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How Much Do You Need to Start Trading Forex? • Benzinga

With the world of traditional finance under fire, individuals are turning to self-taught forms of income generation. You can learn to trade forex and don’t need much to get started. Learn more with Benzinga’s guide.

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With the world of traditional finance under fire, individuals are turning to self-taught forms of income generation. You can learn to trade forex and don’t need much to get started. Learn more with Benzinga’s guide.

You can trade forex with as little as $1. Will you get very far? Probably not. Even Warren Buffett needed $228 to purchase 6 shares of Cities Service, and that was in 1941.

In contrast, the Securities and Exchange Commission (SEC) requires $25,000 in your securities trading account for access to all day trading privileges. 

The global forex market is not centrally regulated. There is actually no legal minimum account deposit required for forex trading, but most brokers do have a minimum deposit policy. Forex brokers, however, can and should be regulated within a jurisdiction to make sure they engage in best practices with clients.

For instance, forex brokers based in the U.S. must generally remain in compliance with The Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA). If they don’t, they can be barred from doing business in the U.S. 

Still, some online brokers like eToro have chosen other business models to operate within the U.S. and are instead registered as a Money Services Business (“MSB”) with the Financial Crimes Enforcement Network (“FinCEN”). 

This does not stop you from getting into contact with them, however, through whatever means you see fit. But many brokers based outside the U.S. will not take clients from the country. 

And if you are accessing the forex market through a foreign broker that is not locally regulated, the U.S. government will not protect you in case of fraud or theft. High-net-worth individuals with assets above $10 million may not be protected under any circumstance. Regulators often assume you have a high level of sophistication to go along with your hefty bank account.

Leverage

The U.S. also regulates the amount of leverage a forex broker can provide and limits it to 50:1 on major currency pairs and 20:1 on minor currency pairs. Major currency pairs are usually made up of currencies issued by well-developed countries and enjoy high liquidity levels like EUR/USD. 

Minor and exotic pairs typically have one or more currencies issued by developing nations and may have substantially lower liquidity than the majors. Online brokers operating outside the reach of U.S. regulators sometimes try to attract customers through extremely high leverage, some going up to 1,000:1.

The leverage ratio you are allowed to use by your online broker dictates how much money you need in your margin trading account to control a certain position. For instance, if you want to control a $500 position with 50:1 leverage, you must have at least $10 in your account ($10 x 50 = $500). 

With 1000:1 leverage, you would need only $0.50. The higher the leverage amount, the more quickly your broker will either close out your losing position or demand you pay for your losses if the trade goes against you. 

Because they can close out your position at their discretion, you may not even have the chance to ride out a swing if you have a low account balance. For this reason, you should only put funds you can comfortably afford to lose in your forex trading account. 

Why Use Leverage?

Leverage allows you to control a larger position than your account value would otherwise allow, and you can build profit or losses as if you had that larger account balance in cash. This gets around the psychological problem of boredom many low balance traders suffer from. If you only have $1 in your account, you can double it 5 times and still only have $32. (Doubling your account funds in just 1 trade is extremely hard, to say the least.)

Many traders use leverage as part of their core strategy and use market analysis to tip the risk to reward ratio in their favor. Leverage can also be used for trading account  diversification. 

Instead of having to stake the entire account on one trade, a trader can put up only a small percentage of the notional value of each forex trade. This allows a trader to operate in a substantially higher overall trading size  for the same amount of account funds as a single unleveraged transaction.

The amount of leverage you use impacts the risk you have and the amount of money you need in a forex account. Make sure you only take risks you can afford. You must also consider the other side of the coin — margin.

Margin and the Margin Call

Margin is just the other side of the leverage coin. While leverage is the multiplicative exposure you can take on a trade, margin is the minimum amount of cash you need to make that trade. 

In return for allowing you to take a leveraged position, your broker demands a minimum amount of margin to be deposited at all times in your account depending on what positions you have open. When a leveraged trade moves against you, you start losing money in your trading account in real time and at a greater rate compared to taking an unleveraged trade.

When your available margin moves below the broker’s acceptable level, you may receive a margin call. You must then either deposit the amount of money they report to you or allow a  forced closure of the trade. 

Margin calls can be quite frustrating if you are waiting for a trade to reverse itself only to have your broker close it at a huge loss. The higher your account cash balance, the more margin you have to play with, but the more money is at stake overall.  

Most online forex brokers completely avoid the margin call process by simply closing out your outstanding positions once your account margin is insufficient, so check their policies for details on how they handle that situation. 

Best Forex Brokers

Make sure you are doing business with a reputable broker. Here are some you may want to consider.

Forex Risk and Money Management

Some of the most important aspects of forex trading for beginners are risk and money management. Proper management of risk protects you as you scale up into using a larger trading account. Consider the following to manage your risk:

  • Build your account balance. Larger account balances protect you against margin calls and automatic closeouts, but you also have more to lose if your positions get underwater. If you plan on leveraged trading, you should probably either set automated stops for your positions or have extra money you can put at risk to avoid margin calls and closeouts.
  • Trade a max percentage. Risking only a set percentage of your account balance per trade is a common way to limit the amount of money you risk on each trade. If you set a 1% of account size max loss limit per trade with an account balance of $10,000, then you can risk a maximum of $100 per trade.

    At this rate, you would have to lose 100 trades in a row to wipe your account out. If you set the maximum percentage that you will allow your trades to go against you before closing it out, then you can also calculate the cash you’ll need in your account to avoid a margin call or closeout of that particular trade. Things get more complex when you have multiple positions.

  • Trade the majors. Major currencies include the U.S. dollar, the Swiss franc, the British pound, the Japanese yen and the EU’s euro. The 4 major currency pairs involving them (EUR/USD, USD/JPY, GBP/USD and USD/CHF) are generally more liquid, making large transactions easier to execute.
  • Set automated stops. You may not use full fledged trading bots, but you can use an automated stop loss to order a position closed if the market trades at a certain level. Stops do not have to be static either. The trailing stop follows exchange rate movement that favors your position and is useful for protecting profits as a trade moves positively for you.
  • Trade at high liquidity times. The forex market is open around the clock from 5 p.m. ET on Sunday to 5 p.m. ET on Friday. Lulls in activity do occur on holidays and at the beginning and end of the trading week. When less people are trading and making markets, even the forex market can experience higher than normal volatility and lower liquidity.

Forex Trading Examples

On a $100 account. If EUR/USD is currently at 1.1800/05, and you think the exchange rate will rise, you can buy €4,000 against the U.S. dollar on margin with the intent to sell that position later. The leverage ratio of this currency pair at your broker is 50 to 1, so you will only need €80 or $94.44 in your trading account to control a position of that size.

The EUR/USD exchange rate is later trading at 1.1850/55 after 2 hours. The move from the initial offer of 1.1805 to the current bid of 1.1850 was 45 pips, and your profit is (€40,000 x 0.0045) or $18.

On a $500 account. You believe that the current NZD/USD exchange rate of 0.6600/05 is too low. You have a leverage ratio for this currency pair of 50 to 1 at your broker. You want to purchase NZ$35,000 and profit from the subsequent rise in the exchange rate you expect. You will need $462.35 in your account to control this size of position.

If the NZD/USD exchange rate moves up after 2 hours to trade at 0.6645/50. The exchange rate has moved 40 pips (0.6645 – 0.6605), and your profit is (NZ$35,000 x 0.0040) or $140.

On a $1000 account. GBP/USD is trading at 1.3200/05, and you want to buy GBP35,000 because you believe the exchange rate is too low. The leverage ratio at your broker is 50 to 1 for this pair, so you will need a total of $924.35 deposited in your margin trading account. 

The GBP/USD price is later trading at 1.3225/30 after 5 hours. That is a 20 pip gain, and your final profit is (GBP35,000 x 0.0020) or $70 on the trade.

Forex Terms

Forex has its own language you should learn for a better chance of understanding your fellow traders. Here are some of the more common terms you’ll run across.

Pips

Pips are the smallest exchange rate movement in the forex market. It usually corresponds to a movement of $0.0001 in the exchange rate of most currency pairs.

Trading Lots

A lot is a standardized trading amount. A standard lot is 100,000 units of base currency at most forex brokers. You can also sometimes trade in mini lots of 10,000 base currency units and micro lots of 1,000 base currency units at online brokers. 

Stop-Loss Orders

A stop-loss order is an order that closes your trade automatically if the exchange rate hits a certain pre-specified level. You can walk away from the computer, and the order will still be executed if the stop loss level is hit. 

This protects you from taking losses larger than you had expected, although slippage is possible at many brokers. This means that your order might be executed at a worse rate than what you had initially specified. 

What Do You Need to Start Winning at Forex?

The amount of money in your forex account is less important than a winning strategy as part of your overall trading plan. If you trade profitably 100% of the time, then you could theoretically grow your account to any value you wanted given enough time. The reality is that most forex traders lose money. 

There are numerous considerations that go into making your trading business successful, and you must take them into account if you want your goal to become a reality.

If you want to trade forex more confidently, consider taking forex trading courses before committing your money to the market. Once you have the basics down, you can trade using a demo account funded  with virtual money. After this, you’ll have experience under your belt you can use to operate in a live account. 

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Statements about Cryptocurrency

Statements about Cryptocurrency

Cryptocurrencies are in a bubble and regulators could burst this at a whim.

  • Eight years after the introduction of Bitcoin, there are now over 900 cryptocurrencies and their prices are at all-time highs.
  • Richard Schiller categorizes bubbles as an underlying story driving the market forward, as opposed to the fundamentals of the assets. Cryptocurrencies are riding on a narrative of economic empowerment and freedom.
  • Despite the widespread attention that cryptocurrency receive, many of the actors involved in the market are not fully informed. Debate tends to turn to hype and naive investors are buying crypto-assets without fully understanding what they are.
  • Banks spend 73% of the market capitalization of Bitcoin each year on regulatory compliance. Crypto-assets are currently unregulated and free of these restrictions. As such, the market has thrived but also developed some bad habits.
  • Regulators cannot necessarily shut down cryptocurrencies, but they can restrict liquidity into them from fiat currencies and hamper their growth. The global derivatives market, for example, is worth $1.2 quadrillion, dwarfing Bitcoin’s $100 billion market cap.

Statements about Cryptocurrency

Market manipulations in crypto markets are undermining their credibility.

  • Due to low liquidity, no regulation, and a lack of clear understanding of the markets, pump and dumps are widespread in crypto markets. This is where a speculator can artificially sell while concurrently buying their own currency, wait for the market to rise, and then dump their holdings.
  • Frontrunning is also a common occurrence in ICOs, where early investors—who are used to show initial faith in the enterprise—buy discounted tokens before immediately selling them on.

As with historic bubbles, scams are exploiting naive investors.

ICOs can have the characteristics of vaporware. Entrepreneurs are raising hundred of millions of dollars purely on concepts. Money is being raised from investors who do not truly understand the technical concepts being proposed to them, let alone whether they are feasible.

  • The actual asset structures of ICOs are not only complex but also new forms of assets in their own right. This further confuses investors, which is compounded by the “FOMO” mentality of rushing into investments and following the crowd.
  • The use of celebrities to promote ICOs further demonstrates the use of manipulative marketing techniques used to cajole immature investors into participating in ICOs.
  • The current ICO craze is reminiscent of the South Sea Bubble of the 18th century, a speculatory period that involved crazed investment into enterprises in the New World. Once one of the highest valued companies of all time, the South Sea Company’s bubble burst and the company disappeared almost as quickly as it appeared.

Blockchains are still not proven technology, and more work is required.

  • Blockchains are still new concepts and their technology has not yet been proven on a consumer-wide scale. Attention should be focused on developing this, not speculating on short-termist projects.
  • The security of blockchains is a concept that most investors in crypto-assets do not understand. The onus is on them to protect their assets, which, on the basis of the amount of thefts and frauds in the space, is not being done properly.

There are some solutions to these issues.

  • A less polarized mentality of “us against the world” is needed; this could be enforced by the promotion of self-regulatory standards. These could also help to highlight the bad actors in the ecosystem.
  • More development is required into the underlying technology of blockchains. In the long run, this would be far more valuable than ICO moon-shot projects.
  • Awareness and discussion needs to be promoted. Conferences should present balanced debates from both sides of the crypto-view and more emphasis should be placed on educating investors instead of soliciting their investments.

Originally Published here at https://www.toptal.com

Statements about Cryptocurrency

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CMStrader Signals provider, the number 1 signal provider 4 years in a row

CMStrader Signals provider, the number 1 signal provider 4 years in a row.

CMStrader, the number 1 signal provider 4 years in a row, is now offering free signals to new clients!  Reliable trading tools are fundamental part of successful trading.

cmstrader for the Best Trading Signals

cmstrader for the Best Trading Signals

 

CMStrader’s signals success rate is estimated in 91% this should be enough to take a look and decide for yourself. since this is their biggest feature and drives this broker towards success, it is opretty afe to say that they do their utmost to provide you with quality forex signals.

This broker also entered the cryptocurrency market and offers several cryptocurrencies.  in short they act on the market and engage their clients directly.

when you start trading at CMSTrader, you can choose from a extended list of currencies, indices, commodities, gold and oil.

CMStrader Signals for better Trading

CMSTrader sends trading signals to traders’ accounts when there is an opportunity to buy or sell orders at specific points; an overview of the speculated price or loss ratio is included.

CMStrader Signals the number 1 signal provider among brokers

CMStrader Signals the number 1 signal provider among brokers

The signals are sent directly via SMS to a cellphone for major currencies traded on the stock exchange, foreign goods and precious metals.

In addition, signals can be sent to an e-mail address and or traders can be notified directly over the phone.  This service is available 24/5.

Like with Most proper signal services don’t expect 50 signals a day as simply there are not that many. you will get maybe a few good ones a day on which you could and most of the time should act.

Earn profits with CMStrader Signals in the forex market – the biggest trading scene in the world. Enjoy our unique benefits, trading education, minimum margin and best leverage! Start with a demo account and enter the amazing world of forex with CMStrader.

More about CMStrader Signals & Forex Broker

  • Name :CMSTrader
  • Website :cmstrader.com
  • Established :2013
  • Regulation :FSP
  • Country :United Kingdom
  • U.S. Clients Allowed ?  :No

CMSTrader is a leading investment advisor specializing in personal wealth management and growth and is a somewhat a newcomer to the Forex market.

they started in 2013 and since then have won several awards 2 including one for having best customer service in 2013.

CMSTrader “CMStrader Signals” is authorized under the name of CMS Ventures Limited which is a New Zealand Registered Financial Service Provider (FSP).

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Supreme Court Sides With Bits of Gold in Bank Dispute

Supreme Court Sides With Bitcoin Broker “Bits of Gold” in Israeli Bank Dispute

Upon appeal, the Israeli Supreme Court has rejected the closure of Bits of Gold’s banking facilities at Leumi bank, Tel Aviv.

The Israeli cryptocurrency brokerage’s appeal followed a previous ruling against it that has now been set aside by the higher court.

As Israel and many other countries struggle with the accelerated phenomenon of virtual currencies, Leumi Bank recently made the news for being a particularly blunt in its rejection of Bitcoin.

We should of course not be surprised with the banks attitude towards bitcoin or any other cryptocurrency for that matter. keep in mind that the banks become more and more obsolete because of them. Bits of gold versus leumi

They will keep on loosing money which now they make with ridiculous commissions of work that is fully automated. so they will try to see how they are able to make the operation and acquiring cryptos  as hard as possible knowing that they will never be able to stop them.

There is widespread anticipation that the upcoming G20 Summit in March 2018 will produce a global, moderate framework for a regulatory approach. Set against that are persistent hostile stances the world over from banks, asset managers and even governments towards cryptocurrencies.

Now that the countries understand there is money to be made with Taxation in cryptocurrencies they might want to make sure that the banks stay within their lane. 

Apart from the Israeli revenue service opting to tax cryptocurrency assets as “properties” and other more positive developments dating back to mid-2017, Israel remains a strange mix of genteel acceptance alongside wildly opposing voices.

There is thus Hope But no decision

Bits of Gold has fought a David and Goliath battle since their banker decided it wanted to steer clear of all cryptocurrency-related business.

On record as recently telling another bitcoin-related trader that they simply don’t want the business, Leumi Bank’s hard-line stance is accumulating bad press. The second-largest bank in Israel appears as discriminatory when analyzing virtual currency traders and other digital coin businesses.

During 2017, a customer made a bank transfer to the Kraken exchange site for buying bitcoin worth $1000. The bank identified the request, halted it, and started investigating.

The elated CEO of Bits of Gold, Youval Rouach said that “The court’s decision enables us to focus on the growth of the Israeli cryptocurrency community.”

 

The February 26 Supreme Court ruling granted Bits of Gold a temporary injunction against their account closure pending further scrutiny by the bank and other parties. The presiding bench declared that the company had “acted transparently and did not violate any provision of law.”

Calling the bank’s concerns “speculative” and turning an unsympathetic ear to the plaintiff, the ruling does, however, allow for the bank to still close the account on any small technical detail that defies legislation. As a record of a public spat around cryptocurrency’s right to be recognized in many ways, the ruling is seen as a victory for the local cryptocurrency community.

One Small Step Forward

Although not as absolute as nations like China that has opted for draconian bans, Israel is a front line for digital coins’ right not just to exist, but also become assets in the true sense of the word. The Supreme Court noted in its written ruling that Bits of Gold had not made itself guilty of the violation of any standing laws since opening its doors for business.

 

The Bits of Gold v. Leumi Bank case might become something of a test case once the bank applies its mind in scrutinizing the company’s accounts against the backdrop of existing legislation. The outcome will also be informed by sentiment post the G20 Summit due in March as well as other global regulatory trends.

Now that the countries understand there is money to be made with Taxation in cryptocurrencies they might want to make sure that the banks stay within their lane.

This was First Published by coindesk

 

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