Enjoy Portfolio Benefits With Automatic Forex Trading

Enjoy Portfolio Benefits With Automatic Forex Trading Automatic forex trading can be done in a variety of ways and for so many different reasons that just figuring out where to begin is tough . Should you go with an account with a specialized FX trading brokerage, or should you open an account at a brokerage that allows you to trade stocks, options, exchange traded funds, and futures ? Like this decision isn't overwhelming enough, you then need to decide whether to use your FX trading as a speculative or hedging tool, long or short term, etcetera. Before you start there are definitely many things to consider .

Although the above questions alone can start a big response , we'll focus on the basics for the sake of clarity and simplicity in this article . The simplest way for you to begin feeling comfortable with the FX trading world is probably to just take the plunge and open up an account at a brokerage that specializes in this field . Wondering what broker to choose ? That is a whole other topic for a different time . Just make sure you do your research and due diligence before depositing money anywhere !

Once your Automatic Forex Trading is working and you are getting started , it's time to find out more about what you are participating in. With this example , we suggest that since you started with an account with a specialized broker , you are going to be starting out by trading spot contracts or cash contracts . Without making this complicated , all this means is that you are trading the current price as it sits in the open, global market at that very second . If 1.3200 is what you see the Eur/Usd pair is trading on the screen that means that you can sell Euros against US Dollars at that rate or you can sell Euros and buy US Dollars at this rate. Of course there will be a small spread built into the price you see and this is your cost of entry for taking the trade . Look for a broker going with a spread of 2-3 pips and nothing more .

Because it can be challenging to speculate , even for the pros like me , let's say you want to in the United States have the goal of hedging your stock portfolio . Because U.S. Dollars is the denomination of your stock portfolio if the stocks go up in US Dollars, you may make money but your gains can be cancelled if the US Dollar weakens. You want to hedge this part of the portfolio and you have decided in your brokerage account to purchase Euros against US Dollars . This way as against the Euro the US Dollar weakens and your portfolio starts to suffer because of this weakening, your forex gains that you are experiencing as a result of buying Euros are serving to hedge your downside risk .

The above example is one of the most easy ways that you can add a automatic forex trading component to your portfolio . In future articles we'll talk about more advanced methods of speculation , but this should serve as a good starting place .

David F Dacosta - Is a private trader using technical analysis to do automatic forex trading & futures trading. David makes specific trade recommendations for a small select group of traders. He uses drummond geometry to make his forecasts. Click Here for training materials and a free forex trading forecast.