Who Needs To Keep An Eye On Their Country's Exchange Rate?

Watching foreign exchange rates can be quite a task, but for people that deal with economies on an international scale, it is something that's almost necessary. What kind of people really need this information? There are many different categories of person that need to consider foreign exchange rates. What is an exchange rate? Well, this rate basically compares the purchasing power of one country's currency to another.

The most common person that needs to watch the foreign exchange rate is the investor. Many investors out there invest in currency markets, and if they play their cards right they can make it big. Buying and selling in the foreign exchange market is akin to buying and selling stocks. Foreign currencies change in value much like stocks, they move from low values to high values and if a person buys low and sells high, there is quite a bit of money to be made. Even if one does not trade currencies directly, they relative strength of your country's currency can have an effect on its stock market.

The next kind of person that really needs to pay attention to the rate is the international traveler. A person going overseas will need to convert his or her money to the country in question's native currency. Deciding how much money to convert and when to convert it is quite a challenge, because as the markets shift, a person can gain or lose buying power very easily.

What can trigger a change in the relative value of two countries' currencies? Many things can affect foreign currencies, from economic turmoil in either country, to decisions made by banks, to political and social events, any event that can affect the economy of a country can also affect the rate of that county. Many times, a person can use these events in a country to accurately predict what that country's currency will do in relation to other currencies after the dust settles from that event.

Watching foreign currency markets is important for anybody that deals with money on an international level. From travelers to traders, a person can either make significant amounts of money or they can lose significant amounts of money depending on the current currency exchange rates. In an economy like the world is experiencing now, exchange rates can be volatile. Having an intimate knowledge of how currency exchange rates work can save a person a lot of headache in the future, whether that person is an investor, traveler, or just a person that likes to keep track of world news.

To check the exchange rate of the currencies you are interested in please visit this link!

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Using Break-Even Stops in Forex Trading

There are multiple types of stops used in Forex trading. Stops are used as part of a Forex trader's tactics. If you are serious about trading currencies, you will have a Forex trading plan that will say what kind of stops you should use yourself.

The break-even stop is fairly obviously used to stop a Forex trader out, in order to just break-even on trades. You might wonder why Forex traders use break-even stops, because the whole point in currency trading, is to profit. By breaking even, all you are doing is taking back your initial investment and nothing else. However, break-even stops can be very useful and can prevent traders and investors from deducing losses whilst also allowing them to make safer investments in certain market conditions.

A trailing stop is used to lock in Forex profits; it moves up automatically as more profit is made. A break-even stop is essentially a trailing stop, however, it is pulled back to allow Forex traders to get stopped out automatically in the case of one of their trades coming back to a profit/loss of 0. This way, you don't prevent making a loss, but you also consequently make no profit.

Break-even stops are used in Forex trading, mainly in times of greater volatility. If the Forex market is particularly volatile, by placing a trailing stop, you might get stopped out too soon. This is because trailing stops only allow for a little downward movement, before stopping out the currency trader using them. So, if the market for the currency pair being traded is volatile, then a trailing stop wouldn't be particularly ideal since it could prevent a Forex trader from making a larger amount of profit. Break-even stops however, allow for a lot more movement, as they only stop Forex traders out once trades reach a profit/loss of 0. So, this can allow for greater profits to be made.

Of course when using a break-even stop though, Forex traders should try to watch the market closely, because it isn't ideal to just break-even for obvious reasons. Traders and investors in the currency market, want to maximize their profits and minimize their losses. Whilst breaking even will prevent losses, it won't increase a Forex trader's account size.

Break-even stops aren't ever necessary, but they can be useful in times of great volatility. If you wanted to be safer, you might just use a trailing stop, regardless of the FX market's conditions. However, you might place a break-even stop-loss order if you feel that the market's volatility is particularly excessive and you feel that you could benefit from using one.

In conclusion, break-even stops are mostly used by Forex traders who wish to try and make more profits in times of greater volatility. Although they tend to require more attention and are generally less safe than ordinary trailing stops, they can be used to deduce greater amounts of profit successfully in the Forex market, if used properly and effectively. Ultimately though, it will depend on the individual Forex trader, their trading plan and their actual situation, whether or not they decide to place a break-even stop-loss order.

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Whether Technical Analysis is More Effective in the Short Run or Long Run

Some believe that technical analysis can be used in the both short run and long run, but the vast majority of Forex traders only use it in the short run. Generally, this type of analysis is better suited to those who use more short-term Forex trading strategies, but if you are looking for long-term profits only, it doesn't mean that you can't use technical analysis too.

Technical analysis is all about studying price action through various charts and graphs. Most technical traders focus on making shorter-term profits, such as scalpers and swing traders. Forex traders who look for more short-term profits, tend to try and exploit technical analysis more often because it is much more accessible. In fundamental analysis, you have to wait for key economic data and such to be released, but with this kind of analysis, you can simply open up a chart or graph and start looking for trends immediately. Scalpers for example, would look at price charts and graphs for the currency pairs they are trading, with very tight set time frames - some Forex traders even use time frames as tight as a few seconds.

Technical analysis is flexible though; you can still look for long-term opportunities using this type of analysis. For example, you might just set the time frame of your price action charts and graphs for the currency pairs you are trading, to maybe 6 months. By doing this, you will be able to spot longer-term price action trends and patterns. This is one of the most easiest ways you can make money in the Forex market; all you have to do is discover what direction a particular currency pair's price is trending in and then place an order accordingly. However, ensure that you are aware of short-term price volatility too, when doing this.

In conclusion, technical analysis can actually be used effectively in the both short run and long run. It doesn't matter what Forex trading strategy you use; you can make use of technical analysis whatever your situation may be. In all fairness, if you are more of long-term Forex trader, you might want to consider focusing on fundamental analysis more. However, this doesn't mean that you should neglect technical analysis, because it is just as important. Always focus more on what you're best at and what works better for you, but never trade narrow-minded. If a Forex trader placed an order, basing their investment decision solely on the technical analysis that they conducted beforehand, they would essentially be trading half-blind. Even if you spot a really strong and consistently bearish currency pair price trend on a price chart or graph, it doesn't necessarily mean that you will be able to make an easy profit from it, because the economy of the base currency could suddenly take a turn for the worse and you could lose everything. It's important to always keep up-to-date with the news too, if you do choose to focus on technical analysis, regardless of whether you use it to spot long-term or short-term trends and patterns.

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Why Having No Forex Trading Plan Will Put You at a Disadvantage

Just like with any other business, you need a plan before starting up. Forex trading is just like any other type of business, so you need a trading plan to try and ensure your success in the market for currencies. Without one, you won't stand much of a chance of profiting because you will have no idea what to do on a lot of occasions. A trading plan will essentially lay out all of your Forex trading tactics.

Even if you do have a good plan for your trading, if it isn't concise or doesn't have clarity, you will struggle to follow the plan and you will most likely end up failing just like you would without having one at all. You don't need any old currency trading plan; you need a good one that you will actually be able to follow.

You need to be disciplined with your trading and remain consistent with your trading behaviors. It can be difficult to do this of course, especially when you don't have a plan that has been carefully laid out. This is why it is important to not only create a trading plan that works, but also one that is neat and tidy, as a clean, straightforward trading plan will make be a lot easier to read and follow than an unclear, vague and complicated one.

Without a Forex trading plan, you won't be able to carry out your trading system properly and effectively, because a plan should outline the exact rules of it. You will also struggle when looking for points of entry and exit, because a plan for your currency trading should specify rules of entry and exit that you are looking to follow. Money and risk management are both extremely important in Forex trading and without a trading plan, you won't have a set of money management rules and techniques to follow and take advantage of - this will more than likely cause you to deduce more losses than you should.

There are also other important aspects of a Forex trading plan. A solid plan for your trading might also explain your trading routine, mindset, goals and what type of trader you are. Not only will a good currency trading plan keep you more organized, disciplined and consistent, but it will also help you to stay motivated by outlining your both short-term and long-term goals. Setting goals in Forex trading is important and goals can certainly help you to stay on track and focused.

In conclusion, by entering the Forex market without a well-written, clear and concise plan for your Forex trading, you will be putting yourself at a great disadvantage. Although it might take a little time and effort to write up a currency trading plan, it will absolutely be worth your time in the future. To succeed in the currency markets you need to work hard, so really, the time and effort needed to create a plan for your trading means nothing in the grand scheme of things. If you want to be a Forex trader that is actually profitable in the long run, you must take your trading of currencies seriously and treat currency trading like a business. By creating a Forex trading plan before you start placing orders in the currency market, you will be putting yourself at a great advantage.

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What's Your Most Profitable CCI Forex Trading Strategy?

One of the most remarkable Forex indicators and my personal favorite is the Commodity Channel Index also known as (CCI). This indicators acts as a warning when the market reaches extreme oversold or overbought conditions.

When I use CCI indicator I focus on +200 and -200 levels. So basically when the indicator moves below -200 level this means that the price is oversold and about to reverse and start moving upwards. On the other hand, If the indicator moves above the +200 level this means that the price has been moving strongly upwards and its about to reverse and start falling.

So It's great at identifying reversals and will help you catch big moves early. But to make it safer you can't just depend on this indicator alone.

To get the best results out of this, here is a way that have a winning ratio of over 70% and it's actually very simply and I will share that with you right now.

1) You must first identify the trend to make sure you are trading with the trend and this is usually done using larger time frames like 4hr chart or daily charts. If the price is making higher highs and lower lows then this is a bullish trend. If the price is making lower lows and lower highs then this is bearish trend.

2) So for example let's say that you are in an up trending market, at this stage you will be only looking to buy. Now here comes the CCI's role.

In an up trending market, if the price makes a brief retracement to the downside and CCI goes below -200 that's a strong sign that the retracement is over and the price will continue moving up again.

With a little confirmation like a candlestick inside bar or an outside bar you got your self a very low risk trade and a very good chance of winning this trade.

3) To make things clearer let's take an example in a bearish trend. So if the price in a down trending market makes a brief retracement to the upside and the CCI becomes above +200 this is a very good sign that the retracement is over and the price will continue it's down trend very soon.

Now wait to see an inside bar or an outside bar before you execute your trade to make sure that the price action is also confirming that the retracement is over and that the price will most probably go downwards from here.

This is a very good tactic that I use my self along with some support and resistance lines you are in for a very profitable yet very simple Forex trading strategy.

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What Is The Foreign Exchange Market?

What is Forex? Forex is a market that allows investors to trade currencies from different countries around the world. The Forex market is the largest and most liquid market available to investors. Estimates put the amount of money in the Forex market at roughly $3 trillion.

The foreign exchange market is similar to the stock market. Investors can buy, sell, and trade currencies with the goal of making a profit when the currency changes value. However, there are many ways in which Forex is different. With Forex trading, there are no central exchanges to oversee the purchase of currency. Investors are free to trade as much currency as they wish. They can trade currency directly with other investors or through digital trading systems. As a result, Forex trading can be performed at any time of day or night. It can also be done on any day of the week. Whether an investor wants to trade in early morning, in the afternoon, or late at night, the foreign exchange market is always open.

Foreign exchange is also a purely speculative market. "Speculative" means that Forex investors are not trading actual currency. Rather, they are trading the value of a currency rather than the currency itself. Because of this, Forex investors do not own a currency like they might own shares of stock. Instead, when the price of the currency rises or falls, the Forex trader makes money on the change in value.

All Forex currencies are traded in currency pairs. In currency pairs, one currency is sold and one currency is bought. The currency that the investor buys is called the base currency, and the currency that the investor sells is called the quote currency. The pairing of the two currencies determines the price. For example, if an investor wanted to sell the American dollar (USD) and buy the Australian dollar (AUD), then the currency pair would be listed as USD/AUD. The pair would be quoted in terms of how much American money is needed to purchase one Australian dollar. A quote of 0.9805 for USD/AUD means that 0.9805 American dollars is needed to purchase every 1.0000 dollar in Australian currency. This results in a value of 0.9805 for every USD/AUD pair sold.

Forex is a multi-trillion dollar exchange that holds a lot of opportunities for investors. It is a highly liquid and versatile market that allows greater control over one's trading. Forex can be an ideal way for a trader to expand their investment strategy and diversify their portfolio.

If forex trading is your kind of game, you gotta make the most out of it.
Cause in the real fx trading world, only the vigilant, persistent and diligent survives.

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Where to Place Fixed Forex Trading Stops

Unfortunately there's no set place where you should place your fixed stops in Forex trading. In fact it's actually different for everyone; ultimately, it will depend on your own Forex trading strategy, where you place your fixed stops.

As you will probably already know, fixed stops are used to automatically close your trades once they reach a certain profit/loss, as set by you, the Forex trader. Fixed Forex trading stops are used by most traders and investors in the Forex market, to cut losses. You should set your fixed stops appropriately to allow for the most profit to come through though, as many currency traders don't set theirs appropriately and get stopped out too often.

In order to maximize your profits when placing stops, you don't just want to cut your losses, but you want to allow for some room for movement so that you don't keep getting stopped out like many currency traders do. Your trades could come down in value and then right back up, so you don't want to set your stops too close to your points of entry, or you could miss out on some nice profits. By all means ensure that your stops effectively cut your losses, but don't let them cut potentially profitable trades.

If you use a long-term Forex trading strategy, your stops will obviously need to be wider, because you are in it for the long-term and need to allow for more movement. When using short-term currency trading strategies like scalping, you will most likely want to place your fixed stops closer to your points of entry. If you had the same wide stops when using shorter-term trading strategies, you would most likely deduce excessive losses. When trading for short-term profits, tighter fixed stops are needed, especially when scalping where trades can last for just seconds.

Although you might not want to hear it, you just need to test again and again, so that you can discover the most profitable place(s) to put your stops. You can do this risk-free through using demo accounts, which most Forex brokers can provide on demand.

Remember, fixed stops are only one type of stop and stops in general are only one single aspect of Forex trading tactics. You should always remember to look at the bigger picture and not get bogged down on every single variable during your Forex trading career. Fixed stops and stops in general are very important, but don't forget about the other important aspects of Forex trading such as analysis and strategies themselves.

In conclusion, fixed stops in Forex trading should be placed optimally to allow Forex traders to make the most profit possible. It is difficult to do this, but with adequate testing you can find profitable places to put your stops which not only allow to cut your losses, but also allow you to keep profitable trades from getting stopped out. Remember, the positions of your stops will depend on the currency trading strategy that you use. It is also important to not think about the positions of your stops too much, as there are other important aspects of Forex trading which must be addressed too.

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Why the Trend Is Your Friend in Forex Trading

One of the key principles of Forex trading, is trading with trends. You may well have already heard of the saying "the trend is your friend" and there really is a lot of truth in this particular saying that so many currency traders reiterate to one another. This principle applies to all Forex traders; it doesn't matter what trading plan or even what system you use, because ultimately it will be the trends that allow you to make your money in the Forex market.

Forex trading is ultimately about following the crowd, without following the crowd too late of course (because if you follow the crowd too late you will most likely have already missed out on any profitable opportunity).

If you are an independent Forex trader, you are actually very insignificant when taking into account the rest of the currency market which is extremely large and ever-growing; unless you have a large amount of money (millions and millions) to place orders with, your trades alone will not really affect the Forex market's movements in the slightest. However, Forex traders collectively are very significant and they together, almost as a team, can cause both upward and downward trends in the currency markets. Of course the large banking institutions and big, developed business corporations will have more of an effect than independent investors, but individual Forex traders are still influential collectively.

So, the main idea in the FX market is to profit quite obviously, so in order to profit you must find trends and ride them as best you can. This means that you first must spot a trend, understand whether it is upward or downward, find a suitable point of entry and then close your trade once you reach a certain amount of profit. Although this is a very simple example, this is exactly what Forex trading is about, in a nutshell. If a trend is moving upward, you will want to buy the currency pair in question that is a part of this trend and is consistently increasing in value. Similarly, if the price of a certain currency pair is falling, you will of course want to sell that currency pair in order to make profit instead of buying into it and making a loss.

It sounds simple, but the reason why Forex traders deduce losses, is simply because they buy into currency pairs that fall in value and sell currency pairs that increase in value. You might think that they're a bit stupid for doing this and you'd be right, but if you haven't yet begun to trade currencies yet yourself, when you do you will realize that you will also make these mistakes because everyone does - no one can be correct 100% of the time. It is pretty much impossible to trade currencies successfully all the time - you win some and you lose some; currency trading is really about maximizing the profits that you make and winning as much as possible, as well as minimizing the losses that you take and losing the least amount of times possible. The reason why Forex traders don't profit all the time, is because not everyone thinks identically in the market for currencies; if someone profits, someone else has to make a loss - that's just how markets work. If everyone made the exact same decisions in the Forex market, it would be absolutely pointless. The market always changes so it is hard to profit every time, so bear that in mind.

It is worth knowing that more experienced Forex traders can trade against trends and see success. This is when you place an order against a trend because you suspect that the trend will reverse in the near future; some of the more experienced Forex traders can predict trend reversals and such before they happen, which is a little like trading against trends, except they end up deducing profits that can potentially be larger than what average Forex traders can deduce. However, this does take a lot more attention, as well as nerves of steel - not to mention more sophisticated skills. Trading against trends does require experience and a lot of it really, so you shouldn't consider trading against trends at all if you are a beginner.

In conclusion, the main principle of Forex trading, is to trade alongside trends. By attempting to do this, you will be able to dramatically increase your chances of success, in the Forex market. If you trade alongside trends successfully, you will be able to profit every time, though do bear in mind that you probably won't profit every time since losses are pretty much inevitable when trading currencies. Just try to focus on profiting in the long run; it is the long-term profits that you should aim for and not the short-term ones. By focusing on long-term profits, you will stand a far greater chance of actually succeeding, in the ever-changing market for currencies.

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Whether or Not You Can Get Rich through Forex Trading

It is in fact possible to get rich from Forex trading. Many beginners get excited over Forex trading, thinking that they will be able to make millions overnight. The fact is, whilst it is possible to make millions overnight in the Forex market, you should be realistic and know your facts.

There are many scammers on the internet trying to sell you their special currency trading systems that will supposedly make you a millionaire in no time at all. However, if these systems really could dramatically increase your wealth, do you really think that the creators would be selling the systems? Sometimes it's a good idea to just take a step back and think; what do you want to get out of Forex trading?

Some people aspire to trade Forex for a living and live off of their trading of currencies, whereas others are just interested in making some extra income each month. Whatever you aspire to get out of currency trading, just be sure that you know how much work you will need to put into it.

If you want to get rich through Forex trading, then you should understand early on before you start, that it will definitely take blood, sweat and tears. In fact, if you want to become a millionaire through any kind of business, you can expect to work very hard. Nothing is easy unfortunately, but with hard work you will be able to reap the rewards.

Of course anyone can work hard but not see profits, though. You will also need to learn how to work smartly, if you want to make some serious money in the currency market. After getting to grips with the basics of Forex trading, you will be able to move onto the more advanced aspects of Forex trading, such as fundamental analysis, technical analysis, tactics and strategies.

Anyone can get rich through Forex trading; people have done it before, so you can too. You just have to be aware that many start up businesses fail and so do many Forex traders; if you want to be one of the successful traders that goes onto make serious profits, then you will need to do a lot of studying and practicing. The saying "practice makes perfect" really does ring a lot of truth in Forex trading. Remember, even if you're only interested in a little extra income each month, you still need to find what works for you.

Stay away from tools, services and such in the beginning; focus on studying and practicing. Because the Forex market is closed over most of the weekends, you might want to do your studying over the weekends so that you can practice and trade for real on the other days. Some people just aren't into working hard and don't want to put their time or money into Forex trading, however if you really want to be successful in life, you need to take risks. Thankfully, risk can be controlled in Forex trading and with the availability of micro and mini trading accounts, you don't have to deposit and risk a lot of money initially. However, you will need to risk your time, even if you don't risk a lot of your money.

In conclusion, it is true that you can get rich in the Forex market. When a currency trader loses in the market for currencies, another one is winning. It's up to you which trader you become; the winning one or the losing one. By working hard and smartly, you could eventually become a highly profitable Forex trader, making millions annually and working at home. It is absolutely possible, but it's certainly not easy. Time is limited, so the sooner you start, the better.

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Use the COT Report to Trade the Forex Market With These COT Report Forex Strategies

While the COT Report is not an exact timing indicator, it can aid in forex trading and provide a context for the current, and future, market environment. There are potentially many ways to use the COT Report for analyzing a forex pair; here are three COT Report forex strategies.

Speculators are Trend Followers

Speculators drive trends. Contrary to popular the convention "Don't follow the crowd," we actually want to follow the crowd...at least for a time. If others are buying, we want to be buying too. This is how trends occur, and how traders make money. The trick is to get out before everyone starts heading for the exit.

Therefore, use the interest of speculators as a confirmation tool for trends. If the Euro is moving higher and speculators are increasing their long position this means big traders are pushing the market in your favor if you are long the EURUSD. Trade with the big boys, and follow the trend. Don't get too greedy though, because if all the speculators are long, then there is no one left to keep pushing the trend. This brings us to the next way to use the COT data.

Extreme Levels Can Indicate a Reversal

When speculators are accumulating a position it can be a confirmation that there is interest in the trend - if shorts are being accumulated as the price drops or if long positions are being accumulated as the price rises this can be a good sign the trend will continue. But speculators have a limit--they can't purchase or sell indefinitely. They may run out of money, or simply wish to take profit (or losses). When speculators are tapped out, want out or don't want to invest anymore there is nowhere left for the price to go, but to reverse.

Therefore, the COT data can be used as a type of "overbought/oversold" indicator. Not in terms of price and arbitrary levels like most overbought and oversold indicators, but in terms of the health of traders within the market. Each futures market will be a bit different but critical levels will often repeat and indicate when speculators are overextended.

This method is not recommended for a top or bottom picking strategy; it can be used to provide a context for other analysis and be used to confirm reversals in price though. Extreme levels can look easy to isolate in hindsight, but are not ideal timing indicators. That said, it is very useful for alerting traders when a reversal could be nearby. The COT data should not be acted on alone though; wait for price to confirm a potential reversal signal in the COT data.

Watch For Speculators to Flip Their Position

With the third approach we are looking to capture "the meat" of the trend. If speculators are net short and that short position continually decreases until eventually it crosses above zero, a new trend is quite possibly underway.

The movement from net short to net long or vice versa signals a change in sentiment and that a new trend is emerging or has already begun. Using the logic of our first method of following the speculator trend (when it aligns with price) this shift represents a potential trading opportunity. Exiting positions can be done when the price breaks the trends, when speculation reaches extreme levels or when speculative demand begins to wane. Again, the COT data should always be combined with price analysis, and not acted on in isolation.

COT Report Forex Strategies- Conclusion

The COT report is useful in at least three ways for forex trading. None are precise entry and exit signals but rather provide a context for other analysis and can be used as a confirmation tool for reversals or trends. The first uses COT data as a confirmation tool for forex trends. The second method alerts us when speculators are over-extended, which could in turn lead to a reversal. The third method can be used to see shifts in sentiment and potentially catch a chunk of the trend (but remember to watch for over-extension). When using any indicator, wait for price to confirm the indicator signal.

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Why Forex Trading Is Becoming So Popular

Investing has been around for a long time, but in the last decade or so Forex (abbreviation for Foreign Exchange) trading has been growing in popularity, especially online. Forex refers to currency trading or, more specifically, trading one country' currency against another. People are always talking about the "value of the dollar" and how it is going up or down against the Euro or the Yen or whatever other currency. That is exactly what Forex trading seeks to profit from.

So why has Forex become so popular recently? There are a few reasons, so let's take a look at some.

The Internet - The internet has made just about anything accessible to anyone, and investing is no exception. It's not like there is a Forex broker in your neighborhood you can just drive over to, but you can pull up a browser on your computer and visit a broker's website. The internet has also given people the knowledge of Forex; most people didn't know what it was 10 years ago.

Furthermore, since the currency markets are open 24 hours a day (except on the weekends), anyone can trade from anywhere at any time. The internet allows for around the clock access to an around the clock market.

The internet has also allowed for investing to become cheaper. In the past, if you wanted to invest, you had to pay a higher commission to your broker who you probably had to go see in person (or at least give a phone call to). Now that you can do everything yourself online, the commissions are minimal. Lower commissions means that it's not as cost prohibitive anymore to start investing.

Scalability - Some investment markets force you to use a certain size when you trade. For example, if you are trading futures contracts, the smallest size you can trade is 1 contract, but even the movement on 1 contract may be too much for your risk tolerance. If you are trading S&P 500 futures (this contract is called the "ES"), one point of movement is $50. So if the S&P moves against you by 5 points (which can happen in less than a minute under the right circumstances), that means that even with 1 contract you've lost $250. That may be more money than you feel comfortable losing, especially if you only have a small account to begin with.

With Forex you can trade whatever size you want. You can set it up so that the smallest amount of movement in a currency (called a "pip") only causes your account to go up or down by $0.01. This means even if a currency makes a huge move and goes 100 pips, your account will only change in value by $1.00. Of course, if you have more money you can trade as large as you want, too.

Because the internet has made it accessible to everyone, and the scalability factor means that you can trade comfortably at any account size, Forex continues to experience an increase in popularity as more people are drawn to it.

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Using Fixed Initial Stops in Forex Trading

Initial stops are fixed stops that allow Forex traders to get automatically stopped out of their trades early on, if the markets move unfavorably early on. Fixed initial stops simply protect traders and investors in the Forex market, from deducing unnecessary losses.

It is pretty much impossible to win every single time and losses are inevitable, especially if you are a beginner. This is why all good Forex traders use these types of stops, as they serve to close orders that don't turn out to be profitable.

If you set a fixed initial stop and your trade meets that stop, you will make a loss. However, fixed initial stops can actually help to increase a Forex trader's account size, because without the use of these types of stops, a trader or investor could end up deducing far more losses in the long run. These kinds of stops allow Forex traders to simply limit their losses, by cutting them short.

Initial stops are generally set fairly close to the entry points of orders. Some currency traders use trailing stops too though and those who do use them, might set their initial stops in the same place as their trailing stops, though this ultimately depends on the individual Forex trader's trading strategy and system.

It would be very unwise to avoid the use of these types of stops. Every trader and investor in the currency market who has done their fair share of reading and studying, will know that it is important to place fixed initial stops. Beginners especially need to understand that currency trading is all about maximizing your profits and minimizing your losses. You will never be able to minimize your losses if you let your losses run. So, you should use these sorts of stops to prevent your losses from having a significant effect on your total Forex trading account's size.

If you find that you consistently get stopped out, yet you feel that your investment decisions are generally solid, then you might want to consider widening the gap between your point of entry and your fixed initial stop. Although these types of stops should be kept close to your points of entry, they don't have to be just a few pips away from them. You should allow some appropriate room for a little movement, because as soon as you enter an order you are in the red, so don't allow your initial stops to prevent your trades from getting anywhere. You really just need to find a fine balance between safety and risk.

In conclusion, initial stops are fixed and are used in Forex trading, to effectively limit and cut losses short. These types of stops are one of the most important money management techniques in currency trading and should be used by all Forex traders, though the actual use of these types of stops will differ across different traders and investors, since different currency traders have different trading tactics, plans, strategies and systems. Forex traders must be disciplined and never let their initial stop change for different trades; you need to be consistent with your trading tactics and trading plan. Money management is an important aspect of Forex trading tactics and you should carry yours out properly and effectively, if you want to optimize your results and maximize your profits.

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