Forex Trading System

Forex trading tips, advice and news

Pips vs Pipettes – Know the Difference

May 16th, 2012

As a forex trader, you’re going to beg getting pretty intimate with numbers in a big way. You will live numbers, breathe numbers, eat and sleep numbers. But that’s just the way it is. The more data that you have, the better tracking that you can do. You will need to make sure that you understand some key concepts before you plunge in too deeply into forex.

One concept that we wanted to address right now is the difference between pips and pipettes. You’ll see these terms a lot as a new trader, and they’re very, very important.

A pip is a unit of measurement used by traders to show the change in value between your currency pairs. A pipe is the last decimal place of a quotation. Most currencies are expressed in values out to four decimal places — except for the Japanese yen. It’s special in that it only goes out two places.


So let’s say that EUR/USD moved from 1.2250 to 1.2251 — that’s one pip. If it moved from 1.2250 to 1.2259, that would be NINE pips. That’s a pretty good deal!

But what about those pipettes? We’re not trying to bring you back to chemistry class or anything like that. We’re just saying that you might want a little more precision when you’re looking at gains.

You will need to go to the pipette, which are fractional pips. Let’s use the same EUR/USD pair from earlier.

What if your pair went from 1.22503 to 1.22504? That’s one pipette. Notice that we went out to five decimal places. That’s because we are getting the quote for the pipette value. Most of the time you’ll probably want to just deal with pips, but it can be helpful to also know if you’re making any headway in terms of pipettes as well. It can make the difference between staying in a trade and backing out.

Now that you know more about forex, do you think you’re ready to start trading? Hold on there — there’s still a lot more ground to cover. We say this a lot in forex land, but if you really are very new to forex getting a demo account is way smarter than just rushing in. Even if you have previous investing experience, a forex demo account is truly the way to go. It’s not the end of the world if you spend a few months learning your forex platform and your demo account. It’s better to lose your whole demo account and just have to start over than losing real money and having problems getting into the game at a later time.

The Numerous Ways to Trade Forex, Regardless of Current Skill Level

May 11th, 2012

Forex is something that’s open to everyone, even though many investors are afraid of diving in. Forex is one of those things where you are either really doing a good job with it or you’re having problems. If you want to really make sure that everything is going to be fine wit your forex trading career, you need to make sure that you’re getting the right skills now before it’s too late. Just like rushing into any situation causes problems, it’s going to be a very bad thing if you try to rush into the world of forex before you’re really ready to take that leap. That’s not something that you want to really play with, and we don’t blame you fore being a little hesitant.

As a newcomer, you might wonder how you actually can get into forex without losing your shirt immediately. So we figured we would cover the top places to break into forex.


First and foremost, we have the spot market. It means that currencies are going to be traded “on the spot”, using the current market price. It’s simple and to the point, with round the clock operations. You can open a small account with a very small amount of money, and many brokers are going to basically charge you nothing for the charts and research work that you need. Spreads are also good and tight, and we’re okay with this.

Aside from the spot market, you can always trade forex futures. These were created way back in 1972, and they are very standardized. You have price and transaction information readily available, so you will be able to plan accordingly base don your own strategy.

There are also options for forex, which is just an instrument that gives the buyer the right but not the obligation to buy or sell an asset at a specified price on the options expiration date. The forex market for options isn’t very liquid as futures and certainly not as liquid at the spot market. If you really want the most liquidity, sport fore is where you want to be.

Forex ETFs (exchange-traded funds) are the new players in town, but not everyone is on board with it just yet. The upside is that the ETF will contain stocks, so youíre getting a bit more diversified, but the trouble is that the market isn’t open 24 hours a day, so you will have some limitations and possible losses there.

It’s up to you to decide which path you’ll go towards when it comes to trading forex. Are you ready to get started? We suggest going with spot forex until you’ve really mastered the basic forex concepts. When you have, you can then feel free to branch out if you want to.

How does Forex Stack Up Against Futures

May 6th, 2012

Are you thinking about getting into the wider world of forex, but you’re not sure if you should leave your current trading strategy? You’re actually in very good company. A lot of people are interesting in the world of forex but they have to make sure that you’re really making a good move by switching over. If you have something that already works, we’re definitely not telling you that you should only think about forex and forsake everything else. The nice part of investing is that you really can do just about anything and everything that you want already. If you want to dive into forex, you can definitely do that.

What if you’re already in the futures market? Surprisingly enough, you can stay there. You don’t have to cross futures off your list if you want to go with forex. But there are some advantages to be had when it comes to forex versus the futures market.

The first area would have to be liquidity, first and foremost. Indeed, the forex market is huge. How huge? $4 trillion is traded everyday. It’s the largest and most liquid market in the world. You can pretty much expect a lot of volume. However, you might think that the futures market is pretty massive. This isn’t quite the case — $30 billion is nothing like $4 trillion. That’s why the forex market is really getting a lot more attention than it had in the past. If you really want to make sure that you dive into a market that can really offer you the most volume for value, it would have to be forex, hands down.

Liquidity, if you’re not sure what we’re referring to, is simply the concept of positions being liquidity into cash and stop orders being executed quickly. Unless the market in question is extremely volatile, you can back out of positions quickly.

The futures market isn’t a 24 hour market, but the forex market sure is! You will be able to pretty much trade all day and all night if that’s what you really wanted. This is because the major markets open and close at different times. If you want to trade at a different time, you just switch to another marketplace. Sydney closed? Go to London! London closed? Hit New York! It’s really a 24 hour seamless market.

The difference in commissions is also staggering as well. Futures is an expensive market to trade in because the commissions are so high. It’s the cost of doing business, you say? It doesn’t have to be that way!

In the forex market, the commissions are much smaller, if they’re even charged at all. Yes, brokers are going to make their money in terms of the spread, but that’s with any marketplace. When you really compare futures with the forex market, there are just too many advantages not to really pay attention to them.

What about price certainty? You will virtually always know what the prices are in the forex market, at least when the market is under normal conditions. However, futures and equities don’t work nearly the same way. The price can be incredibly volatile, and the price that you’re quoted is often the last trade, not the price for the contract at fulfillment.

Even though forex can be risky, there are steps that traders can and will take in order to minimize their risk. You can set stop loss points so that you can gracefully back out if a trade goes to a place where you don’t want it to go. During normal market operations, your open positions are going to be closed fast.

Overall, we really can’t speak enough on the many benefits of going towards forex rather than futures. Are we saying that you have to get out of the futures market? Not at all. It’s completely up to you, as always!

College Students and Forex Trading

April 24th, 2012

Can you invest while in school? It’s a question that might sound silly t some, but the truth here is that the world of investing is really open to everyone. You might find yourself wondering if you really can get through so many different components in order to master an investing strategy, but you never know what you can do until you test yourself. It’s just a matter of believing in yourself, and that can make all of the difference. Be sure that you are always thinking about your needs and getting things done — you will not have to worry about much from there if you do!

So let’s talk a little more about college students, and forex trading. We’re going to be honest — forex is something that all people need to be cautious about. It’s tempting to think that you can dive right in and make big money like you hear about in the forums online, but that’s not the case at all. Forex trading is highly sophisticated, and it can take a few months all the way up to a few years to master everything going on. It can be tempting to want to rush and make sure that you get into the action quickly, but that’s really a recipe for disaster. It makes a lot more sense to really be sure that you have everything else taken care of rather than just rushing in.


Knowledge is one of the things that you can use to really make sure that you can make money over the long term. Yes, that’s right — you can’t walk into forex expecting money right away. College students have been traditionally warned away from forex because of the tendency to be impatient. You want money now and you hear story after story of people doing well in the forex market. However, the truth here is that while it’s great to get money fast in forex, it’s horrible to lose money fast in forex.

Take the time to learn about limit orders of all types, leverage, and the different types of analysis. If you aren’t willing to learn more about math, economics, trading, and other investing topics, you probably should stay out of forex.

When it comes to figuring out how much money you need, you can get by with around $1,000. That’ll give you a mini forex account that you can use to get the feel of things.

Yet before you risk your capital investment, you want to make sure that you are demo-trading. Demo-trading means that you trade in a virtual system at the forex trading house you choose. You aren’t risking any money, but you aren’t making any money either. This will be the part that college students are most tempted to skip over, but we definitely recommend that you just stick it out. The more time and effort that you put into the world of demo-trading, the easier it will be in the long run. Yes, you’re going to want to end up just skipping it, but we definitely don’t recommend that line of thinking either. It’s too easy to end up making choices that you will regret later. You don’t want to get caught in the moment.

College students do have one thing going for them — they’re going to be able to make solid decisions with the help of a company. You might be used to reaching out for assistance, so don’t stop now. Join forex groups, but take them with a grain of salt. Online, everyone wants to be an expert. Take the good parts and leave questionable advice behind.

Now is the best time to really make sure that you have things under control when it comes to entering the world of forex — even as a college student!

Forex Lots and the Traders That Love Them

April 3rd, 2012

Transactions. If you really want to make sure that you are grasping the ins and outs of forex trading, you’re going to need to understand transactions a great deal. That’s because everything — and yes, absolutely everything — is going to rely on transactions. If you want to know what type of profits and losses that you’re dealing with, you’re going to need to understand transactions. In the world of forex, lot size relates directly to transactions. There are different sizes because it creates more flexibility in the market. However, this is also what makes forex so volatile. There’s a heavier trading volume that takes place that’s unlike anything else in the world.

The lot size is also the reason why forex is to available to just about everyone. Even though we always recommend starting out with plenty of trading capital, you can use micro-lot sizes to get in as a “baby” investor and then scale up as you get more trading capital. Is this recommend? Not at all. But let’s go over lot size in a little bit more detail.

The standard lot is going to be 100,000 units of the base currency, and there’s going to be a set pip value. In the case of EUR/USD, it’s going to be $10. It’s also referred to as a standard account.

If you can get away with it, you really want to make sure that you can go with getting a standard account.

However, there’s also the mini lot size, which is 10,000 units of the base currency. Using the same currency pair from earlier, this would mean EUR/USD at $1.

What about if you can’t get your hands on a mini account? That’s where that micro account comes in. It’s 1,000 units and the pip value is going to be $0.10.

Which account is right for you? Honestly if you really want to take advantage of leverage, you really need to make sure that you work with a standard account. That’s going to give you the best power when it comes to long term planning. This also assumes that you’ve done some demo trading before you even put money into the account. Again, even if you’re coming into forex from another investing platform there’s nothing that says you will automatically become a rockstar. Forex takes a different set of strategies than anything else, so you will need to make sure that you plan accordingly.

Don’t think that you have to rush, either. Just because you’re not ready for a standard account today doesn’t mean that you’re doomed to fail. There are plenty of forex investors that started out with a micro account and earned their way into a standard account.

Brace yourself, know your limits, demo trade until you’re ready to move up, and take it slow. Even though the newspapers and financial news outlets would like you to believe otherwise, there is always time to make more profits!

Dealing with Anxiety in the World of Forex Trading

January 31st, 2012

Are you worried about the forex markets? Thinking that your portfolio isn’t going to be trading properly? It’s time to relax! That’s right, we said it — it’s time to relax and try not to take life too seriously!

How can we say that? How can we think that forex trading is a game?! We’re not saying any of that. We are saying that trading anxiety in the world of forex is something that you have to correct right away. if you worry too much about the way your trading portfolio is set up, you’ll end up making costly mistakes that will cost you big in the long run. It’s better to step back from time to time and make sure that you have the core concepts taken care of.

You have to forgive yourself for any mistakes you make as a trader. No one, not even the super traders, are going to have perfect days every day. There are times where mistakes are going to cost everyone from one point or another. What makes the difference is how you handle the mistakes. If you give up and don’t try to move on, you lose the ability to really be objective. You lose the ability to be strong in your decisions. You lose the power to truly control your destiny through sharp trading.

Sometimes people find that they really benefit from keeping a trading journal. It sounds silly, but being able to look back at your victories as well as your defeats can help you stay in the game a little longer.

This is a journey, and you have to be committed to going to the very end. Except there’s a secret that you probably have figured out by now — there’s never really going to be an “ending”. There’s always going to be a point where you will need to know more information. You will need more challenges. You will have times where you will succeed and wonder what else there really is. These feelings are all normal. You don’t want to go into the markets when you’re feeling upset. That’s going to cause you try to “win back” money that you lost, and that’s usually going to lead to even more losses.

So now is the time to unplug and assess where you are in the forex game. if you’re a solo trader, you might need to join a forum and bond with other forex players. Even though we think that advice in the forums tends to be a little hit or miss, there’s nothing hit or miss about being able to bond with players that have the same desires that you do.

There are people that will try to use your losses to get you to back out of the market completely. If you know that forex is really part of your overall blueprint, then there’s no reason to skip over it, is there? Not at all!

Hang in there, and don’t give up!

Understanding Fibonacci Ratios as They Relate to Forex

January 31st, 2012

We have a secret for you: all of those old math lessons are coming back to get you, and you better be prepared if you’re going to trade in the world of forex. Thankfully, it’s just theory that will repeat itself over and over, so it’s really not the end of the world if you aren’t catching on as fast as you would like at first.

Let’s go into today’s math concept real quick: the Fibonacci ratio.  The term is named after Leonardo Fibonacci, a famous Italian mathematician.

Fibonacci discovered a series of numbers that corresponded to ratios that revealed the natural proportions of just about everything contained in the universe.

The number series was simply: 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144…well, you get the idea.

To repeat the numbers, you simply take one and then follow it with 2, then take 1 + 2 to make 3 — the third number in the series, then 2+3 to make 5 — the pattern just repeats itself to infinity and beyond. Not that we’re getting all cartoony on you! :)

What about that ratio issue? Well, let’s take two numbers from the series: 34 and 55. Fibonacci found that if you divide 34 by 55, you will get .618.

But you want to know what this has to do with your forex trading, right? Right!

These ratios turn into retracement and extension levels in the world of forex, and we use them as support and resistance areas. That’s really all you need to know, but we’ll go ahead and explain it a little better.

You see, you’re going to need to know when to back out of a trading position, and when to push forward. The more information you have, the easier it will be to push forward and get what you want in the long run. You also need to know when you have to back out of a trade in order to protect your profits.

The extension levels are designed to place profits before everything else.

Keep in mind that your charting software that comes with your forex package should be letting you set these Fibonacci points automatically. You don’t really have to calculate them by hand — the software’s job is to do that so you don’t have to worry about it.

As you get deeper into forex trading, you’ll see how all of these connections fit together. We’ll cover more on Fibonacci retracement levels next, so stay tuned!

Good Forex Strategy Gives You the Power to Build Consistent Profits

November 30th, 2011

Everyone gets to a point where they need to start looking into all of their investing options. As you might have already found out, investing really is what you make of it. If you want to make sure that you’re going to be able to really make things happen, you’re going to have to take on some risk. Yes, there are ways to build wealth slowly over time, but if you’re reading forex guides chances are good that you need a little more speed and you’re willing to take on more risk to get where you ultimately want to be. Just as there are conservative options for people that really crave them, there are options for people that are drawn to high-risk, high reward situations.

Forex is really the place to be if you’re into that type of thing, but that doesn’t mean that you get to throw all types of caution to the wind and just do whatever seems to be right at the time. You’re going to actually want to make sure that you focus on the bigger picture and keep your wits about you. That’s the only real way to go when you’re serious about making the most out of your investing situation.

Now, are we saying that in order to embrace forex you’re going to have to jettison everything else you might have picked up in the investing world? Absolutely not. You will just need to make sure that you shift over into getting everything that you’re seeking to get with your new investing plan. Merging the two investment styles is the key to a well balanced portfolio. No one, not even a super forex junkie would tell you to just give up the conservative investment world and embrace forex to the point where all of your money is at stake. That just wouldn’t make sense!

In addition, you also need to make sure that you really do take the time to not only learn the basics of forex trading, but advanced concepts as well. Good forex trading is a matter of strategy. If you’re not looking at strategy, you’re going to have a really hard time making sure that you will be able to make consistent profits.

Is anything in investing guaranteed? Not at all. However, the closer you get to looking at the hard numbers and making decisions base don key market principles, the easier it will be to predict the type of returns that you’re going to get. It’s only when you try to follow every last little trend out there that trouble begins brewing on the horizon.

Good strategy comes from solid information. So you will need to make sure that you have access to a lot of data before you even make any decisions. The right forex platform truly means everything.

Could Swing Trading Be Where You need to Go Next?

November 30th, 2011

One of the most frustrating things you’ll encounter when you enter the world of investing — specifically, the world of forex trading — is that there’s always something new to learn. There’s always something that you need to understand before you can move to the next step of the problem, and if you don’t embrace these new concepts early on, you’re not going to really go very far. Thankfully, it’s quite easy to pick up on concepts over time, especially when you don’t pressure yourself one way or the other. Now is the time to learn the key basics and then build on that information. Over time, you will get exactly where you want to go within the world of forex.

So the first topic that we definitely had to address is swing trading. If you don’t know what swing trading is, this is definitely the guide you need to read.

You see, swing trading as it relates to forex means that you’re trying to catch the wave of a major trend and taking advantage of trades that are profitable. These trades are not long term — a few days to a week is the normal duration. So you’re trying to handle things in the short term which can be risky — but very profitable. A lot of people recommend swing trading because it really does allow you to get a lot of stuff done without a lot of hassle, because the system is so clearly understood. In fact, a lot of forex forums will assume that you know something about swing trading if you’re going to attempt it, so make sure that you keep reading!

Keep in mind that swing trading is not the same as currency day trading — you want to make sure that you are going off real valid data and not just running with volatility. Volatility in terms of pricing and movements can really mess up your analysis, which leads to missed opportunities to make your profits.

Support and resistance are going to be two concepts that you really need to understand as they relate to swing trading.

You will want to look at a trend and identity the moments of support as well as resistance, and then take the opposite view. This means that you execute a trading signal in the opposite direction.

Stop loss orders play well into swing trading — in fact, they are downright necessary. You want to always make sure that you place your stop levels behind the supp-ort or resistance level. Never assume that a trade is just going to take care of itself — you must always make sure that you are in control.

Forex Trading System

Forex trading tips, advice and news