Forex trading is one of the most active and volatile markets, making it ideal for traders. Our forex trading guide provides a starting point for beginners. Tips, strategies, and training are also provided for seasoned investors. We explore forex trading hours, explain how to compare online trading platforms, how to manage risk, and even where to find the best forex trading demo accounts.
So, start your journey into the world of Forex and take part in a market where more than half a billion dollars are traded every day…
Best Forex Broker in Korea
Forex definition
Foreign exchange (Forex) is the exchange of one currency for another. Businesses, governments, and holidaymakers around the world need to exchange currencies at different times (albeit at different volumes). Forex market they can. General forces of supply and demand will govern the movements of these exchange rates – Forex trading is an active speculation in these exchange rates.
Forex trading revolves around ‘pairs’. They represent the two currencies being exchanged. The exchange rate is expressed as the number of second currencies required to buy one of the first currencies. So, if the EUR/USD pair is ‘1.1811’, it means that you need 1.18 US Dollars to buy 1 Euro. Exchange rates are often quoted to 6 decimal places. Online forex trading platforms allow retail investors to speculate on the fluctuations in this exchange rate.
How to start forex trading
Retail investors can start trading forex using the online platforms and software of numerous forex brokers. However, one difficulty is choosing which broker to choose. One major problem is that the broker that is best for one trader may not be suitable for another.
There are so many different factors to compare when looking at a forex broker. Many people will look at available assets such as gold or bitcoin, or even if the broker is in a well regulated jurisdiction like the UK or Switzerland, offers and spreads, the leverage or margin required to trade, gold or bitcoin. no see.
We cover all these popular factors in our review, but try to include comparative factors that may be overlooked, such as minimum deposit and trade size, spread type (fixed or floating), and deposit and withdrawal methods. By Paypal or Skrill. Some of these factors are important to some traders, but irrelevant to others. This makes it difficult to suggest a “best” broker that will suit everyone, but we still give each broker a rating.
Demo accounts
In addition to our comparison list, potential new traders can use demo accounts to try out different brokers and see which ones they prefer. Usability or look and feel matters. Opinions about different online trading platforms can often differ. The best way to judge a particular platform is to use it. You can also ensure new clients frequently trade assets are available and spreads are competitive.
In summary, here is a list of comparative factors to consider when judging different forex brokers.
- Offer/spread (trade cost)
- White space or utilization flexibility
- Minimum Deposit
- Software integration – e.g. MT4 (MetaTrader4)
- Asset (Market you want to trade, such as Oil, GBP/JPY or Bitcoin)
- regulations
- Demo account
- Bonus
- Mobile trading app
Apart from this, could there be other important considerations such as the broker accepting traders from certain countries? Some regions, such as Australia and the US, have different regulatory bodies and many brokers may not serve those regions. Our brokers table usually only shows relevant brands by IP.
Benefits of trading the forex market
One of the biggest advantages of options trading in the forex market is that brokers are flexible and allow you to trade volatility. You can also predict the price movement of currency pairs to achieve returns as high as 80% or more in a matter of minutes.
Make the most of forex trading
A typical trade involves selecting a currency pair. For example, take EUR/USD and determine if it ends above or below the current price over an hour. You choose the ‘Call’ option if you expect the price to rise, or the ‘Put’ option if you believe the price will move lower than the current price. If the closing price is higher than the price you purchased with the ‘call’ option, it will be ‘in the money’ at expiration. If you choose a ‘Put’ option and the closing price is lower than the price you bought at, you ‘make money’ and you will make 60-80% or more on the trade. Even the smallest fraction of a pip above or below the strike price can turn you into a profit within an hour. However, in traditional forex trading, you need a minimum of 81 pips on a $1000 x 100 leveraged trade.
Powerful hedging tool
Short expiry periods allow you to take advantage of news events that can trigger market fluctuations without interruption. One of the most exciting applications of forex binary options is that they can be used as powerful hedging tools. This allows traders to transfer risk from below the buying point to above it. If you take a traditional long position EUR/USD with a Stop/Loss and buy a binary ‘Put’ option, you will be compensated for any loss or profit from the failed long position trade. Risk moves from below stop/loss up. If the rally continues in the right direction, it may end in a successful trade. This makes investing in binary options more fun, exciting and less stressful for beginner traders. For more information on hedging, read this great article by Mifune.
The Basics of Forex Binary Options Trading
One of our expert traders and founder of a money management and trade advisory firm shares his thoughts on the basics of forex binary options trading and the system he personally uses.
The strategy I want to talk about is no secret. But it’s not common. The reason for its success is its simplicity.
The currency pair I mostly (90%) trade is the Euro Dollar pair. This is because they are the most volatile and predictable pairs. The Euro-Dollar is the most traded pair, and its daily trading volume has increased significantly since the Forex market opened to retail investors. The Euro-Dollar is also a common pair used by financial firms to hedge their clients’ returns against market fluctuations.
The main problem I see every day when reading through binary options forums is the myriad of different strategies. Traders believe that the more complex the system, the better the profit. Then, if it fails, blame the system you’re using, and the problem actually lies behind the screen. No system can adapt to changing market conditions. It is up to the trader to adjust their approach.
I’d argue that this won’t work in this or that market situation, but they forget that the market itself is binary. Prices can go up or down. There is no such thing as a ranging market. Moreover, the core of all trading systems is the same. The system’s job is to detect the best entry and exit points for traders.
For example, seasoned traders will quickly detect support and resistance levels on a chart. Rookies don’t. Rookies will implement strategies using stochastic, MACD and RSI.
For binary options, knowledge of finding the best entry point along with a prediction of the next price movement is important. Every tenth Picture-in-Picture count with binary options.
Disclaimer: This section represents my personal opinions and the strategies I personally use. Read everything carefully and avoid using high-risk strategies before you fully understand how the strategy works. Use demo account to trade before going live. This strategy is the Holy Grail because it’s not too greedy. If it doesn’t feel like a deal I simply pass and wait for the next one.
Forex Fundamentals
It is important to understand what forex is and what its main uses are. Currency exchange governed by supply and demand laws.
A simple hypothetical example: Apple sells 1 million iPhones in Europe in September for 500 Euros as the base currency. We trade through HSBC. In other words, the invoicing account belongs to HSBC. However, Apple reports in dollars and the managed account is with BOA.
So Apple has now invested 500 million euros in Luxembourg’s HSBC account. This amount should now be transferred to your BOA account and changed to USD.
Now it gets interesting. Transfer orders will be served on Tuesdays at 4pm GMT. It is not sent immediately. The bank accumulates all dollar orders over the night. Orders can be placed yesterday or a month in advance. Banks send work orders to their partners (like us) and commission structures and order deadlines.
The Euro-Dollar is trading at 1.27000 on Wednesday 6 GMT. BOA’s Apple account gets $666 million at 8am EST. The order is fixed at 1.27000. How do we and the two banks make the most of that order?
BOA gets a fee from Apple, but what about HSBC?
At 8:00 am, London opens, liquidity is 380 million euros and the price is 1.27010. So 500 million euros is equivalent to 635 050 000 USD. There isn’t enough money in the market yet, so it’s not enough yet and it can’t be run.
The euro outlook is bullish, Asian markets rose overnight, and the US fiscal cliff is clearing. Millions of retail investors and outlets take BUY orders, 10 pips down from the current price. The liquidity market is 300 million euros and current liquidity is 380 million euros. Therefore, the total equivalent liquidity of currently available USD is (1.27010) 482 638 000 USD and 381 030 000 USD pending (equal to stop).
The data shows that the stop is 1.26910, so the order at 8:15 am GMT is 840 times the available liquidity (840 million euro sell orders). This brings the price to 1.26905. A buy order is triggered and retail investors place new buy orders to compensate for losses. The price goes up to 1.27099, it’s time for us to gradually exit our BUY positions, and since the trend still looks strong, people place buy orders. On the chart, you can see the green candle getting smaller in size after a good run upwards.
So market liquidity jumped to 380 + 300 = 660 million euros, a profit of 9.9 pips (from 1.27000) at 1.27099. It doesn’t say much, but we gave our position a leverage of 10 from Barclays for a commission of 0.1 points. So the leveraged market cap of 500 million euros is 5 billion euros, or 5 billion / 100 million = 500 million lots X 10 USD = $5 million pip value X 9.9 pips = $49.5 million or 36.1 million euros. This is shared between HSBC, us and Barclays.
The number above is just an example. In reality, the volume is huge ($4 trillion daily) and many players, but this example is just to show how FX works and is needed when analyzing SR levels and trends.
SR levels are defined by the big players (Smart Money) and they are actually held by retail investors as well. The smart money cycle occurs in 3 price cycles, the short-term channel shows a slight build-up in price (GBPUSD last week during the US session).
Forex System – Fibonacci
These price cycles do not occur randomly, they have an order and in fact every candle or price movement has an internal cycle and sequence. This sequence is defined by a series of numbers called Fibonacci numbers.
Fibonacci numbers were not developed for trading, they occur everywhere in nature where many biological systems can be described with Fibonacci-like sequences.
The big players do not use indicators such as RSI, CCI or MACD and their algorithms are based on Fibonacci numbers.
Combining Fibonacci know-how with a highly accurate Price Channel Calculator and information about other trading methods, you have a formula that will rule all other systems and strategies.
Now why are you interested in trading binary options? Unlike spot FX, you have to be right every time. Basically, I need to be able to predict whether a candle is red or green.
During weekly trades that don’t involve smart money orders, you want to pack pips easily, so you need to use what defines price cycle movement and reversal. For binary and spot fx day trading we use 3 indicators with very precise functions.
Forex correlations
Forex correlation is an important trading tool. If you don’t know what they are, they can hurt your trades without you even knowing. Correlation shows which currencies move together, which ones move in opposite directions, and which ones have little to do with each other. This information can help us determine which trades to take, control risk, and provide additional trading opportunities not easily visible on the price tag.
Forex correlations are usually displayed in tables as values between -100 and 100. A value of -100 (negative numbers are called inverse) means that the two forex pairs move in the exact opposite direction of each other. One falls and the other rises. A value of 100 means both forex pairs move simultaneously. One rises, the other falls, the other falls. It’s very rare to find an asset that has a 100 or -100 correlation with another asset. As you can see in Figure 1, there are many forex pairs that have a very high positive or negative correlation with each other.
Figure 1. Daily Forex Correlation (July 25, 2013)
Consider -/+ 70 or higher as notable correlation and -/+ 80 or higher as strong correlation. Using the chart above, find GBP/USD on the left, then EUR/USD on the top, then scroll to the box where the row and column meet. The correlation between GBP/USD and EUR/USD is 89.6. That is, in most cases, they are synchronized with each other every day. It’s important to know why, which we’ll discuss in the next section.
Now look for USD/CHF on the left and then EUR/USD on the top. If you find the box where the row and column meet, the correlation between these two pairs is -95.4. That means they share a very strong inverse correlation. When EUR/USD rises, USD/CHF falls and vice versa.
Sometimes it’s irrelevant. If a pair has a correlation value less than 60 (positive or negative), the correlation is not very strong and there is no correlation between the pair as it approaches 0. Examples include NZD/USD and EUR/USD. The correlation between these pairs is -1.7, and there is no daily discernible correlation between these pairs. In other words, if NZD/USD goes up or down, you have no idea what EUR/USD can do.
Correlation tables are typically provided on an hourly, daily, and weekly time period. All of these periods provide useful information depending on the trading period. For short-term trading, hourly and daily correlations are the most important.
It’s important to note that correlations change all the time. Pairs that are currently very strongly correlated may not make it down the road. Therefore, it is important to frequently monitor correlations to recognize the changing relationship between pairs.
Why Forex Correlations Matter
There are many reasons to consider forex correlation. The main reason I monitor is to control risk. For example, you may think you are “diversifying” by taking on several trades at once. But maybe not.
If you long (buy) EUR/USD, long (buy) GBP/USD, and short (buy) USD/CHF, you are essentially taking 3 very similar positions. If one is against you, they will all be against you. Diversification has not reduced risk. You actually tripled your risk!
Another reason why forex correlations are so important is that they can offer you trades you may not have seen. For example, you think the EUR will appreciate against the USD (i.e. EUR/USD will go up), but you look at the chart and don’t see a big trade setup. We know that GBP/USD usually moves with EUR/USD (per current correlation), so you can check GBP/USD to see if there is a better trade setup. You can also see if there are any trades that will go short (buy) as USD/CHF moves in the opposite direction of EUR/USD. A high correlation (positive to negative) provides an alternative trade. Choose the one with the best trading setup.
I also like to use forex correlation to confirm trades. When you find forex pairs that are highly correlated, you use one pair to confirm trades on the other side. For example, if EUR/USD is rising and you want to long your currency, you want GBP/USD to rise as well. Since these pairs are related, they should move together. If they don’t, I’ll have to take a closer look at my trades. That doesn’t mean you won’t trade just because the correlations are shifting and the two pairs aren’t perfectly matched. It just means you have a better reason to trade.
Correlation can be a complex statistical topic, but this introduction will familiarize you enough with the concept, and you might as well do your own homework. Check out correlation studies often to get a sense of the relationship between forex pairs that may affect your trading. Use correlation data to control risk, find opportunities, and filter deals. If you’re having trouble seeing how the correlation works, look at the numbers in the correlation table and get a price chart for the two forex pairs you’re having trouble with. Notice how the pair move relative to each other. This will help you to have a general understanding of correlations.
Forex signal
Forex represents a rich hunting ground for signaling and alerting services. Volatility is high because there is no central market and there are multiple driving factors. Forex pairs are traded 24 hours a day, 5 and a half days a week. The volume of currencies traded is staggering. All of these factors mean that the opportunities are great and the signal service offers regular trading offers.
As a more established trading instrument, signal providers for forex are more established than binary platforms. Many of the best services have been going well for 10 years. Thus, potential clients can check a large amount of performance in the past to see how good the service is.
Service providers also have high confidence in their systems given their long-term performance. For traders, that means free trials or membership discounts for new clients. Signals services encourage traders to trade risk-free as they know that traders can only be impressed by the results.
The best forex signal provider?
We have seen many forex signal services and related advertisements. Results matter to us. For this purpose, we suggest Signal Hive to provide you with the best forex signals. Here’s why.
Take a look at these monthly performance numbers since 2004.
Called the Master T-2000 v2, the service has provided annual returns for nearly 14 years. Signal Hive is the market for other systems, but the most consistent. Performance over 14 years cannot be ignored.
Crucially, you don’t have to take our word for it. The system is available in a free trial run by the company. So, you can get these signals for free without risk.
Some major brokers allow you to automate your software. With MetaTrader 4 integration and real-time indicators, the software is as good as we’ve seen. After the free trial, the full pro service costs $50 per month. But if you’re not satisfied after the trial period, just walk away.
Drill into the signal details
Beyond the number of headlines, the system is very consistent. Data can be analyzed hourly or by day of the week, and in the long run all time periods are profitable. So software and algorithms simply pick solid trades.
Signal Hive, as the name suggests, offers a variety of signals. In addition to the Master T-2000 v2, there is a system call MELISA (Multi-Entry Logic Investment And Savings Algorithm). This algorithm works well in times of turmoil in more traditional markets. Again, we’ve shown gains every year over the past 14 years. With investors now looking for safer havens, this system could offer an element of diversification.
