Forex

Forex Strategy: Trading with Stochastics

2008-08-06T16:53:00.003-07:00

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

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

Stochastics consist of two lines:

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

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

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

Interpretation:

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

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

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

Trending market

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

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

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

Trend-less market

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

Divergence

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

Stochastics can also be used to trade off divergences.

Price behavior

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

I hope this article helps you become a better trader.

Don't forget to read our risk disclaimer.

Forex Strategy: Trading with Stochastics

2008-08-06T16:53:00.001-07:00

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

Stochastics consist of two lines:

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

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

Interpretation:

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

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

Trending market

Trend-less market

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

Divergence

Stochastics can also be used to trade off divergences.

Price behavior

I hope this article helps you become a better trader.

Don't forget to read our risk disclaimer.

Forex Broker: Choosing the right Forex Broker

2008-08-06T16:48:00.000-07:00

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

1. Is it regulated?

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

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

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

2. Trading Conditions

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

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

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

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

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

Quarterly Window Dressing - A Recurrent Wall Street Scam

2008-08-06T16:46:00.000-07:00

"The time has come the walrus said, to talk of many things": Of corrections--portfolios--- and window dressing--- of market cycles--- wizards--- and reality.

Quarterly portfolio window dressing is one of many immortal Jaberwock-like creatures that roam the granite canyons of the Manhattan triangle, sending inappropriate signals to unwary investors and media spokespersons. Many of you, like the unsuspecting young oysters in the Lewis Carroll classic, are responding to the daily news nonsense with fear instead of embracing the new opportunities that are surely right there, cloaked, just beyond your short-term vision field.

Older and wiser mollusks who have experienced the cyclical realities of the markets tend to stick with proven strategies that are based on a solid foundation of QDI (quality, diversification, and income production). They know that corrections lead to rallies, and that rallies always give way to corrections. If only the corrections could elicit patience instead of fear; if only rallies didn't produce greed and excess. There's a lot of confusion in a world that considers commodities safer instruments than corporate bonds.

Long lasting investment portfolios are consciously asset allocated between high quality income and equity securities. Each class of securities is then diversified properly to mitigate the risk that the failure of a single security issuer will bring down the entire enterprise. Simply put, a portfolio with 100% invested in the absolute, hands-down, best company on the planet is a high-risk portfolio. There is no cure for cyclical changes in security market values--- diversified portfolios thrive on it, in the long run.

The differences between a correction in either a market (equity or debt) or a market sector (financials, drugs, transportation, etc.), and a fall from grace in a specific company are important to appreciate. Corrections are broad downward movements that affect nearly all securities in a specific market. This particular one has impacted prices in both investment markets, while creating rallies in more speculative arenas. Ten years ago, the dot-com bubble began under very similar circumstances. Ten years earlier, it was interest rates--- and on, and on. When all prices are down, opportunity is at hand.

There are approximately 450 Investment Grade Value Stocks, and at least half are down significantly from their 52-week highs; fewer than ten per cent were in this condition just over a year ago. But very few companies have thrown in the towel, or even cut their dividends. Closed end income fund prices are still well below the levels they commanded when interest rates were much higher, yet they provide the same cash flow as before the financial crises. The economy and the markets have been through much worse.

Why aren't the wizards of Wall Street assuaging our nerves by explaining the cyclical nature of the markets and pointing out that similar crises have always preceded the attainment of new all time highs? Right, because the unhappy investor is Wall Street's best friend. Why can't politicians address economic problems with capitalist-economic solutions? Fear, and the panic it evokes, creates an easy market for walruses, oyster knives in hand.

Wall Street plays to the operative emotion of the day--- greed in the commodities markets and fear in the others. Once per quarter, they trim their holdings in unpopular sectors and add to their positions in areas that have strengthened. Under current conditions in the traditional investment arena, don't be surprised by larger than usual cash holdings (certainly not "Smart Cash"). Window dressing pushes the prices of your holdings lower, in spite of their continued income production and sustained quality ratings.

How have the wizards managed to re-define the long-term investment process as a quarterly horse race against indices and averages that have no relationship to investor goals, objectives, or portfolio content? Why do these proponents of long-term investment planning and thinking religiously conspire to make short-term decisions that prey upon the emotional weaknesses of their clients? The "art of looking smart" window-dressing exercise accomplishes several things in correcting markets:

The things you own are artificially manipulated lower in price to make you even more uncomfortable with them, while the things you don't have positions in stabilize or move higher. The glossies from the new fund family your advisor is talking about show no holdings in any of the current areas of weakness. It's easy to make fearful investors change positions and/or strategies. Sic 'em boys. Brilliant!

Value investors (those who invest in IGVSI stocks, and income securities with an unbroken cash flow track record) may lapse into fearful thinking as well, and this is where the Working Capital Model comes to the rescue. By focusing on the purpose of the securities you own, their enhanced attractiveness at lower prices becomes obvious. Higher yields at lower market valuations and more shares at lower prices equal faster realized profits as the numbers move higher during the next upward movement of the cycle. That's just the way it is. A reality you can count on.

Surprisingly few investors have the courage to take advantage of market corrections. Even more surprising is how reluctant the most respected institutional walruses are to suggest buying when prices are low. The instant gratification expectation of investors combined with the infallibility expected of professionals, by both the media and their employers, is the cause. Gurus are expected to know what, when, and how much. Consequently, they prefer to manipulate their portfolios to create an illusion of past brilliance, rather than taking the chance that they may actually be in the right position a few quarters down the road. There is no know in investing.

The stock market yard sale is in full swing--- add to your retirement accounts, buy more of IGVSI stocks at bargain prices, increase your dependable income and increase current yields at the same time. Apply patience, and vote for economic solutions to economic problems.

Perge'

About the Author

Steve Selengut http://www.sancoservices.com http://www.kiawahgolfinvestmentseminars.com Professional Portfolio Management since 1979 Author of: "The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"

Trading it for Bigger Profits

2008-03-19T03:28:00.000-07:00

Today, we have more news than ever and its delivered in the click of a mouse and many trader want to trade it and make profits - after all it’s the fundamental supply and demand situation that drives forex prices…

No it isn’t!

Supply and demand fundamentals are not important by themselves - it’s how they are perceived that determines price.

Here is a simple equation for market movement to illustrate the above:

Supply and Demand (facts and news) + investor Perception = Price

From the above you can see that it is investors who determine price.

We all have the same facts to look at but we don’t all draw the same conclusions from what we see and this is the problem when trading news stories.

If you could win by trading the news, with today’s quality of it and lightening communications, the percentage of traders who would win would be far greater but the fact is:

The same amount of people who lost in forex trading 50 years ago lose today and this statistic won’t change because you can’t trade news stories in isolation.

The problems with trading news stories are greater today than they have ever been.

Why?

Because we all get the information quickly and it’s instantly discounted by the market, we all have the information at the same time in any corner of the globe online and no one has an advantage of getting it first before the herd.

The problem that is always present and has been since markets started trading is:

You don’t know how the traders are going to view the news because their all driven by their individual motivations and emotions furthermore, the news always reflects the views of the crowd and the crowd is always wrong.

Will Rogers once said:

“I only believe what I read in the papers”

He was joking of course, but it’s surprising how many people read a paper or see a view on CNBC and think they can trade it and win - they can’t.

FACT:

Markets collapse and turn when they are most bullish and rally when they are most bearish - this is nothing to do with the facts but how the investors perceive them.

News stories can be used but it’s not in the way you may think.

If a bullish piece of news fails to push market higher, or bearish news fails to push a market lower, then you may have a trend change at hand.

You need to check and to do this, look at a forex chart and see the technical view of price only. Here you are seeing the reality or the truth in black and white.

This gives you a detached non emotional view of price and you can decide which way to trade. Using the news in this contrary fashion is a great way to spot situations which you can time entry with your technical indicators.

There is an old saying:

“If you can hold your head, when everyone around you is losing theirs you probably haven’t heard the news”

In the above instance you have - but you’re not taking the view of the majority.

If you use news in the above way and combine it with forex charts to time your trading signal, then you have a powerful combination for bigger forex profits.

How To Make Money In Your Sleep

2008-03-18T06:28:00.000-07:00

Everyone knows that it is possible to work and make money. The more we work, the more we earn. Let s look at some ways we have to let the power of leverage return more to us even when we don t work more. With leverage, money gets returned to us in a sort of a self-propelled fashion. It doesn t matter to leverage if we are not working hard, or even if we are not awake.

Stockbrokers allow their clients to use leverage by buying stocks on margin. This means if you want to buy $1,000 worth of stock, your broker will lend you $1,000 more so you can buy twice as much. Therefore, if your stocks double in price, they become worth $4,000, and since you have only $1,000 of your money invested and $1,000 belongs to your broker, you have tripled your $1,000 to $3,000! You would have only doubled your money had you not been able to use the leverage provided by buying on margin.

Commodity brokers allow their clients to make money by using a lot of leverage. For about $1,500 you can control 5,000 bushels, or about $30,000 worth of soybeans. Here, if the price of the soybeans rises 10%, you make a profit of $3,000. Of course, it can go the other way, too, and if it does, you lose big. That s how it is with leverage. Still, fortunes have been made in commodities futures trading and it is a superb example of using leverage.

Another area where people can gain a large amount of leverage is through multilevel marketing. With multilevel marketing a person signs people into his down line. These people recruit and sell products for him, thus giving him the ability to make money with the leverage they provide.

Probably, the most ubiquitous form of leverage is the leverage you gain when you put down $40,000 to buy a $200,000 house. Sooner or later most families make a similar investment. It is leverage because the mortgage allows you to control an asset that is 5 times as big as the investment you have made. Should the price of your $200,000 property double, not at all an unheard of event in real estate, you will have made $200,000 on your $40,000 investment, or a return of 500%! Now that's leverage! It's no wonder people like to invest in real estate!

All these examples of leverage show ways to make money, even a lot of money, without doing more work. However, they all come with a potential downside. Certainly investing in stocks is a great thing to do, but the leverage found in stock investing isn't normally what one thinks of as very strong leverage. There is a lot of leverage in commodities futures trading but there is also an abnormal amount of risk. I find that it takes a certain type of person to trade commodities futures. Trading commodities futures isn t recommended for everyone. Multilevel marketing isn t recommended for everyone, either. Though many success stories have been written because of multilevel marketing, it is a type of business that many people never find success with.

Buying a house on the other hand, is recommended for everyone, even if it is bought only to provide a place for someone to live. The price of real estate doesn't always go up, however. In the area that I live and invest in, real estate had a major slump between 1988 and 1993. In this time frame, real estate lost value drastically. Anyone who bought real estate in 1988, had to weather the storm, and if they did, they were richly rewarded by the mid '90s and they made out very, very well if they re still holding that real estate. With real estate, it always seems that you'll come out ahead and make money if you don't give up. Buying at the right time can make you a lot of money in a real hurry, but buying at the wrong time can severely slow down your ascent to wealth. If you do buy at the wrong time, all you can do is hold on tight and wait for a turn around. So far, throughout history, real estate prices have always broken sharply upwards when coming out of slumps. If you are able to weather a real estate down cycle until the market turns around, it will be well worth your perseverance because as the price climbs, you will gain leverage you need to make a lot of money in a real hurry.

So go put down 20 percent, get a mortgage and go live in your new house. Then, go take a nap and dream of all those dollars flowing into your bank account!

Forex Avenue: The Road to Riches

2008-03-18T06:27:00.001-07:00

In meinem anhaltenden Streben nach den Besuchern meiner Website mit einer großen Anzahl von Optionen zur Auswahl, wenn man von zu Hause aus arbeiten Ich habe schon einige Forschungen über Forex-Handel. Ich lernte während des Devisenhandels verfolgt meine MBA-Programm. Für diejenigen unter Ihnen, die haben noch nie davon gehört, Forex Trading ist der Austausch der ausländischen Währung. Ich weiß, ich hätte auch nie wissen, war dies eine Option für die Geld hatte ich nicht herausgefunden, in der Klasse. Die meisten der wirklich großen Konzerne haben Abteilungen von Menschen, die sich an diesem für ein lebendiges, weil sie kann sehr lukrativ, wenn sie richtig. Die beste Nachricht, die ich gelernt habe zu diesem Prozess der Umtausch von Währungen ist, dass viele der Webseiten, können Sie sich mit diesem Angebot zu tun kostenlose Trial-Accounts zu helfen, lernen Sie, bevor Sie Ihr Geld investieren in versuchen es. Sie werden keine Geld in den Test-Konten, wenn Sie sich gut, es ist nur so tun, sondern Geld im Wesentlichen mit den realen Marktbedingungen. Wenn Sie auch in den Test-Account werden Sie wissen, ob dies etwas ist, was Sie wollen, versuchen Sie es auf eigene Faust. Vorteile für die Forex Trading sind, die getan werden kann, 24 / 7, während die Börse ist eine der Geschäftszeiten nur Austausch. Es ist 24 / 7, weil es mit Ländern auf der ganzen Welt so deutlich, dass es Länder gibt, wach sind und arbeiten, während wir schlafen. Ein weiterer Vorteil ist, dass Sie die Kontrolle über den Handel auf Ihr Konto. Sie brauchen sich nicht zu engagieren, lizenzierten Broker, um Ihren Handwerks und Gebühren Gebühren. Entlang den gleichen Linien, wer noch keine Investitionen am ehesten weiß, dass einige Mittel erforderlich machen, um dann selbst für eine bestimmte Zeit oder ein frühzeitiges Ausscheiden Gebühren zahlen. Sie brauchen sich nicht zu befassen Sie sich mit diesen beiden. Ein letzter Vorteil, dass möchte ich darauf hinweisen, ist die Tatsache, dass Forex ist nicht wirklich gelten die gleichen Arten von Schaukeln auf dem Markt, die Bestände sind freibleibend. Natürlich immer, wenn Sie kaufen und verkaufen die gleichen Währungen, dann wird es Schaukeln Markt. Aber da gibt es hunderte von Währungen, die es gibt, gibt es immer etwas für Sie zu Geld machen, weil während einer Währung in eine andere Wert ist und umgekehrt. Es gibt viele Mittel zur Verfügung, um jemanden zu interessieren, die in dieser Art der Ausbildung. Die Federal Reserve Bank-Website ist nur ein Beispiel für die Informationen zur Verfügung - http://www.ny.frb.org/markets/foreignex.html. Hier ist ein weiterer Artikel, finden Sie in ab, die in diesem Bereich. Http://www.forex.com/pdf/pro2.pdf. Ich habe auch eine der Websites, bietet eine kostenlose Lektion. Zwar gibt es viele Vorteile für diese Art von Ausbildung, wie ich schon erwähnt, gibt es sicherlich auch Risiken. Es besteht die Gefahr, mit den Wechselkursen, Zentralbanken im Ausland, und die Risiken, die Zins-und Kredit. Forex wird schnell ein beliebter Weg, um Ihr Investment-Portfolio zu diversifizieren. Wenn Sie gut mit Verständnis investieren Konzepte und genießen Sie es tun, kann dies zu Hause Geschäftschance für Sie. Just do your Forschung und versuchen Sie eine der Websites bietet den kostenlosen Test-Account, um mit der Praxis, und Sie sind auch auf dem Weg der Road to Riches. Von Scott Bianchi

Forex Trading System: Discretionary vs Mechanische Systeme

2008-03-18T06:23:00.002-07:00

Es gibt im Wesentlichen zwei Arten von Forex Trading-Systeme, mechanische und ermessensabhängiger Systeme. Die Trading-Signale, die sich aus der mechanischen Systeme sind vor allem der auf der technischen Analyse in eine systematische Art und Weise. Auf der anderen Seite, diskretionäre Systeme verwenden Erfahrung, Intuition oder die Entscheidung über die Ein-und Ausfahrten. Aber, die man produziert bessere Ergebnisse? Oder was noch wichtiger ist, die man passt besser zu Ihrem Trading-Stil? Wir werden erste Analyse der Vor-und Nachteile zu den einzelnen System-Ansatz.

Mechanische Systeme

AdvantagesThis Art von Trading System kann automatisiert und effizient backtested. Es hat sehr strenge Regeln. Mechanische Händler sind weniger anfällig für Emotionen als diskretionäre Händler.
DisadvantagesMost Händler Backtest Forex Trading Systeme falsch. Um genaue Ergebnisse zu produzieren, brauchen Sie ein Häkchen Daten. Der Forex-Markt verändert sich ständig. Der Forex-Markt (und alle Märkte) hat eine zufällige Komponente. Der Markt kann es ähnlich, aber sie sind nicht das gleiche. Ein Trading-System erfolgreich gearbeitet, dass das vergangene Jahr nicht unbedingt bedeuten, wird es noch in diesem Jahr.

Discretionary Systeme

AdvantagesDiscretionary Systeme sind leicht adaptierbar an neue Marktbedingungen. Trading-Entscheidungen basieren auf Erfahrung. Traders lernen, um zu sehen, die Trading-Signale haben eine höhere Wahrscheinlichkeit für den Erfolg.
Nachteile Sie können nicht backtested oder automatisiert, da gibt es immer einen Gedanken zu entscheiden. Es dauert seine Zeit, zu entwickeln, die Erfahrung benötigt, um erfolgreich Handel und Gewerbe Spur auf diskrete Weise. In frühen Stadien kann dies gefährlich werden.
Nun, der Ansatz ist besser für Forex Händler? Das passt besser ein, dass Ihre Persönlichkeit. Zum Beispiel, wenn Sie ein Händler fest, dass es schwer zu folgen Ihre Trading-Signale, dann sind Sie besser dran mit einem mechanischen System, in dem Ihr Urteil wird nicht spielen eine wichtige Rolle in Ihrem System. Sie nehmen nur die Geschäfte, die Ihr System Signale.
Wenn die psychologischen Barrieren, die jeder Händler (Angst, Gier, Zorn, etc.) erfragen Sie bitte bei unerwünschten Szenarien, die Sie auch besser Handel mechanischen Systemen, denn Sie brauchen nur zu folgen, was Ihr System sage Ihnen, gehen Sie kurz, gehen Lange, in der Nähe eines Handels. Keine andere Entscheidung gemacht werden.
Auf der anderen Seite, wenn Sie einen disziplinierten Händler, dann sind Sie besser dran mit einem diskretionären, weil diskretionäre Systeme Anpassung an die Marktbedingungen und Sie sind in der Lage, ändern Sie Ihre Geschäftsbedingungen der Veränderung des Marktes. Zum Beispiel, haben Sie ein Ziel von 60 Pips auf eine lange Handels. Doch der Markt beginnt plötzlich verlaufende bis ziemlich stark, dann können Sie sich Ihr Ziel zu sagen 100 Pips.
Bedeutet dies, dass der Handel eine diskretionäre System hat keine Regeln? Das ist absolut falsch. Diskretionäre Trading-Systeme bedeutet, dass, wenn ein Händler findet seine / ihre Einrichtung, der Händler dann entscheidet, was zu tun ist. Aber jeder Händler noch bestimmte Regeln, die befolgt werden müssen, wie beispielsweise die Größe der Position, die Bedingungen erfüllt sein müssen, bevor Denken Sie in den Markt, und so weiter.
Ob Sie sich für eine diskretionäre oder eine mechanische Händler gibt es einige wichtige Punkte sollten Sie berücksichtigen:
Sie müssen sicherstellen, dass die Forex Trading System Sie ganz passt Ihre Persönlichkeit. Andernfalls werden Sie sich outguessing Ihrem System. Außerdem müssen Sie einige Regeln und vor allem die Disziplin, sie zu befolgen. Nehmen Sie sich Zeit, um das perfekte System für Sie. Es ist nicht einfach und erfordert Zeit und harte Arbeit, aber am Ende, wenn sie richtig verstanden habe, gibt es Ihnen konsequent profitable Ergebnisse. Bevor wir leben, versuchen Sie es auf einem Demo-Account oder sogar auf einem kleinen Konto (ich werde gehen für die zweite Option, da die psychologischen Barrieren werden anwesend sein.)

Von: Raul Lopez

Forex Fundamental Analysis

2008-03-18T06:23:00.001-07:00

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

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Here we look at some of the major Forex fundamental factors that play a role in the movement of a currency:
Economic Indicators
Economic indicators are reports released by the government or a private organization that detail a country’s economic performance. These economic indicators can be released on a weekly basis, but the more common report is monthly. Indicators are based around a number of economical situations, of which the two primary factors are that of International trade and Interest. Subsidiary factors also include Consumer Price Index (CPI), Purchasing Managers Index (PMI), Durable goods orders, retail sales and Producer Price Index (PPI).
Currency’s Interest Rates
One of the major indicator factors, Interest rates, are a key economic function of any nation. Generally, when a country raises its interest rates, the country’s currency will strengthen in relation to other currencies as assets are shifted to gain a higher return. Interest rates hikes, however, are usually not good news for stock markets. This is due to the fact that many investors will withdraw money from a country’s stock market when there is a hike of interest rates.
International Trade
The trade balance portrays the net difference (over a period of time) between the imports and exports of a nation. A trade deficit can be an economic disaster for a government and a currency. A deficit may appear when a country is importing more than it is exporting, meaning that more money is leaving and less is coming in. In some ways, however, a trade deficit in and of itself is not necessarily a bad thing. A deficit is only negative if the deficit is greater than market expectations and therefore will trigger a negative price movement.

Forex Software - Choosing the Best

2008-03-18T06:22:00.002-07:00

When it comes to forex trading the forex software you choose is essential. There are so many forex trading companies all competing for your business that choosing the right forex software can be quite a difficult task. Most of the forex software products available offers live online forex trading platforms but what other components are vital when it comes to your forex software.
Key Elements For Your Forex Software
Before purchasing any forex software there are a few essential items that should be included. The most important is security and your online forex trading software should include a 128 bit SSL encryption which will prevent hackers from accessing any of your personal details and information such as your account balance, transaction history, etc.
Providing the best security for your forex trading will include a company that provides 24 hour technical server support for your forex software, 24 hour maintenance should anything go wrong, daily backups of all information, and a security system that has been designed to prevent any unauthorized access. Along with these security protocols there are also some forex trading companies that use smart cards and fingerprint scanners to ensure that only their employees can have access to their servers.
Another important factor when it comes to choosing your forex software is to check what the company’s downtime is like. When it comes to trading forex and particularly your online forex trading you need to ensure that the forex software you choose is reliable and available 24 hours a day. The forex software you choose for your forex trading should also have technical support available at all times should your session be cut short.
Ensuring that all the above features are listed in the forex software you choose will help to ensure your forex trading success.

Forex Trading System: Discretionary vs. Mechanical Systems

2008-03-18T06:22:00.001-07:00

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

Mechanical systems

AdvantagesThis kind of trading system can be automated and backtested efficiently. It has very rigid rules. Mechanical traders are less susceptible to emotions than discretionary traders.
DisadvantagesMost traders backtest Forex trading systems incorrectly. In order to produce accurate results you need tick data. The Forex market is always changing. The Forex market (and all markets) has a random component. The market conditions may look similar, but they are never the same. A trading system that worked successfully the past year doesn’t necessary mean it will work this year.

Discretionary systems

AdvantagesDiscretionary systems are easily adaptable to new market conditions. Trading decisions are based on experience. Traders learn to see which trading signals have higher probability of success.
Disadvantages They cannot be backtested or automated, since there is always a thought decision to be made. It takes time to develop the experience required to trade successfully and track trades in a discretionary way. At early stages this can be dangerous.
Now, which approach is better for Forex traders? The one that fits better your personality. For instance, if you are a trader that finds it hard to follow your trading signals, then you are better off using a mechanical system, where your judgment won’t play an important role in your system. You only take the trades that your system signals.
If the psychological barriers that affect every trader (fear, greed, anger, etc.) puts you in unwanted scenarios, you are also better off trading mechanical systems, because you only need to follow what your system is telling you, go short, go long, close a trade. No other decision has to be made.
On the other hand, if you are a disciplined trader, then you are better off using a discretionary system, because discretionary systems adapt to the market conditions and you are able to change your trading conditions as the market changes. For instance, you have a target of 60 pips on a long trade. But the market suddenly starts trending up pretty strongly, then you could move your target to say 100 pips.
Does it mean that trading a discretionary system has no rules? This is absolutely incorrect. Trading discretionary systems means that once a trader finds his/her setup, the trader then decides what to do. But every trader still needs certain rules that need to be followed, such as the size of the position, conditions that have to be met before thinking to get in the market, and so on.
Whether you choose to be a discretionary or a mechanical trader there are some important points you should take in consideration:
You need to make sure the Forex trading system you are using totally fits your personality. Otherwise you will find yourself outguessing your system. You also need to have some rules and most importantly have the discipline to follow them. Take your time to build the perfect system for you. It’s not easy and requires time and hard work, but at the end, if done correctly, it will give you consistent profitable results. Before going live, try it on a demo account or even on a small account (I will go for the second option, since psychological barriers will be present.)

By: Raul Lopez

What you see is not what you get?

2008-03-18T06:21:00.000-07:00

When your spot trade becomes a two-day contract.

In forex trading any delay is more than an inconvenience: your trading strategy is interrupted, you make fewer trades, costs go up, there's unnecessary risk. It's a waste of your time.
With most market makers today, every trade you make is a forward contract--not a spot trade. What does that mean?

Say you've made a successful intra-day trade and you'd like to close out your position and collect the proceeds. Don't hold your breath... Absent the immediate settlement of a real spot trade, you'll wait two business days until you get your money. (And in the meantime, your funds are a hidden asset for the institution processing your trade.)
What if you'd like to keep your position open? Most market makers require you to do a rollover swap: close out and re-open your position simultaneously, with a new settlement date one day further in the future. (Whom does the swap benefit? Who do you think pays for this antiquated housekeeping detail? And why is it even necessary?)
Two-day settlement restricts your flow of capital, penalizes traders who depend on equity to fund their next trade (which might be in an hour... or in five minutes), and gives unfair advantage to the market maker who provides no value in return. It's just old-fashioned processing.

In a world of increasingly short-term trading (90% of forex trading is intra-day), the system is out of sync with practical reality.
Think it's not a serious problem? Then why have the big banks invested years of time and money making this particular pill a little easier to swallow? (By enabling "netting" through a prime broker or daily settlement through the CLS network.)
As a counter party to every trade, the market maker is responsible for maintaining transaction flow. Two-day settlement invites myriad opportunities for disruption:
through defaults or delays in the transaction stream;
through the need to reconcile inconsistencies; and, consequently
having to make up for time lost in restoring the flow.

Advantages of the Forex Market

2008-03-18T06:19:00.000-07:00

What are the advantages of the Forex Market over other types of investments?
When thinking about various investments, there is one investment vehicle that comes to mind. The Forex or Foreign Currency Market has many advantages over other types of investments. The Forex market is open 24 hrs a day, unlike the regular stock markets. Most investments require a substantial amount of capital before you can take advantage of an investment opportunity. To trade Forex, you only need a small amount of capital. Anyone can enter the market with as little as $300 USD to trade a "mini account", which allows you to trade lots of 10,000 units. One lot of 10,000 units of currency is equal to 1 contract. Each "pip" or move up or down in the currency pair is worth a $1 gain or loss, depending on which side of the market you are on. A standard account gives you control over 100,000 units of currency and a pip is worth $10.
The Forex market is also very liquid. When trading Forex you have full control of your capital.
Many other types of investments require holding your money up for long periods of time. This is a disadvantage because if you need to use the capital it can be difficult to access to it without taking a huge loss. Also, with a small amount of money, you can control
Forex traders can be profitable in bullish or bearish market conditions. Stock market traders need stock prices to rise in order to take a profit. Forex traders can make a profit during up trends and downtrends. Forex Trading can be risky, but with having the ability to have a good system to follow, good money management skills, and possessing self discipline, Forex trading can be a relatively low risk investment.
The Forex market can be traded anytime, anywhere. As long as you have access to a computer, you have the ability to trade the Forex market. An important thing to remember is before jumping into trading currencies, is it wise to practice with "paper money", or "fake money." Most brokers have demo accounts where you can download their trading station and practice real time with fake money. While this is no guarantee of your performance with real money, practicing can give you a huge advantage to become better prepared when you trade with your real, hard earned money. There are also many Forex courses on the internet, just be careful when choosing which ones to purchase.
by Heather Redmond
http://www.onlineprofitscoaching.com/

Investing in Forex

2008-03-18T06:18:00.000-07:00

Investing in foreign currencies is a relatively new avenue of investing. There are considerably fewer people are aware of this market than there are people aware of several other avenues of investing. Trading foreign currency, also known as forex, is the most lucrative investment market that exists. There are several factors that make this true among which, successful forex traders earn realistic profits of one hundred plus percent each month. Compared to some of the better known investment markets such as corporate stocks, this is an unheard of return on investment. It's very necessary to mention here that a person who invests in forex must, without exception, make it a point to learn the detailed, but simple strategies and information surrounding the market. This very fact is what makes the difference between successful forex traders and other traders.
A few additional points, which create such powerful leverage for investors within the forex market are: The amount of capital required to begin investing in the market is only three hundred dollars. For the most part, any other investment market is going to demand thousands of dollars of the investor in the beginning. Also, the market offers opportunities to profit regardless what the direction of the market may be; In most commonly known markets investors sit and wait for the market to begin an up trend before entering a trade. Even then, investors, as a rule must sit and wait some more to be able to exit the trade with a nice profit. Given that the forex market produces several up, down, and sideways trends in a single day, it can easily be seen that forex stands head and shoulders above other markets. Additionally there are trading strategies, which are taught that provide for compounded profits; these are profits on top of profits. In addition, free demo accounts are available within the industry of forex trading, which facilitate the sharpening of skills without the risk losing any capital. And the advantage regarding the time factor in trading foreign currency is a very attractive point for any investor. Compared to one of the most sought after avenues of investing, which often requires forty or more hours each week, namely in the real-estate market, the forex market requires a much smaller demand on the investor's time. Forex trading requires approximately ten to fifteen hours each week to earn a full time income. It's easy to see that the advantages and great leverage that exist in the forex market, make it among the most lucrative, time liberating, and easy to enter by far.
I hope this information gives you a clear understanding of how you can turn your investing into a true method of making your money work harder for you.
by Joe Clinton
http://www.joeforex.com/

Forex The Future Investment

2008-03-18T06:17:00.002-07:00

There are many many advantages over the various other ways of investing. First of all it is a 24 hr market, except for weekends of course. You have the US market then the european and then the Asian. One of the great times to trade is during the over lapping periods. The USA and european overlap between 5am & 9am eastern and the Euro & Asian between 11pm & 1am eastern. Usually the busiest time and best to trade.
The is also the risk factor for the accounts. With futures and options you can get margin calls that can wipe you out. If you get caught in a bad trade not only do you lose the money in the account but you may have to come up with alot more from your pocket. It can be very risking. But not in Forex. Worst case senerio you could lose whats in you account. But you would have to do something really stupid. Like making a big trade on a Fundamental day and leave it alone. If market takes a bad move and you weren't there. OOOPS. But That wouldn't happen with a smarth trader.
Then there are the demo accounts which is an account where you can trade using all the right things, platform,charts,and information. But you are using play money, or what we call paper trading too.
Plus with Forex you have a mini account. Instead of needing thousands of dollars to get into it. You can open an account with as little as $300.00. Now of course you will be trading at 1 tenth of a trade. IN other words you controling 10,000 instead of 100,000.00 These are call lots. Which also means you will only risk 1 tenth too!
So if you would love to learn to do investing and not have near the risk you really need to take a closer look at Forex trading.

by Mike Pachuta
http://www.SUCCESSFUL-FOREX.COM/

Explosive Profits: 7 Reasons to Trade Forex

2008-03-18T06:17:00.001-07:00

There are many money-making opportunities out there and we've been involved with quite a few, namely property marketing, web development, residential construction security, multi-level marketing businesses etc.
We've come to a few conclusions with the help of some well-known properity coaches.
Often people with the income they desire don't have the time to enjoy it. Those that have time don't often have money. You don't have to sacrifice your life-style to earn an above-average income. If you focus on the for a few months you can make that dream a reality and create time and money to do what you REALLY want.
To earn a living money is given in exchange for a product or service rendered. It needs to be sold continuously otherwise your income stops abruptly unless it's a repeat type of product or service.
Money is a medium of exchange. There's no magical formula to possess it, you need to exchange something of value for it.
What if, you could have access to thousands of customers who are ready, willing and able to buy from you whenever you wanted? Wouldn't it be great to avoid any hassles like money collection problems (just had a delayed payment from my web business), keeping difficult customers happy (we all know what that's like), competition stealing your business without providing the same value etc.
All that is possible with . You can also trade from anywhere. Take your laptop with you, find an internet connection and away you go.
Another advantage is that you don't need experience to get started. Get a traditionally job involves accumulating specialized experience, having a well-polished resume and having the right contacts. With the right training course, you can get started straight away.
Here's 7 more reasons to trade :
1. It never closes. It's open around the clock, worldwide. Trading positions open at Monday 7am, New Zealand time and close 5pm New York time on Friday. During this time, you can enter or exit the market whenever you like. It's a continuous electronic currency exchange. This is great because you can trade whenever you have spare time.
2. Leverage. Standard $100 000 currency lots can be traded with as little as $1000. This is mainly because of the ease with which you can buy and sell, some brokers will leverage up to 200 times, so with $100 you can control a 200 000 unit currency position. It's the best use of trading capital around, even banks lending on property investments don't come close.
3. Accurately predict the outcomes. Currency prices generally repeat themselves in predictable cycles so you can see what the trends are. 'Technical Analysis' helps to see these trends and profit from them.
4. Low Transaction Cost. In other words, you mistakes won't cost you a fortune. Good brokers won' charge commissions to trade or maintain an account even if you have a mini account and trade small volumes.
5. Unlimited Earning Potential. has a daily trading volume of over 1.5 trillion, the largest financial market in the world. It dwarfs the equities market (50 billion daily) and the futures market (30 billion).
6. You can make money in any market conditions. Each market is one currency against another, so when you buy in one, you're selling in another so there's no biase towards either currency moving up or down. This means it's up to you to choose which currency to buy or sell with. Yu can make money going up or down.
7. Market transparency. This is an advantage in any business or trading environment. It means you can manage risk and execute orders within seconds. It's highly efficient and allows you to avoid unexpected 'surprises'.
I hope you're now convinced that is the best investment and income opportunity around.
To continue your journey of Trading success and achieve enormous profits, visit http://www.wealthyforex.com. You'll receive all of the resources you need to positively impact your future.
by Sorna Devadas
http://www.internetwealthmentor.com/

Why Trade the FOREX?

2008-03-18T06:16:00.002-07:00

My purpose for writing this article is to demonstrate to you the advantages of trading on the Forex market. However, there is one myth that I want to dispel before I go further. The myth is that there is a difference between trading and investing. To dispel that myth I quote from Al Thomas, President of Williamsburg Investment Company, who wrote "If It Doesn't Go Up, Don't Buy It". He said "Everyone who invests is a trader, only the time period is different." It is a lesson that I took seriously after taking a beating in the stock market in 2000.
So now, let's compare features of currency trading to those of stock and commodity trading.
Liquidity - The Forex market is the most liquid financial market in the world around 1.9 trillion dollars traded everyday. The commodities market trades around 440 billion dollars a day, and the US stock market trades around 200 billion dollars a day. This ensures better trade execution and prevents market manipulation. It also ensures easily executable trading.
Trading Times - The Forex market is open 24 hours a day (except weekends) which means that in the US it opens at 3:00 pm Sunday (EST) and closes Friday at 5:00 (EST), allowing active traders to choose the times they want to trade. Commodities trading hours are all over the board depending on which commodity you are trading. Including extended trading times US stocks can be traded from 8:30 am to 6:30 pm (ET) on weekdays.
Leverage - Depending on your Forex account size, your leverage may be 100:1, although there are Forex brokers that offer leverage of up to 400:1 (not that I would ever recommend that kind of leverage). Leverage in the stock market can be as high as 4:1, and in the commodities market, leverage varies with the commodity traded but it can be quite high. Because the commodity markets are not as liquid as the Forex market, its leverage is inherently riskier. Although I was never shut out of a commodity trade by the day limit, the fear was always in the back of my mind.
Trading costs - Transaction costs in the Forex market is the difference between the buy and sell price of each currency pair. There are no brokerage fees. For both the stock and the commodity markets, there are transaction costs and brokerage fees. Even when you use discount brokers, those fees add up.
Minimum investment - You can open a Forex trading account for as little as $300.00. It took $5,000 for me to open my futures trading account.
Focus - 85% of all trading transactions are made on 7 major currencies. In the US stock market alone there are 40,000 stocks. There are just over 200 commodity markets, although quite a few are so illiquid that they are not traded except by hedgers. As you can see, the fewer number of instruments allows us to study each one more closely.
Trade execution - In the Forex market, trade execution is almost instantaneous. In both the equity and commodity markets, you count on a broker to execute your trades and their results are sometimes inconsistent.
While all of these features make trading the Forex market very attractive, it still requires a lot of education, discipline, commitment and patience. All trading can be risky.
by Susan Walker
http://www.creative4xtrader.com/

Forex Avenue: The Road to Riches

2008-03-18T06:16:00.001-07:00

In my continuing quest to provide visitors of my site with a large amount of options to chose from when considering working from home I have done some research on Forex trading. I first learned of Forex trading while pursuing my MBA program. For those of you who have never heard of this, Forex trading is the exchange of foreign currency.
I know I would have never even know this was an option for making money had I not found out in class. Most of the really big corporations have departments of people that do this for a living because it can be very lucrative if done correctly. The best news I have learned about this process of exchanging currencies is that many of the websites that you can sign up with to do this offer free trial accounts to help you learn before you invest your money into trying it. You won't make any money in the trial accounts if you do well, it is just pretend money essentially but with the real market conditions. If you do well in the trial account you will know if this is something you want to try on your own.
Benefits to Forex trading are that is can be done 24/7 whereas the stock market is a business hours only exchange. It is 24/7 because it is done with countries around the world so clearly there are countries that are awake and working while we sleep. Another benefit is you are in control of the trading on your account. You do not need to hire a licensed broker to make your trades and charge you fees. Along those same lines, anyone who does any investing most likely knows that some funds require you to own then for a certain period of time or pay early withdrawal fees. You do not need to concern yourself with this either. One last benefit that I would like to point out is the fact that Forex is not really subject to the same kinds of swings in the market that stocks are subject to. Of course if you always buy and sell the same currencies then there will be market swings. But, because there are hundreds of currencies out there, there is always going to be something for you to make money on because while one currency is up in value another one is down and vice versa.
There are many resources available to someone interested in becoming involved in this type of training. The Federal Reserve Bank's website is just one example of the information available - http://www.ny.frb.org/markets/foreignex.html. Here is another article that you will find helpful in starting out in this field. http://www.forex.com/pdf/pro2.pdf . I have also included one of the sites that does offer a free lesson.
While there are many benefits to this type of training, as I mentioned above, there are certainly risks involved as well. There are risks with exchange rates, central banks in foreign countries, and risks involving interest rates and credit. Forex is quickly becoming a popular way to help diversify your investment portfolio. If you are good with understanding investing concepts and enjoy doing it this may be the home business opportunity for you. Just do your research and try to find one of the sites offering the free trial account to practice with and you are well on your way down the Road to Riches.
by Scott Bianchi
http://www.best-internet-bargains.com/

Introduction To Forex Trading

2008-03-18T06:15:00.002-07:00

There are many markets: markets for stocks, futures, options and currencies. These are probably the most accessible markets for everyday traders like you and I. People easily understand the basics of trading shares, so I will occasionally use examples from that market.
I began trading shares first and then I moved on to trading currencies; therefore, most of the examples I will be using in this book are derived from trading currencies.
If you do not know a lot about currency trading, allow me to introduce it to you. It is what I trade and I believe that it is one of the best markets to trade because of its efficiency. The transaction costs to execute a trade are minimal and most brokers provide you with the tools and data you need to make your trading decisions, they usually provide them for free. The market is open 24 hours a day which allows you to design your trading hours around your daily commitments. It is very volatile, which is great for those people who are looking for day-trading opportunities.
The foreign exchange market is the market in which currencies are bought and sold against one another. People may loosely refer to this market under different labels, including foreign exchange market, forex market, fx market or the currency market.
The foreign exchange market is the largest market in the world, with daily trading volumes in excess of $1.5 trillion US dollars. All transactions involving international trade and investment must go through this market because these transactions involve the exchange of currencies.
It is the most perfect market that exists because it has a large number of buyers and sellers all selling the same products. There is a free flow of information and there are little barriers to participate.
The currency exchange market is an over-the-counter (OTC) market which means that there is not one specific location where buyers and sellers can actually meet to exchange currencies. Instead, transactions are conducted by phone, fax, e-mail or through the websites of brokers who specialize in currency trading.
The major dealing centres at the time of writing are: London , with about 30% of the market, New York , with 20%, Tokyo , with 12%, Zurich , Frankfurt, Hong Kong and Singapore , with about 7% each, followed by Paris and Sydney with 3% each. Because of the fact that these centres are all over the world, foreign exchange traders can execute transactions 24 hours a day. The market only closes on the weekends.
THE MAIN 'PLAYERS' IN THE FOREX MARKET
The five broad categories of participants are: consumers, businesses, investors, speculators, commercial banks, investment banks and central banks.
Consumers, including visitors of countries, tourists and immigrants, do need to exchange currencies when they travel so that they can buy local goods and services. These participants do not have the power to set prices. They just buy and sell according to the prevailing exchange rate. They make up a significant proportion of the volume being traded in the market.
Businesses that import and export goods and services need to exchange currencies to receive or make payments for goods they may have bought or services they may have rendered.
Investors and speculators require currencies to buy and sell investment instruments such as shares, bonds, bank deposits or real estate.
Large commercial and investment banks are the 'price makers'. They are the ones who buy and sell currencies at the bid-and-offer exchange rates that they declare through their foreign exchange dealers.
Commercial banks deal with customers on one hand, and with the Interbank or other banks, on the other hand. They profit by utilizing the bid-and-offer spread. The bid price is the exchange rate that the buyer is willing to buy and the offer price is the exchange rate at which the seller is willing to sell. The difference is called the bid-offer spread. They also make profits from speculating about whether the exchange rate will rise or fall.
Central banks participate in the foreign exchange market in their effective duty as banks for their particular government. They trade currencies not for the intention of making profits but rather to facilitate government monetary policies and to help smoothen out the fluctuation of the value of their economy's currency.
by Marquez Comelab
http://www.marquezcomelab.com/

Trading Forex To Advance Your Financial Position

2008-03-18T06:15:00.001-07:00

Everyday, currencies are traded in an international foreign exchange market, otherwise known as the forex market, with the main marketplaces (otherwise known as bourses) existing in the world's financial centes New York, London, Tokyo, Frankfurt and Zurich. Historically, the only way to participate was from the trading floor of one of these bourses, but today, people can trade forex from anywhere through a secure internet connection and a PC.
Today's traders operate in a global network, taking positions in the market and making investment decisions based on either relative value between two currencies, or a particular currency's actual price. Currency value fluctuations are constantly renegotiated through trading activity, and this activity, and the corresponding currency values are also indicators of the levels of currency supply.
An example of market behaviour greater demand for the Euro might indicate a weakening supply. Low supply and increased demand will drive the price of the Euro up against other currencies like the dollar, until the price better reflects what traders are prepared to pay when short supply exists. Another way to look at this situation is this higher demand means it will cost more dollars to buy the Euro, which equates to a weakening of the dollar in comparison. Analysis of situations such as in this example forms the basis for a trader's investment decisions, and they will purchase or sell currency accordingly.
This should be remembered, as while many see the foreign exchange market as the vehicle for converting their home currency while travelling abroad, many others choose to use the market to advance their financial position and secure their future.
by Jay Moncliff
http://www.goforexonline.info/

Learn Currency Trade - Intro to The FOREX Market

2008-03-18T06:14:00.004-07:00

The Foreign Exchange Market - better known as Forex - is a world wide market for buying and selling currencies.
It handles a huge volume of transactions 24 hours a day, 5 days a week. Daily exchanges are worth approximately $1.5 trillion (US dollars). In comparison, the United States Treasury Bond market averages $300 billion a day and American stock markets exchange about $100 billion a day.
The Foreign Exchange Market was established in 1971 with the abolishment of fixed currency exchanges. Currencies became valued at 'floating' rates determined by supply and demand. The Forex grew steadily throughout the 1970's, but with the technological advances of the 80's Forex grew from trading levels of $70 billion a day to the current level of $1.5 trillion.
The Forex is made up of about 5000 trading institutions such as international banks, central government banks (such as the US Federal Reserve), and commercial companies and brokers for all types of foreign currency exchange.
There is no centralized location of Forex - major trading centers are located in New York, Tokyo, London, Hong Kong, Singapore, Paris, and Frankfurt, and all trading is by telephone or over the Internet. Businesses use the market to buy and sell products in other countries, but most of the activity on the Forex is from currency traders who use it to generate profits from small movements in the market.
Even though there are many huge players in Forex, it is accessible to the small investor thanks to recent changes in the regulations. Previously, there was a minimum transaction size and traders were required to meet strict financial requirements. With the advent of Internet trading, regulations have been changed to allow large interbank units to be broken down into smaller lots.
Each lot is worth about $100,000 and is accessible to the individual investor through 'leverage' - loans extended for trading. Typically, lots can be controlled with a leverage of 100:1 meaning that US$1,000 will allow you to control a $100,000 currency exchange.
There are many advantages to trading in Forex, including:
- Liquidity: Because of the size of the Foreign Exchange Market, investments are extremely liquid. International banks are continuously providing bid and ask offers and the high number of transactions each day means there is always a buyer or a seller for any currency.
- Accessibility: The market is open 24 hours a day, 5 days a week. The market opens Monday morning Australian time and closes Friday afternoon New York time. Trades can be done on the Internet from your home or office.
- Open Market: Currency fluctuations are usually caused by changes in national economies. News about these changes is accessible to everyone at the same time - there can be no 'insider trading' in Forex.
- No commission Fees: Brokers earn money by setting a 'spread' - the difference between what a currency can be bought at and what it can be sold at.
How does the foreign currency exchange market work?
Currencies are always traded in pairs - the US dollar against the Japanese yen, or the English pound against the euro. Every transaction involves selling one currency and buying another, so if an investor believes the euro will gain against the dollar, he will sell dollars and buy euros.
The potential for profit exists because there is always movement between currencies. Even small changes can result in substantial profits because of the large amount of money involved in each transaction.
At the same time, it can be a relatively safe market for the individual investor. There are safeguards built in to protect both the broker and the investor and a number of software tools exist to minimize loss.
by Anna Rowe
http://www.1st-forex-online-trading.com/

Forex Trading - Understanding Commissions, Spreads and Trading Costs

2008-03-18T06:14:00.003-07:00

The forex market is quickly becoming one of the most popular markets for trading.
Not only are the experienced traders looking to this market to maximize their trading returns, but many new, individual investors are now able to trade the Forex market - just as they do stocks and futures.
More and more individuals are seeing Forex not only as a new way to diversify their portfolio, but are also finding that it is becoming the most profitable component of their investments.
And that's because of the many advantages Forex offers over other markets like stocks or commodities. Here's what you will typically see advertized about Forex:
- Unparallelled liquidity. It is the largest financial market in the world by far. Almost $2 trillion being traded daily!
- Excellent leverage potential. Individual investors have access to leverage of 100:1 and even 200:1
- No Commissions (more on this later on)
- Low trading costs.
And yes, the Forex market really does offer all these advantages.
But the last two points above talk about costs, and that's what we'd like to focus on in this article.
Like any trading, there are costs involved, and, while these may be much lower than they used to be, it is important to understand what those are.
Let's start by looking at stock trading, something that most of us investors are pretty familiar with.
When trading stocks, most investors will have a trading account with a broker somewhere and will have investment funds deposited in that account.
The broker will then execute the trades on behalf of the account holder, and of course, in return for providing that service, the broker will want to be compensated.
With stocks, typically, the broker will earn a commission for executing the trade. They will charge either a fixed dollar amount per trade, or a dollar amount per share, or (most commonly) a scaled commission based on how big your trade is.
And, they will charge it on both sides of the transaction. That is to say, when you buy the stock you get charged commission, AND then when you sell that same stock you get charged another commission.
With Forex trading, the brokers constantly advertise "no commission". And, of course that's true - except for a few brokers, who do charge a commission similar to stocks.
But also, of course, the brokers aren't performing their trading services for free. They too make money.
The way they do that is by charging the investor a "spread". Simply put, the spread is the difference between the bid price and the ask price for the currency being traded.
The broker will add this spread onto the price of the trade and keep it as their fee for trading.
So, while it isn't a commission per se, it behaves in practically the same way. It is just a little more hidden.
The good news though is that typically this spread is only charged on one side of the transaction. In other words, you don't pay the spread when you buy AND then again when you sell. It is usually only charged on the "buy" side of the trades.
So the spread really is your primary cost of trading the Forex and you should pay attention to the details of what the different brokers offer.
The spreads offered can vary pretty dramatically from broker to broker. And while it may not seem like much of a difference to be trading with a 5 pip spread vs a 4 pip spread, it actually can add up very quickly when you multiply it out by how many trades you make and how much money you're trading. Think about it, 4 pips vs 5 pips is a difference of 25% on your trading costs.
The other thing to recognize is that spreads can vary based on what currencies you're trading and what type of account you open.
Most brokers will give you different spreads for different currencies. The most popular currency pairs like the EURUSD or GBPUSD will typically have the lowest spreads, while currencies that have less demand will likely be traded with higher spreads.
Be sure to think about what currencies you are most likely to be trading and find out what your spreads will be for those currencies.
Also, some brokers will offer different spreads for different types of accounts. A mini account, for example may be subject to higher spreads than a full contract account.
And finally, because the spreads really are the difference between bid prices and ask prices as determined by the free market, it is important to recognize that they are not "guaranteed". Most brokers will tell you that there may be times during periods of low demand, or very active trading when the spreads widen and you will be charged that wider spread.
These do tend to be rarer situations because the Forex market really is so large and demand and supply are generally quite predictable, but they do occur, especially with some of the lesser traded currencies. So it's important to be aware of that.
In summary then, when trading Forex, understand that the "spread" is truly your most important consideration for trading costs.
Spreads can vary significantly between brokers, account types and currencies traded. And small differences in the spread can really add up to thousands of dollars in trading costs over even just a few months.
So be sure to understand what currencies you are going to be trading, how frequently, and in what type of account and use those factors to help decide which broker can offer you the best trading costs.
by Rich Cochrane
http://www.forexdiscountbroker.com/

Online Forex Trading

2008-03-18T06:14:00.001-07:00

Do you know what Forex trading is? Some people have heard of this type of trading, others have not. If you haven't, it might be something you are interested in trying. Forex trading stands for foreign exchange trading. What it consists of is the buying and selling of different currencies. This is done simultaneously, and there are people who make a lot of money with this kind of trading. This is apparent by the 1.9 million dollar turnover in this market that happens every day. Also a lot of it is done online. Online Forex trading is very popular.
The most common currencies to trade are the Euro and the U.S. dollar, and the U.S. dollar and the Japanese Yen. However, nearly all of the Forex trading done involves the major currencies of the world. These include the Euro, Japanese Yen, U.S. dollar, Canadian dollar, British Pound, Australian dollar, and the Swiss franc. The Forex exchange is different from other exchanges, such as the New York Stock Exchange, in that it does not have a physical location or central exchange. The exchange day begins in Sydney, then moves to Tokyo, on to London, and finally ends in New York. Each country takes the responsibility of regulating the Forex exchange activities in their own country. So there is no overall regulatory agency. However, this does not seem to be a problem and most countries do very well at overseeing Forex exchange activities.
There are a lot of things that influence the Forex rate. For instance, economic things, like interest rates and inflation, and also political things, such as political unrest in other countries and major changes in government cause up and down changes in the Forex rate. However, these things tend to be short-term, and don't affect it for long.
Online Forex trading sites are easy to find by surfing the Internet. Most of them provide a wealth of information for the first time trader. You can find out about the history of Forex trading, how to co it, tips on being successful, etc. You can also start trading with as little as $250 in your account on some sites. For anyone who is interested in currency or trading, it is something you should check out.
As with any type of trading, there are no guarantees that you will make money or that you won't make money. It is a smart choice to learn as much as you can about online Forex trading before investing any money and doing any trading. It is a fact that informed investors do better than those who don't know much about what they are trading. So get the fact before you dive in. You might just make a little money in a very interesting currency exchange.
by Bob Hett
http://www.forexinformation.info/

Internet Marketing VS Forex Currency Trading

2008-03-18T06:13:00.001-07:00

Have you noticed that when someone's trying to sell you something - such as a system for making money - they always make it look far easier than it is?
Let's look at two Internet businesses, almost as diametrically opposed as it's possible to be - Internet Marketing and Forex Currency Trading.
You've probably heard the old Internet adage - build a better website and they will come. Well it ain't true!
You could put up a site advertising dollars for a dime and they still wouldn't come - because they wouldn't know where to look!
Let's look at what you need to have in place in order to build a successful Internet marketing business.
First of all, you need a product. If you've been reading the recent Internet marketing blurb you'll know you need a niche product.
Actually, the new thing is sub-niche but whatever they call it, you need a product for which there is high demand but low supply.
Finding a suitable niche is the hardest part of the whole process but let's say you have a killer product, what else do you need?
The List.
Ask any Internet marketeer and they will say that the most important part of your business is your opt-in list.
For people to join your list you usually have to give them something of value such as a free eBook or report on a subject related to your main product line.
To keep them interested, you need to keep in touch with them offering them additional information, advice and tips.
Website.
To promote your opt-in list you need a website (although there are other ways of promoting your list, too) with features that will encourage people to sign up to your list.
You also need a killer website with killer copy to describe - and sell - your killer product. This may or may not be the same as the one you use for your opt-in list.
Killer copy.
Maybe you're not a good copywriter. There are many eBooks on the subject that can help you or you can pay someone to write copy for you.
You need a domain name, preferably one with some relation to the product but good domain names are becoming increasing difficult to find.
Ads.
To get people to visit your website in the first place you need to register it with the search engines.
SEO (Search Engine Optimisation) is an art in itself. You can mug up on the subject or pay someone to do the job for you (but be aware that not all experts are!).
You might also want to place ads for your list in newsletters and ezines. The better ones will charge you although you might get a free ad in return for an article.
Autoresponder.
To automate your business you need an autoresponder. These clever devices automatically send emails to everyone on your opt-in list at predetermined intervals, and contain predetermined copy.
For example, you could create a series of emails containing, say, five parts of a free course to be sent one a day over the first five days.
Then emails would be sent once a week advertising a different product each time.
Whenever anyone signs up to your list they automatically start at the beginning so everyone gets the full cycle of marketing material.
We haven't even looked at affiliate sales and marketing but I'm sure you get the picture.
The basic idea of selling over the Internet sounds good but there's a lot more to it than most people realise.
Forex Currency Trading
Someone said that trading is the last frontier, the last place where men and women can stand up and pit themselves against the world.
It sounds very Wild Westish but most of it is true! You win or lose entirely by your own efforts and if you win, it's like having your very own bank.
However, even owning a bank is a business and you still have to work hard to put the money there - and to keep it!
Unlike Internet marketing where all your efforts, in one form or another, are geared towards making people join your list and then selling them stuff,
Currency Trading has no customers. That's worth repeating - with currency trading, you don't need customers.
No customers means you don't need any of the associated accoutrements that go with Internet marketing such as: Products Web site Domain name Opt-in list Ads eBooks and reports Autoresponder Any other marketing aids
So far so good, but what do you have to do and what do you need? Well, you need to know what currency prices are doing.
You can get a list of prices at the close of each trading day free from many web sites. If you want to trade during the day - intraday trading, you can get real-time prices for a nominal fee from several data suppliers.
In the foreign exchange currency market, commonly called forex, you can get this data and charting software free from many web sites.
Okay, that's the easy bit. In order to trade currencies, you need to analyse the data and determine which way price is heading.
In other words you need a system and this will require study and dedication.
There's lots of other stuff you have to know, too - trading terminology, margin, leverage, money management, order types, trader psychology and more.
But all of this is available in eBooks and courses and on the Net.
You also need some money upfront to fund your trading account. With forex you can begin with as little as $300-500 although you would be advised to start with more.
So while you don't have the ongoing quest for new customers, new products and inventive sales techniques, you do need some sort of education or training before you begin and you need discipline while you're trading.
For more information on getting started with forex currency trading, go to: www.webkept.com
Making money takes work whether it's online or off. Make sure you know what's involved before you start and remember that the more you put into a business, the easier it gets.
by Amin Sadak
http://www.webkept.com/

What is Forex Market?

2008-03-18T06:12:00.002-07:00

The biggest money market in the world, Foreign Exchange or Forex or FX is a platform where money is sold and bought freely between buyers and sellers. With over $1.5 trillion USD being traded daily, the foreign exchange market has now become a market which is open to trading by an average investor as much as it is open to a high investor. Launched over three decades back, in the early seventies, Market Forex introduced free exchange rates worldwide, according to which, the price of the currencies was determined on the basis of demand and supply only. No external regulatory authority was and still is, allowed to set or fix prices or rates. The power of setting or fixing a price for each currency is with the participants of the market, the buyers or the sellers, who decide the price of one currency against the other. Forex Market is also free and independent from all or any outside control and is open to all, as far as free and fair competition is concerned, making it the perfect market to invest in. Today, Forex market deals in over hundred times the every day trading done in the New York Stock Exchange. The Forex market is an over-the-counter market in which buyers and sellers trade through different means of communication such as telephone, fax or internet network rather than being physically present on the exchange location. The major reason for this is that contrasting to other money markets, the Foreign Exchange market neither has a physical location nor any central exchange. And it is this lack of physical exchange, which enables the Forex market to trades incessantly, 24 hours a day, going from one time zone to the other, from the world’s one major economic center to another, day after day. Beginning since 1997 till date, more than a trillion dollars of foreign exchange activity has been taking place at Forex, day after day. The every day forex trading quantity escalated from US$5 billion to US$1.5 trillion approximately. At this pace, it can be said for sure that the Forex market continues to grow at an exceptional rate. Going back to the time when Foreign Exchange market had been launched, before the Internet geared up its popularity, Forex was only limited to big companies, transnational or global banks and affluent corporate individuals, who could trade currencies in the market through the bank-owned trading systems. During that time, opening an account for trading required a deposit of as much as US$1 million. It was only with the advent of Internet and online technology, that today, investors can open an account as well as trade successfully, with only a few thousand dollars. Brokers are a significant part of this trading industry. It is only because of these Forex Brokers, that this Foreign Exchange market is a nonstop cash market, with a continuous buying and selling of currencies of different nations. Forex market conditions are highly unpredictable in nature and change every second, with fluctuation in price being the only constant factor in this trading. This is the main reason why, at times, Forex is also known as a highly fickle and fragile market. Forex today, provides a great substitute to the stock market trading for the traders and investors. Although Stock Exchange provides a far larger variety of stocks to trade in, Forex offers only a few major currencies to trade for, where in the US Dollar, Yen, British Pound, Swiss Franc, and Euro, are the most popular ones. Trading such big currencies is definitely more exciting for the investors than the stocks, and it can be seen that more and more traders and investors are now turning towards Currency trading to get the real thrill of the trading business.

Economic Indicators

2008-03-18T06:12:00.001-07:00

Economic indicators can be anything, from the bits and pieces of financial and economic news, to the data published by different agencies on the statistics of government or private sector. This data is regularly made public to help the common man keep track of the latest developments in the nation’s financial sector. Most benefited from these economic indicators are the market observers who are constantly keeping an eye on the overall economy and its effect on the market. This is the main reason why such indicators are consistently tracked by nearly everyone related to the financial markets in some way or another. Also, this is the rationale behind the economic indicators containing great potential for creating levels and moving currency prices along with the whole markets, as so many people are expected to respond to the same data together. Major IndicatorsIndustrial Production –It is a measure of the variation in the manufacturing of the country’s industrial units and mines in addition to a measure of their business capability and their capacity utilization, which is the number of used accessible resources amongst the various industrial units and utilities. Producer Price Index – The Producer Price Index or PPI calculates the price variations in the industrialized sector. It determines the average variations in selling prices received by home manufacturers in the industrializing, mining, farming, and electric service business or trade for their production. The PPIs mainly used for fiscal study are those for refined goods, intermediary goods, and unfinished goods. Hard Goods Orders – Durable or Hard Goods Orders calculates any new orders which have been placed with the home producers for instant and potential delivery of durable goods. Retail Sales – The retail sales report measures the entire revenue of retail houses from section on behalf of all range, class and type of industries in retail business all through the nation. Retail sales contain both hard and soft commodities sold, and services and excise taxes accompanying the trade of commodities, not including the sales taxes. The Gross Domestic Product – Gross Domestic Product or (GDP) measures the total of all the merchandise and services created either by home or overseas companies, showing the speed at which a nation’s wealth and market is rising or falling. (GDP) is regarded as the most extensive indicator of monetary productivity and development of a nation. Housing Starts – The Housing Starts report calculates the quantity of housing units which are being initiated into construction every month, where the initiation process is predefined as the start of an excavation for the groundwork of any residential structure. To make full use of these economic indicators in the Forex market and trading world, you should always be aware as to when each economic indicator is due to be out in the markets. Keep track of all the release dates through a calendar or keeping in touch with the agencies which will be releasing these statistics or snippets for the public. Also, keeping a record or a watchful eye on the release dates of these economic indicators will help you build a stronger decision whether to go forward or drop the position you were planning to go with by predicting the market movements based on gut feelings.

Analysis stages in Forex

2008-03-18T06:11:00.001-07:00

It will not be wrong if we say that Forex traders lead their lives, living on the edge. You never know what’s going to happen the next moment. In this currency world of speculations, instincts, calculations and uncertainties, the market experiences one moment of total harmony, and the next one of absolute commotion. Amidst such high degrees of speculation and large amount of money at stake, can we precisely foretell the trend this market is going to follow each time? And furthermore, can we bet high capital on it? For all this, we first need to be clear with the basics. The basics which tell us exactly what causes the market to move in the direction it does? What makes it follow the trend it does? Why are different traders trading with same currency using different strategies? Answers to all these questions can be a little tricky especially knowing that every trader senses different set of indications and warnings each time the market moves. Every trader has his personal instinct behind his decision of buying or selling a currency, keeping in mind the atmosphere in the market. But there is still something that every sensible Forex trader does, Analysis! Before investing a sum of money in the market, any sensible trader would want to analyze the market, get full knowledge of the situation and be equipped to forecast what movement the market might take in the future. And to do this analysis, a trader must keep in mind the six important stages of analysis in Forex trading, which are: Who tells us about the people involved with Forex who form the market and bring about action in it. Why is about comprehending the outlook of the Forex market and the openings or prospects which it provides to its traders. Where tell us to match our goals with the goals a genuine and professional dealer. When tells us about the right time when our trades can bring us maximum efficiency. What is all about choosing a trading medium or currency pair on the basis of your budget and investment principle. How is about choose a trading toolkit which will help us advance our trading skills and techniques. Every trader requires building up a fanatical sense of the Forex market and what’s happening in it and around them. Not every move of the currency market can be predicted though, but we can definitely try developing an understanding of the situation and the environment of the market. What all the above mentioned six stages do is help us in creating more advantageous trading options. With the systematic and balanced use of these stages, we can easily create and execute a complete trading plan, the one that covers all the major trading aspects and angles. It is important to understand who actually trades Forex? Also needed to be known are the participants, and the reasons for their success and failure. This will help us make use of the points which lead to successful results and avoid the ones which led to a loss. To know why to trade Forex at the first place is the very reason why we should be interested in trading with it. Only if we know the advantages and disadvantages of this market will we be able to make up our minds for or against trading Forex. It is also important to know from where we should trade. Always choose the right trading platform or broker who can professionally allow your trading style to mingle with its approach. For deciding upon what to trade for, we should always choose a currency pair and money management method which will boost your returns. Deciding on when you should trade is also an important aspect to be kept in mind before you start to trade. Always advisable is to trade when the situation you are in, is most liable to generate the best circumstances for you to execute your trading methods and techniques. Choosing on how to trade should always be done keeping in mind the usage of those methods that make best use of your skills and also help you follow the previously well-known successful traders of the market.

How to earn in Forex

2008-03-18T06:10:00.002-07:00

Forex, where the commodity to be traded is currency, and not stocks and shares, is a trading market which gives its investors, returns in the form of the relative value of one currency exchanged against another. Forex trading is therefore, always dealt in currency pairs with the major currency pairs being Euro/US Dollar (EUR/USD) and US Dollar/Japanese Yen (USD/JPY), to name a few. And it is with concurrent buying and selling of currencies that the trader hopes to make a profit on favorable exchange rate fluctuations. Exchange rates are always fluctuating, going down as well as up, within seconds and the whole art of trading lies in perfectly foreseeing the trend of the variation between two currencies. But, how do you make money in such a competitive and incessant Trade market?
Well, here is an example to illustrate how…Supposing the current bid/ask price for EUR/USD is going by the rate of 1.5027/30, giving you the option to buy 1 euro with 1.5030 US dollars or sell 1 euro for 1.5027 US dollars. Now, if you feel that the Euro is underrated against the US dollar, you would opt on buying Euros, selling your dollars at the same time. So you buy 100,000 euros by paying 150,300 dollars. You can then start analyzing the market, waiting for the exchange rates to rise. One can also opt in for Spot Forex Trading due to its benefits
As predicted, the rates begin to rise and then you decide a favorable rate at which you plan to sell your Euros to get a hefty profit. Supposing the Euro rises to 1.5090/93. Now, to realize your profits, you sell 100,000 euros at the current rate of 1.5090, and receive $150,900. You bought 100k Euros at 1.5030, paying $150,300. You sold 100k Euros at 1.5090, receiving $150900. That's a difference of $600 or in other words, you successfully earned a profit of $600.
Change and fluctuation, in any trading market is quiet frequent and rapid, especially in the Forex market, where these recurrent changes are also influenced by various other world events and factors like oil prices, interest rates and economic conditions. But with all these rapid fluctuations going on, the main aim of any Forex investor still remains on making profit. Every trader is predicting and waiting for the value of the currencies to change in his favor. You can also learn more about the Positions in forex

Sign up for a Live Account

2008-03-18T06:10:00.001-07:00

Registering with Marketforex.net is easy and free of cost.

Our Online Application Form takes no more than 5 minutes of your time. We will assign you an account number and then, it is up to you to start trading through it, whenever you want to. Opening an account with Marketforex.net does not require you to necessarily make a deposit or start trading that very moment!

Free Practice Account

2008-03-18T06:09:00.001-07:00

Opting for opening a Free Practice Account is the best way to learn and practice trading with the Forex market, especially when it’s free of cost, with no risk of losing money involved.
This gives the Forex enthusiasts, be it Beginners, Traders or Experienced Dealers, a great opportunity to experience the stimulating world of currency trading. The practice account helps recognize the Investing Mistakes in Forex.

Free Practice Account gives you a chance to learn and enhance your trading skills, also you can check your Forex trading history as well. So, Register now!

Forex Glossary

2008-03-18T06:08:00.001-07:00

The Foreign Exchange market has its own terminology which is normally used by all Forex brokers, investors and traders. Here is a brief list of the frequently used Forex terms and their meanings. Also besides terms, we provide you beneficial Hints For Forex Trading as well.

Ask Price/ Offer Price

The ask and offer price is the price at which the market is ready to trade a specific currency. This is the price where, an investor can purchase the base currency. When seeing a quote, it is located on the right side. For example, in the quote EUR/USD 1.4547/52, the ask price is 1.4552.

Base currency

The currency listed first in a Currency Pair is known as the Base currency

Bids

A Bid is the price at which the investor is willing to purchase a currency.

Bid/Ask Spread

Simply stating, Bid/Ask spread is the variation between the bid and offer price. It can also be defined as the degree of difference in pips, amid the buying price and the selling price of a currency pair.

Broker

A person or an organization acting as an agent, putting together buyers and sellers for a commission or fee, can be defined as a Broker. They are the ones who work on behalf of their investors.

Counter Currency

The currency listed second in a Currency Pair is known as the Counter currency.

Currency symbols

EUR - Euro

AUD - Australian Dollar

CAD - Canadian Dollar

CHF - Swiss Franc

JPY - Japanese Yen

GBP - British Pound

Day Trading

Day trading refers to the buying and selling of positions within a single day’s trade.

Foreign Exchange

Also known as Forex or FX, it is the process of buying of one currency in exchange of other currency in an over-the-counter market

Leverage

Leverage is the ratio of the deposited amount to the amount that can be traded. Find out Importance of Forex Leverage

Limit order

Limit orders let the Forex investors stop further trading and leave the market at preset profit objectives. It is an order which restricts the greatest price to be paid or the lowest price to be received.

Liquidity

Liquidity can be defined as the capacity of a market to allow fat transaction with negligible impact on the price stability.

Margin

Margin is the minimum amount required to be deposited before an investor starts trading. This can also be known as the initial amount with which the Forex trading account can be opened.

Pip / Point

When dealing in terms of quotes, prices are expressed in terms of Pips. Pips can be defined as “percentage in points” and are mostly the fourth decimal point i.e. 1/100th of 1%. A pip can also be defined as the smallest value at which an exchange of currency can take place.

Stop Loss Order

Stop/loss commands allow the investors to set an exit point for a loss. By limiting your losses to a pre set position, Stop/loss orders help investors control their risk conditions. 'Stop-loss' can lower an investor's exposure to risk by a large proportion.

Forex News Trading: The latest marketing wizardry in the forex market

2008-03-18T06:06:00.001-07:00

Welcome to “Shoot-out in Main Street”

(also called “Hop-a-long Cassidy and Forex Kid live at EST 08:30”)

I want to explain to you how so-called News Trading is the latest method devised by the marketing wizards to take your money.

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 ...
The following is a visual representation of what happened with that release:
Fig 1: Shoot-out on FX Street

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.)
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.
Next time
Love them, hate them but don't mess with them: My take on forex brokers.
Kind regardsDirk D. du Toit
DrForex is the author of the highly acclaimed "Bird Watching in Lion Country - Retail Forex Trading Explained" ebook, available now. Read more here or read some reviews here

How to Save Yourself from Forex Scam

2008-03-18T06:02:00.000-07:00

Forex trading is one of the best home based online business opportunity you can find today. The Big Sharks know that and use the demand for information about Forex market to get every possible dollar in their hands.
Who are they? The answer is always easy - Follow the Money. There is one player on currency market (and in every other market) who never loses his share in every single trade. Brokerage service on Forex trading is claimed to be commission free, right? But you always pay your minimum 3 to 10 pips fee on each trade. Where those 3 to 10 pips go? Make your best guess!
There is almost no chance for a person who has no idea for the forces driving the Info market to save himself from being robbed and abused by those well advertised money machines. You can see their banners on your e-mail provider. You can watch their infomercials on every TV channel.
Be aware about the presence of those Big Sharks and be sure that the information they will try to sell to you is always available for free online. Most of the time the quality and the real value of that free information is much better than the one you will be asked to pay for.
Here is the story of a good friend of mine. He was very excited about Forex when he first time heard about it. That happened to be on one of those popular free seminars, organized by one of the Big Sharks on that field. So he got the bite without paying attention for the hook in it. He went to the next level - two days training for $1,995, only.
He came back more excited. He opened Forex trading account on that seminar, using a special form provided by the Big Shark Company. They honestly declared that by doing that the broker agrees to pay them one pip from each trade made by the customer recruited by them.
My friend started real trading, constantly increasing the amount of his investment until he put all of his savings into that Forex trading account. Everything was fine until one beautiful day of October. On that day he got the news: his broker filed under chapter 11.
He was broke. I asked him how successful was his trading? His answer was that he actually lost 30% of his investment, from trading, only. He was able to realize know that the training was completely inefficient and not even close enough to start trading with real money.
Something big was missing here. He was missing the big picture in the entire game. His trading experience was very frustrating. After each trade he felt like just hit the wall with a car flying with 100 miles per hour.
A few days ago my friend called me on the phone. He was very enthusiastic about a new Forex training package, just delivered to him. I decided to check it by myself, too.
The package is very detailed. All the missing information about the big picture is there. More than 20 hours of free videos are revealing all you need to know about that business. Zooming towards Forex trading is very smooth and on the level every beginner and advanced trader will tremendously benefit of.
The one unbeatable and shocking advantage of this package is that it delivers information, priced from between $3,000 and $10,000, for free.
Finally we got something valuable about Forex trading, very professionally developed, for free.
Probably, that will put the Big Sharks business on hold for awhile, for the good sake to all of us.
So, be careful and keep an eye on the Internet unlimited free resources if you want to self yourself from the Forex scam.
Happy Forex trading!
by Teo Gee

Why Trade the Forex Market

2008-03-18T05:59:00.000-07:00

Trading the Forex market has become very popular in the last
years. Technology advances like the internet have spawned
this new trading craze, where anyone with a secure internet
connection prepared to undertake a small amount of training
can engage in trading foreign exchange on the forex market.
Before the Internet, only corporations and wealthy individuals
could trade currencies in the Forex market through the use of
proprietary trading systems of banks, often through private
banking.
The foreign exchange market is one of the largest in the world
if not the largest. It is more than 3 times larger than the stock
/equities market and more than 5 times bigger than futures,
give Forex traders nearly unlimited liquidity and flexibility.
It has been estimated that approximately $2 trillion USD of
currency exchanges hands each and every day.
The foreign currency markets are very liquid because
worldwide, the most powerful international banks provide
a market around the clock. The Global foreign exchange
market daily averages of the Bank for International
Settlements in 1998 were $660 billion and now have increased
to $2.3 trillion (2006).
There is really no insider information in the forex markets.
Since exchange rates are calculated by actual money flow as
well as by the outlook of financial flowage, which takes into
consideration such things as inflation, GDP changes, trade
and budget deficits and surpluses, as well as interest rates,
it would be difficult to come across so-called 'insider
information'. All of these factors are self-evident, though
different projected outlooks may prove more accurate
than others. There is less room for market manipulation
is there may be for thinly traded stocks.
A equally important property of forex market is the fact that
trends in forex market last longer and are more clearly
defined than in any other trading instrument. Analysis of
forex market charts also often displays identifiable chart
patterns of price movement and once a pattern is established,
the trend or pattern becomes the most probable course of
future price action until the market changes. Because the
FOREX market is so huge, there is no possibility of
someone controlling the market price for a long time. When
there are a lot of buyers and a lot of sellers, you can expect
to buy or sell at a price that is very close to the last market
price. The market maker in the forex market is usually a
bank or brokerage company that provides during the trading
day a bid and ask price. Example of forex market makers
include CMS Forex, GFS, Forex, Forex Capital Markets
(FXCM), and Global Forex Trading, all of which are
regulated by the Commodity Futures Trading Commission
(CFTC) of the USA.
Brokers offer clients access to online FX trading system,
platform or software that can make it easy and fun to
trade the market and usually there are usually no
commission charges. With these trading systems and
platforms you can trade the forex markets for free
using the same state-of-the-art software packages that
professional Forex traders use to help them make
real-time, live currency trades. So individuals with
a few hundreds of their own currency hope to buy
and sell something for a smiling profit. Speculators
trade to make a profit by purchasing one currency
and simultaneously selling another.
In conclusion I think the FOREX market is one of the
best investment opportunities around today. There
are great opportunities in the FOREX market because
of the constant movements of the exchange rates. There
is no surprise that more and more traders are turning
to the foreign currency market to take advantage of
the fluctuation in exchange currency rates as a way to
speculate and trade to increase their capital and wealth