The Lazy Traders guide to the types of forex trading

This might, or might not, come as a surprise. There are actually two types of trading. Well, to be brutally honest, the difference is in the way that you analyze the market. Both ways can be deadly efficient in the plan-making part of your trade, and although many traders rely more on the one or the other, it is always a good idea to keep an eye on the other method.

Now, what are these to types, I hear you asking. They are

• Technical Analysis
• Fundamental Analysis
  

Fundamental analysis is the analysis of the economy. This is normally the economy of the land in which the main currency in a currency pair. Usually the analysis uses a few factors, or reports, such as the CPIX and Reserve Bank Meetings and announcements. Certain things happen in an economy to suggest that an economy is doing well or not. Whenever something bad happens, like a war (extreme example), you normally see it reflected in the currency's value, which would have taken a fall. If something good happens, and the economy gets a boost, the currency's value also moves up.

This is what makes the basis for fundamental trading; traders who trade on fundamentals normally trade only on certain days when the reports and news will have an influence on the markets.

Technical Analysis is where the trader uses charting software and certain price indicators and the like to analyze the markets. Traders who use this method study the movement of the prices. There is one cardinal rule when it comes to trading with technical analysis, and that is stay with the trend, cause in the end the "trend is your friend!” Many have made millions with that rule, and many have lost plenty for ignoring that rule!

That is the two main and basic styles of trading the forex market. I will get into some detail more later on with both these styles. Keep in mind that the one can't survive without the other. You might just see yourself in a very bad situation if you do!

Basic Terminology Every Forex Trader Should Now

The first time I heard that the market is "bullish", I thought that we were in Spain, with the running of the bulls. I also thought that straddling the market, meant something totally inappropriate to the business world.

Forex Terminology is something that can truly through any novice right out off the bus. That is why I thought I should probably begin with terminology first. I will try and explain the most basic terms, just to give you a boost in the right direction. Trust me when I say that Forex is made easy by knowing these basic terms

Bullish / Bull Market.
This means that there are increases in the market, i.e. the market is moving upwards. If the dollar increases towards the yen, then this would be a bull market.

Bearish / Bear Market.
This means that there are decreases in the market, i.e. the market is moving downwards. If the dollar decreases towards the yen, then this would be a bear market.

Spread.
This is what normally is charged by your broker to enter you into a market. The standerd nowadays seem to be a 3-5 pip spread. This is also a fixed cost so you will not be charged anything extra to enter a certain market. Remember that, for you to make a profit, or break even, you need to make at least the spread asked by your broker.

Pip.
A pip is the amount at which a price of a currency can increase. A 1.2500 to 1.2501 move, is one pip! Make sure that you know where to look to determine the amount of pips you made or lost in a trade as some currencies pip is the 4th decimal point (0.0001) and some is the 2nd decimal point (0.01).

Lots.
When you trade forex you trade in lots. Lots are standard at $100 000.00, though there are mini lots which are $10 000.00.

Leverage.
Leverage is what enables you, as a small investor, to trade such huge volumes on the forex market. Say for instance that your broker gives you leverage of 100:1, what this means is that for every $1000 you have you can trade $100,000, which is 1 standard lot. So if you had $5,000 then you could trade 5 lots. This amount will vary from broker to broker and is normally shown as a ratio.

Margin-call.
This is what happens when you are in a non-profitable trade and you do not have enough security left in your margin account at your broker. When you reach this point, your broker will close some or all open positions, to you from going into a negative account balance.

There are more terms that I will discuss further along the line, and I will go into much more depth into some, but this should get you started on the right road.

4 ways to make forex trading easier

The thing about forex trading, is that many people are always on the verge of making millions. But really, how many people have you seen that have started from scratch and are now living like kings. Not many!

There are of course, ways to make forex trading a bit simpler to understand and come to grips much quicker than normal. And as with most things in life, it will cost you some work. Not too much though.

• Read, read, read!
• Join a forum, ask questions.
• Planning
• Practice

Read, read, read as much as you can. The more you read, the more you are likely to see what are the normal pitfalls in forex trading and thus learn to avoid them. This is also something you can do in bed or on a bus, so no excuses here!

Join a forum, ask questions. This is also something that can really save you a lot of money. If for some reason you cannot find the answers you are looking for in online or offline resources, then this is normally the best place to look for those answers. Many people of forex forums are very helpfull, and sometimes you get a killer strategy, though not always.

Planning. This step is probably the most important and will make you life much, much easier if done. If not, then you will tend to lose a lot of money really, really fast. There is a saying in forex trading: "Plan your trade, trade your plan!". This was the best piece of advice that I ever could have gotten.

Practice makes perfect. Do not start to trade with real money if you have not been successful in your practice accounts. Some experts say that you should be profitable for at least 3 months before you even think of starting to trade with real money, I say 1 should be okay, but only if you were extremely successful.

That in short is 4 ways to make your forex trading easier. Apply them and I cannot see you going wrong in the world of forex trading. Till next time.

How is Forex Made Easy?

It isn't. That is the short and sweet of it. Many people say that forex is a very easy thing to do and that anyone can do it. Though this might be true, there are definitely some aspects of forex that is not made for every person.

If you look at forex trading, ask yourself one question.
"If it is so easy, why isn't everybody doing it?"
That is the question is normally what I tell people to ask themselves when they look into forex trading as a way of life. For many people it has become a great way to make a living, but unfortunately it is not for everybody.

How then is forex made easy? In the form of a managed account, where you hand over your money and let the professionals take the strain that can be forex trading. Many institutions that offer forex trading, most of the time, also offer a managed forex service. This service normally costs much higher than what might be neccesary to start up on your own. Although it is more expensive, your risk is reduced. Why? Because you might not spot the right trade. Because you might forget your stop-loss. These intitutions normally have a wealth of experience to ensure maximum growth of your investment capital.

That is the short of how forex is made easy. Next I will look into some strategies and how they perform on the markets today.

Forex Technical Analysis - 4 Costly Mistakes to Avoid

If used correctly, forex technical analysis can make you huge trading profits. Look at any forex chart you'll see trends that repeat themselves. These trends can be traded for profit. However, its not as easy as it seems - which is why 95% of forex traders lose money.

Here are the four most common mistakes that cause the majority of traders to lose money:

1. Forex Charts can't Predict the Future

Many traders believe that technical analysis can predict the future - but they're wrong. Think about it - if technical analysis could predict the future, then we'd all know tomorrow's price today - and there'd be no market. Currency prices move due to a difference of opinion - and of course, if we all had the same opinion, prices wouldn't move!

There are several theories, and currency trading systems, that claim they can predict prices with scientific accuracy when forex trading. These include: Elliot wave theory, and trading systems based on the Fibonacci number sequence. Don't fall for them - they don't work!

2. Using Time Spans that are Too Short

Trading is not scientific - it's an odds game. The aim of technical analysis is to get the odds on your side - and for this you need to work with valid data. This means having enough data to calculate the odds. Generally, you need at least a few weeks' data - preferably several months' data.

The biggest mistake you can make, is to fall for the myth of forex day trading. To think that it's possible to calculate the odds in a day, or less, is laughable. Yet, more novice forex traders try day trading, than any other method - and they get wiped out. If you think that you can make money executing trading signals in day trading, try to find a day trader who's made money in the market. Real money - not a hypothetical track record - good luck on your search, I doubt you'll find even one.

If you base your forex trading strategy on day trading, say goodbye to your money!

3. Not Using Confirming Indicators

Many traders, when using technical analysis, like to buy into support, or sell into resistance levels - and hope they hold. Do this and you'll lose money. Why? Because you're trying to predict prices, by hoping and guessing - and the market will wipe you out.

If you want to trade the odds, use momentum signals to time entry to your trades - so you trade with price momentum. For example, if you were selling into resistance, you'd only do so if price momentum turned down below support. This way you're not hoping - you're trading confirmation of price weakness - and the odds.

If you don't use momentum indicators in your forex strategy, you won't have the odds on your side.

4. Using Too Many Indicators

Many forex traders assume that the more indicators a forex trading system has, the better it must be - after all, 10 indicators must be better than 4 - wrong!

It's a fact that simple systems work best in currency trading - as there are fewer elements to break. All you really need is technical analysis - to help you determine the price trend, support and resistance - and a few momentum indicators.

You don't get rewarded in forex trading for being clever - you get rewarded for being right with your trading signal - and the best way to do this, is to keep your forex trading system simple.

The above technical analysis mistakes, are commonly made by the majority of forex traders. If you want to enjoy currency-trading success, avoid making these mistakes - and you'll be on your way to making bigger FX profits by using technical analysis correctly.

The Basics of FOREX Trading

Foreign exchange, or FOREX, is the term used to refer to trading currencies. The trades on the FOREX market amount over $1.5 trillion daily, making it the world's largest market. Just to get some idea of the amount of money that FOREX trading involves, think of it as being one hundred times bigger than the amount traded daily on the New York Stock Exchange. The currency conversion needs of companies and governments represent a small share of the market, which is the reason why FOREX trading is thought of as speculative. The difference between FOREX trading and stock market trading is that, with the former, it is not the central exchange but the 'interbank' that's controlling the market. The two counterparts interested in making a trade do so directly, either over the phone or by means of worldwide electronic networks. The main centers for FOREX trading are New York, London, Sydney, Frankfurt, and Tokyo, making the FOREX market a twenty-four-hour market.

FOREX trading actually refers to buying one currency and selling another one simultaneously. The currency combination is extremely varied, and is referred to as "cross". The most common combinations are called "majors".

The spot market is the most important FOREX market, given its volume, which is the largest. The name of the market comes from the way that trades are settled, i.e. "on the spot".

If you're wondering why so many people choose online FOREX trading, you should know that it comes with a lot of advantages, such as 24-hour trading, the lack of commissions, superior liquidity, a considerable potential for profit in falling markets, 100:1 leverage, etc.

First of all, probably the most notable advantage of FOREX trading is the opportunity to trade currencies twenty-four hours a day, within the interval Sunday 8 p.m. GMT - Friday 10 p.m. GMT. What does this mean? It means that considerable profits can be made from instant reactions to markets all over the world being affected by all sorts of events.

Secondly, investors consider FOREX trading very attractive given the fact that currencies are often traded with no commissions. This feature is extremely appealing to those who want to deal on the FOREX market frequently.

Furthermore, FOREX trading comes with superior liquidity, especially for major currencies, which ensures price stability and small differences between the price you sell at and the price you buy at.

Moreover, trading opportunities occur quite often on the FOREX market, based on how the relations among currencies evolve and on the constant movement of the market. This means that the weakening or strengthening of a currency creates considerable profit potential.

Online FOREX trading is possible from your mobile phone or your personal computer, but if you plan on trading online, make sure you have the appropriate software system, which allows both collection of information on market prices and quick and easy trading. You can use either web -based software or client-based software for your online FOREX trading, either of which must give you the ability to buy and sell quickly on the market, as well as provide real time quotes.