FOREX BOOKS

Many FOREX traders have at least one unique and creative idea of how to generate profits in the FOREX market. Unfortunately, few traders have the background and the skills required to translate their ideas into a profitable mechanical trading system. With the introduction of Automatic Alpha, traders finally have a resource that fully explains the complicated process of turning their creative ideas into profitable trading systems Automatic Alpha is a unique book: it provides a framework that describes the complete development of a mechanical trading system, as well as providing an actual trading system. Shortly after reading Automatic Alpha, the reader will have a profitable trading system as well as the skills required to build their own trading system using their own ideas.

Risk Investment

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

How to Read Forex Charts?

Our company provides you with an opportunity to engage in online Forex trading. It means you can monitor the real time market situation taking the advantage of the charts in our web-site, see section Live Trade. In our chart you can see the currency price when we entered the market shown as a red horizontal "entry" line and the current price highlighted with a grey "current" line.

There are three most commonly used types of charts: line chart, bar chart and candlestick chart.

We use the candlestick chart as it is the most popular and widely used chart type. A candlestick chart reveals things that are not visible on other charts. It gives comprehensive information about price on the market and thus helps better understand and predict future price moves.

Each bar of the chart is a candlestick known also as Japanese candlestick. Because of its appearance candlestick delivers more information than any other line or bar method.

Candlestick carries High, Low, Open and Close for the price at specific time and possesses a Body. A color and the size of the body supply traders with additional price details.

The major part of the candlestick, the body, represents a range between Open and Close prices.

When Open for the price is above Close, a candlestick body is filled (gold).

When Open for the price is below Close, a candlestick body is hollow.

One of the common set up which we are going to use for our charts is gold and white. So "gold" will stay for the filled candlestick giving a signal that the price has dropped and "white" will stay for hollow giving a signal that the price has gone up.

The "gold" and "white" candlesticks also describe two opposing forces on the market: buyers and sellers (also called bulls and bears). Bulls (buyers) are traders who push the price up and bears (sellers) pull price down. So the gold and white candlesticks show who is in control on the market at the time.

The size of the candlestick tells how strong buying or selling pressure is. A long big candlestick symbols of a strong market pressure (buying or selling), whereas a small size candlestick means that buyers and sellers are in consolidation and the pressure is weak.

Shadows (tails or wicks) of the candlestick reveal activity of buyers and sellers. The upper shadow shows activity of buyers towards pushing the price up. The lower shadow represents seller's activity pulling the price down. Long shadows occur during high activity coming from both sides - sellers and buyers - as they try to turn the price into their direction.

A small upper shadow plus a big lower shadow tells a trader that in the beginning sellers were dominant and forced the price down, but fell under the pressure of buyers at the end of the trading session.

A big upper shadow plus a small lower one indicates that at first buyers took over the trade and pushed the price up, but eventually forced to give up facing strong sellers' pressure.

A candlestick with no shadows indicated that buyers (in case of a white candle) or sellers (gold candle) were dominant during the whole trading session.

A candlestick that posses a small or no body and at the same time has small shadows indicates indecisiveness between buyers and sellers and a very little trading - a weak, slow trading market.

Doji candle has no or an extremely short body and long shadow(s). It is formed when buyers were unable to overcome sellers' pressure and push the price any further from an open point, and at the same time, sellers met strong buyers' pressure and also didn't succeed in their efforts to push the price down from the open point. The result is a draw: open price = close price.

The very first look at a newly opened chart usually gives traders a little or no clue what the market is currently doing. So the trader must reorganize a wavy indefinite graph into a very clear picture to be able to trade.

Analysis usually starts with defining the trend. The gold rule of trading says "Always trade with the trend" ... or at least try to.

What is a Managed Forex Account?

Many people are drawn to the Forex market due to high liquidity, 24 hour trading, low startup costs, and a number of other attractive reasons. However, some traders are unable to sufficiently learn or trade currency due to a conflicting full time job or other obligation. Also, many investors like to supplement their existing portfolio without having to learn a completely new market. This is where the "managed Forex account" comes in. A managed Forex account is an established live Forex account funded by the investor, and traded by a company or professional. This allows the investor a reasonable rate of return on an account he does not necessarily have to trade himself, and the opportunity to be a part of the largest market in the world.

There are obviously many up sides to a managed Forex account. The investor is able to achieve a steady rate of growth without having to spend all the necessary time and effort to trade the money himself. The Forex market is a very liquid market as well, giving the investor a much more flexible means of withdrawing funds from the managed Forex account. Also, trading currency allows profit potential in both rising and falling markets, giving the experienced money manager more opportunities to grow the investor's account.

Two of the major types of managed Forex accounts are those traded manually, and those traded by an automated trading software. Automated trading software automatically trades currency based on a hard coded set of rules. A coder will write the system and money management rules into a variety of programming languages to produce software that could provide a more regulated steady rate of return for the managed Forex account than the manual trader. This gives the ability of the company or professional to advertise a set rate of monthly (or yearly) growth.

As a managed Forex account seems like a very lucrative direction to take in the Forex market, some people may still be drawn away from it for a few select reasons. Usually, many commercial brokers and investment companies have a minimum for the account to be traded. These minimums are usually around $10,000, and prove a hefty starting cost to the average trader. Also, many of these companies can (and usually do) promise high returns. In spite of these statements, the majority charge a monthly management fee to your managed Forex account. If your monthly return is less than the standard monthly charge, your managed Forex account will be in the negative even though before the fee, you were positive.

Unlike other companies, the managed Forex accounts with Secure investment Inc. have no monthly charges for account management and no hidden fees. The minimum amount for investing on the managed Forex account with Secure investment Inc. is as low as 10 USD.

Managed Forex accounts can be an excellent way to grow a large account, or provide a steady rate of growth over a long period of time without the hassles and emotional swings of trading currency yourself. If the investor has both the capital and a reputable investment firm or professional, a managed Forex account could prove to be a great investment opportunity.

Forex scam

Forex scam
A forex scam is any trading scheme used to defraud individual traders by convincing them that they can expect to gain a high profit by trading in the foreign exchange market. Currency trading "has become the fraud du jour," according to Michael Dunn of the U.S. Commodity Futures Trading Commission.But "the market has long been plagued by swindlers preying on the gullible," according to the New York Times."The average individual foreign-exchange-trading victim loses about $15,000, according to CFTC records" according to The Wall Street Journal.The North American Securities Administrators Association says that "off-exchange forex trading by retail investors is at best extremely risky, and at worst, outright fraud."
“In a typical case, investors may be promised tens of thousands of dollars in profits in just a few weeks or months, with an initial investment of only $5,000. Often, the investor’s money is never actually placed in the market through a legitimate dealer, but simply diverted – stolen – for the personal benefit of the con artists.
The forex market is a zero-sum game meaning that whatever one trader gains, another loses, except that brokerage commissions and other transaction costs are subtracted from the results of all traders, technically making forex a "negative-sum" game.
These scams might include churning of customer accounts for the purpose of generating commissions, selling software that is supposed to guide the customer to large profits,improperly managed "managed accounts",false advertising,Ponzi schemes and outright fraud. It also refers to any retail forex broker who indicates that trading foreign exchange is a low risk, high profit investment.
The U.S. Commodity Futures Trading Commission (CFTC), which loosely regulates the foreign exchange market in the United States, has noted an increase in the amount of unscrupulous activity in the non-bank foreign exchange industry.
An official of the National Futures Association was quoted as saying, "Retail forex trading has increased dramatically over the past few years. Unfortunately, the amount of forex fraud has also increased dramatically..." Between 2001 and 2006 the U.S. Commodity Futures Trading Commission has prosecuted more than 80 cases involving the defrauding of more than 23,000 customers who lost $350 million. From 2001 to 2007, about 26,000 people lost $460 million in forex frauds.CNN quoted Godfried De Vidts, President of the Financial Markets Association, a European body, as saying, "Banks have a duty to protect their customers and they should make sure customers understand what they are doing. Now if people go online, on non-bank portals, how is this control being done?"

Forex Money Management

Forex money management is one of the most important things you can learn before you actually begin making live trades.The money management principles discussed here will teach you how to avoid the costly mistakes many new traders make, often to the degree that they lose their entire investment on the first handful of trades.Psychology is really the most important factor to money management in forex. You have to be able to separate yourself from any emotional attachment you may have to your money. This is not very easy to do, but it works and it can be done.If you allow yourself to become emotional on a trade, you will not exit the trade properly, and this could mean holding on to a trade when you should have let it go, or letting go before the trade had a chance to turn profitable.First and foremost, you should consider leverage and risk. It is advisable that you never risk more than two percent of your account balance on any trade. However, some go further and allow for as much as ten percent, but never more than that. This gives you the ability to withstand market fluctuations, and if the trade goes bad, you still have money to try again. You should never operate under the assumption that you will profit from every trade. You should also plan for losses. Therefore, most traders will tell you that the best thing to do is to keep your gains large and your losses small. Develop your trading strategy around this idea.Keep track of your gains and losses. Keeping accurate and detailed records of your account activity will allow you to see whether or not the strategy is working, or if it needs to be re-built.Never go blindly into trading without a way to keep track of results. You will lose all of your funds and never understand why it happened.Finally, it is highly advisable that you first practice a strategy on a demo account. Nearly all brokers offer a virtual account whereupon you make trades in real-time, but with imaginary money, so nothing is risked. This is the best way to test a strategy before you put your real money on the line.However, be careful, once again, of the psychology of trading. When you play with fake money, nothing is risked. When real money is on the line, you must not get emotional. If you do, you will find yourself with very different results, most likely losses, than you had with the demo account.

The dollar gained against the euro

The dollar gained against the euro and the yen as investors continued to worry about further danger for the economies of Europe and Japan.
The greenback rose against the 15-nation euro, which fell 0.6 cents, or about 0.5% to $1.275, but fell against the British pound, which rose 1.2 cents, or about 0.8%, to $1.452.
The dollar also advanced ¥1.33, or about 1.4%, to ¥94.76 against the Japanese yen.
Officials from the European Central Bank expressed concern for the euro-zone economy, according to Reuters.
European nations could face severe debt problems after implementing large economic stimulus packages, according to Jose Manuel Gonzalez-Paramo, a European Central Bank board member at a conference in Madrid.
ECB President Jean-Claude Trichet also expressed concern for the European economy, saying that without proper regulation, banks in the region risk damaging the euro zone's financial system as they sell off assets to reduce their exposure to debt, according to Reuters.
Investors are also worried about the euro zone's exposure to the economic crises in nearby countries and Eastern Europe, according to Jacob Oubina, currency strategist with Forex.com.
Europe has "massive exposure to emerging markets."
And because the euro-zone is a conglomeration of nations, the ECB may not have enough tools to right the euro-zone economy - if they need to buy bonds to support the region, it's not clear which bonds they should buy, Oubina added

Breaking Brokers News

OANDA Asia Pacific - regulated by the Monetary Authority of Singapore - is now open for business. // 04-10-2009OANDA Asia Pacific Pte. Ltd. was established to meet the growing need in Asia Pacific for ultra competitive spreads and consistent liquidity regardless of transaction size. We offer all our clients, starting from a single dollar, the same extremely tight spreads, instant execution and second-by-second interest payments.
ACM has Filed the Swiss Banking Licence Requisition // 04-10-2009
Broco:Stock schedule for Easter holiday // 04-10-2009Dear Customers! Easter holiday is venerated by our many Partners in the financial world. Therefore, a number of stock exchanges have a special schedule these days when the resurrection of Christ is celebrated by Christians of the world. Please carefully study this schedule and plan your work according to that.
Dukascopy TV - Forex Television // 04-09-2009Dukascopy is a prime broker for the first Decentralized Marketplace (SWFX - Swiss Forex Marketplace) that combines liquidity of centralized marketplaces and a number of banks.
M I G - EXPOS // 04-09-2009The Moscow Forex Expo 2009 Moscow, Russia - April 17-18, 2009 - - full details Asia Trader & Investor Convention Singapore - April 18th-19th -full details The Shorex Wealth Management Forum Singapore - April 28-29th - full details

Daily Forex Reviews

Forex Market Update: USD/JPY Eased Slightly As Recent Rallies Continue to Fail Ahead of 101.00 // 04-10-2009Early stop-loss hunting was the only notable activity in the Asian market Friday with much of the regional markets closed for holiday and with the European markets closed in the session ahead. USD-JPY pushed through stops at 100.58/60 in early Tokyo to trade to 100.72 highs and drift back as low as 100.22 on quick profit-taking. Similarly, the market went after EUR-USD stops under 1.3100 for a brief push to 1.3092 before a bounce back to 1.3133.
British Pound Testing Below Key Support Against US Dollar // 04-10-2009
All Eyes Point Toward Bank of England Language In Hours Before Meeting (Euro Open) // 04-09-2009Euro and Pound trading remained relatively flat in the hours prior to the rate announcement by the Bank of England. Despite expectations that the bank will keep the policy rate steady at 0.50%, investors will be looking for explicit language in the accompanying statement that indicates a policy shift towards that of the Federal Reserve’s massive $1.25 trillion quantitative easing program.

Partnership program

InstaForex Partnership program is a no-risk method of earning secure profit along with InstaForex. Forex-brokers earn on spreads, which clients pay when they open deals. You can earn part of the broker profits, if you become a partner and attract new clients.You can work by attracting clients, depending on your skills, and therefore you may choose one of three types of partnership program:- trader-partner- Webmaster-partner- Representative-partnerPartnership program general termsRegardless of the type of partnership chosen, you have access to the following:1) earning 1.5 point profit from the spread or 0.015% of the volume of each deal, depending on the account type. 2) a partnership link, which can be placed on a website or personal page 3) an opportunity to use any information from the InstaForex website and obtain advice on the running of the partnership program. Partnership program technologyThe idea of the partnership program is that any participant spreads information, one way or another, about the company to other people. When those people open accounts at the company, you earn profit with each deal made. There are two ways to record visitors. Either: - use a partnership link, where each visitor who links to us within a 6-month time period, automatically becomes your referral if an account is opened within that time period. - use a record system, where you’ll have to know the full name and trading account number of the client attracted. In order to turn the attracted client into a referral, you have to send an email to the following address, eng.partners@instaforex.com and mention the necessary information as well as give your partnership account number as well. Later you receive credit for the deals the client you attracted makes, as the trading account was opened through your partnership link. Partnership Program description typesTrader-partnerIf you are a real Forex market trader and would like to earn additional profit from the partnership program without any serious investment in that area, then this type of partnership is for you. You may spread information about the company among your friends and traders.It is not necessary to open each trading account using your partnership link, because you can use the record system to keep track of clients you attracted, just by keeping track of their full name, and account number. Webmaster-partnerIf you own website, a personal page, blog or any other web resource where you can display InstaForex company information or our website link, then you may become a participate in this type of partnership program. Regardless of how easy it is to use the record system for keeping track clients who open accounts, this type of partnership program implies that the main source of clients will be attracted through partnership resource links, which you place.Representative-partnerThis type or partnership program is for physical and legal parties in the American, Asian and Pasific regions, who are able to render representative services in their cities and towns. Representatives get significant interest rate from each deposit made to a trading account, which is made via their office/service, as their work includes not just work with clients, but also money transactions. Should you have significant interest in becoming a representative in the American, Asian and Pasific regions, then InstaForex guarantees an appreciable return for this type of partnership. Please send all questions dealing with participation in the partnership program to eng.partners@instaforex.com or to Yahoo messenger contact IFX.partners@yahoo.com

Understanding Forex Trading

The stock markets are complicated, but you can educate yourself. If you are interested in getting involved with the stock markets then one of the first things that you will want to learn about is Forex trading. The forex market is basically the foreign stock exchange. This is where parties purchase stocks in one currency by exchanging payment in a separate currency. Forex trading is done on one of the biggest financial markets in existence. Forex trading is done between corporations, large banks, and even different governments. Forex trading is particularly challenging because it trades in such large volumes, and it is trading things from a wide geographical area. One of the greatest things about forex trading is that you can trade 24 hours a day during the business week. Trading on any stock exchange can be a risk, and forex trading is just as risky. Though there are not typically as many losses as some of the ones found on the smaller markets they do still exist within forex trading. Additionally, given the larger volumes that are currently traded within forex trading there is the potential for investors and traders to pull down larger margins of profits from their trades.

An overview of the Forex market

The Forex market is a non-stop cash market where currencies of nations are traded, typically via brokers. Foreign currencies are constantly and simultaneously bought and sold across local and global markets and traders' investments increase or decrease in value based upon currency movements. Foreign exchange market conditions can change at any time in response to real-time events.

The main enticements of currency dealing to private investors and attractions for short-term Forex trading are:

• 24-hour trading, 5 days a week with non-stop access to global Forex dealers.
• An enormous liquid market making it easy to trade most currencies.
• Volatile markets offering profit opportunities.
• Standard instruments for controlling risk exposure.
• The ability to profit in rising or falling markets.
• Leveraged trading with low margin requirements.
• Many options for zero commission trading.

Forex trading examples

An investor has a margin deposit with Saxo Bank of USD 100,000.

The investor expects the US dollar to rise against the Swiss franc and therefore decides to buy USD 2,000,000 - 2% of his maximum possible exposure at a 1% margin Forex gearing.

The Saxo Bank dealer quotes him 1.5515-20. The investor buys USD at 1.5520.

Day 1: Buy USD 2,000,000 vs. CHF 1.5520 = Sell CHF 3,104,000.

Four days later, the dollar has actually risen to CHF 1.5745 and the investor decides to take his profit.

Upon his request, the Saxo Bank dealer quotes him 1.5745-50. The investor sells at 1.5745.

Day 5: Sell USD 2,000,000 vs. CHF 1.5745 = Buy CHF 3,149,000.

As the dollar side of the transaction involves a credit and a debit of USD 2,000,000, the investor's USD account will show no change. The CHF account will show a debit of CHF 3,104,000 and a credit of CHF 3,149,000. Due to the simplicity of the example and the short time horizon of the trade, we have disregarded the interest rate swap that would marginally alter the profit calculation.

This results in a profit of CHF 45,000 = approx. USD 28,600 = 28.6% profit on the deposit of USD 100,000.

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Example 2:

The investor follows the cross rate between the EUR and the Japanese yen. He believes that this market is headed for a fall. As he is not quite confident of this trade, he uses less of the leverage available on his deposit. He chooses to ask the dealer for a quote in EUR 1,000,000. This requires a margin of EUR 1,000,000 x 5% = EUR 10,000 = approx. USD 52,500 (EUR /USD 1.05).

The dealer quotes 112.05-10. The investor sells EUR at 112.05.

Day 1: Sell EUR 1,000,000 vs. JPY 112.05 = Buy JPY 112,050,000.

He protects his position with a stop-loss order to buy back the EUR at 112.60. Two days later, this stop is triggered as the EUR o strengthens short term in spite of the investor's expectations.

Day 3: Buy EUR 1,000,000 vs. JPY 112.60 = Sell JPY 112,600,000.

The EUR side involves a credit and a debit of EUR 1,000,000. Therefore, the EUR account shows no change. The JPY account is credited JPY 112.05m and debited JPY 112.6m for a loss of JPY 0.55m. Due to the simplicity of the example and the short time horizon of the trade, we have disregarded the interest rate swap that would marginally alter the loss calculation.

This results in a loss of JPY 0.55m = approx. USD 5,300 (USD/JPY 105) = 5.3% loss on the original deposit of USD 100,000.

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Example 3

The investor believes the Canadian dollar will strengthen against the US dollar. It is a long term view, so he takes a small position to allow for wider swings in the rate:

He asks Saxo Bank for a quote in USD 1,000,000 against the Canadian dollar. The dealer quotes 1.5390-95 and the investor sells USD at 1.5390. Selling USD is the equivalent of buying the Canadian dollar.

Day 1: Sell USD 1,000,000 vs. CAD 1.5390. He swaps the position out for two months receiving a forward rate of CAD 1.5357 = Buy CAD 1,535,700 for Day 61 due to the interest rate differential.

After a month, the desired move has occurred. The investor buys back the US dollars at 1.4880. He has to swap the position forward for a month to match the original sale. The forward rate is agreed at 1.4865.

Day 31: Buy USD 1,000,000 vs. CAD 1.4865 = Sell CAD 1,486,500 for Day 61.

Day 61: The two trades are settled and the trades go off the books. The profit secured on Day 31 can be used for margin purposes before Day 61.

The USD account receives a credit and debit of USD 1,000,000 and shows no change on the account. The CAD account is credited CAD 1,535,700 and debited CAD 1,486,500 for a profit of CAD 49,200 = approx. USD 33,100 = profit of 33.1% on the original deposit of USD 100,000.

WHAT IS FOREX?

The Foreign Exchange market, also referred to as the "FOREX" is the biggest and largest financial market in the world. It has a daily average turnover of US$1.9 trillion- just imagine that amount of money! Don't you want to join this trillion-dollar industry?FOREX is the simultaneous buying of one currency and selling of another. Currencies are traded in pairs, for example Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY). So basically, FOREX is trading.There are two reasons to buy and sell currencies. About 5% of daily turnover is from companies and governments that buy or sell products and services in a foreign country or must convert profits made in foreign currencies into their domestic currency.The other 95% is trading for profit, or what you call speculation. Investors frequently trade on information they believe to be superior and relevant, when in fact it is not and is fully discounted by the market.On one side of each speculative stock trade is a participant who believes he has superior information and on the other side is another participant who believes his information is superior.For speculators, the best trading opportunities are with the most commonly traded (and therefore most liquid- meaning its in cash or convertible to cash) currencies, called "the Majors." Today, more than 85% of all daily transactions involve trading of the Majors.A true 24-hour market, FOREX trading begins each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, London, and New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - real time- day or night.The FOREX market is considered an Over The Counter (OTC) or 'interbank' market. This is because the transactions are conducted between two counterparts over the telephone or via an electronic network. Trading is not centralized on an exchange compared to stocks and futures markets.

HOW TO START TRADING FROM FOREX?

The FX market, you buy or sell currencies. Placing a trade in the foreign exchange market is simple: the mechanics of a trade are very similar to those found in other markets (like the stock market), so if you have any experience in trading, you should be able to pick it up pretty quickly.The object of Forex trading is to exchange one currency for another in the expectation that the price will change, so that the currency you bought will increase in value compared to the one you sold.Example of making money by buying EurosTrader's Action EUR USD You purchase 10,000 euros at the EUR/USD exchange rate of 1.18Two weeks later, you exchange your 10,000 euros back into US dollars at the exchange rate of 1.2500.you earn a profit of $700. 0 +700EUR $10,000 x 1.18 = US $11,800EUR $10,000 x 1.25 = US $12,500An exchange rate is simply the ratio of one currency valued against another currency. For example, the USD/CHF exchange rate indicates how many U.S. dollars can purchase one Swiss franc, or how many Swiss francs you need to buy one U.S. dollar. How to Read an FX Quote Currencies are always quoted in pairs, such as GBP/USD or USD/JPY. The reason they are quoted in pairs is because in every foreign exchange transaction you are simultaneously buying one currency and selling another. Here is an example of a foreign exchange rate for the British pound versus the U.S. dollar:GBP/USD = 1.7500The first listed currency to the left of the slash ("/") is known as the base currency (in this example, the British pound), while the second one on the right is called the counter or quote currency (in this example, the U.S. dollar). When buying, the exchange rate tells you how much you have to pay in units of the quote currency to buy one unit of the base currency. In the example above, you have to pay 1.7500 U.S. dollar to buy 1 British pound. When selling, the exchange rate tells you how many units of the quote currency you get for selling one unit of the base currency. In the example above, you will receive 1.7500 U.S. dollars when you sell 1 British pound. The base currency is the “basis” for the buy or the sell. If you buy EUR/USD this simplymeans that you are buying the base currency and simultaneously selling the quote currency.You would buy the pair if you believe the base currency will appreciate (go up) relative to the quote currency. You would sell the pair if you think the base currency will depreciate (go down) relative to the quote currency.Long/ShortFirst, you should determine whether you want to buy or sell. If you want to buy (which actually means buy the base currency and sell the quote currency), you want the base currency to rise in value and then you would sell it back at a higher price. In trader's talk, this is called "going long" or taking a "long position". Just remember: long = buy.If you want to sell (which actually means sell the base currency and buy the quote currency), you want the base currency to fall in value and then you would buy it back at a lower price. This is called "going short" or taking a "short position". Short = sell. Bid/Ask SpreadAll Forex quotes include a two-way price, the bid and ask. The bid is always lower than the ask price. The bid is the price in which the dealer is willing to buy the base currency in exchange for the quote currency. This means the bid is the price at which you (as the trader) will sell. The ask is the price at which the dealer will sell the base currency in exchange for the quote currency. This means the ask is the price at which you will buy. The difference between the bid and the ask price is popularly known as the spread. Let's take a look at an example of a price quote taken from a trading platform:On this GBP/USD quote, the bid price is 1.7445 and the ask priceis 1.7449. Look at how this broker makes it so easy for you totrade away your money.If you want to sell GBP, you click "Sell" and you will sell poundsat 1.7445. If you want to buy GBP, you click "Buy" and you willbuy pounds at 1.7449.In the following examples, we're going to use fundamental analysis to help us decide whether to buy or sell a specific currency pair. If you always fell asleep during your economics class or just flat out skipped economics class, don’t worry! We will cover fundamental analysis in a later lesson. For right now, try to pretend you know what’s going on…EUR/USDIn this example Euro is the base currency and thus the “basis” for the buy/sell. If you believe that the US economy will continue to weaken, which is bad for the US dollar, you would execute a BUY EUR/USD order. By doing so you have bought euros in the expectation that they will rise versus the US dollar. if you believe that the US economy is strong and the euro will weaken against the US dollar you would execute a SELL EUR/USD order. By doing so you have sold Euros in the expectation that they will fall versus the US dollar.USD/JPYIn this example the US dollar is the base currency and thus the “basis” for the buy/sell. If you think that the Japanese government is going to weaken the Yen in order to help its export industry, you would execute a BUY USD/JPY order. By doing so you have bought U.S dollars in the expectation that they will rise versus the Japanese yen. If you believe that Japanese investors are pulling money out of U.S. financial markets and converting all their U.S. dollars back to Yen, and this will hurt the US dollar, you would execute a SELL USD/JPY order. By doing so you have sold U.S dollars in the expectation that they will depreciate against the Japanese yen.GBP/USDIn this example the GBP is the base currency and thus the “basis” for the buy/sell. If you think the British economy will continue to do better than the United States in terms of economic growth, you would execute a BUY GBP/USD order. By doing so you have bought pounds in the expectation that they will rise versus the US dollar. If you believe the British's economy is slowing while the United State's economy remains strong like bull, you would execute a SELL GBP/USD order. By doing so you have sold pounds in the expectation that they will depreciate against the US dollar.USD/CHFIn this example the USD is the base currency and thus the “basis” for the buy/sell. If you think the Swiss franc is overvalued, you would execute a BUY USD/CHF order. By doing so you have bought US dollars in the expectation that they will appreciate versus the Swiss Franc. If you believe that the US housing market bubble burst will hurt future economic growth, which will weaken the dollar, you would execute a SELL USD/CHF order. By doing so you have sold US dollars in the expectation that they will depreciate against the Swiss franc. I don't have enough money to buy $10,000 euros. Can I still trade?You can with margin trading! Margin trading is simply the term used for trading with borrowed capital. This is how you're able to open $10,000 or $100,000 positions with as little as $50 or $1,000. You can conduct relatively large transactions, very quickly and cheaply, with a small amount of initial capital. Margin trading in the foreign exchange market is quantified in “lots”. For now, just think of the term "lot" as the minimum amount of currency you have to buy. When you go to the grocery store and want to buy an egg, you can't just buy a single egg; they come in dozens or "lots" of 12. In Forex, it would be just as foolish to buy or sell $1 EUR, so they usually come in "lots" of $10,000 or $100,000 depending on the type of account you have.For Example:• You believe that signals in the market are indicating that the British Pound will go upagainst the US Dollar.• You open 1 lot ($100,000) for buying the Pound with a 1% margin at the price of1.5000 and wait for the exchange rate to climb. This means you now control $100,000worth of British Pound with $1,000. Your predictions come true and you decide tosell.• You close the position at 1.5050. You earn 50 pips or about $500. (A pip is thesmallest price movement available in a currency). So for an initial capital investmentof $1,000, you have made 50% return. Return equals your $500 profit divided by your$1,000 you risked to trade.Your Actions GBP USDYour MoneyYou buy 100,000 pounds at the GBP/USD exchangerate of 1.5000+100,000 -150,000 $1,000You blink for two seconds and the GBP/USDexchange rate rises to 1.5050 and you sell.-100,000 +150,500** $1,500You have earned a profit of $500. 0 +500When you decide to close a position, the deposit that you originally made is returned to you and a calculation of your profits or losses is done. This profit or loss is then credited to your account.We will also be discussing margin more in-depth in the next lesson, but hopefully you'reable to get a basic idea of how margin works.

WHAT IS PIP?

In the Forex market, prices are quoted in pips. Pip stands for "percentage in point" and is the fourth decimal point, which is 1/100th of 1%.In EUR/USD, a 3 pip spread is quoted as 1.2500/1.2503Among the major currencies, the only exception to that rule is the Japanese yen. In USD/JPY, the quotation is only taken out to two decimal points (i.e. to 1/100 th of yen, as opposed to 1/1000th with other major currencies).In USD/JPY, a 3 pip spread is quoted as 114.05/114.08The smallest price increment in a currency, so instead of a point like in stocks, in the forex market it is called a pip.

WANT TO BECOME A SUCCESSFUL FOREX TRADER??

Forex trading, or any trading for that matter, is an occupation that requires experience and the accumulation of proficiency not unlike any other highly skilled profession. Whether you are a leading executive at a major publically traded company, a professional golfer or trading from your kitchen table, there are 5 key ingredients that one must possess in order to become successful.1. You must be Passionate about what you do.As Forex traders we all face one unique set of circumstances that does not exist in any other profession. We get rewarded for when we succeed and equally punished when we don’t! Could you image a corporate worker one quarter receiving a significant accomplishment bonus and the next quarter actually getting money taken from their paycheck for missing performance targets? Not on your life! We do as Forex traders and that is why passion for what you do will carry you through the tough times that are part of your trading business. Asked yourself why you trade currencies and would you still do it if Forex were not potentially lucrative? Your answers will be quite revealing. You’ve got to feel your passion for trading!2. You have to Apply Yourself and work hard at it.I talk to so many people that enter into Forex trading with the aspiration of getting rich quick. Without putting the time and energy into really getting good at trading I see them jump from strategy to strategy looking for the goose that will lay the golden egg and eventually quitting while blaming everything else, except the true cause.I got news for you – you are the goose and your Forex education is the golden egg. The magic has always resided with the magician and not some strategy. Work hard at trading and the rewards will eventually come your way. Remember what Tiger Woods said, “Funny, the harder I work the luckier I get.” Apply yourself as a trader and it will be no accident when your account begins to blossom.3. You must Focus to really get good at what you do.Now here is the hurdle most Forex traders struggle to get over. You have the passion and you are applying yourself to your trade, now focus and really get good at just at what you are doing. Be the expert to the experts at just that one thing. Become the master of a strategy or risk management methodologies. Really focus on getting good at it.Stop jumping around or getting pulled from the last “latest and greatest” into the next “latest and greatest” and focus on one aspect of Forex trading and know it inside out. Know it strengths and weakness. Set your sights on becoming expert on just one aspect of trading and watch it spill over in all other aspects for your currency trading. This is the time to fail forward fast, use every setback as a learning opportunity that will propel you 3-steps ahead!4. You must Push Yourself beyond the point everyone else might have quite. In Forex Trading this is simple. Assume there is someone on the other side of your trade that is pushing themselves and sharpening their edge. To be successful you must you must do the same thing. Now is the time to examine your mental edge. Do you know the single most critical factor in any currency trade? It is you, the trader! Sharpening you mental edge is the most difficult aspect of trading, but also the most rewarding.Start with your Forex education and gain the self-awareness necessary to maximize your strengths and suppress your weaknesses. Any expert will tell you that trading is 80% mental. It’s time to sharpen your trading to the razor’s edge and you do this through Forex education. A constant and never ending process that will become the cornerstone of your Forex experience.5. You must, without wavering, be Determined and Persist to your objective.You will fail. I can state that emphatically. However, you will not be defeated unless you allow your failures to control your trading. It is the old adage; failure is not falling of your horse, failure is refusing to get back on. Your success depends on your ability to dismiss the criticism, rejection, self-doubt and pressures associated with Forex trading.Defining what is a winning trade, losing trade and bad trade will go a long way into developing you as a successful trader. Without the determination and persistence in all aspects of your trading life, obstacle will definitely appear closer and larger than they actually are.Take a moment and assess yourself and your trading. Do you have the key elements to succeed? Which areas are presents development opportunities? When conducting a self-evaluation it is critical to be totally upfront and honest with yourself. After all, you will only be dishonest with yourself. One of the most interesting observations you can make is that all key success factors are interwoven. One factor supports the other. This is why your Forex education is a continuous journey of forex strategy, money management and self-mastery. Set these factors as your Forex education goals and take your currency trading to new heights.

FOREX WORLD--BRIEF

Foreign Exchange (FOREX) is the arena where a nation's currency is exchanged for that of another. The foreign exchange market is the largest financial market in the world, with the equivalent of over $1.9 trillion changing hands daily; more than three times the aggregate amount of the US Equity and Treasury markets combined. Unlike other financial markets, the Forex market has no physical location and no central exchange. It operates through a global network of banks, corporations and individuals trading one currency for another. The lack of a physical exchange enables the Forex market to operate on a 24-hour basis, spanning from one zone to another in all the major financial centers.Forex is becoming more and more popular due to its availability over the internet and current high speed internet. Some people have made a living out of forex trading. Its not easy but we all have to start somewhere. Here there will be infomation on forex trading, forex brokers, forex signal, forex chart, technical study and fundamental study of forex and lots more.There will be other posters, other forex traders that will contribute article here. Come and learn to trade forex. See how easy it is actually to make money and to lose money as well.

FOREX--DEFINITIONS

Ask Price ¨C Sometimes called the Offer Price, this is the market price for traders to buy currencies. Ask Prices are shown on the right side of a quote ¨C e.g. EUR/USD 1.1965 / 68 ¨C means that one euro can be bought for 1.1968 UD dollars.Bar Chart ¨C A type of chart used in Technical Analysis. Each time division on the chart is displayed as a vertical bar which show the following information ¨C the top of the bar is the high price, the bottom of the bar is the low price, the horizontal line on the left of the bar shows the opening price and the horizontal line on the right of bar shows the closing price.Base Currency ¨C is the first currency in a currency pair. A quote shows how much the base currency is worth in the quote (second) currency. For example, in the quote - USD/JPY 112.13 ¨C US dollars are the base currency, with 1 US dollar being worth 112.13 Japanese yen.Bid Price ¨C is the price a trader can sell currencies. The Bid Price is shown on the left side of a quote - e.g. EUR/USD 1.1965 / 68 ¨C means that one euro can be sold for 1.1965 UD dollars.Bid/Ask Spread ¨C is the difference between the bid price and the ask price in any currency quotation. The spread represents the broker's fee, and varies from broker to broker.Broker ¨C the intermediary between buyer and seller. Most FOREX brokers are associated with large financial institutions and earn money by setting a spread between bid and ask prices.Candlestick Chart - A type of chart used in Technical Analysis. Each time division on the chart is displayed as a candlestick ¨C a red or green vertical bar with extensions above and below the candlestick body. The top of the extension shows the highest price for the chart division and the bottom of the extension shows the lowest price. Red candlesticks indicate a lower closing price than opening price, and green candlesticks indicate the price is rising.Cross Currency ¨C A currency pair that does not include US dollars ¨C e.g. EUR/GBP.Currency Pair ¨C Two currencies involved in a FOREX transaction ¨C e.g. EUR/USD.Economic Indicator ¨C A statistical report issued by governments or academic institutions indicating economic conditions within a country.First In First Out (FIFO) ¨C refers to the order open orders are liquidated. The first orders to be liquidated are the first that were opened.Foreign Exchange (FOREX, FX) ¨C Simultaneously buying one currency and selling another.Fundamental Analysis ¨C Analysis of political and economic conditions that can affect currency prices.Leverage or Margin ¨C The ratio of the value of a transaction to the required deposit. A common margin for FOREX trading is 100:1 ¨C you can trade currency worth 100 times the amount of your deposit.Limit Order ¨C An order to buy or sell when the price reaches a specified level.Lot ¨C The size of a FOREX transaction. Standard lots are worth about 100,000 US dollars.Major Currency ¨C The euro, German mark, Swiss franc, British pound, and the Japanese yen are the major currencies.Minor Currency ¨C The Canadian dollar, the Australian dollar, and the New Zealand dollar are the minor currencies.One Cancels the Other (OCO) ¨C Two orders placed simultaneously with instructions to cancel the second order on execution of the first.Open Position ¨C An active trade that has not been closed.Pips or Points ¨C The smallest unit a currency can be traded in.Quote Currency ¨C The second currency in a currency pair. In the currency pair USD/EUR the euro is the quote currency.Rollover ¨C Extending the settlement time of spot deals to the current delivery date. The cost of rollover is calculated using swap points based on interest rate differentials.Technical Analysis ¨C Analysis of historical market data to predict future movements in the market.Tick ¨C The minimum change in price.Transaction Cost ¨C The cost of a FOREX transaction ¨C typically the spread between bid and ask prices.Volatility ¨C A statistical measure indicating the tendency of sharp price movements within a period of tim

THE ADVANTAGE OF FOREX

There are many benefits and advantages to trading Forex. Here are just a few reasons whyso many people are choosing this market:• No commissions.No clearing fees, no exchange fees, no government fees, no brokerage fees. Brokers are compensated for their services through something called the bid-ask spread. • No middlemen.Spot currency trading eliminates the middlemen, and allows you to trade directly with the market responsible for the pricing on a particular currency pair.• No fixed lot size.In the futures markets, lot or contract sizes are determined by the exchanges. A standard-size contract for silver futures is 5000 ounces. In spot Forex, you determine your own lot size. This allows traders to participate with accounts as small as $250 (although we explain later why a $250 account is a bad idea).• Low transaction costs.The retail transaction cost (the bid/ask spread) is typically less than 0.1 percent under normal market conditions. At larger dealers, the spread could be as low as .07 percent. Of course this depends on your leverage and all will be explained later.• A 24-hour market.There is no waiting for the opening bell - from Sunday evening to Friday afternoon EST, the Forex market never sleeps. This is awesome for those who want to trade on a part-time basis, because you can choose when you want to trade--morning, noon or night.• No one can corner the market.The foreign exchange market is so huge and has so many participants that no single entity (not even a central bank) can control the market price for an extended period of time.• Leverage.In Forex trading, a small margin deposit can control a much larger total contract value. Leverage gives the trader the ability to make nice profits, and at the same time keep risk capital to a minimum. For example, Forex brokers offer 200 to 1 leverage, which means that a $50 dollar margin deposit would enable a trader to buy or sell $10,000 worth of currencies. Similarly, with $500 dollars, one could trade with $100,000 dollars and so on. But leverage is a double-edged sword. Without proper risk management, this high degree of leverage can lead to large losses as well as gains.• High Liquidity.Because the Forex Market is so enormous, it is also extremely liquid. This means that under normal market conditions, with a click of a mouse you can instantaneously buy and sell at will. You are never "stuck" in a trade. You can even set your online trading platform to automatically close your position at your desired profit level (a limit order), and/or close a trade if a trade is going against you (a stop loss order).• Free “Demo” Accounts, News, Charts, and Analysis.Most online Forex brokers offer 'demo' accounts to practice trading, along with breaking Forex news and charting services. All free! These are very valuable resources for “poor” and SMARTtraders who would like to hone their trading skills with 'play' money before opening a live trading account and risking real money.• “Mini” and “Micro” Trading:You would think that getting started as a currency trader would cost a ton of money. The fact is, compared to trading stocks, options or futures, it doesn't. Online Forex brokers offer "mini" and “micro” trading accounts, some with a minimum account deposit of $300 or less. Now we're not saying you should open an account with the bare minimum but it does makes Forex much more accessible to the average (poorer) individual who doesn't have a lot of start-up trading capital.