Learn the Forex School Way and Notice How Knowledge Makes A Difference

Every schoolboy knows that getting started is really the only way to learn! However, before you make unwise investments, it is best to give our Forex school a shot. Here we’ll teach you about the influencing forces that shape the Forex trading world and give you the tools with which to analyze them.
Combined with our offer of Forex charts, quotes and indicators, ForexFloor School will set you up on an exciting, hopefully successful, sometimes bumpy but always fruitful, ride on the rollercoaster better known as online currency trading.

The Forex Quotes You Need to Make Your Investment Decisions

Check out the modules we laid out for you! Much more than raw numbers, these Forex quotes are presented in simple, easily readable charts that will help you follow the world’s leading currencies in real time, as well as in weekly and monthly interpretive charts.

What is a Transaction Cost and How to Calculate Them?

In economics, transaction costs are the rate acquired when making an economic exchange. This costs incurred when buying or selling securities or stocks. This is also referred as transaction fees. Transaction costs also comprise of brokers’ commissions ad spreads (difference between the price that the dealer paid for a security and the price it may be sold. This is what the broker or bank produce for being a middleman in a transaction.
For instance, most people when buying or selling a security or stock, pays a commission to their broker and that commission can be considered as the fee or transaction cost for doing that stock deal. When evaluating a potential transaction, it is crucial to think about these costs that might prove significant. Mostly, in financial markets, the initial cost for these transactions is commission which is paid to brokers upon trade execution. This costs becomes increasingly important the shorter the holding time of an investment.
Many market models disregard transactional costs, presumptuous instead those markets are non resistant. While this thought is invalid, for many applications such costs are low enough that they can be disregarded. The lesser the cost for a transaction, the more effective and competent a market is said to be. The Foreign exchange market and stock market have lower costs for such transactions of any major asset class.
It is considered to be much more cost- efficient to trade in Forex in terms of both commissions and transaction fees. An online website for example charges no fees or commissions and at the same time offer traders an access to all relevant market information and trading tools. On the contrary, online stock trade commission ranges from $7.95 - $ 29.95 per trade and up to $100 or more per trade with full service brokers.
Another thing to consider, which is an important point is the width of the bid / ask spread. Regardless of the deal size, foreign exchange dealing spreads are normally or common in 3-4 pips (anyway a pip is .0001 US cents) in the major currencies. Generally, the width of the spread in a foreign exchange market transaction is less than one tenth (1/10) that of a stock transaction, which could contain a .125 or one eight (1/8) wide spread.
Since transaction costs are paid via bid/ask spread, there has to be no charges to trade or hidden fees. There are instances that there would be extra charges asked by good brokers for some non compulsory services or access to particular reports. A smaller spread is visibly better. Since brokers are taking the other side of all the customer trades, brokers gain profit by making the spread between the bid and offer prices. You may find that find spreads vary by broker.
In order to be successful in trading on the foreign exchange market, you have to find a good broker.

The Value of Trade Balance to Local Economy

The balance of trade also referred as trade balance, which sometimes is symbolized as NX, is the difference of the monetary value of imports and exports in one economy in a given period of time. The balance of trade is considered the biggest part of a country’s balance of payments.
Imports, domestic spending, foreign aid, and investment abroad are called debit items while credit items includes exports, foreign investments in domestic economy and foreign spending in domestic economy.
A trade surplus is a positive balance of trade which is consists of more exporting than importing. A trade deficit is the negative balance of trade or sometimes called a trade gap. The trade balance can sometimes be divided as services balance and goods balance just like in the United Kingdom which they use the terms invisible and visible balance.
The balance of trade is a part of current account which includes transactions that includes income derived from international investment and international aid. Thus, if the current account comes as a surplus then the nation’s international net asset increases also while deficit will decrease the international net asset.
A good trade surplus is achieved when a country exports products more than buying imported goods. A trade deficit is eventually experience as a result of the opposite of a trade surplus. The trade balance is alike to the difference of a country's output and the domestic demand. These factors may affect the trade balance: prices of goods manufactured, taxes and tariffs, trade agreements, business cycle (home or abroad), and exchange rates.
The trade balance is different in many business cycles. For instance, export growth like oil and industrial goods which improves when there is economic expansion.
In developed countries like; Japan, China and Germany usually run at trade surpluses in which they experience a higher savings rate. Around the world there are different natural resources which a country may have for instance, countries from the coastal regions are major producers of fish, Canada can be a major producer of lumber because of its huge forests while in the Middle East, has the most oil reserves.
International trade is important so in order to sustain the balance of trade. A country should be totally self sufficient without international trade. Through international trades, each country will have the opportunity to produce specialize goods efficiently. In relation, when a nation specializes in producing these goods, the total production increases instead of trying to be self sufficient. Nations will benefit from international trades and also meets their needs. Generally, nations will trade to other nations when they gain from the trade. But the gains are not usually equal in terms of benefits and profit.

What Is A Tick or A Pip and How to Calculate It?

If the currency pair means the quotation of two correlated but different currencies known as pip or “percentage in point”, then a “tick” depicts to the smallest change or increment or movement in any currency pair on the FX market.
In a currency pair, the first currency is called the base currency or the transaction currency while the second currency is known as quote currency, payment currency or counter currency and they are always subjected to changes like for example; EUR/USD currency pair. For example, a change or movement from 0.8941 to 0.8942 is called one tick or pip, so pip for this is 0.0001. For AUD/USD currency pair the case is the same, one pip is 0.0001.
Below is a table for the most common or major currency pairs showing its National Amount and Its pip to USD equivalents:
EUR/USD EUR 10,000 .0001 = $1
USD/JPY USD 10,000 .01 = $1
GBP/USD GBP 10,000 .0001 = $1
USD/CHF USD 10,000 .0001 = $1
USD/CAD USD 10,000 .0001 = $1
AUD/USD AUD 10,000 .0001 = $1
NZD/USD NZD 10,000 .0001 = $1
You will notice that in the table the example currencies are quoted in four decimal places, which is the most common way to quote, except for Japanese yen. Let’s take a value of USD/CHF of 1.5395 as an example, 5 the fourth place is the pip.
So, how do we arrive with these results? The formula to calculate this value is defined as: one PIP (with proper decimal placement) / currency exchange rate x National Amount
Let‘s take for example per 10,000 Euros in EUR/USD, how much in dollars is one pip movement or one tick? Taking or referring to the size that is in this case is 10,000 units of Euros as the base currency and National Amount and one pip base on the given table, we will get: (.0001/.8942) x EUR 10,000 = EUR 1.1183
Using the same example, since we want to the get the value of one pip in dollars or USD, we will need to get the product of EUR 1.1183 and the exchange rate of this currency pair, that is 0.8942 and we will get $1.00 same as in table.
If you notice, every currency pair like the USD/JPY, GBP/USD or USD/CHF one pip is always $1.00 per 10,000 currency units. This in an amazing fact and that is why pip or tick values even in futures are always the same.
This is one important term on Forex that one should know and have to understand because this will determined or using pip you will know how to calculate your profits and losses in the Forex market.

The Basics of Forex Technical Analysis

Technical analysis is one of the two methods of analyzing Forex; fundamental analysis is the other. These two methods are very important in the Forex trading by forecasting the variations of the Forex market, prediction of the price and the movement of the market. Although technical analysis and fundamental analysis differ greatly, they both predict a price or movement. In this article, Forex technical analysis will be analyzed in detail.
Technical analysis is a method of forecasting price movements and future market trends through the study of past market action which take into account price of instruments, volume of trading and open interest in the instruments. Unlike fundamental analysis, technical analysis is focused with what has actually happened in the Forex market, rather than what should happen. There are certain technical analysis tools such as the relative strength index (RSI), which is a price-following oscillator that ranges between 0 and 100; the Elliott waves method, which deals in the prediction of the market movement by the study of wave patterns over a period of time; the parabolic SAR methodology, in which the prices are examined and compared to stop and reversal numbers which are an indication of entry points and exit points for any Forex trade; the stochastic oscillator, which shows the over bought or oversold currencies on a scale of 0- 100%; and gaps, which denotes the spaces on the bar chart that none of the trading takes place.
Technical analysts are confident that historical performance of stocks and markets denote future performance. They use charts and other tools to identify patterns that can suggest future activity. They do not attempt to measure a security's intrinsic value. They study the price and volume movements. And they create charts from that data. A technical analyst would rather sit on a bench in a certain mall and watch people going into the store. He decides basing on the activity of people going into each store. But if he is a fundamental analyst, he would rather go to each store and study the products on sale. Later he decides whether to buy or not. In other words, technical analysts disregard the intrinsic value of the products in the store. From the point of view of technical analyst, anyone can gain the profit by posing himself in the trend direction. Consequently, they use different patterns in order to create the price chart that will suit the future market and the price would follow the pattern.
In summary, Forex technical analysis focuses on what actually happens in the market. The charts are based on market action involving price, volume and open interest. It is always focused with the pricing and time factors rather than the factors affecting the market. Thus technical analysts study the effects, not the cause of market movement.

How Is Stop Limit Order Done?

A Stop Limit order is same as stop order wherein a stop price will trigger the order. Such an order will be placed by a broker that merged the features of both the stop order and those of a limit order. This is a combination of both a stop order and a limit order. Once this is activated, the stop limit order becomes a buy limit or a sell limit order and can be carried out at a particular price or a better one. This will be executed after a stop price has been reached, and once reached, it becomes a limit order to buy (or sell) at the limit price or for a better one. As with all limit orders, a stop limit order could not be filled unless the security price reaches the specified stop price.
The benefit of this type of order is that it allows the traders to control over when is the best time order should be filled. Investors can manipulate the price at which the trade will be implemented. Of course, like all limit orders, the trade will be filled or guaranteed unless the stock’s price or commodity never reaches the specified stop or limit price. Mostly, this incident happens in fast moving markets since prices tend to vary or fluctuates outrageously.
Since this type of order can help you in the possibility of getting a lower buy price or a higher sell price than a limit order alone, there are few tips which might be useful for you.
1.If you are unfamiliar with the process of using a basic type of limit order, read some articles about how to issue a limit order, for you to have an overview about it.
2.Be aware of the difference of using a stop limit order from a limit order. As a substitute of having one price point, you must need to set two. The initial one will be a “trigger” point that will stimulate your order. The second will represent the price at which you intend to actually buy or sell the stock.
3.Decide what you desire to have with this type of order. You may use one to sell your stock at a particular price point after it tapped above your trigger point. As well, you can use one to purchase a stock at a particular price after it moved below your trigger point. This can be helpful if the stocks you are selling heads up and keep moving or the one you intend to buy drops down and keep falling. On the other hand, just like the basic limit order, there is no assurance that you will achieve the price you set; your stock could either hit the trigger or have the reverse direction. As much as possible, keep in mind that the further apart your trigger and target prices are, the less you will be able to achieve both objectives in one day.