Thursday, April 17, 2008

forex edge Updates

Forex Definition - A brief Overview

The Forex, and also known as "The Foreign Exchange" market exists wherever one currency is traded for another. It's the largest financial market in the world. Simply if we compare the New York Stock Exchange trades vs changing hands in forex, we will discover Forex market is a lot of times larger than both Equity and Treasury markets combined.

Forex or "Foreign Exchange" is where the money of one nation is traded with another. The most important and popular pairs of exchange in the forex market are "Euro Dollar", and you will see this pairs in all forex display screens as "EUR/USD". There are also a lot of others pairs but sure not important and not famous as "EUR/USD" pairs, like:-

1-The British Pound, and you will see this pairs in all forex display screens as "GBP/USD".

2- The Japanese Yen, and you will see this pairs in all forex display screens as "USD/JPY".

3- The Swiss Franc, and you will see this pairs in all forex display screens as "USD/CHF".

However there is a problem in the forex market until this day, there is no one central exchange where everyone can exchange the currency. All the currency traded are done over the telephone and online through a very big networks that connects all the banks, brokers and currency traders with each others.

Currency trading in the past was just for the banks, but today and after the new revolution electronic economy, online forex trading companies start to offer a lot of services to all traders around the world. Today if anyone have a computer and internet connection can easily start to trade currencies, but sure the experience and analysis is very important to success in forex game.

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Your FOREX trading potential can be predicted by looking at your daily emotional behavior

As hundreds and thousands of articles have been written on the subject of trading the markets, and with the emergence of new financial instruments every day, I feel compelled to put together a dissertation on the most important element of trading, the emotional effect.

Before detailing the key elements, I will offer to you the thoughts of two prominent individuals. They do not need any introduction, as their work is known and appreciated all over the world. I am sure you will love their insight into the human psyche.

"When dealing with people, remember you are not dealing with creatures of logic but creatures of emotion". Dale Carnegie (1888-1955)

"Let's not forget that the little emotions are the great captains of our lives and we obey them without realizing it". Vincent Van Gogh (1853-1890)

In a world apparently dominated by logic, it is very interesting to find such "heretic" ideas. There is nothing more debilitating than the thought of us acting not on our heavily trained conscious, but rather on the unknown subconscious impulses.

I would like to add just one more fact to my presentation, in order for you to fully grasp the importance of this new approach to trading and in general to any business activity.

The Institute for Health and Human Potential, with offices in U.S.A., Canada and Australia is a research and learning organization that uses Emotional Intelligence to leverage performance and leadership. Fortune 500 companies, the world's top business schools, professional athletes and Olympic medallists seek their expertise.

According to their studies, "Research tracking over 160 high performing individuals in a variety of industries and job levels revealed that emotional quotient was two times more important in contributing to excellence than intellect and expertise alone"

Shocking? Not at all. It is our way to act on impulse, without questioning the triggers. .

It is well known already that the two emotions dominating trading are GREED and FEAR. What is less grasped is the extent to which these emotions influence our decisions.

While amateur traders are greedy when they lose and fearful when they win, professional operators have an exactly opposite attitude, being fearful when losing and greedy when winning.

While simple psychological training could help you discipline your impulse reactions, it is the experience you get "in the ring" that makes you understand how to play with these primal emotions.

We all hate to lose, not necessarily money. The sentiment is very powerful. ALL professional operators are well versed in dealing with it day in and day out.
Although they have been through tense moments due to financial losses, they have learned the most important rule in trading the markets: losses are the COST OF DOING BUSINESS.
They have a high emotional management procedure and are trained to implement it no matter how hard their "ego" may suffer.

This is easier said than done, as emotions kick in and all theory crash and burn together with any trading plan.

Here you have some easy steps to help you start taming your emotional horses.

- What you see is NOT what you get, as opposed to what you have been taught all your life. The way you act is just a consequence of years and years of education and interaction with others and not your genuine attitude. You are the product of an outside education, not necessarily positive.

- In the long run, your FOREX business is just PART of your whole life, together with your family, friends, hobbies, long-term projects and various other activities. I personally use a very powerful "mantra" when in pain following a loss. LIVE TO FIGHT ANOTHER DAY!

- Never lose sight of the general picture. That is your primary goal. For a professional FOREX operator, the primary goal is the PROTECTION of his or her trading capital. Keep a trading journal and learn from your mistakes.

- If you want to get a pretty accurate picture of your trading prospects, take a look at your daily emotional decisions. Most of the time, you will repeat all emotional behavior in your professional life.

If you take your time to sit back and observe your daily routines, the picture will emerge with greater clarity, helping you foresee hurdles along your trading career. Do you have a swinging mood? Do you change your mind very often? Are you capable of keeping a commitment? Do you lose your temper easily? Are you on the "half-full glass" or "half-empty glass" side of life?

These traits will not change just because you start trading. That is why you have to be very careful with your expectations. Base them both on your assets as well as liabilities, in order to obtain an accurate picture.

That is just the beginning, but a very resourceful one on a journey few of us have started yet.

I have seen traders taking NLP (Neuro-Linguistic Programming) lessons, practicing the Tai-Chi art or simply meditating. They try to get in touch with unseen forces at work deep inside, vectors of influence that rule our inner world.

The way to succeed in life has infinite variations but one common start, superbly crystallized in the following aphorism, inscribed in golden letters at the entrance to the Temple Of Apollo at Delphi and attributed to Socrates, among several other ancient Greek philosophers: NOSCE TE IPSUM,(Know yourself).

The magic of success is within our grasp. We just need to find the wand!


Professional FOREX trader and owner of FOREX educational website,

About the Author

Mr. VASILE is the founder and President of VORTEX Capital Management, a seasoned FOREX trader, member of the Securities & Investment Institute in London and author of the revolutionary SyncronDec? program used in his professional FOREX course. He has a Professional Certification in Financial Regulation with the above Institute as well as extensive experience in the field of Investment Management.

Types Of Orders In Forex Trading

The forex market provides different kinds of orders for trading. The following are some major types of orders that can be found on forex trading stations.

Market orders - A buy or sell order in which the forex firm is to execute the order at the best available current price. It is also called at the market.

Entry orders - A request from a client to a forex firm to buy or sell a specified amount of a particular currency pair at a specific price. The order will be filled once the requested price is hit.

Stop Loss orders - An order placed to close a position when it reaches a specified price. It is designed to limit a trader's loss on a position. If the position is opened with buying a currency pair, the stop loss order would be a request to sell the position when the price fall to the specified level. And vice versa. Traders are strongly recommended to use stop loss orders to limit their losses. It is also important to use stop loss orders when investors may enter a situation where they are unable to monitor their portfolio for an extended period.

Take Profit Orders - An order placed to close a position when it reaches a predetermined profit exit price. It is designed to lock in a position's profit. Once the price surpasses the predefined profit-taking price, the take profit order becomes market order and closes the position.

Good Until Cancelled (GTC) - In online forex trading, most of the orders are GTC, meaning an order will be valid until it is cancelled, regardless of the trading session. The trader must specify that they wish a GTC order to be cancelled before it expires. Generally, the entry orders, stop loss orders and take profit orders in online forex trading are all GTC orders.

The above are the basic orders types available in most of them trading systems. Some trading systems may offer more sophisticated orders. Traders should be familiar with the different orders and make the most of them during trading.

About the Author:

Action Forex provides forex analysis reports, live pivot points on majors and crosses, etc are provided with collection of carefully selected educational articles and free trading ebooks downloads.


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