How Good Forex Software Benefits Traders

Forex software helps traders make money by providing a view of market price fluctuation over time, and by making trade execution easy to handle and error free.

Good Forex Software Facilitates Trading Tools And Runs Smoothly

A good forex software must be capable of delivering in all aspects of a trader’s needs, including insightful forex charts and implementation of advanced forex trading strategies. Unfortunately, event to this day, many forex brokers still suffer from poorly designed software and inexcusable errors and latency times during trade execution. More precisely their clients pay the price, since all that badly designed software ends up costing them money in unnecessary losing trades, as well as badly placed trades. Most software issues in large software firms arise from the fact that software architecture and concept is kept secret to a good few programmers. Who then divide up the entire project in fractional parts and source them out to various other programmers. This is all for security reasons, so as to prevent espionage within the industry, and prevent their competitors from copying their software. The problem in large software projects that are made this way is that many critical faults go unnoticed, many bugs in the code which are triggered only when those fractional pieces are put together, and only at certain times during software use. Real life examples of this, have been seen over the years, where computer glitches caused massive sell off days at the NYSE, and of course in the software of those aforementioned brokers, where once again there is no single person to debug and assess the entire code. Similar issues are found in all kinds of software, not just in trading software. Even in the aerospace industry, software engineers have to spend many days, to figure out why a missile system or radar, does not work as expected. Again, it comes down to the issue that too many people got involved in writing the code, and some bugs have not been spotted.

forex software
Serious software is always designed by a small, well coordinated team of programmers. So that nothing is left to chance.

Good Forex Software Works Like a Swiss Clock

Good forex software on the other hand works very efficiently, because a single programmer, capable of fixing not only bugs, but also bugs waiting to happen, took the time to make the software error free. These are programmers who also understand forex trading, not just programming. And who took the time to learn forex trading at some level, as well as understand how factors such as volatility and liquidity can cause all kinds of problems. Good forex brokers, and not necessarily the most advertised ones, run solid software where many issues have been addressed in advance. They are able to provide a very reliable and accurate trading platform where one can trade with confidence. This is a very important criterion for choosing a forex broker, since only a handful of brokers run reliable software.

Trading Forex For Results

Trading forex is an experience with the world’s largest and most liquid market. The principal participants span the entire range of size (from virtually capital-unlimited central banks) to individual traders with under-$100 capital margin, leveraged to a factor of 400 or more. Similarly, their motivation span the entire risk attitude spectrum — from those seeking to profit from currency gyrations (speculators); To those seeking to insulate their underlying economic activity from international events beyond their control (hedgers); To everyone in between. And, as with any marketplace, the different participants also have different time perspectives.

Forex Vocabulary

Invest the time to learn the basics of trading forex: Including forex signals and forex charts. At this early stage in your pursuit, strive to master techniques which are not naturally your temperament or ability. Master basic terms such as:

  • The national currency you are using for the purchase is the base currency. The national currency that you are acquiring is called the quote currency. In trading forex, transactions involve selling one currency to buy another.
  • The exchange rate denotes how much one has to spend in quote currency to buy the equivalent base currency.
  • A long position translates into buying the base currency and selling the quote currency. As an example, you might sell U.S. dollars to purchase the Euro.
  • A short position means that you would purchase quote currency and sell the base currency. In other words, you would sell the Euro and buy US Dollars.
  • The bid price is the price at which you (or your broker) is willing to purchase the base currency in exchange for the quote currency. The bid is the best price at which you would consider selling your quote currency on the open market.
  • The ask price, (also called the offer price), is the price at which you (or your broker) will accept to sell base currency in return for the quote currency. The ask price is the best currently available market price for which you would want to buy the currency.
  • A spread represents the difference between the bid and the ask prices. [1]
  • A pip measures the difference in worth between 2 currencies. Usually, one pip equals 0.0001 of a difference in value. For example, if your EUR/USD trade moves from 1.063 to 1.064, your currency value has increased by ten pips.

Forex Brokers

  • Find a broker with experience and a track record. In the business world, caring for your customers is the key to longetivity.
  • Confirm that the broker is subject to regulation by appropriate national and international authorities. A regular  submission to government oversight helps confirm the broker’s honesty and transparency.
  • Review the broker’s variety of offerings with the clear implication that the larger the product base, the more disperse and diffuse the customer base.
  • Troll reviews but with a wary eye. In our era of confessional deterministic ratings, brokers, like all businesses with an online presence seek to game the system.
  • Visit the firm’s web site. It should look professional, and offer full demo account functionality. Trading should be simple click-through and confirm. Ensure that a modicum of forex charts and forex signals are offered.
  • Verify any transaction costs. Review the ease of depositing and withdrawing funds from accounts. Examine any commissions incurred for funds transfers.
  • Focus on the essentials. Try out the customer support.

 

Explore CFD Trading: A Powerful Platform For Skilled Traders

A Contract for Difference (CFD) enables you to open a trading position for the change in the price of an instrument, from the moment of initiating the trade to when you reverse and close it.

  • Notably, CFDs are leveraged products, implying that positions only require a tiny margin deposit to incur a significantly larger market risk exposure.
  • This leverage is a two-way sword with magnified benefits and risks: your initial deposit can generate out-sized returns and losses.

CFD trading permits you to initiate a position on the future value of an instrument, to capitalize on a price movement up or down. In this manner, investors are able to use unique forex trading strategies Thus, the inherent flexibility and financial leverage of CFDs also requires a sophisticated grasp of risk management and attention to market gyrations. While trading over the internet in general is an abstract process, CFD trading platforms are somewhat unique, offering transactions in which no transfer of ownership takes place.

CFD Trading Platforms

While CFD trading initiated on public exchanges, the rise of cloud computing capacity and explosive internet bandwidth allowed for the growth and flourishing of proprietary CFD trading platforms. This elimination of a public exchange allowed for transaction fee-free trading and a more personalized experience. Furthermore, the rise of a mobile ecosphere / environment has created a vastly enlarged community of Apps, both on Android and iTunes.

The breadth and variety of experiences available to traders using mobile cfd trading platforms is significant and therefore requires individual traders to personally review the offerings and evaluate how appropriate a given technology is for him.

Among the minimum features that traders expect in their mobile experience are:
professional trading functionality with a simple user-friendly interface.

  • The full spectrum of the world’s most widely-traded financial instruments.
  • Fast and efficient order execution.
  • Access to real-time quotes including: forex pairs, indices, commodities such as oil and gold, and widely-traded stocks.
  • Buy and Sell CFDs online: shares, NASDAQ stocks, NYSE and many more equity exchanges.
  • Initiate and terminate positions, set limits to manage your investment risk exposure.
  • View your equity, margin, and balance.
  • Full support in a variety of languages.
  • Real time signals and charts.
  • The ability to use credit cards wire transfer and the whole range of digital wallets to manage your account balances.

Forex Trading Strategies

The following example shows how a Euro – US Dollar (USD) position actually is initiated and closed:

A trader seeks to buy euro against USD. In the transaction / quotation he views a current Bid and Ask price similar to the demonstration line below:

1.0952 / 1.0957

The spread is the difference between the bid and ask values. Position holders can sell at the bid price and buy at the ask price. For the euro/dollar pair, a change in value of  0.0001 is referred to as a one pip change. Here we see the bid – ask spread as five pips.

To buy euros, the investor should establish a transaction volume (for instance, 2 lots which equals 200,000 euros) and then press the “BUY” button. The result of the operation will be reflected in the application (desktop or mobile) “Trade” window .

If we assume that the price has risen and the new values are:

1.1052 / 1.1057

The trader is satisfied with the position profit and decides to realize his gain. To do so, he must determine his closing position and click “Close on the current price”. The closing of the position (that is, selling the previously purchased euro) will occur at the price of the BID that is 1.1052

This transaction generates the following economic cash flows:

  • The trader will have bought 200,000 Euros (2 lots) at a price of 1.0957 by spending 200,000 * 1.0957 = $219,140
  • The trader will have sold 200,000 Euros at a price of 1.1052 and received 200,000 * 1.1052 = $221,040
  • The difference of the transaction is: $221,040 – $219,140 = $1,900 dollars
  • The sum of $1,900 is the trader’s profit in this case.

The margin deposit required for this trade depends on the leverage available, which in cfd online forex trading often reaches 400:1, so the required margin in the trading account would be $219,140 / 400 = $548 or denominated in any other currency.

 

From this we see that the return on margined capital: 1,900 / 548 -1 = 246%, a phenomenal profitability rate.

And while price movements of this magnitude can easily occur within a single trading day, so can the opposite. Furthermore, CFD positions are forcefully liquidated when the margin value reaches zero, so as a rough guideline, CFD forex trading strategies recommend that traders tie up no more than 2% — 5% on any given trade.

Comparing CFD Trading Platforms

The explosive growth in CFD trading platforms has made CFD online trading globally accessible. Through a variety of forex brokers, customers now know what is CFD trading.

What is CFD Trading

This post will explain what are the key elements with which to evaluate CFD trading platforms. These elements center on interface, service, and reliability. But each trader has their own favored set and feature ranking, so apply evaluatory criteria in a personalized manner, with the elements ranging from required to nice-to-have.

 Ease of Access. In today’s 22/5 trading world, forex, share and commodity customers expect continual unfettered cross-platform access to all their global markets and positions. They expect a single unified interface from which they can rapidly and easily:

  • Manage account positions — At-a-glance summaries of opened positions, standing orders and closed positions. By using toolbar, tabular or drop-down grouping, toggling between modes should be an effortless experience.
  • Manage account balances — Friendly and intuitive interface to view cash and bonuses; one-click deposit and withdrawal. With the myriad of incentives offered and available, traders expect to receive real-time notice of their balances and how to use them.
  • View active markets and initiate trades — Filtering, grouping and selecting of financial instruments.  Leading CFD trading platforms offer a wide variety of instruments. Clients expect instant access to the entire range through smart search and node-tree drop-down listing.

CFD Online

Customizable Charts. What with cloud computing and  fast internet, traders expect their forex broker’s CFD online offering to include customizable charts for a complete modelling effort, Thus all the key elements in chart construction should be available for your usage

  • Time unit variances — Correctly defining the trading period is of critical importance for effective trading. Any graphical interface must allow you to visualize your exact trading horizon is one glance.
  • Multi-dimensional activity markers —  The science and art of chart-reading are a subject of continual advancement, though the 200-year old Japanese candlestick chart representation is still the trader community’s consensus favorite. Less complex bars, lines and area representations also have their uses.
  • Cloud-based algorithm indicators — Traders expect turbo-charged algorithms to assist them in teasing out price movements. Popular indicators, whether based on averages, momentum, stochastic processes or more obscure calculations, must be available with a simple click.
  • Graphical alignment tools — Additionally, the super-imposition of geometric patterns is a valuable addition to the trader tool set.
  • Multiscreen capability — The ability to graphically display numerous different instrument activity graphs simultaneously is an additional capability of significant assistance to traders. This capacity helps in discerning correlative price movements.

Risk warning: CFD online trading and other forex broker activities are highly leveraged. Thus, your losses may amount to significant percentages or all of your initial deposit. Ensure you understand the risks, seek independent financial advice if necessary. The necessity of constantly monitoring your open positions is a requirement for this fast-moving financial channel. In addition, stop-limit orders are the preferred means of managing risk exposure and their usage should be a default assumption. Note: Nothing on this website constitutes a solicitation or recommendation to enter into any security or investment.

Best Forex Strategies for Traders

Forex strategies, or “how to trade forex” are an important element in the online trading world. This post will elaborate on what is forex, what are the winning strategies and how to use available tools, including forex charts.

The focus here will be on methodology, that is, approaches which have proven successful. Implementation of specific forex strategies is trickier to convey because of specifics inherent in any given trading instance, but if  a profitable means is devised and understood, the inevitable personalization can easily be derived.

The following trading methodologies can work for you as they have for others. This list is not offered as comprehensive or even systematic, only as a set of helpful insights. Learning and using these techniques requires a continued enthusiasm and willingness to systematize your activity. Maintain rigorous trade books detailing your activity. Review the forex charts on which you based your decision making.

Forex Strategies

Also, take brakes from trading. Step back and contextualize to allow yourself to develop a perspective.

1) Trends

The truism holds: The trend is your friend. Over time, prices go up and they go down. And they go sideways. The insight here is the correct identification of trade action and movement patterns. Even in the case of pretense where the “recognized pattern” is an artifice, the usage in trading has a self-fulfilling confirmation and simple rules can yield a profitable trading regime.

2) Price Action 

Price, a leading indicator, is the only variable. All you need to develop rules are in the price movement alone. Specify your entry points and exit points by price thresholds along. The logic here is that price movement is the ultimate reflection of human behavior and as such embodies predictable and repeated patterns. In and of itself, without any super-imposed artificiality or arbitrary patterns. PA can be analyzed using forex charts but in our 21st century hyper-computational environment, the default means of analysis is algorithms, using cloud data and computing and transmitted to smartphone wielding traders.

3) Divergence 

This framework is a generalized method of using contra-indicators in an oscillating manner. Various parameters are continually reevaluated in comparison to one another to understand better causality and associativity.

4)  Resistance/Supply, Demand, and Volume Trading and Breakout/Support

The flip side of trends is sideways action, a trading range within boundary limits. In this instance, expectations of boundary trading are fulfilled. Expertise here requires a greater understanding of non-price deterministic dynamics with factors such as volume and off line supply / demand parameters

5) Basket

Here, the correlation of forex movement, stemming from a temporal or permanent association between nations motivates traders to turn to factors affecting a group, like, for example, emerging market economies or commodity extraction economies. Thus forex chart watchers analyze currency groupings as baskets when exogenous variables enter consideration and evaluate the significance of the effects on overall movement.

How to trade forex

Each of these methodologies is worthy of consideration and traders are advised to try each in its stead in the attempt to understand how to trade forex. Additionally, to understand what is forex, and what are the appropriate forex strategies to use, a broader perspective is required.