Strangle Options Strategy » Foreign Exchange

How to Find a Broker for the FOREX Trading Market

admin — Mon, 18 Jan 2010 21:05:33 +0000

It’s not always easy to know what to look for in a broker in any market, much less a market as complex as the FOREX. But, if you want to trade in FOREX you need a broker. While it might be tempting to simply ask the brokers what they can do for you, you can’t always depend on them to give you a straight answer. Here are a few things to consider when choosing your broker.
You will want a broker that has low spreads. Since FOREX brokers don’t charge a commission, this difference is how they make money. Low spreads will save you money.
Along with this, you should be looking for a broker attached to a reputable institution.
Unlike equity brokers, FOREX brokers are usually attached to large banks or lending institutions. The broker should also be registered with the Futures Commission Merchant (FCM) as well as regulated by the Commodity Futures Trading Commission (CFTC).
Once you’ve narrowed your choices down to brokers that won’t cost you too much, and that are reputable, consider the trading tools that they are offering you. FOREX brokers have many different trading platforms for their clients, just like brokers in other markets. These often show real-time charts, technical analysis tools, real-time news and data, and may even offer support for the various trading systems.
Before you commit to any one broker, request free trials of their tools. Brokers generally provide technical as well as fundamental commentaries, economic calendars, and other research to help you make good trades. Shop around until you find a broker who will give you what you need to succeed.
The next item that you will need to evaluate carefully is the number of leverage options your potential broker has. Leverage is a necessity in FOREX trading because the price deviations in the currencies are set at fractions of a cent. Leverage is expressed as a ratio between the total capital that is available to be traded and your actual capital. For example, when you have a ratio of 100:1, your broker will lend you $100 for every $1 of actual capital you have. Many brokerage firms will offer you as much as 250:1. If you have low levels of capital you will need a brokerage with high levels of leverage to make reasonable profits.
If capital is not a problem, any broker that has a wide variety of leverage options would be a good choice for you. A variety of options will let you vary the amount of risk you choose to take. For example, less leverage (and therefore less risk) may be preferable if you are dealing with highly volatile (exotic) currency pairs.
Along with different levels of leverage, look for brokers that offer different types of accounts. Many brokers will offer you two or more types. The smallest account is known as a mini account and it requires you to trade with a minimum of around $300. The mini account also generally offers a high amount of leverage.
The standard account allows you to trade at a variety of different leverages, but it requires minimum initial capital of $2,000. And finally, there are premium accounts, which often require significant amounts of capital. They also generally have different levels of leverage available to the traders who use them, and often offer additional tools and services. You will need to make sure that the broker you choose has the right leverage, tools, and services for the amount of capital that you are able to work with.

Forex Trading – the Tools of the Trade

admin — Sat, 02 Jan 2010 20:49:47 +0000

Your best asset when doing forex trading is your mindset. The right attitude towards both the upside and downside of trading and the aptitude to craft a strategically sound trading plan, including a back up one, would make it easy for you to grow your profits in forex trading. Once you have mastered the trading market, you will soon be lining up your pips and shrugging off losses. Yes, there are still losses to be incurred even for the best of traders. But, any experienced trader would know that gains and losses are not taken on a per trade basis but in terms of total forex portfolio. Forex trading is a complex game. Playing the game and expecting to win it necessitates some amount of work and preparation.

There are tools that can help you especially if you are not an expert and are just starting in forex trading. Entering the trading game without these tools will just result in you gambling away your money. Yes, you may experience some gains by entering in certain trades but you will also lose some trades. The difference between losing in an uninformed forex trade versus one that is based on a strategic method is that a strategic trade will more likely be counteracted with another trade which is part of the carefully crafted plan. Tools like charts and market indicators are useful in making wise trading decision and placing buy and sell orders at the right market timing. Start with the right mindset and attitude, then move on to understanding the forex market and its players. With these preparations set for your entry into forex trading, you would already have equipped yourself with most important tools of the trade.

Forex Trading – Easy as 123 – Forex Learning for Beginners

admin — Tue, 22 Dec 2009 12:24:01 +0000

Making foreign exchange trading an easy thing to learn is a challenge to most educators. There are a lot of technicalities involved in a forex trade, not to mention the gut-feel a forex trader should have in making a successful forex trade. The School of Pipsology has made things as easy as can be by segmenting the learning into levels that are more manageable to the beginner. Just like when you were learning how to count, you can learn forex trading in a snap. You go from Pre-school level learning the basics, and move on to other concepts in the grade school, high school, and college levels. More advanced studies are likewise available to those who want to take their forex trading education to higher levels.

First things first. If you want to succeed in forex trading, you should not bypass the basics. Take the time to learn the basics of forex options trading and currency trading just like when you were learning your 123s.

The first step to learning how to trade forex is to know about the types of trading and the types of charts used in analyzing forex figures. This is covered in the Kindergarten level. The 1st Grade level covers candlestick patterns used in analyzing how the market is trading.

Next, 2nd Grade, comes learning about support and resistance levels for market tolerance as indicated by trend lines.

The 3rd level covers how the Fibonacci retracement and extension levels can be applied to your charts and help you place your buying or selling orders. Pricing movements and charting are covered in the 4th Grade level.

And finally, on your last level in the elementary stage, you learn about the common chart indicators like the Bollinger Bands, the MACD, and the Relative Strength Index among others.

Once you have gotten these learnings down pat, you can move on to the high school stage and learn about more complex forex concepts. The succeeding forex education curriculum is available at the School of Pipsology. These levels will be easy enough for you to understand once you have a strong basic foundation.

The Joy of Options

admin — Sun, 20 Dec 2009 21:22:59 +0000

Owning stock has only two, maybe three, possibilities. The stock goes up. Or the stock goes down. Or, as a third possibility, it does a little of both. If you buy a stock, all you want it to do is go up.
If you sell a stock short or close a position (or consider buying it and then decide not to , all you want it to do is go down. I call this one-dimensional trading. You’re long, you’re short, or you’re flat. Your gains and losses travel up and down the number line you may remember from elementary school in lock step with the movement of the stock. Not only that, but it takes a big move to make a big profit. And a big move against you can mean a big loss. Potentially all the way down to zero.
You need to add a second dimension to your trading. You need more choices than picking a direction and hoping you are right. You need to limit your losses, improve your returns, and increase your flexibility. You need options.
For many people, options are something to avoid, being dangerous, complex, and scary. I would like to introduce you to the joy of options. Any time you think you want to buy a stock, I’d like to get you in the habit of first looking at how you could do more with less using options.
In the stock and commodities markets, the type of option we just described would be known as a call. A call typically represents 100 shares of a stock. In the commodities markets, a single option contract represents a single futures contract. (For simplicity, from this point forward, I will talk about options on stock. Just remember that the same discussion applies to options on futures.)
Owning a call gives the owner the right to buy 100 shares (usually) of the underlying stock at the agreed upon strike price at or before the expiration date. (I say “usually” 100 shares because, due to splits or acquisitions, there are times when an options contract may represent something other than 100 shares.) Selling a call gives the seller the obligation to sell, if asked, 100 shares of the underlying stock at the agreed upon strike price any time up until the expiration date.
The other kind of option is called a put, and it is exactly the same as a call with one simple difference. A put gives the owner the right to sell 100 shares (again, usually) of the underlying stock at the agreed upon strike price at or before the expiration date. You can think of a put as insurance. No matter how badly the stock price crashes, having a put means that you can sell your stock for the strike price. On the flip side, selling that put means you may be obliged to buy stock at far more than its current market price.
An important distinction to always keep in mind: Buying an option gives you rights. Selling an option gives you obligations. Buying an option cannot cost you more than what you pay for the option. Selling an option can cost you far more than what you receive for selling the option.
Let’s examine the terminology of calls and puts. The underlying is the actual instrument such as a stock or commodity that is being represented by the options contract. In the real estate example, the house would be the underlying. Options are said to be derivatives because their value is directly tied to or derived from that of the underlying. An option has no meaning without an actual asset underlying it. It is the right to buy or sell that underlying asset that gives the option a reason for being and some value.
The strike price is the agreed upon price for which the underlying can be bought or sold under the terms of the option contract. In the real estate example, the strike price was $100,000. The expiration date, obviously, is the date when the option expires. The day after expiration, an option is worthless. This is the single most important fact about options that you must remember. This is why your friends think you are crazy for your interest in options. Unlike a stock, which you can hold forever, an option has a clearly defined shelf life.
One term remains, and that is the premium. The premium is what you pay for the option, when you are the buyer. Or what you receive for an option, when you are the seller. In our real estate example, the premium was $500. That’s what it cost you to hold the right to buy the house any time in that thirty-day period. The last day of the thirty-day period would, again, be the expiration date.
We have barely scratched the surface. I say that not to intimidate you, but to make you realize that you only have enough knowledge to be dangerous to yourself. Please do not think that you are ready to go out and buy calls or place spread trades. You are not. You don’t know how an option moves relative to moves in the price of the underlying. You don’t know what time does to the value of an option. You don’t know what volatility is or how it plays into option prices. You don’t know the types of spreads or what they are used for.
Please, please get yourself better educated before you start putting money into option trades. Resist the temptation to buy some cheap options, just to try it out. This is expensive education. There are plenty of advantages to trading options, but it’s still a ruthless market, happy to take your money, your wallet, and your hand if you give it an opportunity. Learn the rules of the game before you put money on the line.
Trading options can be satisfying, rewarding, stimulating, and fun. I invite you to add another dimension to your trading by including options to your repertoire.

Forex Trading – Going Japanese in the Forex Market

admin — Thu, 17 Dec 2009 22:08:32 +0000

For the uninitiated, going Japanese in the Forex market may sound bizarre, but for those who are familiar with Forex options trading, they know that the phrase has something to do with Japanese Candlesticks, one of the many seemingly complex concepts involved in the industry.

Japanese candlesticks, as far as Forex options trading is concerned, do not pertain to home design pieces, decor, or accessories. The term is used in the singular form and refers to a technical analysis illustration that the Japanese invented long ago to trade rice. It was Steve Nison, a Westerner, who discovered this Asian secret and shared it with the world, prompting it to become one of the most heavily relied-on technical analysis tools in the Forex market today. Japanese Candlesticks is in fact a chart that makes use of candles to indicate buying and selling activities.

It is best to explain Japanese Candlesticks by making a plea to the imagination. Think of a candle and the possible sizes it can have. If you find long-bodied candles in the charts, you’d be looking at indicate strong selling or buying, with the length representing the intensity of the selling or buying pressure. If, on the other hand, you find short-bodied candles in the charts, you’d be looking at weak selling or buying. Japanese Candlesticks also makes use of shadows to indicate hints about the current trading session. If you find candles that have long shadows, you’d know that the trading action took place over or above the opening and closing prices. If, on the other hand, you find candles that have short shadows, you’d know that the trading action took place near the opening and closing prices.

There are other indicators out there, but many experienced traders in Forex options trading recommend the use of Japanese Candlesticks to ascertain the best and worst times to enter the market, allowing one to protect his or her investment. Going Japanese can surely do you good in as you set out to become a successful Forex trader.

Forex Trading – Back to School Forex Education

admin — Tue, 15 Dec 2009 22:33:55 +0000

Foreign exchange trading could be a complex business to get into. The only way for any beginner to learn the ropes of forex trading is to go through intensive education and training. Quite heavy, so it seems. But, broken down in digestible chunks, you will soon be able to find your way around a successful forex trading business. There is a way to teach you the intricacies of forex trading in a simple and understandable way. Replicating the way you learned your ABCs and 123s, you will soon speak forex as if it is your second tongue. Soon, you will join the new breed of successful traders in the foreign exchange market.

Simply put, succeeding in forex trading rests on three things: making pips, keeping pips, and repeating the cycle. If you can master these three things, you are on your way to successful forex currency trading and forex options trading. To make things easy for you, you can break down your forex trading much like your early education was broken down. You move from one level to another once you have successfully completed the learning requirements of each level.

At the School of Pipsology, you learn the basics of forex from Pre-school, to elementary, to high school, to college, and then on to further more advanced studies. Graduating from each level will take you through learning milestones until you are finally able to identify trading opportunities, time the market, and close a trade. There are lots of important forex concepts to learn at the School of Pipsology if you want to be a successful forex trader. By the fifth grade level, you will already have learned how to do basic market analysis and read common chart indicators as Bollinger Bands, MACDs, Parabolic SARs, Stochastics, and RSIs. The best thing about it is that you can learn in simple terms and therefore at a faster pace.

Forex Options Trading – Advantage of Technical Analysis

admin — Mon, 14 Dec 2009 23:14:19 +0000

In the world of foreign currency exchange, it is important for any trader to be able to analyze the market and look for the signals in order to determine his or her next move. Every decision made should be based upon the information one can gather in the movement of the market. But, how do you actually analyze the complexity of this market?

In analyzing the world’s largest financial market, there are two options for any trader. One is to use fundamental analysis which is concerned with the different factors that can affect the price or the value of any currency. Such factors include the performance of the government, the economic situation and the political issues. All of these are important factors in determining fundamental analysis.

The other way to analyze the foreign exchange market is to use technical analysis. This procedure is actually used more often compared to fundamental analysis. This is a more efficient way to analyze the market and insure that you will earn money. Basically, technical analysis uses charts as well as statistical data in order to see what can happen next. This procedure is aided by the belief which says that what happens in the past could happen again. With that in mind, the trader would then be able to use the charts to predict what movement it will make in the near future.

Knowledge is indeed power and the foreign exchange market is a prime example for that. The forex technical analysis is the best choice for any aspiring trader.

Forex Options Trading – How Profitable Currency is as Commodity

admin — Mon, 14 Dec 2009 09:29:45 +0000

In Forex Trading, your prime and only commodity is currency. There are lots of them. You can earn from different currencies from different countries across the universe. But most of the time, the commodity currency that you will be trading in the market are the leading currencies of this planet.

The leading currencies that are usually traded in the market are: the US Dollar (USD), the European Euro (EURO), the Great Britain Pound (GBP), the Japanese Yen (JPY), the Swiss Franc (CHF), and the dollar of Australia (AUD) as well as Canada (CAD). Each currency has its own code to easily tell them apart, and is written by combining the acronym of the country and the currency they use.

The aforementioned currencies are considered as the primary commodity currency not only because they belong to first world countries but mostly because they are seen as having the best potentials for profitability. The base currency is the US Dollar (USD) since it is regarded and recognized to be the strongest currency in the world regardless of the economic situation of the country right now.

Commodity currency trading is highly profitable. Currency is a product that is needed and required by countries all over the world for countless purposes. The principle of Forex is simple and straightforward: buy and sell with currency as your commodity. If the strategies and methods of the trade may seem a little complex to you, there are always tools and automated programs that you can rely upon for help.

Forex Options Trading – Difference Between Leading and Lagging

admin — Sun, 13 Dec 2009 23:51:10 +0000

It is no secret that trading in the largest financial market in the world known as the Foreign Exchange market is no walk in the park. First of all, it is a very complex market with a lot of technical details. In order to be successful here, you would need to understand how the market works in the first place. To do this, you must take up forex education and learn about the fundamentals of the Foreign Exchange market before starting your journey into becoming a trader.

The basics and fundamentals of currency trading however aren’t enough to accompany you in your journey. You would need skills and tools to use while you’re trading the forex and understand when and where to use these tools. A very useful tool you should learn is identifying and taking advantage of the different trading signals. There are a lot of different signals but mainly they would only mean one of two things and categorized as such; leading signals and lagging signals.

Leading signals are trading indicators which notifies the trader of an upcoming or imminent trend in the forex market. It is vital that you become the first to find and take advantage of a trend to get the most out of it. However, this signal can also be misleading which proves to be a problem.

Lagging signals on the other hand indicates a trend which has already started and is still profitable. This carries lesser risk compared to the former but will basically earn less in forex trading.

Forex Options Trading – Online Courses to Help Trading Currency Effectively

admin — Sun, 13 Dec 2009 11:24:30 +0000

Nobody in this world can ever start riding a bike without first mastering the skill. Likewise, you need to be trained and you need to learn the know-how from the experienced traders before you can have the competence to trade. So, unless you are an expert in trading and have already earn considerable amount of profits from trading Forex, you should take a Forex trading course which can benefit you a lot.

Being new in trading Forex, you should start learning the fundamental from a course in currency trading. If you have been trading currency for quite some time, you could still benefit from the training for learning something new which you do not know. It isn’t possible to thoroughly understand trading currency due to the complexity of the market. You need to take many years of experience to understand and master it. Hence, by training yourself via an online course in Forex trading can help you save a lot more time and money in the long term.

Forex trading was once only open to big corporations and businesses, and due to this reason, you could hardly find anyone giving course or training in this subject. In the modern world where internet has become so popular and commonly used, more individual traders are coming into the market and also more courses and trainings are entering and competing to offer their help.

With the help of the internet, now people are able to attend their courses conveniently at the comfort of their own home. If you prefer to attend the training in a classroom to online, you can also do so. There are many courses available out there in the market for you to choose from and with the convenience these courses are providing, doesn’t it seem that there is no excuse from you to reject the idea of upgrading?

In addition to the convenience in training at you own home, another advantage is that you do not have to stress over completing the course within a time frame. Learn at you own pace and you do not have to sacrifice too much of your valuable time spending with your family. However, one disadvantage of these courses is that you can only learn from the DVDs or online videos sent to you, and there will be no trainer available for you when you need certain clarification.

Look for online currency trading courses that can be returned for a full refund if you do not like their training, that is, a money-back guarantee. Also, be careful with those advertisements which claimed that they can guarantee a profit by going through their training. This claim may not be true.

You should be aware that what the online currency trading courses will only be teaching you the principles of trading, so that you can have a better understanding and knowledge to trade. These tutorials cannot teach you how to think and make decision faster which are very essential requirements for a good trader. So, combine the knowledge you have learnt with your everyday trading practice, and you will be surprised to find out that your thinking and decision making will be automatically faster.

Although these online courses cannot tell you when to buy and sell a trade, it sure can help you make the next move easier when you spent time learning everything from it. If you need further security, seek help from Forex signal service providers.

You can never learn everything about currency trading from anyone or any course. The only thing you can do is to obtain as much knowledge as possible from these online currency trading trainings and apply this know-how to your everyday trading habits; it should help you to trade more profitably.