Forex Demo Account

The first thing you should do if you are a beginner in Fores Trading is to open a forex demo account. This will give you the opportunity to learn and practice forex trading without the risk of losing money in the process. Additionally you can use a demo account to test different trading systems.

If you are a novice in foreign exchange industry, and have no idea what is happening around them, better go and find information online. There is plenty of information obtained, and it is best that you have knowledge of the fundamentals. There are websites that offer commercial electronic books to its customers only. Do you want your bargaining skill developed? Do not worry! Just find a site that offers to create an online demo account Forex.

It will give you practice in the trade and you will find very useful. There are also forex trading software that provides practice in trade. Account is like having a real live demonstration of the currency and is in the market today. Better find commercial software that can run on any computer.

When you have your demo account of the currency, and portability of the software is there, if you are traveling on the road or just stay home, you will have access to everything that is happening in the currency markets. You will always be updated with current news of negotiation. Forex demo account would be the way online forex trading system.

For Beginners

In order to become a competent participant of FOREX market, i.e. a professional trader, it is necessary to pass through inevitable stages, acquiring the skills and knowledge which are essential for working on FOREX.

To be a novice trader - does not mean to incur losses. Owing to the fact that the accounts of InstaForex do not have limits to the volume of minimal lot, you can start working with any sum, having the opportunity to reduce risks. Getting more experienced, you expand the volume of trading operations, thus increasing risks as well as the opportunity of collecting higher profit.

1 Step. Training on DEMO-account.

Every person can open Demo account and learn how to operate the trading terminal and trading strategies for unlimited period of time and absolutely free. Even without having any idea about FOREX market you can try yourself as a trader, opening a DEMO-account. In spite of the fact that all deals on DEMO-accounts appear virtual and are not put on FOREX, you have exactly the same conditions as on live accounts. On a DEMO-account a trader can conduct deals as if he or she were trading on a real account.

No matter how many questions arise, you can try to find the answers working on a DEMO-account, without risks and having the opportunity to open any number of such accounts totally free. Moreover, 24/5 support department is available by ICQ, chat, telephone or e-mail.

2 Steps. Trading on the live account.

Having got the hand in working with terminal and learning the main trading strategies, you can try yourself on the real account, limiting your risks. Owing to the absence of limits on minimal deal’s volume you can trade according to the principle "risk=profit", when you define the volume of your investments.

Working on a live account lets you understand and learn more in comparison with a DEMO-account, no matter how seriously you take the virtual trading. Working with real, even minimal funds, you start to feel the connection between your profit and currency movements. This experience is very important for raising to the next level of trader’s development.

3 Steps. Professional work.

Having obtained the necessary knowledge, a trader is able to work independently on the currency market, using his own or borrowed trading strategies for collecting profit from currency movements. A professional trader develops the style of his trading and chooses the instruments which are more suitable for his strategy.

Not all new coming traders are able to reach this level, but InstaForex Company guaranties that our team bends every effort in order to help each client to go forward and get professional support if any problems arise.

How to Make Money on Forex?

Educate Yourself:

If you are thinking to make money from Forex trading first you have to educate yourself. Start reading Forex Articles found in the website, ebooks, and check some top Forex courses on the market. Think about your education as an investment on yourself, not as an expense. Some people argue that you can learn everything about Forex for free. Well, it's possible, but I seriously doubt anyone can become a good trader without investing in his education.

This is true for everything in life, so how could it be different on Forex? Can you imagine a doctor performing a surgery if he has not invested in is education?

The same happens in Forex. Forex is a business and as a business it needs time and investment on your part. If you don't treat it as a business you won't be able to earn money on it.

There's no holy grail out there that can make you money effortlessly but there are some courses and systems that can give you all the knowledge you need to succeed. The only good education that comes fro free is the experience. This is a value resource and since all Forex brokers offer you a demo account for free, you can gain experience without risking any money.

Plan how you will trade: 

You need to decide how you would like to trade. Would you like to day trade?   Would you like to swing trade? It all depends on your personality and on the time you know to trade. There's no such thing as the best trading style. The best trading style is simply the one that best suits you personality. If you personality is more suitable for day trading, you probably won't be a bright swing trader. If you prefer less stress and/or you don't have the time to stay in front of your screen all day, you will probably be better swing trading.

Test your skills with virtual Money:

Before you commit your hard earned money on a strategy or system, you should test it on a demo account. With this test, you will be above to know how good your strategy is and you won't risk a dime. Visit a Forex broker and open a demo account. It's 100% Free and it will allow you to grow as a trader.

Develop Your Strategy:

This is the most important step to master the Forex market. You can use your technical analysis sills to define a trading strategy from scratch. Define it and test it deeply before you commit real money to it. You can also visit some websites in order to learn their own strategies and techniques.  If you prefer to use an automatic trading system, you can start with Fap turbo, Forex Autopilot or Forex Auto Run. These are great products which can help you start trading Forex successfully.

Improve Risk Management and Discipline:

Risk Management is extremely important for trader. If you want to achieve success, you need to adopt a disciplined mind about trading and improve your risk management rules as much as you can. You shouldn't risk more than 2% of your account on a trade. This way you'll be more relaxed because you know that if you lose money on a trade that's not the end of the world. Besides this , if you have a good system or strategy, you need to have the discipline to stick to your rules. 

The Most Useful Indicators on Forex

In this chapter you’ll learn how to use the most effective indicators on Forex.

  RSI(Relative Strength Index): The Relative Strength Index (RSI) is an extremely usefuland popular momentum oscillator. The RSI compares the magnitude of recent gains to the magnitude of recent losses and turns that information into a number that ranges from o to 100. There are multiple ways that you can use the RSI. Yu can use it to spot Overbought / oversold levels,    to spot divergences that show you a trend is losing steam, or you can use it to confirm a trend. 

a.Overbought/Oversold: RSI above 70 usually means the currency pair is overbought, so a top might be near. RSI below 30 means the currency pair is oversold so a bottom might be near. Generally, if the RSI rises above 30 it is considered a bullish signal. If the RSI falls below 70, it is a bearish signal. Some traders indent the long-term trend and then use extreme readings for entry points. If the long-term trend is bullish, then oversold readings could mark potential entry points. 

bDivergences:  Buy and sell signals can also be generated by looking for positive and negative divergences between the RSI and the currency pair price.  If the price reaches a higher high but RSI isn't able to reach a new high, there’s a bearish divergence. If prices reach a new low, and RSI can’t reach a new low, there’s a bullish divergence.  Divergences that occur after an overbought or oversold reading usually provide more reliable signals.

c. Centerline Crossover: A reading above 50 indicates that average gains are higher than average losses and a reading below indicates that losses are winning the battle. Some traders look for a mover above 50 to confirm bullish signals or a mover below 50 to confirm bearish signals.    

2-  MACD (Moving Average Convergence/ Divergence): MACD, invented in 1979 by Gerald Appeal, is one of the most popular technical indicators in trading. MACD is appreciated by traders the world over for its simplicity and flexibility because it can be used either as a trend or momentum indicator. With MACD you'll be able to spot bull divergences and bear divergences which are rare and effective patterns on Forex.    

   a.  Bullish Divergence: When the price reaches a new low, and MACD can't reach a new low, there's a bullish divergence which shows that the down trend is losing steam and an uptrend might be near.Bullish divergences are (as you may have guessed) bullish signs and they come in many forms.  For instance, sector breadth indicators are showing that the bank sector is starting to move higher again (after being in historically oversold territory).  Now, when breadth (internal) indicators are moving higher while the external market is moving lower, that's a bullish divergence.  It's bullish because breadth (internal) indicators typically lead external markets.

Below is a chart of the Financial Select Sector SPDR Fund (XLF).  It's basically the financial sector in the S&P500.  It's an ETF which tracks the financial index, and is market-cap weighted, which just means that the stocks with the largest market-caps have the most influence on the index.  So it's the financial part of the external market.

b. Bearish Divergences: When the price reaches a new high, and MACD can't reach a new high, there's a bearish divergence which shows that the uptrend is losing steam and a downtrend might be near. A bearish divergence means the chart shows rising price highs, but the indicator highs, in this case the RSI highs are flat or declining. This suggests a lot of momentum. It should be noted that divergences can be quite extended in a trending market.

MACD is not particularly good identifying overbought and oversold levels. Even though it is possible to identify levels that historically represent overbought and oversold levels, MACD doesn't have any upper or lower limits to bind its movement. MACD can continue to overextend beyond historical extremes.

c.  Confirmation Indicator:  You can also MACD as a confirmation indicator. If MACD Histogram is above 0 this means we're in an uptrend. If MACD histogram is below 0, we're in a downtrend.Using a cross above 0 or below 0 as a buy or sell signal respectively, works well during strong trends, but when the market is choppy, this technique gives too much false signals. So, I only recommend using MACD histogram above 0 or below 0 as a confirmation of other indicators buy and sell signals.Unfortunately, during choppy markets, MACD gives too much false signals that's why I just use MACD to spot divergences and to confirm traders. That's the best way to use MACD on any kind of market. 

3-  Stochastic Oscillator: The stochastic Oscillator is a momentum indicator that shows the location of current close relative to the high/low range over a set number of periods. Closing levels that are consistently near the top of the range indicate accumulation (buying pressure) and those near the bottom of the range indicate distribution (selling pressure).

 

Buy and sell signals can also be given when % K crosses above or below % D. However, crossover signals are quite frequent and can result in a lot of false signals.

One of the most reliable stochastic signals is to wait for a divergence to develop from overbought or oversold levels. Once the oscillator reaches overbought levels, wait for a negative divergence to develop and then a cross below 80.for a buy signal, wait for a positive divergence to develop after the indicator moves below 20

Best Hours to Trade Forex

Forex market is open 24 hours a day, a trader can‘t track every single movement on the market. It’s crucial for a trader to know when he can expect high volatility, so that he can implement his strategy on the most effective way. If you ‘r trading using daily charts, the best period to analyze Forex is around 5pm EST because that’s the rollover period. If you’re trading on shorter time frames, you must know when you can expect more volatility.

The most important Sessions on Forex are:

The Asian Session (7am – 4am EST) – 

During this period, you can successfully day trade especially if you trade the yen, USD/JPY is a good choice if you plan to trade on this session. This period is not as volatile as the US session or the European session, but it’s possible to trade it and achieve a good performance; 

The European Session (2am – 12pm EST)

This is one of the best periods to trade Fore. Since most of the dealing desks of large banks are located in London, the majority of major Forex transactions are completed during this session. During this period you can implement a successfully strategy on any currency pair. 

The U.S. Session (8am-5pm EST) – 

This is great period to implement your forex strategies. Volatility is good, and you can expect good volatility on any currency pair.

The European and U.S. Sessions are the most important ones on Forex, so you can trade between 2am and 5pm EST and get good intraday swings almost every single day.

Between 8am and 12pm Ext we have the U.S. sessions and the European session at the same time. This is the best time of the day to trade Forex. Volatility is good in all currency pairs. Some of the most important economic releases appear during this period, and this brings good opportunities for Forex traders almost every single day.

Financial Instruments

These are some Forex Trading Instruments

Spot:  A spot transaction is a two-day delivery transaction (except in the case of trades between the US Dollar, Canadian Dollar, Turkish Lira, EURO and Russian Ruble, which settle the next business day), as opposed to the futures contracts, which are usually three months. This trade represents a “direct exchange” between two currencies, has the shortest time frame, involves cash rather than a contract; and interest is not included in the agreed-upon transaction.

Forward: One way to deal with the foreign exchange risk is to engage in a forward transaction. In this transaction, money does not actually change hands until some agreed upon future date. A buyer and seller agree on an exchange rate for any date in the future, and the transaction occurs on that date, regardless of what the market rates are then. The duration of the trade can be one day, a few days, months or years. Usually the date is decided by both parties. Then the forward contract is negotiated and agreed upon by both parties.

Swap: The most common type of forward transaction is the FX Swap. In an FX swap, two parties exchange currencies for a certain length of time and agree to reverse the transaction at a later date. These are not standardized contracts and are not traded through an exchange.

Future: Futures are standardized and are usually traded on an exchange created for this purpose. The average contract length is roughly 3 months. Futures contracts are usually inclusive of any interest amounts.

Option: A foreign exchange option (commonly shortened to just FX option) is a derivative where the owner has the right but not the obligation to exchange money denominated in one currency into another currency at a pre-agreed exchange rate on a specified date. The FX options market is the deepest, largest and most liquid market for options of any kind in the world.

Speculation: Controversy about currency speculators and their effect on currency devaluations and national economies recurs regularly. Nevertheless, economists including Millton Friedman have argued that speculators ultimately are a stabilizing influence on the market and perform the important function of providing a market for hedgers and transferring risk from those people who don't wish to bear it, to those who do. Other economists such as Joseph Stieglitz consider this argument to be based more on politics and a free market philosophy than on economics.

Large hedge funds and other well capitalized "position traders" are the main professional speculators. According to some economists, individual traders could act as "noise traders" and have a more destabilizing role than larger and better informed actors.

Currency speculation is considered a highly suspect activity in many countries. While investment in traditional financial instruments like bonds or stocks often is considered to contribute positively to economic growth by providing capital, currency speculation does not; according to this view, it is simply gambling that often interferes with economic policy. For example, in 1992, currency speculation forced the Central Bank of Sweden to raise interest rates for a few days to 500% per annum, and later to devalue the krona. 

Myths about Forex Trading

1- How to earn in Forex: 

Forex, where the commodity that is traded is the currency, not stocks and a share, trading is a market that gives its investors, the performance in the forms of the relative value of a currency changes by one. Forex is therefore always traded in currency pairs with the major currency pairs are Euro/dollar (EUR/USD) and the U.S. Dollar/Japanese Yen (USD/JPY), TO NAME A FEW. And it is concurrent with the purchase and sales of currencies which the operator expects a profit in the fluctuations of the favorable predict the trend of variation between the two currencies. But how to make money in such a competitive market and constant trade?

Well, here's an example to illustrate how…assuming that the current supply/ sale price for EUR/USD is going by the rate of 1,627/31.giving you the option to buy 1 euro of 1630UsD or sell 1 euro for 1627 USD. Now, if you feel that the euro is undervalued against the US dollar, would choose to buy Euros, the sale of their dollars at once. So, buy 100,000 Euros by paying 150, 300 US dollars. You can then start analyzing the market, pending the exchange rates goes up. You can also opt for Spot Forex Trading.

Many stock tradrs think the Forex market is easy because it is open 24 hours a day. They think they can trade whenever they want and make their quick bucks. Truth is you can make money in Forex. But for that, you need to have a deep knowledge about this market.

The indicators that work in stock don't always work in Forex. The Forex market is more complex and, this way the indicators that you use on stocks don't work so well here.]

Brokers are another huge difference between stocks and Forex. In the Forex market, due to the lack of regulations, a lot of Forex brokers don't act in their client's best interest. It's a lot of more difficult to find a good Forex broker than a stock broker.

2-  You can make money anytime you want:

This market is open 24 hours a day, in the majority of the time there isn't enough volatility to make good traders. This is a big challenge because volatility can appear at any time of the day and the trader can't be watching the market all the time. He has to adjust his strategy in order to trade only in high volatility periods.

3-  You need to predict what will happen in order to make money in Forex:

In order to make money in Foex, you need to react to what is happening. This is not the same thing as predict. A good trader simply reacts to whatever the market is telling him. He analyses charts, reads the news and all information he has at his disposal in order to react as fast as possible to make movements. A good trader is always looking to evolove and learns.

4- Commission trades are free on Forex market:

You don't pay a commission fee when you place an order. Although, you pay the spread, which is the difference between the bid and the ask. This way, the more you trade, the harder it will be to make money in Forex because you'll have higher fees. In the Forex market, as in any other market, a trader must avoid the overtrading at all costs.

5- The more complicated my strategy, the best:

This is another myth that has nothing to do with reality on Forex trading. The truth is that usually the simple strategies or systems outperform the complicated ones. So, there's no need to use plenty of different indicators at the same time. Study the market, find your favorite system or strategy, and stick with it. 

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What is Forex?

The Foreign exchange market also known as Forex, currency market or FX market is, by far the largest financial market in the world. It includes trading between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions. Foreign Exchange (FOREX) is the arena where a nation's currency is exchanged for that of another. The average daily trade in the global Forex and related markets is currently over US$ 3 trillion, more than 3 times he aggregate amount of the US Equity and Treasury markets combined. Unlike other financial markets, the Forex market has no physical location and no central exchange (off-exchange).

It operates through a global network of banks, corporations and individuals trading one currency for another. The lack of a physical exchange enables the Forex market to operate on a 24 hour basis, spanning from one zone to another in all the major financial centers. Traditionally, retail investors only means of gaining access to the foreign exchange market was though banks that transacted large amounts of currencies for commercial and invest purpose. Trading volume has increased rapidly over time, especially after exchange rates were allowed to float freely in 1971.

Today importers and exporters, international portfolio managers, multinational corporations, speculators, day traders, long-term holders and hedge funds all use the FOREX market to pay for goods and services, transact in financial assets or to reduce the risk of currency movements by hedging their exposure in other markets.MG Financial, now operating in over 100 countries, serves all manner of clients, comprising speculators and strategic traders. Whether it's day – traders looking for short-term gains, or fund managers wanting to hedge their non-US assets MG's Deal Station allows them to participate in FOREX trading by providing a combination of live quotes, Real-Time charts, and news  and analysis that attar acts traders with an orientation and  technical analysis.

 

The primary purpose of the foreign exchange is to assist international trade and investment,by allowing business to convert one currency to another currency. For example, it permits a US business to import British goods and pay Pound Sterling, even though the business income is in US dollars. It also Supports direct speculation in the value of currencies, and the carry trade, speculation on the change in interest rates in two currencies.
The basic concept of forex trading is similar to those used in equities, bonds, futures, and options markets—the distinction being the product that is traded. In fact, most new forex traders will probably find the transition to forex to be simple and straight forward. The technical indicators and strategies used in other markets can be used in the forex market as well.