It is a Forex market timing software that helps you analyze the efficiency of the market, particularly the highs and lows. It lets you know the strength of the trend so that you could have warned of any opposite transfer. It means that you can know the volatility of the worth in addition to the perfect time to put a trade.

You merely want to know it to make an extra profit within the Forex market. It additionally lets you know the areas which are consistent with Support in addition to resistance to trade-in.

They assist you to understand the perfect time to Sell again into the present trends or load in new trades. Throughout sturdy trending strikes within the Forex market, it is the very important path your stops behind the Support or resistance range if you wish to keep long within the long-term trend. Your email address will not be published. One other efficiency indicator is varied trading. The currency pair is one other essential issue to bear in mind. The Bollinger band is one other key efficiency indicator to bear in mind.

Moving averages are additionally crucial concerning realizing the efficiency of the Forex market. Post Views: Related Posts Trading Foreign Exchange With Bollinger Bands. The Studying Goals and Trading Targets. Foreign Exchange Ideas and Tips. FX Scalping — Earnings By way of the Roof. Management Your Feelings And Enhance Your Income With Forex Online Trading Methods. A Easy Forex Methodology. People generally focus on certain metrics more than others. For example, the all-important bottom line or net profit is generally the first statistic considered.

Nevertheless, achieving the net profit requires the exercise of various trading practices, such as average time length of a trade, which constitutes another metric. When considering net profitability, the time frame in which the net profit was made and the amount of capital used to make that profit are of considerable importance.

Percentage of Winning Trades — this metric is usually the first statistic considered after the net profit. The percentage win rate is derived by dividing the number of profitable trades by the total number of trades, which gives the win percentage. Percentage of Losing Trades — much like percentage win trades, the percentage of trades showing a loss are the number of losing trades divided by the total amount of trades.

The percentage of winning vs losing trades can be very important in assessing money management rules used in the account. Largest Winning Trade — this refers to the biggest winner a trader had, which can carry a lot of weight for an account if the amount of the winning trade is a large percentage of the net profit. Largest Losing Trade — this metric indicates the level of risk that the trader allowed the account to be exposed to. This metric is extremely important when considering a trader to copy, for a social trader, and for hiring a trader, in the case of a fund or bank.

Average Winning Trade — the average winning trade is derived by adding up the sum amount of all winning trades and dividing this number by the number of winning trades. Average Losing Trade — the average losing trade is calculated by adding up the sum of all losses and dividing this amount by the number of losing trades. Holding Time — the amount of time that a trader holds a position determines whether they are a short-term, medium-term or long term-trader.

Depending on the type of trader, the time a trade is held can be an important metric. The average holding time for a scalper for example could be less than a minute, while a long-term trader might hold a position for several months.

The average holding time is calculated by dividing the total holding time for all trades by the number of trades. Winning Trade holding time versus Losing Trade holding time — this metric can indicate whether the trader is holding losing trades too long or cutting out profits by exiting winning trades too soon.

Holding on to losing trades for long periods ties up capital that can be used better elsewhere. Maximum Drawdown — this very important metric shows the reduction of capital in the account after a string of losing trades. Worst Losing Streak — this stat shows the most consecutive losing trades made in the account.

This metric can be somewhat deceptive, in that if the losing streak was for many small monetary losses, it could indicate a sound money management strategy. Trade Expectancy — this refers to the average amount expected to be made or lost on each trade. The trading expectancy is calculated by multiplying the loss percentage by the average loss and subtracting the amount from the win percentage multiplied by the average win. Basically, interpreting forex metrics like those listed above can be the key to improving your trading skills.

Once a trading system has been evaluated over a period of three months and then tested in a live account for a similar time frame, the trader then probably has enough statistical information to see where there can be room for improvement.

Of course, one of the main reasons for using forex metrics is to develop a sound trading plan. Without a trading plan, a forex trader can be compared to a traveler without a compass or a map. Knowing what to look for when analyzing forex metrics can considerably improve your own trading results, as well as your confidence in copying the trades of others whose metrics meet your standards.

If a trader happens to be using MetaTrader 4 or 5 for their forex trading activities, then they will be able compute various metrics for their trading system from within the platform. Another very useful feature that MetaTrader offers those interested in testing trading systems is the ability to optimize the parameters for a particular trading system based on what would have been the most profitable solution over a particular historical time frame.

This will help a trader get a more realistic sense of how the system will perform in the current trading environment where dealing spreads and response times are taken into account.

The final testing step for a strategy will usually involve trading it personally or automatically, as appropriate, in a funded account in small volumes. This helps the trader make sure that their live trading results are consistent with those obtained from backtesting and demo trading the system.

Once you have been trading a strategy for a while, you may then wish to compute your personal forex metrics to see how your performance has been.

Earnforex has a tool which can compute these metrics from MetaTrader performance data. A screenshot of this forex report analysis tool appears below:. Figure 1 — Screenshot of forex report analysis tool by EarnForex. Now that you have obtained some trading performance metrics by going through any of the three main strategy testing options listed in the previous section, you will now want to know what to look for when reviewing the trading metrics of a particular forex strategy.

Virtually the same performance review process can be used to assess the success rate and risk in using a particular fund manager, signal provider , or other managed forex account program. Before you start this analysis process, you will first want to prioritize the various trading performance metrics obtained from the raw trade data and determine your boundaries for acceptable performance.

You will typically do this based on your personal risk tolerance and profit objectives. For example, you may want to set a maximum tolerable drawdown or a minimum net profitability target for a system or trader to meet in order to warrant further consideration.

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Our Forex trading PDF, it is widely believed that forex is one of the biggest and most fluid or liquid asset markets in the world.

Sometimes referred to as FX, currencies are traded 24 hours per day — 7 days per week. In simple terms, refers to the process of exchanging one currency to another — and generally speaking, this will be for tourism, commerce, trading and many other reasons. In this forex trading PDF we are going to talk about what forex trading is and some of the commonly used terminology in the industry. Essentially, it is the action of selling or buying foreign currencies. Of course, these are all used by banks, corporations and investors for a variety of reasons like profit, making a trade, exchanging foreign currencies and tourism.

One of the major benefits with forex trading is that after opening a position, traders are able to put in place an automatic stop loss as well as at profit levels this closes the trade. The forex market is a place to buy or sell against each other a variety of national currencies, globally. Wherever two foreign currencies are being traded, you can be sure that a forex market exists regardless of the time zone.

In this section of our forex trading PDF, we are going to run through some of the most commonly used forex trading terminologies in the industry.

The pip represents the smallest amount possible a currency quote can alter. For instance, 0. The differentiation between the sale price and the purchase price of a currency pair is known as the spread.

The least popular least commonly used currency pairs usually have a low spread. In some cases, this can be even less than a pip. When trading the most commonly used currency pairs the spread is often at its lowest. The total value of the currency pair needs to surpass the spread in order for the forex trade to become profitable. In order for forex brokers to increase the number of trades available to its customers, they need to provide capital in the way of leverage.

Before you can trade using leverage, you must sign up to a forex broker and open a margin account. Contingent on the broker and the size of the position, leverage is usually capped at if you are a retail client non-professional trader. Some offshore forex brokers will offer much more than this if you are seeking higher limits. It is because of the aforementioned example that you should exercise caution when using leverage.

Should the worst possible scenario happen and your account falls below 0, you should contact your forex broker and ask for its policy on negative balance protection. The good news is that all forex brokers which are regulated by ESMA the European Securities and Markets Authority will be able to provide you with this extra level of protection, ensuring that you never become in debt with your broker.

Margins are a good way for traders to build up their exposure. Put simply, in order for a trader to maintain position and place a trade, the trader needs to put forward a specific amount of money first — this is the margin.

Rather than being a transaction cost, the margin can be compared to a security deposit. This will be held by the broker during an open forex trade. It is commonplace for forex brokers to give their customers access to leverage see above. In order for you to lower your risk of exposure and offset your balance, you might consider hedging. This is a procedure which involves traders selling and buying financial instruments.

When there are movements in currencies, a hedging strategy can reduce the risk of disadvantageous price shifts. The protection of this technique is often a short term solution. Traders often turn to hedge in a panic as a result of the financial media reporting volatility in currency markets.

This is usually down to huge events like geopolitical turmoil conflict in the middle east , global health crisis COVID and of course the great financial crisis of To counteract negative price movements, market players will tactically take advantage of attainable financial instruments in the market. This is hedging against risk in its truest form.

Hedging will give you some flexibility when it comes to enhancing your forex trading experience, but there are still no guarantees that you will be totally protected from any losses or risks.

While it can take some time to get your head around heading in the forex markets, the overarching concept is that it presents both outcomes. That is to say, irrespective of which way the markets move, you will remain at the break-even point less some trading commissions.

More specifically, the spot trade is a spot transaction, with reference to the sale or the purchase of a currency. Essentially, spot forex is to both sell and buy foreign currencies. A good example of this is if you were to purchase a certain amount of South African rands ZAR , and exchange that for US dollars USD.

If the value of the ZAR increases, you are able to exchange your USD back to ZAR, meaning you get more money back in comparison to the amount you originally paid. CFD is basically a contract which portrays the price movement of financial instruments. So, without having to own the asset, you can still make the most of price movements, whilst also avoiding the need to sell or buy vast amounts of currency. CFDs are also accessible in bonds, commodities , cryptocurrencies, stocks, indices and of course — forex.

With a CFD you are able to trade in price movements, cutting out the need to buy them at all. This section of our forex trading PDF is all about forex charts. When it comes to a MetaTrader platform, traders can use bar charts, line charts and candlestick charts. You can usually toggle between the different charts, depending on your preferences, fairly easily. The first record of the now-famous candlestick chart was used in Japan during the s and proved invaluable for rice traders. These days, this price chart is without a doubt one the most popular amongst traders all over the world.

Much like the OHLC bar chart see below , candlestick charts provide low, high, open and close values for a predetermined time frame. Live forex traders love this chart due to its visual appearance and the range of price action patterns utilised. This allows you to gain a better understanding of how live trading works before you take any big financial risks in the market. As the title suggests, this one is a bar chart, and each time frame a trader is looking at will be displayed as a bar. In other words, if you are viewing a daily chart you will see that every bar equates to a full trading day.

With this price chart, traders are able to establish who is controlling the market, whether it be sellers or buyers. OHLC analysis was the starting block for the creation of the ever-popular candlestick charts please further down. It is a great tool for looking at the bigger picture when it comes to trends. The line chart arranges the close prices at the end of that time frame; so in this case, at the end of the day, the line will connect the closing price of that day.

In this section of our forex trading PDF, we are going to talk about the different ways in which you can sell and buy a forex position as well as things to look out for.

When it comes to forex trading you can trade both short and long, but always make sure you have a good understanding of forex trading before embarking on trades. After all, forex trading can be a bit complex to begin with, especially when mixing long and short trades. In a nutshell, going long is usually a term used for buying. So, when traders expect the price of an asset to rise, they will go long. When forex traders expect the price of an asset to fall, they will go short.

This means benefiting from buying at a lesser value. To achieve this, you simply need to place a sell order. The current exchange rate of a forex pair is always based on market forces. This will change on a second-by-second basis. As we noted earlier, you also need to take the spread into account, so there will always be a slight variation in pricing. For instance, if you exchange 1 USD for 17 ZAR, the sale and purchase price offered by your forex broker will be either side of that figure.

The currency pairs with the most notable supply and demand attached to them will be considered the most liquid in the forex market. The supply and demand aspect is thanks to the investment of importers, exporters, banks and traders — to name a few. The most liquid currency pairs are therefore the ones in high demand. When you feel you are ready to take the plunge and begin live trading, you need to select a forex trading system. There is a vast amount of trading strategies for you to pick from.

This is because investors, speculators, corporations and banks have been trading for decades. In this part of the forex trading PDF, we are going to explain a few of the strategies available to you. If you want to buy and sell currency pairs from the comfort of your home or even via your mobile device , you will need to use a trading platform. Otherwise referred to as a forex broker, there are literally hundreds of trading platforms active in the online space.

This makes it extremely difficult to know which broker to sign up with. In the below sections of our forex trading PDF, we explain some of the considerations that you need to make. You should also look out for analysis tools available to you. In some cases, this might be embedded, while some offer tools such as technical analysis and fundamental analysis.

This is because it will save you a lot of leg work having to move between different sites and sources of information. Some of the fastest and easiest trading platforms are MetaTrader 5 MT5 and MetaTrader 4 MT4.

Crucially, both MT4 and MT5 are fast and receptive trading platforms, both providing live market data and access to sophisticated charts. It is essential before you begin trading seriously that you fully trust the trading platform you intend on using. This is especially the case if you intend on using a scalping strategy, for example. However, if you like to trade, it is vital for your peace of mind and your finances that you are fully confident with the fast execution of data transfer.

This is also the case with the precision of quoted prices, and the speed of order processing. All of these things are going to help you to have a successful forex trading experience. To enable you to make the most of new opportunities, the ideal forex broker will be available to you 24 hours a day and 7 days a week, in line with the forex market opening hours.

To save you from having to request that your broker takes action for you, your forex broker should enable you to manage your account and your trades separately.

Not all currencies act the same in this market, so you will need to know which pairs are going to be more profitable to you. The supply and demand aspect is thanks to the investment of importers, exporters, banks and traders — to name a few. All of these things are going to help you to have a successful forex trading experience. Basically, interpreting forex metrics like those listed above can be the key to improving your trading skills. Large clearing companies and financial institutions with large dealing desks use risk managers to determine the level of risk taken by traders operating at their firms who are using its capital and credit lines with the goal of generating extra profits. The currency pair is one other essential issue to bear in mind.

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