Showing posts with label forex 6 majors. Show all posts
Showing posts with label forex 6 majors. Show all posts
need a opinion on a forex strategy?
Posted by Ryanita
on
Tuesday, June 10, 2014
, under
forex 6 majors
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greenberre
i need an opinion on a forex strategy i use. here is what i use my time frame is the daily charts and i only trade the majors i use the following indicators Heiken-Ashi, and a 5 day on the open & 6 day on the close EMA plus a MACD and the ADX indicators on the bottom and i trade the crossovers is there anyone here that trades the forex with a similar setup what im looking for is just some opinions from some more experienced forex traders ive been back testing this for a couple of months and seems to be profitable but maybe i might just be missing something a more knowledgeable forex trader might be able to help me tweak it some more i realize there is no holy grail but any opinions would be greatly appreciated thank you for your time ive traded stocks for 30 years but the forex is a whole new ballgame
Answer
Opening and closing prices in forex do not have the same weight they do in stock trading, since forex is a continous 24 hour market. If you are using a 5 and 6 day EMA, and trading the crossovers, you might get many false signals. Test EMA 5 over EMA 13 on the close prices.
I have never used the Heiken-Ashi, but the MACD is pretty accurate on the daily chart when it gives bullish or bearish divergences and that is confirmed by a crossover or another signal elsewhere.
Back testing has the drawback of allowing the trader to 'curve-fit' the chart, better to test how the indicators perform in a demo account.
ADX is an okay indicator, but proper use of EMA with MACD will probably give better trade calls over the long term than the ADX alone.
Do not neglect the fundamental picture and know when to stay out of the market (major data, announcements), practise, practise, practise.
And good luck.
Opening and closing prices in forex do not have the same weight they do in stock trading, since forex is a continous 24 hour market. If you are using a 5 and 6 day EMA, and trading the crossovers, you might get many false signals. Test EMA 5 over EMA 13 on the close prices.
I have never used the Heiken-Ashi, but the MACD is pretty accurate on the daily chart when it gives bullish or bearish divergences and that is confirmed by a crossover or another signal elsewhere.
Back testing has the drawback of allowing the trader to 'curve-fit' the chart, better to test how the indicators perform in a demo account.
ADX is an okay indicator, but proper use of EMA with MACD will probably give better trade calls over the long term than the ADX alone.
Do not neglect the fundamental picture and know when to stay out of the market (major data, announcements), practise, practise, practise.
And good luck.
What would you recommend? Forex or StockMarket?
m2cgbldlr
What is easier?, More Fun?, More rewarding?
Personal experience please
Answer
Alex is right, trading is the hardest thing you can do. There should be 1 and only 1 reason for trading - to make money. If you're doing it to have fun, and get personal satisfaction, you're doing it for the wrong reason.
Now, which one is better? In my opinion, Forex. Here's why:
1) The average daily dollar volume on the NYSE is about $35 billion and in the gobal equities market, about $200 billion. In the forex, average daily dollar volume is $2 trillion conservatively, but actually is estimated to be as high as $6 trillion.
2) There are 1700 issues on the NYSE alone and around 40,000 worldwide. That's a lot of information to sift through. On forex, there are 6 major currency pairs. Sure, you can get into the cross currency pairs and exotic currencies, but why. Of the $2 trillion traded daily, the EUR/USD pair accounts for 50% of that volume. You really need not go much beyond looking at just 4 currency pairs: EUR/USD, GBP/USD, USD/CHF, USD/JPY.
3) To effectively trade stocks, you need several thousand dollars. With forex, you can start with as little as $100.
4) No commissions in forex. The brokers make their money on the bid/ask spread.
5) Forex starts trading around 5 pm EST on Sunday and doesn't stop till about 4 pm EST Friday, so if you can't trade during the day due to work schedule or such, doesn't matter. You can trade forex at 2 am if you wish.
6) Equities are subject to the short-sale rule, forex is not.
7) Equities have max 2:1 leverage, forex has up to 400:1 leverage. But beware, it's a double edged sword.
8) Forex offers demo accounts. The demo accounts trade just like a real account. In fact, you use the same terminal to trade a demo account as you would a live account, so you can practice and test your strategies in real time and see how you do before you commit real money. Sure, you can paper trade equities, but paper trading doesn't take into account slippage, what prices order at filled at, etc.
9) You can trade standard, mini or micro lots (depending on your broker). A standard lot is $100,000, a mini is $10,000 and a micro is $1,000.
Alex is right, trading is the hardest thing you can do. There should be 1 and only 1 reason for trading - to make money. If you're doing it to have fun, and get personal satisfaction, you're doing it for the wrong reason.
Now, which one is better? In my opinion, Forex. Here's why:
1) The average daily dollar volume on the NYSE is about $35 billion and in the gobal equities market, about $200 billion. In the forex, average daily dollar volume is $2 trillion conservatively, but actually is estimated to be as high as $6 trillion.
2) There are 1700 issues on the NYSE alone and around 40,000 worldwide. That's a lot of information to sift through. On forex, there are 6 major currency pairs. Sure, you can get into the cross currency pairs and exotic currencies, but why. Of the $2 trillion traded daily, the EUR/USD pair accounts for 50% of that volume. You really need not go much beyond looking at just 4 currency pairs: EUR/USD, GBP/USD, USD/CHF, USD/JPY.
3) To effectively trade stocks, you need several thousand dollars. With forex, you can start with as little as $100.
4) No commissions in forex. The brokers make their money on the bid/ask spread.
5) Forex starts trading around 5 pm EST on Sunday and doesn't stop till about 4 pm EST Friday, so if you can't trade during the day due to work schedule or such, doesn't matter. You can trade forex at 2 am if you wish.
6) Equities are subject to the short-sale rule, forex is not.
7) Equities have max 2:1 leverage, forex has up to 400:1 leverage. But beware, it's a double edged sword.
8) Forex offers demo accounts. The demo accounts trade just like a real account. In fact, you use the same terminal to trade a demo account as you would a live account, so you can practice and test your strategies in real time and see how you do before you commit real money. Sure, you can paper trade equities, but paper trading doesn't take into account slippage, what prices order at filled at, etc.
9) You can trade standard, mini or micro lots (depending on your broker). A standard lot is $100,000, a mini is $10,000 and a micro is $1,000.
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Forex: What is the best pair to earn with Swap?
Posted by Ryanita
on
Tuesday, November 19, 2013
, under
forex 6 majors
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comments (0)
Pedro P
I want to earn as much as possible with the swap. Please explain to me which pair pays the highest swap.
Thank you.
Answer
I think you are confused and need to define your terms and restate your question.
Are you asking about a currency swap? A swap is generally for companies, not individuals. We, as individuals, use a forex broker to trade currency pairs.
Investopedia explains Currency Swap
For example, suppose a U.S.-based company needs to acquire Swiss francs and a Swiss-based company needs to acquire U.S. dollars. These two companies could arrange to swap currencies by establishing an interest rate, an agreed upon amount and a common maturity date for the exchange. Currency swap maturities are negotiable for at least 10 years, making them a very flexible method of foreign exchange.
Currency swaps were originally done to get around exchange controls.
Read more: http://www.investopedia.com/terms/c/currencyswap.asp#ixzz1fOAgL6Rc
Firms and financial institutions dominate the swaps market, with few (if any) individuals ever participating. Because swaps occur on the OTC market, there is always the risk of a counterparty defaulting on the swap.
Currency swaps have two main uses:
To secure cheaper debt (by borrowing at the best available rate regardless of currency and then swapping for debt in desired currency using a back-to-back-loan).
To hedge against (reduce exposure to) exchange rate fluctuations.
Is one of the above what you're trying to do? If so, give an example so we can be clear and not have to waste our time guessing.
You asked, "I want to earn as much as possible with the swap." As you can see from the "uses" above, the objective of a swap is not to "earn as much as possible."
If not a swap, then you are probably asking "what is the best currency pair to speculate on in order to make money?" You want to trade currencies, and you're asking which currency pair makes or "pays" the highest return?
Are you a trader? Or are you new to Forex? Once again, I have to guess you're a newbie. A trader focuses on risk, not potential profits.
Whatever your question relates to, you don't seem to realize that "best" is a relative term, that means something different to each and every trader. The highest volatility pair may have the biggest price swings, but may not be "best" for trading or your account.
For me, a prerequisite to trading is liquidity. That means I don't trade the rare crosses or at illiquid times of the day -- I don't trade the Asian session, for example.
Define your terms on Investopedia.com.
Maybe the following will help:
Currency Trading â FOREX â Foreign Currency Exchange
1.EUR/USD - Euro/U.S. Dollar
2.GBP/USD - Great British Pound/U.S. Dollar
3.USD/CHF â- U.S. Dollar/Swiss Franc
4.USD/JPY â- U.S. Dollar/Japanese Yen
5.USD/CAD â- U.S. Dollar/Canadian Dollar
6.AUD/USD - Australian Dollar/U.S. Dollar
7.EUR/GBP - Euro/Great British Pound
8.EUR/JPY - Euro/Japanese Yen
9.EUR/CHF - Euro/Swiss Franc
10.GBP/CHF - Great British Pound/Swiss Franc
11.GBP/JPY - Great British Pound/Japanese Yen
12.CHF/JPY - Swiss Franc/Japanese Yen
13.NZD/USD - New Zealand Dollar/US Dollar
14.EUR/CAD - Euro/Canadian Dollar
15.AUD/CAD - Australian Dollar/Canadian Dollar
16.AUD/JPY - Australian Dollar/Japanese Yen
17.EUR/AUD - Euro/Australian Dollar
NOTE: Of the above 17 currency pairs, six of them are deemed the âmajor currency pairsâ in the FOREX market because they account for about 80 percent of FOREX transactions:
1.EUR/USD - Euro/U.S. Dollar
2.GBP/USD - Great British Pound/U.S. Dollar
3.USD/CHF â- U.S. Dollar/Swiss Franc
4.USD/JPY â- U.S. Dollar/Japanese Yen
5.USD/CAD â- U.S. Dollar/Canadian Dollar
6.AUD/USD - Australian Dollar/U.S. Dollar
As you can see, there is a currency on the left and one on the right. The one on the left is referred to as the base, and the one listed on the right is known as the cross. The format, once again, is as follows. BASE/CROSS, or EUR/USD. The EUR is the BASE and the USD is the CROSS.
TERMINOLOGY:
â¢PIPS- Price Interest Point. This is the smallest unit price for any Foreign Currency.
â¢LOT- A lot of currency is one denomination for a trade (100K or mini account). This is similar to purchasing one stock or one contract in the futures market.
â¢LONG to buy
â¢SHORT to sell
â¢BID-The price at which you sell
â¢ASK-The price at which you buy
Price Interest Point - (PIP)
Profits are made in the FOREX by gaining PIPS. A pip is the last digit from the decimal point. This value is 1/100th of a cent. You may now be asking yourself, how do I make money off of 1/100th of a cent? The answer is leverage. The FOREX market is highly leveraged and should be respected. That said, it can also provide for a tremendous return on your investment. The average leverage in the FOREX is 100 to 1. Basically this indicates that for every dollar you invest in a trade you are controlling $100 of value.
I think you are confused and need to define your terms and restate your question.
Are you asking about a currency swap? A swap is generally for companies, not individuals. We, as individuals, use a forex broker to trade currency pairs.
Investopedia explains Currency Swap
For example, suppose a U.S.-based company needs to acquire Swiss francs and a Swiss-based company needs to acquire U.S. dollars. These two companies could arrange to swap currencies by establishing an interest rate, an agreed upon amount and a common maturity date for the exchange. Currency swap maturities are negotiable for at least 10 years, making them a very flexible method of foreign exchange.
Currency swaps were originally done to get around exchange controls.
Read more: http://www.investopedia.com/terms/c/currencyswap.asp#ixzz1fOAgL6Rc
Firms and financial institutions dominate the swaps market, with few (if any) individuals ever participating. Because swaps occur on the OTC market, there is always the risk of a counterparty defaulting on the swap.
Currency swaps have two main uses:
To secure cheaper debt (by borrowing at the best available rate regardless of currency and then swapping for debt in desired currency using a back-to-back-loan).
To hedge against (reduce exposure to) exchange rate fluctuations.
Is one of the above what you're trying to do? If so, give an example so we can be clear and not have to waste our time guessing.
You asked, "I want to earn as much as possible with the swap." As you can see from the "uses" above, the objective of a swap is not to "earn as much as possible."
If not a swap, then you are probably asking "what is the best currency pair to speculate on in order to make money?" You want to trade currencies, and you're asking which currency pair makes or "pays" the highest return?
Are you a trader? Or are you new to Forex? Once again, I have to guess you're a newbie. A trader focuses on risk, not potential profits.
Whatever your question relates to, you don't seem to realize that "best" is a relative term, that means something different to each and every trader. The highest volatility pair may have the biggest price swings, but may not be "best" for trading or your account.
For me, a prerequisite to trading is liquidity. That means I don't trade the rare crosses or at illiquid times of the day -- I don't trade the Asian session, for example.
Define your terms on Investopedia.com.
Maybe the following will help:
Currency Trading â FOREX â Foreign Currency Exchange
1.EUR/USD - Euro/U.S. Dollar
2.GBP/USD - Great British Pound/U.S. Dollar
3.USD/CHF â- U.S. Dollar/Swiss Franc
4.USD/JPY â- U.S. Dollar/Japanese Yen
5.USD/CAD â- U.S. Dollar/Canadian Dollar
6.AUD/USD - Australian Dollar/U.S. Dollar
7.EUR/GBP - Euro/Great British Pound
8.EUR/JPY - Euro/Japanese Yen
9.EUR/CHF - Euro/Swiss Franc
10.GBP/CHF - Great British Pound/Swiss Franc
11.GBP/JPY - Great British Pound/Japanese Yen
12.CHF/JPY - Swiss Franc/Japanese Yen
13.NZD/USD - New Zealand Dollar/US Dollar
14.EUR/CAD - Euro/Canadian Dollar
15.AUD/CAD - Australian Dollar/Canadian Dollar
16.AUD/JPY - Australian Dollar/Japanese Yen
17.EUR/AUD - Euro/Australian Dollar
NOTE: Of the above 17 currency pairs, six of them are deemed the âmajor currency pairsâ in the FOREX market because they account for about 80 percent of FOREX transactions:
1.EUR/USD - Euro/U.S. Dollar
2.GBP/USD - Great British Pound/U.S. Dollar
3.USD/CHF â- U.S. Dollar/Swiss Franc
4.USD/JPY â- U.S. Dollar/Japanese Yen
5.USD/CAD â- U.S. Dollar/Canadian Dollar
6.AUD/USD - Australian Dollar/U.S. Dollar
As you can see, there is a currency on the left and one on the right. The one on the left is referred to as the base, and the one listed on the right is known as the cross. The format, once again, is as follows. BASE/CROSS, or EUR/USD. The EUR is the BASE and the USD is the CROSS.
TERMINOLOGY:
â¢PIPS- Price Interest Point. This is the smallest unit price for any Foreign Currency.
â¢LOT- A lot of currency is one denomination for a trade (100K or mini account). This is similar to purchasing one stock or one contract in the futures market.
â¢LONG to buy
â¢SHORT to sell
â¢BID-The price at which you sell
â¢ASK-The price at which you buy
Price Interest Point - (PIP)
Profits are made in the FOREX by gaining PIPS. A pip is the last digit from the decimal point. This value is 1/100th of a cent. You may now be asking yourself, how do I make money off of 1/100th of a cent? The answer is leverage. The FOREX market is highly leveraged and should be respected. That said, it can also provide for a tremendous return on your investment. The average leverage in the FOREX is 100 to 1. Basically this indicates that for every dollar you invest in a trade you are controlling $100 of value.
Is EUR/USD the best currency to trade in forex?
Stuart
I want to start trading in forex, therefore just want to know which curreny is beneficial at this point of time.
Answer
The EUR/USD is the most liquid, most traded currency. I'm not sure what you consider to be "best." We tend to trade whatever is moving at the moment.
There are six currency pairs that are deemed the âmajor currency pairsâ in the FOREX market because they account for about 80 percent of FOREX transactions:
1. EUR/USD - Euro/U.S. Dollar
2. GBP/USD - Great British Pound/U.S. Dollar
3. USD/CHF â- U.S. Dollar/Swiss Franc
4. USD/JPY â- U.S. Dollar/Japanese Yen
5. USD/CAD â- U.S. Dollar/Canadian Dollar
6. AUD/USD - Australian Dollar/U.S. Dollar
As you can see, there is a currency on the left and one on the right. The one on the left is referred to as the base, and the one listed on the right is known as the cross. The format, once again, is as follows. BASE/CROSS, or EUR/USD. The EUR is the BASE and the USD is the CROSS.
In the case of your question concerning the EUR/USD pair, it's simpler to think in terms of being long first. If you are long the pair, you are long the base currency(EUR) and short the cross (USD) simultaneously. Being short would be the reverse of that.
If yo are short the EUR/USD pair, you are short the base currency (EUR - betting it will go down in price, or go down more than the USD), and long the cross currency (USD - betting it will go up in price, or go up more than the EUR).
TERMINOLOGY:
⢠PIPS- Price Interest Point. This is the smallest unit price for any Foreign Currency.
⢠LOT- A lot of currency is one denomination for a trade (100K or mini account). This is similar to purchasing one stock or one contract in the futures market.
⢠LONG to buy
⢠SHORT to sell
⢠BID-The price at which you sell
⢠ASK-The price at which you buy
Price Interest Point - (PIP)
Profits are made in the FOREX by gaining PIPS. A pip is the last digit from the decimal point. This value is 1/100th of a cent. You may now be asking yourself, how do I make money off of 1/100th of a cent? The answer is leverage. The FOREX market is highly leveraged and should be respected. That said, it can also provide for a tremendous return on your investment. The average leverage in the FOREX is 100 to 1. Basically this indicates that for every dollar you invest in a trade you are controlling $100 of value.
Calculated PIP
Calculated PIP â shows the Price Interest Point (PIP) value for the selected currency pair based upon your trading account margin. For example, a standard 1 percent margin trading account controlling $100,000 in currency would show the EUR/USD with a PIP value of 10.
PIP VALUE-Fixed or Floating
FIXED- When the USD is the cross currency (right side of the pair), the PIP value is fixed at $10 in a 100k account.
FOATING- When the USD is the base currency (left side of the pair), the PIP value is based upon the exchange rate of the cross currency (i.e., USD/CAD.). Also, the PIP value is floating when the pair consists of foreign currencies (i.e., EUR/ GBP).
LOT
A lot is the normal unit of trading in the FOREX market. Trades are made in lot increments, similar to share increments in the stock market.
Standard (or 100k) FOREX account- has a 100:1 leverage ratio
1 LOT= $1,000 investment= ratio leveraged 100 to 1, which = $100,000 in buying power.
Mini FOREX account- has a 200:1 leverage ratio
1 LOT= $50 investment= ratio leveraged 200 to 1, which = $10,000 in buying power.
TRADING HOURS (EST)
⢠Trades 24 hours a day, 6 days a week. The market is open from Sunday at 5pm EST to Friday at 4pm EST.
The EUR/USD is the most liquid, most traded currency. I'm not sure what you consider to be "best." We tend to trade whatever is moving at the moment.
There are six currency pairs that are deemed the âmajor currency pairsâ in the FOREX market because they account for about 80 percent of FOREX transactions:
1. EUR/USD - Euro/U.S. Dollar
2. GBP/USD - Great British Pound/U.S. Dollar
3. USD/CHF â- U.S. Dollar/Swiss Franc
4. USD/JPY â- U.S. Dollar/Japanese Yen
5. USD/CAD â- U.S. Dollar/Canadian Dollar
6. AUD/USD - Australian Dollar/U.S. Dollar
As you can see, there is a currency on the left and one on the right. The one on the left is referred to as the base, and the one listed on the right is known as the cross. The format, once again, is as follows. BASE/CROSS, or EUR/USD. The EUR is the BASE and the USD is the CROSS.
In the case of your question concerning the EUR/USD pair, it's simpler to think in terms of being long first. If you are long the pair, you are long the base currency(EUR) and short the cross (USD) simultaneously. Being short would be the reverse of that.
If yo are short the EUR/USD pair, you are short the base currency (EUR - betting it will go down in price, or go down more than the USD), and long the cross currency (USD - betting it will go up in price, or go up more than the EUR).
TERMINOLOGY:
⢠PIPS- Price Interest Point. This is the smallest unit price for any Foreign Currency.
⢠LOT- A lot of currency is one denomination for a trade (100K or mini account). This is similar to purchasing one stock or one contract in the futures market.
⢠LONG to buy
⢠SHORT to sell
⢠BID-The price at which you sell
⢠ASK-The price at which you buy
Price Interest Point - (PIP)
Profits are made in the FOREX by gaining PIPS. A pip is the last digit from the decimal point. This value is 1/100th of a cent. You may now be asking yourself, how do I make money off of 1/100th of a cent? The answer is leverage. The FOREX market is highly leveraged and should be respected. That said, it can also provide for a tremendous return on your investment. The average leverage in the FOREX is 100 to 1. Basically this indicates that for every dollar you invest in a trade you are controlling $100 of value.
Calculated PIP
Calculated PIP â shows the Price Interest Point (PIP) value for the selected currency pair based upon your trading account margin. For example, a standard 1 percent margin trading account controlling $100,000 in currency would show the EUR/USD with a PIP value of 10.
PIP VALUE-Fixed or Floating
FIXED- When the USD is the cross currency (right side of the pair), the PIP value is fixed at $10 in a 100k account.
FOATING- When the USD is the base currency (left side of the pair), the PIP value is based upon the exchange rate of the cross currency (i.e., USD/CAD.). Also, the PIP value is floating when the pair consists of foreign currencies (i.e., EUR/ GBP).
LOT
A lot is the normal unit of trading in the FOREX market. Trades are made in lot increments, similar to share increments in the stock market.
Standard (or 100k) FOREX account- has a 100:1 leverage ratio
1 LOT= $1,000 investment= ratio leveraged 100 to 1, which = $100,000 in buying power.
Mini FOREX account- has a 200:1 leverage ratio
1 LOT= $50 investment= ratio leveraged 200 to 1, which = $10,000 in buying power.
TRADING HOURS (EST)
⢠Trades 24 hours a day, 6 days a week. The market is open from Sunday at 5pm EST to Friday at 4pm EST.
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