ONLINE TRADING
THE LOVE AFFAIR between American investors and their online brokers is growing deeper and more intense. In the first six months of this year, 3.8 million new accounts were opened, and online trading surged 87% compared with a year ago.
But are the lovers happy?
Introduce some stress into the relationship--such as a 25% plunge in the Nasdaq composite in one week's time last spring--and tensions build, rifts emerge and spats break out. Then calls go unanswered and e-mails don't get the courtesy of a reply. Trigger-happy brokers dump stocks of leveraged clients without notification. Orders don't get executed because computer systems crash. In a nutshell, that's the state of online-brokerage service these days--great when the going is good, quarrelsome and bittersweet when it isn't.
In our annual survey of online brokerages, we've sought to take the emotion out of your task of deciding which firm merits your affection. Fifteen brokerages are ranked on eight key measures, ranging from commissions to the quality of research they offer to the savvy of their telephone reps (not to mention the time it takes to reach one of them).
And guess what? After all our poking and prodding, the unmistakable conclusion is that they are, on the whole, more reliable and offer you a better deal than they did just a year ago.
FOREX Trading Strategies
To be a successful FOREX trader you need a trading strategy. There is no one set strategy that is good for all traders; rather, each trader needs to develop his or her individual approach to the FOREX. Some traders rely solely on technical analysis while others prefer fundamental analysis, but many successful FOREX traders use a combination of both to get a broad overview of the market and for plotting entry and exit points.
Technical analysis relies on one key concept: Prices move by trends. The common saying in FOREX is 'The trend is your friend.' Market movements have identifiable patterns that have been studied over many years and a thorough understanding of these trends and how they can be read forms the basis of a good trading strategy.
There are many analytical tools available to understand market movements.
The beginner FOREX trader is well advised to study each one separately for getting a working knowledge of their concepts and application. Once one has been understood, keep on using it while studying others.
Each tool tends to reinforce the others.Support and resistance levels are used in many FOREX trading strategies. 'Support' refers to the price level that is repeatedly seen as the bottom – when the price reaches this level it tends to rise. Resistance levels are upper prices that the currency rarely trades beyond. Support and resistance levels contain price movements for a period of time.
When currency prices break through support or resistance levels, the prices are expected to continue in that direction. For example, if the price rises above the previous resistance level, it is seen as bullish – the price should continue to rise.To find support and resistance levels, price charts need to be analyzed for unbroken support and resistance levels.
Charts can be analyzed in any time frame; however longer time frames establish more important support/resistance levels. Traders can use support/resistance levels to determine when to enter or exit a transaction.Moving averages are another common tool in FOREX trading strategies. The simple moving average (SMA) shows the average price in a given period of time over a specified period of time.
Moving averages serve to eliminate short term price fluctuations giving a clearer picture of price movements. FOREX traders can plot a SMA to determine when prices have a tendency to rise or fall. If prices cross above the SMA they have a tendency to keep on rising. Conversely, prices below the SMA have a tendency to continue their downward motion.These are two examples of trading strategies that can be used individually or in combination.
In practice, the FOREX trader should have a repertoire of trading tools to examine market conditions and to support the findings of one study or another. If several indicators show that the market is moving in a particular direction the trader can act with more assurance than when relying on a single indicator.
