Forex Market Strategy
Financial Forex market is a popular place to trade world currencies for specialized traders, brokers and individuals who want to earn money online. At online Forex market anyone can get a financial success with the help fundamental knowledge, continuous training and business luck. Briefly speaking Forex market strategy is a method of using currency exchange rates from different countries to buy one country's currency when it is undervalued and exchange it for another country's currency when it is of normal or higher value. By using Forex market strategy you will get profits from the difference of currency exchange rates.
Our managed Forex day trading system will help you to raise your business profits, increase financial success of your company and personal income. But before you decide to try managed Forex trading strategy in practice and invest in foreign exchange real money, we strongly recommend you to determine your investment purposes, level of experience and possible risks. Before using managed Forex trading strategy you should be well informed about all risks associated with foreign exchange trading and in case of any problem consult with our financial advisors.
You can start trading on financial Forex market from everywhere you want: your home, office and even on the road with your mobile phone. Install financial Forex market platform on your computer and begin to earn money.
Register any Forex trading account with us and we will provide you with top-notch customer support and high level services to help you follow your chosen Forex market strategy successfully.
Trading Strategy - Pre-trading shorts?
The SEC rule change on short-selling forces speculators to borrow shares before shorting them. This all but eliminates day-trading on the short side. Seems likely to be viewed a positive for a bear market but like all rules the unintended consequence will be to eliminate liquidity in shares just as the market wants it and the short-squeeze will be less dramatic. While calming markets down is the first order of business that Bernanke made clear in his testimony – the second order is inflation and today’s US CPI will be key in allowing all the other things that need to be fixed the key ingredient – time. FX markets actually took center stage overnight – with both CHF and JPY gaining again – but not purely against the USD. The article in the WSJ coupled with the CPI reports today show that Europe suffers as much as the US. The failure in Spain of the biggest real estate developer should be a wakeup call for the EU. Further ECB hikes due to inflation targets will be meeting more resistance from politicians. Bernanke won’t be alone in his rock or hard place dilemma. The US data today may actually help stabilize the market more than any new regulation - first the TIC data may show that the world still puts money into the US enough to finance its deficits, second the IP data may not be horrible enough to show a clear recession in manufacturing, third Congress may be able to support Bernanke in his second round testimony by suggesting more stimulus. Overall, the bears should be a bit worried today – and that may be good for the USD but better for the crosses. Key for USD will be 103.70 JPY – the voodoo of the cloud point, but more interest overnight in EUR/CHF and EUR/JPY may be the driver linked to equities. With oil down, gold down, the USD may hold well in a dull range allowing some respite from the volatility that destroyed risk-taking over the last week.
Trading Timeframes
Long term traders will work from end of day data and look to hold trades for a few weeks up to many months. Usually trend trading.
Advantages
No need to watch the markets intraday.
Fewer transactions means lower commission costs.
Cost of equipment and data is minimal.
Disadvantages
Large equity swings on single positions with large stops.
Usually only 1 or 2 exceptional trades a year so patience is essential.
Bigger capitalization required to ride longer term swings.
Frequent losing months.
Working from intraday data and looking to hold for a day up to a week. Usually swing trading.
Advantages
More opportunities for trades.
Less chance of losing months.
Less reliance on one or two trades a year to make money.
Disadvantages
Transaction costs will be higher.
Intraday data adds to costs.
Overnight risk becomes a factor.
Working from intraday data the day trader will attempt to take small profits from intraday swings. All positions will be exited at the market close.
Advantages
Many trading opportunities in a day.
Much lower chance of losing months.
No overnight risk.
Reduced margin requirements due to no overnight risk.
Disadvantages
Transaction costs will be high.
Psychologically more difficult due to frequency of trading.
Profits are limited by needing to exit at the end of the day.
Data costs are high as real time data is essential
How to Calculate Leverage, Margin, and Pip Values in Forex
1 comments Posted by sara carter at 6:08 PM
How to Calculate Leverage, Margin, and Pip Values in Forex
1-Leverage and Margin
Most forex brokers allow a very high leverage ratio, or, to put it differently, have very low margin requirements. This is why profits and losses can be so great in forex trading even though the actual prices of the currencies themselves do not change all that much—certainly not like stocks. Stocks can double or triple in price, or fall to zero; currency never does. Because currency prices do not vary substantially, much lower margin requirements is less risky than it would be for stocks.
Most brokers allow a 100:1 leverage, or 1% margin. This means that you can buy or sell $100,000 worth of currency while maintaining $1,000 in your account. Mini-accounts can have leverage ratios as high as 200.
The margin in a forex account is a performance bond, the amount of equity needed to ensure that you can cover your losses. Thus, you do not buy currency with borrowed money, and no interest is charged on the 99% of the currency’s value that is not covered by margin. The margin requirement can be met not only with money, but also with profitable open positions. The equity in your account is the total amount of cash and the amount of unrealized profits in your open positions minus the losses in your open positions. Your total equity determines how much margin you have left, and if you have open positions, total equity will vary continuously as market prices change. Thus, it is never wise to use 100% of your margin for trades—otherwise, you may be subject to a margin call.
So if you buy $100,000 worth of currency, you are not depositing $1,000 and borrowing $99,000 for the purchase. The $1,000 is to cover your losses. If the equity in your account drops below the margin requirement, then you will have to deposit more money, or the broker will liquidate your positions. Thus, buying or selling short currency is like buying or selling short futures rather than stocks.
Leverage is inversely proportional to margin:
Leverage = 1/Margin = 100/Margin Percentage
Margin Percentage = 100/Leverage
