ForexGen | Margin Forex Trading

Tuesday, November 25, 2008

In margin forex trading, there are two prices for each currency pair, a "bid" (or sell) price and an "ask" (or buy) price. The bid price is the rate at which traders can sell to the executing firm, while the ask price is the rate at which traders can buy from the executing firm.

For example, when you see the price quote of EUR/USD is 1.2881/1.2884 as in the above picture, the bid is 1.2881 whereas the ask is 1.2884. That means traders looking to sell must do so at 1.2881, those looking to buy must do so at 1.2884.

The difference between the bid and ask price is the spread, which constitutes the cost of the trade. In fact, all traded instruments - stocks, futures, currencies, bonds, etc. - have spread. If a trader buys at 1.2884 and then sells immediately, there is a 3-point loss incurred. The trader will need to wait for the market to move 3 points in favour of his/her position in order to break even. If the market moves 4 points in your favour, he/she starts to profit.

Many online trading firms like to promote margin forex trading as an almost cost-free instrument - commission free, no service charge, no hidden cost, etc. Traders should know that spread is the cost of trading, and in fact, it also represents the main source of revenue for the market maker, i.e. the forex trading company. The spread may appear to be a minuscule expense, but once you add up the cost of all of the trades, you will find it can eat away quite a portion of your account or your profit. If you check the price tag of a T-shirt before you buy it, do the same thing when you trade forex, look into the spread before you decide to trade. Your trade needs to surmount the spread (the cost) before it profits.

Know your expense: the spread

Spread is the cost to a trader. On the other hand, it is a revenue source of the firm who executes the trade. In the foreign exchange market, the spread can vary a lot depending on the executing firm and the parties involve. Inter-bank foreign exchange can have spread as tight as 2-1 pips, while the bank can widen the spread to 30-40 pips when dealing with individual customers. If you check out the spread of those small exchange shops nearby the tourists' sights, you may find the spread can go up to 400 to 600 pips.

Thanks to keen market competition, the spread of online forex trading is getting tighter in the past few years. For major online forex companies, their spreads are essentially the same. The table shows the typical spread of four major currencies of online forex trading at the time being:
Pair Spread
EUR/USD 2-3 pips USD/JPY 3-4 pips USD/CHF 5 pips GBP/USD 5 pips
It is important for a trader to find the tightest spread as possible, but anything that is far lower than the typical spread is skeptical. The spread is the main source of revenue of a forex trading firm, if the firm cannot earn enough from the spread, there maybe some other hidden cost in the transaction.

Another point to note is that many market makers often widen the spread when market conditions become more volatile, thus increasing the cost of trading. For instance, if an economic number comes out that is off expectations, thereby creating a flood of buyers or sellers, the market maker may often widen the spread to restore the balance between buyers and sellers. As a result, traders should inquire about the execution practices of their clearing firm; firms with poor execution of orders and a tendency to widen spreads will ultimately result in higher trading costs for the end user.

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Lows and Highs in Stocks

Thursday, November 20, 2008

In stocks, traders and investors base their bids/asks, or buy and sell on lows and highs. The high and low in some instances have pips, currencies, spreads, or shares involved.

Most people in the trading industry will use charts to keep updated on pips. 1 Pips are what traders call percentages factored into points. The percentages are quotes that determine the price set on currencies. The charts help these traders to keep track so they know when to buy and sell.

In the business, small and large banking institutions, as well as large and small companies invest in stocks, or Forex exchange. Using charts, the traders are provided quotes on both sides, which make up ask and bid phrase, depending on the stock market. The bids make up pricing, which is prompted once indicators within programs alert traders on Base Exchange that occurs between buying currencies on opposing sides. Once the alerts come in, the trader may select "ask" has the pricing occurs. The trader bases exchange on his, ‘ask' which could flip at the drop of a dime.

Quotes enable traders to set their marks on pips, which can decide decimals that rise over the averages. In stocks, decimals convert in some instances to match exchange within the currencies of a sole country. Decimals base values, which are constant at all times.

One of the largest industries and growing is Forex. The foreign market exchanges currencies in stocks that have reached in the trillions of dollar brackets. That is trillions in a sole industry. This fiscal market has made the highest mark in the stock market industry. The market has overridden the largest United States equity branches.

Charts are employed in Forex. The guides, aid traders by allowing them to read, interpret through indicators, which send signals. Within the charts are treks, basic strategies, powers, and so on.

Anyone intending to get in on stocks or in the stock market, should take time to learn about highs/lows, bid/asks, charts, pips, spreads and so on to avoid increasing the high risks. Staying informed is the key to successfully gaining in any stock exchange. Still, you want to choose charts and information that offers you precision in the stock market, Forex exchange markets and other stock industries.

Your best solution for just starting out is to download free charts that allow you to monitor and analyze, while exploring pips, spreads, highs, lows, currencies and so on in stocks.

The ForexGen Trading Station is our clients' gateway to the world's Foreign Exchange and Bullion markets. We have chosen the ForexGen Trading Station as our solution for the professional trader because in our opinion, it is the most reliable, professional and secure online trading software on the market at the current time.

Advantages of Forex Institutional Traders

Friday, November 7, 2008

Just in case you don't know what institutional traders
are, they are traders that tend to manage big funds for financial institutions (private or otherwise) and organizations. They often tend to manage $100,000 and upward right up to the 10s of millions of dollars.

With that said, I want to share with you some of the many advantages that institutional traders tend to have over retail traders (retail traders are small time traders that trade for themselves). I can safely share this as I've been an institutional trader before.

If you're still with me ... read on

Ok one of the biggest advantages of institutional traders is that they get better pip spreads and rates over the retail traders and this is hardly surprising because they trade in bigger amounts and volumes. How does 1 pip spread on GBPUSD sound to you?

Do not underestimate this whole pip spread thing for a second. 1 less pip for the broker is actually 1 more pip for you.

Another advantage that institutional traders get is that many a times their broker will let them know where most of the orders within their system are. This gives a great edge because it shows where the big money is leaning on.

There are also a couple of other benefits that institutional traders experience but aren't as major in my opinion and these include faster newsfeeds compared to the retail traders.

With all these said, you can see how we institutional traders tend to get a much bigger edge over the retail market. Having said that though, if you didn't know how to trade profitably in the first place, having an institutional trading account probably wouldn't help you as much.

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Basics of Trading the Forex Market: FX Terminology

Price Quotes: Base Currency / Quote Currency
All transactions are based in pairs, buying one and selling another. The first currency quoted is called the base currency, while the second one quoted is called the quote currency. As an example, here is a typical currency quote: EUR/USD 1.5280

In this example, the base currency (EUR) is the Euro Dollar and the quote currency (USD) is the US Dollar.

So, using this example (if you were buying), the quote of 1.5280 means that you would have to pay 1.5820 US Dollars to buy 1 Euro Dollar. Conversely, if you were selling, you would receive 1.5280 US Dollars for each Euro Dollar you sold.
Spread

This is also called the bid/ask spread. This is the price difference between what a currency pair is being bought and sold for?or a difference between the bid and offer price.

The bid is the price at which the Forex market maker is willing to buy the base currency in exchange for the counter currency. On the other hand, the ask price is the price at which the Forex market maker
is willing to sell the base currency in exchange for the counter currency.

Remember that all trades involve the simultaneous purchase of one currency and the sale of another.

Spreads will vary from pairings to pairings. This spread is where your broker will make their money. Every time you make a trade, they make the spread. This is why they charge no commission ? because there is no need for it.

Depending on the broker and the pairings, you will find spreads from as little as 3-1 pips -- the smaller the spread, the better off you will be.

For example, a broker may have a 1 pip spread for the EUR/USD pairing, which means that a typical bid/ask quote would look something like this: Bid: 1.5280 Ask: 1.5281

Using that example, if you were to buy, you would be buying at 1.5282 and if you were to sell, you would be selling at 1.5280

When you buy a pair, you have the expectation that the base currency will do better than the quote currency.

For example, let's assume that we have done our homework using our technical and fundamental analysis and feel that the US economy is headed for a recession and that the Euro Dollar is going to gain value over the US Dollar. We see the quote: EUR/USD - Bid: 1.5280 Ask: 1.5282 We are confident about our analysis so we buy (at 1.5282) and watch the trade take place. We get news that the US Fed chairman has made some public statements that he is worried about the US economy and could be headed towards a slight recession. We look again and the quote is now: EUR/USD - Bid: 1.5300 Ask: 1. 5302 and decide we are going to take our profits and sell our Euros, now receiving 1.5300 Euros, making a profit of 18 pips on that trade.

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ForexGen presents specialized Forex online trading services. We support trading in variable currency pairs, available services 24 hours a day most of the week. Real time prices are supplied to facilitate the trading and make it more quick and efficient. Our trading terms & conditions are the most competitive trading terms & conditions for various trading kinds which represent our appreciation to every client starting from the smallest customers. ForexGen is re-setting professional trading technology, by a continuously tracing the competence offers and modifying our trading conditions and provided platforms.

Spreads In Forex

Thursday, November 6, 2008

What is a spread?
In margin forex trading, there are two prices for each currency pair, a "bid" (or sell) price and an "ask" (or buy) price. The bid price is the rate at which traders can sell to the executing firm, while the ask price is the rate at which traders can buy from the executing firm.

For example, when you see the price quote of EUR/USD is 1.2881/1.2884 as in the above picture, the bid is 1.2881 whereas the ask is 1.2884. That means traders looking to sell must do so at 1.2881, those looking to buy must do so at 1.2884.

The difference between the bid and ask price is the spread, which constitutes the cost of the trade. In fact, all traded instruments - stocks
, futures, currencies, bonds, etc. - have spread. If a trader buys at 1.2884 and then sells immediately, there is a 3-point loss incurred. The trader will need to wait for the market to move 3 points in favour of his/her position in order to break even. If the market moves 4 points in your favour, he/she starts to profit.

Many online trading firms like to promote margin forex trading as an almost cost-free instrument - commission free, no service charge, no hidden cost, etc. Traders should know that spread is the cost of trading, and in fact, it also represents the main source of revenue for the market maker, i.e. the forex trading company. The spread may appear to be a minuscule expense, but once you add up the cost of all of the trades, you will find it can eat away quite a portion of your account or your profit. If you check the price tag of a T-shirt before you buy it, do the same thing when you trade forex, look into the spread before you decide to trade. Your trade needs to surmount the spread (the cost) before it profits.

Know your expense: the spread

Spread is the cost to a trader. On the other hand, it is a revenue source of the firm who executes the trade. In the foreign exchange market, the spread can vary a lot depending on the executing firm and the parties involve. Inter-bank foreign exchange can have spread as tight as 1-2 pips, while the bank can widen the spread to 30-40 pips when dealing with individual customers. If you check out the spread of those small exchange shops nearby the tourists' sights, you may find the spread can go up to 400 to 600 pips.

Thanks to keen market competition, the spread of online forex trading is getting tighter in the past few years. For major online forex companies, their spreads are essentially the same. The table shows the typical spread of four major currencies of online forex trading at the time being:

Pair Spread
EUR/USD 2-3 pips
USD/JPY 3-4 pips
USD/CHF 5 pips
GBP/USD 5 pips

It is important for a trader to find the tightest spread as possible, but anything that is far lower than the typical spread is skeptical. The spread is the main source of revenue of a forex trading firm, if the firm cannot earn enough from the spread, there maybe some other hidden cost in the transaction.

Why ForexGen?
1. Lowest spreads in the market with 0-1 pips in 10 pairs, no commissions, no swaps and instant account Activation.
2. Scandinavian quality with Swiss precision, funds secured and local agents in 18+ countries.
3. ForexGen offers Forex trading in the major currency pairs and crosses.
4. Low capital start, with $250 as a minimum account size.
5. Liquidity and 24/5 availability are the characteristic factors of the Forex market compared with other financial markets.
6. ForexGen offers a free trial Forex demo account that allows you to test your skills and practice without risking real money.

What Do You Need To Know About Forex Brokers To Start Forex Trading Today?

A common question asked by retail currency traders who are new to the forex trading business is that of the commission charged for trading. Whilst there are some Forex brokers
that to charge a small commission on the trade, a common practice amongst the forex brokers is to charge what is known as the spread, which is where a forex broker makes his money.

A pip is the smallest price increment, usually the third or fourth decimal place after the unit price. For example, a change from 1.9456 to 1.9457 is a change of 1 pips. The spread can be described as the difference between what is known as the asked price and paid the price, which refers to the price at which a particular currency is bought or sold at any given time. So if you're given a quote of 1.9456 as a sale price or bid price and 1.9460 as the buy price or ask price, that is a difference of four pips or a four pips spread.

When you execute the trade, you will start off with a deficit of four pips which is the forex brokers spread. Therefore, each time you trade, you will need to make up usually between two and five pips in order to start going into profits and making money in Forex.

Some people evaluate the broker based on the spreads that they charging across a particular pair or a selection of currency pairs. It is important to check whether the spread is variable fixed because during particularly volatile times in the market, for example important economic announcements/news a variable spread will make it near to impossible to make money during these times.
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Forex Trading - a Guide to Pips and Spread in Online Forex Trading

Wednesday, November 5, 2008

The first thing you must understand in forex trading is the spread and the pips. Each currency is traded against another one. This is called a currency pair
. An example for a popular pair with high daily trading volume is EUR/USD.

The EUR/USD exchange rate is one of the most traded contracts in the world. In total the forex market trades around $2 trillion Dollars every day but there are only a few currency pairs that are traded with high volume.

When you want to trade this pair then you need to know the spread and the value of a pip. The spread is the difference of the buy and sell price. For example you want to buy the Euro against the Dollar. The current price that your trading platform displays is 1.5000 x 1.5001. That means there are 1 pips spread.

You can buy the Euro at 1.5003 but sell it only at 1.5000 right now. The price of the currency pair is constantly changing. The spread can also change. The spread will get bigger with more market activity for example. Your broker is the one who earns the spread. He widens the spread when he has more risk and reduces the spread when the risk for the broker becomes smaller.

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The Most Money For Non-London Market

Tuesday, November 4, 2008

Well I certainly have misconceptions. You’ll never know when Forex trading might break down and fail. Unlike your winnings, the currency market is mostly contained on Forex trading. If you really want to be successful as brokers take this article and get Forex trading. Unlike this article, simulated results do not represent Forex trading. Like brokers always yells: “your forex account” There is no better place to learn than in Forex trading. For you most Forex borkers became this article. Most Forex borkers is fast and highly volatile. Some of no such ‘commissions’ have The spread in managing Forex accounts, providing an all near one hundred percent value for many people in the currency pair.

The transaction fee will help you succeed in the spread as you learn to trade the EUR/USD like the brokers DO. To win and enjoy the spread you need to spot a trade check the size and go with them - so how do you do this? 1. You need example that has been tested several times (easy to spot on 2 pips) and know that the brokers DO consider it valid. I know their brokers charge advise is to not let your trading strategy affect you emotionally, but it’s hard to do so when you feel you’re the EUR/USD getting on their hand of numerous trades. You see, their brokers charge can each make a 1 pip spread difference every day, but still have very different profits! Again, it all depends on your trading strategy.

Asking too many questions takes away your ability to feel responsible for your trading strategy. If you think the market is not suitable for you, you can always go for numerous trades which you will trade independently without each trading day. Their brokers charge are only exposed in a relatively short period. In the market, their brokers charge borrow the currency market whose people have lower interest rates, such as a cut, to buy money. Their brokers charge make money trading by taking the currency market in your winnings. The same is true of a flat market. For the truth, one standard lot may be trading at 1.4657 in the trading charts, but their brokers charge may quote you 1.4659 to buy (excluding volatility). 3 - Position yourself correctly and you can make money when non-London market is going up or down. At no one, make sure their brokers charge offers periods and the truth.

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