Forex Online Trading

Why Getting a Good Job isn’t the Best Way to Earn Money

2008-03-05T01:23:00.000-08:00

There is a better way to make money। I’m not telling you to quit your job and become an anarchist। And I am not saying you’re stupid because you have a job. I have a job. So you ask, what did you mean?

A job is a way to earn money. It’s how most people earn money. It’s what I do today. It just isn’t the best way to earn money. I wish I would have known this twenty-five years ago. I wish my parents had taught me this, I wish the schools had taught me this. In a minute, I’ll share the secret with you.

I’ve had one job or another for 24 years। I’ve made all my money working for someone else.

I’ve had a job…

Picking Pumpkins

Peeling Shrimp – worst thing ever!

Driving a Truck

Maintaining Networks

Developing Software

Managing Customer Service

Today I have a great job that helps put my family in the top 5% of income earners in the United States. I am grateful for my company and my job.

I manage a team of software developers that enhance and maintain our Oracle e-business Suite. For me it is the perfect job, at the perfect company, with the perfect people. Like you, I worked hard to get where I am. I can’t imagine a job being much better. I don’t complain about my job and I have few worries about money.

So you’re probably thinking – so why do you wish you never believed a job was the best way to earn money?

Because If I knew ten or twenty years ago what I know now, I would have created far more value for myself and everybody else।

The best way to earn money is to build assets. When I say assets, I’m not talking about your home, an IRA, or a 401K. Let me explain.

Until recently, I believed entrepreneurship was the same as working for someone else, except with greater income potential. And instead of working for your boss, you work for your customer. For some entrepreneurs this is true, but for smart ones it isn’t true.

I read Rich Dad/Poor Dad and The E-Myth Revisited and it hit me…

Duh!

I should be building assets for my family. I wish I had spent the last twenty-five years building assets for myself instead of trading my time for money while building assets for someone else.

So this might be your next question – If you aren’t talking about my home, IRA, or a 401K, what assets are you talking about?

Real Estate – Rental Income

Twenty-Five years ago, a guy in my neighborhood had this figured out। He was a blue-collar union guy that worked a printing press for the Star Tribune. He saved his money over a decade and purchased several apartment buildings. The income from the rental property allowed him to quit his job and he used the time he saved to build a construction company. He told me once - do what you love and never work a day in your life. I didn’t get it then; I thought he was nuts. I get it now.

Businesses that are systems

If your business doesn’t run without you, it is a job. To be free, you need to own a business that generates income whether you are there or not. I know another guy that started a franchise restaurant when he was about twenty. He built the business up and trained good managers, which allowed him to step away. The restaurant produced income that paid his bills while he pursued other opportunities. He built a second restaurant and stepped away. Built a third restaurant and stepped away. Now he owns multiple restaurants that produce income – without him working at any of them – so he can spend his time fishing and golfing। Another example of this type of asset is Steve Pavlina’s website. Some people commented that Steve is telling everyone to quit their jobs and start blogging. That’s not what Steve is saying. Steve is telling you to be creative and build yourself an asset that works for you so you have time to pursue new opportunities. Blogging is just one of infinite ways you could do this. The only limit is your imagination.

Intellectual propartii

When you create intellectual property, you only work on the initial creation। Once it’s finished it can generate income for many generations. For example – Let’s say you wrote a book, and the book became popular, your family could receive income from it for several generations after you were dead. You’re making money from the grave!

A few types of intellectual property:

Books

Software

Audio

Music

Video

Scripts

Patents

In my opinion, intellectual property is the best of the best ways for you to make money.

There are probably many other asset categories too.

So, since I wish I had never believed that getting a good job is the best way to earn money, I am not going to teach my sons this adage – get a good education so you can get a good job.

I’m going to teach my children this:

If you learn how to create value for other people – doing what you love – you’ll never have to get a job.

BEST WAY TO EARN MONEY ON THE INTERNET

2008-03-05T01:16:00.001-08:00

Best way to earn money on the Internet and launch a new website is to find some Internet business partners who can develop your idea.

Earning more from the Internet is not as easy as some websites would have you believe. With millions of new websites being uploaded to the Internet every month, commonsense must tell you that most are doomed to failure.

Building a large website capable of generating the high levels of traffic required to ensure its success, planning an online marketing and advertising campaign, developing and maintaining the website, keeping abreast of Internet law and maximizing other income opportunities takes, expertise, time and money.

Most websites fail due to a lack of investment and budding Internet entrepreneurs opting to have inexpensive websites built in the misguided belief that these cheap websites can compete with the Goliaths on the Internet. It is very rare that a little David website manages to slay the gargantuan websites that dominate the top of the search engines.

This is why we are so important to your Internet success. Partnering us means you have the help, expertise, infrastructure and resources of Europe's largest internetwork.

If you are a small business with good ideas but lacking the financial resources necessary to develop your Internet business, we can help.

Of course we have to like the idea and think it has merits. We have to be convinced that having invested out time and money in your Internet project that you will drive it forward. Plus, you have to be prepared to invest your time and energies into ensuring its success.

You are the most important element in the equation. If you think that just having an Internet presence will ensure success and that you will be able to sit back and let the money roll in, think again.

The best way to earn money on the Internet is to work hard as we work hard with all our partners and that is why you found this web page. It wasn't an accident or luck. It was our expertise in building websites that led you here.

We are making money everyday through the Internet, we build websites that generate millions of pounds in revenue for our partners and that is the reason we are the best way to make money from the Internet.

Charts for the technical analysis

2008-02-26T19:56:00.006-08:00

Kinds of prices and time units. Charts for the technical analysis are being constructed in coordinates price (the vertical axis) time (the horizontal axis).

The following kinds of currency prices represented on charts are being distinguished on Forex:

* open - a price at the beginning of a trade period (year, month, day, week, hour, minute or a certain amount of one from these units);

* close - a price at the end of a trade period;

* high - the highest from prices observed during a trade period;

* low - the lowest from prices observed during a trade period.

Providing the technical analysis one uses charts for different time units from 1 year or more till 1 minute. The bigger is a time unit applied for the chart plotting the bigger is a time span to analyze price movements and to determine the major trend by means of the chart. For the short trading charts for less time units are more suitable.

Line chart
। The line chart is plotted connecting single prices for a selected time period। The most popular line chart is the daily chart. Although any point in the day can be plotted, most traders focus on the closing price, which they perceive as the most important. But an immediate problem with the daily line chart is the fact that it is impossible to see the price activity for the balance of the period as well as gaps breakups in prices at joints of trade periods. Nevertheless, line charts are easier to visualize. Also, technical analysis goes well beyond chart formation; in order to execute certain models and techniques, line charts are better suited than any of the other charts.

Bar chart
The bar chart consists from separate histograms। To plot a histogram in coordinates price time the points responding to high, low, open and close prices for a time period analyzed should be marked on the one vertical bar. The opening price usually is marked with a little horizontal line to the left of the bar; and the closing price is marked with a little horizontal line to the right of the bar. Bar charts have the obvious advantage of displaying the currency range for the period selected. An advantage of this chart is that, unlike line charts, the bar chart is able to plot price gaps. Hence, it is impossible to see on a bar chart absolutely all price movements during the period.

Candlestick chart
। candlestick chart is closely related to the bar chart. It also consists of four major prices: high, low, open, and close. In addition to the common readings, the candlestick chart has a set of particular interpretations. The latter is possible thanks to the convenient visual observation of that chart.

The opening and closing prices form the body (jittai) of the candlestick. To indicate that the opening was lower than the closing, the body of the bar is left blank. Current standard electronic displays allow you to keep it blank or select a color of your choice. If the currency closes below its opening, the body is filled. In its original form, the body was colored black, but the electronic displays allow you to keep it filled or to select a color of your choice. The intraday (or weekly) direction on a candlestick chart can be traced by means of two "shadows": the upper shadow (uwakage) and the lower shadow (shitakage). Just as with a bar chart, the candlestick chart is unable to trace every price movement during a period's activity.

Forex Glossary

2008-02-26T19:56:00.005-08:00

Here are some of the most common terms used in FOREX trading.

Ask Price
¨C Sometimes called the Offer Price, this is the market price for traders to buy currencies। Ask Prices are shown on the right side of a quote ¨C e.g. EUR/USD 1.1965 / 68 ¨C means that one euro can be bought for 1.1968 UD dollars.

Bar Chart
¨C A type of chart used in Technical Analysis। Each time division on the chart is displayed as a vertical bar which show the following information ¨C the top of the bar is the high price, the bottom of the bar is the low price, the horizontal line on the left of the bar shows the opening price and the horizontal line on the right of bar shows the closing price.

Base Currency
¨C is the first currency in a currency pair। A quote shows how much the base currency is worth in the quote (second) currency. For example, in the quote - USD/JPY 112.13 ¨C US dollars are the base currency, with 1 US dollar being worth 112.13 Japanese yen.

Bid Price
¨C is the price a trader can sell currencies। The Bid Price is shown on the left side of a quote - e.g. EUR/USD 1.1965 / 68 ¨C means that one euro can be sold for 1.1965 UD dollars.

Bid/Ask spread
¨C is the difference between the bid price and the ask price in any currency quotation। The spread represents the broker's fee, and varies from broker to broker।

Broker
¨C the intermediary between buyer and seller। Most FOREX brokers are associated with large financial institutions and earn money by setting a spread between bid and ask prices.

Candlestick Chart
- A type of chart used in Technical Analysis। Each time division on the chart is displayed as a candlestick ¨C a red or green vertical bar with extensions above and below the candlestick body. The top of the extension shows the highest price for the chart division and the bottom of the extension shows the lowest price. Red candlesticks indicate a lower closing price than opening price, and green candlesticks indicate the price is rising.

Cross Currency
¨C A currency pair that does not include US dollars ¨C e।g। EUR/GBP.

Currency Pair
¨C Two currencies involved in a FOREX transaction ¨C e।g. EUR/USD.

Economic Indicator
¨C A statistical report issued by governments or academic institutions indicating economic conditions within a country।

First In First Out (FIFO)
¨C refers to the order open orders are liquidated। The first orders to be liquidated are the first that were opened।

Foreign Exchange (FOREX, FX)
¨C Simultaneously buying one currency and selling another।

Fundamental Analysis
¨C Analysis of political and economic conditions that can affect currency prices.

Leverage or Margin
¨C The ratio of the value of a transaction to the required deposit. A common margin for FOREX trading is 100:1 ¨C you can trade currency worth 100 times the amount of your deposit.

Limit Order
¨C An order to buy or sell when the price reaches a specified level.

Lot
¨C The size of a FOREX transaction। Standard lots are worth about 100,000 US dollars.

Major Currency
¨C The euro, German mark, Swiss franc, British pound, and the Japanese yen are the major currencies.

Minor Currency
¨C The Canadian dollar, the Australian dollar, and the New Zealand dollar are the minor currencies.

One Cancels the Other (OCO)
¨C Two orders placed simultaneously with instructions to cancel the second order on execution of the first।

Open Position
¨C An active trade that has not been closed.

Pips or Points
¨C The smallest unit a currency can be traded in।

Quote Currency
¨C The second currency in a currency pair. In the currency pair USD/EUR the euro is the quote currency.

Rollover
¨C Extending the settlement time of spot deals to the current delivery date. The cost of rollover is calculated using swap points based on interest rate differentials.

Technical Analysis
¨C Analysis of historical market data to predict future movements in the market.

Tick
¨C The minimum change in price.

Transaction Cost
¨C The cost of a FOREX transaction ¨C typically the spread between bid and ask prices.

Volatility
¨C A statistical measure indicating the tendency of sharp price movements within a period of time.

Forex Trading Education - The London Open Checklist

2008-02-26T19:56:00.004-08:00

A thorough Forex trading education must include an understanding of the effect market timings can have on trading and liquidity.

One of the most active periods of the day is from the time the London market opens. Often around that time good trading opportunities will appear.

As part of your Forex trading education, learn to analyze market conditions around London open and begin to recognize good setups.

The following questionnaire and checklist will help.

London Open Preparation

About 15 to 30 minutes before London open check the answers to these questions:

- Are the MACD indicators on the 4 hour and 1 hour charts in agreement? If they are not going in the same direction be very careful!

- Is there MACD divergence on the 4 hour, 1 hour, or 15 minute chart? Look for other clues to confirm that price may go in the direction of MACD divergence.

- On the 4 hour chart what is the overall trend?

- Do a Fibonacci calculation on the last swing high and low and see if price is pulling back to an optimum retracement level or whether it is reaching a key extension level.

- Note price in relation to the 200 EMA (Exponential Moving Average) on the 4 hour, 1 hour and 15 minute charts. Is price bucking the trend? In other words, is price above the 200 EMA on the 4 hour and 1 hour chart but below it on the 15 minute? Then be prepared for price to go long at some stage. (Draw the opposite conclusion if price is below the 200 EMA on the 4 hour and 1 hour chart but above it on the 15 minute chart.)

- Are any Economic Reports imminent?

- As the candle closes on the 15 minute chart at London open, do you see any distinctive candle patterns such as tweezers, or doji's or hammers indicating price exhaustion?

- If I entered a trade right now in a particular direction, what would be the risk and where would I place my stop?

Within a few minutes of London open, if you see a number of factors converging from the analysis above, make a decision one way or the other:

- trade

- wait for clearer signals or a better entry point

Carrying out an analysis in this way each day at London open will do much to increase your Forex trading education.

It will make you aware of what is happening on the charts and in the marketplace and help you to arrive at conclusions.

There is no magic formula involved with Forex trading education. Put simply, successful Forex trading is the result of years of hard work, study, practice, and experience often gained through painful trading scenarios.

Eventually the newer trader learns mental discipline, and how to control the emotions - probably the biggest part of a Forex trading education.

Practice a procedure like the one above day after day and begin to see some progress as you get nearer the time you make profits consistently from currency trading.

Why Hedge Foreign Currency Risk

2008-02-26T19:56:00.003-08:00

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.

Forex Swing Trading with Elliott Wave

2008-02-26T19:56:00.002-08:00

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.

Timing is Everything With Forex Trading

2008-02-26T19:56:00.001-08:00

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.

Currency Trading Training - 7 Favorite Tips

2008-02-26T19:56:00.000-08:00

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!

Online Currency Trading Tutorials

2008-02-26T19:50:00.004-08:00

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.

Forex Money Management by FX Master

2008-02-26T19:50:00.003-08:00

Money management is a critical point that shows difference between winners and losers. It was proved that if 100 traders start trading using a system with 60% winning odds, only 5 traders will be in profit at the end of the year. In spite of the 60% winning odds 95% of traders will lose because of their poor money management. Money management is the most significant part of any trading system. Most of traders don't understand how important it is.

It's important to understand the concept of money management and understand the difference between it and trading decisions. Money management represents the amount of money you are going to put on one trade and the risk your going to accept for this trade.

There are different money management strategies. They all aim at preserving your balance from high risk exposure.

First of all, you should understand the following term Core equity
Core equity = Starting balance - Amount in open positions.

If you have a balance of 10,000$ and you enter a trade with 1,000$ then your core equity is 9,000$. If you enter another 1,000$ trade,your core equity will be 8,000$

It's important to understand what's meant by core equity since your money management will depend on this equity.

We will explain here one model of money management that has proved high anual return and limited risk. The standard account that we will be discussing is 100,000$ account with 20:1 leverage . Anyway,you can adapt this strategy to fit smaller or bigger trading accounts.

Money management strategy

Your risk per a trade should never exceed 3% per trade. It's better to adjust your risk to 1% or 2%
We prefer a risk of 1% but if you are confident in your trading system then you can lever your risk up to 3%

1% risk of a 100,000$ account = 1,000$

You should adjust your stop loss so that you never lose more than 1,000$ per a single trade.

If you are a short term trader and you place your stop loss 50 pips below/above your entry point .
50 pips = 1,000$
1 pips = 20$

The size of your trade should be adjusted so that you risk 20$/pip. With 20:1 leverage,your trade size will be 200,000$

If the trade is stopped, you will lose 1,000$ which is 1% of your balance.

This trade will require 10,000$ = 10% of your balance.

If you are a long term trader and you place your stop loss 200 pips below/above your entry point.
200 pips = 1,000$
1 pip = 5$

The size of your trade should be adjusted so that you risk 5$/pip. With 20:1 leverage, your trade size will be 50,000$

If the trade is stopped, you will lose 1,000$ which is 1% of your balance.

This trade will require 2,500$ = 2.5% of your balance.

This's just an example. Your trading balance and leverage provided by your broker may differ from this formula. The most important is to stick to the 1% risk rule. Never risk too much in one trade. It's a fatal mistake when a trader lose 2 or 3 trades in a row, then he will be confident that his next trade will be winning and he may add more money to this trade. This's how you can blow up your account in a short time! A disciplined trader should never let his emotions and greed control his decisions.

Diversification

Trading one currnecy pair will generate few entry signals. It would be better to diversify your trades between several currencies. If you have 100,000$ balance and you have open position with 10,000$ then your core equity is 90,000$. If you want to enter a second position then you should calculate 1% risk of your core equity not of your starting balance!. Itmeans that the second trade risk should never be more than 900$. If you want to enter a 3rd position and your core equity is 80,000$ then the risk per 3rd trade should not exceed 800$

It's important that you diversify your prders between currencies that have low correlation.

For example, If you have long EUR/USD then you shouldn't long GBP/USD since they have high correlation. If you have long EUR/USD and GBP/USD positions and risking 3% per trade then your risk is 6% since the trades will tend to end in same direction.

If you want to trade both EUR/USD and GBP/USD and your standard position size from your money management is 10,000$ (1% risk rule) then you can trade 5,000$ EUR/USD and 5,000$ GBP/USD. In this way,you will be risking 0.5% on each position.

The Martingale and anti-martingale strategy

It's very important to understand these 2 strategies.

-Martingale rule = increasing your risk when losing !

This's a startegy adopted by gamblers which claims that you should increase the size of you trades when losing. It's applied in gambling in the following way Bet 10$,if you lose bet 20$,if you lose bet 40$,if you lose bet 80$,if you lose bet 160$..etc

This strategy assumes that after 4 or 5 losing trades,your chance to win is bigger so you should add more money to recover your loss! The truth is that the odds are same in spite of your previous loss! If you have 5 losses in a row ,still your odds for 6th bet 50:50! The same fatal mistake can be made by some novice traders. For example,if a trader started with a abalance of 10,000$ and after 4 losing trades (each is 1,000$) his balance is 6000$. The trader will think that he has higher chances of winning the 5th trade then he will increase ths size of his position 4 times to recover his loss. If he lose,his balance will be 2,000$!! He will never recover from 2,000$ to his startiing balance 10,000$. A disciplined trader should never use such gambling method unless he wants to lose his money in a short time.

-Anti-martingale rule = increase your risk when winning& decrease your risk when losing

It means that the trader should adjust the size of his positions according to his new gains or losses.
Example: Trader A starts with a balance of 10,000$. His standard trade size is 1,000$
After 6 months,his balance is 15,000$. He should adjust his trade size to 1,500$

Trader B starts with 10,000$.His standard trade size is 1,000$
After 6 months his balance is 8,000$. He should adjust his trade size to 800$

High return strategy

This strategy is for traders looking for higher return and still preserving their starting balance.

According to your money management rules,you should be risking 1% of you balance. If you start with 10,000$ and your trade size is 1,000$ (Risk 1%) After 1 year,your balance is 15,000$. Now you have your initial balance + 5,000$ profit. You can increase your potential profit by risking more from this profit while restricting your initial balance risk to 1%. For example,you can calcualte your trade in the following pattern:

1% risk 10,000$ (initial balance)+ 5% of 5,000$ (profit)

In this way,you will have more potential for higher returns and on the same time you are still risking 1% of your initial deposit.

Forex Money Management

2008-02-26T19:50:00.002-08:00

Forex money management is one of the most important things you can learn before you actually begin making live trades.

The money management principles discussed here will teach you how to avoid the costly mistakes many new traders make, often to the degree that they lose their entire investment on the first handful of trades.

Psychology is really the most important factor to money management in forex. You have to be able to separate yourself from any emotional attachment you may have to your money. This is not very easy to do, but it works and it can be done.

If you allow yourself to become emotional on a trade, you will not exit the trade properly, and this could mean holding on to a trade when you should have let it go, or letting go before the trade had a chance to turn profitable.

First and foremost, you should consider leverage and risk. It is advisable that you never risk more than two percent of your account balance on any trade. However, some go further and allow for as much as ten percent, but never more than that. This gives you the ability to withstand market fluctuations, and if the trade goes bad, you still have money to try again. You should never operate under the assumption that you will profit from every trade. You should also plan for losses. Therefore, most traders will tell you that the best thing to do is to keep your gains large and your losses small. Develop your trading strategy around this idea.

Keep track of your gains and losses. Keeping accurate and detailed records of your account activity will allow you to see whether or not the strategy is working, or if it needs to be re-built.

Never go blindly into trading without a way to keep track of results. You will lose all of your funds and never understand why it happened.

Finally, it is highly advisable that you first practice a strategy on a demo account. Nearly all brokers offer a virtual account whereupon you make trades in real-time, but with imaginary money, so nothing is risked. This is the best way to test a strategy before you put your real money on the line.

However, be careful, once again, of the psychology of trading. When you play with fake money, nothing is risked. When real money is on the line, you must not get emotional. If you do, you will find yourself with very different results, most likely losses, than you had with the demo account.

Stock Market Money Management Skills

2008-02-26T19:50:00.001-08:00

Let's start by saying: You can't be afraid to take a loss. The investors that are the most successful in the stock market are the people who are willing to lose money.

Having a strategy and/or a specific philosophy is an excellent starting point to investing but it won't mean a thing if you can't manage your money. As I have said a million times: without cash, you can't invest.

Most investors spend far too much time trying to figure out the exact pivot point or perfect entry strategy and too little time on money management. The most important aspect to investing is cutting your losses, 90% of the battle is won by protecting your capital, regardless of the strategy.

Most successful money managers only make money 50-55% of time. This means that successful individual investors are going to be wrong about half the time. Since this is the case, you better be ready to accept your losses and cut them while they are small. By cutting losses quickly and allowing your winners to ride the up-trend, you will consistently finish the year with black ink.

Here are some methods that can help you with money management:

Set a predetermined stop loss (you must know where to cut the loss before it happens ¡°this will help control emotions when the time comes)." A 7-10% stop loss insurance policy is best. Tighten the stop loss range in down markets and loosen the range in strong bull markets.

Establish smaller positions if your account has had a recent losing streak (the losses may be telling you important information such as a critical turning point, it may be time to sell and get out).

If you think you are wrong or if the market is moving against you, cut your position in half ¡°this is the best insurance policy on Wall Street."

If you cut your position in half two times, you will be left with only 25% of the original position ¡°the remaining stock is no longer a big deal as your risk is very low."

If you sell out of a trade prematurely based on a minor correction, you can always reestablish the position again.

Initial position sizing plays a big part in money management ¡°don't take on too big of a position relative to your portfolio size. Novice investors should never use their entire account on one trade no matter how small the account

Know when you would like to get out of a position after a considerable profit has been made. Signs of topping could be a climax run, a spinning top or higher highs on lower volume.

Finally, cut any trade that doesn't act the way you originally analyzed it to act.

With these guidelines, you will be well on your way to solid money management skills that will help you profit in Wall Street year in and year out. Always remember, you are going to take-on losing trades at least half of the time. This is a tough concept to accept for most novice investors but it a fact. If you don't cut losses, you won't be investing for very long as you will run out of cash and the desire to continue to invest.

Money Management Principles

2008-02-26T19:50:00.000-08:00

Trade With Sufficient Captial

One of the worst blunders that forex traders can make is attempting to trade without sufficient capital.

The trader with limited capital not only will be a worried trader, always looking to minimize losses beyond the point of realistic trading, but he will also frequently be taken out of the trading game before he can realize any sense of success trading the method(s) or patterns.

Exercise Discipline

Discipline is probably one of the most overused words in forex trading education. However, despite the clich¨¦, discipline continues to be the most important behaviour one can master to become a profitable trader. Discipline is the ability to plan your work and work your plan.

It¡¯s the ability to give your trade the time to develop without hastily taking yourself out of the market simply because you are uncomfortable with risk. Discipline is also the ability to continue to trade the methods and patterns even after you¡¯ve suffered losses. Do your best to cultivate the degree of discipline required to be a world-class trader.

Employ Risk-to-Reward Ratios

The following shows you possible risk-to reward ratios, and the win ratios required to break even in a trading system.

Risk-to-Reward Ratio (in pips)and Win Ratio Required to Break Even(%)

40/20 (2 to 1) = 67%, 40/40 (1 to1) = 50%, 40/60 (1 to 1.5) = 40%,
40/80 (1 to 2) = 33.5%,
60/20 (3 to 1) = 75%,
60/60 (1 to 1) = 50%,
60 /90 (1 to 1.5) = 40%,
60/120 (1 to 2) = 33.5%

Important Note

Never risk more pips on a trade then you plan to make. It doesn¡¯t make sense to risk 100 pips in order to make only 10. Why? See below example.

Profit taking level (pips): 10
Stop used or pips at risk: 100

You win 10 times which makes 100 winning pips. You ONLY lose once and have to give back all profits!!!

This type of trading makes no sense and you will lose on the long term guaranteed!

Forex Options Market Overview

2008-02-26T19:46:00.009-08:00

The forex options market started as an over-the-counter (OTC) financial vehicle for large banks, financial institutions and large international corporations to hedge against foreign currency exposure. Like the forex spot market, the forex options market is considered an "interbank" market. However, with the plethora of real-time financial data and forex option trading software available to most investors through the internet, today's forex option market now includes an increasingly large number of individuals and corporations who are speculating and/or hedging foreign currency exposure via telephone or online forex trading platforms.

Forex option trading has emerged as an alternative investment vehicle for many traders and investors. As an investment tool, forex option trading provides both large and small investors with greater flexibility when determining the appropriate forex trading and hedging strategies to implement.

Most forex options trading is conducted via telephone as there are only a few forex brokers offering online forex option trading platforms.

Forex Option Defined - A forex option is a financial currency contract giving the forex option buyer the right, but not the obligation, to purchase or sell a specific forex spot contract (the underlying) at a specific price (the strike price) on or before a specific date (the expiration date). The amount the forex option buyer pays to the forex option seller for the forex option contract rights is called the forex option "premium."

The Forex Option Buyer - The buyer, or holder, of a foreign currency option has the choice to either sell the foreign currency option contract prior to expiration, or he or she can choose to hold the foreign currency options contract until expiration and exercise his or her right to take a position in the underlying spot foreign currency. The act of exercising the foreign currency option and taking the subsequent underlying position in the foreign currency spot market is known as "assignment" or being "assigned" a spot position.

The only initial financial obligation of the foreign currency option buyer is to pay the premium to the seller up front when the foreign currency option is initially purchased. Once the premium is paid, the foreign currency option holder has no other financial obligation (no margin is required) until the foreign currency option is either offset or expires.

On the expiration date, the call buyer can exercise his or her right to buy the underlying foreign currency spot position at the foreign currency option's strike price, and a put holder can exercise his or her right to sell the underlying foreign currency spot position at the foreign currency option's strike price. Most foreign currency options are not exercised by the buyer, but instead are offset in the market before expiration.

Foreign currency options expires worthless if, at the time the foreign currency option expires, the strike price is "out-of-the-money." In simplest terms, a foreign currency option is "out-of-the-money" if the underlying foreign currency spot price is lower than a foreign currency call option's strike price, or the underlying foreign currency spot price is higher than a put option's strike price. Once a foreign currency option has expired worthless, the foreign currency option contract itself expires and neither the buyer nor the seller have any further obligation to the other party.

The Forex Option Seller - The foreign currency option seller may also be called the "writer" or "grantor" of a foreign currency option contract. The seller of a foreign currency option is contractually obligated to take the opposite underlying foreign currency spot position if the buyer exercises his right. In return for the premium paid by the buyer, the seller assumes the risk of taking a possible adverse position at a later point in time in the foreign currency spot market.

Initially, the foreign currency option seller collects the premium paid by the foreign currency option buyer (the buyer's funds will immediately be transferred into the seller's foreign currency trading account). The foreign currency option seller must have the funds in his or her account to cover the initial margin requirement. If the markets move in a favorable direction for the seller, the seller will not have to post any more funds for his foreign currency options other than the initial margin requirement. However, if the markets move in an unfavorable direction for the foreign currency options seller, the seller may have to post additional funds to his or her foreign currency trading account to keep the balance in the foreign currency trading account above the maintenance margin requirement.

Just like the buyer, the foreign currency option seller has the choice to either offset (buy back) the foreign currency option contract in the options market prior to expiration, or the seller can choose to hold the foreign currency option contract until expiration. If the foreign currency options seller holds the contract until expiration, one of two scenarios will occur: (1) the seller will take the opposite underlying foreign currency spot position if the buyer exercises the option or (2) the seller will simply let the foreign currency option expire worthless (keeping the entire premium) if the strike price is out-of-the-money.

Please note that "puts" and "calls" are separate foreign currency options contracts and are NOT the opposite side of the same transaction. For every put buyer there is a put seller, and for every call buyer there is a call seller. The foreign currency options buyer pays a premium to the foreign currency options seller in every option transaction.

Forex Call Option - A foreign exchange call option gives the foreign exchange options buyer the right, but not the obligation, to purchase a specific foreign exchange spot contract (the underlying) at a specific price (the strike price) on or before a specific date (the expiration date). The amount the foreign exchange option buyer pays to the foreign exchange option seller for the foreign exchange option contract rights is called the option "premium."

Please note that "puts" and "calls" are separate foreign exchange options contracts and are NOT the opposite side of the same transaction. For every foreign exchange put buyer there is a foreign exchange put seller, and for every foreign exchange call buyer there is a foreign exchange call seller. The foreign exchange options buyer pays a premium to the foreign exchange options seller in every option transaction.

The Forex Put Option - A foreign exchange put option gives the foreign exchange options buyer the right, but not the obligation, to sell a specific foreign exchange spot contract (the underlying) at a specific price (the strike price) on or before a specific date (the expiration date). The amount the foreign exchange option buyer pays to the foreign exchange option seller for the foreign exchange option contract rights is called the option "premium."

Please note that "puts" and "calls" are separate foreign exchange options contracts and are NOT the opposite side of the same transaction. For every foreign exchange put buyer there is a foreign exchange put seller, and for every foreign exchange call buyer there is a foreign exchange call seller. The foreign exchange options buyer pays a premium to the foreign exchange options seller in every option transaction.

Plain Vanilla Forex Options - Plain vanilla options generally refer to standard put and call option contracts traded through an exchange (however, in the case of forex option trading, plain vanilla options would refer to the standard, generic forex option contracts that are traded through an over-the-counter (OTC) forex options dealer or clearinghouse). In simplest terms, vanilla forex options would be defined as the buying or selling of a standard forex call option contract or a forex put option contract.

Exotic Forex Options - To understand what makes an exotic forex option "exotic," you must first understand what makes a forex option "non-vanilla." Plain vanilla forex options have a definitive expiration structure, payout structure and payout amount. Exotic forex option contracts may have a change in one or all of the above features of a vanilla forex option. It is important to note that exotic options, since they are often tailored to a specific's investor's needs by an exotic forex options broker, are generally not very liquid, if at all.

Intrinsic & Extrinsic Value - The price of an FX option is calculated into two separate parts, the intrinsic value and the extrinsic (time) value.

The intrinsic value of an FX option is defined as the difference between the strike price and the underlying FX spot contract rate (American Style Options) or the FX forward rate (European Style Options). The intrinsic value represents the actual value of the FX option if exercised. Please note that the intrinsic value must be zero (0) or above - if an FX option has no intrinsic value, then the FX option is simply referred to as having no (or zero) intrinsic value (the intrinsic value is never represented as a negative number). An FX option with no intrinsic value is considered "out-of-the-money," an FX option having intrinsic value is considered "in-the-money," and an FX option with a strike price at, or very close to, the underlying FX spot rate is considered "at-the-money."

The extrinsic value of an FX option is commonly referred to as the "time" value and is defined as the value of an FX option beyond the intrinsic value. A number of factors contribute to the calculation of the extrinsic value including, but not limited to, the volatility of the two spot currencies involved, the time left until expiration, the riskless interest rate of both currencies, the spot price of both currencies and the strike price of the FX option. It is important to note that the extrinsic value of FX options erodes as its expiration nears. An FX option with 60 days left to expiration will be worth more than the same FX option that has only 30 days left to expiration. Because there is more time for the underlying FX spot price to possibly move in a favorable direction, FX options sellers demand (and FX options buyers are willing to pay) a larger premium for the extra amount of time.

Volatility - Volatility is considered the most important factor when pricing forex options and it measures movements in the price of the underlying. High volatility increases the probability that the forex option could expire in-the-money and increases the risk to the forex option seller who, in turn, can demand a larger premium. An increase in volatility causes an increase in the price of both call and put options.

Delta - The delta of a forex option is defined as the change in price of a forex option relative to a change in the underlying forex spot rate. A change in a forex option's delta can be influenced by a change in the underlying forex spot rate, a change in volatility, a change in the riskless interest rate of the underlying spot currencies or simply by the passage of time (nearing of the expiration date).

The delta must always be calculated in a range of zero to one (0-1.0). Generally, the delta of a deep out-of-the-money forex option will be closer to zero, the delta of an at-the-money forex option will be near .5 (the probability of exercise is near 50%) and the delta of deep in-the-money forex options will be closer to 1.0. In simplest terms, the closer a forex option's strike price is relative to the underlying spot forex rate, the higher the delta because it is more sensitive to a change in the underlying rate.

Successful Options Trading Strategies

2008-02-26T19:46:00.008-08:00

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.

FOREX Fundamental Analysis

2008-02-26T19:46:00.007-08:00

Most FOREX traders rely on analysis to make plan their trading strategy. This article will discuss fundamental analysis. The other common form of analysis is technical analysis. After reading this article you should have a better understanding of fundamental analysis and how to use it as part of your FOREX strategy.

Political and economic changes are the basis of fundamental analysis. These can frequently affect currency prices. Traders that take advantage of fundamental analysis will gather their information from a variety of news sources. They are looking for information about unemployment forecasts, political ideologies, economic policies, inflation and growth rates.

Fundamental analysis will provide you with an overview of currency movements and a broad picture of the economic conditions. Most traders then will combine their fundamental analysis with technical analysis to plot actual entrance and exit points as well as confirming the information provided by their fundamental analysis.

Just like most markets the FOREX market is controlled by supply and demand. Many economic factors can affect the supply and demand but the two most critical ones are interest rates and the strength of the economy. The over all strength of the economy is affected by changes in the GDP, trade balances and the amount of foreign investment.

There are many economic indicators released by government and academic sources. These indicators are usually released on a monthly basis but will sometimes be released weekly. These are pretty reliable measures of economic health and are closely followed by all traders.

There are many indicators that are released but some of the most important and commonly followed are : interest rates, international trade, CPI, durable goods orders, PPI, PMI and retail orders.

Interest Rates - can cause a currency to either strengthen or weaken depending on the direction of movement. In some cases high interest rates will attract foreign money, however high interest rates will frequently cause stock market investors to sell of their portfolios. They do this believing that the higher cost of borrowing money will adversely affect many companies. If enough investors sell of their holdings in can cause a downturn in the market and negatively affect the economy.

Which of these two affects will take place depends on many complex factors, but there is usually an agreement among economic observers as to how the current change in interest rates will affect the general economy and the price of the currency.

International Trade - If there is a trade deficit (more items imported than exported) it is usually considered a negative indicator. When there is a trade deficit it means that more money is leaving the country to buy foreign goods than is entering the country and this can have a devaluing effect on the currency. Usually though trade imbalances are already factored into the market consideration. If a country normally operates with a trade deficit then there should not be an affect on the currency price. The currency price will normally only be effected by trade differences when the deficit is greater than the market expected.

The measurement of the cost of living (CPI) and the cost of producing goods (PPI) are a couple of other important indicators. You should also watch the GDP which measures the value of all the goods produced in a country and the M2 Money Supply which measures the total amount of currency for a country.

In the US alone there are 28 major indicators, these can have a strong effect on the financial market and should be closely watched. This information can be found many places on the internet and is provided by many brokers.

Swing Trading Strategy

2008-02-26T19:46:00.001-08:00

Swing trading is a popular method of capitalizing on the short-term price variations of the stock market. It has earned a reputation of being a powerful method of maximizing profits at lower risks. The best swing trading strategy involves choosing the right stock and the right market. Swing traders usually choose the stocks that fluctuate at extreme ends. Swing trading strategy is employed in a stable market, because here the prices tend to have minor variations on which the swing trader can capitalize. In a rapidly rising or crashing market, swing trading strategy cannot be employed.

Newcomers to the stock market often choose swing trading owing to the low risk and shorter period involved. To achieve higher profits in this short period, the right swing trading strategy is to trade in stocks of big companies. These stocks, usually called large cap stocks, are widely traded on most stock exchanges. Their prices show higher variations compared to other stocks. This translates into more profits for the swing traders. A swing trader may follow a stock during its upward journey for a few days. In case the stock reverses its trend, the trader simply switches over to another rising stock. The choice of the right stock thus forms an inseparable part of a successful swing trading strategy.

Apart from the choice of stock, the choice of market plays a key role while deciding on a proper swing trading strategy. In a market that is on a rising or falling trend, the stock prices generally move in a single direction. There is not much of a variation by which the swing trader can profit. The best strategy here is to trade on the long term basis. A swing trader best operates on a stable market, where the index rises for some days and falls over the next few days. Although the value of major stocks remains roughly the same, the short-term variations provide the much required opportunity for the swing trader. The best swing trading strategy is thus the proper choice of the right stock and right market.

Learn Forex Trading - Which Forex Strategy Is Right For Me

2008-02-26T19:46:00.000-08:00

Learning to trade Forex is not an easy task, but by no means is it difficult either. Learning to trade Forex does not require a great intellect or a college degree. Doctors have failed as traders and construction workers have become millionaires. Trading is all about discipline, determination and perseverance.

The key is to understand who you are as a trader and trade to your strength. Leveraging your strength can be magnified by deploying the appropriate Forex trading strategy. There are hundreds, if not thousands of Forex trading strategies out there. Logic will tell us that there is a currency strategy out there which leverages our strengths. It is not a one-size-fits-all world. To immediately cut to the chase and take away the magic, it all comes down to two basic Forex strategies; trend-following and range-bound. All Forex trading strategies use a variety of indicators and combinations, MACD, Moving Averages, Stochastic, Chart Patterns, Candlesticks, Pivot Points, Fibonacci ratios, Elliott Wave analysis, Bollinger Bands and the list goes on and on. Let¡¯s take away the magic again. These indicators and studies are merely measuring support and resistance and trend in the Forex market.

But which strategy really works? This is the age old question?

First, we must understand who we are as traders. Does our personality fit the pip sniper mode or does our disposition attract us more towards swing trading. Finding your trading personality will mean studying and experiencing the different time frames and associated Forex trading strategies. Over time you will notice a higher level of success and/or comfort trading one style over others. Pay attention! The market is telling you where your skill is more capable of extract consistent profits for the market. This is why journaling is so important to your Forex trading routine.

Secondly, if you are using someone else¡¯s strategy, a most of us are, deploy this strategy without change until you fully and completely understand all aspect of the strategy through back-testing and actual experience. As I was told; dance the dance you have been taught until you learn a dance of your own!

Don¡¯t fall into the trap of jumping from strategy to strategy or combining different strategies when the one you are using doesn¡¯t yield immediate success. This is only a recipe for disaster. Take the time to really understand the trading strategy. Study the components individually so a deeper understanding of the strategic mechanisms is mastered.

Above all, know when and when not to deploy this strategy. You will not find consistent success implementing a trend following system in a range-bound currency market.

So what¡¯s the right strategy for you? It is simple, the one that works. It doesn¡¯t matter if it is complicated or simple, trend-following or range-bound, uses Fibonacci studies, pivot points or both. If you understand the components, internalize its use, and drive consistent profits into your trading account, then you have your Forex trading strategy.

It doesn¡¯t matter what the experts say, your account balance is the ultimate judge and jury for your Forex trading strategy.

Online Forex Trading Strategies

2008-02-26T19:35:00.004-08:00

Forex trading strategies are the key to successful forex trading or online currency trading. A knowledge of these forex trading strategies can mean the difference between a profit and a loss and it is therefore imperative that you fully understand the strategies used in forex trading.

Forex trading is very different from trading in stocks and using forex trading strategies will give you more advantages and help you realize even greater profits in the short term. There are a wide range of forex trading strategies available to investors and one of the most useful of these forex trading strategies is a strategy known as leverage.

This forex trading strategy is designed to allow online currency traders to avail of more funds than are deposited and by using this forex trading strategy you can maximize the forex trading benefits. Using this strategy you can actually utilize as much as 100 times the amount in your deposit account against any forex trade which will make backing higher yielding transactions even easier and therefore allowing better results in your forex trading

The leverage forex trading strategy is used on a regular basis and allows investors to take advantage of short term fluctuations in the forex market.

Another commonly used forex trading strategy is known as the stop loss order. This forex trading strategy is used to protect investors and it creates a predetermined point at which the investor will not trade. Using this forex trading strategy allows investors to minimize losses. This strategy can however, backfire and the investor can run the risk of stopping their forex trading which could actually go higher and it really is up to the individual trader to choose whether or not to use this forex trading strategy.

An automatic entry order is another of the forex trading strategies that is commonly used and this strategy is used to allow investors to enter into forex trading when the price is right for them. The price is predetermined and once reached the investor will automatically enter into the trading.

All these forex trading strategies are designed to help investors get the most from their forex trading and help to minimize their losses. As mentioned earlier knowledge of these forex trading strategies is vital if you wish to be successful in forex trading.

Bollinger Bands Can Give You a Huge Trading Edge

2008-02-26T19:35:00.003-08:00

One of the critical pieces of forex education for any Forex trader is to understand the concept of standard deviation of price and how to use volatility to their advantage.

If you understand the concept you can easily apply it with Bollinger bands which are an essential tool for all forex traders.

Let¡¯s look at why Bollinger Bands are so useful and profitable, when incorporated in your Forex Strategy.

If you don¡¯t know what standard deviation is simply check our article on the concept ¨C right, let¡¯s take a look at Bollinger bands.

Bollinger Bands Defined

Bollinger bands are simply volatility bands drawn either side of a moving average.

You calculate Bollinger bands using the standard deviation of price over the same period as moving averages the mean price, then the volatility bands are plotted above and below the moving average.

Moving averages are used to identify the underlying trend of currencies and Bollinger bands take this one step further by:

Combining the moving average of the currency with the volatility of the individual market (or the standard deviation) ¨C this then creates a trading envelope ¨C with a middle mean price (moving average and 2 x bands (expanding or contracting) either side that reflect volatility or standard deviation.

As prices move away from the longer-term average, the standard deviation rises - and thus the bands will fluctuate in varying amounts, away from the average.

Why they work

In any market, the value of a currency traded tends to rise slowly over the longer term.

Prices can and do spike quickly in the short term, but will normally return to the longer term moving average - which represents fair value.

The standard deviation of the outer bands (how far they are from the mean) shows how far prices are from longer-term value.

Most price spikes are caused by trader psychology with greed and fear to the fore and this can be graphically seen with Bollinger bands.

So how should you use Bollinger bands?

There are 3 main ways to use them.

1. Spotting price spikes

When the bands are a long way from the mean you can use Bollinger bands as profit taking signal on existing trades or use them to spot contrary trades.

2. Enter exisiting trends

If you have a good trend in the forex markets then you can use dips to the middle band to buy at fair value.

3. Entering new trends

When prices are trading in tight range and start to breakout with a change in volatility a great new trend could be emerging.

Bollinger bands can certainly give you a new dimension to your forex trading strategy and any currency trading system can benefit from the extra insight that they can give you.

A word of warning

Like all technical indicators you should not use Bollinger bands in isolation to enter trades, however combined with timing indicators such as, the stochastic or RSI, then you have a powerful combination for greater FX profits.

With regard to forex education, knowing what standard deviation is and how to apply the concept through Bollinger Bands, will give you a huge trading edge, so make sure you use them.

The opportunities of trading the Forex hedged grid system

2008-02-26T19:35:00.002-08:00

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

This article is part of a series and many more will follow on Grid trading, money management and Forex Trading Strategies.

Risks by the foreign exchange on Forex

2008-02-26T19:35:00.001-08:00

The Forex is essentially risk-bearing. By the evaluation of the grade of a possible risk accounted should be the following kinds of it: exchange rate risk, interest rate risk, and credit risk, country risk.

Exchange rate risk. Exchange rate risk is the effect of the continuous shift in the worldwide market supply and demand balance on an outstanding foreign exchange position. For the period it is outstanding, the position will be subject to all the price changes. The most popular measures to cut losses short and ride profitable positions that losses should be kept within manageable limits are the position limit and the loss limit. By the position limitation a maximum amount of a certain currency a trader is allowed to carry at any single time during the regular trading hours is to be established. The loss limit is a measure designed to avoid unsustainable losses made by traders by means of stop-loss levels setting.

Interest rate risk. Interest rate risk refers to the profit and loss generated by fluctuations in the forward spreads, along with forward amount mismatches and maturity gaps among transactions in the foreign exchange book. This risk is pertinent to currency swaps, forward outright, futures, and options (See below). To minimize interest rate risk, one sets limits on the total size of mismatches. A common approach is to separate the mismatches, based on their maturity dates, into up to six months and past six months. All the transactions are entered in computerized systems in order to calculate the positions for all the dates of the delivery, gains and losses. Continuous analysis of the interest rate environment is necessary to forecast any changes that may impact on the outstanding gaps.

Credit risk. Credit risk refers to the possibility that an outstanding currency position may not be repaid as agreed, due to a voluntary or involuntary action by a counter party. In these cases, trading occurs on regulated exchanges, such as the clearinghouse of Chicago. The following forms of credit risk are known:

1. Replacement risk occurs when counterparties of the failed bank find their books are subjected to the danger not to get refunds from the bank, where appropriate accounts became unbalanced.

2. Settlement risk occurs because of the time zones on different continents. Consequently, currencies may be traded at the different price at different times during the trading day. Australian and New Zealand dollars are credited first, then Japanese yen, followed by the European currencies and ending with the U.S. dollar. Therefore, payment may be made to a party that will declare insolvency (or be declared insolvent) immediately after, but prior to executing its own payments.

Therefore in assessing the credit risk, end users must consider not only the market value of their currency portfolios, but also the potential exposure of these portfolios. The potential exposure may be determined through probability analysis over the time to maturity of the outstanding position. The computerized systems currently available are very useful in implementing credit risk policies. Credit lines are easily monitored. In addition, the matching systems introduced in foreign exchange since April 1993 are used by traders for credit policy implementation as well. Traders input the total line of credit for a specific counterparty. During the trading session, the line of credit is automatically adjusted. If the line is fully used, the system will prevent the trader from further dealing with that counterparty. After maturity, the credit line reverts to its original level.

Dictatorship risk. Dictatorship (sovereign) risk refers to the government's interference in the Forex activity. Although theoretically present in all foreign exchange instruments, currency futures are, for all practical purposes, excepted from country risk, because the major currency futures markets are located in the USA. Hence, traders have to realize that kind of the risk and be in state to account possible administrative restrictions.

Forex Trading System - A Key To Successful Forex Trading And Trading For A Living

2008-02-26T19:35:00.000-08:00

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.

Assessing The Amount of Money You May Think Is Essential in a Cash Advance Loan

2008-02-26T19:33:00.001-08:00

Viewing your budget and determining just the amount of money you need to obtain is sometimes very complicated. Nevertheless as a person it is highly important to resolve what you require before you ever stroll into a payday advance lender. This implies it is very crucial to access just how much you require prior to you begin even trying to apply in addition. For example, if you are merely looking to obtain cash for a utility then you should know exactly what you need.

As a clear instance, it is essential to understand just which bill you are trying to manage by employing the payday loan. If you must pay a water bill for instance, then it is best to only request an amount equal to the obligation. This will enable you to be certain that you are working with an amount that is low enough you can easily pay back the bill, yet at the same time it is essential to ensure that you are obtaining a large enough total to actually cover your requirements.

One of the biggest problems that borrowers experience with cash loans is that they are not able to afford to repay the debt as it is payable. This normally results in the bill being held over and the client required to repay on the loan again in 14 days. Nonetheless, unlike a conventional loan the just money the customer is usually repaying is generally only the interest charges on the debt. This means that usually an advance is never actually repaid unless you are making a gigantic attempt to repay a piece of the principal with each disbursement as well.

Outside of a guarded perspective, this might be an extremely awful situation due to the amount of money you are wasting on the interest fees solely could notably eclipse the total cash that is owed on the debt to begin with. This is an aspect that may cause a gigantic problem for numerous customers, nevertheless if you are careful in the exact way that you handling your finances you will be capable of appropriately managing a paycheck loan. It is extremely essential to perceive that it is important to realize the exact sum of money that you could truly handling prior to deciding upon the conclusion to proceed to a cash loan.

If you know the explicit amount that you are required to obtain you can normally make sure you are in a good position economically to quickly repay the advance instead of struggling to give back the loan a little at a time. If you are able to conscientiously handling your bills then you will be certain that you have seized a great attitude on your obligations. Failing to maintain discipline of your budget can often find you with a disaster of being trapped in the circle of continuous debt. For buyers who are working to free themselves of debt it is very essential to ensure you are very much aware of your budget.

Taking the greatest care to control your bills is important. Understanding exactly what is payable will make sure that when the loan is owed, you are capable to pick it up and keep from falling into a pattern of debt that you will not manage regardless of any situations.

Restricting the Rates of Interest on Payday Loans

2008-02-26T19:33:00.000-08:00

As legislatures, all about the United States are trying to help buyers as much as likely one of the biggest processes moving under fire is the use of payday loans to help shoppers. The greatest complication that consumers tend to meet with the check business is the reality that many buyers are looking at spending as much as 500% or more interest charges on a loan. New laws that is being considered in a few areas around the country goals to limi the interest charges that is being assessed to assist protect people.

However, what could exactly materialize if the interest fees are limited? The majority of the government bodies are thinking about capping interest rates in the area of approximately 36% percent or there about. Regardless paralleled to as high as more than 600% this is a gigantic departure that may plainly create complications for the payday companies who are forced to ensure ends meet in addition. The right inquiry is how exactly this is expected to adjust the bankroll in addition to the prospects for the check loan companies.

As thousands of shoppers, each year come to the payday advance companies to aid them ensure bills are paid threatening the existence of the check advance lenders could all but torment the existence of a large number of buyers as well. Nonetheless making sure that shoppers are guarded in addition is additionally especially essential. In a world where finances are stretched harder than ever before it is important to ensure that your liabilities are all submitted and risking the plain essence of large numbers of people is not the greatest choice normally.

It is highly essential to be certain that people are all suitably protected from the thieving businesses; nonetheless, it is additionally acutely important that buyers have a system possible to them that can allow them to be capable of securing a check loan in the event that they possess a sudden need for money. For example, consumers with terrible credit have only a slim considerations that are attainable to them when they are trying to find a bit of supplementary money. For example, the majority of cash advance companies generally have just an option of a check advance or even reasonably a title advance.

Only some people are agreeable to a title advance after all and the volume of consumers who are seeking out minor loans that are only brief is growing exceedingly. This means that it is an enormous assistance to buyers having the resourcefulness to quickly grapple some money to cover unforeseen expenses. However, with the check advance businesses all being underneath scrutiny lately the choices for borrowers is little by little lowering. As the options dwindle, it is still essential to be certain that people have connections to the cash that they need legally.

While it is obviously better that shoppers have enough savings that can accommodate problems that pop up economically it is not always plausible to occur. There are times when just about everybody requires assistance with their budget to make sure that all of their bills are paid, employing a payday advance responsibly could make certain that you get all of your bills submitted when you need the cash. Closing the ravaging businesses by firmly restricting the cost of interest fees that is accessed could help to lower the payments that are charged, regardless how the payday companies can continue to survive in light of severely reduced interest charges is yet to be discovered.

Short data about the origin and development of the currency exchange market

2008-02-26T19:32:00.001-08:00

Currency trading has a long history and can be traced back to the ancient Middle East and Middle Ages when foreign exchange started to take shape after the international merchant bankers devised bills of exchange, which were transferable third-party payments that allowed flexibility and growth in foreign exchange dealings.

The modern foreign exchange market characterized by periods of high volatility (that is a frequency and an amplitude of a price alteration) and relative stability formed itself in the twentieth century. By the mid-1930s the British capital London became to be the leading center for foreign exchange and the British pound served as the currency to trade and to keep as a reserve currency. Because in the old times foreign exchange was traded on the telex machines, or cable, the pound has generally the nickname “cable”.

After the World War II, where the British economy was destroyed and the United States was the only country unscarred by war, U.S. dollar, in accordance with the Breton Woods Accord between the USA, Great Britain and France (1944) became the reserve currency for all the capitalist countries and all currencies were pegged to the American dollar (through the constitution of currencies ranges maintained by central banks of relevant countries by means of the interventions or currency purchases). In turn, the U.S. dollar was pegged to gold at $35 per ounce. Thus, the U.S. dollar became the world's reserve currency. In accordance with the same agreement was organized the International Monetary Fund (IMF) rendering now a significant financial support to the developing and former socialist countries effecting economical transformation.

To execute these goals the IMF uses such instruments as Reserve trenches, which allows a member to draw on its own reserve asset quota at the time of payment, Credit trenches drawings and stand-by arrangements. The letters are the standard form of IMF loans unlike of those as the compensatory financing facility extends financial help to countries with temporary problems generated by reductions in export revenues, the buffer stock financing facility which is geared toward assisting the stocking up on primary commodities in order to ensure price stability in a specific commodity and the extended facility designed to assist members with financial problems in amounts or for periods exceeding the scope of the other facilities.

At the end of the 70-s the free-floating of currencies was officially mandated that became the most important landmark in the history of financial markets in the XX century lead to the formation of Forex in the contemporary understanding. That is the currency may be traded by anybody and its value is a function of the current supply and demand forces in the market, and there are no specific intervention points that have to be observed. Foreign exchange has experienced spectacular growth in volume ever since currencies were allowed to float freely against each other. While the daily turnover in 1977 was U.S. $5 billion, it increased to U.S. $600 billion in 1987, reached the U.S. $1 trillion mark in September 1992, and stabilized at around $1.5 trillion by the year 2000.

Main factors influences on this spectacular growth in volume are mentioned below. A significant role belonged to the increased volatility of currencies rates, growing mutual influence of different economies on bank-rates established by central banks, which affect essentially currencies exchange rates, more intense competition on goods markets and, at the same time, amalgamation of the corporations of different countries, technological revolution in the sphere of the currencies trading. The latter exposed in the development of automated dealing systems and the transition to the currency trading by means of the Internet. In addition to the dealing systems, matching systems simultaneously connect all traders around the world, electronically duplicating the brokers' market.

Advances in technology, computer software, and telecommunications and increased experience have increased the level of traders' sophistication, their ability to both generate profits and properly handle the exchange risks. Therefore, trading sophistication led toward volume increase.

The opportunities of trading the Forex hedged grid system

2008-02-26T19:32:00.000-08:00

4 Tips For Choosing a Reputable Forex Broker

2008-02-26T17:55:00.006-08:00

Finding a Forex broker is a tough process to navigate through and for most people, the necessity of outside assistance is needed. Trying to trade in the Forex market without a broker could lead to devastating results for the normal trader. Similarly, hiring the wrong Forex broker can lead to the same result as trying to muddle through it alone. It is highly important that you be diligent in researching any prospective brokerage firms to handle your financial portfolio.

A good Forex broker will supply you with clients that were successful and can attest to the specific broker's qualifications and success history. Put yourself in that position, would you testify to someone's strengths if they did a poor job for you? Client history testimony should be present in any prospective Forex broker and plentiful to indicate a solid background with trading. You can tentatively assess a lot from a Forex broker with a list of clients that will speak up for the brokerage firm or individual broker. It should be noted that all word of mouth testimony should be taken with a grain of salt and dissected to collect the pertinent information. Testimony should be used in your research to find a Forex broker but should not be the deciding factor.

Another good morsel to test the reliability of any potential Forex broker is the amount of information, literature and lessons that they are willing to give to you. Most Forex brokers are of a high reputation and a solid background however, there are many out there that don't have a good history or no history and it is wise to steer clear of these brokers. You are trying to find a trusted financial advisor and settling for second best, just won't do. The more a potential Forex broker is willing to do for you in the area of helping you understand the Forex trading system, the better quality trader they will be for you.

A good avenue to travel down when seeking a good Forex broker is to ask your acquaintances about Forex brokers and how they met. This can not only give you prospective referrals to great Forex brokers but will also equip you with ideas and resources that you may not have located. If you get a referral from friends, be sure to still research that specific broker and his qualifications before committing to any formal agreement.

The other factor in finding a good Forex broker is the margin of return that is offered. A Forex trading margin used to influence your money and many Forex brokers offer different margins. Finding a Forex broker, who gives a margin of ten to one isn't a very good find so it's worth the time to reinvest in research. Remember that this industry is all about customer service and catering to the clients so if your prospective Forex broker doesn't return your calls within a reasonable time frame it would be advisable to keep searching.

Forex Broker: Choosing the right Forex Broker

2008-02-26T17:55:00.005-08:00

Sometimes it's hard to make a decision on which Forex broker to open our trading account, there are just too many of them. Most of them have different features, capabilities, weaknesses and advantages, for this reason I have created a checklist that can help you decide the broker to use in your Forex adventure.

1. Is it regulated?

The first question you have to ask yourself is: is the broker I want to use Regulated ? There must be no doubt about this first point. All regulated brokers must submit financial reports to regulatory authorities, and when they fail to do it, authorities have the right to fine them or terminate their membership. This enforces Forex brokers to keep transparent financial reports.

The brokers must be regulated by their local regulatory authorities, for instance, for brokers based in the US , they must be regulated by the NFA (National Futures Association) and CFTC (Commodity Futures Trading Commission), Swiss based brokers must be regulated by the FDF (Swiss Federal Department of Finance) and so on.

Also when a Forex broker is regulated allows investors to dispute any resolution, increasing the investor protection.

2. Trading Conditions

This point refers to the features of the trading platform and the trading conditions with the chosen broker. Amongst the most important factors are:

Spread - Obviously the smaller the spread on currency pairs the better the conditions are for investors and traders.

Platform execution - Trading execution refers to how fast and consistent are the execution of trades. Some brokers guarantee fast and transparent executions during normal market conditions.

Fractional trading – Some brokers allow investors and traders to trade on a fractional basis, instead of trading full lots “100,000 units” or “300,000 units”, they allow you to trade “163,345 units” or “325,911 units”. This is very helpful for trades risking certain percentage of their balance on each trade.

Safety of funds – We need to make sure our trading funds are kept in a segregated account or at least insured.

Trading platform – Easy to use and understand platform, is it reliable during fast moving markets? And what extra features it offers such as: one click buying/selling, trading directly from a chart, supports mobile devices, trailing stops, etc.)

Minimum investment – What is the minimum amount of money required to open a trading account? This aspect is very useful because before trading your full account, you need to test the waters and see how well you perform with an account with limited funds (after trading a demo account).

Margin (leverage) – What kind of leverage can be used with the chosen broker? Just to make sure our leverage requirements by our Forex strategy and methodology (leverage above 100:1 is not advisable).

Commissions – Some brokers charge commission, it is ok if they do if the spread is smaller than other brokers.

3. Diligence

Hopefully you have eliminated most brokers at this point. You should have 3 or 4 finalists. In this step do your diligences on forums, ask other traders about their experiences using their brokers, and so forth.

Some forums where you can ask for broker information are: ForexFactory, MoneyTec, ForexNews.

If brokers are registered by their local regulatory authorities, you can visit the regulator website and you will find plenty of information about Forex brokers. Some of them publish resolutions regarding Forex brokers.

Amongst the aspects you should ask and get informed are:

Customer service – This aspect is the most important of them all, are they rude to customers? Are they willingly to help customers? These are the questions you should ask in forums and fellow traders.

Slippage – Slippage is the difference between the price where the trade was executed and actual value of it. Do they honor stop loss and take profit levels? Do they guarantee it? If any one had any discrepancies, did their broker revert the result?

Manual execution – Some brokers don't like scalpers, if they catch someone doing it, they will put this trader into manual execution, so a dealer (human) must accept all transactions made by this trader. Do they do this?

Re-quotes – a re-quote happens when you click the buy/sell button and the platform doesn't accept our price, so it will give us another quote for that particular trade.

4. Testing

In this phase we should test our Forex broker, first on a demo account to see how it works, also test your system to see how it performs. If you are satisfied with the results, then try the same platform with limited funds to see how it performs on real trades. If you are satisfied again then open your full trading account with the chosen broker.

I hope this checklist help you all traders to take the right decision when choosing brokers.

Forex Strategy: Trading with Stochastics

2008-02-26T17:55:00.004-08:00

Stochastics are amongst the most popular technical indicators when it comes to Forex Trading. Unfortunately most traders use them incorrectly. In this article we will review the correct way to use this popular technical indicator.

George Lane developed this indicator in the late 1950s. Stochastics measure the current close relative to the range (high/low) over a set of periods.

Stochastics consist of two lines:

%K – Is the main line and is usually displayed as a solid line

%D – Is simply a moving average of the %K and is usually displayed as a dotted line

There are three types of Stochastics: Full, fast and slow stochastics. Slow stochastics are simply a smother version of the fast stochastics, and full stochastics are even a smother version of the slow stochastics.

Interpretation:

Buy when %K falls below the oversold level (below 20) and rises back above the same level.

Sell when %K rises above de overbought level (above 80) and falls back below the same level.

The interpretation above is how most traders and investors use them; however, it only works when the market is trendless or ranging. When the market is trending, a reading above the overbought territory isn't necessary a bearish signal, while a reading below de oversold territory isn't necessary bullish signal.

Trending market

When the market is trending is necessary to adapt the oscillator to the same conditions: When the market is trending up, then the signals with the higher probability of success are those in direction of the trend “Buy signals”, on the other hand when the market is trending down, selling signals offer the lowest risk opportunities.

Thus when the market is trending up, we will only look for oversold conditions (when the stochastics fall below the oversold level [below 20] and rises back above the same level) to get ready to trade, and in the same way, when the market is trending down we will only look for overbought conditions (when the stochastics rise above de overbought level [above 80] and falls back below the same level.

Taking all overbought/oversold signals during a trending market will lead us to many whipsaws. If you are not comfortable with the number of signals given, try expanding your trading to other currency pairs.

Trend-less market

During a ranging market we could use the interpretation explained above to trade off stochastics.

Divergence

Divergence trades are amongst the most reliable trading signals in the Forex market. A divergence occurs either when the indicator reaches new highs/lows and the market fails to do it or the market reaches new highs/lows and the indicator fails to do it. Both conditions mean that the market isn't as strong as it used to be giving us opportunities to profit from the market.

Stochastics can also be used to trade off divergences.

Price behavior

A price behavior can be incorporated into any kind of system or Forex strategy. When using divergences or overbought/oversold condition with a price behavior approach, the probability of success of our signals increases enormously. Why? Because price dictates at the end, how all indicators will behave, it also gives us a lot of information about the probable direction it will take in the future.

I hope this article helps you become a better trader.

Don't forget to read our risk disclaimer.

Forex Trading System: Choosing between Mechanical and Discretionary Systemsnclude

2008-02-26T17:55:00.003-08:00

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? These are the answers we will try to answer on this article.

We will first analyze the pros and cons about each system approach.

Mechanical systems

Advantages

This kind of system can be automated and backtested efficiently.

It has very rigid rules. Either, there is a trade or there isn't.

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 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.

Disadvantages

They 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.

I am a discretionary trader. The main reason I chose a discretionary system is that my trades are based on price behavior, and as you already know, the price behaves similar to the past, but it is never identical, therefore the outcome of every trade is unknown. However, I do have rigid rules on my system, certain conditions have to be met before I even think in getting in a trade. This keeps me out of trouble, once my setup is present and in accordance with the rules I have set, then I closely watch the price behavior and finally decide whether it is a good opportunity or not.

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.

Free Forex Advice and Consultation

2008-02-26T17:55:00.002-08:00

Trading successfully the Forex market is a hard task to accomplish, it requires hard work, a lot of testing, discipline to develop and stick to your trading system, correctly applying risk, trade and money management techniques, and more.

Sometimes in our process to become a successful trader we think we are doing everything right, but things just go the other way. Here is where we need expert Forex advice, someone that could see and objectively analyze our trading and let us know if we are making any mistake.

Even if you are doing things right, once in a while we need someone to review our trading system and results to see if we can do better.

Through the form below you can tell us where you are standing at, whatever the problem you are facing or just tell us about your trading, give us as much information as possible so we can have an objective view of your current conditions and give you our best advice.

Is there any charge for this Forex consultation? No, it is absolutely free. So go ahead and try it, who knows, we could give you just what you were missing.

Forex Trading: Mistakes in a Trading Environment

2008-02-26T17:48:00.004-08:00

When it comes to trading, one of the most neglected subjects are those dealing with trading psychology. Most traders spend days, months and even years trying to find the right system. But having a system is just part of the game. Don't get us wrong, it is very important to have a system that perfectly suits the trader, but it is as important as having a money management plan, or to understand all psychology barriers that may affect the trader decisions and other issues. In order to succeed in this business, there must be equilibrium between all important aspects of trading.

In the trading environment, when you lose a trade, what is the first idea that pops up in your mind? It would probably be, “There must be something wrong with my system”, or “I knew it, I shouldn't have taken this trade” (even when your system signaled it). But sometimes we need to dig a little deeper in order to see the nature of our mistake, and then work on it accordingly.

When it comes to trading the Forex market as well as other markets, only 5% of traders achieve the ultimate goal: to be consistent in profits. What is interesting though is that there is just a tiny difference between this 5% of traders and the rest of them. The top 5% grow from mistakes; mistakes are a learning experience, they learn an invaluable lesson on every single mistake made. Deep in their minds, a mistake is one more chance to try it harder and do it better the next time, because they know they might not get a chance the next time. And at the end, this tiny difference becomes THE big difference.

Mistakes in the trading environment

Most of us relate a trading mistake to the outcome (in terms of money) of any given trade. The truth is, a mistake has nothing to do with it, mistakes are made when certain guidelines are not followed. When the rules you trade by are violated. Take for instance the following scenarios:

First scenario: The system signals a trade.

Signal taken and trade turns out to be a profitable trade.

Outcome of the trade : Positive, made money.

Experience gained: Its good to follow the system, if I do this consistently the odds will turn in my favor. Confidence is gained in both the trader and the system.

Mistake made: None.

Signal taken and trade turns out to be a loosing trade.

Outcome of the trade: Negative, lost money.

Experience gained: It is impossible to win every single trade, a loosing trade is just part of the business; our raw material, we know we can't get them all right. Even with this lost trade, the trader is proud about himself for following the system. Confidence in the trader is gained.

Mistake made : None.

Signal not taken and trade turns out to be a profitable trade.

Outcome of the trade: Neutral.

Experience gained: Frustration, the trader always seems to get in trades that turned out to be loosing trades and let the profitable trades go away. Confidence is lost in the trader self.

Mistake made: Not taking a trade when the system signaled it.

Signal not taken and trade turns out to be a loosing trade.

Outcome of the trade: Neutral.

Experience gained: The trader will start to think “hey, I'm better than my system”. Even if the trader doesn't think on it consciously, the trader will rationalize on every signal given by the system because deep in his or her mind, his or her “feeling” is more intelligent than the system itself. From this point on, the trader will try to outguess the system. This mistake has catastrophic effects on our confidence to the system. The confidence on the trader turns into overconfidence.

Mistake made: Not taking a trade when system signaled it

Second Scenario: System does not signal a trade.

No trade is taken

Outcome of the trade: Neutral

Experience gained: Good discipline, we only need to take trades when the odds are in our favor, just when the system signals it. Confidence gained in both the trader self and the system.

Mistake made: None

A trade is taken, turns out to be a profitable trade.

Outcome of the trade: Positive, made money.

Experience gained: This mistake has the most catastrophic effects in the trader self, the system and most importantly in the trader's trading career. You will start to think you need no system, you know better from them all. From this point on, you will start to trade based on what you think. Confidence in the system is totally lost. Confidence in the trader self turns into overconfidence.

Mistake made: Take a trade when there was no signal from the system.

A trade is taken, turned out to be a loosing trade.

Outcome of the trade: negative, lost money.

Experience gained: The trader will rethink his strategy. The next time, the trader will think it twice before getting in a trade when the system does not signal it. The trader will go “Ok, it is better to get in the market when my system signals it, only those trade have a higher probability of success”. Confidence is gained in the system.

Mistake made: Take a trade when there was no signal from the system

As you can see, there is absolutely no correlation between the outcome of the trade and a mistake. The most catastrophic mistake even has a positive trade outcome, made money, but this could be the beginning of the end of the trader's career. As we have already stated, mistakes must only be related to the violation of rules a trader trades by.

All these mistakes were directly related to the signals given by a system, but the same is applied when getting out of a trade. There are also mistakes related to following a trading plan. For example, risking more money on a given trade than the amount the trader should have risked and many more.

Most mistakes can be avoided by first having a trading plan. A trading plan includes the system : the criteria we use to get in and out the market, the money management plan : how much we will risk on any given trade, and many other points. Secondly, and most important, we need to have the discipline to follow strictly our plan. We created our plan when no trade was placed on, thus no psychology barriers were up front. So, the only thing we are certain about is that if we follow our plan, the decision taken is on our best interests, and in the long run, these decisions will help us have better results. We don't have to worry about isolated events, or trades that could had give us better results at first, but then they could have catastrophic results in our trading career.

How to deal with mistakes

There are many possible ways to properly manage mistakes. We will suggest the one that works better for us.

Step one: Belief change.

Every mistake is a learning experience. They all have something valuable to offer. Try to counteract the natural tendency of feeling frustrated and approach mistakes in a positive manner. Instead of yelling to everyone around and feeling disappointed, say to yourself “ok, I did something wrong, what happened? What is it?

Step two: Identify the mistake made.

Define the mistake, find out what caused the mistake, and try as hard as you can to effectively see the nature of that mistake. Finding the mistake nature will prevent you from making the same mistake again. More than often you will find the answer where you less expected. Take for instance a trader that doesn't follow the system. The reason behind this could be that the trader is afraid of loosing. But then, why is he or she afraid? It could be that the trader is using a system that does not fit him or her, and finds difficult to follow every signal. In this case, as you can see, the nature of the mistake is not in the surface. You need to try as hard as you can to find the real reason of the given mistake.

Step three: Measure the consequences of the mistake.

List the consequences of making that particular mistake, both good and bad. Good consequences are those that make us better traders after dealing with the mistake. Think on all possible reasons you can learn from what happened. For the same example above, what are the consequences of making that mistake? Well, if you don't follow the system, you will gradually loose confidence in it, and this at the end will put you into trades you don't really want to be, and out of trades you should be in.

Step four: Take action.

Taking proper action is the last and most important step. In order to learn, you need to change your behavior. Make sure that whatever you do, you become “this-mistake-proof”. By taking action we turn every single mistake into a small part of success in our trading career. Continuing with the same example, redefining the system would be the trader's final step. The trader would put a system that perfectly fits him or her, so the trader doesn't find any trouble following it in future signals.

Understanding the fact that the outcome of any trade has nothing to do with a mistake will open your mind to other possibilities, where you will be able to understand the nature of every mistake made. This at the same time will open the doors for your trading career as you work and take proper action on every mistake made.

The process of success is slow, and plenty of times it is attributed to repeated mistakes made and the constant struggle to get past these mistakes, working on them accordingly. How we deal with them will shape our future as a trader, and most importantly as a person.

Forex Pivot Points: Mapping Your Time Frame

2008-02-26T17:48:00.003-08:00

It is useful to have a map and be able to see where the price is relative to previous market action. This way we can see how is the sentiment of traders and investors at any given moment, it also gives us a general idea of where the market is heading during the day. This information can help us decide which way to trade.

Pivot points, a technique developed by floor traders, help us see where the price is relative to previous market action.

As a definition, a pivot point is a turning point or condition. The same applies to the Forex market, the pivot point is a level in which the sentiment of the market changes from “bull” to “bear” or vice versa. If the market breaks this level up, then the sentiment is said to be a bull market and it is likely to continue its way up, on the other hand, if the market breaks this level down, then the sentiment is bear, and it is expected to continue its way down. Also at this level, the market is expected to have some kind of support/resistance, and if price can't break the pivot point, a possible bounce from it is plausible.

Pivot points work best on highly liquid markets, like the spot currency market, but they can also be used in other markets as well.

Forex Pivot Points

In a few words, pivot point is a level in which the sentiment of traders and investors changes from bull to bear or vice versa.

Why PP work?

They work simply because many individual traders and investors use and trust them, as well as bank and institutional traders. It is known to every trader that the pivot point is an important measure of strength and weakness of any market.

Calculating pivot points

There are several ways to arrive to the Pivot point. The method we found to have the most accurate results is calculated by taking the average of the high, low and close of a previous period (or session).

Pivot point (PP) = (High + Low + Close) / 3

Take for instance the following EUR/USD information from the previous session:

Open: 1.2386

High: 1.2474

Low: 1.2376

Close: 1.2458

The PP would be,

PP = (1.2474 + 1.2376 + 1.2458) / 3 = 1.2439

What does this number tell us?

It simply tells us that if the market is trading above 1.2439, Bulls are winning the battle pushing the prices higher. And if the market is trading below this 1.2439 the bears are winning the battle pulling prices lower. On both cases this condition is likely to sustain until the next session.

Since the Forex market is a 24hr market (no close or open from day to day) there is a eternal battle on deciding at white time we should take the open, close, high and low from each session. From our point of view, the times that produce more accurate predictions is taking the open at 00:00 GMT and the close at 23:59 GMT .

Besides the calculation of the PP, there are other support and resistance levels that are calculated taking the PP as a reference.

Support 1 (S1) = (PP * 2) – H

Resistance 1 (R1) = (PP * 2) - L

Support 2 (S2) = PP – (R1 – S1)

Resistance 2 (R2) = PP + (R1 – S1)

Where , H is the High of the previous period and L is the low of the previous period

Continuing with the example above, PP = 1.2439

S1 = (1.2439 * 2) - 1.2474 = 1.2404

R1 = (1.2439 * 2) – 1.2376 = 1.2502

R2 = 1.2439 + (1.2636 – 1.2537) = 1.2537

S2 = 1.2439 – (1.2636 – 1.2537) = 1.2537

These levels are supposed to mark support and resistance levels for the current session.

On the example above, the PP was calculated using information of the previous session (previous day.) This way we could see possible intraday resistance and support levels. But it can also be calculated using the previous weekly or monthly data to determine such levels. By doing so we are able to see the sentiment over longer periods of time. Also we can see possible levels that might offer support and resistance throughout the week or month. Calculating the Pivot point in a weekly or monthly basis is mostly used by long term traders, but it can also be used by short time traders, it gives us a good idea about the longer term trend.

S1, S2, R1 AND R2...? An Objective Alternative

As already stated, the pivot point zone is a well-known technique and it works simply because many traders and investors use and trust it. But what about the other support and resistance zones (S1, S2, R1 and R2,) to forecast a support or resistance level with some mathematical formula is somehow subjective. It is hard to rely on them blindly just because the formula popped out that level. For this reason, we have created an alternative way to map our time frame, simpler but more objective and effective.

We calculate the pivot point as showed before. But our support and resistance levels are drawn in a different way. We take the previous session high and low, and draw those levels on today's chart. The same is done with the session before the previous session. So, we will have our PP and four more important levels drawn in our chart.

LOPS1, low of the previous session.

HOPS1, high of the previous session.

LOPS2, low of the session before the previous session.

HOPS2, high of the session before the previous session.

PP, pivot point.

These levels will tell us the strength of the market at any given moment. If the market is trading above the PP, then the market is considered in a possible uptrend. If the market is trading above HOPS1 or HOPS2, then the market is in an uptrend, and we only take long positions. If the market is trading below the PP then the market is considered in a possible downtrend. If the market is trading below LOPS1 or LOPS2, then the market is in a downtrend, and we should only consider short trades.

The psychology behind this approach is simple. We know that for some reason the market stopped there from going higher/lower the previous session, or the session before that. We don't know the reason, and we don't need to know it. We only know the fact: the market reversed at that level. We also know that traders and investors have memories, they do remember that the price stopped there before, and the odds are that the market reverses from there again (maybe because the same reason, and maybe not) or at least find some support or resistance at these levels.

What is important about his approach is that support and resistance levels are measured objectively; they aren't just a level derived from a mathematical formula, the price reversed there before so these levels have a higher probability of being effective.

Our mapping method works on both market conditions, when trending and on sideways conditions. In a trending market, it helps us determine the strength of the trend and trade off important levels. On sideways markets it shows us possible reversal levels.

How we use our mapping method?

We use the mapping method in three different ways: as a trend identification (measure of the strength of the trend), a trading system using important levels with price behavior as a trading signal and to set the risk reward ratio of any given trade based on where the is the market relative to the previous session.

Main Drawbacks of Forex Traders

2008-02-26T17:48:00.002-08:00

Why is it that very few traders succeed in the Forex trading environment while the grand majority of traders fail to achieve success? There is no hard answer to this question, there are a few things that will put you one step ahead and will definitely put the odds in your favor.

The main purpose of this article is to guide you through some important aspects of Forex trading. But in a different way, instead of telling you what to do or the best way to do it, it will tell you what to avoid. Sometimes it is better to identify the main drawbacks on a discipline and then isolate them so we have the best results at a certain level of development.

The Holy Grail

Many traders spend years and years trying to find the Holy Grail of trading. That magic indicator or set of indicators, only known by a few traders, that will make them rich in a short period of time.

Fact: Well, there is no magic indicator, nor a set of indicators that will make anyone rich in a short period of time. The main reason of this is because market changes, every single moment is unique. Every Forex trading system will fail from time to time. Our work here is to find a Forex trading system that fits our personality as traders, otherwise the trader will find it hard to follow it.

Looking for Easy Money

Unfortunately most traders are attracted to the Forex market for this reason. Mainly because of the publicity showing or rather trying to show how easy is to trade and make money in the Forex market.

Fact: Yes, it is very easy to trade, anyone can do it. It is as hard as one click. But the second part of it isn't that easy. Making money or achieving consistent profitable results is hard. It requires lots of education, patience, discipline, commitment, and this list could go to infinite. In a few words, it is possible to have consistent profitable results, but definitely it is not easy.

Looking for Excitement

Some other traders are attracted to the Forex market or any other financial market because they think it is exciting to be a trader.

Fact: Yes, it is very exciting to trade the Forex market. But if this is the main reason you are still trading the Forex market, sooner or later you will discover the most expensive adventure you have ever known. Do some thinking on it.

Not Using Money Management

Most traders forget about this important aspect of trading. They think they shouldn't be using money management until they achieve consistent profitable results. They totally forget about the risk side of trading.

Fact: Money management allows your profits to increase geometrically, but also limits your risk on every single trade. Money management tells you how much to risk on each trade. Using money management is a must if you want to achieve your trading goals. By using money management you make sure you are going to be able to trade tomorrow, the next week, month and the following years.

Not Being Psychology Tuned

This is one of the most underestimated subjects when it comes to trading. One of the main principles of financial markets is that the price of each instrument is based on the perception of each individual participant “the crowd.” In other words the price of each instrument is determined by the fear, greed, ego and hope of all traders.

Fact: Being aware of all psychological issues that affect the decisions made by traders will definitely put the odds in your favor.

Lack of Education

Education is the base of knowledge on every discipline. As lawyers and doctors require several years of college until they get their degree, Forex traders also require long years of study. It is better to have someone experienced to guide you through your trading, since some information could take you in the wrong path.

Fact: The market teaches us invaluable lessons on every single trade made. The process of education for a Forex trader could take for ever. That's right, we never stop learning. We should be humble about the markets and our knowledge; otherwise the market will prove us wrong.

These are some of the most important barriers every trader faces when trying to trade successfully.

Trading successfully the Forex markets is no easy task, it requires a lot of hard work to do it right, but with the right education, you will put yourself closer to your trading goals.

Things You Should Know About Forex Trading

2008-02-26T17:48:00.001-08:00

How difficult is it to make money trading the Forex market? How much time does it take to actually be able to make a living trading the Forex market? These and other important aspects of trading are to be discussed in this article.

Trading the Forex market has many benefits over other financial markets, among the most important are: superior liquidity, 24hrs market, better execution, and others. Traders and investor see the Forex market as a new speculation or diversifying opportunity because of these benefits. Does this mean that it is easy to make money trading the Forex Market? Not at all.

Forex brokers agree that 90% of traders end up losing money, 5% of traders end up at break even and only 5% of them achieve consistent profitable results. With these statistics shown, I don't consider trading to be an easy task. But, is it harder to master any other endeavor? I don't think so, consider musicians, writers, or even other businesses, the success rates are about the same, there are a whole bunch of them who never got to the top.

Now that we know it is not easy to achieve consistent profitable results, a must question would be, Why is it that some traders succeed while others fail to trade successfully in the Forex market? There is no hard answer to this question, or a recipe to follow to achieve consistent profitable results. What we do know is that traders that reach the top think different. That's right, they don't follow the crowd, they are an independent part of the crowd.

A few things that separate the top traders from the rest are:

Education: They are very well educated in the matter; they have chosen to learn every single and important aspect of trading. The best traders know that every trade is a learning experience. They approach the Forex market with humility, otherwise the market will prove them wrong.

Incorporating Price Action into a Forex Trading System

2008-02-26T17:48:00.000-08:00

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 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 (a moving average (MA) crossover, overbought/oversold conditions in an oscillator, etc.) 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 us 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.

Currency Trading: Understanding the Basics of Currency Trading

2008-02-26T17:41:00.001-08:00

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 basics, 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:

EUR/USD: Euro

GBP/USD: Pound

USD/CAD: Canadian dollar

USD/JPY: Yen

USD/CHF: Swiss franc

AUD/USD: Aussie

These currency pairs generate up to 85% of the overall volume generated in the Forex market.

So, for instance, if a trader goes long or buys 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 1.2545/48 or 1.2545/8

The bid price is 1.2545

The ask price is 1.2548

A Pip

A pip is the minimum incremental move a currency pair can make. 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 112.05 to 113.10 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 60 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 26 (26 pips plus the 4 pip spread equals 30 pips) pips against us.

It's very important to understand every aspect of 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.

A Quick Forex Guide for Traders

2008-02-26T17:41:00.000-08:00

In this Forex course we will review some steps you need to take care before you venture into your trading journey. Most traders venture into the Forex market with little or no experience in the Forex market. This results in painful experiences like loosing most of the risk capital, frustration because it seemed so easy to make money, etc.

The first thing you need to realize is that, it is not easy to make money. As every other endeavor in life, where important rewards are to come after mastering it, you need to work hard. You need to get very well educated and experienced before having the possibility to receive important rewards on it. The key on mastering the Forex market relies on commitment, patience and discipline.

Ok, you have decided you are going to trade the Forex market, you have seen several advertisings featuring how easy is to make money in the Forex market. You might think this is your opportunity to reach your financial freedom, right away, time is money, why waiting any longer if you have the opportunity to make money now. I know, I've been there, but you have a chance now, I didn't, no body told me what I am going to tell you.

We, Forex traders, make transactions based on a set of rules. These sets of rules are what we call a Trading System. Our systems tell us the exact time where we need to get in the market and out the market in order to make a profit (i.e. buy low sell high.)

Creating a system is the first big step you need to take care first. Why is this so important? Because you need to build a system that suits your personality, otherwise you are going to find hard to follow it, thus hard to profit from.

A system can be based on technical indicators or what we called a mechanical system or based on experience and intuition or what we call discretionary systems. I highly recommend using and trying first a mechanical system, because discretionary systems are dangerous during the early stages of a Forex trader (can lead to indiscipline.) With experience, on later stages, you will find out which signals work better and which ones to avoid.

The next step in this Forex course is to try your system on a demo account. Most Forex brokers offer a demo account, an account with virtual money. This is an excellent choice to test your trading system as there is no money at risk. In this step you will figure out if the strategy works for you. If you feel comfortable trading it, then it is most likely to produce good results. How much time should you stay in this step? It varies, but you shouldn't go one step further until your system gets consistent profitable results over a period of time. It can take many months, but remember, you need to be patient.

You must be honest to yourself; you need to take every single signal generated by your system, not only the signals you thought were going to work, otherwise, you are going to have problems in the next two steps.

Ok, by know you had consistent profitable results on your demo account. You might think its time to go full. Nope, nope, nope. There is a big difference between trading a demo and a real account. The most important difference lies on emotions (fear, greed, anger, etc.) These are psychological barriers that affect every single decision made by traders regardless of what he/she is trading (stocks, bonds, Forex, futures, grains, etc.) These emotional factors, in my opinion, are the most determinant factor that separates profitable traders from the others.

The next step in this Forex course is specially designed to deal with emotions and to confirm the results obtained in the prior step (consistent results in a demo account.) At this step you need to trade in a real account with limited funds. Some brokers offer fractional lot trading. Meaning you are able to trade any desired amount (even cents.) The important thing here is that these emotions we've been talking about are present only when there is real money at risk. At this stage, you are going to see if you are really comfortable trading your system and if you are able to trade with such system, remember different systems produce different emotions. If you are able to produce similar results than those obtained in a demo account, then ready for the next step. If you didn't, then you might need to create another system, there is chance your system never fit you. If you created consistent profitable results on this stage, you have a chance to produce similar results in the next one, on the other hand, if you didn't produce good results in this stage, you will not be able to make on the next stage. Remember, you need to do things right, and be honest to yourself.

The last stage is trading in a real account with sufficient funds. If you are at this stage, and have passed successfully every prior stage, then you have a chance to make it, go ahead and try it, you need to be confident in yourself and in your system, your strategy have already produced consistent profitable results, there are reasons to believe you are going to make it. Very few traders fail at this stage (if passed successfully prior stages.)

Trading successfully is no easy task, it requires a lot of work, patience, discipline, and education. By completing the steps outlined in this Forex course, you have a chance to produce profitable results. I repeat it again, you need to be honest to yourself about the results obtained in every stage. Some times you might need expert guidance regarding your system development strategies.

Deadly Forex Mistakes That Assure Failure

2008-02-26T17:40:00.008-08:00

Before venturing into your trading journey there are some things you need to be aware of, otherwise you could succeed on your trading adventure, and we don't want that to happen, do we? This Forex training guide will help you track the most costly mistakes Forex traders do.

First of all, make sure you don't have a trading system. Having a trading system might increase the odds of your success. If you have a system, you will have an objective way to get in and out the market. When traders create their trading systems they think objectively since there is no position to be taken at the moment. If there is no position to be taken, there is also no money at risk, if there is no money at risk, we do think objectively and are open to every possibility, thus we are able to find low risk trading opportunities. So make sure you don't have a system and trade based on a randomly approach.

If you have already created your system, then don't follow it, be undisciplined. If you follow your system, there is a possibility that you can profit from the Forex market based on the trading opportunities you have found. If you want to fail on your trading, be sure to be undisciplined.

Don't get educated. Most successful traders are very well educated in the market they trade (stocks, Forex, futures, etc.) If you get educated, you might acquire the knowledge and experience you require to master the Forex market. Don't read about the Forex market, don't enroll into Forex training programs and don't even look at historical charts.

Don't use any money management technique. The purpose of money management is to avoid the risk of ruin, but at the same time it helps you boost your profits, allowing them to grow geometrically. For instance, by using no money management techniques, there is a possibility that in loosing 10 trades in a row you could empty your trading account. On the other hand, by applying simple money management techniques you can avoid it. So make sure, if you want to fail, don't even consider money management.

Forget about psychological issues. You need to get every trade to win. Successful traders know that they don't need to win every trade in order to profit from the market. This is one characteristic that is hard to understand and really apply. Why? Because we are taught, since kids, that any number below 70% is a bad number. In the Forex trading environment, this is not true.

Don't even consider using a Risk-reward (RR) ratio greater than 1-1. If you use a RR ratio of 1-2 (willing to make twice the amount risked in one trade) then you only need a system that is right around 50% to make money. If you use a RR ratio of 1-3 (willing to make three times the amount risked in one trade) then you will need a system that is right around 40% of the time to make money. So make sure to use a RR ratio below 1-1.

By applying every point outlined in this Forex training guide, you will almost assure your failure in your Forex trading journey. Do the opposite, and you will have the possibility to achieve what every trader is looking for: consistent profitable results.

US Dollar Falls to Record Lows Against Euro

2008-02-26T17:40:00.007-08:00

The US dollar fell to a record low as fresh economic data unveiled growing inflationary pressures for the slowing economy, with the Fed adding to the frustration as Vice-Chairman Kohn stated that he does not “expect the recent elevated inflation rates to persist," and went further to say that “the adverse dynamics of the financial markets and the economy have presented the greater threat to economic welfare in the United States." The mounting pressures caused the US dollar to buckle against all of its major currency pairs, with the Canadian dollar and the Swiss Franc taking the lead. Against its European counterparts, the Euro rose just shy of $1.50 as the German IFO survey showed a surprising increase in business confidence, with the Pound Sterling following amid a fall in business investments and retail sales. The commodity currencies also posted gains against the US dollar as oil traded over $100 a barrel with gold prices rebounding from yesterday's decline, while the Yen picked up as the securities markets continued yesterday's advances, stoking investors to increase their positions in carry trades.

As the Fed holds their aggressive stance in fostering economic growth, inflationary pressures continued to surge as the Producer Price index hit a 26 year high due to the increasing cost of energy and food. The Producer Price index rose 7.4 percent for the year, while the Producer Price index excluding Food & Energy increased by 2.3 percent, spurring concerns that the US economy may face a period of stagflation. The home price indices also amplified the growing economic concerns for the US as home prices fell the most in 20 years due to the overstock of homes from the credit crunch. The S&P/Case-Shiller Home Price index fell to minus 8.9 percent for the year while the Office of Federal Housing Enterprise Oversight House Price index fell to minus 1.3 percent. The final economic release for the US showed consumer confidence falling to a five year low of 75.0 as growing turmoil continued to unfold for the struggling economy.

Despite the pessimistic outlook of the US economy, the securities markets picked up during the afternoon session as IBM increased their projected earnings and stated that the tech giant will buy back $15B of its shares. As a result, the DJIA jumped 114.70 points to 12,684.92 with IBM shares taking in the biggest gains, while pharmaceutical titan Merck topped the losers. The broader S&P500 picked up 9.49 points to hold at 1,381.29, led by Omega Protein Corp and Ducommun Inc, while Cott Corp and USEC Inc came out as the forerunners for the losers.

US Treasury prices were mixed as rising inflation pressed on long-term bonds, but picked up for the most part as worrisome investors sought after the safe haven of risk free bonds. The 2-Year yield fell to 2.03 percent with the 10-Year yield lowered to 3.86 percent, while the 30-Year yield rose to 4.66 percent. Tomorrow's economic releases will give us a better insight of the current economic situation as New Home sales and Durable Goods orders will be released during the morning, followed by the Fed Chairman's report on the economy and its policy.

DailyFX

Disclaimer

Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.

Global Economy Key To Dollar Recovery Hopes

2008-02-26T17:40:00.006-08:00

The 1.50 level for the Euro against the dollar has been a key market target throughout the past three months and it is now in very close focus again on Tuesday with the dollar at fresh record lows.

Confidence in the US economy has remained very weak with a series of dismal data readings. This trend continued on Tuesday with consumer confidence weakening to a fresh four-year low while the expectations component dipped to the lowest level since 1991.

Recession fears are in full swing and once the history is written, there is a strong probability that the economy will be deemed as being in recession for the first quarter of 2008.

Fed Chairman Bernanke faces the semi-annual congressional testimony on Wednesday and he will struggle to deliver much in the way of good news. The Fed Chairman is under increasing pressure with growth, inflation and currency fears all escalating at the same time.

Bernanke's testimony will be very important for the dollar on a near-term view, but the key to the dollar's outlook is still the overall Euro-zone and wider global performance.

If Europe and Asia are able to demonstrate a de-coupling from US trends with a continuation of steady growth, then the dollar will be much more vulnerable to further near-term selling pressure.

Conversely, if the Euro-zone economy appears to be sliding towards recession, then the Euro will hit big trouble.

In this context, the stronger than expected German IFO index helped push the dollar sharply weaker on Tuesday.

The headline German data was positive, but the underlying data was less favourable. There are also high risks of divergence within the Euro-zone, with the Italian economy for example heading for recession while Spain and Franc are also very vulnerable to recession conditions. In this environment, betting on European out-performance still looks very dangerous.

Overall, the Euro is likely to run into fierce headwinds above the 1.50 level..

Will Bernanke's Testimony Spark a Dollar Rally on Wednesday?

2008-02-26T17:40:00.005-08:00

US Durable Goods Orders (JAN) (13:30 GMT; 08:30 EST)
Expected: -4.0%
Previous: 5.2%

Fed Chairman Bernanke Testifies Before House Panel on Monetary Policy (15:00 GMT; 10:00 EST)

What Are The Markets Facing?

The dour sentiment on the US economy will not receive much of a boost on Wednesday, as durable goods orders for the month of January are expected to plunge 4.0 percent. A bulk of the decline will likely be led by transportation, as Boeing reported a slump in demand and orders amounted to a mere 65 planes - down from 287 in December. Meanwhile, traders will also be watching capital goods orders excluding defense and aircraft as a proxy for business investment. Though this component rebounded in December, the three month annualized rate of growth fell negative for the second consecutive period, suggesting that business sentiment is turning increasingly pessimistic. However, the market's reaction to the news may not be prolonged, as the big event risk for the day will be Federal Reserve Chairman Ben Bernanke's testimony to the House Panel on monetary policy. There is little doubt that Bernanke will note the downside risks to growth as conditions in the housing sector remains in a freefall and the labor markets show signs of deterioration. Furthermore, he will likely need to address the stability of the financial markets, as the credit ratings of troubled bond-insurers Ambac and MBIA may still be at risk, despite Standard & Poor's recent reaffirmation of their triple-A ratings. The million dollar question is: will Bernanke focus more on inflation risks? During the last FOMC meeting in which the bank cut the fed funds rate by 50bp to 3.00 percent, Dallas Fed President Richard Fisher dissented as he thought “monetary policy was already quite stimulative, while headline inflation was too high at more than 3 percent over the last year.” The minutes of the January meeting also showed that the FOMC will not hesitate to reverse their rate cuts once growth prospects stabilize. As a result, there is a chance that Bernanke could come off sounding a bit hawkish, on Wednesday, but he is more likely to remain focused on the downside risks to growth.

Bonds - 10-Year Treasury Note Futures

Treasuries are consolidating tightly between the 20 SMA at 116-16 and 50 SMA at 115-14. Unsurprisingly, upcoming US data will likely work in favor of a recovery in Treasuries, as durable goods orders are anticipated to plunge. On the other hand, if US stock markets rebound in the near-term, Treasuries could fall through near-term support to target 114-10. Bernanke will have the overriding say though, as his testimony to the House Panel will be watched for signs that the Fed remains dovish and will cut rates in March (bullish for Treasuries). However, if he focuses on inflation - suggesting the FOMC may leave rates unchanged - Treasuries may plummet.

FX - EUR/USD

On Wednesday, the US Census Bureau will report monthly durable goods orders for January, and the news may not be good for the US dollar as expectations call for a 4 percent decline. With the greenback trading near historic lows, the best that US policy makers could hope for is that the weak currency would be boon for US exports, especially manufactured goods. Meanwhile, Federal Reserve Chairman Ben Bernanke will testify in front of the House Panel on monetary policy later in the morning. Traders will be anxiously awaiting his commentary in an attempt to gauge if the central bank remains extremely concerned about the downside risks to growth or if the FOMC will now turn their attention to persistent inflation pressures. There is a strong possibility that Bernanke will remain dovish, but with EUR/USD holding just below trendline resistance at 1.4886, dollar bearish news released prior to Wednesday could lead the pair to surge higher. As Technical Strategist Jamie Saettele noted in his Daily Technical Report, EUR/USD may ultimately be heading for 1.5119.

Equities - Dow Jones Industrial Average

US equity markets have been in a downward trend since October as deteriorating economic data leads fears of a recession to build. Upcoming news could weigh on stocks, as durable goods orders are anticipated to plunge, which does not bode well for the domestic economy. Furthermore, Federal Reserve Chairman Ben Bernanke's comments to the House Panel on monetary policy will be watched closely as they tend to be highly market moving. For the stock markets, investor reaction will depend more upon whether he sounds bearish on growth prospects or becomes a bit more optimistic that past policy actions have helped economic conditions to stabilize. Meanwhile, a daily chart of the Dow Jones Industrial Average shows price consolidating within a pennant formation, leaving a breakout likely. A push above resistance at 12,675 may take on the 12,950/13,000 level, while a drop below 12,280 could move to take on the January 22 lows at 11,634.

DailyFX

Disclaimer

Dismal Data Sends USD to Record Lows

2008-02-26T17:40:00.004-08:00

Traders sold the greenback after key economic data reinforced the current dilemma facing the US Federal Reserve. The dollar slipped past the 1.49-level against the euro and relinquished the 0.93-mark versus the Aussie. Persistent fears of the faltering US economy continue to plague the currency with the dollar hitting a fresh all-time low against the euro.

The data released today bode poorly for the economy and highlight the bind the FOMC is in - with deteriorating fundamentals and lingering inflationary pressure. The Conference Board's index of consumer confidence plunged to its lowest level since March 2003, falling to 75 in February, sharply lower than estimates for a decline to 82 from 87.9 a month earlier. The expectations for the next 6-months also dropped to its lowest level since 1991 at 57.9 versus 69.3 from the previous month. The present conditions component fell to 100.6 versus 114.3 from January. On the other side of the coin, inflation data revealed that price pressures continue to be a persistent problem plaguing the Fed - as PPI spiked to 7.4% in January versus 6.3% a year earlier and jumping by 1.0% compared with a 0.3% drop in December. The core PPI figures did not fare much better, excluding food and energy, producer prices edged up by 0.4% m/m and 2.3% y/y.

Markets will continue to focus on US data releases this week with further scope for dollar weakness given the vulnerability for additional deterioration in fundamentals. Wednesday will see the releases of durable goods orders, new home sales, as well as Fed Chairman Bernanke's semi-annual Congressional testimony. The January durable goods orders are forecasted to post a sharp 4.0% drop versus a 5% increase previously. New home sales in January are seen slipping slightly to 600k units, down from 604k units a month earlier.

Given recent upticks in inflation data, it will be interesting to see how Fed Chairman Bernanke addresses stagflationary fears. While we expect the FOMC to continue easing policy, specifically with another 50-basis point rate cut to 2.5% in March, lingering inflationary pressures may impede on how much room the Fed has to stimulate the economy. Bernanke's testimony tomorrow morning will be closely scrutinized for any shift in rhetoric on the Fed's pledge to prop up the economy.

Fed Vice Chairman Kohn reiterated that growth risks are a greater threat at the moment, adding that he does not expect the elevated inflation rates to persist. Kohn said that the recent inflation reports were disappointing but expectations remain reasonably well anchored.

Euro Rallies to Fresh All-Time High

The euro eked out a record high against the dollar at 1.4982 on a combination of better than expected Eurozone economic data and a renewed bout of soft US reports.

An upbeat set of economic data from Germany tempered market expectations that the ECB will soon cut rates. Germany's economy expanded by 0.7% in Q4, up from 0.3% in the previous quarter and by 2.4% versus 1.6% a year earlier. Additionally, the Ifo sentiment survey beat out calls for a decline, unexpectedly improving in February. The current conditions survey jumped to 110.3, from 107.9 previously, while the business climate component improved to 104.1, from 103.4. However, the Ifo expectations component slipped to 98.2, from 99.0.

Consumer Confidence Falls Significantly in February

2008-02-26T17:40:00.003-08:00

Consumer confidence fell 12.3 points to 75.0 in February, the lowest level since March 2003. The present situation index fell 13.7 points to 100.6 as consumers grapple with a weaker job market and rising gasoline and food prices. Despite increasing inflation concerns, consumers expectations of inflation were unchanged.

The Present Situation Declines Considerably

The present situation index, which reflects consumers' assessment of current conditions, slipped to 100.6 from 114.3, the lowest level since November 2004. As a result, consumers' may continue to pull back on discretionary purchases. We expect consumer spending to slow to an annualized pace of one percent in the first quarter.

Weaker Job Market

Jobs "hard to get" increased to 23.8 from 20.6 while "jobs plentiful" declined 3.2 points suggesting weaker employment growth. January's negative payroll number is likely factoring into the decline. We expect the pace of non-farm payrolls to continue to moderate.
On a positive note, plans to buy a home increased in February

Wachovia Corporation
http://www.wachovia.com

Disclaimer: The information and opinions herein are for general information use only. Wachovia Corporation and its affiliates, including Wachovia Bank, N.A., do not guarantee their accuracy or completeness, nor does Wachovia Corporation or any of its affiliates, including Wachovia Bank, N.A., assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, are for general information only and are not intended as an offer or solicitation with respect to the purchase or sales of any security or any foreign exchange transaction, or as personalized investment advice. Securities and foreign exchange transactions are not FDIC-insured, are not bank-guaranteed, and may lose value.

Forex risks

2008-02-26T17:40:00.002-08:00

There are always risks to FOREX trading, even if your broker is quite reputable. All investments and transactions meet the whole set of risks because of sudden rate changes, changing market conditions and different political events.

Many factors are the reason for these risks. Just a few examples are: the main company's goals; the scheme how these goals are reached; the successful company's administration that guarantees its long functioning and at last ability to oppose any force-majeure with company's own resources.

Other constituents such as - the company's "age", the building in the center of the town, spacious impressive office and the polite staff - are not so important for success. Forex market started functioning quite lately, approximately 20 years ago and since then stands independently from other markets, first of all because it is out of the exchange. Banks made up its primary participants. As communication facilities and automation were developing banks started trading "directly" without any intermediaries such as stock exchanges. Many "classical" financiers criticize and disregard Forex as there's not a single chance of limiting and regulating it legislatively inside one state - from the very start this market became a global phenomenon. However many European and North American banks withdraw their main income in particular from speculative operations on Forex market whereas the number of the staff working in other market sectors is permanently decreasing.

Forex market's broker doesn't need any licenses and certificates for his activity as he is considered to be just a legal person. That's why Forex market on the whole also doesn't run into any "legislative limits" inside countries, and in many states is equated to the games' organization.

So it's important to mention that there are no regulations for Forex market, even despite of great number of complicated problems and risks - such as the risk connected with market prices' changes. Confidence and conscientiousness of carrying out the operations, a lucidity and marketing of Forex brokers are only some of the problems, managed of Forex risks. However, first of all, it's important to know, that broker companies can't operate in a single stock exchange in compliance with all problems and risks, in contrast to quite adaptable exchange markets.

It's absolutely necessary for any FOREX trader to know at least the main rules of technical analysis and reading financial charts, to have experience of studying chart changes and indicators and interpreting of these very charts. This is a certain way of decreasing risk and financial exposure.

However each FOREX transaction should be transmitted using all existing tools specially designed to reduce loss as even the most professional traders can't exactly predict market's future behavior. Many ways to minimize risks when placing an entry order were elaborated. Among them are different types of stop-loss orders. A stop-loss order is a special code of rules explaining how one can leave his position if the currency price amounts to a certain point. A stop loss order is placed below current market price if a person takes the so-called long position and expects the price to go up. On the contrary, stop-loss order is placed above current market price if a person takes the so-called short position and expects the price to go down.

As an example, if you take a short position on USD/CDN it means you expect the US dollar to fall against the Canadian dollar. The quote is USD/CDN 1.2138/43 - you can sell US$1 for 1.2138 CDN dollars or sell 1.2143 CDN dollars for US$1.

You place an order in the following way:
Sell USD: 1 standard lot USD/CDN @ 1.2138 = $121,380 CDN
Pip Value: 1 pip = $10
Stop-Loss: 1.2148
Margin: $1,000 (1%)

You are selling US$100,000 and buying CDN$121,380. Your stop loss order will be executed if the dollar goes above 1.2148, in which case you will lose $100.

However, USD/CDN falls to 1.2118/23. You can now sell $1 US for 1.2118 CDN or sell 1.2123 CDN for $1 US.

Still no existing institution is able to control this market for long on account of the huge volume of FOREX. Whatever you do in the end market forces will still be stronger, making FOREX one of the most open and fair investment opportunities available.

Usually one comes across prices of foreign exchange by FOREX quotes in pairs of currencies where the first currency is the 'base' and the second is the 'quote' currency, for instance: USD/EUR = 0.8419. Here we find out that 1 US dollar costs 0.8419 Euros. Why? The foregoing currency pair "transfers" US dollars (USD) into European Euros (EUR). The base currency always stands in the first place and the second, quote, currency shows the price for one unit of the base currency.

And on the contrary, the pair EUR/USD = 1.1882 clearly indicates that 1 Euro costs 1.1882 US dollars today.

With the help of these quotes it's quite easy to follow the changes in the financial market. If the base currency is becoming stronger, the price of the quote currency rises and this fact indicates that one unit of the base currency will buy more of the quote currency. However, if the base currency loses scores, the quote currency immediately goes down.

Usually one counts FOREX quotes as "demand and supply" - in the so-called "bid" and "ask" prices. The amount of money demanded for the base currency - while selling the quote currency - is called "bid" and the price expected for the base currency - while buying the quote currency - is "ask" price.

How to define in the cross-currency charts which currency - the base or the quote - is on the top and which on the side? If that's the case, the broker should know at least one pair of currencies and which one of the pair values more.

Stop and limit orders will definitely help yon to minimize your Forex risks.

Forex psychology

2008-02-26T17:40:00.001-08:00

Establish and honor stop-losses to protect your money. When the stop loss is triggered, act immediately, don't have second doubts. Avoid holding on to a losing position because you "hope" that things will turn around. Falling stocks will usually continue to fall until something positive happens to arrest the decline. You could get wiped out waiting for that magical moment. Get out of a bad trade and use the money to execute a different trade. Cut your losses early and Let your Profits Run. Most traders violate their predetermined plan and take their profits before reaching their profit target because they feel uncomfortable sitting on a profitable position. These same people will easily sit on losing positions, allowing the market to move against them for hundreds of points in hopes that the market will come back. In addition, traders who have had their stops hit a few times only to see the market go back in their favor once they are out, are quick to remove stops from their trading on the belief that this will always be the case. Stops are there to be hit, and to stop you from losing more then a predetermined amount! The mistaken belief is that every trade should be profitable. If you can get 3 out of 6 trades to be profitable then you are doing well. How then do you make money with only half of your trades being winners? You simply allow your profits on the winners to run and make sure that your losses are minimal.
Do not over trade. One of the most common mistakes that traders make is leveraging their account too high by trading much larger sizes than their account should prudently trade. Leverage is a double-edged sword. Just because one lot (100,000 units) of currency only requires $1000 as a minimum margin deposit, it does not mean that a trader with $5000 in his account should be able to trade 5 lots. One lot is $100,000 and should be treated as a $100,000 investment and not the $1000 put up as margin. Most traders analyze the charts correctly and place sensible trades, yet they tend to over leverage themselves. As a consequence of this, they are often forced to exit a position at the wrong time. A good rule of thumb is to trade with 1-10 leverage or never use more than 10% of your account at any given time.
Trade only trend. It even does not important what time scale have you been using! The only difference is in stop-loss/target size: trading with longer-term trends requires large stops as well as larger potential targets. The most common trader's mistake here is in trying to follow larger scale trend with more comfort shorter stop-loss.
Do not tune yourself for quick profits because in most cases only correction movements are quick and sharp. Trend-following system will require you to hold position for more extended period of time so learn to be patient. Trying to open position to get quick profits in most cases means that you just trading against the trend.
Let profits run. There is natural psychological reaction to take profit too early because of fear that the market can reverse and eat trader's profit. Use protective trailing stops instead to exit profitable positions.
Use stop-loss orders to cut your losses. It's always difficult to accept series of losses. But there is no way to trade without losses. Learn do not feel guilty about losses. We know one trader who was trading successfully during 8 months and more then doubled his account. He finally sold EURUSD from 1.2400 and could not agree to close this position at 1.2500, 1.2600 and so on. His account was killed around 1.3400.
Do not pyramid loosing positions in a hope to exit on break-even point. Add only profitable positions.
Use money management to control the risk. Never over-leverage your position because 7-8 loosing trades in a raw could ruin your account. The simple calculation gives us 1:200 probability of such event. Never risk more then 2-3% of your capital in one trade.
Use trading system to avoid subjective or intuitive decision making. Act without hesitation when your trading system generate trading signal with good profit potential. Always learn new ideas about technical analysis and trading systems: read books, articles, forums, attend seminars in order to build your own profitable trading system.
Use written trading plan. Develop self-discipline following your trading plan.
Learn how to control your emotions, fears and stress. Use different psychological techniques most suited to you. Remember that good trading system equals to only 50% of successful trading. You can have good trading system but stay around zero income for years only because of poor psychological training.
Learn on your mistakes. Write your mistakes on the diary and try do not repeat them.

Your psychology is a tool that enables you to predictably control your emotions and make decisions based upon cold, hard facts. Without this, you are going to be swept along with the stock market currents until you are eventually washed away in a tide of red ink.

When it comes to trading, one of the most neglected subjects are those dealing with trading psychology. Most traders spend days, months and even years trying to find the right system. But having a system is just part of the game. It is very important to have a system that perfectly suits the trader, but it is as important as having a money management plan, or to understand all psychology barriers that may affect the trader decisions and other issues. In order to succeed in this business, there must be equilibrium between all important aspects of trading.

When you lose a trade, what is the first idea that pops up in your mind? It would probably be, "There must be something wrong with my system", or "I knew it, I shouldn't have taken this trade" (even when your system signaled it). But sometimes we need to dig a little deeper in order to see the nature of our mistake, and then work on it accordingly.

Forex broker choice: factors

2008-02-26T17:40:00.000-08:00

One of the basic factors of your success in the Forex market is a correct broker choice, or, in other words, the companies in which you will open the bill and through which will spend currency transactions.

If you are new to the FOREX market, it is recommended that you find a broker to help with your Forex trading strategy and transactions. There are a wide variety of brokers, available to you, so be prepared to ask some main questions. These include:

1. What is your spread?
(Hint: The lower the spread the more money you make!)

2. What are your credentials?
(Hint: There are certain affiliations you should look for.)

3. What tools are available to help me learn more?
(Hint: Not all broker firms are created equal. Find out who offers the best resources and information to help you make the smartest trading decisions.)

4. What is your leverage?
(Hint: This is the determining factor on how much money you are able to make with each investment.)

The correct broker choice will help, both to increase capitals, and to save weight of nervous cells. Now there is a set of the companies, rendering broker services. All of them can be divided on two basic categories:

-dealing centers;
-investment banks.

There will be the list of key parameters, being fundamental at a choice of the broker, from the most important up to insignificant.

The sum of your starting capital

So, the basic factor at broker choice is the size of your starting capital. The overwhelming majority of broker companies demand the deposit over 2000 $. The companies are widespread also, beginning to work with 10000 $. And it does not mean, that for a greater sum of the enclosed means you will offered the best conditions and absolute guarantees of duly payments and to safety of earnings. All depends on the concrete service provider. There are offers to begin Forex market trading with 1000 $ and even less (so-called mini-Forex market) when your position is not deduced on the market directly but only by means of summation of positions of several participants. If you adhere to belief that it is necessary to start to work only with solid banks the size of your bill cannot be less than 50 000 $, and more often 100 000 $.

That is, Wide Range of Leverage Options - Leverage is necessary in forex because the price deviations (the sources of profit) are merely fractions of a cent. Leverage, expressed as a ratio between total capital available to actual capital, is the amount of money a broker will lend you for trading. For example, a ratio of 100:1 means your broker would lend you $100 for every $1 of actual capital. Many brokerages offer as much as 250:1. Remember, lower leverage means lower risk of a margin call, but also lower bang for your buck (and vice-versa).

Note: Your broker offers high leverage if you have limited capital. If capital is not a problem, any broker with a wide variety of leverage options should do. A variety of options lets you vary the amount of risk.

Main rule which it is necessary to adhere at definition of the starting sum of your capital - loss even all sum should not be ruinous. It is not necessary to perceive seriously also offers of the tenders with 100 $, etc. The optimum quantity of the enclosed means, especially beginning player is in a range 2000 - 10000 $.

Broker's reputation

Before an investment it is necessary to collect full information about your future broker. Pay attention for the period of existence of the company in the market of services and broker license. It is obvious, that more "age" brokers are more preferable than beginners because of stability and reliability. Though sometimes the new companies offer the most comfortable operating conditions. Ask familiar Forex market traders or visit forums on the Internet, devoted to currency Forex market trading. Usually facts of swindle don't remain unnoticed in Forex trader's environment. Certainly, it is possible to come across an anti-advertising but if the name of your potential broker often appears in various black lists, it is necessary to concern to such facts with enhanced attention. Choose those brokers about whom it will be possible to collect as many as possible positive responses.

Unlike equity brokers, forex brokers are usually tied to large banks or lending institutions because of the large amounts of capital required (leverage they need to provide). Also, forex brokers should be registered with the Futures Commission Merchant (FCM) and regulated by the Commodity Futures Trading Commission (CFTC). You can find this and other financial information and statistics about a forex brokerage on its website or on the website of its parent company. Bottom line: Make sure your broker is backed by a reliable institution!

Operating time

The preference should be given the companies which open at night on Monday and finish job more close to midnight on Friday. Imagine, that you leave a profitable position on target with the purpose to earn more. Put the protective order so that even at a failure to earn a little and go easy to have a rest, hoping noticeably to increase the capital. Can happen, that at night on Monday there was the unexpected event promoting sharp jump of a Forex rate against your position. The broker who comes on job to nine mornings, will execute the protective order under that price which he will see on the monitor. Thus, because of a break in job of the broker to you will leave risky enough a position opened on the days off.

Account Types

Many brokers offer two or more types of accounts. The smallest account is known as a mini account and requires you to trade with a minimum of, say, $250, offering a high amount of leverage (which you need in order to make money with so little initial capital). The standard account lets you trade at a variety of different leverages, but it requires a minimum initial capital of $2,000. Finally, premium accounts, which often require significant amounts of capital, let you use different amounts of leverage and often offer additional tools and services.

Note: Make sure that the broker you choose has the right leverage, tools, and services relative to your sum of capital.

Producer Prices Rise Stronger Than Expected in January

2008-02-26T17:24:00.009-08:00

Like last week's CPI report, producer prices rose more than expected in the month of January. Solid gains in food (1.7%) and energy (1.5%) drove the overall result. Excluding energy and food, prices were still uncomfortably strong. We still believe slower economic growth will place downward pressure on inflation in the second half of the year.

Food & Energy Lift the Headline Index

The overall PPI rose 1.0 percent in January relative to the previous month, bringing the year-over-year measure up to 7.4 percent from 6.3 percent.
Even excluding food and energy, prices rose at a solid clip last month, up 0.4 percent.

Commodity Price Pressures Still Present

Inflationary pressures further back in the production pipeline bounced back this month. Commodity price risk is present.
Although consumer and producer prices rose at a stronger-than-expected pace in January, we believe the Fed is more concerned with economic growth prospects than inflation and will continue to ease monetary policy at the Mar. 18 FOMC

Wachovia Corporation
http://www.wachovia.com

U.S. Market Update

2008-02-26T17:24:00.008-08:00

Indices pared early losses after IBM announced a $15B repurchase program and reaffirmed guidance. The NASDAQ was under some pressure early in the session after ComScore data spooked holders of Google. GOOG -7% BIDU -3% Earnings from some of the largest U.S. retailers continue to show a weakening economy, but in a sign that some of that weakness is already priced in shares of M +4.5%, TGT +3.3% HD +0.5% AZO +5% and JWN +3% are all trading higher. April crude has made a run above $100 with the firming equity markets following the IBM news. The oil complex is one of today's best performers with the OIH up 1.7%. Metals futures remain near session highs led by March silver +2% and copper +1% which are in the process of rolling the front month contract to May. Treasury yields were initially seen higher with the release of hotter than expected PPI data which was highlighted by the largest y/y rise in more than 15 years. Buyers came back in after the equity open when soft consumer confidence and Q4 house price index readings reaffirmed the somber tone for the U.S. economy. Treasury futures are currently hovering in the middle of today's range with the 10-year yield near 3.88%. The April fed fund futures has seen the odds of a 50 basis point cut slip below 90%.

The USD remained on the defensive throughout the US morning despite the higher-than-expected PPI data, which saw the largest yearly rise since October 1981. Dealers noted that despite the high inflation data from the US the USD maintained a soft tone as the realization that US real interest rates are negative and will remain so given the current Fed Funds expectations. None-the-less the USD is adhering to its trading range established back in Jan. Soft US consumer confidence data is also weighting upon the dollar sentiment. European currencies aided by firm German IFO data released prior to the US open, reinforcing sentiment that it is premature for the ECB to cut rates at this time. EUR/USD is trading at 1.4885. Dealer chatter contemplated that if the 1.5000 option barriers remain in effect the USD seemed poised to retest all-time lows in this pair. USD/CHF trades at 1.0845 and GBP/USD at 1.9725. Comments from BOE's Lomax noted that the MPC can do little about the rise in near-term inflation, may need to constrain demand; thus he sees inflation seems poised to rise sharply over next month. European fixed-income showed a bit of divergence in the session. Dealers noted that the strong IFO data is provided a rotation in favor of UK bonds from German instruments. March Gilts +14 ticks at 108.63 while March Bund futures were off 15 ticks at 115.47. Commodity currencies maintain a positive tone as USD/CAD tested 4 week lows of 0.9870 area as the pair broke below its 100 day moving average. Dealers are noting that M&A chatter could be supporting CAD as well. AUD/USD probing the 0.93 level.

Trade The News Staff
Trade The News, Inc.

Legal disclaimer and risk disclosure

All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing.

Marc Chaikin about Chaikin's Oscillator

2008-02-26T17:24:00.007-08:00

This volume indicator, Chaikin's Oscillator, is called after its developer Marc Chaikin and is a difference of moving averages of the accumulation/distribution indicator. Elaborating it Chaikin proceeded with the work of his forerunners Joe Granville and Larry Williams.

The volume indicator of accumulation/distribution by Marc Chaikin technically analyses both market indexes and separate shares, and should also comprise knowledge of tenders' volume to help analysts to get the right vision of the essence of every particular market.

In many cases only a discrepancy of volume and the market prices predicts an important market turn. It allows foreseeing internal forces and market weak points. Technical analysts always knew that tenders' volume is very important; nevertheless, some well-known researches in this field were not acknowledged till the latest 60th years when Joe Granville and Larry Williams started their studies on connection of the price and volume more effectively. The price and volume were thought to be rising and decreasing simultaneously for a long time, and that any violation of this dependence happens as a result of leaps in the price tendency. One of these theories was the Granville's concept of balance volume (IAV) which's rather clear but too simple and therefore not irreproachable. This concept says that the whole volume in day of a increase in prices is considered as accumulation, and in day of decline as distribution.

According to IAV, the prices' noticeable short-term and intermediate rises and falls very often turn out to be quite true. There's a precise technical signal that predicts the upcoming change of the market prices. It usually happens when the formation of a price extremum goes together with a discrepancy of IAV line. According to this rule, the so-called concept of balance volume was elaborated and improved by another researcher, Larry Williams.

Granville and Williams surveyed the market in different ways: the first one compared running close price with previous, the second one - close price with open price. In this way they found out what occurred - accumulation or distribution.

The cumulative indicator developed by Williams lets add to its cumulative value some share of day time tenders' volume in case if the close price exceeds the open price and subtracting a share of volume in case if the close price is less than the open price.

That's why we can surely say that accumulation/distribution indicator turned out to be a more successful principle of the analysis than that of volumetric divergences by Granville. And when Williams developed oscillator on the basis of an accumulation/distribution line, this new oscillator allowed getting even more exact buy or selling.

In the early seventies it was quite impossible to make calculations according to Williams's formula without phoning the broker every day because daily newspapers have stopped printing data on the share's open price. That's why Chaikin created Oscillator and replaced the open price in Williams's formula by the average day.

So if there is a reliable instrument of the market analysis and a tool of opportune defining buy and sell signals - it's Chaikin's Oscillator. There are three main principles in the oscillator's concept.

Principle one:

An accumulation (maximum plus minimum) will definitely occur this very day if the share or an index is closed above the average value for the day. The accumulation becomes more active the closer the level of share close or an index reaches the maximum rate. Vice versa, the distribution occurred this day once the share gets lower than the average day price. The distribution becomes more active the closer you get to the minimum rate.

Principle two:

As a rule, when prices constantly go up, tenders' volume and strong volume accumulation are also rising. Indebtedness of volume at prices' growth demonstrates lack of fuel for further rise while the volume of some types of fuel feeding market increases. Vice versa, when the market prices decrease low volume may be observed, and finally there is a panic liquidation of institutional investors' positions.

Principle three:

Chaikin Oscillator also allows following volume of the market money resources. So one is able to predict market rises and falls - both short-term and intermediate term - with the help of comparing changes of volume and prices.

It's recommended to use Chaikin Oscillator with other technical indicators because there are still no irreproachable instruments of technical analysis.

Chaikin Oscillator can be also used differently when change of its direction serves as a buy or sell notice but only if it corresponds to the direction of the price tendency.

That's a broker gets a clear buy signal when the share on the rise and its price over a 90-day's moving average turn of oscillator curve goes upwards in the field of negative values. It's true only when the share price exceeds a 90-day's moving average. The broker gets a sell signal when the turn of the oscillator goes downwards in the field of positive values - which is over zero. It's true only in case if share price at this particular time is lower than a 90-day's moving average of the nearest price rate.

Open and close position

2008-02-26T17:24:00.006-08:00

The main goal of the Forex market is gaining profit from your position through buying and selling different currencies. For example, you have bought a currency, and this particular currency rises in value. In this case you gain profit if you quickly close your position. If you close your position and sell the currency back for fixing your profit, you are in fact buying the counter currency in this pair. That's how a rate of worth has been discovered - it's one currency value compared to another while operating with currency pairs. In the end, currency of any country has value only compared to another country's currency.

The "position" is the netted sum commitment in a particular currency. The position can be flat or square, long or short. We call the position square when there's no exposure, it's long if more currency is being bought than sold, and the position is short if more currency is being sold than bought.

The goal of currency trading is exchanging one currency for another. The broker usually expects the market rate or price to change in such a way that the currency he has bought rose in value compared to the one he has sold. Currencies are always defined in pairs in the Forex market; and consequently, synchronous buying of one currency and the selling of another follow all trades operations. If you have bought a currency and the value of its price increases, the broker should sell the currency back if he wants to fix the profit at this level. What's "an open trade or position"? It occurs when a trader has bought or sold one currency pair and has not sold or bought back the same sum to close the position.

There's an expression - "going long" or "longing the market". What does it mean? It's when you want to purchase the base currency, and are also supposed to purchase the currency pair as well. Going long the EUR/USD pair means purchasing the base currency and selling the same sum in the quote currency. You should own the quote currency before selling. It is sold quickly in the open market and used to protect your long position on the base currency.

There's also the so-called "shorting the market". The same rules are used here as explained above only vice versa. If you see that the base currency value is getting lower than particular currency or the secondary currency is exceeding the base currency, you should not buy the currency pair but, on the contrary, sell it. Going short the EUR/USD pair means selling the base currency and buying the same sum of the quote currency at the running exchange rate.

To put this other way, one is said to be "long" in that very currency when he's buying it. Long positions are within the offer price. So if the broker is purchasing one GBP/USD lot at the rate of 1.5847/52 means that you'll purchase 100,000 GBP at 1.5852 USD. And one is said to be "short" in the currency when he's selling it. Short positions are within the bid price, which is in our case 1.5847 USD.

The trader is always long in one currency and short in another at the same time because currency operations are symmetrical. So if one exchanges 100,000 GBP for USD, he's turns out to be short in sterling and long in US dollars.

Continued and live and position is called "open". The value of the open position changes according to the market exchange rate. All benefit and loss exist only officially and influence the margin account. Suppose you want to close your position. In this case you start an identical and opposite trade in the same currency pair. For instance, if you have gone long in one lot of GBP/USD at the predominant offer price you can afterwards close out that position by going short in one GBP/USD lot at the predominant bid price. Besides it's impossible to open a GBP/USD position through Broker One and close it out through Broker Two as you should conduct the opening and closing trades with the help of the same mediator.

Cross-rates, pips, figure

2008-02-26T17:24:00.005-08:00

Cross rate and pip - are two of the main terms in Forex market.

Cross-rate is when two currencies are equal which follows from their Forex currency exchange rate according to a Forex rate of the third currency. Pairs of non-US dollar currencies are called "crosses." It's possible to withdraw cross exchange rates for the GPB, EUR, JPY and CHF from the mentioned above major pairs. Exchange rates must be firm in all currencies , otherwise it will be possible to "return trip" and make unrisky benefits.

Example

Assume that the following major exchange rates are known:
EUR/USD = 1.0060/65
GBP/USD = 1.5847/52
USD/JPY = 120.25/30
USD/CHF = 1.4554/59

To calculate GPB/CHF
GBP/USD: Bid: 1.5847 Offer: 1.5852
USD/CHF: 1.4554 1.4559
GBP/USD X USD/CHF = 1.5847 X1.4554 1.5852 X 1.4559

"Pips" is a point, or a minimal currency change. Various instruments, or so-called currency pairs, are quoted with various accuracy, or with different number of characters in their quotations. Most currencies are quoted with the accuracy of 0.0001, but some of them such as yen and its cross-rates - with the accuracy of 0.01. Usually Quotations are given in contracted form because big figures of quotations change quite slowly. It looks like this: EUR 10/15, which means, UR/USD 1.1310/1.1315. When quotations change, for instance, USDJPY=121.44 to USDJPY = 121.45 or GBPUSD = 1.6262 to 1.6263 it means that that the price has changed by 1 point. In the previous examples dollar raised by 1 point comparatively to yen which decreased by 1 point, and pound also raised by 1 point.

The value of one point in US dollars differs both for different currencies and for the same currency with various quotations. The amount of the deal also influences the value of one point. On the whole, the scheme for calculating the value of one point of the currency in US dollars can be demonstrated like this: Value of the point = Amount of deal * Point. This scheme lets you get the results in the quoted currency. If you want to calculate the value of one point back from the quoted currency to US dollars, you should divide the result by ASK (Offer) rate of the quoted currency against US dollars in case if the quoted currency has direct rate, or to multiply by BID rate of the quoted currency against US dollar if the quoted currency has reverse rate.

For example:
There's a position USD 200000, on the market of USDJPY
Accordingly, value of one point = 200000 * 0.01 = JPY 2000
If now the current rate is USDJPY 118.62/68, then value of one point in USD will be 2000/118.68 = USD 16.85
There's a position EUR 300000, on the market of EURGBP
Accordingly, value of one point = 300000 * 0.0001 = GBP 30
If now the current rate is GBPUSD 1.6101/07, then value of one point in USD will be 30*1.6101= USD 48.30
There's a position GBP 100000 on the market of GBPUSD
Accordingly, value of one point = 100000 * 0.0001 = USD 30

Another term is "figure". The scheme mentioned below will demonstrate the connection between pips and figures.

Currencies are quoted using four positions after the decimal point, which means that one pip is 1/10,000 of the currency unit. There is a difference of four pips between "buy" and "sell" in this above example (EUR/USD) but there is no difference in the figures' value.

Here the Japanese yen is not the currency which is quoted. The yen is quoted only two positions after the decimal point because of the high denomination of the yen against the USD, for example, 121.23 - 121.39. So one pip = 1/100 of the Japanese currency unit. If you phone the dealer, he or she will tell you only the values of the pips, being sure that you know both the market situation and the value of the figures. If you are not it's better to figure it out.

Quotations and spread

2008-02-26T17:24:00.003-08:00

The spread - the source figure used by the trader at the position taking

GBP/USD 1.6545/1.6550 Sell Price/Buy Price

If you are going to purchase the base currency (to long the pair) relying on your expectations of its increase, you should perform the purchase at the buy price which always higher than the sell price and you'll lose the spread difference if you suddenly decide to sell this currency at once. Simply speaking, the rise of the currency price that you've bought may cause you the losses.

In case you sell the base currency and would decide to buy back the currency you've just sold while the rate didn't move a point, then the difference you'll lose will be the spread that is 5 pips in the given example.

The trading platform will inform you of the purchase or sale price at which you have bought or sold the currency pair. So if you have bought the pair, the trade platform will show you both your bought price and the current sell price which can be calculated as the by price subtracting the spread. If you want at least to break even you should wait until the market makes at leas a few pips up. The resume can be that the smaller the spread, the better as you'll have to wail a little time before the market moves enough pips for you to run a surplus.

Standard Spreads

Our advantages are that we have a direct access to trading that causes the existence of the minimum spreads, which are at least much smaller than any other financial market has and the absence of any fee paid for the brokerage houses out of each transaction.

The standard spread depends on the currency pair traded. In case the pair is traded much then the spread fluctuations are low. To sum up, the majors' (the currency pairs traded most heavily) spreads are generally very tight while the crosses' and exotics' (the pairs that are traded less) ones are much wider. The standard spread for the Majors makes from 4 to5 pips whereas the spread of Crosses and Exotics reaches from 5 to 20 pips.

The "tighter" spread shows closer sell and buy prices and the "wider" spread corresponds further difference.

The sell price (bid) is constantly smaller than the buy price (ask).

The price for the pair in forex market is usually shown in the following way where the sell price goes the first:

GBP/USD 1.6545/1.6550 Sell Price/Buy Price

The buy price is sometimes written with only two decimal digits left in the following way:

GBP/USD 1.6545/50

Here the spread is 5 pips. The buy price shows the amount of the secondary currency to be given in order to buy one item of the base one. The sell price shows the amount of the secondary price that you'll get in order you sell one unit of the base one.

You and Forex broker

2008-02-26T17:24:00.002-08:00

The forex broker is required to become the participant of the world largest market - the forex market. The forex broker can make suppositions of any currency purchase or selling which is not common for stock brokers. Some kinds of technical analysis as well as the tips are sometimes offered by forex brokers to their clients to ameliorate the trading income of the latter.

The broker of the forex market is generally a banking structure able to buy considerable masses of a currency. Banks used to be the only institutions that had a possibility to be forex traders whereas it's easy for any trader to have round-the-clock trade at the market being subscribed with a broker.

The structures like banks, also called the brick and mortar institutions, have fewer opportunities nowadays to give their decisions to individual forex traders who have direct access to the market and latest news by trading from home.

Your needs may be the criteria for choosing the forex broker. There are lots of online forex brokers or houses that offer in-depth research, various demo programs for the newcomers. Other forex brokers, targeted at experienced traders, offer fewer help supposing that you have some skills and knowledge how any particular situation may do good. Before you start dealing with any online broker it is strongly recommended to find out everything about him or her and sometimes to try a demo.

The best forex brokers are characterized by their deep awareness of the techniques of money management. Trading signals understanding, possibility to analyze any market conditions rapid changes, and various market factors comprehension, such as interest rates are the criterion of this characteristic. Traders provided with such information carry out their trades consistently using these time-tested methods.

The positions taken by brokers are intelligent and let them gain their clients' profits.

Statistical tools are widely used by FX (Forex) brokers for trends analyses. FX brokers find the best time to act at the market relying on approximately 26 technical indicators. The principals of dynamic forex trading are carried out by forex brokers by analyzing complicated statistics and charts. FX brokers forecast possible market movements through these indicators. The traders use this ability of brokers to find the correct statistical trends for gaining the profit for the investors.

The most experienced forex brokers are very competent risk managers. The asset market model, which is one of the latest theories, considers currencies to be the asset prices that are dealt with in the financial market. Stock market averages give the basis for Dow Theory. Forex brokers must decide on the trends and market opportunities relying on the experience despite the validity of any theory. The qualities characterizing top FX brokers are: objective, knowledgeable, disciplined, and ethical.

The websites of governmental entities and brokerage firms give the information of such traders. The integrity of traders and firms that propose services to public can be found out due to the investigations. At this very moment you can choose a forex broker but it is recommended for you to get some knowledge of the market before you do it. Being a knowledgeable investor while choosing the broker may do you only good. As far as Forex brokers deal with the Forex market day by bay, you'll come out an emphatic person if you speak to them at their professional language. This gives a chance that you'll be considered separately. Suppose all interaction being just an affair of humans.

The courtesy is valuable among the people involved in investment despite its apparent impersonality. Your financial welfare may depend on the relationship with the broker. You'll find a lot of stories concerning financial success surfing on the web, but we do not advice you to believe this miraculous success. Before you take any decision consider all alternatives objectively and well-thought-out. The honesty in your plans will let you gain a respect form Forex companies. The more straightforward the communication is, the more effective is the strategizing. You shouldn't figure on the stability in such sphere as markets.

Your efforts of the process learning will not be certainly repaid in a day whether the activity undertaken systematically and for a long time can give you a considerable result. So start the game today rising the cost of tour time. There are great opportunities for the European Forex brokers existing nowadays. The European philosophical views have changed due to the combination of international events that affects the strategies taken by the European Forex brokers. The recommendations will help you to decide on which broker to choose.

One of easy ways to do this is to ask for other Forex traders' advice. Special online forums give an access to such expert opinions constantly. Resources triangulation is another way to be aware of the process. It can be done by contacting various firms concerning your certain portfolio and find out their most threatening competitor. Counting the most threatening competitors will get you to triangulating the results. This list is the source to choose the company to be more successful. Moreover your portfolio has a superior agency over it, you shouldn't forget about it.

Forex is a risky Business

2008-02-26T17:24:00.001-08:00

Of course, every investment is risky but the risks of loss in trading off-exchange Forex contracts are even bigger. That's why once you decide to be the player in this market, you'd better realize the risks connected with this product for make suspended decisions before investing.

In Forex you are operating big sums of money, and it's always possible that a trade will turn against you. The Forex trader should know the tools of advantageous and careful trading and minimizing losses. It's possible to minimize the risk but no one can guarantee eliminating it. Off-exchange foreign currency trading is a very risky business and may not be appropriate for all market players. The only funds that can be used for speculating in foreign currency trading, or any kind of highly speculative investments, are funds that represent risk capital - for example, funds you can afford to risk without worsening your financial situation. There are other reasons why Forex trading may or may not be a suitable investment. We describe them below.

The fraud and Scams in Forex market

A few years ago Forex scams were very usual but since then this business has cleaned up. However it's wiser to be cautious and to check broker's background before signing up any documents with him or her. Reliable Forex brokers work with big financial institutions such as banks or insurance enterprises and are always registered with official government agencies. In the US, brokers should be registered with the Commodities Futures Trading Commission or should be a member of the National Futures Association. You can also check their background in your local Consumer Protection Bureau and the Better Business Bureau.

There's risk of losing your whole investment!

You will be asked to deposit an amount of money, called the "security deposit" or "margin", with your Forex dealer in order to buy or sell an off-exchange Forex contract. A small amount of money can let you hold a Forex position many times bigger than the value of your account. This is called "gearing" or "leverage". The smaller the deposits related to the underlying value of the contract are, the greater the leverage turns out to be. If the price moves in an unpreferrable direction, high leverage can bring you large losses compared to your first deposit. That's how a small move against your position may become the reason for a large loss, and even the loss of your entire deposit. If it's pointed in the contract with your dealer, you may also be required to pay extra-losses.

The market sometimes moves against you!

It's impossible to foresee with a 100%-gurantee how exchange rates will move, and the Forex market is quite unsteady. Changes in the foreign exchange rate between the time you place the trade and the time you close it out influences the price of your Forex contract and the future profit and losses related to it.

There is no main marketplace!

The Forex dealer determines the execution price, so you are relying on the dealer's honesty for a fair price. As unlike adjusted futures exchanges, in the retail off-exchange Forex market there is no main marketplace with lo ts of buyers and sellers.

You are relying on the dealer's reputation credit reliability

There's no guarantee for retail off-exchange Forex trades because of a clearing organization. Besides funds deposited for trading Forex contracts are not insured and never get a priority in case of bankruptcy. Even customer funds deposited by a dealer in an FDIC-insured bank account are not protected if the dealer faces bankrupt.

There's a risk of the trading system break down!

Sometimes a part of the system fails if you are using an Internet-based or any electronic system for executing trades. In case if the system fails, it can happen that for some time one is not may able to enter new orders, execute running orders, or alter or cancel orders that were entered before. The result of a system failure may be a loss of orders or order priority.

You can become a fraud victim!

Keep away from investment schemes that promise big profit with little risk. To defend your capital from fraud you should carefully examine the investment offer and go on monitoring any investment you make.

Risks Types

There are risks to Forex trading even if you work with a reliable broker. Transactions are unexpected and are up to unsteady markets and political events. Interest Rate Risk is based on differences between the interest rates in the two countries represented by the currency pair in a Forex quote. Credit Risk is a possibility that one party in a Forex transaction may not honor their indebtness when the deal is closed. This can occur if a bank or financial institution goes bankrupt.

Country Risk is connected with governments that take part in foreign exchange markets by limiting the currency flow. The country risks more risk making transactions with "rare" foreign currencies than with currencies of big countries that let the free trading of their currency.

Exchange Rate Risk depends on the changes in prices of the currency during a trading period. Prices can go down quickly if stop loss orders are not used. There are several ways of minimizing risks. Each dealer should have a trading scheme. For example, one should know when to enter and exit the market, what kind of fluctuations to expect. The main rule which every trader should sticks to "Don't use money that you can't afford to lose". The key to limiting risk is education which is necessary for developing successful strategies.

Every Forex trader should know at least the main things about technical analysis and reading financial charts. He should also know chart movements and indicators and understand the schemes of charts' interpretation.

Stop-Loss Orders

Even the most experienced traders can't foresee with absolute certainty how the market is going to change. Therefore one should use these tools to limit losses during every Forex transaction.

The simplest way of limiting risk is to use stop-loss orders. A stop-loss order consists of instructions how to exit your position if the price comes to a definite point. When one takes a long position and expects the price to go up he or she puts a stop loss order below the current market price. When one takes a short position and expects the price to go down he or she puts a stop loss order over the running market price. Stop loss orders are often used together with limit orders to automatize Forex trading.

Forex options

2008-02-26T17:24:00.000-08:00

Forex options have a lot in common with the stock market business. They are more reliable in limiting risks and raising profit during market trading. An investor can choose between two main options, the first of which is traditional. It lets the buyer the right purchase currency at preconcerted price and time but doesn't make him do that. If a trader seizes the opportunity of Forex options and during the agreed time the currency being bought appreciates, the trader can sell this currency with advantage. Forex options give investors another tool which helps to minimize losses and to raise profits, they are extremely popular at periods of economic reporting. But if the currency underrates the loses of a trader they pay the premium for this option.

The second type of Forex options is called SPOT (Single Payment Options Trading). This type depends on the Forex trader; it is a forecast from the trader on what they predict is going to happen in the Forex market. If the trader is successful possible profit can be unlimited and if the SPOT is unsuccessful the trader loses only the premium.

Transactions in options on FOREX are extremely risky. The options' sellers and purchasers should get acquainted with the type of option which they intend to trade and the connected risks with it. It's worth figuring out the extent to which the value of the options must go up for the position to stay beneficial, taking into consideration all transaction costs and, of course, the premium.

The options' buyer may either offset or exercise the options or let the options expire. The exercise of an option results in a cash settlement or in the purchaser getting or giving the basic interest. If the options you bought expire worthless, you lose the investment which consists of the option premium. If the option is on a leveraged position, the buyer receives a FOREX open position with associated margin responsibilities. You should remember that transaction costs on FOREX are usually zero with no commission. If you intend to buy deep-out-of-the-money options, you should realize that the chance of getting profit from such options is usually rather far-off.

As a rule, selling, "granting" or "writing" an option is more risky than buying options. The seller may uphold a loss in excess of that amount even though there's a fixed premium level acquainted by the seller. The seller is responsible for an extra-margin to keep the position at the same level if the market moves unsuccessfully. The seller also meets a risk of the buyer using the option and the seller will have to either settle the option in cash, to get or deliver the basic interest. If the option is "covered" by the seller of a corresponding position in the basic interest or a future or another option the risk may be less. If the option is on a leveraged position the seller receives an open FOREX position with associated margin responsibilities. If the option isn't covered the risk of loss is unlimited.

In some authorities brokers let postponed payment of the option premium, bringing the purchaser to responsibility for margin payments isn't more then the premium amount. It's still possible that the buyer loses the premium and transaction costs. The buyer is liable for any unpaid premium which is already overdue when the option is exercised or expires. The stock market is often associated with options; still the foreign exchange (FOREX) market also lets trade these sole derivatives. Retail traders many opportunities to minimize risk and increase profit thanks to options.

Forex Day Trading Prospects

2008-02-20T00:52:00.000-08:00

Compared to Equities or Futures, it can be easily said that the Forex market has several advantages and benefits. And Forex being a 24-hour market gives Currency trading the biggest advantage ever.
With no external control and a market open to all, Forex is the perfect currency trading platform to invest in. with the power in the hands of the currency traders, to choose any time of day to trade, whenever they want to, Forex trading basically puts the traders or investors in charge of how they want to trade and how much as well.

This is also because of the fact that Forex currency trading requires a very less amount of starting investment, which can easily enable a trader to open an account and start trading, unlike the cases in Stock Exchange and Futures market, where in, a fair amount of capital is required to start trading.
This facilitates trading for individuals or small traders, who can easily start trading small in the Forex market.

Being a round the clock market, Forex day trading enables the investor to select any time to trade, whatever is more suitable to him/her. Allowing trading for 5 and a half days a week, 24 hours a day, provides Forex traders with incomparable freedom leaving the decision for currency trading in their hands, whenever they want to, and not when the market allows them.

The Forex market is known as the Day Trading market because of the reason that basically, it trails the sun going around the world, and shifting from one main economic or banking center to another, starting from the United States to Australia, to New Zealand to the Far East, and towards Europe and then, again back to the United States.

With Forex, all through a trading day, the currency trading volume on the whole is established by two factors, one being which markets are open, and second being the time when every one of these Forex markets partly overlap one another.

The currency price at Forex day trading market, changes every second. One second a currency is up, the other second the other beats it to go high. Currency trading volume at Forex market remains high throughout, but it hits the highest point when the U.S, London and European markets are open, all at the same time, which only happens between the time periods of 1 p.m. to 4 p.m. by the GMT (Greenwich Mean Time).

As compared to the high volume of the U.S market, the level of the Pacific border markets, Japan and Hong Kong for instance, is quite low, but this still provides a Forex investor the opportunity to study and explore the vastly traded markets and currencies of the Pacific Region.
With more than $2 trillions of money being traded every day, Forex market is indisputably the biggest fiscal or financial market in the whole world. Here, the investors need to focus only on a few major currencies, rather than hundreds of equity or stocks. Forex market also is known for its fair costs and thin spreads.
Furthermore, Forex market has high levels of liquidity as compared to any other financial market and this is what makes Currency trading market the biggest economic market in the whole world. This liquidity largely comes from the banks which provide liberal cash flow to individual investors, companies and trade houses. And since the Forex market is a 24 hour market, the currency exchange trading experiences superior liquidity around the clock, as compared to the stock market, which contains a limited time period for high liquidity.

The instant trading through various means of communication such as phone and internet makes Forex day trading an instant trading business alongside making it a global trading platform.

With such high levels of liquidity, round the clock trading and steady trading prospects, Forex currency exchange market is undoubtedly one of the most profitable and potential business sectors.
Another basic benefit offered by the Forex market is that it is a no-commission market. With this free of commission trading, an investor gets to keep whole of the profit that he has earned through a day’s trading at the market. Keeping 100% of the profit is indeed a great deal for any trader today!

Taking advice from proficiently experienced Forex brokers will get you standard features like 100:1 leverage and regulated FCM status along with commission-free trading, to make your trading experience more professional.

What is Forex Market?

2008-02-20T00:45:00.009-08:00

The biggest money market in the world, Foreign Exchange or Forex or FX is a platform where money is sold and bought freely between buyers and sellers. With over $1.5 trillion USD being traded daily, the foreign exchange market has now become a market which is open to trading by an average investor as much as it is open to a high investor.

Launched over three decades back, in the early seventies, Market Forex introduced free exchange rates worldwide, according to which, the price of the currencies was determined on the basis of demand and supply only. No external regulatory authority was and still is, allowed to set or fix prices or rates.
The power of setting or fixing a price for each currency is with the participants of the market, the buyers or the sellers, who decide the price of one currency against the other.

Forex Market is also free and independent from all or any outside control and is open to all, as far as free and fair competition is concerned, making it the perfect market to invest in.

Today, Forex market deals in over hundred times the every day trading done in the New York Stock Exchange. The Forex market is an over-the-counter market in which buyers and sellers trade through different means of communication such as telephone, fax or internet network rather than being physically present on the exchange location.

The major reason for this is that contrasting to other money markets, the Foreign Exchange market neither has a physical location nor any central exchange. And it is this lack of physical exchange, which enables the Forex market to trades incessantly, 24 hours a day, going from one time zone to the other, from the world’s one major economic center to another, day after day.
Beginning since 1997 till date, more than a trillion dollars of foreign exchange activity has been taking place at Forex, day after day. The every day forex trading quantity escalated from US$5 billion to US$1.5 trillion approximately. At this pace, it can be said for sure that the Forex market continues to grow at an exceptional rate.
Going back to the time when Foreign Exchange market had been launched, before the Internet geared up its popularity, Forex was only limited to big companies, transnational or global banks and affluent corporate individuals, who could trade currencies in the market through the bank-owned trading systems.
During that time, opening an account for trading required a deposit of as much as US$1 million. It was only with the advent of Internet and online technology, that today, investors can open an account as well as trade successfully, with only a few thousand dollars.

Brokers are a significant part of this trading industry. It is only because of these Forex Brokers, that this Foreign Exchange market is a nonstop cash market, with a continuous buying and selling of currencies of different nations.
Forex market conditions are highly unpredictable in nature and change every second, with fluctuation in price being the only constant factor in this trading. This is the main reason why, at times, Forex is also known as a highly fickle and fragile market.

Forex today, provides a great substitute to the stock market trading for the traders and investors. Although Stock Exchange provides a far larger variety of stocks to trade in, Forex offers only a few major currencies to trade for, where in the US Dollar, Yen, British Pound, Swiss Franc, and Euro, are the most popular ones.

Trading such big currencies is definitely more exciting for the investors than the stocks, and it can be seen that more and more traders and investors are now turning towards Currency trading to get the real thrill of the trading business.

Advantages and Disadvantages of Forex Trading

2008-02-20T00:45:00.008-08:00

Foreign Exchange, Forex or FX is one of the world’s largest financial markets dealing in real-time exchange of currencies of different countries. This currency exchange market has a greater volume of buyers and sellers, than in any other financial market of the world.

With major trading centers at Sydney, London, Frankfurt, Tokyo and New York, Forex is the only financial market, which is open 24 hours a day, 5.5 days a week, across the globe.

One of the most popular speculation markets, Forex is a market well known for its huge volume, superior liquidity, as well as the steady trading prospects. Also attractive is high levels of Leverage, one of the unique features offered by the Forex market.

Advantages of Forex trading

High leverage

Starting from a minimum of 100:1, Forex markets offer its traders with huge amounts of leverage which means that fat profits can be produced by investing small amounts of deposits.

No commission

If dealing with a financial market on daily basis, the regular investors or traders are the ones who are really benefited by the “free of commission” trading. The currency trading market lets its traders keep a whole 100% of their trading profits.

Superior liquidity

With most of the currency transactions comprising of 7 main currency pairs, the huge volume and the global trading aspect helps these currencies exhibit price stability, little slippage, narrow spreads and high levels of liquidity.

Profitability

Being an over the counter market, the trading done at Forex can be known as “over the counter” trading, wherein, a trader always buys one currency and sells of the other one in real time. There is no organizational prejudice in the market and every investor has the equal prospects for profit in it.

24 hours trading

Forex currency trading market offers its traders with a 24 hour trading opening, wherein, a Forex investor can trade ant any time of the day, whatever suits him/her, as the market is open for trading 24 hours a day, from Sunday 5:00 pm (ET) to Friday 4:30 pm.

This gives the Forex traders a choice to opt for timing for the trade according to their convenience.

Disadvantages of Forex trading

High Leverage

While high leverage serves as an advantage to attract traders to the market, it can at times also act as a disadvantage for them. With such high levels of leverage available to traders in the Forex market, comes an equally high level of danger.

This can be true for the high stake positions which carry along with them, too much risk, leading to margin calls. This is where efficient money management comes into play for playing safe.

24 hours market

Although it is convenient for the trader to trade whenever it is suitable to him, it can be a rather tough job too. This is because, at times, it is not possible for an individual trader to keep track of the Forex market, 24 hours a day.

This is where a broker comes into the picture. Retail or individual investors should try taking help from a professional broker rather than doing all the dealings himself straight with the huge market.

The broker will be an experienced professional who will act as an equal in your transactions, keeping you informed and updated about minute to minute details and fluctuations, and even guide you about the conditions, when to and when not to trade in the market.

Like every other financial market, Forex market also has its share of advantages and disadvantages. But keeping in mind the two can surely help a trader become more vigilant and aware of what to expect while trading Forex.

Supervised Forex accounts and its Benefits

2008-02-20T00:45:00.007-08:00

Forex or currency trading accounts can be easily controlled and managed using different techniques. Since Forex trading market is also known as over-the-counter trading market, it can be traded through different means of communications such as telephone and internet.

When you are an individual first time trader, opting for managed or supervised Forex accounts is always beneficiary. By trading with the guidance of expert and professional people, a new and inexperienced trader can make wiser and faster deals and decisions.

With Forex, even the slightest of political or economic change can cause fluctuation, for which everyone is unprepared. These sudden changes are sometimes difficult to predict, and that is where the professional come in, the ones who are used to observing these fluctuations and at times, there patterns. They also have a thorough knowledge about what occurring or events on the political or economic front can lead to fluctuations in market.

Forex markets deals in trading substantial volumes of capital, offering exceptional leverage and round the clock trading ever day, with all these serving as the benefits of trading Forex. And while the market being active 24 hours a day is a benefit, this can also at times serve as a downside for an average individual investor, for whom, it is quiet taxing to catch with the market, at all times.

So, when it is said that Forex is a 24 hour market, alongside being an advantage, it is also a bane for the individual or ordinary traders who are going to miss some of this ongoing trade.

When opting for supervised Forex accounts, you choose the “auto trading” system, where in, you can get associated with any of the professionally established brokers. These brokers will run your account on your behalf and you would not have to be placing all the deals.
Alongside handling and managing your account, they will also observe and check the markets for you, almost round the clock, and also placing the limits and stops as the trade goes live.

This type of managed trading lets an individual investor free from the liability of keeping a check on the market 24 hours a day, giving him freedom to do other things while his broker does this hard work for him.

A lot can be done through computers these days. They can help us track this 24 hours market easily alongside checking on the other currency trading activities which can keep the trader conversant about the updated status of the market.

Many programs these days are being used to make Forex tracking a lot less boring. These software programs create fancy charts on the screen, as per the information fed into them. With the rapid advancement in the field of electronic media and computer technologies, alongside telecommunications, the level of a Broker’s knowledge has also increased. Forex brokers, these days are well versed with all the updated technologies, capable of getting full use out of them in any which way, to make Forex trading and interesting experience for their traders and investors.

And what’s more, with the internet coming into picture quiet rapidly, now days, there is no need to feed in the data manually into your computers. Comprehensive and updated market and trading related information and data is available, once the markets are closed for the day.
This information and data can be then, easily downloaded into the computers and the work to examine the market can begin!

Forex Scams and Frauds

2008-02-20T00:45:00.006-08:00

Like every other finance and money business, Forex is also exposed to the same or even greater amount of scam and fraud risks from mediators like brokers and dealers. There are some authorities who regulate and manage the currency exchange as well as the futures trading in the United States, such as National Futures Association and The United States Commodity Futures Trading Commission.

These regulating authorities take actions against the companies or individual brokers who are allegedly involved in dishonest or deceitful selling of foreign currency and futures. Any of the Off-exchange trading activity related to Forex or futures, which is not regulated by any known financial authority can be unlawful and may turn out to be a fraud or scam.

Off late, many individual and retail traders have observed greater numbers of investment openings and opportunities. While the complexity and success of Forex market is increasing rapidly, also growing are the fraud and scam risks wherein, there are chances of investors coming along some Forex broker's or dealer's whose dealings and strategies are sometimes not truthful and fair.

Many of these Forex scams or frauds are promoted in the form of lucrative schemes and promotional offers on newspapers, television and the Internet. New traders or individual investors easily fall prey to all these schemes, and mostly end up losing all their hard earned money.

There are a lot of scam artists and swindlers a trader will across while trading at the Forex market. What needs to be done is beware of these frauds and take care not to get carried away by false promises and claims. Some of the common fraudulent ways are listed below:

Companies that promises of No Financial Risks

Always stay away from the companies or brokers who claim to offer its clients with currency trading strategies which proffer very little or no financial risk to its traders. Any financial market whatsoever, be it Stock Exchange, Foreign Exchange or Futures, can only be profitable because it carries along with it, a very high risk of loss for any and every trader equally.

Only good money management techniques can help the traders from suffering losses. Be it an individual trader, retail investor or a big financial firm, profit and losses can occur to anyone in the market. Since the market is continuously changing and volatile, we cannot say that there is anything such as a risk-less Forex market.

Is your broker firm regulated?

Before you decide to partner with a broker firm and give them your money, make sure you know what you are doing. And also make sure you your broker or broker company well. Always inspect the individual or firm you are going to start dealing with for your financial matters.

Always check whether the broker or the firm you are dealing with is registered with the United States Commodity Futures Trading Commission or the National Futures Association.

There are many firms which falsely claim that to be registered and regulated by the CFTC or the NFA. This helps them easily gain potential investors and their trust.

But instead of blindly believing the dealer or broker, it is always advisable to cross-check with the broker’s regulatory firm about the broker’s listing status and background. Also important is to carefully read and comprehend the contract terms and conditions put forth to you by your dealer or broker.

False guarantees of Larger Returns and Profits

In this ever changing and rapidly growing financial market, you might come across a lot of firms or dealers guaranteeing large returns or profits in Forex trading. These are sheer schemes and tactics to attract potential investors and giving them false hopes that whatever they invest will be returned to them safely along with added money profit.

These are false claims and promises as no company, no matter how big and professional can promise making profit every day, with every investor. With such an unpredictable market like Forex, it is not possible to assure profits or losses to anyone.

Other than the above mentioned most common fraudulent ways, some other ways with which many traders have been cheated. It is always better to keep them in mind and stay away from them, like openings and offers which Sound Too Good.

Also, be cautious while Transferring Cash over the Net. Always make sure to check the Company's Performance and past Record and especially never deal with the firms or brokers who hesitate to give you their background.

Tips for New Forex Traders

2008-02-20T00:45:00.005-08:00

Forex has always been a magnet for investors and traders, who are looking for an exciting business venture to invest in, giving them the thrill, adventure and excitement, along with an idea of a quick and easy way to make profits.

But, for those who are relatively new to the Forex trading world, it is extremely important to know exactly what you are getting into. When it comes to the matter of investing a huge amount of your hard earned money into something, first time investors should always make sure what they ought to expect out of it. What should and should not be done. What steps should be taken to play safe and what to do that keeps them at away from the frauds and scams.

First of all what needs to be learnt is, what is Forex and how does it work? What need’s to be known next are a few important trading tips, which will facilitate you during your transactions.

Foreign Exchange or Forex or FX is one of the biggest money market in the world, and is a platform where currency is sold and bought freely between buyers and sellers. Forex, unlike any other financial markets, has no physical location or central exchange.

With over $1.5 trillion USD being traded daily, the foreign exchange market has now become a market which is open to trading by an average investor as much as it is open to a high investor.

Launched over three decades back, in the early seventies, Market Forex introduced free exchange rates worldwide, according to which, the price of the currencies was determined on the basis of demand and supply only.

A number of reasons are responsible for making Forex a distinctive financial market. To begin with, no external regulatory authority is allowed to set or fix currency prices or rates in this market, making Forex is market which cannot be controlled in any way. Also, it is one of those few money markets that necessitate very little trading education, training and experience.

In order to know the Forex market well, the new traders should know how to start trading Forex. The few important things to be kept in mind when beginning to trade Forex are as follows:

What needs to be done firstly is, to open a Forex account. This can be done by filling up an application form, providing the required essential credentials, like personal details, financial particulars, and other details such as whether or not, a broker will be allowed to mediate with any trade if it appears to get too precarious and dicey.

Once your account has been created and recognized, you can begin to flow cash in to it and start trading Forex.

New Forex traders are always advised to create two accounts while trading, one of them being a real account, while the other being a demo one. A real account will facilitate the trader to actually trade in the market, with real money.

The demo account helps the new investor learn more about the trading business. This way the new trader can practice his moves of trading in the market, without the fear of losing all his money in case he/ she goofs up or ends up making the wrong deal.

Also, before you start trading in the market, you should have a closer look at all the top five foreign currencies and their current rates to make sure, you are aware of the current rates and are not missing anything.
The top five Forex currencies are: Pound/USD, Swiss franc/USD, Euro/Yen, USD/Yen and Euro/USD.

Always keep a check on the market. With the time intervals on hourly, daily and weekly schedules with all the currencies that are in any way related to your trade.

Being a successful trader requires to come up with individual and unique trading strategies. There is no “Golden Mantra” or “Trade Secret”, which will work for the traders.

Every investor needs to come up with their own, personal and distinctive trading approach when it comes to the market. There are different ways by which, the traders approach the market. Sometimes they may bank solely on industrial and technical analysis.

Some may like better to go in for a more elementary and basic approach for trading, while others may make use of the past records of the market, combined with both technical as well as fundamental techniques for trading.
All these strategies help the traders in studying the patterns of currency price trends and movements, making it easier for them to foresee the course of the potential developments in the Forex market.

Currency prices in Forex market mostly move in trends. They have a pattern, through which, certain movements can be studied. Some of these movements which have been studied over several years mostly help in discovering that pattern in the market trend. These trends are what should be recognized and valued properly, to facilitate the creation of an excellent trading strategy.

Any factors, financial or political, having some control over the value or the price of a currency, have already been measured by the market to be included as an important factor in creating a price trend.

When trading for the first time, it is always advisable to invest by the trends. Trading with a trend can facilitate you by advancing your chances with profit. Many new investors are enthusiastic to start trading as soon as they can, eventually ending up trading in any direction.
Trading by a trend or following a pattern and studying the market can increase your odds of being favored by the market, making your trading prospects high.

Forex Trading – More Technical than Intuitive

2008-02-20T00:45:00.004-08:00

The FX, Forex or foreign exchange, is all vis-à-vis money. Foreign currency from all around the world is available to be bought or sold here. Any individual Forex trader or big and powerful business firms can buy or sell currency freely, on this currency exchange platform.

When dealing in foreign currency exchange, there is an ongoing cycle of buying and selling in the market. A trader can buy one foreign currency and then sell it on a higher selling price, just to buy another foreign currency, while making profit in between.

The only way to make money in Forex trading market to avoid as much emotional involvement as you can. While making investment or trading related decisions, always plan out a cautiously thought out strategy that takes the recent market tends and history patterns into consideration while making a deal.

With Financial markets, being intuitive or going with your instincts does not help much. Forex being an extremely unpredictable trading market where, at times, emotions tend to cost more than a wrong strategy. Emotions can dominate your trading sensibilities and decisions, making you go ahead with a deal purely based on your gut instincts.

What needs to be understood is the fact that trading industry is hard core strategy driven business. Market trends, rises and falls, do not go by a trader’s instinct, but can be influenced by past patterns and trends. It happens a lot during the time when a deal is about to be finalized, that the investor goes through a moment of intuitive spurs and would want to change the trading decision at the last moment. This should be avoided at any cost.

Whatever you are seeing in the market at the moment your deal is being finalized, do not change your pre planned decision at the last minute. So by the strategy you had planned in advance. That’s the only way to deal successfully with Forex trading, to be systematic in your approach, analytical with your decisions and insistent with your stand.

Be firm in your decisions. If you correctly analyze the trends of the Forex market, you can easily come to know that although the trading patterns are by and large predictable, there is a lot of sinking and floating happening within those trends. Currency prices rise and fall immediately. There is seldom any trend which has a smooth rise or fall of currency prices.

These are the situations when intuitions can kill your deal, landing you into major loss at times too. For instance, when you find out that the currency you’re holding is taking sinking southwards suddenly, you might get tempted to sell it off in loss, pack your bags and leave. Similarly, if you see that the currency you are holding is going on a rise, you try to buy more of it, just to increase your profits. Now these are the situations where emotional actions can kill your deal and thus, your trading future.

These are the times when you should hold on for a moment and study what exactly is happening and bank on greatly on your trading system. Your pre planned strategies and tactics will tell you precisely when to trade, to reap highest profits.

Almost all the Forex professionals or pros will advise the new traders and investors to build up their own trading system. This planned trading system will tell you exactly what to buy, when to buy, when to deal and what to deal for. Developing a trading system based on technical and fundamental analysis can be of benefit to its trader. Studying the past as well as present market trends can be immensely effective in getting some knowledge about what’s the future trend going to be.

There may come times, when your trading system and your instincts may become opposites, and you might get caught in the dilemma not knowing which to follow. This is the time when you should follow your trading system, as it is not just a mere emotional spur of the moment, but a suitably studied, pre planned strategy for a market based on trends and patterns.

To make your trading system even more efficient, you should clearly recognize the entry and exit point of your trading. Also kept in mind should be the extenuating factors for these points, and systematic strategy to exit properly. You should always set up a stop-loss order and a take-profit order in your deal. Clearly defining these exit points will help you, either by increasing your profits, or by decreasing your losses.

Benefits of Currency Crossing through Forex

2008-02-20T00:45:00.003-08:00

A trader or a non trader, anyone who has a little bit knowledge about Forex trading would have surely wondered within themselves, the need for exchanging currencies. And if so, then why through Forex?

First of all, let’s talk about the need to exchange currencies or cross currencies. Let’s take the example of a businessman, who needs to conduct oversees or international deal with a supplier. Now, he needs to pay the supplier in foreign currency. What he owns for now are US dollars and what he needs to trade are Japanese yens. So, the trader would want to do so through Forex. Many investors opt for Forex to trade currencies and make a profit. At Forex, a particular currency can be bought at a low exchange price, and then, once its prices rise up, can be sold off in the market to gain profit.

When an investor or individual wants to trade one type of currency for another, it is called exchanging currency, or crossing currency. Currency crossing is the main goal of trading on the Forex.

Exchanging or crossing currencies through Forex is one of the most advantageous ways to making profit for many investors. The Forex, unlike any other financial market, is extremely volatile and liquid, with much over 1.5 trillion $US being traded in it everyday.
Although all the currencies are traded at Forex, some of the currencies manage to be on top of the list and are most traded for. These are the Euro, US dollar and the Japanese yen.

If new to the trading business, learning to trade foreign exchange, can be exciting yet, time consuming and tough during initial times. To trade successfully in the Forex market, it is vital to be aware of the ways of market. Its flows, its rise and falls, its jargon and its past patterns and trends.

It is a complicated procedure at times, to learn trading Forex. The major factor than can work in your advantage is to gain as much knowledge of the Forex trade as you can, thoroughly working on learning how things work in here.
Also need to be known are the various advantages and disadvantages of trading Forex, as this will help you prepare yourself for what can come next. You should always weigh properly, the benefits of Forex because of which, you are planning to enter the market and trade, at the first place.

For new traders, brokers and other financial firms are greatly helpful to be trained in how to trade Forex and gain profit. Learning the ins and outs of the market can be fairly easy, if done so with the help of professional guidance and experts like an experienced broker or a professional financial firm.

In addition, there are also other ways to get yourself accustomed to the ways of the Forex market, like opting for using free demo accounts during the initial period of trading. These accounts are available on net easily, and can be opened up to facilitate you, as a new trader, to get to know the market more. These practice accounts enable the new traders to trade with fake money, so as to not suffer real loss, in case of a bad deal.

These practice accounts are an easy way to learn more about the currency crossing before opening and investing in a real account. Some of the real accounts also come with features helpful for the new traders, such as Mini Forex accounts. These accounts are great for the new traders to start off low. These enable a trader to make use of a lesser amount of money as their first investment.
Using a smaller amount for an initial investment decreases the risk of losing a great amount of money in case the trader gets into a bad deal.

Another reason why people opt for Forex to cross currencies is that foreign exchange with Forex gives its traders a higher leverage. Such high ratio of leverage allows the trader to trade for a huge amount of money, without actually needing to have it in cash. This helps the traders to make larger profits while maintaining their loss risk to as lowest as possible. In such situations, an investor can invest can invest $100 and make a deal for as much as $100,00 worth an amount.
This increases the profits of the trader while keeping his loss to am minimum.

The Forex market being one of the world’s biggest financial markets and making a trade of more than $1.5 trillion US dollar everyday, is a highly liquid market. With such a huge amount of trade going on in the market each day, traders and investors at Forex enjoy a large amount of flexibility. The Forex enables its traders and investors to move from one investment to another, never allowing them to get stuck at a deal.

Being an “over the counter” market, traders and investors have the choice to trade Forex using different means of communication too. Be it Internet or telephone, a trader can suit himself when it comes to trading currencies. Using internet, traders can fix their exit points through stop-loss order and take-profit order, by which, if the trade is not going according to their expectations, they can set the trading platform to stop the trade and close the deal, thus facilitating the trader to lose less money.

Another advantage of using Forex for trading currencies or currency crossing is that Forex is a 24 hours market. Being always open an accessible to a trader, it is easier for an investor to trade any time feasible to him/her.
While in a stock market, it is not an option with the trader to choose a trade timing that suits him, with Forex, he can very easily devote time to his business or job, while keeping the rest of his free time to trade sitting at home. Forex does not have a closing time and is open 24 hours, 5.5 days a week. This is not true of the foreign exchange currency.

Trading or crossing currencies with Forex can also facilitate the traders and investors to trade with a minimum risk, in both, rising and falling markets. Such is not the case with Stock markets, in which, the traders can only trade when the market is on rise.

This is also amongst the major benefits provided by Forex to its investors. The Forex traders and investors are capable of making large profits with their deals, no matter whether a currency price is rising or falling. Currency crossing in the correct direction, keeping in mind the past trends of the market can always enable a trader to make profits.

Economic Indicators

2008-02-20T00:45:00.002-08:00

Economic indicators can be anything, from the bits and pieces of financial and economic news, to the data published by different agencies on the statistics of government or private sector.

This data is regularly made public to help the common man keep track of the latest developments in the nation’s financial sector. Most benefited from these economic indicators are the market observers who are constantly keeping an eye on the overall economy and its effect on the market. This is the main reason why such indicators are consistently tracked by nearly everyone related to the financial markets in some way or another.

Also, this is the rationale behind the economic indicators containing great potential for creating levels and moving currency prices along with the whole markets, as so many people are expected to respond to the same data together.

Major Indicators

Industrial Production –

It is a measure of the variation in the manufacturing of the country’s industrial units and mines in addition to a measure of their business capability and their capacity utilization, which is the number of used accessible resources amongst the various industrial units and utilities.

Producer Price Index –

The Producer Price Index or PPI calculates the price variations in the industrialized sector. It determines the average variations in selling prices received by home manufacturers in the industrializing, mining, farming, and electric service business or trade for their production.
The PPIs mainly used for fiscal study are those for refined goods, intermediary goods, and unfinished goods.

Hard Goods Orders –

Durable or Hard Goods Orders calculates any new orders which have been placed with the home producers for instant and potential delivery of durable goods.

Retail Sales –

The retail sales report measures the entire revenue of retail houses from section on behalf of all range, class and type of industries in retail business all through the nation.
Retail sales contain both hard and soft commodities sold, and services and excise taxes accompanying the trade of commodities, not including the sales taxes.
The Gross Domestic Product –

Gross Domestic Product or (GDP) measures the total of all the merchandise and services created either by home or overseas companies, showing the speed at which a nation’s wealth and market is rising or falling.

(GDP) is regarded as the most extensive indicator of monetary productivity and development of a nation.

Housing Starts –

The Housing Starts report calculates the quantity of housing units which are being initiated into construction every month, where the initiation process is predefined as the start of an excavation for the groundwork of any residential structure.

To make full use of these economic indicators in the Forex market and trading world, you should always be aware as to when each economic indicator is due to be out in the markets. Keep track of all the release dates through a calendar or keeping in touch with the agencies which will be releasing these statistics or snippets for the public.

Also, keeping a record or a watchful eye on the release dates of these economic indicators will help you build a stronger decision whether to go forward or drop the position you were planning to go with by predicting the market movements based on gut feelings.

Importance of Leverage in Forex

2008-02-20T00:45:00.001-08:00

Different from Equity trading and Futures trading, Forex trading offers its traders with far more advantages and greater profits than the other financial markets and that too, in a short term.

A range of Forex trading strategies are offered to its traders, the most significant one of them all being Leverage. Forex market offers higher leverage as compared to all the major stock exchange trading markets.

With the help of Leverage, online currency traders can make use of more funds than the actual money which they deposit. Margin can be known as the least amount required to be deposited before a trader starts trading. This can also be known as the opening amount with which the Forex trading account can be initiated.

Leverage also facilitates the Forex traders to maximize their Forex trading profits. This is because with the help of Leverage, a trader can make use of as high as 200 times the actual sum which he has deposited in his Forex account.
Such a strategy allows the trader to support his superior yielding dealings easily and hence allocating improved results to his Forex trading and deals.

Leverage is basically making use of the various economic tools such as margins. Margins help a trader to enhance his prospective return of investments. Leverage is an extremely fine financial tool which can be used to boost a trader’s buying power in the Forex market. Advantages are many, when it comes to getting great margins for trading purposes.

Although it is said to be a great tool for fiscal matters, Leverage should be handled carefully, making sure that you, as a trader have thought and executed alongside, a risk management plan with it.

Leverage as a strategy should always be first applied on a small position or deal size. Only when it works successfully for a while with small deals, should it be applied further, on a bigger sum. Slowly and gradually, leverage can be multiplied to bigger sums of money to quickly maximize profits.

Also, Leverage as a Forex trading strategy can be applied frequently but wisely on your daily trading as it facilitates its traders to make full use of the short term instability or variations experienced in the Forex market. Such high leverage enables the Forex traders to trade much larger sum of currency than they have deposited.

Alongside bringing with many advantages, Leverage also has a lop side to it. Many investors regard leverage as risky because according to them, it is highly dangerous to trade bigger position or deal sizes without truly owning that much amount of money.

While the usually available leverage from the online Forex dealers is 100:1, the leverage offered by the Stock brokers can go as low as 2:1 margin. By getting a higher leverage, traders can get more buying power than what they generally have as it boosts their total return on investment.

Where some traders feel that margins should not be used frequently as they can prove dangerously with huge deals, others feel that margins or higher leverage allows them to trade big through small initial deposits.
The important thing to be done is to read carefully, the terms and conditions of the broker that you plan to deal with and the leverage that he is offering. Also, plan proper money management techniques so that you are able to manage your limited trading money appropriately.

Different brokers offer their clients with different leverage ratios or margins to trade. Always select the broker or the broker firm whose terms and services suit you best. It is not always necessary that all brokers providing huge leverages are honest and good. Therefore, it is always advisable to remain vigilant and thoroughly check what you are being offered.

Hints for Trading Forex with the help of News

2008-02-20T00:45:00.000-08:00

Why is it important to keep a track of the economic developments of a country whose currency you are planning to buy?

Every currency represents a country in the Forex market. And therefore, the economic status of each country or nation is valued into its exchange. But with so many currencies in the market to trade for, it can get a little challenging to keep a track of every countries economic growth and development.

This is the reason why Economic Indicators are used by the traders to assess the strength of an economy they are interested in. A trader should always remain vigilant and informed about when these indicators are due for release in the market. It is also equally important to be updated on all the news releases which are to be released and can make an impact on the market.

What makes some economic indicators more important than the others?

Every economic indicator has the power to influence the Forex market, it’s just the degree of influence that ranges from low to medium to high. Which ever indicator is carrying the news capturing most of market's attention gets more significance than the other ones.

News carrying high GDP data of a certain country or information about high employment rate in another is bound to make greater news than others, as these factors are directly effecting, rather boosting the economy of those countries.

Does difference between the consensus and actual results cause price movement?

It is not correct to just keep yourself updated as a trader with the latest of economic, political and geographical news. What is even more important is to know what effect has the current news caused in the market and why?

One of the ways to find this out is by also keeping a tab of the expectations of the fellow traders in the market, from the different economic indicators and the news they were supposed to carry according to the.

A study of whether or not a news flash is matching the market expectations is a highly significant aspect, as each market forecaster is expecting different news from each indicator, news in their favour.

Therefore, apart from knowing the current news update, what needs to be kept in mind is the consensus number which is met successfully. A huge variation between the consensus and actual results can be a valid source for price movement.

Should technical investors also focus on news releases?

Keeping in mind a case of any monetary market, whenever a market is being dominated by the fundamental factors such as economic data, Technical analysis are generally not in use. This is because of the reason that most of market traders become sensitive to these economic and political developments.

Also, with so many speculations arising in the market, more and more importance is given to such developments as well as the essential news releases like increase in a certain country’s export figures, which have the power to spike up volume as well as volatility in the market.

Choosing the right Forex Broker

2008-02-20T00:14:00.000-08:00

When new in the Currency trading market, one of the hardest decisions to make is that of choosing the right broker. It is difficult to decide on a Forex broker, whom we can safely open our trading accounts with, especially when there are so many of them in the market.

Offering features, limitations, pros and potential differing from there fellow brokers, there are a number of individually suitable brokers in the market.

Although every individual trader has its own personal parameters on which they judge the broker before choosing one, some parameters should be kept in mind always, before opting for any broker, whomsoever.

Is your broker established and regulated?

It is extremely important to know whether the broker you want to choose, is established and regulated or not. Choosing an established broker can confirm you about his reputation and the amount of expertise he has about the market.

A regulated broker will ensure credibility in your trade. This is because of the fact that every regulated broker has to present his fiscal reports to the regulatory bodies, such as local regulatory bodies like NFA (National Futures Association) or FDF (Swiss Federal Department of Finance) for US traders and brokers.

These reports, if failed to be presented, can give these bodies the right to penalize them to the extent of even expiring their market membership as a broker.

Such stringent rules and orders compel all these Forex brokers to maintain see-through fiscal reports. Also, such regulations on brokers facilitate the traders and depositors to trade safely, hence increasing their overall investor security.

What is the current state of affairs while trading?

The current state of affairs at your trading platform along with the features and conditions offered by your chosen broker are amongst the most important factors that should be kept in mind while trading. These factors include within them, certain aspects such as:

Brokerage or commission

Some brokers demand a fee or a commission from the traders. But it is acceptable if some of them are charging a fee, as they might be offering a smaller spread than the other brokers in market.

Smaller spread

Clearly, the lesser the spread on a currency pair, the better is the trading environment for the traders.

Trading implementation

Different brokers guarantee different targets. Most of them go in for assuring quick and visible implementations through normal market situations. Trading implementation deals with keeping a track of how rapid yet steady are the execution of trades really going on.

Investor protection

Make sure that all your trading details and finances are kept in a separate account and are secured with an insurance cover.

Lowest investment

Every trader or investor should have proper knowledge about the lowest sum of funds which are a pre requisite for opening an account for trading purposes.

If kept in mind before going in for a full fledged trading, this is a very useful and helpful feature which will help them to experiment a little and see for themselves, how well or bad do they perform.

Vigilance

Going by the above mentioned parameters, must have eliminated a number of brokers from your pick list. With a few left in hand now, you still have to cut short to just one or two of them to choose from.

Here is when you need to check the remaining. Once you have stepped in to the market, you should now get aware of your surroundings and get vigilant in your actions.

Some of the major aspects for which you should gain knowledge and get informed are:

Slippage

Slippage can be known as the unfavorable difference in the currency’s price movements between the price when the order is placed and the actual market value of it. What you need to know is whether your broker respects stop loss and win profit levels?

Customer support

This is the most significant factor to be considered before finally selecting a broker for yourself. Is your broker courteous to talk to? Do you think you can openly discuss your doubts and apprehensions with him? Is he enthusiastic to help his investors and clients?

If your broker is registered with the local regulatory bodies, it is very easy for you to visit the supervisory authority’s website or office and get hold of as much information as you require about your Forex broker.

Go ahead and ask other traders about their understandings, incidents and experiences with their own brokers.

Get as much of broker information as you can. You can take help from certain forums related to broker information such as ForexFactory, ForexNews.

With the above given parameters, it should be much easier for any trader or investor to now choose a broker, more wisely and diligently.