Forex Trading

Online Forex Trading Tutorial

There is an old adage connected to online forex and stock trading. It goes some what like this If you are inexperienced and have money and meet an experienced trader, but without money, you are likely to end up with experience and the experienced trader your money. There can be some semblance of truth in this but what this infers is trading without experience and strong fundamental knowledge of the market is an invitation to loss making.

Online Forex Trading Tutorial
There are several reputed online forex trading houses that cater to retail investors and traders. The same trading houses offer to train their prospective and existing clients on the nitty gritties of online forex trading most of the times free of cost.

What You Need To Learn About Online Forex Trading?
If you are a novice you need to start from the beginning. The macro economic factors that affect price volatility and the demand and supply of currencies that trigger the short term fluctuations which are your trading opportunities and most importantly the points of entry and exits form the basis of your learning.

Most of the online forex trading tutorials available require you to open a cost free demo/practice account so that you get exposure to either real time or simulated environment for better understanding.

Online Forex Trading Tutorial Curricula
You will see that, generally all the tutorials have more or less the same curricula. Basically speculations are made through a number of charts and indicators.
Chart Types:
1. Line chart
2. Bar chart
3. Candle stick chart

All these charts are price plots for selected periods. Then there are several indicators that help make decision. The important and most followed ones are

1. Average true range (ATR)
2. BOLLINGER BAND
3. Commodity Channel Index
4. Linear Regression
5. MACD
6. Momentum
7. Moving average
8. Parabolic time price
9. (ROC)Rate of Change
10. Relative Strength Index
11. Slow Stochastic
12. Standard Deviation
13. Stochastic

All charts and indicators are taught with sufficient demonstrations for self study. The tutorials deal with the patterns and formations made by charts/indicators and what they mean. While charts help you for short term speculative trading (technical analysis) they don’t concentrate on the underlying reasons for price movements. This is the ground for fundamental analysis. The study of macroeconomic factors such as changes in government policies, wars etc that influence supply and demand, and as a consequence prices, constitute the fundamental analysis. These things are illustrated in contrast with demonstrative price movements.

Online forex trading tutorial helps gain a lot for everyone who takes it.

Online Forex Trading Tutorial / Jason Uvios

Jason Uvios writes about “Online Forex Trading Tutorial” to visit : foreign currency trading, foreign pharmacy and foreign currency.

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Rollover in Forex Trading

The rollover is the arrangement of artificially postponing the actual delivery settlement of a currency in position by normally a day. In actual practice, ideally all traders are required to take or give delivery of the currency they bought or sold (settlement) on the second business day after the deal was closed. But the actual practice differs by way of artificially extending the settlement day. But this rollover differs in the forex trading parlance fom that of stock trading.

It can be fairly well assumed that most of the forex trading accounts are leveraged with the broker having extended the trader a loan for the day which is the exposure limit. At the closing every day theoretical closing; though- at 21:59 London time, traders need to close their position unless they actually want to take or give delivery of their positional currency. But due to the loan leverage the traders account will not be having that kind of capital that enables him to take delivery of the currency.

Brokers have a stated policy of closing all accounts at that precise time and almost instantaneously open a new account for the quantity of that currency pair at the corresponding rate. This means although the account has been closed theoretically, the positions are still open from the traders’ perspective. This effectively means hat he traders do not have to take or give delivery nor do they have to payback the loan extended to them.

Broker, on the other hand charges an overnight interest for the amount rolled over. How is the differential interest calculated by the broker? Assume that you have a 1 lot position of euro/dollar with euro being your long position. If during the trading day the dollar appreciates by 25 pips and the broker rolled over your position to the next trading day at the close with dollar having further appreciated by another pip overnight, this 1 pip is the difference in interest between the two currencies. So you pay this 1 pip premium to the broker.

On the other hand if you were short on euro and long on dollars you would gain that differential interest amount. To put things in perspective, if you bought a currency and it gained overnight you are to benefit by that incremental differential and if the reverse were to happen, you have to pay this to the broker.

In actual practice, all rollovers and overnight interests are automatically calculated and credited or debited to your account by the broker. For tax purposes, IRS treats the interest gained or paid separately.

Rollover in Forex Trading / Jason Uvios

Jason Uvios writes about “Rollover in Forex Trading” to visit:forex, online forex trading and forex broker.

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Unique Characteristics of Forex Market

Give a thought to this: what makes the forex market so unique that none other like equities, commodities or even the bond market can match either individually or all put together? I think everyone who wishes to have a share worth his or her salt of action in the forex market needs to know this.

The Unique Characteristics of Forex Market
Forex market allows trading in all major world currencies seamlessly. US Dollar, Euro, Japanese Yen and Great Britain Pounds are the few currencies that account for over 80% of the daily forex trade. Now let’s see what other features attribute to make this so unique.

1. There is no single exchange market for trading foreign currencies yet all of them are so closely connected to each other (‘over the counter’ trading) that the differences in values can hardly be considerable, at least, for a retail trader.

2. There is no commission involved in the foreign exchange trading although there is low transaction costs involved. One reason for this feature is you are trading currencies and not negotiable instruments which are always virtual in nature at the point of trade time.

3. Forex market has a continuous nature. Global time zones and universal nature of currencies have facilitated the continuous nature of this. When markets in Asia close European markets open and when they close there is American market to take over. The next cycle begins with the Asian markets taking over from American markets.

4. Largest daily turnover- over US Dollar 3 billion which is ten times bigger than turnovers for all equity exchange markets put together.

Ponder the point number one again; London, New York and Tokyo are the top trading markets with many smaller markets and countless banks and operators functioning across the globe in relativity and interconnection to these big three. Thanks to the continuous nature and ‘over the counter’ trading facilitates quick decision making for traders without waiting for the markets to open the next day.

‘Over the counter’ trading also brings in the benefit of arbitrage (overnight differential interest) since there is no single dollar rate over the world depending on significantly great number of factors that affect the local Dollar demand and the local economy. Beginners need to understand the mechanics of economy that play roles here. These factors include the GDP, budget, trade deficits, rate of interests and inflation amongst other macro economic issues.

An interesting piece of information: regardless of trends, US Dollar is involved in about 90% of transactions.

Unique Characteristics of Forex Market / Jason Uvios

Jason Uvios writes about “Unique Characteristics of Forex Market ” to visit: forex currency trading, forex trader and forex market.

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