Forex trading examples 3

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

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

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

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

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

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

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

Forex trading examples 2

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

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

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

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

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

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

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

Forex trading examples 1

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

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

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

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

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

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

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

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

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

Short-Term Forex Technical Outlook: GBP/CHF

The British pound weakened against the Swiss franc for the fourth day, but looks to be finding short-term support near the 50-Day moving average (1.7743), and the GBP/CHF may continue trend higher over the near-term as market sentiment improves. After reaching a high of 1.8976 in November, the pound-franc slipped to a low of 1.5124 on 12/29 following the rise in risk aversion however, the rebound in market sentiment has led the pair higher throughout the first half of year, and the GBP/CHF should continue to trend higher over the near-term as investors speculate the Bank of England to tighten policy over the next 12 months. Credit Suisse overnight index swaps are higher by nearly 100bp as investors anticipate the BoE to hike rates in the following year, and expectations for an economic recovery later this year may continue to support the rise in the interest rate outlook as growth prospects improve. Over the next few hours of trading, we may see the pound-franc continue to push lower to retrace the advance from the end of July however, as the RSI approaches oversold territory, further moves to the downside are likely to be capped, and we may see the pair bounce back to fill-in the gap from the 120 SMA at 1.7888. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.

Automatic Forex Trading Software

From the time when automatic systems was introduced and became ordinary as well as within reach, forex trading software programs had experienced an emergent significance. What was once the sole domain of banking companies and other such large investors, financial and otherwise, is now luring tiny and mid level investors. This is the market where one trades currency of one country with that of another. There is no end in dealing trillions of dollars in this place every day so this market had been hailed as the most active and largest financial marketplace in the world.

Today dealing with forex is relatively simpler with the advent of the net and superior connectivity technology anyone with an net link, forex dealing software programs and some knowledge of accounts and brokering can actually indulge in this. This marketplace never closes, and to know about what is happening in the marketplace, you have to keep a constant monitoring system in place. Before you deal in any currency the automated system allows you to not just select the currency, but also its asking and selling price. If you want your transaction being attended to instantly, all you need to have is a tiny amount for investment and a broker.

Making money in this trade or marketplace needs no proper proficiency since all the work will be done by the automatic forex trading software systems for you. When automated dealing systems are used by supervised accounts, the program itself handles all the details for you. This is a great time saving procedure since you are saved from the hassle of trading yourself. Compared to a manual dealing, the automated dealing system can actually facilitate the synchronized management of one or more accounts. These programs allow you the dealing of multiple systems in multiple market places.

The Value of Trade Balance to Local Economy

Discover the importance of forex trade balance to import and export values and their related impact on currency trading.

Interests Rates as Influencing Forces In The Forex Market

Interest rates play the foremost important role in moving the prices of currencies in the Forex market. As the institutions that set interest rates, central banks are therefore the most influential factors. Interest rates dictate flows of investment. Since the currencies are representations of a country’s economy, differences in interest rates affect the relative worth of currencies in relation to one another. When central banks change interest rates they cause the Forex market to experience movement and volatility. In the realm of Forex trading, accurate speculation of central banks’ actions can enhance the trader's chances for a successful trade.

An increase in interest rates encourages traders to invest within that market and causes the demand for the currency to rise. As demand rises, the currency becomes scarcer and consequently more valuable. Investors are drawn to the currency, causing it to appreciate, because they will gain a higher yield on their investments, as in the Jane example. In order to purchase the country's assets (stocks or bonds), Jane will have to convert her domestic currency to the target country's currency also increasing demand. Conversely, a fall in interest rates discourage investors from purchasing assets in that particular economy, as the return on their investment is now smaller. The economy's currency will depreciate as a result of the weaker demand.

US dollar firms as market braces for payrolls data

NEW YORK: The US dollar gained ground on Thursday as investors awaited key US jobs data for signs of economic recovery, and after both the European Central Bank and the Bank of England left interest rates unchanged.

Sterling weakened sharply after the Bank of England announced it would pump another 50 billion pounds into the economy as the recession is proving deeper and more stubborn than expected.

At 2100 GMT, the euro traded at 1.4347 dollars from 1.4411 dollars in New York late on Wednesday.

Against the Japanese currency, the dollar rose to 95.44 yen from 94.97 yen late Wednesday.

After central bank decisions in line with forecasts, the market looked ahead to Friday's report on US unemployment and non-farm payrolls, one of the best indicators of economic momentum.

"The state of the US labour market is critical to not only the outlook for the US economy but also the global economy," said Kathy Lien at Global Forex Trading.

She said job losses are forecast to be anywhere between 150,000 and 460,000, leaving the market uncertain.

Online Forex Trading Low spreads for all traders, for any size trade Discover FXTrade 0.9 EUR/USD spread Second-by-second interest Any trade size yo

Bernanke befriends the Buck today!

The main event enters the Capital Markets ring today. In June the Fed acknowledged ‘the pace of economic contraction is slowing’, however, conditions in financial markets have generally improved in recent months. They noted that inflation will ‘remain subdued for some time’, which will warrant keeping the Fed funds rate at ‘exceptionally low levels for an extended period’. It would be a shock if Bernanke and Co. decided to change their stance on rates. The US Yield curve would be smoked during the mid-week auctions too! Will there be a hint of an exit strategy this afternoon?

The US$ is stronger in the O/N trading session. Currently it is higher against 12 of the 16 most actively traded currencies in a ‘whippy’ trading range.

Not much to get enthusiastic about yesterday in the US. The main event occurs at 2.15pm this afternoon. Will the Fed soften their stance on the state of the economy? It’s a slam dunk that rates will not change. But, whatever is decided and announced...

Free Forex Charts with Live FXCM Quotes 2

Free Forex Charts with Live FXCM Quotes

forex news

Many blogs provide timely news on fundamental events related to the Forex market. Forex news usually highlights important events that occur, on a daily basis, in nations throughout the world. The news has an effect on the currency market and the strength of each nations currency vs. the others.

News coming out of countries with the largest economies will have the greatest affect on the market. The United States, Great Britain, Japan, and Germany are all countries under the microscope of Forex Traders throughout the world. Events such as the Non-Farm Payrolls in the United States consistently have a large impact on the pricing of currencies. Often news will also be related to the government officials of each country and what they say during meetings or press conferences. Sometimes a government official will say something with the intent strengthening or weakling their countries currency. This is typically referred to as "Jawboning" their currency.

The Forex Market is driven by fundemental events, so it is important to pay attention to Forex news on a daily basis.

Yen (japanese currency) exchange rate

n spite of a sharp monthly reversal, the matched trend lows of 87.15 from the months of December as well as January, the Forex market has been confined to an important downward trend while the current rebound has been classed as corrective. As was witnessed in the Forex market, a daily double bottom has been initiated, and it is hopeful that the Japanese yen will climb back to the 104.00 area.

Interest Rate Forecast of Japanese Yen and US Dollar Interest Rate

The pair of currencies which consist of the US Dollar/Japanese Yen seems to be literally unaffected by the interest rates between the Bank of Japan and the Federal Reserve. The risk manifestation has driven the price action for the Japanese Yen and US Dollar with risk sentiment favoring the Yen. The relationship between these two currencies disappeared in February once the USD/JPY rallied in spite of a large sell off in equity markets all across the world.

The Credit Suisse made some expectations about the Japanese Yen over the next year. The one good thing about all of this is that the Bank of Japan has always kept rates near zero. The Fed funds rate is expected to rise by 41 bps. Therefore, the Japanese Yen could resume its position as one of the funding currencies which may also add to the Yen's weakness going forward.

Forex analytics

There are two main types of analysis one can use trading in the Forex. They are Fundamental analysis and Technical analysis. You should know a little about both types in spite of the fact that there has always been a debate which analysis is more preferable. It's necessary to examine the currency markets from aside and learn how news influences prices. You should know and understand the daily Forex news and market analysis proposed by professional currency analysts. Soon you'll realize what big part fundamental news are playing in your everyday trading. Luckily, most Forex news and analysis are offered on the Internet free of charge. We'll name these sites.

Technical analysis

Technical analysis is equal to charts, or, in other words, it's the study of price movement. The thing is that anyone can look at historical price fluctuations, and according to them, predict at some point where the price will go. In the charts one can find trends and patterns which will help you find good trading options. The most necessary thing in technical analysis is the trend! A lot of people know quite well that "The trend is your friend". You will more apparently succeed if you're able to find a trend and trade in the same direction, and Technical analysis can help you identify these trends as soon as possible. Then you'll get more beneficial trading opportunities.

Internet and Computer Systems in the FOREX Business

With every passing year the interest in electronic trading is bigger, more especially trading shares and currency through Internet. A new profession came forward - this of the currency dealer.

Currency Trading Services and Forex Information

Welcome to the giant Currency Trading Information portal! Are you interested in Trading Futures Online or Trading Forex Online or Investing in Property or maybe you need some Stock Market Investing Services or Forex Market Training. Whatever you need here is an amazing collection of the Best Online Forex Currency Trading and Investing Services. We tried some of them and were blown away by these automatice trading robots and how much Money you can make Online Currency Trading on the Stock Exchange, but obviously with these experts help. Be prosperous!

FOREX-Yen rises as China's data disappoint, US stocks fall

NEW YORK, Aug 11 (Reuters) - The Japanese yen rose broadly on Tuesday as investors bought the low-yielding currency as U.S. stocks declined and amid rising risk aversion after disappointing economic data from China.

China reported below-forecast growth in factory output and investment, reminding markets that the world's third-largest economy is not yet back on a solid footing. (For details, see [ID:nPEK328668]).

The news also added to the currency woes of the so-called commodity-bloc countries that supply raw materials to China, such as Australia and Canada.

The dollar traded in a tight range, swinging between gains and losses against a basket of currencies and as investors awaited a policy statement from the Federal Reserve and speculated whether strong U.S. data would support the currency going forward.

U.S. jobs data last week boosted expectations for higher U.S. interest rates by early 2010, but with a Fed announcement scheduled for the conclusion of a two-day meeting Wednesday, some dollar investors are choosing to wait rather than continue to buy.

A drop in U.S. and European stocks also prompted traders to sell currencies seen as higher risk versus the dollar and the yen.

"Chinese economic news is likely playing a part in today's forex market activity," said Nick Bennenbroek, head of currency strategy at Wells Fargo Bank in New York. "And with China seen as the global economy's main growth engine during the early stages of recovery, the disappointment (with the data) is weighing on equities and on the commodity-based and emerging currencies."

Wells Fargo expects further weakness in commodity and emerging markets currencies in the near term.

In afternoon trading in New York, the dollar was down 1.3 percent at 95.84 yen JPY=, off an eight-week high of 97.79 yen set last week on electronic trading platform EBS. The euro was down 1.1 percent against the yen at 135.74 yen EURJPY=R.

Technical currency analyst James Chen at FX Solutions in Saddle River, New Jersey, said in a note that the move lower in euro/yen after recent sharp gains may pave the way for a further drop to the 131.00 price region.

FOREX MARKET MAKERS Poised Against Forex Traders

Toronto, Canada (PRWEB) August 12, 2009 -- InvestTechFX the leading 1 PIP Forex Co. reported that some Forex market makers are now operating against traders, while others are shamelessly exploiting their position in the market. Since this is not true of all market makers all of the time, it can be difficult to pin a specific instance of misconduct on a specific market maker. It is also that it is not necessarily illegal for a market maker to buy and sell against the interests of a trader, though it does go against the spirit of their intended role in the market. It is important to remember that market makers have fundamentally the same goal as a private trader: to buy low and sell high.

InvestTechFX the leading 1 PIP Forex Co. offering the MetaTrader4 trading platform described the concept of a market maker as essentially a financial institution that works like a wholesale operation; buying and selling assets in bulk and baring the burden of depreciation risk. Market makers use their superior buying and selling power to maintain large inventories of assets (in the context of Forex, the assets are lots of currency). Because they can pool greater resources, market makers can use banks to hedge risk more effectively. In theory, market makers are supposed to literally "create" a fertile trading environment by guaranteeing the option to buy or sell a currency. In a market as liquid as Forex currency trading, the ability to buy and sell at the click of a mouse is an absolute prerequisite, especially for short term traders like scalpers. A market maker creates a situation in which there a perpetual supply and demand for the same currency; if a trader wants to sell a certain currency, the market maker will be willing to buy it, and if a trader wants to buy that same currency, the market maker will be willing to sell it: guaranteed, regardless of market conditions.

InvestTechFX the leading NDD Forex Co. offering 1 PIP on 6 majors explained that because marker makers will usually pass on your order to buy or sell to another independent trader ("covering" the order), however marker makers will also sometimes hold on to the purchased currency (or whatever the relevant asset is). When a market maker takes this step, they essentially become a competing trader. The market makers can capitalize on therr position in the market to trade from a position of authority and reduced risk, making them essentially a trading institution that pools resources to gain a trading edge and influence the market.

InvestTechFX the leading NDD 1 PIP Forex Co. stated that not all market makers are predatory, and that within Forex trading a marker maker role is a simple necessity. There are upsides to working with a market maker: they can have a more user-friendly software interface, they can provide more consistent prices, and often provide free market news and software. However market makers do have significant disadvantages from the perspective of the private trader. Market makers shun scalpers, and will often put them in special account groups to slow trade executing. Trade execution can also be severely slowed during news and other trading rushes. Finally, there is the continuing issue of a fundamental conflict of interest; a market maker always has the option to trade against you, becoming a competitor instead of a neutral party.

InvestTechFX the leading NDD 1 PIP Forex Co. is a No Dealing Desk alternative broker that works directly with a clearing partner and never deals against traders. With a 1 PIP fixed spread on 6 majors, InvestTechFX creates an atmosphere of transparency that allows traders to focus on the market instead of on broker spreads. InvestTechFX is a software solution Co. supporting the entire diversity of traders and there strategies, including scalpers, expert advisor users, and Islamic traders. For more information on account groups and trading options, visit InvestTechFX's website.

InvestTechFX the leading 1 PIP Forex Co. offers the MetaTrader4 trading platform, as well as mutually beneficial white label partnerships for other brokers and Forex institutions. The concept of a white label is simply that of one product that is marketed under different brand names. A white label partnership allows other Forex institutions the ability to offer InvestTechFX's top-of-the-line and fully supported MetaTrader4 platform under their own name. A white label partnership helps both organizations provide superior technology and service while expanding client base. InvestTechFX is committed to making the best possible technology available to all Forex traders.

FOREX-Dollar inches lower vs high-yielders after Fed

TOKYO, Aug 13 (Reuters) - The dollar edged lower on Thursday after the Federal Reserve painted a less gloomy outlook for the U.S. economy, an assessment that led investors to return to commodity-linked currencies.

The Fed said it would slow the pace at which it buys Treasuries by extending the duration, but not the size, of its $300 billion programme to buy long-term government securities. [ID:nN1272730]

The U.S. central bank also kept interest rates near zero and said they would likely stay there for an extended period, which dealers said scaled back some market speculation that the Fed might raise rates soon.

"The Fed move basically did not have enough impact to alter the market trend of funds flowing into riskier assets," said Kazuyuki Kato, treasury department manager at Mizuho Trust & Banking.

"The prospect that the Fed will keep rates low will likely be one factor causing dollar weakness in the long term," he said.

The euro was firmer EUR= as were other high-yielding currencies like the Australian and New Zealand dollars, which made impressive gains against the greenback and the yen after being sold-off aggressively in the past few sessions.

The euro rose 0.3 percent from late U.S. trade on Wednesday to $1.4227 EUR=.

The Aussie was up 0.2 percent at $0.8352 AUD=D4, having fallen as low as $0.8180 on Wednesday, while the kiwi advanced 0.2 percent on the day to $0.6730 NZD=D4 and up from Wednesday's trough of $0.6599.

The dollar edged down 0.1 percent to 95.96 yen JPY= after rising to 96.80 yen on trading platform EBS the previous day.

The U.S. currency's upside against the yen seems to be capped due to talk of dollar-selling by Japanese investors repatriating funds related to $27 billion in coupon payments on U.S. Treasuries due on Aug.15. In addition, $61 billion in coupon securities mature on the same day.

Analysts said that while sentiment towards riskier assets improved, there was a general degree of caution on the Fed's move to extend the time frame of asset purchases as it indicated the economy was still vulnerable.

"I guess that leaves its options open just in case the improved economic outlook turns out not be blemish free," said David Watt, senior currency strategist at RBC Capital. "The Fed is strategically taking a middle road with the BoE on one wing and Norges Bank on the other."

WORLD FOREX:Dollar Demand Supported, Following Fri's Move

NEW YORK (Dow Jones)-- Dollar demand remains supported Monday morning, pushing the U.S. currency to several intraday highs.

The dollar advanced to a one-week high against the euro, as the market continued to unwind the near-record amount of short positions in the U.S. unit following a stronger-than-expected U.S. payrolls report Friday.

The euro is also breaking below closely watched technical levels, which sends the common currency lower, said analysts.

The U.K. pound also fell to a fresh one-week low, and is falling even faster than the euro, after the Bank of England last week expanded its gilt-buying program and as technical analysts point to continued vulnerability.

BNP Paribas, along with other currency research analysts, suggest selling the pound on the U.K.'s economic uncertainties.

The dollar's gains Monday extend a sharp rally Friday.

"Friday was a watershed day," said John McCarthy, manager of currency trading at ING Capital Markets in New York, referring to the dollar's rally off of positive U.S. data for the first time since the financial crisis shifted trading strategies.

Usually, as a safe-haven asset and lower-yielding currency, the dollar had declined throughout the past two years against riskier, higher-yielding currencies, such as the euro, when spurts of positive data boosted market sentiment - even if it is was positive U.S. data.

But this time the dollar was bought on interest-rate expectations and economic fundamentals, something that hadn't happened since the world's major central banks began their aggressive easing campaigns.

Traders "are still testing that...and there's been a bit of demand for dollars," said McCarthy.

The euro fell as low as $1.4129, while the pound fell to a low of $1.6520.

Pound weakness helped the euro rise to a session high of GBP0.8569.

The dollar gained to a session high of CHF1.0871 earlier, and is nearing a high versus the yen.

Monday morning in New York, the euro was at $1.4142 from $1.4169 late Friday. The dollar was at Y97.37 from Y97.48, according to EBS. The euro was at Y137.70 from Y138.20. The pound was at $1.6510 from $1.6671. The dollar was at CHF1.0854 from CHF1.0825.

"The labor market data's strong effect may have been associated with the widely-held view that the Fed is not going to start tightening policy while the unemployment rate continues to climb," said analyst at Barclays Capital.

That's why Wednesday's Federal Open Market Committee meeting is so important this week.

"What would be negative for the U.S. dollar is if Fed officials don't follow up with more hawkish/less dovish commentary," said analysts at UBS.

Also key will be how the dollar responds to U.S. retail sales data Thursday and industrial production and consumer confidence data Friday.

A Beginner's Guide to FOREX

FOREX is a word play on the term Foreign Exchange Market. It is a market for buying and selling of currencies from all over the world. Certainly, such transactions are bound to be voluminous. It is just an estimate that there are about transactions of $1.5 trillion USD on a daily basis in the FOREX. Now just compare this with the paltry $300 billion USD a day transactions for the US Treasury Bond and the $100 billion a day transactions for the US Stock Exchange.

The FOREX came into existence in 1971 when the fixed currency exchanges were abolished. Currencies no longer had fixed values after that; on the contrary, their rates (mostly taken in comparison with the USD) were fluctuating, and changed on a daily basis. Throughout the seventies and the eighties the FOREX grew steadily, showing more advancement in the later years. The market has stupendously grown from $70 billion USD a day to the staggering amount that it transacts today on a daily basis.

There are actually about five thousand trading institutions in the FOREX. These include international banks, central government banks such as the US Federal Reserve, and commercial companies and brokers for all types of foreign currency exchange. The best thing that shows the unbiased nature of the FOREX market is that it has no fixed headquarters anywhere – it operates primarily from all major cities like New York, Tokyo, London, Hong Kong, Singapore, Paris, Frankfurt, etc. One can even use the telephone or the internet to make the transactions. The major businesses at the FOREX are the buying and selling of products in other countries. Several transactions are also conducted from the currency brokers or traders who stand to make small profits with the daily fluctuations in the market.

Most of the FOREX business is centered on big banks and financial institutions, but it doesn’t mean that the FOREX is inaccessible to small investors. The recent changes in the financial regulations have effectuated this accessibility. Earlier, a minimum transaction size was required to conduct business with the FOREX. But the current rules have made it possible to break large inter-bank units into smaller bits. Each bit is worth as less as $100,000. This makes it possible to each individual investor through loans that are extended for trading, known as leverage. The ratio to control the lots is 100:1. This means, every $1000 USD will allow one to control $100,000 on the FOREX.

The benefits of trading with the FOREX are mentioned below:-

(1) Liquidity of Investments – As the FOREX is a huge market, the funds have a very high degree of liquidity. This is because of the presence of the international banks who provide their bids and carry out a large number of transactions on a daily basis. Therefore, there is always a buyer or seller for any type of currency.

(2) Highest Degree of Accessibility – The FOREX is open 24 hours a day for 5 days a week. Every Monday morning the exchange opens at Australian Standard Time and closes on Friday afternoon at New York time. Greater accessibility is provided because the transactions can be conducted from the person’s home or office.

(3) Open Market – At the FOREX, there are no secrets. All the fluctuations that occur in the market are made accessible to everyone at the same time. There is no insider trading in the FOREX.

(4) No Commission – There is no hassle of paying commission to the brokers in the FOREX. Here the brokers earn by setting up a difference between the buying price and the selling price of a currency, which is known as a spread.

It must be understood by now that for the FOREX to work effectively, the currencies must always be traded in pairs. For instance, the Japanese yen must be traded against the euro. When one kind of currency is sold, there should be another to be bought in its stead.

The profit happens because there is always mobility between the different currencies. Even if there is a miniscule change in the exchange rate, then it could mean substantial changes in the profits due to the large amount of money involved in the transactions. People are thronging to the FOREX and not any other institution due to the trust that they have in it. To add to the advantage, the market is absolutely well-advanced and uses sophisticated software for dealing out its transactions.

4 Simple Steps To Currency Trading Success

If you want to learn currency trading the right way you need to be aware that 95% of traders lose - not because they because they don't try, its just they get the wrong Forex education and this results in a swift wipeout. Here, we are going to give you a plan to devise and implement a forex trading strategy for success in 4 simple steps.

1. Accept Responsibility

If you want to make money in currency trading then you need to accept responsibility for your destiny - no one else is going to give you success you have to take it for yourself.

This means no blaming your forex broker, a guru or the currency markets; you are on your own.
That's no bad place to be, as all successful traders in currency trading accept this fact and love the challenge.

If you want to make money in currency trading you can, there is nothing to stop you as everything about successful currency trading is specifically learned.

Don't fall for its easy, its not and with the rewards on offer you wouldn't expect it to be either.

2. Accept These Facts For Currency Trading Success

The most important fact to accept is that currency trading is a game of odds not certainties, predicting the market and scientific theories, and pinpoint accuracy is a lie perpetrated by vendors and they won't give you success.

You're like a successful card player simply playing the high odds but instead of hands their trading opportunities.

You bet big when the odds are in your favor and fold when there not it really is that simple and it will make you a lot of money, if you do it correctly.

Accept that you have to have confidence in what you are doing (which comes from self education and knowledge of your personality) this then gives you the discipline to follow your currency trading system.
Of course - If you can't follow your currency trading system with discipline, you have no system in the first place!

Markets can be frustrating and you have to wait for the right opportunities but you can win, if you get learn currency trading the right way.

Now lets look at your method for currency trading success.

3. Your Currency Trading System

Building a trading system should be based on the following points and if you work smart and get the right knowledge, it should only take you a couple of weeks to master the basics and have a robust forex trading system that can get the odds on your side.

1. Use a long term trend following system

2. Learn about support and resistance and the timeless method of breakouts - if you don't know what they are read our other material.

3. Confirm any trading signal you execute with momentum oscillators, this is the key to getting the odds on your side, if you don't trade with momentum your not trading the odds.

4. Employ a money management system that ensures you have clearly defined get out area when you enter a trade for both losses and profits

Also you need to:

Keep your system simple!

Simple systems are easy to understand, apply and are more robust than complicated ones. If your trading system has to many indicators and it will break in the brutal world of trading and in currency trading less is more just a few is enough.

You can win with a simple system based upon support, resistance and just a few momentum indicators and this is very quick to build and test.

5. Getting Success

Don't work hard at trading! Work smart and only learn the right forex education.

There is plenty of rubbish sold on the net. For example, most novice traders love day trading yet its guaranteed to lose you money or trust scientific systems that are as accurate as your horoscope.

These traders are naive lazy or both - don't join them or you will lose.

Once you have built your currency trading system, don't do any more work on it. Many traders bang on about learning all the time - but if you are happy with your trading system and the logic is sound, there is no need to do more work.

You don't get paid for effort in forex trading you get paid for being right and that does not involve hard work!

It should only take you 30 minutes or so to execute your trading signals per day and that's it - get on with your life.

If you follow the above four simple steps you can enjoy currency trading success. You will get the right forex education you need, have the confidence and discipline to apply your forex trading strategy for big gains.

Most traders fail not because they lack a method, but because they lack the mindset to apply it with confidence and discipline and this point cannot be stressed enough. If you want to learn to trade successfully, keep the above points in mind and they will lead you to currency trading success.

10 Forex Trading Essentials

These 10 Forex trading essentials are a high-level peek at the pitfalls that catch many traders. Compare your trading style with these simple fixes and if you are not employing some or all of them, you are placing yourself at a higher risk level.

1) Increase your time perspective - If you are not a well seasoned Forex trader, you shouldn't even look at a price chart of less than 60 minutes. The randomness of the normal transactions which occur in Forex will distort your judgment of the true picture. Use longer time frames, such as 60 minute, 4 hour and daily charts when planning your trades.

2) Reduce your position size to 5% Maximum - Having more than 3 to 5 percent of your trading capital on the table is a major no no. High leverage makes it very easy to get in away over your head. This combination snares many traders and can rapidly destroy your account. You need to have the ability to ride the volatility waves common in Forex.

3) Give your trade time to work - You can only use this option effectively if your position is sized safely... as per 2) above. Prices will fluctuate dramatically in Forex, and you need to be sure that a loss really is a loss before you close a trade that is moving against your plan. A 30 pip stop loss will often kick you out of a trade, just as it's about to turn in your direction. You need to allow for larger price swings... if you have determined the major price trend, be patient and let the odds work in your favor.

4) Reduce your dependence on technical indicators - Due to the fact that technical indicators get their data from past events, the reality is they have no ability to predict the future. Pro's that enjoy success using these indicators, often profit from the knowledge of how the masses are likely to react to this data, rather than the information itself. You need to determine the major trend (a simple moving average will show you this) and hop aboard. Use a longer time frame, as in 1). The largest players in Forex rely about 25% on technical indicators when making their trading decisions.

5) Trade only one or two currency pairs - And stick to the majors... not the crosses. Currency prices are driven primarily by fundamental data. In order to anticipate what is likely coming down the road, you need to follow some basic data for each of the countries involved. Trading too many currencies will make it difficult to keep up to date. There is equal opportunity to profit from each of the pairs, so wait until your experience level has matured and the information tends to sink in without as much effort on your part before you start to trade more currencies.

6) Average in and out of your trades - If your trading account is less than $50,000 have your broker enable mini-lots for your account. This will allow you to average in and out of your trades... a great way to add more flexibility to your account. If this applies to you and your broker doesn't offer mini lots, find a new broker... this is an important need to do.

7) Follow the data for your currency pair(s) - Know what data is pending for release. Volatility often increases dramatically when these releases occur. The safe strategy is to exit your positions prior to major releases... this is the way many of the larger accounts handle these situations. Data releases can often cause a change to the trend. Take them seriously.

8) Determine the trend and get aboard - As with any type of trading, the safest bet is to determine which way prices are trending, and then trade in that direction. You don't need anything fancy... a simple moving average on your candlestick chart is sufficient. Zoom your chart out to be sure you have the big picture. Compare where the price is now, relative to where is has been for a significant amount of time (at least a month). Use caution if the current price is near upper or lower extremes, as there may be a trend change once that extreme is reached.

9) Know when to take a profit - A winning position can quickly turn into a loser if you set your sights too high. Don't be afraid to take your profit - or a part of your profit at 20 or 30 pips. The price waves in Forex make it ideally suited to averaging into and out of positions by using multiple entry and exit points for each position. This is exactly where your mini lots can help! The benefit of spreading out your position is that your overall risk is reduced.

10) Stop listening to "Gurus" - Don't fall into the trap of believing everything, or even most things, you hear. The trading world is overflowing with gurus only too willing to offer their opinion on the future. It will only be an opinion, nothing more. They may seem to have convincing data, but trust your own brain. You need to weigh the economic data from your countries... that is what drives currency prices. The enormous size and nature of Forex ensure there is no insider information. You have access to the same data as everyone else in the game. In time, your own instinct will guide you to your goals, and that is what you need to trust.