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FTMO vs Topstep vs Blufx vs Fidelcrest vs The5ers vs City Traders Imperium

A quick comparison table between the best prop trading companies (such as FTMO and its main competitors) to help you choose on your journey to becoming a funded trader:

Proprietary Trading Firm Fees Profit Share Profit Target Max. Drawdown Available Instruments Allow Trade News Weekend Position Visit Prop Firm
10k balance for €155
25k balance for €250
50k balance for €345
100k balance for €540
200k balance for €1080

Scaling plan up to $2 million.
In non scaled accounts: 80% for the trader.

In scaled accounts: 90% for the trader.
10% for Step 1 and 5% for Step 2 in Normal Mode.

20% for Step 1 and 10% for Step 2 in Aggressive Mode.
Normal Mode:
5% Maximum daily loss.
10% Maximum loss.

Aggressive Mode:
10% Maximum daily loss.
20% Maximum loss.
Forex, Indices, Commodities, Cryptocurrencies and Stocks.
Yes in FTMO Challenge and Verification. After passing the Evaluation Process there are restrictions (except for Swing accounts).
Yes in FTMO Challenge and Verification. After passing the Evaluation Process there are restrictions (except for Swing accounts).
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50k balance for $165 $132/month
100k balance for $325 $260/month
150k balance for $375 $300/month
100% of the first $5,000 you generate and 90% from that amount.
6%
2% Daily loss limit.
4% to 3% Max trailing drawdown (the percentage varies depending on the account you choose).
Futures Markets: CME Exchange (17 instruments) NYMEX Exchange (4) COMEX Exchange (3) CBOT Exchange (13)
Not recommended
No
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20% OFF USE CODE:
trade7656 Show Code
Best Overall

10k balance for $129
25k balance for $189
50k balance for $315
100k balance for $549
200k balance for $979
300k balance for $1,469
400k balance for $1,958

Standard Challenge
(other programs available)
80%
(90% with scaling plan)
10% for Step 1.
5% for Step 2.
None in funded account.
6% (Daily loss limit).
12% (Max loss).
Forex, Indices, Commodities and Crypto.
Regular Mode: Yes in Step 1 and Step 2. No in Funded Account.
Swing Mode:
Yes in Step 1 and Step 2. Yes in Funded Account.
Regular Mode:
No
Swing Mode:
Yes
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15% OFF USE CODE:
CEASER Show Code

25k balance for $250
50k balance for $400
100k balance for $700
250k balance for $1.8k
500k balance for $3.5k
1m balance for $6.5k

No scaling plan.
75%
(or 90% with add-on purchase)
10%
5% (Daily loss limit).
6% (Max trailing drawdown).
Forex, Stocks and Crypto.
Yes (except single share equity CFD)
Yes
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10% OFF USE CODE:
EM10OFFSTX Show Code
10k balance for €99M
25k balance for €249M
50k balance for €449 M
150k balance for €649
500k balance for €1,599
1m balance for €2,699

M=Micro trader
Micro Trader and ProTrader accounts with Normal risk strategy: 80%.

Micro Trader Swing and ProTrader accounts with Aggressive risk strategy: 90%
10% for Phase 1 and 2 in Normal Mode.

20% for Phase 1 and 2 in Aggressive Mode.
Normal Mode:
5% Maximum daily loss.
10% Maximum loss.

Aggressive Mode:
10% Maximum daily loss.
20% Maximum loss.
Forex, CFDs, Cryptos, Metals, Commodities, and Stocks.
Yes
No
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$6,000 balance for €235
$10,000 balance for €385
$20,000 balance for €745

Scaling plan up to $4,000,000
50%
6%-7% (Low Risk Mode).
12% (Aggressive Mode).
6% of the balance at LV1 and LV2 of the scaling plan. 4% at higher levels.
Forex, Metals and Indices.
Yes (except indices)
Yes
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$10,000 balance for $99/month
$25,000 balance for $159/month
$50,000 balance for $369/month
$100,000 balance for $1099/month

Scaling plan up to $1,000,000
50%
5% to withdraw. 10% for account growth.
10% Maximum drawdown limit based on the initial balance.
No daily drawdown.
Forex and Gold.
Yes
No
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$10,000 balance for £119
$20,000 balance for £209
$40,000 balance for £389
$50,000 balance for £459
$70,000 balance for £659

Scaling plan up to $2,000,000
50% to 100%
10% (9% in the Evaluation phase)
5% Absolute Drawdown from the initial balance.
No daily drawdown.
Forex, Commodities and Major Index Stocks
Yes
Yes
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10% OFF USE CODE:
CTI10% Show Code
$10,000 balance for $84
$20,000 balance for $139
$50,000 balance for $299
$100,000 balance for $499
$200,000 balance for $979
75% (first month), 80% (second month) and 85% (third and next months)
8% in phase 1
5% in phase 2
5% Daily Starting Drawdown.
12% Overall Drawdown.
Forex, Indices and Commodities
Yes
No
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5% OFF USE CODE:
EBFINANCE5 Show Code

In the table above you can find the main features of FTMO, the world’s leading prop trading firm and probably the best known company in this sector that has financed traders from more than 180 different countries. FTMO started its activity in 2014 so it is one of the most experienced and reliable prop firms. Its headquarters are located in the historical centre of Prague in the Czech Republic. It offers an evaluation process divided into two phases, the first known as FTMO Challenge and then the Verification phase, before becoming a trader funded by FTMO and being able to get up to 90% of the profits you generate and with an scaling program that will allow you to manage a funded trading account of up to 2 million dollars.

If you want to know more about this firm here is our review of FTMO.

In addition to FTMO you will also find in the table the most important features of some of the other best proprietary trading firms on the market today that represent some of the main alternatives to FTMO. This way you can easily compare FTMO with its competitors such as:

At the same time you can also compare these other prop firms with each other and find the one that best suits your preferences. We hope you find the comparison table useful.

Posted by Eduardo Montero on January 10, 2021 – Comments Off on FTMO vs Topstep vs Blufx vs Fidelcrest vs The5ers vs City Traders Imperium
Posted in Blog

Basics of Forex trading for beginners

What is forex trading?

Forex is the short form of foreign exchange and it is about trading currencies. Currency trading market is identified as the world’s largest market with a trunover of over GBP 2 trillion. As far now, there is no fixed exchange for currency trading like what we have for trading stocks. Currency trading market is rather considered as over-the-counter market.

Like stock trading markets, forex trading market is also completely electronic and all the trades can be executed using internet or phone. Before 10 years, the currency trading was carried out only by the financial institutions such as banks etc. But with the introduction of internet, and with the growing interest of the individual investors in the currency trading market, it has almost become a way to make money for everyone out there.
Following is the process how currency trading works.

1. In stock market, you pay the money and get the shares. When the price goes up, sell it and take the profit. But in currency trading, you get the profit through another currency. Then you have to trade the other to make profit in your currency, which means currency trading should be done in pairs. For example, a currency pair would look like GBP/USD (GB Pounds over US dollars). In this currency pair, the first currency GB pounds is called the base currency. The second currency US dollars is called the counter currency. This is a representation of how many units of counter currency is required to buy one unit of base currency.

2.Which means if you want to buy one US dollar, you have to pay sufficient amount of GB pounds. Once you see the markets going in favour of GB pounds you can buy it back using the US dollars you have and take the profit. This might look like a confusing subject but once you get involved directly you will find it very comfortable to understand.

3. Once you start analysing, you will find the currencies going up and down against each other. Once such recommended currency pair to trade is GBP/USD because of their stability. If you think GBP is doing better than USD, then you buy GBP using USD. Once you find GBP is going down, then you sell GBP and get your USD back. I do understand trading two currencies might be a bit difficult to understand. But with experience anyone can be a good currency trader in no time. Let me explain with an example..

4.In this example i am going to use GBP/USD pair. If you have a look at any forex trading platform, you might find the numbers as shown here 1.4322/1.4320. In this the first price is called bid price, which means if you want to buy GBP, you must pay 1.4322 USD. The second price is called the selling price, which means if you want to sell GBP, then you will get 1.4320 USD in return for 1 GBP.

5.The difference between the buying price and the selling price is called the spread. The spread in the currency is normally between 3 to 5 pips. This symbolises the strength of the currencies you are trading. If the spread is too high, its not worth trading as you have to wait long because of low volatility. If the respective price of GBP/USD moves from 1.4320 to 1.4322 it is called one pip. A pip is nothing but the last decimal value of a quotation. For example in above mention values, 1.4320 and 1.4322, the last digits 0 and 2 respectively are referred as pips. Most of the currencies use four decimal points with the exception for japanes yen where the decimal is quoted only upto 2 positions. for eg 132.44.

6.The term pip is an exclusive forex trading term and you must get used to it as the currency traders signify their profit with this term say “it moved 10pips and i made GBP 2000”. You will hardly find traders saying the full number.

7. Trading in forex is carried out in lots or even referred to as contracts. Standard size of the contract could be from GBP 100,000 depending upon the country you are trading from. In the recent day, lots small as GBP 10000 has been introduced in order to attract new currency traders. Currency trading is done with leverage, with some brokers offering upto 1%.

8.It means you can handle a lot worth GBP 100000 with just GBP 1000. You might need an amount of GBP 1500 to GBP 2500 depending upon the brokers and the leverage offerred.

9.Using mini currency trading accounts would be good for a beginners as the amount required for opening a new account is as low as GBP 250. So new traders must make use of this account to get intial idea about the currency trading.

Analysis of forex trading

Forex or currency trading is basically an easy form of trading but people don’t spend much time in studying the basics principles involved in currency trading. Whether you are experience or not, currency trading is very much like we buy and sell everyday but done online. If you have already traded stocks, then you have an added advantage as the platforms and transactions are similar.

1. So lets do some close analysis as how this forex trading really works. If you are trading stocks, you will look for the company’s long term future, its managment competence, the confidence of investors and their past record.

2. But when you are trading currencies, instead of looking at company, you are looking at a country, which means you are considering the long term stability of the country and its currency.

3.You must also decide whether you are going to be a long term forex trader or a short term forex trader. Long term currency traders carry out lots of technical analysis using the advanced analysis tools available. Short term currency traders tend to invest based on the short term movements of the currency value without doing much analysis.

4. But as the time goes on, long term currency traders get enough experience to plot mini trends, which is very useful to trade currencies in short time.

5. Economic indicators such as Inflation Rate, Unemployment Rate, Interest Rates, Gross National Product (GNP), Retail Sales, Consumer Price Index (CPI), Non-Farm Payroll, and the sales of Durable Goods are the main aspects which forex traders include in their fundamental analysis.

6. Even though fundamental analysis is carried out perfectly, currency traders must track the political and other factors involved in the country’s economy. For example, war, riots and natural disaster seriously damages a country’s economy. As i previously said, forex and stocks have close links. With the recent recession, we saw the collapse of two banks in united states crashed the stock market and eventually the country’s economy saw a sharp fall.

7. I do understand analysing a company is easy when compared to analysing a country. But there are some positives. Company’s can fail easily but the country’s don’t. Even though forex trading seems to be boring and complicated, with experience you will find you have found the golden egg.

Benefits of forex trading

The prominent advantages of trading currencies are:

1. Superior liquidity :

 Liquidity is the superior factor which makes forex market the most lucrative form of trading compared to others. More than a trillion pounds is traded everyday through currency trading. Because the volume of trading is too high, it also becomes very difficult to manipulate the market unlike stock trading.

2. Market for 24 hours: 

The factor which makes currency trading more attractive is that it can be 24 hours a day starting from 3.00 am at new zealand EST to 10.00pm san francisco EST. In stock trading, you normally start in the morning and ends in the evening. But in currency trading since it can be traded round the clock, investor can choose the time they want to trade currencies.

3. Trading with leverage :

The next advantage in trading currencies is trading with leverage. For instance there are currency trading brokers who offer a leverage of 400:1 which is just a requirement of 0.25% in margin. For example, if your currency trading broker is offering a leverage of 100:1, it means in order open a position of GBP 100000, you need only GBP 1000. And in currency trading, it is broker commission free and all you have to pay is for the spread (difference between the buying price and selling price). Another point is you are allowed to trade to lowest limit of 1 pip in some currency pairs.

4. Investment required is low: 

The investment required for currency trading is very low and it depends upon the leverage provided by your forex trading broker. With maximum leverage offerred, you investment in currency trading could be as low as GBP 300.

5. Specialized trading :

Because of the superior liquidity of currency trading, most of the investment is concentrated in seven major currencies. This makes the investment pretty comfortable because the instrument which needs concentration is less and investors can be more vigilant of their investment.

6. All round the world trading :

Currency trading is a major advantage for those who spend most of their time in travelling. Since forex market is not controlled by any exchange, its neutral platform gives the edge of trading currencies from any part of the world with the same account. But it must also be noted that currency trading also requires a lot of experience and risk taking attitude as the volatility of the currency trading is too high.

Pros and cons forex trading

1.Forex trading might appear to be one of the best way to make quick money. But you must be aware that its not a quick money making strategy for everyone. The fact whether currency trading is an advantage or disadvantage depends on the way you approach it.

2. Let us look some of the advantages. While starting to use currency trading, you will learn to analyse different aspects in the business world. You will learn to analyze the technical aspects of currency trading such as charts, trading platform etc.

3. In currency trading, you will be given a demo account to trade with virtual money. This is one of the greatest advantages available in forex trading. This demo account gives you access to the latest and live charts, news and developments which you can use to trade currencies effectively. But you must also remember that you should not spend too much time in trading the demo account as you might not be able to follow the trend of currency trading market. You must also use this opportunity to learn the ups and downs of the market and the factors that influences forex market.

4. As currency trading is closely linked to a country’s internal and external affair, you will also learn to follow a country’s aspects very closely. For example if you are trading GBP / USD pair, you will invest when the currency of the united states dollar goes down and sell when it goes up. In order to know when the USD goes down, you must carefully analyze the political factors of united states. Factors like war, floods, riots always has good impact on the country’s currency value. So you will be able to pick the right time to invest in currency as you come across these factors.

5. Currency trading market cannot be manipulation like stock exchange because the currency values are pegged straight to a country and not to a company. So people who want to manipulate the currency value find it almost impossible.

6. No some of the disadvantages: Most of the investors enter the currency trading market just out of greed instead of treating it as an ethical business. This is the main reason why most of them end up as losers in currency trading. Most of the traders execute trade just by looking at the movement of the numbers and not looking at the factors that influence the movement. This means these investors fell prey to the high volatility of the forex market and loose their within hours.

7. Most of the people loose confidence in currency trading and it even affects their personal life. So it is always advisable to take advise of the people who had already traded currencies and you can get better about the trading aspects instead of just trading using the demo account.

Mistakes of forex trader

1.Trade systematically: 

Systematic trading is the key in forex trading. Most of the currency traders loose their money just because they don’t have the exact system to trade instead carry out trading with the movement of numbers alone. Trading is full of profits and loss and currency trading is not an exception. You must keep yourselves open to any outcome from the currency trading.

2. Stick to the system:

As you start getting experienced in currency trading, you will have your own system. Next mistake done by the currency traders is they don’t stick to the system what they had developed in the past. Most of the investors get carried away just by rumours and unconfirmed news, which turns out to be a huge loss. So investors must develop confidence in their own system and stand strong.

3.Keep yourself educated : 

No matter how much you get better or how strong your systems are, there are always new things to learn. Everyday there are new technologies and new tools to be used and learnt. Most forex traders are reluctant to learn these new techniques and stick to their old. But it doesn’t mean you have to leave your old strategy on the whole. But still you must consider how these new tools in currecy trading can be integrated into your old strategy.

4.Managing you money: 

Any investor who is thinking about investing in forex must learn to maintain account and manage the investment. Because its easy to loose track of investments. For instance it should be evident since the currencies are traded in pairs, its very easy to forget the exact amount what you use to buy and sell the currencies. Investors must understand that this step is more important than looking at the charts as you might loose money where you can easily gain.

5. Psychology: 

If you know to control yourselves, you can be the best forex trader. Most currency traders don’t take profit and loss equally. People must understand that it always happens in currency trading. Successful traders use the loss as an opportunity to analyze what went wrong and how it could be avoided next time. So this data is use to plan the investment next time. This strategy is always missed by the new traders as they loose all the money within a short span. This can be avoided by minimizing your investment and splitting into parts.

Risks in forex trading

Most of the forex traders don’t understand the real risks behind the currency trading and it becomes one of the main reason why most of the currency traders get out at the early stages without even understanding what the forex market is all about and how it really works. The first thing every investor must learn is to take profit and loss with positive approach and not get disappointed.

The main risk taken by the forex traders is

1. By the way the forex prices moves, it is crystal clear that it is the world’s most volatile market. The traders who trade stocks, don’t really understand the pace in which the forex market lose. So they simply give away their investment only by the sheer pace of the currency market. It is the greatest risk.

2. Even though currencies cannot be manipulated, still there exist a risk to losing out the moment of trading when the time is right. Because currencies are pegged to their respective countries and every news emerging from the country has a considerable influence in the currency value. So investors must be ready to seize the opportunity else they risk losing out to their competitors in currency trading.

3. Most of the traders don’t understand that you buy currency using another currency. So when you find the currency you bought is losing its value, you must be ready to find another currency so that you can buy the other currency by selling the currency what you hold. This quick strategy must be practised by all the forex traders because most of the currency traders lose out this main factor.

4. Currency traders must learn to use new options and tools available in the currency trading market. Stop loss is the best technique available for now, with which you can reduce the risk of loosing money due to unstable forex market.

5. If you are new to currency trading, you will tend to listen to more people to get some practical idea about the forex market. Some traders don’t realize that they are being influenced by false traders who are there to mamipulate new investors. So this is risk which every trader has to overcome and improve themselves so that you trade less based on others advise.

Interesting forex trading facts

As discussed in the previous articles, currency trading better known as forex trading has lots of benefits and advantages. This trading industry grew from GBP 40 billion in the 1980’s to GBP 1 trillion today. Listed are some of the interesting facts of forex trading.

Forex at first was traded only by the large financial institutions such as banks etc. but today it is available for individual traders due to the advent of internet and exposure to the potential currency investors. You can trade with very high leverage unlike other market, something like a lot of GBP 100000 with just GBP 1000, which is 100:1 leverage.

No other market in the trading industry offers this high leverage except forex. Forex is also the most volatile market of all so within clicks and seconds you might gain or lose money. Stop loss is also available in forex trading. The main purpose of stop loss is you don’t have to wait before your pc. You can simply set the price and the software does the job for you.

With currency trading, you can trade 24 hours for 5 days. With the market starting from newzealand and ending at sanfrancisco, currency trading continues as the investors are active all the time.

One great advantage of the currency trading is there are no commission. All you have to pay is a small transaction fee. But when you compare with the profit can be made with the currency, this small transaction fee would be nothing. But you must be aware of the quick changes in the market because of the high volatility.

As i said, even a small change in the market could end up disastrous, either in positive direction or in negative. So you must be vigilant all the time. There are lots of onlin currency trading platform who offer demo account which can be used to trade currencies with virtual money. But you must remember that without losing money you will never recognize the real strategy behind the forex trading.

Forex trading scam and fraud

Many wonder if there are any scams and frauds in forex trading. The bad news is there are a lot. Many have lost their hard earned money believing this fake forex brokers. These scam brokers are in every trading industry and forex trading is not an exception. These scammers build the most good looking and high profile website to attract the potential investors. Its a pity people always get attract to good looking website as they find it very believable. First step to find out a scammer is to identify the i.p address of the website. You will find that most of the scammer operate from a low profile and poor countries.

There are honest brokers everywhere but its not worth in believing in someone just by the website and not by reputation.

Forex trading companies, brokers who are located in the USA, UK, France, Germany, Japan are generally trustworthy because of the presence of strict laws and protection offerred to the investors. But it doesn’t mean that everyone is honest. Whenever you enter a forex or stock broker website, you must look for a license number as the countries mentioned above always requires the brokers to be registered. If they have one, the next step to verify with investment watchdogs in your country. Generally these watchdogs have a list of blacklisted websites and brokers who are already accussed of scam and fraud.

You must also note that there are fake watchdogs as well which is set up to help these fraudsters. The best way is to look for reviews and attend the forums where you will find people who have already invested and look out for their experience with the brokers. You will definitely get the good one. Following are some of the point to identify the fraudsters.

1. Don’t believe any one who say they can make an unbelievable amount of money in a short time as a profit. These scammers mainly target the people who have drawn lots of money mainly pensioners because its the general intention of the pensioners to multiply their money with low risk. These scammers also have attractive offers to blind the pensioners. So one must realise that they should not lose their hard earned money just like that.

2. Everyone must understand that any kind of trading is not easy. All the trading on the planet involves some amount of risk in it. Whether it is forex or stocks or mutual funds, everything is linked to the business outside the market and loss in the business will reflect wherever you have invested. So don’t believe anyone who says they can make profit even when the market goes down. But there are some very reputed brokers who offer these kind of schemes, but the point there is they will take the extra profit they make and cancel it when they run your investments in loss.

3. There are other advertisements made such as make GBP 10000 a week with just GBP 5000 as the intial investment. There is a general human tendency you must think about. No true businessman will share his secret and help others to make money. They always keep it to themselves. So never believe these too good to believe stuff.

4. Beware of those companies who claim they have access to interbank market. The name interbank market might sound odd or attractive. But interbank market is not a market or a bank, its a building where the banks and big companies make their transactions. So they don’t get carried away by these trading scams.

5. There are also scammers who want you to invest a big amount and promise that they can double or triple within a year or two. Well there are no schemes like that. Forex and stocks are high risk investments and nobody can guarantee anything. If so, everyone would be a millionaire by today.

6. The most important thing is if you find something wrong or misleading, never hesitate to make a complaint or atleast alert other through a forum or a blog posting.

Learn to analyze forex trading chart

Charts are pictorial representation of share prices and currency prices with their rise, fall and the time frame. If you see a typical chart, most of charts have time in the horizontal axis and price variation in the vertical axis. Then the variation is plotted in the form of line, candlestic or bars. These types are explained as follows.

1. Line charts:

This is the most easiest type of charts to analyse as it shows the rise and fall of price with time frame. But the problem with this type chart is it doesn’t provide other details such as market behaviour or whether the market was bearish or bullish. Once you get experience in stock and forex market, you will find that line chart is not as useful as other type of charts such as bar chart or candlestick chart.

2. Bar chart:

These kind of charts have bars instead of lines. Compared to line chart, bar charts gives more details about the market situation. Every bar in the bar chart represents the high and low price at that hour, and its easy to determine whether the market was bullish or bearish.

3. Candlestick charts 

It is the most popular charts among all the charts. They are mainly used in forex trading. Candlestick charts are almost same as the line and bar charts in concept, but the details the candlestick charts provide are more precise and detailed. Candlestick charts comprises of green candlestick symbolises the rise in price and the red candlestick indicates the fall in price. The shape of the candlesticks play and its colour plays an important role in the analysis of candlestick charts. Depending upon the rise and fall of the prices and according to the behaviour of the investors, the candlesticks are formed and market analysis are made as the candlesticks are formed.

4. Candlestick types:

If you start learning about candlestick charts, you will find lots of strange names like doji, hammer etc. Initially it might be a bit confusing, but with time you will find it very easy to analyze the charts and make the most out of it.

Stock trading vs forex trading

Stocks are issued by the companies to raise money to run the company. Each and every stock a person own represents his part in the company. It is one of the most popular form of investment as it is easy to understand and implement compared to other investment. Then how does it differ from the forex market.

1. Stock or share prices fluctuates depending upon the company fortune (ie) management, profit, competence in the market etc. so when the price rises, its all about selling the shares and taking the profit or wait for the next opportunity to get a better deal.

2. In stocks, there is a concept called dividend. Dividend is a small percentage of profit paid by the company. Only a few companies offer dividend. The advantage of dividend is that you will be paid the dividend even if the market fluctuates.

3. There are few companies which trade in all the markets like london stock exchange, new york stock exchange etc. Stock market can be used as a long term and short term strategic trading. Long term traders are those who invest in a reliable company and take part in its ups and downs. short term traders are mostly totally dependent on market for their living and they trade on daily fluctuations of a share.

4. There are few companies which holds the status of Blue chip stocks. These are the stock which have the long term trading value which in short means the companies which had earned reputation. With the advent of internet, now stock market offers daytrading which involves righ risk trading.

5 . Day traders use the fluctuations in the share price to trade. As i explained before, this type of trade involves high risk and brokers charge high commission as the option of leverage is available. One can expect upto 50% leverage which means you can trade with just half of the money required and the rest will be paid by the broker.

6. Forex might seem very similar to stock trading but the concept behind forex is a little bit different. Unlike stock trading, forex involves in trading currencies (ie) selling US dollar and buying GB pounds or vice versa or other currencies.

7. Like we have stock brokers in share market, there are no brokers in forex market. So you can execute as many trades as you want. Compared to stock market which only trades about GBP 100 billion, forex trades are about GBP 1 trillion. So forex trading is considered to be the most volatile in the world.

8. The fluidity of the forex market is justified by the currency trading happening all the time in the world. Some one is buying and selling at some moment at some part of the world all the time and all the currency pairs as well.

9. The stock market is not as fluid as forex because companies trade stock only in a certain exchange at a particular time and their amount is limited.

10. Stock exchanges are open only for a certain time but forex is open all the time for 5 days as there is no fixed market for currency trading. And the greatest advantage of the forex is it cannot be manipulated that easily as it is done in stock market as the forex is pegged to a country unlike stock which is pegged to a company.

Forex trading vs future trading

Futures is the worldwide market for all sorts of commodities including manufactured goods, agricultural products, and financial instruments such as currencies and treasury bonds. A futures contract states what price will be paid for a product at a specified delivery date. When the futures market is played by speculators, the actual goods are not important and there is no expectation of delivery. Rather, it is the futures contract itself that is traded as the value of that contract changes daily according the market value of the commodity.

a. In every futures contract there is a buyer and a seller. The seller takes the short position and the buyer takes the long position. The futures contract specifies a buying price, a quantity and a delivery date.

b. For example: A farmer agrees to deliver 1000 bushels of wheat to a baker at a price of £5.00 a bushel. If the daily price of wheat futures falls to GBP 4.00 a bushel, the farmer’s account is credited with GBP 1000 (5.00 – 4.00 X 1000 bushels) and the baker’s account is debited by the same amount.

c. Futures accounts are settled every day. At the end of the contract period, the contract is settled. If the price of wheat futures is still at GBP 4.00 the farmer will have made GBP 1000 on the futures contract and the baker will have lost the same amount. However, the baker now buys wheat on the open market at GBP 4.00 a bushel – GBP 1000 less than the original contract, so the amount he lost on the futures contract is made up by the cheaper cost of wheat.

d. Similarly, the farmer must sell his wheat on the open market for GBP 4.00 a bushel, less than what he anticipated when entering the futures contract, but the profit generated by the futures contract makes up the difference. The baker, however, is still in effect buying the wheat at GBP 5.00 a bushel, and if he hadn’t entered into a futures contract he would have been able to buy wheat at GBP 4.00 a bushel.

e. He protected himself against rising prices but he loses if the market price drops. Speculators hope to profit by the daily fluctuations in the futures market by buying long (from the buyer) if they expect prices to rise or by buying short (from the seller) if they expect prices to fall.

1. Forex The foreign exchange market (forex) has several advantages over the futures market. Forex is a more liquid market – as the largest financial market in the world it dwarfs the futures market in daily exchanges. This means that stop orders can be executed more easily and with less slippage in the forex. The forex is open 24 hours a day, 5 days a week.

2. Most futures exchanges are open 7 hours a day. This makes forex more liquid and allows forex traders to take advantage of trading opportunities as they arise rather than waiting for the market to open. Forex transactions are commission-free. Brokers earn money by setting a spread – the difference between what a currency can be bought at and what it can be sold at. In contrast, traders must pay a commission or brokerage fee for each futures transaction they enter into.

3. Because of the high volume of trading forex transactions are almost instantly executed. This minimizes slippage and increases price certainty. Brokers in the futures market often quote prices reflecting the last trade – not necessarily the price of your transaction. The forex is less risky than the futures market because of built-in safeguards in the trading system. Debits in futures are always a possiblility because of market gap and slippage

Want to know the best prop firms to trade futures? Here is our comparison: Futures funding prop firms.

Forex trading tips and tricks

1. Understand volatility and have fun in taking risk: 

Forex trading or any other trading is all about volatility. If there is no ups and downs in the price, forex trading will cease to exist. So anyone who wants to invest in forex must realise that its all about risk. Someone who is scared to take risk can never be a winner. This is the foremost reason why all the traders give up forex trading as they are too scared. Remember, if you are gaining there is someone losing and vice versa. This is the way forex trading works and investors must understand this.

2. Trade Infrequently 

Most of the traders think that trading frequently makes lots of profits. But it doesn’t work like that. Big gains are made only at a particular time of the year and not every second. So spend some time in analyzing the currency and wait for the right time. While analyzing you will understand and you will know the right time to invest. When that time arrives, invest in the currency you think you can make that big gain. This is one important strategy which most of the forex traders miss out.

3. Avoid diversification. 

Diversifying your investment is one of the trusted strategy. But you must remember that you are trading currency and not stocks. In stock trading, diversifying your investment will give you an edge but it the opposite in the forex trading.

4. Money Management 

So long we discussed something general, but there are other ways available to reduce risk and increase your profit potential. Some of the strategies are to : 1. Buy options at or in the money, to give you power to stay in the market – and to prevent yourself from being stopped out from the market. Most of the forex traders lose out not by making a wrong move in the wrong direction but by getting stopped out due to volatility. 2. Most of the forex trading start trailing their stops and then they automatically get stopped out. But the price moves on and ends up in a spectacular gains. Don’t get inside this market trap. Leave your stop in the original position until you find the market is moving in the way you think. Once the forex price has moved, you can move up. Remember you are trying to big gain in short time. So enjoy the risk you are taking.

5. Advantage of Compound growth

In forex trading: If you are looking for long or short term strategy, understanding the compound growth in forex trading is very important. For example, If you are having a target of 50% profit in your currency trading, you can make an intial investment upto an amount of GBP 20000 and can make a million pound in 10 years.

How to Overcome the Fear in Trading

When we feel the concern that How to overcome the fear in trading, we would take fast steps to beat it, whether or not that leads to jumping out of, or into a trade. It’s important to not let the concern cause unhealthy behaviors, habits, or harmful cope mechanisms like habit. There are some brief details on it that might give you better idea to overcome the fear of trading. These suggestions or solutions may definitely help you to overcome the trading fear.Common varieties of concern seen in traders:

  • Fear of Losing cash
  • Concern of Missing Out Fear of property a Profit become a Loss
  • Fear of Being Wrong

How to overcome the fear in trading! Here square measure some solutions or suggestions:

1. Acknowledgement

The first factor once overcoming concern of commercialism is to acknowledge that it exists. Concern is simply one in every of the numerous emotions that any traditional person would possess. Instead, either because of ego or pride, several traders plan to place it aside, thinking that concern can escape miraculously. That’s one in every of the worst factor to try and do as a result of, by ignoring it, concern can hit you once you least expect it to come back and it’ll hit you arduous.

On the contrary, and as ironic because it sounds, acknowledgement additionally includes respecting concern. This can be vital as a result of once you begin to respect one thing, you naturally pay additional attention to that, you’re taking note of its type and form still as searching for however it works.

In a shell, you would like to consciously embrace concern and, in my view, the most effective start line to the current is to own a commercialism journal that records your emotions. You would like to jot down down once concern strikes you, why it strikes you and the way it strikes you.

When you have done it usually enough, then you’ll understand once to expect concern once it next emerges.

2. Stop Making an Attempt to Win

The aim of most traders is long run gain. However, some commercialism colleges fail to emphasize the numerous profitable commercialism systems lose additional then they win. Yes, believe it or not, several systematically profitable systems have additional losing trades than winning ones albeit they’re profitable. With that, I powerfully encourage traders to prevent making an attempt thus terribly arduous to win all the time.

As shortly as you stop making an attempt to win, the expectation of winning subsides and once there’s nothing to expect from the trade, there’s nothing to concern.

Do you see the consequence of making an attempt to win?
Instead of that specialize in winning or losing, I feel it’s additional vital to aim to trade your system cleanly i.e. attempt to excellent your commercialism edge. This leads Maine to my next topic.

3. Perfecting Your Commercialism Edge

Making each effort to excellent your commercialism edge could be a great way to scale back or eliminate concern.

In my view, this can be somewhat like the automotive trade. In theory, driving a automotive could be a high risk and life threatening activity. However, as folks have place their trust within the automotive makers, they begin to relax and to fancy the automotive because it is. A part of the rationale that trust exist is as a result of automotive makers perpetually upgrade and incessantly excellent their technology. This offers assurance to the users that each effort has been created to create the automotive safe.

Likewise, if you create each effort to boost, defend and excellent your commercialism edge, the amount of trust you’ve got can still increase. This implies your level of concern can decrease, forward you execute your commercialism edge consequently. And hence you can beat the fear of losing in trading as well.

4. Target the Currently

Believe it or not, very often, concern is triggered by voices that we have a tendency to hear in our mind. These voices sometimes return from our psyche and that they haven’t any factual proof to support them. Our psyche is extremely vulnerable to data generated from our acutely aware mind and, hence, it’s vital to figure our acutely aware mind. Typically, i’d counsel feeding it with positivism, however, during this context a higher plan is to target the currently.

By that, I mean to target what you would like to try and do currently to create ensuing trade an honest one. That specialize in actions helps avoid (but not eliminate) negative pictures on our mind. The secret is extremely being focus, rely on what you would like to try and do currently, select it and simply doing it. There’s no purpose watching your past commercialism results or considering the longer term (since you’ve got no plan what is going on to happen within the future). Hence, swing all of your energy and creating ensuing trade excellent could be a great way to eliminate concern and you can easily overcome the fear in trading.

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Top 5 Forex Books You’ll Have to Read

The forex market is the biggest with the most liquid across the globe. As this is an international market, the average value traded often goes over $1 trillion per day. Since this is the foreign exchange, all currencies are also welcome, which can be incredibly scary to a new trader. Many people have wondered how do you become successful in such a booming worldwide market, and some experts have stepped up to lend their advice. These authors detail all kinds of strategies, maneuvers, tactics and mental skills needed to overcome challenges in the forex market. These are also seasoned traders who have worked with the forex market for many years. Whether you’re a beginner or just want to perfect your own forex strategies, these are some amazing reads that will truly inspire you to make successful trades.

1. Trading in the Zone by Mark Douglas
Mark Douglas is a well-known name in trading literary works. His book The Disciplined Trader was released in 1990 and got people talking about trading psychology. It’s still considered a classic to stock trading theory. Some people call Trading in the Zone the “Bible of Trading.” The book’s theories and explanations can apply to almost any market, but it seems particularly fond of forex. As a trader, this book will change the way that you look at foreign markets and currency trading. While the forex can be particularly risky, Douglas goes into a variety of ways to be inspired by that fear and make smart choices for success.

Douglas really focuses on the mental strategies behind doing well in trading including trending and non-trending techniques, mental strategies, trading dos and don’ts and much more. Through his guides, the reader is able to see how to get an edge on the market and utilize his theories to train the mind towards trading goals.

The book goes into why there is a lack of consistency in the market and also advises traders on how to overcome instinctual habits that may cost them more money when trading. There are also several exposed myths, which are very useful for today’s forex traders.

2. Jesse Livermore: World’s Greatest Stock Trader by Richard Smitten

Jesse Livermore is often regarded as one of the most legendary stock traders. The stock market hero was known for winning and losing millions of dollars during the stock market crash through short selling in the early 1900s. Even with his multi-million dollar losses, he continues to be one of the most talked about figures in modern stock trading theory schools. This book details the experiences and techniques of Livermore in a way that stock traders can truly appreciate.

Smitten starts off explaining about Livermore’s upbringing and how he ran away at the age of 14 with just $5 on his person. Livermore continues to be one of the most talked about stock traders in history. His tactics and short-selling skills during the American stock market crashes actually revolutionized Wall Street. This book details Livermore’s trading system and goes into the steps that Livermore took to secure his trades in the early 1900s.

The World’s Greatest Stock Trader also goes through valuable lessons and advice gained through Livermore’s trading skills that can apply to almost any market but especially foreign exchange. It will help you learn more about currency trading and recognizing significant opportunities across all markets. If you are inspired by Jesse Livermore, there is also Reminiscences of a Stock Operator by Edwin Lefevre, which focuses more on the legendary stock trader’s life.

3. Currency Trading for Dummies by Mark Galant and Brian Dolan
For beginners in forex trading, Currency Trading for Dummies is a must read. While it’s not specifically written about the foreign exchange market, the advice on market changes, currency charts and finishing trades is invaluable if you are a new trader. Galant really covers the basics and offers sound advice to trading on the forex market.

The book goes through how to spot the best trading opportunities, thoroughly comprehend what sparks market changes, pick the best brokers, complete successful trades, minimize risk, maximize profits and develop an in-depth analysis of currency charts.

Traders learn how to understand the tendencies of different currencies, how to look for the right times and reports, how to manage trades and a lot of other basics. If you’re just starting out on forex market trading, the tips and practical basics in Currency Trading for Dummies will really change how to perceive this global market. In addition you’ll learn the ins and outs of the most popular FX trading techniques.

4. The FX Bootcamp Guide to Strategic and Tactical Forex Trading by Wayne McDowell
Wayne McDowell is the Chief Currency Coach at FX Bootcamp and one of the seasoned traders of today’s Wall Street. This guide is entirely about how to trade successfully again and again on the forex market, which makes it an incredibly valuable tool for anyone who doesn’t have that much experience with the foreign exchange.

McDowell shows readers how you can combine technical indicators with guaranteed market strategies. This helps to create a “tactical trading plan,” which allows traders to easily maneuver in and out of a trade. McDowell gives specific advice on when to pull the trigger on certain trades and how to hold off on others that may just be above your head. The advice covers both technical and fundamental aspects that every prominent forex trader needs to be a success.

McDowell also talks about all of the different challenges that traders face in the forex market and how to overcome those difficulties. Some of those challenges are re-learning old mental habits so that you’re not held back from taking risks. In addition, traders learn how to handle the emotions and predicaments that come with trading on the foreign exchange. There is a lot of loss and isolation that traders often don’t know how to go through.

5. Forex Patterns and Probabilities: Trading Strategies for Trending and Range-Bound Markets by Ed Ponsi
The forex market is particularly vast and daunting for most traders. There are so many variables, and if you’re not careful, you may find yourself on a trading ledge. Ed Ponsi gives you some incredible advice on how to capture huge profits with forex while also avoiding those mistakes that lead so many traders to despair. This book is definitely for those with a little bit more experience in forex trading. After you’ve read some of the others on this list, you’ll definitely find more clarity and even hone your strategies.

Ponsi developed his approach after years of trading on today’s forex market. However unlike some beginner guides and general trading theory books, Ponsi goes in-depth with Forex Patterns and Probabilities to really help traders understand the mechanics of currency trading as it is today.

The book is divided into four detailed parts that go over how to understand the playing field of forex markets, analyzes specific trading strategies including FX-Ed trend techniques, develop an insider’s view of behavioral patterns of prominent forex traders and explains non-trending trading techniques like the volatile “squeeze play.” It’s a definite must read for anyone who already has an understanding of forex markets but wants to know more.
Some other good reads for forex traders include Face the Trader Within by Chris Lori, Warrior Trading by Clifford Bennett, The Secret of Candlestick Charting by Louise Bedford, Nison Candlesticks – Japanese Candlestick Charting Techniques and Beyond Candlesticks by Steve Nison, Encyclopedia of Chart Patterns by Thomas N. Bulkowski and How to Trade a Currency Fund by Jarratt-Davis.

While there are plenty more books on forex trading, these are a great start for any trader just beginning their journey into the foreign exchange market. Each book goes into great detail about the nuances of forex trading that separates it from Wall Street. You learn about different currencies and how to spot anomalies that are worth the risk. These books also give traders lessons on how to train your mind to understand forex. These tips allow traders to push themselves farther while also making sound decisions. The advice from seasoned experts in forex trading can greatly impact even those with some experience in forex trading. With these books as tools and guides, you’ll be able to make some incredible investments and hopefully avoid the most common mistakes of beginners on the forex.

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Do You Have What It Takes To Become A Day Trader?

To become a day trader, you need to have certain qualities. In day trading, positions are opened and closed within the same day. This helps define the type of personality that tends to be drawn to day trading.

  • You don’t mind being at your computer the whole day, or if you’re part time, for the time you have allocated to trade. If you have a demanding job, or a lot of family or other commitments, day trading may not be a good fit for you.
  • You want/need to keep an eye on the trade and monitor it whilst it’s open. Because a day trader opens and closes positions in the same day, they aren’t going to be affected by things that are happening whilst the market is closed, or they are asleep, or involved in social activities.
  • Day traders are in many ways more impatient than other traders, though they do need to have some patience to be successful. A good day trader needs to be patient enough to wait for a trade to come along that fits their strategy. They need enough self-control that trades aren’t entered out of boredom, or the need to ‘do’ something – even if it means waiting for hours.
  • Day traders tend to feel the need to be doing something all the time, hence they don’t mind watching the stock market for a good trade whilst that session is open. Those that compulsively micro-manage things might be drawn to day trading.

A good day trader needs the ability to take decisive action when conditions are identified that meet their trading criteria. This is partly related to confidence in your own judgment, as well as how you handle a sense of risk psychologically. Leaving it too long to enter a trade by waiting until a stock moves into profit can mean the window of entry that would make it a good (profitable) trade, is missed. This is a mistake that beginners can make, and could be a function of needing to learn more, or simply a lack of experience leading to a lack of confidence. Certainly, if you prefer someone to take you by the hand, joining a service that recommends stocks might be a good idea.

The flip side to the above is about not making rash decisions. A good day trader does not approach trading like a gambler would. Day traders mostly use technical analysis, which follows price movements in the stock market, to determine whether to make a trade. Most people who become a day trader are risk averse, so this may not be a problem. Day traders tend to use small stop losses to limit the possible amount lost per trade.

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Best Pairs to Trade as a Beginner

WHAT ARE THE CURRENCY PAIRS EVERY BEGINNER SHOULD TRADE?

There are a multitude of currency pairs available to Forex traders. Unfortunately, many beginners make the mistake of choosing the wrong ones when venturing into the market for the first time. If you are a Forex beginner, it is much easier to start off by trading the major currency pairs, such as the EUR/USD, USD/JPY, and the GBP/USD, rather than the myriad of minor currency pairs that are available. Here are several reasons why these are often considered the best currency pairs to trade, especially for Forex novices:

– The currency cross pairs are the most widely traded pairs, which makes them extremely liquid with the volatility needed to conduct profitable trades every day.

– They have extremely tight spreads. For instance, most brokers only have a one or two pip spread for the EUR/USD. However, most Forex brokers place a higher spread for the GBP/USD, due to the much higher volatility of this currency pair.

– All of these currency pairs involve the USD and are actively traded during the New York session, which takes place from 8:00 am to 4:00 pm EST. This is the most active trading session and regularly has the highest volume of trades.

– There are numerous trading systems that have been developed specifically for trading these pairs. Many of these trading strategies and systems can be found online for free.

Now that you know what the best currency pairs are for beginner traders, next it is necessary to know which ones should be avoided. Every serious trader agrees that trading exotic currency pairs requires advanced knowledge of the market. Novice traders should only focus on trading the following list of major currencies and avoid any others until they have proven that they can trade these profitably:

  • US Dollar (USD)
  • Euro (EUR)
  • Japanese Yen (JPY)
  • British Pound (GBP)
  • Australian Dollar (AUD)
  • Swiss Franc (CHF)
  • Canadian Dollar (CAD)

It is important to note that only pairs containing two of these currencies should be traded by novice traders. If one of these currencies is paired with an exotic currency, then it should not be traded.

It is also important for novice traders to avoid trading currency pairs that have high spreads. Typically, the major currency pairs listed above have much lower spreads than exotic pairs. Most of the time, currency pairs with high spreads are much more volatile, causing price spikes and wide price changes that are difficult for beginner traders to execute profitable trades. Although spreads vary by broker, the spreads employed by a broker can easily be found on their website or on their online trading platform. Most traders typically just subtract the Bid price form the Ask price, both of which can be found on the Bid/Ask table.

All too often, beginner traders make the mistake of trying to monitor and trade too many currency pairs at one time. In addition to making trading complicated and difficult to handle, this also makes it difficult to gain in-depth knowledge of each currency pair and learn the unique behavior of each.

Every currency pair moves in a unique way, forms trends, and reacts to political and economic events. Therefore, it is necessary for novice traders to study one currency pair at a time so that they can observe its behaviour and learn the most effective way of trading the pair.

THE MACD AND MOVING AVERAGE METHOD FOR TRADING THE EUR/USD

The EUR/USD is well-known as a trending currency pair, especially during the morning hours of the New York session, making it perfect for implementing this short-term trading strategy utilizing the 15-minute chart.

This proven strategy requires the use of the following technical indicators:

  • Two-period exponential moving average
  • Five-period exponential moving average
  • Ten-period exponential moving average
  • MACD

Some traders prefer to use a custom MACD indicator that features bars that change colour when a change in price direction occurs. However, this is not necessary, because a standard MACD makes these changes quite clear and can allow traders to spot the change in time to prevent a lag.

Long Entry Rules:

When going long on a trade, you simply need to identify the point in which the two-period EMA begins to cross over the long-term EMA’s. A buy order should be executed when the two-period EMA crosses above the five-period EMA, and also when both the two and five-period EMA’s cross upward over the ten-period EMA. The bars of the MACD indicator should also change from a downward position to an upward position at the same time as the EMA crossovers.

There are no predefined rules that govern the use of profit targets or a stop loss as these can be executed at your discretion. However, since this system is designed to be implemented on a 15-minute chart, the trade outlook is very short. Therefore, it is recommended that profit targets be set to no greater than 30 pips, and stop losses should be set around 15 pips for a risk/reward ratio of one to two.

Short Entry Rules:

When using this strategy for a short trade, the two-period EMA should cross downward over the five and ten-period EMA’s. Similar to a long entry, both the two-period and five-period EMA should also cross below the ten-period EMA. The bars of the MACD indicator should also go from an upward position to a downward position. This transition usually occurs gradually, giving you plenty of time to spot the impending price change and prepare for a trade.

Similar to a long entry, profit targets should be set for no more than 30 pips, and stops losses should also be placed around 15 pips. However, rather than setting a profit target, trailing stops can also be used to lock in profits and ride the trends that are commonplace with the EUR/USD.

CONCLUSION

When venturing into the Forex market for the first time, it is important to trade one of the major currency pairs, such as the EUR/USD. Pairs such as this have greater liquidity and provide plenty of safe trading opportunities. By utilizing the multiple EMA crossover and MACD system, you will be able to easily identify trade set ups on the EUR/USD and execute profitable, short-term trades. When used to trade the EUR/USD, this system has proven to be profitable for beginner traders time and time again.

As you know, the spread of a particular currency pair can greatly affect your potential profits. Since each broker offers different spreads, it is imperative to find a broker that offers the lowest spreads possible for each of the major currency pairs. Get your trading off to the best start possible by finding the right broker and utilising this EUR/USD trading system today.

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Generating profit through Forex Day trading

Forex day trading is another great technique in generating profit from investment, which refers to one day trading. In this way, all transactions are traded from one currency to another in one day. This approach is really fast and easy to make money in just a single day. People who are engaged in this day trading are earning a lot of money and they hold the top positions in currency trading market. Therefore, they can afford to invest more and earn more money. With these traders, people can get good amount of money by selling their currency.

Forex day trading is based upon an easy concept and that is “with money, more money can be earned”. To be an effective trader, it is important that the individual is familiar with all kinds of tricks and techniques used in the market. It is way different from other usual long term investments. In a regular trading, investors look at the trading history and other factors; all in all take time to make right decisions, however, in forex day trading, decisions are made instantly and even in minutes.

Forex day trading is viewed as dangerous approach to some people. Although risks are accompanied with such trading approach, but, if proper decisions can be taken, it is also a wonderful opportunity to be utilized and make great money. In fact, the regular investor spends 60 or 90 minutes every day and makes the final decision after long overview and analysis of the market and after all these effort the regular investor makes as much money as the forex day trader. Considering the amount of time and effort spent on it, forex trading is the better one to choose. However, some bad sides are also there in forex day trading. An inexperienced investor who does not have necessary skills, are going to be at the risk of losing the invested money. Apart from that, even the experienced one can get frustrated spending the day in trading and ending up with a zero return. Thus, after analyzing all aspects, potential investors should make right approach.

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How To Choose the Right Forex Trading Software

Forex trading software is becoming more popular among traders as time goes by. One reason for this is the software’s ability to continue working even if you are not. There are several forex software programs available but it is important to choose the one that is right for you.
There are three important things to remember when choosing the right forex software for your trading needs. These three things include:

  • Good Security Measures
  • Proper Customer Support
  • Easy to Understand and Operate

These are the three most important things to remember when trying to determine which forex software you want to use.

Security

When choosing forex trading software it is important to pick one that uses good safety measures. This should be one of the first things you consider when making the decision of which one to use.

Customer Support

This is also a very important aspect of a good forex trading software program. This is especially important for beginners as you are most likely going to have lots of questions until you learn your way around the market and gain a little experience. For this reason it is important to choose software that has unlimited and constant customer support to answer those questions.

Easy to Understand

It is equally important to use software that is easy to understand and operate. Because most people are just learning this market it is going to be pointless to spend money on a good forex trading software program if it is too complicated for you to use and understand. If you don’t understand what is going on you will lose money quickly and in large amounts.
Although there are many forex software programs available it is important to know which ones are the most effective as well as the easiest to understand and operate. One such software program is Forex Tracer.

Forex Tracer has the ability to continue trading by automation making it effective even when you can’t be right there to monitor ever move that is made. This makes it easy to continually earn money and further increase your profits over manual trading alone.

It is recommended that you use the program on a trial basis for a few days before making a purchase to ensure that you understand how it works and that it is the right program for your trading needs. This goes a long way in determining your success rate.

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Tips to Finding a Good Forex Broker

One of the first things you need to address in Forex trading is what sort of money management rules you will employ.

Forex trading is a risky business at the best of times. For this reason it is important to do everything possible to protect your investments and get qualified advice. One way of doing this is by finding a good Forex broker.

A quality Forex broker will give you all kinds of information about how and where to invest your money with foreign companies. Although Forex brokers are not readily available everywhere there are many places to find them.

Some of the best places to find Forex brokers include places such as:

  • Large commercial firms
  • Large banks
  • Internet

A Forex broker will also be able to help you learn more about Forex trading such as how and when to invest and how much to invest into a specific system. They will also be able to tell you what the minimum investment amounts are.

It would be advisable to check with several different companies before choosing one as each one has different minimum investment amounts ranging anywhere form $5-$500.
Every company also has their own fees and these fees vary from one company to another just like anything else. These fees are generally based on the type and size of whatever transaction you are involved in. Typically the largest fees are invoked when moving from one fund to another or one account to another but it is advised to always be sure you understand exactly what those fees are and how much they are. Remember that fees is how Forex brokers make their money so make sure you know what you are paying and how much.

Remember that this is a person you should feel comfortable placing your trust in. always be very aware of any Forex broker that tells you to place large amounts of money very quickly. A true quality broker will give you the necessary information and allow you time to review it and make an educated decision. Watch out for anyone that seems to be too impatient as they may not have your best interests at heart.

Remember that it is your money and you have the final say about where and how it is invested and how much is invested. Your broker should only be concerned with giving you sound advice not making your decisions for you. Any broker that tries to make the final decision for you should be avoided at all costs.

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The Benefits and Risks of Swing Trading

Swing trading is a style of trading in which a stock is held for a length of time ranging anywhere from as little as two or three days up to as long as two or three weeks. This particular style is usually used by beginners however more advanced traders have also been known to profit from it.

This type of trading is dependent on short term variations in the market and traders must be able to react to these changes quickly. Swing trading relies more on stress price patterns than actual stock value.

Swing trading is kind of a middle ground between day trading and trend trading. Day trading focuses on the trader holding the stock for no more than a day whereas with trend trading it can be as long as a few weeks or months.

With swing trading the trader does not wait for the price of a stock to hit bottom when buying however he also does not wait for the highest prices when selling either. They focus more on the short term fluctuations in the market. Those engaging in swing trading also do not usually have to worry about competition for large traders.

If a person wants to be successful with swing trading he needs to know how to pick the proper stocks. This usually includes the ones owned by large companies. A swing trader will generally follow a rising stock for a few days and then when it turns downward they simply change over to a different stock that is on an upward swing.

This type of trading is most profitable when markets are stable. Swing trading however is not very successful during times of constant rising or falling with very little fluctuation in stocks as this projects instability in the market making it a much higher risk.

In order to profitably engage in swing trading it is extremely important to understand the different fluctuations and rises and falls in the market and what it all means.

It is very foolish to jump in and try to compete in this market without at least doing a little research first to know which trades might be profitable and which ones will be too risky to be attempted. By knowing this you not only increase your chances of making a profit but you greatly reduce your risk of losing major amounts of money making the risk much less likely to be a waste of time and money.

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Important Guidelines to Successful Forex Trading

Before you even think about venturing into the world of trading there are some important things you need to know. Knowing (or not knowing) these things can dramatically affect whether or not you are successful in your trading endeavors. Following simple guidelines can go a long way in determining your success or failure and let’s be realistic if you are entering into the trading world your goal is to make money.

Have a Trading System

Having a trading system is important and can greatly increase the chances of your success. Generally when trades create a system they think in an unbiased way since no money is at risk. If no money is at risk then there is therefore no chance of losing money. This allows the traders to be more open to possibilities thus finding lower trading risks. Never approach trading randomly as it is almost certain to lead to financial disaster.

Stick With Your System

If you have determined a system and have it in place follow it. Being disciplined and following the system that you have created will help increase the chances of your success using the trading opportunities you have discovered. Failure to remain disciplined and follow your system will almost surely end in the failure of your investments and the loss of money.

Get Educated

In order to be a successful trader in the Forex market you have to be educated. By doing this you have the possibility of gaining the knowledge and experience necessary to be successful in the Forex market. Read everything you can about the market and check into training programs as well as study historical charts. All of these things will go further into making your success a reality and not just a dream.

Money Management

The main goal of money management is to keep from losing money. One way money management does this is by boosting your profits and letting them grow. By not employing good money management techniques you could lose everything very quickly.

You Can’t Win Them All

A good trader knows that you can’t win every trade. Not only is it unrealistic but it is also unnecessary to think you can win every single trade. Even if you only win half the trades you attempt you can still see a profit.

By following these guidelines you can greatly increase your chances of success in Forex trading and not only break even but make a nice profit.

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What is social trading?

Forex trading, as you undoubtedly already know, is generally based on the use of several types of analysis such as technical analysis and fundamental analysis, but have you heard of social trading?

If your answer is “no”, it is time for you to learn about what social trading actually is and why it is considered superior to other, more traditional apprenticeship methods.

Social trading: What is it?

Social trading is a practice born following the advent of online trading. Indeed, whereas before traders had to use communication methods such as the telephone and fax, today everything mainly takes place online through the internet. The flow of information available to all has radically changed the investors’ methods of trading; they are no longer alone to take decisions but rather can exchange information and advice freely with other traders, both more and less experienced.

With this growing “socialisation” in the trading world, some brokers such as eToro decided to participate and generate automated social trading.

The changes implemented by online trading

Due to what is commonly known as web 2.0, traders can now share their operations with the entire world and can also consult the trading methods of other investors, both individual as well as professional.

The fact that all information has become transparent and can be studied and analysed, then used by everyone, allows a type of mutual assistance between investors from which came a communal trading through online discussion forums to give one example.

The different operations completed on the Forex can in this way be explained by their instigators and so help other traders to understand why one investment succeeds and another fails.

Social trading: A truly different trading tool!

Following these positive results, certain brokers decided to implement tools allowing the use of social trading directly from inside the trading platform. The first to implement this system was the broker eToro who launched OpenBook in 2010. The principle of OpenBook is in fact entirely based on social trading as each subscriber that trades on the platform can share their trades and consult the trades of other investors, without communicating the amount of money invested or gained.

Thanks to this flow of information, it is easier to know how to adjust positions in accordance with the positions of more experienced traders. These adjustments can be made manually through spotting interesting trades and using them to implement your own strategy, or completed entirely automatically by making the same trades as another trader judged more experienced or profitable.

What is the point in social trading?

Although social trading can be useful for more experienced traders, it also offers beginner investor a unique chance to make profitable investments quicker while learning about Forex trading in a practical manner by following trades completed by expert investors. In this way, it is in fact easier to understand how and why the experienced traders place their orders with only a very basic theoretical understanding. In addition, traders can communicate among themselves and ask questions or advice from other investors on the platform.

It is important to indicate that the first results communicated by the broker eToro are highly encouraging as the gains recorded overall by the traders using OpenBook are vastly superior to those generated through traditional trading.

A review of Zulutrade: Automatic trading

As you probably already know, certain Forex brokers offer automatic trading systems using signals. Among these systems one in particular is notably appreciated by traders, Zulutrade. Here are a detailed review on this investment method.

The operation of Zulutrade:

The trading signals operation used by Zulutrade differs from the other analytical methods in the sense that it relies on the principle that if it is possible to identify the best members of a group then it is possible to determine probability calculations according to their own signals.

By studying the winning and losing signals, Zulutrade calculates which are the better performing signals suppliers thereby enabling their members to trade using quality signals and avoid the scams.

The Zulutrade model therefore offers certain very strong advantages concerning automatic trading, but that is not all. In fact Zulutrade also offers access to the analytical methods of the signal suppliers and therefore offers the opportunity to understand some of the reasoning that leads them to foretell one trend or another.

Zulutrade also demonstrates perfect transparency and an objectivity that is essential for maintaining its trade. The signals it offers are therefore studied in a neutral manner and are checked before being communicated to their clients whereas other brokers are a little less particular over the quality of their trading signals.

A system based on a community of skilled traders:

Another particularity of the automatic trading at Zulutrade concerns the community that is centred on a number of serious and experienced independent traders. Through exchanging their ideas, strategies and viewpoints on the markets and their movements, the registered traders benefit from a truly interesting and complete methodology. With the Forex, as with all the financial markets, unity is strength and this is why brokers around the world are increasingly attracted to what is referred to as  ‘social trading’.

The classification of the best signal suppliers and its continuous development is proof of the honesty and objectivity of Zulutrade in the context of trading signal providers. In fact, when a supplier makes a mistake, their position in the classification is immediately revised downwards and replaced by another signals provider judged to be more effective and profitable by recent general achieved results.

Our conclusion on the automatic trading from Zulutrade:

We can therefore summarise this analysis of the automatic trading solution from Zulutrade as being generally positive. It is currently one of the best methods of trading without any particular knowledge of the Forex and of making rapid profits by speculating using quality signals information and objective reasoning.

Zulutrade also offers the possibility to start with a free demonstration account for new subscribers to test the profitability of the signals offered. From there, and when you are satisfied with the trial, you can subscribe to a monthly membership to benefit permanently from this valuable assistance.

Benefit from the high performance of other traders

Whether you are just beginning or you are a seasoned Forex trader, it can sometime be difficult to prepare an efficient and lasting trading strategy. In fact, it is necessary to adapt to new market conditions to maintain profitable performance.

To resolve this problem, it is now possible to benefit from other traders’ high performance using practical advice offering a strong profitability without the need for any online trading experience. To understand how this trading method works you will find here some explanations and details on social trading together with innovative features in this sector.

How can other traders help you gain money?

On the Forex, as you certainly knew, there are several categories of traders, each of them showing different results, sometimes with major differences. To provide you with a better understanding we will here broadly distinguish between experienced and beginner traders. It seems clear that traders with a lot of experience are more likely to more precisely determine the future trends that will affect currency pairs, and thereby, accomplish more profitable investment on a short term basis.

For the beginner traders, the first trading months are often more complicated and it is not unknown for some to suffer severe losses making it more difficult to maintain their long term positions.

By analysing this difference, one can conclude that if the more experienced traders could give trading advice to the beginners that would help them to make profits quicker.

But the act of accessing the details of the experienced investors’ trades can also represent a very interesting way of learning. Although one can learn from one’s mistakes, one can also learn from the success of better traders. By closely following the strategies implemented by these seasoned traders, little by little, you will understand the logic behind opening or closing one position or another or even understand the consequential elements of the implementation of one order or another.

The other traders can be an important starting point on the Forex, but it also enables other traders, even those with great experience, to follow others with the objective of learning information and even improving ones techniques.

How to follow the other traders? The tools at your disposal

What we call “social networks” appeared fairly recently and, to summarise, represent the exchange of information, the responses and advice exchanged online between traders. Accessing information is indeed much easier now than before when faxes and mail were the principal methods of communication. In fact, we have seen various sites and forums develop with the Forex as the principal subject and on which traders come to share information.

But more recently, certain brokers, such as eToro, decided to use this social networking to create specific tools allowing members to both see, follow and even to copy the strategies of other more experienced traders.

Indeed this is what eToro’s OpenBook offers to all platform trader members. You can see the trade details of other members and choose to follow or to copy the strategies of those that you consider to obtain the best results. In this manner, you can make immediate benefits and also limit your risk while teaching you in a practical way.

The main types of trading on the Forex

No rule is imposed concerning the durations of trading on the Forex. Indeed, it is up to each trader to decide themselves as to which style of trading to adopt, and this is due to the great flexibility of the foreign exchange market.

However, do not choose your strategy randomly but rather determine which corresponds best to you by concentrating on several criteria such as, for example, your available time, your investment capital amount or your capacity for stress management. We will detail the three main styles of trading in this chapter.

Whatever the strategy you decide to use, it is recommended to always refer to the daily chart or, even better, the 4 hour charts. This will enable you to notice the overall market trends as well as the support and resistance phenomenon.

Of course, hundreds of strategies are actually available and you can use them freely to elaborate and refine yours. The three styles we will detail here have been chosen due to their popularity and efficiency.

Short term trading

Short term trading is carried out over a short duration of a few minutes maximum. This strategy consists of taking position for a very short time with small profits. So, to fully benefit from this strategy you will need to use strong leverage effects.

Beware! This technique is really difficult to master and is more suitable for experienced traders. When well managed however, it allows the trader to profit easily from the different bullish or bearish trends.

Some advice

To trade on a short term basis on the Forex, you need to possess certain essential characteristics such as very good stress management, real time reactivity and a high availability. Avoid all sources of distraction and make sure you are in a calm environment without the risk of being disturbed.

Use correct analysis tools such as the minor support and resistance indicators and a 5 period moving average coupled with a 10 period moving average and, if possible, a five minute candlestick type chart.   

Trade only on strong currencies as GPB/USD, EUR/JPY, EUR/USD, GPB/JPY, because the other currencies will bring you only a very small profit over such a short period. 

Use a leverage effect ranging between 30 and 50, never beyond, and fix your maximum loss threshold at half of your profit objective.

Don’t aim too high. A profit ranging between 5 and 20 pips constitutes a reasonable objective.

Advantages and disadvantages

Even if this strategy requires a lot of self control due to the risks linked to the minor support and resistance breakout phenomenon, it offers the advantage of maximising your gains by taking benefits from the bearish and bullish movements of a trend.

Day trading

This strategy is without a doubt the most popular among investors all over the world. Its technique consists of opening positions in the morning and closing them in the evening.

Some advice

The qualities required for this type of strategy are good stress management, excellent knowledge of the markets and good short term trend analysis. Experience and flair are also important. Day trading on a very short term will only require a few minutes of your day (count around 30 minutes) as you have the possibility to place orders only then.    

The indicators to be used are the thirty minutes candlestick chart type, the major support and resistance indicators and a 5 period moving average coupled to a 10 period moving average.

Here again, trade only on the main currency pairs and be careful to not go beyond a leverage effect ranging between 20 and 40, fixing your loss threshold at half your profit objective. On this type of trade you can easily speculate on profits ranging between 20 and 50 pips.

Advantages and disadvantages

The only constraint of day trading is the need to carefully control the stop orders and the various market entry points. On the other hand, you will experience less stress while benefitting from the short term trends and their analysis.

Medium and long term strategies

Any position held beyond 24 hours will be considered here as a medium or long term strategy. However it is not recommended to trade and speculate on movements over several days as the longer the period is, the less the information you have will be reliable and your risks are therefore too high with no real guarantee of profit.

Some advice

Medium and long term trading is more especially the domain of experienced traders that have an excellent macro-economic analysis. It does not require a particular competence in technical analysis, the long term indicators are fairly rare and not very reliable. You must possess true investor logic. This strategy does not require much availability either and it is more considered as a complementary activity.

On a long term, you can risk trading on the currencies known as “exotic” but be sure to closely monitor the movements. Generally, all currency pairs can be traded on a medium or long term. Use leverage effects ranging preferably between 10 and 30, know that this type of strategy enables a higher generation of profits (from 60 to 200 pips). It is therefore unnecessary to take too many risks.

As with the other types of trading, your maximum loss threshold should never exceed half of your gain objective.

Use preferably daily and candlestick charts and always pay attention to major support and resistance indicators as well as the trend lines.

Advantages and disadvantages

Long term strategies can seduce with their capacity to generate large benefits. In fact, they do not require any special attention to variations observed on major trends but allow you to benefit from all the amplitude of the bullish and bearish channels. However, trading on a long term basis requires major financial capabilities that enable you to hold positions. Therefore, it seems this technique is generally reserved for major investors.

The different time frames for technical analysis

The time frames, or time units, proposed by the Forex trading platforms are the essential elements for the implementation of an investment strategy based on currencies or CFDs. But what are the different time frames available and how to choose the right one to use for the type of trading you wish to implement? Here you can find the answer to those questions.

A timeframe: What is it?

A ‘Timeframe’ is a unit of time with which we analyse a trend; they are displayed in the form of charts by the brokers.

These units of time and their choice are of paramount importance as it is necessary to use the right time frame according to the life duration of your positions. But the choice of a time frame also depends on the asset that you trade and its level of volatility as certain assets move quickly with a high volume whereas others take more time to gain or lose points.

It is important to remember here that timeframes serve above all to identify the trends within other trends.

The use of time frames in the interpretation of trends:

When we observe a rising or falling trend on a daily chart, it is important to bear in mind that this trend is itself composed of micro-trends over very short terms that, placed end to end, give the global trend over the long term.

According to the expected duration of your trade and the moment you take position, it is primordial to take into account the different timeframes. For this we generally implement a particular method of analysis that takes into account the different periods and ensures the best presentation of observed movements.

Timeframes according to the trading method:

According to your strategies and the Forex trading method that you use, you can choose the most appropriate timeframe. We can therefore associate different trading styles with timeframes in this manner:

  • For a strategy of Forex Scalping, with targeted profits of between 2 and 10 pips, you would best opt for a time frame of 1, 5, or 15 minutes.
  • For intra day trading with targeted profits of between 10 and 50 pips, time frames of 5 or 15 minutes or those for 1 or 4 hours.
  • For day-traders with profits set for between 50 and 100 pips, the time units from 1 to 4 hours would be preferable.
  • Finally, for Swing Trading, with profits of over 100 pips, the preferential time frames would be Daily, Weekly or Monthly.

How to choose your timeframe:

Among the advice to follow for correctly choosing your time frame, we must reiterate that if you only have a little time for trading then it would be preferable to choose longer time frames with a strategy of day-trading or swing-trading.

On the contrary, if you prefer to trade over short periods with a sustained and attentive eye on the market you may wish to opt for scalping or intra day strategies and choose short time frames.

The Strategy of Hedging on the Forex

Although most trading strategies applicable to the Forex are aimed above all at making large profits, certain strategies have the unique aim of enabling you to cover certain other existing positions to limit your possible losses. This is the case for the strategy named Hedging which consists of using a precise method of buying and selling currency pairs by covering riskier positions. Here are some explanations that will help you better understand this technique.

What is the strategy of Hedging on the Forex?

As we have just noted in the introduction, the strategy of Hedging on the Forex is not aimed directly at making profits by taking position on a currency pair, but rather at taking certain positions for covering others.

The use of this method offers the advantage of being both simple and rapid and therefore accessible to all traders, even total novices. To summarise, once you have taken position on a currency pair that you wish to cover in case of a drop in its rate, you take an inverse position over the short term for the same amount as that of your first position. Thereby, if a drop occurs in the rate of your main pair, you will have the possibility of recovering part of the points lost due to your inversed position.

However, the Hedging strategy can go much further as you can use it simultaneously on several pairs. As an example, imagine that you take position on the USD/JPY on the rise. You can then use an asset that is inversely correlated to the dollar to cover this first position. Oil or gold would be an example of a good choice in this situation for Hedging.

The advantages of using a Hedging strategy on the Forex:

There are of course other methods that enable the covering of positions on the Forex, but Hedging offers a number of advantages. One of them being that this strategy helps you to avoid acting impulsively to an inversion of the trend by closing your position too early and so missing certain opportunities.

On the Forex this technique is particularly recommended due to the low cost of transaction fees or spreads applied to the currencies. Selling your covering position will therefore not be very expensive.

Finally, it is particularly advantageous to benefit from this method of covering your positions when you invest on the foreign exchange market and you wish to increase your profits over long positions.

The few disadvantages of Hedging applicable to the Forex:

Of course, and as with any investment strategy, Hedging doesn’t offer only a plus side. It is therefore necessary that you have a large enough investment capital available to enable you to open several positions at the same time, without forgetting the margin applied by your broker that you need to include in your calculations.

If you carry out the correct calculations these spreads on one or another of your positions will be the only losses that you will experience.

Posted by Eduardo Montero on June 1, 2020 – Comments Off on The Strategy of Hedging on the Forex
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Best stock trading strategy

Stock market is one of the world’s most dynamic market. If you have a look at the electronic board of the indices and the pace at which it moves, you will know how dynamic the market is.

The basics to enter the stock market is to have a strategy. when i say strategy, it mean when to buy a share, at what price should i buy, when i should i exit? these are few question you must ask yourselves

If you think you can buy the shares and sell when the price goes up and make profit, well you are wrong. You will never know when the price will go up. Who knows, the stock might be already standing in its highest position ever. You might have bought the share at a wrong time.

So how should you device a good stock trading strategy? First things first. Create the portfolio. Wait for a few months. Learn the behaviour of the shares and its fluctuations with respect to the market’s behaviour.

In the mean time, you can also learn about the behaviour of the company you are trying to invest in. You must note that share price rise and fall with the investors confidence. A company which cannot hold its investors can never succeed. You must make careful analysis of these aspects.

You can also use this time to read some of the past datas using charts. You will get an idea of the minimum and maximum position of the share you are going to invest in. When you have all these datas under your belt, you can do your investment with ease. When you think the time is right, you can invest your money and the most important thing in stock market is to have exit strategy. If you have decided to get out at a certain limit, you must do it. Never allow your greed to take on you. Your exit strategy is more important than anything else.

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The analysis of fundamental strategies on the Forex

The technical analysis that we have just studied will certainly enable you to multiply your possibilities for profits on the Forex. However, this analysis should be completed with a clear understanding of the different basic strategies.

In fact, it is primordial that before drawing any conclusions it is important to understand the economical environment in which a trade takes place. We can illustrate this aspect using the example of the Yen which underwent a major increase between February and March 2007. If we only refer to the technical analysis we can observe some excellent entry points with the pairs concerning the Yen at the beginning of March. 

However this event should be seen in its economical context.  In fact, the latter took place before the crisis and at this time the carry trade was still experiencing huge success. If we were to place this event in the current time it would constitute a real error of judgement to take a sell position on the Yen. In fact, this currency is actually experiencing great demand by numerous investors as well as financial establishments who, through this intermediary, wish to settle debts accumulated in the Yen before the crisis.

This reflection brings us to the conclusion that the analysis of a currency deemed as the counterpart reveals a certain importance when we take position on a trade. It is therefore necessary to know how to conduct an analysis. In fact, although many Forex traders quasi-systematically associate the Dollar with other currencies this choice is not always the best as it doesn’t enable the possibility of maximising opportunities for profits. 

In this case, what is the best choice for the matching currency? Let us return to the example of the Yen, remembering that at that time the American economy was starting to slow down and the potential for a rise in the Dollar was fairly weak. At the same time the Pound Sterling seemed to be promising a much higher increase. Also, due to objectives fixed by the BoE, a continual rise in its interest rate was expected. It was therefore more judicious to place an investment on the GBP/JPY than on the USD/JPY.  

This therefore brings us to the following conclusion: It is very profitable to make your choice concerning which currency pair to trade in accordance with the growth potential of the country concerned as well as the economical situation of that country. It is therefore primordial to remain well informed as to the different elements as whatever the exactitude of a technical analysis, it is of no use whatsoever if it is not studied within its economical context.   

Let us now examine in detail some of the basic strategies that enable trading in a concrete manner. 

Study of announcements and position

Once your strategy has been established, you should follow the announcements and their eventual consequences on the Forex market. In fact, as we have previously seen, the effects of announcements can have a real impact on the rates by greatly influencing the investors. 

The announcements are consultable on a daily basis via the economic calendars or through dedicated newsletters. We will now examine reading and interpreting these calendars. 

Firstly it is highly important to note that these economic calendars are quoted in GMT. This signifies that for European time you should add two hours in winter and one hour in summer. 

The first column indicates the time at which the event is programmed to take place and the second refers to the countries concerned by this event. 

The third column gives the title of the announcement, that is to say the event. Referring to the fourth column, this gives the period (here expressed in months) at which the event is announced. 

The two items of information that interest us most here are indicated in the two columns situated at the top to the right. The consensus informs us of the figures awaited by the economists at the time indicated in the corresponding column. Finally, the last column indicates the preceding figure recorded. What should be noted here is that the more the preceding figure is similar to the awaited figure, the less the influence that the announcement will exert on the markets, the inverse also holds true. 

However, it is just about impossible to analyse and compare these figures rapidly enough to make a correct decision. In fact, at the same time these figures are published the entire market reacts in accordance with the importance of the announced event. The major movements do in fact take place following an announcement. It is for this reason that certain traders prefer not to be holding a position at the time of an announcement to avoid a destabilisation due to the engendered effects. 

Some Advice

At the time of an announcement, it is recommended either to take position before the beginning of the announcement in such a way as to be able to negotiate its effects over the whole period or wait in order to take position at the exact time that the announcement takes place. The latter requires a certain availability together with great attention and reactivity but allows you to take position immediately according to the observed occurring trend. Another technique consists of taking position at the time the first signs appear of a turn in the market once the announcement has been made. The taking of profits by investors often balances the speculative aspect engendered by such an announcement.  

It is interesting to note that at the time of an announcement its effect on the currency rate is almost immediate with a tendency to continue throughout the day. If you decide to use this style of trading on announcements you should not use a strong leverage effect and should be careful to not take too many risks concerning your capital.  

The Carry-trade strategy

The Carry Trade strategy consists of using the differences observed between the interest rates of different currencies for trading purposes. The Carry-Trade strategy is one of the most frequently used on the Forex market. It in fact amounts to completing an operation by purchasing a currency at a high interest rate and at the same time selling a currency at a low interest rate. The profit here is easily understood as it simply corresponds to the difference between the two rates of interest. Of course, this profit is only really interesting if you use the leverage effect. It is also necessary to possess all information concerning the different interest rates of the currencies concerned. 

* Let us take a simple example

We know that the New Zealand Dollar offers an interest rate of 3.5% whereas the interest rate of the Yen is at 0.1%. By purchasing the NZD and selling the JPY we obtain a profit corresponding to the difference between these two rates, that is to say 3.4%. This profit can be made every day by the carry trader. There again, the benefits of using a leverage effect here can be easily understood given the small amount of revenue that is represented by such an operation.

There is a simple calculation that enables you to evaluate the long term profits for a carry trade. You simply need to multiply the difference by the number of days and divide by 360. 

The difference between the two interest rates expressed in pips is called the “swap” in an exchange. It can easily be found on the different trading platforms. This swap in an exchange is indicated by a loan operation combined with a deposit operation. The loan is accomplished here using the currency that offers the higher interest rate and the opposite for the deposit operation. This swap is applied on a daily basis on the position held. 

Caution! The real impact of these exchange ‘swaps’ on a position is not observed except for those currencies offering a major difference in interest rates although it is applied in a regular manner on all the currency pairs. The currency exchange ‘swaps’ are also called ‘roll-overs’.  

At the end of each day’s trading, each position is said to be ‘rolled over’ to another trading date. This ‘roll-over’ consists of closing a position and re-opening it with the modified difference between the closing rate and the opening rate. It is precisely this difference that is expressed by the exchange ‘swap’.  

To summarise, the carry trade comes down to identifying an interesting entry point on a currency pair that shows a strong difference between the interest rates and keep the position for as long as possible. This choice of entry point is extremely sensitive as it determines the direction in which you position yourself on the market. In fact, far from being a perfect position for a trader, this carry trade strategy, like all other strategies offers both limits and risks. The risk of change can in fact rapidly become an obstacle to your forecasts. 

Despite the risk of abrupt movements, the carry trade remains one of the most efficient methods for making profits over the long term. 

The reason for diversifying investments

The fact of investing the total sum of your capital on one sole currency can pay off handsomely if you are lucky. This technique is however very risky as if you lose, you lose all your investment without registering any profit in any part. To trade well on the Forex one of the rules to respect is that of caution so keeping risks to a minimum. It is therefore essential to not place all on one currency but on the contrary to diversify your trades in order to register profits that can recompense any eventual losses.  

The notion to take into consideration when diversifying your investments is that of the ratio profit/risk. By analysing at the same time both the potentials for the profitability of your financial operations and the risks that you are incurring, you will implement a strategy of diversification. 

The Forex is actually the ideal market for applying this strategy and spreading your risks. Contrary to the stock market, on which it is necessary to find buyers in order to offset any recession suffered by the stock markets, here it is easy to inverse a position by selling on one hand and buying on the other. The high liquidity of the Forex contributes to this strategy by offering the possibility to sell or buy at any time of the day.  

The main objective of diversification is here to cover the risks undergone on one of your positions using an opposite position. You therefore have full control of your investments and it is easier to master your real risks from the moment where you pay particular attention to the risks you take. The orders are there to help you master these risks without requiring too much diligence.  Remember that whatever happens, your orders will be completed at the rates you have set. 

Due to the leverage effect that we explained earlier, you can either decide to take a chance on making major profits but at the risk of losing a lot too, or keep your risks to a minimum and rely on your strategy and money management to make lesser profits. 

The ideal position is therefore to trade on 3 or 4 pairs simultaneously in order to limit your risks to the maximum, even if this signifies that your profits will be a little smaller. However, do make sure you carefully choose the pairs you invest in. 

Certain trading platforms offer their clients tools that indicate in real time the client’s exposure to different currencies. This information, coupled with your intuition and technical analysis will enable you to reduce or increase your exposure. 

As we detailed earlier, a currency should never be considered alone but rather in correlation with another. This is exactly the reason for diversification. To benefit from the different trading methods it is not enough simply to analyse one currency compared to another but rather one pair of currencies compared to another with one of the currencies being common to both. Very often, these pairs move in parallel as they are both vulnerable to the same economic susceptibilities. This is therefore the ideal method of identifying opportunities while at the same time diminishing your risks on certain investments. You can therefore evaluate more precisely your exposition to one or several currencies.  

Some Advice

When you trade on the Forex, it is preferable to compile your portfolio with trades relative to currency pairs that move in opposite ways. The more marked this effect, the more you will cover your investments. Of course, this method will proportionately lessen your opportunities for profits. Use the correlation rate to determine the direction in which the different pairs are moving. The more the rate approaches the value of -100 the more the rate has a tendency to move in the other direction, and the same with the opposite.  

As the Forex is a dynamic market, these correlation rates vary over time. It is therefore necessary to update your data on a regular basis.

Buying stock and shares in margin

When you buy shares, you pay the full amount according to number of the share and price of the share. But if you pay only a part of the amount, thats called buying on margin.

For example, if you buy a 1000 shares worth GBP 1 per share, you pay GBP 1000 and buy the shares. But when you choose to buy shares in margin, you will be required to pay only for 50% of shares, which is GBP 500. The remaining amount will be paid by the brokerage firm.

But there are limitations with regards to the margin depending upon the stock brokerage firms. Some brokerage firms set the minimum limit in the form of amount say GBP 2000, which means you have to pay atleast GBP 2000 to buy the shares or they might set the limit in the form of a certain percentage which means you have to pay the percentage instead of the fixed amount. But the catch is you have to pay the interest for the amount they are giving you. In the mean time they will be holding your a certain amount of your shares.

If you are unable to pay the interest, your shares will be sold by your brokerage firm and the amount will be recovered. This is something like buying a home in mortgage. When you are unable to pay the mortgage, your home is seized. Just like that.

When you are buying shares in margin, you have to make sure that your share value is rising to a level, so that you can make profit and pay interest as well. But as per law there is a limit upto which you can hold the shares in loss. But if the share value goes below that limit, then your shares will be sold and amount you owe to brokerage firm will be recovered. In this process the risk is mainly for the investors and not for the stock brokers.

Buying on margin has huge risk as mentioned above. You might end up losing your entire capital, as you are not in complete control of your stocks. So buying shares in margin is not really advisable for the beginners of stock trading as they dont know the behaviour of the shares. If you have reached a level where you can judge the movement of shares, then you can start buying shares in margin.

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Strategies based on a technical analysis of the Forex

The use of technical analysis is particularly appropriate and important on the foreign exchange market. Indeed, this market being permanently open, one does not encounter an opening gap. The purpose of this chapter is to explain how it is possible to use the different technical analyses to trade on the Forex.

You will quickly understand that this analysis is essential to accomplish fruitful operations.

The analysis of the support and resistance levels

You should remember that a support level represents a threshold below which a price does not fall and a resistance level, the threshold above which it does not rise. These support and resistance phenomenon are therefore indicators which give concrete and reliable information on the different movements of currencies.

To make the best use of these indicators, you will have to become accustomed to using the support and resistance lines. Your objective here is simply to take a buying position above the observed support level and to sell this same position below the observed resistance level. However, you will also be able to sell when the prices passes below a resistance level and to buy when it rises above the support level.

When you begin trading, it is strongly recommended to trace these support and resistance lines even if with experience you will learn to detect them without the need to trace them. The most appropriate charts are the 4 hour charts and the daily chart. These two types of charts are in fact the ones which will give you the best representation of the market trend of the pair you wish to study.

How to trace support and resistance lines

With the help of your chart, begin by indentifying the highest points and the lowest points. Caution! To be accurate, these points must appear in your chart at least twice.

After that, join these higher and lower points with horizontal lines. Each line should pass through at least two high or two low points. You have just traced the support and resistance lines.

By looking at your chart, you will notice that certain lines pass through more points than the others. The more numerous the points, so the more this support or resistance line will represent a reliable indicator. This means that these support and resistance lines will be more difficult to break. 

All you have to do now is to take your selling or buying positions according to the support and resistance phenomenon observed. 

Remember that the resistance levels are sell signals and the support levels are purchase signals.

Trends Analysis

The technical analysis of trends aims to determine the recommended time to enter into the market. To do this, we consider that the Forex market follows only one direction on a long term basis.  

Here therefore we will use monthly, weekly and daily charts.

To make good use of trends analysis, you need to determine the precise moment when it is possible that a turning point in the trend will take place. When you use a weekly chart, it is recommended to refine your analysis with the help of 4 hours or 30 minutes charts before taking position because these two charts will allow you to spot the support and the resistance levels of these trends.

How to use the indications given by the tendencies?

When you observe a bullish trend, it is recommended that you choose an entry point as close as possible to a support level. On the contrary, if it relates to a falling trend, choose an entry point close to a resistance level.

How to anticipate a turning point in the trend

There is an efficient technique to determine at which time a turning point in the trend could happen. To do this, we use an exponential moving average period 10 coupled with an exponential moving average period 25 on a daily chart and an exponential moving average period 45 for a 4 hours chart.

You can then conclude as follows: If the long exponential average is below the medium exponential average, this is synonymous of an upward trend or bullish tendency. On the contrary, when the long exponential average is located above the medium exponential average, it signifies a bearish period or falling trend. Therefore, when the two exponential moving averages meet at a precise point, this point indicates a reversal of the trend.

Caution! It is not recommended to base your decisions only on the trends analysis to take position on the Forex. In fact, the information that you gather will be reliable only if you use it in association with other technical analysis tools, especially the support and resistance phenomenon.

Double Zero strategy

As stipulated in the chapter dedicated to psychological phenomenon, investors often have a tendency to place stop and limit orders on round numbers. With this indicator, you can easily implement strategies based on the execution of these orders.  

In fact, the number of opportunities offered to you by the foreign exchange market increases considerably from the moment you understand the thresholds where the principal stop orders are placed because the execution of these orders has the main effect of creating major movements on the market.

This technique, called the double zeros, is used, consciously or not, by many traders. One could say that the accomplishment of the objectives from the placement of these stop orders is generally realized. One could quote here the example of acceleration observed the first time that these psychological thresholds are reached.

Moreover, in addition to the individual investors, other actors on the market tend also to influence the movements related to the psychological thresholds. The operators also use round numbers to place their option limits. This phenomenon is due to the fact that in the volumes traded on the Forex, the exchange options part increases constantly. Therefore, the options traders will show the same reaction as traditional traders by placing major orders when a price reaches double zero.

Some advice

Take your buying position on a double zero when you observe a bearish movement and be sure to place a stop order at 20 pips below the entry point and a limit order at 50 pips above this same entry point. In the same manner, a sell order should be placed on a double zero after a bullish movement, not forgetting to place a stop order 20 pips above the entry point and a limit order at 50 pips below this same point.

Here again, the method we have just indicated should, to be efficient, be complemented with other technical analysis tools.

The break out technique

To benefit from this analysis, it is necessary to apply it on several consecutive days.

This analysis indicates that it is judicious to take a buying position when:

  • The highest and the lowest points recorded the first day of the period were not broken during the following days.
  • The price finally manages to break through the highest.

The breakout technique is particularly appropriate to the day trading style but will require you to carry out preliminary identification work on the breakout points or breakthrough points. These breakout points are actually the first day’s highest and lowest points of the period. To detect them, you must first check that the highest and lowest points of this first day were not broken during days 2 and 3. Then, you only have to connect them with two horizontal lines, one connecting the highest points and the other the lowest points. 

Finally, to benefit from your analysis, you simply have to take a buying position as soon as the price reaches the higher line or take a selling position when it reaches the lower line.

Some advice

When you decide to take a buying position, make sure to place your purchase order 10 pips above the breaking point. After that, place a stop order at 20 pips below the entry point and a limit order 50 pips above this same point. On the contrary, when you take a selling position, take it 10 pips below the breaking point and place a stop order 20 pips above the entry point and a limit order 50 pips below this same point.

Keep in mind that the higher the volatility of the market, the more interesting it will be for you to take position on a breakthrough point. However, pay attention to false breaks which are easily identifiable as they correspond to the support and resistance levels of the price.

Thomas Jegu and the “U” strategy

Beginning as a simple trader, Thomas Jegu was quickly noticed for his exceptional performance on the Forex market. Thanks to simple methods and strategies, he quickly managed to adapt himself to the foreign exchange market and its risks. One of his most popular strategies is without a doubt the “U”. 

The “U” strategy enables the identification of the most interesting entry points of the market. To achieve this, one only needs to visually analyse the various charts, regardless of the market configuration. Then, simply apply the appropriate Money Management.

How to spot a ‘U’ configuration

To identify a “U” configuration as accurately as possible, you will need to use three different types of candlestick charts: One of 4 hours, one of 30 minutes and the last of 10 minutes.

The first allows us to analyse the background trend, the second the short term tendencies and the last one the medium term trend.

This analysis highlights an eventual movement on the overbought or oversold prices and so benefit from the following corrective phase.

Simply put, the “U” configurations always follow the direction of the trend. So, if the background trend is bullish, the “U” configuration will speculate on the purchase and, to the contrary when the background trend is bearish.

To correctly identify these configurations, it is recommended to firstly identify a bull or bear rally of different rates, i.e. one or two successive candlesticks, rising or falling. (Note: The shadows of these candlesticks must be higher than 100 pips over 4h, 30 minutes at 80 pips and 10 minutes at 60 pips.) Then you need to wait until two or even three consolidation candlesticks form, which will signal the end of the bull or bear trend. Finally, when the prices correct respectively at 25 pips over 4 hours, 30 minutes at 20 pips and 10 minutes at 15 pips, this is the signal to buy or sell.

Once this identification has been made, you can take a buying position by using a leverage effect from 5 to a maximum of 20. Then place a stop order 20 pips below the lowest point of the consolidation candlesticks and a limit order at the level where the fall was confirmed. Of course, in the case of a long term trade, one simply has to increase the stop and limit order levels.

Some advice

To take the least risk possible, verify that you have a minimum of three consolidation candlesticks before taking position. Trade only in the direction of the trend as to do otherwise is too risky, and never forget to place your stop order to avoid important losses in the case of an inversion of the market. 

Basic of online stock trading

Internet had brought revolution in all the fields and stock market is not an exception. Once stock market was only for the rich people as it involved lots of formalities and investment, but with the advent of the internet, the stock market has become a boon to people who have lower income. Once the stock market was all about spending lots of time with analysis as all the details were available only in paper and transaction done in person. But after the arrival of the internet, all the activities (Buying and selling shares, analysis) are done with the mouse clicks.

Internet has brought lots of changes within the stock market. Let us see some of the changes and advantages brought by the online stock trading.


1. Brokers: Initially the brokers were one of the most expensive aspect of stock trading. As the stock brokers were completely involved in trading, investors actually had less idea about the stocks and they simply followed what the stock brokers advised. Stock brokers also charged high brokerage due to their command in the stock market. But the scenario has changed with the internet. With more access to the stock market, investors are more involved in the stock market ever before. Even though stock brokers are still an essential part of the market. Stock broking also got expanded with different kinds of brokers as explained in previous article.

2. Electronic stock data: Before the arrival of the internet, all the stock prices were published in the newspaper next day. which means you have to wait almost a day to know the latest share prices. Or you were supposed to call the stock broker to know the latest. But now almost all the investors have access to streaming share price datas and with mobile phone it has got even more easier.

3. share Analysis tools: As i previously said, investors were totally relying on stock brokers for recent developments on share prices. But now with advanced tools like charts, electronic RNS, trading software etc. things have just become easy. Investors can now make their own decision in buying and selling shares. With the advanced charts, you can analyze the past movements of the stocks and with advanced trading softwares, you dont have to be sitting before the computer as the computer would do the job for you.

But with the developments always comes the risk. Here are some of the risks in online stock trading.

1. Data theft: With all the transaction done online, the chances of your money getting to someone’s hand is more likely. As the online transactions are controlled by passwords, its easy for the people who have good knowledge about the systems to take it away without your concern. You might even come across some strange brokerage fee (ie) phone brokerage is more expensive compared to online brokerage. Data theft is one of the reason behind this expensive brokerage.

2. Loosing track: With online softwares, maintaining stock portfolios is easier. So people tend to track lots of stock at the same time instead of tracking one or two. so investors normally loose track of the share prices or recent developments which might be crucial to make profit or prevent loss. So investors should learn to the keep the balance.

3. Stock trading softwares: As the usage of the software is getting more and more everyday, investors might get too dependent on the softwares as the softwares always has the tendencies to commit mistakes which might end up crucial for your investment. So investors must keep in touch with datas from all the corners instead of just one.

Photo by Austin Distel on Unsplash

Automatic Trading : Should it be trusted?

Although the Forex is experiencing a time of glory and becoming more and more popular with individual traders, we see an increasing number of tools and software including, more recently, automatic trading software.

But how reliable is the latter? Is this type of software efficient and can it be used by everyone?

The advantages of automatic trading

The merits of automatic trading are vaunted unceasingly by the distributors, promising you gains in time, security and money, but in reality is a machine truly capable of achieving satisfactory results by trading instead of you?

It is true that the main advantage of such a tool is that you can gain time by letting the software do your trading work while you are busy with your daily tasks. After all, a machine does not need to sleep, or eat, unlike you. This software was created in response to demand by individuals, more and more of whom are investing online.

Also, the automatic trading software was developed to be capable of making more calculations than a human can do. It takes into account numerous technical factors and can, in just a few seconds, complete a precise analysis of the market without making a single error.

The software can therefore appear to be quite appealing but you will need to know how to choose the software and up to which point you trust it with your capital.

The shortcomings of automatic trading software

One important thing to know is that automatic trading software will not do all the work in your place. You will have to spend some time setting up the rules according to your strategy in order that the machine can implement them during operation. Certain software that is more complex is aimed for traders with a solid knowledge of computers and therefore not recommended for beginners. There are certain software programmes however that have been adapted for beginners with, for example, an intuitive interface but still require a certain technical knowledge of the market in order to choose the indicators to follow and decide on a firm strategy.

It is important to remember that certain, more psychological, elements of the Forex market will never be taken into account by the software. It was created to react in a logical manner to mathematical information and in that resides its main drawback. The Forex is above all a human orientated market and the trends that can be observed often result from the psychological effects of announcements. We cannot therefore expect a machine to understand or display intuition or free will. This software can therefore be used as a complement to your human skills but not to trade entirely in your place.

Our advice when using automatic trading

To really profit from automatic trading you must follow a few simple rules of which the following are the most important:

  • Learn to master on your own the technical aspects of the market.
  • Take the time to prepare a precise strategy.
  • Take into account the psychological effects to refine your analysis and manually adapt your configuration as necessary.
  • Choose a solution that is both simple yet efficient and that really saves you time.

In conclusion, the majority of Forex experts will recommend that you opt for a semi-automatic trading by using orders, for example, instead of completely relying on automatic trading software. In this way, you can still benefit from the advantages of automatic analysis as well as taking into account other, more implied factors.

Penny stocks for dummies

Penny Stock Options For Newbies

A fantastic method to investing is in penny stocks. Whilst they are quite volatile and high-risk, they can generate an incredible financial gain if you do it properly.

It’s not so easy to just get started buying and selling penny stocks and options with no background in the subject. You need to fully understand the best place to look, what to avoid and the trade secrets for making the most of your profits.

Practical experience in penny stock trading is the best strategy to have an understanding of them. Nevertheless, in the beginning, without experience you must do the very best they can; whilst you might not have experience you can at least acquire knowledge before you start.

Many different techniques exist to help you get the basics including articles or blog posts, tutorials and even a penny stocks for dummies book. Using one or a combination of these methods will help you gain the knowledge that will hopefully lead you to be successful at comprehending the nuances of penny stock trading.

The more information you can find from various sources the better armed you’ll be to go out and trade in penny stocks and options with a fair amount of self-confidence and a good success rate. Those folks who have the essential knowledge along with experience can help make it crystal clear in order to optimize your experience.

The way to avoid being ripped off is probably the most essential things to be discovered from a penny stocks for dummies course. Whether intentional or not, penny stocks and options can be talked up or even discredited at any time, causing their share price to explode – or drop. Those attempting fraud will frequently take advantage of this weakness. One notable example from 2011 is rapper 50 Cent’s use of Twitter to cause the price of a penny stock (HNHI) to increase dramatically. 50 Cent had previously invested in 30 million shares of the company, and as a result made $8.7 million in profit. It was only after critical feedback that he subsequently informed his followers that he owned shares in the company he was promoting.

Steering clear of schemes that appear too good is the most obvious advice people, and your gut, will tell you. If somebody guarantees that a stock will blast over the top within the next few days, it is usually appealing to buy shares and make it big. You have lost out if the stock is unsellable later on or the company folds.

Just take guidelines from dependable sources. Having faith in counsel of respected investors and ensuring you understand all about a business prior to buying is advisable. Make sure it looks good to you personally before you decide to take anyone’s advice.

Paper trading is the last strategy you can try. This type of trading gives you plenty of experience minus the risk. You pretend to purchase penny stock shares with an imaginary amount of money and then decide when to sell after monitoring for a little while. You’ll be able to very easily track your losses and gains in this manner without actually losing anything. Whenever you are ready for trading you will have learned the correct method to trade.

In order to make the very best investment possible you have to be cautious. By gaining all the expertise and experience you can without really trading you will be ready to go ahead with some volume of know-how, even just starting out.

Photo by Micheile Henderson on Unsplash

The Spread Betting Strategy

Inspired by Paris sporting methods, spread betting has become a true investment strategy for Forex traders. We therefore propose to look closely at this strategy that is easy to implement and has already proved its worth, notably in the United Kingdom where it has been used for several years.

Here therefore we will explain its operation in detail together with its advantages and disadvantages.

The operation of the spread betting strategy:

As indicated by its name, the spread betting strategy operates as a simple speculation on a financial asset such as a currency pair, or, why not, with CFDs, on shares or even commodities.

Spread betting has exactly the same function as classic Forex trading, the only difference being that here you speculate a precise amount per point won or lost. For example, if you believe that the EUR/USD currency pair will rise you may decide to speculate one Euro on each point on the rise. In the case whereby the EUR/USD pair falls, you will also lose one Euro per point lost.

As with classic trading, you may of course place ‘stop loss’ and ‘take profit’ orders to master the risks and objectives of your trades. There again, the broker will be paid from the spread with no hidden costs.

The advantages of the spread betting strategy:

There are numerous advantages to using the spread betting method for your investments on the Forex. Here are the major ones:

  • You have a great range of assets available to you as spread betting can be used on all the assets generally offered by the brokers.
  • This strategy is economically viable as, apart from the classic spreads, you should not have to pay any supplementary fees.
  • You can benefit from a high or low leverage effect to increase your potential profits.
  • You have the opportunity to speculate on the rise or on the fall of an asset and therefore make profits whatever the direction of the trend.
  • Finally, you know in advance how much you can make or lose as you yourself decide the amount you wish to allocate to each point won or lost.

The disadvantages of the spread betting strategy:

Of course, spread betting does not offer only advantages. Among the disadvantages of this method are the following:

  • Profits from spread betting can be substantial but this also incurs risks relating to losses, which is why it is important to use stop orders.
  • In accordance with the current regulations of certain countries, the profits made using spread betting may be considered as profits from financial products which are therefore subject to taxation.
Photo by Sharon McCutcheon on Unsplash

Penny stock trading for beginners (part 2/2)

Just What Are Penny Stocks?

You can find options and stocks of all kinds trading at every possible cost per share that you can imagine. One popular kind of stock is called a penny stock. What does this name mean and exactly what are penny stocks?

Penny stocks are generally defined as options and stocks that trade at under $5 a share in the US or under £1 in the United Kingdom. This classification can be applied to a great variety of cheap stock options however a penny stock is notable by more than simply cost.

One fascinating fact concerning penny stocks is they’re unavailable through an exchange. Illustrations of exchanges are the New York Stock Exchange (NYSE), the London Stock Exchange (LSE) as well as the National Exchange (NASDAQ). Instead they’re sold “over the counter”, not via a stock broker. To acquire penny stocks you usually have to proceed through a broker or exchange.

Since of the high-risk tendencies of these stocks and their unpredictable pricing they are typically low price. Large businesses trading on the exchanges are more regulated than newer companies which are just starting to trade, often in penny stocks.

Penny stock pricing is arranged by the seller. This selling price can easily fluctuate extensively from seller to seller. After you purchase a penny stock you could then choose what your bid price is to sell at. After buying a penny stock the next determination is deciding what price you wish to sell your investment at for when the purchase price rises.

There is a totally different group of laws covering the penny stock trade due to the problems that can easily arise with this type of investment. One downside to this kind of stock is because of the price they can easily be procured in large quantities and can have an enhanced incidence of dupery or money making schemes linked to them. Inflating the buying price of these options and stocks using unethical facts makes it easy to market them for a lot more than you bought them and a lot more than they are worth. Then big quantities of stock can easily be sold for a terrific gain. This kind of con is called the “pump and dump”, when the stocks are distributed the value of the stock drops substantially and the buyer will forfeit the majority of their investment value.

When performed correctly and fairly, there is still the opportunity to make some good money. The penny stock investor is looking to utilize the unpredictable penny stock market to short sell their stocks and shares at a gain.

To purchase penny stocks you should go through an on-line broker like E-trade, Iweb, Hargreaves Lansdown or TD Ameritrade. Setting up an account provides you with the opportunity to monitor your stock options which is vital with penny stocks, much more so than in the stock exchange, as their value can differ significantly every day.

Just how can you explain precisely what a penny stock is? They are a high risk, highly unstable form of stock which also provide the potential of substantial benefits in a small amount of time. Penny stocks can easily be a fun short term investment option but it not advised for managing wealth.

Following a prosperous trader is a great way to learn how to become successful in the penny stock industry. Blogposts regarding penny stock options you may see in a chat room or a blog site are something to be suspicious about. Do your homework and don’t leap at any chance until you know what you are getting yourself into. This can help you to make sure you have the very best experience and minimizes your chance of a fraudulent penny stock experience.

Photo by Steve Johnson on Unsplash

Trading brokers comparison: Plus500 vs eToro vs AvaTrade vs XM vs Markets

You need to choose your trading platform but you are a little lost with the huge choice offered by the online brokers? Don’t panic! To be sure you make the best choice and use a platform which correspond to all your requirements, This site has completed an objective comparison of the best platforms for you highlighting for each of them the solutions available, the major technical characteristics as well as the general advantages and disadvantages.

You will also find the tools available and learn about the particularities that differentiate each platform from the others. Below trading platforms are recognised by the Cysec, MIFID and FSA.

Modern and low priced, Plus500 Ltd was created in 2008 in London. Currencies, shares, indices and commodities can all be traded. This platform groups together numerous advantages and has ties to many international banking entities which enables it to offer large transaction volumes, low prices and an optimal rapidity of execution. 

The human quality remains however the major strength of this broker that seeks success through its transparency and honesty.

Your capital may be at risk

Plus500 more details

  • Means of Payment: CC, bank transfer, debit card and Moneybookers
  • Year of creation: 2008
  • Minimum deposit: 100€
  • Regulated by: Plus500UK Ltd is authorised and regulated by the Financial Conduct Authority (FRN 509909). Plus500CY LTD is authorised and regulated by the Cyprus Securities and Exchange Commission (Licence No. 250/14).

Advantages

  • Spreads determined in advance.
  • Continuous live quotations in real time.
  • Advanced technical analysis tools.
  • A free demonstration account.
  • A leverage effect of up to 1:200.

Disadvantages

  • A low graphics interface
  • Withdrawals that take time

General Characteristics

The minimum deposit is €100 with a minimum transaction of 2,500 units. Leverage effects are offered of up to 1:200. 

The demonstration account is free and unlimited. 

19 different currency pairs can be traded as well as CFDs on commodities including precious metals.

Tools and support available

The major trading tools can be found on Plus 500 such as charts and financial analyses that have been added to the demonstration account entirely free of charge and there is a complete guide for learning how to trade, ideal for experienced traders. 

The eToro platform is one of the most affordable and is easily accessible to all. It is doted with a simple yet clean design enabling the investor to find their way around easily. Navigation is intuitive and helped by an accompaniment noting the various stages of trading. This platform is conceived for both beginner and expert traders but does represent an excellent place to start trading as it has such an efficient help system and community  assistance.

eToro more details

  • Means of Payment: Credit card, PayPal, bank transfer, Neteller and Western Union
  • Year of creation: 2006
  • Minimum deposit: $50
  • Regulated by: Banque de France, Cysec, MIFID

Advantages

  • Simplified usage
  • Demonstration account
  • Complete assistance (telephone, email and chat)
  • Strong leverage effect
  • Transparent spreads and commissions 

Disadvantages

  • Commissions from 2 pips

General Characteristics

The minimum deposit required is $50 with a transaction of at least $10,000 including the leverage effect. The leverage effects available are numerous and vary from 1:5 to 1:400. 

Spread only apply as from 2 pips and vary according to the currency pair. 

All major currencies are traded.

Apprenticeship and Training

Concerning trading help we could say that eToro makes a big effort as this broker offers a whole panel of courses and training for the Forex and its trading platform through the bias of different supports. According to the level of your deposit or balance of your account you can benefit from interactive lessons, explanatory videos or written advisory articles. A complete guide to the platform is accessible to all as well as the glossary that explains the details of all the major terms and language particular to the Forex. Everything possible is done to ensure that everyone finds their place.

Tools and support available

We find numerous efficient tools such as the educational software, an online chat, direct training by telephone and a variety of economic information, charts and technical analyses that give you a complete research summary in real time of the market and its trends. 

To enable you to profit even more from trading on the Forex, eToro has implemented a system of weekly competitions. Each week, the trader registered on the platform that makes the most profits is rewarded by the broker. But the following are not negligible either. 

The best wins $1,000, the second wins $750 and the others follow up to places 31 to 50 who each pocket $100. 

A way to combine fun with trading so developing your taste for competition, but, most especially, an excellent means of profiting even more from your investments on the Forex.

Created in 2006 by financial professionals and entirely devised by individual traders and experts, AvaTrade distinguishes itself from its main competitors by its client orientated approach. This trading leader counts more than 100,000 clients at present and records monthly volumes of trading exceeding $20 billion. 

You will find trading tools both advanced and easy to use with software that enables you to benefit from the power of the most important world banks. AvaTrade respects the highest standards of security and integrity.

AvaTrade more details

  • Means of Payment: Credit card (Visa or MasterCard), PayPal and Western Union
  • Year of creation: 2006
  • Minimum deposit: $100
  • Regulated by: MIFID, Banque de France

Advantages

  • No commissions or fees
  • Demonstration account
  • Technical assistance 24/24
  • Fixed spreads
  • Daily institutional analysis
  • Broker approved by the Banque de France

Disadvantages

  • A platform accessible only using a pc (download required with supplementary software for Mac) 

General Characteristics

The minimum required deposit is $100 and it is possible to trade in mini lots of $5000. Leverage effects are offered of up to 1:200. 

Spreads are only used after 2 pips and vary quite a lot according to the currency pair. 

All currencies are covered as well as major metals (CFD).

Apprenticeship and Training

The opportunities to train yourself in the rudiments of Forex are numerous at AvaTrade. The broker offers all traders numerous explanations on the online trading of foreign currencies plus there are webinars enabling you to learn specific functions of the Metatrader platform that is used. You can also learn to trade in VFDs thanks to the educational section to which it is entirely devoted and which was created especially for beginner traders with no particular knowledge of trading. 

Virtual and guided visits of the platform are also proposed in order for you to better understand the uses of the tools available.

Tools and support available

AvaTrade offers traders a demonstration account that enables you to practice in realistic conditions. There is also a guided tour and numerous video tutorials enabling you to gain a good understanding of the software as much for experienced traders as beginners. Support and assistance is available by telephone or email 24/24.

The ‘Mirror Trader’ function offered by AvaTrade enables investors to use the knowledge of experienced traders to develop efficient strategies thanks to real time signals. You can therefore compare the strategies used by the best traders on the platform and use them to your advantage. Thanks to Mirror Trader you only have to copy other’s strategies, using their parameters as stop and limit orders, while keeping the possibility of modifying certain parameters according to your feelings.

XM is a fairly recent broker on the market, launched in 2010 in Cyprus it offers numerous advantages including the surety of being regulated by the Banque de France, CySec and the MiFID. You can trade a variety of assets through XM including currencies, commodities and even stock indices.

XM more details

  • Means of Payment: Bank transfer, credit cards, Moneybookers (Skrill) and Netellers.
  • Year of creation: 2010
  • Minimum deposit: 5$
  • Regulated by: Cysec, MIFID

Advantages

  • Minimum deposit of $5
  • Tight spreads
  • Free demonstration account
  • Numerous approvals and authorisations
  • Assistance in several languages 24/24 and 7/7.

Disadvantages

  • Few training modules

General Characteristics

Truly accessible to all with a minimum deposit of only $5, XM offers numerous advantages including a leverage effect of up to 1:888 plus hedging. You have the opportunity to speculate on no less than 53 currency pairs.

Apprenticeship and Training

XM did not want to leave beginner traders without any real accompaniment during their first steps on the Forex and therefore offers those who need it various online webinars to learn the basics of speculating on the foreign exchange market. They are accessible through a simple registration. Also, a free demonstration account is available for beginner traders so they can learn trading in real market conditions.

Tools and support available

Customer and technical support is directly accessible on the XM website in several languages with a live chat, telephone and email support. This broker also offers various online tools for your assistance including technical analyses and quality daily signals.

One of the particularities of the XM broker concerns the competitions organised among the platform traders. In the form of a poker tournament, these competitions are regularly organised enabling participants who have bought a ticket to make even more money. Once a trader has bought a ticket they can access an interface that displays the performance of other players in real time.  The best traders win lots in the form of financial incentives that they can withdraw or add to their existing trading capital.

Based in Cyprus, Markets.com is operated by Safecap Investments Ltd., which is regulated and authorized by CySEC under license number 092/08 and by the FSB under the number 43906. Geared more towards the experienced traders, this platform combines all the tools necessary for good trading. Beginners also appreciate the ease of use of the different functions as well as the different training modules at their disposal. The site is entirely administered by a English team who also manage the technical support. 

Markets more details

  • Means of Payment: transfer, cheque, credit cards, Moneybookers, Neteller
  • Year of creation: 2009
  • Minimum deposit: 100$
  • Regulated by: Markets.com is operated by Safecap Investments Limited, a regulated investment services firm authorized by the Cyprus Securities and Exchange Commission (CySEC) under license no. 092/08 and by the Financial Services Board (FSB) in South Africa as a Financial Services Provider under license no. 43906.

Advantages

  • Fixed spreads among the lowest on the market
  • No fees or commissions
  • Free demonstration account
  • Assistance 24/5

Disadvantages

  • A site more appropriate for experienced traders

General Characteristics

Markets.com accepts deposits in Euros or Dollars from $100 with a maximum leverage effect of 1:200. The minimum size trading lot is 1,000 units. You can trade all major currencies, commodities, metals and indices. 

The spreads on the major currencies are stable and vary from 2 to 4 depending on the currency pair. The site does not demand any management fees.

Tools and support available

Markets.com provides many tools for traders to take advantage of:

  • Intuitive web and mobile platforms
  • Advanced charts and studies for analysis
  • Stop Loss, Take Profit, and other strategic risk management tools
  • Exceptional 24/5 customer support in over 20 languages

To trade while minimising risks it is important to pinpoint the sell and buy signals on the Forex. With Markets you no longer need to pass long hours analysing charts and other data as this broker supplies you with pertinent signals every day, for free, in order to help you better manage your positions on the Forex. 

Please note, the free trading signals supplied by Markets are only available to traders with an account showing a balance of above $2,000. 

These signals are in fact easily identifiable as they are here represented by arrows pointing up or down.

Photo by bruce mars on Unsplash

More on proprietary trading firms review

DISCLAIMER: All of 5bestproprietarytradingfirms.com contents posted on this page are based on “My” and “Our” opinions alone and are only for entertainment purposes. You should not take any of this information as guidance for buying or selling any type of investment or security. “I”,”We” and “Us” are not a financial advisor and anything that have been posted here on this site should not be seen as financial advice. “I”,”We” and “Us” are only sharing biased opinion based off of speculation and personal experience. An individual trader’s results may not be typical and may vary from person to person. It is important to keep in mind that there are risks associated with investing in the stock/forex market and that one can lose all of their investment. Thus, trades should not be based on the opinions and information of others that are put on the internet such as this page, but by your own research and due diligence. Any financial losses incurred will be at your own risks and the people behind this site will not be held responsible.

Penny stock trading for beginners (part 1/2)

Penny stock and penny share trading

Stocks which is valued at GBP 1 or USD 1 or less can be called as penny stock. Standing outside the circle, penny stock trading might sound very simple. All you need is a small amount of money with which you can buy a significant amount of shares and when you see the prices rising, sell the shares and take the profit.

Hang on, Unfortunately most of the penny stock don’t work this way.


1. In my honest opinion, It is always to better to keep yourself away from the penny stocks. But wait, if you think this is the best way to make profit or you are not financially stable to invest in big companies, then there is a strategy to follow for investments in penny shares. In today’s world, there are lots of new corporation emerging everyday and many decide to go public.

2. The decision made by the companies to go public is mainly to increase their investment and share value. No matter what is the intention of the companies, investors must be vigilant in making their decision. These companies are mostly unstable as they are brand new in the market.

3. Annual and quarterly statments won’t be availble due to the new emergence of the company and so this itself is a big as you are going for a stock about which you have no idea.

4. Next best thing would be to get some reputation from shareholders. If you find some shareholder desperate to sell off the share, that would be a clear indication that the company is not doing well. Or sometimes the existing shareholders might simply encourage you to buy the share just to increase the share value and sell off their share at the right time. You might end up being dumped with useless shares.

5. Most the companies with penny stocks lose money through incompetence in management. So its very important analyze who is managing the company and the way it is done. One more thing is to monitor the way the investor’s money is spent.

6. Read the newsletter published by the company. Important thing to note is “How the distribute the profit”. As cash or shares. You must ask yourself whether is it really worth to take profit in the form of shares? Sometimes it is and sometimes its not. It depends on the situation and the market. Sometimes distribution of shares is just to dump the shares on investors.

7. Make a careful analysis whether the company is paying IR professional money to get listed in the exchange. If it is listed by paying, then you must exercise caution. Sometimes its good to avoid this factor by considering IR professional money as advertisement if company is reputed.

8. So don’t just give up the stock just for the above mentioned reason as you might be missing the best stock of your lifetime. Pay attention the movement of the share.

9. If you are considering being a part of a company by buying shares, then make a careful note of the recent news and its improvement, otherwise you might end up as the last one to hold the share whilst other have left the company.

10. Next thing to consider is the performance of the company. Were they really efficient in bringing the product to the market on time. Did they make right decisions on right time? Did they win the investors confidence?

11. The most attractive concept of penny share is that you need a very small capital. Imagine how many shares can you buy with GBP 3000 which is worth GBP 0.10 per share. Even a small increase in price will increase your profit. But you must remember, loss happens the same way. So its necessary to more vigilant while trading penny stocks.

12. Once you had started making profit, naturally your next step will be to increase your investment. You must go through the cycle once again. If you think the profit you earned has earned some reputation for the company, its better to increase the investment because nothing matches the experience. But from now on you must have an exit strategy as you know the movement of the stock and the behaviour of the shares with annnouncement of news.

13. Penny stocks are available in all the industries like oil and gas, mining and banks. Choose the one which suits you. Its always better to choose the industry about which you know well, which would make your trading experience smooth.

Photo by Ibrahim Rifath on Unsplash

Basics of day trading

UK is considered to be one of the world’s strongest economies but the 2008 recession proved that its not immune from the economic ups and downs. No matter what the condition of economy is, people are ready to take risk and one of them is day trading online.

Daytrading is just like stock and share trading but here the trade is done within a short period of time and it is considered to be one of the fastest way to make money in the share market. But remember, with lots of money comes lots of risk. Its been also reported that many traders have lost money is quick succession, so it is advisable to know all the risk and process of trading before even thinking about investing in daytrading.

But thats not where the story ends. If you have a good trading strategy and a strong guidance, making money in stock market is not a big deal at all. Follow the steps to have a better experience in daytrading.

1. Choose a few stocks in any industry or combined. (For eg. Oil and gas, Mining, Bank etc.)
2. Now, please be patient and analyze the stocks you have chosen
3. Analysis includes having a look at the RNS (Regulatory news service), company’s management, and share holders.
4. The next step would be getting inside the chat room, where you can talk to other buyers and sellers.
5. This is a good way to find out what the next big time company might be, but you have to know if the people with whom you are chatting are “share ramping,” which is the process of taking up the shares artificially.
6. These people who are called as “rampers” get inside the chat room, and convince all the other members to invest in a particular stock in which they might have invested already.
7. So you have to take the risk of guessing if this person is correct or not and if the information he provides is authorized or not. With the latest techologies and innovations, daytrading can also be a big trouble because of the nature of trading and could be potentially dangerous. But with your trading knowledge and professionalism in selling and buying shares, making profit from daytrading will be easy in no time.
8. The day trading should not be used by beginners, as the risk of losing money is too high. So start with normal trading stocks where you wait and see the results and get used to profits and losses.

Photo by Jason Briscoe on Unsplash

Basics of spreadbetting

1. Spread-betting is gambling, not a kind of formal investing. All you have to do is to gamble upon the movement of price (may be rise or fall) of the stocks, index or a commodity. You must note that if you are lucky enough, spreadbetting company might end up grabbing all your money and you might face unlimited losses.

2. One thing about spreadbetting that would make you smile is that its free of capital tax. Well, it might sound like a huge advantage but you must never forget to remember before analyzing the losses you might encounter.

3. Now coming to the process of trading, imagine a stock which has (selling) and offer (buying) price for the FTSE 100, with 1,012 and 1,016 respectively. Let the opening price of the stock be 1,016 and the closing price be 1,050. So now the difference between the two prices is what you trade on. To be more precise, the difference between 1,050 and 1,016 is 34. This difference is called spread. Say you have betted GBP 10 for every spread, then the profit you earn is GBP 340. Remember if the market goes the other way, you might end up losing the same amount.

4. In my honest opinion, it is always better to start with a demo instead of going for live trade right away. With lots of investors eager to do spreadbetting, companies are now offering virtual trading platform where you can trade using virtual money and get an idea how this really works.

5. Stop loss, one of the most beneficial features of any trading is available in spreadbetting as well. Stop loss always minimises you losses and reduces the risk of losing your entire investment.

6. You can also use spreadbetting as a long term trading instead of playing it as a short time gamble by betting with small values so that the reduction in prices doesn’t make a huge impact on you investment.

7. When you start to think to go for live spreadbetting, try to gather some past datas about the stock you are going to invest by analyzing its past behaviour as the risk involved in spreadbetting is too high.

8. In some instance, the spreadbetting trading use hedge to keep themselves immune from market ups and downs. For example, if you have invested GBP10,000 in a FTSE 100 tracker fund and if you are concerned that the market would fall, then what you can do is to hedge your position by selling the index on spreadbet. If the close of index is at 5386 then you can sell at GBP 1.86 which is nothing but (GBP 10000/5386). Now for every point the market falls, you can earn GBP 1.86 in order to cover all your losses while hedging.

What is CFD trading?

CFD trading basics for beginners

CFD represents Contracts For Difference, that means it is a derivative product, where your profit depends on the difference in the price of stocks and shares. Imagine you are buying a share for GBP 10 and the price of the share raises to GBP 10.50, then you gain from the difference of price.
Which means if you had bought 2000 CFDs, then the profit you will make is GBP 1000. Now it must be clear that your profit depends totally on the difference of the share price, you profit with the rise in price.
With the risks involved, still cfd has lots of advantages:

1. Leverage is the top most factor what makes cfds so attractive to investors. Generally a leverage of 1 in 10 is offered but a leverage of upto 1 in 20 is offered by some brokers to attract investors. When you have such a big leverage, it is easy for the investors to trade with a small investment and make considerable profit. You might be trading stocks with 30 % return in profit per year which means with an investment of GBP 3000, you maintain a profit of GBP 1000. But in cfds, since you use a big leverage, you can maintain a profit of 300% with is GBP 10000.

2. Second reason why investors prefer cfd because unlike stocks and shares, you can profit even when the share price falls. As i said earlier, the cfd trading is done based on the difference in share price. So it doesn’t matter whether the market is bearish or bullish, you still make the profit.

3. Considering the costs and expenses in the cfd trading, it is very low compared to stocks and share trading because of the big leverage offered in the cfd trading. Interest and leverage are the 2 main expenses in the cfd trading.

4. One more advantage of trading cfd is setting up the option of stop loss. Stop loss is mainly to reduce your loss, because its a normal tendency of human to gamble further even if they feel the loss. So cfd gives the option of stop which automatically triggers the stopping of the cfd trading.

5. Unlike stock trading, in cfd trading there is an option of placing trade in the evenings. Which means you can set the trading amount and volume the previous day and prepare yourself for the next day. It is also very advantageous for the people who work and there are automatic systems available to trade cfds even if you are not before you personal computer.
There you go, we have analyzed the pros of cfd trading, and now to look at some expenses as i mentioned earlier.
   

Interest.

When you using cfd for long position, which means holding the cfds overnight, interest is charged. Conversely interest is paid to you if you hold a short position. Normally the interest charged would be the rate plus 2%, and the interest paid would be rate minus 2%. Here the rate refers to the banks prescribed overnight interest rate. For instance the interest rate of a major bank could be 5% or in other words .05 per year. Now to calculate the interest, all we have to do is divide .05 by 365 and then multiply it by the number of days involved in trade, adn then multiply by the size of the trade. So imagine, your trade size is GBP 10,000, which you had been holding for 14 days, then the interest would be GBP 15. Not a big expense in my opinion. In long stand, cfd traders would not be even bothered about these small expenditures.
 

Commission

There is actually no concept of commission in cfd trading which makes even more advantageous to trade cfd. But there might be some situations where some brokers charge a small commission because of their years of experience and reputation. It might be as low as 0.15%. When you are trading at a leverage of 10 in 1, these small expenses doesn’t make much of impact.

Photo by Austin Distel on Unsplash

What is stock trading? A quick guide.

Stock trading for beginners.

Stock or share represents ones ownership of a company or a corporation. Depending upon the number or percentage of shares you hold, your role will be determined inside the company. When you have shares in small number, your role will be limited to an investor. If you hold a higher percentage of share, then you might be invited for a higher position.

As far as the stock trading is concerned, almost all the company trade their shares using online platforms and exchanges. In olden days, when these shares were traded, the practise was to give a certificate as a proof of ownership.

What is the point in trading stocks?

As I previously said, stock represents ownership of a company, so whenever the company makes profit, you will be awarded a part of profit depending upon the number or percentage of stocks you hold. Sometimes the profit is fixed as a certain percentage which is called dividend.

But you must remember that its upto company to share the profit as it is a general practise of most of the corporates to reinvest the profit and increase the share value instead of paying the dividend. This increase in share value is to further increase the confidence of the share holder and new investor.
The process involved in stock trading is quite simple. If you are buying a 1000 shares of a company for GBP1 and imagine it raises to GBP2, the amount you get back is GBP2000. So the profit you made is GBP1000. Remember, there will be some deductions for brokerage and when you use different currency while investing.

What is the way to trade stocks?

Most of the share traders use portfolio, which is nothing but the list of shares of different companies that you think is good to invest. It might not be something new. You must have watched a screen where you see the share price going green and red every second.

Next thing you must know is the ticker. Ticker is the shortform of a company, which is a unique identification of a company’s share in a particular stock exchange. Other thing you would see are three value against the share. The top price denotes the buying price of the share, the middle one indicates the average price of share and the bottom price indicates the selling price of the share.

Next thing to identify in the listing is the high price which means the highest price reached by the share on that day and low price which indicates low price. Some listing also indicates 52 week high price and low price which is an extra indication of the share’s performance.
You will also find some huge numbers like 250000 which indicates the volume bought and sold. If you carefully analyse you will be able find the close relationship between the volumes of stocks traded and the investors confidence.

Also you can find the previous day close price of the stock and the day’s opening price of the stock. These two price gives a clear indication of how the investors behaviour has changed and if you see a huge difference between these two prices, you must be aware that there is a potential release of news which might have a huge impact in the future of the share price.

You must also learn to follow the stock charts as you can grasp the past datas (upto 5 years) about a share and its behaviour. Also one important thing in stock trading is to be upto date with news. News like floods, riots can terribly alter the share price, depending upon the industry of the share. So vigilance is a better part of share trading.

Photo by Markus Spiske on Unsplash

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