What is FXAdvisor Currency Trading?
FXAdvisor Currency Trading is the use of automated trade signals which can be overridden and enhanced through manual execution. After extensive research, with virtually every FX trading system in existence today, we have determined what we believe are the best trading systems based on consistent performance results. By monitoring our own trade signals, we cancel trades which are not technically sound and wait for another trade to trigger. In addition, manual trades are placed in other currency markets when deemed appropriate.
Where is the
central location of the FX Market?
FX Trading is not centralized on an exchange; rather it is a true network of global banks, FCMs (Futures Commissions Merchants, or brokers) and private traders like you. As is the case with the Nasdaq stock markets, the FX market is considered an Over the Counter (OTC) market. Transactions are conducted between two counterparts by telephone or via an electronic network.
Who are the participants
in the FX Market?
The Forex market is called an 'Interbank ' market, due to the fact that historically it has been dominated by banks; including central banks, commercial banks, and investment banks. However, the percentage of other market participants is rapidly growing, and now includes large multinational corporations, global money managers, registered dealers, international money brokers, futures and options traders, and private speculators.
When is the FX Market open for trading?
A true 24-hour market, Forex trading begins each day in Sydney, and moves around the globe as the business day begins in each financial center; first Tokyo, on to London, and finally New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events as they occur - day or night. Most Forex brokerages allow clients to begin trading late Sunday afternoon until late Friday afternoon. Retail trading is typically suspended from Friday close until Sunday open, creating a two day weekend. Each broker’s dealing hours may vary slightly. First National Forex is open for trading from 6 PM EST on Sunday, until 4 PM EST on Friday.
What are
the most commonly traded currencies in the FX Markets?
The most often traded or 'liquid' currencies are those of countries with stable governments, respected central banks, and low levels of inflation. Today, over 85% of all daily transactions involve trading of the major currencies, which include the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and the Australian Dollar.
What is the meaning
of a 'long' or 'short' position?
In trading terms, a long position is one in which a trader buys a currency at one price and intends to sell it later, at a higher price. In a long position, the investor benefits from a rising market. In a short position, the trader sells a currency in anticipation that it will depreciate. In this scenario, the investor benefits from a declining market. However, it is important to remember that every FX position requires one investor to go long and another to go short in the same currency.
How do the traders manage risk?
The most common risk management tools in FX trading are the limit order and the stop loss order. A limit order places restrictions on the maximum price to be paid or the minimum price to be received, when entering a position. A stop loss order is placed to close a position when a pre-determined price is reached. Despite the tremendous liquidity this market offers, which in turn, provides us with the greatest execution of any existing market, our fills are never guaranteed.
What kind
of trading strategy do traders employ?
Currency traders make decisions using both technical analysis and economic fundamentals. Technical traders employ charts, trend lines, support and resistance levels, and numerous patterns and mathematical analyses to identify trading opportunities. Fundamentalists, on the other hand, predict price movements by interpreting a wide variety of economic information, including news, government-issued indicators and reports, and even rumor. The most dramatic price movements however, occur when unexpected events happen. The event can range from a Central Bank raising domestic interest rates, to the outcome of a political election, or even an act of war. Nonetheless, it is more often the expectation of an event that drives the market rather than the event itself.
How often are trades made?
Market conditions dictate trading activity on any given day. As a reference, the average trader might trade as often as 10 times a day.
How long are positions maintained?
As a general rule, a position is kept open until one of the following occurs: 1) realization of sufficient profits from a position 2) the specified stop-loss is triggered 3) another position that has a better potential appears and additional margin is needed. There are essentially two categories of traders in the FX market, the ‘position or trend traders" and the ‘day trader’. Trend traders are those who tend to hold long term positions using lower leverage perhaps over days, weeks, or even months. Although in this situation we mention lower leverage, please note that leverage, even at this level, can lead to substantial losses as well as gains. Day traders are just the opposite and prefer to open and close a position in a 24 hour period or less. Often, day traders hold positions for as little as a few minutes.
What is the
minimum deposit to open an account?
A deposit of $500 is required to open an account.
What is a PIP?
PIP stands for Price Interest Point and is the increment that currency pairs trade in. Pip values will vary based on pair traded and some will change daily based on formula.
How are Pip
Values calculated?
A pip is the smallest increment in any currency pair. In EUR/USD, a movement from 1.0066 to 1.0067 is one pip, so a pip is .0001. In USD/JPY, a movement from 120.45 to 120.46 is one pip, so a pip is .01. How much in dollars is this movement worth, for example, per 100,000 Euros in EUR/USD? How much is one pip worth per 100,000 Dollars in USD/JPY? We will refer to the size, in this case 100,000 units of the base currency, as the 'Notional Amount'. The formula for calculating a pip value is therefore: (one pip, with proper decimal placement/currency exchange rate) x (Notional Amount). Using USD/JPY as an example, this yields: (.01/120.46) x USD100,000 = $8.30 or $8.30 cents per pip. Using EUR/USD as an example, we have: (.0001/1.0066) x EUR 100,000 = EUR 9.93. But we want the pip value in USD, so we then must multiply EUR 9.93 x (EUR/USD exchange rate): EUR 9.93 x 1.0066 = $10.00. This is in fact a phenomenon you will see with any currency in which the currency is quoted first (such as EUR/USD, GBP/USD, or AUD/USD): the pip value is always $10.00 per 100,000 currency units. This is why pip (or 'tick') values in currency futures, where the currency is quoted first, are always fixed. Approximate pip values for the major currencies are as follows, per 100,000 units of the base currency: USD/JPY: 1 pip = $8.30; In other words a change from 120.45 to 120.46 is worth about $8.30 per $100,000. EUR/USD: 1 pip = $10.00; 1.0066 to 1.0067 is worth $10.00 per 100,000 Euros. GBP/USD: 1 pip = $10.00; 1.5765 to 1.5766 is worth $10.00 per 100,000 Pounds. USD/CHF: 1 pip = $6.87; 1.4555 to 1.4556 is worth $6.87 per $100,000.
What is meant by ‘Equity Swings’?
This is the amount of trading range your money will move up or down while holding an open position. The smaller the equity swing, the lower the leverage by rule of thumb. ‘Rollercoaster’ equity swings are severe whereas ‘plateau’ equity swings are considered less volatile and easier to handle as a trader.
What is a Draw Down?
A draw down is used to describe the amount that an open position price has fallen, after entering the market. This is a good indicator for investors to observe the accuracy of the system. Minimal draw downs mean that the technical indicator used to enter the trade is very strong.
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