The Labyrinth - Forex Software

By Tom K Kearns

Some of the many forms in which Forex software is now available include interactive web-based programs, downloads, and CD's. The feeling that you are in a mysterious Labyrinth with fairies, ogres, and talking doors is understandable with the abundance of software options available. You are required to make the right turn that leads you to your desired mark by pulling together all the information, guts, and intuition you have.

You are left to navigate through the maze of Forex software. By creating an exact sense of it all you will be brought to the experience you have never encountered before. People never know they are in a maze for some reason and you must come to a full understanding of why you are there in order to access the exit point. Forex software works the same, to be an expert at it takes is the right tools and gumption but there are millions of choices promising you the gold. Some traders move into other software after having stayed with the original first purchased software until they are able to know how to use every button to its fullest.

Types of Forex Software

There is a computer based program called Forex Trading Software which declares they use levels of algorithms to calculate or trigger the buying and selling of currency trading orders. It was designed, when trading currencies, to reduce psychological barriers but note that when it comes to the software impeding fault within currency trading there is no proof.

The all knowing, everyone needs software is the Trading Platform Software. A wealth of knowledge is bestowed, including basic tools and information. Unfortunately guidance is not offered. This will suit advanced traders just fine but may not be suitable for beginners.

Signal Software-a piece not recommended for beginners, signal software allows you to witness spread changes and then make your decisions based on those discrepancies. It involves more involvement from the Forex investor, and requires a certain degree of expertise.

The experienced Forex investor was in mind during the making of Charting Applications Software. For predictions and analyses, charting applications are valuable. Automated transactions and data stream set alerts on the buy and trade are things this can be set up for.

Getting you through the Forex labyrinth

DO NOT believe everything you read! There are no guarantees to the promises made by the Goblin King, or in this case Forex software websites and advertisements. For you they are apt to come with an underlying problem. Keep your eyes open because it is all to make a sale.

2) Become the analysts and do research, this is important. Get on the forums, seek counsel and information. Researching can save you so as tedious as it may seem, ask tons of questions and scope every area.

3) Know your options. Discover prices and duties of the software, which will aid you if you are a beginner or pro. Demo it, test it out and see for yourself.

Just know that in the end you will have exactly what you need, no matter how much leg work is required to get you out of the Forex software labyrinth. - 31876

About the Author:

To learn more about Automated Forex Trading Systems or to choose a signal provider at Zulutrade visit http://www.automatedforextradingsystems.com .

Forex Basics and Opportunity

By Frank Rivera

The foreign currency exchange market is easily the largest marketplace anywhere in the world. Larger than any stock market, the volume of currency that is exchanged on the forex market each day exceeds a trillion dollars. Once the domain of banks, governments, large corporations or the super-rich, it's now becoming more popular with smaller investors too.

Trading on the forex market is simply the act of exchanging the currency from one country for the currency of another. When the values of those currencies alter, you trade back for your original currency again, hopefully with a profit in your hand at the end of the trade.

For example, if you're beginning with the US Dollar (USD) and trading it for the British Pound (GBP), then you hope that the value of the USD goes up or appreciates in value. When the price does go up, you trade your GBP back for your original USD and you receive the higher amount back again.

The difference between what you bought and sold it for is profit and it is kept track of in a unit of measurement called pips. Pips are the basic unit in trading currencies. Your goal as a forex trader is to gain as many pips as you can.

There are a lot of different strategies available to trade forex including scalping, swing trading, and trending. Scalping is one of the most popular methods of trading and it utilizes a lot of quick, small transactions. You decide to buy a certain currency and then you sell it a few moments later. In this manner, you can gain a lot of small profits and hopefully minimize any risk to your account.

With so much growth in the forex market, there are obviously a lot of different people involved. You will find that there are a lot of products and services that you can purchase to help your forex trading. Everything from coaching programs to robots that trade for you will be pitched and promoted. If you're new to the market, it is probably a good idea to get some kind of guidance. Without it, you will probably lose a lot of money fairly quickly. However, you want to make sure that you investigate any product thouroughly before you buy it.

The sheer amount of forex products on the market does mean you will find some that aren't as reputable as some others. This is the primary reason for spending as much time as you can checking the validity of the claims you read and then actually speak to or email people who have used the products. Reviews can be helpful, but aim at forums where forex traders hang out and ask questions.

In addition to that, you should also do your homework on whichever broker you decide to go with. There have been a few brokers that turned out to be scams, so you'll want to make sure that they are regulated and that you feel comfortable with them. If you live in the United States, you'll probably want to find a broker that is in the United States and regulated by the NFA.

While the forex market can be incredibly lucrative, it can also be equally volatile. Take a bit of time to learn how the market place works before you begin trading. - 31876

About the Author:

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A Look Into Win Percentage - Choosing A Forex Signal Provider

By Tom K Kearns

Are the better traders closer to 100% winning trades, or is that just the way it seems? In contrast, the closer the traders are to 0%; it would seem that they are worse. There is more to trading than winning the most possible trades, even though that seems peculiar. This article will hopefully help fill you in on why I would argue that a 95% win rate is infinitely worse than a 65% win rate.

First we'll take a look at traders with a low win rate. We will classify 0% to ~40% as low. If a trader fits into this range, then the closer they are to zero probably means the worse they are. Most traders in this lower range are losing traders. You will occasionally find a trader who attempts to catch very large moves with very tight stops. This type of trader may have an extremely low win % and still be a very successful trader.

Next, let us look at the 40% - 70% range. Most of your winning traders will fall somewhere in here. They win not because the majority of their trades are winners with few losers. It is quite possible that have more losing trades than winning ones. Their success comes from their ability to correctly manage their trades once opened. They take advantage of stops that will then be executed more often than not. This looks for all the world like a losing trade, and it is, but a small loser. The traders that can manage their trades effectively most often are the ones that are able to cut their losses and allow their winners to take off. There are very few traders out there who have the discipline to take advantage of this simple concept.

The last group are those with a very high win % (over 70%). It seems the closer to 100% these traders get, the more people want to trade their signals. Unfortunately the opposite is probably the correct play. These traders win an incredibly high amount of the time because they often take profit off of the table as soon as it appears. This strategy is fine if you also plan to cut losses in that manner. But traders with 95% win rates and above do not have this strategy in mind. Rather than accepting a small loss and moving on with their day, they will let a loser run indefinitely and even add to that position in many cases. This eventually wipes out months or more of winning trades all at once and in the end has no chance of success. One 500 pip loser wipes out 500 one pip winners. Keep in mind that this trader would have well over 99% winning trades and still be an over all loser.

Do not think for one minute that the reason for this article is to convince you that no trader outside the specified ranges is automatically a losing trader. I'm quite sure that there are traders that are successful with a win percent falling outside of the above ranges. The point of this article is to lead you to thoroughly investigate the trader with the 95% win rate as he could implode upon himself (and you) at any minute. - 31876

About the Author:

To learn more about Managed Forex Accounts visit Automated Forex Trading Systems.

Option Trading - Developing An Option Trading System

By Micheal Thomas

If you plan to engage in option trading then you will need to understand the two types of option trading systems currently being used in the market today. They include discretionary and mechanical. A trader or investor using the discretionary method does not use a particular technique, process or method but instead makes trading decisions based on his current knowledge or speculation on the market for that day. The mechanical options trading require traders to understand and select stocks, determine entry and exit strategies, and transform these methods into objective processes, usually by way of a computer application. The advantage of the later process is the elimination of human judgment and possible error based on speculation rather than actual trends and analysis.

Year ago I migrated from discretionary to mechanical option trading in order to gain more consistency with successful option trading. I developed a mechanical option trading system called the Star Trading System (http://www.mastersoequity.com). You can develop your own mechanical trading system utilizing the following guidelines:

1. Stock Selection

Begin developing a list which includes criteria which must be true for a stock to quality as a viable option trading opportunity. Quantify and research the criteria you are using to develop your strategy. Use a computer application that will allow you to record the criteria you have established and then compare the stocks you have selected against your dependencies. You can cross verify your finding with stock information from the internet to formulate your final stock selections.

2. Option Selection Procedure

After performing your stock selection analysis you can more confidently begin selection of a stock that meets your established criteria. Additionally you can create your option trading system using OTM options or ITM options as well as basing it on current market conditions. Market conditions can be bullish or bearish at the time you are making your selections so you could include this factor into your overall analysis.

3. Entry Procedure

Once you make your conclusions as to which stock to watch and which option to buy, you will need to decide what conditions will invoke a purchase. This decision could be simply to purchase at market opening or be more complex and require watching the underlying stock movement for a pre-determined timeframe making that purchase. Use your option trading system to help navigate these decisions.

4. Exit Procedure

When you have open position you will need to determine when to take a profit or when to stop a loss. The two exit strategies include Stop Loss and Profit Taking. Stop loss in option trading is based on the percentage loss of the option position or based on the percentage loss on the underlying stock. Profit Taking is based on the target price or the percentage gain on the option position. Once you have established this criteria your broker assist in the automation of this transaction. Many traders proceed to a stop loss or profit taking based on emotions, which is why brokers develop automatic processes to control these actions. If your broker does not support include automatic mechanisms and you tend to make emotional decisions, then you should find a broker that with these offerings.

Your next step is to name your option trading system and use it for 6 months. Do not set your expectations high on getting it perfect the first time. Creating a profitable option trading system take time, knowledge and experience. - 31876

About the Author:

If you want to learn more about option trading, feel free to visit our website.

Forex Option Trading

By Micheal Thomas

Foreign exchange trading or forex option trading involves buying and selling of various currencies from around the world through the foreign exchange market. Currencies prices change on a daily basis and is driven by the global market. These varying rates are based on everything from global news and politics, changing industries and economies, agriculture and varying other global market conditions. All these factors need to be considered and understood when moving forward with this type of trading.

Experienced traders and investors watch for currency prices falling in one market. When there are falling prices with one currency another is usually increasing in value. This is where many traders engaging in forex option trading practices will gain their most profits and expand their portfolios. It can be an area where you can lose money if you do not understand the intricacies of this type of trading.

Foreign exchange options or forex option trading are similar to traditional stock market options. They are essentially financial contracts or instruments where a buyer or owner has the right to exchange one world currency for another world currency from a prearranged agreement. The prearranged agreement consists of an exchange rate, known as a strike price, that will be paid by the owner at a previously agreed upon date or time period. This does not necessarily mean the buyer is obligated to make this exchange but it does allow the trader that choice when the prearranged time period arrives.

Trading on the foreign exchange in this manner provides traders and investors to hold forex options to purchase a currency at a fixed exchange rate but when that date arrives if it does not meet initial expectations of the buyer they are under no obligation to make that purchase. If the conditions are profitable for the trader then they can sell the currency they are holding to the market and reap the benefits and the profits from this form of option trading. The traders and investors do have to pay their brokers up-front for this privilege but it is well worth the extra investment to have this type of option.

The up-front premium in which has to be paid by the options owner to the broker provides traders and investors some security with engaging in forex option trading. The broker retains this premium regardless of whether the trader or investor exercises their right to sell the options contract or instrument. If the contract expires and the foreign exchange rate on the currency is less than the initial strike price agreed upon, the options contract or instrument is then worthless.

Forex option trading is gaining in popularity because of the higher and quicker return rates as opposed to those returns from the traditional stock market. Foreign currency traders and investors develop strategies that will be most profitable in the near term and deal less with the routine market fluctuations which occur on the stock markets around the world. This type of trading is also considered daily transactions in large volumes, which makes it extremely important for novice investors and traders to consult with an experienced brokerage before attempting these types of trades. - 31876

About the Author:

If you want to learn more about option trading, feel free to visit our website.

Currency Options Trading

By Micheal Thomas

A growing trend on the market is currency options trading. This is one of the forex methods within the stock market where traders exchange one foreign currency for another, preferably making the transaction when one currency is trading for a higher amount than the other. This type of forex trading is gaining in popularity as the currencies around the world continue to shift with the overall global economy.

However, currency options trading require a clear understanding around foreign currencies, economic and world trends and the stock market. This type of forex training is not for a novice trader and should be left to experts in the field. If you want to engage in foreign exchange trading then make sure you have a strong mentor or broker who can help you with the details of this type of market trading.

The foreign exchange market is the largest market in the world. Currency options trading and foreign exchange training has gained in popularity in Europe and the United States over the last decade. New strategies, methods and techniques have been developed to assist traders when engaging in the foreign exchange market. These new strategies have been able to increase trader and investor portfolios as their knowledge and experience in this area increase.

Currency options trading had proven to be a viable method for producing financial gains through trading on the foreign market. Over the last few years it has quickly grown to be one of the preferred methods for traders and investors around the world. The technique applied to this type of trading can also be used when people approach conventional market trading options and allows them to better leverage their investments.

There are many types of market trading techniques available to traders and investors in today's market. Most of these methods require experienced traders and brokers to truly understand and take advantage of capital gains and expand their portfolios. Although anyone can perform options trading it would be wise to seek expert advice prior to your getting involved with currency options trading. Learn from the experienced and those who are actually benefiting from this type of forex trading until you feel confident to move forward with your own investment strategies.

Currency options trading are very similar to the way you approach stock options trading on the market. Trading currency options you basically work in a contract situation that provides you with a means to purchase a world currency at a designated exchange rate within a specific time period sometime in the future. The most important aspect is that this contract does not commit you to buy that currency at that time, so you can decide not to purchase the currency if the price you anticipated did not transpire. However this type of arrange does come at a cost whereby you would pay your broker a premium that will allow you to make these types of trading choices if they arise. This type of trading lets you hedge your investments during unpredictable market trends. - 31876

About the Author:

If you want to learn more about option trading, feel free to visit our website.

What Happens On a Trading Floor

By Zeke Lee

Have you ever seen a trading floor?

No, were not talking Liars Poker here

Weve all seen the so-called pit traders on CNBC yelling and screaming at each other. But whats it like on a typical trading floor at a large bank that you might work at?

Usually, youll see one large open room " no cubicles. On the edges of the trading floor youll see meeting rooms and occasionally the offices of the Managing Directors.

On the floor itself, youll see rows of really long desks that are sectioned off per person. Traders within the same group will naturally sit close to each other. So you might see the foreign exchange group in one area, the credit group in another, and the equity guys somewhere else.

But youll notice something unique about each traders desk: the monitors. No, not that they are eco-friendly and conserve energy " but that there are so many monitors on each desk and that some of them are constantly blinking.

Got Screens?

If youve never worked in trading before, you might think theres no reason you would actually need between 3 and 8 monitors " the other 7 must be for playing World of Warcraft or catching up on 24, right?

Wrong.

Partly, its for showing off: some traders view the number of monitors they have as a status symbol on the trading floor. Hey, even if you cant see my BMW, my 8 monitors mean that I own a really expensive car, right? Or at least that our P&L is higher than that of the other group over there with only 2 monitors.

The actual rationale " status symbols aside " is that speed is extremely important in trading, and you dont want to waste time switching between windows. Alt + Tab is for bankers.

You need to be able to look up and know that Apple surged 4% in the last 10 minutes.

Then you need to monitor the market news and major headlines coming in through Bloomberg " is Steve Jobs OK? Is some analyst raising their prediction for the number of iPhones sold? Was there an announcement that just came out regarding Apples contract with AT&T or talks with Verizon? Did consumer spending numbers just come out?

As an active prop trader, youre multi-tasking all the time and constantly thinking about these kinds of questions, assessing risk, and making quick decisions.

Bloomberg

Bloomberg is an expensive news/finance information service that all banks and trading firms have access to.

Beyond just watching the news, you also need to track stocks youre interested in and see their prices updated in real-time " so you use another monitor for that. These screens are constantly blinking as the prices of securities are changing every second.

Bloomberg has a price feature that lets you organize and track stocks by sector (Technology, Financials, Energy, etc.) and lets you see where everything is trading.

You can also get a real-time heat map of the market, so you can see which sub-sectors of the S&P are up, and by how much.

Trading Platform

Next, you use another monitor to actually make your trades " this might be Merrills MLX platform, Goldmans REDIPlus platform, FlexTrade, Fidessa, or anything else.

If youre trading equity derivatives, you need to enter your orders for stocks, puts, and calls quickly and monitor any pending orders that are waiting to be filled.

Why do you need an entire monitor just for making trades?

Because you be managing a HUGE portfolio of securities and each of these securities could have various derivative products attached to them. For example, a list of a hundred stocks could each have derivatives like calls and puts with various maturities and strike prices.

Depending on what youre trading, you might actually need 2 monitors to track everything.

Option Valuations / Other Calculations

If youre not trading derivatives, you wont need to value options " but you may well have to make other calculations, whether youre valuing bonds, analyzing the yield curve, or back-testing a trading strategy.

While the math itself is not quite rocket science, it goes beyond what most bankers deal with: simple arithmetic. While investment bankers may come from liberal arts, finance, or engineering backgrounds, derivatives traders primarily come from mathematical / engineering backgrounds.

Your firm might have a proprietary way of valuing options, developed by a senior IT programmer (see, the back office may have some merits after all) " and depending on what youre trading, it might be very complex.

Getting these programs working properly can be difficult because they need to be synced up with other programs you use. Getting the # of shares and contracts held, exposure to risk, and other variables linked together dynamically rarely works perfectly " and this complexity means youll be calling the back-office tech guy or floor IT guy to fix technical issues quite frequently.

Messages

Of course, youll also need a monitor for Outlook " the standard email program at any bank " to handle email and see incoming messages from brokers and the rest of your team.

The Rest of Your Desk

So what else is on your desk?

Just like at a bank, you get a phone terminal along with a headset and regular phone " but be careful about the conversations you have, because anything between brokers and clients is recorded.

Talking about bottles may not get you fired " but you probably want to postpone talking with your model(s) until later. Even if its not recorded, everyone else on the desk will hear what youre saying.

The phones are also connected to CNBC audio, so you can listen to whats going on in the news throughout the day.

So What Else Do You Do On the Phone Besides Chatting with Models?

For one, the phone actually rings quite often " especially between the trading hours of 9:30 AM and 4:00 PM.

Most of the time, brokers call to tell you what their clients are looking to buy and sell and see if you have any interest. Some of this is shifting to online chat instead, but its still common for brokers to call to get your attention on larger orders.

Junior traders will have often help deal with the influx of phone calls by screening the phone calls and taking down broker quotes.

Forget About the Bathroom " or Trips to Starbucks

This also brings up another key point and a major difference between banking and trading: most traders hate leaving their desks for fear of missing out on something important.

Lunch breaks are limited to 15 minutes (and often the junior guys or interns will go get the food for them). Bathroom breaks are rare unless you really need to go. Forget about 10 trips to Starbucks during the day: bankers can do that only because they have so much down time. No friendly chats with the cute marketing intern " at least not until the market is closed. This also means that its common for traders to gain weight: they pretty much just sit there all day, eyes glued to the monitors, only taking the occasional break to eat.

If you walk up and try to talk to a trader, half the time he wont even look at you: this might seem rude to you, but to him not paying attention for even a few seconds might result in a loss of thousands or tens of thousands of dollars.

And part of it is just habit: theyre so used to having their eyes glued on the screen that its almost weird to look away from it.

Hey, if you had that much money on the line constantly, you probably wouldnt give the time of day to bright-eyed interns or newbie traders either - 31876

About the Author:

This article was contributed by Zeke Lee, a Stanford graduate, former management consultant with Booz & Company, and current derivatives trader on Wall Street. He founded the GMAT Pill (GMAT Prep course) based on his experience scoring in the 98th %ile on the GMAT in just 2 weeks with a special study method.