Currency: Expert Guides and Resources

Foreign exchange (or forex) markets are one of the fastest and most volatile financial markets to trade. Money can be made or lost in a matter of seconds; at the same time, currencies can display significant trends lasting several days, weeks, even years. Most importantly, forex markets are always moving, providing an accessible and target-rich trading environment.

When it comes to trading options, knowing how to look for breaks is key. For more details on a zoomed-out look at this, read How to Find a Breakout in Trading.One way to trade a breakout is after the break has occurred. You may not have noticed the significance of a particular technical level, or you may not have left orders in overnight to exploit a break.

One way to follow the market from a distance is to set rate alerts from either your charting system or your trading platform. A rate alert is an electronic message that alerts you when a price you’ve specified is touched by the market in a currency pair you specify. Rate alerts are a great way to keep tabs on the market’s progress.

The first step in trading on a breakout is to identify where breakouts are likely to occur. Pinpointing likely breakout levels is most easily done by drawing trend lines that capture recent high/low price ranges. In many cases, these ranges will form a sideways or horizontal range of prices, where sellers have repeatedly emerged at the same level on the upside and buyers have regularly stepped in at the lower level.

The forex markets have had a limited form of electronic trading since the mid-1980s. At that time, the primary means of electronic trading relied on an advanced communication system developed by Reuters, known as Reuters Dealing. It was a closed-network, real-time chat system well before the Internet ever hit the scene.

News trading (buying and selling around high-impact economic data) is notoriously difficult, to the point that many traders intentionally close all their trades ahead of major news reports like nonfarm payrolls (NFP) or central bank meetings. To be successful with this style of trading, you need to have a predetermined, disciplined structure — you don’t want to haphazardly place emotional trades.

Moving averages are one of the most commonly used technical indicators across a wide range of markets. They have become a staple part of many trading strategies because they’re simple to use and apply. Although moving averages have been around for a long time, their capability to be easily measured, tested, and applied makes them an ideal foundation for modern trading strategies, which can incorporate both technical and fundamental analyses.

Leverage refers to the multiple applied to your available margin collateral, which translates into the maximum size of your market position. Leverage is typically expressed as a multiplier rate (like 10 times or 20 times) or a ratio (like 10:1 or 20:1). If the leverage rate is 10-times/ratio is 10:1, for example, and you have $1,000 of available margin, you’re able to hold a maximum position equal to $10,000.