The Inside Scope of How Forex Trading Works - FinSMEs
The Inside Scope of How Forex Trading Works - FinSMEs |
- The Inside Scope of How Forex Trading Works - FinSMEs
- What are the advantages of forex trading with bitcoin? - Born2Invest
- Psychological Levels & Round Numbers in Forex Trading - DailyFX
| The Inside Scope of How Forex Trading Works - FinSMEs Posted: 29 Oct 2019 02:00 AM PDT  The history of forex trading can be traced hundreds of years back. Gradually, it became a necessity that allowed people to exchange currency when traveling to other countries. Of course, there were banks, foreign exchange centers, and foreign exchange brokers as among the players who facilitated this trade. Over the past several years to a few decades, forex trading has grown to be a form of investment that is rapidly growing in popularity. Most people are developing an interest in learning how the trade works and in addition to this, to make a buck out of it. In definition, ForEx or foreign exchange, usually denoted as FX, can be described as the trade where currency (or a variety of currencies) is the main commodity. It takes place between a network of buyers and sellers, trading one currency for the other. These traders can either be individuals, central banks, or companies. If you've traveled abroad, there's a high chance that you've done a forex transaction at one point or the other. Now, you'll notice that many forex transactions are only done for practical and convenience purposes, where you have to convert your money from one currency to another so you can use it to make certain purchases or payments. However, the vast majority of forex traders are in it to make a profit. Traders in the forex market who are in to earn a profit take advantage of the price movements gained from currencies converted every day. This is what makes the foreign exchange market so volatile and consequently, it's this volatility that makes forex trading an attractive and lucrative cash-earning opportunity to many. But how exactly does foreign exchange trading work? Some may wonder. Without further ado, here's the inside scope of how forex trading works. Understanding the Currency Market Unlike trading in shares and commodities, the trading laws of the forex market are dictated by a network of banks. The network of banks running the forex market is spread across different time zones and they include New York, Tokyo, London, and Sydney. This means that the forex market doesn't have a central operating point or location, allowing forex traders to trade 24 hours a day. In a world where the internet runs things, you don't even have to leave the comfort of your home to engage in forex trading. From regular employees in 9-5 jobs to work at home moms and people in-between employment, forex trading online has become a major source of income for many. What's more, you don't need a business degree to make it in the world of forex trade. With a little research about the currency markets, some digging into online trading tutorials, signing up for online trading classes and finding mentors who'll teach you the tricks of the trade, you can make a substantial amount of cash every day from forex trading. All the same, the forex market also allows business owners to do business and purchase different currencies in different countries. Currency traders in the worldwide network work round the clock to make this happen. Essentially, the worldwide network of these currency traders is the driving force behind the exchange trade around the world. Types of Foreign Exchange Markets Traders in the forex exchange markets take advantage of the price movements when making the exchange rate predictions. The foreign exchange market is divided into three categories, which include: How to Leverage In the Forex Trade More often than not, new traders in forex trading are very optimistic to double their accounts in a short duration of time. It's very easy to assume that you'll make huge profits when starting out, but the thing is, you first need to learn how to trade in the forex market. The concept of leveraging in the forex market is a feature utilized by investors to significantly increase their returns. This is done by utilizing various options such as futures and margin accounts. This means that you need to find a way to finance your assets. In other words, it means financing your investment in debt to increase the value of your shares. Increasing your shareholder value in the forex exchange is an important if not a vital step in the forex market because it allows you to profit even from relatively small price variations in currency pairs. In a nutshell, leveraging involves using sources of financing other than your own to enter into a transaction. However, you also need to be aware of the various risks involved. This is because excessive leveraging in the forex market can either increase your profits or double your losses. The fact that you're using borrowed money doubles the risks threefold. On the brighter side, however, working with a forex broker has its perks. First and foremost, they'll help to provide you with the funds to enter into a transaction, and since they are not in business to lose, they'll provide you with the strategies to boost your returns. Factors That Affect the Forex Market The forex market involves trading in currencies from all over the world. Again, the trade is all about making predictions in price movements before entering into a transaction. Now, several factors affect the forex market and exchange rates. To make it in the world of forex trading, you need to learn these factors beforehand and stay up-to-date with any changes that occur. Some common factors that affect currency exchange rates include: To be on the winning side, it's imperative to invest in effective forex trading tools as they provide you with insights and strategies of trading. In addition to this, depending on the forex trading tool you choose and the features it contains, you can receive real-time news feeds associated with the forex market. The ins and outs of the forex market are very similar to those of trading in stocks, asset trading, and bonds. Fundamentally, the determining factor of whether you make profits or losses depends on how you choose to trade. Smart trading involves choosing your forex broker wisely, utilizing a reliable trading platform and picking your trading tools smartly. Hopefully, the above pointers will provide you with information that will go a long way in increasing your forex trading knowledge, which is key if at all you are to be successful in the forex trading world.  | ||||||||
| What are the advantages of forex trading with bitcoin? - Born2Invest Posted: 29 Oct 2019 09:27 AM PDT As Bitcoin becomes an accepted form of currency within the forex market, more traders are beginning to ponder the advantages of the crypto within the world's most liquid marketplace. The dynamism prevalent within forex's massive global platform, the fact it's constantly moving 24/7, alongside the relative stability of Bitcoin, has opened new possibilities for traders. Whether short-term trading strategies are the goal or a longer-term investment, Bitcoin offers certain advantages that traders can choose to pursue. Why bitcoin?Bitcoin is one of the most prominent forms of digital currency in the world. Developed in 2009, it now has a track record that offers traders a strategic understanding of its value and future potential, establishing better risk management. The decentralized, peer-to-peer system that governs Bitcoin means the currency is free of any central authority (such as a bank or government) that, through the way transactions are processed on digitally recorded public networks, brings several advantages to the investor. Firstly, no personal information is carried with transactions. This gives the investor anonymity not afforded to them when trading fiat currency, providing a significant degree of privacy and security. Secondly, with no transaction costs, a frequent trader will enjoy the benefits of those savings. And there are advantages due to leverage. Bitcoin typically enjoys high leverage with brokers, while its market volatility is an attractive proposition for opportunistic traders. The benefits of trading with bitcoin on forex The benefits of forex trading with Bitcoin come down to the advantages inherent in the cryptocurrency. If we take the decentralized nature of Bitcoin as an example, we know that trading with cryptos is not influenced by geopolitical factors. No bank is going to change valuations overnight because no bank exists to do so. Also, it's a global currency, so macroeconomic fluctuations caused by a country changing its interest rates or geo-specific inflation are not going to impact Bitcoin in the way a fiat currency could be. The global nature of forex and Bitcoin gives this combination another advantage. You're putting the world's decentralized behemoths together, while the combined international stock markets don't come close to matching this volume of trading. Bringing Bitcoin to this marketplace secures the advantages of the cryptocurrency within a huge trading environment that dwarfs the possibilities afforded to it by Bitcoin-only trading platforms. Global boundaries are therefore eliminated. A trader from the US can make a Bitcoin trade with someone based in the United Kingdom without having to jump through fiat-related regulatory red tape. This has further appeal when you consider experienced traders can benefit from forex brokers' high leverage. Combine this with the sheer range of options for traders pursuing crypto-forex trading, with Top Rated Forex Brokers listing many trusted options such as FXTM and Alpari based on a variety of ranking factors, and the validity of this method of trading can be clearly observed. The growing presence of Bitcoin on forex has also encouraged brokers to reduce their fees to attract potential customers. Low deposit amounts and the prevalence of promotional offers such as trading firms matching new member deposits are also presenting further opportunities for the Bitcoin trader. Using a broker also allows investors to speculate without possessing any Bitcoin. Trades can be made as a contract for difference (CFD) or a spread bet without additional expense, with volume-based commissions adding the reassurance of security. Bitcoin's prominence means investors benefit from the highest liquidity amongst cryptocurrencies. And the lowest spreads are achieved when trading as a CFD. More specifically, those who want to hedge their portfolio may see Bitcoin as a way to avoid factors that influence fiat value such as quantitative easing or a national recession. And the numbers have shown plenty of positive growth amongst cryptocurrency pairs such as BTC/USD.  Balancing the risks with the rewardsLike any form of financial trading, the risks are as evident as the rewards. For the investor, individual ambition will help formulate a strategy that should identify the benefits of trading Bitcoin on forex. There are factors you can't avoid. Multiple exchanges mean multiple exchange rates, which will always vary. Meanwhile, the allure of high leverage adds risk to the inexperienced trader. As does adding a different asset class; an intermediate currency that can significantly impact profit-loss predictions leading to uncertainty. However, it is increasingly commonplace to see Bitcoin traded on forex meaning investors are getting more experienced while the cryptocurrency builds a reputation that can inform decision-making and limit risk. Being able to take a position without significant investment will attract many, as will the opportunity to hold short or long positions, speculate on Bitcoin volatility without taking possession, and trade against a variety of fiat currencies. Success is most likely going to come down to expectation and strategizing your goals around ambition. __ (Featured picture by Icons8 team via Unsplash) DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation for writing this post, nor do I own any shares in any company I've mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.  | ||||||||
| Psychological Levels & Round Numbers in Forex Trading - DailyFX Posted: 29 Oct 2019 07:11 AM PDT Key levels in forex tend to draw attention to traders in the market. These are psychological prices which tie into the human psyche and way of thinking. This article will cover the following key areas about psychological levels and round numbers in forex trading:
What are psychological levels and how do they work?Psychological levels are market price levels which are often key levels in forex denoted by round numbers. These round numbers frequently act as levels of support and/or resistance. Psychological support and resistance consistently work because of fundamental human disposition. Human beings value simplicity; from a trading perspective this means valuing whole numbers. Traders often use these numbers as entry, exit or stop levels. These stops and limits can alter order flow and price changes.  Identifying psychological levels on forex chartsTraders will often call these whole number intervals 'double-zeros,' as these prices are at even numbers such as 1.31000 on EUR/USD, 1.57000 on GBP/USD or 132.00 on GBP/JPY. The chart below identifies the 'double-zeros' on the current USD/JPY chart.  Some traders will take this a step further by looking at the number directly in the middle of these whole numbers or 'the fifties.' These levels, such as 1.31500 on EUR/USD or 131.50 on GBP/JPY can often come into play in the same manner as the 'double-zeros.' Traders will notice that there will often be some element of congestion at these key levels in forex as prices move up or down. The chart below illustrates USD/ZAR with 'fifties' denoted.  Notice that many of the price swings on the above chart take place around one of these levels. Therefore, traders want to incorporate these levels into the support and resistance revisions. The chart below represents the initial USD/JPY chart with identified swing levels.  Consequently, these prices act as a psychological line which work well as support and resistance. Not every one of these prices act as a function of support or resistance, but enough do that these levels warrant the trader's attention. How to use psychological levels in forex tradingAUD/JPY weekly chart  On the AUD/JPY chart above there are six strong inflections off the 75.00 price level. Each time price approached 75.00, the currency pair bounced back up. This is because:
After the first inflection, traders may not have been extremely bullish on the prospect of pushing price much lower than 75.000 as this price has already been exhibited as support. In many ways, untested 'psychological' levels can be looked at like pivot points. An area where there maybe some element of support or resistance. In general, round numbers such as 70.000 on AUD/JPY or 1.0000 on AUD/USD will garner more attention than a more pedestrian level like 71.000 on AUD/JPY. Most traders will often assign a higher degree of strength to the more rounded-intervals. Where traders can really find value with these levels is when prices may have resisted or been supported there in the past. This tells the trader that others are noticing and acting on those prices, and the potential for the 'self-fulfilling prophecy' of technical analysis may potentially be considered with more strength. Advantages and limitations of psychological levelsKey levels in forex should be assessed in line with the current trend and whether there is secondary technical suggestions in favor of the trade. Below are the advantages and limitations of psychological levels:
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