Hot Tips for Successful Online Forex Trading - Part One

There is no one-size-fits all solution for online forex trading. You will do your most successful online forex trading with a system that is customized to fit your needs, your style of trading and your risk comfort level. Then you need the discipline to follow your system, capital to work with and a willingness to approach each trade with energy and enthusiasm.

That being said, there are always a few things you can watch for with your online forex trading career. A few pointers that will help you steer clear of mistakes and keep you on the path to success. I`ve gathered some of these useful tips in this article. Keep them in mind for when you`re uncertain what to do, and incorporate them into your system. They will make a difference in your trades.

Online Forex Trading Tip #1 - Never add to a position that is losing. This is one of the few trade rules that you should never break. If you`re losing money on a position exit the trade, don`t add to it. This is how small losses become large losses, which leads to traders no longer trading.

Online Forex Trading Tip #2 - Always set your stop losses and decide when you will take profits before you enter a trade. Place stops that are based on market information, and not your account balance. If a "proper" stop is too expensive for you, don`t make the trade. Be sure to decide when you are going to take your profits and follow through on it. Successful traders are successful because they keep their losses small, and they take their profits often.

Online Forex Trading Tip #3 - Pay attention to the market. Exit and enter trades based on market information. Don`t wait for a price you think the currency should hit when the market has changed direction on you.

Online Forex Trading Tip #4 - There are times when, due to a lack of liquidity or excessive volatility, you should not trade at all. On a similar note, never trade when you are sick. You can`t count on yourself to be alert to the shifts of the markets, and make good decisions.

Online Forex Trading Tip #5 - Trading systems that work in an up market may not work in a down market, and a system that works for trending markets, or for range bound markets may not work in other markets. Have a system for each type of market.

Online Forex Trading Tip #6 - Up market and down market patterns are ALWAYS there, but you have to look for the dominant trends. Always select trades that move with the trends Online Forex Trading Tip #7 - During the blow-out stage of the market, either up or down, the risk managers are usually issuing margin call position liquidation orders. They don't generally check the screen to see what`s overbought or oversold; they just keep issuing liquidation orders. Make sure you stay out of their way. Online Forex Trading Tip #8 - Trust your instincts. If something feels wrong about a trade, don`t make it. It`s better to be superstitious than to loose money.

Online Forex Trading Tip #9 - Rumour is king. Buy when you hear the rumour, sell when you hear the news.

Online Forex Trading Tip #10 - The first and last tick are always the most expensive. Get in the market late, and out early. And never trade in the direction of a gap, either opening or closing.

Online Forex Trading Tip #11 - When everyone else is in, it's time for you to get out. If a stock or currency is overbought, it`s time to exit your position.

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Choosing the Right Forex Broker

If you've already made the decision to go ahead and start trading forex, the first step you need to take is to choose the right forex broker. Currency brokers vary more than the U.S. Investment houses, so you really need to do your homework before making a decision. This is very important because your broker is almost like your business partner. They need to not only treat you fairly, but also execute when called upon. Here are some of the most important aspects to consider when picking your broker:

Low Spreads. Always look for a broker that offers low spreads (which are measured in pips). The spread is the difference between how much you can buy or sell a currency at a specific point in time. It's very similar to the bid and ask prices in the stock market. Since you don't pay a commission to a forex broker, they make their income through the spread. You don't get anything in return for paying the spread, so you'll save money on each trade if you pick a broker with low spreads.

Amount of Leverage Offered. Leverage is essential to making big money in forex. When you're making a profitable trade, the amount of "increase" in what you're holding amounts to just fractions of a penny per unit. So if you're not investing tens or hundreds of thousands of dollars, your total gain is minimal. To make a stock market comparison, assume that you buy $5,000 worth of a stock for $20. A few hours pass, and you sell it for $20 1/8. Total gain? A barely noticeable $31.25. Now lets say you were able to borrow your brokers money, and buy $500,000 worth of the same stock. Your gain would now be $3,125, which is much more substantial. An equity broker would never give you that much margin, but you can find some forex brokers who will offer as much as 100:1, which means that you can borrow up to 100 times the amount of your own capital invested. Obviously, this can be risky because you can lose money as well. Do your homework on how margin and margin calls work before using it, but understand that it is the fastest way to big money.

Reputation of the Firm. All forex brokers should be registered with the Futures Commission Merchant and the Commodity Futures Trading Commission. You should verify that your potential forex broker is in fact registered before giving them any money. Also, because of the massive amount of capital required in the foreign currency market, brokers are usually owned or operated by large banking institutions. Verify their financial stability to ensure the safety of your investments.

Account Types Available. Small investors should look for brokers that offer mini accounts. A mini account usually offers a high amount of leverage (otherwise it would take decades of successful trading to grow $300 into anything significant). Every broker should have standard accounts which need $2000 to start the account with and offers more leverage options. The third type of account is a premium account, which will offer access to more powerful tools, services, and research. The amount of capital needed for a premium account will vary based on institution.

Quality of Tools and Research. Just as in online stock trading accounts, the quality and availability of tools and research will vary greatly between brokers. Most will have real time charts, news, & data, along with technical analysis tools. Some will have expert analysts writing articles and reports. You can look these analysts up on Google to see how credible they are. Also look for technical trading tools, economic indicators, and good customer support. I suggest starting a demo account at several brokers to get a feel for their platforms and see what type of system is most comfortable to you.

Choosing a forex broker is a very important decision, so take your time and do your due diligence. If you end up with a good one, you'll have everything you need to succeed and will be able to focus solely on trading the forex.

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What is Forex?

If you read about investing, you've seen the word forex pop up. But because forex doesn't get much publicity in the major publications and websites, many investors don't know that forex is just short for "foreign exchange." So trading the forex market is simply trading foreign currencies. As recently as ten years ago, currency trading had high barriers to entry, so only large banking and institutional firms had access to the tools and systems required to play in the forex game. Recently, however, technology has developed to the point that any individual investor can hop right in and trade with one of the many online platforms.

When buying and selling in the forex market, you'll see that there are four "currency pairs" that dominate the percentage of trades. Those four are the Euro vs U.S. Dollar, US Dollar vs Japanese Yen, US Dollar vs Swiss Franc, and US Dollar vs British Pound.

The goal when investing in currency is to be holding a currency that appreciates in value in relation to the other currencies. To use an overly simplistic example, if you bought 50 British Pounds for 100 US Dollars, held the Pounds for 1 week, and in that period the value of Pounds increased in relation to US Dollars, you could then convert those Pounds back into dollars for, say, $120.

Unlike the domestic stock markets, the forex is open for trades 24 hours a day. Much like the phrase "it's always noon somewhere," it's always business hours at some region of the globe. Since every country trades on the FX market, and it's open all day, the daily volume is roughly $1.2 trillion, which dwarfs that of the NYSE. Another comparison to make in order to truly realize the magnitude of the forex market is with the currency futures market (which has around 1% of the daily volume).

One other important distinction to make is that currency trading is not centered on an exchange like the NYSE or NASDAQ. There is no central body or organization required to act as middleman. Trading circulates between major banking centers around the world.

Until recently, there were strict financial requirements and massive minimum transaction sizes which prevented individual investors from trading. But with the advent of the internet came the FX brokers. A forex broker is similar to an online stock trading account such as etrade. Anybody can open an account and buy and sell in any quantity. Because the brokers have thousands of investors placing orders through them, they are able to meet the large minimum transaction size by purchasing in large blocks and distributing currency amongst the purchasing investors.

Although it is now easy to start trading forex, it is a complicated and complex market. While it offers fantastic opportunity for wealth, it is also very easy to lose your shirt in a hurry. Before trading forex, do your homework and read as much as you can find before investing your hard earned money.

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Forex Market Offers Opportunity And Information

 The forex market is what is called an international exchange currency market, where currencies are exchanged on a daily basis. There are five forex market centers around the world New York, London, Tokyo, Frankfurt and Zurich. One does not need to be on the trading floor, so to speak to be involved in the forex market. Today, forex trading can be done from home on a computer.

The forex market itself is basically a worldwide connection of traders, who make investment moves based on the price of currencies, or their values relative to other currencies. These traders constantly negotiate prices with other traders resulting in the fluctuation or movement of a currency's value. The value of a currency on the forex market also corresponds with supply. If there is greater demand for the Euro, let's say, then there will be less supply of it on the forex market, which means, in time, it will make a Euro more valuable compared to let's say the dollar. In short, in this forex market situation, one Euro would yield more dollars, subsequently weakening the dollar as well. Analyzing the forex market's fluctuations allows investors to make predictions on how a currency will move in relation to another currency. They then can make predictions and buy and sell currency accordingly.

While some people view the forex market as a place to see what their exchange rate will be when they travel abroad, others view it as an opportunity to make great gains in their financial planning and future.

Jay Monclif is an specialist in forex trading. He helped many entrepreneurs to get more for their money at http://www.forexadvise.info . Get more updated daily about Forex in his Broker forex site http://www.forexadvise.info
Jay Moncliff - http://www.forexadvise.info