Myhts about the forex-bot!

Forex robot trading is not the easy route to huge profits that most traders believe. If you want to win with an automated trading system make sure you don't believe the 3 common myths enclosed...

Here are your 3 common myths

1. Forex Robots Offer Huge Gains and Low Risk

Does anyone seriously believe you can double your money each month with little or no risk and make money while you sleep? This is the advertising copy and it's laughable. No robot does this and the user gets handed a lesson by the market.

2. Complex Mathematical Algorithms that Predict Price Changes in Advance

I see many robots which claim 90% accuracy and they say the complex mathematical equations they use can predict price changes in advance but they don't. Most of the equations are actually crude, not complex and lose. These systems also tend to trade too much and have no concept of money management.

Mathematics to predict the market is a huge myth why?

Because markets don't move to mathematics, they move to probabilities. In an odds based market a complex equation is of no real use, as simple systems always work best as they are more robust than complex ones.

3. You Have no Risk Because you Can trade it in a Demo Account

This is normally part of the advertising copy. Trade it for a month and see how it performs in a demo account and see for yourself.

Well since when was a month long enough to judge a system and its performance? Two years should be the minimum any system trader should consider and by the time you have done that, the guarantee no longer applies.

The Reality of Forex Robot Trading

Never matches the hype and deep down most traders know they wont get rich for a few hundred dollars but they still buy them. In recent years we have had the rise of online trading and account minimums have fallen to just a few hundred dollars.

People want to get in on the action and the Forex robot myths sell a lot of systems but if you believe them you will lose.

Before you trust your financial destiny to mass produced piece of software, think about the above and try a different route; Get yourself a decent Forex education and learn skills, apply them with discipline and you will be on the right route to Forex trading success.

New to Forex

For those of you that are new to the foreign exchange (forex) market, it is important to familiarize yourselves with this market’s characteristics and unique attributes. The forex market allows traders to buy and sell distinct currency pairs. No commission is charged per trade, the broker is compensated through the buy and sell price differential – commonly known as the “spread”. Below are a few guidelines to start trading with Advanced Currency Markets – your gateway to the largest and most liquid market on earth.


What is Forex (Foreign Exchange, FX) ?

ACM offers online forex trading services for traders wanting to make speculative transactions on the exchange rate between two currencies.

These rates may be influenced by world economic and political events, currency rate differentials, as well as many other factors including extreme weather conditions (hurricanes), acts of terror etc.

Forex is the largest marketplace in the world with more than 3.2 trillion dollars changing hands daily and so making it one of the most attractive and lucrative markets.


How does the foreign exchange market work?

The forex market allows you to buy and sell currencies against each other and speculate on the differences in exchange rates.

Making a transaction on the forex market is simple: the procedures are identical to that of any other market so switching to trading currencies is straightforward for most traders.




Buying/Selling - B/S

If you want to open a position (i.e.: place an order to sell – to make a profit if the exchange rate falls) you have to choose the amount (i.e.: 100.000 EURUSD) from the drop down menu on the platform and then click the mouse on the sell currency button: SELL (if you want to place an order to buy, you should act in reverse).

This will open a position in the market and you will receive an immediate notification of it on your trading station.

To close an open position, you have to do the opposite of the initial operation – in our case buy the 100.000 EURUSD back.

Different order types also exist to open or close a position under a certain condition.



How does the B/S system work?

As with any market, for each currency pair, there are 2 prices. The difference between them is called the spread.

The spread is measured in points or pips – lowest decimal figure in a currency rate.

For a EURUSD a pip equals 0.0001 (or 10 dollars on 100.000), for EURJPY a pip equals 0.01 (or 1000 yen on 100.000). More information on P/L calculation on the following page: profit and loss.


Forex currencies quotation system

Currencies are quoted in pairs, for example – EUR/USD or USD/JPY.

The first currency in the pair is called the base currency and the second is called the counter currency.

The base currency is the ‘basis’ for purchases and sales.
For example, if you buy EUR/USD, then you acquire Euros and sell Dollars. You do this if you expect the Euro to grow against the Dollar.

It is also possible for a currency pair to be quoted as USD/EUR, but this method is used extremely rarely.

Each transaction must have 2 sides – a buy and a sell (or a sell and a buy).
By this we mean that it is impossible to buy 100.000 EUR/USD and then exchange it for another currency pair (i.e.: EUR/JPY) without closing the first position.

Also please note that no physical currency delivery will be made. For these purposes banks and exchange companies, which specialize in low-rate currency conversions are available.


Forex market working hours

The forex market, based on ‘spot’ transactions, is unique in comparison with all other global markets.
This is because trading takes place 24 hours a day, 5 days a week (ACM platform works from Sunday 22:00 to Friday 23:00 CET). Financial centers are open for work, and banks and other organizations exchange currencies in different parts of the world for different purposes.

Therefore, trading never stops apart from a short break during the weekend.
Early closings are possible depending on calendar arrangement such as, for example, Christmas or new year’s eve.


Forex trading margins

A margin deposit is not, as many traditional traders suggest, the payment in cash for purchasing market shares. A margin is in fact a guarantee or a trust deposit, providing protection from losses during a deal? It allows traders to open positions on amounts that greatly exceed their account limits and so increase their buying power. ACM offers a 1% margin (or 1:100 leverage), which means you can control 100 times your deposit in the real market.

If the funds in the account, in the course of trading, fall below the prescribed margin, your positions will be closed automatically without prior notice. Using this system, the client’s account cannot go overdrawn even under volatile, fast-changing market conditions.

The formula for calculating margins is as follows: (account balance + profit/loss) : open position = the margin


Rollover of positions (swap)

For the sake of transparency and unlike any other online broker we actually have a complete explanation of applied cost of carry on behalf of the market or the customer on open positions held overnight. This overnight cost of carry is presented as a simple flat fee either paid or charged on a customer's account. This process makes for extremely simple statements and greatly increased executional transparency since we do not modify the original price of the position entered into by the customer.

Dollar Weakens before Important Reports

The U.S. dollar declined today against the other major currencies, except yen, after rallying for three days, as the investors sought a technical correction before some important macroeconomic reports to be released today in United States.

Federal Reserve Chairman Ben Bernanke said yesterday that the new fiscal policies wont’ produce a long-term recovery effect on the whole economy, hinting that the additional monetary measures will be used to ease the financial conditions. But those measures may also press on the dollar. Traders already started to include this information into their bets against the greenback.

Although many analysts believe that the first-in-first-out rule will work when the current crisis will be over — meaning that the U.S., which entered the recession first, will be out of it before Europe or Japan, some point out that the bad news are still coming out mostly from United States. Some even say that the consequences for U.S. will be much more serious than for any other developed country.

EUR/USD rose from 1.3178 to 1.3206 as of 9:05 GMT today after reaching as high as 1.3336 earlier. GBP/USD went up from 1.4507 to 1.4605, while the daily high was reached at 1.4706; USD/JPY rose from 89.35 to 89.57.