Free Hosting from 000webhost

Info Free Hosting from 000webhost






Get your free hosting now ;)

a Simple FOREX Strategy - Stop Hunting

Today FOREX world is built around large leverage and constant use of margin, in equities, standard margin is set at 2:1, in options, the leverage increases to 10:1, in the futures market, the leverage factor is increased to 20:1, but in the FOREX market the leverage sets the highest bar by increasing to 100:1 ratio and can climb up to 200:1 meaning that you can invest $100 for a $20,000 value control! An experienced trader would limit his leverage to no more than 10:1.

Alongside leverage usage, or as in many FOREX rookies’ cases using too much leverage, comes the opportunity for either extremely profitable or extraordinarily dangerous and huge loses. You can double your account overnight or lose it all in a matter of hours if you make use of the full margin at your disposal. Considering that fact, most FOREX traders use “stops” order / “stop-loss” - they simply do not have the luxury of nursing a losing trade for too long because their positions are highly leveraged, and here you can step in and take advantage of this knowledge.

Stop order in a nutshell is a form of insurance or security measure that is given to buy or sell when a currencies' price surpasses a particular point. Using stop loss is critical for long-term survival. By setting a predetermined entry or exit price, investors usually use this system to minimize their loses when off for the business day or any other situation in which they are unable to monitor their portfolio for an extended period.

The main FOREX strategy which takes advantage of this knowledge is “Stop Hunting” , which attempts to force some foreign currency exchange investors out of their positions by driving the price of a currency pair to a level where many investors have chosen to set their stop-loss orders (aka “weak longs”), by understanding that the human mind naturally seeks order, most stops are clustered around round numbers ending in "00" (i.e. if the EUR/USD pair was trading at 1.1380 and rising in value, most stops would reside within one or two points of the 1.1400 price point rather than, say, 1.1417). Absorbing that fact alone is priceless knowledge (the price of a currency pair can experience sharp moves when many stop losses are triggered); professional traders place their stops at less crowded and more unusual locations. The possibility of profit from these unique dynamics of the foreign currency market is huge and proven.

About The Author

Mia Milis is an independent trader and provides financial advice regarding foreign exchange to several institutions as well as private individuals. Being an Internet enthusiast, she has taken up to provide advice through her brilliant articles, and in recent years has also founded theforexblogger.com in order to provide a platform online traders worldwide could share experiences through.
Visit Mia at http://www.theforexblogger.com

Why Do Forex Trading?

Your Independent guide to Forex Trading
By. Michael Russell

Forex, or foreign exchange, trading is the buying of one nation’s currency by selling another’s. Forex trading didn’t exist much before the early 1970s, because that’s when currencies were no longer required to “measure up” to gold (“the gold standard”). In the 1980s forex trading became well-established as the Internet grew. London is known as the forex trading city of the world, largely because of its centralized location. In the United States, Chicago has the big forex market.

There are five major currencies in the forex market: US Dollar, Japanese Yen, British Pound, Euro and the Swiss Franc. Together, these make up over 70% of forex trades. For the last 10 years the forex market’s biggest even was the introduction of the Euro. Today the fantastic growth of two Asian countries, China and India, is the major happening.

Forex trading has gained popularity in recent years. For one thing, it has become the largest financial market in the world - turning over about $2.2 trillion each day. It is about ten times the size of the next largest financial market, the New York Stock Exchange. For another, it is also the fastest developing market in the world. This is somewhat due to globalization. Each country is losing control over their own currency’s exchange rates. This contributes to the overall liquidity of currency in global financial markets. And last, but not least, it’s easy to make a profit at - or at least limit - losses. Unlike other futures investments, you can’t lose more than you’ve put in.

Forex trades are not done through a centralized exchange, but rather are over-the-counter trades using broker-dealer relationships. This requires high-speed communications networks and trading systems to relay the financial market information as well as individual trades in real time. This is why common use of the Internet had to occur before smaller investors could be direct players themselves.

The foreign exchange currency market used to be available only to the largest of players, like banks and investment firms and they still make the greatest percentage of trades; around 80 percent. It is estimated that banks deposit about 30% of their money in the forex market and make 45% on it.

Recently, though, forex trading has evolved into a system that welcomes small investors as well as large. Most trades are done online today. Anyone with an Internet connection can invest in the forex market in real time. Most online accounts have great flexibility and filter options, allowing you to set up exit (or entrance) points based on price. When that point is reached, a sale will be executed on your behalf automatically. You needn’t be glued to the screen watching for your price.

Opening a forex trading account requires filling out a simple form and presenting your I.D. Once you have your online access, you usually also have access to tools provided by your broker. You can also buy separate tools such as signals, used to foretell a particular currency price change. Usually there is no commission paid on individual trades.

One of the great things about forex trading is that you can do it from home with your computer and Internet access and the tools provided by your online broker. You don’t NEED anything else. You could even become a professional forex trader and still never leave your computer room at home. But a friendly word of caution – just because you’ve had a few good trades over a couple months doesn’t mean you’re ready to go pro! That takes lots of education and experience.

Refference at : http://EzineArticles.com/?expert=Michael_Russell