No-Frills Guide to FOREX

CEONLINEWRITINGSTORE

Books, Ebooks, Courses, Consulting, Writing, Tutoring

If you’re looking to invest, why not try your hand at FOREX trading? Learn the basics of FOREX with our NO FRILLS Guide to FOREX TRADING, a comprehensive but decidedly straightforward look at the ins and outs of currency trading in today’s market.

Read A Sample Below:

Add to Cart

Text Box: It’s almost universally agreed that money management in business, as in life, can make all the difference between success and failure. The all-important question, which too often is left unanswered: what exactly is money management? Since our primary focus is currency trading on the Foreign Exchange Market, the first thing to do when attempting to define the term, “money management” is to understand how the word applies to currency trading and to what extent it is actually a key factor in determining success versus failure. William O'Neill, founder of Investor’s Business Daily, once said that, “The whole secret to winning in the stock market is to lose the least amount possible when you're not right.” This quote aptly describes what money management is as an abstract concept. To best understand money management, however, it is important to understand the context in which money management is being used – in this case, in currency trading – and it is also necessary to try to grasp the methods used to achieve money management in the chosen context. First of all, let’s consider Foreign Exchange Systems and the role that they play overall in determining the value of currency and thus is determining the most appropriate method for money management. It’s generally true that governments around the world follow one of three different foreign exchange systems. These systems are known as free float, peg, and dirty float systems respectively. The free float system lacks any form of government intervention to determine value. In other words, the government does nothing to steer the value of currency in the preferred direction. Market prices instead are adjusted according to supply and demand, affording officials flexibility to establish domestic policies. The peg system is also known as the currency board and it offers fixed domestic currency rates for the countries that use it. Overall, it proves stability and helps to control inflation in smaller nations and in developing economies, which tend to benefit from the limited flexibility of this system. The dirty float system offers a combination of the free float and peg system features. Prices are not completely determined by market forces, as in the free float system; nor is the currency legally pegged to any particular rate of foreign exchange. Now let’s consider the derivatives – spot trading, futures trading, forwards trading, and option and swap financial tools – that interact to move the value of the foreign currency market and affect pricing overall. An often overlooked aspect of successful currency trading focuses on the achievement of a balance between these various elements. Many currency traders with limited experience make the mistake of focusing solely on spot trading, which is considered the most user-friendly and also the most popular tool for currency trading. Focusing on just one type of trading very much limits the trader’s options for money management and thus for profit from effective trading. The best way to trade by far is to establish a balance between the various types of trading mentioned above; between the various derivatives. Spot trading is known as FOREX in the FOREX market, as confusing as that might sound. A FOREX exchange of one currency for another is a simple simultaneous transaction that can be settled in two days (unless it involves Canadian currency, in which case it will be settled in as little as one day). Forwards trading is a type of trade that establishes a delivery date for a commodity that is sometime in the future. A forward trade is generally engaged for one, two, three, six, or twelve months ahead. Traders typically use forwards to take advantage of interest rate differences between countries, such as the difference between the US and Europe where the interest rates are established as five percent and eight percent respectively. Futures trading is very similar to forwards trading in the sense that the contract established binds both the buyer and seller in a trade of currency for a predetermined price at some predetermined time in the future. During the transaction, the investor makes a deposit on a futures contract and the resultant deposit provides a margin or bond for the trade. The buyer and seller will want to monitor the market to determine whether it is more valuable to lock into a lower or a higher price based on the likely direction of the currency value. Options trading is a form of currency trading in which the investor receives the option to buy a specific amount of currency at an established price on or before a specific date. Options are bought, sold, or resold according to the market conditions and they may be brought either on an exchange or over-the-counter. Swaps are a combination of a spot trade and a forward trade. They amount to an agreement between two parties, specified according to the trade of currency on a specific date with the understanding that the currency will be traded back on another date. Money management in the context of currency trading is about striking a balance between the method of trading that you use and the analyzed and applicable value of the currency you trade. In the following section, we’ll consider the significance of ensuring that your approach to money management is not only balanced but well controlled as well.

Text Box: Chapters: 1. Introduction 2. Fundamental and Technical Analysis 3. Evaluating A Trading System 4. Position Sizing Techniques 5. Managing A Trading Portfolio 6. Conclusions and Exercises 7. Further Resources for FOREX Trading

SERVICE SITES:

Writing:

www.ceonlinewriting.com

Consulting:

www.ceonlineconsulting.com

Publishing:

www.ceonlinepublishing.com

Tutoring:

www.ceonlinetutoring.com

PROFILE SITES -

Connect with me online @

View Cart

Buy Now