ONLINE FOREX TRADING SECRETS

FOREX or Foreign Exchange is the largest as well as the most liquid trading market in the world and there are many people involved in FOREX trading all over the world. A lot of people claim that the FOREX is the best home business that could be pursued by any person. With each day, more and more are turning to FOREX traders, via electronic means of computer and internet connectivity.

This means that foreign exchange is not delivered to a person who actually buys like stock trading, FOREX trading also has day traders that purchase and sell foreign exchange same day. Thus, FOREX is not a get-rich-quick scheme as many people thought which complicates the real concept of online Forex trading.

Unlike stocks and futures that trade through exchanges, Forex trading is done through market makers that include major banks as well as small to large brokerage firms located around the world who collectively make a market on 24 hours – 5 days basis. The Forex market is always “open” and is the largest financial network in the world (daily average turnover of trillions of dollars).

Forex trading involves trading currency pairs such as the EUR/USD pair (Eurodollar/US dollar pair) where a buyer of this pair would actually be buying the Eurodollar and simultaneously selling short the US dollar.

Here’s the deal: Just like any other market, most “traders” are losing when trading Forex. And the reasons for their failure are mainly because some lack good trading methods, sound money and risk management principles and indiscipline trading attitude. In most cases, it could be wrong mindset and motive towards the market. Some don’t even understand the trend of the market, of which the trend plays a vital role in the life of any trader, as it is simply says that “the trend is your friend”.

Moreover, many have been mislead by dishonest individuals or questionable brokers promising outwardly overnight riches and hidden policies.

Forex is still a little like the “wild west”, so there’s naturally a lot of confusion and misinformation out there but I’m here to cover many tactics and strategies used by successful Forex traders all over the world. Unfortunately, only few Forex traders are actually aware of this information.

Forex trading is all about regulation, willpower and determination. Leveraging your strength could be extravagant by organizing the appropriate Forex trading strategy. You may find hundreds and thousands of Forex trading strategies out there. All Forex trading strategies use a variety of indicators and combinations. These indicators and studies are just calculating support and resistance and trend in the Forex trading market.

What you are about to read is more valuable to you than what you will find in many trading courses or seminars that you’d have to pay for. Anyway, I don’t believe in sugarcoating anything or giving you false hopes of success. There are enough swindlers doing that already. I want to give you the facts, like ‘em or not, so you’re empowered to take action and make positive decisions on how to succeed in the Forex markets.

There’s nothing magical about the Forex markets, because all markets are ultimately driven by human psychology – fear and greed – and supply and demand. Sure, every market has its own peculiarities, but if you understand how the basic drivers of human emotions work, you can potentially succeed big in Forex market, because the market controls 95% of live trader’s emotions. Some traders think it’s a “get rich quick” trading the popular Forex markets.

There are many advantages of Forex trading over other types of financial instrument trading like bonds, stocks, commodities etc. But it does not mean that there are no risks involved in the Forex trading. Of course there are risks associated with Forex trading. Therefore, someone needs to understand all the terms related to Foreign Exchange carefully. There are many online sources as well as offline sources that provide hints on trading of Forex. These hints are basically the SECRETS.

As I said above, the foreign exchange trading is considered as one of the most profitable and attractive opportunities for investment as any person can easily do at home or office and from any part of the world. For succeeding the Forex trading, a person is not required to do any online promotion, marketing etc. The only requirement in the Forex trading is the account that a person is required to open with reliable and registered brokers, a computer system and fast internet connection.

Now, you have to be careful when opening a Forex account with any broker because some could be SCAM. The Commodity Futures Trading Commission (CFTC) in US has jurisdiction over all Futures and Forex activity. When trading in the foreign exchange markets, individuals should only trade with a CFTC registered entity that is also a member of the National Futures Association (NFA) and is regulated by the CFTC. For non-US broker/ bank entities, be sure that the broker or bank is registered with that country’s appropriate regulatory bodies.

The Forex account could be opened with any amount between $300 (mini) and $2000 (standard). After opening the account, a person is required to learn how the Forex market works, demo trade and after a while go live trading. Moreover, there are some secrets that have to be followed.

A person can also apply all the secrets when demo trading and can see if the secrets really work. It could be said without any doubt that if someone can apply all the secrets in right way, he/she can easily gain good money by way of Forex trading.

All successful traders have Forex trading strategies that they follow to make profitable trades. These Forex trading strategies are generally based on a strategy that allows them to find good trades. And the strategy is based on some form of market analysis. Successful traders need some ways to interpret and even predict the movements of the market.

There are two basic approaches to analyzing the movements of the Forex market. These are Technical Analysis and Fundamental Analysis. However, technical analysis is much more likely to be used by traders. Still, it's good to have an understanding of both types of analysis, so that you can decide which type would work best for your Forex trading strategies.

There has been misconception about the Forex market because there are different types of traders and advert out there full of exaggerations that makes the business unreal to so many people and that is why I am here to show you the SECRETS in Forex Trading.

What is traded on the Forex market? The answer is money. Forex trading is where the currency of one nation is traded for that of another. Therefore, Forex trading is always traded in pairs and the most commonly traded currency pairs are traded against the US Dollar (USD). They are called ‘the Majors'. The major currency pairs are the Euro Dollar (EUR/USD); the British Pound (GBP/USD); the Japanese Yen (USD/JPY); and the Swiss Franc (USD/CHF). The notable ‘commodity’ currency pairs that traded are the Canadian Dollar (USD/CAD) and the Australian Dollar AUD/USD. Because there is no central exchange for the Forex market, these pairs and their crosses are traded over the telephone and online through a global network of banks, multinational corporations, importers and exporters, brokers and currency traders. But if you really want to make it big in the Forex market, I will strongly advise that as a “beginner” in the business. Kindly get acquainted with one or two major currency pairs. Study them very well and make sure you understand their volatility period.

And to further simplify Forex trading, you could easily limit your trading to the two most liquid and widely traded pairs, the EUR/USD and the GBP/USD. This really starts to reduce demands on your time for trading activities without giving up good profit potential.

Traditionally, currency trading has been a 'professionals only' market available exclusively to banks and large institutions, however, because of the invention of the new E-economy, online Forex trading firms are now able to offer trading accounts to 'retail' traders like you and I. Now almost anyone with a computer and an Internet connection can trade currencies just like the world's largest banks do.

ATTRIBUTES AND BENEFITS OF FOREX TRADING

The Forex markets are indeed different from the stock markets in the sense that their price behavior is different with usually more abrupt price swings. This requires different trading methods than those typically used for stocks in order to take full advantage of the profit potential that Forex has to offer while at the same time designing the right strategy to minimize risk. On the other hand, they are alike in that both Forex and stocks are markets that develop repeatable price behavior that present profit opportunities for those traders with good trading methods, sound money management principles and disciplined trading.

There are many benefits and advantages to trading Forex. Here are just few reasons why so many people are choosing this market as a business opportunity:
1.         LEVERAGE: In Forex trading, a small margin deposit can control a much larger total contract value. Leverage gives the trader the ability to make extraordinary profits and at the same time keep risk capital to a minimum. Some Forex firms offer 200 to 1 leverage, which means that a $50 dollar margin deposit would enable a trader to buy or sell $10,000 worth of currencies. Similarly, with $500 dollars, one could trade with $100,000 dollars and so on. Moreover, one must be careful when choosing leverage because due to experience and research, it is very clear that leverage is misunderstood and this misunderstanding is a root cause of Forex trading losses and the futile attempts to overcome these losses without addressing the root cause.
Because of the high leverage that Forex offers, Forex positions require a much smaller account size than stock. Stocks trading similar sized positions as Forex margin requirements are much smaller than stock margin requirements. And so the reward can be much greater with Forex, but at the same time, the risk is much greater. But this can be dealt with effectively with good trading tactics and good money management rules that allow for maximizing profit potential and minimizing risk.

Now, let me explain in a lame man way that the deposit (money) you have in your Forex account with a broker is refers to as collateral (margin) for getting a loan (leverage) from the broker to trade any required amount of currencies.

2.         LIQUIDITY: Because the Forex Market is so large, it is also extremely liquid. This means that with a click of a mouse you can instantaneously buy and sell at will. You are never 'stuck' in a trade. You can even set the online trading platform to automatically close your position at your desired profit level (limit order), and/or close a trade if a trade is going against you (stop order).

3.         PROFIT IN BOTH 'RISING' AND 'FALLING' MARKETS: On the stock markets, you can only make money if shares are rising, but in economic recession and falling 'bear' markets, there is little chance of making big money. Forex is different. One of the most exciting advantages of FX trading is the ability to generate profits whether a currency pair is 'up/bullish' or 'down/bearish'. A trader can profit by taking a 'long' position, (buying the currency pair at one price and selling it later at a higher price), or a 'short' position, (selling the currency pair and buying it back at a lower price). For example, if you think the US dollar will increase in value vs the Japanese Yen then you will buy Dollars and sell Yen (go long). If you think the Yen will increase in value against the Dollar then you will sell Dollars and buy yen (go short). As long as the trader picks the right direction, a potential for profit always exists.

4.         24 HRS: From Sunday evening to Friday Afternoon EST the Forex market never sleeps. This is very desirable for those who want to trade on a part-time basis, because you can choose when you want to trade - morning, noon or night.

5.         FREE 'DEMO' ACCOUNTS, NEWS, CHARTS AND ANALYSIS: Most Online Forex firms offer free 'Demo' accounts to practice trading, along with breaking Forex news and charting services. These are very valuable resources for traders who would like to hone their trading skills with 'virtual' money before opening a live trading account. I will also want to advise the newbies in the Forex market to atleast “Demo Trade” for 2 months uninterruptedly before going live trading because this will really help build up strong emotions in live trading. Also, demo trade with what you will fund your live account with. Take for instance, you wish to fund your live account with $500, don’t demo trade more than what you will fund your live account with.

You must also take the demo trade serious and maintain the account like a real live account. Apply all strategies on demo account before applying it on live account.

6.         MINI & MICRO MINI TRADING: One might think that getting started as a currency trader would cost a lot of money. The fact is it doesn't. Online Forex Firms/Brokers now offer 'mini' trading accounts with a minimum account deposit of only $200 - $500 with no commission trading. This makes Forex much more accessible to the average individual, without large, start-up capital. But my personal perspective about the Forex market is that the more money you have to trade the more you enjoy trading Forex.

7.         BID AND ASK PRICE: Currency is traded in pairs as mentioned above; where one is Base and the other is Counter currency. The currencies are two-sided quoted, consisting “Bid” and “Ask” e.g. 2.0440/2.0443. The bid is always lower than the ask price.  The Bid is the price at which the dealer is willing to buy the base currency in exchange for the quoted currency. This means the Bid is the price at which you (as the trader) will sell i.e. 2.0440 The Ask is the price at which the dealer will sell the base currency in exchange for the quoted currency. This means the Ask is the price at which you will buy. i.e. 2.0443

8.         PIPS: Is the Percentage Interest Points and the last decimal point in a quoted price of any currency. The most common increment of currencies is known as the "pip." It is the smallest value change in a currency pair exchange rate. Example: the movement of GBP/USD of 1.7896 to 1.7897 signifies a pip movement. A positive or negative pip value is how you calculate your profit or loss.
HOW TO GET STARTED: After demo trading for minimum of 2 months, what you need to put in place before trading Forex on a live account are: PC, fast Internet connection, a Domiciliary Account with any bank in Nigeria, Utility Bill, Means of Identification (International Passport, National ID Card or Driver’s License) A copy of the means of identification must be a true copy that a Notary Public will notarize. You can get a Lawyer especially (SAN) to notarize the document.

Once you have all the afore-mentioned documents, you are set for the business. You can courier, fax or scan and send the documents to your desired broker for opening of FOREX account. Fund your account base on your financial capacity.

THE FOREX SYSTEM FOUNDATIONS

Before you can make it big in the Forex market, the following four (4) building blocks that I believe to be foundations to the Forex Profit System must be considered.

Foundation #1: Currency Trading is not a Get-Rich-Quick Scheme.
Currency trading is a SKILL that takes TIME to learn. Skilled Traders can and do make money in this field, however like any other occupation or career, success doesn’t just happen overnight. Here is a great ‘formula’ for success in the Forex market:

Practice + Patience + Persistence = Profits

As they say, there is no substitute for hard work and diligence. Practice trading on a demo account and pretend the virtual money is your own real money. Do not open a live trading account until you are profitable trading on a demo account. Stick to the plan and you can be successful.

Foundation #2: I highly recommend that you follow 1 or maybe 2 major currency pairs.
I recommend that traders choose one of the 4 majors that I will be recommending because their spread is referable and are liquid. The Euro/USD is the most commonly traded pair and usually has the best ‘spread’ because of its liquidity. The USD/Swiss Franc is usually the most volatile and moves the most during the trading week. The USD/Yen moves a lot on the news out of Japan and normally the Pound Sterling/USD is more stable in its moves than the other three. So choose one currency pair and demo trade on it very well.

Foundation #3: Follow and understand the daily Forex News and Analysis of the professional currency analysts.
It is important to get a birds-eye view of the currency markets and the news that affects the prices. It is also important that you know and understand what the key technical ‘support’ and ‘resistance’ levels are in the currency pair that you want to trade. Support is a predicted level to buy (where currency pair should move up on the charts), resistance is a predicted level to sell (where the currency pair should move down on the charts). Fortunately, all the best Forex news and analysis is offered free on the Internet. Here is what you should do first:

Note: While you are reading the daily news and technical analysis, write down on a piece of paper what direction the analysts are saying about the major currency pair you are following and the key support and resistance levels for the day.

A) Go to www.forexfactory.com and you will find 24hr news and analysis on the spot FX markets. The site will give you the big picture of how the economic calendar and Central Banks affect the currency markets. A great resource.
B) You can also go to www.fxstreet.com and click on the ‘Top Forex Reports’. Here there is a wonderful listing of all the major daily currency analysis and forecasts with support and resistance and direction forecasts. Or
C) Click on www.currencypro.com and go to ‘Today’s Market Research’ and there you will find more excellent analysis on the Major Currency pairs. Another great Forex Portal.
D)  You can also go to www.actionforex.com for more FX news.

Foundation #4: Learn how to use the technical indicators and always trade with stop losses!
It is worth your time to be patient and learn how to use the technical indicators on the charts that you will be reading about shortly. It is also important when you are trading Forex, to be disciplined and to stick to a plan. Don’t just trade your ‘gut’ feeling. Use the technical indicators outlined and always enter in stop losses on every trade. Remember that everyone who trades has a different tolerance for losses. Depending on your risk capital, and strategy, set your stop losses accordingly.