Currency Trading

Tuesday, June 30, 2009

Introduction to online trading


On the road to progress, everyone must have to break down and build anew. We must unlearn everything that we know and think we know and begin again -- from the beginning.

CFDs are "Contracts for Difference"

The "CFD" was developed to allow clients to receive all the benefits of owning a stock without having to physically own the stock itself. For example, instead of purchasing 1,000 shares of Microsoft from a stock broker, a client could instead buy a CFD on Microsoft on the GCI trading platform. A $5 per share rise in the price of Microsoft would confer to the client a $5,000 profit, just as if he had purchased the actual shares that are traded on the exchange. A major difference is that there are no exchange fees and many of the inefficiencies of trading the underlying shares on the exchange are eliminated. GCI can therefore offer CFDs with zero commissions and very attractive margin requirements. CFDs have grown in popularity dramatically over the past few years, and we believe that this will increasingly be the preferred way to trade the financial markets.

The other major benefit of trading a CFD is the fact that the client can trade on margin. CFD trading means clients can trade a full portfolio of shares, indices, or commodities without having to tie up large amounts of capital. Using the example above, a client purchasing $50,000 worth of CFD Shares will only be asked to put up a $500 margin. Just 1% or less of what we buy or sell.


CFDs then are the future of the Stock and Commodities Markets and the future is here now, available to you right in your own home or office through the use of your Personal Computer and the Internet.


Basic trading principles


In trading stock and currency, there are certain principles that are common to all the different issues or instruments. But at the same time, there can be very great differences, as well. Before we can be enabled to trade profitably, we must obtain to some familiarity concerning them all. Through our observing price movements, we will be able to arrive at some understanding of how and why they fluctuate the way they do.


Each issue or currency should be regarded as one independent and unique economic unit -- each different, with different parameters, standards, pace of movement, range of prices and character. They may or may not have a professional operator, one who in some way affects, influences or controls its up and down movements. The operator or operators may have different styles and methods of trading and controlling the price movements. Thus the prices in general may move in an orderly or erratic fashion, fast or slowly, predictably or randomly. The movement may keep to a trend or may be trendless. It is different from time to time. But profits can only be made when the market stays on trend or moves predictably. Only then should we get on board. Otherwise, we should get out and stay out.


Each group or issue then should be studied separately. However, since all of them are governed by the same basic principles, we can simply study one main group first and then adjust our settings accordingly for each of the other groups and issues. For our purposes then, let us study CFDs in conjunction with the FX Guides as our initial main focus. The FX Guides are available to those who enroll in our Free Hands-on Training.


Technical trading


For most traders, technical trading rather than fundamental trading is much preferred. And we don't need to have a degree in economics or finance to be an expert. A short course can bring us up to speed.


Price cycle


The price movement of any and all of the financial instruments undergoes 4 stages - Accumulation, Marking up, Distribution and Marking Down. In this, they are all the same. We only need to change price ranges, time frames, standards and settings.


Support & Resistance, Stops, Entry Limits, Entry Stops


Just like an Indian scout can follow a trail by reading the signs along the way, so can we determine the course of the markets from the price highs and lows and Support and Resistance levels. And we can then set our Stop Loss Prices and Buy and Sell Limits.


Seasons and Cycles


One important difference unique to stock trading is that their price movements coincide with certain seasons and are often cyclical by nature.


Usually not always, towards the end of the year, window dressing begins and carries over to a week or 2 weeks into the new year. The market then overbought, unloading will set in allowing prices to drift down until the Holy Week and income tax payments. A mid-year rally might kick in possibly till August/September, especially if first half performance is positive. Selling usually precedes the payment of tuition fees. Then the cycle repeats in December.


Throughout the year, there are the monthly and quarterly performance reporting of most companies. New mines and oil finds, fresh innovative products entering the market and recently approved drugs or drugs found harmful spark the interest of investors and traders, alike. Presidential elections, wars, civil unrests, and deaths of important personalities; earthquakes, hurricanes, volcanic eruptions and tsunamis; IPOs, declarations of stock dividends and rights offerings -- All such likewise incite speculations. There is always something going on that will impact prices.


Strategy


There are so many different methods of earning from our trading, as many as there are traders. Most every strategy can earn. We only need to dance to the rhythm of the music. We should go with the flow, follow the line of least resistance as indicated by the charts. We should listen more to what the market is telling us and not dictate to it based on what we want it to do.


Choosing issues


Going over the whole list to trade, we will always be able to find a few that are poised to move up or down. And here in CFD trading, we not only can make money by going long or first buying. We can also earn by selling short and then buying back at lower prices. But nevertheless, there are advantages to specializing in just a few issues and watching them closely. Predictability with sufficient range equates to greater profit.


Timing


Each issue moves in different cadences or rhythms. They follow different time schedules. There is a time to wait, a time to load and a time to sell.


Allocating lots


How much we should invest or put at risk at any one time should depend on our desired profits and the safety and sufficiency of our capital.


Demo trading


Basing on the charts and through continuous practice, we will be able to adjust our standards and settings to match our expectations and maximize our performance.


Evaluating your performance


No plan being perfect, we should keep improving our overall Strategy as we go. We should learn how to spot problem areas and effect the necessary solution when the need arises.


Before you trade live


For most traders, failure is more the rule. But those who take their studies seriously, train well and practice adequately will have a far better chance of succeeding. Practice makes better all the time. And success becomes inevitable in the end.


Spiritual prerequisites


Lest you be misled, there is an overriding spiritual component to the amassing and enjoyment of wealth. You may be deserving or not deserving and still make a fortune doing most anything, even the immoral and criminal. Through hard work or by just taking it easy, you could be the best trader there is, be a billionaire, be famous and respected. But all that won't last unless you also first live as God directs. His laws are eternal and unchanging. Eternal life and happiness await those who do His will.


Open a live trading account with FXCM or GCI and be entitled to join our training and consultation email group at Yahoogroups.


For inquiries, send email to: forex300club@gmail.com



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posted by Angel Luz - Inner Quest @ 7:16 PM  

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