** PLEASE NOTE** - THE MARKET CAN OPEN HIGHER OR LOWER THAN THE CLOSE, CAUSING A GAP IN THE PRICES. IF YOUR MARGIN PERCENT ON YOUR ACCOUNT IS CLOSE TO A MARGIN CALL, YOU MAY HAVE POSITIONS CLOSED OUT AUTOMATICALLY AT THE OPEN THIS SUNDAY. CLOSING SOME OF YOUR OPEN POSITIONS YOURSELF TO RAISE YOUR MARGIN PERCENT IS AN OPTION YOU MAY WANT TO CONSIDER.

Another common scenario that can happen when the market gaps over the weekend, your stop order (stop loss) becomes a market order when the price reaches it. (A stop loss is a stop order that becomes a market order when the price reaches it.)

For more information on stop orders, please see the section on “Stop Orders” on page 36 and 37 of the following National Futures Association website:
http://www.nfa.futures.org/NFA-investor-information/publication-library/opportunity-and-risk-entire.pdf

“A stop order is an order placed with your broker to buy or sell a particular futures contract if and when the price reaches a specified level.”

“There can be no guarantee, however, that it will be possible under all market conditions to execute the order at the price specified. In an active, volatile market, the market price may be declining (or rising) so rapidly that there is no opportunity to liquidate your position at the stop price you have designated.”

Stop orders are handled in the same manner in the stock market as well:
http://www.sec.gov/answers/stopord.htm
Here is an excerpt form that section:
A stop order is an order to buy or sell a stock once the price of the stock reaches a specified price, known as the stop price. When the specified price is reached, your stop order becomes a market order. A market order is an order to buy or sell a stock at the current market price.

Investment banks will take out a credit check on each other, a bit like when a person applies for a mortgage. Whilst currency trades are placed and completed real-time either by computerised system or telephone, the actual transfer of funds happens a couple of days later.

However, with the retail forex trader, usually, the trade is only placed in the brokers books and no real transfer of funds occurs, although the retail investor is in effect trading with the banks at almost the same quotes and with a very similar spread these days.

So who is the forex broker and what is their relevance in the answer to this forex topic? The retail investor places their trades through the environment of the margin broker. Trades are placed in real time and via a trader who receives the order from the investor, either buy (long), sell (short) or close position.

The broker not only allows retail investors to trade forex live with the banks, but also provides a system of leverage. This means that the broker only requires a deposit to represent the amount of currency a person wants to control, so long as the deposit is enough to cover any losses that might be incurred by the trade.

Take for example a margin leverage of 100:1 given to you by the broker. This means to control $100,000 of real currency (1 lot), you need to provide security to the broker of only $1000. Each ‘pip’ movement in price will cause your equity to increase or decrease by $10. For example if the currency pair you are trading is GBP/USD (also known as cable) and the price you are quoted is 1.8484, this means 1 UK pound sterling is equal to 1.8484 US dollars.

So, if you are controlling 100,000 units of currency (or you have placed a buy/sell forex trade of ‘1 lot’)in the above case, each time the price changed by 1 pip – i.e. 1.8484 changes to 1.8485 – you gain or lose $10 US. This is because 0.0001×100,000 = 10 and you have opted to control 100,000 units of currency.

The amazing thing though is that you as a retail trader have only used a security measure of $1000 deposited with the broker in your brokering account and the only cost for placing the trade is a small spread (no comission in many cases) of say 2-3 pips in which the broker makes his profit regardless of whether your trade is successful or not. And the chances of you losing that entire $1000 in the trade are extremely slim, especially if you use risk management and safeguard your capital from losses by setting a “stop loss” – a topic out of the scope of this article.

So what about mini-forex trading. It’s a subject which many people seem to want to know about. What is a mini-forex trading account? What is mini forex trading? Mini Forex trading is quite simple to explain given the above information. In light of the information that is told to you above about retail forex trading in general, the use of a mini-account is exactly that!

Rather than trading 1 whole lot each time (ie controlling 100,000 units of currency using only 1000 units of security or deposit to trade for a profit of about $10 per pip depending on the forex currency pair you and trading) you can use a mini-account (sometimes this is entirely indistinguishable from a standard lots account) to trade a fraction of a lot. This could technically be as little as 0.1 lot (i.e. $1 profit per pip) or half a lot – $5 profit per pip etc.

This is the authors understanding of mini-forex-trading.

In conclusion then, mini forex trading is explained away by understanding what a ‘lot’ is in forex. Once you understand that forex is traded in ‘lots’ and what ‘1 lot’ means to the investment banker/forex trader in the bank and to the retail investor using margin leverage provided by a broker, you can understand that mini-forex trading is forex trading on a mini-scale. Instead of trading in lots or multiples of lots (more than one) the retail investor uses a smaller deposit with the broker and trades for less profit, but less risk as well and not needing so much profit to start out with, eg 0.1 lots or 0.5 lots. Some forex brokers these days will allow currency trading with a deposit of as little as $500 into a customers account.

By: Sam Beatson

Forex Trading Tutorials ]]> http://forextrading-tutorial.com/forex-your-account/forex-account/forex-mini-account/mini-forex-trading-trading-forex-with-a-mini-account/feed/ http://forextrading-tutorial.com/forex-robots/forex-trading-robot-trade-forex-24-hours-a-day/ http://forextrading-tutorial.com/forex-robots/forex-trading-robot-trade-forex-24-hours-a-day/#comments Tue, 20 Oct 2009 07:48:10 +0000 admin http://forextrading-tutorial.com/?p=265 Forex Trading Robot: Trade Forex 24 Hours a Day

You would need money to live a comfortable life. You would need money to provide education to your children. And, you would need money to eat. This is why you work, this is why people put up businesses, and this is why people go to great lengths to make money.

One great money-making career that you should consider is trading in the largest financial market in the world. Not only is Forex or Foreign Exchange the world’s largest financial market, it is also the most liquid market in the world that operates 24 hours a day.

With trade exchanges that generates up to 2 trillion dollars a day, who would not get attracted to trade in this very liquid market? If you are a regular person with a regular job who is looking for a way to earn extra money, you can consider entering the Forex market and trade.

However, Forex also has its risks and people who have traded in Forex without the proper knowledge and skill, lost large amounts of money, and some have suffered extreme financial losses. This is why it is necessary for you to have enough knowledge and skills when you trade in the Forex market.

Today, there is a software available for you to use that can really make it easier for you to trade in the Forex market and earn that extra money you want. This software is often called the Forex trading robot.

Normally, Forex trading robots are accessed in the internet. It is very much like hiring a Forex broker but instead of a broker being human it would be in a form of a program. Since Forex trading robots don’t sleep, this software can run 24 hours a day and therefore, giving you the advantage of not missing any money making opportunities when the Forex market changes.

Just imagine, it is now possible for you to trade in the Forex market like a professional. And, you can trade 24 hours a day. With this benefit, you will never miss another potentially profitable day in the Forex market. Also, you can even do this while you’re at work.

All these are possible through the use of a Forex trading robot. However, before you subscribe to a Forex trading robot, you have to first determine if the software can really work to your advantage. You have to determine if the Forex trading robot can really trade effectively and efficiently.

You should also look for advanced trading features that the Forex trading robot can offer you.

Here are a few of the features you should look for in a Forex trading robot:

•    24 hour a day operation – You want this feature in a Forex trading robot so you will never miss a money making opportunity.

•    Minimum investment requirements – Investments in a Forex trading robot should be minimal in order for you to afford.

•    Trading automation technology – Since your money is at risk, you should choose a Forex trading robot with the latest trading technology existing in the market today.

These are some of the things you should look for in a Forex trading robot. With these features, you can be sure that you can really earn money.

Forex trading robots are perfect for people who wants to get involved in the Forex market but don’t have the proper knowledge and skills to trade currencies.

It is also great for people who are afraid to invest their money in Forex. You can also benefit from a Forex trading robot if you want to concentrate on your day job and still earn cash in the Forex market.

Investing in the Forex market is one of the best ways to earn that extra cash you need. However, you should always remember that in Forex, you need to invest money to earn money. Also, you should also be able to afford to lose the money you invest in Forex.

Always remember that Forex, although a great money-maker for lots of people, also has equal risks that may cause you to lose money. With a Forex robot, you will be able to minimize the risk of losing money and increase you chances on earning potential 24 hours a day. With a Forex trading robot, you will never miss another trading day at the Forex market and take advantage of great market trends.

Aside from the fact that the Forex market can give you an opportunity to earn a lot of money, you should also know that Forex is the largest and the most liquid financial market in the world with trade exchanges that amounts up to trillions of dollars each day.

Forex also operates 24 hours a day and therefore making it the most liquid market in the world.

However, Forex is also a very risky market. Besides that fact that it generated a lot of people to become rich, it also made a lot of people lose large amounts of money. Therefore, you should consider that you should think twice before entering this financial market. You should have enough knowledge and skills before you enter this market. Part of the knowledge that you should know the best time you should enter this very liquid and very large market.

Sure you know how to trade, you know what currency pairs to trade, and you even know how to read charts. Perhaps, you also know one or two strategy when trading in the Forex market. However, you should also consider the fact that because the Forex market operates 24 hours a day, you need to know when you should trade.

Every minute in the Forex market counts. One minute you notice a currency is increasing in value, the next you notice that the same kind of currency you noticed a minute ago is decreasing in value. This is why you should consider the fact that Forex market is a very dynamic market with lots of price oscillations.

Minute by minute events are very important in order for you to be successful. Because of this feature that is found in the Forex market, you, as a Forex trader, can enter the market a number of times a day. This will allow you to earn some profits after every number of trades you do and perhaps maybe even lose one if you made the wrong trading decision.

Firstly, you have to remember that the Forex market beings at Sunday at 5PM EST to Friday at 4PM EST then it beings again at 5PM EST. Trading begins in Forex at New Zealand next at Australia followed by Asia, in the Middle East, Europe and ends in America. The major markets in Forex are London, Tokyo and New York with trading activities the heaviest when major markets overlap.

Basing from the times, you will see that there will always be someone anywhere in the world who is buying and selling currencies. You will see that when one market closes, another market opens. Trading in the Forex market is 24 hours a day.

Forex market transaction volume is always high during the whole day. However, it peaks the highest when the Asian market, the European market and the US market opens at the same time.

These are the trading hours in the Forex market you have to trade in, in order to get the highest possible trades. This are the hours that are also the most profitable.

Here are the open market times that you can use as reference:

• New York – 8am to 4pm EST
• London – 2am to 12nn EST
• Great Britain – 3am to 11am EST
• Tokyo – 8pm to 4am EST
• Australia – 7pm to 3am EST

If you look at the schedule and study it, you will see that there are two instances where two of the major markets overlap on trading hours. These are between 2am and 4am EST with Asian and European markets and 8am to 12pm EST with European and North American.

These are the things you should remember when trading in the Forex market if you want to make most out of the trade. It is not only important that you know how to trade and know some strategies on Forex trading, but, you should also know when is the best time to trade in this very large and very liquid market.

If you follow all these, you can be sure that you can earn a potentially higher profit than on other trading times.

Discipline. Successful traders always go by a strategy and don’t let their emotions get the better of them. They never ‘trade on the fly’.

The ability to accept risk as part of the game. Despite what you may hear from shrewd sales pages, Forex trading is never without risk. Risk is the other side of the coin. There is big profits to be made but you have to be willing to accept the risk of losing.

Willingness to accept failure and learn from it. Even the best traders in the game lose trades. Its the natural order of things. But the difference between a successful trader and a losing trader is the ability to learn from failed trades and not dwell on the negative.

Confidence. Successful traders always keep confidence in their ability and knowledge. They don’t second guess themselves after making a trade.

The ability to accept being wrong. No one is perfect. You are going to make plenty of mistakes along the way. Don’[t be stubborn and stay in trades gone bad to save yourself from admitting you were wrong.

Patience. Smart traders stay with their system and wait patiently for the right spot to present itself. You don’t need to have positions open all the time. Don’t trade just to trade.

Know when to get out. There is more to trading than knowing when to get in, you need to know when to get out as well. Too many traders got greedy and stayed in a trade for too long, only to see their profits wiped out. Get out when your system tells you too. Don’t go chasing pips.

Know your financial limitations. Don’t over-leverage yourself and don’t trade with money you need to pay your bills or risk ending on the street. Only trade with money you can afford to lose even if this means starting out with only a few hundred dollars. There are many forex brokers where you can get started with that.

So lets get down to business and look at how to calculate profit and loss for Forex trading:

There are only two formulas needed: One for the quote currency and one for the base currency.

In the next example let’s assume we are trading USD.
When the USD is the quote currency (second currency in a pair: XXX/USD), we will use this formula:

Profit = Price Change In Pips X Units Traded

When the USD is the base currency (first currency in a pair: USD/XXX), we will use this formula:

Profit = Price Change In Pips X Units Traded / Exit Price

Let us look at some examples for how to do this:

First example let the USD be the quote currency. We assumes 1% margin and trade 1,000$ for 100,000$
So we are looking at EUR/USD which in our example is trading at 1.2518. We predict the euro will rise against the dollar so we execute a trade to buy euros while simultaneously selling dollars.

We buy 100,000$ worth of units at price 1.2519. This is the ask price.
Next, we assume that our calculations were correct and the price rises to 1.2532. We execute a sale and cash in at the bid price 1.2532.
Since we bought at 1.2519 and sold at 1.2532 we have made 13 pips profit or 0,0013.

Now let’s see what that amount to in real money:

Profit = Price Change in Pips X Units Traded

Profit = 0.0013 X 100,000 = $130.00

A useful rule to remember is that when you are trading a standard size lot (100,000$), then one pip is always equal to 10$.

Next we look at how to calculate profits when the USD is the base currency:

We will buy 100,000$ worth of USD/JPY units at price 117.22. The price rises accordingly and we sell at 117.35 for a profit of 13 pips as well.

Now we have to use our second formula to calculate real money profits.

Profit = Price Change in Pips X Units Traded / Exit Price

Profit = .13 X 100,000 / 117.35 = $110.78.

Simple and easy, there is really not much too it!

Look at the simple chart above. As you can tell this is a bull market moving up. As the market moves it doesn’t move straight up or down but in these zig zag patterns as traders are testing the limits or taking profits. Thats why we look at the graph and see that the first point where the graph moved up but then pulled back. This temporary high is now what we call a ‘resistance level’. Now as the market moves down we refer to the lowest point before it moves up again as ’support’.

These movements up and down, then up, then down are characteristic of a forex market with both an uptrend or a downtrend. Said in other words: The market can go up or down in general, but we will still see these variations over that trend. These peaks and lows of a general trend are ’support and resistance levels’ and are a natural thing brought on by the psychology of the traders as everyone tries to anticipate the future direction.

This is the very basics of support and resistance and while it may seem easy to understand at first, there are actually many different methods and views on the subject.

In the next article we will go much more in depth on how to use this knowledge to trade profitable.

1) Each trade style for a certain pair/timeframe can be profitable.
2) There are extremely complicated and easy styles.
3) Only a few are EA, and mostly those are not as effecient as desired. (management issues)…
After 3-4 years of trading, I do know that there is not 1 trade style that fits all pairs all needs…

So, what can we say, there are the following self evident items in the forex market.

Spreading of trading opportunities can make more profit than concetrating on 1 pair.

Spreading of the same style can lose greatly if your not informed of what times/pairs/styles to use.

But not all times are equally good for forex trading. Some forex trading times are better or worse than others because of the volatility when a market opens or closes and the overlaps in between.

So the question you are going to ask is probably: When to trade?

We are going to try to answer that question here, but first let us make sure that we understand the world time differences. There are two world time methods that are widely used:

GMT:

Greenwich Meridian Time (GMT), is the current time in Greenwich – England and is considered the general world standard time (A leftover from the time of the British empire!).
If we use this system that means that the time in Greenwich is always 0 and all other locations east of Greenwhich adds a positive + to the GMT time. For example Tokyo time would be GMT +9. Countries west of GMT adds a negative – to the GMT time. An example of this could be Alaska which would be GMT -10.
So if it is noon (12 pm) forex trading times in Greenwich, then it is 9 pm in Tokyo and 2 am in Alaska. Makes sense?

EST:

Eastern Standard Time (EST) is the other commonly used world clock system. It is the time of North America and is the same as GMT -5.

So now when we know how to understand the world clock systems, let us have a look at the actual forex trading times and the major Forex trading time sessions. There are three major sessions in the Forex market. In each of these the volatility is much higher than usual and in each one there is different currencies being traded (in larger numbers than otherwise).

Asian Session (Tokyo) (7PM : 4AM EST):

The Asian forex trading session begins at 7 PM EST (12 AM GMT) and closes at 4 AM EST (9 PM GMT). The major countries involved in this session is Japan, Hong Kong and Singapore. In this session the most commonly traded currencies are GBP/JPY, GBP/CHF and USD/JPY. These currency pairs can fluctuate 110 pips during these forex trading times.
Other currencies that are traded are USD/CHF, AUD/JPY and GBP/USD which can fluctuate 60 pips.

U.S. Session (New York) (8 AM : 5 PM EST):

The US session kicks of at 8 AM EST and closes at 5PM EST. The US is a moderate to highly volatile session, because of its interaction on other markets such as the Stock or Bond market. The most traded currency pairs during these forex trading times are: GBP/USD, GBP/JPY and USD/JPY which fluctuate around 95 pips. There is also trading in USD/EUR and USD/CAD.
This session is both challenging and exciting. There is usually release of economic data early in the trading day and of those some reports cause the Forex market to move significantly. The stock, bond and commodities markets are also interlinked with the currency market so any news from those markets will also affect the Forex market and particularly the USD.

European Session (London) (2 AM : 12 PM EST)

London is the most important and biggest center for trading in the world at a market share higher than 30%. The majority of all Forex trades in the market are carried out during these forex trading times because of the high liquidity and efficiency of the market. This also makes the London session the most volatile of all.
All major currency pairs are traded during this session. For risk loving traders the GBP/JPY and GBP/CHF have very high fluctuations of up to and even surpassing 140 pips.

Other major currency trades include: EUR/USD, USD/CAD, USD/CHF and GBP/USD which fluctuate less but still up to an average of 100 pips. These currency pairs are a good pick because their volatility makes it easy to enter the market.

In this article we looked at the basic make up of the different forex trading times. In the next article we are going to look at individual strategies for trading during these forex trading times.

In this article we are going to look at how we can use forex candlesticks to get more accurate information on how the market performed and how we can use that information. If you haven’t read my introduction to forex candlesticks, I suggest you do that before continuing on.

First we are going to look at how to determine if a market is bullish (Bull Market: Positive Trend and Optimistic Traders. Below is a figure of what candlesticks could look like in such a scenario:

A bullish trading period will always show up as a white or clear candlestick no matter how the shadow looks. The body is white because the closing price is higher than the opening price. The shape of the tail also tells us something about the nature of the bullish market, but that will have to wait for next article. Until then you can take note that the most bullish forex candlestick is the one with the arrow pointing to it.

Next up we look at how a bearish (Bear Market: Downwards trend and pessimistic traders) looks like:

Notice how the body is dark. This mean that the closing price was lower than the opening price. Again we look at the tails and note that the one candlestick with an arrow pointing to it is the most bearish.

So, now we have covered both bearish and bullish markets, but how about neutral market, that is, a market that is neither on an upawards or downwards trend? Take a look below:

Reading candlesticks may seem confusing at first, but with a little practise it will become second nature and you only need to glance at the chart to get an idea of what is going on.

In the next article, we will discuss more advanced charting tools.