Basic Forex Trading Guide

Saturday, October 29, 2011

Money Management

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Is there a secret to becoming a successful trader?
There is a method that all successful traders use, and it’s no secret. It’s called
money management.

Money management is not some vague industry lingo – it simply means the
knowledge and skill of managing your Forex trading account. As simple as that
may seem, it’s the key to a long and successful trading career. And yet it is often
forgotten or neglected in the thrill of the trade. We’d like to take this opportunity
to lay out some ground rules by which you can effectively manage your account.
Don’t go looking for the Big Win; it will most likely result in a big loss. Successful
trading means consistent trading, where small wins amount to large long term
profits. Never assume that all your trades will be profitable, and plan on losses.

Add caption

You should only risk a small percentage of your total account balance on each
trade. This simply minimizes your risk, so that even if you end up losing your
entire investment on a trade, it doesn’t have a critical effect on your account
balance. The recommended amount is 2% of your account balance per trade.
More aggressive traders go as high as 5%, but never higher than that. It is a very
important rule to keep, since the lower your account balance drops, the harder it
is to rebuild it.

Using Limit Orders
Learn to use the Stop Loss and Take Profit orders effectively. These orders protect
your investment and realize your profits. They are very simple tools that can make
all the difference to your account balance.
Size of Trades
You are suggested to open small trades, because in the case of a losing trade, you
can then open the opposite trade with a bigger investment or higher leverage,
thus compensating for losses.
Practice with Virtual Money
Use virtual money mode for practice. One of the unique features of eToro is that

our platform provides you with a practice environment. Virtual money mode
works exactly the same as real trading mode and uses the same real time rates,
with the small difference of no risk involved. We recommend using the practice
mode to get to know the platform and gain Forex trading experience.
And even after you’ve begun trading with real money, it is the perfect place to try

Sunday, October 2, 2011

Introduction About Forex

Retail participation in off-exchange foreign currency
(forex) markets has increased dramatically in
the past few years. If you are a retail investor considering
participating in this market, you need to fully
understand the market and some of its unique features.
Like many other investments, off-exchange foreign currency
trading carries a high level of risk and may not be suitable for
all investors. In fact, you could lose all of your initial investment
and may be liable for additional losses. Therefore, you need to
understand the risks associated with this product.
You should also understand the language of the forex markets

before trading in those markets. The glossary in the back of this
booklet defines some of the most commonly used terms.

This booklet does not suggest that you should or should not
participate in the retail offexchange foreign currencymarket.
You should make that decision after consulting with your financial
advisor and considering your own financial situation and
objectives. In that regard, you may find this booklet helpful as
one component of the due diligence process that investors are
encouraged to undertake before making any investment decisions
about the off-exchange foreign currency market.
Finally, the discussion in this booklet assumes you are funding
your forex account with US dollars. The principles in this booklet
apply to all currencies,however 

Simple Trade

Are you ready? It's time to trade!

Here is a to-do list of actions to be taken as you open a trade:
- Identify the pair to buy/sell
- Decide on the initial investment amount
- Choose the appropriate leverage
- Consider applying trade limits (covered in the next chapter)
- Open trade
Let’s say that after spending some quality time on gazing at the charts of several
currencies, you’ve concluded that:

1) The EUR is trending up
2) The USD is trending down
Now, what is the reasonable decision based on this conclusion?
Clearly you can profit by first selling USD and buying EUR, and then buying
cheaper USD and sell expensive EUR.
We could do this by buying and then selling the EUR/USD currency pair.

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A reminder - buying is done at 'Ask' price, while selling is done at the “Bid” price.
Imagine that you bought $100 worth of EUR/USD with a leverage of 1:100 at the
exchange rate of 1.5461. The details of your trade are:
Investment $100
Leverage 1:100
Units sold 10,000
EUR/USD (Ask) 1.5461
In plain English, what you’ve just done is bought (100X100=) 10,000 Units of EUR
/USD, which at that specific rate represents 1.5461 USD per 1EUR.
Now, let’s assume that at the end of the day, or possibly even a few minutes later,
the EUR/USD rate has risen to 1.5538. You sell those 10,000 Euro/USD Units at
the new rate of 1.5538 and get $177 back.

How can I trade

Is there a secret to becoming a successful trader?

There is a method that all successful traders use, and it’s no secret. It’s called

money management.

Money management is not some vague industry lingo – it simply means the

knowledge and skill of managing your Forex trading account. As simple as that

may seem, it’s the key to a long and successful trading career. And yet it is often

forgotten or neglected in the thrill of the trade. We’d like to take this opportunity

to lay out some ground rules by which you can effectively manage your account.

Don’t go looking for the Big Win; it will most likely result in a big loss. Successful

trading means consistent trading, where small wins amount to large long term

profits. Never assume that all your trades will be profitable, and plan on losses.

You should only risk a small percentage of your total account balance on each

trade. This simply minimizes your risk, so that even if you end up losing your

entire investment on a trade, it doesn’t have a critical effect on your account

balance. The recommended amount is 2% of your account balance per trade.

More aggressive traders go as high as 5%, but never higher than that. It is a very

important rule to keep, since the lower your account balance drops, the harder it

is to rebuild it.

Using Limit Orders

Learn to use the Stop Loss and Take Profit orders effectively. These orders protect

your investment and realize your profits. They are very simple tools that can make

all the difference to your account balance.

Size of Trades

You are suggested to open small trades, because in the case of a losing trade, you

can then open the opposite trade with a bigger investment or higher leverage,

thus compensating for losses.

Practice with Virtual Money

Use virtual money mode for practice. One of the unique features of eToro is that

our platform provides you with a practice environment. Virtual money mode

works exactly the same as real trading mode and uses the same real time rates,

with the small difference of no risk involved. We recommend using the practice

mode to get to know the platform and gain Forex trading experience.

And even after you’ve begun trading with real money, it is the perfect place to try

Money Management

Is there a secret to becoming a successful trader?
There is a method that all successful traders use, and it’s no secret. It’s called
money management.
Money management is not some vague industry lingo – it simply means the
knowledge and skill of managing your Forex trading account. As simple as that
may seem, it’s the key to a long and successful trading career. And yet it is often
forgotten or neglected in the thrill of the trade. We’d like to take this opportunity
to lay out some ground rules by which you can effectively manage your account.
Don’t go looking for the Big Win; it will most likely result in a big loss. Successful

trading means consistent trading, where small wins amount to large long term
profits. Never assume that all your trades will be profitable, and plan on losses.
You should only risk a small percentage of your total account balance on each
trade. This simply minimizes your risk, so that even if you end up losing your
entire investment on a trade, it doesn’t have a critical effect on your account
balance. The recommended amount is 2% of your account balance per trade.
More aggressive traders go as high as 5%, but never higher than that. It is a very

important rule to keep, since the lower your account balance drops, the harder it
is to rebuild it.
Using Limit Orders
Learn to use the Stop Loss and Take Profit orders effectively. These orders protect
your investment and realize your profits. They are very simple tools that can make
all the difference to your account balance.
Size of Trades
You are suggested to open small trades, because in the case of a losing trade, you
can then open the opposite trade with a bigger investment or higher leverage,
thus compensating for losses.
Practice with Virtual Money
Use virtual money mode for practice. One of the unique features of eToro is that
our platform provides you with a practice environment. Virtual money mode
works exactly the same as real trading mode and uses the same real time rates,
with the small difference of no risk involved. We recommend using the practice
mode to get to know the platform and gain Forex trading experience.
And even after you’ve begun trading with real money, it is the perfect place to try