Why Hedge Foreign Currency Risk

International commerce has rapidly increased as the internet has provided a new and more transparent marketplace for individuals and entities alike to conduct international business and trading activities. Significant changes in the international economic and political landscape have led to uncertainty regarding the direction of foreign exchange rates. This uncertainty leads to volatility and the need for an effective vehicle to hedge foreign exchange rate risk and/or interest rate changes while, at the same time, effectively ensuring a future financial position.

Each entity and/or individual that has exposure to foreign exchange rate risk will have specific foreign exchange hedging needs and this website can not possibly cover every existing foreign exchange hedging situation. Therefore, we will cover the more common reasons that a foreign exchange hedge is placed and show you how to properly hedge foreign exchange rate risk.

Foreign Exchange Rate Risk Exposure - Foreign exchange rate risk exposure is common to virtually all who conduct international business and/or trading. Buying and/or selling of goods or services denominated in foreign currencies can immediately expose you to foreign exchange rate risk. If a firm price is quoted ahead of time for a contract using a foreign exchange rate that is deemed appropriate at the time the quote is given, the foreign exchange rate quote may not necessarily be appropriate at the time of the actual agreement or performance of the contract. Placing a foreign exchange hedge can help to manage this foreign exchange rate risk.

Interest Rate Risk Exposure - Interest rate exposure refers to the interest rate differential between the two countries' currencies in a foreign exchange contract. The interest rate differential is also roughly equal to the "carry" cost paid to hedge a forward or futures contract. As a side note, arbitragers are investors that take advantage when interest rate differentials between the foreign exchange spot rate and either the forward or futures contract are either to high or too low. In simplest terms, an arbitrager may sell when the carry cost he or she can collect is at a premium to the actual carry cost of the contract sold. Conversely, an arbitrager may buy when the carry cost he or she may pay is less than the actual carry cost of the contract bought. Either way, the arbitrager is looking to profit from a small price discrepancy due to interest rate differentials.

Foreign Investment / Stock Exposure - Foreign investing is considered by many investors as a way to either diversify an investment portfolio or seek a larger return on investment(s) in an economy believed to be growing at a faster pace than investment(s) in the respective domestic economy. Investing in foreign stocks automatically exposes the investor to foreign exchange rate risk and speculative risk. For example, an investor buys a particular amount of foreign currency (in exchange for domestic currency) in order to purchase shares of a foreign stock. The investor is now automatically exposed to two separate risks. First, the stock price may go either up or down and the investor is exposed to the speculative stock price risk. Second, the investor is exposed to foreign exchange rate risk because the foreign exchange rate may either appreciate or depreciate from the time the investor first purchased the foreign stock and the time the investor decides to exit the position and repatriates the currency (exchanges the foreign currency back to domestic currency). Therefore, even if a speculative profit is achieved because the foreign stock price rose, the investor could actually net lose money if devaluation of the foreign currency occurred while the investor was holding the foreign stock (and the devaluation amount was greater than the speculative profit). Placing a foreign exchange hedge can help to manage this foreign exchange rate risk.

Hedging Speculative Positions - Foreign currency traders utilize foreign exchange hedging to protect open positions against adverse moves in foreign exchange rates, and placing a foreign exchange hedge can help to manage foreign exchange rate risk. Speculative positions can be hedged via a number of foreign exchange hedging vehicles that can be used either alone or in combination to create entirely new foreign exchange hedging strategies.

Forex Swing Trading with Elliott Wave

When evaluating the forex market for swing trade opportunities the focus is placed on predicting directional changes or continuations for a given currency pair. For this we rely on technical analysis.

In technical analysis, just as in fundamental analysis, there are lagging indicators and leading indicators. One of the most reliable tools used to predict forex market swings is Elliott Wave analysis. Elliott Wave analysis can be used to identify trends and countertrends, trend continuation or exhaustion and to evaluate the potential price targets of a trend.

You can apply Elliott Wave analysis to both long and short position swing trade set ups for your currency pairs.

Elliott Wave theory is named after Ralph Nelson Elliott, who concluded that the markets moved in a repetitive pattern of waves. He attributed this action to the mass psychology of the market.

Elliott concluded that the market¡¯s movement was a direct result of the mass psychology of the time and that the stock market is a fractal. A fractal is an object that is similar in shape, but at different scales. A great example of a fractal in nature is a stalk of broccoli. The stalk and the individual branches look exactly the same; just the branches are smaller in scale.

Fractals just happen to form in accordance with Fibonacci ratios. Is this a coincidence?

Elliott attributes this mass psychological move to the human trait of herding. Even though Elliott¡¯s theories were based on stock market price movements, it has been applied to evaluating Presidential approval ratings and fashion trends changes as well.

The conclusion, the market price actions are not the cause of economic growth or slow down, but the reflection of the mass psychology of investors. If the mood of the investing public is upbeat then a bull market ensues. This is counter to what most individual perceive, that because there is a bull market the mood of the investing public is upbeat.

Elliott Wave patterns follow a sequence that the markets move up in a series of 3 waves and down in a series of 2 waves. This 3 wave impulse and 2 wave corrective sequence form the foundation of the 5 Wave impulse pattern (the opposite is true in a downtrend).

The Elliott Wave Counts are as follows;

Wave 1 - Short Covering
Wave 2 - Pullback from Short Covering
Wave 3 - Major Rally Phase
Wave 4 - Institution Pause in the Rally
Wave 5 - Retail Buying

Wave 1 is usually the weakest of the impulse waves. It is a brief rally based on short covering of the bears from a previous move down. When Wave 1 is complete, the currency pair sells off, creating Wave 2.

Wave 2 ends when the market fails to make new lows. You often see dominant reversals patterns form at the end of this wave signaling the being of the rally phase or Wave 3.

Wave 3 is the longest and strongest of the impulse waves. This signals strong currency buying or selling in the direction of the trend. This trend usually starts of slowly, but tends to accelerate as it breaks to new highs above the top of Wave 1.

Like any trend, especially a strong trend a correction will occur. Traders will begin to take profits and the currency pair will retrace. This signals the beginning of Wave 4.

Again the currency pair will rally ushering in the Wave 5 rally. Wave 5 is typically supported by the retail traders and not institutional buyers (the herd) and tends to lack the momentum generated in the Wave 3 rally. This creates divergence that can be easily measured on any technical oscillator. After the currency pair breaks to new highs above the previous Wave 3 high, the rally loses steam and changes trend.

This trend change can result in either a new 5 Wave impulse pattern or a corrective in nature.

Now that we know what the Elliott Wave analysis is, how would a currency trade using this analysis look like, just as an example?

Look to Wave 5 as the most reliably tradable impulse wave. The trade sets up as follows. Look for the Elliott Oscillator to pull back between 90% and 140% of the Wave 3 high on a daily chart. This pullback should correspond to a 38%-62% Fibonacci retracement from the Wave 2 extension. This signal is the strongest when the Fibonacci retracement is between 38% - 50%.

Like any technical analysis tool you never want to employ an indicator as a stand alone analysis tool. A trigger and a confirming indicator are required as well.

Look for a trigger in candle patterns, such as Harami, Tweezers or Harami cross. There are a variety of software packages on the market that perform Elliott Wave counts and have other entry signal indicators as well.

Draw a regression channel on the Wave 4 retracement and look for a break above or below the channel as confirmation to enter the trade.

Place stops at the high of the Wave 1 advance, just below the 38% Fibonacci retracement level or where your individual trading plan dictates. Trail your stops once the currency pair has advanced past the Wave 3 high. Look for reversal candle patterns like doji, hammers, shooting stars or hanging mans for signals that the wave is about to end or stall. A typical price target is 127% retracement of the Wave 4 low.

This is just a glimpse of how Elliott Wave analysis can be deployed to enhance your forex swing trade evaluations. Look more into the Elliott Wave theory and other strategies as tools for increasing your forex swing trade opportunities.

Timing is Everything With Forex Trading

The most challenging part of getting started with Forex trading is to learn this innovative way of trading. Many potential investors that try to navigate the Forex system unaided end up being frustrated and financially intimidated. There are very simple strategies to becoming successful using the foreign exchange trading system but the first step is gathering all of the necessary information surrounding this type of trading specialty. Securing a reliable Forex trading broker is likely the first and most pivotal step after learning the initial principles.

Unlike many types of trading and futures, foreign exchange trading is not designed to make the client rich quickly. Many people are frightened off by the word that Forex trading is a get rich quick scheme that in large part, doesn't work. This is a financial myth despite all the hype surrounding the foreign exchange trading system. There are steps and gains to be taken in order to secure a future in successful trading. Expect to dedicate a large portion of time to researching and understanding the market in general before setting out with your pocket book ready to invest. Learn all you can about the Forex market in the beginning in order to make the Forex trading path a smooth and triumphant one.

There is no doubt that there are numerous types of orders that can be utilized in order to open and close trades and becoming familiar with them is a must. In the foreign exchange trading business there are charts, graphs and other visuals to help you effectively analyze trends in currency trading. These charts and graphs will assist in making well-informed decisions on what currency to sell. Timing is everything and it goes without saying that when experiencing with the Forex trading system, knowing when to trade can be the pivotal difference between success and failure. Understanding the analysis tools and how to use them efficiently will put any investor on the right track.

As well as proficient trading tools, it is an absolute necessity when using the foreign exchange trading system to understand how to use the software to perform actual trades. The only way to become comfortable with using Forex trading software is to use it and learn how to plot a course through the process. Selecting a good trader is the most imperative tip at this stage because an established trader can help you with the services required as well as giving you in depth tutorials using the foreign exchange trading system.

The most critical tool that will be utilized in the Forex trading system is patience and discipline. As mentioned earlier, foreign exchange trading is not a get rich quick proposal so learning patience and discipline can help you to become profitable in a timely fashion without losing money. Most brokers offer a demo account that can be used to practice and learn the foreign exchange trading system that mimics the real account with the exception of real money being traded. This gives a client insight into the market and its behaviors before actual money is invested. Learn how to make a profit using paper trading on a regular basis before risking your capital with Forex trading.

Currency Trading Training - 7 Favorite Tips

Currency trading training is not over when a trader finally sees the equity increasing in their account.

The Forex market is a very demanding environment and for a trader to maintain a success level, constant currency trading training is necessary.

The following 7 favorite tips can be used as timely reminders and need to be read and absorbed on a regular basis:

#1 - Take Responsibility

"The buck stops here." Don't blame the markets, or a host of other factors for a losing trade. You entered it for whatever reasons you had at the time. Take responsibility for it.

#2 - Use Each Losing Trade As A Stepping Stone

You lost a trade? Good. It will help you focus on a potential problem in your trading method. If after careful analysis you are satisfied you worked according to your plan, fine. Move on.

#3 - Never Become Impatient With The Market

New traders in the early stages of their currency trading training can be eaten alive by the market. During periods of consolidation with little liquidity the anxious impatient trader will force trading opportunities where there none.

Learn to accept the fact that around 70% of the time price will be in a consolidation channel.

#4 - Focus Daily On Improving Your Trading Skills

Currency trading training is an ongoing process. Day by day, step by step the trader improves. So rather than be preoccupied with profits and losses, concentrate on developing the skills. Your account will start to reflect your focus in time.

#5 - Be Pleased With Well Executed Trades Whatever The Outcome

Is this possible? Yes. You can feel well pleased even with a losing trade if you stuck to your methodology and executed the trade well. It is dangerous to feel good about a winning trade when you went against your trading method to achieve it. Your elation is likely to be short lived. Learn to execute the plan!

#6 - If In Doubt Stay Out

The feeling of regret can drain a person mentally and emotionally from entering a poorly considered trade. Once the trigger has been pulled and the trade starts going wrong, the agony of watching it inch towards your stop should renew in the trader the determination to stay out when in doubt!

#7 - Always Have A Good Reason

Currency trading training involves careful analysis of reasons for entering a trade. Just because price is high is not a reason to go short or long if price is low. Price will do what price wants to do so rather than trading from gut reaction, e.g. "Price can't go any higher (or lower)" learn to detach emotions and use pure technical analysis to establish a number of reasons why you should take a trade.

As currency trading training is a long term commitment, skills and disciplines learned can sometimes be forgotten as bad habits creep in.

It is necessary to constantly renew the thinking processes by repeating over and over the habits of successful traders.

These 7 favorite tips will keep the newer trader out of a lot of trouble!

Online Currency Trading Tutorials

Whether are learning to drive a car or trade in the Forex market you benefit from the experience and knowledge of others. None of us ever really believe that we are an expert at something as soon as we try it for the first time. For this reason, unless you are already maintaining a healthy bank balance trading Forex then you can benefit from a tutorial in Forex trading.

A tutorial in currency trading will help to teach you the basics, and even if you have been trading currencies for a while then you may still learn something new. You see, the Forex market is pretty complex and therefore it can take years to master it. For this reason taking the time to learn as much as possible will save you money in the long run.

Not too long ago it was almost impossible to find anyone offering any kind of training or tutoring in Forex. This was mainly because trading was only open to large corporations and businesses. The situation is completely different nowadays as the Internet boom has opened the doors to individual traders and that has led to a massive increase in the number of courses and tutorials available.

Training can be done online or in a classroom depending on your location and preference. There are so many ¡®learn at home¡¯ courses available now that if you think that is the way to go then all you have to do is pick one. Classroom learning is a little different since you may find yourself having to travel fair distances to get to your nearest course.

Another advantage of an online tutorial is that not only do you get to learn from the comfort of your own home or office but you can also take things at your own pace. The downside however is that there is no teacher for the one to one discussions and explanation (the DVDs or online videos are your teacher) that you may sometime need.

Some online currency trading tutorials come with a money-back guarantee, that is if you do not like their course you can return it for a refund. However, you should look out for those courses which claim to be able to guarantee you a profit. These kind of claims are hard to achieve and should be treated with sketiscm as some courses are no more than scams.

Forex trading requires very quick thinking and decision making. Tutorials cannot teach you that. They can tell you the principles of trading and make you a much better trader for it. However, what it takes is for you to use the knowledge they give you and incorporate it in to your daily trading habits.

Through the help of a course you decision making and speed can definitely be improved but they cannot tell you exactly when to enter or exit a trade. That said, if you take the time to learn everything you can then it will be much easier to call the next market move correctly. You can also look to the help of Forex signal service providers for further security.

Currency trading tutorials can never teach you everything you will ever need to know. No-one can. However, they can help you to make decisions more quickly and with more success, it¡¯s all about how you take the knowledge they give you and what you do with it.

Calculating Pip Values

Perhaps the first question we need to ask is what does pip mean in forex trading? A pip is the smallest movement that is possible in the price of one currency against another and it is vital to be able to calculate pip values quickly and easily as it is the movement in prices which results in your profit or loss when trading.

A pip is normally, but not always, 0.0001 or 0.01%. In other words, if a currency moves from a price of 1.7650 to 1.7655 it is said to move 5 pips.

The easiest way to understand how to calculate pip values is to start by considering currency pairs which involve the US Dollar and we start by considering the situation when the US Dollar is the quote currency as in the case of JPY/USD, GBP/USD or CHF/USD.

Here calculating a pip value is very easy as a pip will always have a value of $10. So, if while trading JPY/USD the market moves in your favor by 10 pips you will make a profit of $100. Let's see how this works.

Consider a quote of GBP/USD is 1.9730. This means that 1 UK Pound is worth 1.9730 US Dollars. A standard InterBank lot size is 100,000 and which means that 100,000 UK Pounds are worth 197,300 US Dollars. If the market moves 1 pip so that GBP/USD is 1.9731 then 100,000 UK Pounds will now be worth 197,310 US Dollars - a rise of $10.

Now let's turn our attention to what happens when the US Dollar is the base currency and consider a quote of USD/GBP = 0.6439. Here 1 US Dollar is worth 0.6439 UK Pounds and 100,000 US Dollars are worth 64,390 UK Pounds.

If the price moves up 1 pip then USD/GBP = 0.6440 and 1 US Dollar is worth 0.6440 UK Pounds and 100,000 US Dollars is worth 64,400 UK Pounds.

In this case a movement of 1 pip represents a value of 10 UK Pounds which, in US Dollars, gives a pip value of 15.53 US Dollars (10 ÷ 0.6440).

For a standard trading lot with the US Dollar as the quote or counter currency a pip has a value of $10 but, when the US Dollar is the base currency, the pip value will vary with the market price.

5 Reasons For Becoming A World Currency Trader

The foreign currency exchange market offers today's investor many advantages and here are just reasons why you might want to become a world currency trader.

A Market Which Never Closes

Many of the trading markets around the world are situated in fixed locations and operate within strict trading hours, often limited to just five or six hours a day between Monday and Friday. The Forex market however is open 24 hours a day.

This means that traders can not only take advantage of international events and react literally as they happen, but they also have the ability set their own trading hours. If you prefer to work in the mornings then that's fine but, if this doesn't suit you, then you can choose to trade during the afternoon, late evening or even in the middle of the night if you want to.

Low Trading Costs

In many markets, like the equity market, traders not only have to pay a spread (the difference in price between buying and selling a stock) but also have to pay a commission to the broker. On small trades this commission can typically be about $20 and this can rise rapidly to over $100 for larger trades.

Because the foreign currency exchange market is a wholly electronic market many of the traditional trading costs are eliminated and you are in affect reduced to paying nothing more than the spread. In addition, the extremely liquid nature of the global currency exchange market means that spreads are normally much tighter than those seen in other markets.

The Ability To Trade On High Leverage

In most markets where a trader has an opportunity to trade on leverage the leverage offered is often quite low. In the case of equity markets, for example, professional equity day traders will normally operate on a leverage of about ten times their capital. In the Forex market by contrast it is quite common to find that traders are permitted to trade at one hundred to two hundred times their capital.

A downside of high leverage is that it can of course lead to high losses as well as high gains. However, within the foreign currency market, risk management is extremely tightly controlled.

Limited Slippage

In currency trading trades are executed immediately using real-time prices at which firms will buy or sell the currencies quoted. In almost all cases this means that the price you see and the price you pay are the same.

This is not often the case in other markets where there can be often considerable delays between placing an order and that order being executed during which time the price will often move against you.

The Chance To Profit In Both Rising And Falling Markets.

Equity markets follow rising and falling trends (cycling between Bull and Bear markets), but the Forex market does not suffer this cycling which comes from structural bias in the market.

World currency trading always involves two currencies so that if you are down on one currency then you are up on the other. There is therefore always the potential for making a profit whether the market is rising or falling.

Forex Dictionary

Base currency
This is the first currency of a currency pair. Example : EUR/USD. The Euro is the base currency. For every trade, you always buy or sell the base currency.

Broker
This is the company that will provide you the forex trading service. You open and fund an account and start to trade. Each broker has its own prices, spreads, minimum requirements (amount of money to start trading). Brokers generally offer a demo account and also have some training programs. See a list of Forex Brokers we recommend.

Exchange rate
The exchange rate tells how much a currency is worth in terms of another currency. Example In the pair EUR/USD, the exchange rate is 1.30. This means 1 euro (base currency) is worth $1.30. SO you can buy $1 .30 dollar with 1 euro, or sell 1 euro for $1.30.

Leverage
This is what allow small investors to trade big lots. Forex brokers have leverage of 100:1 or 200:1. This means you can use $100 to trade $10,000 (100x100) or $20,000 (100x200). The leverage depends of the broker.

Lot
Forex is traded in lots, because a pip is a too small amount of money if you could only trade with $1. You can't trade forex with only $1. The standard lot size is $100,000, the mini lot size is $10,000. Brokers now also let you trade smaller lots. To understand pips and lots see our article : Forex profits - pips and lots.

Quote currency
This is the second currency in a currency pair. In the EUR/USD pair, the US Dollar is the quote currency. Quote currency is also called counter currency.

Pip
Pip stands for percentage in points. This is the last decimal point and minimum increment you can see on a quote. Example : 1.1230. Here 0 is the last decimal point, if the price increases to 1.1235, this is 5 pips more. You will look at the pips to know if you are earning or losing money. To understand pips and lots see our article : Forex profits - pips and lots.

Position
A position can be "long" or "short". Long specifies a trade where you buy and hope the price goes up. Short specifies a trade where you sell and expect the price go down.

Signal
Signals are alerts that help traders. Signals are sent by signals providers or your broker. Signals are sent by email, sms or directly to your trading platform (software). Signals generally include the entry and exit points for a pair at a specific time of the day.

Spread
The Ask/Bid spread is the different between the ask (buy) and bid (sell) price. The spread is given in pips.

Binary Equation Strategy in Forex Trading

Binary equation trading is actually a kind of trading strategy that employs the use of a certain mathematical procedure to edge out profitability.With a simple to understand mathematical scheme, a trader can be on his way to increased probability of profit acquisition.

The binary equation was formulated by an 18th century mathematician Jean le Rond d'Alembert, and was more recently found to be a useful component in Forex trading.

A Forex trader should always keep in mind that the volatility of the trading platform is his number one concern. He should be able to comprehend the regular patterns that lead to the upward or downward motion of profit values. In such a case, binary equation trading may provide a good opportunity for the trader to keep the highest amount of potential earnings he can possibly have.

A person is not required to have a master's degree in mathematics or be a math genius to use this technique. The binary equation trading lets a trader have a significant overview towards a wide scope of direction expected for a particular exchange rate currency partner. All the trader has to do is to rely on the position recommended as projected by the binary equation formulation.

He can easily purchase a lower valued exchange rate and wait for a particular time frame to expect the exchange currency to increase. With a binary equation, he can easily predict when to sell his acquired foreign exchange currency. This will give him a definite residual advantage which serves as profit.

The binary equation trading is perceived to be a form of confidence tool among Forex traders. The most important attribute of this kind of trading concept is its ability to provide decision making rules for a particular trader.

Most of the technical systems that use binary equation trading have already acquired profits in real trading which is in contrast to a hypothetical approach brought by other trading parameters. The mode of trading can be optimized in such a way that it can be useful to almost any other trading platforms, not just for Forex.

If a trader uses a trading platform that heavily relies on the binary equation strategy, chances are, his profits are somehow guaranteed to take a positive course. Since most platforms conduct trading schemes in real time and instantly, a significant amount of stable profit is assured. Even though it only uses a single modular approach in trading, it can be used to conduct a system wide variety of trade exchanges.

With binary equation trading, the total management of trades can be simplified. Shorter forms of calculations may be done to conduct real time trading strategy. Results can be acquired within seconds of pre-calculation of profit generation prediction. A trader may simply opt to choose which results he may want to use for actual trading.

Even though the binary equation promotes a rather instant access to high end profit sources, the long term effect is not sacrificed.

A trader can rely on the effects of the calculation for future referencing of trades. He can conduct multiple trading strategies for a wide spectrum of platforms in future money manipulations.

Are You Winning? Calculating FOREX Profits and Losses

When trading currency you deal with much smaller divisions than when dealing with actual cash. For example the smallest denomination of US is currency is the penny ($0.01) but on the FOREX market it can be traded down to $0.0001. The smallest division that a currency can be traded at is known as a pip. A pip is short for Price Interest Point; this is sometimes also referred to as points. Currencies are traded in very large lots so even a small change in the value can create a significant profit or loss. If you are trading $100,000 in US dollars a single pip is worth $10 so a change of 60 pips or 6/10 of one cent will generate a profit or loss of $600 depending on the direction of the move.

When trading currencies various lot sizes are not unusual but 100,000 units are considered a standard lot. A single unit is what ever the name of that particular currency is for example when trading Japanese currency a single unit is the Yen. Some trades are done in lots of 10,000 these are commonly referred to as mini lots. Even though lots of various sizes are possible the majority of trades involve standard lots of 100,000 units.

The size of the pip is based on the currency type; different types of currencies have different pip sizes. For example the Yen pip is 0.01 where as the US dollar has a pip of 0.0001. Both the type of currency as well as the size of the lot determines the actual value of the pip. Using the US dollar as the quote currency (second currency) such as CAD/USD then the pip always equals $10 for a standard lot and $1 for a mini lot. For other currencies it is easiest to use a pip value calculator to determine the pip value.

In the FOREX market there are a variety of order types available for making trades. You need to have a solid working knowledge of the different order types to be a successful FOREX trader.

Market Orders - This is simply an order to buy or sell at the current market price. Market orders can be used to enter or exit a position. Market orders can be dangerous during times of high market volatility. The price can change significantly between the time that you enter your order and the time when it is actually recorded or executed. The amount that the market changes between the time that an order is placed and when it is executed is known as slippage. Depending on market conditions slippage can result in the gain or loss over several pips.

Limit Order - This is an order to buy or sell at a specific price. These are used to help you control your trades without having to constantly monitor the market. If you have a sell limit in place for a price higher than the current rate your order will be executed as soon as the market rate rises to match your limit. If you have a buy order in place to purchase a currency at below the current market price your order will not execute until the current rate drops to match your limit.

Stop Order - These are used to limit your losses if the market moves in the opposite direction of what you are expecting. This will cause your currency to be sold at below the market price or purchased above the current price. A stop loss is executed when the market crosses the threshold set by the trader when placing the order.

To be successful on the FOREX market it is essential that you learn to figure profit and losses and to use the various order types to their fullest potential.

A Brief Look at Forex Trading

Forex is the currency trading market which is the biggest and most quickly evolving markets in the world. Currently it has a daily turn over of of 2.5 trillion dollars which is actually one hundred times larger then the NASDAQ. Different markets are great ways to diversify your investments and trade different goods and services. The same is true with the Forex market in which the "goods" are actually currencies from around the world. Here you can buy Euros with American Dollars and sell Japanese yen for Swiss Francs. The profit is make in the difference between currencies values.

To make a profit on the Forex market investors only need one rule - buy cheap and sell high. The profit comes from the fluctuations within the exchange market for currency. The great thing about the Forex market is that it has regular daily changes and a fluctuations of 1% is actually multiplied by 100. For example if the exchange rate of your pair of currencies increases by 0.7% in 5 hours, the profit you make will be 70% of your initial investment. This can happen within a single day or a single hour. Trading the Forex market is extremely secure because you can never lose more than your initial investment. This is low risk when compared to the unlimited profit you could potentially gain.

You can choose your pair of currencies and your volume whether the market is moving up or moving down - and still make a profit. You can decide to buy Euro and sell dollar or buy dollar and sell Euro. Additionally you do not have to physically have the currency you choose to buy and sell. The easiest way to get started in the Fored market is to find a Forex market site, open an account, deposit your money, and begin trading. Most companies provide you with training, support, and advice.

Once you have all the necessary research in hand you are ready to make your first trade. You need to first select the pair of currencies that you wish to trade. Then you select the volume or the amount of money you want trade. Then you must deposition the collateral needed for the whole deal, usually about 1%. Most companies allow for a brief freeze period in which the consumer can adjust or cancel their deal. While the deal is running you can monitor the status and check for additional trading tips online. You still have the ability to change the terms, or cash out the profit to minimize loss. Forex trading companies allow an automatic take profit option which allows the investor to preset the rate at which you want to see and it will do it for you. That way you do not have to stay constantly online to monitors your trade.

Forex is a great trading market for new investors. The specifics of the currency trade are fairly straight forward and easily accessible to the general public. There is a low initial investment that way new investors can begin small and as they feel comfortable and work their way up to larger trades.

8 Tips To Improve Your Forex Trading By 100% Now

Most traders don't take a rational approach to trading and have unrealistic goals. A return of 200% on your account is possible but it is not possible every month, a return of 10-15% every month is more realistic and possible.

Here are 10 tips that will improve your trading by 100% and help you reach that level of consistence you are looking for.

1. Do not trade on anything lower than 4H charts.
If you are new to trading or loosing consistently you must follow this rule, it will keep your trading account alive and growing. The higher the time frame the easier it is to make money, you can easily grow your account by 10-15% each month only taking 2-4 trades a month.

2. Only take the A trades.
Be Patient, the markets will be around longer than you, plan your trades and wait for the perfect setups then pull the trigger with out hesitation.

3. Never risk more than 3% of you account.
No mater if your stop is 150 pips or 30 pips your risk should be exactly the same, most brokers allow micro lots (.10c) which make it easy to get the correct position size.

4. Keep your system very simple.
My core system's are very simple and and very profitable! You do not need to have 10 indicators pointing in the same direction to take a trade.

5. Back test your system.
Candle by candle back testing your system will give you great feeling of confidence in you trading.

6. Use price action.
Although there is nothing wrong with indicators try to keep them to a minimum, start learning how to read price action, it will reward you greatly.

7. Don't over trade.
This is the most common problem with traders, 95% of traders would be more profitable if they just took 1 trade a month and no more, this would force them to plan that trade with immense forethought and more often than not it would be profitable.

8. Cut your losses short and add to your winners.
This has been said time and time again, but how many of you actually do this? Your wins should be at least twice the size of you losses, preferably three times the size. Start trying to build on profitable positions instead of taking profit as soon as it appears.

If you are a newbie looking to get into the forex market or even a trader who just cant seem to stay consistently profitable. Following these rules will get you on the right track, stay with the higher time frames and you will find your trading more profitable and less stress.
Control Your Emotions to Achieve Success in the Foreign Exchange Market

Emotional forex traders will be tempted to chase bad money with good, and subject themselves to even greater losses.

Get a Grip

“The sign of an intelligent people is their ability to control their emotions by the application of reason” ~Marya Mannes

forex trading is not for the faint of heart, nor is it for those who are controlled by emotion. Certainly, it is an emotional thing to engage in an activity of risk and reward with your money. Human nature dictates that when you put your heart into something as vital as your financial portfolio. However, a Foreign Exchange trader cannot afford to wear his heart on his sleeve.

This isn’t a heart matter; it’s a head thing. Let your heart rule in romantic affairs, but use your head when you are trading currencies. If you do not use your head, you may well lose your behind!

Every successful Forex trader develops, or borrows, or borrows and modifies a system. That system is based on facts, observed trends, and expected market behaviors. Your system will guide you, informing you when to get into a trade, and when to get out.

Fear and Greed: Extremes that kill

When you lose on a trade – and if you trade, you will lose on occasion –, it takes a great deal of self-discipline to get out while the getting is good. Emotional traders will be tempted to chase bad money with good, and subject themselves to even greater losses. Greed often compels the emotional trader to try to recoup every lost dime.

The other side of the Forex coin is the need to stick with a good trade and riding it to its full potential. Fear will cause the emotional trader to bail on a deal prematurely. You have to be guided instead by your system. Know how many pips you are risking and how many you stand to gain. Keep your risk and reward in balance.

Greed and fear are two very different motivators, but they each have the same result: they wreak havoc on the Forex market.

Mind over matter


Norman Vincent Peale, Robert Schuller and others have written volumes on the power of positive thinking. Every single champion who has ever perched atop the pinnacle of his profession first visualized himself/herself doing so. Visualize success.

A good trading system is vital, but you have to believe in it – and in yourself – in order for it to bring you the success you desire. Confident traders are successful traders.

Here are some steps to take to avoid the traps of emotional trading and establish yourself as a successful Forex trader:

1. Educate yourself. Someone has said, “The woodsman never wastes his time sharpening his axe.” Read that statement carefully, for it is not saying a smart woodsman just grabs an axe and runs to the nearest tree. Instead, it is declaring that the time spent sharpening the axe, is time well spent. Never stop learning from those who have proven themselves successful trading currencies.

2. Establish your system. Take the time to develop the system that works for you. Test it, prove it, refine it…and use it.

3. Embrace your losses. That’s right! Every experience is a good experience when you keep it in perspective.

4. Eliminate emotions. Keep greed and fear out of the mix.

5. Envision success. See yourself as a successful Forex trader.

There are plenty of times in life that call for an emotional response: a marriage proposal, for instance. Or the funeral of a loved one. Or when your favorite team wins the championship. Those are all fine times to let your emotions take the wheel. The Forex Market, however, is not a good place to do it. Once you have managed to control your emotions and make informed, intelligent trades, you will have plenty of reason to celebrate later.

Happy trading!

Rate of inflation

Consumers try to avoid the eroding effect inflation has on their purchasing power. Consequently, goods from countries with a low inflation rate become more attractive than the goods from countries with higher inflation. In turn, the currency from the lower inflation country rises in value, while the currency from the higher inflation country falls in value. Both the inflation factor and the purchasing power of the currencies directly impact currency exchange rates. For example, if the United States is experiencing lower inflation than its trading partner Germany, the DM/USD ratio would rise to reflect the growing price level in Germany relative to the United States. This factor is rooted in the concept of purchasing power parity. It holds that, over the long run, a currency exchange rate adjusts to reflect the difference in price levels between countries.

Yield differentials and their affect on currency values.

Yield differentials is the difference between interest rates in various countries and how it affects currency values. As an example, let's use German and American securities to illustrate how interest rates affect exchange rates.

All else being equal it stands to reason that a higher yield on German securities (compared to American securities) would make German securities more attractive. What's more, an increase in German yields would raise the flow of U.S. dollars into German securities, and decrease the outflow of Deutsche marks to American securities. This increased flow of funds into Germany would lower the value of the U.S. dollar and increase the value of the Deutsche mark. Hence, the Deutsche mark to U.S. dollar ratio, as it is represented in the foreign exchange market, would potentially decrease.

Fundamental and Technical Analysis

Fundamental Analysis tries to understand price moves in the market by analyzing the economic factors that can affect the price of a particular financial instrument, in this case, currencies. Importance is placed on interest rates, trade balance, government policies, market supply and demand, and a myriad of other factors that can affect the intrinsic value of a currency against another currency.

Technical Analysis, on the other hand, states that all the factors whether it be economic, political, or even the effect of weather on the value (or price) of a currency is all factored into the 'market price' of a currency. It is therefore only necessary to study the technical charts, which show all the effects, and all the causes that a "fundamentalist" would study. Thus the study of price movement is of primary importance to a "Technician" to determine where the markets are going.

In reality, both factors are important in determining the value of buying and selling currencies. Whichever school of thought you adhere to, the fact remains that when the perceived value of a currency is over-priced it will be sold, if the perceived value is under-priced it will be bought. If there are more 'sellers' in the marketplace, the price will go down. If there are more 'buyers' than 'sellers' the price will go up.

Glossary of Foreign Exchange Terms

ABA - a digital code used by the American Bankers Association to define a bank.

Base Currency
The currency which other currencies are quoted against.

Basis Point - One hundredth of one percentage point. A change from 5.25% to 5.75% is said to be a 50 basis point move. See 'Point' for currency moves.

Bid - The price that a buyer is willing to pay to purchase a given currency and sell another at a particular time.

Central Bank - A Government institution in control of the nation's monetary policy and the printing of that nation's currency.

Consumer Price Index (CPI)
A measure of the average amount (price) paid for a market basket of goods and services by a typical U.S. consumer in comparison to the average paid for the same basket in an earlier base year.

Cross Rates
The exchange rate between two currencies expressed as the ratio of two foreign exchange rates that are both expressed in terms of a third currency. Foreign exchange rate between two currencies other than the U.S. dollar, the currency in which most exchanges are usually quoted.

Currency - means money denominated in the lawful currency of a country.

Current Account
A category in the balance of payments account that includes all transactions that either contribute to national income or involve the spending of national income.

Day Trading - refers to opening and closing the same position(s) before the close of that day's trading. Associated with speculative trading.

Deficit Spending
A term which refers to the situation wherein he government spends more than it receives in taxes.

Discount Rate
The interest a private bank pays for a loan from the US Federal Reserve System.

Draft - click here

EMS - European Monetary System

Euro - The currency of the European Monetary Union (EMU). This is the amalgamation of the following currencies, after Jan. 1, 2002 these currencies will be considered legacy currencies. Germany Deutsche Marks, Italy Lira, Austria Schillings, France Franc, Belgium Francs, Netherlands (Dutch) Guilders, Finland Markka, Portugal Escudo, Greece Drachmas, Ireland Punt, Luxembourg Francs, Spanish Pesetas.

Federal Debt
The current dollar sum of obligations equal to the accumulated past deficits minus surpluses of the United States government.

Federal Open Market Committee (FOMC)
The body that is responsible for setting the interest rates and credit policies of the Federal Reserve System. A 12-member committee consisting of the seven members of the Federal Reserve Board and five of the twelve Federal Reserve Bank presidents. The Committee sets objectives for the growth of money and credit. These objectives are implemented through purchases and sales of U.S. government securities in the open market. The FOMC also establishes policy relating to System operations in the foreign exchange markets.

Federal Reserve System - The central bank of the United States, with responsibility for implementing the country's monetary policy and regulating member banks of the System. The Fed was created in 1913 and is composed of 12 regional Federal Reserve Banks and a national Board of Governors.

Fiscal Policy
Government policy regarding taxation and spending. Fiscal policy is made by Congress and the Administration.

Fixed Exchange Rate
Official rate set by monetary authorities for one or more currencies

Floating Exchange Rates
Floating exchange rates refer to the value of a currency as decided by supply and demand.

Foreign Exchange - The exchange of foreign currency. On the foreign exchange market, foreign currency is bought and sold for immediate (spot) or forward delivery

Forex - Industry term - Same as Foreign Exchange

Forward Contract - A forward contract fixes the exchange rate for future delivery at a date to be agreed by both participants. A deposit (or a minimum margin) is usually required in forward transactions. For example, if I want to lock in today's rate to buy $10,000 USD at 1.5820 Canadian for the next 4 months, I will have the ability to purchase up to $10,000 USD at this rate.

Fundamental Analysis - focuses on the economic forces of supply and demand that causes price movement. The Fundamentalist studies the causes of market movement, whereas the Technician studies the effects.

FX - an abbreviation of Foreign Exchange

Hedging - A hedging transaction is a purchase or sale of a financial product, having as its purpose the elimination of loss arising from price fluctuations. With regards to currency transactions it would protect one against fluctuations in the foreign exchange rate. (see Forward Contract)

Initial Claims
Initial jobless claims measure the number of filings for state jobless benefits. This report provides a timely, but often misleading, indicator of the direction of the economy, with increases (decreases) in claims potential signalling slowing (accelerating) job growth. On a week-to-week basis, claims are quite volatile, and many analysts therefore track a four week moving average to get a better sense of the underlying trend. It typically takes a sustained move of at least 30K in claims to signal a meaningful change in job growth.

Interbank Rates - The Foreign Exchange rates at which large international banks quote other large international banks.

Margin - a cash deposit provided by a client as collateral to cover a forward position.

Monetarists
Followers of Milton Friedman who focus on the effect of money and monetary policy on changing price and employment levels.

Monetary Policy
The federal governments attempt to change aggregate demand through money supply changes.

Money Markets - Refers to financial investments that are generally under one year in duration and generally only open to banks and other financial institutions

Offer - The price, or rate, that a willing seller is prepared to sell at.

Point (or Pip) the term used in currency market to represent the smallest incremental move an exchange rate can make. It is one one-hundredth of a percent
For example, when a currency moves from 1.5720 to 1.5725 it has moved 5 points.

Repurchase Agreements
When the Federal Reserve makes a repurchase agreement with a government securities dealer, it buys a security for immediate delivery with an agreement to sell the security back at the same price by a specific date (usually within 15 days) and receives interest at a specific rate. This arrangement allows the Federal Reserve to inject reserves into the banking system on a temporary basis to meet a temporary need and to withdraw these reserves as soon as that need has passed.

Settlement - (1) The final stage of a transaction, actual physical exchange of one currency for another (2) is the process by which available funds have been instructed by a client of Cambridge for transfer via wire, draft or deposit to a multi-currency account and a designated receiver of such funds.

Spot - Generally describes a transaction which will come to settlement in two days.

Spot Price - The current market price for a spot transaction.

Spot Rate - The current rate for a spot transaction.

Spread - The difference between the bid and offer prices. This is usually used for Interbank trade of currencies.

Swift - Society of Worldwide Interbank Financial Telecommunications. It is a dedicated computer network that is set up to support fund transfer messages between member banks worldwide.

Technical Analysis - is analysis based on market action through chart study, volume, trends, moving averages, patterns, formations and many other technical indicators.

Treasury Bill - Short-term U.S. government obligations sold at a discount from face value. Treasury bills generally are issued with 13-, 26- or 52-week maturities.

Treasury Bond - Obligations of the U.S. government that mature in 15 or more years and pay a specified coupon.

Treasury Note - Obligations of the U.S. government that mature in 2 to 10 years and pay a specified coupon

Trend - simply the direction of the market, usually broken down to three categories….major, intermediate and short-term trends. Three directions are also associated with a trend; that is, uptrend, downtrend, and a sideways trend.

US Prime Rate
The rate at which US banks will lend to their prime corporate customers

Value Date - The date that both parties of a transaction agree to exchange payments.

Volatility - A measure of price fluctuations. The standard deviation of a price series is commonly used to measure price volatility.

Volume - represents the total amount of trading activity in a particular stock, commodity or index for that day. It is the total number of contracts traded during the day.

CGTIM — Another Jordanian MT4 Forex Broker

CGTIM (or Commercial Group for Trading in International Markets) is a MetaTrader 4 Forex broker based in Jordan. As the other Jordanian brokers it offers Muslim-friendly trading accounts — with no overnight interest or swaps. Trading with this broker can be started with $1,000 for mini-Forex accounts. The deposit/withdrawal methods are limited to wire transfer, check and credit cards. Apart from Forex it offers CFD and some futures and indexes to trade on. Although, it’s presented on-line only since 2004, it already looks like it’s dying from an age — the website works with problems and opening a demo account via MT4 platform alone isn’t possible. In addition, the spreads offered by CGTIM look ridiculous nowadays — 4 pips on EUR/USD currency pair is simply too much. In my opinion, this broker can only be useful to the Islamic traders — and even not all of them, but those who live in Jordan and can confirm the legitimacy of CGTIM and quickly solve any problems with this broker. Because I don’t know for what someone would pay 4 pips per trade.

EUR/USD Posts Biggest Daily Gain This Year

Today EUR/USD rose at a fastest pace since December 17. As the fundamental data reports were very positive in the United States, traders thought that it might be a good chance to bet against the dollar in the favor of the more risky and high-yielding currencies. EUR/USD rose from 1.2916 to 1.3141 as of now.

Existing home sales rose by 6.5% from the annual rate of 4.45 million to 4.74 million in December. The market analysts expected a decline to 4.4 million. That can bring a much needed positive wave into the realty market — the one that damaged most by the ongoing financial crisis.

Leading indicators of the U.S. economy advanced by 0.3% in December after falling by 0.4% in November. According to the forecasts it was expected to decline by 0.3% in December. Although this indicator is quite weak in its influence on the financial markets it can signal the beginning of the economic revival in the United States.

TeleTRADE — Russian Forex and CFD Broker

TeleTRADE is a very old Forex broker company. It’s quite popular in the ex-USSR territories due to the large amount of the off-line offices and the free trading seminars they are offering from time to time. The company was created back in 1994, but the on-line services were presented in 2001. Actually, the company’s age is probably its only advantage. The trading is done via MetaTrader 4 platform. Apart from Forex, CFD and gold trading is also available. The trading account can be opened with $2,000 and there is no mini-trading available — the minimum position size is 1 lot. TeleTRADE offers probably the highest spreads in the industry — 5 pips on EUR/USD. I don’t know why would anyone even bother trading with such a high spread. Another disadvantage of this broker is the numerous accounts of traders complaining about their brokerage ethics and services (including training).

EUR/USD Tumbles after FOMC Meeting

EUR/USD showed some really promising growth earlier today. The optimistic mood at the financial markets was based on the FOMC meeting’s expectations and the expectations that the «bad bank» plan will be approved soon. The Federal Reserve meeting showed that the committee is still sees the U.S. economic conditions as deteriorating. EUR/USD is currently down to 1.3125 — down from 1.3225 level. where it traded right before the FOMC statement release.

U.S. commercial crude oil inventories advanced by 6.2 million barrels last week. Considering 1.2 million barrels growth during the previous week, the oil inventories now show that the supply is significantly greater than the demand for this energy resource.

Federal Open Market Committee at its scheduled meeting, which ended today, decided to leave the interest rate unchanged in the range between 0% and 0.25%. The released statement says that the economy declined further since their last meeting in December and that they will need to expand the purchases of the troubled assets and the long-term Treasury securities as well:

The Federal Open Market Committee decided today to keep its target range for the federal funds rate at 0 to 1/4 percent. The Committee continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.

EUR/USD Falls Steadily as Economic Conditions Worsen in U.S.

EUR/USD posted a rather deep decline today after showing some weak drops during the previous two days. The U. S. macroeconomic reports from the employment, industrial and housing sectors were all negative today. EUR/USD is now trading near 1.2976 after opening at 1.3150.

Durable goods orders decreased by 2.6%, while the consensus forecast for the decline was at 2%. More than that, the last month decline was revised more than twice from 1.5% to 3.7%.

Initial jobless claims grew from 585k (revised down from 589k) to 588k last week. The market participants expected them to decline to about 575k.

The new home sales declined to the annual rate of 331k in U.S. in December. They fell from 388k reported for November (revised down from 407k) and are below the 400k estimate.

Dollar Continues to Gain as GDP Falls in 4th Quarter

EUR/USD continued to fall today for the fourth straight day as the advance GDP report for the fourth quarter showed a considerable decline of the economic output in U.S. The currency pair is currently trading near 1.2795.

GDP (advance) in the Q4 of 2008 decreased at an annual rate of 3.8%. The decline followed 0.5% contraction in the third quarter, but was significantly below the estimated 5.4% drop.

Chicago PMI declined from 35.1 to 33.3 in January, while a drop only to 34.9 was expected by the market participants.

Michigan Sentiment Index rose above the previous month’s value of 60.1 (which was revised down from 61.9) in January and was reported at 61.2. The average forecast for this index was at 61.9 for January.

20. Forex Brokers

MetaTrader 4 Forex Brokers — a list of Forex brokerage firms that support MetaTrader 4 Forex trading software as their trading platform.

PayPal Forex Brokers — a list of Forex brokers accepting PayPal on-line payment system as a way to deposit/withdraw money to/from customers' accounts.

WebMoney Forex Brokers — a list of Forex brokers that accept WebMoney e-currency system as the fast deposit/witdhrawal method, offering high security combined with the fast transfers.

Muslim Friendly Forex Brokers — a list of Forex brokers that try to be friendly to Muslim Forex traders offering "no-interest" margin accounts.

Forex Brokers with Web Based Platform — a list of Forex brokers that fully support Forex trading without installing any trading software.

Forex Brokers with Advanced Trading Platform — a list of Forex brokers with unique and powerful Forex trading software.

Institutional Forex Brokers — a list of on-line Forex brokers that are backed by strong and respected off-line financial companies.

Forex Brokers with CFD Trading — a list of Forex broker companies that allow their traders to trade not only Forex, but also CFDs (Contracts for Difference).

ECN Forex Brokers — a list of on-line Forex brokers that act as ECNs (Electronic Communication Network) offering Forex traders highly competitive spreads.

Moneybookers Forex Brokers — a list of Forex brokers that accept Moneybookers electronic payment system as for trading funds transfers.

e-gold Forex Brokers — a list of Forex brokers that accept e-gold payment system as the method of depositing/withdrawing funds to/from the trading accounts.

All Forex Brokers — a detailed list of all on-line Forex brokers with descriptions without breaking down into specific categories. A rather large list.

19. Forex Dictionary

Base currency
This is the first currency of a currency pair. Example : EUR/USD. The Euro is the base currency. For every trade, you always buy or sell the base currency.

Broker
This is the company that will provide you the forex trading service. You open and fund an account and start to trade. Each broker has its own prices, spreads, minimum requirements (amount of money to start trading). Brokers generally offer a demo account and also have some training programs. See a list of Forex Brokers we recommend.

Exchange rate
The exchange rate tells how much a currency is worth in terms of another currency. Example In the pair EUR/USD, the exchange rate is 1.30. This means 1 euro (base currency) is worth $1.30. SO you can buy $1 .30 dollar with 1 euro, or sell 1 euro for $1.30.

Leverage
This is what allow small investors to trade big lots. Forex brokers have leverage of 100:1 or 200:1. This means you can use $100 to trade $10,000 (100x100) or $20,000 (100x200). The leverage depends of the broker.

Lot
Forex is traded in lots, because a pip is a too small amount of money if you could only trade with $1. You can't trade forex with only $1. The standard lot size is $100,000, the mini lot size is $10,000. Brokers now also let you trade smaller lots. To understand pips and lots see our article : Forex profits - pips and lots.

Quote currency
This is the second currency in a currency pair. In the EUR/USD pair, the US Dollar is the quote currency. Quote currency is also called counter currency.

Pip
Pip stands for percentage in points. This is the last decimal point and minimum increment you can see on a quote. Example : 1.1230. Here 0 is the last decimal point, if the price increases to 1.1235, this is 5 pips more. You will look at the pips to know if you are earning or losing money. To understand pips and lots see our article : Forex profits - pips and lots.

Position
A position can be "long" or "short". Long specifies a trade where you buy and hope the price goes up. Short specifies a trade where you sell and expect the price go down.

Signal
Signals are alerts that help traders. Signals are sent by signals providers or your broker. Signals are sent by email, sms or directly to your trading platform (software). Signals generally include the entry and exit points for a pair at a specific time of the day.

Spread
The Ask/Bid spread is the different between the ask (buy) and bid (sell) price. The spread is given in pips.

18. Forex Demo

My second recommendation is to practice a lot. Your forex broker will let you open a free demo forex account and you will trade the real time forex market. Of course this is not real money. I suggest you practice for 3-6 monthes before starting trading forex with your own money in a live account.

You need to know that forex brokers requires a minimal investment to open a forex live account. Marketiva, will let you open a free $10,000 practice account and gives you $5 to trade live.

If you really want to become a forex trader and from your home, you must be patient. Learn to manage risk and practice currency trading a lot with a demo account.

17. Managed Forex Accounts

If you have enough money, you can sign up for a managed forex account. These accounts generally require at least $10,000, sometimes more, to be opened. Here you ask your Forex broker to manage the funds for you. The forex broker will ask his forex traders to do the work. So your funds are in the hands of professionnal traders. Risks are really lowered and you don't need to stay at your computer to fight with forex charts. Of course the forex broker will take a percentage (about 20%) of the net profit made.

This is a high percentage, but a little example : you invested $10,000 and the forex trader who manages your money makes 10% ($1,000) profit a month. He takes 20% ($200) of the profit. You still earned $800.

16. Automated Forex Trading

Some forex brokers offer forex autotrading services. You fund your account and choose the pair you want to trade. Then their software receive signals and trade automatically. If your forex broker doesn't offer this option, you can find a software and setup it to autotrade

You will have to add files to called "expert advisors". Nothing difficult, once your trading software is installed, just copy the expert advisor file in the indicated folder. You then can activate the expert advisor and let the trading automated.

15. Great Britain Pound

Pound Down vs. Euro, Dollar, Yen
Great Britain poundThe British pound fell against the other major currencies today, most notably against the euro, as the market participant expect that the Bank of England will continue reducing the interest rates for the U.K. banks.

Euro Near Weekly Lows before Rate Decision
European Central BankThe euro declined today against the U.S. dollar, almost snapping the yesterday’s gain, as the traders expect the weak data on the Eurozone retail sales after PMI shrank in the leading Eurozone economies.

Pound Loses for Third Day Despite Correction
Great Britain poundThe U.K. pound continued to fall against the U.S. dollar and the Japanese yen today, despite the correction seen in some other dollar- and yen-based currency pairs, as the traders expect a major rate cut by the Bank of England.

British Pound Declines before GDP Report
Great Britain poundThe British pound fell today against the U.S. dollar and the yen, following the three days of growth, as the traders expect the GDP report to confirm a decline of the economy today.

Pound Stops Below $1.5 as Recession Blooms
Great Britain poundThe Great Britain pound continued to trade below the psychologically and technically important level of $1.5 per pound for the second day today as the recession continued to show up at its worst in Europe and the U.S. rescue plans changed.

Pound Declines on the Lowest Home Sales
Great Britain poundThe Great Britain pound continued to fall today against the other major currencies after reaching the all-time low against the euro as the home sales report showed the lowest level in the last 30 years.

Banks Slash Rates; Pound, Euro, Franc Drop
European Central BankThe Europe’s currencies posted a daily drop against the U.S. dollar after showing a moderate volatility during the early trading session after the regional central banks cut the interest rates at an unexpectedly large scale.

Pound Gains on Stock Market Optimism
Great Britain poundThe Great Britain pound gained today against the other major currencies as the growth on the global stock markets spurred optimism and the high-yielding pound showed a stronger reaction to this uprise.

Pound Slides on King’s Recession Outlook
Great Britain poundThe Great Britain pound dropped to the lowest rates in several years against the dollar and the yen and the weekly low against the euro today after the BoE Governor Mervyn King said that the recession is very likely due to the worst banking crisis since World War I.

Pound Falls vs. Euro After Jobless Report
Great Britain poundThe Great Britain pound fell against the euro, while being moderately up against the other major currencies, after the release of the BoE’s minutes and the jobless claims report in the United Kingdom today.

14. Economics Indicators

Canadian Dollar Dips On Bada Statistics
Yesterday Canadian dollar reached its monthly minimum levels after the macroeconomic statistics were released by Canada’s National Statistics Agency. September 2007 retails sales fell by 0.2 percents compared to previous month. USD/CAD traded at 0.9923 on Forex as the data was released.

Fed’s Projections - Uncertain
Federal Reserve’s FOMC published its first meeting minutes to include the 3-year projections of the committee members regarding the GDP growth, consumer prices inflation and unemployment rate. While the average projection expectations didn’t differ greatly (except for the year 2008) from this year’s results, the uncertainty of the inflation projections spoke for itself - Fed is unsure of the impact the interest rates manipulations will have on the consumer prices growth.

EUR/USD on Record High
As the Forex traders wait for today’s housing data release, EUR/USD reached its new historical maximum at 1.4778. With just a little trailing back it continues to hover around 1.4770 level ready to strike again to probable 1.4800 level.

13.Euro Declines on Dovish ECB Expectations

The euro declined against the U.S. dollar and the Japanese yen today after opening with a rather large negative weekly gap against these currencies as the traders expect that ECB will continue rate reduction this week.

The European currency fell to the one-month lowest against they yen and the weakest level since January 6 against the dollar. The currency analysts and Forex traders expect that the European Central Bank will cut its main interest rate to the lowest level since 2005 on its next meeting this Thursday — January 15. The today’s decline in the Asian stock markets also helped the yen to grow against the euro as the investors ran away from the carry trade.

Apart from the ECB rate decision, this week will feature some important macroeconomic reports from the world-leading economies. Analysts expect these reports to show the further worsening of the overall situation that will spur the risk-aversion and inevitably push the yen and the dollar up against the euro. If the ECB’s cut will exceed 50 basis points, euro may fall significantly faster than the markets are showing currently.

12. NZD Drops as Credit Rating Outlook Revised

The New Zealand dollar dropped to the monthly low against the U.S. dollar today as the S&P rating agency revised the country’s foreign currency credit rating outlook from stable to negative.

Standard & Poor’s, one of the world’s leading credit rating agencies, confirmed New Zealand’s AA+ foreign currency credit rating and revised its outlook to negative yesterday. The country’s currency reacted with a drop as the confidence in the national economy and the ability of the business to get the refinancing declined significantly after the aforementioned event.

The kiwi (a nickname, by which the New Zealand dollar is known) also fell sharply against the Japanese yen and the Australian dollar. The decline against the latter signals that the current bearish trend is caused almost solely by the credit rating outlook change and has little to do with the currently popular carry trade unwinding.

Analysts point at the New Zealand dollar as one of the clear Forex outsiders. Its position is worse than the one of the Australian dollar and, while those two are closely related (both Australia and New Zealand are export-orientated economies), the AUD/NZD becomes an attractive investment opportunity today.

NZD/USD fell from 0.5730 to 0.5563 as of 8:38 GMT today with the daily low at 0.5556 — the minimum level since December 16. NZD/JPY declined from 51.19 to 49.39, while AUD/NZD rose from 1.1853 to 1.2086 today.

11. Euro

Euro Declines on Dovish ECB Expectations
The euro declined against the U.S. dollar and the Japanese yen today after opening with a rather large negative weekly gap against these currencies as the traders expect that ECB will continue rate reduction this week.

Euro at 3-Week Low vs. Dollar on Low Inflation
The European single currency bottomed near the 3-week low against the U.S. dollar and significantly fell against the Japanese yen and the British pound today as the investors expect further rate cuts from the European Central Bank.

Euro Near Weekly Lows before Rate Decision
The euro declined today against the U.S. dollar, almost snapping the yesterday’s gain, as the traders expect the weak data on the Eurozone retail sales after PMI shrank in the leading Eurozone economies.

Banks Slash Rates; Pound, Euro, Franc Drop
The Europe’s currencies posted a daily drop against the U.S. dollar after showing a moderate volatility during the early trading session after the regional central banks cut the interest rates at an unexpectedly large scale.

Bank Guarantees Help Euro to Rise
The European currency rose today at the highest rate in the last three weeks against the U.S. dollar after the European leaders pledged to guarantee bank borrowings.

Euro at 2-Year Low on Europe’s Credit Crunch
The European currency fell to the lowest level in the last two years against the Japanese yen and the weakest level in more than 13 months against the U.S. dollar today as the credit crisis urged Eurozone’s governments to pledge a help to the troubled financial institutions.

Euro May Fall against Dollar on Paulson’s Plan
Friday, September 26th, 2008
The bet on the euro short positions may increase in the following months as the Paulson’s rescue plan may pull out the U.S. financial system from the crisis, while the Eurozone’s economy will be in recession.

Euro Rose on ECB Rate Signals
The euro rose today against the dollar and yen for the second day and for the third day against the Great Britain pound after the ECB policy makers signaled yesterday that there won’t be any rate cuts in the Eurozone soon.

Euro Drops to 5-Month Low on Rate Outlook
The euro fell to its five-month lowest level against the U.S. dollar as the investors traded on the high probability that the ECB won’t be raising interest rate as the economy is slowing.

Euro Grows, ECB May Signal Inflation Risk
The euro rose today against the U.S. dollar and other major currencies on Forex after a quite deep decline that was observed yesterday, as the traders expect ECB President Jean-Claude Trichet to signal uprising inflation risks on the next meeting of the Governing Council.

10. Chinese Yuan

Chinese Yuan Depreciates to July’s Levels
The Chinese yuan fell to the weakest level since August today as the country’s government continued to manipulate its currency before the scheduled meeting with the U. S. Treasury Secretary.

Yuan Reaches Post-Peg Peak Against Dollar
The Chinese yuan rose today to its new highest level against the dollar as the Forex traders reacted on the U.S. bank-rescue plan of dumping $700 billion into the economy that will hurt some important macroeconomic statistics and increase the supply of dollars.

Chinese Yuan May Slowdown on Lower CPI
The Chinese yuan traded almost unchanged in price against the U.S. dollar today after posting a significant gain yesterday on speculations that the central bank will reduce the currency’s appreciation rate as the inflation returns to its normal values.

China’s Yuan Heads for 4th Weekly Loss
The Chinese yuan is currently heading for its fourth weekly decline against the U.S. dollar for the first time since the end of the peg to dollar in 2005.

Yuan Falls as China to Control Money Inflow
The Chinese yuan fell against the U.S. dollar for the third day this week as the government tightened control over the illegal capital inflow into the country’s financial system.

Yuan Declines for a First Time since Monday
The Chinese yuan showed the first declining day since Monday on Forex today as the traders were driven by the speculations that the government will let national currency weaken slightly to support exporters.

Chinese Yuan at New High vs. Dollar
The Chinese yuan continued its general appreciation trend today and rose against the U.S. dollar and other major currencies as the traders believed that the central bank will continue to use stronger yuan in its anti-inflation policy.

Yuan Appreciates beyond 6.9 per Dollar
The Chinese yuan extended its gain against the U.S. dollar today reaching the 20 percent appreciation since the end of the peg in 2005 as the new meetings of the U.S. and Chinese financial officials will be held soon.

Yuan at Highest Level since End of Peg
The Chinese yuan rose to the highest rate against the U.S. dollar since the scrapping of the peg in 2005 as the investors expected China to quicken yuan gains in order to cut the inflation growth.

Chinese Yuan Rose on Dollar’s Decline
The Chinese yuan continued its record breaking growth against the U.S. dollar after a month-long pause today and rose to a new maximum level since the scrapping of the yuan-dollar peg in 2005.

9. Canadian Dollar

Canadian Dollar Rises as Oil Shows Strength
The Canadian dollar rose against the 3 other major currencies today, completely reversing the daily trend, as the oil and commodity markets become more attractive after the holidays.

Canadian Dollar Declines for Fourth Day
The Canadian dollar declined today against its U.S. counterpart for the fourth straight day as the oil prices continued to fall globally.

Canadian Dollar Slid This Week as Oil Declined
The Canadian dollar declined against the U.S. dollar for the second week in a row as the oil and commodities prices continued to drop on the worsening global economy outlook.

CAD Weakest since March 2007 on Oil Slump
The Canadian dollar fell to the weakest level against the U.S. dollar in more than 18 months after crude oil and commodity prices fell significantly on speculation that the global demand will decline.

CAD Loses on U.S. Economy Slowdown
The Canadian dollar continued its strong bearish trend today against the U.S. dollar as the currency traders began to realize that the commodity prices won’t hold up if the world’s biggest economy will continue to cool down.

CAD Down before Central Bank Meeting
The Canadian dollar was falling slightly yesterday and today against the other world currencies as the traders expected the interest rate decision of the Bank of Canada monetary policy meeting, which is scheduled for 22nd of April.

Canadian Dollar Continues Appreciation
The Canadian dollar continued its two-day growth against the U.S. dollar and the Japanese yen today, as the commodity markets showed that are still able to grow.

Canadian Dollar Slipped Down on Risk Concerns
The Canadian dollar dropped on Forex today, mainly against the U.S. dollar and the Japanese yen, as the investors favored less commodity-dependent currencies.

CAD Grows for Second Day
The Canadian dollar continued to grow today after rising from the one month bottom in which it has been until yesterday. Oil rose to the record high levels above $100 per barrel recently adding interest to one of the largest oil-exporting economies.

Canadian Dollar Grows on Improving Conjuncture
Canadian dollar rose this week again, after its sharp turn back from the long-term growth to the depreciation against the U.S. dollar.

8. Singapore Dollar

Singapore Choose to Depreciate Its Currency
Singapore dollar declined for the sixth day against they U.S. dollar today as the country’s monetary authorities will probably use the weak national currency as a stimulus for the export-producing economy.

Asian Currencies Fell on High Oil Costs
The Asian currencies fell this week as the oil prices surged and the rising inflation concerns forced foreign investors to cut the inflow of liquidity into this region.

Singapore Dollar Drops Large This Week
The Singapore currency had its worst week in a year on the Forex market, as it lost along with the other Asian currencies to the U.S. dollar, because the investors began to expect that the U.S. interest rate will unchanged rather than lowered next time.

Singapore Dollar Rises Before Fed Cut
The Singapore dollar rose today during the Asian Forex trading session as the market analysts expected the Federal Reserve of U.S. to lower the interest rate at the next meeting, widening the rates difference for these two currencies.

7. Interest Rates

Banks Slash Rates; Pound, Euro, Franc Drop
The Europe’s currencies posted a daily drop against the U.S. dollar after showing a moderate volatility during the early trading session after the regional central banks cut the interest rates at an unexpectedly large scale.
Bank Indonesia Raises Borrowing Costs
The Bank Indonesia increased the interest rates today for its third meeting in a row to efficiently fight the accelerating inflation caused by the growing food and oil prices.
Polish Zloty Gains for Second Week
The rising interest rates difference between the U.S. and Poland stimulated the second week of Polish zloty’s growth against the U.S. dollar.
AUD, NZD Going for 5th Daily Gain
Today both the Australian and New Zealand dollars continued their daily growth against their counterpart from the United States on willingness of the Forex traders to earn from the interest rates difference.
Bahrain, Kuwait, Saudi Arabia Cut Interest Rates
GCC states — Bahrain, Kuwait and Saudi Arabia — decided to cut their deposit rates from 3.50% to 3.00% today, following the yesterday’s interest rate cut by the Federal Reserve.
Reserve Bank of India Holds Interest Rates
The majority of Forex traders expected that the Reserve Bank of India will lower the main interest rates today to pare with recent emergency cut by the Fed and the anticipated additional interest cut at tomorrow Fed’s meeting. But Yaga Venugopal Reddy, Governor of the Reserve Bank of India, decided to leave the key interest rates at the same level.
Czech and Polish Central Banks Leave Rates Unchanged
After two other European central banks decided to hold their current interest rates, Czech and Polish banks chose to follow the same way and didn’t change their reference interest rates despite the fact that they both raised the rates at the end of November.
Swedish Riksbank Leaves Rate at 4.00%
Swedish central bank left the main interest rate unchanged at 4.00% during the meeting of the Executive Board on 18 December.
Hungarian Central Bank Holds Rate - Forint Drops
Magyar Nemzeti Bank (Hungarian Central Bank) decided today during the Monetary Council’s meeting to hold the main refinancing interest rate at the same level - 7.50%, after the last cut made from 7.75% by MNB on September 25.
Central Bank of Chile Raised Interest Rate
Yesterday Chilean central bank increased its interest rate by 0.25 basis points up to 6.0%. It was the first rate hike in Chile since September 13 this year.

6. Australian Dollar

AUD, NZD Down on Aroused Risk Aversion
The Australian and New Zealand dollars both showed a second day of decline today on the Forex market as the stocks, commodities and the confidence in the fast recovery from the recession fell world-wide.
Aussie Reaches 2-Month High versus Dollar
The Australian dollar rose slightly against the U.S. dollar and reached a new 2-month high level today as the dollar still suffers from the near zero interest rates set yesterday by the Federal Open Market Committee.
AUD Falls on Weak Business Confidence
The Australian dollar declined today against the U.S. dollar and the Japanese yen as the country’s stock markets fell after the report on the November business confidence came out showing the record low reading for the index.
Aussie, Kiwi Rise on China’s Stimulus Plan
The Australian and New Zealand dollars rose against the U.S. dollar and the Japanese Yen compared to the last Friday’s close levels as the China said that the government will provide $586 billion of liquidity help to the national economy.
Aussie Declines After Interest Rate Cut
The Australian dollar reversed its yesterday gains versus the U.S. dollar and the yen after the Reserve Bank of Australia announced its decision to reduce the target cash rate today.
Australian Dollar Rises for the Third Day
The Australian dollar rose against the U.S. dollar and the Japanese yen for the third day today after the rate cut in U.S. and a moderate decline in the global risk-aversion.
Australian Dollar Falls on Stock and Oil Drop
The Australian dollar fell today against the Japanese yen after the U.S. stocks failed to demonstrate Monday’s growth and the Japanese Nikkei showed poor dynamics during the earlier Asian trading session.
Australian Dollar Rebounds after Rate Cut
The Australian dollar got boosted by the central bank’s decision to cut the interest rate by 1 percentage point today and recovered against the other major currencies during the Asian trading session.
Australian Dollar Has Worst Week Since 1985
The Australian dollar posted the biggest weekly loss since 1985 against the U.S. dollar this week, as the traders dumped their positions in the high interest rate currencies, while the situation with the global financial system remained uncertain.
Buy AUD for NZD Can be Next Big Trade Idea
The Australian currency may experience considerable gains against the New Zealand dollar soon as the New Zealand’s central bank showed commitment to the extreme rate cutting in the fear of recession, while Australian central bank may refrain from changing the rate for now.

5. U.S.Dollar

Dollar Declines on Oil Shortage Expectations
The U.S. dollar began today’s trading session with a rather strong decline against the euro, after posting a significant gain yesterday, as the investors expect the oil prices to surge on the Middle East conflict.
Dollar Falls on Fears That Recession Deepens
The U.S. dollar declined today against the other major currencies and especially against the euro as the traders expect weak macroeconomic reports to continue coming out from the United States, showing that the world’s biggest economy is in the worst situation of all the developed countries.
Ecuador to Continue Using U.S. Dollar
The President of the Republic of Ecuador, Rafael Correa, said yesterday that the U.S. dollar will remain as the country’s main currency as the economic crisis offers harsh times for the Ecuadorian financial system.
Dollar Down before Fed Rate Deciosion
The U.S. dollar continued to go down today against the euro and the yen as the traders expect a rate cutting decision from the Federal Reserve and the bailout of the U.S. automakers.
Dollar Near 2-Month Low vs. Euro
The U.S. dollar dropped to the weakest level during the last 6 weeks against the European currency as the world’s stock markets rallied despite the delay in the U.S. automakers bail-out.
Dollar to Post Weekly Decline against Euro
The measures proposed by the U.S. government to support the national financial system and the optimism that followed the announcement of Obama’s economic team caused the U.S. dollar to decline against the euro this week as the money risks decreased world-wide.
Dollar Falls Before Employment Report
The U.S. dollar declined against the euro and the British pound as the traders expect that the release of the important employment data from U.S. will show the worst contraction since 2003 today.
Dollar Uncertain Before Interest Rate Decision
The U.S. dollar traded with an alternate success against the other major currencies as the investors are uncertain before the Fed’s interest rate meeting today and the state of the global financial system.
Dollar Strengthens after Stimulus Proposal
The U.S. dollar rose today against other major currencies, except the yen, after the Federal Reserve Chairman Ben Bernanke proposed further measures to provide more liquidity and credit confidence to the U.S. economy.
USD Demand Triggers Biggest Weekly Gain
The U.S. dollar showed the biggest weekly gain ever against the euro on the Forex market this week as the global demand for dollar liquidity kept the greenback up despite the strong negative factors.

4. Indian Rupee

Indian Rupee Falls to Record Low
The Indian rupee fell to the record low level against the U.S. dollar today as the Asian stock markets followed the path of the U.S. equities and declined strongly; the recession forecasts for 2008 and the first half of 2009 also played their role.
Rupee Declines More as Stocks Tumble
The Indian rupee continued to fall against the U.S. dollar and the Japanese yen today as the Asian stock markets fell again, spurring the outflow of the capital from the emerging markets.
Rupee Falls to Record Low on Rate Cuts
The Indian rupee fell to the new record low level versus the U.S. dollar today as the foreign investors pulled out capital out of the country’s markets amid deepening of the global financial crisis.
Indian Rupee Heading for Weekly Gain
The Indian rupee is more likely to end this week in a positive zone against the U.S. currency as the investors expected that the companies’ good reports will attract traders and the conversion to local currency.
Rupee Falls on Oil Demand Speculations
The Indian rupee showed a weakening today at the Forex market as the speculations that the domestic companies will have to buy oil rose in the country.
Rupee Rose on Earning Conversion
The Indian rupee rose today as the exporters had to convert their overseas earnings after the India’s currency has been losing significantly to the U.S. dollar in May.
Rupee to Gain 9% This Year on Higher Rates
Fortis Bank analysts expect Indian currency to rise 9 percent by the end of this year as the Reserve Bank of India will have to increase interest rates to fight the accelerating inflation growth.

2. What is Forex Trading?

A guide to the place we call home.
Before you start trading in the Forex market, you need to know what Forex is all about. Forex is short for Foreign Exchange. It carries multiple names such as FX, 4x, and Spot FX. We are focusing on the retail Forex market which is for all individual traders. Currency trading is by far the largest market to trade in on the planet.
The commodity that is traded is actual currency. For example, if you would like to sell Euros and by US dollars, you would do this trading the EURUSD currency pair. Most Forex brokers offer you many different pairs to trade. When starting out you may want to stick to the big pairs connected to the US Dollar. These include eurusd, usdchf, gbpusd, and the usdjpy. These pairs tend to have the most fluid movements and the best liquidity.
If you need a complete beginners guide to the Forex market, you can find plenty of information by typing a search in Google. This guide is setup to give what we think are the Top 20 items to think about before trading with your own money.
Source From: forexnewstrader.com

1. Forex News Trader

Forex News Trader was developed to give traders the edge they need to learn how to trade based on economic news events from around the world. The same edge the institutions use to make hundreds of millions and even billions of dollars in profit each year.
Forex News Trading will provide you with the information you need to give you a true insider’s understanding of the Forex markets. You will feel confident in your trading, and never doubt your trades again.
Does this mean you will win every trade? No, of course not, but armed with the knowledge Forex News Trader will provide you, you will never be afraid to take that next trade - as the odds will now be tipped in your favor.
Each and every month there are a tremendous number of news releases for the Off Exchange Retail Foreign Currency Market. Many of these events and announcements move the markets considerably. But how do you properly capitalize on these moves? Get it wrong and you could be wiped out. Get it right and you can be in a small group of trading elite, consistently pulling pips out of the market each and every week.
Our Forex Trading goal is to provide our visitors with the best trading strategies available. We work exclusively with Forex brokers who specialize in news trading, and also include extensive reviews on the best in the business. Any relevant and helpful information related to Forex news trading can be found on this site.
There are many trading methods that exist to help you succeed as a trader, but there also many factors you need to consider before you execute your trades. Each news event moves differently. What we do is provide you with techniques and systems on how to trade these major news events. How can you maximize your gains and limit your loses? Not easily done, unless you truly know what you are doing.
Forex News Trader will teach you the moves you need to make. In volatile or fast moving markets, such as news trading events, it is imperative to be completely focused and on top of your game. You need to constantly learn new styles and techniques if you want to stay ahead.
Whether you profit, or end up like the other 95% of traders, depends on your ability, knowledge, patience, and how the market moves that day. With such a large world market there are numerous opportunities to pull profits on a consistent basis.
Source From: forexnewstrader.com