In order to make rational, successful trades, the FOREX trader needs information - lots of information.
Knowing the current exchange rates is only the tip of
the iceberg. The FOREX trader who desires success needs historical data as well as
current information about political and economic conditions that could
affect currency prices. All this information is provided by many a FOREX broker on their web site.
FOREX trading relies on making accurate assessments of current
political and economic conditions. Being able to predict whether a
currency will fall or rise against another currency allows the FOREX
trader to profit from currency movements.
There are two basic trading methods for buying and selling currencies...reactive and
Reactive trading means the FOREX trader
responds to changes in the political or economic climate.
trading means the trader
decisions based on predictions on how the market will respond to
current events. While most FOREX trading is speculative, both types of
trade require up-to-the-minute information and an analysis of current
and historical conditions.
on both fundamental and technical analyses.
based on news information about political conditions, economic
policies, trade patterns, interest rates and unemployment
analysis, on the other hand,
relies on historical charting and other mathematical and logical
modeling to identify trends and
patterns over time.
needed for both types of analyses is
available in real time on the Internet. Most online brokers offer live
news feeds and streaming rates for observing minute by minute changes
in the market.
information can help you decide which currencies to buy.
FOREX trading tools are
available to help you minimize your risk and maximize your profits.
Probability Calculator (RPC)
can be used to identify trades that have
more potential gain than potential loss. The RPC can also help you
target exit points to end the trade.
can be used to predict movements of currency prices. They are
calculated as an average of the currencies high, low and closing
prices. Pivot Point Calculators tell you whether prices fall in the
normal trading range or extreme trading ranges.
calculators are used to tell
you the value of each pip (smallest
currency unit) according to various sized lots. Pip calculators can
tell you the actual profit or loss that will result from movements in
Once a trader
has decided which currency pair to trade, he or she logs on to an
account provided by his or her broker. The desired currency pair is
and the current exchange rate appears on the screen. The amount of the
trade is entered (how much currency you wish to buy). Some brokers may
give you the option of specifying the amount you wish to risk. This
automatically enters a 'stop loss rate'
into your order.
details of the trade have been entered, you will be taken to a
screen where you can accept the current price on screen. You may be
given the option of 'freezing' the quoted price, meaning the price of
your transaction is exactly what you see on screen without any
slippage. Accept the rate and your deal is running.
Just as you
can enter a 'stop loss rate'
to automatically sell the currency if it
falls below a certain rate, you can enter a 'take profit rate'
automatically sell the currency when it reaches a certain level. If you
don't enter a 'take profit rate'
you need to monitor the movement of
the currency to decide when to close the deal and take either your
profits or your losses.
additional information relevant to 'stop loss' and 'take profit', read FOREX