jazzz

This thread is devoted for all new beginners and forex seeking people who are interested in learning concepts and techniques for forex trading.

Cheers

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jazzz

What is a Market Order?

This order is the most common order in the forex world, and it is used by dealers in order to trade instantly – sell or buy –at the current market price. This order is used by traders interested to quickly merge with the market's steep rise, or to leave quickly when the market is at an extreme weakening trend.

What is a Limit Order?

If a trader wants to invest in the Forex market, but he would rather wait until the market reaches a certain value, with Finexo's sophisticated trading platform there is no need to wait.
Once the trader has access to the platform he can place a limit order, thus the platform will automatically make the purchase or sale if and when the moment the market reaches the value defined by the trader within the order. Furthermore, the trader can restrict his profits by setting a value in which the trade will automatically close (read below). As long as the conditions for the execution of the order were not met, the trader is free to cancel the order or make changes within it.

What is a Stop-Loss?

The trader can restrict his future losses by placing an order instructing the trading platform to buy or sell, the moment the market drops below the previously established price. Placing a stop-loss within Finexo's sophisticated trading platform decreases the risk for the trader, as the system will close the trade if the market value drops below the point defined within the order, thus limiting the losses.

What is a Trailing Stop?

Finexo's advanced trading platform provides the trader with the trailing stop: a unique tool, that goes far beyond the regular stop-loss. Placing a trailing stop order means that as the market rises, the stop will follow the trend, setting itself higher than the trader's initial investment. This exclusive tool guarantees that the trader will always keep a position higher than the original, thus fixing his profits and restricting his losses automatically.
Therefore, the trader saves himself the need to be updated about the fluctuations of the market – he is assured that he made a profit, or in the worst case, that he did not lose.

What is OCO? (One Cancels the Other)

The traders of Finexo's advanced trading platform can use all kinds of orders at the same time, yet the execution of one order does not necessarily imply a cancellation of the rest. Placing an OCO order establishes that the execution of one order will mean the cancellation of the others belonging to that same position, allowing the trader to start over and place new orders.

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jazzz

Here are some forex indictors which will help you to optimize your returns and thus leading you to mature as a successful trader.

Simple Moving Average (SMA)- this is the average price over a certain period of time, keeping in mind that equal weighting is given to each daily price. The time period can be 5 minutes, 10 minutes, 1 day, 1 month etc. Where each of the chosen periods carries the same weight for the average.

Exponential Moving Average(EMA) - Here, in exponential moving average indicator the averages are calculated with the recent forex rates carrying more weight in the overall average; for example: In a 10-day exponential moving average, the last 5 days will have more effect on the average than the first 5 days. The idea is to use the most recent data as a better indication of trend direction. This moving average reacts faster to recent price changes than a simple moving average. The 12- and 26-day EMAs are the most popular short-term averages, and they are used to create indicators like the moving average convergence divergence (MACD) and the percentage price oscillator (PPO). In general, the 50- and 200-day EMAs are used as signals of long-term trends.

Bollinger Bands - The basic interpretation of Bollinger Bands is that, the prices tend to stay within the upper and lower bands. The Bollinger Bands have unique characteristic that the spacing between the bands varies based on the volatility of the currency prices. During high volatility periods, the bands widen to become more forgiving. Similarly during periods of low volatility, the bands narrow to contain currency prices. The bands are draw with two standard deviations above and below a SMA. They indicate a "sell" when above the moving average (or close to the upper band) and a "buy" when below it (or close to the lower band). The bands are used by some forex traders in conjunction with other analyses, including RSI, MACD, CCI, and Rate of Change.

Rate of Change – This is one of the simplest and very useful indicators. It is calculated by ROC = ( (Today's close - Close n periods ago) / (Close n periods ago) ) * 100. ROC can be prepared by using different periods such as 15 days or 45 days. The longer the time span used, the greater the fluctuation in the indicator (in terms of both magnitude and duration).
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RSI (Relative Strength Index)- The RSI is extremely useful and popular indicator. It is a price-following oscillator that ranges between 0 and 100. The RSI is analyzed by looking for a divergence where the currency price is making a new high, but the RSI is failing to surpass its previous high. This divergence is an indication of an impending reversal. When the RSI then turns down and falls below its most recent trough, it is said to have completed a "failure swing." The failure swing is considered a confirmation of the impending reversal in the price of the currency.

Stochastic – This is based on the premise that as prices rise, closing prices tend to be near the high value. Conversely, as prices fall, closing prices are near the low for the period. Stochastic studies are made of two lines, %D and %K, that move between a scale of 0 and 100. The %D line is the moving average over a specified period of time of the %K line. The %K line measures where the closing price of a currency is compared to the price range for a given number of periods. If the closing levels that are consistently near the top of the range indicate accumulation (buying pressure) and those near the bottom of the range indicate distribution (selling pressure).

Momentum - The Momentum indicator calculates the value of the commodity price shifts during a definite period of time. It is designed to measure the rate of price change, but not the actual price level. This consists of the net difference between the current closing price and the oldest closing price from a predetermined period. The Momentum indicator can be used as either a trend-following oscillator similar to the MACD or as a leading indicator.

Article taken from: forex- cash machine
Cheers

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jazzz

What is a Bull Market?

When the rise in market prices is combined with the belief of investors in a continued rising trend, the market is defined as a bull market.

What is a Bear Market?

When the fall in market prices is combined with the belief of investors in a continued falling trend, the market is defined as a bear market.

What is day trading?

Here positions are open and closed within the same day, and at the end of it no open position will remain for the next day. Day trading is intended for traders who wish to make a profit from the market's volatility within a short period, since the margin amount required for this kind of trade is relatively low. With the leverage that Finexo offers the traders, the small fluctuations of the market are greatly increased and so are the profits!

What is Hedge?

Hedging means protecting an investment from long-term changes in the market. The various hedging strategies, taken by both private and corporate traders, yield good profits at a minimum risk by neutralizing the market's volatility. Companies, for example, usually perform hedging, when they purchase a product from a foreign company, and the payment for it will only be transferred at a later stage. These companies use various kinds of hedging techniques in order to maintain the value of the currency, since a rise means loss.

What is a Spot Trade?

A spot trade refers to the direct exchange of currencies, taking place within the next 2 work days at most. This kind of trade is suited for traders wishing to hedge their investment from the rise or fall of the market within that period of time.

What is a Forward Trade?

Here too a direct exchange of currencies is performed, with the only difference that the date of the actual exchange succeeds the two-day period of a spot trade. Both sides establish the exchange rates and the date in which the actual trade will take place, as well as the added interest rates to the exchange.

What is Swap, Roll Over?

A trade within the Forex market (a spot trade) is a daily trade. If the position remains open after one work day, it may be charged with the relative interest rate corresponding to that currency pair.

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jazzz

What are Futures?

A future establishes the purchase or sale of a certain financial product at a certain price and date which were previously established by the contract. Trading in futures is not about an actual purchase or sale, it is about the speculation of the trends which will establish the future price of a certain financial product. As opposed to the trade in options, in which the trader can choose to fulfill a trade, here the trader is obligated to comply with the terms established within the contract, and buy or sell accordingly. Finexo offers its traders a leveraged, online trading in more than 300 types of futures in 21 stock markets worldwide, in which the traders can trade in a selection of financial products: currencies, bonds and commodities such as: gold, silver, oil, gas and coffee among many others.

What are CFDs? (Contracts for Differences)

A CFD is a contract between a buyer and a seller, which establishes that the seller will pay the buyer the difference between the current and the future value of a product, at an established date. In case of a negative difference, the buyer pays the seller the aforementioned difference. The CFD trails a certain index, stock or commodity without purchasing them and the profit is made by the previously mentioned differences. The online trading of CFDs within Finexo's advanced trading platform offers you a high leverage with a relatively small margin, giving you the possibility of fine profits in a short period of time.

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jazzz

Trading successfully is not a very simple matter. It requires time, market knowledge and market understanding, a large amount of self restraint and analytical mind.

It is very difficult to make consistently money in foreign exchange markets as they are driven by many factors. Foreign exchange by nature, is a volatile market. The practice of trading it by way of margin increases that volatility exponentially. We are therefore talking about a very 'fast market' which is naturally inconsistent.

Trade with money you can afford to lose:
Trading forex markets is speculative and can result in loss, it is also exciting, exhilarating and can be addictive. The more you are 'involved with your money' the harder it is to make a clear-headed decision. Money you have earned is precious, but money you need to survive should never be traded.

If in doubt, stay out:
If you're unsure about a trade and find you're hesitating, stay on the sidelines.

Trade logical transaction sizes:
Margin trading allows the forex trader a very large amount of leverage, trading at full margin capacity can make for some very large profits or losses on an account. Scaling your trades so that you may re-enter the market or make transactions on other currencies is generally wiser. In short, don't trade amounts that can potentially wipe you out and don't put all your eggs in one basket.

Identify the state of the market:
What is the market doing? Is it trending upwards, downwards, is it in a trading range. Is the trend strong or weak, did it begin long ago or does it look like a new trend that's forming. Getting a clear picture of the market situation is laying the groundwork for a successful trade.

Determine what time frame you're trading on:
It is important to define from the outset if you'll be 'scalping' (trying to get a few points off the market) trading intra-day, or going longer term. This will also determine what chart period you're looking at. If you trade many times a day, there's no point basing your technical analysis on a daily graph, you'll probably want to analyse 30 minute or hour graphs. Additionally it is important to know the different time periods when various financial centers enter and exit the market as this creates more or less volatility and liquidity and can influence market movements.

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