Which Forex currency pair is the best to trade?

The major currency pair EUR/USD is a great choice for beginners because it moves slowly compared to other currency pairs. The EUR/USD has a strong positive correlation with GBP/USD and a negative correlation with USD/CHF.

It is the most traded currency pair with with around 30% of total daily volume of the Forex market. This currency pair is also popular with more experienced traders.

It can be useful to compare the EUR/USD and USD/CHF charts because of their negative correlation, when planning trades. Usually  USD/CHF moves ahead of EUR/USD.

A strong USD weakens the EUR/USD.

To make your EUR/USD trading decisions you should apply both technical analysis tools and fundamental analysis. Be sure to follow follow important financial news from the Europe and the US.

The best opportunity  to trade this major is during the European session.

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Trading currencies and currency pairs

The currencies of the world are on a floating exchange rate, and they are always traded in pairs Euro/Dollar, Dollar/Yen, etc. About 85 percent of all Forex daily transactions involve trading of the major currencies.

Four major currency pairs are usually used for investment purposes. They are: Euro against US dollar, US dollar against Japanese yen, British pound against US dollar, and US dollar against Swiss franc. Right now I will show you how they look in the trading market: EUR/USD, USD/JPY, GBP/USD, and USD/CHF. As a note you should know that no dividends are paid on currencies.

If you think one currency will appreciate against another, you may exchange that second currency for the first one and be able to stay in it. In case everything goes as you plan it, eventually you may be able to make the opposite deal in that you may exchange this first currency back for that other and then collect profits from it.

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Are you over-cautious or reckless?

Getting started trading the Forex market is something that can be quite thrilling, such is the potential for making real money. For many people, what  attracts them about the Forex market is exactly the same thing that can turn them off it – that is to say the high stakes which exist. Successful trading can make you very rich very quickly, but a bad trade can wipe your profit out in the blink of an eye and empty your account. Having a negative experience early on can cause a trader to decide not to return to the trading arena. Even the fear of something going wrong can put the brakes on a promising trading career.

It is completely human to be cautious early on in your trading career, in fact, being over-cautious is better than being reckless, because as beneficial as a daring strategy can be, if you suffer a major loss early on in your trading career it can put the thought of failure in your mind on every future trade. You will, in all likelihood, lose leverage from your broker, and you may also become prone to a kind of paralysis which prevents you from trading at all.

However, this does not mean that you should react hastily to any drop in the market because every market undergoes corrections from time to time. A short drop is not always the precursor to a crash, and judging the right time to stop your loss is something you will learn to do with experience.

Open a Forex demo account and practice trading with virtual money.  A demo account is important because you can test your forex trading strategies whitout taking any risks and without loosing any money.

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Forex Tester – Real-life Forex Experience for Building Strong Trading Skills

Forex Tester is a computer simulator of the FOREX market. It allows the user to practice trading and test out different trading strategies against the historical market data, rather than risk real money. The simulator gives total control over the testing process. The user can select the testing speed, make a pause, track history forward by bars, or roll it back if the activities result into a loss, enter new parameters and retest the strategy.

The FOREX simulator has a built-in library of indicators and oscillators that will help the trader to decide when to enter or exit a trade. For example, there are indicators, such as Ishimoku, Relative Strength Index, MACD, Stochastic, and Bollinger Bands. The library is regularly updated with new indicators, plus users can create their own custom indicators using Forex Tester API and samples of how to create custom indicators in the help system. There is also a library of drawing tools, traders can use to track their actions with ease. The user can paint different graphic shapes on the charts, including vertical, horizontal, trend lines, rays, poly lines, Fibonacci tools and snap their control points to bars on the graph. Shapes can be deleted, copied, or edited to change color and style.

Forex Tester is designed for all traders, including beginners who are just taking the first steps into the world of FOREX and professionals who want to hone their trading skills. Developing a trading strategy that brings profit is one of the most difficult things to do. While a live FOREX demo account can help in this process, practicing in real time is too long and complex. For example, if the trading system allows trading every day only at 9 AM, the user will have to sit at the computer every day at 9 o’clock during a month or even more. To make matters worse, the Internet connection can go dead, or the user can oversleep the trading time – this all has impact on the final results. Forex Tester reduces learning from weeks to minutes and allows the trader to test strategies uninterruptedly.

Unlike similar software, Forex Tester brings precise, realistic results, letting the beginning trader gain true FOREX experience and prepare to trade on the real market. To achieve more precision, the program handles swaps, spreads, margins and other market parameters. You can see the results of testing as profit diagrams, including balance, margin, equity and drawdown. Besides, Forex Tester has no restrictions on the number of currencies, or timeframes to be used for testing, which is inacceptable for multicurrency testing. The program imports an unlimited number of currencies and years of historical data and allows you to test them simultaneously.

Forex Tester puts all important information and tools up front, letting the user trade with remarkable ease. Offering a multi-window interface, the program allows one to open several windows with different currencies and timeframes of one currency simultaneously. Any operation is a mouse click away. All needed parameters can be selected from menus, and the user does not have to write formulas.

To get started with Forex Tester, the trader is required to get history data and generate ticks. The program can import history data from different sources and in various formats, including MetaTrader history format. Once the history is loaded, it’s necessary to generate ticks for testing. To do so, the user should choose the desired method to generate ticks, select the currency name, specify the timeframe for trading and generate ticks. When the process is completed, the user can start testing. Forex Tester will read and process the prepared tick data and build bars. The trader can buy, sell or place pending orders, pause testing, trace by bars, or rewind the history.

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The reliability of trending data

When making an investment in the Forex market – or indeed cashing out of one – it is common to use the trending patterns of the currency that you are trading. This is data that has been collected over a period of time – in many cases over the course of years, even decades. Knowing how to read the data effectively can make you a lot of money, or save you from making a catastrophic loss. The way that you go about investing can make a big difference, and it is advised that you do not ignore the lessons of history. However, can it be said that the historic data is foolproof?

Well, the only true answer to that question is “no”. Very few things in this world are 100% certain, and anything that is so certain is not going to be a sound basis for investment because it will never move in terms of value. As far as is possible, the most popular methods of data analysis within the Forex market can be very reliable and aid a profit strategy, but you must accept that they carry a certain risk. That risk is reduced the longer a period of data collection continues. However it is important to be aware that the lower the risk, the lower the potential reward becomes.

It is fair to say that any sound strategy needs to have a basis in data. The more data you have, the more comprehensive your strategy. You need to be aware at the point of investment however that there is a chance your strategy will fail, no matter how much data went into creating it. This does not mean the data was bad, just that on this occasion the market won.

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Micro Lots are launched in eToro

eToro has released a new version of our groundbreaking platform with a new exciting feature: micro lot trading.

Micro lots enable traders to buy and sell smaller amounts of currency with each trade. Whereas a standard mini lot contains 10,000 currency units a mini lot is comprised of only 1,000 currency units. Practically speaking, what that means for eToro’s Bronze account traders (eToro’s standard beginner account), is that they can now open trades with as little as $2.5 of initial investment!

Example: 1,000 units of EUR/USD divided by a leverage of X400 will result in a $2.5 trade amount needed to open such a trade.

This will enable Bronze account traders to open TEN TIMES MORE TRADES!

With a $100 deposit, they can now invest as little as 2.5% of their balance capital for each trade, instead of having to invest 25% with a minimum $25 trade.

The feature is sure to have massive appeal to novice traders who are just starting out in forex, because now with a small deposit of $50 in their eToro account, traders can get a lot more market action for their money.

Visit eToro.com for more information.

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Forex trading – Do it your way!

There have been some extremely successful traders in the history of the various markets, people who have made so much money in fact that they have been able to retire before the age of thirty in some cases. Whether the idea of being retired before you are even half way to the legally-mandated retirement age thrills or terrifies you, it has to be said that there is a real upside to having the opportunity. If we could all do what those super traders have done, we would surely do it, giving us more time to spend with loved ones. It probably comes as no surprise that such a way of operating is impossible.

As impressive as the idea of making billions and quitting before the market has the chance to take it back may be, we cannot just ape the actions of past successful traders and expect that to work for us. The market is constantly changing, and things that were true yesterday, a month ago or before we were even born are not necessarily so now. You need to find your own way, and this is as true of market trading as it is for anything else. As much as any other reason, this is true because sometimes you need to react instinctively. If you have been following someone else’s strategy, then you’ll be sunk because you do not have their instincts. Play it your way – learned through years of effort if needs be – and you will have a much greater chance of making a fortune.

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Don’t get carried away – consistency is the key!

When trading on any stock market it is easy to look at early positive results and think yourself bullet-proof. In fact, the world’s impression of stock traders in many cases tends to picture them as extremely sure of themselves and convinced that they alone hold the secrets that create wealth. This is due in no small part to the fact that, not all that long ago, that was exactly how the typical market trader behaved. It would be easy to sneer at people for behaving in that way, but the stakes involved in the world’s big markets create that kind of attitude. If your every decision can mean several figures of profit or loss, you need to at least appear confident.

There is a fine line between self-assurance and over-confidence. There is an equally small space between the relatively self-assured confidence of a trader who has just had a moderate success and the complete blind panic of someone who has just seen their positions tumble. As far as possible, you have to remain constant in your emotions when trades are live. Most traders will set stop-loss and take-profit positions on their trades, which enable them to get out while there is still time to protect some money, or to cash out before a rising stock hits difficulties. These are cautionary steps, and can be very worthwhile.

Never assume that you alone hold all the secrets. It only takes one thread to be pulled for the whole thing to come apart, and make you look very stupid. It is better to be cautious and have a house, than be impulsive and homeless.

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Don’t assume that you know everything

If there is one piece of advice that should be issued to every potential Forex trader before they go anywhere near the trading floor (virtual or otherwise) it is this: “You may well arrive at the conclusion that you are always right. Get that idea out of your head now before it is proved to be dead wrong.”

The fact of the matter is that even the most experienced traders, and the most successful of those, have made mistakes in the past. In fact, the ones who have continued to trade for years and made a lot of money will very often be the ones who didn’t get overconfident. There is only one thing that can come from absolute confidence, and that is a rude awakening. Allow yourself to consider the phrase “the only thing that I truly know is that I know nothing”. Although it may not be quite true, it at least allows you to keep reasonable expectations.

The simple truth is that a bit of confidence is always worthwhile – it pushes you to make decisions that can be risky but are manageable. Too much confidence however is always bad. It does not allow you to keep an open mind. Without an open mind you will not be able to play the market successfully, as it will often be too late to react and make quick profits. The race, as corny as it sounds, is only against yourself, so take the time to learn its course and you will benefit

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Bulls and Bears – oh my!

Anyone who has flicked through the financial channels on their cable TV box without really stopping to listen to what is being said will probably be occasionally confused by references to “bulls” and “bears”. These terms are common parlance in trading situations, and can be heard or read in any market analysis if you stay tuned long enough. They are not references to sports teams, nor to a traveling zoo visiting a trading floor, but rather to styles of market.

A “bull” market is, in short, a market on the rise. It is characterised by a great deal of investor confidence, which can carry on for an indefinite period of time. When a currency breaks its resistance level, it is expected to continue rising, to move with a singularity of purpose. This is much like the way a bull is characterised. Additionally, it triggers herd behavior, as more and more investors will join in and invest more. The term “bull market” is therefore a good definition of a market behaving confidently.

“Bear” markets, on the other hand, are the exact opposite of bulls. Where prices fall and the investor mood is negative, the support level may be broken and the price will continue to fall. The most common explanation for the terminology here is that when a bear attacks its prey, it tends to do so by striking downwards. For a true bear market to be declared, a majority of currencies need to fall, however a single currency can be described as behaving “bearishly”.

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