The most common type of forward transaction is the foreign exchange swap. In a swap, two parties exchange currencies for a certain length of time and agree to reverse the transaction at a later date. These are not standardized contracts and are not traded through an exchange. A deposit is often required in order to hold the position open until the transaction is completed.
In every part of life, discipline is important, but neglecting discipline in day trading may potentially result in huge losses. Success without discipline is practically impossible. You need to be able to monitor prices for extended periods of time without making any rash trading decisions. This is hard and requires lots of discipline. Sometimes seeing profitable market moves that you have predicted but did not execute is painful, yet it is better to waste an opportunity, than to guarantee a loss.
Many new traders choose not to close a trade because the market is still moving in the direction they want it to, only to then lose all of their gains when the direction suddenly changes. If your trade hits your predetermined target, close it and enjoy your winnings. If the market moves in the opposite direction, close the trade or set a stop loss so it will close automatically.
Secondly, a larger return is needed on your remaining capital to retrieve any lost capital from the initial losing trade. If a trader loses 50% of their capital, it will take a 100% return to bring them back to the original capital level. Losing large chunks of money on single trades or on single days of trading can cripple capital growth for long periods of time.
Economic numbers: While economic numbers can certainly reflect economic policy, some reports and numbers take on a talisman-like effect: the number itself becomes important to market psychology and may have an immediate impact on short-term market moves. "What to watch" can change over time. In recent years, for example, money supply, employment, trade balance figures and inflation numbers have all taken turns in the spotlight.
There are two main types of retail FX brokers offering the opportunity for speculative currency trading: brokers and dealers or market makers. Brokers serve as an agent of the customer in the broader FX market, by seeking the best price in the market for a retail order and dealing on behalf of the retail customer. They charge a commission or "mark-up" in addition to the price obtained in the market. Dealers or market makers, by contrast, typically act as principals in the transaction versus the retail customer, and quote a price they are willing to deal at.
From cashback, to a no deposit bonus, free trades or deposit matches, brokers used to offer loads of promotions. Regulatory pressure has changed all that. Bonuses are now few and far between. Our directory will list them where offered, but they should rarely be a deciding factor in your forex trading choice. Also always check the terms and conditions and make sure they will not cause you to over-trade.
Leveraged trading in foreign currency contracts or other off-exchange products on margin carries a high level of risk and may not be suitable for everyone. We advise you to carefully consider whether trading is appropriate for you in light of your personal circumstances. You may lose more than you invest (except for OANDA Europe Ltd customers who have negative balance protection). Information on this website is general in nature. We recommend that you seek independent financial advice and ensure you fully understand the risks involved before trading. Trading through an online platform carries additional risks. Refer to our legal section here.
The purpose of this method is to make sure no single trade or single day of trading hurts has a significant impact on the account. Therefore, a trader knows that they will not lose more in a single trade or day than they can make back on another by adopting a risk maximum that is equivalent to the average daily gain over a 30 day period. (To understand the risks involved in forex, see "Forex Leverage: A Double-Edged Sword.")