Simple Forex Trading Tips

95% of the traders are losing their money but the educated and the person who have right mindset can make out the inconsistency of Trade Forex. And for this purpose here are some tips which will help you in avoiding the losing majority and obtain a real gain for you.

Use Forex Trading Technical Analysis

There are several technical indicators are available in the market and you can use the best one which is properly understand by you to get the best possible return on your investment. Use technical charts and trend indicator, however with the help of these indicator you can predict the uncertainties of Forex market in advance and you can take some better step to protect your trading or if some better opportunity will come through these fluctuations then you can get the chance of better trading

Keep focusing on the action of trend price and use simple strategy

Complicated strategies are good but only for those traders who understand it and put it perfectly into their trading. If you use your strategy cleverly, then it will end up several elements that break your trade. Therefore keep your strategy simple and follow the trend pattern charts to become a successful trader.

One of the most efficient Forex trading tips for new trader is to buy currencies at low prices and sell it at high prices. As far as trading in Forex is concerned, you don’t need to buy the foreign currencies. In this trading system you use contracts intended for the amount and exchange rate of that pairs of currencies. Trade Forex becomes so popular and profitable as compared to stock market because currencies are fluctuating every day so this allows you to gain profit on a daily basis.

Another most crucial tip for beginner is to keep your planning and strategies easy and simple. If you choose very difficult strategy that you don’t even understand properly then you will soon face failure in your trading. Particularly you have to be updated always with the market trends.

Learn from your Mistakes and Losses

One of the best strategy is to learn from your past mistakes and losses. The fact is that you will become a perfect trader when you make a mistake and then learn from it and then never do that mistake again in your trading. 

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The impact of block trades

Because the increase in institutional trading has caused an increase in block trades, it is important to consider how block trades influence the market and understand how they are transacted. The increase in block trading by institutions has strained the specialist system because some specialists did not have the capital needed to acquire blocks of 10,000 or 20,000 shares. Also, because of Rule 113, specialists were not allowed to directly contact institutions to offer a block brought by another institution. Therefore, specialists were cut off from the major source of demand for blocks. Block Houses This lack of capital and contacts by specialists on the exchange created a vacuum in block trading that resulted in the development of block houses. Block houses are investment firms (also referred to as upstairs traders because they are away from the exchange floor) that help institutions locate other institutions interested in buying or selling blocks of stock. A good block house has (1) the capital required to position a large block, (2) the willingness to commit this capital to a block transaction, and (3) contacts among institutions.

Example of a Block Trade: Assume a mutual fund decides to sell 50,000 of its 250,000 shares of Ford Motors. The fund decides to do it through Goldman Sachs (GS), a large block house and lead underwriter for Ford that knows institutions interested in the stock. After being contacted by the fund, the traders at Goldman Sachs contact several institutions that own Ford to see if any of them want to add to their position and to determine their bids. Assume that the previous sale of Ford on the NYSE was at 35.75 and GS receives commitments from four different institutions for a total of 40,000 shares at an average price of 35.65.  Goldman Sachs returns to the mutual fund and bids 35.50 minus a negotiated commission for the total 50,000 shares. Assuming the fund accepts the bid, Goldman Sachs now owns the block and immediately sells 40,000 shares to the four institutions that made prior commitments. It also “positions” 10,000 shares; that is, it owns the 10,000 shares and must eventually sell them at the best price possible. Because GS is a member of the NYSE, the block will be processed (“crossed”) on the exchange as one transaction of 50,000 shares at 35.50. The specialist on the NYSE might take some of the stock to fill limit orders on the book at prices between 35.50 and 35.75.

For working on this trade, GS receives a negotiated commission, but it has committed almost $ 355,000 to position the 10,000 shares. The major risk to GS is the possibility of a subsequent price change on the 10,000 shares. If it can sell the 10,000 shares for 35.50 or more, it will just about break even on the position and have the commission as income. If the price of the stock weakens, GS may have to sell the position at 35.25 and take a loss on it of about $ 2,500, offsetting the income from the commission. This example indicates the importance of institutional contacts, capital to position a portion of the block, and willingness to commit that capital to the block trade. Without all three, the transaction would not take place.

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