The Importance of Real Time Forex Charting

Do you want to earn money in the arena of foreign exchange? In order to accomplish so, you should possess in-depth technical knowledge, focused on the capability of tracking currency exchange rates, through interpreting actual forex charts.

If you are an amateur in this field, you should quickly discover authentic forex charts from the Internet or may opt for free actual forex charts. The best option is however, to take the help of free chart recognition software and mastering on it, you are well suited for this business.

Online forex charts keep you updated about currency values at any time, even between short time gaps like minutes to long intervals like several years. The graphs depicting the oscillations in rates are line graphs, or bar diagrams or candlestick charts.

Line charts are easy to interpret and help you to broadly check ups and downs of prices. It aids you to track the current trend of rate movement. On the contrary, bar charts are not as lucid as line graphs but supply a much in depth information.

To summarize, the length of a bar chart depicts the amount of rise or fall in price and the breadth gives the duration, which has witnessed this. Initial and final rates are mentioned on chart so that you can identify the range and whether it’s a fall or rise. There are pattern recognition software available that interpret the bar diagrams for you and make your task easier.

The Japanese were first found to use candlestick charts to plot their amount of their rice production. Since then they have been increasingly popular. Though they are similar to bar diagrams, they are colored.

Each color acts as a code to signify the rise or fall in price. The index is written on the graph itself. Thus candlestick plots are much more user friendly than bars. Candlestick charts have unique patterns and they are as pretty as to be named after natural beauties. As soon as you are able to identify the particular pattern you will identify the market trend.

An actual forex chart is often complemented with many technical indicators such as trend, strength, volatility and cyclic movements. A forex chart is useful itself, but this adjunct information is provided to ease your task of market analysis to predict both movements in the market and market volume.

Calculating Interest on Forex Trades

One of the best things about Forex trading is the fact that one can trade using leverage, thus borrowing as much as 1,000 times your capital in order to make a trade. However, borrowing money for trading in foreign exchange is the same as borrowing it for other purposes—interest must be paid on the loan. 

However, as currency trading involves both buying and selling, the interest due on your loan can be offset by the interest earned on the currency you buy. Before going on to particular examples, let us take a look at interest rates in general, to see how the foreign exchange market is affected by it. 

In central banks, interest rates are set in accordance with a country’s monetary policy—high interest rates make the currency more expensive to buy and lower interest rates make it less so. 

Imagining the government of a country with high inflation will help you understand how interest rates are used.

The government, because of rapidly rising prices, might decide to raise interest rates. This would increase the cost of the country’s currency, and make demand and consumption fall, as borrowing would be more expensive.

This in turn would cause prices to fall and inflation rates would come down. Similarly, a country undergoing recession might lower interest rates to boost the country’s economy, as lower price of currency would cause demand, and, therefore, supply, to increase. 

Interest rates set by central banks also determine at what rate commercial banks can borrow from governments and lend to their customers, including forex traders. Which tells us how interest rates affect this trade.

A trader who, for example buys GBP/USD, needs to borrow the Dollars to buy the Pounds and will, thus, pay interest on the USD and earn it on the GBP. If the interest rate the Bank of England sets for the UK Pound is higher than the one set by the Federal Reserve for the US Dollar, the trader will earn more on the UK Pounds he bought than he pays on the US Dollars he borrowed, thus making a profit.

However, unless there is a significant difference between the two interest rates, the net profit or loss will be marginal. Besides, while interest rates are set on an annual basis, trading positions are usually opened for short periods. This serves to significantly lower any gain or loss on interest rates.

The Advantages of Automated Forex Trading

Forex trading is nowadays the preferred form of investment for an increasing number of people these days. It is apparent why this is so.

As the largest trading market in the world, the Forex market has a steadily growing trading volume, which has risen from around $500 billion to about $2 trillion in the last twenty years.

Additionally, since it is not tied to any particular trading floor, it is an unusually liquid market. Operating around the clock also makes it a permanently open market. Thus, since many markets are opening and closing at the same time, one can effectively follow the markets around the world.

Both big and small traders are thus being attracted to Forex trading. They enjoy a wide choice of trading strategies based on the various aspects of the foreign exchange rates. Many traders coming into the market find the different things that affect currency exchange rates very attractive for a very simple reason – they can use a wide range to tools when working in this exciting and stimulating market.

Automation is perhaps the greatest influence today on the future growth of the Forex market, as it brings with it more advantages than disadvantages. Manual systems trying to operate in a fast paced and volatile environment bring with them several losses.

A simple time delay in buying and selling may cause a row of losses in a manual system and thus cause the trader immense frustration. Automated Forex trading allows trade to be conducted anywhere in the world, in real time, and eliminates the losses seen in manual systems.

Operating in a wide range of different currency markets at the same time, without worrying about the time zones of the places concerned, is another advantage that automated Forex trading brings. Sitting in New York at 2 o’clock in the morning, one can conduct business with traders in different countries on the other side of the globe, simultaneously and with great ease. All thanks to automated Forex trading.

Risk management is often a source of worry for traders, but even this is reduced with automated Forex trading. Payments can now be synchronized in real time and this leaves traders satisfied, as opposed to manual trading where there is always uncertainty about payment being made after completion of trade. The automated trading system is developing progressively, and that brings with it hopes that the settlement system will be updated and markets risks will soon cease to exist.

If there is one technology that has advanced by leaps and bounds over the past few years, it is computer technology. Indeed, one hopes that it will continue to grow for many years to come. Most importantly, advances in computer technology spell good for traders who wish to access the best Forex automated trading.

Access to technology easily and cheaply from the comfort of the traders’ homes means they can manage their own investments with ease. Automated Forex day trading will thus come as a welcome addition to a fully empowered investment vehicle for those in the currency-trading world.

Choosing the Right Automated Forex Trading Software

Automated forex trading has a few advantages of its own. Here all you have to do is follow trade signals that are generated and if you are able to execute them with discipline and if your system is logical, then you can easily pile up gains.

Before looking at the various ways you can gain profit through these software, let’s take a look at what not to do.

Many traders find forex robots online and buy them. But you must keep in mind that most of these are pieces of junk and have never been traded in real time. Take a look at the track record and then at the disclaimer. It is probably hypothetical or stimulated and that is no sure indication of future results. It is strange how some one can just take a test and claim to make money with it.

Of course, they do make money for the vendor, they get the sale of the software and the trader gets spanked in the market. No one gets 100k annual income for a hundred bucks. You will never make any money with these stimulated systems so try and steer clear of them.

Let’s now take a look at how automated forex trading is done in the proper way and discuss the options.

Buy a system with a track record that has been audited over two years. These may not be cheap but they can pay for themselves many times over. You only make sure that you understand and agree with the logic before you begin to use it.

Try the free systems. Look up our other articles to know more about them and you will realize why this is a great place to begin your automated forex trading career.

Go ahead and build your own. This is easier than it sounds. It is also a better way of trading because if you build and customize the system, you will gain more confidence and you will be able to trade with discipline, even during periods of loss.

If you do decide to build yourself a system, we have it covered in our articles. But the best way to go is to trade breakouts, to new highs or lows, have momentum indicators to time your moves and focus on long term trends. The simpler it is the better. This will enable it to face the ever changing market condition. Packing it with too many indicators might break it down.

Once you are in possession of a system, get hold of a forex software package, program the rules and you are all set.

Keep in mind that all forex trading systems, including the best ones will suffer losses that can continue for a long period of time. You need to continue trading until you hit a home run and because of this discipline and money management is necessary.

If your system does between 50-100% compounded annually, you are a part of the best automated forex trading software and you can trade markets and enjoy currency trading success.

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