An excellent collection of Forex trading videos is now available to be perused 24/7 online at TipTopVideos/Forex. There is also a search tool available that allows the visitor to search for and watch trading videos of all ilks, all in one place. Whether you are looking for videos that illustrate different forex systems, forex training opportunities, forex charting and graphing, various currency strategies, forex success stories or even forex humor (and any other niche subject related to forex) you can find it all using this resource.
Those new to forex trading will naturally seek out information on Forex Trading Signals. Forex day traders rely on accurate signal services to keep them abreast of this fast moving 24 hour a day market.
The purpose of this article is to introduce the concept of using reliable day trading signals. Three important areas will be covered. We will discuss the importance of a signal generator, how to judge for reliability, and alternative ways to locate profitable forex trading signals. The goal is for you to be able to seek out and recognize profitable signals and trade like a forex pro.
The easiest way to utilize trading signals is to use signal generator software. Most professional traders use some kind of signal software or signal service to help them judge the market. Even if this is not their sole source of information in making trading decisions, getting to know and then using regularly one or more of the many signal services available will aid any professional trader in making the split second decisions often required by the forex market. Signal services are useful neutral, non-emotional sources of information regarding ongoing market fluctuations.
Those new to the forex market are sometimes concerned about using trading signals, and the truth is that it can take time to learn to read them. The best way to approach this is as with all else in the forex market, use a demo account first. I remember all too well how I felt the first time I looked at a screen full of fluctuating lines, graphs, pip points, with multi-colored lines running in all directions. It can be daunting, but worry not; in time the lines will be begin to make sense to you and the language of charts will become your own.
Strategies differ, but most traders tend to use charts to track long term trends in the market, and then use these trends to determine their buy/sell entry points. Approximately 90% of trading in the forex market is based on trends, the other 10% are riskier trades based on spikes up or down for various currency pairs. By becoming proficient at reading signals a forex trader will find profit opportunities in both parts of the market; trend and sudden volatile spikes or currency movements.
Currency Signals are to a forex trader as the wind is to a sailer. You cannot sail a boat across the ocean unless you understand the prevailing winds. The same could be said for successfully trading the forex market; you cannot navigate your way to profit until you adequately understand currency trends and how to read them. It will prove to be well worth the time you take to become proficient at reading signals. By combining your knowledge of signals with a good trading software you will find that your percentage of profitable trades increases exponentially.
Today, the Foreign Currency Exchange exists in real-time as the world’s largest virtual (online) marketplace. Most often referred to as the Forex, FX, or Spot Forex, the Forex market is by far the largest financial marketplace in the entire world, with more than $1.5 trillion dollars exchanging hands every day. This is more than 30 times larger than the volume of all the U.S. equity markets put together.
Another important feature of the Forex is that it operates 24 hours a day, six and a half days a week, corresponding to the opening and closing of world’s major financial centers, beginning each day with Sydney, then on to Tokyo, London & New York. At any given moment of the day, in each of these locations, there are buyers and sellers trading on the world’s largest virtual marketplace, buying and selling currency pairs, making the Forex market the most dynamic, most liquid, and fastest moving marketplace in existence on the planet.
Exactly what is traded in the Forex Marketplace?
The Forex is all about Currency, and currency trading is always done in matched pairs, never with just a single currency. (A simple way to comprehend this is to understand that a single currency pair must always be traded against something else in order for there to be a measurable value exchanged in the trade.) Forex currency pairs such as EUR/USD, USD/CHF, or GBP/USD are measured against each other in an active forex trade. Hence, all forex trades result in the concurrent buying of one currency and the selling of another. The base currency provides the “basis” for the buy or the sell. It is helpful to think of a currency pair as an instrument, which is bought or sold in values relative to other similar instruments.
Interpreting the Forex quote
The Base currency is always the first currency in the pair. The counter currency is always the second currency in the pair. Thus, in the pair USD/CHF, the dollar is the base currency and the Swiss franc is the counter currency.
Traditionally, the US dollar has been the mainstay of the Forex market and is considered the ’base’ currency for all quotes involving the dollar. Recently however the Euro has shown a significant increase in popularity, and many pairs today include the Euro as base currency. For example, in all of the following currency pairs the dollars is represented as base currency; USD/JPY, USD/CHF and USD/CAD, whereas the Euro is the base currency in the pairs EUR/USD, EUR/GBP.
Quotes are always a measure of one currencies strength against another where the base currency is represented as a singular unit. For instance, quotes involving the US dollar are expressed as a unit of $1 USD against the second currency quoted in the pair. For example, a quote of USD/CHF 1.189 means that one U.S. dollar is equal to 1.189 Swiss Francs.
Forex Trading is commission free, but not really… (there’s the “Spread”)
Forex trading normally a commission free trading activity. Unlike when trading other securities where you must pay a commission both going into a trade as well as coming out of it, in the forex market there are normally zero commissions charged. However, every forex trade involves a spread which must first be passed before any earning can be realized in a trade.
In a Forex trade the Spread is the difference between the bid and ask price of a currency. Normally, spreads are between 3-5 pips on the major currency pairs. Thus, logic tells you that if enter a trade you will first have to bypass the spread difference between the “ask” price of the currency and the “bid” (or sale price) of a currency before you will realize a profit on your trade (*unless you are in a short trade in which case the relationship is flipped, but don’t worry about that for now.)
What are BID and ASK Prices?
You will most often see currency pair pricing expressed as both “bid” and “ask” prices. The simplest way to understand this is to remember that you going to have to pay what is being “asked” for a currency pair by its current owner if you want to buy it, and that you when you wish to sell a currency pair someone else will pay the current “bid” on your lots up for sale. The ’bid’ is the rate at which you can sell the base currency (while at the same time buying the counter currency), and the ’ask’ is the price at which you can buy the base currency (while at the same time selling the counter currency).
Utilizing Margin and Leverage to your advantage
Very high levels of leverage are available to the average trader in the forex market, making leverage of the most important (as well as potentially dangerous) tools in the forex traders arsenal. The ability to trade at high leverage (in other words to trade with other peoples money) is one of most attractive elements of the Forex market. Leveraged trading, also known as trading on margin, means that you only using a small amount of your own money to cover your positions in a trade, with the remainder being “loaned” to you by your brokerage firm. Forex brokers provide much more leverage to traders than do stock or futures firms. The amount of leverage accessible to a forex trader can be up to 400 times the value of your account, making this unique trading tool both potentially extremely lucrative and potentially extremely dangerous to your account if used improperly or without careful consideration.
Rollover? It’s what happens at the end of each trading day…
Rollover is a built-in process whereby the settlement of your trade is rolled forward to the next trading day. It happens automatically at the end of each trading day unless your positions are closed before the end of the day. The result of a rollover can be either a credit or a debit to your account depending upon the structure of your trade an is calculated by the interest rate differential of the currencies you are trading. Most brokers automatically roll over your open positions, allowing you to hold a position in the market for as long as you wish.
As in all areas of life, in Forex practice makes perfect; or as near to it as you can get. Using forex practice accounts allow you to learn to trade the forex market while not putting your hard earned capital at risk. These accounts are often also called forex demo accounts, these accounts should be free - so if a forex broker is trying to charge you for one – just say no thank you and look for another broker.
Most forex practice accounts will work for about 30 days, some are longer and some are shorter - it all depends based on the forex broker that you choose to open your practice account with. We have found some forex brokers even let you continue to use the account for longer than the time frame that they say it is good for. However, other brokers will discontinue the account as soon as the time period is up.
Forex brokers offer forex practice accounts to people as a way to get new people interested in their forex trading platform and use their forex broker services. As a result - they will normally collect some basic information from you when you setup your forex practice account. Depending on the broker, they may call you and see how you are doing in your demo account and see if they can help you get started in a live account. Remember they get paid a commission only when you are making trades in a live forex account not the forex practice account.
It is in your best interest to use a forex practice account until you have thoroughly tested your forex trading strategy and are comfortable trading the forex market. Trading a live forex account is quite a bit different than trading a demo forex account. Never understimate the excitement and responsibilities of live forex trading. There is nothing worse than making a mistake in a live account, especially when its something that you should have learned not to do in your practice account. If you aren’t sure yet of how you are going to trade the forex market and you are looking for a simple and easy to use system I suggest that you links listed on our front page under Forex Systems.
We have learned a lot using forex practice accounts to test out different strategies and test new theories. Often times we will be running anywhere from 3 to 5 practice accounts at the same time just to try out different forex strategies. Some brokers make it easy to have several accounts and other brokers make it difficult. The broker we use allows us to create new demo accounts in just a few mouse clicks and they don’t care how many accounts you have – as a result – it makes it a lot easier to test strategies on their platform as opposed to other forex brokers.
Even after you have been trading the forex market for a long time you will want to experiment and test out new methods of trading and that is what forex practice accounts are great for. Test your new forex method without putting any money at risk in a demo account. Try every variation you can think of in your demo account, different currency pairs combinations, pip size allotments, leverage strategies; all the variable that will affect your live trading once you are ready to begin. Do all this first in a demo account will be one of the wisest decisions you ever make.
In Forex, those who succomb to the temptation to go live too early usually pay a heavy price for their inexperience. There is no rush, the market will be there tomorrow and next week, and next month. Demo accounts are key to your growth and education.
