There are many tools available to the FOREX trader for analyzing the market as well as
for buying and selling currencies. Software tools are a necessary part of FOREX
because of its volume and volatility. Software can be used to automate some of the
trading procedures and safeguard against losses.
In order to make rational, successful trades, the FOREX trader needs information – lots of
information. Current exchange rates are the tip of the iceberg – the trader needs
historical data as well as current information about political and economic conditions that
could affect currency prices. All this information is provided by many FOREX brokers on
their web sites.
Successful FOREX trading relies on making accurate assessments of current political and
economic conditions. Being able to predict whether a currency will fall or rise against
another currency allows the FOREX trader to profit from currency movements.
There are two basic trading methods for buying and selling currencies. Reactive trading
means the trader responds to changes in the political or economic climate. Speculative
trading means the trader makes buying decisions based on predictions on how the
market will respond to current events. While most FOREX trading is speculative, both
types of trade require up-to-the-minute information and an analysis of current and
historical conditions.
Traders rely on both fundamental and technical analyses. Fundamental analysis is based
on news information about political conditions, economic policies, trade patterns, interest
rates and unemployment rates. Technical analysis relies on historical charting to identify
trends and patterns over time. Information needed for both types of analyses is available
in real time on the Internet. Most online brokers offer live news feeds and streaming
rates for observing minute by minute changes in the market.
All this information can help you decide which currencies to buy. More tools are available
to help you minimize your risk and maximize your profits.
The Risk Probability Calculator (RPC) can be used to identify trades that have more
potential gain than potential loss. The RPC can also help you target exit points to end
the trade.
Pivot Points can be used to predict movements of currency prices. They are calculated
as an average of the currencies high, low and closing prices. Pivot Point Calculators tell
you whether prices fall in the normal trading range or extreme trading ranges.
Pip value calculators are used to tell you the value of each pip (smallest currency unit)
according to various sized lots. Pip calculators can tell you the actual profit or loss that
will result from movements in the FOREX.
Once a trader has decided which currency pair to trade, he logs on to his online account
provided by his broker. The desired currency pair is entered and the current exchange
rate appears on the screen. The amount of the trade is entered (how much currency you
wish to buy). Some brokers may give you the option of specifying the amount you wish to
risk. This automatically enters a 'stop loss rate' into your order.
After the details of the trade are entered, you will be taken to a confirmation screen where
you can accept the current price on screen. You may be given the option of 'freezing' the
quoted price, meaning the price of your transaction is exactly what you see on screen
without any slippage. Accept the rate and your deal is running.
Just as you can enter a 'stop loss rate' to automatically sell the currency if it falls below a
certain rate, you can enter a 'take profit rate' to automatically sell the currency when it
reaches a certain level. If you don't enter a 'take profit rate' you need to monitor the
movement of the currency to decide when to close the deal and take either your profits or
your losses.
for buying and selling currencies. Software tools are a necessary part of FOREX
because of its volume and volatility. Software can be used to automate some of the
trading procedures and safeguard against losses.
In order to make rational, successful trades, the FOREX trader needs information – lots of
information. Current exchange rates are the tip of the iceberg – the trader needs
historical data as well as current information about political and economic conditions that
could affect currency prices. All this information is provided by many FOREX brokers on
their web sites.
Successful FOREX trading relies on making accurate assessments of current political and
economic conditions. Being able to predict whether a currency will fall or rise against
another currency allows the FOREX trader to profit from currency movements.
There are two basic trading methods for buying and selling currencies. Reactive trading
means the trader responds to changes in the political or economic climate. Speculative
trading means the trader makes buying decisions based on predictions on how the
market will respond to current events. While most FOREX trading is speculative, both
types of trade require up-to-the-minute information and an analysis of current and
historical conditions.
Traders rely on both fundamental and technical analyses. Fundamental analysis is based
on news information about political conditions, economic policies, trade patterns, interest
rates and unemployment rates. Technical analysis relies on historical charting to identify
trends and patterns over time. Information needed for both types of analyses is available
in real time on the Internet. Most online brokers offer live news feeds and streaming
rates for observing minute by minute changes in the market.
All this information can help you decide which currencies to buy. More tools are available
to help you minimize your risk and maximize your profits.
The Risk Probability Calculator (RPC) can be used to identify trades that have more
potential gain than potential loss. The RPC can also help you target exit points to end
the trade.
Pivot Points can be used to predict movements of currency prices. They are calculated
as an average of the currencies high, low and closing prices. Pivot Point Calculators tell
you whether prices fall in the normal trading range or extreme trading ranges.
Pip value calculators are used to tell you the value of each pip (smallest currency unit)
according to various sized lots. Pip calculators can tell you the actual profit or loss that
will result from movements in the FOREX.
Once a trader has decided which currency pair to trade, he logs on to his online account
provided by his broker. The desired currency pair is entered and the current exchange
rate appears on the screen. The amount of the trade is entered (how much currency you
wish to buy). Some brokers may give you the option of specifying the amount you wish to
risk. This automatically enters a 'stop loss rate' into your order.
After the details of the trade are entered, you will be taken to a confirmation screen where
you can accept the current price on screen. You may be given the option of 'freezing' the
quoted price, meaning the price of your transaction is exactly what you see on screen
without any slippage. Accept the rate and your deal is running.
Just as you can enter a 'stop loss rate' to automatically sell the currency if it falls below a
certain rate, you can enter a 'take profit rate' to automatically sell the currency when it
reaches a certain level. If you don't enter a 'take profit rate' you need to monitor the
movement of the currency to decide when to close the deal and take either your profits or
your losses.
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