Forex Currency Trading Online

Forex Signals Armageddon

2009-11-15T02:51:00.001-08:00

The trading system was created specially for H1 timeframe. The following pairs are used in trading & Forex signals: GBP/USD, EUR/USD,GBP/JPY, USD/CHF, EUR/GBP.
Minimum deposit a person needs to follow the system's Forex signals is $10000 (using mini Forex account). Max stop-loss is 300 pips, which means that risk per trade is no more than 3% of deposit. So, maximum risk on all open positions at the same time is no more than 10%. Max drawdown for full amount is 20%. In case of breaking that drawdown level the trading system' giving Forex signals will be stopped.
The trading system is based on defining different fractal models and using Neely wave analysis. It implies the following development of currency prices: impulse-correction-impulse. If an impulse forms on H1 timeframe and then begins a correction, and at the same time fractals shows a certain model (system developer's observation) and break the certain fractal when H1 closes - in that case the position is open and Forex signals are given.
Few moments later the stop-loss and take-profit are defined and set. Sometimes, when a position is open there might be new Forex signals for adding some lots to the open position. In that case another order is opened, but the stop-loss of already opened one is set in "profitable zone". The orders are usually closed by stop-loss or take-profit.
The positions can be hold from 1 up to 5 days. Forex signals are given once in 1-2 days on each of the currency pairs. The trading system doesn't imply fundamental analysis, but during the release of important news the trading is usually stopped. Open positions are closed or their stop-loss is changed in order to close position with profit. Pending orders can be also set, but in this case the level of stop-loss is somehow more than level of possible profit. So, the trading strategy can be called low-risky. The signals can be used by people, who want to get additional income on Forex market, but have no time for creating their own trading system.

Currency Trading - Best Approach to Learn It

2009-11-15T02:50:00.003-08:00

With recent developments, anyone without proper training can gain profits from currency trading by utilizing automated trading systems such as trading signals or forex robots. But by deciding to learn currency trading, you are always one step ahead over others who know nothing about it.
For example, you can tweak the performance of your robot to trades in more aggressive manners with proper risk management. This is what happen to the FAP Turbo when many expert traders experimenting with its settings. Knowledge to interpret news is another benefit; some times breaking news can cause high movement in the market within short time and this can be a potential extra profit for you.
If you are new at this and just have decided to learn currency trading, don't take too complicated lessons and try to swallow it all; you'll get confused and might want to stop halfway. What you need to do is selecting a recommended and proven trading system, study it, and test it. Gaining profits from your own trades no matter how small it is will be a huge boost to learn even more.
Currently, currency trading is the largest market in the world with daily trades worth of 1.9 trillion US Dollars. The rules are different from stock trading; these currencies are moving against each other so you just have to know which one to play in order to make profits. These are what you need in your lessons in order to utilize those movements:
1. Charts is the basic of all analysis methods in currency trading, so your lessons must teach you well in this topic. This includes types of charts, support, resistance, trends, indicators, oscillators, multiple time frames, patterns, etc.
2. You don't learn currency trading just to get your money wiped up by the ferocious market; make sure you also learn proper risk management such as placing stop loss and take profits order with good risk/reward ratio. In addition to that, identify a stagnant market where there are no profit that can be made is one of the most important skill; in this condition it is best to just stay aside and do nothing.
3. How to identify the best entry and exit to make profits. This is the most essential lesson: studying a proven trading system. Depend on your teacher, you might learn different strategies such as swing trading, scalping, or longer term trading strategies where your trades will keep open for weeks.
Note:
Swing trading: trading style where your trades will keep open for days and aiming for larger market movement.
Scalping: A trader who watched the smallest market movement during a trading day to makes many trades with little profits for each trade.
If it is works and you can do it with ease, the methods are not that important. Personally, I don't suggest scalping if you are going to maintain your trades manually since it can be really tiring to look for every profit chance and maintain multiple trades at once; that would be a perfect job for a trading robot.
Conclusion
There are no boundaries when you decide to learn currency trading, but I suggest you only take what you need to protect your money and make steady profits. Don't forget to practice what you learn since massive lessons without practice will kill your desire to learn. A demo account would be a perfect means to start practicing.

The Route to an Easy Income? No, They All Lose Money

2009-11-15T02:50:00.001-08:00

If I came up to you into a bar and said give me a hundred dollars and I will give you an income for life with no effort, you would think I was joking. But online, people hand over to Forex Robot vendors who promise them an income for life with no effort and they all lose their money for one simple reason...
If you have someone claiming they can make you money, you would have thought they could produce some hard evidence, that they had made some themselves but look at all the Forex robots sold and you get big claims and NO verified, real time track record!
A closer look at the track records, shows them to be no more than computer simulations going backwards knowing all the closing prices, well that's very easy but the challenge of Forex is trading without knowing this key data.
People will always believe the shortcut route to riches and they buy these systems and they lose. They never stop to think, that 95% of traders lose money and if it were so easy to make money as the robot vendors claim, the whole world would be trading and not bother going to work. These systems are sold for so little because they DON'T work, not because they do.
Forex trading is a learned skill and you can win, anyone can but you have to do what you do in all professions to succeed and that's to learn the basics and get confidence in what your doing.
Sure you have to make an effort but that's true in any money making venture and Forex trading is no different but the really good news is for the effort you have to make the rewards are enormous.
So learn Forex trading the right way and make an effort and you will be well rewarded.

Which is Best a Forex Robot Or an Forex Course

2009-11-15T02:49:00.001-08:00

If you want to learn Fore the two main choices for new traders are either Forex robots or Forex courses but which is the best for you? Let's take a look...
Forex robots are very popular, due to the fact they tell traders they can make money with no effort, all you have to do, is read the manual, plug the system in and it will then trade on auto pilot for you. These systems come at a cost of around a hundred dollars, so there affordable to any traders. These systems though, have one major problem and its, they don't work and never produce the gains they claim.
So why can't they make the gains they cliam on the track records which they produce?
The reason is, the track records are not real money trading, there just computer simulations going backwards over past data, knowing all the closing prices. Anyone can make money, if they know the price in advance but that is simply not the reality of Forex trading.
These systems simply don't work and give the Forex industry a bad name but can you make money with a Forex course?
A forex course means you have to do some work and learn skills. In a market where 95% of all traders lose money you need to have the right education but the good news is these courses will teach you strategies and tools and the logic behind them so you can trade with confidence. In any profession, you need to learn the basics and get an education and trading currencies is no different. Currency trading courses will provide you with the skills you need and they will also provide you with, a hundred percent money back guarantee so you can learn with no risk; if you feel Forex trading is not for you, your course fee is rebated by the vendor in full.
Anyone can learn Currency trading and if you make the effort to learn skills, you will be well rewarded with a great second income.

The Easy Way to Educate Yourself and Make Huge Gains

2009-11-15T02:48:00.001-08:00

If you want to learn Forex trading and make big gains, you don't need to work hard, you need to work smart avoid the myths and get the right education to win and this is what this article is all about...
The first point you need to keep in mind is to avoid all the get rich quick software packages you see that claim you can make an income with no effort and for paying a hundred dollars or so - they don't work. These systems give Forex trading a bad name and should be avoided at all costs.
In a market where 95% of traders lose you need to earn skills but this won't take you long and a couple of weeks of education is all you need to get on the road to success. The reason you can learn so quickly is - Forex trading is simple and simple strategies work best and always will - Why?
Because make a strategy to complex or to clever and it will simply have to many elements to break. Don't work harder than you need too on getting your system ready to trade.Learning a system is easy but you now need to do the harder part which is learning the right mindset to trade with discipline and keep your emotions out of your trading. This is something most traders simply cannot do - Why?
The problem for most traders is they come to trade with an ego and hate being wrong. When they get some losses, they get angry and can't take them so, they hold them and hope they turn around and this of course leads to disaster. In Forex trading you must learn to take losses and hold onto your equity in periods of drawdown and if you do this, you will still have equity left to run the big profits when they come around again.
Discipline sounds easy but it's not easy, keeping your emotions out of your trading, when money is on the line but with confidence in what your doing which comes from a good education, you can do it and if you can trade in a dsicplined way, a huge income awaits you.

Become a Currency Trader

2009-11-15T02:47:00.000-08:00

Anyone can become a currency trader from home and you don't need to work hard or have a college education and here we will give you a story which will inspire you and show you that the route to Forex trading success is open to you.
Richard Dennis was a well known trader who decided to treat a group of novices to trade to show that anyone could learn to win with the right mindset and education. This group was ordinary people - a clerk, a boy out of high school, an auditor and a security guard, so regular people. He then taught them to trade in 2 weeks, gave them a system and told them to trade and he waited for the results which proved his point, that anyone could learn to trade:
The group made several hundred million dollars, in just 4 years and achieved outstanding success. The rules they used are public information now and free online and if you look at them, you will see the system was simple ( all the best systems are) and all the traders remarked how easy the system was to learn - but the hard part they found was adopting the right mindset to apply it with discipline.
The problem most traders have is not related to learning a system but getting the right mindset to make it win. To make a system win, need to trade with discipline and take losses and keep them small For example, the turtle system had far more losers than winners but by keeping losses small and running the big trends, the system made outstanding gains long term.
The system if you look at it, had rigid money management rules and there hard to follow with discipline but you can see that if you do adopt the right mindset and have the discipline to cut your losses and have the courage to run your profits, you can make a lot of money over the longer term
Forex trading is a learned skill and anyone can learn a system, the easy part of Forex trading and while it takes focus to adopt the right mindset it can be don and if you trade a solid system with discipline, you can make a huge income - it really is that simple.

Forex -Software System -Trading For Being a Successful Forex Trader

2009-11-10T10:33:00.002-08:00

There are thousands of options that you can choose from when it comes to forex software system trading. Trading in the money market is already on its way to being the most popular trend. Individuals can simply make money from home and this could go up to millions. You could either choose any of the online forex trading software or you could choose to buy trading software offered by several trading companies which will help you enter the trading scene.
However, before you go ahead and invest in one, you need to look at a few points.
Make sure that the trading software works in a real time market scenario. It should be able to give you real time information in the form of charts or graphs, which are again easy to understand. This will help you analyze the market trends easily.
The forex trading software or the website, whichever you choose should have access to the trading market 24 hours a day. This is because the trading market works 24 hours, and if it looses out or disconnects for even a few minutes, you could be loosing out on vital investment opportunities. The trading market trades in different market currencies on a worldwide basis and therefore is open all the time.
Choose trading software that offers you a choice of currency pairs, since the market trades in pair like USD/EUR where you trade one currency over another.
Some excellent software let you trade on it as a practice session. This way, you get to know how your software works and will also pick up indications about the market that most software usually provide. Also check for free demo or trial forex software system trading programs that will help you understand the software. If you are comfortable with that particular software, you can go ahead and purchase it.

Forex -Secret -Trading

2009-11-10T10:33:00.000-08:00

Online forex trading is a new type of investment that most individuals follow to make some profits. You would have probably known a few others who have minted a bagful of money with forex trading. However, if you are looking for the best forex secret trading, then you need not look any further.
Firstly, before you begin, make sure you are working with the help of a system that is reputed and offers you tips, suggestions, help in gauging price action and which has an easy system that will help you master reading trend lines and chart patterns.
Once you have an excellent trading system in place that is user friendly as well, you need to progress to the next step. Make sure that you start off small with each trade. You don't want to invest a huge amount of money only to loose it. When you put in your first trade, you are always a bit scared, and could likely make the wrong decision or it could be your kind of retracement channel. It is best that you step into the trading scenario with a small investment amount, this way you do not have a lot at risk. Once you set your trend and style and are much more confident in your profit making abilities, you can then go ahead with a larger amount.
Another trend about forex secret trading is that you start off small and then keep on adding your investment, depending how the trends prove themselves. This way, you are dealing in less risky areas of trading. Once you have an excellent exit signal, you will increase your profits by many folds. You could either choose to scale out by starting big or you could start small and then keep on adding. However, with the add-on method, you are likely to have a smaller risk factor.

Forex -Trading -Strategies - Best Times to Trade on the Foreign Currency Market

2009-11-10T10:32:00.000-08:00

The foreign currency market also known as the Forex market is an area that is difficult to learn to work with. The Forex market is very popular because it operates for longer hours than the stock market or other markets. The flexibility of the market provides it with an advantage over other markets. The market is open from 800 GMT to 2200 GMT.
Trading takes place around the globe while the market is open. Many automated robots look for the slower times that the market is open to take advantage of better trades. Depending on which country you may be trading from, the times can be very different. Most people lose or make money during 1300 GMT to 1600 GMT.
The Asian market is very slow and because of the current economy, many people are avoiding some markets such as this one. More research will have to be done to determine which currency pairs might work best for you in this market. The US market is considered the most active and it begins about 1300 GMT. If you are interested in the best currency pairs for this market, they usually are the USD and the EUR. With the economic situation that most countries now face, even trading with the USD and the EUR is not as safe as it once was. In the London market, most trades happen during 1300 GMT and 1600 GMT.
Finding the right time to trade is not always the easiest to do. The opportunities for trading are much higher when the market is the highest. Some robots also look for ways to make trades that happen when the market is not at its highest. Understanding the best times to trade can make a big difference in the returns you gain. Simple research is needed to find out which currency pair and time is the one for your Forex trading strategies.
If you make manual trades, you may have to operate at times that are very different from the ones you may be comfortable with in your regular life. Certain times will require you to be available to make trades when most of the world is asleep. You will have to make the decision on when to operate and whether to rely on a robot to do the work for you. Your strategy will determine which choice you should consider making.

A Key To Successful Forex Trading And Trading For A Living

2009-11-05T20:15:00.000-08:00

Every one has his days when no matter how well he has planned out his trades, he may find some of his trades not performing to what is planned. It is only natural for one to feel upset, but for the follower of a forex trading system, making money or losing money from that trade is not the paramount objective.

Why is this so?

For the trader who employs a forex trading system, he can still face the losing trade with a smile, because he has had followed through the trading signals in a disciplined way, and it is only when a trader follows a system, he can be sure of keeping his losses small and to live to trade again another day.

By using a forex trading system, the trader can have a cool head, and can face his trades rather unemotionally. He can execute his trades following pre-determined price levels of initial stop loss, trailing loss and computed and projected price profit.

He knows his tolerable level of loss, his threshold of pain - and of course, his risk to reward ratio even before he trades.

Now when a trader has a trading system and follows through the trading plan, making profits is a natural result when he makes a correct trade. But when his trade is wrong, his forex trading system will very quickly show him that the direction of his trade is wrong, so that he is out of the game fairly quickly.

I am often flabbergasted at some very broad claims of some traders who condemn day trading systems and relegate them to the garbage bin. When you look at forex trading systems, review them quickly by peer recommendation whenever possible. By peer recommendation, I mean you can ask existing traders their experience on the trading system, and how they are doing with it. Posting to the numerous reliable trading forums will allow you to receive some independent reviews fairly quickly. At the same time, my personal experience, and that of many other professional traders is that day trading can be profitable, though it is never easy to day trade. Otherwise, how is it that so many day traders are able to earn their income day trading the short swings of the market daily for a living? So it is important for you to have a broad view of forex trading systems if you are contemplating of learning or purchasing any trading system that relates to day trading.

If you ever wish to trade successfully, whether you day trade or swing trade, it is important that you have a trading system that will allow you to approach trading in a disciplined manner. It is only when you are a disciplined trader that you can see consistent large gains and small losses.

The opportunities of trading the Forex hedged grid system

2009-11-05T20:14:00.002-08:00

I have seen the hedged grid system been used successfully (and highly unsuccessfully) over the last few years. Unfortunately the failures tend to discourage traders from taking advantage of this great system. I have found that the failures are mainly due to ignorance, impatience and greed (common reasons for trading failure).

In a nutshell the grid system uses the following methodology. You start by buying and selling a currency. When the price moves a predetermined distance (grid leg) you cash in the positive leg, leave the negative leg and buy and sell again. Sooner or later the system goes positive and you would then cash in when it is positive.

This is a brief summary of the content of our free hedged grid trading course available on expert-4x.com. Please refer to this course for more details of how money is made. The attraction is that the system is reasonably mechanical, can be programmed and does not take much supervision as exclusively entry orders are used.

Money is made when the price retraces 100%, 50%, 33% at various levels. This starts looking like a strategy that supports the Fibonacci concept. The grid system is also based on the nature of the market to trade sideways 80% of the time and to trend 20% of the time.

The dangers are that what if the price does not retrace and continues to trend. The Grid system can not make money in a trending market – full stop. One has to realize that. You therefore need Strategies to minimize damage during these periods:-

Firstly I have found that the biggest mistake made by traders is that they select a very small grid leg sizes e.g. 20 to 30 pips. This is a recipe for disaster. The trick is to use big leg sizes between 150 and 300 pips. What this does is that it sometimes turns a trending phase into movement in a sideways market. I would typically use 300 pips for the GBPJPY and 150 pips for the EURUSD for instance.

Secondly there is no rule that says that the legs have to be the same size. So I change my leg sizes in trending markets to be even bigger. If I started with 150 for the 1st leg I would go to 200 for the 2nd leg and 250 for the 3rd leg etc. This makes sure that I am carrying less loss making transactions in a trend.

Thirdly – sometimes it is wise to increase the number of lots with the trend compared to the numbers against the trend in a good trend. However be aware of having the same number of sell and buy transactions. All you will have done was lock in your current status in a 100% hedge.

Fourthly – This is the biggest change and most important one that I personally have made in my grid trading strategy. Always cash in all your transactions when your system is positive and when the price reaches the end of one of your grid legs. By cashing in you are reducing the risk of carrying negative lots in a trending market. This also gives you an opportunity to re-assess the market conditions.

Fifthly:- Cash in a start again is always an option. One of my strategies is to cash in all my open positions when the 3rd leg of my grid is reached and start again. Experience has taught me that this is a short term pain that goes away very quickly and is soon forgotten.

People that have traded the grid system will immediately see how the above approaches will reduce the risks of exponential losses building up in a strongly trending market. Please feel free to contact Mary McArthur at marymcarthur@expert4x.com for clarification on any items discussed above. She has numerous examples of successful applications of grid trading

Trend Following System - Building a System For Triple Digit Annual Gains

2009-11-05T20:13:00.001-08:00

Forex markets trend long term, they always have and they always will as long as we have a free market and the big trends which reflect the underlying economic cycle can last for many weeks, months or even years. If you learn to trend follow correctly you can make huge long term profits in around 30 minutes a day...

Many traders like to trade the market noise and trade short term but this is doomed to failure, as all short term volatility is random. If you trade the big trends you get better odds, more profits and spend less time on your trading. Lets look at trend following in more detail.

If you want to succeed at Forex trend following, you should keep the key points in mind below when formulating your Forex trading strategy.

Simple and Robust

The best trend following systems are simple and it's a fact that in Forex simple systems work better than complex ones, as they have fewer elements to break than complex ones. A graphic example of this is the free one we have on this site which has only one rule yet, test it and you will see how much money it makes. A Successful trend following system can be based on just looking at support and resistance and have a few indictors to confirm your view and that will work just fine.

Use Breakouts

All big trends start and continue from breakouts to new market highs or lows so if you are considering trend following, breakout methodology should be used in your Trading strategy. Breakouts are simple to understand and simply trade the reality of price change and trading breakouts is a highs odds way of trading Forex.

Trade Infrequently

I know traders that trade maybe once or twice a month and make triple digit gains and that's because they focus on the best high odds trades. You get nothing for effort in Forex trading, you're judged purely on results and if you are patient and wait for the best set ups you will increase your odds of success and reduce your work rate

Acceptance of Short Term Volatility

If you are tend following in Forex you are after trends that last for weeks, months or even years and you have to accept that you cannot predict tops or bottoms, you always have to give a bit back at the end of a trend and you also have to accept short term drawdown in equity against you as you follow the trend.

Long term trend following, requires patience and discipline but if you caught just 60% of every major trend, you would make a lot of money.

AUTO- FOREX- TRADING -SYSTEM

2009-11-05T20:12:00.001-08:00

If you wish to make most of the forex trading opportunities, then auto forex system trading is something which could really assist you in this concern. Just select the best trading system and earn lots of money.

When it comes to earn lots of money with forex trading in an easiest manner, it is highly recommended to go for auto forex system trading. Now, you must be wondering why it is so. Well, before taking into the account of these systems, it is essential for you to consider their worth first. Basically, forex trade market works for twenty four hours a day. It means that opportunities of earning money can come at anytime. But, is it possible for you to monitor all these trade activities for the whole day? Well, the answer will definitely be no! Now, here comes the requirement of these auto forex system trading.

Such systems can assist you as a professional broker and that too without charging any monthly wages. Now, let us consider the functioning of these trading systems. Basically, these systems work upon the specific software which acts according to the growth or fall of the currency. It means that the decisions taken by auto trading system are the assurance of earning a lot of money.

In addition, these systems do not require you to sit in front of them to monitor their activities. They work for you throughout the whole day and as soon as any earning opportunity arrives, you are sure to grab that instantly. Although these systems are quite trendiest these days, but it doesn't mean that you should trust them blindly. As forex trading is a risky game and even a single mistake of yours could put you into halt. That's why it would be a prudent decision to go for a demo session of these systems.

In addition, make sure the system that you are going to deal with is tested under the practical conditions of forex market. You can also search over the Internet to find out the most appropriate auto forex system trading software for you. It doesn't matter which software you are using in the forex trading, the only thing which matters is your strategy to make the most out of it. Therefore, select the software that works according to your strategies.

The Secret of Forex Option Trading

2009-10-28T20:02:00.003-07:00

Are you struggling to make money in the foreign exchange market? Do the wild swings drive you crazy while your account dwindles?
I know forex trades can be tough because, believe me, I've been there. I would place a trade and seemingly out of pure meanness the market would whip around and gobble up all my money.
Or sometimes I would have a nice profit, then the market gods would decide that I have made too much and shave off about half of my profits in just minutes.
If the apparently random moves of the market have got you down, don't feel bad. Studies show that 89% of forex traders lose money and eventually quit trading.
What secret do you suppose the 11% of the successful traders know that the other 89% don't know?
Actually there are several secrets. Over the years, I have (painfully) uncovered these secrets and become successful.
Here is my first secret. You have to trade in a time frame that smooths the randomness. Many traders think that day trading for a few pips here and there is the key to riches. Actually the forex market can provide very nice trends over longer time frames. These trends allow you to rack up big profits. But short term market moves will eat you alive.
Yet, I'll bet that many people you talk to about forex consider it a day trading vehicle. Little do they know that the big money is in the longer term trends. But now you do.

You can learn to trade forex profitably. But there are many more secrets up my sleeve that you need to know to be a successful forex trader. Follow me on my blog as we use little known tools to consistently take money out of the market.

Forex Trading Strategy That You Should Know

2009-10-28T20:01:00.002-07:00

As forex traders, you have to keep you strategies simple so that you can avoid being stressed and sometimes pressured. Along with tons of strategies and indicators that you will have, you don't have to wonder why most of the new traders leave within a month or two after being bankrupt or having a zero profit. Having a simple business strategy, not only in forex can enable you to gain success at the same time as you will find it comfortable to work for your success in this field. Always kleep in mind that simplicity is what make most of the thing beautiful and fascinating and it seem that it goes the same way in having business.
On the other hand, you should need to know some simple strategies that you can have particularly if you choose to be onto the world of forex. And these strategies include the following:
• Do business only during market hours. For instance, you choose to have US dollars as your business currency then you need to have a research first with regards to the market hours since currencies are most active and accurate during these times.
• Never utilize pointers as your exit and entry indication. Always keep in mind that indicators are sometimes not consistent and sooner or later you will return your earnings back to the broker every time. You are more likely making it hard for yourself if you insist on utilizing pointers.
• Learn the psychological effect of the Japanese candlestick so as to create more chances to succeed no matter what.
• Learn a very simple strategy in pricing analysis, after all forex price action trading lets you acquire a great feel.
• Prefer a currency in which you are comfortable with and analyze at its daily, monthly, and even an hour movement. You have to focus on a single currency pair until you have become more experienced.
• Avoid forex trading news especially once you have large amount of traders shifting the market since it can get so changeable. Just always keep in mind that there are no consistent in the world of forex but changes. Therefore, if you choose to be into this world you have to make sure that you can cope up with these changes that normally happen.
• Always verify on your exchange pairs movement and forex calendar for future news events
You have to crucially keep these strategies in your mind before it is too late particularly if you are a beginner in this type of business. This way, you can be able to ensure success at the same time as you can enjoy the things that you are doing. After all enjoyment of an individual in almost everything that they are into is the big secret why can they cope up despite of all the trials and difficulties on their way.

Forex Trading Signal Software - Massive Returns, Tiny Risk

2009-10-28T20:01:00.000-07:00

Foreign exchange is one area which offers plenty of lucrative opportunities these days. World wide, investors are increasingly looking towards this sector to make good money. Billions of dollars are traded in the market every day. It is the largest market and perhaps, one of the most busiest too in the world. If you are someone who is thinking of jumping into the fray then it is necessary that you get yourself the best tools to be successful in the field. With forex trading signal software, your success is more or less assured. These automated systems will help you in the trading process, whether you are a beginner or a veteran.
One of the key ingredients for success in this field is to keep in tune with the rapid changes that take place in the market. This is something that is only possible when you keep a constant watch on the happenings in the market. It is not always possible for everyone to keep watching the happenings and devise strategies accordingly. This is where forex trading signal software comes into picture. By making only a very small initial investment, you will be able to reap rich rewards in the long run. It will also help you utilize your time for other important business too.
The forex trading signal software that are available these days are so sophisticated that they will even implement your own unique strategy. All that you need to do is to program them accordingly. They will even send alerts to your mobile phone at regular intervals of time. Moreover, these automated systems are capable of dealing with several pair so of currencies, something that is not always humanly possible.All this in turn translates into increased profits for you.What this means is that you keep in track of what is happening to your business, while the automated system takes care of the currency trading process.

Increased Profits From Automated Forex Trading

2009-10-28T20:00:00.001-07:00

Would like to see a brief guide on the basics of Forex Trading?
This will help you understand the basics and help you start your own trading. You only need to understand a few basic concepts; it is really easy with a Automated Forex Trading robot.
To get a practical feel of these concepts you can get a demo account on one of the Forex trading sites. It is best to specify your starting capital as equal to the amount you plan to invest in your actual account on the trading site.
Get used to the workings of Metatrader at your disposal. Assure that you know to open the chart and alter its time frame. It is better to get acquainted with the platform first and then get started with your Robot even though they come with complete manuals which do the set up and installation.
If you note that your Forex Robot is making consistent profit for you in your demo account then you are ready to make real money. Check if you have made good profit in the stipulated time of say one month, then you know it is working for you. Learn your robot strategy of trading on line, study the way it performs the trades to understand its workings and the frequency at which it performs the trades.
There are forex trading systems that may not work for you. One that will fit each persons personality and style of trading; you can look around and do a little research. Beware of the many scams on line, you should be able to check the background of any site offering purchases.
You can perform the demonstration test over a few days learning the software trading strategies before you use any of the above products for live trading. It is of paramount importance to understand the workings of the currency pairs, margins, leverages and lot sizes and then you will understand trading. The automated forex trading tool will increase the profits for seasoned investors and the beginner can get started earning profits with few losses.

Automated Forex Trading

2009-10-28T19:57:00.001-07:00

The introduction of automated system of FX trading has made currency trading more popular. The good thing about auto forex trading system is the fact that you need not to be a savvy forex trader for you to trade automatically. The reliability of the automated system of currency trading is based on the fact that a good number of the software is created by expert traders and not just software developers. You can trust their years of experience and expertise in FX trading to guide you in auto system of trading.
Automated forex system presents a lot of advantages; it gives the trader time to do other things; this is contrary to the manual trading system where trade is to be closely monitored and managing of multiple accounts is even made difficult. In order to enjoy the full benefits of auto trading; you have to exercise care when selecting the software you need for your auto trading. Trading round the clock seven days of the week, is made possible through auto FX trading and you can be executing profitable trades while away from your computer.
It's also good to know that there is no form of human element with automated forex trading, every calculation, prediction, decision making and trade execution is done robotically. Most of the automated system software are user-friendly and would certainly meet the needs of both the savvy and new forex trader. Video and written materials usually accompany the software to aid installation and use.
However, whether you are a manual trader or you use automated trading techniques; it is good to have adequate knowledge on forex trading and the best way to do that is to obtain training on forex trading online. Indeed auto trading is desirable as it makes trading less stressful.

Online Currency Trading

2009-10-23T08:08:00.000-07:00

Whether are learning to drive a car or trade in the Forex market you benefit from the experience and knowledge of others. None of us ever really believe that we are an expert at something as soon as we try it for the first time. For this reason, unless you are already maintaining a healthy bank balance trading Forex then you can benefit from a tutorial in Forex trading.

A tutorial in currency trading will help to teach you the basics, and even if you have been trading currencies for a while then you may still learn something new. You see, the Forex market is pretty complex and therefore it can take years to master it. For this reason taking the time to learn as much as possible will save you money in the long run.

Not too long ago it was almost impossible to find anyone offering any kind of training or tutoring in Forex. This was mainly because trading was only open to large corporations and businesses. The situation is completely different nowadays as the Internet boom has opened the doors to individual traders and that has led to a massive increase in the number of courses and tutorials available.

Training can be done online or in a classroom depending on your location and preference. There are so many ¡®learn at home¡¯ courses available now that if you think that is the way to go then all you have to do is pick one. Classroom learning is a little different since you may find yourself having to travel fair distances to get to your nearest course.

Another advantage of an online tutorial is that not only do you get to learn from the comfort of your own home or office but you can also take things at your own pace. The downside however is that there is no teacher for the one to one discussions and explanation (the DVDs or online videos are your teacher) that you may sometime need.

Some online currency trading tutorials come with a money-back guarantee, that is if you do not like their course you can return it for a refund. However, you should look out for those courses which claim to be able to guarantee you a profit. These kind of claims are hard to achieve and should be treated with sketiscm as some courses are no more than scams.

Forex trading requires very quick thinking and decision making. Tutorials cannot teach you that. They can tell you the principles of trading and make you a much better trader for it. However, what it takes is for you to use the knowledge they give you and incorporate it in to your daily trading habits.

Through the help of a course you decision making and speed can definitely be improved but they cannot tell you exactly when to enter or exit a trade. That said, if you take the time to learn everything you can then it will be much easier to call the next market move correctly. You can also look to the help of Forex signal service providers for further security.

Currency trading tutorials can never teach you everything you will ever need to know. No-one can. However, they can help you to make decisions more quickly and with more success, it¡¯s all about how you take the knowledge they give you and what you do with it.

Currency Trading Training

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Currency trading training is not over when a trader finally sees the equity increasing in their account.

The Forex market is a very demanding environment and for a trader to maintain a success level, constant currency trading training is necessary.

The following 7 favorite tips can be used as timely reminders and need to be read and absorbed on a regular basis:

#1 - Take Responsibility

"The buck stops here." Don't blame the markets, or a host of other factors for a losing trade. You entered it for whatever reasons you had at the time. Take responsibility for it.

#2 - Use Each Losing Trade As A Stepping Stone

You lost a trade? Good. It will help you focus on a potential problem in your trading method. If after careful analysis you are satisfied you worked according to your plan, fine. Move on.

#3 - Never Become Impatient With The Market

New traders in the early stages of their currency trading training can be eaten alive by the market. During periods of consolidation with little liquidity the anxious impatient trader will force trading opportunities where there none.

Learn to accept the fact that around 70% of the time price will be in a consolidation channel.

#4 - Focus Daily On Improving Your Trading Skills

Currency trading training is an ongoing process. Day by day, step by step the trader improves. So rather than be preoccupied with profits and losses, concentrate on developing the skills. Your account will start to reflect your focus in time.

#5 - Be Pleased With Well Executed Trades Whatever The Outcome

Is this possible? Yes. You can feel well pleased even with a losing trade if you stuck to your methodology and executed the trade well. It is dangerous to feel good about a winning trade when you went against your trading method to achieve it. Your elation is likely to be short lived. Learn to execute the plan!

#6 - If In Doubt Stay Out

The feeling of regret can drain a person mentally and emotionally from entering a poorly considered trade. Once the trigger has been pulled and the trade starts going wrong, the agony of watching it inch towards your stop should renew in the trader the determination to stay out when in doubt!

#7 - Always Have A Good Reason

Currency trading training involves careful analysis of reasons for entering a trade. Just because price is high is not a reason to go short or long if price is low. Price will do what price wants to do so rather than trading from gut reaction, e.g. "Price can't go any higher (or lower)" learn to detach emotions and use pure technical analysis to establish a number of reasons why you should take a trade.

As currency trading training is a long term commitment, skills and disciplines learned can sometimes be forgotten as bad habits creep in.

It is necessary to constantly renew the thinking processes by repeating over and over the habits of successful traders.

These 7 favorite tips will keep the newer trader out of a lot of trouble!

Timing is Everything With Forex currency Trading

2009-10-23T08:05:00.001-07:00

The most challenging part of getting started with Forex trading is to learn this innovative way of trading. Many potential investors that try to navigate the Forex system unaided end up being frustrated and financially intimidated. There are very simple strategies to becoming successful using the foreign exchange trading system but the first step is gathering all of the necessary information surrounding this type of trading specialty. Securing a reliable Forex trading broker is likely the first and most pivotal step after learning the initial principles.

Unlike many types of trading and futures, foreign exchange trading is not designed to make the client rich quickly. Many people are frightened off by the word that Forex trading is a get rich quick scheme that in large part, doesn't work. This is a financial myth despite all the hype surrounding the foreign exchange trading system. There are steps and gains to be taken in order to secure a future in successful trading. Expect to dedicate a large portion of time to researching and understanding the market in general before setting out with your pocket book ready to invest. Learn all you can about the Forex market in the beginning in order to make the Forex trading path a smooth and triumphant one.

There is no doubt that there are numerous types of orders that can be utilized in order to open and close trades and becoming familiar with them is a must. In the foreign exchange trading business there are charts, graphs and other visuals to help you effectively analyze trends in currency trading. These charts and graphs will assist in making well-informed decisions on what currency to sell. Timing is everything and it goes without saying that when experiencing with the Forex trading system, knowing when to trade can be the pivotal difference between success and failure. Understanding the analysis tools and how to use them efficiently will put any investor on the right track.

As well as proficient trading tools, it is an absolute necessity when using the foreign exchange trading system to understand how to use the software to perform actual trades. The only way to become comfortable with using Forex trading software is to use it and learn how to plot a course through the process. Selecting a good trader is the most imperative tip at this stage because an established trader can help you with the services required as well as giving you in depth tutorials using the foreign exchange trading system.

The most critical tool that will be utilized in the Forex trading system is patience and discipline. As mentioned earlier, foreign exchange trading is not a get rich quick proposal so learning patience and discipline can help you to become profitable in a timely fashion without losing money. Most brokers offer a demo account that can be used to practice and learn the foreign exchange trading system that mimics the real account with the exception of real money being traded. This gives a client insight into the market and its behaviors before actual money is invested. Learn how to make a profit using paper trading on a regular basis before risking your capital with Forex trading.

Forex Swing Trading with Elliott Wave

2009-10-23T08:04:00.001-07:00

When evaluating the forex market for swing trade opportunities the focus is placed on predicting directional changes or continuations for a given currency pair. For this we rely on technical analysis.

In technical analysis, just as in fundamental analysis, there are lagging indicators and leading indicators. One of the most reliable tools used to predict forex market swings is Elliott Wave analysis. Elliott Wave analysis can be used to identify trends and countertrends, trend continuation or exhaustion and to evaluate the potential price targets of a trend.

You can apply Elliott Wave analysis to both long and short position swing trade set ups for your currency pairs.

Elliott Wave theory is named after Ralph Nelson Elliott, who concluded that the markets moved in a repetitive pattern of waves. He attributed this action to the mass psychology of the market.

Elliott concluded that the market¡¯s movement was a direct result of the mass psychology of the time and that the stock market is a fractal. A fractal is an object that is similar in shape, but at different scales. A great example of a fractal in nature is a stalk of broccoli. The stalk and the individual branches look exactly the same; just the branches are smaller in scale.

Fractals just happen to form in accordance with Fibonacci ratios. Is this a coincidence?

Elliott attributes this mass psychological move to the human trait of herding. Even though Elliott¡¯s theories were based on stock market price movements, it has been applied to evaluating Presidential approval ratings and fashion trends changes as well.

The conclusion, the market price actions are not the cause of economic growth or slow down, but the reflection of the mass psychology of investors. If the mood of the investing public is upbeat then a bull market ensues. This is counter to what most individual perceive, that because there is a bull market the mood of the investing public is upbeat.

Elliott Wave patterns follow a sequence that the markets move up in a series of 3 waves and down in a series of 2 waves. This 3 wave impulse and 2 wave corrective sequence form the foundation of the 5 Wave impulse pattern (the opposite is true in a downtrend).

The Elliott Wave Counts are as follows;

Wave 1 - Short Covering
Wave 2 - Pullback from Short Covering
Wave 3 - Major Rally Phase
Wave 4 - Institution Pause in the Rally
Wave 5 - Retail Buying

Wave 1 is usually the weakest of the impulse waves. It is a brief rally based on short covering of the bears from a previous move down. When Wave 1 is complete, the currency pair sells off, creating Wave 2.

Wave 2 ends when the market fails to make new lows. You often see dominant reversals patterns form at the end of this wave signaling the being of the rally phase or Wave 3.

Wave 3 is the longest and strongest of the impulse waves. This signals strong currency buying or selling in the direction of the trend. This trend usually starts of slowly, but tends to accelerate as it breaks to new highs above the top of Wave 1.

Like any trend, especially a strong trend a correction will occur. Traders will begin to take profits and the currency pair will retrace. This signals the beginning of Wave 4.

Again the currency pair will rally ushering in the Wave 5 rally. Wave 5 is typically supported by the retail traders and not institutional buyers (the herd) and tends to lack the momentum generated in the Wave 3 rally. This creates divergence that can be easily measured on any technical oscillator. After the currency pair breaks to new highs above the previous Wave 3 high, the rally loses steam and changes trend.

This trend change can result in either a new 5 Wave impulse pattern or a corrective in nature.

Now that we know what the Elliott Wave analysis is, how would a currency trade using this analysis look like, just as an example?

Look to Wave 5 as the most reliably tradable impulse wave. The trade sets up as follows. Look for the Elliott Oscillator to pull back between 90% and 140% of the Wave 3 high on a daily chart. This pullback should correspond to a 38%-62% Fibonacci retracement from the Wave 2 extension. This signal is the strongest when the Fibonacci retracement is between 38% - 50%.

Like any technical analysis tool you never want to employ an indicator as a stand alone analysis tool. A trigger and a confirming indicator are required as well.

Look for a trigger in candle patterns, such as Harami, Tweezers or Harami cross. There are a variety of software packages on the market that perform Elliott Wave counts and have other entry signal indicators as well.

Draw a regression channel on the Wave 4 retracement and look for a break above or below the channel as confirmation to enter the trade.

Place stops at the high of the Wave 1 advance, just below the 38% Fibonacci retracement level or where your individual trading plan dictates. Trail your stops once the currency pair has advanced past the Wave 3 high. Look for reversal candle patterns like doji, hammers, shooting stars or hanging mans for signals that the wave is about to end or stall. A typical price target is 127% retracement of the Wave 4 low.

This is just a glimpse of how Elliott Wave analysis can be deployed to enhance your forex swing trade evaluations. Look more into the Elliott Wave theory and other strategies as tools for increasing your forex swing trade opportunities.

Hedge Foreign Currency Risk

2009-10-23T08:03:00.000-07:00

International commerce has rapidly increased as the internet has provided a new and more transparent marketplace for individuals and entities alike to conduct international business and trading activities. Significant changes in the international economic and political landscape have led to uncertainty regarding the direction of foreign exchange rates. This uncertainty leads to volatility and the need for an effective vehicle to hedge foreign exchange rate risk and/or interest rate changes while, at the same time, effectively ensuring a future financial position.

Each entity and/or individual that has exposure to foreign exchange rate risk will have specific foreign exchange hedging needs and this website can not possibly cover every existing foreign exchange hedging situation. Therefore, we will cover the more common reasons that a foreign exchange hedge is placed and show you how to properly hedge foreign exchange rate risk.

Foreign Exchange Rate Risk Exposure - Foreign exchange rate risk exposure is common to virtually all who conduct international business and/or trading. Buying and/or selling of goods or services denominated in foreign currencies can immediately expose you to foreign exchange rate risk. If a firm price is quoted ahead of time for a contract using a foreign exchange rate that is deemed appropriate at the time the quote is given, the foreign exchange rate quote may not necessarily be appropriate at the time of the actual agreement or performance of the contract. Placing a foreign exchange hedge can help to manage this foreign exchange rate risk.

Interest Rate Risk Exposure - Interest rate exposure refers to the interest rate differential between the two countries' currencies in a foreign exchange contract. The interest rate differential is also roughly equal to the "carry" cost paid to hedge a forward or futures contract. As a side note, arbitragers are investors that take advantage when interest rate differentials between the foreign exchange spot rate and either the forward or futures contract are either to high or too low. In simplest terms, an arbitrager may sell when the carry cost he or she can collect is at a premium to the actual carry cost of the contract sold. Conversely, an arbitrager may buy when the carry cost he or she may pay is less than the actual carry cost of the contract bought. Either way, the arbitrager is looking to profit from a small price discrepancy due to interest rate differentials.

Foreign Investment / Stock Exposure - Foreign investing is considered by many investors as a way to either diversify an investment portfolio or seek a larger return on investment(s) in an economy believed to be growing at a faster pace than investment(s) in the respective domestic economy. Investing in foreign stocks automatically exposes the investor to foreign exchange rate risk and speculative risk. For example, an investor buys a particular amount of foreign currency (in exchange for domestic currency) in order to purchase shares of a foreign stock. The investor is now automatically exposed to two separate risks. First, the stock price may go either up or down and the investor is exposed to the speculative stock price risk. Second, the investor is exposed to foreign exchange rate risk because the foreign exchange rate may either appreciate or depreciate from the time the investor first purchased the foreign stock and the time the investor decides to exit the position and repatriates the currency (exchanges the foreign currency back to domestic currency). Therefore, even if a speculative profit is achieved because the foreign stock price rose, the investor could actually net lose money if devaluation of the foreign currency occurred while the investor was holding the foreign stock (and the devaluation amount was greater than the speculative profit). Placing a foreign exchange hedge can help to manage this foreign exchange rate risk.

Hedging Speculative Positions - Foreign currency traders utilize foreign exchange hedging to protect open positions against adverse moves in foreign exchange rates, and placing a foreign exchange hedge can help to manage foreign exchange rate risk. Speculative positions can be hedged via a number of foreign exchange hedging vehicles that can be used either alone or in combination to create entirely new foreign exchange hedging strategies.

The Forex Market and Understanding Foreign Exchange Rates

2009-10-23T08:01:00.002-07:00

Unlike the stock exchange, the Forex Market (foreign exchange market) is a relatively new player to the investment world. Today's current Forex market model started in the early 1970's, and today it represents the biggest financial market around, even surpassing the stock market. With trading surpassing $2 trillion dollars per day, the Forex market attracts more and more investors all the time. Before an investor starts trading on the Forex market, he should grasp the fundamentals of how exchange rates work.

Exchange rates

Basically, the exchange rate represents the rate of exchange between two currencies. Most currencies are traded, or paired up against the dollar. The five most common currencies traded on the market are the dollar (USD), euro (EUR), the yen (JPY), the British pound (GBP), and the Swiss franc (CHF). Some other currencies that are traded are the Australian dollar, the Canadian dollar, and the Hong Kong dollar.

In the exchange rate or ratio, the numerator represents the quote currency and the denominator the base currency, which always equals one.

Let's say that an investor wants to exchange euros for dollars. In this case, the euro currency is the quote currency, or how much currency you have to exchange. The base currency is the dollar. The investor researches the current exchange rate (euros converted into dollars) either on the Internet, through the bank, broker, etc., and then multiplies that amount by the number of euros to exchange. Let's say that the exchange rate is 1.57959. That means that 1.57959 euros must be paid to receive one dollar. If he has 1000 euros to exchange, then he can receive $1,579.59 (1000 x 1.57959).

On the flip side, the exchange rate can also tell the investor how much he'll receive if he converts dollars back into euros. If he has $1000, he can either divide that amount by the same euro to dollar exchange rate ($1000/1.57959 = 633.07 euros), or look up the conversation rate for dollars to euros on the Internet, etc. (i.e. .633072) and multiply it by the amount of dollars to exchange ($1000 x .633072 = 633.07 euros).

Once the exchange rate concept is understood, the investor can feel more confident in investing in the Forex market.

Forex Trading Systems Scam

2009-10-23T08:01:00.000-07:00

Have you ever encountered an online promotion for a forex system, strategy or software? If so, I bet that the promoter promises great wealth in no time, something like " this incredible system makes $3, 000 a day " or " I am making money in my sleep using this automated trading software " and so on. Very tempting for some of us. And as this " Forex Systems " hype is relatively new, even veteran traders ask themselves whether these systems are for real.

The exactness is that some of these forex merchandise are indeed total scams. But absolute is again not logical to foresee that ALL of them worth nobody. Luckily, we live in the hot poop ticks, locality a scam cannot hold office close for spun out. So if you encounter a forex system, strategy or software for sale, conclude not carry lazy and search the net for relevant blogs, forex forums and reviews. If the product is a scam, you will familiar conceive physical quite delicate. However, lease ' s spiel that you treasure a decent, reliable Forex System - what rap you assume from sound? Will positive well deliver? Fine, flying start by commercial the following questions:

Am I disciplined?

Most traders purchase a first-rate trading system or software but operate not have the discipline to trade according to the system ' s rules. Some traders achieve not credence the system they have tried bought and endeavor to chicken feed the rules from day one. Others certainty the system prime, but next a few bad trades source losing confidence and contract apprehensiveness and attraction genie their decisions. I itch admit - substantial was very insolvable for me to faith a system that was created by someone too many. Solitary when I tacit the logic late the system I began to fashion confidence, traded stow away discipline and somewhere made profits.

Are my expectations fitting my ration?

The size of your trading invoice will halt your lifelike profit expectations. If you have a mini account ( a keep of between 500 to 10, 000 US dollars ), irrefutable means that for trading the EUR / USD, a 1 pip movement in your favor equals 1 US dollar in profit. So if you are a very rad trader stifle a very superb trading system, a stupendous trading point veil a total of 500 pips hike, equals US$ 500 in profit. I guess you cannot quit your job yet. But if you have a one million dollar account, you can definitely earn US$ 1, 000 per pip. So it takes only 3 pips to make US$3, 000 a day. I hope you get the point.

Do I have enough knowledge?

Even the best system is operated by a real person. And each trader is a unique individual. Consequently, if you ask a group of traders to trade the same system, under the same conditions, you will probably get totally different results. Yes, some traders do make money in their sleep using profitable forex systems, but the human factor will always be there. So get yourself a good trading system, but do not stop there. Be ready to acquire a sound knowledge in forex trading and keep expending your knowledge over time.

Forex Market Scam

2009-10-23T08:00:00.001-07:00

The Forex market is the biggest financial market in the world. But this doesn ' t make it easier; on the contrary. You have a lot of big advantages but Forex is also very challenging. Almost all advantages, when observed carefully, transform not is disadvantages but in challenges. It is the case of the Forex market being open 24 hours a day. When someone begins trading the Forex or reads about this particular market, this characteristic is taken as an advantage. Traders tend to think " Great! Finally I can trade whenever I want! ". Well, this is, in part, true. But, when you start trading the Forex, you ' ll see that volatility only appears during certain times and that if you are day trading, you can ' t be in front of your computer 24 hours a day. This is a challenge for most Forex traders who are looking for day trading the currency pairs. If you want to day trade, you will have to develop a decent strategy in order to concise it to a few hours a day, probably when the volatility is more likely to urge.

Other big advantage that is always quoted related to the Forex market is the brim requirements. Well, smooth tuck away a pygmy invoice coextensive $300 you can advantage 100, 200 or rolled 400x your wad. You may think this is a great advantage but, in my opinion, this is more a challenge than an advantage. If you have a petite balance and pop to practice a steep side, you can avoid your entire balance in a single trade.

Also, Forex is admitted as the scam market. You have trading systems, courses and common brokers that are constantly rated by traders as scams. In the case of the systems and courses in that they promise a lot of profits stash no elbow grease at all, and in the case of the brokers that donate you all the resources but inasmuch as trade lambaste you, don ' t agreement you withdraw your property or neatly disappear salt away it.

When you start trading the Forex market, or if you present are, you demand to avoid the scams.

Here are some tips of how to avoid Forex scams:

1 - Exercise your shipshape sense. This is the primary phenomenon you compulsion to arrange. Evaluate carefully the product or the broker you are election. If you think they are offering you utterly much, be careful. It may be a scam.

2 - When you are looking for a forex trading system or a course, you ' ll probably see things same " make $100, 000 in a epoch ". Forex is a challenging market and not everyone can make long green obscure it. Don ' t dispose fooled by stir gilded fast conspiracies.

3 - One commendable tip when buying a trading system or course is to viewing if they have riches back guarantee or a unpaid trial spell. This journey, if you don ' t relating what you bought, you can always request for a decrease.

4 - If you are looking for a forex trading system, course or broker, scan reviews untrue by others traders. Scrutinize what they think about the product, the abutment party, how they handle their clients and therefrom on. Construe all that you can.

5 - Before buying a product or signing up veil a broker, always read their webpages. Feel costless to needle them your doubts. If they reckon on in their products and services, they will answer your questions.

6 - If you buy a forex trading system or course, test it first on a demo account. Don ' t start with your real account because you don ' t know how it will actually work. It may need some adjustments on your part to make the strategy good for you.

As I said, the Forex market is challenging. Unless you are able to spend some time with it, not only trading but also reading and learning, you won ' t make it. But, without a doubt, it ' s a very profitable market.

Risks of Trading in Forex Market

2009-10-23T07:59:00.003-07:00

Although every investment involves some risk, the risk of loss in trading off-exchange forex contracts can be substantial. Therefore, if you are considering participating in this market, you should understand some of the risks associated with this product so you can make an informed decision before investing.

As stated in the introduction to this booklet, off-exchange foreign currency trading carries a high level of risk and may not be suitable for all customers. The only funds that should ever be used to speculate in foreign currency trading, or any type of highly speculative investment, are funds that represent risk capital i.e., funds you can afford to lose without affecting your financial situation. There are other reasons why forex trading may or may not be an appropriate investment for you, and they are highlighted below.

The market could move against you

No one can predict with certainty which way exchange rates will go, and the forex market is volatile. Fluctuations in the foreign exchange rate between the time you place the trade and the time you close it out will affect the price of your forex contract and the potential profit and losses relating to it.

You could lose your entire investment

You will be required to deposit an amount of money (often referred to as a security deposit or margin) with your forex dealer in order to buy or sell an off-exchange forex contract. As discussed earlier, a relatively small amount of money can enable you to hold a forex position worth many times the account value. This is referred to as leverage or gearing. The smaller the deposits in relation to the underlying value of the contract, the greater the leverage. If the price moves in an unfavorable direction, high leverage can produce large losses in relation to your initial deposit. In fact, even a small move against your position may result in a large loss, including the loss of your entire deposit. Depending on your agreement with your dealer, you may also be required to pay additional losses.

Overtrading is another ordinary money management mistake in the forex market. This trading does not have clearly defined trading objectives; the sole reason is to make more money. To avoid this mistake, make sure that every trade is broken into ultimate goals, and that these goals are achieved before other positions are added. Very few traders can successfully manage multiple positions in a variety of currency trading markets.

Overconfidence is a big mistake when it comes to money management and the forex market. This is caused when a trader has or thinks they have particular or inside information. These hot tips are sometimes wrong, and when this happens large amounts of money may be lost because of this. The way to avoid this is to avoid being confident in any rumors or special information you may have. Managing your money means taking measures to preserve it as well.

Preferential bias can exist among forex market traders. This happens when they only see or hear what they want in relative to the favored trade. This can cause a trader to ignore the real activity of the forex market in favorite of what they want to happen. It is important to look at each trade impartially and do not become set in cement with your opinion. Do not ask friends or family for their opinions; just go with what you know.

Learn Forex Trading

2009-10-23T07:59:00.001-07:00

Gone are the days, when people with small bundles of notes surely would draw your attention at the airports/ international bus terminus/ important office areas, who are ready to exchange your currency to your desired foreign exchange at a commission. The literacy, the spread, the entrants of various professionals, automated software, revolutionary online forex trading companies have been able to put a control over the entire unorganized sector to pave the way for complete professionalism and to offer a much more convenient and systematic way of Forex trading.

At the inception phase, people, mainly the large corporations used to perform their Forex trading through various banks or major financial institutes, who used to operate at the international level. The overwhelming popularity of Forex of today's modern world due to the liberalization and global economic polices is empowered by the telecom boom, the immense reach of Internet and the unimaginable advantage of advanced technology. The instantaneous effect and up-to-date news provided by the Online Forex Software exchange trading platform in the regime of online Forex, have given you the classical opportunity of taking decisions and immediate implementation. Online Forex trading has been standardized over the years after the initial teething problems, and today's Forex participants get an almost secured access through various online Forex trading companies, which is free from all encumbrances. The technology, its application in case of online Forex has been drastically improved with the increasing awareness of people at large. The success lies in bringing a wider gamut of people into Forex trading platform and in turn the entire Forex Software exchange trading platform has become commercially viable.

If we want to look into the current Foreign Exchange market, we can find a reasonable number of stakeholders beyond the predominated traditional Multi National Companies or MNCs, banks, brokers and the final impetus has given by the wide acceptance of a large number of commoners, who get engaged in Forex trading due to various reasons including even as a mere hobby. The latest encryption methodologies and plenty of guide and trend analysis will make you secured and comfortable even if you are a first timer dabbling into online Forex trading.

The concept of margin trading, implying the traded on margin, saves you for a huge amount of deposit in the Forex. The margin deposit varies between banks and it is always in percentile terms of the original amount, which the bank allows you to play. A simple example will show you the actual potential. Suppose a bank has kept the margin deposit as 2%, which implies that you need to deposit only $20000 USD to trade two million dollars and also you may gear up your profit by 200%. As the coin has got two sides, the 2% margin deposit in Forex may also take you to the road of losses by 200%. The rule remains same, when the offline Forex trading changes it face to online Forex trading.

As every investment carries the potential risk of both profit and loss, the luck of an aggressive online Forex trader may sway anywhere between 2 to 25% on a daily basis on an average. Just for the knowledge base, the beginner in Forex trading must be aware of that the interest rates on your deposit varies greatly depending upon the currencies and the prevailing practice is to play in multiple currencies, popularly known as Base currency and variable currency in the world of Forex both in traditional platform and in online Forex platform. Your awareness level, your analytic power, your intuition are the key driven forces to transform you to an informed Forex trader and to optimize your Return on Investment (ROI) in the most prospective financial market of today's economic world.

Successful Options Trading Strategies

2009-10-23T07:58:00.000-07:00

When it comes to giving people the hope of becoming a millionaire overnight, the stock market excels. Every day we see evidence of stocks that have flown upwards as if they had wings, providing investors with a windfall of profits. It's inevitable that catching one of those stocks just before it takes off is an exciting possibility, inspiring the beginning trader to take the plunge. When you trade options, the stakes are raised, making those massive profits even more attainable, but the basics that underlie successful trading in the stock market are the same as those for trading options.

Once you start to look at trading stocks, you find yourself plunged into a confusing nightmare where hundreds if not thousands of people are pushing "their" system that is supposedly infallible. For a beginner, it's easy to get drawn into the complex net, believing that there must be a simple solution that will hand you the keys to stock market success. These keys will see you finding winner after winner, and making your fortune.

The reality, however, is that there are no keys that will find a winner every time. After all, if that was possible, how could anyone ever lose any money in the market? And if nobody loses, then how can someone else gain? The whole stock market would collapse.

Having said that, there are a number of very successful trading systems that work well over the long term. It's important to realize that a winning system is one that consistently delivers profit over a longer time frame - and part of the equation is that a percentage of trades will be losers. Once you learn to look at the bigger picture, rather than focusing on the individual trades, you'll be a lot more successful in the market.

There are a couple of approaches to the market that are popular across many systems. One is to take small losses when they happen, and let your winners run. So you might take six little losses, which are more than compensated for by one huge gain. This type of approach takes a lot of confidence and self-discipline, as it's very easy to give up if those six little losses all happen in a row, without a winner in sight.

Another approach is to take your profits after a certain percentage of gain, and occasionally put up with a medium sized loss. This system is nice if you like to see profits, because you don't run the risk of a stock that's risen suddenly dropping again and wiping out your profit - you took your profit early. However you also run the risk that the stock will continue to fly upwards and you miss out on that profit. This system can be risky, because you need a number of small profitable trades to cover one of the losses.

If you can't make up your mind which approach suits you, why not try more than one? You can always split your capital over a couple of portfolios, and use a different strategy for each portfolio. This can be time consuming, but at least you can then make a logical comparison of the choices and decide which one has worked best for you.

It's also important not to abandon your system the second you see a trade making a loss. Far too many traders think that they're only successful if every trade is a winner, which is ridiculous. Then the trader switches to another system, messes around with that for a while, sees a loss, and switches again. You need to find a system that gives you a good overall return, and stick to it. The more you chop and change, the higher your chances of losing more.

Most of the success that comes with trading comes from one source - and it's not the perfect trading system. It's all about you. Trading is more about psychology than watching the charts. You need to have the right character to be a successful trader. Self discipline, confidence, the ability to see the bigger picture, accepting losses as part of the game, controlling your fear and greed - all of these elements work together to make you a successful trader.

If you can identify a system that delivers a consistent profit, and have the discipline to stick with it even when an individual trade loses, then your chances of success are high. And remember - it's always good to start with pretend trades to get the hang on things, before you commit your life savings to the market.

The FOREX Market- Trade with your head not your heart!

2009-10-02T23:57:00.000-07:00

ounds simple…right? In actuality, this is the number one reason why day traders lose their shirts. They let their emotions get the best of them and end up doing something real stupid. Trust me I’ve done it.

When trading currency, you need to take yourself away from the platform and look at your trades in actual bills not numerical values on a computer screen. For example, let’s say you short the USD/JPY for a 50 mini-lot right before a data release and it tanks. The USD/JPY goes down about 50 some odd pips and now you’re up $2500 in about thirty seconds.

Now, if you were smart, you would close the position and take your profit, but you’re not and you decide to let it ride. The market goes down about another 10 pips. So, now you’re up $3000 and you still won’t close it. You think that it’s going to keep tanking and that you could make 5-6k on this one trade…wishful thinking.

All of sudden the market retraces and shoots back up 20 pips, your still up about $2000, but now you tell yourself, I’ll wait until it goes back down a few pips and then close it. Too late, the market ignites and now you’re break-even and then you’re negative. In the end you take a $500 loser, which isn’t too bad, but considering you were up $3000 it’s like you lost $3500.

Now, let’s pretend you did this same trade with actual, physical dollar bills. Now or days most people trade from a three wide spread, so let’s say that you gave a trade booker $150 cash to place a short USD/JPY 50 lot. The data is released and this man keeps giving you $50 bills and before you know it you have $3000 in your hands. In order to keep this money all you have to say is close.

You decide to press your luck and wait and the market continues to trend down and now you have $3500 cash. All of sudden, the market begins to retrace and this nice young man starts taking $50 from you each pip it retraces. How many pips does the market have to retrace before you say close? Maybe, ten pips? Once you saw actual dollar bills being taken away from you, you would throw in the towel. So, how does one improve their money management skills?

First of all, realize that you are trading real money. I’m sure you realize that the money you are trading is real money, but do you conceptualize it? When you make a few hundred or a few thousand dollars trading, do you feel like someone just handed you cash? Of course not! Every time you’re trading, no matter if you are profitable or not profitable visualize and grasp the outcome. Don’t just watch your balance and equity fluctuate; you need to relate your loss and gains to every day life.

For example, let’s say you have a 10k account and in the first week you doubled that to 20k. You need to step back and understand what you just accomplished; you just made 10k in one week by sitting in front of your computer and trading currency. Now, let’s take that money and put it to everyday use. If you were handed a free 10k, what would you do with the money?

Would you pay of some debt, by a car, put money down on a home, go on a vacation, put it towards school, I think you get the gist. All I’m saying is that 10k is yours, you own it and there is no reason you have to keep in the FOREX. You are that 10% that succeeded this week, but the law of averages states that you are most likely to be the 90% next week. If not next week then the week after and if not then, eventually you will.

If you invest 10k and your account doubles to 20k, why would you pull out 15k leave in 5k and go for the gusto? If you lose your remaining 5k who cares you still made 5k in a week at your computer. Tell me another investment where I can make 50% on a 10k investment in one week. Turn around the following week pull my initial investment and my profit and still have 5k to play with. If I hadn’t experienced this first hand then I would have never believed it. DO NOT GIVE YOUR WINNINGS BACK TO THE MARKET! It’s not worth it.

Learn How to Trade in Forex Market from the Basics

2009-10-02T23:56:00.002-07:00

Forex trading is well known as a lucrative way to make money online. It has become an essential part for investor’s portfolio as you can gain thousands in minutes by trading currencies. For those who are new to the forex trading, Forex means Foreign Exchange Market where it involves buying and selling the different currencies of the world. Profits are made through the difference of selling and buying price - you earn when you buy-low and sell-high.

Forex market is a 24-hour market. The trade begins each day in Sydney, and moves around the globe to Tokyo, London, and then New York. Unlike any other financial market, investors can respond to money-value fluctuations caused by economic, social and political events at the time they occur - day or night. Major currencies traded nowadays are U.S. dollars, Australian Dollars, Japanese Yens, British Pounds, Swiss Francs, Canadian Dollars, and the Euro Dollars.

In the past, small speculators are not allowed to trade Forex freely as it is now. The minimum required business sizes are large and the financial requirements for trading foreign currencies are strict. Only huge multi-national cooperation and banks are able to fit into the business. In fact, large international banks are still the main players in currency exchange market. Deutsche Bank is one of the top currency traders; along with other major banks like UBS, Citi Group, HSBC, Barclays, J. P. Morgan Chase, Coldman Sachs, ABN Amro, Morgan Stanley, and Merril Lynch; these banks are said to be responsible for more than 70% trades in currency market. Forex trade is not open to the publics until year 1998, where big sized inter-bank units are sliced into smaller pieces and offered to individual traders.

It is simple to get started in Forex trading, an funded Forex account and a computer connected to the Internet is more than enough to get started. However, to start trading and become a successful Forex trader are totally different. Trading Forex is a high risks game and traders should always follow certain principals, listed below are a few of must-do’s when trading in Forex market.

1. Educate yourself before trading in Forex market

As in any trading markets, building up your trading skills and knowledge is the very first step that you must take. To further your learning in Forex trading, seminars, workshops, video tutorials, online learning, or even books are handful to help us learn from the professional.

2. Having a trading plans

A good trading plan is needed no matter you are a beginner or an expert in Forex trading. The Forex market itself is just a vehicle, to go to your desired destination, which is to gain profit and achieve financial freedom in our case, you have to drive your vehicle with maps and navigations. How much do you want to earn from the trades? How much you can afford to lose if things go wrong? What is the amount of capital you are putting in? Answer the questions to yourself when you are setting your trading plan. If you fail to plan, you are indeed plan to fail.

3. Mature mindsets and discipline trading

Trading Forex with discipline is very important. Success in Forex trading could not be achieved by only plotting out the best trading plan. It is also depends on implementing the trading plan. Be disciplined, trade according to your plan and never trade with your emotion. Greed will stop you from taking profit at predetermined level; while fear will stop you from making the nice kill in the market.

Without a doubt, Forex is getting more and more popular. There are less restrictions in FOREX market. No limited market access, no liquidity issues-after market hours, zero commission fees, low capital requirements, and no restrictions on short selling. However, the risks in Forex trading should not be taken for granted. As you can always trade in margin, you might lose a lot more than you can afford if you don’t plan your investment wisely. Seminars, e-Books, Internet, papers, plus video courses are all you need first before getting involved in the market.

How to Win the Forex Battle

2009-10-02T23:56:00.000-07:00

Every trading activity is in fact participating in a battle. Winning the battle is a matter of knowledge, skill and experience. If you miss any of those you are going to join the long line of losers. Some says that 95 to 99 percent of the traders are lining up on the loser’s side.

How to win the battle in the currency market? It is easy to answer that question, based on the above approach – prepare yourself for the battle. If you treat currency market activity as a hobby you’ll ultimately lose all investments there. If you treat it as a business you still may loose everything.

The correct approach is: consider each pressing of the Buy/Sell button as entering a battlefield. If you enter it without having a knowledge, skill and experience on how to win, you are destined to fail. You may have some lucky trades in the beginning, though. That, by the way, is the worst case scenario for the rookie in trading.

The earlier you get your “bad” lessons, the better for your overall experience. No mater how good you consider yourself prepared, after demo trading lessons, you have no idea of the forces ruling on the real market.

In fact the worst enemy you are going to face in the very beginning is not hiding behind the walls of the global currency trading centers. Your most dangerous foe is hiding deep inside of you. That enemy is so powerful that you will be amazed how quickly it will wash away all your carefully considered decision.

No one has been able to evade the force of that destructive power. No one can understand or realize that force unless it has been confronted face to face. Start trading with real money and you will face it too. Fear, Greed or Hope are some of the names of that power.

Fear forces you to sell near the bottom and buy near the top. Greed forces you to get out of the market prematurely. Hope will keep in the trade until you loose everything. Fear may save you but hope may wreck you completely. Greed will never make you rich.

It is easy to give advice to trade without emotions and use the logic, only. How you can achieve that if you never have been there. You need to go through that turmoil, pick up your loses due to your emotional decisions and than analyze.

Study all your “bad” trades, because they are the most precious gifts on the way to proficiency in trading. Growing as an experienced trader is possible only after getting your losses in the beginning. Then sit down and carefully study the lessons they brought to you.

One thing traders never want to do is to admit of being wrong. The market is a constantly changing and it demands flexibility in taking decision. That implies monitoring and constantly adjusting, changing your decision and action. When your logical analyzes suggest that you are wrong – get out, quickly.

Once you overcome the emotions, concentrate on developing your signature way of trading. You can start with following different advisors and system and picking from them the things you like. Demo trade and test your ideas until you find the trade system which is matching completely your personality.

Now, you have to go back to emotion in a controlled way. Every time your system suggests a trade look inside you and see how you feel about this trade. You feel bad – discard it. If you feel good – keep it.

Here comes the final step: Looking for the final approval sign before submitting the trade. Here is the time, where the mastership shows up. Your weapon is loaded, the target is clearly seen on the visor and the finger is on the trigger. You have to make that final exhale, get the target over the cross point and shoot it.

How much knowledge, skill, experience and patience you need to build within in order to reach that very final stage of trading proficiency? Only you’ll know that and only you can do it. The rest is just numbers in your bank account.

Building a fortune by trading currency is not a mirage in the desert of live. There are hundreds of traders who are making living of that business and you can do it too. Study all you can find on the net and follow the steps of the best if you want to win that battle.

Forex Trading Systems

2009-10-02T23:55:00.001-07:00

You should build your own trading system

A trading system on the Forex market is a type of strategy that allows traders to trade with a set of rules. There are many free trading systems and strategies printed in trading articles, journals, books and on trading-related websites. I would have to say that if you are not inclined to learn how to develop your own trading methodology, then perhaps you should consider giving your money for someone else to invest. Give it to someone who is trading a system that he developed and tested himself because he is more likely to have the confidence and courage to follow his own trading system.

Why you need a forex trading system?

It’s easy to trade with a system.
A good system provides consistent result.

What makes a good trading system?

It’s simple. Forget complicated systems with lots of rules - it’s a proven fact that simple systems work better - and are less likely to fail, in the brutal world of trading.
A trading system with profitable expectation.
It provides good ratio of reward/risk.
A system of comprehensive risk management including market exposure weightings, stop-loss provisions and capital commitment guidelines that preserve capital during trend-less or volatile periods.

Once you learn how to develop trading systems and strategies, you can then be better equipped to test them as well. By this point you might even find that the system created by yourself is the best one for you, because it becomes the system more suited to your profit objectives while operating within your risk tolerance levels. It is likely that once you develops this level of competence, you will simply acquire other trading systems only to dissect them, grab the parts you likes and add them to your own system. To me, the irony is that for a trader to know which system to purchase, you must first learn how to create a system. And after knowing how to create a system, he will no longer have the need to buy one.

Forex Trading: The Perfect Forex Trading System

2009-10-02T23:54:00.001-07:00

Trading the Forex market has become very popular in the last few years. But how difficult is it to achieve success in the Forex trading arena? Or let me rephrase this question, how many traders achieve consistent profitable results trading the Forex market? Unfortunately very few, only about 5% of traders achieve this goal. One of the main reasons of this is because Forex traders focus in the wrong information to make their trading decisions and totally forget about the most important factor: Price behavior.

Most Forex trading systems are made off technical indicators. But what are technical indicators? They are just a series of data points plotted in a chart; these points are derived from a mathematical formula applied to the price of any given currency pair. In other words, it is a chart of price plotted in a different way that helps us see other aspects of price.

There is an important implication on this definition of technical indicators. The fact that the readings obtained from them are based on price action. Take for instance a long MA crossover signal, the price has gone up enough to make the short period MA crossover the long period MA generating a long signal. Most traders see it as "the MA crossover made the price go up," but it happened the other way around, the MA crossover signal occurred because the price went up. Where I’m trying to get here is that at the end, price behavior dictates how an indicator will act, and this should be taken into consideration on any trading decision made.

Trading decisions based on technical indicators without taking price action into consideration will give us less accurate results. For example, again a long signal generated by a MA crossover as the market approaches an important resistance level. If the price suddenly starts to bounce back off that important level there is no point on taking this signal, price action is telling us the market doesn’t want to go up. Most of the time, under this circumstances, the market will continue to fall down, disregarding the MA crossover.

Don’t get me wrong here, technical indicators are a very important aspect of trading. They help us see certain conditions that are otherwise difficult to see by watching pure price action. But when it comes to pull the trigger, price action incorporation into our Forex trading system will definitely put the odds in our favor, it will generate higher probability trades.

So, how to create a perfect Forex trading system?

First of all, you need to make sure your trading system fits your trading personality; otherwise you will find it hard to follow it. Every trader has different needs and goals, thus there is no system that perfectly fits all traders. You need to make your own research on various trading styles and technical indicators until you find a concept that perfectly works for you. Make sure you know the nature of whatever technical indicator used.
Secondly, incorporate price action into your system. So you only take long signals if the price behavior tells you the market wants to go up, and short signals if the market gives you indication that it will go down.
Third, and most importantly, you need to have the discipline to follow your Forex trading system rigorously. Try it first on a demo account, then move on to a small account and finally when feeling comfortably and being consistent profitable apply your system in a regular account.

Forex Trading System: Discretionary vs. Mechanical Systems

2009-10-02T23:53:00.001-07:00

There are basically two types of Forex trading systems, mechanical and discretionary systems. The trading signals that come out of mechanical systems are mainly based off technical analysis applied in a systematic way. On the other hand, discretionary systems use experience, intuition or judgment on entries and exits. But which one produces better results? Or more importantly, which one fits better your trading style? We will first analyze the pros and cons about each system approach.

Mechanical systems

Advantages
This kind of trading system can be automated and backtested efficiently. It has very rigid rules. Mechanical traders are less susceptible to emotions than discretionary traders.

Disadvantages
Most traders backtest Forex trading systems incorrectly. In order to produce accurate results you need tick data. The Forex market is always changing. The Forex market (and all markets) has a random component. The market conditions may look similar, but they are never the same. A trading system that worked successfully the past year doesn’t necessary mean it will work this year.

Discretionary systems

Advantages
Discretionary systems are easily adaptable to new market conditions. Trading decisions are based on experience. Traders learn to see which trading signals have higher probability of success.

DisadvantagesThey cannot be backtested or automated, since there is always a thought decision to be made. It takes time to develop the experience required to trade successfully and track trades in a discretionary way. At early stages this can be dangerous.

Now, which approach is better for Forex traders? The one that fits better your personality. For instance, if you are a trader that finds it hard to follow your trading signals, then you are better off using a mechanical system, where your judgment won’t play an important role in your system. You only take the trades that your system signals.

If the psychological barriers that affect every trader (fear, greed, anger, etc.) puts you in unwanted scenarios, you are also better off trading mechanical systems, because you only need to follow what your system is telling you, go short, go long, close a trade. No other decision has to be made.

On the other hand, if you are a disciplined trader, then you are better off using a discretionary system, because discretionary systems adapt to the market conditions and you are able to change your trading conditions as the market changes. For instance, you have a target of 60 pips on a long trade. But the market suddenly starts trending up pretty strongly, then you could move your target to say 100 pips.

Does it mean that trading a discretionary system has no rules? This is absolutely incorrect. Trading discretionary systems means that once a trader finds his/her setup, the trader then decides what to do. But every trader still needs certain rules that need to be followed, such as the size of the position, conditions that have to be met before thinking to get in the market, and so on.

Whether you choose to be a discretionary or a mechanical trader there are some important points you should take in consideration:

You need to make sure the Forex trading system you are using totally fits your personality. Otherwise you will find yourself outguessing your system.
You also need to have some rules and most importantly have the discipline to follow them.
Take your time to build the perfect system for you. It’s not easy and requires time and hard work, but at the end, if done correctly, it will give you consistent profitable results.
Before going live, try it on a demo account or even on a small account (I will go for the second option, since psychological barriers will be present.)

How to choose a Forex Broker?

2009-10-02T23:52:00.003-07:00

Forex brokers need to be associated with a large financial institution such as a bank in order to provide the funds necessary for margin trading. In the United States a broker should be registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) as protection against fraud and abusive trade practices.

Before trading Forex you need to set up an account with a Forex broker. You may feel overwhelmed by the number of forex brokers who offer their services online. Deciding on a broker requires lots of research on your part. There are several areas to examine before you sign on the dotted line with any broker. Here are some things that you need to look for in making your choice:

Safety of Funds
Is the broker regulated? Are client funds insured?
Order execution
How fast is the broker’s order execution?
Will they place you on manual execution?
Do they offer automatic execution?
How much can you trade before having to request a quote?
Do they offset all clients orders?
Do they trade against their clients?
Spread
Is it fixed or variable?
How tight is the spread?
Is it larger for mini accounts?
Slippage
How much slippage can be expected in normal and fast moving market conditions?
Margin requirements
What are the margin requirements and how are they calculated? Does the margin change with currency traded? Is it the same for mini accounts and standard accounts?
Forex Trading Platform
Is it reliable during fast moving markets and news announcements?
How many different currency pairs can you trade?
Do they offer an Application Programming Interface (API) for automated systems trading?
What other features does it offer? (One click trading from the chart, trailing stops, mobile trading etc.)
Account Size
What is the minimum account balance?
Can you trade mini accounts?
Do you earn interest on the unused equity in your account?
Can you adjust the standard lot size traded?

Forex trading basics

2009-10-02T23:52:00.001-07:00

Forex Market Basics

The Foreign Exchange market (also referred to as the Forex, FX market, "Cash" Forex or Spot Forex market ) is the largest financial market in the world, with more than $1.5 trillion changing hands every day — 30 times larger than the combined volume of all U.S. equity markets. Another major feature of the Forex market is that it operates 24 hours a day, corresponding to the opening and closing of financial centers in countries all across the world, starting each day in Sydney, then Tokyo, London and New York. At any time, in any location, there are buyers and sellers, making the Forex market the most liquid market in the world.

What to trade in Forex Market?

In the forex market, currency trading is always done in currency pairs, such as EUR/USD or GBP/USD. Accordingly, all trades result in the simultaneous buying of one currency and the selling of another. The base currency is the "basis" for the buy or the sell. It is useful to consider the currency pair as an instrument, which can be bought or sold.

Understanding Forex quote

Base currency: The first currency in the pair.
Counter Currency: The second currency in the pair. Also known as the terms currency.

The US dollar is the centerpiece of the Forex market and is normally considered the ’base’ currency for quotes. This includes USD/JPY, USD/CHF and USD/CAD. For these currencies and many others, quotes are expressed as a unit of $1 USD per the second currency quoted in the pair. For example, a quote of USD/CAD 1.1302 means that one U.S. dollar is equal to 1.1302 Canadian dollar.

BID and ASK Prices

When trading forex you will often see a two-sided quote, consisting of a ’bid’ and ’ask’. The ’bid’ is the price at which you can sell the base currency (at the same time buying the counter currency). The ’ask’ is the price at which you can buy the base currency (at the same time selling the counter currency).

Commission-free, but with spreads

Most Forex brokers offer commission-free Forex trading. Spread - The difference between the bid and ask price of a currency. Normally 3-5 pips on the Majors.

Rollover - What happens to my open positions at the end of the trading day?

Process whereby the settlement of a deal is rolled forward to another value date. The cost of this process is based on the interest rate differential of the two currencies. Most brokers will automatically roll over your open positions, allowing you to hold a position for an indefinite period of time.

Leverage & Margin

The leverage available in forex trading is one of main attractions for many traders. Leveraged trading, or trading on margin, simply means that you are not required to put up the full value of the position. Forex brokers provide more leverage than stocks or futures. In forex trading, the amount of leverage available can be up to 400 times the value of your account.

Forex Technical Analysis

2009-10-02T23:51:00.003-07:00

The difference between forex technical and forex fundamental analysis is that forex technical analysis ignores fundamental factors and is applied only to the price action of the market. Forex technical analysis primarily consists of a variety of forex technical studies, each of which can be interpreted to predict market direction or to generate buy and sell signals. The technical analysis works by correlating the results and moves of current markets to create a short-term outlook for currencies. The rolling data that is produced throughout the trading day creates the interest in the markets and informs traders of the strong markets to back.

The Trend is Your Friend

Forex technical analysis is largely based around forex market movement trends, thus creating the widely used phrase ’the trend is your friend’ amongst traders. Buying and selling at the right time is the key in maintaining good levels of profits, following a trend is also about knowing where to entry a trade and more importantly where to exit.

Support and Resistance

Support and resistance is the basic of forex technical analysis. Support and resistance levels are points where a chart experiences recurring upward or downward pressure. A support level is usually the low point in any chart pattern (hourly, weekly or annually), whereas a resistance level is the high or the peak point of the pattern. Buying and selling at the support and resistance points makes a greater profit margin as long as they remain unbroken.

History Tends To Repeat Itself

Another important idea in technical analysis is that history tends to repeat itself, mainly in terms of price movement. The repetitive nature of price movements is attributed to market psychology; in other words, market participants tend to provide a consistent reaction to similar market stimuli over time. Forex technical analysis uses chart patterns to analyze forex market movements and understand trends. Although many of these charts have been used for more than 30 years, they are still believed to be relevant because they illustrate patterns in price movements that often repeat themselves.

Forex Software - Choosing the Best

2009-10-02T23:51:00.001-07:00

When it comes to forex trading the forex software you choose is essential. There are so many forex trading companies all competing for your business that choosing the right forex software can be quite a difficult task. Most of the forex software products available offers live online forex trading platforms but what other components are vital when it comes to your forex software.

Key Elements For Your Forex Software

Before purchasing any forex software there are a few essential items that should be included. The most important is security and your online forex trading software should include a 128 bit SSL encryption which will prevent hackers from accessing any of your personal details and information such as your account balance, transaction history, etc.

Providing the best security for your forex trading will include a company that provides 24 hour technical server support for your forex software, 24 hour maintenance should anything go wrong, daily backups of all information, and a security system that has been designed to prevent any unauthorized access. Along with these security protocols there are also some forex trading companies that use smart cards and fingerprint scanners to ensure that only their employees can have access to their servers.

Another important factor when it comes to choosing your forex software is to check what the company’s downtime is like. When it comes to trading forex and particularly your online forex trading you need to ensure that the forex software you choose is reliable and available 24 hours a day. The forex software you choose for your forex trading should also have technical support available at all times should your session be cut short.

Ensuring that all the above features are listed in the forex software you choose will help to ensure your forex trading success.

Forex Fundamental Analysis

2009-10-02T23:50:00.001-07:00

The two primary approaches of analyzing Forex markets are technical analysis and fundamental analysis. Fundamental analysis comprises the examination of economic indicators, asset markets and political considerations when evaluating a nation’s currency in terms of another. The focus of fundamental analysis lies on the economic, social and political forces that drive supply and demand. There is no single set of beliefs that guide forex fundamental analysis, yet most fundamental analysts look at various macroeconomic indicators such as economic growth rates, interest rates, inflation, and unemployment.

Here we look at some of the major Forex fundamental factors that play a role in the movement of a currency:

Economic Indicators

Economic indicators are reports released by the government or a private organization that detail a country’s economic performance. These economic indicators can be released on a weekly basis, but the more common report is monthly. Indicators are based around a number of economical situations, of which the two primary factors are that of International trade and Interest. Subsidiary factors also include Consumer Price Index (CPI), Purchasing Managers Index (PMI), Durable goods orders, retail sales and Producer Price Index (PPI).

Currency’s Interest Rates

One of the major indicator factors, Interest rates, are a key economic function of any nation. Generally, when a country raises its interest rates, the country’s currency will strengthen in relation to other currencies as assets are shifted to gain a higher return. Interest rates hikes, however, are usually not good news for stock markets. This is due to the fact that many investors will withdraw money from a country’s stock market when there is a hike of interest rates.

International Trade

The trade balance portrays the net difference (over a period of time) between the imports and exports of a nation. A trade deficit can be an economic disaster for a government and a currency. A deficit may appear when a country is importing more than it is exporting, meaning that more money is leaving and less is coming in. In some ways, however, a trade deficit in and of itself is not necessarily a bad thing. A deficit is only negative if the deficit is greater than market expectations and therefore will trigger a negative price movement.

SaneBull World Market Watch

2009-09-28T07:19:00.001-07:00

stock market info

Great British Pound vs. Japanese Yen Morning Report

2009-09-23T02:03:00.001-07:00

The daily double top formation is still negatively affecting the pair as seen on our provided daily chart, particularly after breaching the support areas of 149.00 , supported by the bearish structure of the four-hour candlestick as seen on the s

Domain Name For Forex Sites

2009-09-23T02:02:00.000-07:00

If you are going to become an affiliate in the Forex world, you will have to pick a domain name. As a beginner, you might want to start with just one domain. Later on, as your experience grows, you can expand and manage couple of domains at the same time. How to pick up the right domain name? Where and how to register your domain? Is it possible to get a free domain for your Forex site?
Choosing domain requires some serious thinking and searching. First of all, decide what your Forex website will be about: Forex brokers reviews, Forex forum, Forex blog, Forex education, Forex software, Forex trading platforms etc. Once you have figured out your website theme, choose the domain name with the theme keywords. In fact, brainstorm with 5 top keywords, pair them up, add prefixes and/or suffixes to come up with a good domain ideas. For example, if you decide to make Forex education, a good domain may sound like:
LearnForex.com, or StartForexTrading.com, or ForexTradingGuide.com
Here are couple of more things you should know while choosing a domain for you Forex website:
1. Domain Endings - nothing better than .com
You have probably already noticed the variety of domain endings, such as .net, .org, .tv, however there is nothing better than com. Don't fall for cheaper domains because of the endings other then .com. It is just not worth it.
2. Amount of Words - The Less, the Better
First of all, since your website is about Forex, the domain name must have "Forex" in it somewhere, preferably in the beginning. Don't go overboard by using more than 3 words in the domain.
3. Hyphens and Numbers are Bad
If you can avoid numbers and hyphens in the domain name - perfect! Hyphens might look better for a human eye, but for Google and other search engine they are just obstacles.
4. Don't Look for Misspelling
I completely understand the need to be unique and have an image of a genius over the net; however, don't use difficult words in the domain name because it will only lead to misspelling. The words for your Forex website should be short, easy-to-spell and memorable. Avoid words, such as ecstasy, millennium, irresistible, sacrilegious etc. in your Forex domain!
Now it is time to register the domain for your Forex site. Before buying a domain name via Go Daddy or similar domain registrars, check whether your hosting provider gives away free domain with the hosting plan. Some hosting providers offer free the domain upon the purchase of the plan.
Search to see if the domain name you have come up with is available (there is a domain search with every registrar). Don't be too disappointed to find that all of the wanted domain names for your Forex sites are already taken by someone else. In the worst case scenario add hyphen between words, or try to brainstorm some more with words related to your Forex website topic.
Once you have found the available domain, click through, make the payment (unless you get a domain for free from your hosting provider), and you are all done! You are an official owner of a domain!

Ring Fences, Rustlers and a global bank insolvency

2009-09-18T19:15:00.000-07:00

In this week which has seen so much speculation on the fate of Lehman Brothers, it seems only sensible to review how an international insolvency of a major bank works and what it might mean for international creditors. The insolvency treatment of international banks has remained one of the stubbornly difficult areas of law to harmonise and huge uncertainty and complexity remains. For excellent background, see Cross-border bank insolvency by Rosa Maria Lastra of Queen Mary, University of London.Although markets are global, and Lehman Brothers operations span the globe, all insolvency is local. The basic premise is that each jurisdiction buries its own dead and keeps whatever treasure or garbage it finds with the corpse. Local creditors get to recover their claims out of the locally available assets. If, and only if, there are any assets left over will international creditors be invited to make a claim for the rest. Europe has managed to harmonise cross-border insolvency for banks under directives and local law to embody principles of universality and unity within the EU, but that only works equitably if enough assets are in the EU when the bank fails, and local insolvency law still applies in all its divergent complexity.Claims against a bank are deemed located wherever the contract creating the claim is undertaken. If it is under US law then the claimant must look to the liquidator in the United States and assets under his control for recovery. If the claim is in Hong Kong, then the claimant looks to the Hong Kong receiver and assets.The key to having a happy insolvency, if such a thing exists, lies in ensuring that when a globalised bank goes bust, all the best assets are inside your borders and subject to seizure by your liquidators on behalf of your creditors. Everyone else outside your borders is on their own. As the US dollar is the reserve currency of banking and US Treasuries, Agencies and other assets are the highest preferred asset class, the US is almost always in a good position in an international bank failure.The principle of using local assets for local recovery is known as the “ring fence” – the idea being that insolvency drops an invisible “ring fence” around any valuable assets at the borders to meet claims arising within the borders. No country is more assiduous in weaving the ring fence than the United States of America. It is a very successful strategy for US creditors. US creditors of failed international banks tend to recover disproportionately relative to creditors anywhere else. The ring fence contains all these choicest assets for US creditors, and all the international creditors are forced to pick among the dross of foreign assets to eke out a recovery, only receiving any residual US assets remaining after US creditors get 100 percent recovery.Lehman has been deeply troubled and subject to speculation since the early spring. That was just about the time that we started to see a marked sell off in foreign markets where Lehman has long been a major player. Recently, along with intensification of that sell off, we have seen a strengthening of the US dollar and US asset markets.If one were cynical, and one believed that Lehman was going to be allowed to fail pour encouragement les autres one might wonder if Lehman was quietly bidden – or even explicitly ordered – to sell off its foreign holdings and repatriate the proceeds to asset classes within the US ring fence. This would ensure that US creditors of Lehman received a satisfactory recovery at the expense of foreign creditors. It would also contribute to a nice pre-election illusion of a “flight to quality” as US dollar and assets strengthened on the direction of flow.If one were really cynical, one might even think that a wily bank supervisor might arrange to ensure 100 percent recovery for its creditors with a bit of creative misappropriation thrown in the mix. Broker dealers normally hold securities and other assets in nominee name on behalf of their investor clients. Under modern market regulation, these nominee assets are supposed to be held separately from a firm’s own assets so that they can be protected in an insolvency and restored to the clients with minimal loss and inconvenience. Liberalisations and financial innovations have undermined the segregation principle by promoting much more intensive use of client assets for leverage (prime brokerage and margin lending) and alternative income streams (securities lending). As a result, it is often very difficult to discern in a failed broker who has the better claim to assets which were held to a client account but reused for finance and/or trading purposes. The main source of evidence is the books of the failed broker.On the wholesale side, margin and collateralisation in connection with derivatives and securities finance arrangements mean that creditors under these arrangements should have good delivery and secure legal claims to assets provided under market standard agreements. As a result, preferred wholesale creditors could have been streamed the choicest assets under arrangements that will look above suspicion on review as being consistent with market best practice.If Lehman were to go into insolvency, I will be interested to discover whether US creditors achieve a much higher proportion of recovery than their global peers in other locations where Lehman did business. If so, it will likely be because of the US ring fence and the months of repatriation of assets and funds back into the confines of the ring fence before the failure was finally orchestrated. It will also be because the choicest assets were preferentially delivered to preferred US creditors under market standard margin and collateral arrangements.Unfortunately, the pace of an international insolvency means that any retrospective evaluation will be so far down the road that I will likely be almost alone in looking backwards to see what the final distribution effects are and what they mean for equitable principles of international banking practice

Make Money with Currency Trading

2009-09-18T19:13:00.000-07:00

For those unfamiliar with the term, Forex (Foreign Exchange market), refers to an international exchange market where currencies are bought and sold. The Foreign Exchange Market that we see today began in the 1970's, when free exchange rates and floating currencies were introduced. In such an environment only participants in the market determine the price of one currency against another, based upon supply and demand for that currency.
Forex is a somewhat unique market for a number of reasons. Firstly, it is one of the few markets in which it can be said with very few qualifications that it is free of external controls and that it cannot be manipulated. It is also the largest liquid financial market, with trade reaching between 1 and 1.5 trillion US dollars a day. With this much money moving this fast, it is clear why a single investor would find it near impossible to significantly affect the price of a major currency. Furthermore, the liquidity of the market means that unlike some rarely traded stock, traders are able to open and close positions within a few seconds as there are always willing buyers and sellers.
Another somewhat unique characteristic of the Forex money market is the variance of its participants. Investors find a number of reasons for entering the market, some as longer term hedge investors, while others utilize massive credit lines to seek large short term gains. Interestingly, unlike blue-chip stocks, which are usually most attractive only to the long term investor, the combination of rather constant but small daily fluctuations in currency prices, create an environment which attracts investors with a broad range of strategies.
How Forex Works
Transactions in foreign currencies are not centralized on an exchange, unlike say the NYSE, and thus take place all over the world via telecommunications. Trade is open 24 hours a day from Sunday afternoon until Friday afternoon (00:00 GMT on Monday to 10:00 pm GMT on Friday). In almost every time zone around the world, there are dealers who will quote all major currencies. After deciding what currency the investor would like to purchase, he or she does so via one of these dealers (some of which can be found online). It is quite common practice for investors to speculate on currency prices by getting a credit line (which are available to those with capital as small as $500), and vastly increase their potential gains and losses. This is called marginal trading.
Marginal Trading
Marginal trading is simply the term used for trading with borrowed capital. It is appealing because of the fact that in Forex investments can be made without a real money supply. This allows investors to invest much more money with fewer money transfer costs, and open bigger positions with a much smaller amount of actual capital. Thus, one can conduct relatively large transactions, very quickly and cheaply, with a small amount of initial capital. Marginal trading in an exchange market is quantified in lots. The term "lot" refers to approximately $100,000, an amount which can be obtained by putting up as little as 0.5% or $500.
EXAMPLE: You believe that signals in the market are indicating that the British Pound will go up against the US Dollar. You open 1 lot for buying the Pound with a 1% margin at the price of 1.49889 and wait for the exchange rate to climb. At some point in the future, your predictions come true and you decide to sell. You close the position at 1.5050 and earn 61 pips or about $405. Thus, on an initial capital investment of $1,000, you have made over 40% in profits. (Just as an example of how exchange rates change in the course of a day, an average daily change of the Euro (in Dollars) is about 70 to 100 pips.)
When you decide to close a position, the deposit sum that you originally made is returned to you and a calculation of your profits or losses is done. This profit or loss is then credited to your account.
Investment Strategies: Technical Analysis and Fundamental Analysis
The two fundamental strategies in investing in Forex are Technical Analysis or Fundamental Analysis. Most small and medium sized investors in financial markets use Technical Analysis. This technique stems from the assumption that all information about the market and a particular currency's future fluctuations is found in the price chain. That is to say, that all factors which have an effect on the price have already been considered by the market and are thus reflected in the price. Essentially then, what this type of investor does is base his/her investments upon three fundamental suppositions. These are: that the movement of the market considers all factors, that the movement of prices is purposeful and directly tied to these events, and that history repeats itself. Someone utilizing technical analysis looks at the highest and lowest prices of a currency, the prices of opening and closing, and the volume of transactions. This investor does not try to outsmart the market, or even predict major long term trends, but simply looks at what has happened to that currency in the recent past, and predicts that the small fluctuations will generally continue just as they have before.
A Fundamental Analysis is one which analyzes the current situations in the country of the currency, including such things as its economy, its political situation, and other related rumors. By the numbers, a country's economy depends on a number of quantifiable measurements such as its Central Bank's interest rate, the national unemployment level, tax policy and the rate of inflation. An investor can also anticipate that less quantifiable occurrences, such as political unrest or transition will also have an effect on the market. Before basing all predictions on the factors alone, however, it is important to remember that investors must also keep in mind the expectations and anticipations of market participants. For just as in any stock market, the value of a currency is also based in large part on perceptions of and anticipations about that currency, not solely on its reality.
Make Money with Currency Trading on Forex

Forex investing is one of the most potentially rewarding types of investments available. While certainly the risk is great, the ability to conduct marginal trading on Forex means that potential profits are enormous relative to initial capital investments. Another benefit of Forex is that its size prevents almost all attempts by others to influence the market for their own gain. So that when investing in foreign currency markets one can feel quite confident that the investment he or she is making has the same opportunity for profit as other investors throughout the world. While investing in Forex short term requires a certain degree of diligence, investors who utilize a technical analysis can feel relatively confident that their own ability to read the daily fluctuations of the currency market are sufficiently adequate to give them the knowledge necessary to make informed investments.

The best advice I can give to you is to conduct yourself like a boss interviewing a potential employee. This employee will be making major decision on your financial future (or lack there of) and therefore it is of most importance that you ask the right questions. This decision cannot be taken lightly as must be well thought out. I would interview (more like grill) at least 5 potential Brokers before picking the final two.
When choosing a forex broker there are many factors to take into account.
— Trust
— Experience
— References from past clients
— Level of success
— Amount of advice to be given
— Convenience
— Amount of margin offered
— Speed
All of the above are of course important. In any financial transaction.

It is important to trust the broker you work with. This trust is garnered by the experience level the broker has. Of course there are some new brokers starting out who are quite trustworthy, but most people would rather work with an experienced broker. For that reason most new brokers attach themselves to a firm where they can be mentored and gain experience.
References from past clients are important. If your broker has helped someone else is successful in the past and that person is willing to speak up for him that says a lot. You can gage the level of success your broker has had by speaking with past clients and seeing how well they did working with this broker. Next, take a look at the amount of advice your broker is willing to give you. Of course, you make your own decisions and will never take another person's word for everything, but it is good to have knowledge to work with, and advice from an experienced broker is key information to factor in. Convenience is also impotent. If you live in California then an Ohio broker might not be the best choice. But in the age of the internet that factor has become less relevant. With fax and email where you and your broker live has become less important.
The amount of margin offered is important. Margin is used to leverage your money. A broker who gives you a 50 to one margin is more valuable than one who gives you 20 to one. And of course speed. Is your broker quick? Does he return phone calls and emails promptly? If so, perhaps you can work with him.
Your broker will b a trusted adviser and someone that you may be working with for years to come so choose the relationship carefully. Ask friends and acquaintances who are active in forex trading what broker they use and how they met. It is quite possible that you can get a referral from a friend or acquaintance you trust and acquire a good forex broker that way.
Another good way to find a forex broker is to go online. There are message forums, chat rooms, and email groups through portals like Yahoo, Google and MSN that contain a wealth of information. Getting onto one of these online communities and asking other people for advice is the way that many people found their broker. If a broker has several clients in an online community who are happy with what he has accomplished for them, then that is a good indication that you might be happy with him as well. Take advantage of the number of people who are on the internet and join some of these online communities. Ask question and you'll probably learn a great deal from the experiences that other people have had. Also find trade journals, magazines and ezines to subscribe to. Read as much as you can about the subject of forex trading before going into it. Become a smart shopper and smarter trader.
Finding a good forex broker is a job in itself. When you visit with a forex broker you are in essence conducting an employment interview to determine if this is the broker you wish to handle your financial affairs, so be thorough. Ask plenty of questions. Ask for references. Don't be shy. Also check with other people in the office of the broker and see if you would trust them to fill in for your broker if he were not available. And, see if the broker is willing to offer you a demo account to use to get in some practice before you actually make an investment. If the broker is able to do so and encourages you then it means that the broker wants educated clients and is not just out for the quick buck. See what kind of training and tutoring the broker is willing to offer. A good broker will offer to answer your questions and help you through the learning process.

How to Make Consistent Profits Trading Futures

2009-09-18T05:27:00.001-07:00

One of the mistakes I consistently made in my early years as a trader was to try to make too much money in relation to my trading capital. To make £1000 a day while Futures Trading with £10,000 is absurdly ambitious; of course I have done it many times, as would anyone with this intention, but I have also gone bust on more than one occasion. To have the aspiration of taking £1000 out of the market each day, when trading with £10,000 or under is, I think, a quick route to the poor house.So what is a reasonable objective for a day / futures trader?A few weeks ago I visited an ex-floor trader who has set up a trading operation backing young aspiring traders. I was interested to find out from him how he trains his team. The essence of his approach is to give them a grounding in discipline and confidence. He believes that confidence is one of the primary keys to success in futures trading and that confidence is a by-product of taking money out of the market.One of the reasons he has chosen to work with young futures traders is that he wants people who have minimal financial commitments. He knows it will take a while for them to start earning an income from the business. So his belief is that if his traders can regularly take small amounts of money out of the market, their knowledge, skills and confidence will grow and in time they will become bigger traders. What is critical about this approach is that his traders do not grow in size until they have achieved consistent, regular success on a small scale; and we are talking small, I mean £25 or £50 in a day.What can we learn from this low risk approach? Well first let me ask you: what is more important, to make money today, or to become a consistently profitable trader? Because if we want to become consistently successful traders we need to take a different tack than if we are just out to make as much money as we can today.So back to the question, what is a reasonable objective for a day trader? Well let’s look at bringing our daily target right down to £100, with £10,000 of trading capital, i.e. 1%. Now £100 a day, trading a market like the FTSE seems an achievable target to me. That is a net profit of 10 FTSE points a day. Can you come up with a system that trades 5 times a day and has an average net profit of 2 points? Or a system that trades 10 times a day with an average net profit of 1 point?Is that a yes I hear? Because if you can make an average of £100 a day you will double your money in 100 trading days i.e. 20 weeks or about 5 months. If you double you position size every time you double your money, your account will grow to £1,000,000 in 140 weeks, which is less than 3 years! Of course this does not take into account the impact of tax; but my point is that by taking a low risk, conservative approach to trading objectives, we give ourselves the chance to grow and develop into traders, while also availing ourselves of the possibility of a deceptively good return.If at this point you are tearing your hair out and screaming at the screen that I am a fool for suggesting that you can trade a strategy that averages a few points a trade, I assume that you are not familiar with the benefits of direct access trading. Direct access trading effectively gives everyone and their uncle the same low costs, immediate trade execution and access as was exclusively enjoyed by the floor traders before the advent of the electronic market place. To learn about the advantages of direct access trading.

Archive for the 'Chinese Yuan (RMB

2009-09-18T05:26:00.001-07:00

fter a brief pause, China’s foreign exchange reserves have resumed their blistering pace of growth: “The reserves rose a record $178 billion in the second quarter to $2.132 trillion, the People’s Bank of China said today on its Web site. That dwarfs a $7.7 billion gain in the previous three months.” Considering that the global economy remains embroiled in the worst recession in decades, this is frankly incredible. [Chart below courtesy of WSJ].As far as currency traders are concerned, this development has two important implications, the first of which concerns the Chinese Yuan (also known as RenMinBi or RMB). A quick parsing of trade and capital flows data reveals that the majority of the $178 Billion came from unconventional sources. “The trade surplus was $34.8 billion in the second quarter and foreign direct investment was $21.2 billion.” Currency fluctuations (i.e. the depreciation in the Dollar relative to other major currencies) can explain a small portion, “leaving the bulk of the increase in the reserves unaccounted for.”In short, most of the capital now flowing into China is so-called “hot money,” chasing a piece of the action in China’s surging property and stock markets. The benchmark stock index has risen 75% this year, making it the world’s best performer. In short, China is once again “caught in a squeeze similar to the one that bedevilled policymakers earlier this century, with a flood of hot money trying to force the government’s hand on the currency.” Either it allows the RMB to resume its upward path against the Dollar, or it raises interest rates rapidly to head off inflation. With the money supply now growing at an annualized rate of 30%+, the government is running out of time on this front.The second implication concerns the composition of China’s reserves. You can recall that in recent months, Chinese officials have become more vocal about ending the Dollar’s role as the world’s reserve currency, and have even taken token steps towards achieving that goal. But the latest analysis suggests that when push comes to shove, China is still firmly behind the Dollar: “Estimates suggest around 65% of China’s official holdings are in U.S. dollar assets, and the remainder are denominated in euro, yen, sterling and other currencies. This mix has been relatively stable as the Chinese government continues to place the bulk of its reserves in U.S. Treasury securities.”In fact, “stable” is an understatement. While other Central Banks are gradually paring their holdings of US Treasuries, China is adding to its own stockpile. Already the world’s largest holder of Treasuries, China added another $38 billion in May, for a total of $800 Billion. “On the contrary, Japan, Russia and Canada were sellers of US assets in May. Japan, the second-biggest international investor, reduced its total holdings by $8.7 billion to $677.2 billion.” Meanwhile, Zhou XiaoChuan, governor of China’s Central Bank has endorsed the current composition of reserves: “Despite the $800 billion in U.S. Treasuries, it is a diversified portfolio overall.” This certainly represents a step backwards for Mr. Zhou, who only a couple months ago was leading the charge for a global reserve currency.Perhaps over the longer-term, it can begin to take steps to dislodge the Dollar, but for now, it appears that China has accepted the status quo. As one analyst observed, “We do expect China to increase its purchase of gold and other commodities over time, but these markets are just not big enough to make a meaningful dent in the structure of the overall FX holdings. For example, if China decided to hold 5 percent of its current $2 trillion reserves in gold, it would need to buy …the equivalent to about one year of world production. For other hard commodities, the cost of storage is high and prices fluctuate wildly.”China did recently appoint a new official (an economist trained in the US) to manage its reserves. “The move isn’t likely to fluster foreign-exchange markets or herald any change in China’s exchange-rate policy and reform.” Still, Chinawatchers are advised to continue to monitor the situation closely for any signs of discontinuity.

Archive for the 'Australian Dollar'

2009-09-18T05:25:00.001-07:00

In the same vein as Monday’s and Tuesday’s posts (covering the New Zealand Dollar and Australian Dollar, respectively), I’d like to use today’s post to look at another commodity currency - the Canadian Dollar. The Loonie, it turns out, has also benefited from the a recovery in risk appetite and concomitant boom in commodity prices; it has appreciated by 7% against the USD in the last month alone, en route to a ten-month high. “All in all, with almost everything going its way these days (besides the crummy weather and the impact on tourism), a return trip to parity - last visited nearly one year ago - doesn’t seem far fetched,” chimes one optimistic analyst

China moves ‘forward’ on currency derivatives

2009-09-18T05:24:00.001-07:00

Chinese officials recently approved a preliminary list of banks to make the market in currency forwards. Foreign banks, including HSBC and Deutsche Bank AG, were heavily represented, although the ‘Big 5’ Chinese Banks were predictably included. The move is a large step forward for China, as currency derivatives experience a surge in popularity. Currency forwards allow traders to essentially bet on the future direction of a currency, by entering into an agreement to buy or sell currency at a fixed exchange rate on a fixed date in the future. Yuan-denominated forwards are especially popular, as traders can speculate if, when, and by how much China will revalue its currency. Dow Jones News reports:Once foreign-exchange fowards trading on the interbank market becomes active, it could affect the yuan spot rate and offshore yuan forwards markets. But it’s still not clear how much freedom the People’s Bank of China is likely to give banks in trading fowards.

Hedge Funds get Burned by Dollar’s

2009-09-18T05:23:00.001-07:00

n just the first two weeks of 2006, the Yen has already managed to appreciate 3.5% against the USD, costing some of the most prominent macro hedge funds hundreds of millions of dollars in losses. Hedge funds, with their vast pools of investment capital and proportionately large research teams, are usually ahead of the curve in financial markets. That so many of them failed to foresee the USD’s sudden slide has come as a great surprise to many analysts. Many hedge funds have interpreted the recent fall in the value of the USD as a harbinger of further depreciation. Accordingly, they have quickly and significantly cut their long positions in the USD, a fact that is born out by official statistics. Reuters reports:Long dollar positions measured against the yen, euro, sterling, Swiss franc, Canadian dollar and Australian dollar were cut to 1,241 futures contracts in the week to January 3 from 24,274 contracts the week before, according to the CFTC

Euro retreats from 2009 Highs

2009-09-18T05:16:00.002-07:00

This notion might have some merit, considering that fundamentals arguably favor a continued Euro appreciation. “The economy of the 27-country European Union shrank 0.3 percent in the three months ended June 30, for an annual rate of roughly 1.2 percent. The 16 countries that use the euro registered a 0.1 percent decline for the second quarter, or an annual rate of roughly 0.4 percent.” While output remains well below its 2008 levels, the slight contraction represents a tremendous

Archive for the 'US Dollar

2009-09-18T05:16:00.000-07:00

Over the last week, the markets have been abuzz with chatter about how the US recession will soon come to and end, followed by a quick and healthy recovery. According to investor logic, the result would be a rise in inflation and interest rates. This optimism was partially deflated today, as the Federal Reserve bank conducted its annual monetary policy meeting.Excluding a brief uptick in June (see chart below courtesy of the Cleveland Fed), investors had long come to expect that the Fed would leave its benchmark Federal Funds rate unchanged, at 0-.25%. At the same time, there was a strong belief that the Fed would begin to hike rates at the end of 2009, and comment accordingly in the press release that accompanied its monetary policy decision. Barron’s predicted yesterday: “The statement will acknowledge some improvement in the U.S. economy, though it will imply that this nascent growth reflected in recent gross domestic product reports is fragile and will be monitored closely. This will leave open the specter that interest rates could be increased at some point in the future

Archive for the 'Swiss Franc

2009-09-18T05:15:00.000-07:00

When the Swiss National Bank (SNB) intervened three weeks ago in forex markets, the Swiss Franc instantly declined 2% against the Euro. Since then, the Franc has risen slowly, and it’s now in danger of touching the “line in the sand” of 1.5 EUR/CHF that analysts have ascribed to the SNB.That’s not to say that the Central Bank lacks credibility. Quite the opposite in fact. Every time a member of the SNB speaks about the possibility of intervention, the markets react. For example, “Swiss National Bank Governing Board member Thomas Jordan said the central bank remains willing to intervene in currency markets to prevent a further appreciation of the Swiss franc..The franc declined against the euro after the remarks.” Also, “The Swiss National Bank is sticking decidedly to its policy to prevent an appreciation of the Swiss franc, SNB Chairman Jean-Pierre Roth said in an interview published on Friday…The Swiss franc dipped after Roth’s comments.”In addition, given that the SNB premised its intervention on deflation fighting, its credibility is now higher than ever, since the latest figures imply an inflation rate that is well into negative territory: “Swiss consumer prices dropped 1 percent year-on-year in June, the same rate as in May when prices fell at their fastest rate in 50 years, underscoring deflation dangers although most of the drop was due to oil.” Despite a fiscal stimulus, coupled with an easing of monetary policy and quantitative easing, the Swiss money supply is barely growing. At this point, the only thing the SNB can do is (threaten to) manipulate its exchange rate.Perhaps this is why traders are willing to push back against the SNB, backed by “foreign-exchange analysts [that] argue that the SNB won’t have an appetite to continue buying foreign currencies in large amounts much longer.” The SNB is also fighting against the perception that Switzerland is one of a handful of financial safe havens. The fact that the Swiss Franc is probably undervalued is also contributing to the steady inflow of capital into Switzerland.Still, investors are afraid to step across the line. Futures prices for the EUR/CHF are all hovering slightly above 1.50, for the next 18 months. Prior to the latest round of intervention, the expectation was for a steady rise in the Swiss Franc.

CURRENCIES TO TRADE IN THE FOREX MARKET

2009-09-18T05:14:00.001-07:00

WHAT CURRENCIES TO TRADE IN THE FOREX MARKETYou can trade any country’s currency by exchanging it to another country’s currency, however the list below are the ones that are the most popular and are usually made available by most online brokers for you to trade.Read More With ForexGen0 Comments PermalinkAug 31, 2008 at 15:11 o\clockFOREX Trading Strategy ForexGenby: forexgenpivot Keywords: forexgen, client, easily, manage, mostly, orders, quotes, trader, within, forex, types, using, mode, news, user, whom, cfd, forex, forexI ventured into the FOREX market a little more than 1 year ago. I have tried and tested many different types of trading techniques and styles. Most were failures and some were successful. From my experience, traders making money in FOREX will not reveal their trading system, simply because somebody has to lose money in order for you to make money.Currently I have two strategies working for me. I started with a demo account a little more than one year ago and used the obvious techniques such as technical analysis and fundamentals. Technical analysis seemed to be the easiest method for an inexperienced trader since it only required looking at charts as opposed to watching the news. I used indicators such as MACD, Fibonacci, and RSI to help assess the market and make a prediction on price movement. Needless to say I was successful in my demo account, however when I went live, fear set in and I could not trade using the same techniques I had developed over 4 months of trading with a demo account.The stress was too much and like a lot of people, I started looking for a FOREX signals provider to minimize the time spent and stress. After some due diligence on quite a few FOREX signals providers, I did find a reliable FOREX charting software package that provided excellent signals. To my surprise, the signals worked. The only difficult part was to discipline myself to take each signal whether I agreed with it or not. After all, the company I chose had a winning track record for 3 consecutive years.Now that I had a positive flow of income from a FOREX signals provider, I decided to open a second account using my own trading system. This is where I discovered what I feel is a full proof system when it comes to making a fast 30 to 50 pips in FOREX.Trading now for a little more than 1 year, I noticed that the market moved on speculation. Speculation based on fear and news events, such as the CPI and retail sales. I noticed that between the times of 4:30 am eastern and 8:30 am there was a lot of critical news in majors such as the Euro and the British Pound. The market would move at the exact moment these major news events were released. If a news event was due out at 4:30 am on the British Pound, more than likely the market spiked at that exact moment 30 to sometimes 50 pips up or down. What I started to do was trade on these news events. I would wait until that exact moment the news was due out and execute a trade when the market moved more than 7 pips from its current price 15 seconds before the news is released. A stop-loss should be set at 10 pips above or below the current price.The trick to this method is executing the trade at the right time and discipline yourself to keep your stop-loss very tight, setting it to no more than 10 pips after you got into the trade. The reason being, this works all of the time, but if you click too soon or too late you could fail to predict the direction of the market. However, when you are right, your winning trades will outweigh your losing traders significantly since you are looking to make a gain of 30-50 pips and if you a wrong a loss of only 10 pips. I have used this method for 5 months and it works.Read More With ForexGen

simple breakout system

2009-09-18T05:13:00.002-07:00

it’s a very simple breakout system and it’s a fact that most major trends start from breaks to new market highs or lows.2. By its very nature its long term and if you look at a Forex chart, you will see the big trends can last many months or longer.3. This system as it is always in the market so is guaranteed to put you on the side of every big trend.It’s also got some other great advantages, it’s quick to implement about 15 minutes a day max and gives you a set trading signal with no subjective judgement needed.Despite the fact it works and will continue to work most traders won’t bother with it and here are the reasons why.1. They think its to simple despite the fact it works2. They want to buy tops and bottoms exactly, despite the fact you can’t do this3. Its to long term and traders always like action and lack the discipline to hold long term trends4. It’s not complex - traders think this increases chances of success but of course the opposite is true - simple systems are more robust.5. It’s not based on fancy theories chaos, neural networks, artificial intelligence etc - these theories don’t work in Forex but again traders love them.6. There is no fancy packaging or a ridiculous name that insinuates taking on and beating the market.Most traders pick junk robots with simulated track records and fall for the hype. This automated Forex trading system has no hype but plenty of profits and I know which system I would rather have!The system works and will continue to work and if you are interested in long term profits take a look at it and it can increase your chances of forex trading success.Can FAP Turbo Really Automate Your Internet TradingThis is especially the case if you are talking about trading on the Forex market as there are some automated systems which are actually quite good. There are literally dozens of theseAll Information About Forex The Best Converting And BestThe best automated system I have come across so far has been the FAPTURBO IT does what it says on the tin… Fapturbo Is The Only Automated Forex Income Solution.Forex Trading System Review How Can You Find the Best TradingBy simply installing the system, customizing your settings including level of risk, the amount of times you would like the system to trade your account in a given week and other options,The Forex Autopilot System in 2009 Is it Still the MostAutomated Forex Trading Software - 5 Simple Tips to Select the Most Profitable Forex Robot System Are you looking for the best automated forex trading software to double

Economic Indicators

2009-09-18T05:13:00.000-07:00

n forex, timing is everything. If I had written this post a couple weeks ago, the headline would read “Euro Touches 2009 High.” Perhaps if I had waited another week, it would have read, “Euro Approaching 2009 High.” But alas, I chose today to write about the Euro, and the headline I chose is probably the most appropriate under the circumstances.On August 5, “The euro hit a high for the year against the dollar as stocks trimmed their losses in afternoon trading Wednesday despite a generally cautious tone in currency markets.” Analysts were careful to point out that the markets remained cautious and the Euro eased past - rather than smashed through - its previous high. Technical analysts would and have argued that this paved the way for the subsequently rapid decline: “The euro is testing the base of an ascending channel with daily momentum charts showing a ‘double top in overbought territory.’ ”This notion might have some merit, considering that fundamentals arguably favor a continued Euro appreciation. “The economy of the 27-country European Union shrank 0.3 percent in the three months ended June 30, for an annual rate of roughly 1.2 percent. The 16 countries that use the euro registered a 0.1 percent decline for the second quarter, or an annual rate of roughly 0.4 percent.” While output remains well below its 2008 levels, the slight contraction represents a tremendous improvement from the first quarter, when GDP shrank by 2.5%.

3 Rules to Make serious earnings

2009-09-14T08:30:00.000-07:00

If you want to catch the serious profit in forex dealing you need to trend watch forex trends which are worse term. here we are going to give you a 3 step simple method which if you use it correctly, will help you catch every superior forex trend and lead you to long-term term currency dealing success.

Most beginner traders don't bother trying to trend following forex lengthier term - instead they try forex scalping or day trading. These methods focus the trader on small moves and they hope to catch small profit however as most short term moves are random, this leads to equity eliminate.

The other alternatives are swing trading and long term forex trend following and this article is all about the latter method. If you look at any forex chart, you will see long-term term trends that last for months or years. These moves can and do yield serious profit - present we will outline a simple method to get them.

Breakouts

By far the best way of catching the serious moves is to use a forex dealing strategy based around breakouts. A breakout is simply a move on a forex chart where a new high or low is made and resistance or support is broken.

It's a fact that most leading moves start from new highs or lows.

While it might appear that you are not buying or selling at the greatest level, you are in terms of the odds of the trend continuing. Most forex traders make the mistake of waiting for the breakout to come back and get in at a better price but these traders never get on board. The grounds for this is if a breakout occurs, then you have a new strong trend and a pullback is not very likely to occur.

Most traders don't buy or sell breakouts and that's exactly why it's such a powerful method.

The only point to keep in mind is a support or resistance which is ruined, should be valid and that means at least 3 points in at least 2 different times frames. The more tests and the greater the spacing between the tests the more valid the level is.

Confirmation

Of course not every breakout keeps and some reverse, these are false and can cause losses. You therefore need to confirm each move. All you need to do to achieve this is to put a few momentum indicators in your forex trading system to confirm your dealing signal.

These indicators give you an estimation of the strength and velocity of price and there are many to choose from. We don't have time to discuss them here (simply look up our other articles) but two of the greatest are - the stochastic and Relative Strength Index RSI

Stops and Targets

Stop points are easy with breakouts - Simply behind the breakout point.

If you have a serious trend then you need to be careful you can milk it, so don't move your stop to soon and keep it outside of normal volatility. If it is a huge move, trailing stops should be held a long-term way back and the 40 day moving average is a good level to use.

You have to keep in mind that when the trend does eventually turn you are going to give some profit back. You don't know when the trend is going to end, so don't predict.

It's ok to give a serious back, as that's the nature of trading forex. Keep in mind if you got 50% of all leading trend you would be very rich. When you are long-term term trend following you have accept giving a bit back and taking dips in open equity as the trend develops - this is noise and does not affect the long term trend.

The above is a simple way to trend watch forex and catch the high odds moves that yield the serious profit. If you are learning forex dealing and want a simple method that is robust and will help you get every major move, then you should base your dealing on the above method.

Now that you have all the winning strategies, you now need to have a winning broker, recently.

Make Money Online Trading Forex

2009-09-14T08:29:00.001-07:00

The forex market is filled with scam offers and pie in the sky promises. On the other hand, it is the largest, most liquid market that trades twenty four hours a day. So how to find your way through the maze of offers that are out there, well here are four steps to becoming a successful trader.

Becoming a successful Forex trader basically comes down to four things:

1) Learning about the markets and your appitite for risk
How the markets work, what moves them, etc is a simple matter as these markets are not that complicated. Determining how well you are suited to trading is a difficult process however. Finding out how you react to stress and perform when real money is on the line can be a life long process

2) Finding and learning a system that fits your personality and life style
There are as many different systems as there are traders, many have been proven over time, so really the only question is which one suits me.I know many will dispute this point, however it really is not as complicated as some try to make it. Most of those making it hard are really just trying to sell you something. There are many free systems that once learned and traded can make you wealthy

3) Testing that system until you have an edge.
Testing is the heart of becoming a good trader. Most people don't do this. If you test something until you can prove and edge, no matter how small it may seem, you just need to trade it over and over to make money.

4) Trading that system exactly how you tested it, until you are wealthy.
Many traders are always looking for that magic system that will make money fast. The secret to wealth is to stick to the system you have tested and proved and do it until you acumulate wealth. Not chase the latest trading software or system.

When you are ready to trade this market, keep these four simple steps in mind and then do not let anything stand in your way of becoming the trader you want to be.

Triple Your Forex Trading Profits

2009-09-14T08:28:00.001-07:00

Do you have a good money management rule in your forex trading? Many traders think that money management in forex trading is just by putting a stop loss and a target profit, that's all. This is far from true because that is only part of a forex trading system. Let's look at some forex tips on how you can triple your forex trading profits.

1. Always prepare for the worst, think how to protect your trade first!

Almost all the traders will think how much money or profits they are going to make when they trade. This is a wrong mindset. If you are a beginner in forex trading, then you should assume the worst first and not thinking about profits in the first place. You should be very eager to protect your trade from losses by shifting it to break even after your trade has around more than 40 pips in profits. The trade is also considered won even it has broke even.

2. Don't take high leverage for granted.

Many forex brokers offer a high leverage of 100:1 to 400:1. True it is very tempting, but you should not use very high leverage for a beginning and for a small forex account, it is not advisable to use more than 50:1 or 100:1, so as to prevent your account from going bust. Traders thought they can win big using high leverage, but what if they loose? Their trading capital goes into the drain too.

3. Not risking more than 1% to 5% of your trading account.

This is a very important money management rule. How much do you risk for every trade? Forex trading is all about high probability and calculated risk. If you think you can't take risk at all, then you shouldn't be learning to trade forex at all. For a small $1000 account, it may seems by risking 1%, the gains are very small too, but that's the right way to build your capital. For me, I'm a conservative trader and I risk only 2% of my trading account per trade.

4. The Other Neglected Factor

Many traders only focus on the technicals and money management. But they forget another important factor for success and that's emotion. When you've a good system and money management, you've to use them without emotions. After you entered a trade, do not keep checking on it now and then. Just have confidence with your forex trading system and leave it to the market to hit stop loss or profit target.

Futures And Commodity Trading

2009-09-10T11:52:00.000-07:00

The futures markets are described as continuous auction markets and exchanges providing the latest information about supply and demand with respect to individual commodities, financial instruments, and currencies. Futures exchanges are where buyers and sellers of an expanding list of commodities, financial instruments, and currencies, come together to trade. Trading has also been initiated in options on futures contracts. Thus, option buyers participate in futures markets with different risk. The exact risk is known to the option buyer. It is unknown to the futures trader.

Crude Oil Trading

2009-09-10T11:50:00.001-07:00

Understanding crude oil trading can be greatly aided by learning about the various elements that go into setting the price of this valuable natural resource. These elements can include the OPEC Basket Price, the West Texas Intermediate price, and the Brent Blend. The OPEC Basket Price is basically an average of prices in a variety of countries including Mexico, Dubai, Nigeria, Saudi Arabia, Venezuela, Indonesia, and Algeria. The prices in this category are frequently lower. This may be due to the fact that oil from these countries may have a higher sulfur content, resulting in a lower yield when refined. West Texas Intermediate prices can be among the highest since the quality of the product tends to be higher as well. The weight of the product as well as the sulfur content are two factors that can determine quality. Higher quality products will generally turn out a better grade of gasoline. Brent Blend represents crude oil that comes from several fields in the North Sea. While product in this category will not usually be of as high a quality as that of West Texas Intermediate product, it is still a relatively high quality product. Other factors that are used to establish the price of gasoline can include the demand for the product, currency strength, and distribution and processing expenses. All of these factors can have an impact on crude oil trading.

The subject of crude oil trading is an important one since the price of this valuable natural resource can have a major impact on the economy of the United States as well as other countries. Oil is one of the most important commodities that are traded on the New York Mercantile Exchange, or NYMEX. Prices of light sweet crude oil are monitored on a daily basis. Any changes in these prices can have a major impact on the United States economy as well as the economies of other countries across the globe. Commodity traders will look at factors such as political conditions and supply and demand to try to predict what the price of various commodities will be in the future. When prices rise to high, inflation on the cost of other goods and services can be the result. Since most goods will need to be transported from the location where they were created, higher gas prices can mean that consumers will pay more for these goods at a future time. Conversely, lower gas prices can mean that a manufacturer will need to spend less money to ship goods to customers and will realize a larger profit. Hopefully, these increased profits will mean that a manufacturer will be able to offer the product at a lower price to consumers. While supply and demand and other factors can influence crude oil trading, the actions of futures and hedge fund traders have been also blamed for wide fluctuations in price.

Long before the days of crude oil trading, this natural resource played a major role. Petroleum as an important natural resource has been used for centuries for a variety of purposes. Many civilizations used it to fuel fires. Other uses included the creation of tar, which was widely used to pave streets in the Arab world. Distilled petroleum could be turned into important products such as kerosene for lamps. In some cases, the fuel was used as a means of waging war. The need for energy increased with the Industrial Revolution, although coal was the resource of choice at this time. In addition to coal, wood was also a popular fuel for home heating. In the nineteenth century, Russia became a major producer of oil and crude oil trading took on a new dimension. By the time that the twentieth century rolled around, Russia was producing nearly one half of the world's petroleum supply. Drilling for this valuable natural resource began in the United States at around the middle of the nineteenth century in Pennsylvania. With the passage of time, the oil producing giants in the United States began to emerge with wells in Louisiana, Texas, and a variety of other locations. Today, not only are gasoline and home heating fuel supplies dependent upon these industry giants, but a wide variety of modern products are derived from petrochemicals. Most plastics and a large number of cosmetics and paint products require petroleum for production.

The impact of crude oil trading on gas prices is offset in some countries by subsidized gas prices. While such actions can reduce the cost of transporting goods and be generally helpful to the country's economy, there can be drawbacks. Consumers are far less likely to conserve fuel when prices are low. As prices fluctuate, the need for subsidizing gas prices will most likely decrease. The Bible encourages believers to always be mindful that God is the creator of the universe. "Remember now thy Creator in the days of thy youth, while the evil days come not, nor the years draw nigh, when thou shalt say, I have no pleasure in them." (Ecclesiastes 12:1)

No discussion of crude oil trading would be complete without looking at the impact that this industry can have on the environment. Fossil fuel combustion has been known to send pollutants and green house gases into the atmosphere. Water sources have faced pollution as well through spills and refinery by products. While the need for this valuable resource cannot be disputed, methods for reducing negative environmental impacts are important. Alternative sources of energy are also being explored and may hold crucial answers to this dilemma.

oil trading market

2009-09-10T11:49:00.000-07:00

Oil trading is an opportunity for people to make money behind the computer screen. Investing in oil takes place through one of the oil brokers, who provide the trader with trading software and market analyses. Although the oil market may look like a very complex market, there are ways for you to learn the market by heart. We will explain some simple ways to look at the market, so you get a better understanding of the basics.
You trade against the USD. Oil Trading is buying or selling oil contract with US dollars. In fact you are doing the same when standing at a gas station, and you trade fuel for money. But in order to buy barrels of crude oil, you need mediation from oil brokers. They will supply you with the virtual oil contracts so you can make a trade.
You want to become a profitable trader. Winning traders know what they are doing and always have a trading plan in mind. The most important thing is that you can forecast market highs and lows. Oil brokers can help you analyze the market and make probability estimations of the future direction of the market. In general it is wise to follow the trend, and gain profits from movements in the market.
You will be paying commissions for every trade. Even winning traders have to pay a price for their trading, you have to pay a premium on every trade executed. Oil brokers will offer a slightly different price between buying and selling, which is their profit margin. This is one of the facts you will have to except as these brokers are not established to make you money. They are their to make a little money themselves and they do it by trading commissions.
You will have loosing trades. Oil trading is by some considered gambling. This is for the simple reason that you can never be a hundred percent sure which way the market will be heading. For this reason you will have to accept that there will be loosing trades, but this is not a problem as long as your winning trades offset the loosing trades. Financial management is important, and you can ask your oil broker to help you manage your funds.
Remember that this is a global market. The oil trading market involves a large number of countries worldwide, if not all. Lower oil prices will lead to cheaper production prices, thus cheaper selling prices. For this reason every trader influences the global economy, but you should especially keep an eye on the bigger ones out there who can influence markets significantly. Ask your oil broker who the bigger players in the market are, and ask them for up to date economic releases.

The U.S. Session Trader's Daily Forex

2009-09-10T11:46:00.001-07:00

The U.S. session, trader's daily 09:45 EDT question; "Oh dear, do we now want to take a U.S. based trade and run the risk of a price move stranding things with no momentum, as 80% of U.S. sessions do?"
The law of probability says that U.S. trade will not follow through with sustainable breaks on new positions, and with what came before the Wall Street open, we already have seen that the bullish S&P start could literally go anywhere. TheLFB equity tracking system shows that the main components that we use to gauge S&P momentum has only four out of thirty companies trading in the green.
If this move is to hold, and by default the Usd is to get weaker, a huge raft of volume needs to hit that lifts all stock indices, as well as oil and gold trade. Not to say that could not happen, but it is questionable as to whether it will hit and hold before the European markets go into their close at 10:30 EDT.
The fact that gold moved $10, or 1% in five minutes at the open, and the S&P managed to tag on 0.3%, leaves another question as to why oil has not moved too far, and further enforces the feeling that the Wednesday move could hold. The majors are so far from their previous session highs or lows, that actually breaking new ground and holding for a ride on the dollar is very unlikely; unless a volume tsunami hits.
There is nothing at all clear-cut about the picture we have on the major pairs, and the global market Usd drivers. All are overbought in the near-term, and the major pairs are all dealing with daily chart Simple Moving Average areas that really are creating massive support and resistance areas to work through.
Volume and speculative interest is very light, creating an environment that offers plenty of volatility, but also failed breaks, in the same measure. Global equity trade is flat, and commodity markets are also flat-lining after efforts to hold support this week. In all, not an easy environment to issue high probability signals.

Forex - Order Types

2009-09-10T05:15:00.000-07:00

a) Market Order
An order to buy or sell which is to be done at the price immediately available: the 'spot' rate, the current ratres at which the market is dealing.
b) Limit Order
An instruction to deal if a market moves to a more favorable level (i.e. an instruction to buy if a market goes down to a specified level or to sell if a market goes up to a specified level) is called a Limit Order. A Limit Order is often used to take profit on an existing position but can also be used to establish a new one.
c) Stop Order
An instruction nto deal if a market moves to a less favorable level (i.e. an instruction nto buy if a market goes up to a specified level, or to sell if a market goes down to a specified level) is called a Stop Order. A Stop Order is often placed to put a cap on the potential loss on an existing position; which is why Stop Orders are sometimes called Stop-loss Orders. But can be used to entere into a new position if the market breaks a certain level.
d) Once Cancels the Other (OCO)
An 'OCO' (One Cancels the Other) Order is a special type of Order where a Stop Order and a Limit Order in the same market are linked together. With an OCO Order, the execution of one of the two linked Orders results in the automatic cancellation of the other Order.
e) IF DONE Order
An IF DONE Order is a two-legged order in which the execution of the second leg can occur only after the conditions of the first leg have been satisfied. The first leg, either a Stop or a Limit, is created in an active state and the second, which can be a Stop, a Limit, or an OCO, is created in a dormant state. When the desired price is reached for the first leg, it is executed and the second leg is then activated.

Forex - Concepts and Terminologies

2009-09-10T05:14:00.001-07:00

Here are some important concepts/terminologies of Forex.
a) Spot rate
A spot transaction is a straightforward (or outright) exchange of one currency for another. The spot rate is the current market price or 'cash' rate. Spot transactions do not require immediate settlement, or payment 'on the spot'. By convention, the settlement date, or value date, is the second business day after the deal date on which the transaction is made by the two parties.
b) Bid & ask
In the foreign exchange market (and essentially in all markets) there is a buying and selling price. It is important to perceive these prices as a reflection of market condition.
A market maker is expected to quote simultaneously for his customers both a price at which he is willing to buy (the bid) and a price at which he is willing to sell (the ask) standard amounts of any currency for which he is making a market.
Generally speaking the difference between the bid and ask rates reflect the level of liquidity in a certain instrument. On a normal trading day, the major currency pairs EURUSD, USDJPY, USDCHF and GBPUSD are traded by a multitude of market participant every few seconds. High liquidity means that there is always a seller for your buy and a buyer for your sell at actual prices.
c) Base currency and counter currency
Every foreign exchange transaction involves two currencies. It is important to keep straight which is the base currency and which is the counter currency. The counter currency is the numerator and the base currency is the denominator. When the counter currency increases, the base currency strengthens and becomes more expensive. When the counter currency decreases, the base currency weakens and becomes cheaper. In telephone trading communications, the base currency is always stated first. For example, a quotation for USDJPY means the US dollar is the base and the yen is the counter currency. In the case of GBPUSD (usually called 'cable') the British pound is the base and the US dollar is the counter currency.

d) Quotes in terms of base currency
Traders always think in terms of how much it costs to buy or sell the base currency. When a quote of 1.1750 / 53 is given that means that a trader can buy EUR against USD at 1.1753. If he is buying EURUSD for 1'000'000 at that rate he would have USD 1,175,300 in exchange for his million Euro. Of course traders are not actually interested in exchanging large amounts of different currency, their main focus is to buy at a low rate and sell at higher one.
e) Basis points or 'pips'
For most currencies, bid and offer quotes are carried down to the fourth decimal place. That represents one-hundredth of one percent, or 1/10,000th of the counter currency unit, usually called a 'pip'. However, for a few currency units that are relatively small in absolute value, such as the Japanese yen, quotes may be carried down to two decimal places and a 'pip' is 1/100th of the terms currency unit. In foreign exchange, a 'pip' is the smallest amount by which a price may fluctuate in that market.
f) Euro cross & cross rates
Euro cross rates are currency pairs that involve the Euro currency versus another currency. Examples of Euro crosses are EURJPY, EURCHF and GBPEUR. Currency pairs that involve neither the Euro nor the US dollar are called cross rates. Examples of cross rates are GBPJPY and CHFJPY. Of course hundreds of cross rates exist involving exotic currency pairs but they are often plagued by low liquidity. Ever since the Euro the number of liquid cross rates have decreased and have been replaced (to a certain extent) by Euro crosses.

The Swiss Franc.

2009-09-10T05:13:00.003-07:00

The Swiss franc is the only currency of a major European country that belongs neither to the European Monetary Union nor to the G-7 countries. Although the Swiss economy is relatively small, the Swiss franc is one of the four major currencies, closely resembling the strength and quality of the Swiss economy and finance. Switzerland has a very close economic relationship with Germany, and thus to the euro zone. Therefore, in terms of political uncertainty in the East, the Swiss franc is favored generally over the euro. Typically, it is believed that the Swiss franc is a stable currency. Actually, from a foreign exchange point of view, the Swiss franc closely resembles the patterns of the euro, but lacks its liquidity. As the demand for it exceeds supply, the Swiss franc can be more volatile than the euro.

The British Pound.

2009-09-10T05:13:00.001-07:00

Until the end of World War II, the pound was the currency of reference. The currency is heavily traded against the euro and the U.S. dollar, but has a spotty presence against other currencies. Prior to the introduction of the euro, both the pound benefited from any doubts about the currency convergence. After the introduction of the euro, Bank of England is attempting to bring the high U.K. rates closer to the lower rates in the euro zone. The pound could join the euro in the early 2000s, provided that the U.K. referendum is positive.

The Japanese Yen.

2009-09-10T05:12:00.003-07:00

The Japanese yen is the third most traded currency in the world; it has a much smaller international presence than the U.S. dollar or the euro. The yen is very liquid around the world, practically around the clock. The natural demand to trade the yen concentrated mostly among the Japanese keiretsu, the economic and financial conglomerates. The yen is much more sensitive to the fortunes of the Nikkei index, the Japanese stock market, and the real estate market.

The Euro.

2009-09-10T05:12:00.001-07:00

The euro was designed to become the premier currency in trading by simply being quoted in American terms. Like the U.S. dollar, the euro has a strong international presence stemming from members of the European Monetary Union. The currency remains lagued by unequal growth, high unemployment, and government resistance to structural changes. The pair was also weighed in 1999 and 2000 by outflows from foreign investors, particularly Japanese, who were forced to liquidate their losing investments in euro-denominated assets. Moreover, European money managers rebalanced their portfolios and reduced their euro exposure as their needs for hedging currency risk in Europe declined.

The U.S. Dollar.

2009-09-10T05:11:00.001-07:00

The United States dollar is the world's main currency – an universal measure to evaluate any other currency traded on Forex. All currencies are generally quoted in U.S. dollar terms. Under conditions of international economic and political unrest, the U.S. dollar is the main safe-haven currency, which was proven particularly well during the Southeast Asian crisis of 1997-1998.
As it was indicated, the U.S. dollar became the leading currency toward the end of the Second World War along the Breton Woods Accord, as the other currencies were virtually pegged against it. The introduction of the euro in 1999 reduced the dollar's importance only marginally.
The other major currencies traded against the U.S. dollar are the euro, Japanese yen, British pound, and Swiss franc.

Kuwaiti Dinar (KWD)

2009-09-10T05:06:00.001-07:00

The Kuwaiti Dinar, denoted by KWD, is the official currency of Kuwait. The KWD, which is divided into 100 units, was introduced to Kuwait in 1960 as a replacement for the Indian Rupee. The currency has maintained a very high exchange rate, making it one of the highest valued currencies in the world.

Moody's Rating

S&P Rating

A+

Sovereign credit ratings play an important part in determining a country's access to international capital markets, and the terms of that access. Sovereign ratings help to foster dramatic growth, stability, and efficiency of international and domestic markets.

What does it look like?

Political Structure
The chief of state in Kuwait is the Emir, a semi-hereditary title. The emir appoints the prime minister, who, in the past, was also the crown prince. A council of ministers aids the prime minister in his task as head of government. The parliament known as the Majlis Al-Umma, consists of 50 members who are chosen in elections held every four years. Government ministers, according to the Constitution of the State, are given automatic membership in the parliament.
Prominent Figures Emir of Kuwait: Jabir al Sabah
Crown Prince of Kuwait: Saad al Sabah
Prime Minister: Sabah al-Ahmad al-Jabir al-Sabah
Unique Characteristics
Kuwait is a small, rich, relatively open economy with proved crude oil reserves of about 98 billion barrels - 10% of world reserves. Kuwait's economy is heavily dependent on oil export revenues. Kuwait has the third largest oil reserves in the world after Saudi Arabia and Iraq. Petroleum accounts for nearly half of GDP, 95% of export revenues, and 80% of government income. Key Economic Factors
Economic Overview: Kuwait is a small, rich and relatively open economy with crude oil constituting 10% of the world's oil reserves. Petroleum accounts for nearly half of GDP, 95% of export revenues, and over 75% of the government's income. The climate in Kuwait is a large obstacle in agricultural development, causing the nation to depend almost wholly on food imports (with the exception of fish). Additionally, approximately 75% of water must be distilled or imported. Kuwait continues its discussions with foreign oil companies to develop fields in the northern part of the country.

Industries: Petroleum, petrochemicals, desalination, food processing and construction materials.

Main Export Trading Partners: Japan, South Korea, US, Singapore, Taiwan and Pakistan.

Exports Commodities: Oil, refined products and fertilizers.

Imports Commodities: Food, construction materials, vehicles and parts and clothing.

Main Import Trading Partners: US , Japan, Germany, China, UK, Saudi Arabia, Italy and France.

Basics of Currency Trading

2009-09-08T22:31:00.000-07:00

Investors and traders around the world are looking to the Forex market as a new speculation opportunity. But, how are transactions conducted in the Forex market? Or, what are the basics of Forex Trading? Before adventuring in the Forex market we need to make sure we understand the it, otherwise we will find ourselves lost where we less expected. This is what this article is aimed to, to understand the basics of currency trading.

What is traded in the Forex market?

The instrument traded by Forex traders and investors are currency pairs. A currency pair is the exchange rate of one currency over another. The most traded currency pairs are:

USD/CHF: Swiss franc

GBP/USD: Pound

USD/CAD: Canadian dollar

USD/JPY: Yen

EUR/USD: Euro

AUD/USD: Aussie

These six currency pairs generate up to 85% of the overall volume in the Forex market. So, for instance, if a trader goes long on the Euro, she or he is simultaneously buying the EUR and selling the USD. If the same trader goes short or sells the Aussie, she or he is simultaneously selling the AUD and buying the USD.

The first currency of each currency pair is referred as the base currency, while second currency is referred as the counter or quote currency. Each currency pair is expressed in units of the counter currency needed to get one unit of the base currency. If the price or quote of the EUR/USD is 1.2545, it means that 1.2545 US dollars are needed to get one EUR.

Bid/Ask Spread

All currency pairs are commonly quoted with a bid and ask price. The bid (always lower than the ask) is the price your broker is willing to buy at, thus the trader should sell at this price. The ask is the price your broker is willing to sell at, thus the trader should buy at this price.

EUR/USD 1.2645/48 or 1.2645/8

The bid price is 1.2645

The ask price is 1.2648

A Pip

A pip is the minimum incremental move a currency pair can make. A pip stands for price interest point. A move in the EUR/USD from 1.2545 to 1.2560 equals 15 pips. And a move in the USD/JPY from 112.35 to 113.40 equals 105 pips.

Margin Trading (leverage)

In contrast with other financial markets where you require the full deposit of the amount traded, in the Forex market you require only a margin deposit. The rest will be granted by your broker.

The leverage provided by some brokers goes up to 400:1. This means that you require only 1/400 or .25% in balance to open a position (plus the floating gains/losses.) Most brokers offer 100:1, where every trader requires 1% in balance to open a position.

The standard lot size in the Forex market is $100,000 USD.

For instance, a trader wants to get long one lot in EUR/USD and he or she is using 100:1 leverage.

To open such position, he or she requires 1% in balance or $1,000 USD.

Of course it is not advisable to open a position with such limited funds in our trading balance. If the trade goes against our trader, the position is to be closed by the broker. This takes us to our next important term.

Margin Call

A margin call occurs when the balance of the trading account falls below the maintenance margin (capital required to open one position, 1% when the leverage used is 100:1, 2% when leverage used is 50:1, and so on.) At this moment, the broker sells off (or buys back in the case of short positions) all your trades, leaving the trader "theoretically" with the maintenance margin.

Most of the time margin calls occur when money management is not properly applied.

How are the mechanics of a Forex trade?

The trader, after an extensive analysis, decides there is a higher probability of the British pound to go up. He or she decides to go long risking 30 pips and having a target (reward) of 60 pips. If the market goes against our trader he/she will lose 30 pips, on the other hand, if the market goes in the intended way, he or she will gain 60 pips. The actual quote for the pound is 1.8524/27, 4 pips spread. Our trader gets long at 1.8530 (ask). By the time the market gets to either our target (called take profit order) or our risk point (called stop loss level) we will have to sell it at the bid price (the price our broker is willing to buy our position back.) In order to make 40 pips, our take profit level should be placed at 1.8590 (bid price.) If our target gets hit, the market ran 64 pips (60 pips plus the 4 pip spread.) If our stop loss level is hit, the market ran 30 pips against us.

It’s very important to understand every aspect of forex trading. Start first from the very basic concepts, then move on to more complex issues such as Forex trading systems, trading psychology, trade and risk management, and so on. And make sure you master every single aspect before adventuring in a live trading account.

Day Trading Indicators and Indicator Trading

2009-09-08T22:29:00.001-07:00

Now that you have all the day trading tools that are necessary, the book for education AND the free charting program with those ’best’ day trading indicators, you now need a day trading plan so you can decide which ones of those ’magic’ day trading indicators you are supposed to use. This really is a great book, besides telling you how to day trade using indicators to ’predict’ price - it also said that you need a trading plan to day trade.

So what should this plan be? The book told you about trend following using an indicator called macd, and it also told you how it was possible to pick the top or bottoms using an indicator called stochastic; my guess is that you picked the stochastic indicator to start your day trading - this must be the ’best of the best’ since this indicator was going to ensure you of entering your trades with the ’best’ price. Amazing, simply amazing how easy this day trading stuff really is. In fact, why even bother taking the trades, each time your indicators give a signal - just call up your broker and tell him to stick $100 in your account.

My book was Technical Analysis of the Futures Markets. My charting program was TradeStation with an eSignal fm receiver; that was the one that if you hung the antennae wires just right, and you put enough foil on the tips, you might even get quotes. I had sold a business before I started trading so I did have some capital - isn’t that how everyone gets into trading, you either sell a business or you lose your job? My indicator was the macd as I had decided that I was going to be a ’trend follower’ instead of a ’top-bottom picker’. I also decided that I was going to be ’extra’ clever, if one indicator was good than two indicators must be better, so I added a 20 period moving average. My first trade was a winner, then after many months of extensive therapy, I was finally able to forget the next twelve months - ahhh the memories ƒ؛

Learning To Day Trading - The Learning Progression

Beginning to day trade, or learning to day trade, as an indicator trader is very typical. This is also logical when you consider - HOW are you supposed to initially learn how to trade? Trading indicators are available to anyone who has a charting program, and simply using line crosses, or histogram color changes, provide ’easy’ signals to understand. If you will also take the time to learn the arithmetic behind your indicators, as well as learning what each indicator is specifically intended to do, not only is this a logical way to begin, it is also a good ’step’ in your learning progression - understanding the WHAT you are doing, instead of attempting to create ’canned’ indicator only trading systems, without any regard as to WHY you are trading this way.

This does become one of the ’sticking’ points in your learning progression, as you come to find out that you are unable to profitably trade indicators as signals only - now what? Now what - you ’can’t’ develop your own indicators, so you start doing google searches for day trading indicators and start buying your ’collection’ - they don’t ’work’ either. Now what - you buy a mechanical trading system - what does hypothetical results may not be indicative of real trading or future results mean? Now what - you start subscribing to signal services OR you start joining the ’latest and greatest’ chat room - am I really the only person using the signals who isn’t profitable?

Now what - you never learn how to trade.

I began trading as an indicator trader, and I did try to learn everything that I could about the various indicators, as well as trying to combine indicators that were consistent with how I wanted to trade - I just could never develop a mechanical day trading system from what was available to me. I read a couple more books that didn’t really help me, so I then started looking for someone who could teach me. From what I now know about gurus -vs- teachers, I am very lucky that I got involved with a money manager-trader who taught me a tremendous amount, but I still couldn’t get profitable, in part because there was also ’pressure’ to learn how to trade using real money. As well, any discussions or thoughts about trading psychology and the issues involved, especially to beginning traders, was non-existent.

Now what - learning but losing - I stopped trading. Learning to trading using real money, and ’scoffing’ at trading psychology as simply individual weakness, really was something that I now regard as misinformation. I always mention this as I now feel that this cost me as much as a year of time, and was very close to costing me my trading future, as stopped trading was VERY close to quitting trading. How can’t trading psychology be real to a beginner, when you consider that you are risking losing money at a very fast pace as a day trader, and when you further consider that you are also doing this when you really don’t know what you are doing - this is NOT by definition being weak. And if trading psychology is real, how are you going to learn to make ’good’ trading habits with real money while you are fighting the implications?

Now what - not trading and not ready [quite] to quit - still studying and searching.

Probably the single most important ’thing’ that got me to a next step in learning how to trade, was the concept of a trading setup, and that a setup and a signal were not the same. This was extremely meaningful to me, as it also led to an understanding of how to better use trading indicators for the information that they can provide, but not to use them as trading signals - in essence I began learning about trading method where discretion could be consistently applied -vs- trading system that was mechanical and arithmetic rules.

Traders who are indicator only traders, are also what I refer to right side only traders, that is they are always looking at the right side of their charts for an indicator signal. BUT what about the left side of the chart, what about price and patterns, what about market conditions - WHAT about the relevant ’things’ that are ’moving’ price, instead of indicators only as an arithmetic derivative of price, and thus, one that is dependant on the time frame that you have chosen to trade from? These ’thoughts’, along with the concept of trade setup, became instrumental in the development of a trading method, and how I came to turning my trading around.

When I think about the steps in my learning progression - I would list them as follows:

2/95 - 6/96 indicators only teaching service that included signals learning to trading with real money and trading psychology issues stop trading

6/96 - 3/97 understanding of trading psychology issues learning about trading setups concept trading method -vs- trading system trade setup - trade trigger are not the same method development understand the importance of the left side of the chart and what is happening ’across’ the chart related trading setups and how/when they triggered indicators + pattern indicators + pattern + price indicators + pattern + price + market conditions

3/97 - 11/97 able to paper trade profitably able to real money trade profitably able to trade for a living

Indicator Only Day Trader - Setup Including Indicators Method Day Trader

I have attempted to discuss the way I started day trading, and the way I think many-most traders typically begin. Along with this, I have pointed various issues and problems that I had - those regarding how to learn to trade, and then progressing into a profitable trader. My experiences have been both personal, as well as those of many traders that I have worked with over the last 8-9 years through Tactical Trading - that a very large number of these problems are due to day trading only with indicators, the specific indicators used, along with trying to turn these indicators into a mechanical trading system. This is not to say that this can’t be done - I simply couldn’t do it. However, I would strongly suggest that anyone who is in the early stages of day trading, or struggling with their day trading, consider these things that have been discussed.

Currency Trading Mastery - 5 Tips to Master Your Emotions in Forex Trading

2009-09-01T22:51:00.001-07:00

Many people lost money in forex trading not because they do not have a good forex trading system, a forex strategy or a set of rules they do not follow, but it's the psychology barrier that they have to get over it. They cannot beat their emotions and that caused them to make wrong decisions and lose their trading capital in a flash.

Currency trading psychology is the most important factor for trading success or failure, but it's sad to say that many traders do not have that factor as priority and instead keep looking for better forex trading strategies.

1. Do what you are supposed to do. When the trend is weakening, you should take steps to protect your profits regardless of the forex systems that you are using. Remember that in currency trading, you should be thinking how to minimize losses first and not thinking how to win.

Even a breakeven trade is considered a successful trade because it's not a loss. Likewise when the trend goes in your direction, you will want to set a higher level profit target and on the same time protect your floating profits.

2. You do not like, hate or fall in love with your trades. The currencies pairs are not your friends in the forex market and your only friend is currency trading psychology. Trading with a plan is the #1 forex tips because when a trader is already in a trade position, he/she tends to see the market differently from the first time of analysis. He hopes that the trade will move in favor of him and neglect the factors which may change the market conditions.

3. Increase your position size accordingly. Increase your position size when you have an increase of maybe 10% of your account, this is to build up your trading capital. Likewise, you should reduce the lot size that you are trading when your account have reduced by 10%.

4. Expect the unexpected. In forex trading, always be prepared for both good and bad things. Understand those events and be prepared, so that you can take necessary actions when it happens to you. A good currency trading psychology is where you can take into consideration things that are unpredictable in the forex market.

For example, if the trade is going in your direction, you must have a mental preparation that it can go against you anytime, so that you will not be surprised if that really happens.

5. Remain emotionally detached. A good forex strategy is that you don't check how is your trade going on every now and then. If you keep watching it, you are going to make wrong decisions I can guarantee you! This is because greed and panic may happen and therefore you adjust the trade. Just leave it to the market to hit stop loss or profit target once you have traded.

Forex Trading Tips - How to Triple Your Forex Trading Profits

2009-09-01T22:51:00.000-07:00

Mini Forex Trading: For Beginners In Forex

2009-09-01T22:50:00.000-07:00

Mini forex trading is perfect for newbies in forex and with those who have a little amount of capital available at present. What the mini-account does is that it allows them to trade with real money, as it also limits their risk in trading. With a mini-account, the lot size of trades is only one-tenth of the actual lot size for a standard account, and with the same broker too.

Now, newbies to forex has three options:

(1) they can start out immediately with live trading in a standard broker account, wherein they can invest ranging from $1,000 to $5,000 (gives a great deal of risk for a novice and therefore not recommended);

(2) they can start with live/actual trading in a mini-account (In general, they'll need around $250 for this, but there are always brokers who'll let them start with a lower cost); and

(3) begin with a demo account as they pick up their trading skills without investing any real kind of money, then as they go on and continue in making good profits, they have the option to switch between a mini-account or a full brokerage account (depending on the capital that they have and their strategies, of course).

As for the advantages of the mini-account, most users will choose the third option, which is the demo account. Why? It's because it's really much safer to use toy money rather than real ones online for days, weeks or even months! With a demo account, they will be given an opportunity to try out different kinds of strategies in trading. But, on the other hand, running a demo account for too long can impose a false sense of security to the user, as they may be practicing with the strategies that may not be really effective when it comes to the trading in real life.

So what this kind of account does is that it teaches the trader to make profits out of medium to high risk strategies, but when the time comes that they get to face a real money situation, possibility is that they may lose their confidence, which results to poor decision-making and strategy-hopping, wherein they continually go from one plan to another. Loss of profits can't be avoided in this scenario.

In lieu to this, what some experts advise is to start using a mini-account and use real money almost from the very beginning (they can use the demo account when dealing with a few trades so as to get familiar with the technical stuff of operating their own account and making different trades). Through this, they will be able to learn the techniques and the skills necessary that will work for them on a long-term basis.

The mini-account has also its disadvantages. As the newbies trade small amounts, they are to pay more percentage terms to their chosen broker. Now, this will truly affect their profits negatively, which can have a great impact on their side. With this, those who use this kind of account will switch over to higher value trades whenever they have the capital to enable them to do so.

Beginners should always keep in mind that forex trading is by nature a very risky kind of business, as it gives them the possibility to have large gains in a short-term basis. So, they should invest the amount of money that they are, in a way, ready to lose when the time comes that things will go against their favor. The mini forex trading account is truly great for beginners and is the best way to find out whether or not forex trading really is the thing for them.

Forex Trading Scams and the Great Hunt For Best Forex System

2009-09-01T22:49:00.001-07:00

When you look at the most successful forex traders, most depend upon an effective forex trading system that has proven time and time again to be profitable for them. Every forex trader will need a good forex trading system to help them make consistent profits from the forex market. But how do you select the best forex system that suits you, especially the internet is full of scams and false claims? Well, here are some forex tips that can help you on your hunt for good forex systems:

1. Look Out For Logic Of The Forex Trading System

There will always be a description of what the trading system will be like, how does it trade and the functions of it. I know this may need some experience before you can even comment on the logic that the trading system has.

Let me give you an example, if the vendor claimed that the forex strategy can make you 300% ROI within one month, then you really have to verify whether the trading system uses a scalping strategy, swing method or what.

If the trading system is based on a set of forex indicators, at least know what kind of indicators are they using. I said all those above is because you will need confidence to follow a system with discipline, and if you can't, you have no system at all.

2. Search For Forex Reviews

Before you decide to purchase any forex trading system, you MUST look for reviews in either forex forums, blogs or other websites that allow people to comment on the products that they bought. This is important because you will want to know how other people feel about the trading system and whether is it working or just another scam.

Besides that, if you can't find the answers that you are looking for, you can post comments or questions on those sites to clarify your doubts on the trading system that you are interested in. You should be in total understanding of the product and have confidence in it before you actually put it in your shopping cart.

3. Know The Vendors Well

Be more enthusiastic and find out more about the vendor. Find out who has developed that forex trading system and his track record. If he has not made any real money from the system that he created, then why should you trust him and risk your money?

This is the time to ask them more questions which you still have it in mind. You should see how keen and responsive are they to your questions and what kind of support do they provide. If you ask some questions that normal vendors will answer, but they don't, then something must be hiding from them.

Last but not the least, you must make sure that the forex trading system that you are buying should include a money back guarantee. Most of the products out there in the forex market have a 56 days guarantee, this is to protect you so that if you are not satisfied with the product, you can get all your money back minus the exchange rate.

So the point of the forex training that I have given to you is to help you choose the best and the most comfortable trading system for yourself. Once you have chosen it and if it is a good system, you should stick with it in times of bad periods because no system is holy grail and it's the long term results that count. Good luck and find a trading system that suits you well. If you came across one, you can let me know and I'll see if I can give you some feedbacks on it.

Forex Trading, The Best Chance Of Trading Success

2009-09-01T22:49:00.000-07:00

Definition-In a foreign exchange market different currencies are traded on an electronic platform which has no fixed location, but allows you to buy and sell these currencies on a 24 hour basis, from Monday to Friday throughout the year. This is what is generally referred to as forex trading. The Internet has made forex trading very simple and people from all over the world can trade in currencies. This has made forex trading very widespread and popular.

Who is a forex trader?

The amount of currencies that are exchanged every day is about two billion dollars, and almost everyone with an inclination to trade has got into it. The individual private traders trading in the forex trading market are linked up to forex brokers who in turn are linked up to MNC's and big banks from all over the world. If you want to become a forex trader and indulge in forex trading you would have to look for an authorized forex broker. These brokers are generally authorized by statutory bodies in their country of origin and are subject to the laws in that particular country.

Traditional money exchange

There has always been a traditional method of buying and selling currencies. These are still now available in some exotic Eastern and Middle Eastern markets where the money changer is the part of the activity in that market. Forex trading is just a new spin to this traditional activity and not limited to the small markets. Money changers mainly exchanged currencies which allowed local customers to exchange the currencies they had for the local currency in use in that particular market to enable them to make purchases. Forex trading has taken this to a much higher level and it allows banks and other institutions to exchange currencies depending on the requirement of each of these from various big companies and even governments.

Taking advantage of this forex market

Eight Major currencies are traded in conventional forex trading. The market does constantly fluctuate on a daily basis and the trained forex trader will take advantage of the fluctuations to profit from it. The principle is the same as stock markets; buy low and sell high. So, like the stock market, you also need to have a complete knowledge of the market before you venture into it. There are software programs available which will allow you to do demo trades until you are completely familiar with the way the markets behave. There are also pre-programmed trading software programs like Robot which will automatically make the trades for you. All of these can be of possible benefit you and some traders claim to make an almost daily profit, throughout the year.

What is the profit potential?

Some exceptional traders, who have been in the market for a very long time, claim to make profits of anywhere between 40 percent and 300 percent on a month to month basis! You should NOT expect to make anything like this as a novice forex trader, and in fact it is all too easy to LOSE money. The key to success is to judge the market correctly, work hard with dedication, and persevere. In time, you too can claim your share of the profits from forex trading. There are certainly risks involved, and your profit goal when starting out should be "Don't Lose Money".

Forex Trading Made Easy - How to Automatically Make Money Fast at Home

2009-09-01T22:47:00.000-07:00

The forex market is a twenty-four hour per day, seven day a week, three-hundred and sixty-five days a year foreign currency exchange market that's truly massive --to the tune over two Trillion dollars in currencies traded on a daily basis. Using automated forex trading, to help you time this market correctly can help you make money fast at home.

Forex dwarfs every other trading market on Earth, in fact. If you're a savvy and quick forex trader, you can make thousands of dollars in a day trading on it, but only if you know exactly what you're doing. In order to do this, financial decisions would have to be made on a constant, twenty-four hour basis. We're pretty sure nobody's dedicated enough to sit in front of a computer for that long, every day.

Because we simply aren't able to do what it takes, automated forex trading software programs have been created. Their purpose is to enable a dedicated and educated forex trader to get a boost upwards on the trading decision cycle. It literally can help make you money by trading currency in the forex market. Forex activities can be very lucrative, but they also carry very big risks.

The streets are strewn with the bodies of people who thought they could control the forex market. But because they were human, and unable to literally sit in front of their computer every single moment of every single day, they never came close to fulfilling the dream of making thousands of dollars daily on the forex. Fortunately, something like a forex trading software can do that for you. It will do just about all of the work. Your end is that you need to check in on it for a short while each day.

Some automated forex programs or robots are able to monitor a number of markets at a time, and does its work using mathematical modeling. That doesn't mean it's perfect, but for the price it certainly can't be beat. It's also extremely user-friendly, and is able to identify trends - both hidden and overt - much quicker than a human can. Is it some super-secret method to fabulous riches? It most certainly isn't. But it's also not a scam or an over-hyped product. It'll enable the savvy forex trader to streamline and automate many of his functions, leading to greater profit potential.

It's always best to combine this forex software with more in-depth training and education on forex trading processes, procedures and concepts. There are a number of Internet-based forex autopilot software programs which can give somebody who wants to get into forex trading a real leg-up. As always, the main ingredients for success are hard work, patience, and a willingness to risk a little.

Forex MegaDroid - Multi-Market Condition Top Performer Autopilot Robot + Free Bonus worth more than usd100

2009-08-31T21:26:00.001-07:00

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Successful Forex Trading: Forex Hates Procrastinators

2009-08-31T21:26:00.000-07:00

What have you put off today? Something important you had to do that you ended up not doing? Well i am sorry to say this but Forex doesn't like you very much, it won't actually come out and say this, but it will definatley show you by eating all your money.
Why do lazy people flounder in the forex market?
1. They put off getting a broker too long and then often make a bad choice.
2. They don't do any research or engage in education and therefore end up gambling.
3. They clutter up informative blogs and forums with their incessant whines about how forex is a scam and can anyone lend them $20 because they are good for it.
4. They are often emotional about trades and will either get too excited after a good trade or try to take revenge on the market after a bad loss.
Does this look like a successful traders mindset to you? Of course it isn't. Are you guilty of any of these things? If you are get it sorted ASAP, not or my sake, but for your own. It isn't my money you are gambling away. "But i thought forex is investing not gambling?" Thank you! I don't gamble in forex, i invest, many other traders i know invest as well. Whats the difference? Education my friend, education. We know what we are doing, and make educated decisions about where we want our money, a forex gambler wakes up in the morning and just decides then and there where he is going to flush away some more money. They don't research, they don't even know what a chart looks like, they just go with uneducated gut feelings.
But let's stop talking about forex gamblers before i have a stroke, what about successful traders?
1. They research brokers and then choose one and stick to it until the broker gives them reason not to.
2. They are always learning. What is a better indicator to use? What have i done wrong in the last week? This is the kind of thing that sharpens their trading sword so sharp it could cut space and time.
3. They don't post often, they might not ever post on a forum or blog. To them forex is about learning and they would rather listen then speak. Humble eh?
4. They keep their cool. They know that a win can turn into a loss and the other way around within the next 5 minutes. They have the experience and they have already set up their trades to accomodate for a turn in fortune. They are in control. Well mostly.
So the main point of all this text is to realize that if you can't even bother having a shower when you wake up in the morning, how are you ever going to be successful in something as demanding, but equally as rewarding as forex? You aren't beca

Forex Secrets - Support and Resistance Levels in Forex Market

2009-08-29T23:14:00.000-07:00

Support and resistance are the known cornerstones in Forex technical, wherein:
1. a current Forex rate (CFR) is surrounded by levels of:
a). resistance being superior to CFR;
b). support being inferior to CFR.
2. a level breakthrough triggers a leap to a consecutive support/resistance;
3. a false breakthrough is responsible for a rate backstroke (say, from resistance to support).
Thus, having data on resistance and support levels and being armed with R/S true/false criteria, a trader grows faultless-entry skilled to ensure smooth level-to-level trading.
To be found below is a graphic drawing of a flat followed by an R/S up/down breakthrough.
The chart 1. (For view picture see notes in end of article)
In actual sample GBPUSD trade dated January, 31, 2006 the support breakthrough has triggered a bullish in-session trend.
Simple, isn’t it? Affirmative at a glance, but 95% of traders loosing their forex deposits are calling for natural questions:
1. What’s the reason, the world traders are getting entangled in so a seemingly simple regularity?
2. What’s the way of correct detection of R/S levels for currencies to use to jet off from?
3. What attributes are inherent to true/false breach differentiation?
It is, thus, to be concluded that a trader will never achieve steady FX gains unless the answer is found to the above three simple questions.
CLASSICAL BOOKS ON RESISTANCE AND SUPPORT LEVELS
Forex scholars’ books, when analyzed, are giving grounds why 95% of traders turn deposit-killers. The point is that under different technical scholars:
a). fairly different understanding is being attached to support and resistance;
b). no distinct criteria (except Demark’s technique) is in service to finding a support and a resistance;
c). there is no clear-cut interfacing between R/S levels on different timeframes.
Below is sort of understanding classification:
1. A. Elder. R/S are understood by SOME SCHOLARS to be horizontal lines drawn along price highs and lows
support and resistance are horizontal (or almost horizontal) lines linking several minimums (maximums).
The chart 2. Support and resistance (For view picture see notes in end of article)
b). J. MURPHY also indicates that “points 2 and 4 represent uptrend support levels. The figure depicts uprising support and resistance under an uptrend with points 2 and 4 being support levels which use to be coincident with earlier lows. Points 1 and 3 indicate resistance levels, which use to be coincident with earlier highs” (see: “Technical analysis of the Futures Markets”
Fig. 3a and 3b. Uptrend and downtrend support-resistance levels (For view picture see notes in end of article)
2. SOME SCHOLARS believe support-resistance to be sloped lines drawn along price highs and lows (trend lines, actually) as below:
Fig. 4. Trend line-fashion support-resistance pattern (For view picture see notes in end of article)
a). T. DEMARK
Fig. 5. Bid pivot points (TD-points) building up a resistance level (For view picture see notes in end of article)
The TD-points are peculiar of price values being not exceeded within 2 adjacent days. The points are specially emphasized on the chart.
Note that the price movement above the TD-line is mirrored by same after the down break of this line.
Price projection Z is made by way of the following calculation:
- difference is taken between Y being maximum price above the TD-line and X being special price immediately below the TD-line;
- the obtained value is subtracted from A-B line breakthrough price.
b). L. BORCELINO is also a user of inclined lines as support/resistance (view:
Fig. 6. Quoting L. Borcelino: “As evident form these examples, trendlines, drawn across preceding highs and lows, constitute perspective support and resistance projection”. (For view picture see notes in end of article)
3. E. NAYMAN’S combined commitment of inclined and horizontal R/S levels (view: “Trader’s Minor EncyclopediaJ
“A resistance line connects market important maximums (highs, peaks)”, And further on: “R/S lines drawing should be preferably done through price concentration areas, rather than through highs/lows extremes” (???).
Per minimum price trend line (a support):
Fig. 7 (For view picture see notes in end of article)
Example of E. Nayman using resistance/support levels at trade station:
Fig. 8 (For view picture see notes in end of article)
4. MOVING AVERAGES based resistance/support levels.
a). E. NAYMAN: ”Bollinger Bands are sort of peculiar support/resistance lines
Fig. 9 (For view picture see notes in end of article)
5. ROUND NUMBERS being support/resistance levels
a). E. LEFEVRE (view: “Memories of an Exchange Profiteer” underlined: “Rates, having, for the first time, traveled 100, 200 or 300 points, are almost sure to cover additional 30 to 50 pips”
b). D. SCHWAGGER: “One is to be especially cautious about dollar holdups. With USD 781,25 best working on T-bonds and USD425 – on soybeans, temptation is raising to find “optimum” holdup for each market. It is advantageous to establish a round number to comfortably use it all of the markets.
CLASSIFICATION OF WEAK AND STRONG R/S LEVELS AS VIEWED BY FOREX SCHOLARS
J. MURPHY classifies support and resistance (view “Technical Analysis of Futures Markets”, New York Institute of Finance è Prentice Hall, 1986) proceeding from: price in-domain residence period (1); volume of trade (2) and price domain age (3).
1. The longer the price reciprocation period within a certain support/resistance area, the more critical the area. By way of an example, if a certain stagnation area observed a 3-week price up/down movement with subsequent rally thereof, this support domain is more important than that having observed a 3-day price reciprocation.
2. Volume of trade is another means to evaluate importance of support/resistance. If, say, a support formation did involve a huge volume of trade, it means a huge number of contracts passing from hands to hands, hence the support levels is ranking high and visa versa: the less the volume of trade, the lower-ranking the support.
3. Still another support/resistance importance indicator is its age in relation to the present moment. Since we are dealing with traders’ reaction to market moves and to positions they have entered or have failed to enter, it is fairly clear, that the younger the event and the reaction thereto, the more important the event.
Seven years later (in 1993), A. ELDER has confirmed 2 of 3 J. Murphy’s postulates dated back to 1986. His classification of resistance/support levels is guided by:
- number of test tangencies it sustained (the greater the number – the stronger the level). Within a fortnight an immediate support/resistance is formed; within 2 months the level grows accustomed to by traders, thus attaining medium power; within 2 years actually a stereotype is built radiating strong support and resistance.
- price scatter dominating a support/resistance level (the wider the range thereof – the stronger the level). A wide-range turning-point price consolidation is similar to a high fence surrounding valuable property. A congestion zone equal to 1 % of current price (4 points with S&P500 at 400 level) yields insignificant support/resistance, whereas a 3% area is responsible for medium levels with a 7% area possessing sufficient power to be a strong trend killer.
- The greater the volume of trade in a support/resistance area, the stronger the levels. Huge volume within a congestion zone is indicative of numerous emotional jobbers’ involvement. As opposite, minor volumes point out traders’ indifference towards the level being intersected, hence being attribute of the level’s deteriorated health.
Weak support/resistance levels are capable of bringing a trend to a halt, while strong ones may appear trend reversers. Traders buy support and sell resistance, thus turning their impact into a self-justifying projection.
SCHOLARS’ VIEW ON SUPPORT/RESISTANCE SEATING POINTS
1. T. DEMARK recommends:
- plotting resistance upon bid TD-points
- plotting support upon ask TD-points.
2. D. SCHWAGER (view: “Technical Analysis. Complete Course”) insists on drawing resistance and support “in the vicinity” of prior lows and highs.
“Support and resistance are to be viewed as approximate areas rather, than exact levels. It is to be emphasized that any previous high is not at all a premonition of perspective prices dry up thereat or there under. Instead, it is indicative of a resistance to be expected near that level. By analogy, a previous low is not at all illustrative of further price declines halting thereat or there above. Instead, it is indicative of a support to be projected close to that level.
Depicted below is a support zone governed by relative prior highs and lows concentration: gold, futures.
Fig. 10. (For view picture see notes in end of article)
Continued by D. Schwager: “Some technical analysts use to treat previous highs and lows as being endowed with, sort of, holy significance. A previous high, being 1078, is deemed by them a strong resistance. In case the market displays a spike higher, say, as far as 1085, they reason the resistance to have been breached. It’s not correct. Support and resistance are but to be looked upon as cloud-shaped areas rather than exact levels.”
3. J. MURPHY resorts to plotting support and resistance in a local peak-wise fashion (i.e. by local highs and lows): “A resistance level usually coincides with the previous peak level”.
Fig. 11. (For view picture see notes in end of article)
Fig. 12. (For view picture see notes in end of article)
4. A. ELDER: “Resistance and support are to be preferably plotted (see Fig. 13) through congestion zone margins (CZM) rather than through highs and lows. CZMs constitute traders’ mind-changing areas, whereas highs and lows are only reflective of panic among weakest jobbers”.
Fig.13. (For view picture see notes in end of article)
Continued by A. Elder: “Beware of support/resistance false breaching, indicated as “F” in the above figure. Breaches are followed by amateurs, with professionals being opposite travel jobbers. Now, pay some attention to the chart’s right corner, where prices have bumped into strong resistance. It’s high time to hunt for shorting with a stop-loss to be placed slightly above the resistance level”.
To be noted is a pronounced regularity, not referred to by A. Elder: the support/resistance levels drawn through previous local peaks are not extended by him after false breaching thereof.
4. D. SCHWAGER gives the following explanation when resorting to projection of 2 (!) inclined support and resistance levels:
- “Standard lines are usually drawn through price extrema (highs, lows), attributable to traders’ emotions, therefore these points may not reflect the market’s real trend”.
- “An inner trendline is to be plotted closest to the bulk of relative lows and relative highs, ignoring extreme points”
D. Schwager himself is the recognizer of the subjective nature inner trendline method, but in so doing he jumps to a very important conclusion that ordinary trend lines are:
- similarly subjective (!);
- far less helpful (!), than inner trendlines.
“One of inner trendlines’ shortcomings is their inevitably random nature, even greater than that possessed by ordinary trendlines, being restricted by extreme highs and lows, at least”.
“In practice, not infrequently, several options prove available as regards inner trend line plotting procedure (see Fig. 14). Nevertheless, my experience advises inner trend lines to be of greater avail than ordinary trend lines when spotting potential support/resistance areas”.
BRIEF CONCLUSIONS:
1. Each forex scholar offers his own interpretation of support/resistance levels, meaning different entities thereby (inclined, horizontal, inclined-horizontal, MA-based, round numbers-based, etc.).
2. There exists no clear-cut technique to define points to plot support/resistance levels through (except that of Demark’s).
3. In real time trading, that said, these levels discovery on Forex charts automatically entails absolutely different conclusions.
Fig. 14. (For view picture see notes in end of article)
TESTING AND PRACTICAL INCONSISTENCY OF CLASSICAL SUPPORT/RESISTANCE DETECTION METHODS
Jeffry Owen Katz and Donna L. McCormick have disclosed results of their testing of the above scholars’ recommendation procedures in their “Encyclopedia of Trading Strategies”:
TEST PROCEDURE 2
A channel breakthrough-operated system. Closing prices are utilized only; next day market price entry at session opening; commission and slippage being accounted for.
The above test has been performed exactly the way the previous one, but with no account to slippage (3 ticks) and commission (USD15 per dealing cycle). Although the model displayed perfect operation with no account to dealing expenditures, it has turned out a complete fiasco in practice.
Even the best-in-sample solution has proved loss-responsible only, and, as expected, the system’s beyond-sampling poor operation came into being.
Note: In compliance with E. Nayman’s theoretical outlook, a channel upward breach is alleged to be a STRONG (!!!) trading signal at an uptrend.
TEST PROCEDURE 6
It is a closing price breakthrough system with next day per stop-order entry. The model longs via a stop-order at the point of breaching a resistance appointed by recent highs and shorts via a stop-order at the point of breaching a resistance appointed by recent lows.
As expected, the system exhibited much poorer operation with low profit and deteriorated statistics within sampling. The model proved killer to the per-deal average of USD798, with profit rating being 37%.
TEST PROCEDURE 7
The procedure involved volatility punch with next-day opening entry. The model longs upon next-day opening with provision that today’s closing appears superior to the volatility upper edge. The model shorts in case of the price falling below the above edge.
The optimization period embraced 240 dealings only with 45% being profit-bringing.
TEST PROCEDURE 9
Involved is volatility punch triggering a per stop-order entry. The model effects a market stop-order entry immediately after passing a breach point.
The sampling period incorporated 1465 dealings, each being of 6-day average duration. The system has ensured 40% profit with average gain of USD 931 each. Under all parameter combinations only longs were winning. Both shorts and longs proved loosing outside sampling limits. Only 29% were winning out of the total of 610 dealings.
BRIEF CONCLUSIONS:
Testing data, supplied by Jeffry Owen Katz and Donna L. McCormick, constitute convincing grounds that forex scholars’ trading systems involving support/resistance breakthrough (the way these are described by the scholar) are rather likely to result in loss than in profit. This is one of the reasons for 95% of traders to turn their forex deposits killers.
In as much as the support/resistance related theory is so mixed up and subjective, it is only to be guessed what sort of support/resistance reading-matter may be offered by modern forex brokers’ websites.
Fig. 15 (For view picture see notes in end of article)
d). these recommendations aftermaths are apparent: the GBP has punched 1 point to 1,9001 and swiveled down to 1,8871; the EUR reached 1,2958 and reversed to 1,2853.
Brokers’ recommended support/resistance on the EUR/USD and GBPUSD as of June, 12, 2006 morning:
- EUR/USD: support 1.2780, 1.2740, 1.2685/90 1.2600, resistance 1.2890, 1.2930/40, 1.3000.
- GBP/USD support 1.8740, 1.8670, 1.8560, resistance 1.8890, 1.8940, 1.9000
EUR/USD support 1.2820 resistance 1.22940
GBP/USD support 1.8805 resistance 1.8950
The June, 12, 2006 information on technical levels of EUR/USD and GBP/USD is missing with the support/resistance levels themselves being quoted in incidental unsystematic fashion.
EURUSD:

- support: 1.2840, 1.2800, 1.2770/50, 1.2720, 1.2670, 1.2630, 1.2600/1.2580, 1.2540, 1.2500,
1.2460, 1.2400/1.2390, 1.2350, 1.2300, 1.2250.

- resistance: 1.2890/1.2900, 1.2960, 1.3000, 1.3040, 1.3100, 1.3150, 1.3200/10.
GBPUSD

- support: 1.8840, 1.8800, 1.8740/30, 1.8700, 1.8670/60, 1.8630, 1.8590, 1.8535, 1.8500,
1.8450, 1.8400, 1.8360, 1.8300, 1.8270.

- resistance: 1.8870/80, 1.8915/20, 1.8940/50, 1.8990/1.9000, 1.9060.
EURUSD:
RES 4: $1.2990 RES 3: $1.2965 RES 2: $1.2940 RES 1: $1.2915

CURRENT PRICE: $1.2890

SUP 1: $1.2830 SUP 2: $1.2795 SUP 3: $1.2755 SUP 4: $1.2685
GBPUSD
RES 4: $1.9080 RES 3: $1.9000 RES 2: $1.8960 RES 1: $1.8915
CURRENT PRICE: $1.8895

SUP 1: $1.8815 SUP 2: $1.8725 SUP 3: $1.8725 SUP 4: $1.8515
Are You not getting mixed up? Each broker presents his own support/resistance levels different from others’. With the above diversity of levels being recommended any true/false breach of any technical level proves out of question.
Should we attempt to simultaneously depict all the support/resistance levels furnished by various Forex brokers, we’ll ultimately find ourselves facing a picket fence thereof.
The arrangement is reminiscent of J. Schwager’s “Technical Analysis. Complete course”, raising a question: “Is technical charting to be referred to as a prediction engine or as folk arts?”
Probably, the best way out here is:
1. In view of huge number of Forex scholars’ opinions, let everyone answer this question independently with the purpose of finding out the way to faultlessly pinpoint support/resistance levels.
2. Let everyone decide whether he is going to believe the support/resistance levels, released daily by various Brokers and Dealers, provided that:
a). one has no idea of the definition principles thereof;
b). the above levels being offered at websites by non-traders or by ex-losers.
Otherwise the natural result will remain equal to 95% of losers worldwide.
SUPPORT/RESISTANCE LEVELS CONSTRUCTION UNDER MASTERFOREX-V TRADING CONCEPT
1. Support and resistance levels are to be split into those of flat and trend:
a). support/resistance levels are horizontal when in flat;
b). support/resistance levels are inclined when in trend.
2. Various kinds of support/resistance are intrinsic to various trend types (if You are considering 4 trend types, You will face 4 R/S grids; if 5 trend types are being dealt with, there will emerge 5 R/S grids respectively).
3. A larger trend is of greater significance in respect to a minor one, whereas minor trend support/resistance levels are of more accurate nature than those of larger one. This issue has not at all been touched upon either by forex technical “scholars”, or by modern “analysts”.
4. All the 4 trend-type support/resistance detection procedure is elaborated in the fashion enabling the Masterforex-V Academy hundreds traders to daily set up support/resistance levels with 1-2 points deviation, due to forex quotes difference from various Brokers. This aspect has not been considered by forex technical scholars either.
5. It appeared indispensable to simultaneously analyze the minimum of 2 ally currencies’ support/resistance levels (say, GBPUSD, EURUSD) since there is the formula:
“True R/S level breach by the forex pair 1 + False R/S level breach by the forex pair 2 = EITHER False R/S level breach by the forex pair 1 OR True R/S level breach by the forex pair 2”
This aspect has not been considered by Forex technical scholars either.
6. Minor timeframes intermediate R/S levels ARE DIFFERENT from those being manifested under Forex trendwise travel. This aspect has not been subject to investigation by Forex technical scholars either.
7. The available technical analysis scholar literature on support/resistance levels contains plentitude of helpful and … data. The objective is to effect independent synthesis of T. Demark’s, A. Elder’s, E. Nayman’s, J. Murphy’s, D. Schwager’s techniques with the above Masterforex-V principles in order to attain proper understanding of the way prior binary regularities tailor further movement perspectives.
8. A combination of 4 trends and more is helpful in 1-4 point-accurate detecting forex trading session local extrema.
With the above said, it proves strange to hear the statement of Ch. Lebau and D. Lucas (see: Computer-aided analysis of Futures Markets, reading: “We do not believe in exact price prediction popular practice”.
BUT THEN:
- What’s the way the Masterforex-V Academy students manage to profit now and then?
- Do they independently establish support/resistance levels on multiple timeframes of numerous
ally currencies?
- Do they check their established levels against a primary source (wherefrom the Brokers’ analysts
use to crib a support/resistance)?
- Do they understand principles of true/false breaching of each level and of a bounce there from?
- Are they capable of calculating in-session currencies travel margins to a destination, where after
the above currencies bounce off and exhibit corrective reversal?
Answers you can find in our web site.

FOREX Global Trading

2009-08-29T23:12:00.000-07:00

1. What is FOREX global trading?

FOREX stands for Foreign Exchange Market. It is based on an international marketplace where

currencies are bought and sold. Only the participants in the FOREX market determine the price

of one currency against another. In other words, the prices of currencies are based upon

supply and demand. This is similar to the idea behind stock price determinations. The

difference? Well you could call it a difference, but I call it an advantage. Currency prices

can not be affected by large buyers in the FOREX marketplace. In the traditional stock

market, when stocks are bought up by institutional buyers, stock prices fluctuate. This is

not a factor in the FOREX global trading market place because it is the largest liquid

financial market available. Between 1 and 1.5 Trillion dollars are traded everyday in the

FOREX market. It's impossible for an institutional buyer to make a splash. This is a huge

advantage for the "little guy" who doesn't have a huge budget. If you take the time to learn

how to play the FOREX game, anyone can make a fortune. Success is based on following the

rules of the market and knowing the signs to look for.

2. How does FOREX global trading work?

Currency transactions do not take place on a centralized exchange like the NYSE. It's a

global market and therefore trades take place all over the world through telecommunications.

You can trade on the FOREX global market 24 hours a day from Sunday afternoon untill friday

afternoon. For GMT time, this is translated to 12am on Monday to 10:00pm on Friday. The

process is a fairly simple one. You buy and sell currencies through dealers. The link I

provide at the bottom of the article will steer you in the right direction for finding a

qualified dealer. Think of a dealer as a broker. The dealers provide quotes for all major

currencies and you decide which currently is a sound investment at any given time. A big

advantage to working with dealers in FOREX global trading is the ability to obtain a line of

credit off of a very small initial rate. You can get a line of credit off of a $500 payment

with many dealers. This leverages your ability for huge gains in the FOREX marketplace. The

tactic is called marginal trading, and although it can be risky, once you know how to play the

game it is the ideal way to "take the house's money". The appeal of marginal trading is that

investments can be made with relatively small startup capital. You don't need a big money

supply to be a big winner in the FOREX global trading business. This also allows for bigger

investments to be made with fewer money transfer costs.

Marginal trading is broken up into "lots". A "lot" is an amount close to $100,000 that can be

financed with as little money as .5% down. This means for $500 you can leverage a $100,000

investment. - WOW! That is buying power. Unlike traditional investment methods like flipping

real estate, it doesn't take time to build up your wealth. You can leverage your money to

grow as quickly as you feel comfortable growing.

3. What are some investment strategies for FOREX global trading?

The investment strategies for FOREX trading don't differ too much from tradition stock market

trading. Strategies are categorized into two divisions - Fundamental Analysis and Technical

Analysis.

Funamental Analysis will look at a particular regions currency and take into consideration

such things as their countries economy, their bank's current interest rate, inflation rates,

unemployment levels and a host of other factors. It is important to keep in mind that any

anticipations based on fundamental analysis, should be considered against the perceptions of

other investors in the FOREX marketplace. Afterall, it is more than likely that the current

currency price reflects all perceived knowledge of a country's economical situation.

Technical Analysis is based on graph reading and interpreting signals from financial statistics. The link I give at the bottom of this article gives great insight into this strategy of investing in the FOREX global market. I personally am a big believer in Technical Analysis over Fundamental Analysis. Numbers are open to only so much interpretation and perception. Technical Analysis is a much more black and white way for many investors to choose their winners in the FOREX global market. This is solely my opinion. You can read on through my link below for a far more granular, in depth look at numerous strategies that work and the most efficient ways to employ them.

Again, Congratulations on embarking on one of the most financially rewarding paths you may

have ever found. There is a fortune to gain in the FOREX global market. The most prudent

advice I can give you is to keep learning until you can't learn any more. It's a smarter,

more efficient way to build youself up to financial freedom while trading in the FOREX global

market. Don't go into the marketplace blind. Gain the insight that will reward you tenfold by

continuing your FOREX global trading education. I wish you all the success in the world.

Earn Money Automatically With Forex Trading

2009-08-26T08:59:00.000-07:00

One of the biggest markets for trading entities is the Forex market. Recently much information has surfaced in books and on the internet about this exciting new venture for individuals interested in making a little money on the side, or making a career out of it.
While these sources are fantastic ways to learn how to be a professional trader, there are some very simple guidelines to follow as you learn from these sources and go onto becoming a successful trader in the Forex market. While you read these articles, going to a bookstore and reading book after book is a very sound way to learn and become profitable in your business ventures.
I would argue that the only proper way to do forex trading would be to first wait for the economy to stabilize, as the global economy right now is in turmoil and countries can suddenly increase or decrease their wealth which completely changes the Forex market at the time. Also be careful to keep your life in order. Any form of trading is a risky venture. It ALWAYS involves a risk of losing money, so keep that in mind when you invest, that you should never put your job or house on the line for something like this.
1. Choose a method of learning, or branch out. What I mean is, go to a bookstore, search online, buy an automated robot, whatever you choose to do to get started, you must go at it with the intention of spending hours of studying and learning from previous traders. Even when you get an automated forex software program you can’t just sit there and expect it to do everything for you, you must do your research and carefully set it up. There are tons of options in even the most automated programs you must look into and carefully choose from.
2. Manage your life before you manage your forex trading. Don’t be rash and believe in all of those get rich quick schemes, they are only playing off of your inability to make calm, calculated decisions when you’re infatuated with the idea of making money quickly. You need to have a plan laid out before you spend any money, you need a stable income to pay your rent, and DO NOT expect to suddenly make as much money as they advertise, give it at least 6 months before you can turn a profit.
3. Walk, do not run into trading. If you risk everything, you do just that, you RISK losing all you have. If you only play around with 10% of your wealth, if you lose it all and decide to try something else, it’s not that big of a deal as if you had spent 50% of your money.
4. The market will always be around as long as people have money. It will also not change, so any initial research you do now, will last you your entire life, so imagine it as investing in a company that continues to grow and grow as you sit on it. So build up your knowledge and sit on it and learn as your revenue grows.

Introduction to Currency Trading

2009-08-23T03:32:00.000-07:00

The foreign exchange market (forex or FX for short) is one of the most exciting, fast-paced markets around. Until recently, forex trading in the currency market had been the domain of large financial institutions, corporations, central banks, hedge funds and extremely wealthy individuals. The emergence of the internet has changed all of this, and now it is possible for average investors to buy and sell currencies easily with the click of a mouse through online brokerage accounts.

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Daily currency fluctuations are usually very small. Most currency pairs move less than one cent per day, representing a less than 1% change in the value of the currency. This makes foreign exchange one of the least volatile financial markets around. Therefore, many currency speculators rely on the availability of enormous leverage to increase the value of potential movements. In the retail forex market, leverage can be as much as 250:1. Higher leverage can be extremely risky, but because of round-the-clock trading and deep liquidity, foreign exchange brokers have been able to make high leverage an industry standard in order to make the movements meaningful for currency traders.

Extreme liquidity and the availability of high leverage have helped to spur the market's rapid growth and made it the ideal place for many traders. Positions can be opened and closed within minutes or can be held for months. Currency prices are based on objective considerations of supply and demand and cannot be manipulated easily because the size of the market does not allow even the largest players, such as central banks, to move prices at will.

The forex market provides plenty of opportunity for investors. However, in order to be successful, a currency trader has to understand the basics behind currency movements.

The goal of this forex tutorial is to provide a foundation for investors or traders who are new to the foreign currency markets. We'll cover the basics of exchange rates, the market's history and the key concepts you need to understand in order to be able to participate in this market. We'll also venture into how to start trading foreign currencies and the different types of strategies that can be employed.

What is Forex Trading? Print this Article

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What Is Forex?
The foreign exchange market is the "place" where currencies are traded. Currencies are important to most people around the world, whether they realize it or not, because currencies need to be exchanged in order to conduct foreign trade and business. If you are living in the U.S. and want to buy cheese from

France

, either you or the company that you buy the cheese from has to pay the French for the cheese in euros (EUR). This means that the U.S. importer would have to exchange the equivalent value of U.S. dollars (USD) into euros. The same goes for traveling. A French tourist in

Egypt

can't pay in euros to see the pyramids because it's not the locally accepted currency. As such, the tourist has to exchange the euros for the local currency, in this case the Egyptian pound, at the current exchange rate.

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The need to exchange currencies is the primary reason why the forex market is the largest, most liquid financial market in the world. It dwarfs other markets in size, even the stock market, with an average traded value of around U.S. $2,000 billion per day. (The total volume changes all the time, but as of April 2004, the Bank for International Settlements (BIS) reported that the forex market traded U.S. $1,900 billion per day.)

One unique aspect of this international market is that there is no central marketplace for foreign exchange. Rather, currency trading is conducted electronically over-the-counter (OTC), which means that all transactions occur via computer networks between traders around the world, rather than on one centralized exchange. The market is open 24 hours a day, five and a half days a week, and currencies are traded worldwide in the major financial centers of London, New York, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris and Sydney - across almost every time zone. This means that when the trading day in the U.S. ends, the forex market begins anew in Tokyo and Hong Kong. As such, the forex market can be extremely active any time of the day, with price quotes changing constantly.

Spot Market and the Forwards and Futures Markets
There are actually three ways that institutions, corporations and individuals trade forex: the spot market, the forwards market and the futures market. The forex trading in the spot market always has been the largest market because it is the "underlying" real asset that the forwards and futures markets are based on. In the past, the futures market was the most popular venue for traders because it was available to individual investors for a longer period of time. However, with the advent of electronic trading, the spot market has witnessed a huge surge in activity and now surpasses the futures market as the preferred trading market for individual investors and speculators. When people refer to the forex market, they usually are referring to the spot market. The forwards and futures markets tend to be more popular with companies that need to hedge their foreign exchange risks out to a specific date in the future.

What is the spot market?
More specifically, the spot market is where currencies are bought and sold according to the current price. That price, determined by supply and demand, is a reflection of many things, including current interest rates, economic performance, sentiment towards ongoing political situations (both locally and internationally), as well as the perception of the future performance of one currency against another. When a deal is finalized, this is known as a "spot deal". It is a bilateral transaction by which one party delivers an agreed-upon currency amount to the counter party and receives a specified amount of another currency at the agreed-upon exchange rate value. After a position is closed, the settlement is in cash. Although the spot market is commonly known as one that deals with transactions in the present (rather than the future), these trades actually take two days for settlement.

What are the forwards and futures markets?
Unlike the spot market, the forwards and futures markets do not trade actual currencies. Instead they deal in contracts that represent claims to a certain currency type, a specific price per unit and a future date for settlement.

In the forwards market, contracts are bought and sold OTC between two parties, who determine the terms of the agreement between themselves.

In the futures market, futures contracts are bought and sold based upon a standard size and settlement date on public commodities markets, such as the Chicago Mercantile Exchange. In the

U.S.

, the National Futures Association regulates the futures market. Futures contracts have specific details, including the number of units being traded, delivery and settlement dates, and minimum price increments that cannot be customized. The exchange acts as a counterpart to the trader, providing clearance and settlement.

Both types of contracts are binding and are typically settled for cash for the exchange in question upon expiry, although contracts can also be bought and sold before they expire. The forwards and futures markets can offer protection against risk when trading currencies. Usually, big international corporations use these markets in order to hedge against future exchange rate fluctuations, but speculators take part in these markets as well. (For a more in-depth introduction to futures, see Futures Fundamentals.)

Note that you'll see the terms: FX, forex, foreign-exchange market and currency market. These terms are synonymous and all refer to the forex market.

Reading a Forex Quote and Understanding the Jargon

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One of the biggest sources of confusion for those new to the currency market is the standard for quoting currencies. In this section, we'll go over currency quotations and how they work in currency pair trades.

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Reading a Quote
When a currency is quoted, it is done in relation to another currency, so that the value of one is reflected through the value of another. Therefore, if you are trying to determine the exchange rate between the U.S. dollar (USD) and the Japanese yen (JPY), the forex quote would look like this:

USD/JPY = 119.50

This is referred to as a currency pair. The currency to the left of the slash is the base currency, while the currency on the right is called the quote or counter currency. The base currency (in this case, the U.S. dollar) is always equal to one unit (in this case, US$1), and the quoted currency (in this case, the Japanese yen) is what that one base unit is equivalent to in the other currency. The quote means that US$1 = 119.50 Japanese yen. In other words, US$1 can buy 119.50 Japanese yen. The forex quote includes the currency abbreviations for the currencies in question.

Direct Currency Quote vs. Indirect Currency Quote
There are two ways to quote a currency pair, either directly or indirectly. A direct currencyquote is simply a currency pair in which the domestic currency is the base currency; while an indirect quote, is a currency pair where the domestic currency is the quoted currency. So if you were looking at the Canadian dollar as the domestic currency and U.S. dollar as the foreign currency, a direct quote would be CAD/USD, while an indirect quote would be USD/CAD. The direct quote varies the foreign currency, and the quoted, or domestic currency, remains fixed at one unit. In the indirect quote, on the other hand, the domestic currency is variable and the foreign currency is fixed at one unit.

For example, if Canada is the domestic currency, a direct quote would be 0.85 CAD/USD, which means with C$1, you can purchase US$0.85. The indirect quote for this would be the inverse (1/0.85), which is 1.18 USD/CAD and means that USD$1 will purchase C$1.18.

In the forex spot market, most currencies are traded against the U.S. dollar, and the U.S. dollar is frequently the base currency in the currency pair. In these cases, it is called a direct quote. This would apply to the above USD/JPY currency pair, which indicates that US$1 is equal to 119.50 Japanese yen.

However, not all currencies have the U.S. dollar as the base. The Queen's currencies - those currencies that historically have had a tie with Britain, such as the British pound, Australian Dollar and New Zealand dollar - are all quoted as the base currency against the U.S. dollar. The euro, which is relatively new, is quoted the same way as well. In these cases, the U.S. dollar is the counter currency, and the exchange rate is referred to as an indirect quote. This is why the EUR/USD quote is given as 1.25, for example, because it means that one euro is the equivalent of 1.25 U.S. dollars.

Most currency exchange rates are quoted out to four digits after the decimal place, with the exception of the Japanese yen (JPY), which is quoted out to two decimal places.

Cross Currency
When a currency quote is given without the U.S. dollar as one of its components, this is called a cross currency. The most common cross currency pairs are the EUR/GBP, EUR/CHF and EUR/JPY. These currency pairs expand the trading possibilities in the forex market, but it is important to note that they do not have as much of a following (for example, not as actively traded) as pairs that include the U.S. dollar, which also are called the majors. (For more on cross currency, see Make The Currency Cross Your Boss.)

Bid and Ask
As with most trading in the financial markets, when you are trading a currency pair there is a bid price (buy) and an ask price (sell). Again, these are in relation to the base currency. When buying a currency pair (going long), the ask price refers to the amount of quoted currency that has to be paid in order to buy one unit of the base currency, or how much the market will sell one unit of the base currency for in relation to the quoted currency.

The bid price is used when selling a currency pair (going short) and reflects how much of the quoted currency will be obtained when selling one unit of the base currency, or how much the market will pay for the quoted currency in relation to the base currency.

The quote before the slash is the bid price, and the two digits after the slash represent the ask price (only the last two digits of the full price are typically quoted). Note that the bid price is always smaller than the ask price. Let's look at an example:

USD/CAD = 1.2000/05
Bid = 1.2000
Ask= 1.2005

If you want to buy this currency pair, this means that you intend to buy the base currency and are therefore looking at the ask price to see how much (in Canadian dollars) the market will charge for U.S. dollars. According to the ask price, you can buy one U.S. dollar with 1.2005 Canadian dollars.

However, in order to sell this currency pair, or sell the base currency in exchange for the quoted currency, you would look at the bid price. It tells you that the market will buy US$1 base currency (you will be selling the market the base currency) for a price equivalent to 1.2000 Canadian dollars, which is the quoted currency.

Whichever currency is quoted first (the base currency) is always the one in which the transaction is being conducted. You either buy or sell the base currency. Depending on what currency you want to use to buy or sell the base with, you refer to the corresponding currency pair spot exchange rate to determine the price.

Spreads and Pips
The difference between the bid price and the ask price is called a spread. If we were to look at the following quote: EUR/USD = 1.2500/03, the spread would be 0.0003 or 3 pips, also known as points. Although these movements may seem insignificant, even the smallest point change can result in thousands of dollars being made or lost due to leverage. Again, this is one of the reasons that speculators are so attracted to the forex market; even the tiniest price movement can result in huge profit.

The pip is the smallest amount a price can move in any currency quote. In the case of the U.S. dollar, euro, British pound or Swiss franc, one pip would be 0.0001. With the Japanese yen, one pip would be 0.01, because this currency is quoted to two decimal places. So, in a forex quote of USD/CHF, the pip would be 0.0001 Swiss francs. Most currencies trade within a range of 100 to 150 pips a day.

Currency Quote Overview
USD/CAD = 1.2232/37
Base Currency	Currency to the left (USD)
Quote/Counter Currency	Currency to the right (CAD)
Bid Price	1.2232	Price for which the market maker will buy the base currency. Bid is always smaller than ask.
Ask Price	1.2237	Price for which the market maker will sell the base currency.
Pip	One point move, in USD/CAD it is .0001 and 1 point change would be from 1.2231 to 1.2232	The pip/point is the smallest movement a price can make.
Spread	Spread in this case is 5 pips/points; difference between bid and ask price (1.2237-1.2232).

Currency Pairs in the Forwards and Futures Markets
One of the key technical differences between the forex markets is the way currencies are quoted. In the forwards or futures markets, foreign exchange always is quoted against the U.S. dollar. This means that pricing is done in terms of how many U.S. dollars are needed to buy one unit of the other currency. Remember that in the spot market some currencies are quoted against the U.S. dollar, while for others, the U.S. dollar is being quoted against them. As such, the forwards/futures market and the spot market quotes will not always be parallel one another.

For example, in the spot market, the British pound is quoted against the U.S. dollar as GBP/USD. This is the same way it would be quoted in the forwards and futures markets. Thus, when the British pound strengthens against the U.S. dollar in the spot market, it will also rise in the forwards and futures markets.

On the other hand, when looking at the exchange rate for the U.S. dollar and the Japanese yen, the former is quoted against the latter. In the spot market, the quote would be 115 for example, which means that one U.S. dollar would buy 115 Japanese yen. In the futures market, it would be quoted as (1/115) or .0087, which means that 1 Japanese yen would buy .0087 U.S. dollars. As such, a rise in the USD/JPY spot rate would equate to a decline in the JPY futures rate because the U.S. dollar would have strengthened against the Japanese yen and therefore one Japanese yen would buy less U.S. dollars.

Now that you know a little bit about how currencies are quoted, let's move on to the benefits and risks involved with trading forex.

Foreign Exchange Risk and Benefits

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In this section, we'll take a look at some of the benefits and risks associated with the forex market. We'll also discuss how it differs from the equity market in order to get a greater understanding of how the forex market works.

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The Good and the Bad
We already have mentioned that factors such as the size, volatility and global structure of the foreign exchange market have all contributed to its rapid success. Given the highly liquid nature of this market, investors are able to place extremely large trades without affecting any given exchange rate. These large positions are made available to forex traders because of the low margin requirements used by the majority of the industry's brokers. For example, it is possible for a trader to control a position of US$100,000 by putting down as little as US$1,000 up front and borrowing the remainder from his or her forex broker. This amount of leverage acts as a double-edged sword because investors can realize large gains when rates make a small favorable change, but they also run the risk of a massive loss when the rates move against them. Despite the foreign exchange risks, the amount of leverage available in the forex market is what makes it attractive for many speculators.

The currency market is also the only market that is truly open 24 hours a day with decent liquidity throughout the day. For traders who may have a day job or just a busy schedule, it is an optimal market to trade in. As you can see from the chart below, the major trading hubs are spread throughout many different time zones, eliminating the need to wait for an opening or closing bell. As the

U.S.

trading closes, other markets in the East are opening, making it possible to trade at any time during the day.

Time Zone	Time (ET)
Tokyo Open	7:00 pm
Tokyo Close	4:00 am
London Open	3:00 am
London Close	12:00 pm
New York Open	8:00 am
New York Close	5:00 pm

While the forex market may offer more excitement to the investor, the risks are also higher in comparison to trading equities. The ultra-high leverage of the forex market means that huge gains can quickly turn to damaging losses and can wipe out the majority of your account in a matter of minutes. This is important for all new traders to understand, because in the forex market - due to the large amount of money involved and the number of players - traders will react quickly to information released into the market, leading to sharp moves in the price of the currency pair.

Though currencies don't tend to move as sharply as equities on a percentage basis (where a company's stock can lose a large portion of its value in a matter of minutes after a bad announcement), it is the leverage in the spot market that creates the volatility. For example, if you are using 100:1 leverage on $1,000 invested, you control $100,000 in capital. If you put $100,000 into a currency and the currency's price moves 1% against you, the value of the capital will have decreased to $99,000 - a loss of $1,000, or all of your invested capital, representing a 100% loss. In the equities market, most traders do not use leverage, therefore a 1% loss in the stock's value on a $1,000 investment, would only mean a loss of $10. Therefore, it is important to take into account the risks involved in the forex market before diving in.

Differences Between Forex and Equities
A major difference between the forex and equities markets is the number of traded instruments: the forex market has very few compared to the thousands found in the equities market. The majority of forex traders focus their efforts on seven different currency pairs: the four majors, which include (EUR/USD, USD/JPY, GBP/USD, USD/CHF); and the three commodity pairs (USD/CAD, AUD/USD, NZD/USD). All other pairs are just different combinations of the same currencies, otherwise known as cross currencies. This makes currency trading easier to follow because rather than having to cherry-pick between 10,000 stocks to find the best value, all that FX traders need to do is “keep up” on the economic and political news of eight countries.

The equity markets often can hit a lull, resulting in shrinking volumes and activity. As a result, it may be hard to open and close positions when desired. Furthermore, in a declining market, it is only with extreme ingenuity that an equities investor can make a profit. It is difficult to short-sell in the

U.S.

equities market because of strict rules and regulations regarding the process. On the other hand, forex offers the opportunity to profit in both rising and declining markets because with each trade, you are buying and selling simultaneously, and short-selling is, therefore, inherent in every transaction. In addition, since the forex market is so liquid, traders are not required to wait for an uptick before they are allowed to enter into a short position - as they are in the equities market.

Due to the extreme liquidity of the forex market, margins are low and leverage is high. It just is not possible to find such low margin rates in the equities markets; most margin traders in the equities markets need at least 50% of the value of the investment available as margin, whereas forex traders need as little as 1%. Furthermore, commissions in the equities market are much higher than in the forex market. Traditional brokers ask for commission fees on top of the spread, plus the fees that have to be paid to the exchange. Spot forex brokers take only the spread as their fee for the transaction. (For a more in-depth introduction to currency trading, see Getting Started in Forex and A Primer On The Forex Market.)

By now you should have a basic understanding of what the forex market is and how it works. In the next section, we'll examine the evolution of the current foreign exchange system.

Forex History and Market Participants

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Given the global nature of the forex exchange market, it is important to first examine and learn some of the important historical events relating to currencies and currency exchange before entering any trades. In this section we’ll review the international monetary system and how it has evolved to its current state. We will then take a look at the major players that occupy the forex market - something that is important for all potential forex traders to understand.

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The History of the Forex
Gold Standard System
The creation of the gold standard monetary system in 1875 marks one of the most important events in the history of the forex market. Before the gold standard was implemented, countries would commonly use gold and silver as means of international payment. The main issue with using gold and silver for payment is that their value is affected by external supply and demand. For example, the discovery of a new gold mine would drive gold prices down.

The underlying idea behind the gold standard was that governments guaranteed the conversion of currency into a specific amount of gold, and vice versa. In other words, a currency would be backed by gold. Obviously, governments needed a fairly substantial gold reserve in order to meet the demand for currency exchanges. During the late nineteenth century, all of the major economic countries had defined an amount of currency to an ounce of gold. Over time, the difference in price of an ounce of gold between two currencies became the exchange rate for those two currencies. This represented the first standardized means of currency exchange in history.

The gold standard eventually broke down during the beginning of World War I. Due to the political tension with Germany, the major European powers felt a need to complete large military projects. The financial burden of these projects was so substantial that there was not enough gold at the time to exchange for all the excess currency that the governments were printing off.

Although the gold standard would make a small comeback during the inter-war years, most countries had dropped it again by the onset of World War II. However, gold never ceased being the ultimate form of monetary value. (For more on this, read The Gold Standard Revisited, What Is Wrong With Gold? and Using Technical Analysis In The Gold Markets.)

Bretton Woods System
Before the end of World War II, the Allied nations believed that there would be a need to set up a monetary system in order to fill the void that was left behind when the gold standard system was abandoned. In July 1944, more than 700 representatives from the Allies convened at Bretton Woods, New Hampshire, to deliberate over what would be called the Bretton Woods system of international monetary management.

To simplify, Bretton Woods led to the formation of the following:

A method of fixed exchange rates;
The U.S. dollar replacing the gold standard to become a primary reserve currency; and
The creation of three international agencies to oversee economic activity: the International Monetary Fund (IMF), International Bank for Reconstruction and Development, and the General Agreement on Tariffs and Trade (GATT).

One of the main features of Bretton Woods is that the U.S. dollar replaced gold as the main standard of convertibility for the world’s currencies; and furthermore, the U.S. dollar became the only currency that would be backed by gold. (This turned out to be the primary reason that Bretton Woods eventually failed.)

Over the next 25 or so years, the U.S. had to run a series of balance of payment deficits in order to be the world’s reserved currency. By the early 1970s, U.S. gold reserves were so depleted that the U.S. treasury did not have enough gold to cover all the U.S. dollars that foreign central banks had in reserve.

Finally, on August 15, 1971, U.S. President Richard Nixon closed the gold window, and the U.S. announced to the world that it would no longer exchange gold for the U.S. dollars that were held in foreign reserves. This event marked the end of Bretton Woods.

Even though Bretton Woods didn’t last, it left an important legacy that still has a significant effect on today’s international economic climate. This legacy exists in the form of the three international agencies created in the 1940s: the IMF, the International Bank for Reconstruction and Development (now part of the World Bank) and GATT, the precursor to the World Trade Organization. (To learn more about Bretton Wood, read What Is The International Monetary Fund? and Floating And Fixed Exchange Rates.)

Current Exchange Rates
After the Bretton Woods system broke down, the world finally accepted the use of floating foreign exchange rates during the

Jamaica

agreement of 1976. This meant that the use of the gold standard would be permanently abolished. However, this is not to say that governments adopted a pure free-floating exchange rate system. Most governments employ one of the following three exchange rate systems that are still used today:

Dollarization;
Pegged rate; and
Managed floating rate.

Dollarization
This event occurs when a country decides not to issue its own currency and adopts a foreign currency as its national currency. Although dollarization usually enables a country to be seen as a more stable place for investment, the drawback is that the country’s central bank can no longer print money or make any sort of monetary policy. An example of dollarization is El Salvador's use of the U.S. dollar. (To read more, see Dollarization Explained.)

Pegged Rates
Pegging occurs when one country directly fixes its exchange rate to a foreign currency so that the country will have somewhat more stability than a normal float. More specifically, pegging allows a country’s currency to be exchanged at a fixed rate with a single or a specific basket of foreign currencies. The currency will only fluctuate when the pegged currencies change.

For example, China pegged its yuan to the U.S. dollar at a rate of 8.28 yuan to US$1, between 1997 and July 21, 2005. The downside to pegging would be that a currency’s value is at the mercy of the pegged currency’s economic situation. For example, if the U.S. dollar appreciates substantially against all other currencies, the yuan would also appreciate, which may not be what the Chinese central bank wants.

Managed Floating Rates
This type of system is created when a currency’s exchange rate is allowed to freely change in value subject to the market forces of supply and demand. However, the government or central bank may intervene to stabilize extreme fluctuations in exchange rates. For example, if a country’s currency is depreciating far beyond an acceptable level, the government can raise short-term interest rates. Raising rates should cause the currency to appreciate slightly; but understand that this is a very simplified example. Central banks typically employ a number of tools to manage currency.

Market Participants
Unlike the equity market - where investors often only trade with institutional investors (such as mutual funds) or other individual investors - there are additional participants that trade on the forex market for entirely different reasons than those on the equity market. Therefore, it is important to identify and understand the functions and motivations of the main players of the forex market.

Governments and Central Banks
Arguably, some of the most influential participants involved with currency exchange are the central banks and federal governments. In most countries, the central bank is an extension of the government and conducts its policy in tandem with the government. However, some governments feel that a more independent central bank would be more effective in balancing the goals of curbing inflation and keeping interest rates low, which tends to increase economic growth. Regardless of the degree of independence that a central bank possesses, government representatives typically have regular consultations with central bank representatives to discuss monetary policy. Thus, central banks and governments are usually on the same page when it comes to monetary policy.

Central banks are often involved in manipulating reserve volumes in order to meet certain economic goals. For example, ever since pegging its currency (the yuan) to the U.S. dollar, China has been buying up millions of dollars worth of U.S. treasury bills in order to keep the yuan at its target exchange rate. Central banks use the foreign exchange market to adjust their reserve volumes. With extremely deep pockets, they yield significant influence on the currency markets.

Banks and Other Financial Institutions
In addition to central banks and governments, some of the largest participants involved with forex transactions are banks. Most individuals who need foreign currency for small-scale transactions deal with neighborhood banks. However, individual transactions pale in comparison to the volumes that are traded in the interbank market.

The interbank market is the market through which large banks transact with each other and determine the currency price that individual traders see on their trading platforms. These banks transact with each other on electronic brokering systems that are based upon credit. Only banks that have credit relationships with each other can engage in transactions. The larger the bank, the more credit relationships it has and the better the pricing it can access for its customers. The smaller the bank, the less credit relationships it has and the lower the priority it has on the pricing scale.

Banks, in general, act as dealers in the sense that they are willing to buy/sell a currency at the bid/ask price. One way that banks make money on the forex market is by exchanging currency at a premium to the price they paid to obtain it. Since the forex market is a decentralized market, it is common to see different banks with slightly different exchange rates for the same currency.

Hedgers
Some of the biggest clients of these banks are businesses that deal with international transactions. Whether a business is selling to an international client or buying from an international supplier, it will need to deal with the volatility of fluctuating currencies.

If there is one thing that management (and shareholders) detest, it is uncertainty. Having to deal with foreign-exchange risk is a big problem for many multinationals. For example, suppose that a German company orders some equipment from a Japanese manufacturer to be paid in yen one year from now. Since the exchange rate can fluctuate wildly over an entire year, the German company has no way of knowing whether it will end up paying more euros at the time of delivery.

One choice that a business can make to reduce the uncertainty of foreign-exchange risk is to go into the spot market and make an immediate transaction for the foreign currency that they need.

Unfortunately, businesses may not have enough cash on hand to make spot transactions or may not want to hold massive amounts of foreign currency for long periods of time. Therefore, businesses quite frequently employ hedging strategies in order to lock in a specific exchange rate for the future or to remove all sources of exchange-rate risk for that transaction.

For example, if a European company wants to import steel from the U.S., it would have to pay in U.S. dollars. If the price of the euro falls against the dollar before payment is made, the European company will realize a financial loss. As such, it could enter into a contract that locked in the current exchange rate to eliminate the risk of dealing in U.S. dollars. These contracts could be either forwards or futures contracts.

Speculators
Another class of market participants involved with foreign exchange-related transactions is speculators. Rather than hedging against movement in exchange rates or exchanging currency to fund international transactions, speculators attempt to make money by taking advantage of fluctuating exchange-rate levels.

The most famous of all currency speculators is probably George Soros. The billionaire hedge fund manager is most famous for speculating on the decline of the British pound, a move that earned $1.1 billion in less than a month. On the other hand, Nick Leeson, a derivatives trader with England’s Barings Bank, took speculative positions on futures contracts in yen that resulted in losses amounting to more than $1.4 billion, which led to the collapse of the company.

Some of the largest and most controversial speculators on the forex market are hedge funds, which are essentially unregulated funds that employ unconventional investment strategies in order to reap large returns. Think of them as mutual funds on steroids. Hedge funds are the favorite whipping boys of many a central banker. Given that they can place such massive bets, they can have a major effect on a country’s currency and economy. Some critics blamed hedge funds for the Asian currency crisis of the late 1990s, but others have pointed out that the real problem was the ineptness of Asian central bankers. (For more on hedge funds, see Introduction To Hedge Funds - Part One and Part Two.)Either way, speculators can have a big sway on the currency markets, particularly big ones.

Now that you have a basic understanding of the forex market, its participants and its history, we can move on to some of the more advanced concepts that will bring you closer to being able to trade within this massive market. The next section will look at the main economic theories that underlie the forex market.

Economic Theories, Models, Feeds & Data

2009-08-23T03:28:00.000-07:00

There is a great deal of academic theory revolving around currencies. While often not applicable directly to day-to-day trading, it is helpful to understand the overarching ideas behind the academic research.

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The main economic theories found in the foreign exchange deal with parity conditions. A parity condition is an economic explanation of the price at which two currencies should be exchanged, based on factors such as inflation and interest rates. The economic theories suggest that when the parity condition does not hold, an arbitrage opportunity exists for market participants. However, arbitrage opportunities, as in many other markets, are quickly discovered and eliminated before even giving the individual investor an opportunity to capitalize on them. Other theories are based on economic factors such as trade, capital flows and the way a country runs its operations. We review each of them briefly below.

Major Theories: Purchasing Power Parity
Purchasing Power Parity (PPP) is the economic theory that price levels between two countries should be equivalent to one another after exchange-rate adjustment. The basis of this theory is the law of one price, where the cost of an identical good should be the same around the world. Based on the theory, if there is a large difference in price between two countries for the same product after exchange rate adjustment, an arbitrage opportunity is created, because the product can be obtained from the country that sells it for the lowest price.

The relative version of PPP is as follows:

Where 'e' represents the rate of change in the exchange rate and 'π₁' and 'π₂'represent the rates of inflation for country 1 and country 2, respectively.

For example, if the inflation rate for country XYZ is 10% and the inflation for country ABC is 5%, then ABC's currency should appreciate 4.76% against that of XYZ.

Interest Rate Parity
The concept of Interest Rate Parity (IRP) is similar to PPP, in that it suggests that for there to be no arbitrage opportunities, two assets in two different countries should have similar interest rates, as long as the risk for each is the same. The basis for this parity is also the law of one price, in that the purchase of one investment asset in one country should yield the same return as the exact same asset in another country; otherwise exchange rates would have to adjust to make up for the difference.

The formula for determining IRP can be found by:

Where 'F' represents the forward exchange rate; 'S' represents the spot exchange rate; 'i₁' represents the interest rate in country 1; and 'i₂' represents the interest rate in country 2.

International Fisher Effect
The International Fisher Effect (IFE) theory suggests that the exchange rate between two countries should change by an amount similar to the difference between their nominal interest rates. If the nominal rate in one country is lower than another, the currency of the country with the lower nominal rate should appreciate against the higher rate country by the same amount.

The formula for IFE is as follows:

Where 'e' represents the rate of change in the exchange rate and 'i₁' and 'i₂'represent the rates of inflation for country 1 and country 2, respectively.

Balance of Payments Theory
A country's balance of payments is comprised of two segments - the current account and the capital account - which measure the inflows and outflows of goods and capital for a country. The balance of payments theory looks at the current account, which is the account dealing with trade of tangible goods, to get an idea of exchange-rate directions.

If a country is running a large current account surplus or deficit, it is a sign that a country's exchange rate is out of equilibrium. To bring the current account back into equilibrium, the exchange rate will need to adjust over time. If a country is running a large deficit (more imports than exports), the domestic currency will depreciate. On the other hand, a surplus would lead to currency appreciation.

The balance of payments identity is found by:

Where BCA represents the current account balance; BKA represents the capital account balance; and BRA represents the reserves account balance.

Real Interest Rate Differentiation Model
The Real Interest Rate Differential Model simply suggests that countries with higher real interest rates will see their currencies appreciate against countries with lower interest rates. The reason for this is that investors around the world will move their money to countries with higher real rates to earn higher returns, which bids up the price of the higher real rate currency.

Asset Market Model
The Asset Market Model looks at the inflow of money into a country by foreign investors for the purpose of purchasing assets such as stocks, bonds and other financial instruments. If a country is seeing large inflows by foreign investors, the price of its currency is expected to increase, as the domestic currency needs to be purchased by these foreign investors. This theory considers the capital account of the balance of trade compared to the current account in the prior theory. This model has gained more acceptance as the capital accounts of countries are starting to greatly outpace the current account as international money flow increases.

Monetary Model
The Monetary Model focuses on a country's monetary policy to help determine the exchange rate. A country's monetary policy deals with the money supply of that country, which is determined by both the interest rate set by central banks and the amount of money printed by the treasury. Countries that adopt a monetary policy that rapidly grows its monetary supply will see inflationary pressure due to the increased amount of money in circulation. This leads to a devaluation of the currency.

These economic theories, which are based on assumptions and perfect situations, help to illustrate the basic fundamentals of currencies and how they are impacted by economic factors. However, the fact that there are so many conflicting theories indicates the difficulty in any one of them being 100% accurate in predicting currency fluctuations. Their importance will likely vary by the different market environment, but it is still important to know the fundamental basis behind each of the theories.

Economic Data
Economic theories may move currencies in the long term, but on a shorter-term, day-to-day or week-to-week basis, economic data has a more significant impact. It is often said the biggest companies in the world are actually countries and that their currency is essentially shares in that country. Economic data, such as the latest gross domestic product (GDP) numbers, are often considered to be like a company's latest earnings data. In the same way that financial news and current events can affect a company's stock price, news and information about a country can have a major impact on the direction of that country's currency. Changes in interest rates, inflation, unemployment, consumer confidence, GDP, political stability etc. can all lead to extremely large gains/losses depending on the nature of the announcement and the current state of the country.

The number of economic announcements made each day from around the world can be intimidating, but as one spends more time learning about the forex market it becomes clear which announcements have the greatest influence. Listed below are a number of economic indicators that are generally considered to have the greatest influence - regardless of which country the announcement comes from.

Employment Data
Most countries release data about the number of people that currently are employed within that economy. In the U.S., this data is known as non-farm payrolls and is released the first Friday of the month by the Bureau of Labor Statistics. In most cases, strong increases in employment signal that a country enjoys a prosperous economy, while decreases are a sign of potential contraction. If a country has gone recently through economic troubles, strong employment data could send the currency higher because it is a sign of economic health and recovery. On the other hand, high employment can also lead to inflation, so this data could send the currency downward. In other words, economic data and the movement of currency will often depend on the circumstances that exist when the data is released.

Interest Rates
As was seen with some of the economic theories, interest rates are a major focus in the forex market. The most focus by market participants, in terms of interest rates, is placed on the country's central bank changes of its bank rate, which is used to adjust monetary supply and institute the country's monetary policy. In the U.S., the Federal Open Market Committee (FOMC) determines the bank rate, or the rate at which commercial banks can borrow and lend to the U.S. Treasury. The FOMC meets eight times a year to make decisions on whether to raise, lower or leave the bank rate the same; and each meeting, along with the minutes, is a point of focus. (For more on central banks read Get to Know the Major Central Banks.)

Inflation
Inflation data measures the increases and decreases of price levels over a period of time. Due to the sheer amount of goods and services within an economy, a basket of goods and services is used to measure changes in prices. Price increases are a sign of inflation, which suggests that the country will see its currency depreciate. In the U.S., inflation data is shown in the Consumer Price Index, which is released on a monthly basis by the Bureau of Labor Statistics.

Gross Domestic Product
The gross domestic product of a country is a measure of all of the finished goods and services that a country generated during a given period. The GDP calculation is split into four categories: private consumption, government spending, business spending and total net exports. GDP is considered the best overall measure of the health of a country's economy, with GDP increases signaling economic growth. The healthier a country's economy is, the more attractive it is to foreign investors, which in turn can often lead to increases in the value of its currency, as money moves into the country. In the U.S., this data is released by the Bureau of Economic Analysis once a month in the third or fourth quarter of the month.

Retail Sales
Retail sales data measures the amount of sales that retailers make during the period, reflecting consumer spending. The measure itself doesn't look at all stores, but, similar to GDP, uses a group of stores of varying types to get an idea of consumer spending. This measure also gives market participants an idea of the strength of the economy, where increased spending signals a strong economy. In the U.S., the Department of Commerce releases data on retail sales around the middle of the month.

Durable Goods
The data for durable goods (those with a lifespan of more than three years) measures the amount of manufactured goods that are ordered, shipped and unfilled for the time period. These goods include such things as cars and appliances, giving economists an idea of the amount of individual spending on these longer-term goods, along with an idea of the health of the factory sector. This measure again gives market participants insight into the health of the economy, with data being released around the 26th of the month by the Department of Commerce.

Trade and Capital Flows
Interactions between countries create huge monetary flows that can have a substantial impact on the value of currencies. As was mentioned before, a country that imports far more than it exports could see its currency decline due to its need to sell its own currency to purchase the currency of the exporting nation. Furthermore, increased investments in a country can lead to substantial increases in the value of its currency.

Trade flow data looks at the difference between a country's imports and exports, with a trade deficit occurring when imports are greater than exports. In the U.S., the Commerce Department releases balance of trade data on a monthly basis, which shows the amount of goods and services that the U.S. exported and imported during the past month. Capital flow data looks at the difference in the amount of currency being brought in through investment and/or exports to currency being sold for foreign investments and/or imports. A country that is seeing a lot of foreign investment, where outsiders are purchasing domestic assets such as stocks or real estate, will generally have a capital flow surplus.

Balance of payments data is the combined total of a country's trade and capital flow over a period of time. The balance of payments is split into three categories: the current account, the capital account and the financial account. The current account looks at the flow of goods and services between countries. The capital account looks at the exchange of money between countries for the purpose of purchasing capital assets. The financial account looks at the monetary flow between countries for investment purposes.

Macroeconomic and Geopolitical Events
The biggest changes in the forex often come from macroeconomic and geopolitical events such as wars, elections, monetary policy changes and financial crises. These events have the ability to change or reshape the country, including its fundamentals. For example, wars can put a huge economic strain on a country and greatly increase the volatility in a region, which could impact the value of its currency. It is important to keep up to date on these macroeconomic and geopolitical events.

There is so much data that is released in the forex market that it can be very difficult for the average individual to know which data to follow. Despite this, it is important to know what news releases will affect the currencies you trade. (For more insight, check out Trading On News Releases and Economic Indicators To Know.)

Now that you know a little more about what drives the market, we will look next at the two main trading strategies used by traders in the forex market – fundamental and technical analysis.

Fundamental Analysis & Fundamentals Trading Strategies

2009-08-23T03:27:00.000-07:00

In the equities market, fundamental analysis looks to measure a company's true value and to base investments upon this type of calculation. To some extent, the same is done in the retail forex market, where forex fundamental traders evaluate currencies, and their countries, like companies and use economic announcements to gain an idea of the currency’s true value.

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All of the news reports, economic data and political events that come out about a country are similar to news that comes out about a stock in that it is used by investors to gain an idea of value. This value changes over time due to many factors, including economic growth and financial strength. Fundamental traders look at all of this information to evaluate a country's currency.

Given that there are practically unlimited forex fundamentals trading strategies based on fundamental data, one could write a book on this subject. To give you a better idea of a tangible trading opportunity, let’s go over one of the most well-known situations, the forex carry trade. (To read some frequently asked questions about currency trading, see Common Questions About Currency Trading.)

A Breakdown of the Forex Carry Trade
The currency carry trade is a strategy in which a trader sells a currency that is offering lower interest rates and purchases a currency that offers a higher interest rate. In other words, you borrow at a low rate, and then lend at a higher rate. The trader using the strategy captures the difference between the two rates. When highly leveraging the trade, even a small difference between two rates can make the trade highly profitable. Along with capturing the rate difference, investors also will often see the value of the higher currency rise as money flows into the higher-yielding currency, which bids up its value.

Real-life examples of a yen carry trade can be found starting in 1999, when

Japan

decreased its interest rates to almost zero. Investors would capitalize upon these lower interest rates and borrow a large sum of Japanese yen. The borrowed yen is then converted into U.S. dollars, which are used to buy U.S. Treasury bonds with yields and coupons at around 4.5-5%. Since the Japanese interest rate was essentially zero, the investor would be paying next to nothing to borrow the Japanese yen and earn almost all the yield on his or her U.S. Treasury bonds. But with leverage, you can greatly increase the return.

For example, 10 times leverage would create a return of 30% on a 3% yield. If you have $1,000 in your account and have access to 10 times leverage, you will control $10,000. If you implement the currency carry trade from the example above, you will earn 3% per year. At the end of the year, your $10,000 investment would equal $10,300, or a $300 gain. Because you only invested $1,000 of your own money, your real return would be 30% ($300/$1,000). However this strategy only works if the currency pair’s value remains unchanged or appreciates. Therefore, most forex carry traders look not only to earn the interest rate differential, but also capital appreciation. While we’ve greatly simplified this transaction, the key thing to remember here is that a small difference in interest rates can result in huge gains when leverage is applied. Most currency brokers require a minimum margin to earn interest for carry trades.

However, this transaction is complicated by changes to the exchange rate between the two countries. If the lower-yielding currency appreciates against the higher-yielding currency, the gain earned between the two yields could be eliminated. The major reason that this can happen is that the risks of the higher-yielding currency are too much for investors, so they choose to invest in the lower-yielding, safer currency. Because carry trades are longer term in nature, they are susceptible to a variety of changes over time, such as rising rates in the lower-yielding currency, which attracts more investors and can lead to currency appreciation, diminishing the returns of the carry trade. This makes the future direction of the currency pair just as important as the interest rate differential itself. (To read more about currency pairs, see Using Currency Correlations To Your Advantage, Making Sense Of The Euro/Swiss Franc Relationship and Forces Behind Exchange Rates.)

To clarify this further, imagine that the interest rate in the U.S. was 5%, while the same interest rate in Russia was 10%, providing a carry trade opportunity for traders to short the U.S. dollar and to long the Russian ruble. Assume the trader borrows $1,000 US at 5% for a year and converts it into Russian rubles at a rate of 25 USD/RUB (25,000 rubles), investing the proceeds for a year. Assuming no currency changes, the 25,000 rubles grows to 27,500 and, if converted back to U.S. dollars, will be worth $1,100 US. But because the trader borrowed $1,000 US at 5%, he or she owes $1,050 US, making the net proceeds of the trade only $50.

However, imagine that there was another crisis in Russia, such as the one that was seen in 1998 when the Russian government defaulted on its debt and there was large currency devaluation in

Russia

as market participants sold off their Russian currency positions. If, at the end of the year the exchange rate was 50 USD/RUB, your 27,500 rubles would now convert into only $550 US (27,500 RUB x 0.02 RUB/USD). Because the trader owes $1,050 US, he or she will have lost a significant percentage of the original investment on this carry trade because of the currency’s fluctuation - even though the interest rates in Russia were higher than the U.S.

Another good example of forex fundamental analysis is based on commodity prices. (To read more about this, see Commodity Prices And Currency Movements.)

You should now have an idea of some of the basic economic and fundamental ideas that underlie the forex and impact the movement of currencies. The most important thing that should be taken away from this section is that currencies and countries, like companies, are constantly changing in value based on fundamental factors such as economic growth and interest rates. You should also, based on the economic theories mentioned above, have an idea how certain economic factors impact a country's currency. We will now move on to technical analysis, the other school of analysis that can be used to pick trades in the forex market.

Technical Analysis & TechnicaI Indicators

2009-08-23T03:26:00.000-07:00

One of the underlying tenets of technical analysis is that historical price action predicts future price action. Since the forex is a 24-hour market, there tends to be a large amount of data that can be used to gauge future price activity, thereby increasing the statistical significance of the forecast. This makes it the perfect market for traders that use technical tools, such as trends, charts and indicators. (To learn more, see Introduction to Technical Analysis and Charting Your Way To Better Returns.)

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It is important to note that, in general, the interpretation of technical analysis remains the same regardless of the asset being monitored. There are literally hundreds of books dedicated to this field of study, but in this tutorial we will only touch on the basics of why technical analysis is such a popular tool in the forex market.

As the specific techniques of technical analysis are discussed in other tutorials, we will focus on the more forex-specific aspects of technical analysis.

Technical Analysis Discounts Everything; Especially in Forex
Minimal Rate Inconsistency
There are many large players in the forex market, such as hedge funds and large banks, that all have advanced computer systems to constantly monitor any inconsistencies between the different currency pairs. Given these programs, it is rare to see any major inconsistency last longer than a matter of seconds. Many traders turn to forex technical analysis because it presumes that all the factors that influence a price - economic, political, social and psychological - have already been factored into the current exchange rate by the market. With so many investors and so much money exchanging hands each day, the trend and flow of capital is what becomes important, rather than attempting to identify a mispriced rate.

Trend or Range
One of the greatest goals of technical traders in the FX market is to determine whether a given pair will trend in a certain direction, or if it will travel sideways and remain range-bound. The most common method to determine these characteristics is to draw trend lines that connect historical levels that have prevented a rate from heading higher or lower. These levels of support and resistance are used by technical traders to determine whether or not the given trend, or lack of trend, will continue.

Generally, the major currency pairs - such as the EUR/USD, USD/JPY, USD/CHF and GBP/USD - have shown the greatest characteristics of trend, while the currency pairs that have historically shown a higher probability of becoming range-bound have been the currency crosses (pairs not involving the U.S. dollar). The two charts below show the strong trending nature of USD/JPY in contrast to the range-bound nature of EUR/CHF. It is important for every trader to be aware of the characteristics of trend and range, because they will not only affect what pairs are traded, but also what type of strategy should be used. (To learn more about this subject, see Trading Trend Or Range?)

Graph created by E-Signal.

Figure 1

Graph created by E-Signal.

Figure 2

Common Indicators
Technical traders use many different indicators in combination with support and resistance to aid them in predicting the future direction of exchange rates. Again, learning how to interpret various forex technical indicators is a study unto itself and goes beyond the scope of this forex tutorial. If you wish to learn more about this subject, we suggest you read our technical analysis tutorial.

A few indicators that we feel we should mention, due to their popularity, are: Bollinger bands, Fibonacci retracement, moving averages, moving average convergence divergence (MACD) and stochastics. These technical tools are rarely used by themselves to generate signals, but rather in conjunction with other indicators and chart patterns.

How To Trade & Open A Forex Account

2009-08-23T03:24:00.000-07:00

So, you think you are ready to trade? Make sure you read this section to learn how you can go about setting up a forex account so that you can start trading currencies. We'll also mention other factors that you should be aware of before you take this step. We will then discuss how to trade forex and the different types of orders that can be placed.

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Opening A Forex Brokerage Account
Trading forex is similar to the equity market because individuals interested in trading need to open up a trading account. Like the equity market, each forex account and the services it provides differ, so it is important that you find the right one. Below we will talk about some of the factors that should be considered when selecting a forex account.

Leverage
Leverage is basically the ability to control large amounts of capital, using very little of your own capital; the higher the leverage, the higher the level of risk. The amount of leverage on an account differs depending on the account itself, but most use a factor of at least 50:1, with some being as high as 250:1. A leverage factor of 50:1 means that for every dollar you have in your account you control up to $50. For example, if a trader has $1,000 in his or her account, the broker will lend that person $50,000 to trade in the market. This leverage also makes your margin, or the amount you have to have in the account to trade a certain amount, very low. In equities, margin is usually at least 50%, while the leverage of 50:1 is equivalent to 2%.

Leverage is seen as a major benefit of forex trading, as it allows you to make large gains with a small investment. However, leverage can also be an extreme negative if a trade moves against you because your losses also are amplified by the leverage. With this kind of leverage, there is the real possibility that you can lose more than you invested - although most firms have protective stops preventing an account from going negative. For this reason, it is vital that you remember this when opening an account and that when you determine your desired leverage you understand the risks involved.

Commissions and Fees
Another major benefit of forex accounts is that trading within them is done on a commission-free basis. This is unlike equity accounts, in which you pay the broker a fee for each trade. The reason for this is that you are dealing directly with market makers and do not have to go through other parties like brokers.

This may sound too good to be true, but rest assured that market makers are still making money each time you trade. Remember the bid and ask from the previous section? Each time a trade is made, it is the market makers that capture the spread between these two. Therefore, if the bid/ask for a foreign currency is 1.5200/50, the market maker captures the difference (50 basis points).

If you are planning on opening a forex account, it is important to know that each firm has different spreads on foreign currency pairs traded through them. While they will often differ by only a few pips (0.0001), this can be meaningful if you trade a lot over time. So when opening an account make sure to find out the pip spread that it has on foreign currency pairs you are looking to trade.

Other Factors
There are a lot of differences between each forex firm and the accounts they offer, so it is important to review each before making a commitment. Each company will offer different levels of services and programs along with fees above and beyond actual trading costs. Also, due to the less regulated nature of the forex market, it is important to go with a reputable company. (For more information on what to look for when opening an account, read Wading Into The Currency Market. If you are not ready to open a "real money" account but want to try your hand at forex trading, read Demo Before You Dive In.)

How to Trade Forex
Now that you know some important factors to be aware of when opening a forex account, we will take a look at what exactly you can trade within that account. The two main ways to trade in the foreign currency market is the simple buying and selling of currency pairs, where you go long one currency and short another. The second way is through the purchasing of derivatives that track the movements of a specific currency pair. Both of these techniques are highly similar to techniques in the equities market.The most common way is to simply buy and sell currency pairs, much in the same way most individuals buy and sell stocks. In this case, you are hoping the value of the pair itself changes in a favorable manner. If you go long a currency pair, you are hoping that the value of the pair increases. For example, let's say that you took a long position in the USD/CAD pair - you will make money if the value of this pair goes up, and lose money if it falls. This pair rises when the U.S. dollar increases in value against the Canadian dollar, so it is a bet on the U.S. dollar.

The other option is to use derivative products, such as options and futures, to profit from changes in the value of currencies. If you buy an option on a currency pair, you are gaining the right to purchase a currency pair at a set rate before a set point in time. A futures contract, on the other hand, creates the obligation to buy the currency at a set point in time. Both of these trading techniques are usually only used by more advanced traders, but it is important to at least be familiar with them. (For more on this, try Getting Started in Forex Options and our tutorials, Option Spread Strategies and Options Basics Tutorial.)

Types of Orders
A trader looking to open a new position will likely use either a market order or a limit order. The incorporation of these order types remains the same as when they are used in the equity markets. A market order gives a forex trader the ability to obtain the currency at whatever exchange rate it is currently trading at in the market, while a limit order allows the trader to specify a certain entry price. (For a brief refresher of these orders, see The Basics of Order Entry.)

Forex traders who already hold an open position may want to consider using a take-profit order to lock in a profit. Say, for example, that a trader is confident that the GBP/USD rate will reach 1.7800, but is not as sure that the rate could climb any higher. A trader could use a take-profit order, which would automatically close his or her position when the rate reaches 1.7800, locking in their profits.

Another tool that can be used when traders hold open positions is the stop-loss order. This order allows traders to determine how much the rate can decline before the position is closed and further losses are accumulated. Therefore, if the GBP/USD rate begins to drop, an investor can place a stop-loss that will close the position (for example at 1.7787), in order to prevent any further losses.

As you can see, the type of orders that you can enter in your forex trading account are similar to those found in equity accounts. Having a good understanding of these orders is critical before placing your first trade.

Currency Trading Summary

2009-08-23T03:20:00.000-07:00

While this online forex tutorial only represents a fraction of all there is to know about forex trading, we hope that you've gained some insight into this topic. We also encourage those of you who are interested in potentially trading in the online forex market to learn more about the complexities and intricacies that make this market unique.

Let's recap:
The forex market represents the electronic over-the-counter markets where currencies are traded worldwide 24 hours a day, five and a half days a week. The typical means of trading forex are on the spot, futures and forwards markets.
Currencies are "priced" in currency pairs and are quoted either directly or indirectly.
Currencies typically have two prices: bid (the amount that the market will buy the quote currency for in relation to the base currency); and ask (the amount the market will sell one unit of the base currency for in relation to the quote currency). The bid price is always smaller than the ask price.
Unlike conventional equity and debt markets, forex investors have access to large amounts of leverage, which allows substantial positions to be taken without making a large initial investment.
The adoption and elimination of several global currency systems over time led to the formation of the present currency exchange system, in which most countries use some measure of floating exchange rates.
Governments, central banks, banks and other financial institutions, hedgers, and speculators are the main players in the forex market.
The main economic theories found in the foreign exchange deal with parity conditions such as those involving interest rates and inflation. Overall, a country's qualitative and quantitative factors are seen as large influences on its currency in the forex market.
Forex traders use fundamental analysis to view currencies and their countries like companies, thereby using economic announcements to gain an idea of the currency's true value.
Forex traders use technical analysis to look at currencies the same way they would any other asset and, therefore, use technical tools such as trends, charts and indicators in their trading strategies.
Unlike stock trades, forex trades have minimal commissions and related fees. But new forex traders should take a conservative approach and use orders, such as the take-profit or stop-loss, to minimize losses.