Forex trading existed even before we were born. Yes, trading been there for ages now but imagine a time when they had no calculators and no computers. Imagine, dealing with numbers with your paper and a pencil and wouldn’t that take ages to trade?
So glad we have computers, so glad we have internet and so glad that we now have FX trade online. Not just the brokers, we also have the real banks to trade with. We open the trading accounts online in just no time, we deposit via credit cards in just no time and we are there, ready to trade, FX trade online.
So how do you trade or take your first step towards trading? First of all, you need some basic education that you find on multiple websites. There are some very good ones like Baby pips where you will find not just the good educational material but also good notes by experienced traders who actually make a living by FX trade online.
Your next step is to find a broker who will take your orders and maintain your account. Make sure you find a broker who is registered with the regulatory bodies of its country as internet is full of fake companies with all kinds of malpractices. A regulated broker is safe to trade with in terms of safety of your deposits and withdrawal.
Now you have to start your career in FX trade online but you need to know that buying and selling currencies require decision making based on market analysis. You have two options here, first, to learn to analyze the market on your own. For this, your broker will facilitate you with charting application where you can apply your technical indicators and start trading on your own. You may also decide to use fundamental indicators rather. The good news is that the brokers also send you regular updates on all major news happening around the world. What more can you ask for when you get all the news on your desktop, the moment it happens, all the time?
Your second option is to find a good and reputed signal provider who analyses the market and gives you the right trade recommendation. Even better is to find a few hubs like Zulu trade or collective2 where you can find all the major signal providers listed with their performance history on multiple parameters. You can decide who you want to go with and thereon, its simple. Subscribe to him and just follow his trades.
However, FX trade online has now taken a new dimension with the now available API configuration systems and Auto trading. Under these, you can just connect your trading account to good trader that you may know or find on Zulu trade. Once you have connected to him, his real time trades are automatically mirrored onto your account also, hence keeping your trading hands free. This concept is called mirror trading and has the major advantage of keeping you free from analyzing the markets and making decisions on your own. This concept now is on the rise and you too should take advantage of this mechanism as this is easy money.
But remember before you start FX trade online; put only that money to the markets which you can afford to lose. Never ever trade with borrowed money as forex trading has a lot to do with Human Psychology and that takes a toll on your trading decisions the moment you realize that the money on the line is borrowed, not yours. Always invest only your own money and only what you can afford to lose.
Hedging, traditionally is a way to protect your open losing positions by taking an opposite direction trade on the same or the cross-pairs, so that you get more time to re-analyze the markets, redesign your strategy and reset your take-profit targets. This is done in case of No stop-loss trading where the trader prefers naked positions with no hard and fast rule about their entries and exits.
To make it simple to understand, let’s say you have a LONG position on EUR/USD. The position continues to go in negative, so you decide to take an extra position on EUR/USD, this time SHORT. So you would have two positions on EUR/USD both in opposite directions, so either side movement is not going to affect your account balance.
What this does is that it gives you time to decide. Of course getting into a Hedge and coming out safely again is a challenge but the unique advantage is that it provides you time, as much as you want, so as to restudy your exit points for both. Your account balance will be safe till then.
This is only one way of Hedging, there of course are cross-hedges and circle-Hedging where you hedge your positions by taking counter positions on cross currencies and not this one only in specific, so a negative movement on one will be countered by a favorable movement in the other. This style of hedging is good for scalping in sideway moving market with the advantage that even if any sudden adversity (a sharp negative spike) comes, then also the account will continue to be safe. Your portfolio will either earn some profits or will hold all your positions in no profits. Cross Hedges do not go very negative, whatever may happen in the markets. It’s slow; it’s boring but definitely is the safest way of trading if you have reasonable monthly targets to achieve, while taking no or a very little risk.
Cross hedges do not have Stop- losses or any chart based take profit targets, they work only with the Currency pair behavior and its repercussions on the others. It’s the portfolio of Pairs that you choose that makes your Hedge and hence your profit target is your portfolio coming to profits, not your individual positions. Win rate on a system is not calculated here as you could have just a 33% win rate while closing 67% of your positions in losses but the overall results will be better than Bank. The Trading History will look like a pathetic mess but the profit results will surprise any seer. Those that you win will be all big huge trades and the ones you lose will only be small ones. Just as goes the old quote from the trading books’ Cut your losses short, Let your profits run’, Cross-hedge portfolio automatically deploys it even if you haven’t studied that principle before. You can simply make a cross-hedge and go out holidaying. When you come back, then your portfolio will either be where you opened it or will be in profits. The account will never be found fully blown, no matter when you come. The biggest advantage will be that whatever be the size of even the most unforeseen spike in the History and no matter how many Stop-losses in the world fail to trigger, your account will never be blown.
However, the caution is that you need to calculate your Lot sizes for each pair carefully. Each pair requires a proportional position-sizing so as to balance out the previous position. This requires understanding of mathematics behind currency valuations and lot sizes. This only comes with logical brainstorming and good mathematical abilities. Sure you can do it, try it, Good Luck!
Quick Facts About XM (Trading Point Holdings Ltd):
Founded in: 2009
Headquarters: Limassol, Cyprus
Maximum leverage: 1:888
Minimum deposit: $5
Accepting US Clients: No
==>XM Current Bonus Promotions
Regulation: complies with the legal and operational frameworks’ of its regulators, the Australian Securities and Investments Commission and the Cyprus Securities and Exchange Commission. The company is also registered with the FSP (New Zealand), the FCA (UK), and many other European regulatory bodies.
Platforms: MT4, XM Webtrader, XM MAC MT4 and trading applications for iPhone / Android.
Payment: Credit cards, wire transfer, Neteller, WebMoney, Skrill moneybookers, Sofront, Ideal, Paysafe, Qiwi, CashU, Abaqoos, Moneta, Giropay, P24, Astropay, Fasapay, MoneyGram and Western Union
XM Main Advantages:
- License \ Regulation – regulated by the most reliable regulators in the industry.
- Unique loyalty program – comprehensive loyalty program ensures that clients are continuously rewarded for their loyalty. XM Points are awarded on every lot traded in accordance to your Loyalty Status. The higher the loyalty status, the greater the number of XM Points that are awarded. As these XM Points are accumulated, they can be redeemed at any time, and as often as desired, for credit bonuses and real cash rewards.
- Same day withdrawals via a variety of speedy yet secure payment methods.
- A wide variety of educational material is available for all clients, with free weekly interactive webinars, MT4 video tutorials, and periodic seminars taking place in different locations around the world.
XM Main Disadvantage:
Not accepting US traders.
XM review summary:
With strong regulation, great trading tools and unique loyalty program, XM is great broker you may consider. I would recommend you to open demo account
and try it.
Proper Disclosure – I’m affiliate of XM. On the review above I tried to provide details and facts. The considerations to choose affiliate programs are similar to choosing trading platform (reliable partner, ease of use, good reputation, good tools, good support
Now this can be one of the most useful articles you read if you also want a slice of the cake but have no easy way to keep going further, especially when you have seen multiple failures, have experienced enough frustration, helplessness , lack of support everything. You tried the charts up and down, traded with the trend and also against it, you tried Fibonacci, you tried Elliot, you tried channels. You tried everything under the Sun but…, You also tried taking tips but they don’t work, do they?
Forex trading of-course is all about knowing the market movements, knowing your trade set- ups, knowing your risk-management but most of all; it is about knowing your mistakes what led you to your failure, mostly psychological. Everyone has a different temperament, everyone has that greed, everyone has that impatience and bla bla but who cares, show me Money, the color of money!
Ok Guys, it’s true that you can make a living out of Forex trading as long as you have a system in place. Now this is the first thing you need to develop, your own prototype system. However, there are rules to it and nobody’s going to teach you these rules, no books, no colleges, no hedge funds gurus. It’s you and only you who can design that system which meets all your criteria which can include profit-making, easy profit-making, quick profit-making, big profit- making, this and that. If you really trust those websites selling those $50 and $100 trading systems, trading methods, trading strategies and God knows what not, then I suggest that you keep away from trading. I own multiple great systems but I don’t think I would ever want to sell it even for a Million dollars. Why, because this is my brainchild, my creation and it easily is the best in world. With that behind me, I can tell you nobody, nobody will ever sell his trading system to you no matter what! Stop being gullible and stop trusting websites and people, that’s the 1st step to finding your way to making a living with Forex trading.
2d step of course is to spend some time with charts and set your rules to your chart set ups, find your indicators that give you comfort, set your trade timings and your workstation in place where you are going to trade, backtest your system and go Live. Be involved with people and help them in their cause as Forex trading itself is a very selfish discipline. Once you have considerable success, just go, and join a Hedge fund for they have some serious money to give to you to trade, with no liability whatsoever. Of course, another important element of trading is the Health effects as it disturbs your Blood pressure levels, your pulse rate and everything. Trading, irrespective of the success you may have behind you, can also have a psychological effect as here you are dealing with uncertainty, that element of 1% uncertainty will always be there like a hanging sword, so be sure that this doesn’t affect your relationships with family and friends.
However, with the time, I have realized that there’s no point making your systems and then spending N number of hours with your computer every day. You may enjoy making money for some initial days but it definitely takes a toll on your mental happiness and daily discipline. So why to not leave the analysis part to some proven professionals?
With the time, lot of free but very well-proven signal-providers have come up online. The mirror trading websites like Zulutrade and eToro are only some of the examples where you can not only find a list of very good traders but also see everyone’s trading history, trading style, trading results and all such factors that can build up your confidence in their abilities. Find the best ones, spread your investments in each and sit back, relax, reap the benefits.
While choosing your signal provider, just see that they have a minimum of twelve months of active trading-activity recorded. Make sure the ones you select always use a stop-loss and have a win-rate of over 75%. Make sure that their average trade-potential is over four times the spread, meaning a minimum of twenty pips on a trade. The best systems are those that close the trade in less than twenty minutes, either hit TP or hit SL but it’s not a good Idea to hold your positions overnight, not because there’s considerable risk of a sudden overnight movement but because it is going to disturb you evening discipline and morning moods. Similarly, spread the risk over many traders so that some can compensate for the failures of some. Remember, there is always room for Human error and that can come to anyone, anytime. Hence, spreading your portfolio over many good traders and also over many Mirror-trading websites is a good precaution. Similarly, be reasonable in setting your targets where the aim behind trading should only to be to beat the bank and not extraordinary riches. Don’t look for traders who amass huge profits while trading demo accounts on these mirroring websites as they have a short span of life. Remember first rule of trading is protecting your capital, profiting is only second. If you want riches, then create a reasonable record of your trading and go join a Hedge fund but never aim anything more than 10% profits a month.
You can also make your own Brokerage firm or IB websites just to add some extra action to your involvement in Forex. You can also do some training seminars sometimes as I do where I teach the beginners the basics of trading. Some forecasting, consultancy and Forex article writing also goes along; depends what you like doing the most. All this is fun; remember Forex has something to give to everyone. It does take money from most of the traders when they lose initially but eventually places the person in just the right place, with just the right role, a role that suits him the good, that thrills him the better, that pays him the best!
Trading in Forex, as we all know, is done in heavy-lots with each lot-size amounting to $100 thousands on a standard and $10 thousands on a mini. These figures are big and scary and it’s a fact that not everyone has that kind of money to put into trading, even when you are very sure about your trading abilities. So, the question is that where do you get that much of money if a lot means as much as $100000? Is this the end of your trading career dream? Is Forex trading only for the big fish?
No my friend! It might scare you to see the lot sizes running in hundreds of thousands of dollars, that you probably don’t have with you but not to worry as you don’t need so much of money in your account to be able to trade. All you have to do is that you find your trade, just place an order and the broker will lend this money to you, at no condition at all. To further surprise you is the fact that whatever profits you make on his money is all for you to keep. Isn’t that cool? Let’s get into the details of this facility, it’s called LEVERAGE.
The Spot FX market runs on high-leverage which means that the broker makes the money available to its traders even up to one thousand times of what the trader has in his account though the most-commonly used leverage varies from 100:1 to 400:1. A leverage of 400:1 in your account would means that for every dollar that may have in your account, the broker will give you $399 to make it to a total of $400. Similarly, if the leverage used is 100:1, then for every $1 contribution of your, the broker with contribute $99 to make it a total of $100.
The broker lends you this money to trade these lots in lieu of certain deposit- money that he expects you to have in your account. In the spot FX markets, it is called the margin-money. $1 that we quoted in the above examples is called the Margin Money, you must have that much in your account and then the broker will take care of the rest.
The availability of this leverage makes it easy for small capital traders to trade in large-size lots using the brokers’ money when their own contribution in the pool is as low as just 0.25% or even 0.10% when the leverage used is 1000:1. The following calculations will make it further easier for you to understand leverage and calculate the Margin money required to trade a lot.
Example: Running at 400:1 leverage, if the lot size is $100000, then just divide the lot size with the leverage and you reach the money that you are required to have in your account to be able to take that lot, $100000/400= $250
This $250 is what you need to have in your account and the rest $99750 will be contributed by the broker to make it to a total of $100000 so that you can buy or sell the standard-lot that you want to trade. This $250 is called the “Margin-Money” and is kept as the security with the broker as long as your position is open.
In case you would want to take two lots, then you need to have $250*2=$500 in your account and then you can buy up-to two lots, i.e. $200000 worth of any currency you may like.
Example: Similarly, if you want to trade a Mini-lot with $10000 size, you need 10000/400= $25 in your account. Rest $975 will be all brokers’ contribution.
You can also change the leverage to any other figure of your choice and the margin-money required will change proportionately. If you change it to 100:1, then the margin-money becomes higher as you dropped your leverage from 400:1 to 100:1 but if you increase it to 1000:1, then the margin required will become lesser. Don’t panic with the calculations, it will all be on your fingertips in just a few days but for the time being, just remember that to trade Forex, you need nothing more than just a few dollars and a good mathematical ability. Just remember this simple formula, Lot size/Leverage= Margin money. Margin money is what you need in your account to be able to trade in Forex.
You might also feel scared with the thought that the broker can ask you for his money back in case you lose it with your wrong trades. This again is not a reason to worry because the broker has made enough arrangements to safeguard his own money and will not let you lose it even if you want to lose. The maximum loss that can come to your position is restricted to your own account balance i.e. the extra money besides the margin-Money, also called ‘Unused-margin’. The moment the loss goes beyond that, your position is automatically closed by the broker and the broker’s money goes back to him. Broker’s highly-sophisticated software has these inbuilt-arrangements to close your position as soon as your account balance is exhausted, so even if you want, your losses will never affect the broker’s money. All you lose and can lose is what you are willing to lose but only and only out of your own account, nothing more.
So now you know how Leverage can be a friend, how strong mathematical calculations before starting to trade can tilt your trading results in your favor and, how using high leverage on your sure-shot trades can multiply your profits manifold.
Before I conclude, I say that using high-leverage is always advantageous as with the growing leverage, the margin- money required to place your orders becomes significantly low. This means you can buy more lots with lesser money in your account when you are sure about profitability of your trades, all the more when you are a strict reversal-points trader.
However, as I said, good mathematical calculations are a must before deciding to use high leverage as even the slightest of negative movement on your trade can wipe out all your account balance in case of high-stake lots. Availability of leverage tends to use your greed to capture more profits by taking heavy lots. This backfires when the trade goes wrong in the times of sudden spikes or sharp volatility, hence leaving you no time to either hedge or to close your position. That means even a single bad trade can wipe out all your previous profits if you are running on high leverage and the position sizing is big. However, advantages are more and disadvantage less; provided you do your calculations right and not use high leverage in the time of disturbed markets.
These regulated brokers offer leverage of up-to 400:1:
www.easy-forex.com – Regulation ASIC, CFTC, CySEC
www.etoro.com – Regulation NFA, CySEC, ASIC, CFTC, MiFID, FCA
www.avatrade.com – Regulation Central Bank of Ireland, MiFID, ASiC, BVI
So, you can imagine how low an account balance you need to start your trading career
You can search Google for more brokers with higher leverage offers. However, I’ll suggest that you always check their regulatory status and registration details before choosing one. Traders from U.S. may not be able to avail much benefits of this feature without using an offshore broker if their law so permits, as the Forex regulatory authorities in U.S. have restricted the availability of leverage to retails traders to a maximum of 50:1 but U.k., Canada and Australia still continue to be good countries to find high-leverage brokers with due regulation, formal registration and positive customer feedbacks.
The eToro Mobile Trader for Android is an easy to use trading app with a very good design and intuitive user interface.
The application contains The CopyTrader feature, easy to use trading charts, live market rates and basically all you need in order to trade Forex online using your Android based mobile device.
Bitcoin (code: XBT or BTC), a crypto-currency based on a cryptographic protocol, is an electronic cash system not dependent on any central authority. Introduced in 2008 by Satoshi Nakamoto, a pseudonymous developer, Bitcoins are transferable through a smartphone or computer without an intermediary financial institution.
The Processing of Bitcoin Transactions and the Upper Limit of Bitcoins
Bitcoin Miners, servers securing Bitcoin trading transactions, communicate across an internet-based network. Bitcoin Miners validate transactions by including them in a ledger. This ledger is updated and archived periodically employing advanced peer-to-peer file sharing technology. Besides archiving transactions, every new ledger update automatically creates newly minted bitcoins. The total number of new bitcoins minted is halved every 4 years. The maximum of 21 million bitcoins is expected to be reached in the year 2140. No more bitcoins will be minted when this upper limit of 21 million is reached. Each bitcoin is further subdivided down to eight decimals. This subdivision results in the formation of 100 million tiny units named satoshis.
The Advantages of Bitcoin Trading:
Bitcoin trading offers traders an easy avenue to earn profits. Several enterprises offer exclusive Bitcoin trading platforms for all classes of traders and investors.
Traders Can Profit Due to the Constantly Fluctuating Bitcoin Rate
Since bitcoin values are prone to wild intraday swings, traders can book huge profits. Considering that bitcoins are traded worldwide, and Bitcoin mobile trading facility is available to traders, bitcoin transactions are easy and fast.
Binary Options Trading in Bitcoins Helps Traders
Traders are offered binary options to trade in Bitcoins. The binary options trading in bitcoins helps traders to study market trends better and book huge profits. Thus, binary options trading in Bitcoins helps traders to multiply their investments. Bitcoins are also available to traders in the conventional Call/Put binary options.
Added Convenience and Truly International
Bitcoins offer an added convenience since they can be bought or sold during all times of the day. Additionally, bitcoins are truly international since they can be traded in all countries and across different time zones during business hours.
The Disadvantages of Bitcoin Trading:
Trading in bitcoin or any other currency is certainly a risky proposition. Listed below are some of the disadvantages of bitcoin trading.
Governments May Ban or Regulate Bitcoin
Governments of some nations may ban or regulate the use of bitcoin as a currency due to its use by unscrupulous people. Though the possibility of this happening seems remote, there is a slight chance that some governments may adopt this draconian measure. The biggest fear for bitcoin traders is the attempt by regulators to restrict its use.
Another Crypto-Currency Might Outperform Bitcoin
Many crypto-currencies have tried to surpass bitcoin in the past and failed. However, there is a possibility of some other crypto-currency surpassing the bitcoin in future. If this happens, the value of bitcoins may erode suddenly, and they may become worthless. If such an event comes to pass, traders stand to lose heavily.
Unfixable Flaws in the Bitcoin Protocol
Development of unfixable flaws in the bitcoin protocol may lead to a temporary stoppage in bitcoin trading.
The Domino Effect of Fear
For a new currency like bitcoin, any bearish price action can lead to further panic selling by traders due to the domino effect of fear. Buyers of bitcoin may opt to cash out during these bearish price actions leading to unrealistic price drops. During these times, traders stand to lose heavily.
Bitcoins are easy to buy and sell in most countries of the world. Additionally, bitcoins can be traded on the exchange and are easily transferable. Many traders find bitcoin trading more profitable than trading in gold.
eToro offering fast & easy way to buy stocks online. The easy to use interface is great for beginners.
The following short video demonstrates how to buy and sell stock:
When you buy stocks using eToro interface, you are basically purchasing a CFD which is a contract for difference. In CFD contract, the seller will pay the buyer the difference between the stock value on the purchase date and the stock value when you terminate the contract (sell the stock).
What is the main advantage of trading CFDs as opposed to actual stocks?
The main advantage of trading CFDs is that you are not limited by the share price. For example: currently (the day of writing) the price of Google stock stands at $886, this is the minimum amount of capital you need if you would like to buy one Google stock. In CFDs you can buy fraction shares. For example you can invest in Google stock CFD at eToro starting with $10 (as the video demonstration above showing).