eTalkForexeTalk Forex your full guide to forex world

1. OVER USE OF LEVERAGE- Not controlling speed of market due to over use of leveraging tool. The lower the leverage factor or Gear ratio the slower the move.           

GEAR RATIO is a good way to understand leverage. If you have a car in 10th gear it will go much faster than if its in 1st gear. The higher the leverage or gear the faster the speed and the less time to react. It is the same thing with Forex, the more lots, the faster the speed; each lot increases leverage or gear ratio.

Caution: Leverage used correctly is your greatest tool, but used incorrectly it becomes a weapon of destruction and WILL blow you up.

2. LACK OF TRADING PLAN- means that traders do not know what to do if they are wrong nor what to do if they are right. The large floating profit they make may often turn into a large loss, because they did not when know to get out. Trade Defensively and always know your downside and what you are at risk of losing.

3.LACK OF MONEY MANAGEMENT- Trading Forex is a question of what  the odds are of being right. This is known as RISK/REWARD RATIO. Good money management means you know your profit objective and the odds of being right or wrong and know how to control your risks with stops.

4. FAILURE TO USE A STOP- Rejection of Ego is perhaps the toughest of all to handle trading. Not only does the market tell you your wrong, which no one wants to be told, but it also takes your money. Stops are a good thing, because of this ever trending market, it cuts your losses and gets you out before you allow your account to be ruined.  The stronger your entry the less likely of being stopped out, identifying strong support and resistance lines, will keep you in the position longer and when stopped out be happy you out because you were wrong. Never change your plan, once you move your stop, you have no plan, you lose more.

5. ACCEPT A LOSING TRADE - Many traders lose confidence after a couple of losing trades and reduce their ability to become an efficient trader.  This market requires a gradual learning curve so only persistence, trial, and mistakes will help enhance your ability to trade. As a trader your emotional cycles will be like none other, total failure and total rewards almost everyday which make traders unique. If you cannot ACCEPT A LOSING TRADE and realize it will happen more often than not while learning than don’t waste your time starting. Rome wasn’t built in a day and traders aren’t made in a day.

6. HOPE- Lack of proper discipline, is HOPE. Hope is the most devastating of all feelings in trading, because it can lull you in to becoming complacent. You know in most cases when you find yourself hoping, you are wrong, and just get out of market. This requires the most self discipline of all. You were wrong. NEVER HOPE, JUST MANAGE DOUBT!

7. CAPITAL PRESERVATION- Profits are there for the making, but the real key to trading is not making money; it is keeping it. Hold profitable trades and cut losses quickly. It is easier to bask in the elation of a winner than to hope on a loser.

8.TAKING QUICK PROFITS AND LETTING LOSSES RUN - Very common among traders, this is normally a result of no trading plan. After one or two losing trades, you are likely to take a small profit, even though that trade could have been a huge profit maker. This mistake is overcome by using a pre-determined stop to prevent losses from running. Entry in a stalled market allows you to get away with tight stops, reducing your losses.

9. OVERSTAYING YOUR POSITION - Simply failing to take profits at a pre-determined level. If the market meets your price target, adjust your stop above entry, to be in a riskless position and not be at risk of losing profit. Remember, currencies trend a trend means once it breaks it keeps going. Use a trailing stop to maximize profit while enjoying riskless trade.

10. AVERAGING A LOSS - Works with stocks NOT forex. Justifying averaging down by figuring you will have a lower entry price and require a smaller move to break even. Currencies trend and normally you will lose twice as much if the market moves against you, and it usually does.

11. OVER CONFIDENCE - Increasing your commitment, with success, usually leads to disaster. When you are right more often it leads to larger trade sizes, which end up ruining your account. This ruins more trades that a series of small losses. Never try to make back all losses on one trade!

12. OVER TRADING YOUR ACCOUNT - When you are certain that the next move will be a really big one and you risk too much. To prevent this you must have a hard and fast rule that you will not risk a certain percentage of equity regardless of how strong the trade looks. Only trade overweighed with a profitable account will provide the largest gain!

13. CHANGING YOUR PLAN DURING TRADE - when you are most exposed to emotion and greed, you are much more likely to change your plan. If you lift your stop or change your target, you have no plan.

14. TRADING FOR EXCITEMENT, NOT PROFIT(LACK OF PATIENCE) Some traders do not trade for money, they just like the action. Think about it, must you have a trade a day or just an opportunity to make money, regardless of the time frame. The market will dictate NOT you.

Certainly the market will do the unexpected and at times you will lose more than you expected; but if you steadfastly avoid making these mistakes, you must make money. Don’t expect to run a marathon, day one. Rule of thumb; you lose three trades in a row, get up and get away!

Source: First National 4X

Hello to anyone reading this and thanks for taking the time to answer my questions. I am a total beginner but a quick learner with a real drive to try this out and get a well rounded understanding of how it all works. I recently got a good tip on a stock but I am overwelmed when it comes to actually finding and picking a online trading company. I looked at itrade, Ameritrade, Fidelity but the start-up fees are…well for a beginner, financially crippeling. I signed up for free at Sharebuilder but I did not give my checking account# yet because I am a little hesitant on how it works. If anyone can give me some solid advice it would be greatly appreciated. I just read Real Money by Jim Cramer and I have kept up on stocks for years now. Now I would like to put my feet in the water and try some small trades just to see how I do. I have a great job to be a investor/trader. I am a self employed communications technician. I go out to work for a week or two and have a week or two at home and this gives me real time to do my homework. I know what you might be thinking, he just read the book and watches Mad Money and now he wants to be a daytrader, this is true to a point but I used the book as a 101 course and a motivational tool. One of the main things I am wanting to know is if I buy a stock and see I have made a gain how do I get the money out, where does it go? I know they might be silly questions to some but you all started somewhere. If anyone can give me some good advice I will be more than happy. If you have any good links for me to read over or just some sound advice would help. Thanks for reading and I will give you a follow up on how my stock did.

Hi,

I don’t think it would be a great idea to start one more thread on this topic, there really exist lots and lots of them in the beginners forum, please get bothered to look at there and you will find everything you need to startup.

Hi,

Following thread is started for the purpose of letting beginners know where and how to start:

http://www.moneytec.com/forums/showthread.php?t=18439

This forum is full of forex trading info, please run a search on any specific thing and you will get to know almost everything.

The best way to start is to invest in companies you understand. I started investing when I was 16 with the help of my dad. Most of those trades had to do with what was going on in the world. Just pay attention and you can find value. I remember my first live pick I bought shares in air canada and there workers were on strike, picked it up cheap and did very well. Build up a portfolio of several stocks over time and you can see your investments work for you. The basic idea is to keep it simply and stay calm. One of the first things i did was the year before I had started was I traded stocks on paper, so you make pretend picks and track them and see your results, get a feel for investing. Best of luck.

Hi,

I just registered n im been in forex tarding (demo) for almost 2 years. I wnat find out whats the best forex trading platfrom around which is NFa registered thats is.

my answer may not satisfy you but it’s half the answer i found that has got an excellent trading platform but they are not registerted in NFA but i think this will not be a great harm because many brokers are not registreted by they are good.

For beginners in Forex, suggest to read The Foreign Exchange Market Fact Sheet by BoE first.

I would suggest Forexsurge as the company for beginners, thay have demo account and everything is online.

Dear Forex Fellows
Many of us have learned about forex at a free workshop, from a friend or an article.
There are various ways to continue and different approaches to become successful and profitable on the forex market. Here they are

• To attend more seminars, read books and forums, get some Experience and make trading decisions Yourself
• To sit side by side with a Mentor and Study his methods and techniques
• To subscribe for a Signal Alerts services or to get Live deals from a Guru on a chat/forum and trade according to them
• To buy a Software Package that gives you easy understandable signals or to buy a profitable Model/Strategy Description and trade according to it
• To subscribe for Analytical Reports/recommendations with fundamentals, trends, resistances and make your own judgement
• To take time to Develop and backtest your Own profitable System
• To pay monthly fees for a Robot which will make profits for you by itself
• To hire a Professional Forex portfolio/money Manager or to Invest in a Hedge fund
• To open a Managed account and learn by Monitoring the activity
• There is no way to become continually profitable on Forex

What do you think ? What is most suitable for you ?
Your input will be appreciated by our community

Source: BabyPips.com

What is FOREX?

The Foreign Exchange, also referred to as the “FOREX” or “Forex” or “FX” or “Spot FX” market is the largest financial market in the world, with a volume over $1.95 trillion a day. If you compare that to the $25 billion a day volume that the New York Stock Exchange trades, you see how giant the Foreign Exchange really is. It’s actually  more than three times the total amount of the stocks and futures markets combined!

What is traded on the Foreign Exchange? The answer is money. Forex trading is the simultaneous buying of one currency and selling of another. Currencies are traded through a broker or dealer and are traded in pairs; for example the Euro dollar and the US dollar (EUR/USD) or the British pound and the Japanese Yen (GBP/JPY).

This kind of trading is often very confusing to people because they are not buying anything physical. Think of buying a currency as buying a share in a particular country. When you buy, say, Japanese Yen, you are in effect buying a share in the Japanese economy, as the price of the currency is a direct reflection of what the market thinks about the current and future health of the country’s economy.

In general, the exchange rate of a currency versus other currencies is a reflection of the condition of that country’s economy compared to the other countries’ economies.

Unlike other financial markets like the New York Stock Exchange, the Forex spot market has neither a physical location nor a central exchange. The Forex market is considered an Over-the-Counter (OTC) or ‘Interbank’ market, due to the fact that the entire market is run electronically, within a network of banks, continuously over a 24-hour period.

Until the late 1990’s, only the “big guys” could play this game. The initial requirement was that you could trade only if you had about ten to fifty million bucks to start. Forex was originally intended to be used by bankers and large institutions and not by us “little guys”. However, because of the rise of the Internet, online Forex trading firms are now able to offer trading accounts to ‘retail’ traders like us.

All you need to get started is a computer, a high-speed Internet connection, and the information contained within this site. BabyPips.com was created to introduce beginning traders to all the essential aspects of foreign exchange in a fun and easy-to-understand manner.

What is a Spot Market?

A spot market is any market that deals in the current price of a financial instrument.
Which Currencies Are Traded?

Any currency backed by an existing nation can be traded at the larger brokers. The most popular currencies along with their symbols are show below:

Forex currency symbols are always three letters, where the first two letters identify the name of the country and the third letter identifies the name of that country’s currency.

When Can Currencies Be Traded?

The spot FX market is unique to any other market in the world. It’s like a Super Wal-Mart where the market is open 24-hours a day. Somewhere around the world, a financial center is open for business, and banks and other institutions exchange currencies, every hour of the day and night with generally only minor gaps on the weekend.

The foreign exchange markets follows the sun around the world, so you can trade late at night if you’re a vampire or in the morning if you’re an early bird. Keep in the mind though, the early bird doesn’t necessarily get the worm in this market. You might get the worm but a bigger nastier falcon can sneak up and eat you too.

The Forex market (OTC)

The Forex OTC market is by far the biggest and most popular financial market in the world, traded globally by a large number of individuals and organizations. In the OTC market, participants determine who they want to trade with depending on trading conditions, attractiveness of prices and reputation of the trading counterparty.

The chart below shows global foreign exchange activity. It represents the results of a study conducted in 1998 by the Bank for International Settlements (BIS). In comparison, while the total daily trading volume worldwide was estimated at about US$1.5 trillion, only about 12 billion dollars was estimated for currency futures - less than a tenth of one percent!

From the chart below, it is evident that the UK provides the greatest portion of worldwide forex activity. This is despite the fact that the British Pound is only the fourth most widely traded foreign currency in the world.

Why Trade Foreign Currencies?

There are many benefits and advantages to trading Forex. Here are just a few reasons why so many people are choosing this market:

* No commissions. No clearing fees, no exchange fees, no government fees, no brokerage fees. Brokers are compensated for its services through the bid-ask spread.
* No middlemen. Spot currency trading away with the middlemen and allows clients to interact directly with the market responsible for the pricing on a particular currency pair.
* No fixed lot size. In the futures markets, lot or contract sizes are determined by the exchanges. A standard-size contract for silver futures is 5000 ounces. In spot Forex, you determine the lot size. This allows traders to participate with accounts as small as $300.
* Low transaction cost. The retail transaction cost (the bid/ask spread) is typically less than 0.1 percent under normal market conditions. At larger dealers, the spread could be as low as .07 percent. This will be explained later.
* A 24-hour market. There is no waiting for the opening bell. From Sunday evening to Friday afternoon EST, the Forex market never sleeps. This is very desirable for those who want to trade on a part-time basis, because you can choose when you want to trade–morning, noon or night.
* No one can corner the market. The forex market is so huge and has so many participants that no single entity, not even a central bank, can control the market price for an extended period of time. Even interventions by mighty central banks are becoming increasingly ineffective and short-lived. Central banks are becoming less and less inclined to intervene to manipulate market prices.
* Leverage. In Forex trading, a small margin deposit can control a much larger total contract value. Leverage gives the trader the ability to make extraordinary profits and at the same time keep risk capital to a minimum. For example, Forex brokers offer 200 to 1 leverage, which means that a $50 dollar margin deposit would enable a trader to buy or sell $10,000 worth of currencies. Similarly, with $500 dollars, one could trade with $100,000 dollars and so on. But leverage is a double-edged sword. Without proper risk management, this high degree of leverage can lead to large losses as well as gains.
* High Liquidity. Because the Forex Market is so humongous, it is also extremely liquid. This means that with a click of a mouse, under normal market conditions, you can instantaneously buy and sell at will. You are never “stuck” in a trade. You can even set your online trading platform to automatically close your position at your desired profit level (limit order), and/or close a trade if a trade is going against you (stop loss order).
* Free “Demo” Accounts, News, Charts, and Analysis. Most online Forex brokers offer free ‘Demo’ accounts to practice trading, along with breaking Forex news and charting services. These are very valuable resources for “poor” traders who would like to hone their trading skills with ‘virtual’ money before opening a live trading account.
* ‘Mini’ Trading: You would think that getting started as a currency trader would cost a lot of money. The fact is, it doesn’t. Online Forex brokers offer “mini” trading accounts with a minimum account deposit of $300. This makes Forex much more accessible to the average individual who doesn’t have a lot of start-up trading capital.

What Tools Do I Need to Start Trading Forex?

A computer with a high-speed Internet connection and all the information on this site is all that is needed to begin trading currencies.
What Does It Cost to Trade Forex?

An online currency trading (a “mini-account”) may be opened for as little as $300. Do not laugh – mini-accounts are good way to get your feet wet without taking a bath. In Forex, you select how much of any particular currency you wish to buy or sell. For a mini account, we’d recommend at least $5,000 to start