Forex Spread Trading Strategies

A spread is simply defined as the price difference between where a trader buy or sell an asset.

To find the total spread cost, we will know need to multiply this value by pip while considering the total amount of lots traded.

It’s important to note that the fx spread can vary over the pairs. It is betting allows speculation on the movements of the selected currency without actually transacting in the forex exchange market view.

trading view

The three components to a forex spread bet are direction of the trade, trading size (lot), and instrument to be traded.

We know how currencies are quoted in the market. So, we can calculate their spread and make the forex strategies.

Forex margin call calculator

A margin call is the broker’s demand that an investor deposit additional money that the account is brought up to the minimum value.

Margin Call (MC) view known as the maintenance-margin. It’s the ratio of your equity to the used margin of your open positions.

It is means that one or more of the securities held in the margin account has decreased in value below a certain point.

Margin level indicates how healthy your trading account is. It’s indicated as a percentage.

The margin level is a risk management indicator that helps you understand the influence of the currently opened positions on your account.

It’s mathematical equation that effectively tells the forex account owner or trader how much of their funds are available for new trades.

A margin account is core, involves borrowing to increase the possible Return On Investment (ROI).

The amount that needs to be deposited depends on the margin percentage that’s agreed upon between the trader and the broker.

A margin call arises when an investor borrows money from a broker to trading.

Margin is debt or borrowed money a broker or firm uses to invest in other financial instruments.

You can borrow up to 50% of the purchase price of an initial margin. Marginable securities act as collateral for the loan.

You have to pay interest on the amount you borrow depend on the calculator.

Margin-loans are variable-rate loans. The interest rate will vary among brokers.

It’s the agreed reserve amount of money required to be maintained in the account for entering into the particular forex trade.

Equity and free margin in forex

The view of the Equity in forex trading is simply the total value of a fx trader’s account.

When a forex trader has those active positions in the market, in addition to any unused account balance.

The equity on the forex account is the sum of the margin put up for the trade from the fx-account.

Equity is the sum of balance and current profit or loss of open positions and swap.

Free margin is the amount-available to open next trades. It’s available funds to trade on an account.

Margin is the amount of money necessary to cover your possible losses during margin trading.

These funds are not being used as collateral in trades on the forex financial market.

Equity fund and how an equity mutual fund-works is actually quite simple. You give money to a fund, which it invests in stocks. The gains or losses whatever they may be accrue to you.

Equity in simple word is ownership. In trading world, it is refers to stock.

In the accounting and corporate lending world, or shareholders’ refers to the amount of capital contributed by the owners or the difference between a company’s total-assets and its total liabilities.

The account equity consists of the cash balance plus the value positive or negative of open positions.

Free margin is the amount of your trade balance that is available for opening new positions.

As the contracts rise or fall in value so does the account’s total-equity. If a trader’s open positions lose serious value, his equity may fall below a margin maintenance level.

If you have no free margin, you’ll not be able to open any new-positions or your positions will be stopped out.

how to calculate risk management forex

Be smart in handling your forex risk -tolerance depends on personality types also.

So, you should make an effort to fix it to suit your ability. It’s known as controlling your risk.

One of the fastest ways to make money quickly is through the forex market.

In this article I will give you the masterplan to exit the losses for good.   As the forex advisor market, we believe the chart always moves randomly. So, how to calculate risk management on yours.

Incurring losses is inevitable and you’ll be wrong in your predictions a lot of time. However you can control the amount you lose.

When the trade goes against your predictions, you would either close the trades earlier or let it move further.

Both of which brings in losses. Knowing the amount they could risk for.   It’s time to defined your forex risk tolerance clearly.

Most of the traders always look for the right time to enter and exit but where they miss the vital factor of trading is.  You cannot control the number of losing trades.

And traders looking for brokers who offer more leverage is a common sight in the forex arena.

Though leverage allows you to trade with minimum capital, you should be very cautious in using it as it’s a double-edged sword.   You should not use it in the greed of making more money.

You’ve use it when the prospect of making a profit is brighter as per the well-studied forex strategy to go successful.

It is always better to trade with the right position size which you could rightly assess in the course of forex trading.

It’s true volatile forex market is suitable for trading as there will be price movements.

But being on the sidelines during high volatility is the right way to control and how to management your risk.

Fixing calculate the risk as below 10% of the trading capital  per trade (one pair). It’s saves you from blowing the next trade forex account.

The holding time of a trade is also a crucial factor which increases the risk of incurring losses.

Setting a longer holding time or more-pips or more-profit is like having a big position size.

So, you should set the holding time precisely as you know the market and stick to it to avoid losses.

Forex hedging strategy guaranteed profit

Hedging itself is the process of buying or selling financial instruments to offset or balance your current positions, and in doing so reduce the risk of your losses.

Forex brokers nowadays that allow and support hedging strategy and frees you from dependency on the market direction.

Hedging is a strategy to protect one’s position from an adverse move in a currency pair.

The forex hedging is trading both ways (up and down or buy or sell). Trader can make a hedge against a particular currency by using two different pairs.

Forex hedging is the act of strategically opening additional positions to protect against adverse movements in the fx market.

Forex hedging means reducing or controlling risk. This is done by taking a position in the futures market that’s opposite to the one in the same pairs.

The concept of hedging in forex trading is deemed to be illegal in the US.

forex stochastic indicator explained

The stochastic oscillator uses a scale to measure the degree of change between prices from one closing period to predict the continuation of the current direction, or to explained providing insights into potential future market.

The indicator’s used by many traders to implement a consistent form of technical analysis.

It is can used in any financial market especially in forex trading. Stochastic processes are widely used as mathematical models of systems and phenomena that appear to vary in a random manner.

The indicator measures momentum by comparing the closing price with the previous trading range over a specific period of time.

It is widely used in forex trading to pinpoint potential trend reversals ranging from 0 to 100.

The stochastic oscillator reflects overbought conditions with readings-over 80 and oversold-conditions with readings under 20.

By comparing current price to the range over time, the stochastic oscillator reflects the consistency with which price closes near its recent high or low.

The stochastics are more useful in sideways or choppy markets. It’s best in consistent trading ranges.

Parabolic sar forex

Indicators are usually used to forecast price changes on the currency market.

They are calculations which take the volume and price of a certain financial instrument into account.

By using Forex indicators, traders can make decisions about market entry and exit.

Determine when a trend will reverse by using the Parabolic SAR and find the optimum points for entering the market.

In stock and securities market technical analysis, parabolic-SAR (parabolic stop and reverse) is a method devised by J. Welles Wilder, Jr., to find potential reversals in the market price direction of traded goods such as securities or currency exchanges such as forex.

One indicator that can help us determine where a trend might be ending is the Parabolic SAR (Stop And Reversal).

A Parabolic SAR places dots, or points, on a chart that indicate potential reversals in price movement.

The Parabolic SAR is an indicator that follows the trend and determines the reversal point in the price channel.

SAR literally means “stop and reverse.”  Visually, it takes the form of a series of dots that are either above or below the price chart.

If you increase it, the indicator will give more signals, but their accuracy will decrease.  If you decrease it, the signals will be more accurate, but there will be fewer of them.

The longer the indicator’s period, the greater the expiration time must be.  The farther the Parabolic SAR dots from the chart, the more stable the trend.

The closer the dots, the more likely the trend is to reverse.  The Parabolic SAR gives accurate signals only if the market trend is strong.

How to avoid swap forex

Swap is an interest fee strategy that’s either paid or charged to you at the end of each trading day.

A forex swap is a commission or rollover interest charged by a broker for extending a trader’s position overnight.

When trading on margin, you receive interest on your long positions, while paying-interest on short-positions.

Forex swap is a simultaneous purchase and sale of identical amounts of one currency for another with two different value dates and may use foreign exchange derivatives.

It is refers the interest rate differential between the two currencies of the pair you’re trading.

It’s calculated according to whether your position is long or short.

Types of swaps:

  • Basis swap
  • Overnight indexed swap
  • Interest rate swap
  • Currency swap
  • Credit default swap
  • Commodity swap
  • Equity swap

So, how to Islamic forex trading accounts do not charge you with avoid overnight-swap interest for holding your trade?

Forex swap free account is intended for traders who use trading systems without adjustment to swaps or for the customers who are not allowed to receive swaps-owing to their religious beliefs (Islamic Account).

Riba is a concept in islamic-banking that refers to charged interest. It’s forbidden under sharia (Islamic Religious Law).

Forex Expert Advisor Reviews

The forex expert advisor is a program capable of performing in the terminal any action following the instructions of a trader, without his direct involvement.

Forex Expert Adviser is add-on software used with a MetaTrader currency trading platform. A FX EA is used to automatically generate trading signals on the forex-trader’s behalf.

All tasks are performed automatically or mechanically, which is why the advisors are called experts or mechanical trading systems (MTS).

Forex trading and an expert advisor is a piece of software that tells you when to make trades or even automatically initiates and executes-trades according to preprogrammed instructions.

Expert advisors are most often deployed on the MetaTrader 4 or MT 5 forex trading platforms.

The EAs are programs that run on the Meta Trader 4 platform, used to monitor and trade financial markets using algorithms.

They find opportunities according to the parameters you set, then either notify you or open a position automatically (Forex Robot).

To enter the editor, just right-click on an existing expert advisor in the left-hand navigator pane and select modify from the menu.

The MetaEditor of MT4 will then open, and you will be able to create a new file.