I think all newbies in the first year of trading should reduce their lot size substantially. For example, if all you have to trade is one lot, and you use all of it for one position, you are at great risk. Forex is all about pips, not dollars.
For that same one lot size, you could place 10 smaller positions, thereby spreading your risk and diversifying.

If you are inexperienced, open your position with a tester, which is a tiny lot size placed near support/res with a good risk/reward factor. If support/res breaks you get stopped at a small loss. If it holds and reverses, then you get a good pip run. Add to that position when retracements run out of steam.

Major support/res levels should be your entry/exit targets.

It is very interesting to see who is the new richest man in the world for 2008. Warren Buffet. The world’s most successful investor. His investments have netted him an average of 24% for over 40 years! Read the rest of this entry »

Forex volumes fluctuate all the same and are especially during economic data releases. High volume can lead to a lot of volatility, but this is not always the case.

Low volumes can also produce high levels of volatility. Infact in recent years some major support and resistance points have broken during low volumes, often during bank holidays.

If we go back to thanks giving 2006. Some major moves occurred then. The US Dollar depreciated considerably against many of the major currencies.

Another factor massively affected by forex volumes is the ability for big players such as central banks and large investment banks to move the market. The forex market is too big to be manipuled on a long term basis, but price can be moved noticeably when abig trader buys or sells a lot of a currency pair during low volumes.

There are many benefits of forex trading. Firstly, one of the big benefits is the fact you can start trading with a very small amount of capital. Some brokers allow you to start with just $100 and in some cases even less! However, personally I do not recommend starting with less than $1000 and for an account of this size I recommend getting an account that will allow the use of microlots. Microlots are $1000 position sizes.

Another one of the many advantages of currency trading is the fact you can trade with small margin requirements. It is relatively easy to find a broker that will throw 100:1 to leverage at you. This means to open a position size of $10,000, you only need to put up $100.

Forex trading is ideal for those who are excited by alternative investment opportunities and have the time and patience to learn to trade. It can take several months or even several years to become a good traders and unfortunately few people make the grade.

Forex trading must always be considered high risk due to the low margin requirements, but good disciplined trading has a good chance of beating the more mainstream investments such as mutual funds.

In conclusion, there are many benefits of forex trading, but only you can decide if it is right for you.

Many retail FX brokers allow you to hedge an open position by opening a position that is the complete opposite. For example if you have one 10,000 long position open on GBP/USD, you could open a 10,000 GBP/USD short position. This would provide a complete hedge and the trader would not earn or lose, no matter how price moved.

Hedging forex can be incorporated as part of a risk management strategy. Hedging can be used to limit losses as well as lock in profits.

Partial hedges can also be done. If we go back to the example above with the long GBP/USD position. If this position was +200, the trader could open a 5,000 short position. This would effectively hedge half of the position, so half of the profit would be locked in and only the other half would be exposed to the risk of price fluctuation. To trade positions less than 10,000, you would require a broker that supports micro lots.

Some brokers do not allow forex hedging. If you open a position in the opposite direct with some brokers it can close the position. It is important to speak with your broker about this issue and fully test it on a demo account prior to incorporating hedging strategies into your trading.

Forex options trading is an alternative way to spot fx to speculative or hedge the price movements of a particular currency pair. With Currency Options, the trader has the option, but not the obligation to buy or sell a currency pair at a specified date in the future.

Buying currency options contracts will have an initial fee. If at the date of expiry the traders position is in profit, the trader takes the profit. In this situation the net profit will be the contract value on expiry minus the cost of the contract. Read the rest of this entry »

In part one of our article, we discussed pattern recognition on forex charts, using the Gbp/jpy as our example. Let’s take a look at the 4 hour chart.

I have drawn red horizontal lines at swing lows and swing highs. Why? These are areas of rejection where the market price changed directions. In this 4 hour chart, we can see that Geppy is in a serious downtrend after being rejected around the 214 price. Read the rest of this entry »

I would like to introduce a simple, yet complex system for successful forex investing over the long term. Forex trading can be extremely rewarding if you have the right
tools in your arsenal. The system that I have developed over the years consists of a few simple tools that anyone can use for success in forex, or any other other platform.
Success in forex trading takes discipline and patience above all other things. Make a plan and trade your plan. There is no substitute for hard work, and diligent study.
You must be informed and keep up with current events happening around you globally. Information is power in forex trading. Due diligence is needed. Market Sentiment is impacted by current events. Seasonal patterns occur in forex trading, and it is your responsibility to monitor news releases, currency rate changes, global events, such as terrorism attacks, earthquakes, hurricanes, elections, equity markets, commodity markets, etc. Read the rest of this entry »

Web based currency trading offers many advantages over a trading platform. If you are trading from different PCs regularly, it could be highly beneficial to have a web based trading platform. However, it is important that the trading PC is suitably secure for trading.

Here are some popular web based forex brokers:

Oanda is probably the popular broker with a web based platform. I have never used them personally but I have rarely heard about problems with them. I understand the spreads widen considerably during the news, so they might be ideal for news traders. They also offer a demo account that doesn’t expire.

AC-Markets also offer a web based forex platform. This is a swiss broker with low spreads. This broker is regulated by the Swiss Federal Department of Finance (FDF).

HY Markets – This is a UK based broker, regulated regulated by the Financial Standards Authority (FSA).

These are listed purely for informational purposes, I do not personally endorse them.

Since setting up this blog, many people have as me about how they go about Getting started in currency trading, and it is relatively easy to do. However, before starting it is important to have some risk capital. Risk capital is basically money you can afford to lose that would not hurt you a great deal financially. In other words, don’t bet the farm!

Read the rest of this entry »