Clearly, anyone who trades does so with the expectation of making profits. We take risks to gain rewards. The question each trader must answer, however, is what kind of return he or she expects to make? This is a very important consideration, as it speaks directly to what kind of trading will take place, what market or markets are best suited to the purpose, and the kinds of risks required.

Let s start with a very simple example. Suppose a trader would like to make 10% per year on a very consistent basis with little variance. There are any number of options available. If interest rates are sufficiently high, the trader could simply put the money in a fixed income instrument like a CD or a bond of some kind and take relatively little risk. Should interest rates not be sufficient, the trader could use one or more of any number of other markets (stocks, commodities, currencies, etc.) with varying risk profiles and structures to find one or more (perhaps in combination) which suits the need. The trader may not even have to make many actual transactions each year to accomplish the objective.

A trader looking for 100% returns each year would have a very different situation. This individual will not be looking at the cash fixed income market, but could do so via the leverage offered in the futures market. Similarly, other leverage based markets are more likely candidates than cash ones, perhaps including equities. The trader will almost certainly require greater market exposure to achieve the goal, and most likely will have to execute a larger number of transactions than in the previous scenario.

As you can see, your goal dictates the methods by which you achieve it. The end certainly dictates the means to a great degree.

There is one other consideration in this particular assessment, though, and it is one which harks back to the earlier discussion of willingness to lose. Trading systems have what are commonly referred to as drawdowns. A drawdown is the distance (measured in % or account/portfolio value terms) from an equity peak to the lowest point immediately following it. For example, say a trader’s portfolio rose from $10,000 to $15,000, fell to $12,000, then rose to $20,000. The drop from the $15,000 peak to the $12,000 trough would be considered a drawdown, in this case of $3000 or 20%.

Each trader must determine how large a drawdown (in this case generally thought of in percentage terms) he or she is willing to accept. It is very much a risk/reward decision. On one extreme are trading systems with very, very small drawdowns, but also with low returns (low risk – low reward). On the other extreme are the trading systems with large returns, but similarly large drawdowns (high risk – high reward). Of course, every trader’s dream is a system with high returns and small drawdowns. The reality of trading, however, is often less pleasantly somewhere in between.

The question might be asked what it matters if high returns in the objective. It is quite simple. The more the account value falls, the bigger the return required to make that loss back up. That means time. Large drawdowns tend to mean long periods between equity peaks. The combination of sharp drops in equity value and lengthy time spans making the money back can potentially be emotionally destabilizing, leading to the trader abandoning the system at exactly the wrong time. In short, the trader must be able to accept, without concern, the draw-downs expected to occur in the system being used.

It is also important to match one’s expectations up with one’s trading timeframe. It was noted earlier that in some cases more frequent trading can be required to achieve the risk/return profile sought. If the expectations and timeframe conflict, a resolution must be found, and it must be the questions from this expectations assesment which have to be reconsidered, since the time frames determined in the previous one are probably not very flexible (especially going from longer-term trading to shorter-term participation).

John Forman is author of The Essentials of Trading (Wiley - April 2006), and a near 20 year veteran of trading and analyzing the markets. Visit Anduril Analytics to learn more about his trading, market analysis, and research activities and to find out how you can get a copy of Anduril’s free report on what every trader and investor needs to succeed.

I saw a question within another online hedge fund community regarding the differences between hedge funds and mutual funds and figured I would copy my answer to the individual here in my blog. For those of you in the hedge fund industry this is obvious stuff so please just let me know if I missed something glaring.

Mutual Funds

• Their performance is marked against a relevant benchmark which they try to beat in up years with superior performance and protect their investors with less losses in bad years- Pooled investment vehicle similar to a hedge fund.
• They can use some securities that have returns traditionally uncorrelated with the overall market but in general they are limited to stocks, money market accounts, and bonds
• Anyone can invest in mutual funds
• Mutual funds calculate the price of their vehicle daily based on the number of investors and the market-rate or cost for a mutual fund goes up as it becomes more popular- You can find mutual fund of fund products and they have been rising in popularity in the past 5 years- Average cost of a mutual fund is 75 basis points or .75% per year

Hedge Funds

• Contrary to what Investopedia will tell you hedge funds do not always invest in publicly traded securities. They often invest in art, futures, PIPE deals, real estate and other investment vehicles that aren’t highly correlated to the general market.
• Depending on who you ask there are around 12-14,000 hedge funds competing against each other- Hedge fund have developed (the media has developed) an image of hedge funds as being ultra risky employing dangerous levels of leverage- Hedge funds may invest in art, website domain names, stocks, bonds, options, futures, Foreign Exchange, or wind power farms
• Hedge funds manage their portfolios aiming for absolute growth targets and they don’t usually compare themselves against any stock exchange-based benchmark such as the S & P 500 or Russell 3000
• Most hedge funds are attempting to invest their money that is uncorrelated with the overall market
• You have to be an accredited investor (if you live in America. This means meeting high net worth standards) to invest in a hedge fund or hedge fund of fund product- There are several hedge fund of funds. These are investment vehicles that invest in other hedge funds. This way if someone has $2M to invest they can place it into a hedge fund of fund and they will create a portfolio for your funds so that it fits your specific appetite for risk- While fees are starting to come down the average hedge fund manager charges a 2% base fee and a 20% performance fee. Note: America is one of the only places where you have to be an accredited investor to invest in hedge funds.

The Richard Wilson Hedge fund Blog (http://richard-wilson.blogspot.com) is a content rich source for hedge fund industry white papers, trends, articles and professional interviews. I also share lessons I learn in my investment marketing and sales (third party marketing) career and earning a graduate degree at Harvard. I live in Cambridge, MA and can be reached at 503.789.7901 or Richard@RichardCWilson.com

All currency rates are inevitably changing. The Euro-USD goes up and down constantly, usually in small rise and fall. The daily fluctuations of 1% often takes place. However this 1% change can be exploited for profit. This is one of the many evidences that forex trading needs to be monitored by efficient tools. This will help you get strategies by having your own forex trading account online.

Say when you invest a 1:100 leverage, and there are changes of 1.2% that would turn to 120% in a day or even in minutes. You will earn unlimited profits however, you might have negative profit when the exchange rate moves against your favor. It is therefore important to get the right service for your forex trading account online.

There are lots of trusted sites that offer reliable services. You can make your own account any minute of the day. Upon making your account, you will also get daily recommendations from expert analysts for the betterment of your business. Also, registering will let you fund your own account by credit card, moneybookers, paypal, and bank transfer.

Before making an account, assess the site that you are registering in. Be warned about forex scammers that will take away profits from your account. Always remember that you are going to have a long-term business so you must make sure that your account will last for the longest possible period. To know the best about forex trading, you can continuously learn from online schools, if not, you can enroll in a reliable academy that offers forex market courses.

Many insider forex trading strategies include using forex trading software to predict future changes in the market, this allows you to have a cutting edge on the competition. With so many software packages on the market we have decided to create an unbiased review of the top 6 best forex trading software packages available. Check them out at http://www.forexrevealed.net

Trading the Forex market without knowing the meaning of Margin Call is the beginning of failure.The good news is that this article exposes all you need to know about this Margin Call.

Margin Call occurs when your broker notifies you that your deposits have fallen below the required minimum level because an open position has moved against you. Your positions could be partially or totally liquidated should the available margin in your account fall below a predetermined level or percentage.

You may not receive a Margin Call before your positions are liquidated or closed. Meaning all your trades would been return8ing only the balance you have left which no longer be able to open a position based on previously accepted leverage.

For Example: Let’s say you opened Forex account with $500.And you open 3 mini lots of EUR/USD with a margin requirement of $100. The amount you have opened the 3 mini lots EUR/USD which is now active in the trade and in the trade and is called Used Margin or Margin in trade.

Used Margin or Core Equity is the money available to open new positions or sustain trading losses.Since you started with $500, your Usable Margin is $500. But when you opened 3 mini lots, which requires a margin requirement of $300,your Usable Margin is now (Balance/EquityInitial Capital/Opening Margin Minus Used Margin/Amount in trade). If your losses exceed your Usable Margin of $200, you will get a Margin Call.

I believe this makes it clear now.And if you want to trade again with the remaining balance, you either put in more money for more leverage(more leverage is not advisable though) or better you start all over with micro lot sizes of between 0.01 and 0.09 (which is better for you anyway because that is where you should have started in the first instance).

Do you want to know how to trade the Forex Market with out losing a dime? Then go over to http://quickforexpips.blogspot.com

Forex trading systems are actually the strategies that are used by the dealers. These systems are used by them to maximize their profits. Forex traders will always operate on leverage or margin requirements. Usually the margin requirements are 200:1. Simply put the dealer can do trades for $200,000 if they have $1000 in their accounts.

Another system is placing trade through dealers who never ask for margin calls. Margin calls arise when a trader has lost heavily on their deal and now their margin money would be used to substantiate the losses that they have made in the market. Usually the account is suspended when the losses are mounting.

The technical analysis

One of the forex trading systems is known as the technical analysis. It determines the price of the currency based on the past movements. Most traders use this method to find out what the price movement would be. When is the currency likely to reach a peak, what is the likely lowest point etc., this helps them to enter and exit the markets at convenient levels.

The fundamentals of the price get reflected in the price data. For this other factors or the fundamental factors of the trading systems need not be studied by the traders. Since the price movement has a trend that can be predicted, they are known as signals. This systematic approach lets the trader find the market signal to sell and purchase the currency.

The Fundamental approach

The fundamental analysis is another system. It’s the core elements that affect the economy and in turn the currency and forex markets. The factors are economic, business, government, climatic, political and many other factors that affect the economy. It’s not necessary that all factors should affect this system.

This fundamental approach of the forex systems can tell you whether the currency will appreciate or depreciate and which way the currency would move. But it can’t give pin point accuracy of the price movement of the currency. Most traders will use both the fundamental approach and the technical analysis to understand the trends and signals.

With forex trading software, it’s become very easy to calculate and understand forex trading systems.

For more tips and tricks on how you can make large amounts of money by trading forex, visit our Forex Software Review site where we show you the newest and hottest Forex software on the market including our Forex Tracer Review

The Foreign Exchange, also referred to as Currency, Forex, FX or 4X Trading, is the giant of the financial markets. Historically the Forex was only accessible to the banks, large institutions and governments, however over the past 10 years, (with the help of technology making its way into almost every home worldwide), every day mum and dad investors can also compete with a little help of the Forex brokers enabling them access to high leverage, and become part of the 95% of speculators worldwide who trade this $3 trillion dollar a day, 24 hours, 5 days per week market.

There are many benefits for traders to chose the Forex as their main preferred trading instrument:

• First of all the leverage potential is a massive, there are many amounts available even as much as 400:1. This means a trader with a $50,000 trading account could achieve the maximum of exposure of $20 million.
• No commissions or brokerage (brokers make their money by the spread only).
• Limited Risk. Traders can only ever lose what is in their trading account as the Forex brokers will instantly close out the losing position or all their positions should the traders account fall below the brokers margin policy. Unlike other trading instruments where the account can go into negative figures where the account holder will need to immediately repay within a number of days.
• Accessible - If you work part-time or full time, or have other things on in your life, trading the Forex can fit in to your lifestyle as it is open 24 hours.

Don’t worry If you know nothing about forex trading, you don’t need to,I have a software, anyone can use it, anywhere in the world with absolutely no experience or even intelligence Click Here

With financial markets in turmoil, press is full of speculation regarding US dollar and Euro. A lot of coverage is given to unprecedented commodities boom, especially record prices for oil and grains. Precious and industrial metals also draw a lot of attention. Credit and debt markets have been on front pages for a couple of years now. Let’s not forget about stock markets, which, both in US and globally, are experiencing wild swings with seemingly no end in sight.

With so much going on, it’s no wonder that some very large moves in currencies have escaped attention, or at least wide coverage. British Pound, for one, has not been mentioned as often as it deserves. Same goes to Swiss Franc, and by extension, the cross of these two currencies, GBP-CHF.

Despite being one of speculator’s favorite financial vehicle, this pair seems to be living in a shadow of it’s cousin, GBP-JPY, which gets far more coverage from Forex analysts. This fact is likely due to much more vaunted stature of Japanese Yen, while Swiss Franc is so much correlated to Euro, that has been loosing trading volume to other currencies, most notably both Australian and Canadian Dollars. By some accounts, even Swedish Krone has reached comparable trading volume about a year ago.

That is when Franc started to regain some of its past luster as a safe heaven during times of uncertainty and financial turmoil. Swiss central bank started to bust interest rates and CHF staged a very impressive rally, lasting better part of a year. Combined with bearish news coming from Great Brittan, GBP-CHF has seen the most severe sell off amongst CHF crosses.

Between July 2007 and March 2008 this pair fell from 2.5000 to 1.9375. That is a staggering 5600+ pips, a huge move by any standard. In fact, it has been first time in over 10 years, and only the second time ever, that this cross fell under 2.0000, a very important psychological level. As it is often the case in such furious moves, the price rebounded sharply from the March low to about 2.0960 and has since settled into a sideways movement.

This “settled price action” is a relative term and true only in light of past few month. Comparing to other currency pairs, daily moves are still large. Average True Range still shows a reading well over 200, and 300+ pips days are the norm. Just last Thursday daily range was over 420 pips. Certainly this kind of volatility demands respect and creates trading opportunities.

Extreme price fluctuations might make it unsuitable for some traders. Also, trading GBP-CHF on short time frames, might be an expensive proposition. The spread, cost of trading, is still relatively wide. Even though over last few years spreads narrowed down, they are still minimum of 6 pips, with 8-10 pips being the norm. In frequent trading, even the larger profit potential might not offset these costs.

Trading longer time frames might be a better proposition for most traders. The recent low of 1.9375 seems to be a major low, which is likely hold for the the rest of this year. As a matter of fact, patterns on long term charts, weekly and monthly, indicate this to be a multi year low. Long term up trend is expected for the rest of the year with a target of 2.1600-2.1800 over next few months. After that next target would be 2.3000 or perhaps even 2.3500, maybe a year later.

This kind of long term expectations should be reviewed and adjusted every few months. As of this writing, the price is around 2.0470, providing us with a substantial long term trading opportunity. Due to large volatility of this pair, one shouldn’t use high leverage as there are almost sure to be severe pullbacks over time. While not suitable for everybody, GBP-CHF is certainly an exciting cross, worth of a closer look.

Mike P. Kulej is a Chief Forex Strategist for Spectrum Forex LLC. He specializes in mechanical trading systems as explained on http://www.spectrumforex.com Spectrum Forex LLC offers numerous services to individual traders. With questions and comments e-mail him at kulej@spectrumforex.com

Forex trading systems are actually the strategies that are used by the dealers. These systems are used by them to maximize their profits. Forex traders will always operate on leverage or margin requirements. Usually the margin requirements are 200:1. Simply put the dealer can do trades for $200,000 if they have $1000 in their accounts.

Another system is placing trade through dealers who never ask for margin calls. Margin calls arise when a trader has lost heavily on their deal and now their margin money would be used to substantiate the losses that they have made in the market. Usually the account is suspended when the losses are mounting.

The technical analysis

One of the forex trading systems is known as the technical analysis. It determines the price of the currency based on the past movements. Most traders use this method to find out what the price movement would be. When is the currency likely to reach a peak, what is the likely lowest point etc., this helps them to enter and exit the markets at convenient levels.

The fundamentals of the price get reflected in the price data. For this other factors or the fundamental factors of the trading systems need not be studied by the traders. Since the price movement has a trend that can be predicted, they are known as signals. This systematic approach lets the trader find the market signal to sell and purchase the currency.

The Fundamental approach

The fundamental analysis is another system. It’s the core elements that affect the economy and in turn the currency and forex markets. The factors are economic, business, government, climatic, political and many other factors that affect the economy. It’s not necessary that all factors should affect this system.

This fundamental approach of the forex systems can tell you whether the currency will appreciate or depreciate and which way the currency would move. But it can’t give pin point accuracy of the price movement of the currency. Most traders will use both the fundamental approach and the technical analysis to understand the trends and signals.

With forex trading software, it’s become very easy to calculate and understand forex trading systems.

For more tips and tricks on how you can make large amounts of money by trading forex, visit our Forex Software Review site where we show you the newest and hottest Forex software on the market including our Forex Tracer Review

As an online stock trader, part of your responsibilities is understanding when to trade more actively and when to use more leverage. To have a long and rewarding carer as an equity trader you need to understand how to run your business on a daily basis. When my family owned a pizza parlor in NY it would have been great to be making pie after pie all day however that wasn’t reality. You only made a pizza when there was a request, you made many of them when the store was busy.

When you are sitting at your screen you need to understand when it is busy. To define this even deeper, you want to know when institutions are involved. Since we are seeking to jump on their backs we want to know when they are involved. The tool we use to determine this larger involvement is the NYSE TICK. There is also one for NASDAQ, but we feel the info from the NYSE TICK is sufficient.

The TICK represents the number of upticking stocks versus downticking stocks at any one particular moment in time. Reading the absolute number all day is not necessary but there are specific readings to pay attention to in order to make an informed decision regarding your activity level, trade expectation and leverage.

If the TICK has readings of +500 or -500 but no more than that, there is very little institutional order flow or activity. When I see this, I slow down my activity level, lighten up on my leverage and DECREASE my expectation for each trade (meaning I expect to make less per trade).

When I get consistent pushes of +1,000 or higher or -1,000 or lower I know the big boys are around and I will increase my leverage, activity level and my leverage. I am expecting FOLLOW THROUGH now.

This simple but effective tool will be a great gauge for your trading. Monitor it for a few days, I am sure you will be very happy to add this to your arsenal.

Keystone Trading Group provides intra day leverage, software and competitive commissions to direct access traders. The founders and instructors of Keystone Trading Group have managed a profitable short term trading desk for the last seven years. Our specialty is short term stock trades. http://keystonetradinggroup.com/

Everyone has heard of, and most have indulged in some form of stock trading or the other. However, there is a new kid on the block and its name is Forex Trading.

Online currency trading is a fast growing market. The Forex Market never sleeps. A currency trader may take advantage of all market conditions at any time. There is no waiting for an opening bell as in the case of trading stocks. It is a 24-hour, continuous currency exchange that never closes (normal hours of operation are Sunday 1pm through Friday 2pm Pacific standard time). This is very desirable for those who want to trade on a part-time basis, because you can choose when you want to trade: morning, noon or night.

Trading Forex

The first currency in the pair is referred to as the base currency, and the second currency is the counter or quote currency. The U.S Dollar, as the world’s dominant currency, is usually considered the base currency for quotes, and includes USD/JPY, USD/CHF, and USD/CAD. This means that quotes are expressed as a unit of $1 USD per the other currency quoted in the pair. The exceptions are the Euro, Great Britain pound, and Australian dollar. These currencies are quoted as dollars per foreign currency.

As with all financial products, FX quotes include a “bid” and “ask”. The bid is the price at which a market maker is willing to buy (and clients can sell) the base currency in exchange for the counter currency. The ask is the price at which a market maker will sell (and clients can buy) the base currency in exchange for the counter currency. The difference between the bid and the ask price is referred to as the spread.

The most important Forex market is the spot market as it has the largest volume. The market is called the spot market because trades are settled immediately, or “on the spot”. In practice this means two banking days.

Why Trade Forex?

• 24 hour trading
  One of the major advantages of trading Forex is the opportunity to trade 24 hours a day from Sunday evening to Friday evening. This gives you a unique opportunity to react instantly to breaking news that is affecting the markets.
• Superior liquidity
  With $2.1 trillion changing hands daily, the FX market is extremely liquid. This means you can rapidly buy and sell currencies at any offered market price. You can even set the online trading platform to quickly close your position at your desired profit level (limit order), and/or close a trade if a trade is going against you (stop order).
• No commissions
  The fact that Forex is often traded without commissions makes it very attractive as an investment opportunity for investors who want to deal on a frequent basis. Trading the “majors” is also cheaper than trading other cross because of the high level of liquidity.
• 100:1 Leverage
  Forex investors are permitted to trade foreign currencies on a highly leveraged basis which could be up to 100 times their investment. An investment of US $1,000 controls US $100,000 of any particular currency. A small margin deposit can control a much larger total contract value. Of course, as with all leverage one must be very careful with it since it can lead to large losses as well as gains.
• Profit potential in falling markets
  Since the market is constantly moving, there are always trading opportunities, whether a currency is strengthening or weakening in relation to another currency. When you trade currencies, they literally work against each other. If the EURUSD declines, for example, it is because the US dollar gets stronger against the euro and vice versa. So, if you think the EURUSD will decline (that is, that the euro will weaken versus the dollar), you would sell EUR now and then later you buy euro back at a lower price and take your profits. The opposite trading scenario would occur if the EURUSD appreciates.

Forex trading for newbies!

Forex trading, like most forms of trading is highly competitive and most people would end up losing money by going in uninformed and unaided. However, thanks to the power of the internet and leverage offered by independent brokers the ability to trade forex has become much easier and is fast becoming the number 1 home based business opportunity.

Forex software allows even the most technically challenged among us trade forex successfully for a living. Pretty much all that is required is a computer and a connection to the Internet. Once installed the ‘forex tracer’ meticulously scans the market for trading opportunities and automatically picks off the trades with good precision. Now you may be a bit sceptical, I know I was, so why not put the system to the test on a demo account first? Once purchased you can download a demo account here http://www.forexmeta.com/freedemo.php which allows you to trade with play money. If it all goes well, then you could set up a real account and do some real trading!

http://www.frxtracer.info