Shifting Liquidity Conditions Can Increase Currency Trading Volatility The liquidity of the forex market will vary during each trading day as global financial centers open and close in their respective time zones. The drop in liquidity is first evident during the trading session in the Asia Pacific region, which accounts for only about 21 percent … Read more
Signs That Averaging into a Trade Is Not a Good Idea Many trading books recommend avoiding or adding to a losing position average – and for good reason. This tactic can result in significantly higher losses on smaller incremental price moves. Also, if you add to a losing position, you lose the current trend movement. … Read more
Leverage Amplifies Gains and Losses — and Expectations Leverage refers to the multiple applied to your available margin, which translates to the maximum size of your position in the market. Leverage is usually expressed as a multiplier (eg 10x or 20x) or a ratio (eg 10:1 or 20:1). If the leverage ratio is 10 times/10:1 … Read more
Rules of Risk Management for Currency Traders When people think of risk management in the context of currency trading, the natural tendency is to focus on the risk of losing money. There are no two ways about it, this is the ultimate risk. But traders can head to many different streets before they reach their … Read more
Decide What Market to Trade More markets are available for trading today than ever before in the history of the world. Markets are not only available, but public access is easier than ever. With the advent of computers, high-speed internet access, and online electronic trading, you can sit at home and trade stocks, commodities, bonds, … Read more
Day Trading Makes a Bad Hobby Given the excitement of day trading and the supposed ease of doing it, you might think that day trading is a great hobby. On a boring Saturday afternoon, you can spend a few hours a day trading the Forex (Forex) market to make more money than if you spent … Read more
Follow the Market with Rate Alerts One way to follow the market from a distance is to set price alerts from your charting system or from your trading platform. A price alert is an email that alerts you when the market touches the price you set in a currency pair you select. Price alerts are … Read more
Choosing a Broker for Currency Trading Online currency trading is offered by dozens of different individual trading brokerage firms operating from all over the world, so you have many options to choose from. Here are some key questions to ask when choosing a broker: How good is the trade execution? The key to evaluating any … Read more
Foreign Exchange Markets: 24-Hour Trading The foreign exchange market (Forex) is open and active 24 hours a day from Monday morning in New Zealand until Friday night in New York. At any given moment, currency trading desks in dozens of world financial centers are open and active in the market. Currency trading does not stop … Read more
Liquidity and the Foreign Exchange Market The foreign exchange (Forex) market is often described as the most liquid financial market in the world, and this is true. But this does not mean that currencies are not subject to varying liquidity conditions that currency traders should consider. Liquidity refers to how much market interest (number of … Read more