Forex Market Timing – you Don’t Need to be Accurate to Make Huge Gains

January 26, 2010 – 12:01 pm

If you want to win at trading currencies correct forex market timing is needed but if you try and be too precise you will lose. This may sound strange at first but if you look at how forex prices move it will become clearer.

1. When novice traders think of market timing they are dominated by two major thoughts:

Predicting market tops and bottoms

It’s very tempting to do this as you want to be in at the best possible price with your forex trading strategy but you cannot predict in advance why?

Because if you then you are simply hoping and guessing a level will hold and that wont get you anywhere in life and certainly wont give you currency trading success. Let me give you an example:

A forex trader sees prices moving to a support level and buys just above it hoping it will hold – but instead the price carries on towards support, goes through the level and stops him out.

What he should have done is confirmed that the level was going to hold (we will go through how to do this in a minute) but first lets look at another commonly held belief related to the above.

2. Buy low sell high

You will have heard this is the way to make money in investing – but it’s again relying on hoping and guessing which we know will not help us win and also means you will miss the major forex trends and not get in with your forex trading signal – Why?

It’s a fact that most new trends (and the strongest) develop from new market highs o and you can check this on any forex chart. Traders who wait hoping to get into the market at a better price, simply see the trend disappear over the horizon and they don’t make any profits from it.

The Solution

Is to base your forex trading strategy on confirming if level will hold or break with momentum oscillators. If you don’t know what they are its time to learn.

We don’t have time to cover them here – but they are covered in our other articles and will give you advance warning of changes in velocity of price.

If a price is dropping to support – wait for a turn to be confirmed by these indicators.

You will miss the exact turn but you can’t see that in advance anyway, so there is no point in trying and if you trade with momentum on your side the odds are in your favour.

The same technique is used when a market breakout to new highs or lows – if momentum supports the move execute your trading signal and go with the break.

Trading the Odds

In both of the above examples you have not got in at the lowest or best price but what you have done is, got in at the lowest or best price with the odds on your side and traded the reality.

Perfection and perfect timing is a myth, no one can do it and the best way is to trade the reality when you use a forex trading system and that means confirming ALL moves are going your way before trading.

Keep in mind if you get just 50% of every major trend you would be very rich. If you want to learn currency exchange the right way you will realise perfection is impossible.

Forex trading is about making money not trying to be clever and it’s about trading high odds moves and then means waiting for confirmation.

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The History of Forex- – Why Trading on This Market is Extremely Profitable

January 25, 2010 – 10:59 pm

The history of Forex started as early as the civilization of Babylonians, though no one can really predict the exact date the foreign exchange started. Other historians say that the history of forex may have started the same time the human history flourished. This may due to the fact that goods in the old days were exchanged using all kinds of valuable things or goods. This system was then called the barter system – a system where in traders are allowed to use other means of trading, like the use of precious metals, stones and even teeth and bones of humans. As the civilizations become modern, gold, silver and other precious stones are accepted in the trading process. This is due to the fact that stones and other form of gems are extremely easy to store and they have the capacity to be stored for a very long period of time.

In the beginning of the Roman Regime, the Roman people have initially introduced the use of gold coin as one way of making foreign exchange transactions and this has really revolutionized the trading during those times. The history of Forex shows that traders who came from Arab countries and other parts of the globe has expressed wide acceptance of the gold coins which were first introduced by the Roman people and this has eventually created the elementary international monetary system – currency system which was accepted all over the world.

As the world becomes more civilized, the use of paper money are generally encouraged for easy and fast banking transactions among traders all over the world. However, it is the modernizations of global trading in different major economies that have greatly shaped the history of Forex trading in the Forex market all over the world.

One point in the history of forex, a large number of traders realized that using the paper currencies are more advantageous compared to the use of coins and precious metals when it comes to trading. Because of this major governments have finally approved the use of bills. This progress in the history of forex happened sometime around 1816 to 1933 and this is known as the gold standard. Because during this time in the history of Forex, though paper currency are already widely accepted, gold are still used as back up for the paper currencies. Also around this time in the history of forex, gold are accepted as money which can also be exchanged with other precious metal or stones. Gold has become the leading form of reserve that can be used to trade locally as well as globally.

The gold standard was greatly supported by most Central Banks all over the world just before the First World War started, because of the fact that gold has the capacity to be exchanged with any paper currencies that was currently used by any country all over the world. However, the use of gold as the means for trading was not all good because a lot of people have used this in a disastrous manner. It is when they announced that they will convert the gold to mass; this has eventually created confusion and panic among the traders. This mixture of large number of paper money with no gold to cover it as reserve is the perfect recipe for the economic devastation and political insecurity.

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Fundamentals of Forex and Forex Market

January 25, 2010 – 9:57 am

Forex stands for Foreign Exchange Market. It denotes a marketplace which is marked for its geographical dispersion. Often abbreviated as FX, Forex is a potential platform where currencies from all over the world are bought and sold for earning substantial profits. Forex market is not sheltered in any particular place and of course free from external controls. The investors or the participants of the market are real players in forex, who in many ways responsible for accelerating the market and its growth.

The forex is open for all. It welcomes investors of all sizes and income level. Thus anyone with a lust for trading and with a sound knowledge of forex market can participate in investing to gain profit.

The transaction at forex can take place anytime from anywhere in the world. The market is busy and remains alert 24 hours except weekends. While trading in forex market, you can either decide to trade your own money or you can opt for a broker, who will trade the same on behalf of you. In both the cases, it is suggested to take a strong stance of your self. If you are participating in the forex, its better to move with a strategy knowing every latest updates about forex market and your currency. Now if you are moving with a broker, wait and watch. Let him do the job but keep yourself updated about the activities.

Forex traders need to analyze the market at first for the market involves certain calculated risks. Now while analyzing the market, traders can mull over two important aspects namely technical analysis and fundamental analysis. Technical analysis is the interpretation of facts and data based on the data generated by the market. Fundamental analysis seeks to trace out the factors and conditions which influence the market economy and play a pivotal role in altering opinions. Several economic, political, social events affect the forex and its workings. A perfect trader in forex is one who can understand these factors and feel the pulse of the market before striking gold.

Forex is beneficial provided you trade well. It can give substantial profit within a short time frame or in a long run. The whole process of forex revolves around the situation of market, value of currency and of course ideas of investors

Forex traders need to analyze the Forex market at first for the market involves certain calculated risks. The forex is open for all. It welcomes investors of all sizes and income level.

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The Forex Market…Who Are The Players?

January 23, 2010 – 7:50 pm

The Forex Market is huge. Everyone says that, but it is difficult to understand the sheer scope of it. Over 3 trillion dollars traded everyday. That is an obscene amount of money. it belongs more in the realm of fantasy than in real life. The Forex market is also the largest when we talk about average daily turnover per trader. All this is even more impressive when you factor in the fact that there are more players in the Forex Market than any other in world. So, who are these fellas? Well, in general, we will go over some of the majors.

Let’s start with the Banks. You didn’t think they only did saving and lending, did you? It’s a wonder we still call them banks. They are involved in all kinds of things these days. Banks are one of the major leaguers in Forex. Some banks trade several billions of cold hard cash…well electronically mostly…everyday. They sometimes enter trades for clients, but the bulk of it is self-motivated. Commercial Companies are not quite as affluent as the banks. Nevertheless, they do their fair share. Sometimes, they generate enough volume to impact the direction of exchange rates. Central Banks are quite powerful as members of the Foreign Exchange Market. They have significant abilities to influence currency supply, interest rates etc. Central banks for countries have “ideas” about how much theur currency should be worth. If things go too far against them, they can take some action to try and influence the markets e.g. by using currency reserves to trade in huge volumes to raise the value of a currency. There’s a lot of this “intervention” going on now that we have a global recession. They are a sinister group.

We then have the Investment Management Firms. They basically pool a bunch of client finances together and play the market in some way. They tend to use the Forex Market to gain access to foreign Exchange, perhaps to purchase assets in another country. Since this sort of investment happens a lot, they do contribute significant volume to the trades. Think Bernie Madoff…or maybe not, since it turned out he wasn’t really doing much investing after all. Then you have Retail Forex Brokers. These are the good folks you open your Forex trading Account with, and who take the opposite position to you when you enter a trade. Lovely guys. They vary greatly in size and volume of trade, but together contribute something like 2% to market volume.

Then you have me, the little individual Forex Retail Trader. A mere drop in an ocean. We barely make a dent on volumes. Apparently, 95% of us trade at a loss. However, we are a relentless bunch. Most of us realize that the opportunity to get involved can be leveraged to make good profits. We may not have the volume, but we don’t care. We are the new kid at school, finally given the opportunity to make something of ourselves.

There’s room for everyone here. Just know your place.

Donald Ogilve is a Part-Time Forex Trader. To learn more about making money Forex Trading an hour a day visit Donald Ogilve’s Blog at ForexInitiate.com.

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Important Factors Of Forex Market

January 23, 2010 – 6:48 am

Foreign Exchange is the largest market in the world, with volumes close to 2 billion dollars a day.

Listing Rules Of Forex:
Currencies are traded in pairs, the first currency (Listed on left) is recognized as the base currency, while second currency is called compensation.

The quotations are using a five-digit numbers whose last decimal represents a dixmillieme the value of the currency. Dixmillième This is called a “Point” or “Pip” …

For example: For the pair Eur Usd there is a “Pip” difference between 1.2512 and 1.2513 …

The Spread:
Unlike the stock market, there is no commission. “Spread” is applied between the purchase price and the selling price.Spread of the value can vary, depending on the pairs, the size of your account and the brokers.Spread usually performed from 2 to 10 pips .

Margin:
The forex trade is uncovered by hiring a stake in the form of “Lots”.The “margin” or minimum coverage required for 1 lot of EurUsd among Coutier utilser Metatrader platform is $ 1,000 …

A price change of currency 1 pip on EurUsd parity, leads to a gain or a loss of $ 10 .0.01 for batch, the gain or loss is 0.1 per pip.If the margin account is insufficient, some brokers automatically close all or part of the current position .Some other close all or part of the current position on negative equity.

Equity is the net asset value of the account .
Dynamics of Forex:
Financial analysis:

The currency market is influenced by changes in interest rates applied to each of them by the central banks of each country …

These same rates are under the direct influence of macro-economic statistics, the most important are those from the USA …

Technical Analysis:

The practice of trading in this market shows that it is also strongly influenced by notable figures associated with fondametaux of technical analysis …

Pivots Point – Thresholds and resistance – Fibonacci etc.

Dangers Of Forex Market:

1.Very strong potential volatility .

2.It is essential to test your strategies before going virtual to reality!

3.Profitable trading is done with the money market!

4.Major advantage in forexyou won’t get bif loss.

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I am a Forex Trader.I love currency trading.

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How To Make A Killing On The Forex Market

January 22, 2010 – 6:45 pm

Trading on the foreign exchange market is tough. There are thousands, if not millions of people competing neck to neck in the largest marketplace in the world, each one vying for a piece of the $1.9 trillion pie that passes through forex each day. It’s no surprise to anyone that a lot of traders fall by the wayside, victims of over-eagerness, misinformation, or plain ignorance.
You will need a lot of hard-edged discipline, patience and perseverance to get a foothold into the dizzying world of forex, and to do so, the first most important thing to do is to get a solid education on the foreign exchange market.

As with every investment you make, the rule of thumb is to know everything there is to know before plunking down your hard-earned cash. The foreign exchange market is an ever-changing, ever-evolving environment subject to the whims of world events and various other factors. It is very important to learn the basics of the forex market before venturing out to brave its 24/7 freeway traffic.

While you may think that the only way to make a killing in the forex market is to have a degree in finance and years of experience in trading, this is not true at all. With the advent of online forex trading, the foreign exchange market has become accessible to anyone who aspires trade foreign currency, and make a huge profit at the same time.

To make any headway in the forex market, you will first have to learn the basics of the industry. There are very specific terminology, such as “bid price” and “ask price”, “pips” and “spread” that you will do well to learn about to make it easier for you to trade.

You will need a deeper understanding about how the foreign exchange market works, what factors affect currency movements, which currencies are the most popular and most viable to trade, and how you can make a profit by ensuring you get a wide spread margin from the trades you make.

You can get all these information from a great number of sources. On the Internet, you can download e-books or read up on the foreign exchange market in various websites dedicated to the purpose. There are forex reviews that you can browse through, as well as trading forums which will give you the benefit of interaction and information exchange with many like-minded traders. You can also opt to hire a forex broker to advise you, or get a mentor in the person of an experienced forex trader.

There are a lot of risks to be faced when entering into the world of the forex market. In fact, 95% of all traders lose heavily on a regular basis. Apart from getting a solid forex background, the key to trading on the foreign exchange market is patience, discipline, and perseverance. There will be periods of time when it seems that all your trading decisions end up in losses. However, if you keep your eye on the ball and focus on long-term profit, you won’t end up as frustrated as when you expect profitable results immediately.

Good traders don’t let their emotions get the better of them, as it so commonly occurs when big amounts of money are involved. Instead, they exercise extraordinary discipline in managing their financial investments, monitoring the market and keeping their eye on factors that affect currency movements. This way, they are able to make the right trading decisions to minimize their losses while maximizing their profits.

You too can make a success of it in the forex market. All it takes is the determination to learn everything you can, the patience to use that knowledge when the right moment comes, and the discipline to be consistent about employing strategies that work.

Want to learn how to make serious forex trading every single day?

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Currency Trading – Are You Really Into Forex Day Trading?

January 22, 2010 – 5:42 am

There are many ways to trade the forex market and forex day trading is one of them. Although it is gaining popularity, forex day trading or forex scalping as it is more commonly called, is one of the more risky way to trade the currency market. It is a high paced game and requires a different skill set as compared to other forms of forex investments.

If you’re the type who likes the excitement and high adrenalin game of trading, forex day trading could be the one for you. It may even be more profitable than long term forex trading. This is because you can do more trades per day and assuming you are able to consistently make some profits from most of the trades, your profitability can actually be higher than that of long term traders.

Another advantage of day trading is you do not have to worry about holding the trades overnight. You will close all your trades at the end of each day and if something happens that will affect the currency of certain country over the weekends, you can still sleep in peace. On the other hand, the long term forex investor will be pouring cold sweat while waiting for the forex market to open.

Having said that, I must emphasize that forex day trading is not a bed of roses. It is a fact that more than 80% of forex day traders end up losing money. One of the reason is due to the high risk involved. Another is these traders are in the market to make quick buck and did not make an effort to do the necessary forex training to be a successful day trader.

In additoin, many of the day traders are trading on borrowed money. They have high leverage against their trading account. If they risk too much on one trade and if the trade went awry, it could potentially wipe out all their previous gains and they could end up in massive debt. The risk can be minimized if a day trader put in effort to master the skills of forex day trading.

If you are keen on day trading, you can try it out, but do it with care. There are many successful day traders who take the time and effort to create a successful forex trading system that is able to make them consistent profits day in and day out. If you find that you do not have the time and energy for day trading, you should explore other forms of forex trading that suits you as there is plenty of money to be made in the currency market.

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The author, Daniel Su, is the founder of http://www.ForexTradingPower.com where you can get free premium forex trading tips and resources.

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The World And The Forex Market

January 21, 2010 – 4:39 pm

It is possible to day trade currencies along with trading stocks. In case you have ever wondered how the foreign exchange market, or Forex, works, here is an overview of some of the markets basic features:

First and foremost there are the foreign exchange rates, which is the proportional value of two currencies. To be more specific, it’s the required quantity of one particular currency to sell or buy a unit of another currency. There are two methods used to express a foreign exchange rate. The most common method would express the amount of foreign currency that is needed to buy one U.S. dollar. For instance, if a foreign exchange quote expressed as USD/CND at 1.4300, this means that one U.S. dollar can be exchanged for 1.43 Canadian dollars, and vise versa. The second method is when the foreign exchange rate is expressed under the terms that the USD amount can be exchanged for one unit of a foreign currency. For instance, if a quote of CND/USD at 0.6700 means that one Canadian dollar can be exchanged for the same 0.6700 USD. When the USD is not used to convey an exchange rate, then the “cross rate” term is used to convey the proportional values between the two currencies. For instance, if the quote is DEM/SFR at .7000, this means that on German Mark can be exchanged for only .7 Swiss Francs.

Basis points are normally when the foreign exchange rate is expressed by a whole number followed by four decimal points. For example, 0.0001 is called a basis point. Therefore, if an exchange rate rises from 1.4550 to 1.4590, then the currency is said to have changed by 40 basis points.

The Forex market is used to invest in other countries or even to buy foreign products. Sometimes individuals or firms who wish to buy foreign currencies or products, may need to get hold of some of the currency, beforehand, from the country in which they wish to do business with. Also, the exporters may require payment for services or goods in their own currency, or in USD, which is accepted throughout the world.

In the Forex market, a majority of selling and buying of foreign currencies throughout the world is taken place, mostly by the large commercial banks, who are the major traders in the Forex market. With five major institutions based throughout the world in New York, London, Frankfurt, Zurich and Tokyo, the Forex market is considered the largest financial market in the world by far, with the multitude of trading volumes exceeding 1.5 trillion USD on most days.

The foreign exchange spreads are when the exchange rates in the Forex market are cited as a two-tier “bid” or “ask” rate. For instance, when a USD and a DEM is cited as 1.6000/15, the Forex trader who cites this exchange rate is agreeing to buy the DEM’s at 1.6000 and sell them at 1.6015. The “spread” is the actual difference between cites of purchase and cites of sale and also illustrates the profit expected from the transaction for the Forex trader. The “spread” may vary comprehensively on any specific currency; all depending on the currency’s strength or weakness, and even it’s past history or prospective volatility.

Forex traders who consist primarily of world wide network interbank traders are connected together by computers and telephone lines and are constantly negotiating prices among one another. These artful negotiations normally ensue in a market bid, or asking price, for a specific currency that is then introduced continuously into computers to be displayed on official quote screens. When the Forex exchange rates are quoted between banks, this is called “Interbank Rates.”

Many individuals may not be able to get hold of some foreign currencies at Forex rates unless they become licensed traders through Forex. Instead, those individuals may be able to come across foreign currency through a commercial bank, which may charge the individuals with either a commission or a higher spread than those reigning in the Forex market. Sometimes these commercial banks will even charge individuals both commission and higher spread as to enable the bank to make a reasonable profit from the transaction.

The world is big and so is the world of the Forex market.

David Mclauchlan has a great variety of Forex related articles for you at his Forex Directory. Visit it now at http://www.Forex-Article-Directory.com
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Forex Markets – the Perils of Online News Sources

January 21, 2010 – 3:51 am

Forex markets are exciting and with the rise of the Internet, we’ve seen a huge rise in the amount of news available all at the click of a mouse.

However, despite all the advances in communications – and the quantity of news available, the ratio of winners to losers remains the same in the Forex markets:

90% of traders lose money, which may seem a starting fact as more information is seen by many as a key to success

Online currency traders think the news helps them – however, in most cases the news ensures they lose money – for the following reasons:

1. News is discounted by the forex markets in seconds.

All the news is discounted by the markets quickly, in today’s world of instant communications.

If you want to trade profitably, then you need to simply ignore the news.

Markets move on how investors perceive the future and for this you need to study human nature or trader psychology.

Technical analysis is the way to do this; a simple equation will make this clearer:

Supply and demand (Fundamentals) + Investor Perception (human perception) = Price

Humans decide the value of any investment market and that includes currencies.

By studying forex charts, you are seeing the complete picture – and keep in mind investor psychology is constant and shows up in repetitive price trends that you can profit from.

2. They’re stories that’s all

When trading forex markets, online currency news is convincing, but their stories and they won’t help you make money.

The financial writers are knowledgeable and of course they can explain everything in hindsight – but they’re not traders.

If you listened to the news, you could have bought at the top of the market in 1987 – and the tech bubble of the 1990’s.

All the news claimed the market would go on forever, but what happened next? Prices dropped like a stone causing huge losses.

Any market is most bullish at market tops, and most bearish at market bottoms, so listening to currency news will simply damage your online currency trading success.

3. Financial news and emotions

The biggest mistake any FX trader can make is letting his emotions dictate his trading.

If you want to win, then you need to remain disciplined with the execution of your forex trading strategy.

It makes us feel comfortable to go with the news and the consensus opinion but in trading, this is a bad trait to have.

If you feel comfortable, you will not make money.

In trading, you need to stay disciplined and isolated.

Remember, the majority of traders are wrong! – and they listen to, and trade with the news.

Use a technical system – and try to ignore the news and focus on the reality of price.

In the Forex markets, this will enable you to stay detached, unemotional and disciplined and help you achieve currency-trading success while others fail.

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Forex Market – An Expression Of Opinion Of Foreign Economies

January 20, 2010 – 3:35 pm

Trading currency online is happening literally 24 hours a day, with money exchanging hands almost constantly, to the tune of roughly $2 trillion a day. In comparison to the $20 billion average day of the stock market, the Forex market is without question much larger.


The biggest difference is that on the Forex market there isn’t any tangible material that is being bought or sold. There are also no certificates being issued to show how much an individual owns of another country’s money.


What is Forex Trading


In the Forex market all the trades are performed electronically and the currencies are traded in pairs, such as the US dollar being paired with the UK’s Euro. A trade primarily consists of trading a specific amount of USD/EURO for currency pairs from two other countries contained within one transaction.


There are also no brokerage fees involved for buying and selling on the Forex market with broker earning their money on the difference between the bid/sell/buy price (ie – the spread) of the currency at the time the trade is completed.


On the Forex market, a buyer of any particular currency pair is basically indicating their confidence in the economy of that particular country. If the economy improves after a buy is completed, and the value of their currency also improves corresponding to the value of other countries, the investment of the buyer increases in value as well. On the other side of that coin, if that particular economy falls, the value of the currency will also decrease on the open market.


Precise Projections Can Improve Profit Position


One of the primary keys to success in the fourth market is being capable of projecting what the economy in any one particular country is going to do in the short term. The majority of individuals trading on the Forex market are not in it for the long haul like they might be in the stock market. Many people use little indicators that predict the country’s economy will get better or get worse and will execute their trades accordingly.


Only until recent times the Forex market was open only to just a select few that very often made trades worth many millions of dollars in multiple currencies. With the advent of the internet and online brokers average people have been given the opportunity with only a few hundred dollars to get in on the same type of action as the big spenders. Nevertheless, prior to anybody simply jumping in online and opening an account, they should be well-versed in the economies of the numerous different countries.


To become familiarized with the Forex market can seem somewhat intimidating at first, but in actuality so can the stock market to a beginner. It takes time and practice with play money and experience prior to a person getting involved in becoming comfortable with getting their own cash on a country’s economic future.

Listen to Corbin Newlyn as he shares his insights as an expert author and an avid writer in the field of finance. If you would like to learn more go to Forex advice and at Learn Forex Trading tips.

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