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10 reasons to trade with forex.com

2009-02-14T05:35:00.000-08:00

10 REASON TO TRADE WITH FOREX.COM

1.Trade on spreads as low as 1-2 pips, commission-free

Trade on dealing spreads as low as 1-2 pips on the most widely traded currency pairs. As always, you pay no commissions at FOREX.com, only the bid/offer spread. And with our fractional pips, you gain an extra digit of precision so that you can take advantage of smaller price movements. Plus, you can enter orders at any price - even inside the spread - and trade around news events, major economic announcements and other times of high market volatility. For traders who prefer to trade in a fixed spreads environment, that option is also available.

Learn more about pricing and spreads

2.FUlly automated click & deal trading, with instantaneous fills

At FOREX.com, we've always automated processing for all click & deal forex trades. When you click BUY or SELL, our systems perform a real time margin check and, if accepted, immediately respond with a trade confirmation. Why is this important to you? First, you benefit from an unbiased trading environment that is not subject to human intervention. Second, automated trade processing improves our efficiency, which lowers our overhead and allows us to pass along the saving to you in the form of tighter spreads

3.Flexible account types and leverage

» Standard accounts, with a default lot size of 100K and leverage of 100:1 (1%), are well suited for active forex traders. » Mini Accounts feature smaller, 10k contract sizes and leverage of up to 200:1. For traders new to the forex market, a mini account is a great way to get started trading in a live environment. Get Started Now.
Open a FOREX.com trading account.

4.Award-winning forex trading platform

We pioneered our signature "one-click" dealing in 2000 and have been nominated as Best Forex Brokerage by the readers of Technical Analysis of Stocks and Commodities for the past two years. Our proprietary trading platform, FOREXTrader, successfully combines ease-of-use with remarkable flexibility. FOREXTrader offers a highly intuitive user interface, advanced customization features, and a full suite of professional charting and order management tools. Take a closer look at FOREXTrader

5.Advanced tools & research

As a FOREX.com client, you'll have access to a variety of resources and unique trading tools that can help you make more informed trading decisions.
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Full suite of daily and weekly forex research. Whether you're interested in fundamental analysis or technical trading methods, you'll have access to a wide variety of institutional-grade Forex market analysis as a FOREX.com client. And, tune in to our Weekly Market Call for timely trading ideas and analysis from Brian Dolan, our Chief Currency Strategist.
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ForexInsider streaming market commentary: Our exclusive FOREXInsider delivers actionable analysis of news, events and technical levels that impact currency prices, in real-time, to your trading platform. Updates are published as often as 20 times an hour, so that you can act instantly on new market intelligence.
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FOREXCharts by eSignal: Access eSignal's professional level charting package with over 30 analytical tools and indicators, a complete selection of drawing tools, and choice of real-time data feed. Preview FOREXCharts by eSignal

6.Guaranteed fills on stop loss and limit orders

During FOREX.com's trading hours, all stop and limit orders up to $2 million are guaranteed to be filled at your price. We understand that stop loss and limit orders are an important part of every trader's risk management strategy, and so we take this policy very seriously. This policy does not apply during major fundamental announcements, or outside FOREX.com's normal trading hours.
Negative account balance protection At FOREX.com, your risk is only limited to funds on deposit. Our margin policy eliminates concerns about debit balances by guaranteeing that you will never owe more than you have in your account.
Support for automated (API) trade executions For clients utilizing an algorithmic trading system or their own black box strategy, FOREXTrader supports fully automated trade execution via a standard FIX protocol or web-services API. The API provides users with the ability to receive a real-time rate feed, submit trade requests, set and modify stop-loss and take-profit orders, and receive automated confirmations of trade activity. Developers can request access to a testing environment in order to test their systems in real time before using the API in a production environment. Find out more about API trading.
Wireless trading and account access As a FOREX.com client or registered practice account user, you can access the currency markets via virtually any Internet-enabled wireless device. Keep on top of the market from anywhere – you can view real-time forex quotes, news and commentary, and charts and set rate alerts. You can also monitor your open positions, leave orders, even buy and sell at the market. There are no extra fees, and no special sign up. All you need is an Internet-enabled wireless device. Learn more about FOREXTrader.wireless.
Trader education, mentoring services, and more FOREX.com delivers hands-on forex training through a variety of educational programs and events. For traders just getting started in the Forex market, we offer one-on-one platform walkthroughs, online training courses, as well as live, introductory web-based seminars ("webinars"). Exclusive client-only events cover more in-depth trading techniques and strategies and include an interactive Q&A with our senior analysts and currency strategists. As a FOREX.com client, you can also take advantage of our professional mentoring services. During your one-on-one consultations with a senior forex specialist, you can discuss the latest market research report, ask for a second opinion about your trading plan, or just bounce ideas around. Contact us to learn more about our mentoring services.

7.Negative account balance protection

At FOREX.com, your risk is only limited to funds on deposit. Our margin policy eliminates concerns about debit balances by guaranteeing that you will never owe more than you have in your account.

8.Support for automated (API) trade executions

For clients utilizing an algorithmic trading system or their own black box strategy, FOREXTrader supports fully automated trade execution via a standard FIX protocol or web-services API. The API provides users with the ability to receive a real-time rate feed, submit trade requests, set and modify stop-loss and take-profit orders, and receive automated confirmations of trade activity. Developers can request access to a testing environment in order to test their systems in real time before using the API in a production environment. Find out more about API trading.

9.Trader education, mentoring services, and more

FOREX.com delivers hands-on forex training through a variety of educational programs and events. For traders just getting started in the Forex market, we offer one-on-one platform walkthroughs, online training courses, as well as live, introductory web-based seminars ("webinars"). Exclusive client-only events cover more in-depth trading techniques and strategies and include an interactive Q&A with our senior analysts and currency strategists. As a FOREX.com client, you can also take advantage of our professional mentoring services. During your one-on-one consultations with a senior forex specialist, you can discuss the latest market research report, ask for a second opinion about your trading plan, or just bounce ideas around. Contact us to learn more about our mentoring services.

10.Wireless trading and account access

As a FOREX.com client or registered practice account user, you can access the currency markets via virtually any Internet-enabled wireless device. Keep on top of the market from anywhere – you can view real-time forex quotes, news and commentary, and charts and set rate alerts. You can also monitor your open positions, leave orders, even buy and sell at the market. There are no extra fees, and no special sign up. All you need is an Internet-enabled wireless device. Learn more about FOREXTrader.wireless

Forex Resources That Will Make You a Better Trader

2009-02-14T05:34:00.000-08:00

Getting started in forex will, put plain and simply, make your head spin. There is alot of garbage out there, and even more dead ends than there are culdesacs in suburbs. I won't begin to tell you which broker to choose because that is another post for another time. But I can point you in the right direction to online resources that I have stumbled upon during my countless hours of forex research. I can't emphasize the word research enough to the new trader interested in forex. The following sites have proven priceless resources on my journey.

1. Forex Factory

There is one website that I go to every single day for my forex news and economic calendar that I can always trust to be accurate and timely. Forex Factory has the most comprehensive forums, with great traders who can get you pointed in the right direction. The forums include everything from trading systems to programming lessons and files for the Metatrader platform. Many well respected traders unselfishly post their trading systems and back them up with lessons as to why they make the trades they do. Easily and A+ on my grading scale. Another forex forum that gets an honorable mention from me is Money Tec.

2. Fresh Pips

Fresh Pips is a site where readers can submit forex news stories that they like, and they gain recognition through a voting system. Too many articles to read, but I love it because I discover new sites all of the that I would have never found. It's like a news aggregator just for forex. They also run the site Baby Pips which is ground zero for new traders who want to get into the game. Baby Pips presents forex in a fun, very easy to understand manner.

3. Tip'd

Tip'd is a brand new player in the financial world, and is essentially the exact same site as Fresh Pips but includes other financial categories like commodities, stocks, real estate, currencies, etc. There is a voting system, and you can see at the top left of all of my posts that I am submitting to the site and searching for you vote (hint hint!).

4. FX Street and Daily FX

I bundled FX Street and Daily FX together because they are both great news sites. These are the best of the best, with the world's top analysts writing for them. Very up to date, and very helpful for the new trader who has no idea as to why the market just moved 100 pips after a news release.

5. Forex Peace Army

I have to mention Forex Peace Army because their hate for forex fraud is just as strong as mine. When your slogan is Scammers pray that you don't join us today, then you're alright with me. This site will help you with scam recovery absolutely free. They are the police of the forex world. This site also has an extensive repertoire of forums, and they also provide a free daily forex signal from Sir Pipsalot that is based on trading around news releases.

These are the sites that I recommend visiting if you want to become serious about trading forex. I read more books and websites than I can remember. I also had the discipline to paper trader for over 5 years before jumping into the market. Therefore, I feel I should pass on my experiences to save you time and effort, and maybe this will streamline your effort towards taiming this exciting game. Make sure to sign up for my RSS feed for daily updates. Cheers.

Essential Elements of a Successful Trader

2009-02-14T05:33:00.000-08:00

Courage Under Stressful Conditions When the Outcome is Uncertain

All the foreign exchange trading knowledge in the world is not going to help, unless you have the nerve to buy and sell currencies and put your money at risk. As with the lottery “You gotta be in it to win it”. Trust me when I say that the simple task of hitting the buy or sell key is extremely difficult to do when your own real money is put at risk.

You will feel anxiety, even fear. Here lies the moment of truth. Do you have the courage to be afraid and act anyway? When a fireman runs into a burning building I assume he is afraid but he does it anyway and achieves the desired result. Unless you can overcome or accept your fear and do it anyway, you will not be a successful trader.

However, once you learn to control your fear, it gets easier and easier and in time there is no fear. The opposite reaction can become an issue – you’re overconfident and not focused enough on the risk you're taking.

Both the inability to initiate a trade, or close a losing trade can create serious psychological issues for a trader going forward. By calling attention to these potential stumbling blocks beforehand, you can properly prepare prior to your first real trade and develop good trading habits from day one.

Start by analyzing yourself. Are you the type of person that can control their emotions and flawlessly execute trades, oftentimes under extremely stressful conditions? Are you the type of person who’s overconfident and prone to take more risk than they should? Before your first real trade you need to look inside yourself and get the answers. We can correct any deficiencies before they result in paralysis (not pulling the trigger) or a huge loss (overconfidence). A huge loss can prematurely end your trading career, or prolong your success until you can raise additional capital.

The difficulty doesn’t end with “pulling the trigger”. In fact what comes next is equally or perhaps more difficult. Once you are in the trade the next hurdle is staying in the trade. When trading foreign exchange you exit the trade as soon as possible after entry when it is not working. Most people who have been successful in non-trading ventures find this concept difficult to implement.

For example, real estate tycoons make their fortune riding out the bad times and selling during the boom periods. The problem with trying to adapt a 'hold on until it comes back' strategy in foreign exchange is that most of the time the currencies are in long-term persistent, directional trends and your equity will be wiped out before the currency comes back.

The other side of the coin is staying in a trade that is working. The most common pitfall is closing out a winning position without a valid reason. Once again, fear is the culprit. Your subconscious demons will be scaring you non-stop with questions like “what if news comes out and you wind up with a loss”. The reality is if news comes out in a currency that is going up, the news has a higher probability of being positive than negative (more on why that is so in a later article).

So your fear is just a baseless annoyance. Don’t try and fight the fear. Accept it. Have a laugh about it and then move on to the task at hand, which is determining an exit strategy based on actual price movement. As Garth says in Waynesworld “Live in the now man”. Worrying about what could be is irrational. Studying your chart and determining an objective exit point is reality based and rational.

Another common pitfall is closing a winning position because you are bored with it; its not moving. In Football, after a star running back breaks free for a 50-yard gain, he comes out of the game temporarily for a breather. When he reenters the game he is a serious threat to gain more yards – this is indisputable. So when your position takes a breather after a winning move, the next likely event is further gains – so why close it?

If you can be courageous under fire and strategically patient, foreign exchange trading may be for you. If you’re a natural gunslinger and reckless you will need to tone your act down a notch or two and we can help you make the necessary adjustments. If putting your money at risk makes you a nervous wreck its because you lack the knowledge base to be confident in your decision making.

Patience to Gain Knowledge through Study and Focus

Many new traders believe all you need to profitably trade foreign currencies are charts, technical indicators and a small bankroll. Most of them blow up (lose all their money) within a few weeks or months; some are initially successful and it takes as long as a year before they blow up. A tiny minority with good money management skills, patience, and a market niche go on to be successful traders. Armed with charts, technical indicators, and a small bankroll, the chance of succeeding is probably 500 to 1.

To increase your chances of success to near certainty requires knowledge; acquiring knowledge takes hard work, study, dedication and focus. Compile your knowledge base without taking any shortcuts, thereby assuring a solid foundation to build upon.

Common Sense Guidelines for the Average Trader

2009-02-14T05:32:00.000-08:00

Look for a reputable broker

Ability to trade effectively depends on consistent spreads and ample liquidity

Anyone can establish a position

Ability to close out a position at a fair market price is more important

Live to trade another day

Apply prudent money management skills

Avoid using excessive leverage that puts your investment capital at risk

Always trade with a stop!

Don’t trade emotionally, stick to your plan and maintain discipline

Establish a trading plan before initiating a trade

Set reasonable risk/reward parameters

Don’t override your stops for emotional reasons

Don’t react to price action – means don’t buy just because it looks cheap or sell because it looks too high, Have supporting evidence to back up your trade

Don’t punt

Don't punt( Punting is trading for trading sake without a view)

Don’t leave stops at obvious levels such as “big figures” (e.g. eur/usd 1.20, usd/jpy 110)

i.e. JUBBS stops = stops at obvious levels and thus are more likely triggered

Don’t add to a losing position in unless it is part of a strategy to scale into a position

In other words, don’t double up in the hope of recouping losses unless it is part of a broader trading strategy

Trading with and against the trend

When trading with a trend, consider the use of trailing stops.

When trading against the trend, be disciplined taking profits and don’t hold out for the last pip

Treat trading as a continuum

Don’t base success on one trade

Avoid emotional highs or lows on individual trades

Consistency should be an objective

Forex trading is multi-currency

Watch crosses as they are key influences on spot trading

Crosses are one currency vs. another, such as eur/jpy (euro vs. jpy) or eur/gbp (eur vs. gbp)

Crosses can be used as clues for direction for spot currencies even if you are not trading them

Be cognizant of what news is coming out each day so you don’t get blindsided

Be cognizant of what news is coming out each day so you don’t get blindsided

Beware of trading just ahead of an economic number and be wary of volatility following key releases

Beware of illiquid markets

Beware of illiquid markets

Adjust strategies during holiday or pre-holiday periods to take into account thin liquidity

Beware of central bank intervention in illiquid markets

Jay Meisler, a partner in Global-View.com, says one problem of trading with too-high leverage is that one piece of surprise news can wipe out one's capital. "Those who treat forex trading as if they were in a casino will see the same long-term results as when they go to Las Vegas," he says, adding: "If you treat forex trading like a business, including proper money management, you have a better chance of success." …Newsweek International, March 15, 2004

Treat this business as a marathon and not a sprint so you avoid burnout and maintain stamina for the long haul.

Forex Money Management

2009-02-14T05:28:00.000-08:00

Put two rookie traders in front of the screen, provide them with your best high-probability set-up, and for good measure, have each one take the opposite side of the trade. More than likely, both will wind up losing money. However, if you take two pros and have them trade in the opposite direction of each other, quite frequently both traders will wind up making money - despite the seeming contradiction of the premise. What's the difference? What is the most important factor separating the seasoned traders from the amateurs? The answer is money management.

Like dieting and working out, money management is something that most traders pay lip service to, but few practice in real life. The reason is simple: just like eating healthy and staying fit, money management can seem like a burdensome, unpleasant activity. It forces traders to constantly monitor their positions and to take necessary losses, and few people like to do that. However, as Figure 1 proves, loss-taking is crucial to long-term trading success.

Amount of Equity Lost	Amount of Return Necessary to Restore to Original Equity Value
25%	33%
50%	100%
75%	400%
90%	1000%

Figure 1 - This table shows just how difficult it is to recover from a debilitating loss.

Note that a trader would have to earn 100% on his or her capital - a feat accomplished by less than 1% of traders worldwide - just to break even on an account with a 50% loss. At 75% drawdown, the trader must quadruple his or her account just to bring it back to its original equity - truly a Herculean task!

The Big One

Although most traders are familiar with the figures above, they are inevitably ignored. Trading books are littered with stories of traders losing one, two, even five years' worth of profits in a single trade gone terribly wrong. Typically, the runaway loss is a result of sloppy money management, with no hard stops and lots of average downs into the longs and average ups into the shorts. Above all, the runaway loss is due simply to a loss of discipline.

Most traders begin their trading career, whether consciously or subconsciously, visualizing "The Big One" - the one trade that will make them millions and allow them to retire young and live carefree for the rest of their lives. In FX, this fantasy is further reinforced by the folklore of the markets. Who can forget the time that George Soros "broke the Bank of England" by shorting the pound and walked away with a cool $1-billion profit in a single day? But the cold hard truth for most retail traders is that, instead of experiencing the "Big Win", most traders fall victim to just one "Big Loss" that can knock them out of the game forever.

Learning Tough Lessons

Traders can avoid this fate by controlling their risks through stop losses. In Jack Schwager's famous book "Market Wizards" (1989), day trader and trend follower Larry Hite offers this practical advice: "Never risk more than 1% of total equity on any trade. By only risking 1%, I am indifferent to any individual trade." This is a very good approach. A trader can be wrong 20 times in a row and still have 80% of his or her equity left.

The reality is that very few traders have the discipline to practice this method consistently. Not unlike a child who learns not to touch a hot stove only after being burned once or twice, most traders can only absorb the lessons of risk discipline through the harsh experience of monetary loss. This is the most important reason why traders should use only their speculative capital when first entering the forex market. When novices ask how much money they should begin trading with, one seasoned trader says: "Choose a number that will not materially impact your life if you were to lose it completely. Now subdivide that number by five because your first few attempts at trading will most likely end up in blow out." This too is very sage advice, and it is well worth following for anyone considering trading FX.

Money Management Styles

Generally speaking, there are two ways to practice successful money management. A trader can take many frequent small stops and try to harvest profits from the few large winning trades, or a trader can choose to go for many small squirrel-like gains and take infrequent but large stops in the hope the many small profits will outweigh the few large losses. The first method generates many minor instances of psychological pain, but it produces a few major moments of ecstasy. On the other hand, the second strategy offers many minor instances of joy, but at the expense of experiencing a few very nasty psychological hits. With this wide-stop approach, it is not unusual to lose a week or even a month's worth of profits in one or two trades. (For further reading, see Introduction To Types Of Trading: Swing Trades.)

To a large extent, the method you choose depends on your personality; it is part of the process of discovery for each trader. One of the great benefits of the FX market is that it can accommodate both styles equally, without any additional cost to the retail trader. Since FX is a spread-based market, the cost of each transaction is the same, regardless of the size of any given trader's position.

For example, in EUR/USD, most traders would encounter a 3 pip spread equal to the cost of 3/100th of 1% of the underlying position. This cost will be uniform, in percentage terms, whether the trader wants to deal in 100-unit lots or one million-unit lots of the currency. For example, if the trader wanted to use 10,000-unit lots, the spread would amount to $3, but for the same trade using only 100-unit lots, the spread would be a mere $0.03. Contrast that with the stock market where, for example, a commission on 100 shares or 1,000 shares of a $20 stock may be fixed at $40, making the effective cost of transaction 2% in the case of 100 shares, but only 0.2% in the case of 1,000 shares. This type of variability makes it very hard for smaller traders in the equity market to scale into positions, as commissions heavily skew costs against them. However, FX traders have the benefit of uniform pricing and can practice any style of money management they choose without concern about variable transaction costs.

Four Types of Stops

Once you are ready to trade with a serious approach to money management and the proper amount of capital is allocated to your account, there are four types of stops you may consider.

1. Equity Stop

This is the simplest of all stops. The trader risks only a predetermined amount of his or her account on a single trade. A common metric is to risk 2% of the account on any given trade. On a hypothetical $10,000 trading account, a trader could risk $200, or about 200 points, on one mini lot (10,000 units) of EUR/USD, or only 20 points on a standard 100,000-unit lot. Aggressive traders may consider using 5% equity stops, but note that this amount is generally considered to be the upper limit of prudent money management because 10 consecutive wrong trades would draw down the account by 50%.

One strong criticism of the equity stop is that it places an arbitrary exit point on a trader's position. The trade is liquidated not as a result of a logical response to the price action of the marketplace, but rather to satisfy the trader's internal risk controls.

2. Chart Stop

Technical analysis can generate thousands of possible stops, driven by the price action of the charts or by various technical indicator signals. Technically oriented traders like to combine these exit points with standard equity stop rules to formulate charts stops. A classic example of a chart stop is the swing high/low point. In Figure 2 a trader with our hypothetical $10,000 account using the chart stop could sell one mini lot risking 150 points, or about 1.5% of the account.

Figure 2

3. Volatility Stop

A more sophisticated version of the chart stop uses volatility instead of price action to set risk parameters. The idea is that in a high volatility environment, when prices traverse wide ranges, the trader needs to adapt to the present conditions and allow the position more room for risk to avoid being stopped out by intra-market noise. The opposite holds true for a low volatility environment, in which risk parameters would need to be compressed.

One easy way to measure volatility is through the use of Bollinger bands, which employ standard deviation to measure variance in price. Figures 3 and 4 show a high volatility and a low volatility stop with Bollinger bands. In Figure 3 the volatility stop also allows the trader to use a scale-in approach to achieve a better "blended" price and a faster breakeven point. Note that the total risk exposure of the position should not exceed 2% of the account; therefore, it is critical that the trader use smaller lots to properly size his or her cumulative risk in the trade.

Figure 3

Figure 4

4. Margin Stop

This is perhaps the most unorthodox of all money management strategies, but it can be an effective method in FX, if used judiciously. Unlike exchange-based markets, FX markets operate 24 hours a day. Therefore, FX dealers can liquidate their customer positions almost as soon as they trigger a margin call. For this reason, FX customers are rarely in danger of generating a negative balance in their account, since computers automatically close out all positions.

This money management strategy requires the trader to subdivide his or her capital into 10 equal parts. In our original $10,000 example, the trader would open the account with an FX dealer but only wire $1,000 instead of $10,000, leaving the other $9,000 in his or her bank account. Most FX dealers offer 100:1 leverage, so a $1,000 deposit would allow the trader to control one standard 100,000-unit lot. However, even a 1 point move against the trader would trigger a margin call (since $1,000 is the minimum that the dealer requires). So, depending on the trader's risk tolerance, he or she may choose to trade a 50,000-unit lot position, which allows him or her room for almost 100 points (on a 50,000 lot the dealer requires $500 margin, so $1,000 – 100-point loss* 50,000 lot = $500). Regardless of how much leverage the trader assumed, this controlled parsing of his or her speculative capital would prevent the trader from blowing up his or her account in just one trade and would allow him or her to take many swings at a potentially profitable set-up without the worry or care of setting manual stops. For those traders who like to practice the "have a bunch, bet a bunch" style, this approach may be quite interesting.

Conclusion

As you can see, money management in FX is as flexible and as varied as the market itself. The only universal rule is that all traders in this market must practice some form of it in order to succeed.

By Boris Schlossberg, Senior Currency Strategist, FXCM

Reprinted with permission of Investopedia

Boris Schlossberg is the Senior Currency Strategist at Forex Capital Markets in New York, one of the largest retail forex market makers in the world. He is a frequent commentator for Bloomberg, Reuters, CNBC and Dow Jones CBS Marketwatch. His book "Technical Analysis of the Currency Market", published by John Wiley and Sons, is available on Amazon, where he also hosts a blog on all things trading.

TRADING A MIND GAME

2009-01-09T05:07:00.001-08:00

You must change your mental attitude first from a normal person to that of a speculator. Almost all traders I have met, except a few successful ones who really made millions and billions trading in the market, simply waste all their time trying to learn the easiest part in perfection, like about how to read data and charts, and trying to perfect entry and exit skills, etc. Trading is a mind game and without having a right frame of mind, it is a losing game even before it starts. Training a trader�s mind is the first step for any successful trader but almost all new traders neglect that part and that explains why more than 95% of traders are a failure in the long run.

Acquiring the knowledge of the market is not difficult for anyone with average intelligence after a few years of hard study in the market. But it is neither the level of intelligence nor the knowledge that decides the outcome of the market operations of a trader. It is the decision making process that is so hard for most traders to overcome and that is the main reason for a success or a failure for all the traders. Some find it easy to make decisions and stick to it and most find it so hard to make decisions and stick to it. Unfortunately, any decision making process in trading is a pain-taking process and humans tend to avoid pains and go for pleasures even if for temporary ones. Assuming one has acquired enough market knowledge and acquired one�s proven trading system (this is the second most important element of success in trading, in fact. An edge in any system is based on the quality of info one has, charts being only an info of secondary quality not the best one)

Through studies and research, a trader faces the task of making decisions to put this knowledge and system into practice. Then, how many traders can honestly say they can commit their ranch when the trade is suggested by their own system (given that trading is just a chance game) and let the profit run for weeks and months when their system tells them, and how many can manage to cut the loss as a routine process when the situation arise. It all sounds so easy when saying it but so difficult when doing it affecting real money in the market. I still do not sleep well when I am running position because even if the profits are running into a few hundred dollars and the system is telling you to carry on, there is no guarantee that the profit will turn into a yard or two in a month time, and it may even turn into a loss in a day or two when something unexpected happens. A painstaking process in real sense. The pain is not knowing what will happen in the future and in fear of losing. So at the end of the day, assuming one has decent trading system and market knowledge and decent info, it is ultimately how disciplined and how well that trader can take the pain of making right decisions at the right time that decides the outcome of the trades. Hence I call trading a mind game. When I interview prospective young traders, I always look for disciplined and strong-willed person as my first priority as long as one has decent education, but strangely in many cases, it is some kind of genius or half-genius with lots of brains with no disciplines who turn up for an interview thinking only bright people can make good traders.

In fact, I always try to pyramid while position trading medium-term once I am convinced of a new medium-term trend emerging. Like in USD/JPY position trading 135-132 as an initial position, adding in 132 and 129 areas. Same for AUD/USD and EUR/USD with similar strategies. But sitting on positions and watching the counter-rallies costing truck load of money is not easy job to do and causes lots of pain all the time. Most traders even among experienced ones cannot bear that pain and give up too early. But there is no other way to make a big money and we have to bite the bullet and "sit and accumulate" as long as the medium-term trend is intact. That is why I always believe psychological aspects of trading is far more important than anything else in successful trading. A mind game like those bluffing game of poker.

Entries and exits can never be "irrelevant" for any trader for any purpose. It is just that psychological aspects of trading are much more important than entries and exits, and decisive for the success or failure of a trader in the long run. Perhaps exits are more important than entries because any perfect or near-perfect entries are possible only in hindsight.

BC�s WORDS OF WISDOM
Any market, be it real estate market or forex market, is all about transferring money from the masses to a few lucky ones in the long run. In most real property speculation cases, the masses make money ,a lot of money, but the money stays as paper profit and evaporate before they realize their paper profit into real hard cash. In most forex speculation cases, the masses barely survive a few years thanks to lack of knowledge of the market and the deadly leverage. But both types of speculators all serve their useful purposes in investment food chain contributing their hard earned money to the market in exchange for a dream.

For any prospective traders, hope this is not in anyway a discouragement. Trading is a hard mind game and not everyone is suitable to be engaged in such a hard game. Most have neither frame of mind nor mental fortitude to survive in this hard game. Mastering TAs or numbers or options business are at best a first tentative step into the right direction with no guarantee to any success. Training a right frame of mind is the most difficult but absolutely necessary part for success and most are simply not ready to go through that hard stage of the learning process because it is a very painful process. Trading is essentially about pain-taking-process in the end although most do not realize it. The process of overcoming fear, greed and mastering tranquility of mind in this hard school of speculation. Fwiw.

Every trader should find his/her method/system which suits his/her own situation and personality. And that system/method must be the one that has proven to be able to make some money through trials. So, if Tom, the medium-term trader, revealed his money making method of last three decades, it may not have the same effect for Dick and Harry, the day traders, and vice versa. Agree that most fail for lack of system/method and/or lack of discipline to follow through.

Trading success is all about making as much as one can when one is right and losing as little as possible when one is wrong. That is the essence of this business. So, any theory or system which looks after the above is a good one.

System is a weapon of a soldier in this market. You must have one as soon as possible. Otherwise, it will be like fighting well-armed Forex robbers with a handbag. Best one is a self-made one because you can never feel comfy in borrowed shoes although borrowing good ideas from others is a good idea. Good luck.

One cannot make a dime unless follow the herd or trend most of the time. It is just that one has to be cautious when overbought/oversold region is approaching and know how to turn at inflection point for the opposite trend. Following herd needs average intelligence and courage but identifying inflection points and taking a necessary action needs not only intelligence but also a lot of courage. Again, fortune favors the brave.

Money management is where most traders go wrong in almost all cases leaving only a few as the winner at the end of the day. Money management and discipline of mind is what makes or brakes a trader at the end of the day, not the elementary entry and exit method.

Forex/Currency Trading: It is a sentiment game w/ a crowd mentality where even the best players w/ the best forecasts are tricked out of good positions by the magic of price action.

TREND TRADING: Accumulation and Distribution
Forex market like any other market works in a very simple way. It accumulates in a certain area for awhile, and once the accumulation is over, it advances to a certain distance until distribution starts, and accumulation happens again and advances to a certain distance again, and repeat and repeat. Day trading may not yield the best results while the accumulation and distribution work out itself, being double-murdered by zig-zag moves, while the market starts advancing out of accumulation area, day trading is a sure way of cutting profit short. In general, day trading is not the best form of yielding the most profits in my experience contrary to what some writers who never made real money in this game try to say.

The safe and better way in making some money must be wait for "accumulation" to be over and ride the whole length of advance until "distribution" starts and reverse as the market dictates as a short-term trade for 2-10 days, as the case may be.

Please study 8 hour or 4 hour line charts or candle charts, especially the patterns and 20 MA inside the charts for a few months everyday, and you will discover what I mean by accumulation and distribution for short-term trades in Forex market. Forex market always needs this process, so you can decide what tactics you will use at a given stage. Imho. Good luck.

TECHNICALS and CHARTING
Why day trade once you get a good seat and the market is going your way. It is always more profitable to ride even the short wave for 2-10 days by adding up. In general, you must day trade only when you are losing. To find a buy entry seat for short-term trades, you can study the "accumulation and distribution patterns and 20 MA" in 8, 4 hourlies or 30 min "Line Charts" (or Candle Charts), together with MACD "overbought and oversold indicators" with its Patterns. If you study them for awhile you will understand when it the best entry point. The remainder is for money management and discipline and of course, experience. Good trades�

On technical side of the trading, the first thing to do is to find out the trend in one�s trading time frame and the proper trading strategy for that trend. Some ride positions for months, while some ride positions for less than an hour or a day and their views of the trend obviously differ. For a trader who is running a position for months, a daily fluctuation may be just a meaningless noise while for a daytrader or an hour trader, a daily fluctuation could be a monstrous tsunami. Having a precise definition and a technique of identifying a trend and the turn of a trend in a trader�s time frame, and adopting the right strategies for that trend is the first elementary step in a hard school of trading. Imho.

I keep my technical side on any pair as simple as possible largely relying on other�s moves to see how I can take advantage of the situation. So for me the strategy is to "range trade". Please always give stop order per your risk profile when you open any new position. Medium-term reversals can be confirmed only in monthly, weekly and daily charts. Chart reading is not to predict the tops or bottoms of any move, but to confirm the change of trend as soon as they are made and adopt right strategies in that new trend. Good trades.

Each cycle is different from the last one and that is the beauty of the market. It is extremely important to look at the big picture from the distance rather than studying the minute and hourly charts with a microscope. And repeat the whole show again and again �til it shows the sign of turning in daily or weekly chart. And flip. Good trades to you.

I use very primitive charting methods. Please read 8 hour charts of EUR/GBP with 20 and 40 MA, and read round figures and breakout (from consolidations, then you will realize the method cannot be more primitive than that, but still deadly effective). Buy on dips towards the support and add up on breakout of that consolidation treating the two as one trade with same stop loss and "keep them" as long as the market moves in your way. Good trades.

As a rule of thumb, 20 MAs in 8 hour, day, week and month are useful for its directional tendency and as a resistance and support point. Not sure how much it is useful in daytrading though.

Please have a look at Eur/Usd and Usd/Jpy weekly 10 RSI and Aud/Usd monthly 10 RSI "patterns", not levels. Then you will find out primitive things work better when coupled with even simpler MAs. And RSI is useful "only in these weekly and monthly time scale" as far as I can see. You can ignore RSI in short-term scales as the inventor of RSI, Wilder, told us long ago.

Good afternoon. Agree with your observation. Once Soros of Quantum Fund hit the nail on the head with his theory of reflexivity in the market and that is exactly how these players work in the market. That rather romantic tool of daily candlestick chart is useful because whenever some players start positioning to start or stop short-term moves in Yen market, say several hundred pips, for whatever reasons, it reveals their intention to the market, more often than not. It sounds so weird to say tens of yards are spent relying on indicators so primitive like hand-drawn candlestick charts, but that is the truth in Yen market. Same as millions of soldiers risking their lives depending on how their generals draw up the battle plan with their cheap red and blue pencils in their operation room desk. Crazy world, I would say, but that is the fact. And as you say, battle is a battle and those ones who make their first move with their candlestick may not always win either. I happen to believe if a child can learn to trade with some simple signals he will do better than most traders, most of the time, making a good living. But then again, movin market is more than just following the signals. Good trades to you.

I guess if you are a daytrader, 30 minute and 15 minute candle charts and line charts in combination with MACD and MA could be more useful than hourly charts or even daily charts. Especially watch out for the down-sign and up-sign with long tails in candle charts and confirmation of the change of short-term trend in line charts breaking accumulation area in these charts. If you are a nimble trader, even a candle-sign is enough to start moving in with stops above or below the long tail end. For dollar/yen trade, read swiss/yen, pound/yen and euro/yen together to confirm the top or bottom. For Eurodollar or dollar/swiss trade, read pound/swiss and euro/pound together to confirm the same. If you are a daytrader, what matters is the flow of that particular day, not the bull or bear bias, so, 30 Min and 15 Min Candle Charts and Line charts are not bad tools to follow these flows. Good trades.

USING CROSSES AND GOLD
EUR/GBP and GBP/JPY have a value as the leading indicators of EUR/USD and USD/JPY moves. EUR/CHF is similar to EUR/GBP in forecasting value but stopped trading and looking at it a long ago after experiencing difficulties in running good sized positions there.

In short, EUR/GBP and GBP/CHF are leading indicators for EUR/USD and USD/CHF, and GBP/JPY, EUR/JPY and CHF/JPY are leading indicators for USD/JPY. EUR/JPY plays a very important role in EUR/JPY direction too, while GBP/JPY plays the same role for GBP/USD. For example, yesterday�s EUR/USD weakness largely started from EUR/JPY sales keeping EUR/USD and USD/JPY downwards. As a rule of thumb, if EUR/USD does not move but EUR/GBP moves first, it is a good indicator that someone is maneuvering in EUR/USD front in the same direction later, and when EUR/USD moves but EUR/GBP does not move first or in tandem, then it is highly likely EUR/USD move is countered by its opponent and the opposite move is highly likely soon. Same applies in USD/JPY and EUR/JPY, GBP/JPY front in the same fashion. Imho. Good trades.

Good morning. EUR/USD, EUR/GBP, EUR/JPY and GBP/CHF all have correlation to a certain degree affecting each other. It simply shows how the money moves around in these pairs. For daily candle studies, it is more accurate to read them all to see where the flow is going, and same for 4 hourly or hourly or even 10 minute charts. In fact, GBP/CHF and EUR/GBP in many cases move a day or two before EUR/USD. Even by watching GBP/CHF and EUR/GBP charts, short term or long-term as above, you can manage to move in front of EUR/USD moves in many cases. Same goes for GBP/JPY and EUR/JPY charts for USD/JPY moves. More study on these pairs moves will reveal some more interesting things too. Good trades.

I have been using USD index and Eur/Gbp (or Gbp/Chf) as my guide dogs since late 70�s with reasonable accuracy for medium-term trend. Never lost money on medium-term bet relying on those guide dogs in fact. But that cross does not work when Pound is deliberately devalued.

AUD/JPY is one of the important pairs influencing AUD after Dollar, Euro and Pound. Usually falling AUD/JPY is good for Yen Bulls as well.

Good evening. Gold is the mirror of Dollar for hedging purposes and the co-relation is excellent. Sometimes, when I am tired of double checking too many "inside infos" rushing in every hour, I just watch Gold to confirm and go ahead with the moves. Gold chart is one of the top charts you must always watch in forex trading. Eur/Gbp chart, along with the Eur/Jpy chart, is an excellent mirror for Eur/Usd directions most of the time too. Gold, Eur/Gbp and Eur/Jpy charts will tell most of the market story most of the time with Gold and Eur/Gbp leading Forex world most of the time. Good luck.

USING STOPS
Please always give stop order per your risk profile when you open any new position. Medium-term reversals can be confirmed only in monthly, weekly and daily charts. Chart reading is not to predict the tops or bottoms of any move, but to confirm the change of trend as soon as they are made and adopt right strategies in that new trend. Good trades.

For position traders, the basic bias of the market in his trading time frame, the liquidity situation of the market in that time frame, and the size of trading positions must be all taken into account when exercising stops, be it based on tech levels or a certain sum of money or a percentage of a total equity. It is a must but also it is form of art like trading itself. And every trader must develop his own unique style of using stops. But unfortunately, all this can be learned only by paying a certain amount of tuition fee to the market.

Yes, but as a position trader I never use tight stops. Same goes for trailing stops. All very far away from the market not to be taken out by meaningless market noises. Initial stop is always 1% of my total equity, and never commit the whole position at a go but always scale in and scale out.

Good morning. You can avoid your problem in most cases by leaving the market always by trailing stops, i.e., do not set the profit target. So, any winning trade must be held as long as market does not tell you to leave by hitting your trailing stops. When you enter the market by market signals and leave by stops or trailing stops, it solves the most difficult part of decision making process rather easier for traders. Good trades.

USD/JPY HINTS
One of the silly rules of thumb in USD/JPY trading is it rarely moves 700-800 pips in a row without 200 pips or more correction in the middle and it almost always retraces back to 350 pips advance point from the start of its 700-800 pips move. All because of liquidity problem in Yen market.

The real battle of bulls and bears for medium-term trend is always around 20 day MA line in Yen market. Daily option activities here and there are of no relevance as far as medium-term trend is concerned.

Yen position traders sit on their positions gunning for several hundred pips at one go. For day trades, much more nimble approach is required. As Yen position trader, please never buy anything below falling daily 20 MA and never sell anything above rising daily 20 MA, no matter how attractive they look. So start buying only when daily 20 MA starts rising, from whatever level, is not only safe but also proven way of making money although it sounds so simple. Imho. Good trades.

You can read how Yen traders make intraday moves by watching 30 min USD/JPY candlestick chart or line chart if you are not familiar with candle nuance. 4, 8 hourlies are for positional moves. Good trades.

The Tokyo Fix is where the FX rate is established for the day by the banks for their customers. So even though the FX rate may change during the day the customer gets the rate at the time of the fix. There is a fix in Tokyo, London and Toronto (more I am sure). Importers generally settle their accounts on the 5th, 10th, 15th, etc, of the month before and up until the fix ():50 GMT). Sometimes, if there is an "excess" dollar demand $/JPY will continue to climb slightly after the fix. $Bulls will also use this as a staging for extending a rally. $Bears (Yen Bulls) will use this to establish better shorts.

REACTING TO NEWS
News or data are always read by the market along the prevailing market bias. Data can provide a good reading for the state of the market. If the data is bad but the price is still rising or not affected, it must be a bull market which means buy on dip strategy is a better one. Conversely, if the data is good but the price is not rising or even falling, it must be a bear market which means sell on bounce strategy is a better one. The inflexion point must be when bad news or good news. no longer affect the prices as they have done before. Medium/long-term bias changes are usually accompanied by such reactions to the news. Fwiw.

It is not the numbers that counts but how the market reacts to the numbers that counts. That gives some comfort to those who are not privy to the numbers already

FAIR VALUE
Good evening. The concept of fair value in any currency is largely that of CBers and economists and not much about trading ..Almost always currencies overshoot from the fair value areas some 20-30% in their medium-term trend and what makes all hard currencies range in reasonable areas overtime since we had this floating regime in 1971 must the ability of relevant CBs to control the currency ranges and their real economy's weakness or strength to support those ranges. ECB folks were not joking when they said Eur/usd was some 25% undervalued from the fair value when Eur/Usd was below parity levels two years ago. Same goes for BOJ when they were saying Yen was some 10-20% overvalued when it was trading around 100 some three years ago too. That is how these folks view the markets and try to guide the market. Of course, when US Treasury folks say "Dollar is still strong" when it is falling, they are begging the market to sell more Dollars.

DIFFERENT CENTERS
The first hour after opening in Tokyo tend to provide the best liquidity of the day and that is when most heavyweight players try to position their way without having much difficulty for the day. Sydney open is more often used as an ambush hour by certain players using the time window till Tokyo open. One rule of thumb is when Yen jumps at Tokyo open the chances are it will continue throughout the day and a few more days. On different point, learn to position trade Yen or any other currency if one is really going to make a big money one day. Fwiw.

One hour from Tokyo open, London open and NY open are the times where most liquidity of the market exist. And that is where market makers are busy setting the trend for the session or even the day. Your observation has a merit because most of the session or daily moves are started either in London open or Tokyo open or NY open. Especially London Open. Other markets are too thin for any good sized traders to make their market views felt. Good luck.

London is just a market place where all sorts of Forex folks flock to buy and sell. It does not have to be London folks. It could be anyone from anywhere in the world with deep pockets who start setting the market direction on a given day. Same goes for NY and Tokyo sessions markets. In any case, Tokyo and NY still relatively small markets when compared to London as far as Forex goes.

A WORD FOR NEW TRADERS
Traders that try to pick the tops and bottoms of the market throughout the day end up with mostly misery because inexperienced fellows in Forex departments even in first division clubs try to pick the tops and bottoms believing that is where the real big money is. And ego demonstration and bonus consideration comes into play too for smart college graduates. The first thing I do when facing new recruits is, do my best to destroy their ego and fear in the market first. Once their ego and fear are reasonably cured, they become dutiful followers of the market like Pavolv�s hounds and they can survive. And once they can survive, they can be taught on how to put temporary tops and bottoms to the market at much higher level of speculation school. Then, that may take at least a decade of training too.

QUIPS FROM BC
Forex is all about how to hit the next ball correctly rather than worrying about something of a distant future. The next ball may be for 2 pips or 20 pips or 200 pips or 500 pips depending on a trader�s style.

Anything is possible in Forex.

I am useless as a daytrader. Corrections may take days or longer to complete.

Good quality info is everything in this game.

Bottom picking in the Usd/Jpy is the Mother of all risky trades.

We learn how to trade till we stop trading and we learn from each other everyday. That is the beauty of trading and life in general.

Do not worry about what market will do. Just worry about what you will do when market reaches your "pain point" or "happy point". You will have an easier life as a trader that way.

Forex players can operate quietly, but they cannot hide their moves in those charts.

Good morning. Yes, no liquidity and no conviction by players make the market look like a vagrant loitering in his usual area. Good forecasts and trades.

Good sleep is essential for good trading but most of the traders I know of seem to sleep with one eye open.

Forex Money Management

2009-01-09T05:05:00.000-08:00

Amount of Equity Lost	Amount of Return Necessary to Restore to Original Equity Value
25%	33%
50%	100%
75%	400%
90%	1000%

Figure 1 - This table shows just how difficult it is to recover from a debilitating loss.

The Big One

Learning Tough Lessons

Money Management Styles

Four Types of Stops

Once you are ready to trade with a serious approach to money management and the proper amount of capital is allocated to your account, there are four types of stops you may consider.

1. Equity Stop

2. Chart Stop

Figure 2

3. Volatility Stop

Figure 3

Figure 4

4. Margin Stop

Conclusion

As you can see, money management in FX is as flexible and as varied as the market itself. The only universal rule is that all traders in this market must practice some form of it in order to succeed.

By Boris Schlossberg, Senior Currency Strategist, FXCM

Reprinted with permission of Investopedia

High Probability Trading

2009-01-09T05:04:00.000-08:00

Even traders with limited experience start to realize that we are not trying to capture every market move. We want to improve our odds and reduce our frustration by filtering, for high-probability trades.

The combination of trend and Fibonacci techniques can provide powerful signals for higher probability trading. We already know that trend-lines have some validity, and so do Fibonacci levels. Combine the two, to improve your chances.

The following charts are the USD/British Pound GBP. First, the daily chart as of October 5th 2005. I have drawn a red down-sloping trend-line joining the two recent swing highs.

The chart has moved down since early September , making a down-trend of consecutive "waves" with lower swing highs and lower swing lows. There were several opportunities to take advantage of the down-move. In this tutorial we will focus on the October 6th opportunity.

In a down-trend we want to short those swing highs, and take profits on swing lows. We don't want to short every time we **think** we have a swing high. If you have tried that, you know about whipsaw and fake-outs already haha. We only want the best trades, those which are more likely to succeed. So how do we choose an optimum entry point?

Our odds are improved if we have a swing high near a down-sloping trend-line (in red on the chart). Markets tend to reverse at Fibonacci levels. So if we have a significant resistance level near a trend-line we have an even better chance of success.

The next chart shows the GBP with Fibonacci resistance levels. Notice the "SK Resistance" level. This represents an area of significant resistance, with a higher probability of a reversal.

If you are new to Fibonacci, those studies look like a confusing series of colored lines. Learning how to use these Fibonacci studies, and which of them are stronger (higher probability), is really easy! I have made two video seminars that explain this.

That "SK Resistance" level, coinciding with a trend-line is an optimum shorting zone. If the market reaches that area (we can't be sure it will), and if the market resists there, we want to take a short position. Once the resistance materializes, it will be difficult for the market to move against us.

Most of us are not trading the daily chart, but we can use the longer-term charts to find **powerful** trends and Fibonacci levels. The next chart is a 60-minute chart. I choose 60-minutes because it clearly shows when resistance has materialized. You may prefer a 30 minute or 5 minute chart.

The following 60-minute chart shows how the Pound rallied to the SK resistance level, and the trend-line. It rallied over those, tested them briefly, then retreated. There are several ways to determine whether resistance has materialized. I have some very powerful techniques for that purpose. However we want this tutorial to focus on some basics. So for now we will use the obvious breaking of the rising trend as our trigger.

During that rally upward, the 60-minute chart has a series of higher swing highs and higher swing lows. Once we broke the highest swing low (see the last bar on the above chart), we know that up-trend has expired. So we want to start shorting rallies and take profits on dips as shown on the next chart (60-minute chart).

Notice how the market broke down, and never looked back! That is what happens when you combine trend-lines with Fibonacci techniques. The best trades go your way and keep on going. That is a characteristic of higher-probability trading.

If this tutorial makes sense, you are ready for my Fibonacci Trading videos! My two introductory videos are inexpensive, and they receive glowing reviews almost daily. You can take your trading to the next level, bring these powerful techniques to your trading just by watching my video seminars.

Taking Profits

2009-01-09T05:02:00.000-08:00

So much time is spent on entering a trade. Today I want to focus on some exit strategies. This is not a full Fibonacci course, so if you don't understand the basics I suggest that you visit my website for help with those aspects.

Human nature makes trading very challenging. Sometimes you want to exit a trade too quickly when it goes against you, and to cling on to a winner too long. Too often a winning trade will reverse, taking back most of your profits, or even going into a loss. On the other hand if you exit too soon, you risk missing some big profits. You may find that you're sitting on the sidelines while the market continues well beyond your exit.

In this lesson I'll show you how to bank those profits before they turn against you.

First look at this FOREX chart (JPY hourly chart).

Let's imagine that you were clever (or lucky) enough to enter long near point "A". You're feeling pretty good when price reaches "B". So good that you don't want to exit, because the up-thrust just before "B" give the impression that this market wants to go further.

Before you know it, the market reverses and heads towards "C". Right at "C" you get scared and bail out with a little profit. Not much profit compared to exiting at point "D" or even at "F".

You exit near "C", and feel relieved until you see the market heading (thrusting) up to point "D". You stop kicking yourself long enough to enter when it breaks above "B", just a little before the high at "D".

Soon after your entry near "D", the market retraces to "E", and on the way breaks below the high of "B". Breaking below the high of "B" feels scary because you're thinking this chart could be back at "A" in a flash. So you exit at "E" licking your wounds with a loss in this trade.

You start to notice more frustration now, when you enter somewhere between "E" and "F". You're feeling good near "F", but then the chart dives to "G" and you're stunned! This is a losing day for your account, and it's beginning to hurt.

By this time you feel like the whole market is watching your trades, and they're doing exactly the opposite of what you are doing. You start thinking that they wait for you to enter before they slam you and empty your account..

You have wasted your emotional capital, you don't want to trade any more. You don't have the stomach to consider shorting the rally after "G" to take profits at "H".

There must be a better way!

Banking those profits.

You should seriously consider using profit targets to improve your trading performance. There are several ways to do this, my preference is to use Fibonacci techniques.

On the following chart, I have added a Fibonacci expansion using points "A, B, C". This provides us with three profit targets. They are at 116.52, 116.93, and 117.59, see the blue arrows.

If I add another Fibonacci expansion using points "C, D, E", then two more profit targets are added, at 116.87 and at 117.22 . I have not added those studies to the chart, in order to keep things simple for now. You will notice the 116.87 target is quite close to the profit target at 116.93 in the above paragraph. And the 117.22 target is remarkably close to the swing high at 117.32 which is between E and F. We'll ignore those for simplicity, just remember that Fibonacci is excellent at predicting probable turning points.

The trick with Fibonacci is that the market sometimes blows right through a profit target. So what do you do then? Simple - you stay in the trade! But sometimes the market reverses shortly after a profit target.

Sometimes the market respects a certain Fibonacci level, sometimes not. Some Fibonacci levels are "stronger" than others. Advanced Fibonacci techniques are able to help determine which have more validity, but that is beyond the scope of this lesson. What mechanism could you use to exit the trade?

One practical method of timing a trade is to use an oscillator. Another is to use a moving average. When an oscillator shows a decline of momentum, or when price crosses a moving average, you could exit the trade. Let's explore the "oscillator" option in the following chart.

In that chart, I have removed the Fibonacci studies (less clutter), leaving the blue arrows for profit targets. At the bottom I have added the default Stochastic per E*Signal charting software. I have added a red vertical line whenever the Stochastic "fast" blue line crosses the "slow" red line just after price rises above the Fibonacci target. If you exited when price reached those vertical red lines, you'd be a happy trader!

Already you can see the potential of using profit targets with an exit trigger.

You may want to research the following:

Possibly exiting a partial position at each profit target.
Consider entering long again on the dips, when the chart begins to rally again.
Consider using multiple time-frames, perhaps Fibonacci studies on the hourly chart, and exit triggers on 5 minute charts.

Forex News Trading

2009-01-09T05:01:00.000-08:00

The last 30 minute candle gives the picture. In the bottom right corner the time is indicated as 08:40:29. The data release was at 08:30 and the pre-release price was 1.2670 (EURUSD). The action during these ten minutes dwarfs the preceding price action of more than 60 hours. According to News Trading 2006, the spike from 1.2670 to 1.2710 should have had follow-through as the increase in non-farm payrolls was only 50,000 whereas 125,000 was expected. Even a significant adjustment to the previous month simply negated the impact of the 50,000 and brought the month’s net adjustment in line with the three month average. (This supposedly should have resulted in a “no trade” due to no volatility. Big revisions to previous jobs reports are a standard feature and part of the expectations.)

The more subtle marketing wizards package it very scientifically. They use impressive looking historical statistics to show how price action unfolded immediately after certain economic data releases. See the pattern, they trumpet, and make money from it.

The less subtle approach explains how to beat the gun with proprietary data feeds on supposedly important data releases. In reality, most of these data releases have never had any significant impact on the forex market before, but despite this, the marketing wizards invite you to join them in the shoot-out by paying a monthly subscription in the belief that this will help you beat the market makers.

Before I go any further in showing you how to really lose your money, your mind and your interest in this most lucrative market, let me just tell you why I think you can pay attention to what I have to say on the topic. Apart from the fact that I describe in my book, Bird Watching in Lion Country – Retail Forex Trading Explained (BWILC), the absolute necessity of real-time analysis and the folly of basing a trading strategy for the long-term on very short-term technical analysis indicators - or other illusionary patterns - I also explain a term which I coined: “relational analysis”. This simply means that, if you are trading forex, you have to relate three things all the time: price, time and events.

News trading as a concept has mainly to do with “events” and specifically with those anticipated events that cause prices to move more than usual, but only briefly - brief even in terms of short-term trading. News trading as offered by the marketing wizards takes this concept and then distorts it to rob you of your money.

Non-farm payrolls: March 1998

My mentor is an institutional bond trader who has a simple view on technical analysis: “if the prices are high, it may be time to sell and if the prices are low it may be a time to buy”. (He amusingly referred to traders’ screens filled with every conceivable squiggle, line and indicator as Playboys – dirty pictures.)

The point he was making is that trading decisions were not made based on technical analysis other than for the basic positioning it could give you as regards where the price is now, relative to where it has been recently. If you are closely monitoring the market you will have a feel for this anyway, but charts are helpful for a quick snapshot picture.

Noting and being acutely aware of upcoming economic data releases was one of the main elements of his analysis and approach to understanding the market and price action. This is what he based his trading decisions on. At the time I started trading in 1998 I was only vaguely aware of things like CPI, PPI, trade balance, money supply, and unemployment – all the things that give economists and analysts that warm and fuzzy feeling – but I quickly acquired an interest, figured out what each of them meant and started using the Sunday papers’ business section to monitor releases and follow the comments.

At this stage I was trading bonds on margin here in South Africa.

I had no live real-time price feed, nor a charting service. After a few months I got a pager-based informational price feed which was about as real-time as you could get. In addition to price changes it also informed me of economic data releases. If you saw a price change occour that made you to want to trade, you used the phone to call the broker - who wasn’t in the primary business of fielding these sorts of calls - and so, if you were lucky you got through to someone who was willing to help, and that help usually took the form of discussing how stupid your anticipated trade was.

My dumbest trading idea ever

Now, you have to understand, there is a psychological element to all of this. Big price moves are exciting – and they lure traders. If you could figure out how the prices would react to the data releases you might just have it made, I thought. But my mentor explained to me why this was about my dumbest idea. Of course I knew everything, and disagreed. “Look”, I said “Here are all the examples, I have this cracked.” But I didn’t. And he explained to me why. Let me first give you some background.

One of the things that I realized when looking into the phenomenon of News Trading (2006 retail FX version) was that it was brand new in the forex market (you’ll see how new below.) I have been watching economic data and its effect on short-term forex pricing since I started in forex in 2000/1. I did this because this is the genetic code of the forex market. Very early on I bought a book by Brian Kettell, “What drives the Currency Markets”? This book contains a dedicated chapter on the phenomenon of expected economic data releases and the academic research on their impact on the US dollar, in the very short term and also in the longer run. With the right perspective of the market all data releases make sense, as do price action around these data releases. (I am not talking about the on-the-release spikes.)

When I decided to write this newsletter, something prompted me to go to my 1999 diary in which I did some initial, and to me, important research on price behaviour and relating different markets’ influences on the market I was involved in (the South African government bond market). And then I almost fell on my back. What did I see?

On Friday 5 March 1999 at 15:30 local time I wrote:

“US Employment as expected. 14.16% à 14.11% !!!!”

I was referring to the non-farm payrolls report. My note indicated that it had come out as expected and my exclamation marks indicated that it had triggered a relatively big price move on the South African bond market.

Consciously or unconsciously, relating price, event and time has been a part of my trading from the very beginning and a constant feature of my analysis. It has become the genetic code of my 4 X 1 strategy and relational analysis. I watched the effect of the non-farm payrolls for probably 5 to 6 years before many so-called forex gurus caught on. In fact, many of them mechanically recited the mantra “don’t trade on a Friday, play golf” until quite recently.

If repetition is the mother of all learning, my news watching experience may have been behind what I said to my clients in my Daily Briefing (GMT 06:00) on non-farm payrolls (GMT 12:30) October 6, 2006:

You can also rest assured that the new bread of news traders will have an increasing tussle with their clearinghouses - a fight the news traders will lose and due to the historical sentiment that the jobs report is the big one, the day that April / May 2003/4 - can't exactly remember which one - will be repeated and the blood will be flowing is nearing. Someone is going to get sick of it and run the market and shake out every trade straddle and news trader trick in a million mile radius ...

My dumbest trading idea ever - reborn: Class of 2006 News Traders

The idea of doing something on News Trading came to me after I had launched my Bird Watching Newsletter in August 2006. The first two newsletters covered the topic of leverage. I didn’t know what I was going to do for the third. And then it came to me as a flash-back to my days as an early bond trader, how I was going to beat the market. Dumb idea, the dumbest I have ever had. That was then, now it is 2006, but history is repeating itself. There are a lot of newbies thinking they are sitting on the best idea since sliced bread, but as they’ll find out, they are just being plain dumb.

I cottoned on to the revival of the “dumbest trading idea ever” (2006 version) when one of my clients who was trading a live account contacted me on the Instant Messenger, with an ominous “what’s happening here?” “Here” was the market and a recent data release, and “what was happening” was basically nothing. Yet my client was bothered. Why? (As background I should perhaps just mention that my main source of real-time information and analysis is CNBC Europe. All economic data releases are discussed beforehand, flashed instantaneously, and analysed afterwards. My television is near me, either with the sound on (not very often), or with the sound way down, which allows me to see the ticker and news flashes.)

So for a moment I was taken aback by the client’s question because as far as I knew nothing had happened and, the way I had anticipated it, nothing was supposed to happen. It was some minor data release in the US of no real consequence for forex and the release was basically as expected. However, zooming in on my very short-term charts I saw there had been a flurry of price action around this mundane data release and a relatively significant spike and then a reversal but, all said, no big deal, yet my client was anxious. Why?

And then the penny dropped. News Trading had become the big new thing. I should have picked it up, the signs were all around me. Marketing wizards were punting it. Bird Watching affiliates had become big on “News Trading” recently. I checked and sure enough, there had been a number of recent referrals from those sites. New clients increasingly had “News Trading” in their vocabulary. I should have seen it earlier, but there it was, the new manifestation of my old dearest and dumbest trading idea ever, the News Traders of 2006.

And where News Trading is present, sorrow, loss and confusion is never far behind. It was all so familiar. Of course it was much sexier now with instant information, many different feeds to choose from, analysts by the dozen, gurus by the bagful, and those exhilarating 1 minute and 5 minute tick charts tracking the rising and falling account equity of 1 minute-a-day News Trading “millionaires”, but the results were the same: people losing money.

Hop-a-long Cassidy and the Forex Kid

At school I read cowboy books. The only author I can remember now is the legendary Louis L’Amour.

Crossfire Trail; Showdown at Yellow Butte; Last Stand at Papago Wells; The First Fast Draw; The Quick and the Dead; The Sacketts; Hanging Woman’s Creek and many more.

If you haven’t read the books I am sure you would have at least seen a traditional western movie. The plot is pretty simple. There are cowboys and there are crooks. The crooks come to town and cause havoc. In ride the cowboys and you know the shooting is about to start. All the decent folk get out of the way, mothers grab children off the street, stores close, windows are boarded, old people get off the boardwalk, someone peeks from behind a curtain. There is danger in the air, and before you can say “shoot-out”, Main Street is cleared. The action starts, guns blaze, the bad guys turn tail. And sometimes there is an interesting sub-plot - some testosterone driven wannabe Kid with a gun joins in. He’s been told beforehand not to, but he can’t be dissuaded. He reckons he’s slick with a fast draw but he’s just an amateur. He comes up against the pros and the result is a dead Kid.

One of L’Amour’s books is called The Daybreakers … sounds a bit like The Day Traders.

The Class of 2006 News Traders know when there will be a shoot-out, they know it is going to be ugly, but they can’t be talked out of it. They’re the wannabe Kid. Don’t join the shoot-out, the greybeards tell them, but no, they know better.

The problem with shoot-outs is that so much can happen and there is a lot that can go wrong. For instance, the other guy can be faster on the draw. But he can also have a back-up man somewhere behind you, just in case. Crooks come in pairs (as do currencies). Shoot-outs are unpredictable, lead flying in all directions, and the only guy who benefits is the funeral parlour owner (the forex broker?).

News Trading 2006 version

As far as I can see there are two main strategies used by the Class of 2006 News Traders.

Strategy 1 – The fast draw

This dumb strategy asserts that by being quicker than the broker who gives you the prices to trade on, you can actually make money on a variety of data releases.

This can’t be done consistently, but people fool themselves into thinking it can with one or two text book examples, and using the perfect science of hindsight.

Strategy 2 – follow the leader

This strategy, equally unsuccessful, believes that if the prices go in one direction after the news release they will in the vast majority of cases continue to do so. This, despite good evidence that price action following data release is pretty much a random walk. Of course, this is not enough to deter Hop-a-long Cassidy and the Forex Kid, and they will grimly hang in there until the last bit of life blood is drained from their account.

Slick marketing wizardry shows technicolour examples of fantastic big directional moves on news releases according to the classic News Trading models, ie, the straight forward shootout. Recently however the reviews of their trades are punctuated, with “classical reversals” (being shot in the back?), exceptions to the rule, and other qualifications - only the traders using the professional services offered at a price (like opening and funding a live trading account) are privy to this “inside info”. In other words, simplistic marketing is used to lure Forex Kid to the shoot-out and the moment he arrives he is caught in a deadly crossfire. Doesn’t this sound ominously like the intra-day technical analysis models touted by the self-same forex marketing wizards?

Why do Hop-a-long Cassidy and Forex Kid keep ending up in the mortuary?

It is simply a fact, based on statistical probabilities, that when there is more than a certain amount of lead flying about, you will be hit.

When the shoot-out of data releases starts, the wise old men of Forex Town, sitting on the veranda’s day in and day out watching the daily lives of Forex Town’s folks, vacate Main Street. That is why they are old – remember the adage: there are old traders and there are bold traders but there are no old bold traders.

Many readers (at least all those who have read Bird Watching in Lion Country) know that one of the major delusions of retail forex created by the marketing wizards is that the forex market is ideal for technical analysis. Every marketing wizard trick was initially built on this illusion. People with a deep understanding of technical analysis, which most starry-eyed newbies in the forex market don’t have, know that one of the pillars of technical analysis is accurate volume information. If a move occours on high volume it is much more meaningful than a move on low volume (because a move supported by volume is likely to continue and not peter out in a false break).

Where’s the volume control?

In the spot forex market there is no reliable real-time volume information available, particularly on the retail level. Notwithstanding this, extreme importance is given to technical analysis by the marketing wizards and volume was simply substituted by fast price moves, which, I might tell you, is a wholly inadequate replacement. In other words, a relatively large / fast intra-day price move is seen as extremely important - it must have been on large volume, the argument goes. This, however, is bogus. A large, fast move in the forex market can be caused by almost anything.

Believing it is volume just because the price is moving fast and far, will cost you dearly.

On an intra-day level, fast and relatively large price moves are usually caused by a lack of liquidity. In fact it is a situation of lower, not higher volume and the pros actually don’t like trading if they feel the liquidity is thin and they are not getting the prices they want.

Volume in the currency market can come from two sources: either very large single transactions by a single or handful of participants with the same objectives, or many participants with smaller transactions with the same objectives at any given time. If you for one moment think a number of rational, professional money managers, traders or executing agents will use an erratic data release to do large transactions, you will seriously have to rethink even your most basic assumptions about the forex market. Since 2001 there has been an explosion in general forex market volumes and a large portion of this increase was due to the growth in the numbers of hedge funds and smaller money managers like Commodity Trading Advisors (CTA). It is certainly fair to assume that this large increase in the number of participants contributed to both better liquidity and larger volatility across all time frames in the FX market.

Nobody in his right mind, with his business or bonus at stake, is going to do highly leveraged trades and take undue risks when price movements are random. You have to understand that this is simply not how professional investors or traders, responsible for other people’s money, trade. Highly leveraged gambles on intra-day events are just not part of their repertoire. These guys are pros, and if it is not part of their repertoire, it should not be part of yours.

Don’t trust your mother, but trust your forex counter party

Because the forex market is not a centralized exchange regulated by exchange rules which assure participants that their transaction will be honoured, you have to trust your counter party. What makes this dynamic so interesting is that your counter party also has to trust you and that if this mutual trust is violated someone is going to come short.

Unfortunately retail traders are prone to seek opportunities to exploit the perceived faults in their counter parties’ armour. The moment that this threatens the sustained profitability of the counter party these schemes fall flat – they always have and they always will.

Scalper arbitrage was probably the first of these schemes. As marketing wizards competed to lure more clients, they decreased spreads and margin requirements which opened opportunities for arbitrage pip scalpers to enter the fray using a variety of tricks at the expense of their counter party – the market maker. The pip scalpers had fantastic demo account track records. Things changed the moment the market makers’ (real) money was on the table. This was probably the first fight that the retail traders (the pip scalpers) lost hands down against the market makers, who simply instructed their dealers to identify the pip scalpers who didn’t heed the warnings, and take them out. Problem solved.

The second one was straddling news releases. The thing the retail traders tried to exploit was marketing wizards luring clients with guaranteed fixed spreads and guaranteed stops. It was basically just the US non-farm payrolls that really attracted this group a few years ago. They would place entry orders on both sides of the market just before the data release. Apparently a win-win scenario. So what did the market makers do? They refused to guarantee that they would execute your price on the level you had entered it. As a result they could enter you at a bad price and then take you out on the stop on the retracement and even if you then made money on the other leg of the straddle, it was hardly enough for you to cover your loss on the first stopped-out leg.

However, systemic risk for the market maker remained a problem. If a few hundred or thousand retail traders take 100:1 and 200:1 bets on a data release, the market maker became seriously exposed. Market makers are there to make money, not to run the risk of blowing up on one economic data release.

The problem was that they had to cover themselves against the positions taken by the non-farm payroll straddlers by hedging their exposure at their own clearing houses. Now you try to convince a big bank dealer to take a huge position one minute before non-farm payrolls release. He will send you packing. So the market makers couldn’t off-set their risk and thus had to carry the risk of huge and highly leveraged positions themselves. One bit of bad luck and a whole month’s profits could be wiped out.

The market maker makes the rules

There was a particular non-farm payrolls day a few years ago during which, just before the release, the market was run up about 60 or 70 points and on the data release it was run down about 150 points. Blood flowed on “Forex Street”. The shoot-out was rigged. Rumours abounded that a large futures company caused this outrageous price movement. The market makers had had enough and changed the rules of the game to restore order and prevent news release straddles that could harm them.

How did they do this? Well, they made adjustments to their business practices and their contractual arrangements with clients. Spreads are fixed under normal market conditions and so stops will be honoured under normal market conditions, but not under abnormal market conditions – market makers were free to widen their spreads and thereby pass the risk on to the trader. Sometimes they simply wouldn’t allow traders from entering orders shortly before keenly watched data releases. And the decision as to what constitutes normal and abnormal market conditions rests exclusively with the retail forex market maker. Problem solved.

The Class of 2006 News Traders vs Market Makers

Straddling is no longer an option, so News Traders do the next best thing. They try to beat the gun by guessing the direction of the market’s first move, and then they try to benefit with highly leveraged positions.

There are a few challenges, however:

Being fastest on the draw. This means you need to get a good price close to the pre-release price and before your market maker removes the arbitrage opportunity (initial price spike according to News Trading theory) in an instant.

Being fastest on the draw also means you have to draw faster than the rest of the mob trying the same thing. The risk of them jumping the gun enters the equation.

Before you can actually start drawing to shoot, you have to decide what this data release actually means and how all those who react after you, will react to the data release. What will have the main and immediate affect, the headline or the details?

In other words you must take a guess if this data release will indeed cause a large enough move for you to risk taking the highly leveraged position and secondly, you have to guess correctly the direction of this move vis-à-vis the US dollar.

Opportunists who can see what is going on don’t try to jump the gun but jump in counter the first spike, causing more erratic price movements.

Here is a challenge for anybody who thinks he is going to make a living by consistently beating the odds in a well-publicised shootout with the ever-evolving dynamics I have described above.

Let’s assume you will be able to beat the gun and regularly get an extremely good fill on your news trade. All you will be dependent on then is to analyse the market correctly to understand if the first spike will be up or down (let’s look at it from a USD perspective).

How do you determine that? Well that’s the question, and it doesn’t have a simple answer, despite what the News Trading gurus, analysts and TV talking heads say. There are simply too many factors playing a role: the history of this particular data release, expectations, how far expectations are off or might be off, the actual figures of the data release, the expectations’ reaction to its own expectations, the expectations reaction to the data, it just goes on and on until the final result is just another bout of randomness.

If you don’t believe me try tossing a coin over a period long enough to get a representative sample and then compare your results with that of your guru’s.

News Traders – architects of their own demise.

Let’s look at the dynamic the Class of 2006 News Traders cause in the FX market:

They don’t straddle the market beforehand. They jump in the market on the data release mostly in the same direction (there aren’t many gurus promoting this loony method to lose money). What happens? They cause a sudden great demand for a currency, let’s say euro. As a result euro’s price spikes up - I am talking a few seconds. Our news traders’ orders get filled usually at a worse price than they had hoped for but nevertheless they are in the market and then two things happen – this is before most professionals, still looking at the details of the release, even paid attention to the immediate price action. First this sudden demand just vanishes, so there is no upwards momentum to cause the follow-through the news traders hope will give them their measly pip target on their highly leveraged position. Secondly the weak “highly leveraged” hands with a few pips profit decide to get out, and in a wink there is suddenly euro supply and a turnaround materialises.

During all of this you have a market maker trying to make a decent market for decent clients and now having to manage this crazy action in a traditionally illiquid market. It took a very prominent forex market maker specialist - in fact the one currently with the highest net capital according to the CFTC reporting - about two months to figure out that they have a bunch of hooligan traders on their hands that could cause them serious damage. Their response, as I mentioned above, was to start fooling around with the spreads in order to discourage and chase away News Traders.

Fixed and floating spreads are a topic of a future newsletter, but understand this: widening spreads, thus increasing the cost and the risk to deal, is a basic protection mechanism of the forex market. In the week following 9/11 the New York Stock Exchange was closed as a protective measure against market meltdown. The forex market increased the spreads to 30 - 40 pips on the most popular pairs and 80 – 100 pips on the less liquid pairs.

News Trading is fundamentally an arbitrage opportunity, but like all arbitrage opportunities it will vanish very quickly if the market catches on. There is already evidence that this is happening and this evidence is clear from the reporting of the sudden change in fortunes of some of the gurus now selling this as a subscription opportunity. Whereas past records are reportedly flawless, recent records are certainly not.

In this case, just as with the initial pip scalpers, the arbitrage is basically a duel between the mob of retail traders and their market maker. There will only be one winner.

The death knell for News Trading as a popular strategy

Why do people latch on to News Trading? Because they buy the pitch sold to them by marketing wizards that News Trading is the new way to become a consistent winner. There is no other reason. Unfortunately marketing wizards have already realized that News Trading can make good money for them (but not for you). Here is the proof:

One of the biggest forex marketing wizard companies is behind the popularisation of the 2006 News Trading fad. You must understand that News Trading only makes sense if it is done highly leveraged and very regularly. According to this specific crowd you must push the leverage and you must, wait for this, “place close stops”, because “it will be suicide to use the high leverage without close stops”. (And this is true, but it is only a half-truth, and as with all half-truths it is the other half that kills you.) If this strategy were to be put forward by an individual he would appear foolish. But touted and encouraged by a market maker and their introducing brokers it appears legitimate and savvy.

I downloaded a free report some two years ago from a company. The report gave statistical evidence regarding very short-term price behaviour and supports my contention that it is basically random and that there is no edge to be derived from searching for repetitive linear patterns in these very short-time frames. This company has now changed its view on the randomness of short-term price behaviour. Needless to say they now push News Trading. Unlike some outfits who ask subscription fees for their services (guessing which way the market will go after data releases) everything is free, but you must open a trading account to use their automated News Trading service at the big marketing wizards mentioned above. Even documentation prepared by the big marketing wizards above is provided by this company.

It is pretty clear who sits behind the current popularisation of News Trading. The beneficiaries of regular highly-leveraged-tight-stop trading strategies are the market makers and their marketing agents who promote the viability of this kind of hair-brained trading.

(I again want to point out that while professionals may even play along and have a punt on some data releases it will never be a consistent feature of their professional strategy to expose themselves to any great degree. Yet this is what you are encouraged do: take all your trading capital, gear it up like crazy and take a punt on what is essentially an event with a 50 / 50 probability of satisfying your highly leveraged bet. The placement of a close stop practically ensures that in every instance you do not make money, the market maker gets a nice pay out in addition to whatever he made on the spread.)

And that is why I say you can bet your bottom dollar that most fools who try News Trading will lose. Different game, but the same people are selling it. Here is an example of why you should be very afraid.

A prominent and respected analyst at one of the largest market makers (and marketing wizards) wrote an article on News Trading in which the technical analysis approach to intra-day trading is debunked. Now this should make your ears prick up because they were (and still are) the very ones punting it – to take your money. Ever innovative, they have come up with News Trading as the big new thing, though in this research article news trading in the spot forex market is discouraged.

So what is the solution – can retail traders win?

Yes they can win. They can win if they first of all do not fall for the tricks of marketing wizards. In order to be able to do that you must understand the market very well. Secondly you need to have a strategy that is, or has aspects of it, used by professionals. Thirdly, and this is very important - you must not catch the unwanted attention of a market maker. Do not violate the trust relationship that is supposed to exist by trying to exploit weaknesses in the system and create a scenario where your market maker can only lose. He holds the aces because he can change the rules of the game. If you have a strategy that offers a winning edge, you will be able to negotiate this market and make money without resorting to any fundamentally flawed concepts and tactics which attract the sort of attention from your counter party that will end up costing you money.

There is more than one way to make money trading any market and there are a myriad of factors playing a role in being successful, including having a scientific edge, being a master of relevant analysis and working through the constant changes in the markets. Success as a trader does not come cheaply, it does not come overnight and it does not come from running after every fad touted by marketing wizards. Success is hard earned, requiring application of, and dedication to, sound trading and business principles. Bird Watching in Lion Country – Retail Forex Trading Explained is a thorough introduction to what you need in this regard and it explains in sufficient details my strategy and methodology that have served me and my clients well.

How to Read a Chart & Act Effectively

2009-01-04T08:14:00.000-08:00

Introduction

This is a guide that tells you, in simple understandable language, how to choose the right charts, read them correctly, and act effectively in the market from what you see on them. Probably most of you have taken a course or studied the use of charts in the past. This should add to that knowledge.

Recommendation

There are several good charting packages available free. Netdania is what I use.

Using charts effectively

The default number of periods on these charts is 300. This is a good starting point;

Hourly chart that’s about 12 days of data.

15 minute chart its 3 days of data.

5-minute chart it’s slightly more than 24 hours of data.

You can create multiple "tabs" or "layouts" so that it’s easy to quickly switch between charts or sets of charts.

What to look at first

1. Glance at hourly chart to see the big picture. Note significant support and resistance levels within 2% of today’s opening rate.

2. Study the 15 minute chart in great detail noting the following:

Prevailing trend

Current price in relation to the 60 period simple moving average.

High and low since GMT 00:00

Tops and bottoms during full 3 day time period.

How to use the information gathered so far

1. Determine the big picture (for intraday trading).

Glancing at the hourly chart will give you the big picture – up or down. If it’s not clear immediately then you’re in a trading range. Lets assume the trend is down.

2. Determine if the 15 minute chart confirms the downtrend indicated by big picture:

Current price on 15-minute chart should be below 60 period moving average and the moving average line should be sloping down. If this is so then you have established the direction of the prevailing trend to be down.

There are always two trends – a prevailing (major) trend and a minor trend. The minor trend is a reversal of the main trend, which lasts for a short period of time. Minor trends are clearly spotted on 5-minute charts.

3. Determine the current trend (major or minor) from the 5 minute chart:

Current price on 5-minute chart is below 60 period moving average and the moving average line is sloping downward – major trend.

Current price on 5-minute chart is above 60 period moving average and the moving average line is sloping upward – minor trend.

How to trade the information gathered so far

At this point you know the following:

Direction of the prevailing trend.

Whether we are currently trading in the direction of the prevailing (major) trend or experiencing a minor trend (reaction to major trend).

Possible trade scenarios:

1) Lets assume prevailing (major) trend is down and we are in a minor up-trend. Strategy would be to sell when the current price on 5-minute chart falls below the 60 period moving average and the 60 period moving average line is sloping downward. Why? Because the prevailing trend is reasserting itself and the next move is likely to be down. Is there more we can do? Yes. Look for further confirmation. For example, if the minor trend had stalled for a while and the lows of the past half hour or hour are very close to the 5 minute moving average then selling just below the lows of the past half hour is a better place to enter the market then just below the moving average line.

2) Lets assume prevailing (major) trend is down and 5-minute chart confirms downtrend. Strategy would be to wait for a minor (up trend) trend to appear and reverse before entering the market. The reason for this is that the move is too “mature” at this point and a correction is likely. Since you trade with tight stops you will be stopped out on a reaction. Exception: If market trades through today’s low and/ or low of past three days (these levels will be apparent on the 15 minute chart) further quick downward price action is likely and a short position would be correct.

3) A better strategy assuming prevailing trend down, 5-minute chart down, and just above days lows is to BUY with a tight stop below the day’s low. Your risk is limited and defined and the technical condition (overdone?) is in your favor. Confirmation would be if today’s low was a bit higher than yesterday’s low and the price action indicated a very short-term trading range (1 minute chart) just above today’s low. The thinking here is that buyers are not waiting for a break of today’s or yesterday’s low to buy cheaper; they are concerned they may not see the level.

4) Generally speaking, the safest place to buy is after a sustained significant decline when the bottoms are getting higher. Preferably these bottoms will be hours apart. By the third or forth higher bottom it is clear a bottom is in place and an up-move is coming. As in the example above your risk is limited and defined – a low lower than the last low.

5) The reverse is true in major up-trends.

Other chart ideas

There are always two trends to consider – a major trend and a minor trend. The minor trend is a reversal of the major trend, which generally lasts for a short period of time.

Buying above old tops and selling below old bottoms can be excellent entry levels; assuming the move is not overly mature and a nearby reaction unlikely.

When a strong up move is occurring the market should make both higher tops and higher bottoms. The reverse is true for down moves- lower bottoms and lower tops.

Reactions (minor reversals) are smaller when a strong move is occurring. As the reactions begin to increase that is a clear warning signal that the move is losing momentum. When the last reaction exceeds the prior reaction you can assume the trend has changed, at least temporarily.

Higher bottoms always indicate strength, and an up move usually starts from the third or fourth higher bottom. Reverse this rule in a rising market; lower tops…

You will always make the most money by following the major trend although to say you will never trade against the trend means that you will miss a lot of opportunities to make big profits. The rule is: When you are trading against the trend wait until you have a definite indication of a selling or buying point near the top or bottom, where you can place a close stop loss order (risk small amount of capital). The profit target can be a short-term gain to nearby resistance or more.

Consider the normal or average daily range, average price change from open to high and average price change from open to low, in determining your intra-day price targets.

Do not overlook the fact that it requires time for a market to get ready at the bottom before it advances and for selling pressure to work it’s way through at top before a decline. Smaller loses and sideways trading are a sign the trend may be waning in a downtrend. Smaller gains and sideways trading in an up trend.

Fourth time at bottom or top is crucial; next phase of move will soon become clear… be ready.

Oftentimes, when an important support or resistance level is broken a quick move occurs followed by a reaction back to or slightly above support or below resistance. This is a great opportunity to play the break on the “rebound”. Your stop can be super tight. For example, EURUSD important resistance 1.0840 is broken and a quick move to 1.0860, followed by a decline to 1.0835. Buy with a 1.0820 stop. The move back down is natural and takes nothing away from the importance of the breakout. However, EURUSD should not decline significantly below the breakout (breakout 1.0840; EURUSD should not go below 1.0825.

After a prolonged up move when a top has been made there is usually a trading range, followed by a sharp decline. After that, a secondary reaction back near the old highs often occurs. This is because the market gets ahead of itself and a short squeeze occurs. Selling near the old top with a stop above the old top is the safest place to sell.

The third lower top is also a great place to sell.

The same is true in reverse for down moves.

Be careful not to buy near top or sell near bottom within trading ranges. Wait for breakaway (huge profit potential) or play the range.

Whether the market is very active or in a trading range, all indications are more accurate and trustworthier when the market is actively trading.

Limitations of charts

Scheduled economic announcements that are complete surprises render nearby short-term support and resistance levels meaningless because the basis (all available information) has changed significantly, requiring a price adjustment to reflect the new information. Other support and resistance levels within the normal daily trading range remain valid. For example, on Friday the unemployment number missed the mark by roughly 120,000 jobs. That’s a huge disparity and rendered all nearby resistance levels in the EURUSD meaningless. However, resistance level 200 points or more from the day’s opening were still meaningful because they represented resistance to a big up move on a given day.

Unscheduled or unexpected statements by government officials may render all charts points on a short-term chart meaningless, depending upon the severity of what was said or implied. For example, when Treasury Secretary John Snow hinted that the U.S. had abandoned its strong U.S. dollar policy.

Rollovers in Forex

2009-01-04T08:13:00.000-08:00

Even though the mighty US dominates many markets, most of Spot Forex is still traded through London in Great Britain. So for our next description we shall use London time. Most deals in Forex are done as Spot deals. Spot deals are nearly always due for settlement two business days later. This is referred to as the value date or delivery date. On that date the counter parties theoretically take delivery of the currency they have sold or bought.

In Spot FX the majority of the time the end of the business day is 21:59 (London time). Any positions still open at this time are automatically rolled over to the next business day, which again finishes at 21:59.

This is necessary to avoid the actual delivery of the currency. As Spot FX is predominantly speculative most of the time the traders never wish to actually take delivery of the currency. They will instruct the brokerage to always rollover their position.

Many of the brokers nowadays do this automatically and it will be in their policies and procedures. The act of rolling the currency pair over is known as tom.next, which stands for tomorrow and the next day.

Just to go over this again, your broker will automatically rollover your position unless you instruct him that you actually want delivery of the currency. Another point noting is that most leveraged accounts are unable to actually deliver the currency as there is insufficient capital there to cover the transaction.

Remember that if you are trading on margin, you have in effect got a loan from your broker for the amount you are trading. If you had a 1 lot position you broker has advanced you the $100,000 even though you did not actually have $100,000. The broker will normally charge you the interest differential between the two currencies if you rollover your position. This normally only happens if you have rolled over the position and not if you open and close the position within the same business day.

To calculate the broker's interest he will normally close your position at the end of the business day and again reopen a new position almost simultaneously. You open a 1 lot ($100,000) EUR/USD position on Monday 15th at 11:00 at an exchange rate of 0.9950.

During the day the rate fluctuates and at 22:00 the rate is 0.9975. The broker closes your position and reopens a new position with a different value date. The new position was opened at 0.9976 - a 1 pip difference. The 1 pip deference reflects the difference in interest rates between the US Dollar and the Euro.

In our example your are long Euro and short US Dollar. As the US Dollar in the example has a higher interest rate than the Euro you pay the premium of 1 pip.

Now the good news. If you had the reverse position and you were short Euros and long US Dollars you would gain the interest differential of 1 pip. If the first named currency has an overnight interest rate lower than the second currency then you will pay that interest differential if you bought that currency. If the first named currency has a higher interest rate than the second currency then you will gain the interest differential.

To simplify the above. If you are long (bought) a particular currency and that currency has a higher overnight interest rate you will gain. If you are short (sold) the currency with a higher overnight interest rate then you will lose the difference.

I would like to emphasise here that although we are going a little in-depth to explain how all this works, your broker will calculate all this for you. The purpose of this article is just to give you an overview of how the forex market works.

Forex Trading Systems Scam

2009-01-04T08:12:00.002-08:00

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

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

Am I disciplined?

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

Are my expectations fitting my ration?

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

Do I have enough knowledge?

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

Forex Market Scam

2009-01-04T08:12:00.001-08:00

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

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

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

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

Here are some tips of how to avoid Forex scams:

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

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

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

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

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

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

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

Learn Forex Trading

2009-01-04T08:06:00.000-08:00

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

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

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

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

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

Online Currency Trading Tutorials

2009-01-03T04:56:00.001-08:00

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.

Timing is Everything With Forex Trading

2009-01-03T04:55:00.002-08:00

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.

Selecting the Right Forex Broker

2009-01-03T04:55:00.001-08:00

1) Is the broker I want to use regulated? This is the first question you should be asking yourself and there should be no doubt that they are. All regulated brokers are required to submit financial reports to regulatory authorities. Failing to do so can cause authorities to fine brokers or even end their membership. These rules force Forex brokers to keep financial reports.

Each broker is regulated by local regulatory authorities. For instance, if a broker is based in the United States, they're regulated by the National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC). Swiss brokers, however, are regulated by the Swiss Federal Department of Finance (FDF). Using a regulated broker also protects investors because they're able to dispute resolutions.

2) What are the trading conditions like? This question refers to the trading conditions and special features of the trading platform with a Forex broker. Some of the most important factors include:

-Spread - The smaller the spread on currency pairs, the more favorable the conditions are for both traders and investors.

-Platform Execution - This term refers to how quickly and consistently the trades are executed. Many brokers promise fast, transparent executions during normal market conditions.

- Fractional Trading - Some brokers may allow investors and traders to trade on a fractional basis. For example, rather than allowing you to trade full lots of "100,000 units," they let you trade "163,345 units," which is helpful when you're making trades that risk a certain percentage of the balance on each trade.

-Safety of Funds - It's important to make sure that your trading funds are placed in a segregated account or, at the very least, insured for safety.

Online Currency Trading requires Patience

2009-01-03T04:54:00.000-08:00

When the going gets tough, the tough get going. This adage often brings back the memories of my past days when I was trading initially in the currency exchange market. Indeed, there's nothing more hurtful than losing your invested money in the FX market. But, online currency trading is like life where you're got to learn from your wrong moves and keep moving on. Learning the basic skills of online forex trading could be easy but, practically, one needs to acquire the advanced skills to play safe through thick and thin of FX trading.

I have traded in forex for many years and, if you count on me, I must tell you that the secret of successful trading lies largely on the hunch and intuition of an trader. Technically expressed, you should have the accurate forex alerts and forex signals to be able to make the right moves in the currency market. However, this is easier said than done as the skills of the Currency Trading Signal takes a long time to master. This is why while a few people are able to boost their forex pips in a short span of time, the others take a long time to achieve the same or maybe, some of them get frustrated and just give it up! The reality is that not many people are ready to be entirely devoted to the perilous process of online forex trading.

Having said this, I still wonder why some people choose to be a dare-devil and risk their money instead of simply following an established and renowned Account Forex Online Trading. I began trading in 1997 and there is one important thing I have learnt in my trading career so far, i.e., you have to got to be patient to learn the tricks of making right moves at the right times and profit from your trading.

Since I have led quite a successful career in forex trading, I have been sharing the tips and tricks of online currency trading with many traders around the world through my G7 Forex Trading System which as you know has remained pretty successful for many traders so far. My G7 Forex Trading System is an easy-to-follow, step-by-step trading manual offering in-depth online forex trading review.

Forex Glossary

2009-01-03T04:51:00.000-08:00

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 Global Trading

2008-12-24T10:37:00.001-08:00

If you've just stumbled upon FOREX global trading then let me say first and foremost, Congratulations! FOREX global trading has been, since its inception in 1970, one of the most lucrative self start business opportunites available. I am still baffled as to how this wealth creating, trading system has not been spread to the masses. I suppose the answer to that question resides with the same reason you found this article. Starting your own business takes a certain kind of fortitude and dedication that most people just don't have. It takes a certain type of person to have the kind of ambition necessary for success. If you've discovered FOREX global trading recently then it wouldn't be so silly to assume you've tried other ways to make money on your own. After all, trying to learn more about FOREX global trading tells me off that bat that you want more out of life.

The fact that you've found this article tells me a number of things.

-You want to obtain more financial freedom without some get rich quick scheme.
-You want to have your own legitimate business that you won't be a slave to.
-You want the ability to work anywhere at any time according to your own schedule.
-You're an intelligent person who is not afraid to learn an analytical system.
-You're willing to learn how to work most efficiently, knowing that it will pay off in the long run.
-You've already got what it takes to make FOREX global trading work for you.

My last statement may seem like a bold one to make. The bottom line is, you've already taken the first step to achieving your goals through FOREX global trading by taking the time to LEARN before you EARN.

So let's get right into it. Let's learn what FOREX global trading is and how to MASTER it.

1. What is FOREX global trading?

FOREX stands for Foreign Exchange Market. It is based on an international marketplace where currencies are bought and sold. Only the participants in the FOREX market determine the price of one currency against another. In other words, the prices of currencies are based upon supply and demand. This is similar to the idea behind stock price determinations. The difference? Well you could call it a difference, but I call it an advantage. Currency prices can not be affected by large buyers in the FOREX marketplace. In the traditional stock market, when stocks are bought up by institutional buyers, stock prices fluctuate. This is not a factor in the FOREX global trading market place because it is the largest liquid financial market available. Between 1 and 1.5 Trillion dollars are traded everyday in the FOREX market. It's impossible for an institutional buyer to make a splash. This is a huge advantage for the "little guy" who doesn't have a huge budget. If you take the time to learn how to play the FOREX game, anyone can make a fortune. Success is based on following the rules of the market and knowing the signs to look for.

2. How does FOREX global trading work?

Currency transactions do not take place on a centralized exchange like the NYSE. It's a global market and therefore trades take place all over the world through telecommunications. You can trade on the FOREX global market 24 hours a day from Sunday afternoon untill friday afternoon. For GMT time, this is translated to 12am on Monday to 10:00pm on Friday. The process is a fairly simple one. You buy and sell currencies through dealers. The link I provide at the bottom of the article will steer you in the right direction for finding a qualified dealer. Think of a dealer as a broker. The dealers provide quotes for all major currencies and you decide which currently is a sound investment at any given time. A big advantage to working with dealers in FOREX global trading is the ability to obtain a line of credit off of a very small initial rate. You can get a line of credit off of a $500 payment with many dealers. This leverages your ability for huge gains in the FOREX marketplace. The tactic is called marginal trading, and although it can be risky, once you know how to play the game it is the ideal way to "take the house's money". The appeal of marginal trading is that investments can be made with relatively small startup capital. You don't need a big money supply to be a big winner in the FOREX global trading business. This also allows for bigger investments to be made with fewer money transfer costs.

Marginal trading is broken up into "lots". A "lot" is an amount close to $100,000 that can be financed with as little money as .5% down. This means for $500 you can leverage a $100,000 investment. - WOW! That is buying power. Unlike traditional investment methods like flipping real estate, it doesn't take time to build up your wealth. You can leverage your money to grow as quickly as you feel comfortable growing.

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

The investment strategies for FOREX trading don't differ too much from tradition stock market trading. Strategies are categorized into two divisions - Fundamental Analysis and Technical Analysis.

Funamental Analysis will look at a particular regions currency and take into consideration such things as their countries economy, their bank's current interest rate, inflation rates, unemployment levels and a host of other factors. It is important to keep in mind that any anticipations based on fundamental analysis, should be considered against the perceptions of other investors in the FOREX marketplace. Afterall, it is more than likely that the current currency price reflects all perceived knowledge of a country's economical situation.

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

10 reasons to trade with forex.com

2008-12-24T10:36:00.002-08:00

10 REASON TO TRADE WITH FOREX.COM

1.Trade on spreads as low as 1-2 pips, commission-free

Learn more about pricing and spreads

2.FUlly automated click & deal trading, with instantaneous fills

3.Flexible account types and leverage

4.Award-winning forex trading platform

5.Advanced tools & research

6.Guaranteed fills on stop loss and limit orders

7.Negative account balance protection

At FOREX.com, your risk is only limited to funds on deposit. Our margin policy eliminates concerns about debit balances by guaranteeing that you will never owe more than you have in your account.

8.Support for automated (API) trade executions

9.Trader education, mentoring services, and more

10.Wireless trading and account access

A Guide to Global FOREX trading

2008-12-24T10:36:00.001-08:00

It's probably hard for some people to believe, but the global FOREX trading market dwarfs that of equities, even though the former gets little attention and the latter is talked about incessantly on the news.
The daily volume of global FOREX trading now exceeds $2 trillion dollars! To be sure, it is the leader in the competitive field of market exchange. Currently, London holds the title for the world’s largest foreign exchange center, accumulating 30% of the currency business.

Global FOREX trading is exciting for many reasons.

First, the markets are almost always open. One can trade 24/7 as currencies fluctuate all day and night. Compare that to equities where one can only effectively trade during market hours when the stock exchanges are open.

Second, the potential leverage in global FOREX trading is astounding.

In stock trading, one either trades with money they have or, at best, can open a margin account and trade with double leverage. A margin account funded with, for example, $25,000 can control $50,000 dollars worth of equity positions.

Now contrast that with global FOREX trading in which one can often obtain leverage of 20 times, 50 times, and even 100 times one's original capital.

For example, it's not uncommon to be able to open an account at an online FOREX brokerage with $5,000 and be able to control position sizes of $200,000 or more. (In FOREX, trading is realized in lots. 1 Lot = 100,000).

Think about that! If you funded an account with a mere $10,000 dollars you could control $500,000 worth of positions (10 lots). If your positions moved favorably giving you only a 5% gain you would be in profit $25,000 dollars. From an only $10,000 dollar initial capital!

Clearly the immense leverage in global FOREX trading is what lures a lot of players into the game. However, leverage can cut both ways and it's possible to get wiped out just as fast as one can make a veritable fortune.

Because such large sums of money can be made playing the FOREX markets, hobbyists and full time currency traders are quickly increasing in numbers.

For both amateur and pro alike, getting quality FOREX analysis of the markets -- both fundamental and techical -- is extremely important.

And for people who have yet to learn how to FOREX trade, taking an online course is paramount to get them off to a proper start.

Indeed, it can make the difference between being successful and getting wiped out, although there is no guarantee that even the best newsletter analysis service or FOREX training course will guarantee you profits or guard you against losses.

That's why global FOREX trading is considered a highly speculative endeavor.

The people who do best at it will be methodical, have strong control over their impulses and emotions, are analytical to a fault, and are all around disciplined individuals.

Ever since the speculator George Soros of the Quantum Hedge Fund realized a profit of over $1 billion dollars in a few short days by shorting the British pound in 1992, market players have become more and more drawn to the exciting game of global FOREX trading.

Make no mistake about it, FOREX trading will continue to grow over the years, especially with the advent of online FOREX brokerages that allow people to trade from the comfort of their own home office all night.

Dan Ho is an investor, trader, and speculator who enjoys studying economics, technical analysis and the markets. He has traded equities, options, and currencies.

Forex Global Trading - Is A Forex Demo Account Really Needed

2008-12-24T10:35:00.001-08:00

Welcome to the wonderful world of forex global trading! It is here that you will find both riches and poverty. Joy and sorrow. Dreams fulfilled and hopes dashed. It may sound like an overly dramatic start to an article on forex global trading but to the trader that has been around a while it sounds too much like reality. The point that is being made is this: When it comes to forex global trading, the future is wide open and how you go about trading and what you put into it will largely determine what you get out of it (or lose from it for that matter). Personally, I can attest to the upside and downside of trading as I have been through all that you can imagine. When a move goes your way, there is not a better feeling in the whole world but the other side of things brings on the empty gnawing emotion that is equally powerful. The GOOD NEWS is that you can do something about it. It does not take a genius to make money on Forex Global Trading but is does take someone who is teachable. That is really all there is to it. If you can be taught then you can prosper and prosper greatly I might add. Let me explain a little further.

First, I would absolutely recommend a demo account to get started with. After you have opened up a demo account then you need to learn strategies, discipline, and confidence. Sounds easy? Well it is not and that is why 90% or more of all traders lose their entire nest egg within the first year. What a shame! It does not have to be that way. You can and will make a good consistent profit day in and day out IF you learn the strategies, discipline, and keep your confidence. How do you go about accomplishing this?

The absolute most effective way to accomplishing the goal of becoming a successful forex trader is to trade with a really good set of trading strategies. It may sound overly simplistic and basic but it is an absolute necessity! It does not matter if you have the most ardent discipline. If you go to trade without the best strategies it is like Barry Bonds stepping into the batter's box with a broom stick instead of a Louisville Slugger. Click on the link below to find the best forex trading strategies around.

Global Forex Trading – The Easy Way to Make Money

2008-12-24T10:34:00.001-08:00

Global forex trading was founded in 1997 and is today one of the world’s leading providers when it comes to forex real time trading. Global forex trading offer you the chance to deal in real time online currency trading that is making millions of forex brokers rich each day.

Global forex trading serves over 100 countries, using its DealBrook FX2 software and 24 hour market access with one of the highest levels of customer service available in the forex trading industry. With Global forex trading forex brokers have access to pricing for more than 60 currency pair and excellent analytical services from renowned experts. There are up to the minute currency news bulletins and advanced forex charts available. Global forex trading boasts that they provide the only forex trading platform that is suitable for both beginners and professionals.

Forex Trading Advantages

The forex trading market is open 24 hours a day and is today the most liquid market in the world. With forex and the available leverage strategy you can use 100 to 1 leverage which in turn reduces the need for large amounts of capital to be placed in your account. Forex trading is also commission free and trading is available on more than 60 currencies worldwide. Another advantage of forex trading is of course the fact that it is global and there are not restrictions placed on shorting which means that you can enjoy your profit opportunities no matter what the market condition.

Prior to reading this information you may have assumed that forex trading was only available for large investors but thanks to Global forex trading smaller transactions are now available which allows all traders to take part giving everyone the opportunity to profit from forex trading. Don’t you think it’s time you started profiting.

The Basics Of FOREX Trading

2008-12-24T10:33:00.000-08:00

If you want the potential of making a lot of money in a short time, then FOREX (Foreign Exchange, or FX) may be just what you are looking for. It has long been the means of the ultra rich to use FOREX principles of gaining their wealth, and it has, until recently been out of reach for the average person. Now, though, many people are trying their hand at gaining wealth this way. Here are some basic thoughts about how FOREX works.

FOREX is based on the trading of one currency for another. Every day, due to international trade and business, as well as political events, one currency's value will fluctuate. Money can be gained in FX by being able to know when the currency of one country will fluctuate - and in which direction.

Although the information in FOREX uses the US dollar as its basis in most currencies, it is not always the case. Where a nation's currency is stronger than the dollar, such as in the case of the English pound, and the euro, that currency is listed first. You will see the listings of what is happening on the FOREX market using a listing such as USD/JPY 117.36. In this case, one dollar will buy 117.36 Japanese yen.

On the same chart, you will also usually see an arrow indicating whether the relationship between the two is changing - and in which direction - up or down. Most currencies are listed with 4 digits beyond the decimal (Japanese yen is the only exception). When your FOREX trading and selling results in a difference of .0001, you have gained a pip.

Trading in FOREX is actually done in units of $100,000, although you do not need to have anywhere near that much. Trades in FX can be made with as little as $50, or so. A FOREX broker, which you must have in order to trade in FOREX, will add to your purchase enough to bring the trade up to $100,000. This is called leverage. Even though you may have actually only used $1,000, the broker brings it up to the needed $100,000. In some cases your leverage advantage can be as high as 400:1. The nice thing about FX, though, is that you keep the winnings as if you had actually used $100,000.

FOREX trading actually provides you with several advantages over trading in the stock market. First, because you are actually trading in currency values, your money is always liquid. Secondly, winnings are often quick - taking place within a few hours. A third advantage is that there may not even be any cost - no broker's fee. Some will charge, however, but when they do, it still is considerably lower than in the stock market.

Learning FOREX is different than the stock market because there are different factors.
Everyone has the same data to predict those fluctuations and there is no insider information. You will also need to learn how to choose your own system of predicting when to invest - using a fundamental or a technical approach, and then refining your own methodology. Practice software is available and really is a necessity when it comes to investing safely in FOREX - once you think you are ready.

Understanding the Basics of Forex Trading

2008-12-24T10:32:00.000-08:00

Forex trading or Foreign Exchange Trading refers to the simultaneous trading—that is, buying and selling—of two different currencies. It is done between and among major financial institutions, central banks, small retail currency traders or speculators, large international companies, government institutions, companies with overseas operations and the like.

Based on the amount of money being traded, the international forex trading market is the world’s biggest financial market. Everyday, forex trading market gets an average revenue of $US 1 trillion—an amount far greater than the total revenues produced by all the stock and bond markets in the world.

Characteristics

Forex trading is a kind of over-the-counter trading—it occurs directly between to financial institutions or currency traders. The trading markets may be interconnected but there is no single unified market. Hence, there is also no single or standard rate. Each rate or price depends on what is being traded. However, the traders traditionally use nearly similar rates.

Another characteristic of a forex trading is that it operates 24 hours; thus, one can trade any time of the day. Also, there is no need of an exchange floor, it operates through a global electronic network where trading occurs over the telephone and computer networks. This characteristic also prevents delays that consume a lot of time.

Forex trading market is also very competitive and is highly liquid. This allows the parties to get low dealing costs and better price.

Top Currency Traders and Major Currencies Traded

Wall Street Journal Europe says ten major currencies account for 73 percent of the total forex trading volume. Among them are Deutsche Bank, UBS, Citigroup, HSBC, Barclays, Merrill Lynch, J.P. Morgan Chase, Goldman Sachs, ABN Amro, and Morgan Stanley.

Among the currencies mostly traded are the US, Canadian, and Australian dollars; Euro; Yen; and Swiss France.

A study conducted by the Bank for International Settlements says that the most traded products are Euro/USD, USD/JPY, and GBP/USD. The study noted that in spite euro’s continuous growth, forex trading market remains to be concentrated in dollars.

The Trade

Trade happens when you accept the offered price and when the dealer confirms. Exchange floor is no longer required, as mentioned earlier.

In every trade, two currencies are always involved and the currencies traded serve as the products traded. Each currency has a price expressed in another currency such as 1 euro is equivalent to 1.204 dollar. In the said example, the euro trader sells the euro and buys the dollar. There are no further costs in the trade. There are no commissions and other fees as well.

Large multinational companies engage in forex trading when they are buying from and selling goods to other countries. However, this kind of forex trading encompass only a small portion of he daily activities in the foreign exchange market. Most of the trading activities are carried out by currency speculators who earn from the changes in value of a particular currency.

Key players in the Market

BIS study shows that more than 50%of the forex trading transactions are interbank transactions. Trading revenues of most commercial establishments and currency speculators are deposited in the bank.

Central banks also play a big role in the forex trading market. These banks control the supply of money, interest, inflation and target rates in order to stabilize the forex trading market.

Brief Summary of Forex Trading

2008-12-24T10:31:00.000-08:00

The foreign exchange market is widely known as "Forex". Here brokerage firms and banks are linked over an electronic network. This network enables them to convert the currencies of countries all over the world. It is the largest and the chief liquid financial market in the world. Dollar volume of dealing of currencies daily goes beyond $1.9 trillion dollars in the currency market. Sometimes it goes beyond even the total volume of all U.S. equities and future markets.

The Forex is often considered as being dominated by the government central banks, and commercial and investment banks. That is why private investors prefer to deal on the currency exchanges. It is easy for them to access via various technological innovations like the Internet.

Widely traded currencies include US Dollar, British Pound, Swiss Franc, Japanese Yen, Canadian Dollar and Australian Dollar. Trade in Forex is done for five days a week, round the clock with constant access to dealers throughout the world. It is not centered on any physical location or any exchange, as it is with the stock or future markets. Transactions take place between two corresponding persons over a phone line or through an electronic network.

Background

In the very beginning, there was a barter system i.e. exchange of goods with one another as per individual requirement. But its obvious limitations led to the establishment of mostly accepted channels of exchange.

Consequently, metal coins came to the scenario. However, paper form of governmental IOUs required approval in political administrations during the Middle Ages.

Prior to the First World War, most of the central banks moved ahead to support their currencies with convertibility to gold. But at times, this resulted in political instability due to devastating inflation. This was due to the expanding supply of paper money with no gold coverage. Therefore, Forex controls were initiated to protect local national interest.

Later on, during the Second World War, the USA introduced the Bretton Woods agreement in July 1944. As a result, this agreement led to a system of fixed exchange rates that re-established the gold standard to an extent and also stabilized the dollar at USD 35/oz. It also fixed the other prominent currencies to the dollar and thus made it permanent.

The last few decades have witnessed the developing of Forex trading into the largest global market. By now, all the restrictions from the capital flows have been put off in several countries. It has resulted in the independency of the markets to settle Forex rates as per their perceived values.

There are a number of reasons due to which Forex trading has gained popularity. The most prominent include available leverage, utmost liquidity round the clock a day and extremely low dealing cost, which relate to trading. Certain basics of Forex trading are as follows:

Margin Trading: Here trading is done generally on a margin basis. A larger position in the market can be acquired by a relatively small deposit.

Base and Variable Currency: Trading is done with the combination of two currencies. But two sides of trade are always there i.e. long (bought) and short (sold). Not always, but generally, the trade currency is with the highest value.

Spot and Forward Trading: This means that if no further step is taken, then, dealing will be settled after two business days.

Interest Rates Differentials: Different interest rates are paid by different currencies.

There are also other basics of Forex trading, but one thing is definite - the size of Forex has now made any other investment market smaller to a great extent.

FX Currency Trading For Beginners

2008-12-24T10:24:00.002-08:00

Foreign currency trading or FX currency trading is the new age buzzword for the smart investors. In the global market of foreign currencies, prices fluctuate against one another and change value over time. This creates the opportunity for investment by trading one currency against the other. The dramatic evolution of communication technologies in recent years made it possible for millions of small individual investors to trade forex which was not open to them earlier.

According to a recent study, currencies worth more than $1 trillion are traded daily in the global forex market. Global political and economic events influence forex currency trading. The rates of currencies are determined by the investors’ attitude influencing the market. So if you were capable of foreseeing these developments, you can make profits in FX currency trading. On the other hand, if your assumptions are not correct, you may suffer huge losses. So the key to successful forex currency trading is knowledge.

Forex trading involves currency transactions between banks, investment funds, forex brokers and traders. The demand and supply of a particular currency and investors' expectations determine the market price of that currency. There is no physical location of the market and it is a virtual market.

Four “currency pairs” dominate the global forex currency trading market. These are Euro versus U.S. Dollar, US Dollar versus Japanese Yen, US Dollar versus Swiss Franc, and US Dollar versus British Pound. So for any investor, it will be wise to hold a currency that appreciates in value in relation to the other currencies. For example, you may buy 50 British Pounds for US$100 and hold the Pounds for a while. When the value of Pounds increases in relation to US Dollars, you may sell those Pounds to earn $120.

Analyzing forex currency trading market is also equally important. There are two types of analysis: “fundamental” and “technical”. Fundamental analysis takes into account the economic conditions, political events, situation of emergency, etc. to derive the trend. Technical analysis, on the other hand predicts the future trend on the basis of past prices and trends. Fundamental analysis explains the reasons behind price movements and attempts to predict changes in price and market trends. Traders and investors adopt a hybrid method of analysis based on both technical and fundamental analysis for their Fx currency trading.

Forex currency trading is sometimes described as one of the riskiest financial markets. However, by choosing the reasonable leverage size, traders can minimize their risks. The Forex market is a highly speculative in nature and the ability to analyze price behavior becomes an invaluable asset for any trader or investor.

Since every country is involved in forex currency trading, the market is open round the clock. Irrespective of geographical location, any investor can open an account and buy and sell in any quantity of forex currencies from anywhere in the world. The FX currency trading offers fantastic opportunity for wealth provided you know the basic rules and regulations of the market. Therefore, before starting FX currency trading, do your homework and read as much as to maximize your knowledge hence profits.

No Short Selling Restrictions

2008-12-24T10:24:00.001-08:00

Forex trading always involves buying one currency and selling another, so traders can easily trade in a rising or falling market. There is no Zero Uptick rule or any other restriction against shorting a currency.At $1.9 Trillion Per Day, Forex is the Most Traded Market in the WorldThe sheer volume of Forex helps to facilitates price stability in most market conditions. What's more, almost 85% of all currency transactions involve the 7 major currency pairs.Trade on Your Schedule; Respond to Changes in the MarketForex is a true 24-hour market, open continuously from 5:00pm ET on Sunday to 5:00 pm on Friday.

With three distinct trading sessions in the US, Europe and Asia, you can trade on your own schedule and respond to breaking news.Keep 100% of Your Trading ProfitsFOREX.com charges no commissions or transaction fees, while still offering free access to real-time quotes, news, charts, research, and more. The cost of trading is built into the bid/ask spread. Also, dealing spreads as low as 3 pips (.0003) are available in currency trading.

Even at a penny ($.01), the bid/ask on a stock trade is 30x wider, in addition to the brokerage commission.Up to 200:1 LeverageWith more buying power, you can increase your total return on investment with less cash outlay. Of course, increasing leverage increases risk. With $1,000 cash in a margin account that allows 200:1 leverage (.5%), you can trade up to $200,000 in notional value.

ONLINE FOREX TRADING

2008-12-24T10:23:00.000-08:00

« How do I get started in Forex?
Whither the dollar? »
The Foreign Exchange

The Foreign Exchange is the largest financial market in the world, with trillions of dollars traded each and every day. Initially utilized just by large banks, multinational corporations and extremely wealthy currency speculators, the influx of online brokerages tailored to the retail market has created a vibrant retail foreign exchange market! Now, with a relatively small initial investment, anyone with an internet connection can take advantage of the online Forex market.
While banks and large multinational corporations generally execute foreign exchange transactions simply as a function of doing international business or to hedge their base currency to protect against devaluation, currency speculators exploit fluctuations in the foreign exchange market exclusively for profit. While trading currencies is a bit riskier than trading other instruments, like stocks and commodities, the potential for profit is unparalleled. For example George Soros, perhaps the most successful Forex trader, made $1 billion in a single day when he sold the pound against the dollar in 1992.
The major currencies traded on the foreign exchange are the US dollar, the Eurodollar, the Japanese Yen, the Swiss Franc, and the British Pound. These different currencies are expressed as pairs. When these pairs are traded, one of the currencies is bought and the other currency is sold concurrently. Today, anyone with an internet connection can trade these pairs under the same conditions once reserved for high value individuals and corporations. Most retail brokerages offer real time currency prices, instant execution, advanced charting features and extensive real time news and analysis feeds.
If you are interested in trying out the foreign exchange, we have assembled a list of quality brokerages that offer free “fake money” accounts where one may trade in real market conditions. Not only is their immense profit potential in the Foreign Exchange market, it is quite exhilarating as well. Why not give it a shot?

Are You Ready To Trade The Forex Markets

2008-12-24T10:22:00.000-08:00

Today forex currency trading is a form of trading that working men choose as this can be traded at your convenience, 24 hours a day. Trading here is done on the basis of trading of liquid currencies which are currencies of different countries that can back their currencies with commodities like gold and silver.Because of the backing of the leading banks this market became very popular. When trading forex you try to make profits based on supply and demand by using cash. You buy one currency against another hoping that the exchange rate will go in your favor and you make a profit.The forex market reacts to several variables as the stock market does. When there is political or economic news coming out this can reflect on the strength of that particular currency causing major losses when you hold that currency when this happens.Similarly, if there is an economical gain in the company through new routes or commodities involved in international trade, the cost of the currency exchange for their currency increases. This leaves you in a profit for your currency, than the previous day. And coincidently, inflation in the country proves to be profitable to you if you sell your currency at a high rate. This is because just like in the stock market, you have to buy low and sell high in the forex currency market.Most forex traders are daytraders meaning they get in and out as fast as possible. They do this because when there is any economic or political news coming out this will reflect on the currency rates. Rumours can be sufficient to make the market move. They get in and out of a trade quickly trying to maximize their profits and keep the losses to a minimum.This is the reason why success when investing in the currency exchange market lies in understanding and keeping up with the constant fluctuations of the currency market. With close monitoring on forex currency markets, you can realize when to change money to make the maximum profit in your currency market.When you want to invest a large sum of money in to the currency market it's better to use an investment fund that trades currencies as they are more experienced at this and the change of making profits is much bigger. But if you feel comfortable doing it yourself after studying these markets you can always do it yourself using a currency broker.Like everything in life,checking up on several brokerage firms before deciding which one to use is a wise thing to do. There are several experienced and trustworthy forex brokers out there. The internet can be used as a valuable source of information when studying the forex markets and it's brokerages. Educating yourselves is the most important aspect before investing your funds in these markets.