The Benefits of Forex Compared to Regular Stocks
Liquidity in the FX market means that there are far more trade setups compared to stocks. It also means that there is more money on the table. - (Approx. 3.98 Trillion Dollars are traded per day).
Once you get to an advanced level you can trade the news, however a novice should keep away from trading the news. An example of this would be the first Friday of every month is nonfarm payroll.
There are strong trends in the market meaning that strategies are easier to create and adapt depending on the current economy.
No matter what time you would like to trade or if you want to trade around another job you can as Forex is a 24 hour market.
Stops - almost all stops are guaranteed. NEVER enter a trade without stops. It is incredibly important to do research into your chosen broker as some will charge you more per trade and some don't trade live to market.
With the right equipment and in the correct environment information is easily accessible. You can see what news might affect the market and amend your order accordingly.
It is very important to know when news announcements are due to be released so we can avoid being in an intraday trade during this period.
Pick an economic calendar and look at it regularly - every Monday you should review the week ahead.
Focus on the Primary Important Indicators first (normally flagged RED)
It is generally the difference between the Expectations and Actual result that cause large movements in price.
The expectation of the news release is already factored into the current price.
o If the news release meets its expectations expect little movement in price.
o If the news release is radically different from expectations expect a large movement in price.
Pay attention to news Amendments - this can change everything quickly... (possible revisions up to 48 hrs after initial release)
Pips
If we are to make money we must collect pips
A single pip is the fourth decimal place of the exchange rate
EUR/USD 1.3625
We can collect pips in both a rising and falling market. Long and Short Trades
If we think the market will move up we BUY. This is referred to as going LONG
If we think the market will move down we SELL. This is referred to as going SHORT
How can we sell something we have not yet bought? We are speculating on the movement of one currency pair against another and placing our trades based on this speculation
Examples of Pips
Take £1 = 1.6535 USD
The last two digits are what is important which are referred to as 'Pips'
So if we were long 'Cable' at 1.6535 and we were looking to make 20 pips, we would be looking to close the trade at 1.6555
Some currency pairs only have 2 Decimal places for example USD/JPY 93.25. In this instance 1 USD would be equal to 93.25 Yen
Article Source: http://EzineArticles.com/?expert=Andrew_Argent
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