Online Forex Trading

Until recently, the forex market was a closed market and trading activities were confirmed to the “big boys” like the banking sector, the multinationals and the hedge funds. However, with new technological advancement, small retail investors now have the opportunity to participate in this lucrative market as well with online forex trading.

So what is online forex trading? Essentially online forex trading is just the trading of one currency for another currency through the use of the internet. The forex market is actually the largest financial market in the world and it is an over the counter (OTC) market. This means that there is no centralized location like the New York Stock Exchange from which trading activities must take place. Because of this unique aspect of the forex market, with online forex trading, one can deal in forex from any place in the world. In addition, with online forex trading, it is possible to trade in forex around the clock five days in a week without having to even leave the house.

Online forex trading differs very much from the traditional method of transacting financial instruments in the sense that most trading activities are more or less self-service. With a properly equipped computer and internet access, a trader will be able to basically determine what to buy, when to buy and how much to buy with just a click of the mouse. In addition, the speed with which your orders are executed is almost instantaneous as you will be using a trading platform that is provided by the forex brokerage firm.

Apart from the above mentioned, there are also several other advantages with online forex trading as compared to the traditional brick and mortar way of trading forex. One of these other advantages is the lower transaction cost that you will incur with your online forex trading. As online forex trading is self determined by the trader himself, the brokerage firm will be able do away with other higher cost services and just concentrate on “volume based” business strategy by lowering their cost to attract more business.

And to help their clients determine what a good buy is, charting tools are usually provided on the online trading platform for those who engaged in online forex trading. Once analysis of the forex market is completed with the charting tools, an online forex trader will also to program his market analysis into the trading platform and automate his transaction activities. It is for these few reasons that are mentioned above that online forex trading is now gaining popularity over the rest of financial activities that retail traders previously usually go for.

Auto Forex Trading

Forex (or the foreign exchange market) is the international trading market where currency trading takes place, where money is sold and bought freely. Forex is the financial market with the highest liquidity. As the saying goes "you need to only plan your trade and then trade your plan", auto forex trading comes as a real bonus gift in this perspective over manual trading.

Many traders have tried their hand with manual trading and have concluded that auto trading is provides great assistance in forex trading. Now auto forex trading has become a very popular way to make money through currency trading.

With auto forex trading, software programs are used and are based on all the statistics available. These programs can predict whether the currency will rise or fall and can account for profitable trading decisions. The auto forex trading software will work around the clock which allows the trader to be notified when important news breaks rather than when the market opens. The majority of the people who opt for forex trading have little if not no knowledge of what they are about to get into, this is where the auto forex trading software comes in handy.

The software program is written so that it does all the work for the trader so they can start off by installing the software and begin trading. The installation process takes a few minutes and it is possible to make a profit on that very same day. The forex trading systems usually take a lot of guess work from the foreign exchange market, so even if the trader starts off with a small amount of money, it is very likely that they will be making a considerable profit in a couple of weeks’ time.

This form of electronic trading is increasing exponentially with time and as time progresses the majority of the forex trading will be done with help of time and tested algorithms. It is also interesting to know that a majority of world‘s leading banks are for using auto forex trading.

As we see, everyone is adopting automatic forex trading as this is more accurate, consistent, and dependable. Many trading software programs are available for free, though the more advanced programs are usually available for purchase only. Automatic forex trading works 24 hours, and is an efficient way to earn without having the stress of constantly monitoring the forex trading market.

Online Forex Trading Systems

What is the purpose of an forex trading system?

While the most obvious answer to the above question might be to make money, this is not actually the correct answer! The aim of your online trading system should be:

1. To be able to identify trends as soon as possible.

2. To be able to find indicators to confirm your trendsIf your trading system cannot fulfill these two criteria, then it definitely will not be able to make you money.

The most important part of an online trading system is the stick to the rules and criteria that you put in place. There is no point in spending time and effort creating your system, to then be caught up in the moment and forget everything that you have planned.

What should I consider in my forex trading system?

There are some important criteria that should be considered when developing your trading system:

1. Time Frame - Are you a day trader or a long-term trader? Do you look at charts daily or weekly? Knowing the type of trader you are will determine the time frame you should use when looking for trade signals.

2. Indicators to Identify & Confirm Trends - It is important to select the appropriate indicators for identifying new trends. Just as important is finding indicators that confirm these new trends, to ensure you aren’t acting on a “false” trend.

3. Determine Your Risk Level - It is important to determine your own personal level of risk i.e. how much you are prepared to lose. Each person’s risk will be different, but you should plan your system to act within your risk limit.

4. Define Entries & Exits - Knowing when you will enter and exit the market is very important. Will you act as soon as your indicators line up or will you wait until the candle closes?

How can I test my system?

It is important to test your trading system before launching straight into live trading under the system. You can do this by first looking at charts for previous time periods, following your trading rules and simulate where you would enter or exit trades. It is then a good idea to try out your system in a Demo account until you are confident it is working, and then move to a live account

Online Forex Trading Signals – What Is It?

Online Forex trading signals is defined as analysis or hypothesis that a trader uses to whether he should buy or sell a particular currency pair at any given time. These forex trading signals can either be derived from studying technical analysis or fundamental analysis or conclusions drawn after studying the currency pair based on both methods of analysis. As such, forex trading signals comprises of a bunch of signals that work in synchronisation with each other to produce the actual buy or sell signal. The actual process of determining these forex trading signals can be developed by the trader themselves or provided for free by their brokerage firms or a paid professional service which the traders subscribe to for the forex trading signals.

Forex trading signals forms an integral part of any forex trading strategies and is not just used for the determination of the proper entry and exit point of a market position. The forex trading signals are also used as the foundation for any automated forex trading system. Once the parameters for obtaining the forex trading signals have been defined by the trader, he can use these parameters to “teach” computer software to execute a “buy” or “sell” order when the requirements of these parameters are met for a particular currency pair.

Automated forex trading or algorithmic trading uses forex trading signals in conjunction with computer software. With the use of the automated forex trading system, a trader will be able to take out the psychological impediment out of the equation of forex trading. No longer will a trading decision be subjected to the whims of human emotions. In this manner, a trader will no longer be concerned with greed or fear of losses affecting his investment decisions. In short, the viability of any investment decision is solely determined by the forex trading signals derived from the analysis of technical charts or fundamental analysis of the economy. Nevertheless, having stressed the importance of forex trading signals in one’s trading strategy, it is important to also note that there is no such thing as “The Holy Grail” of forex trading signals.

If there were such a thing like a “holy grail” of forex trading signals, then we would only find winners in the forex market and no losers at all. The fact is, according to a survey done among brokerage firms, 95% of retail investors make a loss with their trading. Even if there were such an efficient system that consistently generates winning forex trading signals, we would find the owner of such system unwilling to share the system. Not surprisingly, we always find the large financial institutions constantly wanting to upgrade their software system as well as being extremely secretive about the software system that they are using.

Although there are limitations with forex trading signals, it is still important for you as a retail investor to try and seek out the best of what technology has to offer in order to make your trading more efficient and profitable.

Online Forex Trading Strategies

Forex Trading Strategies Essential Part of Online Forex Trading

Forex Trading Strategies – An Essential Part of Online Forex Trading With the ease of how one can venture into the forex trading business and the lure of huge gains from the power of leveraging, many novice traders and forex investors make the mistake speculating in the market with any proper forex trading strategies. By chasing the fluctuations of currencies without any clearly defined forex trading strategies, this course of action is akin to gambling in a casino with one’s money.

In addition, although there are countless numbers of materials that one can refer to for the explanations of numerous technical indicators or signals that can be adopted for one’s trading, knowledge of technical analysis alone is not enough. You need clearly defined forex trading strategies that will enable you to know how to use the data obtained from technical analysis to help you make your investment decisions. No doubt possibility of making large sums of money is what entices many novices to venture into the online forex trading arena, one must also be practical when it comes to forex trading strategies.

For forex trading strategies to be effective, it must be able to resolve the following aspects of forex trading as listed below.
When to exit a trade: The problem with most novice traders is that once they have entered into a market position, they have no idea as to when to exit their market position. Without having an exit strategy in our forex trading strategies is a huge mistake as we need to limit and specify the quantum that we can afford to lose on a given market position.
When to realize the profits: Without any clearly defined forex trading strategies, traders will tend to exit a winning market position prematurely due to them succumbing to their emotions. A specific forex trading strategy which takes into account of this aspect of trading will help prevent a trader from losing any additional potential gain.
When to go into a trade: Forex trading strategies must have specific guidelines as to when a trader can go long or short on a trade. It must also specify the quantity of the currency pair to be bought or sold. In other words, we are trying to determine the probability of success of a trade with these guidelines for our forex trading strategies.

Bearing in mind that forex trading strategies need to deal with the above mentioned issues, we must also take note that our trading strategy must not be overly complex and is full of mathematical equations that we will have a hard time comprehending its practical application.