A Day in the Life of a Forex Trader

Are you looking into breaking into the field of professional foreign exchange trading? Or are you already a forex trader doing it regularly? Either way, this article may be of interest to you.
The forex trader is a different breed of human being. They utilize the markets to earn a living everyday. We have a look into the insight of a day in the life of a forex trader.
Any professional forex trader has the potential to make massive returns from their initial investment or on the nastier side any trader can make massive losses. It is not a game of chance, trading is a skill of emotional control and sound decision making. Traders have an understanding of market mechanics and their behaviour as a response of economic trends.
Traders make their living from taking advantage of price differences between the buy and sell price of currency pairs and more importantly they make their money by following the market trend. If you yourself have studies forex charts you may notice how the price fluctuates - there are only three directions the price can do: rise, fall or stay the same. Currency prices only stay the same if the currency value is not floated and fixed to a certain value. Traders make their money on the difference on price so the trader can either buy long and hope the currency rises or sell short as the currency drops in price and still makes a profit. The advanced forex trader waits for a new trade or rather waits for the right time to open a new trade by looking for the right indicators and signs to signal an entry into the foreign exchange market.
There are two things that the forex trader can do at home to watch out for an entry signal: look at charts or wait for news.
Traders watch for the right trending signals to enter a trade. And the primary rule for the trader is that the trend is your friend. Stick to the trend and you wont get hurt.
Secondly, traders also watch the news. They must know what economic data is coming out on which days and what that data means to the future of the economy of the respective countries. If they dont keep track of these facts and economic data and indicators they may find that some currencies are especially volatile during these news announcement events and see the market jump. The forex trader must be ready for these economic announcements to ensure they can anticipate the increased market activity.
Once the forex trader has successfully entered into a trade, a trade that is going well the trader then simply rides the trend to completion, implementing a trailing stop to lock in profits as the price trends the way the trader wanted the trend to go. But if the trade goes sour, the forex traders needs to exit the trade with grace. The trader must cut their losses to succeed in the business of foreign exchange trading. Hopefully this has given you an overview of what a professional forex trader does to make a living from simply taking advantage over the price difference. The technique is to enter a trade correctly using trend analysis or a news announcement and then follow the rules of "riding the trend" or the "trend is your friend" with "cutting your losses quickly."

How to Choose a Forex Broker

When it comes to getting started in Forex trading, there are quite a few things that you have to consider. The first thing to do is to find and choose the right broker to help you in making your trades.
Here are some things that you need to look for in making your choice:
Low Spreads
The spread, which is calculated in pips, is the difference between the price at which a currency can be bought and the price at which it can be sold at any specific point in time.
Forex brokers don't charge a commission, so this difference is how they are going to make money.
When you're comparing brokers, you'll find that the difference in spreads in Forex is as large as the difference in commissions in the stock arena. What this means is that lower spreads will save you money and therefore, look for a broker that offers low spreads.
Quality of the Institution
Unlike equity brokers, Forex brokers are usually attached to large banks or lending institutions because of the large amounts of capital that are required. Also, Forex brokers should be registered with the Futures Commission Merchant (FCM) as well as regulated by the Commodity Futures Trading Commission (CFTC).
You can find this and other financial information and statistics about a Forex brokerage on the company’s website or the website of its parent company. You'll want to make sure that your broker is backed by a reliable institution.
Extensive Tools and Research
Forex brokers offer many different trading platforms for their clients just like brokers in other markets do. These different trading platforms often show realtime charts, technical analysis tools, real-time news and data, and even support for the various trading systems.
Before you commit to any one broker, you'll need to be sure to request free trials so that you can test their different trading platforms. Brokers usually provide technical as well as fundamental commentaries, economic calendars, and other research as a means of assisting you.
Basically, you'll want to find a broker who will give you everything that you need to succeed.
A Variety of Leverage Options
Leverage is a key necessity in Forex trading because the price deviations (the sources of profit) are just set at mere fractions of a cent. Leverage, which is expressed as a ratio between total capitals that is available to actual capital, which is the amount of money a broker will lend you for trading. For example, when you have a ratio of 100:1, this means that your broker would lend you $100 for every $1 of actual capital. Many brokerage firms will offer you as much as 250:1.

Of course, you need to remember that lower leverage also means lower risk of a margin call, but it also means that you will get a lower bang for your buck (and vice-versa).
Basically if you have limited capital, you need to make sure that your broker offers high leverage. If capital is not a problem, you can rest assured that any broker that has a wide variety of leverage options should suffice.
A variety of options lets you vary the amount of risk you are willing to take. For example, less leverage (and therefore less risk) may be preferable if you are dealing with highly volatile (exotic) currency pairs.

Forex Trading Online - 7 Reasons Why You Should!

Forex trading online is a fast way to use your investment capital to it's fullest. The Forex markets offer distinct advantages to the small and large traders alike, making Forex currency trading in many ways preferable to other markets such as stocks, options or traditional futures.
Here are seven reasons why you'll want to look into Forex Trading online.
1 - Forex is the largest market.
Forex trading volume of more than 1.9 billion, more than 3 times larger than the equities market and more than 5 times bigger than futures, give Forex traders nearly unlimited liquidity and flexibility.
2 - Forex never sleeps!
You can execute forex trading online 24/7, from 7AM New Zealand time on Monday morning, to 5PM New York time on Friday evening. No waiting for markets to open: they're open all night! This makes Forex trading online a very attractive component that fits easily into your day (or night!)
3 - No Bulls or Bears!
Because Forex trading online involves the buying of one currency while simultaneously selling another, you have an equal opportunity for profit no matter which direction thecurrency is headed. Another advantage is that there are only around 14 pairs of currencies to trade, as opposed to many thousands of stocks, options and futures.
4 - Forex Trading online offers great leverage!
You can make the most of your investment resources with Forex trading online. Some brokers offer 200:1 margin ratios in your trading accounts. Mini-FX accounts, which can typically be opened with only $200-300, offer 0.5% margin, meaning that $50 in trading capital can control a 10,000 unit currency position. This is why people are flocking to Forex trading online as a way to highly leverage their investments.
5 - Forex prices are predictable.
Currency prices, though volatile, tend to create and follow trends, allowing the technically trained Forex trader to spot and take advantage of many entry and exit points.
6 - Forex trading online is commission free!

That's right! No commissions, no exchange fees or any other hidden fees. This is a very transparent market, and you'll find it very easy to research the currencies and the countries involved. Forex brokers make a small percentage of the bid/ask spread, and that's it. No longer any need to compute commissions and fees when executing a trade.
7 - Forex trading online is instant!
The FX market is astoundingly fast! Your orders are executed, filled and confirmed usually within 1-2 seconds. Since this is all done electronically with no humans involved, there is little to slow it down!
Forex trading online can get you where you want to go quicker and more profitably than any other form of trading.

Forex Trading - Advantages and Disadvantages

What is Forex Trading?
Forex, or Foreign Exchange, is the simultaneous exchange of one country’s currency for that of another. This market of exchange has more daily volume, both buyers and sellers, than any other in the world. Taking place in the major financial institutions across the globe, the forex market is open 24-hours a day.
Currencies are quoted in pairs. The first listed currency is known as the base currency, while the second is called the counter or quote currency. In the wholesale market, currencies are quoted using five significant numbers, with the last placeholder called a point or a pip.
The forex market is one of the most popular markets for speculation due to its enormous size, liquidity, and tendency for currencies to move in strong trends. An enticing aspect of trading currencies is the high degree of leverage available.
Advantages of Forex trading
Leverage. Huge leverage is available in Forex trading, often up to 100:1 meaning that large profits can be generated from small margin deposits.
Liquidity. The enormous size and global trading of the forex markets means that the markets in the major currency pairs are very liquid making trade executions almost instant with little slippage.
Ability to go short. Since currency trading always involves buying one currency and selling another, there is no structural bias to the market. This means a trader has equal potential to profit in a rising or falling market.
Trends. Fundamentally, the value of a country's currency is determined by interest rates and the strength of the economy in relation to other countries. Currencies, therefore, have a greater tendency to trend until the fundamentals change.
Disadvantages of Forex trading
Leverage. With huge leverage available to forex traders the danger is that positions which carry too much risk for the account size can be taken on, leading to margin calls. Effective money management rules must be adhered to.

Brokers. Retail traders must use a broker rather than dealing directly in the interbank market. The broker will be the counterparty in all transactions and is, effectively, making the market. They can, therefore, widen spreads or even refuse to trade during volatile trading conditions. To avoid dealing with brokers an alternative to forex is to use futures. See online futures trading for more details.
Spreads. As the retail trader must use a broker to trade, they cannot deal at the interbank rates. A broker will generally quote a fixed spread of 3-20 pips depending on the currency pair. The underlying interbank rate might be as little as 1 pip.
Forex is a very large market but for most retail traders dealing with brokers the odds are shifted against them.
Online futures trading provides a much more level playing field for most traders who want to take part in forex trading.

Is Forex Trading Better Than Stocks?

For hundreds of years stocks have been a popular investment. Companies issue stocks to raise capital for expansion and new projects. Each share of the stock represents a partial ownership in the company. When the company makes a profit, the value of the stocks rise. Stock owners can sell their shares for a profit, or hold on to the stock for even more gain in the future. Sometimes companies will issue dividends -- part of the profits that are distributed to share holders.
Stock Exchanges
Stocks are traded on stock exchanges. Most stocks are bought and sold through brokers who charge a commission or fee for this service. United States stock exchanges include the New York Stock Exchange (NYSE), the American Stock Exchange, and the National Association of Securities Dealers Automated Quotation System (NASDAQ). Most stocks are listed only on 1 exchange.
Long-Term Trading Vs. Day Trading
Stocks were traditionally seen as long-term investments. So-called "blue chip" stocks, those having proven value over many years, often formed the basis of an investment portfolio.
Short-term trading is a relatively new phenomenon in stock trading, made possible by the advent of the internet. Day traders attempt to take advantage of large daily fluctuations in the market by buying and selling many times in a single trading day. This is relatively risky, and any profits are reduced by the broker commissions charged on each transaction.
FOREX
The Foreign Exchange Market (FOREX) is quite different from the stock exchange. FOREX is primarily a short-term market. Most traders enter and exit deals within a 24 hour period -- sometimes within a few minutes. Many FOREX trades can be made in 1 day without building up a large brokerage fee, because FOREX trades are commission-free. Brokers earn money by setting a spread -- the difference between asking and selling prices.
The FOREX is the largest financial market in the world, with transactions worth $1.5 trillion every day. By comparison, all the American stock exchanges combined handle about $100 billion. The huge volume of FOREX allows it to be 1 of the most liquid markets in the world. There is always a buyer and seller for any type of currency, because the world economy relies on the movement of goods from country to country. The stock market is less liquid because participants may choose to hold their investments indefinitely or move on to other markets.
Non-Stop Trading 5 Days A Week
The FOREX is not based in any 1 location. Trading markets are located worldwide and, due to time zone differences, trades can be made 24 hours a day, 5 days a week. Trading begins in Sydney, Australia on Monday morning (Sunday afternoon New York time) and continues non-stop until Friday afternoon New York time. Stock exchanges have more limited trading hours. While it is possible to trade on exchanges worldwide, each exchange is independent and operates for just 7 hours a day. It is not possible to buy or sell a certain stock that is traded only on 1 stock exchange when that exchange is closed.

Other FOREX Advantages
It is more predictable than stocks; it follows well-established trends.
It allows high leverage -- typically 100:1 as opposed to 2:1 on the stock market
It doesn't require a large investment -- mini accounts as small as $250 can get you started in FOREX.
FOREX trading is not without risk. Neither is the stock market. Either trading vehicle requires education, planning, discipline, and some disposable income.

A Traders Mission And Goal

It is the mission of the trader to become a financially successful long-term
trader. This can be achieved when the trader adopts and accepts The 10 Keys
of Successful Trading. The trader must commit to live by the three disciplines
that create the successful trader.
1. The trader must believe in The 10 Keys to Successful
Trading and merge them into his personality. His
success is dependent on creating a trading plan, and
maintaining the discipline to TRADE THE PLAN!
2. The trader must commit himself to continued education
and learn as much as he can about technical analysis and
the psychology of successful trading. He must use logic,
and not his emotions, in trading. The trader must learn to
trade in control, not out of control!
3. The trader must map out a sound plan of equity
management to insure a return on his investment. A
successful plan is to trade no more than 20% of a margin
account and risk no more than 5 to 10% of that account on
any single trade.

Currency Trading - How Much Do You Need to Spend to Learn How to Trade Forex?

In a short space of time forex trading has become one of the most talked about online business opportunities. Anyone who wants to work at home and is looking for ideas has probably encountered one of the many providers of tuition or forex education. Without doubt, the rewards can be high. So high in fact that the education providers can charge a premium price for their services. It is easy to find a forex course or forex ebook selling for thousands. Yes, selling, not just for sale.
With sound forex trading strategies and good discipline you can make a lot of money. Therefore, a tutor who can show you how to trade effectively can probably charge a lot for their course, seminar or book.
So, if you are considering the various options of learning how to trade forex, do you need to spend so much money?
First, we'll look at these options available to people who want to learn to trade the forex markets. There are basically four, listed on order of cost.
1. Work with a forex trading mentor, who is successfully trading.
2. Enroll or buy a course on line or by mail order.
3. Go to your library or book shop and get a few well-chosen books on forex trading.
4. Read all you can of the free information you can find online.
The Forex Mentor. This is likely to be the most expensive option and is probably only considered by people who have quite a large amount of cash to start with. If you find a good mentor then your tuition fees will be returned many times over. Obviously, if you choose badly then your money go be going down the drain, not just on your training fees but also because you'll probably lose all your money trading too.
Forex Course, Seminar, or Ebook.
How successful you'll be after buying a course or paying to attend a seminar will again depend on the quality of what is on offer. If it is expensive, and it could be, then make sure that it covers the vital subject of trader psychology. This is an area where any trader must do all they can to gain experience and insight. It is no good having fool proof system if your mindset is such that your gains are given back or your winning trades are converted into losers through poor discipline.
There is no guarantee that paying a high price, possibly more than $5,000, is going to make you a wealthy trader.
Forex Books.
There is a huge quantity of them available, some well-recognised classics such as Market Wizards, and Reminiscences of a Stock Operator, are essential reading for a forex trader or any financial trader for that matter. There are many others though, some focusing more on the psychology of trading others on technical trading and more still on understanding how the fundamentals affect the markets. Buying, borrowing and then reading books is a very cost effective way of learning and this certainly applies to forex trading.
Online Forex Information
If you want to learn how to trade forex, you have the biggest resource at your fingertips. From trader psychology to understanding financial charts, all the information you will ever need is available on line. And, most of it is free and easy to access. It is all out there, it just takes a bit of finding. Trading forums, such as trade2win are fantastic resources because many contributors share their experiences of various systems and even publicly evaluate courses and books. It is, however, sometimes worth spending a small amount of money to get some nicely packaged education. A highly recommended ebook is called Bird Watching in Lion Country and similarly a good manual is called The Affluent Desktop Currency Trader. Neither of these two will break the bank and they both offer a very good foundation in an exciting and hopefully rewarding trading enterprise.
So, to return to our original question "Currency Trading - How Much do you Need to Spend to Learn How to Trade Forex?".
The answer is absolutely nothing. Although, for a few dollars, the titles mentioned above are indeed very worthwhile. What about the expensive courses? Forget them and add the money you save to your trading account because experience is the best forex trading education you can buy. Be careful though, it's very dangerous out there.Graham Chapman

Graham Chapman has worked in publishing for nearly 20 years and has been self employed for more than 25. He is a trained life coach and is qualified in sports psychology. He now runs Neesh Enterprises assisting people who work from home or small office particularly in publishing