New to Trading? Getting started in the exciting world of Forex trading is exceptionally easy, but there are certain steps every new trader must take to ensure that he/she makes smart decisions: 1. Educate yourself. All traders should understand the fundamentals of the Forex market. In addition, traders should understand why economic releases, interest rates and international trade are important to movements in the currency market. 2. Learn the basic analytical techniques. All traders should have at least a basic understanding of fundamental and technical analysis. Fundamental Analysis involves the use of economic, financial and political news to determine trading decisions. Technical Analysis involves the study of charts to predict future price movements based on past price patterns and trends. 3. Maximize your tools. CMS provides multiple tools to help you become a better currency trader, including market news and charts. The best resource is the Visual Trading Demo Account. The demo account was designed to help traders gain familiarity with the speed and movements of the market. You should test out various trading strategies and practice placing different types of orders. This is the best way to learn from your mistakes without risking real money. You should also take a look at the Visual Trading Multimedia Tutorial to familiarize yourself with Visual Trading?s many advanced features. 4. Manage risk and your money. Every trader should know how much risk he/she is able and willing to take. You should always be aware of how much money is in your account before placing any trades, and you should consider whether you have enough funds to maintain your margin and withstand any movements against your positions. 5. Have realistic goals. The Forex market is one of the most exciting places to trade, and there exists the opportunity to make profits in short amounts of time. However, there also exists the potential for large losses. Being a good trader comes with practice and experience, and very often you must be patient. It is important to understand the risks associated with trading currencies and not to let unrealistic goals cloud your judgment when considering your entry end exit points in a trade. When you
have taken all of these steps and are ready to trade this market, open
a live account and enjoy the most competitive terms in the market with
WorldTra.de LLC and CMS! |
WHAT IS FOREX? The Foreign Exchange market (also referred to as the Forex or FX market) is the largest financial market in the world, with over $1.5 trillion changing hands every day. That is larger than all US equity and Treasury markets combined! Unlike other financial markets that operate at a centralized location (i.e. stock exchange), the worldwide Forex market has no central location. It is a global electronic network of banks, financial institutions and individual traders, all involved in the buying and selling of national currencies. Another major feature of the Forex market is that it operates 24 hours a day, corresponding to the opening and closing of financial centers in countries all across the world, starting each day in Sydney, then Tokyo, London and New York. At any time, in any location, there are buyers and sellers, making the Forex market the most liquid market in the world. Whether you are aware of it or not, you already play a role in the Forex market. The simple fact that you have money in your pocket makes you an investor in currency, particularly in the US Dollar. By holding US Dollars, you have elected not to hold the currencies of other nations. Your purchases of stocks, bonds or other investments, along with money deposited in your bank account, represent investments that rely heavily on the integrity of the value of their denominated currency ¨C the US Dollar. Due to the changing value of the US Dollar and the resulting fluctuations in exchange rates, your investments may change in value, affecting your overall financial status. Many investors have taken advantage of the fluctuation in Exchange Rates to trade in the Forex market.
Traditionally,
access to the Forex market has been made available only to banks
and other large financial institutions. With advances in technology
over the years, however, the Forex market is now available to everybody,
from banks to money managers to individual traders trading retail
accounts. Open an account and become an active player in the
largest market on the planet. Discover the advantages of investing
with
WorldTra.de LLC and CMS
today! |
HOW DOES IT WORK? Using fundamental and technical analyses, the individual trader attempts to determine trends in the price movements of currencies, and by buying or selling currency pairs, attempts to gain profits. The most often traded currencies, the major currencies, are those of countries with stable governments and respected central banks that target low inflation. Currencies that often trade along with the U.S. Dollar include the Japanese Yen, the British Pound, the Swiss Franc and now the new European currency - Euro are therefore the most liquid, unlike "exotic" currencies which are often tightly regulated and simply too illiquid. Countries suffering political instability or economic turmoil, and who use monetary expansion to fuel the economy or monetary devaluation to increase exports, usually have relatively higher inflation and weaker currencies.
Traders can generate profits (or losses) whether a currency is rising or falling by buying one currency, which is anticipated to gain value against another currency or selling one currency, which is anticipated to lose value against another currency. Taking a long position is one in which a trader buys a currency at one price and aims to sell it later at a higher price. Alternatively, a short position is one in which the trader sells a currency that he anticipates to depreciate and aims to buy the currency back later at a lower price. Buying or selling currencies in response to economic or political events which occur are reactive, whereas buying or selling currencies on anticipated events is speculative. The bulk of currency activity is generated by market participants anticipating the direction of currency prices. In general, the value of a currency versus other currencies is a reflection of the condition of that country's economy with respect to the other major economies.
Foreign exchange is a continuous global market, providing participants with 24-hour market access. The only breaks in trading occur during a brief period over the weekend. Although foreign exchange is the most liquid of all markets, the fact that it is an international market and trading 24-hours a day, the time of day can have a direct impact on the liquidity available for trading a particular currency. The major dealer centers and time zones are that of Sydney, Tokyo, London, and New York. Therefore, traders must consider which players are in the market, since in the modern interconnected financial world, events that occur at any hour, in any part of the globe, can affect some or all parts of the investment community. In addition, although trading in the "spot" market, the difference in time zones accounts for a two-day settlement period. The 24-hour nature of the foreign exchange market is a substantial attraction to many of its participants.
A proficient trader employs both technical and fundamental analyses prior to entering any trades. Fundamentals include watching the world news, and particularly studying variables that may cause the market price of a currency to fluctuate, including monetary and fiscal policy, political conditions, trade patterns, economic indicators (i.e. GDP, CPI, PPI), interest rates, inflation and unemployment numbers. Faith in a government's ability to stand behind its currency also impacts currency price. From time to time, central banks use intervention as an effective method of enforcing market adherence to their desired exchange rate comfort zones. Technical analysis, which has grown dramatically in popularity in the foreign exchange market since the 1980s, involves computer charting, using trend lines, support and resistance levels, reversals, and numerous patterns and analyses to study the behavior patterns of market crowds to track and identify buying and selling opportunities. Over long historical periods, currencies have displayed identifiable trends and patterns.
It is the trader's option to take either a conservative or a more risk-taking approach. Employing a conservative approach, the trader establishes and liquidates positions quickly and efficiently to capitalize on even the slightest of price fluctuations, using limit and stop orders to manage risk. A limit order is placed to ensure a position is established once a price level in the market has been reached.* A stop order is placed to automatically liquidate a position at a chosen price level in order to limit potential loss on a particular trade. By placing orders in relation to technical support and resistance levels, the trader may attempt to take advantage of the minor price fluctuations that occur each day. * Under volatile market conditions, a broker may not be able to execute a limit or stop order at the exact price specified by the trader. |
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You will find that that trading in the Forex market has numerous advantages over trading stocks or futures. 24-hour trading - The Forex market is a true 24-hour market. This is a major advantage over any other market because at any time, day or night, you will be able to trade and there will always be buyers and sellers. At 5pm on Sunday, New York time, the financial centers in Sydney and Singapore open for business and trading begins. The market in Tokyo opens at 7pm, followed by London at 2am and finally New York at 8am. These all overlap to provide for a seamless 24-hour global market throughout the week, allowing traders to react to news by trading immediately at any time. Traders do not have to worry about limited after-hours trading activity because in the Forex market, all hours, except on the weekend, are market hours. Unbeatable liquidity - As the largest financial market in the world, the Forex market has the advantage of superior liquidity. With daily volume of $1.5 trillion, it is fifty times larger than the New York Stock Exchange. Simply put, there are always going to be buyers and sellers around the clock, and traders will almost always be able to open or close positions at fair market prices. 400:1 leverage - WorldTra.de LLC and CMS offer investors leverage of 400:1, meaning that you can trade $100,000 lots by putting up just .25%, or $250. In equity trading, your maximum margin is 2:1, or 50%. This superior buying power is one of the reasons that Forex trading has gained so much popularity and interest over the years. Please note that increasing leverage may increase potential gains as well as losses on any given trade. Equal trading facility in rising or falling markets - The nature of a Forex transaction is the simultaneous buying of one currency and selling of another. That means that there exists the potential to profit (or lose) when the market is going up, and even when it is going down. Commission-free trading - WorldTra.de LLC and CMS does not charge any commission or transaction fees to trade. Trader pays a spread between the bid and ask prices. Because of
the over-the-counter (OTC) nature of the Forex market, as well as the
fact that it is an electronic network connecting traders directly with
market makers with no middle man, transaction costs are greatly reduced.
This reduction in cost is passed on to the investor through some of
the smallest spreads available anywhere. |
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ADVICE FOR NOVICE TRADERS 1. In order to become a successful trader, you must have sufficient risk capital- the loss of some or all of which will neither completely ruin your morale nor adversely affect your lifestyle in any way. In the event of loss, you must be able to handle such an ordeal calmly. Your mind should be on the market, not on your finances. In order to make the proper trading decisions, you must remain calm and concentrate on the task of trading. You should never use the last remains of your finances for trading- the responsibility and the pressure would be too great, and your mind would stray towards your finances, and not towards the market situation, thus greatly increasing the possibility of mistakes. 2. Don't rush to open a real account after only a few days of practice. Practice for as much time as is necessary for you to feel confident on your own. Don`t compare yourself to other traders- just because it took someone a certain amount of time to become proficient, doesn't mean you won't need more time. Your primary goal when practicing is to develop an individual trading style or technique such that, at the very least, your next week's trade earnings are not less than the current week´s, and that your monthly earnings should increase with each successive month. Only after achieving these results, should you open a real account. 3. When the number of winning trades surpasses the number of losing trades and your account balance increases, you have achieved a positive result in trading. However, if you have 5 losing trades for $2000 total and 1 winning trade for $3000, that is nothing to brag about since you probably got lucky, or imprudently risked using the maximum number of lots for your trade. You should never depend on luck outside of the casino or lottery- not when dealing with the market, or your luck will eventually come to an end. 4. It is not enough to achieve the
above results on your demo account. It is equally important to understand
why something has happened, and to develop your individual trading style.
Intuition is very important, but basing your trading decisions solely
on intuition is unacceptable. 5. One of the most deadly mistakes a trader may commit, which may undermine all his efforts, is illustrated by the following example: A trader (after losing $200 on a position) begins to think of excuses not to close this position. ¡°Perhaps the market will suddenly turn around and move in a favorable direction,¡± he thinks to himself, and doesn't have the heart to close the falling position and keeps on waiting as the losses mount. Unfortunately, the market does favors for no one. Eventually our trader is forced to close the position with losses of $1000 or greater. Not only has our trader lost money, he has lost his morale as well. His confidence in himself and his decisions has diminished. The cause of this trader¡¯s mistake is simple- greed. Losing $200 does not hurt one¡¯s opportunity to recover one¡¯s losses, not to mention making profit. However, in losing $2000-3000 in 1 or 2 trades, one may completely destroy one¡¯s opportunity to make further earnings! In order to avoid this type of situation, you must follow a simple rule - never go over the risk limits you set for yourself. Close your positions immediately when your losses reach these limits! 6. Set up strict limits for your losing trades, so that you don't lose more than you can handle. These limits should be within 3-10% of the total sum of your account, depending on its size. If the market starts moving in the wrong direction, don't make excuses as to why you shouldn't close that position- as soon as the losses reach your set limit, immediately close the position. Even if the market starts going in the right direction 5 minutes later, you have still eliminated the risk of it not turning around. You make trading rules to trade by them, not to try to go around them- you will only be hurting yourself if you do. Remember that if your account contains less than $3000, you should not trade using more than one lot. If you are in the $3000-$5000 range, never trade more than two lots, and that if and only if it looks safe in the current market situation. If you have $10,000 in your account you may trade two lots, but never more than three. If you follow these rules, you will considerably limit the risk factor. Trading too many lots at once is dangerous and unwise. 7. The less money your account holds, the less money you can afford to lose in each trade, and the greater the relative value of each trade holds for you. Therefore, you should avoid opening a real account with $1000¨C it¡¯s simply not enough. Just as a spy cannot afford to make a mistake, a trader with insufficient funds cannot afford to make a mistake, because that mistake would be fatal. Keep in mind that for any market, there is no trader, even among the most experienced, that hasn't ever made a mistake. 8. Mistakes and losses are an unavoidable part of trading in any market. The sooner you learn to accept losses as inevitable, the sooner you will begin to learn to trade. You should not blame yourself, others, or the market for your losses. Your losses are in no way related to your reasoning abilities. Your task is to calmly analyze your mistakes and to not repeat them in future trades. You should not jump for joy after winning $800, nor beat your head against the wall after losing $200. The less emotions form a part of your trading, your ability to see the true market situation and to make the right decision will improve. It is vital to develop a cold-hearted lack of emotion, and to treat winnings and losses as just numbers- not money. Understand that traders don't learn from their winnings- they learn from their losses. When every loss is perceived as one step towards your next winning trade- you are on the right track. 9. The trader's greatest enemy is not the market. To blame the market is equivalent to blaming nature. The trader's greatest enemies are greed, impatience, lack of control over emotions, insecurity in oneself, and a self-centered nature. You must never open a position simply because you are bored and want to do something. There is no norm as to how many positions you should open in a given period of time. Even if you only open one position every 2-3 days, if that trade earns you $600-800 then you are on the right track. 10. Keep a diary in which you describe the conditions that led you to make the trading decisions that you did. Write about the market events which influenced your decision to open or close a position. After every trade, write down and analyze the results in your diary. If you made a profit, it is important that you understand and remember your flow of thinking, which led you to the right decision. Market events happen often and new news may replace old news, so you will eventually forget what happened unless you keep track of it yourself. It is even more important to understand why you lost. There are really not that many mistakes that amateur traders commit, and if you can understand them all, you can learn not to repeat them. 11. Read the opinions of others, but base your trading decisions on your own analysis of, and feel for the market, which you will eventually acquire. If your prediction matches someone else's- good. If not, that´s not a problem either. However, if upon seeing a disparity, you start doubting your analysis, it would be best not to make the trade on your real account- only on the demo. If you are confident in your decision, go ahead and do it- one of the predictions will be correct. If your prediction is not the correct one, find the fault in your analysis. 12. Always follow that universal and venerable rule of the market: Cut your losses as soon as possible, and hold your winning positions open as long as possible. Furthermore, do not, under any circumstances, allow loss to occur in a position which has been making profit. It is better to close it altogether without profit if the market suddenly turns in the opposite direction, rather than to allow a profit to turn into loss. That would not be smart. 13. If you suffer a loss, don't immediately open a new position to "get revenge" on the market. You would only make your situation worse. If you recognize that the direction you have chosen for a position is totally incorrect, only then would it make sense to quickly close that losing position, and immediately open a new position in the opposite direction. Don't play guessing games with the market. It is better to lose opportunities than to lose money. 14. Do not attempt to learn trading within the paid demo competition. You should only compete after developing a working individual trading technique, which has been consistently bringing you profit on the demo account. Learning to trade in the paid competition is pointless. In your attempt to win more money than everyone else, you will cross all limits of risk, and even if you did win, such trading techniques would not be effective with your real money. Such risky techniques will only bring losses on your real account, and you will not have cultivated a cautious, safe technique. 15. Try to think of your demo account as your real account. The sooner you are able to convince yourself that the demo is trading the same real money that you would trade on your real account, the sooner you will begin to develop the proper technique of trading. You must act the same way when demo trading, as you will when trading for real, because the technique you develop determines your success in trading. Simulated conditions may differ from real conditions, and traders should not necessarily expect the same results from live trading. 16. No one knows better than you how much money you should put on your real account. When trading in the demo, it is recommended that you lose money until your demo balance reaches the sum you plan to use on your real account, or you can email us at demo@cms-forex.com or support@WorldTra.de and we will reduce your demo balance to the sum you specify. By doing so, you will be trading in conditions which more closely resemble actual trading, and thus, better aid in developing your necessary technique. 17. New traders are not recommended to trade on Sunday nights, New York EST time, because this is actually Monday morning for Asian markets, and the behavior of currencies at this time is the least predictable. It is also not recommended to trade on Fridays, especially in the morning (EST). On Friday the market usually breaks away from the trend which it set during the week, and for the novice, this may come as an unpleasant surprise. Also, on Friday, more often than not, the market has a tendency to sell off American dollars, especially when the US economy is in an uncertain situation. 18. Try to begin trading at the same time each day. The behavior of currencies differs at different times of the day, and by concentrating on a certain time each day, you may come to understand the characteristic behaviors of currencies at this time. Begin your day by researching events which occurred on the market while you were away from trading. For this purpose, our site has a great feature which will help: "Market News". After familiarizing yourself with the market events, look at the graphs to study the movement of the currencies, starting with "tick" charts and ending with daily charts, and select a tactic which you will use for this particular day. 19. Concentrate on no more than 1-2 currency pairs. Research their behavior thoroughly. Do not trade different currency pairs, but observe and analyze the behavior of all currencies, for they are all dependent on each other. Understand that cross rates have the greatest influence over the behavior of the currency pairs, including the dollar. 20. We recommend that you trade on your
demo account daily, read forex news, and research charts. Only patience
and a systematic approach may bring you positive results! Forex trading
involves a substantial risk of loss. If you have any questions or comments, we are always glad to help with any problems which may arise in training or on your real account. Just send us an email at: info@cms-forex.com or support@WorldTra.de Good luck! |