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What is Forex Trading and How Does it Work?

Understanding forex – foreign exchange explained simply

Forex trading is business based on speculating on the fluctuating values of currencies between the two countries. The trading goal is to make a profit by converting one country’s currency into the currency of another country. Forex trading includes all aspects of buying, selling and exchanging currencies at current or determined prices.

Understanding forex trading

Each country has its own currency and when the currency of a country is traded or exchanged with the currency of a foreign country, this is called foreign exchange (forex trading). Investors and traders who are interested in Understanding forex should be aware that the currency pairs are decided by the forex brokers. These brokers may not be able to offer a match for the currency pair a trader is interested in. One of the most popular currency pairs is the EUR/USD where EUR or EURO is the European currency, and USD is the united states dollar. The value of the forex pair will increase when the Euro value increases compared to the dollar and vice versa.

If a trader speculates that the USD value will decrease in comparison with the Euro, they will invest in the EUR/USD and wait. This kind of trading is called going long. If the dollar value is likely to increase, the trader will go short on the same pair. All trading is routed through forex brokers, who are intermediaries, executing the trade in the open market. Since there is no centralized market for forex trading, the rates offered by the different forex brokers may be different at any time. The forex brokers place their orders using the networks of the major banks. The orders are executed electronically within a fraction of seconds after they are placed.

For forex trading, each trader need to have a forex account and basic knowledge about technical and fundamental analysis. The basic advantages of foreign exchange are high liquidity, 24 hours market, small transaction costs.Forex is legit business where more than 5 trillion dollars each days fluctuate in forex market.Forex trading is not scam – it is as same as trading stocks or any other asset.

Leverage in forex trading

For most people, the main purpose of trading forex online is making money. Large companies may trade in forex for a purchased planned in the future, or for offsetting a contract which they bagged. Retail traders hope to make money from forex trading due to the changes in the values of the currencies they are dealing with. Forex brokers are usually offering the traders leverage while trading. Leverage allows the trader to trade for amounts that are larger than the balance in his account. The forex broker benefits from leverage since the fees will be directly proportional to the amount being traded. The forex broker collects an amount which is called the spread for each trade.

However, there are some disadvantages of using leverage. Many inexperienced traders, use the maximum leverage available., They often make losses, and use up all the money in their account. Hence it is advisable for new traders, to spend some time, learning forex trading, and using the least amount of leverage while trading initially to reduce their losses.

The most important thing is risk in forex trading. Forex offers high leverage. where traders are able to engage in the conducting of trades in the market by using larger sums of money than what their accounts actually possess.
Risk in forex trading need to be small and managing risk is really one of the most important jobs for each trader.

But the person would yet hold the power to engage in the controlling and trading on the market with a currency in the amount of two thousand dollars. This can be somewhat dangerous due to the fact that new traders may be eager to commence trading with leverage set at 50.1 instantly. But they may not give any preparation concerning the consequences that may ensue.

It sounds like a fun experience to be able to trade with access to leverage. This can increase the chances for one to make good money. However, there is not much talk about the fact that this can also present a higher risk of devastating losses as well.

When someone trades at a rate of 50:1 with the sum of one thousand dollars in their account, this indicates that the person would be conducting trading in the amount of fifty thousand dollars on the market. Each pip is therefore worth about five dollars. When the move for the daily average pertaining to the price of a currency pair is set at 70 to 100 pips, this would mean that the average loss could equate to three hundred and fifty dollars. If one engaged in the conducting of a fairly poor trade, this could result in the loss of a whole account in three days if there are normal conditions in place.

So when we talk about profit, 95% of traders lose their money because of high-risk trading, overtrading, lack of risk management plan.

see Table below:

Many new traders hold a lot of optimism with the belief that they could potentially see the doubling of their account in only a few days. Yet, seeing your account undergo many serious fluctuations can indicate that it will be difficult for your account to double in a short time. Many people commence with the assumption that they are able to endure this scenario. Yet, they are not really often able to handle the scenario, they make grave mistakes in their forex trading efforts and no money remains in their accounts.

Though one may truly not fall prey to the trap of the leverage, the big difficulty is to be able to control one’s emotions. One must be able to be in control of his or her emotions when conducting trades on the forex market due to the fact that this market can be wild as a roller coaster and it takes a strong drive to be able to accept the losses at the proper time and not to make the blunder of grasping onto trades for too long a period of time.

Trading tips

Forex traders will first identify currencies whose value is likely to increase in future. They will then purchase these currencies at the right time and wait till its value increases to make a profit. Though forex trading appears simple, in reality, it is far more difficult to make a profit. Many new forex traders think it is very easy, so they do not do the research required. They then make mistakes and criticize or blame the market for their losses. The reality is that the forex market trading is very similar to the stock market trading, and others, only forex traders are allowed more leverage for their account. Forex trading is like other investment option, it requires some patience and knowledge to make a profit.

What is a Trailing Stop in Forex?

by Fxigor

A trailing stop or trailing stop-loss is a special type of trade order to automatically protect yourself from loss by locking profit. Stop-loss price is not set at a single absolute dollar amount price but instead is set at a certain percentage or a certain dollar amount. For example, if we buy the asset at $100 and set a trailing stop to be $10 from beginning price than when the price goes to $102 my new stop loss will be $102-$10=$92. If the price goes to $150 than my stop loss will move to $150-$10=$140 etc. Instead of a fixed dollar amount, we can use the percentage.

How to use trailing stop in forex?

The reality is that there are several traders who realize that they should accept their losses and let them go as quickly as possible. On the other hand, they also have been told that they should let their profits continue to flow for a long period of time. Yet, if someone is not aware of a tool to aid one to implement this strategy, then it is necessary to understand the details of how to use trailing stop in forex. It is quite similar to the application of the usage of a stop order that is regular, but it can be placed to flow with the market.

Take into consideration, for example, if you desire to ride along with the EUR/USD, then you place an emergency stop that will undergo a phase of triggering if the market happens to not move in your favor. Following the passing of a day or a few more, when the trade is tending toward your favor, you desire to conduct a locking in of some profit in an effort to find out what will occur. It is possible to place a stop in the territory of a positive profit. This could be seen as the placement of a trailing stop. If there is the continuance of the market flowing toward your favor, the profit that you have locked in will continue to increase. This will be an ongoing positive situation until the time that the market slides back in a downward trend and reaches the placement of your stop.

The key role of the trailing stop is to engage in the augmentation of the profit lock while the market is in a moving phase. As such, there is no requirement for you to engage in the conducting of interventions or making adjustments. The functionality of the trailing stop permits you to engage in following trends with a level of safety in your preferred comfort zone so that there is no need for constant monitoring.

In regard to the trailing stop, you can also engage in the placement of the trailing stop for the sake of longer-term trading. You can place your stop far removed from the trend of the market and permit things to undergo development. This works rather successfully for trading systems that are slow, which tend to engage in the locking in of profits for extended months or days. When someone engages in setting up a target that is long term, then it is truly advised to place a trailing stop as well. This will permit the person to engage in the setting up of the entire trade at an early stage while granting it the freedom to take its route.

With the reality that the forex market is running for a time frame of twenty-four hours over a period of six days each week, this results in the need for many hours to undergo monitoring. Instead of enduring a lack of sleep or interrupted sleep, it does make wise sense to apply the usage of the trailing stop to one’s trade in this case. The great result is that the lock of your profit can increase even when you are soundly asleep. The market will continue to go on as it does, while your trade will be able to conduct any needful adjustments or stops.

What is a Forex Account?

by Fxigor

What is a forex account

Foreign exchange (forex) trading is widely advertised as a quick and easy way to make a large amount of money. Individuals who wish to start forex trading are told that they should first open a forex account. Since most of them are not familiar with forex they often ask, What is a forex account? A forex account is an online platform account used for holding the forex currencies and trading them. A trader will usually open a forex account, deposit money in the account using the currency of the home country and then sell or buy currency pairs. Though every trade is hoping to make a profit, the majority of forex traders are losing money. On average, a forex account is used only for four months. Though forex trading is not a scam, making money using currency trading is fairly difficult and requires a lot of expertise.

Opening a forex trading account
Video instructions on how to open HF account:

Step 1: Go to Hotforex registration page :

Ste 2: Fill all fields and wait for a confirmation email.

Online forex trading has grown rapidly and this has made it easier to open a forex account online. The process of opening a forex account is similar to opening a bank account. The new trader should first find a suitable forex broker. Some brokerages for stock market trading, investing, also offer a forex account while some brokers are only specializing in forex. While opening the forex account, some questions on financial knowledge, trading plans may be asked. ID proof is required, along with a minimum deposit, required by the broker. After this, the account holder can start trading.

In some cases, the forex broker may accept debit or credit card details instead of the initial cash deposit. However, this is not recommended for new traders who do not have cash. The new traders are likely to make losses, and if they do not have cash, they will have to use their credit card, which has a very high-interest rate.

Choosing Forex brokers

When compared to trading in the stock market, forex trading is considered riskier because there are very few regulations, and in case of specific types of trading there are no regulations at all. Hence traders who do not check the reputation of the forex broker who they have selected, may get defrauded and lose their money. Some tips for avoiding this problem are

– trading with a general brokerage dealing in the stock market in the United States, and hence regulated by the US Securities & exchange commission

– traders should be very careful if they are interested in choosing a brokerage specializing in Forex only. It is recommended that they open the account only with a US-based broker, who is a member of the National Futures Association (NFA). NFA has an information center for checking background affiliation. This center can be used for verifying a brokerage and compliance-related record.

One of the most reputed Forex brokers is Hotforex worldwide except the USA and in USA – Forex Capital markets, FXCM which offers a free account for practice, so trading can try different trades without risking the capital. The TDAmeritrade division, Thinkorswim, and CitiFXPRO, affiliated with Citibank are some of the other reputed Forex brokers in the USA. Before finalizing a broker, it is advisable to compare the commission rates charged since these transaction charges determine the profit made to a large extent while trading in forex.

The Best Forex Technical Analysis Tools

by Fxigor

Tools Used by Forex Traders (Best Forex Technical Analysis Tools)

Forex traders use a variety of tools in their day to day operations to help them advance. Typical price charts simply do not provide enough information for a forex trader to take calculated risks. The main source of information for forex traders comes from technical analysis tools. These tools serve the purpose of gaining additional insight into the market. Technical analysis tools include statistics and chart overlays. There are a few different types of analysis tools. The following few tools are used on a consistent basis for successful trades all over the world by forex traders.

Session Highlighters

A session highlighter is one of the most common tools used in the market today. In order to understand how a session highlighter works, it is important to understand how trading works. First and foremost, trading is open 24 hours a day during the week. At any given time within a 24 hour period, a major market is open in a city somewhere. This is why it is very important for forex traders to trade at optimal times. Europe opens first, followed by NYC and then Sydney. Following Sydney is Tokyo. Before Tokyo closes, London has already opened. This consistent pattern of trading is one of the best ways the forex market stays alive and consistent throughout the workweek. The global market can vary in size, some are large and some are small. The main point to remember is that each market has a different number of transactions and employees.

Therefore, each session is different due to its unique characteristics. Session highlighters effectively show the price action during a specific session. These can be tracked by the minute or the hour. The session highlighter is able to draw a vertical line in the event a major session closes or opens. This occurs on the price chart. Each specific trader can use colors in order to show various trading session and highlight them. It is also important to note that MT4 is one of the most prominent session highlighters.

Download Indicator of Trading Sessions

Forex Volatility

Forex volatility tools are used in order to show how much a specific currency pair moves. Many traders will look at an average of 30 days. By viewing a 30 day average, traders can see specifics that give them insight into the best moves to make. This tool is able to show exactly how much a pair typically moves within a given hour of the day. By viewing general averages and previous statistics, traders can take calculated risks based on the information they observed. If the volatility has changed over time, traders have easy access to this information.

By using forex volatility, a trader can gauge if the investment would reach its profit target. Volatility tools do not disclose which direction a trade will go, but it will show how much the price moves. There are many tools such as the risk calculator that can be used by plugging in a time period, and the tool will provide the likelihood of the price staying within that specific range.

Forex Positions/ COT Data

Position summaries are proven to be helpful tools for revealing long and short. By watching how the ratio subsequently changes as the price changes will provide a level of insight for future trades The main goal of all these strategies is to predict how the market will behave based upon past trends. Traders will exit these positions either at loss or profit. If a large majority of traders are long, this indicates that the majority have already bought. This figure can be somewhere around 90%. There are few traders left in this scenario to continue pushing the price. Without anyone left to purchase, the prices move in the opposite direction.

COT stands for Commitment of Traders report. This report shows data all the way back to 2008. The data shows the specific position of traders during a very significant market turn. This tool helps to anticipate changes and fluctuations.

Download COT data MT4 indicators

Correlation and Indicators

Download Correlation indicators for currency

Correlation and indicator tools are used in relation to direction, but can not anticipate price moves. Correlation is subject to change over time and measured within different times. Indicators are used with graphs and charts. Indicators can draw lines over price waves which helps traders focus on larger price moves and overall profit trading.

Who is Jim Simons?

by Fxigor

Jim Simons Full Biography
James Harris Simons or Jim Simons is an American mathematician and an eminent fund manager. Jim Simons is the father of all quants, pioneer of quantitative trading, the famous mathematician and fund manager, one of the first fund managers who applied machine learning in stock price prediction.

Jim Simons’s net worth is $21.6B in 2020.

Jim Simons video:

He is also known as the Quant King. He has started one of the most successful and popular quant funds in the world. He is a self-made billionaire. Apart from this, he is a philanthropist as well. He is very much popular and well-known for his quantitative investment. In the year 1982, he founded renaissance technologies. It was a private hedge fund in New York City. Simons took retirement from the fund in the year 2009. But he maintains his position of non-executive chairman and advisor as well. He got the success in mathematics and figured out the code-breaking as well. He also built a top-class department at Stony Brook University.

He is very much popular for his useful and important studies on pattern recognition. The Chern-Simons form was developed by him. He was a mathematician professor from the year 1968 to 1978. He held the chair of a mathematics professor at Stony Brook University. As per the year of 2018, his net worth was $20 billion.

Early life and studies:

This eminent personality was born on 25th April 1938. He was born in an American Jewish family. He was the only child of his parents. He was brought up in Brookline, Massachusetts. His father had a shoe factory. But Simons has found his love for mathematics at the early age of his life. At that time, Simons worked at a garden store as a floor sweeper. But he had the ambition of becoming a mathematician at MIT. In the year 1955, he got a chance from MIT. After completing his graduation from there, he got a chance to study at the University of California for his decorate in mathematics. At the age of 23, in the year 1961, he got his doctorate in mathematics.

After that, he started to teach mathematics at Harvard and MIT. In the year 1964, The Institute of Defence Analyses appointed Simons. During the Vietnam War, he played a very important role in the codebreaker. After four years, he left IDA and became the Chairman of Stony Brook University. There he played the key role of developed-in mathematics and physics as well.

Academic career and scientific career:

Simon is very much popular in his mathematical works. At the primary stage, he has focused on geometry and topology of manifolds. In the year 1972, he wrote his Ph.D. thesis under the direction of Bertram Kostant. This thesis gave a new conceptual proof of Berger’s classification. It is now a new cornerstone of modern geometry. Apart from this, he also began the work with Shing-Shen Chern n the theory of characteristic classes. In the year 2014, he was selected by the National Academy of Sciences of the USA.

In the year 1988, Simons decided to use quantitative analysis in order to decide which trade to enter. The Quant King has filled the fund with so many programmers, mathematicians, physicists, and cryptographers as well.

How Mathematician Jim Simons Learned To Beat The Market

Renaissance technologies:

Simon’s renaissance technologies protect the fund for more than two decades. He has employed mathematical models in order to analyze and execute trades. Renaissance can predict the price change in the financial instrument through the computer-based models.

Renaissance also employs specialists and experienced persons from non-financial backgrounds. These backgrounds are such as physicists, mathematicians, and signal processing experts and statistic specialists.

In the year 2006, Simons was named as Financial Engineer by the International Association of Financial Engineers. In the year 2007, he earned personally $2.8 billion. He head earner $1.7 billion in the year 2006 and $1.5 billion in the year 2005. So, here is an actual growth rate of his income and earned money.
Jim simons hedge fund returns were 66% ( generated average annual returns) before charging investor fees—39% after fees—racking up trading gains of more than $100 billion.

By using his strong mathematical background and a very large set of data, Simons wanted to build the computer model. He believed that he could identify and get the profit from patterns in the market. He created his algorithms based on the data 40 years before today. According to Zuckerman, he takes advantage of the smallest and shortest fluctuations in prices. By crunching data and created a predictive algorithm, Jim Simons embraced a radical investing approach. These tactics were embraced radically in Silicon Valley and elsewhere.

Today, the protected funds and other quantitative and investors are the largest market players. They can control 31% of all stock trading. They are inspired by the success of Simons and his colleagues. It is true that Simons took more than a year in order to find a formula to beat the market.

Risks and changes:

Simons had to face a lot of difficulties in this path of invention. In the year 1985, Simons was working with James Ax. He is also another prize-winning mathematician. Simons considered the possible influences of sunspots and lunar phases on markets. At that time, Simons also flew to California in order to discuss the new potential in trading approaches. In addition to his success and fame, Zuckerman also points out some failures, setbacks and other kinds of incidents that nearly ruined his invention. But Simons handled so many things in his life tactfully and smartly as well. He also managed to tackle his whole team members including Baum, Ax, and Berlekamp. Their various reasons, starting from their health issues and all can make a huge problem for Simons.

Awards and legacy:

In the year 1976, he won the AMS Oswald Veblen Prize in Geometry for his outstanding contribution in Geometry and Topology. In the year 2006, Simons was named as Financial Engineer of the year by the International Association of Financial Engineers. In the year 2014, he was elected to the National Academy of Sciences of the USA. Simons has developed strategies to corral and manage their talents. He has changed and turned the raw brainpower as well. He also changed the mathematical aptitude into astonishing wealth. Simons had to make the decision in order to dig through the mountain of vast data. By the year 2019, the funds of quant have emerged as one of the largest market changes in the industry.

Medallion fund:

The medallion fund grew from $66 million to $2.4 billion between the years 1993 and 2000. In the year of 2010, it became and reached up to $10 billion. After this point in time, Simons gave his final resignation and turned the operation power of the fund to Mercer and Brown. But he remained the Chairman of the fund. Apart from the fixed assets of a total of $10 billion, this particular fund continuous to generate enormous profit and this is very much fortunate for the investors. From the year 2011 to 2018, the returns of the fund are consistently and easily the best among the market. Renaissance also offers three funds for outside investors.

As you can see, Simons has a quite career. He is a true genius in the field of mathematics. He changed a lot about the concept of mathematics and its effects on funding as well. He has a great IQ level. He has boundless energy and determination as well. He knows how to tackle tough situations and meet the never-quenched thirst for success. His overall story is a great tale. Everyone should know the very detail of his journey. Zuckerman describes everything from top to bottom in the book named “The Man Who Solved the Market: How Jim Simons Launched the Quant Revolution”.

Simons Foundation established the Flatiron Institute in the year 2016. In this particular house, there are four groups of computational scientists. Each scientist is Ph.D. level researchers. This particular institute consists of three cores or departments such as CCB or the Centre of Computational Biology, CCA or Centre for Computational Astrophysics, CQC or Centre for Computational Quantum mechanics. They will focus on another branch of application computational science. This new institution is located in Manhattan. This institution represents a major investment in basic computational science.

Simons has a strong deal of influence in the scientific world. He founded the Simons Foundation with his wife. Simons Foundation is solely devoted to supporting the scientific research, health, and education as well. Simons also contributed $2.7 billion of his total wealth to the autism center in order to support the noble cause. Simons also founded the Math of America. It aims to encourage the mathematics and science teachers in order to remain their roles and advance their responsibilities of teachings and abilities as well. Simons and his colleagues use unbelievable data and lots of information as well. They really worked very hard to give the economy industry a new path. For their invention, the natural economy of the market has changed a lot. Their equations of Quant Funds can protect the funds and it is very much effective for the industry. According to Jim Simons, the computer has the opinions and all need to follow them slavishly.

How Mathematician Jim Simons Learned To Beat The Market

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