Foreign Exchange Trade Tips and Tools
Before you enter the market, you will want to make sure that you have the extra money to lose, and not money that you need to keep your previous financial commitments. Each trade should be timed correctly based on the technical analysis of the current market situations. When a technical analysis shows that a price is trending upwards, there is an increase in the currency value and then an increase in the amount of buyers. The information in this article on the Forex Market various tools and techniques can be a great start to better equip people new to the market in understanding several of the Forex trading styles and tools.
Trading Styles
Automatic Trading: A version of trading that involves neither human decision making nor involvement, but uses a pre-programmed strategy based on technical or fundamental analysis to automatically execute trades via an automated software program.
Trade Robots: The Forex Robot trades your account while the market is open using highly sophisticated, short-term algorithms designed by professional independent financial advisor and traders.
Swing Trading: A manner of foreign exchange that involves seeking to profit from short to medium term swings in trend. These types of trades manner can last from hours to days.
Swing Tip: Many traders make the mistake of simply buying near support and selling near resistance, even when price momentum is moving strongly to these levels.
Day Trading: A style of foreign exchange that involves multiple trades on an intra-day basis. The main advantage of trading in the day is that you do not have to worry about maintaining your currency position throughout the night. Trading in this style can also last from minutes to hours.
Tip: Take time to learn about various types of trade cycles, this will give you a tremendous edge in trading because most traders don't give them very much attention.
Trend Trading: A technique of Forex exchange that attempts to profit from riding short, medium or long term trends in price.
Trend Tip: Finding the prevailing trend helps traders to become aware of the general market direction.
Range Trading: A version of Forex exchange that works to profit from buying and selling currencies between a lower level of support and an upper level of resistance. The upper level of resistance and the lower level of support defines the range. The range forms a price channel where the price can be seen to swing between the two levels of support and resistance.
Range Tip: Support levels exist at lows while resistance levels exist at highs.
Forex Trade Calculators:
Forex Profit Calculators compute the profit each trade made on the currency market. This calculation follows the following formula: Closing Rate - Opening Rate*Closing [quote]/[home currency]*Units.
Forex Pip Calculators - Pip (or points) is a term used in Forex market to indicate the smallest incremental move an exchange rate can make. Depending on context, this is normally one basis point 0.0001 in the case of EUR/USD, GBD/USD, USD/CHF and .01 in the case of USD/JPY. Lot or Contract is the standard unit of trading on certain exchanges (Standard Lot = $100,000; Mini lot = $10,000; Micro lot = $1,000).
To use this tool, you simple enter in your starting capital amount you wish to risk per trade as a percentage of your capital and your stop loss price. Instantly the results will be displayed. Your performance will vary drastically, if you do not risk a consistent amount on each trade.
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Keep in mind that the end goal of all other traders in the market is to take your money. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts. The techniques and tools in this article are intended to help you realize different and easy ways to make your money work for you in the Forex market.
