5 Forex Trading Strategies

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5 Forex Trading Strategies

If you’re new to trading currencies online and unsure where to start, it helps to understand popular forex trading strategies. Forex comparison site ForexBrokersAZ.com discusses 5 Forex trading styles in detail.

Scalping

Scalping involves buying and selling currency pairs online in small high frequency trades.

It’s designed to capitalize on small changes in exchange rates typically between 5 and 15 pips. A scalper can spend hours on end monitoring the markets, pushing trades through within minutes of closing a previous trade. The best trade opportunities arise when the foreign exchange markets become active – typically around news events, data releases or when trading sessions overlap across international markets.

Stock chart showing levels of support (4,5,6, ...
Stock chart showing levels of support (4,5,6, 7, and 8) and resistance (1, 2, and 3); levels of resistance tend to become levels of support and vice versa. (Photo credit: Wikipedia)

Make no mistake, scalping isn’t for Forex trading beginners. It requires a strong understand of the Forex markets and a clear view on where the markets are going. For this reason, scalpers usually trade with brokers that offer Electronic Communication Networks – also known as ECN brokers – because these brokers deliver faster execution and can provide insights into where the markets are heading through ‘Depth of Market’ (DoM) tools. DoM sounds technical but it’s nothing more than a window onto the orderbook, with volume and price information about buy and sell orders.

Day trading

Day trading involves opening and closing a Forex trading position on the same day – before 5pm New York time. The best day trading opportunities arise over the course of the European and US sessions. Liquidity reaches its peak when these sessions overlap.

Day trading opportunities can be found using intra-day charts with medium timeframes ranging anywhere from 15 to 30 minutes to 1 to 2 hours. Most day traders perform technical analysis on charts to identity support and resistance levels and other patterns.

If this is your preferred trading style, you’ll want to familiarize yourself with the MetaTrader 4 (MT4) platform. It comes loaded with of indicators you can use to perform technical analysis. Click here for Forex brokers that support the MetaTrader 4 platform.

Swing trading

Swing trades unravel over a longer period of time, typically 2 to 5 days with a view to make a 100 to 250 pip mark-up. Swing traders uncover trading opportunities through charts, using technical analysis to identify support and resistance levels and other patterns in the data.

Position trading

Positing traders have an even longer investment horizon: they typically keep their positions open anywhere between 5 and 50 days with a view to make a 250 to 1,000 pip profit. This is where the frontier between technical and fundamental analysis blurs as position traders can use both tactics to uncover trade ideas.

Value investing

Last but not least, value investors such as Warren Buffet or Benjamin Graham have a long term investment horizon. They can hold their positions anywhere from 1 month to several years if they spot a long term trend. Value investors can use both fundamental and technical analysis to identify potential trade ideas. However, longer term considerations such as economic imbalances, interest rate differentials and geo-political considerations often come into play.

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All the things you need to discover about Forex

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With an average daily turnover of virtually $4 trillion in the global foreign exchange market, or Forex, it is easy to see why more and more people at large are taking fascination in buying and selling foreign currencies. Still, the prospect of trading currencies in this “foreign” market can be overwhelming, even for skilled stock market speculators.

Continue reading All the things you need to discover about Forex

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Tips For Locating A Forex Trading Blog

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Locating A Forex Trading Blog

Reading up and educating yourself prior to investing is an important thing to do. The problem is you may not know much about the investment and you need to find a blog on the topic. This is when you should follow two tips for locating a Forex trading blog which can help you so you are not misled with the information which is being presented on other sites.

The first tip you need to use is to look at the age of the blog. If the blogs are older then they have experienced some of the downturns the economy has had and know how to handle them. So you can easily learn more about the way to battle through the changes in the economy because of the changes they have had to cope with before.

Another tip you need to use is to find out exactly how they are doing the trading. For example some of these blogs will be using a computer program, but others do this by hand. So you need to know for certain which method they are using so you can duplicate the effort to make money.

Investing your money in currency can be an exciting way to make money. However, if you are new to this you need to have some form of an education on what you should be doing. This is when you need to have some tips for locating a forex trading blog and know you are using the best one around for your education.

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Top 3 Forex Brokers In The U.S.

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Forex trading comes with its own unique challenges. Once you decide to become a forex broker, you should immediately embark on the task of locating a competent firm that can facilitate smooth and honest trading. In order to achieve great returns, your forex brokerage firm should provide you with formidable forex trading strategies and analysis strategies on a regular basis. In addition, the brokerage firm you choose should be regulated by the right government agency (Commodity Futures Trade Commission and the National Futures Association). Below is a list of top 3 Forex brokers, also know was Forex brokerage firms, in the U.S.

Markets.com

Some interesting features of Markets.com include:

•    Multiple regulating institutions

•    Welcome bonuses for clients with high trading volumes

•    A $100 initial deposit which is quite low

•    Three independent trading packages to go with the client’s expectations and lifestyle

•    A welcome bonus of $2,000

YourTradeFX

This is an internet brokerage and investment firm. They offers the features listed here:
•    An exclusive demo account setup.

•    Losses are ignored during the trial period while any gains over the same period are credited into your account.

•    Trading platforms, various trading tools and education materials are easily accessible online.

•    You are guaranteed to never lose an amount that is more than the initial investment ($100).

Finexo

In a bid to give its clients an advantage, Finexo employs cutting edge trading technology. Other advantages of finexo include:
•    I really like the free demo accounts for new forex brokers.

•    Offers the most popular trading pairs in the Forex market (EUR/USD, EUR/JPY, USD/JPY).

•    Minimum deposits are very low ($100).

•    Three different platforms.

•    A $2,000 welcome bonus.

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4 Good Reasons To Look At Forex As An Investment

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These days there are many investors wondering if they should trade the Forex market or not. Many of them believe that Forex is only for large financial institutions, but this is not the case. While there are certainly plenty of big financial companies in the market, there are plenty of small investors in this market also. In reality the Forex market gives equal opportunity to small and large investors.

There are a number of reasons why you should consider putting money in foreign currency. Here are 4 of the best:

Liquidity

The Forex market is very liquid. To give you an idea of the size of the market, an average of $3,200,000,000,000 changes hands around the globe every day in the currency market. Whereas with the stock market you might have trouble getting rid of your investments, this will not be an issue with currency. In other words, there is less chance of getting stuck with an investment as it plummets.

Cheaper

The liquidity also gives you the chance of tighter bid/ask spreads. This means you will minimize the expenses of investing. The majority of broker platforms do not make you pay an individual cost for every transaction, because they earn their money by the spread from the quote for the various currencies.

Save Time

There are lots of Forex trading robots that will actually make your investing decision for you. If you use them then you can earn passive income, because you never have to touch them. Just keep in mind that you should not trust these robots for 100% of your Forex investments. If you have the time, it would definitely be advisable to invest yourself, because a human investor is always more profitable.

More leverage

As opposed to many other financial markets, the Forex market gives you huge amounts of leverage when investing. An investor with just $200-300 can often invest $10,000s of money in the market. But while lots of leverage can make you a huge amount of money, you can also lose a lot as well. So be cautious when using leverage.

Conclusion

Forex trading can be very profitable when used correctly. Investors globally are turing to it as an investment vechicle with stock markets becoming more and more uncertain. Above are 4 reasons which might make you consider putting your money into foreign currency. Just make sure to start slowly and learn as you go, and you will increase your odds of success.

Author Pete Southern is an active trader of forex and stock markets. Pete submits market reports to many online publications like www.forexrate.co.uk and is avid follower of the economy.

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Currency Wars: A Valuable Economic Resource and Insightful Read

Books about finance don’t come more riveting than Currency Wars by James G. Rickards. Part novel, part non-fiction, the Currency Wars book explains in chronological order the global wars fought over the decades, not with guns and oil but with currencies. In doing so it lays down the foundation for the next forecasted world implosion, which although is sparked by imagination is alarmingly full of insight and probability. Currency Wars reviews have applauded his work, with US Today commenting that it is, “Outside-the-box thinking…an important contribution to the nation’s economic dialogue…an invaluable resource”. Others speak with more trepidation about his predicted financial threats.

Currency Wars: Section One

The Currency Wars book is split into three sections. The first section has the characteristics of a novel as opposed to a financial book. In the section the author Rickards describes in detail his participation in an activity at the Warfare Analysis Laboratory. Usually the group is used by the defense department to simulate war games for planning strategies. However, the activity that Rickards was involved in had nothing to do with on the ground military action, rather military, academic and government interests participated in a simulated currency war that used currencies and capital to bolster power in certain regions. He contributed to this ‘currency war’ by offering advice on the markets. I won’t tell you what the outcome of the war is.

Currency Wars: Section Two

The second section of the book is more historical and outlines the events and conditions that led up to the first two currency wars (named CWI and CWII) in the twentieth century. Rickards also provides some valuable insight into the motivations that drove these wars. According to the book Currency Wars, CWI was fought between 1921 and 1936 and CWII between 1967 and 1987. Both of these wars were waged between countries of competing national interests. These currency wars forced competitive devaluations and government interventions with global finances.

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Currency Wars: Section Three

It is noteworthy that gold reappears throughout the Currency Wars book. According to Rickards, the currency wars were largely caused by the end of the Gold Standard in the global currency market after World War II. It also comes into play in the final section of the book where he gives his explanation as to why the world is now fighting CWIII. He also analyses in details the possible outcomes of CWIII (paper, gold and or chaos), giving the reader much to think about after the book even after the book has been put down. Currency Wars does not only target those concerned with finance, but also those who are interested in the future of our world and who enjoy solid and insightful speculation.

Penny Munroe is an avid writer in currency trading news and tips and aims to encourage any currency broker or trader to practice responsible trading. Her interest in currency markets started after she opened her own Forex trading account with a foreign currency broker.

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