What's Fibonacci Forex Trading?

Fibonacci forex trading is the basis of many forex trading systems used by a great number of professional forex brokers around the globe, and many billions of dollars are profitable traded every year based on these trading techniques. Fibonacci was an Italian mathematician and he is best remembered by his world famous Fibonacci sequence, the definition of this sequence is that it's formed by a series of numbers where each number is the sum of the two preceding numbers; 1, 1, 2, 3, 5, 8, 13 ...But in the case of currency trading what is more important for the forex trader is the Fibonacci ratios derived from this sequence of numbers, i.e. .236, .50, .382, .618, etc. These ratios are mathematical proportions prevalent in many places and structures in nature, as well as in many man made creations. Forex...

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Pivot Points in Forex: Mapping your Time Frame

It is useful to have a map and be able to see where the price is relative to previous market action. This way we can see how is the sentiment of traders and investors at any given moment, it also gives us a general idea of where the market is heading during the day. This information can help us decide which way to trade. Pivot points, a technique developed by floor traders, help us see where the price is relative to previous market action. As a definition, a pivot point is a turning point or condition. The same applies to the Forex market, the pivot point is a level in which the sentiment of the market changes from "bull" to "bear" or vice versa. If the market breaks this level up, then the sentiment is said to be a bull market and it is likely to continue its way up, on the other hand, if...

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Forex Risk Management

This aspect is one of the most important aspects you will ever read about trading. Why is it important? In reality, we are in the business of making money, and to be able to do so we need to learn how to manage it well in order to prevent continuous loss. Ironically, this is one of the most overlooked areas in trading. Many traders are just anxious to get right into trading with no regards to their total account size. They simply determine how much they can lose in a single trade and get into the trade. Trading on Forex, the investor has opportunities to multiply his money, but he also risks losing future profit and much more, the invested capital. Deviation from expected profit average is what determines the investor's risk on the financial market. Risk management methods are applied before...

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Forex Money Management: Leverage and Margin Basics

Two very important concepts of forex money management are leverage and margin. Leverage allows forex traders to invest much more into currency trading than is available in their trading accounts. Thus, forex traders can operate larger funds. Margin is the real funds that are required to be held in the trading account as a collateral to cover any possible losses. Forex Money Management: Leverage Profits and losses in the forex market tend to be higher than what you would experience in the stock market even though the actual price of currencies may not fluctuate wildly. Most brokers allow a 100:1 leverage. This means you can buy or sell €100,000 worth of currencies, even though you have only €1,000 in your trading account. Some brokers offer leverage as high as 400:1. Leverage can also work...

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Why You Should Treat Forex Trading as a Business

If you trade the forex market you will undoubtedly be aware that it is a high risk venture. Most traders who trade currencies end up losing money. Unfortunately, some traders end up losing a substantial part of their net worth. Many traders, especially new traders are attracted to forex because they see brokers offering �200 to 1 leverage� and in some cases even higher amounts. It is a common belief amongst new traders that they can use this leverage to generate a substantial amount of wealth. This belief nearly always ends in tears. To be a successful forex trader, it is imperative that you treat trading like a business. It is unlikely that you could put $50 in to a business and turn it into $20,000 in a short frame of time. Granted, there are exceptions, but they are EXTREMELY few and far...

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The Power of Small Consistent Returns

For most of us, 'safe investments' are limited to the rate of return that we can earn on our savings accounts or long-term deposits. The return would depend on the interest rate applicable in each country. At the time of writing, November 2007, the interest rate earned on a savings account in Australia is around 7% a year. That is a return of 0.57% a month. Despite this fact, many have preconceptions regarding the type of returns they can make from trading the financial markets. A novice trader puts on a winning trade and gains between ten to fifty percent of his trading account. He forms a belief that, by trading, he can quickly become a millionaire. Indeed, if we assume a 20% return per month on a $10,000 trading account, we can expect $89,161 by the end of our first twelve months of trading....

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The Costs Of Trading

You may have relatives or friends who trade the markets. They could be trading shares, futures, options or forex. You may have heard of their exciting trading stories and perhaps this aroused your curiosity and you wondered whether you should trade too. One of the first questions you ask before you trade would be: what are the costs of trading. The costs of trading depend on several factors, including the instrument and market you are trading. Most of the costs you pay are to your brokerage firm. They need to make a living in exchange for the services they provide. Generally, you would expect to incur the following costs: Commissions Slippage Spread Platform Fees Expenses CommissionsThese costs are charged by brokers. The commission you pay is usually calculated as a percentage...

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