Commodity Futures Trader

Posts Tagged ‘currencies’

Metatrader 4 has become the number one trading platform for the independent day trader. The fact that it is very easy to install, simple to use and totally customizable has gone a long way to keeping it the most popular trading platform.

However, it’s the Metatrader indicators which help make it so good. Mt4 indicators can be installed in a matter of minutes and with such tiny files you can save thousands of them to your computer using minimal memory. Metatrader 4 indicators can be edited using the MetaEditor via the built in tool bar. This allows the indicator to be customized which may include, but not be limited to, changing display colours, indicator calculations and changing other various parameters.

Because of this ease of modification there are now thousands of free ones that any forex trader can download and apply to charts. With such a huge growth in the number of free indicators available there is also a market for programmers who for a fee will program any indicator you need.

Popular indicators comprise of Rsi, Macd and Bollinger Bands. However, more complex metatrader indicators are now being created on a daily basis. Fisher Yur4ik, BB Squeeze, Hooya Bands and Shi Channel have all been customized into MQL language from other trading platforms.

As someone considering trading forex options on global exchanges you will want to find an online options broker, look at the key points and decide which service provides the best value. You should find out for example if the firm has any exposure to leveraged instruments like credit default swaps and mortgage investments, as this could be an indicator of potential solvency problems at a future point in time. Also look to see if the firm cover other areas like futures, stocks and bonds.

A key question will be the size of the company and the range of its operations, and you will want to know about its trading volume, whether it is half a million, a million or more, to gain a better picture. As a prospective trader client of an online options broker you would want to check out how the firms margin requirements work, and establish whether it uses automatic limits in real time or offers a service where the broker may make a margin call at the end of the trading day. Check out also what minimum balance the broker requires clients to maintain.

Some option contracts allow you to exit at any time up to the expiry date while other types of contract must be held to expiry or settlement. So you would need to know what type of options your broker can offer in their online trading platform. There is also the question of cost and whether the online options broker can offer a discount and so lower your trading costs. Under what circumstances would they do this? Do you have to have a premier type account or hold a higher maintenance margin to benefit from a discount?

When we consider currency and commodity trading it relates to the currencies of countries where a proportion of their output and exports are commodities, such as raw materials like copper, oil and precious metals and agricultural products like wheat, soybean or timber.

While it would not be wrong to refer to many world currencies as commodity currencies, this is not the intention when traders use this description. Those who follow currency and commodity trading trends, however, use the term to describe the three major countries in which commodities play a major role in both economic output and exports.

The Australian dollar, the New Zealand dollar and Canadian dollar are all affected by movements in the price of global commodities, with gold price movements strongly reflected in changes in the Australian dollar, while the Canadian dollar has a strong relationship with the price of crude oil. Meanwhile the New Zealand dollar (or Kiwi), while not linked to a particular commodity like the other two currencies, displays a general correlation with movements in the Commodity Research Bureau (CRB) Index.

Let’s consider what happens as gold strengthens? We can expect to observe a similar rise in the AUD/USD pair (the Aussie), as all currencies trade in pairs. This equates to a strengthening of the Australian dollar versus the US dollar, or put it another way, the US dollar is weakening in that pair. The onset of economic uncertainty in the global economy, such as recession or rising inflation, prompts investors to move into gold as it is regarded as a safe haven. Currency and commodity traders will also see how gold links to the Aussie, and trade this pair instead.

For trading success, good money management is the key. Many traders ignore this aspect of trading at their own peril and get their account blown in a few weeks of trading. Trading discipline means using a trading system based on money management rules that limit your risk and avoid making trading decisions based on emotions.

One of the worst blunders that trades can make is to try to trade without sufficient capital. This does not mean that you should have a lot of money before you start trading; it only means that you need to have enough capital in your account to take advantage of the movements in the markets. Low capital increases your chances of getting blown out.

The minimum amount required to open a standard account with many forex brokers is $2000. You can start with $2000. However, it is recommended by most of the professional traders that you should start with at least $5000 to get good results. A trader with limited capital is always a worried traders always looking to minimize losses beyond the point of realistic trading. Never ever trade live without practicing on the demo account for a few months.

A standard account or a regular account (often also called 100k account), lets you trade a $100,000 standard lot with a $1000 deposit. This $1000 is kept as the margin by the broker. This is a 1% margin. Your account should have more than $1000 if you want to trade a $100k lot.