Many Reasons to Choose Trading Forex

The smart trader pays close attention to spreads, because they are the cost of trading.
Other market makers may list low spreads, even a 0.9 EUR/USD spread, but there are often strings attached. Their “special rates” may apply only if deposit amount, lot size, trade volume, regional or other restrictions are met. Or these rates may be available only for particular times of the day or week.

By contrast forex brokers offer tight spreads to all traders with no discrimination. Our posted spreads are our standard spreads, except when market liquidity just isn't available to us (for example, during market events or weekends).

• Get the spread that’s posted (under normal market conditions).
• Get the same spread, regardless of your account size, account type, or trade size.
• Get the rate you expect, with immediate settlement, fast execution.
• 100% automated – no intermediaries, no trading desk, and no disappointments.

Take-profit orders

Don’t you just love that name? An old market saying goes, “You can’t go broke taking profit.” Use take-profit orders to lock in gains when you have an open position in the market. If you’re short USD/JPY at 117.20, your take-profit order will be to buy back the position and be placed somewhere below that price, say at 116.80 for instance. If you’re long GBP/USD at 1.8840, your take-profit order will be to sell the position somewhere higher, maybe 1.8875.

Limit orders

A limit order is any order that triggers a trade at more favorable levels than the current market price. Think “Buy low, sell high.” If the limit order is to buy, it must be entered at a price below the current market price. If the limit order is to sell, it must be placed at a price higher than the current market price.

Stop-loss orders

Boo! Sound’s bad doesn’t it? Actually, stop-loss orders are critical to trading survival. The traditional stop-loss order does just that: It stops losses by closing out an open position that is losing money.

Use stop-loss orders to limit your losses if the market moves against your position. If you don’t, you’re leaving it up to the market, and that’s dangerous. Stop-loss orders are on the other side of the current price from take-profit orders, but in the same direction (in terms of buying or selling). If you’re long, your stop-loss order will be to sell, but at a lower price than the current market price.

Dollar Moves in Thin Trading

Dollar mixed, moving within tight ranges in light Christmas week trading

In light holiday trading, the dollar dipped against the euro, but edged higher against the yen and pound Friday.
The 15-nation euro rose to $1.4067 in late New York trading Friday from $1.3999 late Wednesday, while the British pound slipped to $1.4677 from $1.4752.
The dollar also rose to 90.58 Japanese yen Friday from 90.39 yen late Wednesday ahead of the Christmas holiday.
With a lack of economic reports or government financing actions to direct trading, the greenback moved within tight ranges against the major currencies.

As expected, preliminary data showed a lackluster holiday shopping season compared with last year, but equities in the U.S. traded higher on the heels of the Federal Reserve's agreement to make General Motors Corp.'s financing arm, GMAC Financial Services, eligible for bank rescue aid. The Dow Jones industrials rose about 47 points.
In other New York trading, the buck fell to 1.0675 Swiss francs from 1.0740 francs late Wednesday, but gained to 1.2221

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Successful Options Trading Strategies

When it comes to giving people the hope of becoming a millionaire overnight, the stock market excels. Every day we see evidence of stocks that have flown upwards as if they had wings, providing investors with a windfall of profits. It's inevitable that catching one of those stocks just before it takes off is an exciting possibility, inspiring the beginning trader to take the plunge. When you trade options, the stakes are raised, making those massive profits even more attainable, but the basics that underlie successful trading in the stock market are the same as those for trading options.

Once you start to look at trading stocks, you find yourself plunged into a confusing nightmare where hundreds if not thousands of people are pushing "their" system that is supposedly infallible. For a beginner, it's easy to get drawn into the complex net, believing that there must be a simple solution that will hand you the keys to stock market success. These keys will see you finding winner after winner, and making your fortune.

The reality, however, is that there are no keys that will find a winner every time. After all, if that was possible, how could anyone ever lose any money in the market? And if nobody loses, then how can someone else gain? The whole stock market would collapse.

Having said that, there are a number of very successful trading systems that work well over the long term. It's important to realize that a winning system is one that consistently delivers profit over a longer time frame - and part of the equation is that a percentage of trades will be losers. Once you learn to look at the bigger picture, rather than focusing on the individual trades, you'll be a lot more successful in the market.

There are a couple of approaches to the market that are popular across many systems. One is to take small losses when they happen, and let your winners run. So you might take six little losses, which are more than compensated for by one huge gain. This type of approach takes a lot of confidence and self-discipline, as it's very easy to give up if those six little losses all happen in a row, without a winner in sight.

Another approach is to take your profits after a certain percentage of gain, and occasionally put up with a medium sized loss. This system is nice if you like to see profits, because you don't run the risk of a stock that's risen suddenly dropping again and wiping out your profit - you took your profit early. However you also run the risk that the stock will continue to fly upwards and you miss out on that profit. This system can be risky, because you need a number of small profitable trades to cover one of the losses

Forex Options Market Overview

The forex options market started as an over-the-counter (OTC) financial vehicle for large banks, financial institutions and large international corporations to hedge against foreign currency exposure. Like the forex spot market, the forex options market is considered an "interbank" market. However, with the plethora of real-time financial data and forex option trading software available to most investors through the internet, today's forex option market now includes an increasingly large number of individuals and corporations who are speculating and/or hedging foreign currency exposure via telephone or online forex trading platforms.

Forex option trading has emerged as an alternative investment vehicle for many traders and investors. As an investment tool, forex option trading provides both large and small investors with greater flexibility when determining the appropriate forex trading and hedging strategies to implement.

Most forex options trading is conducted via telephone as there are only a few forex brokers offering online forex option trading platforms.

Forex Option Defined - A forex option is a financial currency contract giving the forex option buyer the right, but not the obligation, to purchase or sell a specific forex spot contract (the underlying) at a specific price (the strike price) on or before a specific date (the expiration date). The amount the forex option buyer pays to the forex option seller for the forex option contract rights is called the forex option "premium."

The Forex Option Buyer - The buyer, or holder, of a foreign currency option has the choice to either sell the foreign currency option contract prior to expiration, or he or she can choose to hold the foreign currency options contract until expiration and exercise his or her right to take a position in the underlying spot foreign currency. The act of exercising the foreign currency option and taking the subsequent underlying position in the foreign currency spot market is known as "assignment" or being "assigned" a spot position.

The only initial financial obligation of the foreign currency option buyer is to pay the premium to the seller up front when the foreign currency option is initially purchased. Once the premium is paid, the foreign currency option holder has no other financial obligation (no margin is required) until the foreign currency option is either offset or expires.

On the expiration date, the call buyer can exercise his or her right to buy the underlying foreign currency spot position at the foreign currency option's strike price, and a put holder can exercise his or her right to sell the underlying foreign currency spot position at the foreign currency option's strike price. Most foreign currency options are not exercised by the buyer, but instead are offset in the market before expiration.

Risk-Reward Ratio in Forex Trading

From the very beginning of your forex career a term Risk/Reward Ratio will be an important part of your trading strategy. The realization that every single trade you make contains a certain degree of risk will defend you from uncontrollable fears and panic attacks during the trading hours. This is when the risk management comes in handy. The best known way to figure out the risk you take is to calculate the risk-reward ratio. What is this ratio and how is it determined?

Risk

First thing to do when calculating the risk-reward ratio is to figure out the risk itself. This can be done by analyzing the total sum of money needed to enter the trade. The actual amount of money at risk is calculated by the following formula:

the price of the selected currency multiplied times the amount of lots

Reward

The reward is of course closely related to the profits you hope t make from the price movements. The formula to figure out the reward is as follow:

the gain multiplied times the amount of lots traded