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Want A Clearer Picture Of The Ins And Outs Of ONLINE TRADING, But Don’t Know Where To Start. Consider These ONLINE TRADING Tips.

Online Trading Systems

So you know nothing about types of Online Trading Systems?  Let’s take a look at some questions about different types of Online Trading Systems.

So is there a right time to trade?

While some trading systems are totally automated and by computer, many trading systems work by studying charts and predicting winning day trades or intraday movements of currency pairs. An example of one system strategy is the system where some traders build their online trading system around what time to make trades. The system is set up so you do trading around News Time, like the 8:30 am news update.  This is when real world events can and usually will affect the Forex markets. You would ask yourself questions such as “Has something good or not so good impacted the US Dollar?”, “Have housing stats gone up or down?”  The answers to questions such as these will often have a huge effect on the Forex market.

Are there formulas that can help predict the best times to trade?

Another trading system focuses on getting rid of trading chaos, and using powerful Technical Indicators and Rules to sort out this chaos. They can’t promise you immediate success, but if using this type of system you will learn about these Technical Indicators, and how to use them your own way to get ahead.

Have you heard about the mystique around Fibonacci analysis?

You may remember from school, that adding the two previous numbers together generates Fibonacci numbers, starting from 0, 1.  So then you get: 0,1,1,2,3,5,8,13,21c.  And these numbers also have interesting ratios between one number and the previous number. That is: 2/1, 3/2. 5/3. 8/5c. These converge on the famous golden mean of 1.618c. Try it.  In this system there is a program that uses Fibonacci analysis to figure out market turning points, and these are then the points where the Day trader can make money. Forex traders bet on a change of 100 pips, which is equal to one penny out of a dollar.

Have you heard of a Back Testing Spreadsheet?

Back Testing Spreadsheets are spreadsheets that show, day-by-day, blow-by-blow, how the currency market changed over time, and how an actual trader in real life made their money. The idea is to learn from the data analysis a meaningful, understandable way to learn the mechanics of Forex which you yourself could duplicate.

Are there things that impact upon trading viability and success, regardless of the system used?

The one thing that we do know is you can make money on volatility. That is a loaded word but is the reality. From the impact of Middle East war crises to Real Estate bubble boom and bust cycles, there are plenty of sources of volatility taking place at any one time or in any one place. It is between these up and down crests of the pair-wise value of currencies, that there are many opportunities to make money on the same day, or over multiple days.

Online Trading Platforms

So you don’t know what sorts of trading set-ups are typically used by Online Trading Firms or what to expect?  Let’s take a look at a typical array of trading set-ups at an Online Trading Firm.

One example of an online trading platform is where an Online trading execution provides several different trading platforms. There is a process through which online trading transactions then actually happen. You make contact with your chosen commodity broker and you outline the conditions that have to occur for the”GO” sign to flash on your trade. The broker then monitors the market for when the stipulated conditions are met.  The broker then can call the clearing firm trading desk. When the conditions are met the trade is executed and the clearing firm contacts the broker with the outcome, then your broker contacts and informs you.

Firms usually have several different ways to execute trades.

At one level of service, the client has a broker with whom direct contact is made. This option is for traders who like a broker/client relationship and like to get the maximum level of advice for their trading. It is particularly useful for traders who are new to commodities futures and options. Trades are executed by the broker.

The second level of trading is to have automatic trade execution where the client has the trading decisions made and executed automatically be a computer program. This is also known as programmed trading. You can use a standard automatic set-up of the company, or you can, if you are able to, design you own automatic futures trading system to do your trading. Once the system is started, it makes all the programmed trading decisions automatically.

The third way to trade is through online execution of trades done by the client directly and individually.  There are several kinds of platforms and trading available. There are online commodities charts and commodity quotes available, including future options prices. The client can trade futures, securities, and engage in Forex (foreign exchange) trading. There are certain types of trading that occur at the Chicago Board of Trade (CBOT).  This board is connected to brokers, who in turn are connected through the Internet to traders online.

On a final note…..

There is an ongoing lively debate on which online or on the floor systems that are most effective for making money for the trader.  Some company websites track the different trading systems over one, two, or even five years to see which one of them has yielded the highest profits. The results differ from as big a difference as +200% to negative -50% or more. In fact one trading system boasts that it has made money five out of the last six years! Not bad for something widely viewed as gambling.

Many people profit if you are a trader, whether you yourself win, lose or draw. Your broker would be profiting on each trade. Your ISP and software vendors certainly would be.  Then also the traders, bankers and occasionally even governments that take you to the cleaners.  This is why it is extremely beneficial for you to be clear of the system of trading you choose and to know why that system is best for you, as well as having some understanding of the typical trading platforms that you could use and why your chosen one would be right for you and your individual needs.