Appreciation - A currency is said to 'appreciate ' when it strengthens in price in response to market demand.
Arbitrage - The purchase or sale of an instrument and simultaneous taking of an equal and opposite position in a related market, in order to take advantage of small price differentials between markets.
Around - Dealer jargon used in quoting when the forward premium/discount is near parity. For example, "two-two around" would translate into 2 points to either side of the present spot.
Ask Rate - The rate at which a financial instrument if offered for sale (as in bid/ask spread).
Asset Allocation - Investment practice that divides funds among different markets to achieve diversification for risk management purposes and/or expected returns consistent with an investor's objectives.
Back Office - The departments and processes related to the settlement of financial transactions.
Balance of Trade - The value of a country's exports minus its imports.
Base Currency - In general terms, the base currency is the currency in which an investor or issuer maintains its book of accounts. In the FX markets, the US Dollar is normally considered the 'base' currency for quotes, meaning that quotes are expressed as a unit of $1 USD per the other currency quoted in the pair. The primary exceptions to this rule are the British Pound, the Euro and the Australian Dollar.
Bear Market - A market distinguished by declining prices.
Bid/Ask Spread - The difference between the bid and offer price, and the most widely used measure of market liquidity.
Big Figure - Dealer expression referring to the first few digits of an exchange rate. These digits rarely change in normal market fluctuations, and therefore are omitted in dealer quotes, especially in times of high market activity. For example, a USD/Yen rate might be 107.30/107.35, but would be quoted verbally without the first three digits i.e. "30/35".
Book - In a professional trading environment, a 'book' is the summary of a trader's or desk's total positions.
Broker - An individual or firm that acts as an intermediary, putting together buyers and sellers for a fee or commission. In contrast, a 'dealer' commits capital and takes one side of a position, hoping to earn a spread (profit) by closing out the position in a subsequent trade with another party.
Bretton Woods Agreement of 1944 - An agreement that established fixed foreign exchange rates for major currencies, provided for central bank intervention in the currency markets, and pegged the price of gold at US $35 per ounce. The agreement lasted until 1971, when President Nixon overturned the Bretton Woods agreement and established a floating exchange rate for the major currencies.
Bull Market - A market distinguished by rising prices.
Bundesbank - Germany's Central Bank.
Cable - Trader jargon referring to the Sterling/US Dollar exchange rate. So called because the rate was originally transmitted via a transatlantic cable beginning in the mid 1800's.
Candlestick Chart - A chart that indicates the trading range for the day as well as the opening and closing price. If the open price is higher than the close price, the rectangle between the open and close price is shaded. If the close price is higher than the open price, that area of the chart is not shaded.
Central Bank - A government or quasi-governmental organization that manages a country's monetary policy. For example, the US central bank is the Federal Reserve, and the German central bank is the Bundesbank.
Chartist - An individual who uses charts and graphs and interprets historical data to find trends and predict future movements. Also referred to as Technical Trader.
Clearing - The process of settling a trade.
Contagion - The tendency of an economic crisis to spread from one market to another. In 1997, political instability in Indonesia caused high volatility in their domestic currency, the Rupiah. From there, the contagion spread to other Asian emerging currencies, and then to Latin America, and is now referred to as the 'Asian Contagion'.
Commission - A transaction fee charged by a broker.
Confirmation - A document exchanged by counterparts to a transaction that states the terms of said transaction.
Contract - The standard unit of trading,
Counterparty - One of the participants in a financial transaction.
Country Risk - Risk associated with a cross-border transaction, including but not limited to legal and political conditions.
Cross Rate - The exchange rate between any two currencies that are considered non-standard in the country where the currency pair is quoted. For example, in the US, a GBP/JPY quote would be considered a cross rate, whereas in UK or Japan it would be one of the primary currency pairs traded.
Currency - Any form of money issued by a government or central bank and used as legal tender and a basis for trade.
Currency Risk - the probability of an adverse change in exchange rates.
Sunday, June 14, 2009
The online Currency Trading Basics tips
The All currency trades involve the buying of one currency and the selling of another, simultaneously. that is, the value of one currency relative to another. The relative supply and demand of both currencies will determine the value of the exchange rate.
When a currency trader places a trade he wants the currency purchased to appreciate in value versus the currency sold. His ability to determine the direction that the exchange rate will move, will dictate his gain or loss in a trade. Let's do an example with a currency quote obtained from the forex trading system.
currency trading example
When a currency trader places a trade he wants the currency purchased to appreciate in value versus the currency sold. His ability to determine the direction that the exchange rate will move, will dictate his gain or loss in a trade. Let's do an example with a currency quote obtained from the forex trading system.
currency trading example
Saturday, May 23, 2009
Running A High Risk High Reward Forex Account
In this post I want to discuss the merits of opening a forex account specifically to place high risk high reward positions. Now before you dismiss this idea out of hand, please hear me out because this concept may not be as crazy as it sounds.
What I'm actually suggesting is that you open two forex accounts. The primary one should be used to trade your main forex strategy and should hopefully accumulate regular profits over time as a result of taking controlled positions. You should treat this account like you would your pension fund in that your ultimate goal is to grow your account by taking safe low-risk trades which over time will give you some very healthy returns.
The secondary one should be your high risk account. This account should be a fraction of the size of your main trading account, and should be financed by money you can afford to lose. The goal of this account is to identify set-ups that have a large pay-off of at least 4:1. For example you are looking to trade positions which could potentially move 400 points in your favour whilst using a 100 point stop loss.
Furthermore you will be risking your whole account on this trade, or as much as you are allowed by using leverage. The worst case scenario is that you lose all or most of the cash in your account but remember that this account should be very small anyway and it should be money you can afford to lose. I usually start off with no more than £200 in this high-risk account.
With this account I am looking to make at least £800 from a winning trade and while this may sound fanciful, it is not actually that difficult because you only need a success rate of 20% (equivalent to 1 winning trade out of 5) just to break-even. However if you get a couple of consecutive winning trades, your account can grow substantially.
Although this is a high-risk account, you should still take this account seriously. Use technical analysis along with support and resistance lines to place the odds in your favour and only trade those positions that are most likely to pay off. For this particular system I suggest you use some kind of breakout system on the daily or weekly charts because these time frames are the ones that will give you these substantial gai
What I'm actually suggesting is that you open two forex accounts. The primary one should be used to trade your main forex strategy and should hopefully accumulate regular profits over time as a result of taking controlled positions. You should treat this account like you would your pension fund in that your ultimate goal is to grow your account by taking safe low-risk trades which over time will give you some very healthy returns.
The secondary one should be your high risk account. This account should be a fraction of the size of your main trading account, and should be financed by money you can afford to lose. The goal of this account is to identify set-ups that have a large pay-off of at least 4:1. For example you are looking to trade positions which could potentially move 400 points in your favour whilst using a 100 point stop loss.
Furthermore you will be risking your whole account on this trade, or as much as you are allowed by using leverage. The worst case scenario is that you lose all or most of the cash in your account but remember that this account should be very small anyway and it should be money you can afford to lose. I usually start off with no more than £200 in this high-risk account.
With this account I am looking to make at least £800 from a winning trade and while this may sound fanciful, it is not actually that difficult because you only need a success rate of 20% (equivalent to 1 winning trade out of 5) just to break-even. However if you get a couple of consecutive winning trades, your account can grow substantially.
Although this is a high-risk account, you should still take this account seriously. Use technical analysis along with support and resistance lines to place the odds in your favour and only trade those positions that are most likely to pay off. For this particular system I suggest you use some kind of breakout system on the daily or weekly charts because these time frames are the ones that will give you these substantial gai
FAP Turbo (Another New Robot) Is Released
im kind of reluctant to write a post about FAP Turbo the latest forex trading robot to hit the market, because I've told my readers about other expert advisors in the past and nearly all of them have turned out to be pretty poor from the feedback I have received.
However the aim of this blog is to keep you up to date with the latest forex news and developments so I thought it was worth a mention, plus I know for a fact that a lot of my readers and subscribers are very interested in forex robots.
So what actually is FAP Turbo?
Well it's basically an automated expert advisor for Metatrader4 that trades the markets for you. It claims to be a much improved and far more profitable version of Marcus Leary's forex trading robot, after the three technical experts behind the system gave it a complete overhaul.
On first impressions the sales page looks like all the other robots being sold on the market, but what caught my eye about this one is that it has been trading and updating it's live account for everyone to see for a few months now, and seems to be having great success.
One obvious positive feature about the FAP Turbo system is that it seems to use tight stop losses, which already makes it a lot better than some other robots I've seen that have huge stop losses and very small profit targets.
It seems to be completely legit with impressive-looking
However the aim of this blog is to keep you up to date with the latest forex news and developments so I thought it was worth a mention, plus I know for a fact that a lot of my readers and subscribers are very interested in forex robots.
So what actually is FAP Turbo?
Well it's basically an automated expert advisor for Metatrader4 that trades the markets for you. It claims to be a much improved and far more profitable version of Marcus Leary's forex trading robot, after the three technical experts behind the system gave it a complete overhaul.
On first impressions the sales page looks like all the other robots being sold on the market, but what caught my eye about this one is that it has been trading and updating it's live account for everyone to see for a few months now, and seems to be having great success.
One obvious positive feature about the FAP Turbo system is that it seems to use tight stop losses, which already makes it a lot better than some other robots I've seen that have huge stop losses and very small profit targets.
It seems to be completely legit with impressive-looking
Latest Analysis Of The GBP/USD, AUD/USD And Dollar Index
Well I've got a special treat for you this holiday weekend because Adam Hewison has just created three brand new trading videos covering the GBP/USD and AUD/USD currency pairs as well as the Dollar Index.
Actually the videos are now a couple of days old but every single one of his calls has been correct so far and have since moved in his favour. Each of these videos contains some excellent analysis particularly regarding fibonacci analysis, which I have to admit is not a tool that I use very much myself, and overall they are well worth watching.
Actually the videos are now a couple of days old but every single one of his calls has been correct so far and have since moved in his favour. Each of these videos contains some excellent analysis particularly regarding fibonacci analysis, which I have to admit is not a tool that I use very much myself, and overall they are well worth watching.
Dealing Spread, but No Commissions
When trading foreign exchange, you are quoted a dealing spread offering you a buying and a selling level for your trade. Once you accept the offered price and receive confirmation from our dealers, the trade is done. There is no need to call an exchange floor. There are no other time-consuming delays. This is possible due to live streaming prices, which are also a great advantage in times of fast-moving markets: You can see where the market is trading and you know whether your orders are filled or not.
The dealing spread is typically 3-5 points in normal market conditions. This means that you can sell US dollars against the euro at 1.7780 and buy at 1.7785. There are no further costs, commissions or exchange fees.
The dealing spread is typically 3-5 points in normal market conditions. This means that you can sell US dollars against the euro at 1.7780 and buy at 1.7785. There are no further costs, commissions or exchange fees.
Base Currency and Variable Currency
When you trade, you will always trade a combination of two currencies. For example, you will buy US dollars and sell euro. Or buy euro and sell Japanese yen, or any other combination of dozens of widely traded currencies. But there is always a long (bought) and a short (sold) side to a trade, which means that you are speculating on the prospect of one of the currencies strengthening in relation to the other.
The trade currency is normally, but not always, the currency with the highest value. When trading US dollars against Singapore dollars, the normal way to trade is buying or selling a fixed amount of US dollars, i.e. USD 1,000,000. When closing the position, the opposite trade is done, again USD 1,000,000. The profit or loss will be apparent in the change of the amount of SGD credited and debited for the two transactions. In other words, your profit or loss will be denominated in SGD, which is known as the price currency.
The trade currency is normally, but not always, the currency with the highest value. When trading US dollars against Singapore dollars, the normal way to trade is buying or selling a fixed amount of US dollars, i.e. USD 1,000,000. When closing the position, the opposite trade is done, again USD 1,000,000. The profit or loss will be apparent in the change of the amount of SGD credited and debited for the two transactions. In other words, your profit or loss will be denominated in SGD, which is known as the price currency.
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