Forex for a trader
Forex or futures for beginners

Forex or futures for beginnersBeginner's Guide To Trading Futures. A futures contract is an agreement between two parties – a buyer and a seller – to buy or sell an asset at a specified future date and price. Each futures contract represents a specific amount of a given security or commodity. The most widely traded commodity futures contract, for example, is crude oil, which has a contract unit of 1,000 barrels. Each futures contract of corn, on the other hand, represents 5,000 bushels – or about 127 metric tons of corn. Futures contracts are similar in many ways to options contracts in terms of their usefulness when hedging or speculating. If you're interested in learning more about options trading, Investopedia's Options for Beginners Course includes over five hours of on-demand video, exercises, and interactive content introducing everything from using put options as insurance to complex strategies like spreads, strangles, and straddles. Futures contracts were originally designed to allow farmers to hedge against changes in the prices of their crops between planting and when they could be harvested and brought to market. While producers (e. g., farmers) and end users continue to use futures to hedge against risk, investors and traders of all types use futures contracts for the purpose of speculation – to profit by betting on the direction the asset will move. (For more, see What is the Difference Between Hedging and Speculation? ) While the first futures contracts focused on agricultural commodities such as livestock and grains, the market now includes contracts linked to a wide variety of assets, including precious metals (gold), industrial metals (aluminum), energy (oil), bonds (Treasury bonds) and stocks (S&P 500). These contracts are standardized agreements that trade on futures exchanges around the world, including the Chicago Mercantile Exchange (CME) and the Intercontinental Exchange (ICE) in the U. S. (For more, see How Do Futures Contracts Work? ) This tutorial provides a general overview of the futures market, including a discussion of how futures work, how they differ from other financial instruments, and understanding the benefits and drawbacks of leverage. It also covers important considerations, how to evaluate futures and a basic example of a futures trade – taking a step-by-step look at instrument selection, market analysis and trade execution.

If you are considering trading in the futures markets, it’s important that you understand how the markets works. Here’s a quick introduction to help you get started. Forex trading: A beginner's guide. Forex is short for foreign exchange, but the actual asset class we are referring to is currencies. Foreign exchange is the act of changing one country's currency into another country's currency for a variety of reasons, usually for tourism or commerce. Due to the fact that business is global, there is a need to transact with other countries in their own particular currency. After the accord at Bretton Woods in 1971, when currencies were allowed to float freely against one another, the values of individual currencies have varied, which has given rise to the need for foreign exchange services. This service has been taken up by commercial and investment banks on behalf of their clients, but it has simultaneously provided a speculative environment for trading one currency against another using the internet. Commercial enterprises doing business in foreign countries are at risk due to fluctuations in the currency value when they have to buy or sell goods or services to another country. Hence, the foreign exchange markets provide a way to hedge the risk by fixing a rate at which the transaction will be concluded at some time in the future. To accomplish this, a trader can buy or sell currencies in the forward or swap markets, at which time the bank will lock in a rate so that the trader knows the exact exchange rate in order to mitigate his or her company's risk. To some extent, the futures market can also offer a means to hedge currency risk, depending on the size of the trade and the actual currency involved. The futures market is conducted in a centralized exchange and is less liquid than the forward markets, which are decentralized and exist within the interbank system throughout the world. Forex as Speculation. Since there is constant fluctuation between the currency values of countries due to varying supply and demand factors such as interest rates, trade flows, tourism, economic strength and geopolitical risk, an opportunity exists to bet against these changing values by buying or selling one currency against another in the hopes that the currency you buy will gain in strength or that the currency you sell will weaken against its counterpart.

(For additional reading, see "Top 6 Questions About Currency Trading.") Currency as an Asset Class. There are two distinct features to currency as an asset class: You can earn the interest rate differential between two currencies. You can gain value in the exchange rate. Why We Can Trade Currencies. Until the advent of the internet, currency trading was limited to interbank activity on behalf of their clients. Gradually, the banks themselves set up proprietary desks to trade for their own accounts, which was followed by large multinational corporations, hedge funds and high net worth individuals. With help from the internet, a retail market aimed at individual traders has emerged, providing easy access to the foreign exchange markets, either through the banks themselves or brokers making a secondary market. (For more on the basics of forex, check out "8 Basic Forex Market Concepts.") Trading currencies can cause some confusion related to risk due to its complexities. Much has been said about the interbank market being unregulated and therefore very risky due to a lack of oversight. This perception is not entirely true, though.

A better approach to the discussion of risk would be to understand the differences between a decentralized market versus a centralized market and then determine where regulation would be appropriate. The interbank market is made up of several banks trading with each other around the world. The banks themselves have to determine and accept sovereign risk and credit risk, and for this they have many internal auditing processes to keep them as safe as possible. The regulations are industry - imposed for the sake and protection of each participating bank. Since the market is made by each of the participating banks providing offers and bids for a particular currency, the market pricing mechanism is derived from supply and demand. Due to the huge flows within the system, it is almost impossible for any one rogue trader to influence the price of a currency. In today's high-volume market, with between $2 trillion and $3 trillion being traded per day, even the central banks cannot move the market for any length of time without the full coordination and cooperation of other central banks. (For more on the interbank system, read "The Foreign Exchange Interbank Market.") Attempts are being made to create an Electronic Communication Network (ECN) to bring buyers and sellers into a centralized exchange so that pricing can be more transparent. This is a positive move for retail traders who will gain a benefit by seeing more competitive pricing and centralized liquidity.

Banks of course do not have this issue and can, therefore, remain decentralized. Traders with direct access to the forex banks are also less exposed than those retail traders who deal with relatively small and unregulated forex brokers, which can (and sometimes do) re-quote prices and even trade against their own customers. It seems that the discussion of regulation has arisen because of the need to protect the unsophisticated retail trader who has been led to believe that forex trading is a surefire profit-making scheme. (See also "Why It's Important to Regulate Foreign Exchange.") For the serious and educated retail trader, there is now the opportunity to open accounts at many of the major banks or the larger, more liquid brokers. As with any financial investment, it pays to remember the caveat emptor rule – "buyer beware!" (For more on the ECN and other exchanges, check out "Getting to Know the Stock Exchanges.") Pros and Potential Cons of Trading Forex. If you intend to trade currencies, in addition to the previous comments regarding broker risk, the pros and potential cons of trading forex are laid out as follows: Pro: The forex markets are the largest in terms of volume traded in the world and therefore offer the most liquidity, thus making it easy to enter and exit a position in any of the major currencies within a fraction of a second. Potential Con: As a result of the liquidity and ease that a trader can enter or exit a trade, banks andor brokers offer leverage, which means that a trader can control quite large positions with relatively little money of their own. Leverage in the range of 100:1 is a high ratio, but not uncommon. Of course, a trader must understand the use of leverage and the risks that leverage can impose on an account.

Leverage has to be used judiciously and cautiously if it is to provide any benefits. A lack of understanding or wisdom in this regard can easily wipe out a trader's account. (For more on leverage, check out "Forex Leverage: A Double-Edged Sword.") Pro: Another advantage of the forex markets is the fact that they trade 24 hours around the clock, starting each day in Australia and ending in New York. The major centers are Sydney, Hong Kong, Singapore, Tokyo, Frankfurt, Paris, London and New York. Potential Con: Trading currencies is a "macroeconomic" endeavor. A currency trader needs to have a big-picture understanding of the economies of the various countries and their inter-connectedness in order to grasp the fundamentals that drive currency values. For some, it is easier to focus on economic activity to make trading decisions than to understand the nuances and often closed environments that exist in the stock and futures markets where microeconomic activities need to be understood. However, an understanding of a company's management skills, financial strengths, market opportunities and industry-specific knowledge are not necessary in forex trading. (Take a look at "Economic Factors That Affect the Forex Market" to learn more.

) Note: One of the underlying tenets of technical analysis is that historical price action predicts future price action. Since the forex market is a 24-hour market, there tends to be a large amount of data that can be used to gauge future price movements. This makes it the perfect market for traders that use technical tools. If you want to learn more about technical analysis from one of the world's most widely followed technical analysts, check out Investopedia Academy's Technical Analysis course. Two Ways to Approach Forex Trading. For most investors or traders with stock market experience, there has to be a shift in attitude to transition into or add currencies as a further opportunity for diversification. 1. Currency trading has been promoted as an "active trader's" opportunity. This type of opportunity suits brokers because it means they earn more due to the nimbleness that accompanies active trading. 2. Currency trading is also promoted as leveraged trading, and therefore, it is easier for a trader to open an account with a small amount of money than is necessary for trading in the stock market. Besides trading for a profit or yield, currency trading can be used to hedge a stock portfolio. For example, if someone builds a stock portfolio in a country where there is potential for the stock to increase in value, but there is downside risk in terms of the currency (i. e., the U. S. in recent history), a trader could own the stock portfolio and short the dollar against another currency such as the Swiss franc or euro. In this way, the portfolio value will increase, and the negative effect of the declining dollar will be offset.

This is true for those investors outside the U. S. who will eventually repatriate profits back to their own currencies. (For a better understanding of risk, read "Understanding Forex Risk Management.") Opening a forex account and day trading or swing trading is most common with this profile in mind. A second approach to trading currencies is to understand the fundamentals and the long-term benefits. It is beneficial to a trader when a currency is trending in a specific direction and offering a positive interest differential that provides a return on the investment plus an appreciation in currency value. This type of trade is known as a "carry trade." For example, a trader can buy the Australian dollar against the Japanese yen. If the Japanese interest rate is .05% and the Australian interest rate is 4.75%, a trader can earn 4%. (For more, read "The Fundamentals of Forex Fundamentals.") However, if the Australian dollar is strengthening against the yen, it is appropriate to buy the AUDJPY and to hold it in order to gain in both the currency appreciation and the interest yield. For traders – especially those with limited funds – day trading or swing trading in small amounts can be a good way to play the forex markets.

For those with longer-term horizons and larger fund pools, a carry trade may be an appropriate alternative. In both cases, traders must know how to map out the timing their trades through charts, since good timing is the essence of profitable trading. In both cases, as in all other trading activities, the trader must know their own personality traits well enough so that they do not violate good trading habits with bad and impulsive behavior patterns. (To determine what type of trading is best for you, see "What Type of Forex Trader Are You?") Best Forex Brokers for Beginners 2018. With new forex brokers coming online every day, choosing the best broker for you often requires a lot of research and patience. To save you time and help beginner traders we have identified some of the key things that every trader must evaluate when selecting a broker and we’ve compiled a list of the very best Forex brokers in the market. How to choose a forex broker? (As a beginner trader) The forex market is the world’s largest market with a daily turnover that easily exceeds $4 trillion. However even though it is the largest market in the world, there is no central exchange for it. Consequently, forex traders have to rely on the services of a forex broker to help them execute a trade. That is why it is so important to choose the best trading partner for you. So what do you need to consider when choosing a broker? Regulatory Oversight.

Before all else, the first thing every beginner trader must check when looking for a trusted and reliable broker is to see if the broker is regulated. As the forex market is an unregulated market, having a forex broker that is regulated ensures the broker will operate with transparency and fairness. It is important to note that regulatory oversight for a forex broker is only applicable for the jurisdiction that the broker is based in. For example in the U. S, a forex broker is required to be a member of the National Futures Association (NFA) and be registered with the US Commodity Futures Trading Commission (CFTC). For forex brokers that are based in the UK, they are required to be registered with the Financial Conduct Authority (FCA). These regulatory agencies main functions are to protect the interest of investors as well to develop the rules that dictate how forex brokers should conduct their operations. Most important of all, regulatory agencies constantly monitor the conduct of the brokers under their jurisdictions to prevent any kind of abusive practices, fraud and manipulation on the part of the brokers. By doing so, these regulatory agencies help to promote competition and instill trust in the forex market. So before you decided to open a trading account with a forex broker, ensure that it is regulated by one of the regulatory agencies listed below: Australia: Australian Securities and Investment Commission (ASIC) Canada: Autorite des Marches Financiers (AMF) Cyprus: Cyprus Securities and Exchange Commission (CySEC) France: Autorite des Marches Financiers (AMF) Germany: Bundesanstalt fur Finanzdienstleistungsaufsicht (BaFIN) Switzerland: Swiss Federal Banking Commission (SFBC) United Kingdom: Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) United States: National Futures Association (NFA) and Commodity Futures Trading Commission (CFTC) Finally many regulators offer an investor compensation scheme which protects the investors deposits up to a certain level should the broker become insolvent and become overly exposed to the markets. The Forex Platform Software. The next thing that you have to evaluate in a beginners forex broker is their trading platform or software. The trading platform is the trader’s gateway to the forex market hence you have to ensure the trading platform is reliable and easy to use. It must also have a wide range of trading tools which you can use to help in the analysis of the market. Most useful tools for beginners are clear charts, a streaming news source and even an economic calendar, giving upcoming economic events. In addition, you must also ensure that trade entries and exits can be done effortlessly. This means that the interface of the trading platform must be well designed with all the functionalities clearly labeled and strategically placed.

A trading platform with a poorly designed user interface can actually impede trading which can lead to costly mistakes. For example instead of closing a position, a poorly designed trading platform can cause you to add to a position. Or it can cause you to go long on a position when you really intended to go short. At the end of the day, all these mistakes will just cause you more frustration and drain you emotionally. Make sure that the broker offers you a reliable trading platform such as the MetaTrader 4 platform or the Sirix WebTrader. As a beginner trader is also important to know that brokers usually offer mobile versions of their platforms. This is great when you are on the go, as you never need to lose trading opportunities. Commissions & Spreads. All forex brokers make their money through the commissions or the spreads which they charge their clients. For commission based trades, the commission is usually a fixed amount per lot traded or a percentage of the total volume traded. For spread based trades, the forex broker generally markup a few pips in the difference between the Bid and Ask price. It should be noted that the spread can be fixed or floating. For example for fixed spreads, a broker may specify that the spread for the EURUSD currency pair is 2 pips. With floating spreads, the spread that is payable depends on the market volatility. Take note that the wider the spread, the more difficult it is for you to make a profit.

Nevertheless, frequently traded currency pairs such as the EURUSD or USDJPY often have very tight spread as compared to less frequently traded currency pairs. All leading forex brokers offer their clients a selection of trading accounts for their clients to choose from. These accounts are typically differentiated by the benefits which they offer the account holder but they vary between the different brokers. For example, a micro or mini account which allows a trader to trade in an amount that is less than a standard lot usually comes with a low minimum deposit requirement. These trading accounts are designed for beginner traders and have higher leverage. But they also often come with higher spreads. Sometimes, the broker might limit the number of currency pairs which a trader can trade with a micro or mini account. Trading accounts can also vary according to the type of spreads which a trader has to pay. Some trading accounts have fixed spreads whereas others have variable spreads. Or they can be commission based trading accounts as well. Usually the trading accounts that are geared for experienced traders are ECN type accounts which allow the account to access the raw spreads provided by the liquidity providers. Deposits and Withdrawals. Another factor which you must take into account when evaluating the different types of trading accounts is the deposit and withdrawal methods supported by the broker. Every forex broker in the industry has their own policies on how they handle deposits and withdrawals. Some brokers may require their clients to fund their trading accounts by direct bank deposit whereas others may be more flexible and support a variety of payment methods.

Regardless of the payment methods that are supported, always choose a broker which can provide you with a convenient and cheap payment method. The forex industry a 24 hours market where trading activities never ceases. Because of this, it is possible for a forex trader to trade the market continuously. This means you can encounter a problem which requires the assistance of the customer support team at any time. Hence, it is essential that the support services are available on a 24 hours basis throughout the entire trading week as there is nothing more frustrating than not being able to get assistance when you need it most. Check the methods which are available to contact the support team with eg. live chat, localized phone numbers, email. In addition, review the response time of the customer support representative. Another often overlooked factor when reviewing a broker’s customer support service is whether the broker has provided you with a localized or toll free telephone support number. The reason is fairly obvious as the telephone charges that you rake up when calling the support lines can easily build up to a substantial amount. Our 10 Tips for the Beginner Trader. Below we have compiled a definitive list of the absolute best brokers for beginner Forex traders. We have considered all of the below points. To verify a broker’s regulated status, we check the website of the regulatory agency that issued the authorization for the broker to operate in a particular jurisdiction. Sometimes, a forex broker can be regulated in several jurisdictions. The more jurisdictions the broker is regulated in, the most committed the broker is towards earning the trust of potential clients.

On trading platforms, the more choices of trading platforms that are provided by the broker, the better it is for you as a trader. If you are the type of trader that is constantly on the move and doesn’t like being desk bound, consider a broker that is able to support mobile trading as well. To evaluate how the trading platform is able to perform, always try out the demo account provided by the broker. This will help give you an idea of the performance of the trading platform. Some brokers offer a demo account that works only for a limited period whereas some brokers offer an unlimited demo account. Of course an unlimited demo account is better since you will still be able to use the demo account to back test your trading strategies. For trading costs, we check to see if the broker offers a rebate on the commissions that you pay. Some brokers as a way of rewarding their clients’ loyalty offer rebates on the commission paid by their clients. In other words, the more the trader trades, the more he will get back in terms of rebates. On the issue of withdrawals, we check to see if the broker has any restrictions or specific requirements. Some brokers require a minimum amount to be withdrawn before the withdrawal request is processed. In addition, some brokers may also charge their clients a fee on each withdrawal made. On customer support, we check to see if the support services can also be accessed through social media or through internet telephony. The more methods which the broker can support, the better it is for you as a client.

We check the quality of their training academy. This is important for beginner traders as you want to learn as much as you can before you take the plunge risking your money in the forex market. Some brokers in their bid to differentiate their services from other brokers also offer value added services such as free market signals. These free signals can prove useful to you as a trading aid as well as an educational aid. Finding the perfect broker is not always easy, especially when you are a beginner trader and don’t really know what to look for. In order to help you out we have collated a list of the best Forex brokers for beginners, we hope it’s useful! ZERO commissions and exchange fees. When trading on the futures market, you have to pay commissions and exchange fees; there is no escaping that fact. However, in the currency market, one can escape that fact, because you pay no commissions and no exchange fees. Best Forex Brokers usually eliminate all these added fees, because you are dealing directly with the market maker, via an electronic online exchange, therefore eliminating both the ticket costs and the intermediary's brokerage fees. When initiating any forex trade, there is still no cost. However, that cost is reflected in the bidask spread, that is also present in futures trading. Forex Brokers offer tight and consistent spreads of between one and three pips on their trading platforms. Price "slippage" or bad fills, is negated because (unlike with many other financial products) with brokers’ trading platforms, they offer firm, instant, execution, of two-way prices. Instantaneous execution and firm prices. Prices quoted by forex brokers, often represent the last trade, and not necessarily the price for which the contract will be filled. Instant execution of price certainty is not a guaranteed, even with electronic trading and limited guarantees of execution speed, the price for fill, on forex market orders, is not, in any way certain.

However, when working with best forex brokers, you are trading in real time streaming prices. This means, that your prices are immediately filled and there is no discrepancy between the displayed price and that of the execution price. With recommended forex brokers, this stays true, even when the markets are in a volatile and fast-moving mood. 24 Hour Forex Market Action and Liquidity. The currency market is a seamless 24-hour market, quite unlike most futures markets. And, "seamless" means something like this - on Sunday forex trading begins, as the markets in both Sydney and Singapore open for business. Then, the Tokyo market opens for business, followed by Hong-Kong, Frankfurt, Paris, London, and finally New York. Therefore, as a forex trader, you are in a position to react to favorable andor unfavorable news, by instigating immediate trade. This means, that if important newsdata, breaks in the UK or Japan, whilst the US or European futures markets are still closed, then the next days trading could be a roller-coaster ride. Overnight markets in futures currency contracts do, of course, exist, however, they can only be thinly traded, and they are not very liquid and are quite difficult for the average investor to access. No Debit Balance Risk. At the best forex broker, you will never have a debit balance. Should your forex account fall below margin level, broker’s forex trading platform will close all your open positions. Therefore, should you be completely wrong, and there is a disastrous move against you, you can never lose more than the amount of money in your account.

Moreover, by employing the stop loss orders your risk can be further limited and defined. Having an account allows you to access your personal area on our website and to trade. Once registered, please check your email to find out. The term Short Selling originated in the stock market. A few years back, a person loaned stocks from his broker in order to sell them, and attempted to make a profit. A pip, short for percentage in point or price interest point, is known to be the smallest numerical price move in the exchange market. When a price changes. Copy trading enables traders, experienced and new alike, to take part in the financial markets, by having their trades executed by experienced. Margin is deemed as the deposit needed when a trader enters the market to keep positions open. It is not a transaction fee, rather it is a tiny piece obtained from. Bitcoin Gold (BTG) is the second fork from Bitcoin (i. e. the second version to stem from Bitcoin's source code) after Bitcoin Cash. The Bitcoin. This is what is provided by a forward contract designed to protect companies and individuals against possible risks associated with sharp fluctuations.

With the crypto craze in full swing and potential investors looking to put more and more money into the world of Bitcoin, there are a wide array. Bitcoin is the world's first digital currency and it is expanding in popularity worldwide. Now, traders can trade Bitcoin with AvaTrade as the ideal. Best Forex Brokers for Beginners 2018. With new forex brokers coming online every day, choosing the best broker for you often requires a lot of research and patience. To save you time and help beginner traders we have identified some of the key things that every trader must evaluate when selecting a broker and we’ve compiled a list of the very best Forex brokers in the market. How to choose a forex broker? (As a beginner trader) The forex market is the world’s largest market with a daily turnover that easily exceeds $4 trillion. However even though it is the largest market in the world, there is no central exchange for it. Consequently, forex traders have to rely on the services of a forex broker to help them execute a trade.

That is why it is so important to choose the best trading partner for you. So what do you need to consider when choosing a broker? Regulatory Oversight. Before all else, the first thing every beginner trader must check when looking for a trusted and reliable broker is to see if the broker is regulated. As the forex market is an unregulated market, having a forex broker that is regulated ensures the broker will operate with transparency and fairness. It is important to note that regulatory oversight for a forex broker is only applicable for the jurisdiction that the broker is based in. For example in the U. S, a forex broker is required to be a member of the National Futures Association (NFA) and be registered with the US Commodity Futures Trading Commission (CFTC). For forex brokers that are based in the UK, they are required to be registered with the Financial Conduct Authority (FCA). These regulatory agencies main functions are to protect the interest of investors as well to develop the rules that dictate how forex brokers should conduct their operations. Most important of all, regulatory agencies constantly monitor the conduct of the brokers under their jurisdictions to prevent any kind of abusive practices, fraud and manipulation on the part of the brokers. By doing so, these regulatory agencies help to promote competition and instill trust in the forex market. So before you decided to open a trading account with a forex broker, ensure that it is regulated by one of the regulatory agencies listed below: Australia: Australian Securities and Investment Commission (ASIC) Canada: Autorite des Marches Financiers (AMF) Cyprus: Cyprus Securities and Exchange Commission (CySEC) France: Autorite des Marches Financiers (AMF) Germany: Bundesanstalt fur Finanzdienstleistungsaufsicht (BaFIN) Switzerland: Swiss Federal Banking Commission (SFBC) United Kingdom: Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) United States: National Futures Association (NFA) and Commodity Futures Trading Commission (CFTC) Finally many regulators offer an investor compensation scheme which protects the investors deposits up to a certain level should the broker become insolvent and become overly exposed to the markets.

The Forex Platform Software. The next thing that you have to evaluate in a beginners forex broker is their trading platform or software. The trading platform is the trader’s gateway to the forex market hence you have to ensure the trading platform is reliable and easy to use. It must also have a wide range of trading tools which you can use to help in the analysis of the market. Most useful tools for beginners are clear charts, a streaming news source and even an economic calendar, giving upcoming economic events. In addition, you must also ensure that trade entries and exits can be done effortlessly. This means that the interface of the trading platform must be well designed with all the functionalities clearly labeled and strategically placed. A trading platform with a poorly designed user interface can actually impede trading which can lead to costly mistakes. For example instead of closing a position, a poorly designed trading platform can cause you to add to a position. Or it can cause you to go long on a position when you really intended to go short. At the end of the day, all these mistakes will just cause you more frustration and drain you emotionally. Make sure that the broker offers you a reliable trading platform such as the MetaTrader 4 platform or the Sirix WebTrader.

As a beginner trader is also important to know that brokers usually offer mobile versions of their platforms. This is great when you are on the go, as you never need to lose trading opportunities. Commissions & Spreads. All forex brokers make their money through the commissions or the spreads which they charge their clients. For commission based trades, the commission is usually a fixed amount per lot traded or a percentage of the total volume traded. For spread based trades, the forex broker generally markup a few pips in the difference between the Bid and Ask price. It should be noted that the spread can be fixed or floating. For example for fixed spreads, a broker may specify that the spread for the EURUSD currency pair is 2 pips. With floating spreads, the spread that is payable depends on the market volatility. Take note that the wider the spread, the more difficult it is for you to make a profit. Nevertheless, frequently traded currency pairs such as the EURUSD or USDJPY often have very tight spread as compared to less frequently traded currency pairs. All leading forex brokers offer their clients a selection of trading accounts for their clients to choose from. These accounts are typically differentiated by the benefits which they offer the account holder but they vary between the different brokers. For example, a micro or mini account which allows a trader to trade in an amount that is less than a standard lot usually comes with a low minimum deposit requirement. These trading accounts are designed for beginner traders and have higher leverage.

But they also often come with higher spreads. Sometimes, the broker might limit the number of currency pairs which a trader can trade with a micro or mini account. Trading accounts can also vary according to the type of spreads which a trader has to pay. Some trading accounts have fixed spreads whereas others have variable spreads. Or they can be commission based trading accounts as well. Usually the trading accounts that are geared for experienced traders are ECN type accounts which allow the account to access the raw spreads provided by the liquidity providers. Deposits and Withdrawals. Another factor which you must take into account when evaluating the different types of trading accounts is the deposit and withdrawal methods supported by the broker. Every forex broker in the industry has their own policies on how they handle deposits and withdrawals. Some brokers may require their clients to fund their trading accounts by direct bank deposit whereas others may be more flexible and support a variety of payment methods.

Regardless of the payment methods that are supported, always choose a broker which can provide you with a convenient and cheap payment method. The forex industry a 24 hours market where trading activities never ceases. Because of this, it is possible for a forex trader to trade the market continuously. This means you can encounter a problem which requires the assistance of the customer support team at any time. Hence, it is essential that the support services are available on a 24 hours basis throughout the entire trading week as there is nothing more frustrating than not being able to get assistance when you need it most. Check the methods which are available to contact the support team with eg. live chat, localized phone numbers, email. In addition, review the response time of the customer support representative. Another often overlooked factor when reviewing a broker’s customer support service is whether the broker has provided you with a localized or toll free telephone support number. The reason is fairly obvious as the telephone charges that you rake up when calling the support lines can easily build up to a substantial amount. Our 10 Tips for the Beginner Trader. Below we have compiled a definitive list of the absolute best brokers for beginner Forex traders.

We have considered all of the below points. To verify a broker’s regulated status, we check the website of the regulatory agency that issued the authorization for the broker to operate in a particular jurisdiction. Sometimes, a forex broker can be regulated in several jurisdictions. The more jurisdictions the broker is regulated in, the most committed the broker is towards earning the trust of potential clients. On trading platforms, the more choices of trading platforms that are provided by the broker, the better it is for you as a trader. If you are the type of trader that is constantly on the move and doesn’t like being desk bound, consider a broker that is able to support mobile trading as well. To evaluate how the trading platform is able to perform, always try out the demo account provided by the broker. This will help give you an idea of the performance of the trading platform. Some brokers offer a demo account that works only for a limited period whereas some brokers offer an unlimited demo account.

Of course an unlimited demo account is better since you will still be able to use the demo account to back test your trading strategies. For trading costs, we check to see if the broker offers a rebate on the commissions that you pay. Some brokers as a way of rewarding their clients’ loyalty offer rebates on the commission paid by their clients. In other words, the more the trader trades, the more he will get back in terms of rebates. On the issue of withdrawals, we check to see if the broker has any restrictions or specific requirements. Some brokers require a minimum amount to be withdrawn before the withdrawal request is processed. In addition, some brokers may also charge their clients a fee on each withdrawal made. On customer support, we check to see if the support services can also be accessed through social media or through internet telephony. The more methods which the broker can support, the better it is for you as a client. We check the quality of their training academy. This is important for beginner traders as you want to learn as much as you can before you take the plunge risking your money in the forex market. Some brokers in their bid to differentiate their services from other brokers also offer value added services such as free market signals. These free signals can prove useful to you as a trading aid as well as an educational aid. Finding the perfect broker is not always easy, especially when you are a beginner trader and don’t really know what to look for. In order to help you out we have collated a list of the best Forex brokers for beginners, we hope it’s useful!

Futures Trading: Beginner's Guide To Trading Futures. Learn the basics of futures trading 101, how to get started with a futures broker, different trading strategies as well as the history of the futures and commodities markets. What is Futures Trading? A futures contract , quite simply, is an agreement to buy or sell an asset or underlying commodity at a future date at an agreed-upon price determined in the open market on futures trading exchanges. It's important to understand that futures contracts are standardized agreements that typically trade on an established exchange. One party to the standardized contract agrees to buy a given quantity of an underlying commodity or an equity index for example, and take delivery on a certain date. The other party agrees to provide it or make delivery of the underlying asset. This standardized contract agreement in futures trading may be clear, but how does one invest in futures trading ? A futures trader can initiate a long or short futures position depending on the anticipated move by the speculator on the price of the trading futures contract.

This is accomplished by simply buying, "going long" or selling, "going short" a single or several futures contracts. When initiating a long position, the trader is anticipating an upward move in the price of the futures contract. The opposite is the case with a short futures position. The trader or speculator is hoping for downward price action in the chosen futures contract. It's important to keep in mind that trading futures is very risky; a full risk disclosure can be found at the end of this article. In addition to commercial hedgers, (which will not be covered in this particular article) there are also peopleparties who act as speculators and who seek to make money off of changes in the price of the contract itself, when bought or sold to other investors. Naturally, if the price of a given futures contract rises, the contract itself becomes more valuable, and the owner of that contract could, if heshe chose, to sell that contract to someone else who is willing to pay more for it. This would be known as a long position in a particular futures contract . It is also possible to take on a short position and speculate on the price of the underlying futures contract going down and offsetting the position by buying back the exact same contract on the same exchange with the hope of making a profit on the change in price. These futures contracts aren't just bought and sold over a single market segment, but over almost any asset that's commonly traded. Commodities themselves do indeed represent a large percentage of the futures trading world: Futures contracts are issued on many underlying assets: eggs, gasoline, ethanol, lumber, equity indices, financial contracts and precious metals.

The list goes on and on. All of these commodities have standardized futures contracts and speculators and traders are constantly seeking profit making opportunities, while hedgers attempt to lock in favourable future trading price levels in the present trying to avoid risk. Trading Futures Basics. As implied above, the commodity futures trading markets are not simply all about hogs, corn and soybeans. One can trade equity indices and futures contracts on financial instruments. Some traders trade these vehicles extensively because of the greater potential for leverage than could be garnered by trading these instruments outright on the world's equity markets. Leverage in the futures trading markets is denoted by the substantial position that can be initiated in an underlying commodity while putting up a relatively small amount of cash margin. A trader or speculator needs to be aware of the double-edged sword this implies: while the potential for greater profits exists, so does the increased risk of very large losses in the commodity futures markets . The understanding of leverage and the risks that inherently come with it, is paramount before initiating any positions in the commodity futures markets . No one can claim to know how futures trading works without a firm mental grip on these important futures trading basic mechanics . Delving Deeper into the Beginner's Guide to Trading Futures. For beginners, the term contract can, at first glance, seem cold and uninviting, but it is consciously used because, like any other legal binding contract, a futures investment has an expiration date and standardized features. You don't have to hold the contract until it expires.

You can cancel it or offset your position any time you would like before expiration of the contract. In fact, many short-term traders, known as day traders, only hold their contracts for a few hours - or even just for minutes! The expiration dates for various futures contracts vary between commodities, and you have to choose which markets and futures contracts fit with your futures trading objectives. As a general commodities futures trading rule, the nearer (to expiration) contracts are usually more liquid, i. e. there are more traders trading them and there is inherently more trading volume therein, which is referred to as liquidity. The limitation on the number of contracts you can trade (within reason - there must be enough buyers or sellers to trade with you) is governed mainly by your account balance and the amount of futures trading margin you can bring to the markets. It just so happens that larger tradersinvestment companiesbanks, etc. may trade thousands of contracts at a time in different futures trading markets. These larger positions must adhere to CFTC position limits and reportable position rules. As outlined above, all futures contracts are standardized, in that they all hold a specified amount and quality of a commodity. For example, a Silver (SI) futures contract holds 5,000 troy ounces of silver, a Gold futures contract (GC) holds 100 troy ounces of 24 carat gold; and a Crude Oil (CL) futures contract holds 1000 barrels of crude oil of a certain quality that is standardized and specified in the futures contract itself. Share this Infographic On Your Site. Just copy & paste the below code. Click play to watch video on Basics of Futures Trading and Trading Platforms to Choose From. Getting Started with Commodity Futures Trading. Before you get started Futures Trading or Commodities Trading , make sure you educate yourself with trading futures beginners guide, learn an online commodity futures trading platform, and get to a known commodities broker . Download a free futures trading software from Cannon Trading .

How do I get started with Futures Trading? So you've come this far. You've evaluated different vehicles of investment, and you have decided to expand your portfolio to include commodity futures trading, Now what? You are going to need a few tools at your disposal: a knowledgeable commodity broker that is quick on their feet, a reliable, efficient platform that will get you the information you require and executes your trades on a timely basis, and perhaps most importantly a commodity futures trading plan. Let's begin with the most important requirement: because futures are so highly leveraged (if you are holding one contract of the E-mini S&P 500, the notional value of the futures contract is 50x the current index price), there's no doubt it can be a very risky asset class and you should only be trading with "risk capital", or money that you can stand to lose and won't affect your lifestyle if you do. Once you've accumulated your risk capital and you've come to terms with the nature of trading futures & commodity , you can take matters a step further by doing research on what kind of trader you want to be. Self-directed, Broker-assist, or Managed? One of the most difficult aspects of futures trading is coming to terms with one's own skill set; what are the characteristics of my trading? What are the flaws and finer points of my trading? Is day-trading the E-mini S&P 500 something I was cut out for, or does my personality gear me more towards swing-trading the grains? Execution of Trading Futures. Our future brokerage firm has been in the same location in Beverly Hills, California since 1988 and has the experience and tools to help you achieve your trading futures goals. We offer most of the platforms available in the industry today and it affords us the opportunity to provide an objective, comprehensive point-of-view when helping you choose your execution platform. Whether it is the user-friendly nature and execution of the Firetip platform, the indicator-specific trading of the SierraCharts platform, or the automated risk management feature of TransAct AT, we can assist you figure out what it is that you need to help you increase your chance of success.

Every platform is different, even if they look similar. Depth of Market (DoM) trading has many subtle differences between platforms, and we're more than happy to share which ones we think are best. Also, the markets you're trading are very important to the platform you are going to be executing on; for example, some platforms we offer are not capable of trading Options on Futures or Forex, while some platforms we carry can handle it all. Some platforms are capable of trading Asian markets, while some platforms deal only with a handful of markets. Again, this is where talking to one of our brokers comes in handy. Patience, Tolerance, and Trading Psychology. Navigating the futures trading markets is not understood overnight. It can often take years of preparation and research, and you can never learn enough patience when you're trading live. Just as paramount as any other prerequisite for trading futures is a proper commodities futures trading psychology : one that will allow you to determine the difference between pain tolerance and denial, between responsible targets and greed, and a mindset that won't force you to keep trading when it's time to step away from the computer. Futures Trading Strategies Techniques.

There are many commodity futures trading strategies that can be employed; several of these methods and brief descriptions can be found below: Spread Trading - A type of trade where a single position in the market consists of the simultaneous purchase of one futures contract and sale of a related futures contract as a unit. Options on Futures - The purchase or sale of derivative instruments that grant the trader the right, but not the obligation to execute a trade on underlying futures contracts. Day Trading - Day trading consists of entering futures positions and exiting those same positions within the course of one day's session. Position Trading - Denotes holding a position for a longer period of time that may involve hours, or even a few days or longer. Scalping - Scalping involves the very fast execution of trades in hopes of taking advantage of small and frequent price changes. Swing Trading - Swing trading is a type of position trading that attempts to capture potentially larger price movements than those involved in quick scalping futures trading strategies. MomentumBreakout Trading - Here a trader looks for a narrow trading channel or trading range where volatility has diminished. The goal is to establish a position as price breaks out of this trading channel concurrent with a spike in open interest, thereby taking advantage of the increase in volatility and catching a strong trend move. Trading Futures Spreads. Trading futures spreads , there are important reasons why spread trading should be considered if you're looking for an approach guide to trading futures . "A basic and important strategy for commodities traders using spread trading." Over my 20+ year career as a commodities broker, I have studied and traded a wide range of approaches to trading the futures markets.

From candlestick formations to the commodity channel index, from condors to turtle trading, there's an enormous catalog of tools and methods available for traders to consider. One method I have noticed is surprisingly under represented among retail traders is futures spread trading, where a single position in the market consists of the simultaneous purchase of one futures contract and sale of a related futures contract as a unit. I call it surprising because some of the most invested players in futures trading - and arguably the most sophisticated - include large speculators and commercial firms who regularly employ spreads. This includes traders in the markets who often actually buy and sell the physical commodities we trade. Farmers, ranchers and other food growers along with food producers, petroleum companies who either drill for oil or natural gas or refine these products - or both, financial institutions with enormous holdings in treasuries, equities or currencies, mining interests and their buyers - all these areas of production and distribution employ futures trading spreads from time to time as an important aspect of their businesses. Indeed, spread trading futures is a fundamental and essential part of the commodities futures markets. At the same time, despite the remarkable increase in interest and in the growth in the volume of the futures markets over the years, spread trading is typically dismissed by most other traders in search of a futures trading strategy . With so much attention focused on other approaches related to straightforward directional trading (and within that category, day-trading) it's not difficult to see how spread trading futures can be overlooked . Spread trading futures can also be challenging to figure out anyway. On the surface, buying July soybeans and selling November soybeans, for example, might look like a downright futile endeavor. But there are some important reasons why spread trading should be considered if you're looking for an approach guide to trading futures. Lower Volatility: many futures contracts can be extremely volatile, not just during their U. S. daytime trading hours, but during those night time hours when the preferred activity for many traders is sleep - and futures trading volume can be greatly reduced.

Certain types of spreads can greatly reduce volatility risk for futures positions and be a viable substitute for placing stop orders. In this case, a spread might enable you to withstand the "surprises" that often appear when you rise to a new day. Less margin: because of the lower volatility, the exchanges set margin requirements for many futures trading spreads that can be much less than an outright futures position. For example, the current initial margin requirement for July soybeans is $4,590. The current total initial margin requirement for the July soybean November soybean spread mentioned above is $2,700. But, why bother educating one's self on the inner workings of futures trading spreads? What advantages come with lower volatility and lower margins? Those qualities by themselves don't very strongly suggest futures spread trading is worth pursuing. Buying an out-of-the-money futures option for $200, after all, is also low in volatility and risk. Well, consider this: those same large speculators and commercial firms who regularly employ spreads - again, some of the most invested and arguably the most sophisticated players in futures trading - are often employing spreads based on market conditions and events that recur at periodic intervals. Maybe the most obvious of these intervals is the cycle of weather from warm to cold and back to warm. For agricultural and energy futures markets, weather - more accurately the seasons - can have an important effect on price movement. For example, enormous supplies of soybeans, once harvested, dwindle throughout the year. The same goes for other agricultural commodities such as wheat, corn, sugar, and cotton. Seasons and weather changes affect energy prices as well. Demand for heating oil typically rises as cold weather approaches but subsides as refiners meet the anticipated demand.

Memorial Day typically marks the beginning of the "driving season" in the United States and similarly, a vast number of the rest of the world's population prepares to "go on holiday." As a result, gas consumption rises. Seasons and weather changes aren't the only cycles affecting the markets. Cycles in the financial arena can affect related futures trading markets. Consider how a nation's fiscal year and tax due date is often at variance with others who are important trading partners. That can influence currency flows and the forces on interest rate-sensitive instruments. All these forces, though certainly not 100% predictable, give rise to recurring price phenomena - to greater or lesser degree and in a more or less timely manner - and reveal a tendency for prices to move in the same direction at a similar time every year. Spread trades can take advantage of these types of cycles. Consider this: Market-driven U. S. interest rates historically exhibit a strong tendency to reach a seasonal high around AprilMay - presumably when monetary liquidity is tightest after the massive transfer of financial assets from out of the private sector and into the public sector - in the form of income tax payments due April 15. At the same time, the long June 10-year Treasury note Short June 30-year Treasury Bond spread has closed in favour of the 10-year note between February 8 and April 17 in 17 of the last 19 years! And how that spread found itself into this article leads me to the heart of the article: where can you find out more information about futures spread trading? They may be harder to find, but there are some very good sources of research on futures spreads available for your investigation. My personal favourite is Moore Research Center, Inc. ( mrci.

com). They're responsible for the description and record keeping of the interest rate spread I just cited. Although spread futures trading represents an important slice of the overall trading volume in the futures markets - and is used as a futures trading strategy by some very sophisticated participants, I see it as an approach worthy of investigation by futures traders more broadly, including most of our readers. Even if spread trading futures can take on the directional characteristic of straight futures trading, it is certainly an overall different approach and that can be the trading futures strategy diversification you're looking for. As is always the case when we share trade proposals of this sort, we want to make sure we square up our discussion with the always-important information. Spread trading like all futures trading, isn't without its risks. Even with regard to the annual cycles referenced above, which will inevitably ebb and flow both daily and longer term - no spread works every time. Just look at how some summers are hotter and dryer - and at more critical times - than others for an example of what can affect a grain, livestock, energy, possibly even another type of futures trading spread. Make sure you're aware of the risks to trading futures spreads as you should with any futures trade. A spread usually comprises of multiple futures related positions. If we have to recognize the spread for margin purpose, there needs to be an economic connection between its constituents. Gold and silver are fellow travelling precious metals; however, formally recognizing the spread by exchanging clearing house is needed if we have to derive the spreads benefits.

In most of the cases, the benefit is reduced margin requirements. Selling Gold against Silver purchase wagers on an improvement in silver's buying power, whether it derives from a rise in silver's price or a decline iThere is a variety of "Spread Trading Software" that can help you analyze your trading needs gold's. A spread, therefore, gives you an opportunity to profit regardless of overall market direction. Day Trading Crude Oil Spreads. The price of crude oil is a vital global economic factor. This means that day trading is often influenced by political and commercial concerns. If the price of oil remains high over a period of time, cost of products like fertilizers and plastics are also inadvertently affected. Crude oil futures are standardized, exchange-traded contracts in which the contract buyer agrees to take delivery, from the seller, a specific quantity of crude oil (e. g. 1000 barrels) at a predetermined price on a future delivery date. Wheat futures are standardized, exchange-traded contracts in which the contract buyer agrees to take delivery, from the seller, a specific quantity of wheat (e. g. 5000 bushels) at a predetermined price on a future delivery date. Producers and consumers of wheat can manage wheat's price risk by buying or selling wheat futures. Producers can deploy a short hedge to lock in selling price for the wheat they produce while the businesses that require the wheat can make use of long hedge to secure a purchase price for the commodity needed. There is a variety of "Spread Trading Software" that can help you analyze your trading needs. Futures Trading 101: Trading Around Economic Reports. Trading is truly a fascinating pursuit. The markets can in still excitement, frustration, irritation, exhilaration - really a wide range of emotions - conceivably, even within a single trade. Trading is definitely one of those undertakings where one has to constantly study, evolve and grow.

There are also a number of different approaches to trading, including day trading, swing trading and position trading . There are strategies that focus on just trading straight futures contracts, others solely trade options, including sellingwriting options, still others incorporate long and short positions simultaneously - spread trading - utilizing futures andor options. One narrowly defined approach to trading - probably most relevant for day traders - is trading around economic reports. The release of economic reports occurs almost daily. Most come from the U. S. federal government and look at national or large regional data; some come from other private surveys. Some garner considerable attention by traders; others draw barely a thought, much less a glance at their impact on the markets. This article doesn't attempt to detail any particular number of them and their significance. Rather, it lists some pointers that can help traders prepare for reports releases. Know the times reports are set for release Know which markets reports may impact Know what the markets are expecting and how different outcomes will affect market movement Do your homework, i. e., go over charts from earlier dates when similar reports were released. Keep a journal. Focus on the reports that affect the markets you trade. In general, I like to know what the market expects, observe the market's reaction to the actual data, let the initial strong move occur and then if there is a clear direction, I like to try trading the second wave.

That means if I am looking to go short, I would give the market time, take a look at price action and wait for higher prices to go short. It's possible I may miss the trade but I prefer to be rather conservative and follow the thinking that "no trade is better than a bad trade." Another way more experienced traders can play major reports is by placing limits to both buy and sell at points they consider are the outer ranges for the short time frame. One must be experienced enough and understand the many factors and risks in trading during major numbers and know how to send attached orders. If you trade energies, you should know that Wednesday morning at 9:30 A. M., Central Time a key weekly report is released. If you trade natural gas, Thursday morning at 9:30 A. M., Central Time is similarly worth keeping an eye on. The financial markets (Treasury Bonds & Notes) are probably the markets most influenced by economic reports, such as Non-farm Payrollsunemployment, housing starts, permits and home sales, Producer & Consumer Price Indexes, Consumer Confidence and others. There are a few great sources on the web that will list these reports and their meaning, including some free sources as well as paid services. The latter often provide real time updates and commentary. The vast majority of these reports are regularly scheduled weekly or monthly. Others, such as Federal Open Market Committee events occur every 6-8 weeks. Do your homework. Last but not least, do not enter a trade with the idea that you'll just get in and see how it goes.

Risk levels, potential targets, in other words, a game plan should be considered BEFORE you enter the trade! I will expand on this topic in future articles and write specifically about certain reports, the markets they affect, and more. Until then, don't just jump in and start trading economic reports. Talk to a series 3 professionals at Cannon Trading Co, Inc. who can help you understand more, provide you with an honest outlook of both the risks and opportunities and who can help you devise a game plan! A Short History of Futures Trading. Before the advent history of futures trading , any producer of



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