Archive for the ‘Trading’ Category

How to start trading stocks?

Wednesday, February 6th, 2013

Before answering this question, it is necessary to give definitions of the terms. Stock trading means buying and selling securities on stock exchanges. One of the purposes of the trades is gaining speculative profit. Today most of online trading on global stock markets is conducted by retail traders.

In order to trade stocks, a trader opens and replenishes his trading account with a brokerage company, which provides access to markets. A broker holds agreed commission from his client’s trading account for its services.

Depending on the size of the deposit, the expected schedule, and personality traits, a trade chooses and then tests his trading strategy on a demo account. It involves transactions of a given size on a particular stock market, with certain trading instruments and conditions of closing positions.

Trades on stocks are carried out on special software – trading platform, which sends the order to a broker to buy or sell an asset. A trading platform has all the necessary functions for trading. In addition, it enables you to track stock quotes and analyze the current market situation through various software applications (indicators, oscillators).

For successful stock trading you should understand the way financial markets function, have the skills of technical and fundamental analysis, as well as experience in demo account trading. Trading requires constant self-monitoring and self-improvement, but finally can result in a job satisfaction and a significant income.

Multiple time frames analysis

Tuesday, February 5th, 2013

Starting working on Forex every experienced trader came across the concept of multiple time frame analysis. One might look for the answer for such questions as “Which time frame is the best?”, “Which one is the most profitable?”, etc. In order to answer it, we should examine each of them.

Every time frame is designed to show the same information. The only distinguishing feature is the data provided in terms of different periods of time. In order to help you to choose the most appropriate, let us look at the most popular:

1 day;

1 hour;

5 minutes.

On the daily chart every bar represents one day; thus, changes on the chart will be observed once a day. On the 1-hour chart new bars appear every hour, providing trader with information. Bars on the 5-minute chart appear every five minutes, showing dynamically the current situation on the market.

In order to choose the most appropriate time frame, you should take into account several criteria: the period you will be working with the charts, profit, the amount of your deposit, and account management.

If you prefer a more moderate pace of work and you like to follow the changes of the chart every hour; if you consider that 1-hour chart is more reliable and it reflects precisely the price fluctuations as it does not show a great deal of that fuss about nothing that 5-minute chart contains, then 1-hour chart is ideally suited for you.

We may think over the other alternative. In case you have regular job and you do not have enough time to observe the situation or you think that changes which occur during the day do not influence the market on the whole, and it is better to analyze the final result in the evening; probably you want to participate in the trade at night making money work for you even when you sleep, consequently, it is better to use daily charts.

You have to choose the way you make money on Forex either participating in trading, using every chance, sitting in front of the monitor the whole day or making money relaxed observing price fluctuations from time to time and not breaking your daily routine.

Forex and State Regulation

Wednesday, January 9th, 2013
Forex is based on free currency conversion; it presupposes a state does not interfere in foreign exchange transactions. Nowadays, there is no fixed exchange rate as there are no restrictions on volume of transactions.

However, some countries establish special rules for brokerage firms. First of all, these rules apply to relationships between brokers and clients.

Financial Services Authority (FSA) exercises control over financial markets in the United Kingdom.

Commodity Futures Trading Commission (CFTC) regulates futures and option markets in the United States. National Futures Association (NFA) is an independent self-regulatory organization and watchdog of the commodities and futures industry in the United States. The NFA elaborates trading rules, conditions for brokerage service, and also provides mediation and arbitration for resolving consumer complaints. Besides, the association collects and analyses reports obligatory provided by brokers and its members.

The Central Bank of the Russian Federation exercises control over the exchange transactions in Russia. However, Russian legislation does not make provisions for free unlimited currency conversions.

Dr. Alexander Elder: psychiatrist in trading

Wednesday, December 19th, 2012
Alexander Elder, one of the greatest specialists in the field of finance, was born in USSR. He graduated from the medical university and when he was 23 in 1974 he emigrated to the U.S., where he lives to this day. Today, Dr. Elder is professional trader and a recognized expert in stock trading, who wrote numerous articles on the subject. He worked as a psychiatrist and taught at Columbia University. In addition, Alexander is an author of several books about stock trading, which received a lot of good appraisals. From there he made his name as one of the most reputable experts in stock trading. It all started with a KinderCare share which he bought at the beginning of his trader’s path.

As a psychiatrist, Dr. Elder is well versed in the intricacies of the human mind, so it could not but influence his understanding of trading. He sees not only the deal details, but the personal attitude of traders before, during, and after the deal. It is of key importance that he successfully applies his knowledge to explain market behaviour.
According to Alexander Elder, there are three types of traders:
  1. The trader who is technically literate but has no skills on analyzing the motives of behaviour.
  2. The trader who realises that technical knowledge is not a guarantee of success. Elder calls this the awakening of a psychological understanding with respect to stock trades.
  3. The trader who understands that successful trading requires control and money management. Rather than letting statistics move him, it is money management and control that causes him to anticipate future positions.

Bright personality and wide experience enabled professor Elder to write a range of best-selling books that won the world’s hearts and minds. Elder’s books “Trading for a Living” and “Come into My Trading Room – A Complete Guide to Trading” are the classical trading tutorials. In 1993 “Trading for a Living” became an international business bestseller which was translated into 9 languages, including Chinese, Dutch, French, German, Japanese, Korean, Russian, and Polish. Elder’s “Trading for a Living” won Barron’s Best Book award in 2002. Dr. Elder takes an active part in free educational projects, which he initiates himself, and also trains the younger generation through his webinars available on the Internet.

In conclusion, Alexander Elder said:

The fear – the main problem for the trader. If you have everything you need – the system of the game, the rules of capital controls, the psychological rules prevent loss, it means it’s time to play the market”.

Why Do We Need Forex Economic Calendar?

Wednesday, December 12th, 2012

The stage of your professional development does not play a significant role. If you are engaged in the work on the international currency market the economic calendar will be an irreplaceable tool for trading. There is no doubt that it is used by different traders to a greater or lesser extent. However, those who take into account fundamental analysis cannot manage without Forex economic calendar.

Firstly, the calendar contains detailed timetable of the macroeconomic data. As a rule, it provides information pertaining to the previous, expected, and current figures of the indices. Economic data has considerable influence on price fluctuations. That is why information presented in the calendar may help to elaborate the most profitable trading strategies. Due to the calendar you can change your trading strategy. Moreover, market data updates in real-time.

Thus, using Forex economic calendar you get the possibility to react timely and immediately to major affecting the international currency market.