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FOREX: Online Foreign Exchange TradeWhat is forex and how is it traded? Forex is the buying of one currency and selling of another currency concurrently. Currencies are quoted in pairs such as EUR/USD. The major currencies are EUR (Euro), GBP (British Pound), JPY (Japanese Yen) and the CHF (Swiss Franc) – and they are traded against the USD mostly. The first listed currency is known as the base currency, while the second is called the counter or quote currency. The base currecurrency currency is the basis for the Bid price (the cost of selling the base currency currency) or the Ask price (the cost of buying the currency). For example, if you Ask EUR/USD you have bought Euros (and simultaneously sold dollars) The Concept of Leverage
• What is margin? Margin is a performance bond, or good faith deposit, to ensure a against gainst trading losses. The margin requirement a broker allows traders to hold a position much larger than the account value. In the event that funds in the account fall below margin requirements, your broker will close some or all open positions. This prevents clients' accounts from falling into a negative balance, even in a highly volatile, fast moving market. For example, let's say you have an account with $10,000. That me means you have $10,000 of usable margin. If you use $7,000 to Ask 7 lots o of USD/JPY, you now have $3,000 of usable margin left, meaning that you are allowed to lose $3,000 before you are under the margin requirement.
The account equity remains at $10,000 until you begin to make or lose money on the position. Now, if the USD/JPY decreases to the point that you end up losing the $3,000 which is left in your account, then the broker will close all of your positions to ensure that you do not lose more than you have in your account. Forex, Stocks on Binary Trading or Spot Trading Binary.com : : Online Trading platform for binary options on Forex, Indices, Stocks, Commodities and The Richest Man in Babylon taught me to work smart and let my money work hard. The profits of my money should be committed to work harder. That is the only way to be free from poverty. At Stocks or Money Market, money makes money.
Mathematical Approach to Forex Market Market Analysis: Fundamental
Technical Fundamental Analysis
What influences prices in the forex market?
• Prices in the currencies market are affected by macroeconomic factors, such as inflation, unemployment, industrial production. Information on events such as war, strike actions.These are easy to find and are based on their analysis of economic data, which traders take positions to make profit on the market. There are three mai main macroeconomic factors a trader should focus on when analyzing foreign exchange rates:
• Interest Rates: Each currency has an overnight lending rate attached to which is determined by that country country’s central bank. Lower interest rates usually lead to depreciation in the value of the country's currency. This is largely due to traders who execute carry carry-trades. A carry carry-trade is a trade where a currency with a low interest rate is sold and a currency with a high interest is bought. This is based on the idea that currencies with higher interest rates will generally rise in value, and will rollover and allow trades to earn interest on a daily basis.
• Employment: The unemployment rate is a key indicator of its economic strength. If a country has a high unemployment rate, it means its economy is no not strong enough to provide people with jobs, and thus, leads to a decline in the currency value.
• Geopolitical Events: Key international political events that affect not only the for foreign exchange market, but all other markets as well. Global stability and global recovery will send USD/CHF higher US USD/CHF rallies on geopolitical instability. For example, you think that the market is headed towards a period of global stability and economic recovery, meaning that investors no longer need to park their money in the safe haven currency such as the Swiss Franc, you would click ASK, expecting the U.S. Dollar to strengthen against the Swiss Franc. If you believe that due to instability in the Middle East and in U.S. financial markets, the dollar will continue to weaken, you would click BID, expecting the Swiss Franc to fall in strengthen against the dollar
Mathematical Strategy Technical Analysis
• What is good about technical analysis? Once a trader masters technical analysis, it is easy to apply it to any currency or time frame, and thus allowing a relatively short time to figure out where trends are going. Because of the short time, technicians can follow numerous currencies at the same time, whereas fundamentalists usually focus on one or two pairs of currencies, because there is so much information in the market to analyze. Traders using fundamental analysis can run into trouble because there are so many different ways to analyze market information. This causes controversy and can lead to misdirection, misunderstanding and ultimately, loss of money. On the other hand, technical analysis can be much more straightforward. Many traders even consider it to be a self-fulfilling prophecy, meaning that it works well because so many traders use it. This is an important aspect of technical analysis because if many traders are basing their decisions on technical indicators, then the indicators must be watched since they reflect the sentiment of the market and the majority of the traders.
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• Support and Resistance At the core of all technical analysis theory are two very simple concepts: support and resistance. Support can be defined as a “floor floor” through which the currency pair has trouble falling below. There is no scientific formula for calcul calculating support; it is something that is ypically “eyeballed” by traders, and hence involves somewhat of a subjective element. Resistance, on the other hand, is simply the opposite: it is the upper boundary through which a currency pair has trouble breaking. Similar to support, resistance levels are somewhat subjective. Generally, if the market reaches a certain number of times and cannot sustain a break above that level; it can be identified as resistance. The reason why price has trouble breaking these levels is the presence of actual orders around these levels. A support level is simply a price area wher where Ask orders tend to be,so it takes more than normal Biding pressure to break that level. Similarly, a resistance level is a price area where Bid orders tend to be, and so it takes more than a normal Asking pressure to break that level. Trading Strategies Range Bound Strategy Pivot Point Strategy Price Action Strategy Momentum Strategy Mathematical Strategy Time Concepts Short Term (Daily or Intraday Trading) Long Term (Seasonal or Interday) Wealth: Grow It and Protect It, Updated and Revised Wealth: Grow It and Protect It, Updated and Revised Buy Now Apply Trading Methodolgy Applying The Trade Methodology
• In order for us to have a high probability win trade, firstly we need to wait until the EMAs cross over.
• Sometimes you will see that the EMA lines will come very close to each other, will touch and even cross over slightly and then turn back to its original way.
• In order to avoid such whip saws that falsely take us out of a trade during a good trend we are going to add some extra tools.
• These will be are long term EMAs and they will give us a nice guide line about the long term trend. • We will now add a 200 and 89 day EMAs, which will be our last moving average tools.
• The way to trade by using these tools is to follow the 13 EMA and 6 EMA cross over in the same direction of the long term EMAs.
• Do not go against the trend! Follow the direction of the trend.
• If the price is above the 89 and 200 EMA lines and moving up you are in a more likely long position.
• If the price is moving along under the 89 and 200 EMAs then your position is more likely short.
• To ensure that we can track the trend and stay in the trend as long as the trend lasts we should make use of some additional tools.
• Here is when the Fibonacci retracements come in.
• We are going to use Fibonacci retracements to continue and to make an extra contract entry after confirming the trend.
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Fibonacci Retracements
• Fibonacci levels are a series of numbers which the market tends to use very often to test levels and then move forward.
• Generally on daily trends after a few days of trending there will be a pull back in the price.
• We will see how to take a few days (generally 3 to 4) and track a Fibonacci retractment.
Sample of Intraday Strategy Test this simple strategy “For the intra day session trader! trader!” Tools: 30 minute or 1 hour chart. 89 EMA + 2 SMA and 7 SMA.
• Enter buy transaction when the price goes above the 89EMA by 10 pips and the 2 and 7 SMAs are crossed to an open end.
• Enter sell transaction when the price goes below the 89 EMA by 10 pips and the 2 and 7 SMAs are crossed and opened up.
• Follow trend with 40 pip trailing stop until stopped out or the 2 and 7 MAs cross over.
• When the moving averages get close and merge wait for the price to make its move. This will be nice break out trade.
• You should back test and live test this before you use it. This is just a tip for the intra day trader.