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Forex Trading Online

4X (Forex) Made Easy

I just went to a seminar on Forex trading.  I go to a lot of these types of things, most of them are a complete waste of time, but every once in a while you learn something. This was one where I learned a few things.

Michael Stewart was the guy giving the talk, and he was pretty good. Like I said I go to a lot of these and it only takes about 5 minutes for me to tell if the guy knows how to trade. 

Traders just talk different than people who read about trading in a book then try and teach you what they know.  Anyway, this guy definitely trades.

 He ran thought the basics which I already know, but it was not overly boring.

When you talk about currencies you always refer to a currency pair the base is always first and the cross is always second. If someone just uses one it's always the base.

Two things are important when trading:

  1. Money Management
  2. Timing

Until 1998 only banks could trade currencies then the markets opened up to everyone.

The Major Currencies traded are:

  • Australian Dollar
  • Euro
  • Japan Yen
  • British Pound
  • Swiss Frank
  • Canadian Dollar
  • New Zealand (this one is not traded as much)

Banks are still the largest players in the currency markets.

Differences between the currencies market and the stock market:

  • No gaps in currency markets
  • Trades 24 hours from Sunday afternoon to Friday night 
  • 100 to 1 leverage on trades
  • Brokers will guarantee your stop loss, no trade throughs
  • No commissions
  • No short sell restrictions

Measured in PIPs (Price Interest Point) approximately $10 (between $7 and $18 for the different currencies)

Normal spread is 3 to 5 pips, with $250,000 in your account the brokers start lowering your spread from 3 down to 1 pip.

One Lot = $100,000 of currency, usually you put up $1,000 with your broker to control one lot.

You can trade long or short the same way.

You can open a Mini account for $300 and trade mini contracts.

Different than futures because with futures there is a person on the other side of your trade, and there are floor traders trying to move the market.

With Currencies the economy of the country is on the other side of your trade, no person had an interest in you losing money like with futures.

Three types of traders:

  1. Active - in trades 30 minutes to 2 hours
  2. Swing - in trades 1 day to 3 days
  3. Position - 1 week to 3 weeks (also called Long Term traders)
Money Management consists of:
  • How many lots
  • Reward - how much to make
  • Risk - your stop loss
Must treat trading like a business.

Never trade scared, or bet money you can't afford to lose.

Currency market is completely computerized.

What to look for:
  • Fresh cross (of 2 moving averages)
  • Angle of the cross
  • Separation of the Moving averages - how far appart they are
  • Timing 
Canadian Dollar is the easiest to trade:
  • from 8:30 to 11:00 am the government give out news at this time, 
  • news is announced way in advance
  • after news market usually trends for 2 hours
  • can make a 30 to 50 pip trade everyday
From 4am to 9am European market overlaps US markets so it is the best time to trade.

With Currencies 90% of the movement will happen when their countries markets are open.

Michale then clicked on a button and did a trade the New Zealand Currency (I forget what it is called) he said the software used a 15 pip initial stop loss, and was programmed to put in a 30 pip profit stop loss that would follow the market.

April 25, 2005

 

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