Forex Training - Introduction to Forex Trading
Traders 4 Traders is a Sydney based firm headed by Brad Gilbert who was a former bank traders with 20+ banking experience from CBA to Citibank.
The company has an office in Sydney (71 Macquarie Street) where on site courses are held. There is also an online live trading desk where you can watch real traders analysing and trading the market live.
There is also an online training program where Australian forex traders help develop new traders skills, knowledge to start trading with a sufficient level of acumen.
Overall, T4T are the best forex training providers in Australia but they also have a premium price tag on both their online training and off-site courses in Sydney. If you plan to make serious long term forex trading then this provider is for you.
Knowledge to Action is one of Australia’s largest forex training provider which not only operates in Australia but also other worldwide locations having taught 10,000+ forex traders to date.
Their two day seminars focus on the basics of forex trading and provide future traders with any one of three strategies.
These courses are cheaper than T4T due to in part that they have relationships to brokers which they make you trade through. They are also run by trainers who have less corporate experience than the T4T team but for those just looking to modestly trial forex trading this could be the provider for you.
FX Charts Daily provides regular outlooks on currency pairs (such as USD to EUR) focusing on helping traders digest the day’s movements and analyse charts.
While this is an American website so most updates occur at night in Australia, their wraps and outlooks can be very helpful for Australian traders.
Forex Signals has a unique signal service and free trading room allowing traders to interact with experienced traders. There is also the option to copy the traders into an account using their copy software.
The traders provide a 2 week trial period to copy their trading allow automation and to make adjustments for key events that impact on currency values.
About the Foreign Exchange Market
Currencies are traded at the foreign exchange market. Whether you realise it or not, currency is important to people the world over. This is because you need to exchange currency so as to conduct foreign business and trade.
For instance, if you live in the U.K. and wish to buy wine from Italy, either you or the company you buy your wine from has to pay the Italians for the wine in Euros. Therefore, the U.K. importer would have to exchange the equivalent value of Sterling Pounds into Euros. This is also the case when you travel. For instance, an Australian tourist in Kenya can’t pay in dollars to see the wildebeest migration in the Tsavo because it is not the commonly accepted currency. Instead, the tourist has to exchange or convert his dollars for the local currency, in this case the Kenyan shilling, at the current exchange rate.
This market is the most liquid and largest financial market in the world because of this need to exchange currencies. It dwarfs most of the other markets (including the stock market) in terms of size. The daily average traded value, for example, is around US $2 trillion.
About the International Market
One unique aspect about this international market is that foreign exchange has no central marketplace. Instead, currency trading is performed electronically over the counter.
The market is also open 24 hours a day, 5 and a 1/2 days a week. These currencies are traded in the major financial centers of the world – including Sydney, Paris, Singapore, Hong Kong, Frankfurt, Zurich, Tokyo, New York and London – across almost every time zone. Therefore, when the trading day in France ends, the forex market begins afresh in Hong Kong and Tokyo. As a result, this market is extremely active at all times of the day, with the price quotes changing every second.
Who Trades Currencies?
The daily turnover in the world’s currencies mostly comes from two main sources:
a) Foreign Traders
Foreign trade accounts for about 5 percent of the turnover. Generally, companies sell and buy products in foreign countries. Additionally, they convert the profits from the foreign trade into domestic currency.
b) Speculation for Profit
Speculation accounts for about 95% of the turnover. Most traders in the foreign exchange market focus on the largest, most liquid currency pairs. Otherwise referred to as The Majors’, these include the Swiss Franc, the British Pound, the Euro, the Japanese Yen, the Australian Dollar, the Canadian Dollar and the US Dollar. Actually, more than 85 percent of daily forex trading affects these major currency pairs.
Why Trade Forex?
The main reason why people choose not to invest in online trading is because it’s difficult for them to understand online trading while forex trading is very easy to understand. Forex trading is ideal for individuals who first have forex training although having a history in trading other financial products (eg shares) is not necessary. It’s perfect for people who work because it’s accessible from anywhere. Trading is open 24 hours a day which along with it’s liquidity is one of the reasons why people are choosing Forex trading. Anyone can join and anyone can start with just a small amount of money plus it requires very little time as transactions are done online.
Forex is unlike other financial markets in that investors can respond quickly to any currency fluctuation, whether they occur during the day or at night. After all, forex trading refers to trading currencies from different countries against each other. The other benefits of trading in the foreign exchange market include:
a) Market Volatility and Liquidity
For starters, the foreign exchange market is the biggest and most liquid among all financial market. Daily activity sometimes exceeds US $ 4 trillion a day, with more than US 1.5 trillion of this coming from spot trading. The volatility within this market enables traders benefit from fluctuations in exchange rates for speculative purposes. However, as a trader, you need to keep in mind that the greater the volatility, the greater the risk potential.
On the other hand, liquidity is a term used to refer to the number of sellers and buyers willing and able to engage in a trade at any given point in time. As a matter of fact, assets with greater volatility are often traded frequently, thus translating into higher volumes of trade.
b) Low Cost of Trading
Another important term you should know is the spread. It refers to the cost (or price) to trade with most forex traders. The spread indicates the difference in amount between the asking price and the bid. Spreads in this market tend to be tighter (or much less) than those applied to such securities as stocks. As a result, over – the – counter forex trading is among the most cost effective and profitable method of investment trading.
c) Advantages of Margin – Based Trading
Most over the counter forex brokers tend to offer margin-based trading accounts. These accounts are different from credit based accounts in the sense that when you trade in margin accounts, you first need to open a financial account with a broker before funding (depositing money in) the account.
After funding the account, you can trade as you wish. However, you need to ensure that there is sufficient margin left in your trading account. Using the leverage, you will be able to trade larger positions (than would otherwise have been possible) based on the actual balance in your account. Thus leverage provides greater potential for higher returns. The only downside to this is that you also face greater risk and you can suffer higher losses quickly. The best forex broker leverage available is approximately 500:1 by the most popular brokers.
d) Potential Profit Irrespective of Market Direction
A short- sale (or simply a short) refers to the selling of any given pair of currencies before you buy it. You can easily enter into short sales in the foreign exchange market. In such a case, you would need to buy that currency back for a lesser amount than you got when you first sold it. The difference will represent your loss or profit.
This ability to short sell means that you can make a profit, irrespective of the direction in which the market moves. When rates increase, you can profit if you ‘go long’ (buy) on a currency pair before selling it for more than you paid. On the other hand, when rates fall, you can make a quick profit if you ‘go short’ (sell) a currency pair, then buy it for a lesser amount than you earned when you shorted that particular currency pair early. Forex training is critical to ensure you have the strategies deployed maximise success. Overall, forex trading can earn you a profit irrespective of the market direction.
Finding The Right Forex Broker
Our forex broker comparison features throughout this site make it easy for currency traders to find the right broker for them. Brokers generally either focus on ease of experience and education for beginner traders, reputation and trust for intermediate traders or low spreads mixed with high leverage for experiences traders. The key is to make sure the broker is Australian regulated to provide extra piece of mind compared to overseas regulated forex brokers.
The foreign exchange market (Forex), also known as FX or the currency market, is a decentralised world market for the currency trading. The primary investors in forex markets are primarily large international banks, although there are a considerable number of individual investors involved as well. The Forex market is a primary determiner of the relative values of different currencies. This will serve as your guide to Forex trading, how to get started, the hows and whys, tracking and manipulation of the market, and how to be a successful trader.
Getting Started in Forex Trading
Most of the people who get involved in Forex trading have little knowledge of how it works, and often even what it is when they get started. As a result, most first efforts of Forex traders result in losses. From these first efforts they either quit or they take a step back, do a little more learning and research, and/or practice with a demo account, then return to the market for another try. Another popular option is a forex trading course either online or on-site in Australia. The good news in all of this is that after these traders give a live account another try, they often either break even or actually make money.
Types of Forex Traders
There are 3 basic types of Forex traders. These are the Short-Term trader, the Medium-Term trader, and the Long-Term trader. The defining characteristics and strategies are explained in the below sections:
Short-Term Forex trader
They are a lot like day traders in the stock market. They buy with the intent to sell in the short term, after they recognise a small change in the price movement.
Pluses: This strategy works in theory but more often than not, fails in practice. Quick profits can be made with the ability to spot a price trend when it happens.
Negatives: Large investments are needed to leverage a decent profit. More often than not, however, the risk isn’t worth the losses that often occur.
Medium-Term Forex traders
Medium-term forex traders plan to hold onto positions for a longer period of time, enough to take advantage of better technical situations.
Pluses: Medium-Term investors require the least amount of capital of the three types, since the leverage given by more investment is only done to boost profits.
Negatives: There are fewer of these opportunities to take advantage of so they are harder to find.
Long-Term Forex traders
Long-term forex traders hold their investments for the long haul, either months or years. These investors base their decisions on long-term factors.
Pluses: Long-term profits are more reasonable since this strategy is based on more reliable fundamental factors.
Negatives: Long-term profits are made with larger capital investments since they can cover volatile movements of the market.
Tracking Your Forex Trading
Any businessman knows that the best way to track what he or she thinks the future will hold for their enterprise by studying what has happened in the past and comparing it with how they think the market will be influenced by activity today. A similar method is used by Forex traders, who use currency reports to calculate their average profits. There are many types of these platforms available, but a common, popular version is called MetaTrader, available through most Australian forex brokers.
When a Forex trader wants to review their trading, they go to the report station of their account to run a report which is based on parameters that they can input. This report can be based on trades since the beginning of their history, or other given periods of time. It is important to understand that this is not an automatic or mechanical trading system. Rather, it is a recall of past activity that a trader can base a decision upon. In their most basic terms, where all or most of the technical signals of a currency point in the same direction, there is a high probability that a trading opportunity will result in a profit. A forex trading course will go into this with more detail.
Analysing a Trade
From the report you have generated, you will set up a trading program. This program will use as many technical indicators as you wish to employ, but the more you select the more reliable your system will be but fewer trading opportunities will be revealed. If, on the other hand, you choose fewer indicators, your program will be less reliable but there will be more opportunities given.
Your report will show a tracking of trading on a minute by minute basis. This is called a candlestick chart since the bars take the image of a candlestick.
By studying the candlestick charts of trading, you will be able to get a good idea of the bullish or bearish nature of the market over the given trading period. It is a good idea to place exit points (both stop losses and take profits) even before you place an order for a trade. You should make these points at key levels and you should modify them only if you decide to change the parameters of your trade.
Manipulation of Forex
A problem that has reared its head in recent financial news is the occurrence of Forex manipulation by major banks, a problem that can have serious implications for investors. Manipulation can occur in many ways, but one of the primary methods that was recently employed was when traders who wanted to make a quick profit by buying up currencies after they knew what the starting price or what is called a “Fix” was set and before anyone else knew about the price at which the market would open.
Manipulation can also happen when word is leaked to certain investors about the upcoming trades being planned by other large companies.
The Best Time of Day to Trade
Unlike the stock market which trades only during business hours, the Forex market is active on the four different parts of the world in their respective time zones. This means that the Forex market operates all day and all night, which can mean long days and long nights for active traders. The question that comes up often as a result is what is the best time of day to trade? Unfortunately, that’s a hard one to answer, since good buying situations can happen following market overlaps and news releases. As a result, those who watch the markets more often and for longer periods of time expose themselves to more trading opportunities.
Consider What Forex Broker You Trade With
A forex broker will impact trading style based on a few factors. The first is leverage available with many forex brokers offering 500:1 while others will be as low as 50:1 (OANDA). This may impact strategies and the capital requirements. A second factor is spreads which vary dramatically between forex brokers. Fees (spreads) do add up so keeping these low are critical and for some fx brokers you need to weight up spreads vs commissions between accounts. A third forex broker factor is the trading platform and the allowance of the broker to use third party software or EAs to implement automated strategies.
The Bottom Line
The most important thing to remember with any trading strategy is for investors to strike a balance between market overlaps and news releases. As a result, traders can realise greater profits when markets are more volatile, all the while keeping an eye on the latest market reports. This allows all levels of traders the opportunity to set a trading schedule that will give them peace of mind, while not having to watch the markets constantly. An expert forex trading course can provide key details into this strategy to help you achieve your profit goals from currency exchange products.