A Step-By-Step Guide to Trading Profit – for beginners

The main steps are as follows:

1.) Get background information on what forex trading entails.

2.) Learn how to manage risk and size positions correctly.

3.) Find a strategy you are comfortable with.

4.) Test your strategy.

5.) Interpret the numbers.

6.) Find a broker.

7.) Rake in the cash!
Basics:

First of all, with forex beginner systems, it is important to know just what you are getting into. Forex trading is just like any other business. You wouldn’t go off and try to build houses without reading a book or getting some lessons now would you? Constructing systems is much the same. Without any knowledge of the market you are essentially building a “house of cards”. You don’t need a PhD in macro-economics, but a solid knowledge base will only aid in your trading decisions and help ease your mind throughout the entire process.

Risk Management:

The next thing to learn is how to manage risk and size positions. These factors should be the cornerstones of any system. In essence: you need to know how much to risk losing on each trade. People often make the mistake of ignoring this factor; that’s why over 90% of traders fail. Think of it in terms of being a gambler or being a casino; we know who always wins right? Do your due diligence on risk management and position sizing and you will be well on the way to becoming one of the 10% of successful traders.

Strategies:

Once you understand the numbers a little better you can look at specific strategies to trade. Forex beginner systems should be quite simple. As with many other things; simple can also be very effective. I have found that trend trading and swing trading in particular can be very simple and also very effective. The main thing though, is that you feel comfortable trading a strategy. Psychology plays a large part in forex trading too, so having a simple yet effective strategy is often the best. It’s a case of K.I.S.S. (keep it simple stupid!).

Testing:

The next aspect of creating forex beginner systems is testing. Testing your system is all important in knowing if you will turn a profit or not. Don’t “go off half cocked”; you may wind up with a “blown up” trading account. It’s a step closer to being a “casino” and another step away from being a “gambler”. To add further perspective; just imagine if Boeing didn’t test their planes before they used them….. Would you be getting on one? I didn’t think so! It’s much the same with trading; test your hypotheses and make sure they work.

Analysis:

Analyzing the results of these tests is the next thing to do. Anyone can see if a system will be relatively profitable from the results of testing. The hard part comes with understanding how to interpret the results and how they will effect your trading in real time. Analyzing the results and making necessary changes to your forex beginner systems will also likely make you substantially more profitable. There is no end to what can be done with statistics. Again let’s look at our jet-plane analogy. From flying the plane we know it doesn’t crash. But how much fuel per mile did it use? How much will we need to fly from our place to a nice island in the Maldives? How can we get their faster or without using as much fuel. You get it? Knowing how to get there is one thing; but getting there the cheapest and fastest way possible is harder.

Brokers:

Now it’s time to find a broker to trade your forex beginner systems with. Brokers offer free trial accounts with play money to check out their wares. By all means take advantage of these offers. Also, you should be aware of some of the different types of brokers and the features they offer. This is important as well. Think of it as choosing to fly “Econo-miser” or “Champagne” airways.

Conclusion:

Now you should be all geared up with some shiny new forex beginner systems if you have investigated all these things thoroughly. If you’re still not sure, there is loads more information on my site and others. There are loads of people researching new ways to make money in the currency markets, so please, check the web regularly and see what else they have found. Some offer their information free (like me) and others charge for their info. Do not be too tight with the purse strings though; as one profitable trade can often see an item paid for many times over. Now off you go and rake in some of that cash!

Forex Trading Software – A Discussion

Does it interest you in learning more about Forex Trading software? If you answered, yes, then in this article we are going to give you and overview of the Forex markets, tell you what Forex trading software is and talk about the advantages of using such software in trading the currency markets. This means after you finish reading this article you will have a basic understanding of what is meant by the Forex markets or currency markets, what is Forex trading software and the advantages that this software will give you in trading and making money these markets.

The Forex or currency markets are the largest markets and span the globe. Forex trading has become more attractive to many seeking supplemental income and those looking to make a full time living from trading. The Forex market is a near-seamless 24-hour market with ample liquidity. The around the clock nature of these markets affords the trader the ability to customize their trading schedules. Forex is all about investing money in foreign currencies, just gain profit by selling at a higher price, the one you hold, just to buy another one at a lower price. The markets have developed and so has it intricacy. Forex trading software was developed to help traders analyze and execute trades more successfully and efficiently.

Forex trading software also called as Forex robots, expert advisor’s, and automated Forex trading systems are computer programs based on algorithms that evaluate market technical conditions and generate buy and sell order of Forex currency pairs. The systems may be dependent on dependencies and not contain indicators. The programs have a goal of taking away human emotion from the trading equation. These systems can trade autonomously based on its program variables and do not need human involvement. The majority of the programs that are available today were developed to be used on the Metatrader 4 platform, which is touted to be the best trading platform. The Forex trading programs are based on the SQL4 language. There are variations in the programs to suit different trading style such as day trading, swing trading and long term trading. Most of these systems allow the trader to make adjustment or “fine tune” the system to suit his need and preferences.

The advantages afforded by these programs are numerous. One of these is that it permits novice Forex investor to take part and learn while trading. Since many of these systems can trade autonomously, the new trader does not need to know about the nuances of technical analysis and the markets to take part. One of reasons countless traders fail is that the let their emotions affect their trading, that is one of the major advantages of forex trading software in that it removes this variable These systems will trade on signals generated and removes emotions such as greed, fear inconsistency, tiredness and other similar emotions from the trading equation. These software programs also give traders the possibility to analyze dynamic situations and execute the resulting trade opportunity more quickly. These programs are able to analyze more variables and faster than a trader possibly could. These Forex trading systems can monitor and execute opportunistic trades on a 24-hour basis, which a trader could not possibly do. One last advantage and most likely the biggest is cash management. The system will not budge when it comes s to stop losses thereby mitigating chances for large draw downs and losses. These systems can monitor the closure of profitable positions, moving stop losses to let your winners run and other functions to maximize your profitability while keeping losses to a minimum.

In summary, Forex markets are dynamic fluid currency exchange markets that trade around the clock. Forex trading software was developed so that both the beginner and experts alike could more effectively and efficiently trade this markets and obtain rewards in doing so. The main advantage for this software is that it takes away human emotion from trading and forces the trader to utilize strict cash management principles. Please understand that by reading this article you will not have the entire knowledge you need to trade these markets. If you want to learn more about Forex trading software, I recommend you look at some of my other articles.

5 Key Points to Lead You to Currency Trading Success

If you want to win at forex trading, then you can it’s a learned skill. That’s the good news however 95% of traders lose and you must understand the following key points and make them part of your essential forex education. If you do, you will win…

Here are your key points, in no particular order of importance – there all important.

1. Forex Trading is NOT Easy!

Most traders just think they can buy $100 buck robot or get a mentor and someone will lead them to success. This is naive and you know, if you want success at anything you need to work at the basics and do your homework.

Don’t believe the sire fire systems or forex robots which never have a real track record, just a back tested simulation and keep in mind trading forward is what counts and that’s hard.

Sure it’s hard but that’s why forex trading offers such huge rewards in terms of the effort you put in.

2. You are Responsible

If you accept you are responsible for your destiny, you will put in the effort to get the right forex education. You will learn a simple forex trading strategy which is robust, you understand and can have confidence in. If you have confidence then you will be able to acquire the next key trait.

3. Discipline is the Key

When you trade forex you are going to lose, the market is going to make you look a fool but that’s life in forex and doesn’t mean you can’t win – you can.

What you must do is, have the discipline to apply you forex trading strategy through periods of losses, until you hit a home run. To win you must learn to lose gracefully in the short term and keep your eyes on the long term prize.

Many traders believe they can trade with little or no drawdown. They listen to the so called experts but the truth is – you will have to face weeks of losses at a time and discipline is needed in these periods, for you to emerge a winner.

4. You Need to Trade in Isolation

In society we are taught to agree with the crowd but in forex trading this leads to disaster, as 95% of traders lose money. You have to stay away from the herd and even when your emotions are telling you to conform, you need to stand aside. Get sucked into the herd mentality and you will end up with the 95% of losers.

5. Patience

Not only do you need patience to wait for the right opportunities, you also need patience to take your losses and more importantly, to run your profits.

Many traders get so excited when they have a profit, they move to soon to protect it or bank it; whereas if they hung on they could have made huge gains.

Becoming a Winner

If you want to become a winner in forex, you need all the above attributes and if you do achieve them, you will be on the way to currency trading success. They can lead you to a great second income or even a life changing one, in around 30 minutes a day.

The key point of this article on forex education is:

You can win with a simple system and more importantly, the right mindset and this is what most traders fail to achieve.

The Ins And Outs Of An Online Forex Trading Platform

If you are as confused as I was when I started trading currency on the foreign exchange (forex), than this article will do wonders for you. From facts on the forex to the best online forex trading platform, your questions will be answered.

If you are as confused as I was when I started trading currency on the foreign exchange (forex), than this article will do wonders for you. From facts on the forex to the best online forex trading platform, your questions will be answered.

Ok, let’s go over some of the basics. What is the forex? Well, forex, the word is simply a combination of the phrase FOReign Exchange. That’s it, you’re ready to trade. Oh, you want more? The forex market is an electronic market where the currency of different countries are traded.

In actuality, you are trading the value of currency A vs. the value of currency B. Although you can combine any two currencies to form a currency pair, there are four currency pairs that are considered the major pairs.

They are: EUR/USD (Euro/Dollar), GBP/USD (Pound/Dollar), USD/JPY (Dollar/Yen), USD/CHF (Dollar/Franc). You can spend your entire currency trading career trading just one of those pairs.

Now for some interesting facts about the foreign exchange (forex) market. It is over 30 times as large as any other financial market. Remember this fact, we will be touching on it again later. The forex market is open 24 hours a day 5 days a week. This is a great feature as it allows you to partake in the business of currency trading regardless of where in the world you are.

Back to the size of the forex for a second. Due to this attribute, the foreign exchange market provides currency traders with opportunities that do not exist on any other trading tool. Although this article is not being written to get into too much detail about this, I’ll give you an example. There is no slippage on Stop orders during regular trading hours. If you are not sure what this means, I strongly suggest you spend some time looking it up. This is a quality that, by itself, separates the forex from all other markets.

So, now we get to the nuts and bolts of this article. What is an online forex trading platform?

Truth is, whether you are doing your own trading, following some form of forex trading alert or any other sort of forex trading system you are going to need an online forex trading platform.

Regardless of which forex broker you choose, you will be provided with some form of online forex trading platform. Usually, the trading platform will be the same whether you are trading mini contracts or full contracts.

What should an online forex trading platform provide?

Firstly, you should be able to see the value of your account at a quick glance. Also, you should be able to see how much money you have in the market and in what currency pair at any given time.

Secondly, the value of all currency pairs of interest to you should be right at your fingertips. This means that you should be able to define which currency pairs you want to have access to and you should be able to choose the look and feel of the quotes.

Thirdly, an order entering system should be easy to find and easy to use so that you can make quick reactions when you see an opportunity present itself. When you see a 20 pip reward and a 10 pip risk trade, you don’t want to be fumbling around with your mouse or keyboard, you just want to trade.

In a very small nutshell, that’s it. Those are the three things that an online forex trading platform needs to offer. If you have those than currency trading on the foreign exchange (forex) is only a few clicks away.

Now go make some money. Good trading to you all.

How to Be a Successful Forex Trader and Avoid Forex Gambling

So every Forex trader wants to know the secret to success. In fact, you do not need to be a Forex trader to want that, if you knew that secret, you would become a Forex trader and make millions over night.

There really is no one secret that will make you extreme wealth in one trade, if there was, we would all be millionaires. Having said that, if you are a Forex trader and want to know how to succeed, I have one sentence for you. Avoid Forex gambling.

It all starts before you even risk one cent on the market. Before you can even call yourself a Forex trader, you need to make some decisions in your head. You must ensure that you are going to approach Forex trading for what it is and not as you would Forex gambling. Forex is not a casino and should not be treated as such.

One of the most common and dangerous mistakes a new trader can make is trade the market as if they were Forex gambling and not Forex trading. So what is the difference?

Well, let’s start with a strategy. Make sure that when you first begin trading that you do it with a professional and thought out Forex strategy. Make sure you use all the tools you have at your disposal such as stop losses, take profits, and many more.

Make sure you know what your goals are and how exactly you hope to achieve them, and I mean down to the very last detail.

Read news, market analysis, and Forex articles and make sure you know Forex like the back of your hand before investing your money.

All those tips are important but here is the kicker. Control your emotions as a trader, something you would not do if it was called Forex gambling. Do not put all your eggs in one basket just because you have a hunch. Follow your trading strategy and become a well disciplined Forex trader.

The Forex market is extremely volatile and one wrong move can mean the end of a Forex trader. Once you cross that bridge, there is no way back. It is therefore important to make the necessary preparations prior to trading and define your mindset first and foremost that this is Forex trading and not Forex gambling. That is already half the battle.

what is a Forex currency pair

Forex Currency is always traded in pairs, one pair being traded against another. The pairs are set in a certain format which is consistent throughout the 100’s of pairs that are available and each currency has its own individual symbol. The first currency in the pair is the base currency and will always represent a single denomination of that currency.

To make this more clear we are going to look at the GBP/USD. GBP is the symbol for Great British Pounds and the USD is the symbol for the United States Dollar. As you can see the GBP is the first in the currency pair so this will be represented as 1 single Pound and will not change. The USD however, is the second currency in the pair and therefore the fluctuating currency.

Whenever you see the GBP/USD represented as a price it is the price in dollars that the GBP is worth. For example, if the price is 16200 it is telling you that 1 GBP is worth 16200 USD or $1.6200. The last two decimal places are known as pips and are important denominations to forex traders, but that is a topic for another article.

The forex currency pairs are broken down into sections so it is easy for people to find the most popular. The 3 different bands of currency pairs are Major, Minor and exotic. The major pairs will be currencies that you are more familiar with such as the Australian Dollar, Euro, United States Dollar, Swiss Franc, Japanese Yen, Canadian Dollar and Great British Pounds. These currencies are represented respectively as AUD, EUR, USD, CHF, JPY, CAD and GBP which make up the basis of the major currency trading pairs.

As discussed above these currencies are always paired up against one another in a set format and in the major class always include the USD as one of the pair. Although the symbols can be paired up against one another they would fall into the class of minor unless, being traded against the USD.

One of the currency pairs that is disputed to be major or minor and the only one that does not include the USD is the EUR/GBP. You will find some traders arguing that it is a major currency pair but you will find most spread betting platforms class it as a minor currency pairs.

The most traded of the 6 major currency pairs are the GBP/USD and the EUR/USD. Because of the volume of traders buying and selling this currency it also makes them the most profitable and the most volatile. It is important to receive proper training before taking on the task of forex trading.

How your forex profit/loss is calculated.

This is how to calculate your forex profit or how it is calculated by your forex broker.
Before we can calculate our forex profit, we need to know what our forex pips,pip value and lots are.

What is a pip?
In forex, a percentage in point or price interest point(pip) is a unit of change in an exchange rate of a currency pair. If the GBP/USD moves from 1.2204 to 1.2205 this is ONE PIP. A pip is the last decimal of a quotation. The pip is how you measure your profit or loss.

As each currency has its own value of pip, example in USD/JPY rate at 119.70(notice this currency pair only goes to two decimal
places, most of the other currencies have four decimal places)
In the case of USD/JPY, 1 pip would be .01
Therefore,
USD/JPY:
119.70
.01 divided by exchange rate = pip value
.01 / 119.70 = 0.0000835
This looks like a very long number but later we will discuss lot size.

USD/CHF:
1.5250
.0001 divided by exchange rate = pip value
.0001 / 1.5250 = 0.0000655
In the case where the US Dollar is not quoted first and we want to get the US Dollar value, we have to add one more step.

EUR/USD:
1.2200
.0001 divided by exchange rate = pip value
so
.0001 / 1.2200 = EUR 0.00008196
but we need to get back to US dollars so we add another calculation which is
EUR x Exchange rate
So
0.00008196 x 1.2200 = 0.00009999
When rounded up it would be 0.0001

Now, you know how your forex pip and pip value are calculated, now lets us move to how calculate your forex lots.

What is forex lot?
Spot Forex is traded in lots. The standard size for a lot is $100,000. There is also a mini lot size and that is $10,000. As you already know, currencies are measured in pips, which is the smallest increment of that currency. To take advantage of these tiny increments,you need to trade large amounts of a particular currency in order to see any significant
profit or loss.
Let’s assume we will be using a $100,000 lot size. We will now recalculate some examples to see how it affects the pip value.
USD/JPY at an exchange rate of 119.80
(.01 / 119.70) x $100,000 = $8.35 per pip
USD/CHF at an exchange rate of 1.4556
(.0001 / 1.4556) x $100,000 = $6.87 per pip
In cases where the US Dollar is not quoted first, the formula is slightly different.
EUR/USD at an exchange rate of 1.1930
(.0001 / 1.1930) X EUR 100,000 = EUR 8.38 x 1.1930 = $9.99734 rounded up will be $10 per pip
GBP/USD at an exchange rate or 1.8040
(.0001 / 1.8040) x GBP 100,000 = 5.54 x 1.8040 = 9.99416 rounded up will be $10 per pip.
Your forex broker may have a different convention for calculating pip value relative to lot size but whichever way they do it, they’ll be able to tell you what the pip value is for the currency you are trading is at the particular time. As the market moves, so will the pip value depending on what currency you are currently trading.
Now, you know how your forex trading lot is calculated, let us calculate our forex profit now.

Calculation of forex profit.

Let’s buy US dollars and Sell Swiss Francs.
The rate you are quoted is 1.4525 / 1.4530. Because you are buying US you will be working on the 1.4530, the rate at which traders are prepared to sell.
So you buy 1 lot of $100,000 at 1.4530.
A few hours later, the price moves to 1.4550 and you decide to close your trade.
The new quote for USD/CHF is 1.4550 / 14555. Since you’re closing your trade and you initially bought to enter the trade, you now sell in order to close the trade so you must take the 1.4550 price. The price traders are prepared to buy at.
The difference between 1.4530 and 1.4550 is .0020 or 20 pips.
Using our formula from before, we now have (.0001/1.4550) x $100,000 -= $6.87 per pip x 20 pips = $137.40
Remember, when you enter or exit a trade, you are subject to the spread in the bid/offer quote.
When you buy a currency you will use the offer price and when you sell you will use the bid price.
So when you buy a currency, you pay the spread as you enter the trade but not as you exit.
And when you sell a currency you don’t pay the spread when you enter but only when you exit.

Basic forex terminology two

BASE CURRENCY;A base currency is the first currency quoted in a currency pair on forex. It is also typical considered the domestic currency or accounting currency for accounting purposes, a firm may use the base currency to represent all profit and losses—investopedia.

COUNTER CURRENCY;In this currency pair USD/EUR the euro(EUR) is considered the counter currency. In pair, units of counter currency are per unit of base currency.

MARGIN CALL;If the market moves against a trader resulting in losses such that the trader lacks a sufficient amount of margin, there is an automatic “margin call”. The Forex dealer closes the trader’s positions and limits the losses for the client because this stops the account from turninig into a negative balance.

COMMISSION/FEES;This is a certain amount that a trader pays for every trade that is placed with a forex broker. These cost vary from broker to broker, but they are usually a relatively low amount. These are usually the only cost that you are likely to incur.


ROLLOVER Charges;Rollover charges are determined by the difference between the interest rate of the country of the base currency and the interest rates of the other country.
The greater the interest rate differential between the two currencies in the currency pair, the greater the rollover charge will be. For example, when trading GBP/USD, if the British pound has the greater interest differential with the U.S.
dollar, then the rollover charge for holding British pound positions would be the most expensive. On the other hand, if the Swiss Franc were to have the smallest interest differential to the U.S. dollar, then overnight charges for USD/CHF would be the least expensive of the currency pairs.

CROSS CURRENCY;In forex, when a currency quote is given without the U.S. dollar as one of its components, this is called a cross currency.The most common cross currency pairs are the EUR/GBP, EUR/CHF, and EUR/JPY. These currency pairs expand the trading possibilities in forex market, but it is important to note that they don’t have as much of a following as pairs that include the U.S. dollar, which also are called the majors.

Basic forex terminology

SPREAD;The spread is the amount of pips between the bidding price and asking price.
The spread is what forex brokers use to make money on every forex trade placed through their network. For example, the forex broker may be paying a price of 1.3700 for buying or selling. The broker will then allow you to buy the currency for 1.3701 or sell it for 1.3699

PIPS;A pip is the most common increment in a currency value. It is the smallest price change that any currency can make. Most pips are equal to a 0.0001 price change. For instance, the EUR/USD currency pair might change from 1.4030 to 1.4031-this is a one-pip movement.
However, where a currency has a low unit value, the price is only quoted to 2 decimal places, not 4, in this case, a pip is 0.01 rather than 0.0001. The example is the Japanese yen-if the USD/JPY currency pair increases from 104.22 to 104.23, this is a one-pip change.

LOTS;A lot is simply the bundle of units in trade.The standard lot is the equivalent to 100,000 units of the quote currency in forex trade.
A standard lot is similar to trade size. It is one of the three commonly known lot sizes;the other are mini-lot and micro-lot.
Furthermore, A standard lot represents 100,000 units of any currency, whereas a mini-lot represents 10,000 units and micro-lot represents 1,000 units of any currency.

LEVERAGE;Leverage is the ratio of the amount capital used in a transaction to the required security
deposit (margin). It is the ability to control large dollar amounts of a security with a
relatively small amount of capital. Leveraging varies dramatically with different brokers,
ranging from 2:1 to 400:1.
Margin + Leverage = Possible Deadly Combination
Trading currencies on margin lets you increase your buying power. Meaning that if you
have $5,000 cash in a margin account that allows 100:1 leverage, you could purchase up
to $500,000 worth of currency because you only have to post one percent of the purchase
price as collateral. Another way of saying this is that you have $500,000 in buying power.
With more buying power, you can increase your total return on investment with less cash
outlay. But be careful, trading on margin magnifies your profits AND losses.

BID;The bid price is the price at which the buyer or buyers are willing to pay for a security.
For example, in the quote GBP/USD 1.8812/15, the bid price is 1.8812. This means you
sell one British pound for 1.8812 U.S. dollars.

ASK;The ask price represent the minimum price that a seller or sellers are willing to receive for the security.
For example, in the quote EUR/USD 1.2812/15, the ask price is 1.2815. This means you can buy one Euro for 1.2315 U.S. dollars. The ask price is also called the offer price.

ORDER;The term “order” refers to how you will enter or exit a trade.

Types Of Live /Real Forex Accounts & Their Features

There are three main types of forex trading that a potential forex trader will use in trading forex online. Although, forex brokers offer other types of account such as managed or investment forex account, but when it comes to you trading forex online, you need to use these three types of forex accounts, they are as follows:

i.                   Standard or macro forex account

ii.                 Mini forex account

iii.              Micro forex account

1.     Standard or Macro Forex AccountThe standard account is the most widely used forex trading account. These types of forex account afford you access to standard trading lots of currency, each of which is with $100,000. This does not mean that you have to put down $100,000 of trading capital in your forex account for you to trade. The rules of leverage and margin (eg 100:1or 200:1 in forex) allow you to trade in forex a standard lot which might be as little as $1,000 or  $500.This type of online forex trading account has its own pros, cons, gain potential and loss potential, that is why it is recommended for experienced forex traders who have a portion of capital to invest.

2.     Mini forex accountA mini forex trading account is a type of trading account that allows traders to make trades using smaller lot (eg 0.1). Most forex brokers offer brokerage accounts with mini lots equivalent to $10,000. Forex brokers offer this types of account to new clients that cannot trade full lot because of the big capital required. This type of forex trading account has advantages like low risk, low capital required and also flexibility. It also has its con because low risk management is equal to low reward.  

3.      Micro forex accountThis type of forex account are always smaller than minis, are also available through some forex brothers. Micro accounts trade in $1,000 lots and the pip movements are worth 10cents per pip. These accounts  are really only used by new forex traders with a very little forex knowledge and can be opened with as little as $(10-25).