Posted on 29 September 2011
Tags: account, action, agriculture producers, aid, amount, application, asic, asset, assets, attribute, ban, bank, Banks, Basic, Big, Bottom, center, characteristic, commercial traders, commodity, corporation, corporations, cost, currencies, demand, Develop, downtrend, e buy, ego, end, EST, farmers, forex, Forex trading, Future, Futures, futures contract, futures market, GE, Hanging, hedge, hedge fund, Hedge funds, hedgers, increase, individual, individual trade, individual traders, influence, interest, Japan, japanese expert, Japanese yen, loss, Low, lows, market bottoms, market tops, market trends, mini, money, month, Most, movement, movements, Offs, Other, Pip, pips, Play, position, price movements, prices, profit, profits, protection, real people, retail trader, retail traders, rice, risk, speculators, success, successful traders, three months, top, Trading, transaction, type, US, USD, USD-JPY
To understand the futures market you have to understand the groups of people that are making the shots in forex trading. These are the real people that are driving the futures market. These people are basically divided into three main groups. These groups are as follows:
- Commercial traders that are also known as Hedgers
- Non-commercial traders that are also called as large speculators
- Retail traders that are also known as small speculators
Commercial Traders
Commercial traders or hedgers are those players in the futures market that want to keep themselves protected against any type of unexpected movements of price. The major part of this group includes farmers or agriculture producers who want to minimize the risk in changing the prices of commodity. Other people that are considered to be the part of commercial traders include banks or corporations that are looking to get protection against sudden price movements in currencies or in other assets.
Key Characteristic of Hedgers
The key attribute of commercial traders is that they are very strong at market bottoms and most rough at market tops.
Real Life Example of Hedgers
Let suppose Apple needs a Japanese expert to develop an application and that expert demands to get paid in Japanese yen after finishing developing that application in three months. Apple is aware of the risk that if the USD/JPY drops then it will cost Apple more to pay the expert in yen after three months.
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Posted on 22 April 2011
Tags: amalgamation, continuous basis, endeavor, Forex Market, Forex market function, forex system, forex trading system, individual traders, loss ratio, loss ratios, market liquidity, methodical manner, mishmash, personal involvement, Pip, pips, profit loss, profit loss proportion, profit/loss ratio, profitability ratio, proportion, proportions, systematic approach, tactic
It has been observed that majority of the individual traders in the Forex market function with no trading technique; hence over the longer period of time, they incur high losses. A Forex trading system or tactic is gear to present you an upper hand in the Forex market.
Better to Work with a Systematic Approach
A Forex trading system verifies whether you are earning profit or not in a Forex market. If you make your trading in a methodical manner then your win to loss ratios will be better than the other traders or investors.
Good Trading System
An excellent trading system is that which has already been evaluated by the investors; hence it has an upper hand in the market and also deliver reasonable amount of earning on continuous basis. A gainful and money making Forex system may have win to loss ratio (the percentage of trades with winning to the trades with losing) of 80 percent.
On the other hand the profit/loss ratio on the volume of the standard win to the volume of standard loss may be 2-3 to 1. You can promptly discover that the mishmash of win/loss and profit/loss proportions (renowned as profitability ratio) enlightens you that the system is money making or not.
How Profitability of System can be Determined?
If you proliferate, the sum of profitability ratio must be more than one. Till the time you get this figure more than one, the system is gainful. Preferably the bigger figure is better
Forex System with High Win/Loss Ratio
You can work with more personal involvement with the system that exhibit high win/loss ratio. Besides that the big profit loss proportion presents worthwhile outcome of trading activities, even though you are not making ample sum to enhance the market liquidity.
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