Forex Blog

I’ve fixed some javascript related bugs in both pip value and position size calculators. Those bugs prevented newer versions of non-IE browser from actually calculating any results. I’ve also added new currencies and currency pairs to those calculators. Now they can handle 65 currency pairs. Here is the list of the currency pairs that were added today:

AUD/DKK (Australian Dollar — Danish Krone)
AUD/PLN (Australian Dollar — Polish Zloty)
AUD/SGD (Australian Dollar — Singapore Dollar)
CHF/SGD (Swiss Franc — Singapore Dollar)
EUR/CCK (Euro — Czech Koruna)
EUR/DDK (Euro — Danish Krone)
EUR/HKD (Euro — Hong Kong Dollar)
EUR/HUF (Euro — Hungarian Forint)
EUR/LVL (Euro — Latvian lats)
EUR/NOK (Euro — Norwegian Krone)
EUR/PLN (Euro — Polish Zloty)
EUR/SEK (Euro — Swedish Krona)
EUR/SGD (Euro — Singapore Dollar)
EUR/SKK (Euro — Slovak Koruna)
EUR/ZAR (Euro — South African Rand)
GBP/DKK (Great Britain Pound — Danish Krone)
GBP/NOK (Great Britain Pound — Norwegian Krone)
GBP/SEK (Great Britain Pound — Swedish Krona)
GBP/SGD (Great Britain Pound — Singapore Dollar)
GBP/ZAR (Great Britain Pound — South African Rand)
NZD/SGD (New Zealand Dollar — Singapore Dollar)
SGD/JPY (Singapore Dollar — Japanese Yen)
USD/CCK (US Dollar — Czech Koruna)
USD/DKK (US Dollar — Danish Krone)
USD/HKD (US Dollar — Hong Kong Dollar)
USD/HRK (US Dollar — Croatian Kuna)
USD/HUF (US Dollar — Hungarian Forint)
USD/LTL (US Dollar — Lithuanian litas)
USD/LVL (US Dollar — Latvian lats)
USD/MXN (US Dollar — Mexican Peso)
USD/NOK (US Dollar — Norwegian Krone)
USD/PLN (US Dollar — Polish Zloty)
USD/RUB (US Dollar — Russian Ruble)
USD/SEK (US Dollar — Swedish Krona)
USD/SGD (US Dollar — Singapore Dollar)
USD/SKK (US Dollar — Slovak Koruna)
USD/ZAR (US Dollar — South African Rand)

One of the best things about these calculators is that, unlike many others similar ones, these can be saved as a web page on your PC and used off-line, because they don’t require PHP or the Internet connection.

Today’s update to the MetaTrader expert advisors on my site isn’t very original. For many people MACD Sample expert advisor was the first EA that they tried on the MT4 strategy tester. It’s a well known sample advisor from MetaQuotes, designed to show the basic Forex strategy implementation for the MQL. The one that is now freely available on my site differs slightly from the original version. I’ve decided to make some enhancements and optimized it for GBP/USD pair and H4 (4 hour) timeframe.

In a one year backward test it made about 44% of the initial deposit with 0.3 standard lot position size. The drawdown also wasn’t small, but 10% is quite good, in my opinion. Download this expert advisor and try it for yourself. If you get some interesting results with it on forward tests, don’t hesitate to contact me.

A new addition to my strategy Forex e-books collection arrived today and now can be downloaded by everyone — it’s FX Wizard by Rob Walton. This e-book is about almost everything that is connected to the successful Forex trading — basic money management, discipline, the overall systematic behavior of the trader and, of course, the trading system development. It’s intended for the experienced Forex traders that know the basics and are eager to learn the more important information. But if you trade for several years then you should already know everything that this book can tell you about. If you have just turned from being a Forex newbie to first significant successes and failures in trading then this e-book is for you.

As you can see there are huge potentials to make profits on the Forex. But like any financial market, there are risks associated with Forex trading, and even the most experienced of traders makes a wrong decision every once in a while that ends with them losing a large sum of money. Because the Forex market is such a volatile and unreliable market, it is absolutely necessary that you have a thorough knowledge of trading techniques and plans, market indicators, as well a clear understanding of the Forex market itself.

Before you even think about buying or selling any currency on the Forex market, you will need to have a good understanding of what exactly the Foreign Exchange Market is, and how it works. You wouldn’t make an investment without thoroughly researching it, and knowing exactly what you are getting into. The Forex market is no different, and you wouldn’t want to do something with your hard earned money without knowing every single detail. Therefore, you should do some reading about the Forex market, its origins, general history and facts, as well as some of the more detailed information about how the market mechanism works to determine currency prices and exchange rate values. To get started, the best place to find information about the mechanics behind how the Forex functions (except this site, of course) is Wikipedia. You can gather a great deal of information about the position of Forex in global economies, how the Forex market functions and how this function is performed, as well some of the basic terms that are used when dealing on the Forex market. You wouldn’t want to begin trading on the Forex market without knowing what terms such as derivatives, options, and futures mean.

Now that you have some general knowledge about the Forex market, it is time to do some real world research of the Forex market to better understand how price and exchange rate values are affected by real world events. To do this, I would suggest you look for some articles relating to exchange rates, the Forex market, or events that have affected the dollar’s value. For example, it should not be hard to find articles that describe how the value of the U.S. dollar has been affected by record high oil prices. CNN and Forbes have excellent, high quality articles relating to these topics available for free.

Right now you are probably feeling that doing research about the Forex market and reading articles about it won’t help you one bit when it comes to real life situations. However, by reading more about the Forex you are subconsciously learning about market indicators, devising plans and strategies, as well as touching on the practice of Forex news trading. From articles that you read or information that you have learned, you are taking in a lot of information that translates into practical knowledge that can be put to use when you start buying and selling on the Forex. For example, if you read an article pertaining to the U.S. Federal Reserve relieving inflationary pressure, you will automatically know that when the Fed makes an announcement about lowering interest rates or lending money to financial institutions, the U.S. dollar will decrease in value.

Every good Forex trader knows that the secret to success comes from a well planned strategy or system that enables them to determine profitable trades. A system usually is used to find good trades, though you do need to analyze the market before you can create a good system. Even though you can find pre-developed strategies in various places on the web (however, they usually cost a great deal of money), it is always better to create your own system. A system developed by you can not only better focus on your goals, but it will also allow you to better understand to what extent economic events will affect the Forex market and what type of events cause market fluctuations. Though many sites on the web require you to pay a fee to use their resources to develop your system, there are still a few sites that are absolutely free. You can use this site or any other similar free Forex resource to get some help in your own system development.

A new indicator is available for download now — it’s TzPivots. It shows the daily pivot points directly on the MetaTrader chart. It’s easy to use — you only need to set two input parameters for it to work properly:

• LocalTimeZone — should be set to your MetaTrader server’s time zone shift in hours relative to the GMT. E.g. if your charts in MT4 are for GMT-5, then you should enter “-5″ for this parameter.
• DestTimeZone — is the time zone shift of the destination trading session relative to the GMT. E.g. if you want to trade during the London session, then you need to set this parameter to ”0″ or to ”+1″ when the daylight saving time is on.

That’s all you need to use this wonderful indicator.

I’ve added a new calculator to the Forex tools section of the site — it’s a Position Size Calculator. It’s largely inspired by the Forex Position Size Calculator created by Rich Paredes from ForexProject.com. I’ve tried to improve it with own vision of the position size calculation and now you can check it out. It calculates position size in units and lots, it also returns the amount of risked money or the risk ratio for your position. Account currency and leverage are stored in the cookies.

Pip Value Calculator has been also upgraded so that you can now select account currency different from USD, it will also remember your selection for your next visit.

I published a new complex MetaTrader indicator on the site today — it’s called Traders Dynamic Index. It has almost everything the Forex trader needs: trend direction indicator, trend strength indicator and the market volatility measurement tool. But despite these cool features it is very simple to use. This indicator was sent to me by one of the site’s visitors, but it most probably originates from www.compassfx.com.

Here’s a quick guide to using this indicator (I recommend reading the full guide in its code’s commentary):

1. Blue bands show a strength of the trend — the wider they are, the stronger is the trend.
2. Yellow line indicates the trend’s direction change — when it bounces of 32 level, trend goes bullish, when it bounces down from 68 level, trend goes bearish.
3. Green and red lines signal for the long position — if the green one intersects the red one from below, and — for short position, when the red one crosses the green line from below.

I’ve recently ran across an interesting money management book — Money Management: Controlling Risk and Capturing Profits by Dave Landry. It’s a short e-book, written in four parts. First part simply explains why the risk management is important in the financial trading. Second part gives some interesting advices to organize your money management strategy, or to help you create one. Third part is where some of the Forex professionals are sharing their experiences of poor and good money management. And the final one, fourth, is the most interesting one, in my opinion, — different Forex professionals share their lessons of risk-wise trading.

I’ve also changed the structure of the Forex e-books section a little. Now I have a separate list for beginner, general, advanced, psychology, strategy and money management e-books.

Now you can download a new free research paper related to the Forex market from the e-books section of my site. It is “The Interaction Between the Frequency of Market Quotes, Spread and Volatility in Forex” that was published in the Applied Economics journal more than 10 years ago. This paper researches the relations between volatility, spreads and the frequency of the new market data in the Forex. It can be considered outdated for the majority of the modern traders, but it can help in understanding of how the interbank Forex market works. This e-book is definitely not for the general traders’ community, but it holds a lot of information for the experienced and professional traders.

Today I’ve “attended” a Forex trading webinar by http://www.fxinstructor.com. FXOpen informed me via the MetaTrader 4 mail message that FX Instructor will be holding a free technical analysis on-line lessons on November 26th. The webinar lasted through Asian, European and New York sessions with two hour and a half breaks. The communication via hotCam software went smooth and interactive. There was a chat window, where everyone could say or ask everything they wanted; there was a charting window, where instructor showed the chart and indicators, and the instructor spoke via microphone - the audio was of a good quality, but compact enough to transfer via the web rapidly.

To the contents part, it was informative. That was a large chunk of various information. Two analysts from FX Instructor shared their vision of the majority of popular Forex currencies using a technical analysis. All participants could ask their questions and share comments. All questions were answered thoroughly by the leading analysts. So, to outline the advantages of this webinar:

• A lot of information
• Professional; instructors know what they say
• Convenient form
• Multiple timeframes, currency pairs, trading timezones and technical indicators are covered
• Interaction between students and instructors

Of course, it had some minor disadvantages:

• I had to reconnect manually after losing my connection 2 times
• Instructors speak fast, so a good command of English is a must

That’s it, not many disadvantages I could think about. Overall, I think this service is worth its monthly fee, so, maybe I will subscribe soon. I recommend you to look into it as they often hold free lessons, which are just fun and interesting to look and listen to.