currency pair is quoted. Essentially, in Forex trading, this spread is artificially inflated by the Forex broker. This is how they make their profit. Each and every time you place a trade, the broker is able to take a small amount of "commission" out of the bid / ask spread for themselves - because the price that is really being executed on is "better" than the price that you are seeing on your screen - by a small amount.

This is why we talk about the spread of a currency pair in pips. The EUR/USD for example often has a spread of 1 to 2 pips - however on the actual spot market, the spread is only 0.1 or 0.2 pips - hence the ability for the Forex broker to profit.

How Does Your Forex Broker Make Money with No Commissions?

Why is Foreign Exchange the Most Popular Market to Trade?

We've all seen those impressive figures bantered around about the Forex trading market. 5 trillion dollars in trade each day, 25 times the trading volume of the equity markets, etc. However, none of these statistics tell us why the foreign exchange market is actually rising in popularity.

In this article, we take a close look at the trends within the financial markets, to see exactly why it is that FX trading is becoming so popular among retail investors.

Endless Liquidity

One of the best things about the FX trading industry is that no matter what currency pair you are trading - there is almost an endless amount of liquidity in the market. This is even true for the exotic pairs.

Liquidity is important because it means that your trades can be entered and exited at any time, almost regardless of market conditions. With virtually endless liquidity - phenomena such as slippage and market gapping are almost non-existent.

High Leverage Trades

Whilst the amount of leverage a trader can use per trade has fallen recently, it is still up there with some of the most highly leveraged financial instruments in the world. With Forex trading, it is not uncommon for traders to employ up to 200:1 leverage - meaning that for every $1 in the account, $200 can be used to trade on the market.

Leverage has many important implications for FX trading, including:

The ability to magnify profits without the need for additional capital
Traders can participate in the markets without needing a huge amount of starting capital
Returns on Investment can be far higher than with traditional investments, without the additional risk

24 Hour Trading

The FX trading market is open 24 hours per day, 6 days per week. This is because the markets open when the New Zealand markets open (Sunday night American time), and close when the US markets end on Friday. Essentially, this is a 6 day trading week - and no matter where you live or which time zone you are in, you can still actively participate in the Forex trading markets.

This is a huge draw card for many people - especially those who might have to stay up all night to participate in an overseas equity market. Alternatively, people can trade part time, whilst keeping their day job and simply trading around those set work hours.

Why is Foreign Exchange the Most Popular Market to Trade?

3 Recent Changes in the Forex Trading Market

Just as many businesses, industries, and markets have changed since the financial crisis of 2008, the Forex market has recently undergone a number of interesting changes. For traders, this doesn't necessarily mean that their style of trading will need to change - but instead that they simply need to keep in mind the evolving dynamics of the market.

In this article, we'll take a look at the 3 most important and potentially influential changes which have taken place recently. Understanding these could help to improve your position in the market.

Change One: Leverage Requirements

One of the most obvious changes in the Forex trading market is the fact that leverage - which was once very easy to acquire - is getting all the more difficult to find. Sure, there are still firms out there offering 200:1 leverage, however their numbers are slim.

These days, it is more common to find the following leverage denominations:

20:1
50:1
100:1

Essentially, what this means is that brokerage firms are becoming less "gifting", and are settling for clients trading less on average - whilst still profiting from the spreads.

Change Two: Additional Volatility

Sure, we are certainly through the worst of the volatility, but that doesn't mean that the market has returned to the previous level of calm that was present before the crash.

One of the biggest changes here is the fact that a currency pair could be trading upwards one day, downwards the next - and absolutely nowhere on the third day. This is in contrast to a constant trend which might have been experienced before. For traders, this means that they need to fundamentally adjust the way they place trades - and utilize stop loss orders and risk limiting trades more than ever.

Change Three: Broker Competition

The recent financial crisis has proven that whilst many traders are loyal to their Forex broker, many are not. The fact that a single feature in the Forex trading market could swing a trader from one broker to another is proof that the competition in the industry has really hotted up recently.

As we all know, competition is great for consumers, and in this case - it simply means that traders are getting a better deal on the whole, with lower spreads, commissions, and costs.

3 Recent Changes in the Forex Trading Market

How Does Volatility Affect the Forex Markets?

Foreign exchange markets, like all other financial markets in the world, are affected by volatility to a great extent. On some days, trading can be a bit of a "bore" - as volatility is low. Alternatively, on other days, volatility could be high - and therefore prices in the FX world could fluctuate wildly.

But what actually is volatility, and who creates it? Furthermore, how do we predict volatility, and are there times where volatility is known to be higher than others?

Let's take a look at the answers to these questions.

What is Volatility?

Essentially, volatility is a gauge of the degree to which prices are changing. For example, let's take a currency pair - the EUR/USD - and see how volatility might appear.

Day One: EUR/USD trades between 1.3000 and 1.3100
Day Two: EUR/USD trades between 1.3000 and 1.3020

As you can see, the EUR/USD currency pair has traded in a 100 pip range on the first day, and then a 20 pip range on the second day. Which is the more volatile day? Obviously, the first day is. This illustrates exactly what volatility is - in its most basic context.

However, there is also one other consideration that volatility calculations take in to account. That is - how quickly the price changes. For example, going back to day one - if the currency pair gradually rose between 8am and 5pm from 1.3000 to 1.3100 - this wouldn't be particularly volatile. However, if it traded from 1.3000 to 1.3030 in the first 5 hours of the day, and then suddenly went from 1.3030 to 1.3100 in the last hour of the day - this would indicate a high level of volatility.

Hopefully this illustrates how volatility is created, and why it has important implications for traders in all financial markets.

How to Predict Volatility

Volatility is somewhat difficult to predict, because even the slightest piece of news or rumour in the market can cause currency pair prices to escalate or fall dramatically. Hence - it is best simply to not try to put too much weight on predicting where volatility will go.

However, there are times where volatility is known to be higher on average than others. One of these times is when a major piece of news is about to be released to the market. Take, for example - the non-farm payroll release which comes out on the first Friday of every month. Before this data piece is released, the markets usually see a spike in volatility as last minute trades are placed before the announcement. In this manner - you could actually profit from increased volatility if you are on the right side of the trade.

How Does Volatility Affect the Forex Markets?

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Why is Foreign Exchange the Most Popular Market to Trade?

3 Recent Changes in the Forex Trading Market

Change One: Leverage Requirements

Change Two: Additional Volatility

Change Three: Broker Competition

3 Recent Changes in the Forex Trading Market

How Does Volatility Affect the Forex Markets?

What is Volatility?

How to Predict Volatility

How Does Volatility Affect the Forex Markets?

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