WELCOME

Pips Creator is an innovative blog that helps traders, develop new improved trading skills hence the resultant creation of pips. We believe that trading currencies is very dynamic and a wholistic approach is needed to make the greens.

It is a sad fact that 90% of traders fail, and many do give up too soon. Why? Well thats a very big question that we all need to help answer.

In my opinion the high rate of failure for a new trader can be related to the six major obstacles that a trader faces, which i summarised as follows:

1. Poor Skills.
2. Lack of adequate capital.
3. Setting unrealistic targets and goals.
4. Lack of patience.
5. Lack of discipline.
6. High risk aversion.

This just basically points to the fact that there is no proper Trading System and a Trading Plan- One that includes mind dicipline, money management, proper Forex education and startegies.


WHAT IS FOREX?

Forex (Foreign Exchange) is the name given to the "direct access" trading of foreign currencies, or it is purchase or sale of a currency against sale or purchase of another. It is basically a market where currencies are being traded. With an average daily volume of $1.4 trillion, forex is 46 times larger than all the futures markets combined and, for that reason, is the world's most liquid market. In the past, forex trading was limited largely to enormous money centre banks and other institutional traders. But in just the past few years, technological innovations and the development of online trading platforms allow small traders to take advantage of the significant benefits of trading foreign currencies with forex.
In contrast to the world's stock markets, foreign exchange is traded without the constraints of a central physical exchange. Transactions are instead conducted via telephone or online. With this transaction structure as its foundation, the Foreign Exchange Market has become by far the largest marketplace in the world.

Unlike the stock and futures markets, forex trading is not centralized on an exchange. Due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network, the forex market is considered an "Over the Counter" (OTC) or "Interbank" market. The reason that the forex market is referred to as an interbank market is due to the fact that historically it has been dominated by banks, including central banks, commercial banks, and investment banks. However, the percentage of other market participants is rapidly growing, and now includes large multinational corporations, global money managers, registered dealers, international money brokers, futures and options traders, and private speculators. Forex is a true 24-hour market and trading begins each day in Sydney, and then moves around the globe as the business day begins in each financial centre - first to Tokyo, then London, and finally New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social, and political events at the time they occur - day or night. The most frequently traded or "liquid" currencies are those of countries with stable governments, respected central banks, and low inflation. Nowadays, over 85% of all daily transactions involve trading of the major currencies, which include the U.S. Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and the Australian Dollar. Most forex brokers require a minimum deposit of just $3,000 for opening a regular forex trading account, and only $1,000 for opening a mini account. Forex brokers enable currency trading to be conducted on a highly leveraged basis. You are able to select the degree of leverage or gearing that you wish to employ in trading. However, it is important to remember that while this type of leverage allows investors to maximize their profit potential, the potential for loss is equally great. In the forex market, currencies are always priced and traded in pairs. You simultaneously buy one currency and sell another, but you can determine which pair of currencies you wish to trade. For example, if you believe the value of the euro is going to increase vis-á-vis the U.S. Dollar, then you would go long on EUR/USD instrument (currency pair). Obviously, the objective of forex currency trading is to exchange one currency for another in the expectation that the market rate or price will change so that the currency you bought has increased its value relative to the one you sold. If you have bought a currency and the price appreciates in value, then you must sell the currency back in order to lock in the profit. An open trade or position is one in which a trader has either bought / sold one currency pair and has not sold / bought back the equivalent amount to effectively close the position.

In forex we have what is known as market conventions which are rules and standards imposed by a governing body. In case of decentralized forex market these conventions might differ due to many national regulators (FSA, FSC, CFTC, NFA, BCSC, etc.). Since there is no central governing body that sets forex market rules and standards, we will reference only those that are universal.