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What Is Forex Trading About?

What Is Forex Trading About?

The foreign exchange market is the “place” where currencies are traded. Currencies are important to most people around the world. Whether they realize it or not. Because currencies need to be exchanged in order to conduct foreign trade and business. If you are living in the U.S. and want to buy cheese from France, either you or the company that you buy the cheese from has to pay the French for the cheese in Euros (EUR). This means that the U.S. importer would have to exchange the equivalent value of U.S. dollars (USD) into Euros. The same goes for traveling. A French tourist in Egypt can’t pay in Euros to see the pyramids because it’s not the locally accepted currency. As such, the tourist has to exchange the Euros for the local currency, in this case the Egyptian pound, at the current exchange rate.

The need to exchange currencies is the primary reason why the forex market is the largest financial market in the world. It dwarfs other markets in size, even the stock market, with an average traded value of around U.S. $2,000 billion/day.

One unique aspect of this international market is that there is no central marketplace for foreign exchange. Rather, currency trading is conducted electronically over-the-counter (OTC), which means that all transactions occur via computer networks between traders around the world, rather than on one centralized exchange. The market is open 24 hours a day, five and a half days a week, and currencies are traded worldwide in the major financial centers of London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris and Sydney – across almost every time zone. This means that when the trading day in the U.S. ends, the forex market begins a new in Tokyo and Hong Kong. As such, the forex market can be extremely active any time of the day, with price quotes changing constantly.

Why trade forex?

  • 24 Hour market.
  • Narrow Focus.
  • The market cannot be cornered.
Basic Forex Items.

PIP : A Pip is the "Percentage In Point" (PIP), sometimes also referred to as "Point". It is equal to the minimum price increase of a Forex trading rate. The most common Pip is 0.0001.

Ask Price: The ask price is the price you can buy a currency at. It is also the price at which the market is willing to sell the currency to you.

Bid Price: The bid price is the price you can sell a currency at. The market is willing to pay you this price for this particular currency.

Spreads: Spread is the difference between bid price and ask price.

Currency Rate: A currency rate against another currency rate.

What Are Forex Brokers?

In the past, only large international financial institutions were allowed to trade currencies, but with the introduction of online forex brokers, i.e. forex trading platforms, individuals are also given an opportunity to invest and increase their capital by trading currencies. Basically, a forex broker is a company which provides a platform for individuals who like to engage in speculative trading of currencies. This type of forex trading, where individuals get to trade via a platform is also known as ‘retail forex trading’, a term used to distinguish it from the more traditional type of forex trading. Even though it appeared only about 20 years ago, online forex trading is now a huge market and recent reports show that the daily trading turnover in 2016 was over $280 billion. There are numerous forex brokers that offer forex trading services to individuals all over the world.




The basic definition of the word broker is ‘someone who sells products or services on behalf of other people’. And that is pretty much true for forex brokers. They buy and sell currencies on your behalf. Unlike conventional brokers that you’ve surely seen in Wall Street themed movies, you don’t have to call this brokers and they don’t have to be at a particular place in order to trade.

How to Choose a Forex Broker?

There are more than few forex brokers that operate online, in fact there are dozens of them. Choosing the best online forex broker, isn’t always easy, especially since almost every forex trader seems to be the bets. But, you shouldn’t worry, as there are ways to determine which forex broker is trustworthy and reliable.

Top 10 Forex Brokers online.

1.   optionsXpress  (http://www.optionsxpress.com/)

2.   ONADA Corporation (http://oanda.com/)

3.   FOREX.com (http://forex.com/)

4.   TradeKing Forex (http://tradeking.com/forex)

5.   TradeStation Group (http://tradestation.com/)

6.   Fortex Capital Marketing(FXCM) (http://www.fxcm.com/)

7.   Thinkorswim (https://www.thinkorswim.com/t/innovation.html)

8.   E*trade Fx (https://us.etrade.com/active-trading/investment-choices/forex-trading?vanity=forex)

9.   Place Trade Financial (http://www.us.placetrade.com/)

10.    Interactive Brokers Limited (https://www.interactivebrokers.com/ind/en/main.php)

How to invest in Forex?

In order to invest in the forex market, you must have an account in one of the forex brokers online. Many of the brokers provide demo account where you can practice your trading skills. It is always considered good to trade on demo account first and then shift to the real account.

To invest in these markets you must deposit real funds from some of the wallets available like Skrill, Neteller , Web Money and many more. Different platforms support different wallets to deposit the fund.

Best robots and signal services.

There are some of the auto trading robots and signal service providers online. You can trade on Forex through these robots. You just need to deposit the fund and the robots use some algorithms and patterns to trade from your account. Some of the available and trending robots are :-

·        OptionRobot (optionrobot.com)

·        Binaryrobot365 (binaryrobot365.com)

·        Automatedbinary (automatedbinary.com)

·        Binaryoptionautotrading (binaryoptionautotrading.com)

·        Binaryoptionsrobot (binaryoptionsrobot.com)

·        Mikesautotrader (mikesautotrader.com)

 

Strategies.

There are number of strategies available for trading online. When it comes to selecting strategies, you have the choice between buying one off-the-shelf or trawl. Some of the renowned strategies are:-

·        The blade runner trade.

The Bladerunner is an exceptionally good EMA crossover strategy, suitable across all timeframes and currency pairs. It is a trending strategy that tries to pick breakouts from a continuation and trade the retests.

·        Daily Fibonacci pivot trade.

Fibonacci Pivot Trades combine Fibonacci retracements and extensions with daily, weekly, monthly and even yearly pivots. The emphasis in the discussion here is on using these combinations with daily pivots only, but the idea can easily be extended to longer timeframes incorporating any combination of pivots.

·        Bolly band bounce trade.

The Bolly Band Bounce Trade is perfect in a ranging market. Many traders use it in combination with confirming signals, to great effect. If Bollinger Bands appeal to you, this one is well worth a look.

·        Forex dual stochastic trade.

The Dual Stochastic Trade users two stochastics – one slow and one fast – in combination to pick areas where price is trending but overextended in a short term retracement, and about to snap back into a continuation of the trend.

·        Forex overlapping Fibonacci trade.

Overlapping Fibonacci trades are the favourites of some traders I have known. If used on their own, their reliability can be a little lower than some of the other strategies, but if you use them in conjunction with appropriate confirming signals, they can be extremely accurate.

·        London hammer trade.

The extra volatility you get when London opens presents some unique opportunities. The London Hammer Trade is my take on an attempt to capitalise on these opportunities. Especially effective during the London session, it can be used at any time when price is likely to be taking off strongly in one direction, and possibly reversing from an area of support/resistance just as strongly.

·        The blade runner reversal.

As mentioned above, the Bladerunner is a trend following strategy. The Bladerunner reversal just as effectively picks entries from situations where the trend reverses and price begins to trade on the other side of the EMA’s.

·        The drop ‘n’ stop trade.

The flip side of the pop and stop, this strategy trades savage breakouts to the downside.

·        Trading the forex fractal.

The forex fractal is not just a strategy but a concept of market fundamentals that you really need to know in order to understand what price is doing, why it is doing it, and who is making it move.

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