Page 245 – XTrade

How to Trade Forex Better

In order to learn how to trade forex better, one has to start with basic trading methods, and build upon these methods over time. Quick success isn’t possible.

How to Trade Forex Better than Most

In order to learn how to trade forex better than the average trader out there, one has to persevere and not allow early losses and failures discourage them. All traders, even the most profitable ones still have losing trades, nobody can ever trade perfectly. Profitable trading boils down to effective use of forex charts and good selection of a forex broker. The simplest techniques one can apply on the currency pairs, when looking at those charts are techniques involving the 10 day and 200 bar moving averages. As well as various momentum and strength indicators. These tend to be wrong about half of the time if used exclusively on a single pair. So traders look for ways to improve the usage of these indicators through inter-market analysis, and the use of additional indicators. There are no magic indicators, at least not ones that are commercially available. All indicators and trading tools that come with a charting software package are already obsolete, but that doesn’t make them useless. A profitable trader with a lot of experience can still trade profitably even when given nothing but these obsolete indicators. This is because they know that these indicators (momentum based, moving averages, and volume indicators), will be wrong half the time. Even contrarian indicators tend to be wrong that often. Any indicator or software vendor promising ‘unfair trading advantages’ or proprietary analysis, is bound to fail sooner or later, in real life trading. Forex robots belong in that category as well, they always fail eventually. In fact, complete automation has failed in all aspects of life, where the task is non routine. That’s why automation cannot replace pilots, translators, and many other professionals, including of course traders.

It’s the Non-Routine Element Which Prevents Perfect Trading

Anyone who knows how to trade forex profitably, has found that all classic and commercially available indicators work on collective, coordinated trading action. But markets only follow coordinated action for a little while, as soon as traders of longer time frames enter the market the routine breaks, something unforeseen happens, and these indicators give nonsensical signals. And what is forex without these unforeseen events, it’s simply a period of time where coordination takes control and the market moves on momentum, or lack of momentum, and trades in very predictable ways. Thereby creating the illusion that these indicators have continuous predictive power, but in reality they don’t. The non-routine nature of the markets is what makes them ever more interesting and more profitable in the long run. So uncertainty is what makes them work. If they were predictable as brief periods would have you believe, then everyone would start using MACD and CCI and moving averages, in perfectly routine profitable trading, more and more people would trade in exactly the same way, to the point where no one would take the other side of the trade. At that point markets would be moving so fast, that you would have only few seconds available to read these indicator and make the trade, before the market moved.

Why Traders Use Forex Charts

Forex charts provide powerful insights and patterns into the currency market. And more importantly make technical analysis work, because of collective thinking.

How Forex Charts Make Technical Analysis Possible

Traders use forex charts because they provide great insights into how currencies trade, but also into how other traders think. All forex strategies rely more or less on chart analysis, factors such as volatility and momentum can be seen and understood at a glance. Without charts, it would be very difficult to get a sense of of these factors and make wise trading decisions. This is because humans understand much more and much faster out of graphically represented data, than simple numbers where price history cannot be put in perspective. Not just traders, but all kinds of analysts use charts. All kinds of scientists and physicists use charts and diagrams to simplify analysis techniques. A famous example are Feynman diagrams, invented by physicist Richard Feynman. They were originally opposed by his colleagues, but later adapted for good, by physics. Simply because they illustrated how subatomic particles behave, in a simple way which related time and other parameters. And as a result, even a non scientist could figure things out, as opposed to series complicated equations. So graphical representation is very powerful in many fields, not just trading and investing. Some market analysts developed many insightful trading methods based on charts. Those were charts showing trading volume, the relation between price and volume, or price relative to all kinds of indicators, such as momentum and strength indicators.

Charts Reflect Traders’ Thoughts and Actions

Forex charts reflect so much more information that one tends to think. All traders who want to learn how to trade forex start their journey of learning on charts. Regardless if they are learning on their own, or they have a mentor, charts tell the whole story all in one picture. One can figure out how the forces of supply and demand make currency pairs move up and down, how traders panic or make confident trades, and so much more. Trading is really possible exactly because of the insightful views that charts provide. What is forex trading like without using charts? Without using charts a trader can still trade, but they will have no idea how the other traders think, whose collective actions move the currency markets. So such a trader would be at disadvantage, and they will always be one step behind the latest action. Momentum indicators, support and resistance levels, and the entire trend in any currency pair can all be figured out correctly, only when charts are used. Everybody, even floor traders who trade stocks, do use some kind of chart before going onto the trading floor. They actually do this at home, and they go to the trading floor having taken some support and resistance numbers out of those charts. Hence no trader trades without charts, even if it seems so. The forex market is decentralized, there is no trading floor, no market noise, and all forex traders around the world are simply connected through the common charts they look, study and act upon.

Guide to Best Online Forex Converter for CFD Traders

A forex converter is a program that allows for the instantaneous conversion of a currency based on existing current exchange rates. For individual traders, generic and all-purpose currency converters are most often found and used online and can convert the value of one currency to another, such as euros to US dollars. This process of converting one form of a country’s currency into another’s usable currency, based on spot exchange rates, underlies all international commerce and financial activity.

In its simplest form, the calculation is a single rate deterministic formula and the two parties have only an approximate knowledge of the rate at which the exchange takes place as the transaction usually also involves market makers, brokers and other sundry intermediaries. Particularly for currency trading and forex trading, where values are calculated to the level of pips (usually thousandths of a unit), accuracy and exactness are required for forex converters to be helpful.

Forex Trading

In understanding what is forex, exchange rates are the integral components in a forex calculator. Simply put, an exchange rate is the value of any two currencies, one to the other at a given instant. For example, markets are open nearly perpetually (22 of 24 hours per day) for FX trade, so you can almost always trade one U S dollar for a certain number of Japanese Yen (denominated in hundreds of Yen per dollar).

A forex calculator is not needed for all currency trading and forex trading. Obviously, in cases where currencies are pegged, one to another or a basket, a constant value is in place. But in cases where the exchange rate is floating (variable and subject to change), the market forces of supply and demand affect the exchange rate. Of immediate practical influence are the amount of the respective foreign currencies held in the counter-party central bank vaults. In addition direct trade relations between the two countries can affect their relative exchange rates. The Chinese Yuan was pegged to the dollar with only infrequent reevaluations until 2015 when macroeconomic and financial pressures forced a number of revaluations to the peg. As of this writing the Yuan joined the IMF reserve currency basket and the ability of China’s rulers to manipulate the currency became more constrained.

Pegged Currencies

But other currencies do stay pegged, seemingly forever. For example, the Qatari riyal has been worth $0.274 since 1980.

Floating exchange rates (and the need for a forex converter) is the most efficient system as the ability through currency trading and forex trading to address imbalances in flows and perceptions translates into uninterrupted activity for all those involved. Forex converters have implication well beyond the confines of the $5 trillion per day foreign currency market. Both knowingly and implicitly, any trade that includes any component which was made or priced beyond that of a single national or block currency involves a forex converter.

When we ask “What is forex trading?”, we assume an answer including forex converters.

person may receive less or more value after the currency is converted. This can be determined by looking at the current exchange rate for the country’s currency.

The Many Varieties of Forex Calculators

Forex calculators have been an integral element in the arsenal of forex brokers and traders since the beginning of time and while advanced versions at present can perform multiple calculations with multiple variables, the actual mathematics involved is usually straightforward algebra. In addition to forex calculators, forex brokers also use forex charts. All in an effort to understand what is forex.

Most popular forex calculators

Profit / Loss Calculator — This forex calculator version is the basic accounting calculation. Input parameters include: the Trading Pair; the denominating account currency; whether buy (long) or sell (short); the trade opening and closing prices; and the lot sizes. Results are given in either pips or monetary values
Lot Size Calculator — To understand the financial magnitude of a given trade, use this tool to calculate the position size in units and lots to precisely manage your risks. Correct lot sizing is key to managing your risk and to avoid excessive exposure to your account from a single trade. Input parameters include: Trading pair, stop / loss in pips, risk in percent, the account balance and the account currency
Stop / Loss Calculator — Use this calculator to determine exactly how much you stand to profit or lose when your respective stop loss and take profit levels are reached. Simply select the currency pair you are trading, enter your account currency and your position size. Included in the parameters are: the trading pair, lot size, acceptable risk in percentage-of-principal terms, the account balance and the account currency. The resulting calculation yields the maximum stop loss, in pips.
Margin Calculator — Margins allows you to buy securities by borrowing money. Thus, the margin calculator allows to compute the margin you need to hold open positions. The inputs consist of Trading Pair, leverage, account currency, and lot size.

What is Forex

Forex calculators come in variations from different forex brokers. Depending on their expertise, business model and market presence, different forex brokers will bundle their trade opportunities. Usually forex calculators are offered as inducements for trading along with forex charts. Forex charts are the key analytic tool in the beginning portion of trades wherein you decide which position to initiate. Forex charts have numerous components, including:

Time Units — Dividing your trade duration into helpful sub-units is critical in generating a meaningful chart.
Representative Graphical Elements — Enhancing the two dimensional tracking with multidimensional representation, like with Japanese candlesticks, is also of the utmost importance
Overlaying Indicators — Harnessing the computational power (if not the algorithmic subtlety) of cloud computing allows individual traders to pick and choose from among a plethora of offerings currently popular, like: Bollinger Bands, MACD (moving average convergence/divergence), Stochasitc Ocillator and more
Graphical Elements — The human tendency and ability to see patterns is aided by an innate semiotic capacity. Thus basic shapes and lines as well as more nuanced Fibonacci retracement and Gann Fan patterns help make sense of analog data patterns.

In conclusion, we have looked at the topic of forex calculators from several perspectives and found it to be an integral tool, like forex charts, for thoase trying to understand what is forex.

What is Forex Trading Used For

What is forex trading mostly used for, and how can traders and investors enhance their portfolios through the currency market, and is it really so easy?

What is Forex Trading And How It is Used

Many ask the question of what is forex trading, and how it can benefit them in their investments and businesses. Many people want to learn how to trade forex and implement this or that trading strategy to benefit from the global currency market. Forex is simply the global currency market, or otherwise known as foreign exchange market. To an investor, it is simply a mechanism for trading, through which they can buy or sell a specific exchange rate. These rates are floating freely in the market, and are depicted in forex charts. Where the forces of supply and demand determine how these rates move. Forex also helps price commodities, as many commodity prices are closely related to some local economies and their currencies. The market itself is largely decentralized through, and no central exchange exists. The Forex market has been around for decades, in the way that bankers and large corporations use it. But it was only in the late 90s that it became readily available and affordable to retail traders, and amateur traders. This has helped increase liquidity and make the market even more efficient. Which in turn helps stabilize many commodity prices and allows the consumer to get the best possible, and fairest price. This includes the goods that this consumer buys, as well as the physical foreign currency they will get wit them when visiting another country.

Where Forex is Used Most by Investors & Traders

Most traders are speculators, but many of these speculators are very serious traders who take their investment views with wisdom and determination. They make trades in order to either profit from the market, or to hedge against some market risk. All in order to protect another investment or the profitability of a physical business. This is all done through a forex broker, and these traders themselves actually make the market. This in a nutshell explains what is forex trading, and what it ‘s all about. But there is a third category of investors who pay less attention to exchange rates and more attention to interest rate differentials. These are long term investors seeking to profit from the opportunities that these differentials offer. This type of investing is known as Carry trade, and is much more difficult to do. Because exchange rate risk has to be hedged somehow, through other currencies, and there is not magic formula for doing so. Rather, the Carry trade investor works out some hedging plan, based on approximation and through making assumptions. The profitability of the Carry trade investments is made possible through the power that leverage provides.

What Are The Best Forex Signals

While no single definition of forex signals, it generally includes: suggestions for initiating trade on a currency pair, generally at a specified price and moment in time.^[1]. Signals can be generated either by a human analyst or an algorithmic Forex robot supplied to a subscriber of a forex signal service. Given the time-importance nature of signals, they are usually transmitted via tweet, email, website, SMS, RSS, or other relatively immediate delivery method. The communication channels over which forex signals are provided are evolving and with improved speeds, cloud data processing and smart-phone apps, we are on the verge of a new paradigm.

Why Forex Signals

Forex signals constitute data on a specific instrument, including recommendations with respect to the trade’s volume, position’s opening and closing details, for setting stop loss and take profit orders, and choosing an appropriate trading vessel. Using these signals protects you against unmonitored losses, thus giving you an edge in your market activities.

Signals should be understood as advisory, only. All trading decisions based on these signals should jive and be in conjunction with other available data.

What is Forex Trading

The purpose of forex signals is to empower a market trader with superior wisdom and insight, so that his activity results in profitable trades. Already, the era of big data has radically impacted the world of forex charts and the forex calculator . Traders using simplistic memory-driven hand-generated forex signals are hopelessly out-gunned by do-it-yourself algorithm home traders employing cloud-based computing technologies and cherry picking from among the endless freely-available services. The ability of big data analysis to abstract and aggregate the accumulated activity of millions of individual decision makers means that trading strategies must be continually refined to ensure that they remain unique and outside herd. If the metaphor for our era is that analysis is now finding haystacks for given needles, forex signals are those needles.

The issue of signals is even more complex because of all the levels of perception and commercial motivation of the various market participants. When you act on a signal or set of forex signals which you devised or acquired via a forex calculator or forex charts, and your trade is profitable, you might reasonably surmise that the insight you garnered and applied did, in fact, result in your success. And if another profitable trade also resulted from the same methodology and execution, then you would be even more confident in the correctness of your actions. And yet… the complexity of price determination might very well be an “unknown known” or even an “unknown unknown” (in the lexicon of Former US Defense Secretary Rumsfeld). Popularized in financial analysis circles as “The Black Swan”, the scenario is that everything is understood and proceeding swimmingly until suddenly it isn’t. This conundrum of underlying truth and causality is particularly vexing for the individual trader in our era without recourse to the apparatus and methodology of big data. At least with a “haystack” of data and analysis at the source of your determination process, a statistical logic and framework imbues your trading decisions with meaning and probabilities of success.