Leverage is the greatest asset for Forex over stocks and shares. For
stocks, you are buying single shares with single share price. For forex
you are getting 100 times more with leverage 100:1Leverage is powerful and very useful in Forex Trading. With 100:1 leverage you are effective using $1 to hold $100 dollars. With 500:1 leverage will enable you to hold $500 using $1. This is nothing new to finance industry but widely use for currency trading in order to use the dollar unit value of currency.
Leverage works with capital that funded the trade. The capital has to be in currency value or cash in order to attain the leverage holding. This is similar to derivative or contract for difference for stock and shares. Using cash to leverage is much more powerful then using physical asset as it is harder to dilute and cash it back. Therefore leverage are still use by currency trade with capital at 100:1 leverage. This determined the 1 lot size of 100k contract in forex trading. (For mini lot is 0.1 lot of 100k contract).
1 lot
actually holds 100k contract worth of currency. This is equivalent to
$1k of capital used to hold $100k contract worth of currency. Since pip
is used for currency movement, 100k for 1 pip movement will work out to
$10 a pip. (10,000 pips actually gives 1 dollar but in leverage context
is $100k contract).For trading account, which give 200:1 or 500:1 leverage is different from the currency trading leverage. Please do not mix up both. The currency leverage is fixed at 100:1 for currency trading of 100k contract. Mini lot are executed at 0.1 lot or 0.01 lot. For trading account leverage which is 200:1 or 500:1, this will determine your margin required to hold in order to perform the 1 lot of 100k contract. Using 100:1, is $1k. Using 200:1 is $500 per lot. Using 500:1 is $200 per lot. This of course with higher leverage you actually can buy more lots. With a trading account leverage of 500:1, you can buy 5 lots at a total of 1k capital. Amazing use of leveraging.
No doubt leveraging enable you to buy more lots with higher leverage but the downsize is the drawdown and the pips loss still remains at per your trading lot of 100k contract. So most money management software will use mini lot at 0.1 lot or 0.01 lot to trade. ($1 and $0.1 per pips respectively). Therefore do not mix up these 2 leverage. One is the 100k contract leverage for currency buy and sell which is fixed at 100:1. The other is your trading account leverage which is provided by your Forex broker.
I end of this topic by comparing the trading in stock and shares. Without leverage you are buy 1 shares per 1 share price. Using leverage, you can buy 100 times more using the same capital. (assuming share price is same as currency price, and 1000 shares is equivalent to 1 USD per share.) Using 1k capital, you can but 1000 shares or buy 1 lot of 100k contract forex currency trade. Visit my website for more information.
source http://goarticles.com/article/Leverage-Is-Important-In-FX-Trading/6544881/
Your plain-English guide to currency trading
Forex
markets can be one of the fastest and most volatile financial markets
to trade. Money can be lost or made in a matter of seconds, and forex
markets are always moving. So how do you keep up? This hands-on,
friendly guide shows you how the forex market really works, what moves
it, and how you can actively trade in it — without losing your head!
- All the world's a stage — get an easy-to-follow introduction to the global forex market and understand its size, scope, and players
- Show me the money — take a look at the major fundamental and economic drivers that influence currency values and get the know-how to interpret data and events like a pro
- Prepare for battle — discover different types of trading styles and make a concrete strategy and game plan before you act on anything
- Pull the trigger — establish a position in the market, manage the trade while it's open, and close out on the most advantageous terms
Open the book and find:
- Currency trading conventions and tools
- Key characteristics of successful traders
- Trading pitfalls to avoid and risk management rules to live by
- How major currencies typically trade
- Why it's important to be organized and prepared
- The 411 on buying and selling simultaneously
- Tips for understanding rollovers and interest rates
Learn to:
- Grasp currency quotes
- Capitalize on the foreign exchange market
- Manage risk and reward
- Use the forces that drive currency movements
- Identify key traits of individual currency pairs
Editorial Reviews
Review
"It offers practical guidance and savvy tips.." (Hedge Fund Manager,
Thursday 23rd August) "…gives readers a step by step guide (to) getting
acquainted with the forex market and to making those killer
transactions." (Professional Pensions, Thursday 30th August 2007)
--This text refers to an out of print or unavailable edition of this title.
From the Back Cover
Features forex market guidelines and sample trading plansThe fun and easy way® to get started in currency trading
Want to capitalize on the growing forex market? This nuts-and-bolts guide gives you a step-by-step action plan for understanding and trading the forex market. It offers practical guidance and savvy tips in everything from comprehending currency quotes to using leverage, trading with fundamentals, and navigating technical analysis.
Want to capitalize on the growing forex market? This nuts-and-bolts guide gives you a step-by-step action plan for understanding and trading the forex market. It offers practical guidance and savvy tips in everything from comprehending currency quotes to using leverage, trading with fundamentals, and navigating technical analysis.
- Identify trading opportunities
- Understand what drives the market
- Choose a trading broker
- Execute a successful trade
- Minimize risk and maximize profit
- Analyze currency charts
About the Author
Brian Dolan
has worked for more than 20 years in the forex
market as a currency trader and analyst. As the Chief Currency
Strategist at FOREX.com, Brian oversees fundamental and technical
analysis and is a frequent resource for the financial media on currency
developments.
Currency Trading For Dummies Click here to read amazon customer reviews and rating
While most books on trading deal with general concepts and shy away from specifics, Forex Patterns and Probabilities provides you with real-world strategies and a rare sense of clarity about the specific mechanics of currency trading. Leading trading educator Ed Ponsi will explain the driving forces in the currency markets and will provide strategies to enter, exit, and manage successful trades. Dozens of chart examples and explanations will guide you each step of the way and allow the reader to "look over the shoulder" of a professional trader hard at work at his craft.
This book provides traders with step-by-step methodologies that are based on real market tendencies. The strategies in this book are presented clearly and in detail, so that anyone who wishes to can learn how to trade like a professional. It is written in a style that is easy to understand, so that the reader can quickly learn and use the techniques provided.
Editorial Reviews
From the Inside Flap
In recent years, traders have turned to the foreign exchange market
expecting to capture substantial profits. While the high availability
of leverage within this arena can improve your chances of making money,
ultimately the success of your endeavors depends upon how well you
understand and operate within this market. Nobody knows this better than
author Ed Ponsi. As a professional trader and leading educator of
traders, Ponsi has developed a proven approach to trading today's forex
market, and now, with Forex Patterns and Probabilities, he wants to
share it with you.
While most books on trading deal with general concepts and shy away from specifics, Forex Patterns and Probabilities provides you with real-world strategies and a rare sense of clarity about the specific mechanics of currency trading that will allow you to take advantage of both trending and range-bound markets.
Written in a straightforward and accessible style, Forex Patterns and Probabilities will help you make the most of your time in this market. You'll be introduced to a variety of elements that are essential to forex trading success and discover the best ways to enter, exit, and manage trades. Dozens of chart examples and explanations will guide you each step of the way and allow you to "look over the shoulder" of a professional trader hard at work at his craft.
Divided into four comprehensive parts, this detailed guide:
While most books on trading deal with general concepts and shy away from specifics, Forex Patterns and Probabilities provides you with real-world strategies and a rare sense of clarity about the specific mechanics of currency trading that will allow you to take advantage of both trending and range-bound markets.
Written in a straightforward and accessible style, Forex Patterns and Probabilities will help you make the most of your time in this market. You'll be introduced to a variety of elements that are essential to forex trading success and discover the best ways to enter, exit, and manage trades. Dozens of chart examples and explanations will guide you each step of the way and allow you to "look over the shoulder" of a professional trader hard at work at his craft.
Divided into four comprehensive parts, this detailed guide:
- Explains the playing field of the forex market, using powerful metaphors that relate trading scenarios to situations in everyday life
- Outlines several specific trading strategies—including the FX-Ed Trend Technique—designed for trending markets
- Delves into a variety of non-trending trading techniques—from the volatility-based Squeeze Play to the hedge fund–inspired Interest Rate Edge—which are all based on unique market tendencies
- Offers an insider's view on how to emulate the behavioral patterns of successful professional traders—and how to escape the mindset of the amateur
- And much more
From the Back Cover
Praise for Forex PATTERNS & PROBABILITIES
"Ed has the experience, he has the knowledge, and he has the ability to wrap it all up into one of the most useful and insightful books on trading that I've read. You're going to be a better trader with the help of this book."
—Rob Booker, independent currency trader, and author of Adventures of a Currency Trader
"This book is a must-read for any equities trader who is trying to learn the ins and outs of the forex markets. Ed has the rare gift among traders and educators to take complex trading theories and break them down into interesting and easy-to-digest trading concepts. I have personally had the benefit of studying live with Ed, and I found this book a great review of my live courses with him and now use it as my main forex reference book in my trading library. Ed you truly are the rock star of the FX markets. Well done!"
—Michael J. Di Gioia, cofounder, the Results-Driven Financial Network
"Forex Patterns and Probabilities is one of the best practical forex trading books I have read, and I have read a good many forex books! Ed thoroughly teaches those areas that cause most difficulty for new traders, from economic fundamentals to technical trading to the psychological aspects that are so important but ignored by so many new to trading. Peppered throughout with anecdotes from the trading and non-trading world, Ed's easygoing, homespun style gets his message across very effectively. This work is destined to become essential reading for both new and established traders."
—George Hallmey, Director, www.Clickevents.com
"Ed Ponsi is a complete teacher! Forex Patterns and Probabilities covers it all for forex and trading in general. This book will teach you the foundations, the tactics, the pitfalls, and the 'real' world of forex. As Director of Education for the Online Trading Academy, I understand the importance of education and trading knowledge. . . Forex Patterns and Probabilities, while focused on forex, allows the reader to see the nuances of trading in general—fundamental, technical, psychological, plan management, and a strong, healthy dose of risk management and discipline."
—Mike McMahon, Director of Education, Online Trading Academy
"Ed has the experience, he has the knowledge, and he has the ability to wrap it all up into one of the most useful and insightful books on trading that I've read. You're going to be a better trader with the help of this book."
—Rob Booker, independent currency trader, and author of Adventures of a Currency Trader
"This book is a must-read for any equities trader who is trying to learn the ins and outs of the forex markets. Ed has the rare gift among traders and educators to take complex trading theories and break them down into interesting and easy-to-digest trading concepts. I have personally had the benefit of studying live with Ed, and I found this book a great review of my live courses with him and now use it as my main forex reference book in my trading library. Ed you truly are the rock star of the FX markets. Well done!"
—Michael J. Di Gioia, cofounder, the Results-Driven Financial Network
"Forex Patterns and Probabilities is one of the best practical forex trading books I have read, and I have read a good many forex books! Ed thoroughly teaches those areas that cause most difficulty for new traders, from economic fundamentals to technical trading to the psychological aspects that are so important but ignored by so many new to trading. Peppered throughout with anecdotes from the trading and non-trading world, Ed's easygoing, homespun style gets his message across very effectively. This work is destined to become essential reading for both new and established traders."
—George Hallmey, Director, www.Clickevents.com
"Ed Ponsi is a complete teacher! Forex Patterns and Probabilities covers it all for forex and trading in general. This book will teach you the foundations, the tactics, the pitfalls, and the 'real' world of forex. As Director of Education for the Online Trading Academy, I understand the importance of education and trading knowledge. . . Forex Patterns and Probabilities, while focused on forex, allows the reader to see the nuances of trading in general—fundamental, technical, psychological, plan management, and a strong, healthy dose of risk management and discipline."
—Mike McMahon, Director of Education, Online Trading Academy
About the Author
Ed Ponsi is the President of FXEducator.com and is the former chief trading instructor for Forex Capital Markets. He is an experienced professional trader and money manager who has advised hedge funds, institutional traders, and individuals of all levels of skill and experience. Ponsi is featured on the FXEducator.com DVD series, Forex Trading with Ed Ponsi. He is a dynamic public speaker who has appeared on numerous television and radio programs, and is a frequent guest lecturer at trading conventions and seminars around the world.Forex Patterns and Probabilities: Trading Strategies for Trending and Range-Bound Markets (Wiley Trading) Click here to read amazon customer reviews and rating
A straightforward guide to trading today's dynamic Forex market
Written
by Wayne McDonell, the Chief Currency Coach at FX Bootcamp, this book
shows readers how to successfully trade the Forex market on their own.
FX Bootcamp's Guide to Strategic and Tactical Forex Trading skillfully
explains how to combine popular technical indicators to
formulate a comprehensive market strategy. Readers will then learn how
to focus on using this information to create a tactical trading
plan--one that will help them pull the trigger to get in and out of a
trade. Along the way, McDonell takes the time to discuss the various
challenges a Forex trader faces, such as greed, fear, loss, and
isolation. As a Forex trader and educator of traders, Wayne McDonell
knows what it takes to make it in the competitive world of Forex. And
with FX Bootcamp's Guide to Strategic and Tactical Forex Trading he shows readers how.
Editorial Reviews
From the Inside Flap
In The Art of War, renowned military strategist Sun Tzu states,
"The general who wins the battle makes many calculations in his temple
before the battle is fought. The general who loses makes but few
calculations beforehand." While this observation comes from one of the
oldest military treatises in the world, it's an important piece of
advice for traders looking to win in today's dynamic Forex market.As
the Chief Currency Coach at FX Bootcamp, author Wayne McDonell helps
clients around the world excel in the Forex field by training them to
develop and execute a trading plan with military precision. Why does
this approach work so well? The answer is simple???trading Forex is
similar to war in that they are both zero-sum games, and in Forex
trading, this means that one trader's gain can only come from another's
equivalent loss. So, outthinking your opponent is essential to victory
in both of these arenas.
Divided into five comprehensive parts, The FX Bootcamp's Guide to Strategic and Tactical Forex Trading puts this competitive market in perspective and shows you how to achieve success within it. This reliable resource opens with a detailed look at the technical indicators you'll need to use in your trading endeavors. From here, you'll discover how to combine these popular indicators to formulate a comprehensive strategy and learn how to use this information to create a tactical trading plan???one that will help you pull the trigger to get in and out of trades.
Besides introducing you to a proven Forex trading methodology and showing you how to improve performance by running your trading operations like a business, this book also addresses some the most important psychological aspects of trading???including greed, fear, loss, and isolation???and discusses what you must do to overcome such obstacles.
In Forex trading, patience and discipline are just as important as technical and fundamental analysis. With The FX Bootcamp's Guide to Strategic and Tactical Forex Trading, you'll discover how developing positive trading habits and the right trading skills will put you in a better position to profit over the long haul.
Divided into five comprehensive parts, The FX Bootcamp's Guide to Strategic and Tactical Forex Trading puts this competitive market in perspective and shows you how to achieve success within it. This reliable resource opens with a detailed look at the technical indicators you'll need to use in your trading endeavors. From here, you'll discover how to combine these popular indicators to formulate a comprehensive strategy and learn how to use this information to create a tactical trading plan???one that will help you pull the trigger to get in and out of trades.
Besides introducing you to a proven Forex trading methodology and showing you how to improve performance by running your trading operations like a business, this book also addresses some the most important psychological aspects of trading???including greed, fear, loss, and isolation???and discusses what you must do to overcome such obstacles.
In Forex trading, patience and discipline are just as important as technical and fundamental analysis. With The FX Bootcamp's Guide to Strategic and Tactical Forex Trading, you'll discover how developing positive trading habits and the right trading skills will put you in a better position to profit over the long haul.
From the Back Cover
Praise for The FX Bootcamp's GUIDE TO Strategic and Tactical Forex Trading"Wayne
McDonell is the most popular Forex speaker on our Web site. His live
training and educational events draw large crowds of traders because he
can explain complex Forex trading concepts in a common language that
anyone can understand. This book does the same. I highly recommend it."
—Francesc Riverola, CEO of FXstreet.com
"If
you're looking for specific strategies and methods for making money
with currency trading, you need to start reading this book today. Wayne
knows from experience what it takes to succeed in the Forex markets. He
provides step-by-step instructions and explains in common language what
to look for in charts and in the news to find profitable trades
immediately. Don't make a single Forex trade until you've read this
book!"
—Tim Bourquin, founder of The Forex Trading Expo
With The FX Bootcamp's Guide to Strategic and Tactical Forex Trading,
McDonell shares his invaluable experience as a Forex trader and
commodities trading advisor with you. Filled with in-depth insights and
practical advice, this straightforward guide will teach you how to think
for yourself and trade successfully—relying on your own technical,
fundamental, and even psychological analysis. First, you'll become
familiar with the indicators—from moving averages to price support and
resistance—that form the foundation of the trading methodologies
discussed in the book. Then, you'll discover how to put together a
trading plan, and trade that plan for maximum profits. Along the way,
McDonell also takes the time to discuss the various challenges you may
face while trading Forex and explains how treating your trading
operations like a business can improve overall performance.
If you
want to be a successful Forex trader, you must have a firm
understanding of how the global market works and how to trade it. With
The FX Bootcamp's Guide to Strategic and Tactical Forex Trading, you'll
quickly learn how to gather intelligence, formulate a strategy, and
confidently pull the trading trigger.
About the Author
WAYNE McDONELL is the Chief Currency Coach of FX Bootcamp (www.fxbootcamp.com), a live Forex training organization. He is a professional Forex trader, a member of the National Futures Association, and a registered Commodities Trading Advisor. Respected in the Forex industry as a successful trainer, McDonell is a regular speaker at major investing conferences and expos in Asia, Europe, and America. His videos are syndicated around the world on outlets including Forex Television, FXstreet.com, MoneyShow.com, and MSN. His live trading Webinars have attracted up to 1,000 traders each. McDonell has written "how-to" articles for investing magazines, such as Your Trading Edge and the FOREX Journal magazine. He has also received notoriety in the National Post, TechWeek, Interactive Week, and Inc. magazine to name a few.
The FX Bootcamp Guide to Strategic and Tactical Forex Trading (Wiley Trading) Click here to read amazon customer reviews and rating
No comments:
Post a Comment