Home | Global Traders Association

What is Forex?

When I started trading many years ago, foreign exchange and fx were the most commonly used terms in the forex industry. In futures trading, the words currency and currencies were mainly used to describe this market. The FOREX was the name of the association of New York interbank foreign exchange dealers and appears to have been derived from the first few letters of the term FOReign EXchange.  What is forex? Over the years, as the foreign exchange market evolved into the era electronic trading so did its name. Forex appears to now be the word most commonly used for the foreign exchange market, especially in the trading community. 

So, you might ask what is forex? It is first important to understand that a foreign exchange rate is determined by the relationship between two currencies, which is the amount of one currency it takes to sell in order to buy an equivalent amount of another currency and vice versa. Prior to 1971, foreign exchange rates were fixed until the Bretton Woods accord ended this system and ushered in the era of floating exchange rates which continues today. This is why forex rates are constantly changing.

What is forex trading?

Forex trading differs from other markets as there is no centralized exchange to conduct transactions, which usually take place between two counterparties. Forex trading is the largest financial market in the world, with daily average turnover well in excess of $4 billion. The evolution of the foreign exchange market has seen it grow from what was once the domain of commercial, investment and central banks. This has seen other participants, with access to electronic platforms, take on a greater role. These include hedge funds, fund managers, multinational companies, private speculators and investors, and emerging market central banks. Perhaps the biggest change has been the role of emerging market central banks due to the build up and diversification of foreign exchange reserves as they have taken on a bigger influence in the forex market.

Forex trading is conducted around the clock, 5 days per week, 24 hours per day, starting on Monday morning in New Zealand and ending in the United States on Friday afternoon. As major centers open for the day (e,g, Sydney, Tokyo, Hong Kong, Singapore, Frankfurt, London, etc), liquidity increases as each joins in the rotation. This also allows the diverse participants that make up the forex market to react to events, whether economic or political, at any time they occur. This is especially true today where access to electronic trading platforms provides the opportunity to trade from an office, home or on the go using a mobile device at any time the market is open. This has seen the retail forex industry grow as traders are attracted by the ability to trade around the clock on electronic platforms with increased liquidity, tight bid-offered spreads, low margin requirements, flexible trade amounts, in up (i.e. bull) and down (i.e. bear) markets

So what is forex? It is the relative value of currencies in relation to the dollar and one another that is constantly changing. A forex rate is determined by a global market made up of a diverse group of participants that operates 5 days per week. 24 hours per day.

Jay Meisler

Global Traders Association

Global Traders Association

The Global Traders Association was founded to give individual traders in various markets their own voice. Too often regulators and institutional participants a make decisions that impact individual traders without taking out the wants and needs of those being governed. This not something confined to a single national jurisdiction but is a global concern. What is decided in one country can impact traders in other jurisdictions. This is truly a global association of traders.

A couple examples of areas where regulators have made decisions in what they perceive to be in the best interest of traders without a group of individual traders putting up a united front include: eliminating the ability of U.S. traders to “hedge” forex trades rather than closing them out in the same account. There are also arbitrary rules about the order in which existing trades must be closed. Additionally, regulators have made rules about the maximum leverage permissible on an account. One additional example is a proposed rule in the U.S. prohibiting the funding of trading accounts with credit cards, even though many use their credit cards as a quick and immediate source of liquidity.

We are not arguing the merits of these regulations or proposals; we just feel that often the interests of individual traders are not being given a fair hearing by regulators or the industry because they are not represented by a large common body. The only other way to be heard is on a forex forum. This is your chance to be represented by someone who has your interests at heart in a period of increased regulation by the “nanny state”. We feel individual traders have the intelligence and maturity to make financial decisions for themselves.  

One purpose of the Global Traders Association is to give individual traders a voice with their brokers as well. Individual traders have certain common concerns about the safety and liquidity of their funds at individual firms and best practices as well.  As individuals we have no leverage with the industry, but as a group we do. The Global Traders Association is the place where you can be heard by a body that has the same interests as you and can exert pressure on the industry for change. It is in the interest of all traders to join the Association (no membership fees) simply because in numbers there is strength. In this regard, the GTA has prepared a “Bill of Rights” for individual traders as a first step in asserting our influence with the industry.

The Global Traders Association also is an education source for its members featuring newsletters, special reports and alerts on topics of interest to the membership. We take our role as educator to the membership very seriously. Topics pursued include trading techniques, new trading technologies, regulatory proposals, developments in the trading industry and others. We do not espouse a single point of view, but seek a broad range of perspectives on ky topics. Much like a Forex Forum, the association is intended to be a sounding board for its membership.  

Join the Global Traders Association now. The membership is free!

The forex market is the biggest around the globe with an estimated daily volume of two trillion dollars. To succeed in forex trading, you should understand how to predict price movements and market directions. Traders can achieve this by applying various types of analysis. 

Technical analysis is one of the most useful and commonly used when it comes to evaluating previous market data. This helps figure out potential upcoming market performance. Technical analysis involves the use of different tools and indicators such as MetaTrader 4 (MT4) indicators.

Understanding a Technical Indicator

A technical indicator is any form of metric whose value is obtained from any price activity in assets or stocks. Such indicators focus on forecasting price levels or the general price direction of a certain security by evaluating the past market performance. Common forex indicators are:

• Moving Average Convergence Divergence (MACD)
• Relative Strength Index (RSI)
• Stochastics
• Bollinger Bands
• Money flow index (MFI)

There are diverse MetaTrader 4 custom indicators. Technical indicators do not evaluate any essential components like earnings, revenue, and profit margins. They are used by active foreign exchange traders in the market.

For a longstanding trader or investor, many technical indicators are usually irrelevant because they hardly define the impact of the underlying factors on price moves. Long term traders can gain from technical indicators because they execute an evaluation on the long term trend. This approach helps determine the ideal entry and exit points. 

Why use MetaTrader 4?

MetaTrader 4 offers Forex traders and brokers diverse trading capabilities. The platform works well for both experienced and novice traders and supports both custom and technical indicators. 

Installing Custom Indicators in MetaTrader 4

You can easily install custom indicators on your trading platform using the following steps.

• Copy your custom indicator
• Launch the data folder
• Launch the MQL4 file
• Launch the indicators file
• Paste copied data
• Reopen the MetaTrader 4 platform

Installing Custom Indicators to Charts in MetaTrader 4

Some traders face difficulties when it comes to adding indicators to MetaTrader 4 charts. However, this process is easy compared to the installation of indicators. All a trader needs to do is identify their ideal indicator from the Navigator section and follow the steps below. 

• Click left and hold
• Pull the custom indicator to the chart
• Release the mouse to facilitate the addition of the indicator to your chart

MetaTrader 4 is a convenient and easy to use platform that offers traders everything they need to succeed in forex trading. 

Analyzing the Best MetaTrader 4 Indicators for 2020

Using indicators on the MT4 platform is one way of improving your trading experience and easing your technical analysis. 

·       Moving Average Convergence Divergence (MACD)

MACD is a trend pursuing momentum indicator that indicates the connection between two changing price averages. To calculate MACD, you need to deduct the 26-day EMA (exponential moving average) from the 12-day exponential moving average. Further, a 9-day EMA of the MACD is drawn above the MACD functioning as a prompt for buy and sell signals. MACD is defined in three ways; crossover, divergence, and dramatic rise. 

What is spot gold?

Online brokers have opened the market for gold traders, who have the ability to trade spot gold similar to the way forex is traded. This offers a way to speculate on the price of gold or for those involved with physical gold, a way to hedge their risk without having to take delivery. One exception is in the United States, where trading gold (and other precious metals) is required to be conducted on a futures exchange,

So what is spot gold and how does it trade? Similar to an fx quote, spot gold is quoted vs. the US dollar. For example, a forex symbol for a currency quoted against the US dollar, such as EURUSD (EUR vs. USD), GBPUSD (GBP vs. USD), etc, spot gold is quoted as XAUUSD (GOLD vs. USD). The value is determined similar to the way a currency value is determined by the amount needed to buy (or sell) one currency vs. another at any point in time. The reason I mention any point in time is that gold trading is similar to foreign exchange trading as it is a floating rate market with the relative value of spot gold changing constantly. In the case of spot gold, the value is calculated by what it costs to buy (or sell) gold vs. the US dollar rather than what it costs to buy (or sell) one currency vs. another. Typically, online brokers quote a bid-offered spread with no commissions, similar to the way spot foreign exchange is traded.

Also similar to currency trading where the base unit is 1 (e.g. EURUSD 1.3320 => 1.3320 US dollars = 1EUR or USDCAD1.0350 => 1.0350 Canadian dollars = 1USD), spot gold is quoted as one unit. In the case of gold, a unit is one troy ounce. So if gold is quoted at $1350, then it is the cost to buy (or sell) one troy ounce of gold. If the spot gold quote is $1350.20-1350.60, then the broker is bidding $1350.20 (i.e. the price you can sell) and $1350.60 (i.e. the price you can buy). Unlike futures, contract sizes are not fixed and the trader can determine the amount to be traded.

Just substitute gold for a currency vs. the US dollar and you have XAUUSD. The parameters (e.g. size of bid-offered spreads leverage, etc) offered can vary from broker to broker (note using high leverage has risks and these should be considered carefully whenever trading on margin) and the factors that have made spot fx trading popular have done the same for spot gold trading. These include the ability to trade 5 days per week, 24 hours per day, access to electronic platforms for trading, low margins, good liquidity, bid-offered spreads and no commissions, flexible trade sizes, and the opportunity to trade in both bull and bear markets.

So what is spot gold? It is like spot fx trading except gold takes the place of a currency vs. the US dollar. Otherwise, it is offered the same way by online brokers. This includes a similar risk disclaimer warning as when trading fx. One difference is that gold trading can be more volatile than foreign exchange with less liquidity at times and this risk needs to be factored in when trading as well.

Jay Meisler

Global Traders Association