In his book 'All About The Foreign Exchange Market in the United States' Sam Y. Cross says this about electronic trading, "Quoted prices change as often as 20 times a minute. It has been estimated that the world's most active exchange rates can change up to 18,000 times during a single day. There was a time when this price changed only once in many years. The years became months, then days, then hours and now seconds. These price movements have allowed traders to go in and out of the market at a pace not possible just a few years ago. Active modern day traders can go in and out of the FOREX market 200 times in a single day and take a small profit each time they perform these trades."
So, like a lot of people just being introduced to FOREX, the 64,000 dollar question you're probably asking yourself right now is this:IF THE MARKET NEVER SLEEPS (remember: the FOREX is basically a continuous 24-hour open electronic-trading session) WHEN SHOULD I BE AWAKE TO TRADE?Good question.First a little background for you, then our answer:- 24 hour market - Sunday 5pm EST through Friday 4pm EST. Rollover at 5pm EST - Trading begins in New Zealand, followed by Australia, Asia, the Middle East, Europe, and America - The US & UK account for more than 50% of turnover - Major markets: London, New York, Tokyo - Trading activity is heaviest when major markets overlap - Nearly two-thirds of NY activity occurs in the morning hours while European markets are open.=======================================Select the market, select the time, start trading:=======================================The foreign exchange "week" begins at 5am Sydney time on Monday mornings. The foreign exchange trading day almost never ceases except for short periods over weekends. At any given time, somebody somewhere is buying and selling currencies. As one market closes, another market opens. Business hours overlap, and the exchange continues as day becomes night and night becomes day. So, the answer to the above questions is this: The massive liquidity of FOREX, combined with a true 24-hour market that's traded 5.5 days a week, offers you exceptional independence and choices to trade FOREX when you want to, not when the market wants you to. Trades actually develop with relatively the same frequency, regardless of time. As long as the FOREX is open, there is about the same chance that you will find a trade, whenever your look.However, here's the rub...
During each trading day, overall FOREX *volume* (higher volume = a greater chance of finding more trade opportunities) is determined by what markets are open and the times each of these markets OVRERLAP one another. With each passing second, minute and hour, FOREX volume remains high, but peaks highest when the Asian market (including Australia & New Zealand), the European market and the U.S. market is open at the same time.Here's the Breakdown of OPEN Market Times (the times each countries *exchange-traded* markets are open. Important distinction here. Remember: exchange-traded instruments, such as foreign exchange futures, stocks, bonds, etc. adhere to the traditional exchange trading hours):* New York Market trade times: 8am-4pm EST* London Market trade times: 2am-12Noon EST - Great Britain Market trade times: 3am-11am EST* Tokyo Market trade times: 8pm-4am EST - Australia Market trade times: 7pm-3am EST* = Major Markets
Want to know what time it is in Tokyo when it's 7pm on the east coast of the United States? Go here:http://www.timeanddate.com/worldclock/converter.html
You will notice that there are two times when two of the major markets OVERLAP in trading times; between 2am and 4am EST (Asian/European) and between 8am to 12pm EST (European/N. American).Generally, the markets tend to make their biggest moves during these overlaps and, therefore, are usually the BEST times to trade.FUN TRIVIA (Neat to Know Info): Trading FOREX from Africa has advantages because of the time zone. The continent falls neatly between Asia, Europe and the USA. This means that trading time in Africa is the same as that in Europe and also catches both the end of the Asian trading day and the beginning of the U.S. trading day. This natural resource enables African traders to trade at the best times without having sleepless nights :-)
Wednesday, June 4, 2008
DEMO Your Way to Forex Trading Success ... or, How To Trade the FOREX for Free!
Lesson #11: DEMO Your Way to Forex Trading Success ... or, How To Trade the FOREX for Free!
Hey, here's a tongue-in-cheek, rhetorical question for you:WANT TO TRADE THE FOREX MARKET FOR FREE?
Who doesn't, right?What if we told you can get your ambitious, ever-ready little hands on the same state-of-the-art software package that professional FOREX traders, throughout the world, are currently using to make real-time, LIVE currency trades?What if we told you could experience the same dynamic market action and go through the same process of making decisions, based on breaking news, reacting to charting patterns, and tracking ones performance the same way full-time FOREX traders do?
And, what if, even if you don't put REAL MONEY into your account, you still really can't see any difference in how the market reacts to you and how you react to the market (well, okay, okay ... with imaginary money, we know ya just may be a tad more liberal with your trades, but we hope you aren't).Okay, so here's the deal...When we started writing this 20-part e-course, we realized these lessons could literally go on forever and, still, you won't know everything. At some point, every new FOREX trader needs to start DEMO-trading.Once you begin to place demo trades, you will learn a lot about how Forex transactions are placed. This is an important step for you to be able to learn how to become a trader. A Demo Account allows one to become familiar with trading procedures, such as placing Market, Stop, Limit, OCO Orders without any risk. All dollar losses or gains on a Demo Account are imaginary but, as mentioned above, the EXPERIENCE is not!
SIDENOTE: Although racking up big gains in a DEMO account does not insure profits in live trading, those who are NOT successful trading on paper (DEMO account) rarely are successful when money is on the line. So, yes, just playing around and getting familiar with a demo account can be a great learning experience; however, you will not learn how to become a trader this way. You need to have a trading strategy, like the ones we teach at http://www.rapidforexsystem.com/
Here's how to get started with your own demo account.Go to http://www.fxcm.com/mini-demo-registration.html
There you can sign up for a free mini-demo account. A mini account is just like a real demo account, except the trade sizes are smaller. In a real account the smallest trade size is $100,000, in a mini account the smallest trade size is $10,000 (this can be done with a $50 margin, the power of leverage!).There are several other places online to sign up for a free demo account, but we recommend FXCM, because they have the best overall reputation online. FXCM has built itself to the premier Forex trading platform. We don't get paid anything to endorse them, but they are currently the best.Once you sign up for your mini-demo account, you will need to try out one of the trial charting packages. Any of these will do because they all have the necessary indicator tools that we teach you to use in our course packages. You can then set up your demo account and start drawing trendlines, marking support & resistance levels, monitoring moving averages, etc. This is a good way to get used to how orders are placed. Once you have a real trading system, you will already know how to place orders properly.Everyone makes mistakes placing orders. You need to experiment in a demo account to make your mistakes without losing money.At this point you have to make a decision about how fast you would like to learn how to become a trader. The truth is that the longer you wait to get in on this market, the more potential money you are missing out on. You need to decide what time frame is right for you to begin trading.You need to decide if:1. You want to place real trades within the next 3 months (or sooner, depending on your desire) 2. You want to build your knowledge for several months before placing real trades.The choice is entirely yours. No-one else can make that decision for you. You need to make a plan and stick to it. It is important not to put off your success. Success requires action.If you want to place real trades within the next 3 months, you should check out http://www.rapidforexsystem.com/. There are some great resources there at extremely affordable prices that can get you trading in a very short amount of time. If you want to build your knowledge base, then continue to be on the lookout for these daily email lessons. You are already subscribed to it, all you need to do is read each article attentively as they are released.
Hey, here's a tongue-in-cheek, rhetorical question for you:WANT TO TRADE THE FOREX MARKET FOR FREE?
Who doesn't, right?What if we told you can get your ambitious, ever-ready little hands on the same state-of-the-art software package that professional FOREX traders, throughout the world, are currently using to make real-time, LIVE currency trades?What if we told you could experience the same dynamic market action and go through the same process of making decisions, based on breaking news, reacting to charting patterns, and tracking ones performance the same way full-time FOREX traders do?
And, what if, even if you don't put REAL MONEY into your account, you still really can't see any difference in how the market reacts to you and how you react to the market (well, okay, okay ... with imaginary money, we know ya just may be a tad more liberal with your trades, but we hope you aren't).Okay, so here's the deal...When we started writing this 20-part e-course, we realized these lessons could literally go on forever and, still, you won't know everything. At some point, every new FOREX trader needs to start DEMO-trading.Once you begin to place demo trades, you will learn a lot about how Forex transactions are placed. This is an important step for you to be able to learn how to become a trader. A Demo Account allows one to become familiar with trading procedures, such as placing Market, Stop, Limit, OCO Orders without any risk. All dollar losses or gains on a Demo Account are imaginary but, as mentioned above, the EXPERIENCE is not!
SIDENOTE: Although racking up big gains in a DEMO account does not insure profits in live trading, those who are NOT successful trading on paper (DEMO account) rarely are successful when money is on the line. So, yes, just playing around and getting familiar with a demo account can be a great learning experience; however, you will not learn how to become a trader this way. You need to have a trading strategy, like the ones we teach at http://www.rapidforexsystem.com/
Here's how to get started with your own demo account.Go to http://www.fxcm.com/mini-demo-registration.html
There you can sign up for a free mini-demo account. A mini account is just like a real demo account, except the trade sizes are smaller. In a real account the smallest trade size is $100,000, in a mini account the smallest trade size is $10,000 (this can be done with a $50 margin, the power of leverage!).There are several other places online to sign up for a free demo account, but we recommend FXCM, because they have the best overall reputation online. FXCM has built itself to the premier Forex trading platform. We don't get paid anything to endorse them, but they are currently the best.Once you sign up for your mini-demo account, you will need to try out one of the trial charting packages. Any of these will do because they all have the necessary indicator tools that we teach you to use in our course packages. You can then set up your demo account and start drawing trendlines, marking support & resistance levels, monitoring moving averages, etc. This is a good way to get used to how orders are placed. Once you have a real trading system, you will already know how to place orders properly.Everyone makes mistakes placing orders. You need to experiment in a demo account to make your mistakes without losing money.At this point you have to make a decision about how fast you would like to learn how to become a trader. The truth is that the longer you wait to get in on this market, the more potential money you are missing out on. You need to decide what time frame is right for you to begin trading.You need to decide if:1. You want to place real trades within the next 3 months (or sooner, depending on your desire) 2. You want to build your knowledge for several months before placing real trades.The choice is entirely yours. No-one else can make that decision for you. You need to make a plan and stick to it. It is important not to put off your success. Success requires action.If you want to place real trades within the next 3 months, you should check out http://www.rapidforexsystem.com/. There are some great resources there at extremely affordable prices that can get you trading in a very short amount of time. If you want to build your knowledge base, then continue to be on the lookout for these daily email lessons. You are already subscribed to it, all you need to do is read each article attentively as they are released.
Account Size, Lots, Margins, and the Allure of 200:1 Leverage
Normally, for most brokerages (at least the ones we recommend), a margin deposit of just $1,000 allows you to control a $100,000 position in the FOREX market. That's 100:1 leverage, or 1%. Or, said another way, a *regular full-sized account* -- sometimes referred to as a 100k account -- allows you to trade with lot sizes equal to $100,000. Each lot is worth $100,000 in currency. It will only require $1,000 to trade one lot (aka, "contract")
Think about this for a moment (it is what makes this market the hottest market to trade in right now): The FX broker has loaned you $99,000 dollars secured only by your $1,000. This is HUGE and, as you know by now, is what allows traders to make extraordinary incomes in this market. And, as you also are probably used to hearing - "leverage is two-edged sword" - it is what can cause you to lose a lot of money if you trade without rules or Stop-loss orders.
But, for argument's sake (and to keep the continued tone of this course on encouraging you to become a FOREX trader), let's just say you WERE the person to trade with reckless abandon -- with no common sense, no strategy, no money-management principles, etc. While we don't recommend that ... still, consider this:Unlike Futures (Commodity Trading), the market that most people associate with HIGH leverage, you can never have a debit balance when trading FOREX!So, despite the greater leverage associated with FX trading, it's still arguably less risky than futures trading. Futures markets are often prone to sudden and dramatic moves, against which you can't protect yourself, even by trading with protective stops. Your position may be liquidated at a loss, and you'll be liable for any resulting deficit in theaccount. But because of the FX market's deep liquidity and 24-hour, continuous trading, dangerous trading gaps and limit moves are eliminated. Orders are executed quickly, without slippage or partial fills.And finally, there are no margin calls -- for your protection, the FX broker's trading platform will automatically close out some or all of your open positions if your account equity -- meaning the total floating value of the account -- falls below the level required to hold the positions. Think of this as a final, automatic stop, always working on your behalf to prevent a debit balance.
======================A Quick NOTE about Margin:======================
Besides being generous with their margin requirements (LEVERAGE), FX brokers also are very flexible with you. In other words, you are able to select the degree of leverage, or "gearing" as they call it, that you feel works best for you. The default margin for most brokers is set at 1% (and, of course, most traders prefer the lowest possible margin requirement), but if you prefer to trade with less leverage, some brokers allow you to trade with a 2% margin.For instance, if you start with a 2% margin, then it will cost you $2000 to place a one-lot trade on a 100K (full) account. Your leverage is now 50:1 versus 100:1. As discussed in Lesson #3, currency moves in price-interest- points (pips), and in a regular (100K) account, each pip is worth about $8 to $10.
=========================================================Mini Lots VS. Full-sized Lots and How to Achieve up to 200:1 Leverage:=========================================================The Mini Account (explained more below) uses a different leverage calculation than a regular (100k) account. Instead of trading full-size currency lots (100,000 units), you'll trade in lots that are just 1/10 the size (10,000 currency units), which greatly reduces your risk. Pips in a Mini Account are worth, on average, $1 instead of the $8 to $10 mentioned above. The Mini FX account offers up to 200:1 leverage -- just a $50 margin deposit allows you to trade lots worth roughly $10,000 -- but the smaller lot sizes, with correspondingly smaller pip values, means that you'll be assuming less total risk. For example, while a 20-pip loss on a 100,000 EUR/USD position would be $200, the same loss on a 10,000 EUR/USD position in a Mini account would amount to $20.So, here's the OVERVIEW of LEVERAGE (Margin, Account Size) on each of the two accounts discussed above:100K (Regular Full-sized Account)- Minimum required account deposit = $2,000- Recommended required account deposit = $5,000 to $10,000- Traded in 100,000-unit currency lots- Default Margin: set at 1% ($1,000 per lot)- Leverage = 100:1 or 50:1 (if margin is set at 2%)MINI Account- Minimum required account deposit = $300- Recommended required account deposit = $2,000- Traded in 10,000-unit currency lots- Default Margin: set at 0.5% ($50 per mini-lot)- Leverage = 200:1=====================Because there is no downside to trading a MINI Account (i.e., you're still entitled to all the benefits that full-size FX account holders enjoy - same state-of-the art trading software, charts, resources, and tools, etc.), and it is ideal for a new FOREX trader to develop a disciplined, rational forex trading strategy without excessively focusing on profits and losses (note: with less than $5,000 starting capital, you can't be WRONG too many times when trading with a regular account). . . we've developed an extensive complimentary course on how to use a MINI account.If you haven't already read "Forex Freedom", just follow these instructions:
To DOWNLOAD "Rapid Forex Freedom":'Right-Click' on the link below,and use the 'save as' command.http://forexbooth.com/freedom.pdf
START SMALL, BUILD UP CONFIDENCE!!There is NO MAXIMUM trade volume on the Mini account. Although the standard trade size is 10,000 units – you are not limited to trading one lot! For instance, you can trade10,000 units, 50,000 units or 150,000 units. This means as you become more seasoned and build up confidence you can slowly increase the size of your positions to maximize profits (and losses). In fact the trade size of 10,000 units allows for more flexibility in terms of customizing the size of your trade. The ability to customize the size of the trade enables better risk management.
DEVELOP YOUR TRADING SKILLS WITHOUT FOCUSING ON P&L !!When trading 100,000 currency unit lots in a regular, full-size account, if you have a relatively small balance, you may tend to fixate on your equity fluctuations and sometimes base trading decisions on emotional reactions to these fluctuations. Many traders, for example, resist closing-out unsuccessful trades at a loss, because they hope that the market will turn in their favor. Conversely, many tend to immediately take profits when the market moves in the desired direction, rather than maximizing their gains by allowing profits to run. With less capital at stake in a Mini FX account, however, you can develop a disciplined trading methodology -- as well as the confidence needed to be a successful currency trader -- without the anxiety and distractions that come with large P&L swings.How to capitalize on these two advantages of the MINI account is exactly what we teach you in "Forex Freedom" -- we hope you enjoy it as much as Robert enjoyed writing it.And, to learn all about our famous technical-trading courses, just go here: http://www.rapidforexsystem.com/It is our goal to serve you with the best FOREX trading content on the planet. We have been labeled "the premier go-to website for value-packed, self-taught FOREX education & training." If you're not into forking out hundreds, or even thousands of dollars for seminars, DVD's and conference calls, we think you'll thoroughly enjoy what we have to offer.Until tomorrow's lesson, just remember, "Life is Short, Eat Desert First."
Think about this for a moment (it is what makes this market the hottest market to trade in right now): The FX broker has loaned you $99,000 dollars secured only by your $1,000. This is HUGE and, as you know by now, is what allows traders to make extraordinary incomes in this market. And, as you also are probably used to hearing - "leverage is two-edged sword" - it is what can cause you to lose a lot of money if you trade without rules or Stop-loss orders.
But, for argument's sake (and to keep the continued tone of this course on encouraging you to become a FOREX trader), let's just say you WERE the person to trade with reckless abandon -- with no common sense, no strategy, no money-management principles, etc. While we don't recommend that ... still, consider this:Unlike Futures (Commodity Trading), the market that most people associate with HIGH leverage, you can never have a debit balance when trading FOREX!So, despite the greater leverage associated with FX trading, it's still arguably less risky than futures trading. Futures markets are often prone to sudden and dramatic moves, against which you can't protect yourself, even by trading with protective stops. Your position may be liquidated at a loss, and you'll be liable for any resulting deficit in theaccount. But because of the FX market's deep liquidity and 24-hour, continuous trading, dangerous trading gaps and limit moves are eliminated. Orders are executed quickly, without slippage or partial fills.And finally, there are no margin calls -- for your protection, the FX broker's trading platform will automatically close out some or all of your open positions if your account equity -- meaning the total floating value of the account -- falls below the level required to hold the positions. Think of this as a final, automatic stop, always working on your behalf to prevent a debit balance.
======================A Quick NOTE about Margin:======================
Besides being generous with their margin requirements (LEVERAGE), FX brokers also are very flexible with you. In other words, you are able to select the degree of leverage, or "gearing" as they call it, that you feel works best for you. The default margin for most brokers is set at 1% (and, of course, most traders prefer the lowest possible margin requirement), but if you prefer to trade with less leverage, some brokers allow you to trade with a 2% margin.For instance, if you start with a 2% margin, then it will cost you $2000 to place a one-lot trade on a 100K (full) account. Your leverage is now 50:1 versus 100:1. As discussed in Lesson #3, currency moves in price-interest- points (pips), and in a regular (100K) account, each pip is worth about $8 to $10.
=========================================================Mini Lots VS. Full-sized Lots and How to Achieve up to 200:1 Leverage:=========================================================The Mini Account (explained more below) uses a different leverage calculation than a regular (100k) account. Instead of trading full-size currency lots (100,000 units), you'll trade in lots that are just 1/10 the size (10,000 currency units), which greatly reduces your risk. Pips in a Mini Account are worth, on average, $1 instead of the $8 to $10 mentioned above. The Mini FX account offers up to 200:1 leverage -- just a $50 margin deposit allows you to trade lots worth roughly $10,000 -- but the smaller lot sizes, with correspondingly smaller pip values, means that you'll be assuming less total risk. For example, while a 20-pip loss on a 100,000 EUR/USD position would be $200, the same loss on a 10,000 EUR/USD position in a Mini account would amount to $20.So, here's the OVERVIEW of LEVERAGE (Margin, Account Size) on each of the two accounts discussed above:100K (Regular Full-sized Account)- Minimum required account deposit = $2,000- Recommended required account deposit = $5,000 to $10,000- Traded in 100,000-unit currency lots- Default Margin: set at 1% ($1,000 per lot)- Leverage = 100:1 or 50:1 (if margin is set at 2%)MINI Account- Minimum required account deposit = $300- Recommended required account deposit = $2,000- Traded in 10,000-unit currency lots- Default Margin: set at 0.5% ($50 per mini-lot)- Leverage = 200:1=====================Because there is no downside to trading a MINI Account (i.e., you're still entitled to all the benefits that full-size FX account holders enjoy - same state-of-the art trading software, charts, resources, and tools, etc.), and it is ideal for a new FOREX trader to develop a disciplined, rational forex trading strategy without excessively focusing on profits and losses (note: with less than $5,000 starting capital, you can't be WRONG too many times when trading with a regular account). . . we've developed an extensive complimentary course on how to use a MINI account.If you haven't already read "Forex Freedom", just follow these instructions:
To DOWNLOAD "Rapid Forex Freedom":'Right-Click' on the link below,and use the 'save as' command.http://forexbooth.com/freedom.pdf
START SMALL, BUILD UP CONFIDENCE!!There is NO MAXIMUM trade volume on the Mini account. Although the standard trade size is 10,000 units – you are not limited to trading one lot! For instance, you can trade10,000 units, 50,000 units or 150,000 units. This means as you become more seasoned and build up confidence you can slowly increase the size of your positions to maximize profits (and losses). In fact the trade size of 10,000 units allows for more flexibility in terms of customizing the size of your trade. The ability to customize the size of the trade enables better risk management.
DEVELOP YOUR TRADING SKILLS WITHOUT FOCUSING ON P&L !!When trading 100,000 currency unit lots in a regular, full-size account, if you have a relatively small balance, you may tend to fixate on your equity fluctuations and sometimes base trading decisions on emotional reactions to these fluctuations. Many traders, for example, resist closing-out unsuccessful trades at a loss, because they hope that the market will turn in their favor. Conversely, many tend to immediately take profits when the market moves in the desired direction, rather than maximizing their gains by allowing profits to run. With less capital at stake in a Mini FX account, however, you can develop a disciplined trading methodology -- as well as the confidence needed to be a successful currency trader -- without the anxiety and distractions that come with large P&L swings.How to capitalize on these two advantages of the MINI account is exactly what we teach you in "Forex Freedom" -- we hope you enjoy it as much as Robert enjoyed writing it.And, to learn all about our famous technical-trading courses, just go here: http://www.rapidforexsystem.com/It is our goal to serve you with the best FOREX trading content on the planet. We have been labeled "the premier go-to website for value-packed, self-taught FOREX education & training." If you're not into forking out hundreds, or even thousands of dollars for seminars, DVD's and conference calls, we think you'll thoroughly enjoy what we have to offer.Until tomorrow's lesson, just remember, "Life is Short, Eat Desert First."
Lesson #9: FOREX Order Types and How to Use Them
When you open your trading station software (provided to you for fr.ee by any one of our recommended brokers), you will find there are TWO main ways to ENTER a market or, said in another way, there are two ways to place an initial order to buy or sell any currency pair.
(AFTER we discuss the MARKET and ENTRY order, we'll cover how to protect your profits and limit any potential or realized losses with the STOP and LIMIT order).=============================
MARKET ORDER - an order to buy or sell a currency pair at the market price the instant that the order is received and processed (within seconds of hitting the "OK" button on your screen). When a market order is placed, you are simply saying "I'll buy or sell the currency pair at whatever price it is at when my order gets processed."
Example: If you are looking to place an order for JPY (YEN) when the dealing price is 104.00/05, a market order will request to buy JPY at 104.00 or will request to sell JPY at 104.05 (of course, whether you BUY it or SELL it is up to you and is chosen on the software drop down box. And, again, once you've made your selection, this order is placed with a single click and is executed almost instantly).Within the courses we have for sale at RapidForex.com, 99% of the time, we will have you avoiding MARKET orders. The reason? They tend to compel the trader to act on impulse instead of according to a trading plan.
ENTRY ORDER - an order to buy or sell a currency pair when it reaches a certain price target. This can be any price in theory. You could set an entry order for the low price of a time period, or the high price of a time period. For instance, in one of our courses (Rapid Forex Education Manual 9.0) we teach you to always set an ENTRY order to be the same price as the *open price* of the time period. When you place an ENTRY order to BUY, for example, you are simply saying "I want to buy this currency pair at a certain price, if it never reaches that price, I don't want to purchase the pair."Example: the current "real-time" quote for the EUR/USD is 1.3317. Your analysis shows that IF the pair hits 1.3329 (a key resistance point) that there's a high-probability the pair will turnaround (retrace down) so you decide to place an ENTRY order to sell the EUR/USD at 1.3327.The ENTRY order above shows you how you are fully-empowered to pick a price and place an order to sell at that price. If the market hits 1.3327 ... great, you now have an OPEN position and, as long as the EUR/USD pair keeps dropping and you close out (exit) your trade at a price lower than 1.3327, you make money.And, if you don't get in the trade, via your ENTRY order, don't worry. New trades are constantly developing and if your order entry doesn't get filled you can't lose any money. Learn not to be upset when an ENTRY order isn't filled. You are saved most of the time anyway because the currency pair did the opposite of what you thought and you would have lost money, most likely, if it did get filled. Remember, when orders are not filled, it means you never risked any money!
=============================
After your ENTRY order is placed, you can set a STOP and/or LIMIT order if you desire. STOP and LIMIT orders are both ways to exit a trade, automatically (i.e., without closing out your position via the click of your mouse - manually), after the trade is entered.A STOP order (something we always recommend) is used to stop losses. A LIMIT order (recommended if you can't monitor your open trade) is used to redeem profits. Where these orders are placed, in relation to your open trade, depends on the direction of the entry order.Example STOP order: If you have an open buy position on USD/JPY, which you bought at 104.20, and you want to set a stop order in case the U.S. Dollar starts to depreciate against the YEN, to stop your loss (or limit your loss - however you want to look at it), you could set a stop order at 104.00, thus closing your position at a 20-pip loss.Tip: a STOP order is always placed BELOW the current market value of that currency pair (if you are in a long trade).Example LIMIT order: Assume you placed an ENTRY order to BUY EUR/USD for 1.6100. You might place the STOP order at 1.6081 (limiting your loss to 19 pips) but, at the same time, you could place a LIMIT order for somewhere around 1.6171. If the currency pair reaches that price level, the LIMIT order becomes a market order to sell, or close out, the BUY position for a 71-pip profit.Tip: a LIMIT order is always placed ABOVE the current market value of that currency pair (if you are in a long trade).
=============================This is all you really need to know in terms of placing orders. It's really not that complicated and, of course, our courses will walk you through the finer points of calculating your entry and exit points and ensuring you know how to scale in and out of trades with ease and precision.If you've ever traded ONLINE before, maybe using e-Trade or a stock brokers online software package, you will be pleasantly surprised at just how intuitive, fun, and easy it is to use the desktop-based online software that a reputable FX broker can provide you.
(AFTER we discuss the MARKET and ENTRY order, we'll cover how to protect your profits and limit any potential or realized losses with the STOP and LIMIT order).=============================
MARKET ORDER - an order to buy or sell a currency pair at the market price the instant that the order is received and processed (within seconds of hitting the "OK" button on your screen). When a market order is placed, you are simply saying "I'll buy or sell the currency pair at whatever price it is at when my order gets processed."
Example: If you are looking to place an order for JPY (YEN) when the dealing price is 104.00/05, a market order will request to buy JPY at 104.00 or will request to sell JPY at 104.05 (of course, whether you BUY it or SELL it is up to you and is chosen on the software drop down box. And, again, once you've made your selection, this order is placed with a single click and is executed almost instantly).Within the courses we have for sale at RapidForex.com, 99% of the time, we will have you avoiding MARKET orders. The reason? They tend to compel the trader to act on impulse instead of according to a trading plan.
ENTRY ORDER - an order to buy or sell a currency pair when it reaches a certain price target. This can be any price in theory. You could set an entry order for the low price of a time period, or the high price of a time period. For instance, in one of our courses (Rapid Forex Education Manual 9.0) we teach you to always set an ENTRY order to be the same price as the *open price* of the time period. When you place an ENTRY order to BUY, for example, you are simply saying "I want to buy this currency pair at a certain price, if it never reaches that price, I don't want to purchase the pair."Example: the current "real-time" quote for the EUR/USD is 1.3317. Your analysis shows that IF the pair hits 1.3329 (a key resistance point) that there's a high-probability the pair will turnaround (retrace down) so you decide to place an ENTRY order to sell the EUR/USD at 1.3327.The ENTRY order above shows you how you are fully-empowered to pick a price and place an order to sell at that price. If the market hits 1.3327 ... great, you now have an OPEN position and, as long as the EUR/USD pair keeps dropping and you close out (exit) your trade at a price lower than 1.3327, you make money.And, if you don't get in the trade, via your ENTRY order, don't worry. New trades are constantly developing and if your order entry doesn't get filled you can't lose any money. Learn not to be upset when an ENTRY order isn't filled. You are saved most of the time anyway because the currency pair did the opposite of what you thought and you would have lost money, most likely, if it did get filled. Remember, when orders are not filled, it means you never risked any money!
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After your ENTRY order is placed, you can set a STOP and/or LIMIT order if you desire. STOP and LIMIT orders are both ways to exit a trade, automatically (i.e., without closing out your position via the click of your mouse - manually), after the trade is entered.A STOP order (something we always recommend) is used to stop losses. A LIMIT order (recommended if you can't monitor your open trade) is used to redeem profits. Where these orders are placed, in relation to your open trade, depends on the direction of the entry order.Example STOP order: If you have an open buy position on USD/JPY, which you bought at 104.20, and you want to set a stop order in case the U.S. Dollar starts to depreciate against the YEN, to stop your loss (or limit your loss - however you want to look at it), you could set a stop order at 104.00, thus closing your position at a 20-pip loss.Tip: a STOP order is always placed BELOW the current market value of that currency pair (if you are in a long trade).Example LIMIT order: Assume you placed an ENTRY order to BUY EUR/USD for 1.6100. You might place the STOP order at 1.6081 (limiting your loss to 19 pips) but, at the same time, you could place a LIMIT order for somewhere around 1.6171. If the currency pair reaches that price level, the LIMIT order becomes a market order to sell, or close out, the BUY position for a 71-pip profit.Tip: a LIMIT order is always placed ABOVE the current market value of that currency pair (if you are in a long trade).
=============================This is all you really need to know in terms of placing orders. It's really not that complicated and, of course, our courses will walk you through the finer points of calculating your entry and exit points and ensuring you know how to scale in and out of trades with ease and precision.If you've ever traded ONLINE before, maybe using e-Trade or a stock brokers online software package, you will be pleasantly surprised at just how intuitive, fun, and easy it is to use the desktop-based online software that a reputable FX broker can provide you.
Lesson #8: "A rising tide raises all ships" ... Or ... How To Determine if The Trend is truly your friend
As we explained yesterday, the basis behind using technical analysis is to find trends when they first develop so you can ride the trend until it ends. The foreign exchange market is a very STRONG trending market and is, therefore, a place where technical analysis can be very effective.
But, as sure as the day is blue, we still know and meet traders every week who still end up buying (being "long") while the currency pair is in a basic downtrend, or selling short when a market is in a uptrend.
The key here is this: (it's so simple, some want to overlook it or "argue" with it).Use as many technical indicators as you want, or create a personalized trading strategy based off a combination of indicators, to RECOGNIZE THE TREND. In other words, professional FOREX traders try to identify the major trend, the intermediate trend, and the short-term trend and then construct their trades in that direction, based off how long their rules allow them to hold a position.
"We know that prices move up and down. They always have and they always will. My theory is that behind these major movements is an irresistible force. That is all one needs to know. It is not well to be too curious about all the reasons behind price movements. You risk the danger of clouding your mind with non-essentials. Just recognize that the movement is there and take advantage of it by steering your speculative ship along with the tide. Do not argue with the condition, and most of all, do not try to combat it."
-- Jesse Livermore
So, what is Mr. Livermore - one of the most colorful, flamboyant and respected market speculators of all time - telling us?In our terms, he's saying: If the action of the market shows your judgment to be correct, the successful trader 'stays with the market' and endeavors to make the maximum profit on each trade, according to his/her risk-to-reward / equity management rules. If and when the market goes against him/her, the smart trader will take profits and get out. In a narrow market (see definition below), when prices are not going anywhere to speak of, but move within a narrow range, there is no sense in trying to anticipate when the next BIG movement is going to be - up or down.What Mr. Livermore is saying is to watch the market and see what the market is telling you about upcoming trends. Never argue with the market, or ask it for reasons or explanations.=========================The market often display's some very familiar patterns of price movement. Once a pattern is established, it becomes the most probable course of future price action until the market changes.
There are two types of markets which will become important for you to identify; trending and trend-less. Each market type has two specific patterns which you will also notice over time. These market types and patterns are defined as follows:>>> Trending - Steady elongated price movements with less than a 45-degree angel with occasional pauses, profit taking, or resting periods.In a Trending market, you have:- Uptrends - A pattern of higher highs and higher lows.- Downtrends - A pattern of lower lows and lower highs.>>> Trend-less - Erratic price movements which are often steep ( greater than 45 -degree angle ) and cannot sustain and therefore must reverse. Although the movements can move many points in a short period of time, they often result in very little net price movement over time.In a Trend-less market, you have:- Choppy - An erratic pattern of higher highs and lower lows.- Sideways - A narrow pattern of lower highs and higher lows.While up-trend and down-trend days can offer excellent trading results, choppy markets often create stop outs, while sideways markets produce for little in either direction. Your trading objective is to get into a trending market and ride until you make our target objective.We cover many Trend Trading Strategies in our book, "Rapid Forex Surfing" -- you will learn how to identify and draw your own channel trendlines, support and resistance lines, triangle patterns, chart key top and bottom formations, etc.
But, as sure as the day is blue, we still know and meet traders every week who still end up buying (being "long") while the currency pair is in a basic downtrend, or selling short when a market is in a uptrend.
The key here is this: (it's so simple, some want to overlook it or "argue" with it).Use as many technical indicators as you want, or create a personalized trading strategy based off a combination of indicators, to RECOGNIZE THE TREND. In other words, professional FOREX traders try to identify the major trend, the intermediate trend, and the short-term trend and then construct their trades in that direction, based off how long their rules allow them to hold a position.
"We know that prices move up and down. They always have and they always will. My theory is that behind these major movements is an irresistible force. That is all one needs to know. It is not well to be too curious about all the reasons behind price movements. You risk the danger of clouding your mind with non-essentials. Just recognize that the movement is there and take advantage of it by steering your speculative ship along with the tide. Do not argue with the condition, and most of all, do not try to combat it."
-- Jesse Livermore
So, what is Mr. Livermore - one of the most colorful, flamboyant and respected market speculators of all time - telling us?In our terms, he's saying: If the action of the market shows your judgment to be correct, the successful trader 'stays with the market' and endeavors to make the maximum profit on each trade, according to his/her risk-to-reward / equity management rules. If and when the market goes against him/her, the smart trader will take profits and get out. In a narrow market (see definition below), when prices are not going anywhere to speak of, but move within a narrow range, there is no sense in trying to anticipate when the next BIG movement is going to be - up or down.What Mr. Livermore is saying is to watch the market and see what the market is telling you about upcoming trends. Never argue with the market, or ask it for reasons or explanations.=========================The market often display's some very familiar patterns of price movement. Once a pattern is established, it becomes the most probable course of future price action until the market changes.
There are two types of markets which will become important for you to identify; trending and trend-less. Each market type has two specific patterns which you will also notice over time. These market types and patterns are defined as follows:>>> Trending - Steady elongated price movements with less than a 45-degree angel with occasional pauses, profit taking, or resting periods.In a Trending market, you have:- Uptrends - A pattern of higher highs and higher lows.- Downtrends - A pattern of lower lows and lower highs.>>> Trend-less - Erratic price movements which are often steep ( greater than 45 -degree angle ) and cannot sustain and therefore must reverse. Although the movements can move many points in a short period of time, they often result in very little net price movement over time.In a Trend-less market, you have:- Choppy - An erratic pattern of higher highs and lower lows.- Sideways - A narrow pattern of lower highs and higher lows.While up-trend and down-trend days can offer excellent trading results, choppy markets often create stop outs, while sideways markets produce for little in either direction. Your trading objective is to get into a trending market and ride until you make our target objective.We cover many Trend Trading Strategies in our book, "Rapid Forex Surfing" -- you will learn how to identify and draw your own channel trendlines, support and resistance lines, triangle patterns, chart key top and bottom formations, etc.
Tuesday, April 15, 2008
Charting Your Way to Success: FOREX Price Charts, What They Mean and How to Use Them
When I thought about it, numerous things came to mind – such as discipline, trading rules, not being greedy etc., but what came out of my mouth was really no big surprise:
"Understanding the charts... they represent so, so much. Ya gotta know they represent the lifeblood of the market. Know them well and you'll be head-and-shoulders above the rest."We at RapidForex.com will be the first to admit that reading charts, and interpreting patterns, are more an art form than a skill; however, knowing you'll have to be personally in- tune and subjectively-creative with the charts (basing your entry and exit decisions on YOUR OWN combined methods of technical analysis) doesn't mean you should run-for-the-hills.
Nope, don't be scared...The beauty of FOREX charts, as opposed to charts used for, say, daytrading stocks, is that they are pretty easy to interpret and use. They're a reflection of a slower-moving, stable economy (the one of a country) compared to the future and daily drama of company reports, Wall Street analysts and shareholder demands.And, don't forget...unlike stocks, currency charts rarely spend much time in tight trading ranges and have the tendency to develop strong trends (even though the FX market may be volatile, it's more predictable). And, rather than tens of thousands of stocks to analyze, you only have a few mayor currencies to trade.===================The complimentary charting software provided by any one of our recommended brokers will be absolutely sufficient for you to put your finger (eye) on the pulse of the market for any one currency pair.Understanding just a few basic points, below, of the technical analysis of currency chart reading can lead to increased profit potential that far exceed the hazards ofother markets.===================
Pricing - Price reflects the perceptions and action taken by the market participants. It is the urgency between buyers and sellers in the Over-The-Counter (OTC) or 'interbank' market that creates price movement. Thus, all fundamental factors are quickly discounted in price. Therefore, by studying the price charts, you are indirectly seeing the fundamental and market psychology all at once - after all the market is fed by two emotions - Greed and Fear – and once you understand that, then you begin to understand the psychology of the market and how it relates to the chart patterns.Data Window - Most FX online charting stations ,when you click on a price bar or candlestick, will display a small box of data usually called a display window which will contain the following items:H = Highest_Price L = Lowest_Price O = Opening_Price C = Close_Price (or Last_Price)The most common types of price bars, used in FOREX trading, are the Bar Chart and the Candlestick chart:Bars Charts - Price bars are a linear representation (a line) of a period of time. This enables the viewer to see a graphic representation summarizing the activity of a specific time frame. As an example, we use one minute and five-minute time intervals for our system. Each bar has similar characteristics and tells the viewer several important pieces of information. First, the highest point of the bar represents the highest price that was achieved during that time period. The lowest point of the bar represents the lowest price during the same period. Regular bars display a small dot on the left side of the bar which represents the opening price of the period and the small dot on the right side represents the closing price of the period.Candlesticks - Japanese Candlesticks, or simply Candlesticks as they are now known, are used to represent the same information as Price bars. The only difference is that the difference between the open and close form the body of a box which is displayed with a color inside. A red color means that the close was lower than the open, and the blue colorrepresents that the close was higher than the open. If the box has a line going up from the box it represents the high and is called the wick. If the box has a line going down from the box, it represents the low and is called the tail. Many interpretations can be made from these "candlesticks" and many books have been written on the art of interpretingthese bars (you'll find a few links in our Resources Section).So, the main thing to keep in mind between the two types of price charts is this:Candlestick charts are similar to bar charts in that the top tip of a vertical line represents the high and bottom tip represents the low. However, market activity between the OPEN and the CLOSE is represented differently by the use of candlestick bodies.Because of their colored bodies, candles provide greater visual detail in their chart patterns than bar charts. Which is why we recommend you become intimately familiar with Candlestick charts or, as we like to call them, "bar charts on steroids."=========================Chart Intervals & Time Frames:=========================A chart Time Scale & Period, or timeframe, basically refers to the duration of time that passes between the OPEN and the CLOSE of a bar or candlestick.While most of our trading methods, outlined in our course packages, will have you viewing the 5-min and 1-min candle charts, it is often useful to look at larger time frames (like the 1-hour or Daily chart).For instance, with your broker software, you will be able to view a currency pair, in a 1-hour timeframe over a 2-day period, 5-day period, 10-day period, 20-day period and 30-day period.Most of the short-term time intervals (5-min and 1-min charts) are used for entry and exit points and the longer-term time intervals (1-hour and daily charts) are used to gauge where the CORRECT trend is (we teach this extensively in our course titled "Rapid Forex Surfing").
"Understanding the charts... they represent so, so much. Ya gotta know they represent the lifeblood of the market. Know them well and you'll be head-and-shoulders above the rest."We at RapidForex.com will be the first to admit that reading charts, and interpreting patterns, are more an art form than a skill; however, knowing you'll have to be personally in- tune and subjectively-creative with the charts (basing your entry and exit decisions on YOUR OWN combined methods of technical analysis) doesn't mean you should run-for-the-hills.
Nope, don't be scared...The beauty of FOREX charts, as opposed to charts used for, say, daytrading stocks, is that they are pretty easy to interpret and use. They're a reflection of a slower-moving, stable economy (the one of a country) compared to the future and daily drama of company reports, Wall Street analysts and shareholder demands.And, don't forget...unlike stocks, currency charts rarely spend much time in tight trading ranges and have the tendency to develop strong trends (even though the FX market may be volatile, it's more predictable). And, rather than tens of thousands of stocks to analyze, you only have a few mayor currencies to trade.===================The complimentary charting software provided by any one of our recommended brokers will be absolutely sufficient for you to put your finger (eye) on the pulse of the market for any one currency pair.Understanding just a few basic points, below, of the technical analysis of currency chart reading can lead to increased profit potential that far exceed the hazards ofother markets.===================
Pricing - Price reflects the perceptions and action taken by the market participants. It is the urgency between buyers and sellers in the Over-The-Counter (OTC) or 'interbank' market that creates price movement. Thus, all fundamental factors are quickly discounted in price. Therefore, by studying the price charts, you are indirectly seeing the fundamental and market psychology all at once - after all the market is fed by two emotions - Greed and Fear – and once you understand that, then you begin to understand the psychology of the market and how it relates to the chart patterns.Data Window - Most FX online charting stations ,when you click on a price bar or candlestick, will display a small box of data usually called a display window which will contain the following items:H = Highest_Price L = Lowest_Price O = Opening_Price C = Close_Price (or Last_Price)The most common types of price bars, used in FOREX trading, are the Bar Chart and the Candlestick chart:Bars Charts - Price bars are a linear representation (a line) of a period of time. This enables the viewer to see a graphic representation summarizing the activity of a specific time frame. As an example, we use one minute and five-minute time intervals for our system. Each bar has similar characteristics and tells the viewer several important pieces of information. First, the highest point of the bar represents the highest price that was achieved during that time period. The lowest point of the bar represents the lowest price during the same period. Regular bars display a small dot on the left side of the bar which represents the opening price of the period and the small dot on the right side represents the closing price of the period.Candlesticks - Japanese Candlesticks, or simply Candlesticks as they are now known, are used to represent the same information as Price bars. The only difference is that the difference between the open and close form the body of a box which is displayed with a color inside. A red color means that the close was lower than the open, and the blue colorrepresents that the close was higher than the open. If the box has a line going up from the box it represents the high and is called the wick. If the box has a line going down from the box, it represents the low and is called the tail. Many interpretations can be made from these "candlesticks" and many books have been written on the art of interpretingthese bars (you'll find a few links in our Resources Section).So, the main thing to keep in mind between the two types of price charts is this:Candlestick charts are similar to bar charts in that the top tip of a vertical line represents the high and bottom tip represents the low. However, market activity between the OPEN and the CLOSE is represented differently by the use of candlestick bodies.Because of their colored bodies, candles provide greater visual detail in their chart patterns than bar charts. Which is why we recommend you become intimately familiar with Candlestick charts or, as we like to call them, "bar charts on steroids."=========================Chart Intervals & Time Frames:=========================A chart Time Scale & Period, or timeframe, basically refers to the duration of time that passes between the OPEN and the CLOSE of a bar or candlestick.While most of our trading methods, outlined in our course packages, will have you viewing the 5-min and 1-min candle charts, it is often useful to look at larger time frames (like the 1-hour or Daily chart).For instance, with your broker software, you will be able to view a currency pair, in a 1-hour timeframe over a 2-day period, 5-day period, 10-day period, 20-day period and 30-day period.Most of the short-term time intervals (5-min and 1-min charts) are used for entry and exit points and the longer-term time intervals (1-hour and daily charts) are used to gauge where the CORRECT trend is (we teach this extensively in our course titled "Rapid Forex Surfing").
Buying (going "long") and selling (going "short") in the FOREX market. How to do it and calculate your profit or loss (you won't win ALL the time, bu
RULE #1) ~ Cut your losers; let your winners ride.
Let's be frank (we never promised any rose-colored glasses here did we? Well, at least not the ones you can wear ALL the time): YOU WILL HAVE LOSING TRADES.We do. Every FOREX trader does. The key to being a consistent, predictable, reliable trader is to, at the end of the day, add up more wins than losses. And, when you KNOW (based off your trading rules), without a doubt, that YES, indeed you are, in a losing trade, don't keep losing money (lowering your stop loss) just to *prove you are right* or your rules are wrong (however you want to look at it).
Let's face it - you can't turn a sow's ear into a silk purse. You can't change the spots of a leopard and you can't turn chicken poop into chicken salad. The best trades are usually "right" immediately (the techniques, rules, methods and strategies we teach at RapidForex.com will be your best indicator for just what a "right" trade really is).Remember, people have been trading the markets for a hundred and sixty years. The smart traders know there's going to be another trade. Cut your loses short and compound those winning positions.RULE #2) ~ Thou Shalt Not Trade the FOREX Without the Placing of a Stop Loss Order.When you place a STOP order, right along with your ENTRY order, via your online trade station, you've just automatically prevented a potential loss from "running" too far.Before initiating any trade, if you haven't already figured out at what point you would be wrong and would want to cut your loses or, at the very least, reevaluate your position from the sidelines, then you shouldn't be putting on the trade in the first place.Show us a FOREX trader who doesn't use stop loss orders and we'll show you someone who loses a lot of money.=================To make a profit, in the FOREX, a trader (possibly YOU soon?) can enter the market as a *buy position* (known as going "long") or a *sell position* (known as going "short").For discussion, let's assume you've been studying the EURO (which, if you remember from yesterday's lesson, is paired first with the U.S. dollar or USD. Since it is paired first, it is the base currency).
Your trading methods, rules, strategies, etc., tell you that prices will rise during a particular timeframe. So you buy the EUR/USD pair (or, technically, you will simultaneously buy euros, the base currency, and sell dollars).You open up your handy trading station software (provided to you for free by the online broker), which resides on your desktop, and you see that the EUR/USD pair is trading at:<<>>REMEMBER: the quote to the left of the / (1.3242) refers to the bid or "sell" price (what you obtain in USD when you sell EUR). The quote to the right of the / (1.3245) is used to obtain the ask or "buy" price (what you have to pay in USD if you buy EUR).So, since you believe that the market price for the EUR/USD pair will go higher, you will enter a *buy position* in the market. For simplicities sake, let's say you bought one lot at 1.3245. As long as you sell back the pair at a higher price, then you make money.But, no worries. This seemingly elaborate process is handled, and even calculated for you, via the broker's software mentioned above. The chart software and the quoteboard are in agreement with all sides of the currencies.=================To illustrate a typical FX SELL trade, consider this scenario involving the USD/JPY currency pair:REMEMBER ~ Selling ("going short") the currency pair implies selling the first, base currency, and buying the second, quote currency. You sell the currency pair if you believe the base currency (USD) will go down relative to the quote currency (JPY), or equivalently, that the quote currency (JPY) will go up relative to the base currency (USD).NOTE: while the Profit Calculations, on the Short-sell trade scenario below, may seem somewhat complicated if you've never been in the FOREX market before, trust us when we say, "this process is nearly seamless through your broker trade station (software). We're just showing you this thought- process below so you can SEE how a PROFIT occurs even when SELLING a currency pair.============================The current bid/ask price for USD/JPY is 105.26/105.30, meaning you can buy $1 US for 105.30 Japanese YEN or sell $1 US for 105.26 YEN.Suppose you decide that the US Dollar (USD) is overvalued against the YEN (JPY). To execute this strategy, you would sell Dollars (simultaneously buying YEN), and then wait for the exchange rate to rise.So you make the trade: selling US $100,000 and purchasing 10,526,000 YEN. (Remember, at 1% margin, your initial margin deposit would be $1,000.)As you expected, USD/JPY falls to 104.26/104.30, meaning you can now buy $1 US for $104.30 Japanese YEN or sell $1 US for 104.26Since you're short dollars (and are long YEN), you must now buy dollars and sell back the YEN to realize any profit.You buy US $100,000 at the current USD/JPY rate of 104.30, and receive 10,430,000 YEN. Since you originally bought (paid for) 10,526,000 YEN, your profit is 96,000 YEN.To calculate your P&L in terms of US dollars, simply divide 96,000 by the current USD/JPY rate of 104.30.Total profit = US $920.42=============================
Stay Tuned for tomorrow's email from us. It will have the following Subject line:
Let's be frank (we never promised any rose-colored glasses here did we? Well, at least not the ones you can wear ALL the time): YOU WILL HAVE LOSING TRADES.We do. Every FOREX trader does. The key to being a consistent, predictable, reliable trader is to, at the end of the day, add up more wins than losses. And, when you KNOW (based off your trading rules), without a doubt, that YES, indeed you are, in a losing trade, don't keep losing money (lowering your stop loss) just to *prove you are right* or your rules are wrong (however you want to look at it).
Let's face it - you can't turn a sow's ear into a silk purse. You can't change the spots of a leopard and you can't turn chicken poop into chicken salad. The best trades are usually "right" immediately (the techniques, rules, methods and strategies we teach at RapidForex.com will be your best indicator for just what a "right" trade really is).Remember, people have been trading the markets for a hundred and sixty years. The smart traders know there's going to be another trade. Cut your loses short and compound those winning positions.RULE #2) ~ Thou Shalt Not Trade the FOREX Without the Placing of a Stop Loss Order.When you place a STOP order, right along with your ENTRY order, via your online trade station, you've just automatically prevented a potential loss from "running" too far.Before initiating any trade, if you haven't already figured out at what point you would be wrong and would want to cut your loses or, at the very least, reevaluate your position from the sidelines, then you shouldn't be putting on the trade in the first place.Show us a FOREX trader who doesn't use stop loss orders and we'll show you someone who loses a lot of money.=================To make a profit, in the FOREX, a trader (possibly YOU soon?) can enter the market as a *buy position* (known as going "long") or a *sell position* (known as going "short").For discussion, let's assume you've been studying the EURO (which, if you remember from yesterday's lesson, is paired first with the U.S. dollar or USD. Since it is paired first, it is the base currency).
Your trading methods, rules, strategies, etc., tell you that prices will rise during a particular timeframe. So you buy the EUR/USD pair (or, technically, you will simultaneously buy euros, the base currency, and sell dollars).You open up your handy trading station software (provided to you for free by the online broker), which resides on your desktop, and you see that the EUR/USD pair is trading at:<<>>REMEMBER: the quote to the left of the / (1.3242) refers to the bid or "sell" price (what you obtain in USD when you sell EUR). The quote to the right of the / (1.3245) is used to obtain the ask or "buy" price (what you have to pay in USD if you buy EUR).So, since you believe that the market price for the EUR/USD pair will go higher, you will enter a *buy position* in the market. For simplicities sake, let's say you bought one lot at 1.3245. As long as you sell back the pair at a higher price, then you make money.But, no worries. This seemingly elaborate process is handled, and even calculated for you, via the broker's software mentioned above. The chart software and the quoteboard are in agreement with all sides of the currencies.=================To illustrate a typical FX SELL trade, consider this scenario involving the USD/JPY currency pair:REMEMBER ~ Selling ("going short") the currency pair implies selling the first, base currency, and buying the second, quote currency. You sell the currency pair if you believe the base currency (USD) will go down relative to the quote currency (JPY), or equivalently, that the quote currency (JPY) will go up relative to the base currency (USD).NOTE: while the Profit Calculations, on the Short-sell trade scenario below, may seem somewhat complicated if you've never been in the FOREX market before, trust us when we say, "this process is nearly seamless through your broker trade station (software). We're just showing you this thought- process below so you can SEE how a PROFIT occurs even when SELLING a currency pair.============================The current bid/ask price for USD/JPY is 105.26/105.30, meaning you can buy $1 US for 105.30 Japanese YEN or sell $1 US for 105.26 YEN.Suppose you decide that the US Dollar (USD) is overvalued against the YEN (JPY). To execute this strategy, you would sell Dollars (simultaneously buying YEN), and then wait for the exchange rate to rise.So you make the trade: selling US $100,000 and purchasing 10,526,000 YEN. (Remember, at 1% margin, your initial margin deposit would be $1,000.)As you expected, USD/JPY falls to 104.26/104.30, meaning you can now buy $1 US for $104.30 Japanese YEN or sell $1 US for 104.26Since you're short dollars (and are long YEN), you must now buy dollars and sell back the YEN to realize any profit.You buy US $100,000 at the current USD/JPY rate of 104.30, and receive 10,430,000 YEN. Since you originally bought (paid for) 10,526,000 YEN, your profit is 96,000 YEN.To calculate your P&L in terms of US dollars, simply divide 96,000 by the current USD/JPY rate of 104.30.Total profit = US $920.42=============================
Stay Tuned for tomorrow's email from us. It will have the following Subject line:
How Currencies Are Traded, Understanding FOREX Quotes, Market Structure And How to Love a *pip* -- soon to be your best friend
The amount of money you need to place a trade (known as "margin") is all that can be lost !
I state it like this (in a glass-is-half-empty, negatively-presumptive kind of way) because, even though I know with proper self-taught education you're NOT going to lose as much as you win anyway, I want you to know thate the super-high leverage associated with FOREX trading (200:1 is possible; meaning if you put up $1 the trading vendor will allow you to trade like you really have $200), it's still arguably less risky than futures (commodities) trading.
(And, forget stocks, you'll never get this type of LEVERAGE in the equities market)
Futures markets are often prone to sudden and dramatic moves, against which you can't protect yourself, even by trading with protective stops. Your position may be liquidated at a loss, and you'll be liable for any resulting deficit in the account. But because of the FX market's deep liquidity and 24-hour, continuous trading, dangerous trading gaps and limit moves are eliminated. Orders are executed quickly, without slippage or partial fills. And finally, there are no margin calls -- for your protection, ALL our recommended brokers will automatically close out some or all of your open positions if your account equity falls below the level required to hold the positions. Think of this as a final, automatic stop, always working on your behalf to prevent a debit balance. In fact, if you pick from our list of recommended brokers, we guarantee that you'll never lose more than you have in your FOREX account!
=====================
Currencies are traded in dollar amounts called *lots* -- One lot is equal to $1,000, which controls $100,000 in currency. This is the "margin" I talked about above. Control $100,000 worth of currency for only 1,000 dollars. Good stuff, right?
Okay, let's move on....
Currencies are always traded in pairs in the FOREX. The pairs have a unique notation that expresses what currencies are being traded. The symbol for a currency pair will always be in the form ABC/DEF. ABC/DEF is not a real currency pair, it is an example of a symbol for a currency pair. In this example ABC is the symbol for one countries currency and DEF is the symbol for another countries currency.
Here are some of the common symbols used in the Forex:
USD - The US Dollar
EUR - The currency of the European Union "EURO"
GBP - The British Pound
JPN - The Japanese Yen
CHF - The Swiss Franc
AUD - The Australian Dollar
CAD - The Canadian Dollar
There are symbols for other currencies as well, but these are the most commonly traded ones.
A currency can never be traded by itself. So you can not ever trade a EUR by itself. You always need to compare one currency with another currency to make a trade possible.
Some of the common PAIRS are:
EUR/USD Euro / US Dollar
"Euro"
USD/JPY US Dollar / Japanese Yen
"Dollar Yen"
GBP/USD British Pound / US Dollar
"Cable"
USD/CAD US Dollar / Canadian Dollar
"Dollar Canada"
AUD/USD Australian Dollar/US Dollar
"Aussie Dollar"
USD/CHF US Dollar / Swiss Franc
"Swissy"
EUR/JPY Euro / Japanese Yen
"Euro Yen"
The listed currency pairs above look like a fraction. The numerator (top of the fraction or "left" of the / however you want to SEE it) is called the base currency. The denominator (bottom of the fraction or "right" of the / however you want to SEE it) is called the counter currency. When you place an order to buy the EUR/USD, for instance, you are actually buying the EUR and selling the USD. If you were to sell the pair, you would be selling the EUR and buying the USD. So if you buy or sell a currency PAIR, you are buying/selling the base currency. You are always doing the opposite of what you did with to base currency with the counter currency.
If this seems confusing then you're in luck. You can always get by with just thinking of the entire pair as one item. Then you are just buying or selling that one item. Thinking like this will still enable you to place trades. You only need to be aware of the base/counter concept for Fundamental Analysis issues.
So why is it important to know about the base/counter currency now? The base/counter currency concept illustrates what is actually taking place in a Forex transaction. Some of you reading this, know that short-selling was restricted in the stock market *(Short-selling is where you sell a stock/currency/option/commodity first and then try to buy it back at a lower price later). But in the FOREX you are always buying one currency (base) and selling another (counter). If you sell the pair you are simply flipping which one you buy and which one you sell. The transaction is essentially the same. This allows you to short-sell with no restrictions!
You want to be able to short-sell with no restrictions so you can make money when the market drops as well as when it rises. The problem with traditional stock market trading is that the market has to go up for you to make money. With FOREX trading you can make money in all directions.
=======================
Love Your *pips*
=======================
Currencies are traded on a price interest point (pip) system. Each currency pair has its own pip value.
Since we have a listed currency PAIR (i.e., EUR/USD, EUR/AUD), we need a way to talk about its associated number or price. When you see a FOREX price quote, you'll see something listed like this:
<<>>
The first component (before the slash) refers to the bid price (what you obtain in JPY when you sell USD). In this example, the bid price is 118.46. The second component (after the slash) is used to obtain the ask price (what you have to pay in JPY if you buy USD). In this example, the ask price is 118.51. The difference between the bid and the ask price is referred to as the spread (how brokers REALLY allow you to trade commission-free). In the example above, the spread is .05 or 5 pips.
Sometimes you won't see a two-sided quote, consisting of a 'bid' and 'offer'. But, rather, you'll see something like...
<<>>
When you see a Forex currency pair price quote, like the one above, just remember that that last digit of the price is referred to as the *pip*. So if you see a quote (123.50) and then a quote in one min (123.51), the price rose 1 pip. Similarly, if you see a price quote of 187.50 and then after 5 min (187.58), the price rose 8 pips. The pip is always the last decimal place of the currency price quote.
YOUR GOAL IS TO CAPTURE AS MANY PROFITABLE pips AS POSSIBLE!
Since the US dollar is the centerpiece of the FOREX market, it is normally considered the 'base' currency for quotes. In the "Majors", this includes USD/JPY, USD/CHF and USD/CAD. For these currencies and many others, quotes are expressed as a unit of $1 USD per the second currency quoted in the pair.
In the example above, a quote of USD/JPY 123.50 means that one U.S. dollar is equal to 123.50 Japanese yen.
When the U.S. dollar is the base unit and a currency quote goes up, it means the dollar has appreciated in value and the other currency has weakened. If the USD/JPY quote above increases to 124.01, the dollar is stronger because it will now buy more yen than before.
The three exceptions to this rule are the British pound (GBP), the Australian dollar (AUD) and the Euro (EUR). In these cases, you might see a quote such as GBP/USD 1.4366, meaning that one British pound equals 1.4366 U.S. dollars.
In these three currency pairs, where the U.S. dollar is not the base rate, a rising quote means a weakening dollar, as it now takes more U.S. dollars to equal one pound, euro or Australian dollar.
In other words, if a currency quote goes higher, that increases the value of the base currency. A lower quote means the base currency is weakening.
Currency pairs that do not involve the U.S. dollar are called cross currencies, but the premise is the same. For example, a quote of EUR/JPY 127.95 signifies that one Euro is equal to 127.95 Japanese yen.
====================
So, now that you're fully indoctrinated into how to read currency quotes, let us remind you one on thing:
YOUR GOAL IS TO CAPTURE AS MANY PROFITABLE pips AS POSSIBLE!
Oh yeaaaaah ... that was already mentioned, wasn't it? :-)
The point: never lose sight of your objective. While the above lesson could go on and on for pages, it still wouldn't make you a world-class FOREX trader.
But, the combined power of our remaining lessons just might.
Stay Tuned for tomorrow's email from us. It will have the following Subject line:
Lesson 4 - The Rapid Forex e-Course
We will be educating you on how money is made in FOREX trading or, in plain terms, how to calculate a profit or loss.
I state it like this (in a glass-is-half-empty, negatively-presumptive kind of way) because, even though I know with proper self-taught education you're NOT going to lose as much as you win anyway, I want you to know thate the super-high leverage associated with FOREX trading (200:1 is possible; meaning if you put up $1 the trading vendor will allow you to trade like you really have $200), it's still arguably less risky than futures (commodities) trading.
(And, forget stocks, you'll never get this type of LEVERAGE in the equities market)
Futures markets are often prone to sudden and dramatic moves, against which you can't protect yourself, even by trading with protective stops. Your position may be liquidated at a loss, and you'll be liable for any resulting deficit in the account. But because of the FX market's deep liquidity and 24-hour, continuous trading, dangerous trading gaps and limit moves are eliminated. Orders are executed quickly, without slippage or partial fills. And finally, there are no margin calls -- for your protection, ALL our recommended brokers will automatically close out some or all of your open positions if your account equity falls below the level required to hold the positions. Think of this as a final, automatic stop, always working on your behalf to prevent a debit balance. In fact, if you pick from our list of recommended brokers, we guarantee that you'll never lose more than you have in your FOREX account!
=====================
Currencies are traded in dollar amounts called *lots* -- One lot is equal to $1,000, which controls $100,000 in currency. This is the "margin" I talked about above. Control $100,000 worth of currency for only 1,000 dollars. Good stuff, right?
Okay, let's move on....
Currencies are always traded in pairs in the FOREX. The pairs have a unique notation that expresses what currencies are being traded. The symbol for a currency pair will always be in the form ABC/DEF. ABC/DEF is not a real currency pair, it is an example of a symbol for a currency pair. In this example ABC is the symbol for one countries currency and DEF is the symbol for another countries currency.
Here are some of the common symbols used in the Forex:
USD - The US Dollar
EUR - The currency of the European Union "EURO"
GBP - The British Pound
JPN - The Japanese Yen
CHF - The Swiss Franc
AUD - The Australian Dollar
CAD - The Canadian Dollar
There are symbols for other currencies as well, but these are the most commonly traded ones.
A currency can never be traded by itself. So you can not ever trade a EUR by itself. You always need to compare one currency with another currency to make a trade possible.
Some of the common PAIRS are:
EUR/USD Euro / US Dollar
"Euro"
USD/JPY US Dollar / Japanese Yen
"Dollar Yen"
GBP/USD British Pound / US Dollar
"Cable"
USD/CAD US Dollar / Canadian Dollar
"Dollar Canada"
AUD/USD Australian Dollar/US Dollar
"Aussie Dollar"
USD/CHF US Dollar / Swiss Franc
"Swissy"
EUR/JPY Euro / Japanese Yen
"Euro Yen"
The listed currency pairs above look like a fraction. The numerator (top of the fraction or "left" of the / however you want to SEE it) is called the base currency. The denominator (bottom of the fraction or "right" of the / however you want to SEE it) is called the counter currency. When you place an order to buy the EUR/USD, for instance, you are actually buying the EUR and selling the USD. If you were to sell the pair, you would be selling the EUR and buying the USD. So if you buy or sell a currency PAIR, you are buying/selling the base currency. You are always doing the opposite of what you did with to base currency with the counter currency.
If this seems confusing then you're in luck. You can always get by with just thinking of the entire pair as one item. Then you are just buying or selling that one item. Thinking like this will still enable you to place trades. You only need to be aware of the base/counter concept for Fundamental Analysis issues.
So why is it important to know about the base/counter currency now? The base/counter currency concept illustrates what is actually taking place in a Forex transaction. Some of you reading this, know that short-selling was restricted in the stock market *(Short-selling is where you sell a stock/currency/option/commodity first and then try to buy it back at a lower price later). But in the FOREX you are always buying one currency (base) and selling another (counter). If you sell the pair you are simply flipping which one you buy and which one you sell. The transaction is essentially the same. This allows you to short-sell with no restrictions!
You want to be able to short-sell with no restrictions so you can make money when the market drops as well as when it rises. The problem with traditional stock market trading is that the market has to go up for you to make money. With FOREX trading you can make money in all directions.
=======================
Love Your *pips*
=======================
Currencies are traded on a price interest point (pip) system. Each currency pair has its own pip value.
Since we have a listed currency PAIR (i.e., EUR/USD, EUR/AUD), we need a way to talk about its associated number or price. When you see a FOREX price quote, you'll see something listed like this:
<<>>
The first component (before the slash) refers to the bid price (what you obtain in JPY when you sell USD). In this example, the bid price is 118.46. The second component (after the slash) is used to obtain the ask price (what you have to pay in JPY if you buy USD). In this example, the ask price is 118.51. The difference between the bid and the ask price is referred to as the spread (how brokers REALLY allow you to trade commission-free). In the example above, the spread is .05 or 5 pips.
Sometimes you won't see a two-sided quote, consisting of a 'bid' and 'offer'. But, rather, you'll see something like...
<<>>
When you see a Forex currency pair price quote, like the one above, just remember that that last digit of the price is referred to as the *pip*. So if you see a quote (123.50) and then a quote in one min (123.51), the price rose 1 pip. Similarly, if you see a price quote of 187.50 and then after 5 min (187.58), the price rose 8 pips. The pip is always the last decimal place of the currency price quote.
YOUR GOAL IS TO CAPTURE AS MANY PROFITABLE pips AS POSSIBLE!
Since the US dollar is the centerpiece of the FOREX market, it is normally considered the 'base' currency for quotes. In the "Majors", this includes USD/JPY, USD/CHF and USD/CAD. For these currencies and many others, quotes are expressed as a unit of $1 USD per the second currency quoted in the pair.
In the example above, a quote of USD/JPY 123.50 means that one U.S. dollar is equal to 123.50 Japanese yen.
When the U.S. dollar is the base unit and a currency quote goes up, it means the dollar has appreciated in value and the other currency has weakened. If the USD/JPY quote above increases to 124.01, the dollar is stronger because it will now buy more yen than before.
The three exceptions to this rule are the British pound (GBP), the Australian dollar (AUD) and the Euro (EUR). In these cases, you might see a quote such as GBP/USD 1.4366, meaning that one British pound equals 1.4366 U.S. dollars.
In these three currency pairs, where the U.S. dollar is not the base rate, a rising quote means a weakening dollar, as it now takes more U.S. dollars to equal one pound, euro or Australian dollar.
In other words, if a currency quote goes higher, that increases the value of the base currency. A lower quote means the base currency is weakening.
Currency pairs that do not involve the U.S. dollar are called cross currencies, but the premise is the same. For example, a quote of EUR/JPY 127.95 signifies that one Euro is equal to 127.95 Japanese yen.
====================
So, now that you're fully indoctrinated into how to read currency quotes, let us remind you one on thing:
YOUR GOAL IS TO CAPTURE AS MANY PROFITABLE pips AS POSSIBLE!
Oh yeaaaaah ... that was already mentioned, wasn't it? :-)
The point: never lose sight of your objective. While the above lesson could go on and on for pages, it still wouldn't make you a world-class FOREX trader.
But, the combined power of our remaining lessons just might.
Stay Tuned for tomorrow's email from us. It will have the following Subject line:
Lesson 4 - The Rapid Forex e-Course
We will be educating you on how money is made in FOREX trading or, in plain terms, how to calculate a profit or loss.
Thursday, April 10, 2008
Why FOREX trading is quickly becoming one of the investing world's hottest, most rewarding opportunities. And, why it's our chosen 'Ideal Business
As ambitious, hungry, time freedom-driven entrepreneurs ourselves, before we were introduced to the concept of Trading-For-a-Living, we had the pleasure of reviewing and seeing IN ACTION hundreds of home business plans, profit-making ideas, and ways to earn a decent income outside of a J-O-B.But, more than just analyzing them, we've been a part of quite a few (i.e., Direct Sales, delivery business, Real Estate, marketing consulting, risky investments, etc.).And from meeting with, interviewing, hearing about others in business, studying industries with intensity and/or reading about all the different "gurus of the moment", we have come to find a few SIMPLE truths:
Business Truth #1:Quite often people who have money don't have the time to enjoy it, and those that have the time don't have the money!Well, here's some compelling news for you ...You don't have to sacrifice a LIFE to earn an incredibly above-average income!This isn't a pipe dream. It's purely realistic and completely optimistic to say that, yes, if you FOCUS on FOREX trading for several months, you CAN bring your life into balance.Business Truth #2:Before money is earned...something, somewhere, somehow has to be SOLD. And, if it's not a repeat type (consumable) product or service, as soon as you stop whipping up the sales force your income comes to a screeching halt!Listen: "money" is a medium of exchange, nothing more and nothing less. There's no magic way to acquire it. The way to build wealth is to exchange a value-oriented product or service for it.But what if, rather than hiring sales reps (or being one yourself), a full-time accountant, an attorney, administrative staff, customer service / human resource personnel (in other words, "employees"), you could work by yourself and have access to multiple thousands of "customers" (no need to advertise for them either) who are ready and able to BUY from you (or SELL to you) at the drop of a hat?And, wouldn't it be incredibly cool if your business could just laugh-off such traditional hindrances as competition, collection problems, changing fads, bad publicity, political or social events, etc?Yes, all that and, oops, we almost forgot -- it gets even better...Trade from anywhere. If you like to travel, this is a dream business. Take your laptop with you and you can trade the FOREX and make money anywhere in the world where you have an internet connection. You have total freedom of location.Can you now see why we call this "The World's Most Powerful Home-based Business?"Business Truth #3:A classic dilemma: for most, you can't get a job (or start a business) without experience(expertise) and you can't get experience (expertise) without a job (or being involved inbusiness)When attempting to make more profit than losses on the fluctuation of exchange rates between major currencies (i.e., Trading the FOREX), nobody is going to ask you for a diploma, a formal license or verify the amount of hours you've spent studying the Foreign exchange market and banking industry.Nope, it just aint gonna happen!All the training you'll need to get going smoothly is included IN and WITH our Rapid Forex Training Courses (and, of course, the rest of this email mini-course series will give you more solid info. than even some books do).Now that we've talked some about how FOREX Trading Obliterates, like a nuclear explosion, the 3 main disadvantageous business TRUTHS above .....
============================
Let's discuss the many benefits and advantages of FOREX Trading over Stocks & CommoditiesHere's the HIGHLIGHTS on WHY FOREX is becoming the go-to market for private and institutional traders alike:The Main Benefits of Trading the FX Spot Market: (we'll get into some of the DETAILS after this)- Never a 'Bear' Market!- No Separate commissions!- Low to Zero Transaction Costs / Narrow Dealer Spreads!- A 24-hour Market with Superior Market Liquidity!- It has up to 200:1 Leverage for Margin Trading!- Streaming Executable Prices!- Price Movements Are Highly Predictable!- FOREX Trading is Economical and Start-up Costs are Low!============================
Before we get into the DETAILS on the BENEFITS listed above, as a potential RapidForex.com student, trader, and all-around well-educated investor, it is important to know the differences between cash FOREX (SPOT FX) and currency futures.
In currency futures, the contract size is predetermined.With FOREX (SPOT FX), you may trade any desired amount, typically up to $100,000 USD. The futures market closes at the end of the business day (similar to the stock market). If important data is released overseas while the U.S. futures markets is closed, the next day's opening might sustain large gaps with potential for large losses if the direction of the move is against your position.The Spot FOREX market runs continuously on a 24-hour basis from 7:00 am New Zealand time Monday morning to 5:00 pm New York Time Friday evening. Dealers in every major FX trading center (Sydney, Tokyo, Hong Kong/Singapore, London, Geneva and New York/Toronto) ensure a smooth transition as liquidity migrates from one time zone to the next.Furthermore, currency futures trade in non-USD denominated currency amounts only whereas in spot FOREX, an investor can trade either in currency denominations, or in the more conventionally quoted USD amounts. The currency futures pit, even during Regular IMM (International Money Market) hours suffers from sporadic lulls in liquidity and constant price gaps. The spot FOREX market offers constant liquidity and market depth much more consistently than Futures. With IMM futures one is limited in the currency pairs he can trade - Most currency futures are traded only versus the USD – With spot FOREX, you may trade foreign currencies vs. USD or vs. each other on a 'cross' basis as well - ex: EUR/JPY, GBP/JPY, CHF/JPY, EUR/GBP and AUD/NZD (more on what these mean in Lesson #3 tomorrow)============================More and more savvy investor and entrepreneurs are shunning traditional financial markets, like stocks, bonds & commodities and building their fortunes in the foreign exchange (FOREX) marketplace.Here are 7 important reasons why:1) FOREX is the largest financial market in the world.With a daily trading volume of over $1.5 trillion, the spot FOREX market can absorb trading sizes that dwarf the capacity of any other market. In fact, when compared with the $50 billion daily market for equities or the $30 billion futures market, it becomes quickly apparent this gives you, and millions of other FOREX traders, almost infinite tradingliquidity and flexibility.2) FOREX is a TRUE 24-hour market.The FOREX Market never sleeps. Trading positions can be entered and exited at any moment - around the globe, around the clock, six days a week. There is no waiting for an opening bell as in the case of trading stocks. It is a 24-hour, continuous electronic (ONLINE) currency exchange that never closes. This is very desirable for you if you want to trade on a part-time basis, because you can choose when you want to trade: morning, noon or night.
3) There is never a Bear Market in FOREX.You can have access to a seamless, mutually-inclusive (two-way) exchange of currencies. Meaning, because currencies trade in "pairs" (for example, US dollar vs. yen or US dollar vs. Swiss franc), one side of every currency pair (for example, USD/JPY - JPY = YEN) is constantly moving in relation to the other. Thus, when you buy a particular currency, you are actually simultaneously selling the other currency in that particular pair. As the market moves, one of the currencies will increase in value versus the other. Of course, it is up to you to choose the correct currency to be long or short. Since currency trading always involves buying one currency and selling another, there is no structural bias to the market. This means you have equal potential to profit in both a rising or falling market.4) High Leverage - up to 200:1 Leverage.You are permitted to trade foreign currencies on a highly leveraged basis - up to 200 times your investment with some brokers. This is primarily attributed to the higher levels of liquidity within the currency markets. Standard 100,000-unit currency lots can be traded with as little as 1% margin, or $1,000. Mini FX accounts are permitted to trade with just 0.5% margin -- in other words, just $50 allows you to control a 10,000-unit currency position. Futures traders, who are accustomed to margin requirements generally equal to 5%-8% of the contract value, will immediately recognize that the FOREX market provides much greater leverage, and for stock traders, who must post at least 50% margin, there's no comparison. If you're looking for an efficient use of trading capital, this is it!5) Price Movements Are Highly Predictable.Although currency prices in the FX market may be volatile, they generally repeat themselves in relatively predictable cycles, creating trends. The strong trends that foreign currencies develop are a significant advantage for traders who use the "technical" methods and strategies we teach at RapidForex.com.Unlike stocks, currencies rarely spend much time in tight trading ranges and have the tendency to develop strong trends. Over 80% of volume is speculative in nature and, as a result, the market frequently overshoots and then corrects itself. As a technically trained trader, you can easily identify new trends and breakouts, which provide for multiple opportunities to enter and exit positions.6) Commission-free Trading and Low Transaction Cost.When you trade FOREX, through one of our recommended brokers (this info is in our private resources section), you'll do it totally commission-free! These brokers don't charge commissions to trade or to maintain an account, and that goes for all clients trading the FOREX through them, regardless of your account balance or trading volume. Even Mini FX traders can buy and sell currencies online, commission-free.This is worth repeating: No FX commissions!What about trading fees? There are none of the usual fees to which futures and equity traders are accustomed – no exchange or clearing fees, no NFA or SEC fees. Because currencies trade over-the-counter (OTC), via a global electronic network -- in FOREX, what you see is what you get, allowing you to make quick decisions on your trades without having to worry or account for fees that may affect your profit/loss or slippage.In the equities markets, you must pay both a commission and exchange fees. The over-the-counter structure of the FX market eliminates exchange and clearing fees, which in turn lowers transaction costs.So, if FOREX broker don't charge commissions, how do they make money? Like all traded financial products, over-the-counter currency trading involves a bid/ask spread, which represents the prices at which your counterparty is willing to trade. Because the currency market offers round-the-clock liquidity, you receive tight, competitive spreads both intra-day and night. Stock traders can be more vulnerable to liquidity risk and typically receive wider trading spreads, especially during after-hours trading.7) Instantaneous Order Execution and Market Transparency.Market transparency is highly desired in any trading environment. The greater the market transparency, the more efficient the market becomes. Unlike other markets where transparency is compromised (like in the Enron scandal), FOREX markets are highly transparent (i.e., analyzing countries, and having access to real-time research / news, is easier than companies).Because of this transparency, as an FX trader, you will be able to exercise risk management strategies in accordance to the fundamental and technical indicators we teach at RapidForex.comThe FX market offers the highest level of market transparency out of all the financial markets. Because of this, order execution and fill confirmation usually occur in just 1-2 seconds. Markets that do not offer executable prices and force traders to absorb slippage obviously compromise the trader's profit potential considerably.In the forex world, order execution is all-electronic and because you'll be trading via an Internet-based platform, instantaneous execution is routine. There are no exchanges, no traditional open-outcry pits, no floor brokers, and consequently, no delays.============================
So, by now, if you haven't caught our FOREX fever – our belief and interest in this market of unlimited profit-making opportunities -- well ... we're just not too sure what else we can do with you :-)FOREX trading truly is the "World's Most Powerful Home-based Business" and we invite you to stay-tuned for tomorrow's lesson on *Currency Pairs* - how to read them, calculate profits, recommended pairs to trade, etc.
Business Truth #1:Quite often people who have money don't have the time to enjoy it, and those that have the time don't have the money!Well, here's some compelling news for you ...You don't have to sacrifice a LIFE to earn an incredibly above-average income!This isn't a pipe dream. It's purely realistic and completely optimistic to say that, yes, if you FOCUS on FOREX trading for several months, you CAN bring your life into balance.Business Truth #2:Before money is earned...something, somewhere, somehow has to be SOLD. And, if it's not a repeat type (consumable) product or service, as soon as you stop whipping up the sales force your income comes to a screeching halt!Listen: "money" is a medium of exchange, nothing more and nothing less. There's no magic way to acquire it. The way to build wealth is to exchange a value-oriented product or service for it.But what if, rather than hiring sales reps (or being one yourself), a full-time accountant, an attorney, administrative staff, customer service / human resource personnel (in other words, "employees"), you could work by yourself and have access to multiple thousands of "customers" (no need to advertise for them either) who are ready and able to BUY from you (or SELL to you) at the drop of a hat?And, wouldn't it be incredibly cool if your business could just laugh-off such traditional hindrances as competition, collection problems, changing fads, bad publicity, political or social events, etc?Yes, all that and, oops, we almost forgot -- it gets even better...Trade from anywhere. If you like to travel, this is a dream business. Take your laptop with you and you can trade the FOREX and make money anywhere in the world where you have an internet connection. You have total freedom of location.Can you now see why we call this "The World's Most Powerful Home-based Business?"Business Truth #3:A classic dilemma: for most, you can't get a job (or start a business) without experience(expertise) and you can't get experience (expertise) without a job (or being involved inbusiness)When attempting to make more profit than losses on the fluctuation of exchange rates between major currencies (i.e., Trading the FOREX), nobody is going to ask you for a diploma, a formal license or verify the amount of hours you've spent studying the Foreign exchange market and banking industry.Nope, it just aint gonna happen!All the training you'll need to get going smoothly is included IN and WITH our Rapid Forex Training Courses (and, of course, the rest of this email mini-course series will give you more solid info. than even some books do).Now that we've talked some about how FOREX Trading Obliterates, like a nuclear explosion, the 3 main disadvantageous business TRUTHS above .....
============================
Let's discuss the many benefits and advantages of FOREX Trading over Stocks & CommoditiesHere's the HIGHLIGHTS on WHY FOREX is becoming the go-to market for private and institutional traders alike:The Main Benefits of Trading the FX Spot Market: (we'll get into some of the DETAILS after this)- Never a 'Bear' Market!- No Separate commissions!- Low to Zero Transaction Costs / Narrow Dealer Spreads!- A 24-hour Market with Superior Market Liquidity!- It has up to 200:1 Leverage for Margin Trading!- Streaming Executable Prices!- Price Movements Are Highly Predictable!- FOREX Trading is Economical and Start-up Costs are Low!============================
Before we get into the DETAILS on the BENEFITS listed above, as a potential RapidForex.com student, trader, and all-around well-educated investor, it is important to know the differences between cash FOREX (SPOT FX) and currency futures.
In currency futures, the contract size is predetermined.With FOREX (SPOT FX), you may trade any desired amount, typically up to $100,000 USD. The futures market closes at the end of the business day (similar to the stock market). If important data is released overseas while the U.S. futures markets is closed, the next day's opening might sustain large gaps with potential for large losses if the direction of the move is against your position.The Spot FOREX market runs continuously on a 24-hour basis from 7:00 am New Zealand time Monday morning to 5:00 pm New York Time Friday evening. Dealers in every major FX trading center (Sydney, Tokyo, Hong Kong/Singapore, London, Geneva and New York/Toronto) ensure a smooth transition as liquidity migrates from one time zone to the next.Furthermore, currency futures trade in non-USD denominated currency amounts only whereas in spot FOREX, an investor can trade either in currency denominations, or in the more conventionally quoted USD amounts. The currency futures pit, even during Regular IMM (International Money Market) hours suffers from sporadic lulls in liquidity and constant price gaps. The spot FOREX market offers constant liquidity and market depth much more consistently than Futures. With IMM futures one is limited in the currency pairs he can trade - Most currency futures are traded only versus the USD – With spot FOREX, you may trade foreign currencies vs. USD or vs. each other on a 'cross' basis as well - ex: EUR/JPY, GBP/JPY, CHF/JPY, EUR/GBP and AUD/NZD (more on what these mean in Lesson #3 tomorrow)============================More and more savvy investor and entrepreneurs are shunning traditional financial markets, like stocks, bonds & commodities and building their fortunes in the foreign exchange (FOREX) marketplace.Here are 7 important reasons why:1) FOREX is the largest financial market in the world.With a daily trading volume of over $1.5 trillion, the spot FOREX market can absorb trading sizes that dwarf the capacity of any other market. In fact, when compared with the $50 billion daily market for equities or the $30 billion futures market, it becomes quickly apparent this gives you, and millions of other FOREX traders, almost infinite tradingliquidity and flexibility.2) FOREX is a TRUE 24-hour market.The FOREX Market never sleeps. Trading positions can be entered and exited at any moment - around the globe, around the clock, six days a week. There is no waiting for an opening bell as in the case of trading stocks. It is a 24-hour, continuous electronic (ONLINE) currency exchange that never closes. This is very desirable for you if you want to trade on a part-time basis, because you can choose when you want to trade: morning, noon or night.
3) There is never a Bear Market in FOREX.You can have access to a seamless, mutually-inclusive (two-way) exchange of currencies. Meaning, because currencies trade in "pairs" (for example, US dollar vs. yen or US dollar vs. Swiss franc), one side of every currency pair (for example, USD/JPY - JPY = YEN) is constantly moving in relation to the other. Thus, when you buy a particular currency, you are actually simultaneously selling the other currency in that particular pair. As the market moves, one of the currencies will increase in value versus the other. Of course, it is up to you to choose the correct currency to be long or short. Since currency trading always involves buying one currency and selling another, there is no structural bias to the market. This means you have equal potential to profit in both a rising or falling market.4) High Leverage - up to 200:1 Leverage.You are permitted to trade foreign currencies on a highly leveraged basis - up to 200 times your investment with some brokers. This is primarily attributed to the higher levels of liquidity within the currency markets. Standard 100,000-unit currency lots can be traded with as little as 1% margin, or $1,000. Mini FX accounts are permitted to trade with just 0.5% margin -- in other words, just $50 allows you to control a 10,000-unit currency position. Futures traders, who are accustomed to margin requirements generally equal to 5%-8% of the contract value, will immediately recognize that the FOREX market provides much greater leverage, and for stock traders, who must post at least 50% margin, there's no comparison. If you're looking for an efficient use of trading capital, this is it!5) Price Movements Are Highly Predictable.Although currency prices in the FX market may be volatile, they generally repeat themselves in relatively predictable cycles, creating trends. The strong trends that foreign currencies develop are a significant advantage for traders who use the "technical" methods and strategies we teach at RapidForex.com.Unlike stocks, currencies rarely spend much time in tight trading ranges and have the tendency to develop strong trends. Over 80% of volume is speculative in nature and, as a result, the market frequently overshoots and then corrects itself. As a technically trained trader, you can easily identify new trends and breakouts, which provide for multiple opportunities to enter and exit positions.6) Commission-free Trading and Low Transaction Cost.When you trade FOREX, through one of our recommended brokers (this info is in our private resources section), you'll do it totally commission-free! These brokers don't charge commissions to trade or to maintain an account, and that goes for all clients trading the FOREX through them, regardless of your account balance or trading volume. Even Mini FX traders can buy and sell currencies online, commission-free.This is worth repeating: No FX commissions!What about trading fees? There are none of the usual fees to which futures and equity traders are accustomed – no exchange or clearing fees, no NFA or SEC fees. Because currencies trade over-the-counter (OTC), via a global electronic network -- in FOREX, what you see is what you get, allowing you to make quick decisions on your trades without having to worry or account for fees that may affect your profit/loss or slippage.In the equities markets, you must pay both a commission and exchange fees. The over-the-counter structure of the FX market eliminates exchange and clearing fees, which in turn lowers transaction costs.So, if FOREX broker don't charge commissions, how do they make money? Like all traded financial products, over-the-counter currency trading involves a bid/ask spread, which represents the prices at which your counterparty is willing to trade. Because the currency market offers round-the-clock liquidity, you receive tight, competitive spreads both intra-day and night. Stock traders can be more vulnerable to liquidity risk and typically receive wider trading spreads, especially during after-hours trading.7) Instantaneous Order Execution and Market Transparency.Market transparency is highly desired in any trading environment. The greater the market transparency, the more efficient the market becomes. Unlike other markets where transparency is compromised (like in the Enron scandal), FOREX markets are highly transparent (i.e., analyzing countries, and having access to real-time research / news, is easier than companies).Because of this transparency, as an FX trader, you will be able to exercise risk management strategies in accordance to the fundamental and technical indicators we teach at RapidForex.comThe FX market offers the highest level of market transparency out of all the financial markets. Because of this, order execution and fill confirmation usually occur in just 1-2 seconds. Markets that do not offer executable prices and force traders to absorb slippage obviously compromise the trader's profit potential considerably.In the forex world, order execution is all-electronic and because you'll be trading via an Internet-based platform, instantaneous execution is routine. There are no exchanges, no traditional open-outcry pits, no floor brokers, and consequently, no delays.============================
So, by now, if you haven't caught our FOREX fever – our belief and interest in this market of unlimited profit-making opportunities -- well ... we're just not too sure what else we can do with you :-)FOREX trading truly is the "World's Most Powerful Home-based Business" and we invite you to stay-tuned for tomorrow's lesson on *Currency Pairs* - how to read them, calculate profits, recommended pairs to trade, etc.
What Is FOREX and How to Take Part in it
If you think what you do is great, you ain't seen nothing yet. I'm an FX Trader".
Those were the words I heard over three years ago, and since then, regardless of how confrontational, competitive, or in-your-face they may of seemed at the time, I'm glad I heard them.
I was just introduced to what we will affectionately call, throughout this mini-course (seriously), "The World's Most Powerful Home based Business" (but a lot more on thattomorrow).Even though you, and I, have had the opportunity to take part in trading foreign currencies for profit (in the same way banks and large corporations do) since 1998, it is just now becoming the cool, hip, new "thing" to talk about at parties, business events, and other social gatherings.
Even though it HAS been somewhat of a loosely guarded secret, more and more investors are turning to the all- electronic world of FOREX trading for income and profit because of its numerous benefits & advantages over traditional trading vehicles, like stocks, bonds and commodities (stay tuned, for tomorrow's email, to get the inside scoop on this).But, still, whenever something SEEMS new or is just becoming a part of social conversation, news articles, and water cooler gossip, misconceptions have to be overcome, the mind has to be open and the slate has to be clear for starting out fresh with the CORRECT information.So, in this first Lesson, it is our attempt to give you some solid, but not over-detailed, information on just what the heck "FX" (FOREX) means, what it is, and why it exists.Plus, we wouldn't want you to be the one giving the blank stare, at the parties, when someone brings it up :-)If you'd like to make $_200 to $_3,000 for as little as ten minutes of work -- work that involves minimal risk, but plenty of upside potential -- then this ongoing email mini-course if for you.As a friend of mine said, "Trading FOREX is like picking money up off the floor. NOT trading FOREX is like leaving it there for someone else to pick up." Others in the industry have also said, "It’s like having an ATM machine on your own computer."
In this 20-part e-Course series, we will show you what they mean. Here's the all-steak, no-sizzle explanation (one we feel you'll appreciate) of what FOREX is and how traders, like us, profit from it:
The Foreign Exchange Market, also referred to the "FOREX" or "FX" market, is the spot (cash) market for currency.But, don't mistake what we're doing as trading the futures market, where you buy a contract to purchase a particular currency at a future price in time.What we do is much less risky than trading currencies on the futures market, much more profitable, and a lot easier, than trading stocks. [note: we'll tell you more about this, tomorrow, in Lesson #2]So, you're probably wondering where it's at ... or ... how to access the FX market?The answer is: FX Trading is not bound to any one trading floor and is not centralized on an exchange, as with the stock and futures markets. The FX market is considered an Over-the-Counter (OTC) or 'Interbank' market, due to the fact that the entire market is run electronically, within a network of banks, continuously over a 24-hour period.Yes, if that's the first time you've heard about an all-electronic market, we know this may sound somewhat intriguing to you.And, it should be, because it certainly is.Here's what you are actually trading when you participate in the Foreign Exchange (FOREX) market:Essentially, like the large banks who use the FX market to protect themselves from the fluctuating exchange rate of different currencies, as an investor, what we're doing is simultaneously exchanging one countries currency for another. So, in actuality, we're electronically trading a currency-pair and the price that is quoted to us is the exchange rate between the two currencies.If you just said, "Huh?" ...no worries, we've got ya covered with an explanation.In other words, simply the quoted price is how many of the one currency is worth 1 of the other currency.
Those were the words I heard over three years ago, and since then, regardless of how confrontational, competitive, or in-your-face they may of seemed at the time, I'm glad I heard them.
I was just introduced to what we will affectionately call, throughout this mini-course (seriously), "The World's Most Powerful Home based Business" (but a lot more on thattomorrow).Even though you, and I, have had the opportunity to take part in trading foreign currencies for profit (in the same way banks and large corporations do) since 1998, it is just now becoming the cool, hip, new "thing" to talk about at parties, business events, and other social gatherings.
Even though it HAS been somewhat of a loosely guarded secret, more and more investors are turning to the all- electronic world of FOREX trading for income and profit because of its numerous benefits & advantages over traditional trading vehicles, like stocks, bonds and commodities (stay tuned, for tomorrow's email, to get the inside scoop on this).But, still, whenever something SEEMS new or is just becoming a part of social conversation, news articles, and water cooler gossip, misconceptions have to be overcome, the mind has to be open and the slate has to be clear for starting out fresh with the CORRECT information.So, in this first Lesson, it is our attempt to give you some solid, but not over-detailed, information on just what the heck "FX" (FOREX) means, what it is, and why it exists.Plus, we wouldn't want you to be the one giving the blank stare, at the parties, when someone brings it up :-)If you'd like to make $_200 to $_3,000 for as little as ten minutes of work -- work that involves minimal risk, but plenty of upside potential -- then this ongoing email mini-course if for you.As a friend of mine said, "Trading FOREX is like picking money up off the floor. NOT trading FOREX is like leaving it there for someone else to pick up." Others in the industry have also said, "It’s like having an ATM machine on your own computer."
In this 20-part e-Course series, we will show you what they mean. Here's the all-steak, no-sizzle explanation (one we feel you'll appreciate) of what FOREX is and how traders, like us, profit from it:
The Foreign Exchange Market, also referred to the "FOREX" or "FX" market, is the spot (cash) market for currency.But, don't mistake what we're doing as trading the futures market, where you buy a contract to purchase a particular currency at a future price in time.What we do is much less risky than trading currencies on the futures market, much more profitable, and a lot easier, than trading stocks. [note: we'll tell you more about this, tomorrow, in Lesson #2]So, you're probably wondering where it's at ... or ... how to access the FX market?The answer is: FX Trading is not bound to any one trading floor and is not centralized on an exchange, as with the stock and futures markets. The FX market is considered an Over-the-Counter (OTC) or 'Interbank' market, due to the fact that the entire market is run electronically, within a network of banks, continuously over a 24-hour period.Yes, if that's the first time you've heard about an all-electronic market, we know this may sound somewhat intriguing to you.And, it should be, because it certainly is.Here's what you are actually trading when you participate in the Foreign Exchange (FOREX) market:Essentially, like the large banks who use the FX market to protect themselves from the fluctuating exchange rate of different currencies, as an investor, what we're doing is simultaneously exchanging one countries currency for another. So, in actuality, we're electronically trading a currency-pair and the price that is quoted to us is the exchange rate between the two currencies.If you just said, "Huh?" ...no worries, we've got ya covered with an explanation.In other words, simply the quoted price is how many of the one currency is worth 1 of the other currency.
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