Forex Tips and Advice

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Lately Binary Options trading platforms have become more and more popular. New ones are being added all the time: anyoption.com, bulloption.com, spotoption.com, binaryoption.com, etc.  These options are also known as all-or-nothing options, digital options, or Fixed Return Options (FROs). You can purchase them on stocks, commodities, indexes, foreign exchange, and other derivatives.

One of the big advantages of binary options trading is you can trade from home whenever markets are open and set up an account with a credit card. Incidentally, you can also do this without a broker.

Perhaps you should ask these questions:

1) Can you paper trade binary options for several weeks before spending real money?

2) Can you invest a specific amount of money (which should be discretionary) and be okay with losing?

3) Do you have the discipline to stick with a system until it pays off and not become distracted by the next ‘shiny object’?

If you can methodically enter the binary options market, with money you can afford to lose, and have the discipline to stick with one approach (or system) until it pans out — you may be a perfect fit for binary options trading.

You must have the time and want to learn how to trade binary options. You must also be able to remain calm and carry on after you have had a losing day, week, or month. Some investors feel that when the stock market drops is the best time to put money back in.

But remember the cardinal rule for investments of any kind is: to invest only as much money as you can comfortably lose.

Always remember that trading mistakes will occur. You will lose money. It is the nature of trading. You must be able to learn from each mistake. In fact, you must view your mistake as a lesson. Successful traders develop strategies and track those strategies to determine which ones will fair best over time. For instance purchasing Call options in a bull market and Put options in a bear market would be considered a sound strategy. (Remember, any investment carries risks. Seek the proper advice before investing money).

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Historically the stock market has been a consistent predictor of the election results. Since 1948, the
Standard & Poor’s 500-stock index has proved to be a reliable indicator of the president’s reelection.
To complicate this even further there is what is called ‘election stock market.’ Election stock markets
(also referred to as election prediction markets) are financial markets in which the ultimate values of the contracts being traded are based on the outcome of elections. Participants invest their own funds, buy and sell listed contracts, earn profits and bear the risk of losing money. Election stock markets
function like other futures exchanges, such as commodity exchanges for the future delivery of grain,
livestock, or precious metals.

But the bottom line is it won’t matter which party is back in office because you are bidding
incrementally. In binary options, a percentage of profit will not be effected by any change in the
trends of the market. These trends become important when you are looking at long term investment
opportunities. But binary options let the average person trade without the need to ‘study the stock
market’ in the traditional sense.

A binary option, also known as a digital option or an all-or-nothing, is a trading instrument with a
fixed return that is determined at the outset of the trade. A trader will
receive a predetermined payout if the binary option expires in-the money.

A Binary Option asks a simple yes or no question. An example would be will gold go up or down in the next 15 minutes? If you think yes, you call the Binary Option. If you think no, you put.

The great advantage of binary options is that the actual price of gold does not matter. You are simply
bidding on the direction of the stock. The stocks will continue to fluctuate whoever is in office.

Binary Options offers several opportunities for trading which can be split into four categories:

Intraday – at times within the current trading day
Daily – at the end of the current trading day
Weekly – at the end of the current trading week
Event-based – at a specified future time and date

In addition, binary options trading offers you the ability to earn 70%, or more, within your first 15
minutes of trading. Obviously there are risks but if you are looking to exponentially increase your
investment binary options trading is certainly worth considering.

The added benefit of being an active binary trader is that you can spend less time watching politics
and more time enjoying life.(Remember, any investment carries risks. Seek the proper advice before investing money).

The goal is straight forward. You want to add more money to your portfolio (or bank account) without too much risk.

Traditional stock market traders have to focus on the price movement of stocks. They understand that stocks have regular cycles where the price falls and rises between two points. Their goal is to purchase the stock near the cycle low and sell when its price is near the cycle high. Then to repeat that cycle over and over and use the gain as income.

You will need to anticipate the expected direction of the price movement of the underlying asset. Unlike traditional options, knowing the direction of the price movement, as well as magnitude of the movement, is not required.

There is a reason that binary options trading has become so popular in recent months. One reason is the current economic downturn. The other reason is because anyone can do it! You don’t need to spend hours each day studying stock trends and corporate acquisitions. For as little as $5 dollars you can place a trade.

But don’t let the low price of entry fool you. Binary options trading can return some of the highest payout rates. You could get as much as 85% on options that expire in the money. In some cases, with the right training it is possible to achieve a 700% return on your investment.

You can visit a binary options trading platform and process the transaction yourself in a matter of minutes. Not needing to involve a broker makes this simpler and cheaper! But remember you can either earn a high return on the binary option if it ends up “in the money”, or you lose the entire investment. This is why it is referred to as ‘all or nothing’ trading.

Binary options trading can provide you with an easy way to trade forex, stocks, indexes and commodities. Before investing in a binary options, make sure you understand the underlying asset, are familiar with the relevant financial markets and where the asset is traded.  Unlike a traditional option, the payout amount is not proportional to the amount by which the option ends up in-the-money. If your trade settles in-the-money by even one tick, you receive the entire fixed payoff amount. (Remember, any investment carries risks. Seek the proper advice before investing money).

Financial intelligence is the gathering of information about the financial affairs of entities of interest, to understand their nature and capabilities, and predict their intentions. It is easy to understand how such an approach should be used in relations to binary options trading.

One of the big advantages of binary options trading is you can trade from home whenever markets are open and set up an account with a credit card. Incidentally, you can also do this without a broker.

Gathering Information
You can search for the most popular online trading options by entering the words “binary trading platforms” into your favorite search engine. What will return is a list of places to trade online. Your next step is not so easy. Now you must select the best platforms based upon your trading preferences.

Many believe that the best way to trade in binary options is to go through an online broker. This is a person who writes contracts for various binary options. You have the choice of choosing several assets such as currency pairs, commodities and stocks. These contracts come with a purchase price, an expiration time, and the conditions for profit. These conditions are called; a strike price or a barrier price. You can find online brokers that deal in multiple contracts. This will allow you to trade both stock binary options and forex binary options with the same broker.

Like all new industries binary options trading is loaded with jargon. These are the terms that traders use in relations to making trades. The basics can be picked up in a few days. A good way to settle into the world of binary options trading is to pick up a book from the library (or Amazon.com). Thanks to the power of the internet the ability to learn binary options trading is well within your reach.

You can get intelligence, and trade binary options, right from the comfort of your home. Thanks to the accessibility of the ‘money never sleeps’ Forex market you can trade every day of the week. It looks like this kind of trading is the future of the stock market. The sooner you get smart about it the sooner you can profit. (Remember, any investment carries risks. Seek the proper advice before investing money).

There are many who consider online sites that offer binary options trading as gaming platforms. Their view is that because of their negative cumulative payout (they have an edge over the investor) and because they require little or no knowledge of the stock market to trade in it is gambling.

Most platforms have their investors sign a “Terms and Conditions” document before trading that warns the investors about the risk involved in dealing with binary options. However, in light of the high risk involved, it would be expected that the risk of trading in binary options will appear in this document in bold letters as well as on the platform itself. In addition, advertisements for binary option trading platforms tend to highlight only the high profit but not the high risk involved.

Despite all of the excitement surrounding binary options trading it does have perceived disadvantages. The following are some factors to consider before investing in binary options.

They are the most expensive financial instruments in the market for retail investors. There are cases where the bid versus ask price spread can be as high as 40% for some underlying assets. This means that you will have to ‘be in the money’ most of the time to offset this spread.

Some investors feel that it is too short term. But to traders this is one of the powerful attractions of binary options trading. Some critics site the precarious movements in the market in the short term makes this activity too hard to predict.

Binary options markets are much more volatile due to additional political, economic and currency considerations, so there is a chance for large profit through options trading, but at the same time  there is risk for large losses.

But many new investors will continue to be drawn to binary options trading because of its simplicity. It would be wised for all new traders to spend a significant time educating themselves about the market in general and the risks of binary options trading.

To be sure options trading is a risky venture and binary option trading is no less risky. (Remember, any investment carries risks. Seek the proper advice before investing  money).

Imagine waking up, doing an hour, or two, of binary options trading and then having your entire day free! Is this a fantasy or can it become a reality.

Binary options trading gives you the ability to earn 75% or more with trades that can last only minutes. Obviously, it doesn’t take too many successful trades to realize a return of a couple of hundred dollars per day (or more).

A binary option is a type of option where the payoff is either some fixed amount of some asset or nothing at all. The two main types of binary options are the cash-or-nothing binary option and the asset-or-nothing binary option. The cash-or-nothing binary option pays some fixed amount of cash if the option expires in-the-money while the asset-or-nothing pays the value of the underlying security. Thus, the options are binary in nature because there are only two possible outcomes. They are also called all-or-nothing options, digital options (more common in forex/interest rate markets), and Fixed Return Options (FROs) (on the American Stock Exchange). Binary options are usually European-style options.

One of the biggest advantages of binary options trading is the ability to Control your risk. You will always know how much you risk losing from an option. This also allows you to establish a level of risk that is acceptable before putting down money.

As a trader you simply need to bid on the direction of an asset’s movement. In other words will the price of a security go up or down? Unlike traditional investing you are not concerned about the actual cost of the stock or commodity. You are merely trading on the direction it will move in a specific period of time.

Binary options trading gives regular people the opportunity to experience exciting returns on their investment, with a fixed level of risk. Your payouts can occur within minutes. This ability to get quick returns on your investment is what allows you to earn so much money in a short period of time. Most trading platforms have ample information, and some training, to get you up and going quickly. (Remember, any investment carries risks. Seek the proper advice before investing money).

A binary option pays a fixed amount or nothing. These type of options, are also referred to as all-or-nothing options, since it is a type of option where the payoff is all or nothing. The return is therefore fixed and it comes to no surprise that such options are also known as: FRO’s-Fixed Return Options, Digital Options is another common term.

Trading on binary option platforms can be done with little to no knowledge of the stock market. An investor will only need to choose whether the price of some asset (underlying asset) will be higher (in the case of a call option) or lower (in the case of a put option) at the option’s expiration. Binary options are offered for a time period of 60 minutes or less.

The main difference between a regular vanilla option (traditional stock trading) and a digital option is largely based on how much the contract can potentially lose or gain. Digital options (binary options) are often referred to as FRO fixed rate options since the contract will have predetermined percentage of fixed rate of return.

Traditional vanilla options are much riskier since the potential gains can have no ‘ceiling’.  Regular options options have a payoff that is based on the price of the underlying asset. This can vary dramatically in return on your investment. But with a binary option you only need to consider the direction of the asset price (up or down) in a specific measurement of time (minutes, days, weeks, etc.). The important difference here is that you don’t have to take magnitude into consideration.

With binary options trading the payoff is fixed and pre-determined so therefore the potential risk and reward is known from the outset. Whereas with traditional options there are no outlined parameters so the possible loss or gain is not known (and can be dramatic).

The option will settle the contract regardless of how much the asset price is ‘in the money’ at expiration. Therefore even if the contract is only successful by one tick the contract still pays out at the fixed level.

Binary options allow you to focus on the most stimulating aspects of trading, the challenge and fun of forecasting market direction, rather than on the acquiring more risky ability to estimate the market trends. (Remember, any investment carries risks. Seek the proper advice before investing money).

Test-driving an online forex demo account is the preferred method of potential traders to minimize risk.  A demo account readily allows a cautious person to go online and observe exactly how a paid account would work. Think of it like playing the popular wargame Command and Conquer: you send in the troops (gobs of fictitious money), make a few tactical maneuvers (invest in speculative exchanges) and conquer territories (reap profit).

It can be addictive. Without investing and risking any real money, the investor plays with ghost money in an account and initiates buys and sells the same way it would be done in reality. The software used for these demo accounts parallels what the real trading platform does. Real figures are pulled from exchanges, trend charts are generated, and profits are calculated from buy/sell maneuvers., A trader sees at the end of the day the net loss or gain should real money had been used in the transactions.

Even a novice can trade. Let’s assume an investor pretends to open a margin account with ten thousand dollars. He watches trends in the currency markets and believes that the dollar will go up in value against the British pound. The demo software empowers him to purchase at a ten to one margin; he then authorizes a buy of one hundred thousand dollars of dollars and sells one hundred thousand dollars of Pounds. There will be a spread, or difference, which accumulates to the gains, or “profit”.

Why invest time with demo accounts? Simple. It’s safe to learn the currency trade without having real money to lose.

Think of it like crashing your car in driving simulators or doing crazy rolls in an F-14 – on a Playstation. You stretch your creativity, test your reflexes and build your skills all behind the safety of a highly immersive computer screen. Your mind gets a full reflex workout without incurring damage to property and incurring lawsuits!

The same holds true for forex trading. Spending time with a demo account allows the potential trader to gain skills and learn the ins and outs of the game and the market place. A person is then able to see if they truly have the instincts necessary for the market and have sufficient knowledge to “play with the big boys.”

Almost all online companies involved in forex trading offer demo accounts, sometimes free and sometimes for a small fee. Even if a fee is paid, it is usually worth it because a forex trader can flex his skills and knowledge for vast profits after spending some time practicing with the forex demo software.

Setting up a demo account requires nothing more than a valid email address and your name. Upon activation, you will have access to the usual charts, graphs, ordering system and even prediction tools. The latter are quite interesting, particularly predictive implements based on Fibonnacci… but take care that such tools can never predict swings in the market. Too many social, political and environmental variables cause erratic fluctuations and no software can ever take those into consideration.

Richard Peyton, my good friend,  benefited from a forex demo account. After months of study of the forex market, Jackson was convinced that he could make a go of it as a day trader in the forex market. His girlfriend, however wasn’t convinced and feared the inherent risk. She considered forex nothing more than sophisticated gambling.

Richard went to a brokerage company online that he felt held good reputation. He set up a demo forex account and began to make trades as though he were using real money. After several days, on paper, Richard garnered consistent profit. He continued learning and his confidence increased that he grew anxious to open a real forex account and invest a percentage of disposable income. His girlfriend also saw how on paper he had made a nice profit and relaxed, withdrew her objections.

Today Richard and his family do very well financially through forex trading, With a demo account, he leapt into a world of vast financial potential and built a fortune. He retired his day job.

You might be looking for a charting platform, or a trading platform. You could also be looking for an automated trading program, or a signal service. You are most probably looking for some form of assistance to help with your trading. This is really the holy grail for a lot of traders who do not have the time or the inclination to sit in front of a computer 16 hours a day. I have done that for a couple of years and done my ‘chart-time’, now its time to let the computer take care of it for me.

The best charting and trading platform is MT4, this allows you to also create custom indicators and expert advisors allowing you to auto-trade your account. Some people have created truly excellent Expert Advisors, and its like having your own forex trading guru sat at your computer 24/6, never getting tired, grumpy, hungry or anything else for that matter.

Provide a stable internet connection and power, and the EA will handle everything else for you. The problem is selecting the correct one, as there are so many out there.

Some criteria you should apply, when judging an EA are;

– Whether they will give you a free trial
– Their FORWARD tested history as well as their backtested history
– What modelling quality their backtests are run on (90% is the best available)
– Whether they offer a money back guarantee should the EA fail to perform for you

Markets change, and so do the performances of EA’s. The goal is really to find one that can perform consistently over different market conditions. The best we have seen yet in the market is the PointBreak EA. This was used by a private trading group by over a year before being recently released to the public.

PointBreak Expert Advisor (Very Aggressive Trading) has resulted 49.76% since October 2007.

This is the most aggressive setting available, the more conservative settings give smaller returns but correspondingly smaller drawdowns.

As you read forex charts, remember that the two fundamental approaches for online forex trading: fundamental analysis and technical analysis.

Fundamental analysis doesn’t rely on forex charts. It scrutinizes political and economic indicators to determine trades. Charts here are deployed as used as a secondary reference.

Technical analysis on the other hand, attempts to predict price swings by analysis of historical price activity. Those who use technical analysis study the relationship between price and time.

The most actively traded pair of currencies is the Euro and the US dollar, so we will use them in our example. The dollar is on the right hand side of the chart and the Euro is on the left hand side. The currencies are expressed in relationship to each other in pairing. Forex charges will always display how much of the currency on the right hand side is necessary to buy a unit of the currency on the left side. Looking at the typical EU-USD, chart you will notice the last price displayed per given date. This number is always emphasized. The time is tabbed horizontally across the bottom of a chart and the price scale is displayed vertically along the right hand edge of the chart. The time and the price are set in all caps to help the trader remember that technical analysis rests upon the relationship between time and price.

The trader observes the price and time movement on a chart. These include bars, lines, point and figure, and Japanese candle sticks– the most favored method.  With the candlestick method there is a large, red section that is the body of the candlestick. Lines protrude from the top and bottom and they are the upper and lower wicks. When you look at all the candles on a chart it is apparent that bodies come by difference sizes. Sometimes no body exists at all.

The same is true with wicks. Candle wicks come by many difference sizes; there may be no wick at all. The length of the body and the length of the wick are determined by the price range for the candle. Longer candles will have had more price movement during the time that they were open. The top of a candle wick is the highest price for that currency while the wick’s bottom is the lowest price. A currency is bullish when the close of the candle is higher than the open. In simple terms this means that there were more buyers than there were sales during the opening time period. Sometimes the candles will not have wicks. The price opened and it dropped off until it closed.

Forex charts don’t offer bullet proof trading hints, but they can help a trader. Past trends do have their place in forex trading as most traders will admit, and using the charts to track historical trends can assist a trader in making a snap decision.

The online investor typically joins a service that provides realtime charts that updates on currency activity. Charts can be checked on a minute to minute basis. For those who primarily do their trading based on historical accuracy this can ease the burden of prediction.

Most forex traders however use a combination of fundamental and technical analysis. They may chart historical trends, but they will also pay close attention to political, cultural and economic indicators within a region.  They might use charts and other techniques to check correlation between political climate and currency fluctuations. But even the most sophisticated technical analysis software or tool has its limitations. A trader must be prepared to take risks… and invest money that is not needed for the immediate future.