Types Of Forex Trading

From short-term trading has become very popular in recent decades. The 90's bull market in stocks has led many investors to test their luck in the daily life of buying and selling shares. When the party ended and the U.S. stock market has Crashing Down in 2000, many stock traders ceased all activity. The progress of Internet technology and the opening of retail foreign exchange (forex) daily market investors then caused many to take the currency exchange online. Despite the sudden notoriety of commerce, not all negotiations is the same.

One major factor that separates one type or style of Commerce the other is the frequency with which traders buy and sell stocks (or currencies, futures, options or other financial instrument). Here is a brief explanation of different types of commerce: Day Trading This is the most popular form of negotiation. It involves the purchase and sale of a stock or other financial instruments in one day. Day traders start the day without posts (all cash), to execute buy and sell orders throughout the day and finish the day entirely in cash once more. A day trader can hold stocks of a few seconds to a few hours, but a true day trader sells everything before the market closes each day. In the USA, stock day traders need to have at least $ 25000 in their account by the law.

Forex Trade

FOREX currencies are traded in much smaller divisions than cash. Whereas the smallest division in US cash is the penny ($0.01), US currency can be traded on the FOREX in divisions of $0.0001. This smallest division is called the pip (short for Price Interest Point – sometimes just called 'points').

Since currencies are traded in large lots of (say) $100,000 - small movements in value can generate substantial profits and losses. In a lot of US$100,000 one pip is worth $10 so an increase in 40 pips (4/10 of one cent) can generate a profit or loss of $400.
Currencies are traded in lots of various sizes. The standard lot is 100,000 units of the base currency. A unit is the currency name e.g. one unit of US dollars is the dollar. So a standard lot of US currency is worth $100,000. FOREX trades can have lots of various sizes - a mini lot is 10,000 units, but the most trades are done using standard lots.
Various currencies have different sized pips. The US dollar is expressed in pips of 0.0001 while the Japanese yen is expressed in pips of 0.01. The value of a pip depends on the size of a lot and the currency pair traded. Currency pairs with USD as the quote (second) currency (e.g. CAD/USD) always have a pip value of $10 per standard lot or $1 per mini lot. A pip value calculator can be used to calculate other currencies.

Currency Trading

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These Currency Trading Tips aim to help you avoid making the common mistakes that hurt your account balance.

1. Always have a solid trading plan

2. Never Deviate from your plan

3. Make sure your trading plan includes the amount of your account you want to risk for each trade

4. NEVER under any circumstances overtrade

5. Follow the trend. It is your friend afterall.

6. Don’t be tempted to listen to “experts” and piggy back them. Stick to your plan

7. Forget about buying other peoples Forex Forecasts and such like. If they were good traders, they’d be trading, not selling their forecasts.

8. Spend at least several months trading a demo account before trading live