Learning Currency Trading – Part 8: EUR/GBP

The symbol EUR/GBP stands for Euro/British Pound. It tells us about the number of British Pounds required to purchase one Euro. In the symbol, EUR is the base currency while the GBP is the counter currency.

General Facts and Importance

Various websites and forex analysts have concluded that the most important and the most voluminous exchange rate in the United Kingdom is the rate of exchange of EUR to GBP. While EUR is the world’s second largest trading currency, GBP happens to be the fourth. The currency pair is of immense importance when the proximity of the location and nature of trade between the UK and the Euro zone is taken into account.

More goods, as compared to services, are exchanged between the UK and EU. Almost half of UK’s exports are directed to and imports are directed from the different members of the EU.

The EU market is one of the world’s largest markets. Moreover, most of the members of the EU are rich nations that enjoy rather stable political atmosphere that ensures a safer and stronger currency. Unlike the UK where debates over joining or not joining the EU lead to conditions that ultimately favour the Euro and depreciates the pound. With its 28 members, the EU has made sure that it happens to be the origin and the termination point for a great many trades, consequently supporting the already strong position of the Euro.

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Famous Quotes from Professional Traders

Trading is all about possibilities and sometimes you'll win, sometimes you'll lose or sometimes you'll be losing for so long that you get frustrated. People assume that a trader's life is full of pros but ask a real trader and they'll probably laugh at that assessment. In reality, sometimes they just want to quit because of it but rest assured, after this article, quitting will be the last thing on your mind. Take it from the people who've been doing it for years and got big:

1. “In this business if you’re good, you’re right six times out of ten. You’re never going to be right nine times out of ten.” -Peter Lynch

The possibility of a good trade or a bad one can not be forseen and instead of getting emotional about just think of it as part of the game.

2. What seems too high and risky to the majority generally goes higher and what seems low and cheap generally goes lower.” -William O’Neil

The message here is to understand the dynamics. Some of them might seem appealing but are actually not or viceversa.

3. “It takes 20 years to build a reputation and 5 minutes to ruin it. If you think about that, you’ll do things differently.” – Warren Buffett

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Live Vs. Demo Trading Accounts

There are numerous forex trading platforms that allow you trading through them and in order to start trading you have to create an account. Now there are different types of accounts that can be categorized as live and demo accounts. Demo accounts are basically for beginners to learn about trading without risking any money.

Now obviously it is good to practice one’s trading strategy with a demo account but the problem is that people stay on their demo accounts too long. A time comes when the trader has mastered the screen time and has all the relevant knowledge but when he/she starts trading with a real account, they start to lose their money.

It is good to know all the ins and outs of trading, understanding the market and charts and other relevant knowledge about trading before entering the real trading world. But if you don’t jump in and get your feet wet, you’re never going to develop the skills to succeed in the market. They are good to educate you but they are only simulations, not the real thing. Also, you are never going to get those ‘perfect’ scenarios in the real world, for example, order fills, stop out levels, prices and etc. are different in demo accounts. The reason why traders do much better on demo accounts is because there is no risk involved and no emotions clouding their judgment either.

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The Forex Industry – Uncut Version

This article might possibly shock you and make you question everything you've ever been told personally by a 'professional' trader, as well as potentially offend many (if not all) of the experienced forex traders. The purpose of this article is to 'expose' everyone in your life who's told you everything against this article.

I'm pretty sure that what initially inspired many people to pursue trading was all the hype that the media created regarding the simplicity and luxury that comes with being in this industry. Traders you personally know might have showed-off their new car or huge house in an attempt to 'encourage' you to begin trading. The truth is that all of that was a lie.

Now don't get me wrong, gradually you can have that new car or extravagant lifestyle but what everyone fails to mention is that it doesn't just present itself to you in a hand basket. You need to work for years on end and one good trade won't do you any favours if you don't know what you're doing.

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Take your Forex Losses Like a Man

Only a fool would believe that you can enter the competitive Forex arena without taking a few blows. An even bigger fool would also believe that all the blows he or she might endure are shallow. Accepting loss is one of the key elements any trader or investor has to master even before they go ahead with their first trade. It’s an inevitable part of the daily forex circle of life, some will rise and others will fall instantly and it can’t be any simpler than that.

Although you cannot avoid losses altogether there are ways which an aware trader can take advantage of in order to always be the one holding the reins regarding how hard he or she is to fall if they do.

Traders are probably tired of hearing this but actually it’s the most important and basic rule of any venture in the trading world, that is to never stray from your strategy. Forex trading is part lack and part intuition among others but one of the biggest mistakes both novice and experienced traders make is overestimating their own reach. There might be a day where the wins seem to be flowing in but this confidence should never hypnotise the trader and trick them into trading and investing more than they originally planned to.

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Learning Currency Trading – Part 7: EUR/JPY

Introduction:

The symbol EUR/JPY stands for Euro/Japanese Yen. It tells the reader about the number of Japanese Yen that is needed to buy one Euro. In the EUR/JPY currency pair, EUR is the base currency while JPY is the counter currency.

EUR/JPY is one of the most heavily traded currency pairs. However, many forex traders find this pair to be highly volatile with a very large loss risk associated with its exchange. Depending on the market conditions, this particular exchange could either help the trader earn big profits overnight or cause him great losses.

General facts and importance:

Japan and the EU are two successful giants in the global market. With Japanese Yen serving as a proxy currency for Asia and EUR being the representative of the entire Euro zone, the significance of the currency pair can hardly be undermined.
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The Cost of Trading in Forex

Forex trading is a highly attractive option for people who are interested in making a decent side income. However, before you start trading in forex, you need to know the overall costs of trading in the foreign exchange market. The overall cost of trading is the cost you will have to pay in order to run your trading business as a forex trader. There are certain optional costs, which are also termed as variable costs that you might have to incur based on your requirements. Optional costs generally include faster connections, customized technical analytics as well as dedicated news services that help you remain informed and up to date.
Apart from variable costs, there are certain fixed costs that a trader must incur. The costs of membership and essential services are often termed as the fixed cost, since they cannot be avoided whether you trade or not. For every single trade that you make, a certain amount will be paid as a commission to your broker. While the commission costs generally differ from one broker to another, the amount itself is relatively small. This is the basic cost of trading that you will incur.
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What is Scalping?

The forex trading market remains active round the clock. This means that there are always people in different parts of the globe who are trading between currency pairs and hoping to generate a profit out of it. The forex trading market has become tremendously popular in the past few years due to several reasons. For starters, it allows the average person to make an investment with a very small amount. The barriers to entry are very low, and you can easily trade at any point during the day or night. Because of the fact that the market remains open round the clock, many people often trade in the dead of night.

Now, there are many different trading strategies and styles that a person can use when trading on the forex market. One of them is scalping. Some traders prefer following a long term trading strategy, which essentially means to hold currency pairs for a longer period in order to generate more profits. However, there are many traders who opt for smaller profits in the shorter run. Many amateur traders in the forex market often think of scalping as a viable strategy.

However, what is scalping?
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Why is Latency so important for forex trading ?

Latency or delay as known in computer networking, is the time interval for a process to present an outcome, the time delay between the cause and effect of a physical change within a system. In Forex Trading, latency indicates the time needed for the traders’ requests to get a response from the broker’s server. Latency is considerably important because it can have a huge impact on the price that traders pay in the markets, hence it is significant for latency to be at lowest when making a trade. Traders can identify the range of latency in accordance with the trade that they are executing.

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Fixed and Floating Spreads - What You Need to Know

When it comes to trading in the forex market, spreads play a very important role. Many people don’t realize the difference between fixed and floating spreads. Simply put, the difference between the Bid and the Ask prices is the spread and this difference is calculated in pips. A pip is a basic numerical value that is used widely in the Forex market.

The value of the currency is measured in pips. One pip is equal to 0.0001, while two pips equal to 0.0002 and so on. A single pip is the smallest exchange of price that can occur on the forex market.

Most of the currencies traded on the forex market are generally priced four numbers after the decimal. For instance, a standard five pip spread for EUR/USD (two of the most popular currencies) is generally 1.2530/1.2535. On the other hand, there are certain major currencies that do not have four decimal places after the point. Instead, some pairs, such as the USD/ JPY pair, only has two places after the decimal. The pair generally looks like this: 114.05/114.08. As you can see, there’s a three pip spread between the selling and the buying price.

What’s a Spread?

The spread highlights the difference between the price that the market maker gives to the trader, as well as what the market maker collects to sell it off to a trader. If you buy any pair of currency and sell if off without any change in the values of the currency, the trader ends up losing money, because the bid prices always fall below the ask prices.

Therefore, it stands to reason that smaller spreads are much better for forex traders. The reason for that is obvious: a small movement in the exchange rates can allow the trader to profit considerably form a trade in a much easier manner. Now, in general, there are two types of spreads: fixed and floating.

Fixed Spreads

As you can already guess, fixed spreads do not fluctuate with the passage of time. They are also not influenced by market volatility or the standard fluctuations in the market. However, the spread may change temporarily in case of high volatility and low liquidity, but the change is not massive and is only shifted to a different spread level. As soon as the market returns back to its original position, the spread automatically reverts back to its original position.

Floating Spreads

A large majority of spreads on the forex market are floating spreads. They tend to continuously fluctuate based on the volatility in the market and the general fluctuations. A number of companies offer trading on floating spreads as well as almost all relationships between international banks are defined by floating spreads. Moreover, floating spreads are generally where people tend to make more money, as there’s considerably more unpredictability with floating spreads.

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