Six steps to improve your currency trading: First step

step 1: Strategize, Analyze and Diarize:

Successful professional traders do three things that amateurs often forget. They plan a trading strategy, they follow the markets, and they diarize, track, and analyze each of their trades.

1. Plan How You Will Trade
   You may have heard the adage, "if you fail to plan, you plan to fail." This is particularly true in Forex speculation.
   
   Successful traders start with a sound strategy and they stick to it at all times.
• Choose the currency pairs that are right for you.
  Some currency pairs are volatile and move a lot intra-day. Some currency pairs are steady and make slow moves over longer time periods. Based on your risk parameters, decide which currency pairs are best suited to your trading strategy.
• Decide how long you plan to stay in a position.
  Based on your currency pair selection, plan how long you want to hold your positions: minutes, hours, or days. Remember that depending on your account type, having open positions at 5:00pm Eastern Time may incur rollover charges.
• Set your targets for the position.
  Before you take a position you should establish your exit strategy. If the position is a winner, at what rate will you cash out? If the position is a loser, at what rate will you cut your losses? Then, place your stops and limits accordingly.
2. Follow the Forex Market
   Use Forex charts and Forex news to monitor market information and technical levels that affect your positions.
   
   
   • Use Forex Charts
     Charts are an indispensable tool to improve trading returns. You can easily recoup the money spent on a charting package from a single well-placed trade based on the analysis from professional charts. Check out XE Charts. Please keep in mind that forex trading involves a high risk of loss, and no guarantee is made that the investment on the charting applications will be recouped.
   • Follow Forex News
     XE Forex News provides breaking Forex news on economic reports and political events that influence the currency market. You can access detailed market commentary and trading strategies from experienced Forex traders.
3. Keep a Forex Diary
   Most traders fail because they make the same mistakes over and over. A diary can help by keeping track of what works for you and what doesn't. Used consistently, a well-kept diary is your best friend. When keeping your diary, make sure that it contains at least the following:
   • The date and time you took the position.
   • The rate at which you took the position.
   • The reason you took the position.
   • Your strategy for the position.
   • The date and time you exited the position.
   • The rate at which you exited the position.
   • Your profit/loss on the position.
   • Why you exited the position. Did you follow you strategy?
   Once you learn to recognize successful trading patterns, you will be able to spot them when they return.

Be aware that trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Source: http://www.xe.com/currencytrading/improve.php

What should you know about Forex Signals ?

How to read a Forex Quote

Reading a Forex Quote

  Quoting Convention

 Quotes in the currency market can be a bit confusing because any position you take in the market is actually two different positions. In FX you’ll see currencies listed in Pairs. This permits you more options in FX then you get in other markets. For example, you may be bullish on Euro and will therefore buy want to buy the Euro. In FX, you can chose what you want to buy those Euros with. You can buy them with USD, or you can buy them with JPY if you prefer. You can buy Euros with a long list of other currencies that we offer. So a currency pair will be displayed in this manner.

 EUR/USD The first currency listed is referred to as the “base currency”. The second currency listed is considered the “counter currency”. So for EUR/USD, the Euro is the base currency and the US Dollar is the counter currency. If the pair is trading at 1.4700, that quote tells us how much of the Counter currency it would cost to buy one unit of the base currency. So it would cost $1.47 US to buy one Euro. When it comes to placing a trade, keep in mind that any time you take a position you are doing so in terms of the base currency. So if you buy a pair, you are buying the base currency. If you sell a pair, you are selling the base currency. Then it’s easy to keep in mind that you are always doing the opposite with the counter currency. So, if you buy EUR/USD, you are buying Euros and selling US Dollars. If that is still a bit too confusing, you can think of it simply this way. Buy if you expect the rate to go up. Sell if you think the rate will go down. Simple as that! You will always see a two-sided quote in FX. In your FXCM account you will always be shown a Buy price and a Sell price. They can also be referred to as the “bid” and “ask” respectively.

 The Buy price is the rate that you can buy that pair at, and the Sell price is the rate at which you can sell that pair. The difference between the two prices is called the “spread”. The spread is determined by the price providers and liquidity in the markets at that precise moment. FXCM has up to 12 interbank firms streaming prices into our platform. The platform filters those feeds for the best Buy price and the best Sell price, and passes them on to account holders with a small mark up. A spread exists for all tradable instruments, stocks, bonds, futures, options, etc, it just isn’t always visible to the trader. So now you hopefully understand how currency pairs are quoted and what you are buy and what you are selling when you place a trade.

Source:www.dailyfx.com 

What should you know about Forex Signals ?

The A-Z Of Forex Trading