Month: March 2010

Source: Forex Yard

After two weeks in which the Euro saw a bullish correction against the Dollar, the EUR/USD pair seems on its way downwards. The pair is currently trading around the 1.3515 level, and a drop of 100 pips will mark a year low. Will it take place later on in the week?

Economic News

USD – Recovery Indications from the U.S. Economy Strengthen the Dollar

The Dollar continued to strengthen during last week’s trading session. The Dollar soared against the Euro, and the EUR/USD pair has reached the 1.3502 level. The Dollar saw a rising trend against the Pound as well.

The bullish trend of the Dollar came in a week on which several economic indicators proved that the U.S. economy is stabilizing. The Building Permits report showed that 0.61M new residential building permits were issued during the month of February. This has been the third month in a raw that at least 0.60M permits were issued. In addition, the Core Consumer Price Index (CPI), the leading inflation gauge rose by 0.1% during February. The latest CPI results showed that there are no worries of either inflation or deflation, which is a very reassuring notification for a recovering economy. The unemployment condition also seems to be stabilizing as the weekly Unemployment Claims decreased by 5,000 to 457,000 during last week. At the current timeline, when global economies still struggle to pull out of recession, investors understand that it is often better to see solid data from the economy. This shows that the economy is truly recovering and is likely to continue to provide recovery indications.

As for the week ahead, many interesting news events are expected from the U.S. economy. Traders are advised to pay special attention to the Existing Home Sales, the Durable Goods Orders index, the New Home Sales and the weekly Unemployment Claims. Traders should also follow Fed Chairman Ben Bernanke’s speech which is expected on Thursday as he is expected to discuss potential interest rate changes.

EUR – Euro Continues To Tumble Vs. The Majors

The Euro saw a bearish trend against most of its major counterparts during last week’s trading session. The Euro dropped about 250 pips against the Dollar, about 100 pips against the Pound and over 200 pips against the Yen.

Two main reasons continue to push the Euro lower against the major currencies. The first reason is the Greece debt crises. The Euro-Zone seems to be reluctant to offer a final rescue plan at the moment, and investors respond with less and less faith in the European currency. It appears that the Euro will continue to slide until the problematic Greek financial issues will be resolved. The second reason of the Euro’s freefall is the disappointing economic data from the Euro-Zone. The European Economic Sentiment failed to reach expectations for 40.1 points and has dropped from 40.2 on February to 37.9 points on March. This has been the sixth consecutive drop in this survey. This further indicates the fragile condition of the Euro-Zone that still seems as if the economic recession is not completely over.

Looking ahead to this week, a batch of data is expected from the Euro-Zone. Special attention should be given to publications from the German economy such as the German Business Climate and the German Consumer Climate. In addition, the European Central Bank President Trichet is expected to deliver two speeches this week and traders are advised to pay attention as harsh volatility usually takes place during his speech.

JPY – Yen Corrects Losses against the Major Currencies

The Yen rose against most of the major currencies during last week’s trading session. The Yen gained about 200 pips against the Euro and the EUR/JPY pair is trading at the 122.20 level. The Yen gained about 200 pips against the Pound as well.

The most significant reason for the Yen’s bullish trend is the pessimism regarding the Euro-Zone which takes place mostly due to the Greece debt crises. This has lowered risk appetite in the market, and led investors to look for safe-haven assets such as the Dollar and the Yen. Another catalyst for the Yen’s appreciation is the positive data that was published from the Japanese economy. The Tertiary Industry Activity, which measures the change in the total value of services purchased by businesses during January, rose by 2.9%, beating expectations for a 1.3% rise. In addition, the All Industries Activity report showed that the total value of goods and services purchased by businesses has grown by 3.8% during January. These two indicators further strengthen the notion that the Japanese economy is recovering, and thus supporting the Yen.

As for this week, traders are advised to follow two leading indicators: the Japanese Trade Balance on Tuesday and the Tokyo Core Consumer Price Index (CPI) on Thursday. These publications tend to have a large impact on the Yen, and traders should take under consideration that positive result are likely to further boost the Yen.

OIL – Harsh Volatility Drives Crude Oil towards $80 a Barrel

Last week’s trading session was mostly characterized with ups and downs for crude oil trading. Crude began the past week with a drop to $79 a barrel, which was followed with a sharp rise to $83 a barrel. However close to the weekend crude oil dropped again and is currently trading around $80.00 a barrel.

Crude oil saw a bullish trend during the beginning of last week mainly due to speculations that the Euro-Zone will declare a final bailout plan for Greece. However, as the week progressed it seemed quite certain that the Euro-Zone leaders would fail to agree on such rescue plan. This has reduced risk appetite and drove investors to look for safer haven assets such as the Dollar and the Yen. In addition, the appreciation of the Dollar also contributed to the weakening crude oil. Crude is traded in Dollars and thus when the Dollar rises, crude oil’s value tend to drop.

As for the week ahead, traders are advised to follow the main publications from the U.S. economy and the Euro-Zone as these seem to have the largest impact on crude oil. Traders should also follow the U.S. Crude Oil Inventories report on Wednesday, as its publication tends to have an instant impact on the market.

Technical News

EUR/USD

During Friday’s trading the pair broke out of the bearish flag consolidation pattern that had formed over the past two weeks. However the pair may have become oversold during this continuation of the bearish trend. The daily chart shows a bullish cross may be forming on the Slow Stochastic Oscillator, indicating the potential for an upward price movement. This is supported by the 4-hour chart that also shows a bullish cross on the Slow Stochastic. The 7-day Relative Strength Indicator has broken its downward sloping trend line and is moving higher. Traders may want to liquidate long positions as the pair could begin to move higher.

GBP/USD

The bearish streak continues and the daily chart shows signs that the downward price movement could accelerate. The MACD histogram is downward sloping and a bearish cross appears to be forming, indicating a downward price trend and the potential for the price to head lower. The price has also crossed below the 20-day moving average line on the Bollinger Bands, indicating the pair could extend as far as the lower Bollinger Band line. Traders should use this level as a take profit target of 1.4870.

USD/JPY

A consolidation pattern has been forming on both the daily chart and the 4-hour chart with a majority of the price action taking place above the 20-day moving average of the Bollinger Bands. This shows a tight trading range for traders to enter the market. For those that go long, a limit order should be placed near the resistance level of 90.70. Traders going short will want to target the 90.30 support.

USD/CHF

The pair has been range-trading for a while now, with no specific direction. The Daily chart’s Slow Stochastic providing us with mixed signals. All oscillators on the 4 hour chart do not provide a clear direction as well. Waiting for a stronger sign on the hourlies might be a good strategy today.

The Wild Card

Oil

Oil prices are once again dropping, and are currently traded around $80.50 per barrel. And now, the 4-hour chart’s RSI is giving bullish signals, indicating that Oil prices might go up. This might give forex traders a great opportunity to enter a very popular trend.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

The dollar, the equity market and most commodities notched up gains last week as a lack of economic data failed to cause any negative volatility. The only surprise of the week came when the Indian Central Bank raise interest rates, which was really more a surprise of timing than action.  The S&P 500 Index rallied 9.5 points or .85% and the Dow Jones was the last of the major indexes (in the US) to make a new 52 week high.  The dollar index retraced last week’s loses and gained .5%

On Monday in the US, Industrial Production increased by 0.1% in February to an index value of 101.0 (2002=100), better than the expected decrease of 0.1% following a 0.9% increase in January. Over the year, the industrial production index is up by 1.7%. Capacity Utilization was reported at 72.7%, an increase from the revised level of 72.5% for January, but 7.9 percentage points below its average for the period from 1972 through 2009. In February 2009, Capacity Utilization was measured at 70.6%. The biggest gain in the report showed output in the mining industry rose 2.0% after climbing 1.1% in January. Mining capacity use rose to 88.2% from 86.4%.

On Tuesday the Federal Reserve Bank left interest rates unchanged.  The Fed’s statement following the March meeting was nearly identical to January’s remarks. The central bank continues to see economic improvement and expects to scale back emergency programs, but makes no signal that rates are going to rise in the near term.  The Federal Reserve said it will end one of its main support programs for the U.S. economy, the purchases of $1.25 trillion of mortgage backed securities.

In economic news in the US, Housing starts decreased by 5.9% to a seasonally adjusted 575,000 annual rate compared to the prior month, according to the Commerce Department.  While this was the biggest decline in four months, it followed an upward revision in the previous month’s data, when starts staged a 6.6% gain. January starts were originally reported up 2.8%.  February’s homebuilding activity remained above the level of 573,000 registered in December. Economists surveyed forecast a 4.7% drop in February housing starts, to an annual rate of 563,000.  Building permits, an indication of future construction, fell 1.6% to a 612,000 annual rate.  Economists had expected permits to decline 3.1% to a rate of 603,000. January permits fell 4.7% to 622,000.

In Europe, Greece avoided a downgrade to its credit rating by Standard & Poor’s Ratings Services, which had warned last month that it was considering such a move, although the ratings firm slapped on a negative outlook.  S&P credit analyst Marko Mrsnik said the Greek government’s plans to reduce its deficit was supportive of the nation’s current triple-B-plus long-term credit rating, which is three notches into investment-grade territory.

Over in Japan, the BoJ left its key target rate unchanged at 10 basis points, but appeared to bow to government pressure and increased the size of the three-month loan facility arranged last December to JPY20 trillion from JPY10 trillion.  Tweaking this facility was widely tipped as a likely compromise formation between the BOJ who has argued that monetary policy was already extraordinarily easy and interest rates were extremely low, while the government wants more efforts to combat deflation.  Nevertheless, the compromise was not satisfactory and two BOJ members (Noda and Suda) dissented.

On Thursday, U.S. wholesale prices in February posted their biggest drop in seven months as gasoline costs fell sharply, leaving scope for the Federal Reserve to keep short-term interest rates at a record low. The producer price index for finished goods dropped by a seasonally adjusted 0.6% m/m in February, according to the Labor Department, following an unrevised 1.4% increase in January.  The core PPI, which excludes volatile energy and food prices and is more closely watched by the Fed, rose 0.1% last month after increasing by 0.3% in January.

The seasonally-adjusted consumer price index was unchanged last month, the Labor Department said Thursday, after increasing an unrevised 0.2% in January. The last time inflation looked so tame was in March 2009, when consumer prices fell by 0.1%.  Core consumer prices, which strip out volatile energy and food items and are more closely watched by the Fed, were up by a monthly 0.1% in February. In January, core prices fell by 0.1%.  Economists surveyed were expecting an increase of 0.1% in both the headline consumer price figure and the core consumer price index number.  On an annual basis, which is not adjusted for seasonal factors, consumer prices rose by 2.1% in February. Core consumer prices rose by 1.3% from 12 months ago, the lowest increase since Feb. 2004.

The Philly Fed said its index of regional manufacturing activity rose to 18.9 in March from 17.6 in February, with a positive reading indicating growth in the sector. Economists had been expecting a more modest increase by the index to a reading of 18.0.

The Labor Department said in its weekly report Thursday that initial claims for jobless benefits fell by 5,000 to 457,000 in the week ended Mar. 13. The previous week’s level was left unrevised at 462,000. Total claims lasting more than one week, meanwhile, increased moderately. The decrease in initial claims was just below economists’ expectations. Economists surveyed expected initial claims to decrease by 7,000. The four-week moving average, which aims to smooth volatility in the data, also went down for the week ending Mar. 13. The Labor Department said the four-week moving average decreased by 4,250 to 471,250 from the previous week’s unrevised average of 475,500.

On Friday, India surprised the market by announcing a 25 basis point hike in key rates.  The surprise was only in the timing.  This brings the repo rate to 5% and the reverse repo rate to 3.5%.  To the extent there was speculation of a rate hike, it was more about China than India.  That said, India had raised reserve requirement earlier this quarter and many understood a rate hike was a question of time.

Forex

Canadian retail sales in January rose a robust 0.7%, which was slightly stronger than the 0.6% rise expected by analyst, according to Canstat. This small upward surprise occurred despite new car sales being much weaker than expected by dropping 2.3%. The offset was an unexpectedly large surge of 1.8% in ex-auto sales that was more than triple the 0.5% gain expected going into the report.  The jump in ex-auto sales was attributable to sales at building and outdoor home supplies stores rising an impressive 7.4%. This strength was attributed to households making purchases before the expiration of the federal government’s Home Renovation Tax Credit. This factor may also have boosted sales at furniture, home furnishings and electronic stores, which rose 2.5% boosted by surge in sales of floor coverings.  From a technical point of view the Canadian Dollar broke major support and seems to be heading lower.

The combination of mixed political signals in the Euro zone and technical resistance created the failure in the upward movement of the Euro.  In general, a bottom will be tested multiple times prior before support is created.  The Euro again felt pressure from the 50 day moving average which has held the Euro in a down trend for the past 4 months.  Additionally, the RSI 50 level has created resistance where technical traders have become sellers.

Daily Forex Market Analysis provided by eToro

Disclaimer: Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and are willing to accept them in order to trade in the foreign exchange market. Don’t trade with money you can’t afford to lose.

© 2009 eToro Blog.

EURUSD broke below the lower border of the price channel on 4-hour chart, suggesting that a cycle top has been formed at 1.3817 level on 4-hour chart and the bounce from 1.3435 has completed. Deeper decline to test 1.3435 support could be expected later today, a breakdown below this level will signal resumption of long term downtrend from 1.5144 (Nov 25, 2009 high), then another fall towards 1.3200 could be seen.

Daily Forex Reports

By Andrew Daigle – The best Forex trading system is a combination of currency trading strategies that fit your style, temperament, and risk management. There is no one “best” Forex trading strategy in making profits in the currency markets. However, there are many excellent systems that have been developed and are being used every trading day. Each one was custom tailored by the person who is enjoying the profitable results it produces.

Take the Time

To make money in the Forex markets, you need to develop your own Forex trading system. This means taking the time to get Forex training available throughout the Internet, as well as through brokers and other educational sources. There’s a gold mine of Forex courses available. But as the saying goes “no pain, no gain.” You have to take the time to study all the technical and fundamental factors that affect Forex trading in order to develop the currency trading strategies that will make you money.

Forex Trading Essentials

Limiting your losses, allowing your profits to run, and properly identifying your entry and exit points, are essential to any system. A proper forex education will allow you to develop a system that takes your emotions out of your trading, minimizing your mistakes. A proper background in chart analysis, moving averages, and other technical trading indicators, is what’s needed to produce successful results. You must have the discipline to use these tools to become a successful trader.

Valuable Information

Information is king in Forex trading. The uninformed always lose. You need to have a good trading platform together with the proper trading software to obtain the information that will help you make your decisions with accuracy and speed. Your success will entirely be dependent on how effectively you recognize and exploit trading signals. One must be able to expect and determine what will happen in the future. Through your analysis of the available information, you’ll be able to calculate the probabilities of profit and loss on any individual trade. With proper risk management, forex currency trading strategies can be developed to produce exceptional results.

Managing your Forex Trading Risk

All trading entails risk, and as such, risk management is essential. Developing a Forex trading system and standing by your strategy will yield greater results; decisions based on fear rather than a predetermined Forex trading strategy will always result in failure. Keeping your emotions out, will help minimize your Forex trading risks. You should always limit the major risks, and never risk more than a few percent of the money you have available on any single trade. If you risk too much at any one time, you will rapidly lose your capital and be unable to trade. You must have funds to participate in the market to generate profits, and thus, preservation is as important as profit. Always have the intention to trade for a long period of time with consistently limited risks.

About the Author:

Andrew Daigle is the owner and author of many successful websites including ForexBoost, a free Forex educational site to learn Forex trading strategies and a website for learning profitable online home business opportunities.

By Giles Windholm – Technical analysis and fundamental analysis are the two basic areas of strategy in the FOREX market which is the exact same as in the equity markets. However, technical analysis is by far the most common strategy that is used by individual FOREX traders. Here is a brief overview of both forms of analysis and how they directly apply to forex trading:

Fundamental Analysis

If you think it’s hard enough to value one company, you should try valuing a whole country instead. Fundamental analysis in the forex market is often an extremely difficult one, and it’s usually used only as a means to predict long-term trends. However it is important to mention that some traders do trade short term strictly on news releases. There are a lot of different fundamental indicators of the currency values released at many different times. Here are a few of them to get you started:

* Non-farm Payrolls
* Purchasing Managers Index (PMI)
* Consumer Price Index (CPI)
* Retail Sales
* Durable Goods

You need to know that these reports are not the only fundamental factors that you have to watch. There are also quite a variety of meetings where you can get some quotes and commentary that can affect markets just as much as any report. These meetings are often brought out to discuss any interest rates, inflation, and other issues that have the ability to affect currency values.

Even changes in how things are worded when addressing certain issues such as the Federal Reserve chairman’s comments on interest rates; can cause a volatile market. Two important meetings that you have to watch out for are the Federal Open Market Committee and Humphrey Hawkins Hearings.

Just by reading the reports and examining the commentary, it can help FOREX fundamental analysts to get a better understanding of any and all long-term market trends and also to allow short-term traders to be able to profit from extraordinary happenings. If you do decide to follow a fundamental strategy, you will want to be sure to keep an economic calendar handy at all times so you know when these reports are released. Your broker may also be able to provide you with real-time access to this kind of information.

Technical Analysis

Just like their counterparts in the equity markets, technical analysts of the FOREX trading market analyze price trends. The only real difference between technical analysis in FOREX and technical analysis in equities is the time frame that is involved in that FOREX markets are open 24 hours a day.

Because of this, some forms of technical analysis that factor in time have to be modified so that they can work with the 24 hour FOREX market. Some of the most common forms of technical analysis used in FOREX are:

* The Elliott Waves
* Fibonacci studies
* Parabolic SAR
* Pivot points

A lot of technical analysts have a tendency to combine technical studies to make more accurate predictions on your behalf. (The most common method for them is combining the Fibonacci studies with Elliott Waves.) Others prefer to create trading systems in an effort to repeatedly locate similar buying and selling conditions.

Choosing Your Strategy

Most successful traders will develop a strategy and perfect it over a specific period of time. Some people will focus on one particular study or calculation, while still some others use broad spectrum analysis as a means of determining their trades. Most experts would likely suggest that you try using a combination of both fundamental and technical analysis, with which you can make long-term projections and also determine entry and exit points. Of course, in the end, it is the individual trader who has to decide what works best for him.

When you are ready to get started in the FOREX market, you should open a demo account and paper trade so that you can practice until you can make a consistent profit. Many people who fail have a tendency to jump into the FOREX market and quickly lose a lot of money because of a lack of experience. It is important to take your time and learn to trade properly before you start committing capital.

You also need to be ale to trade without emotion. You can’t keep track of all stop-loss points if you don’t have the ability to execute them on time. You must always set your stop-loss and take-profit points to execute automatically, and don’t change them unless you absolutely have to. Make your decisions and stick to them. Otherwise you will drive yourself and your brokers crazy.

You should also realize that you need to follow the trends. If you go against the trend, you are just messing with your money because the FOREX market tends to trend more often than anything else and you will have a higher chance of success in trading with the trend.

The FOREX market is the largest market in the world, and every day people are becoming increasingly interested in it. But before you begin trading, make sure your broker meets certain criteria, and take the time to find a trading strategy that works for you.

About The Author

Giles Windholm is a trader, and a forex strategist. He writes for http://www.ForexMachine.com.

By Monica Hendrix – Leonardo Fibonacci was an Italian mathematician, who lived in the 13th century and known for his world famous Fibonacci sequence, which many trader use to try and predict currency prices with greater accuracy. Let’s look at the Fibonacci number sequence and Forex trading.

The Fibonacci sequence was printed in the Liber Abaci, written by Leonardo Fibonacci in 1202. It introduced Hindu-Arabic numerals to replace Roman ones. The Fibonacci number sequence was devised to solve the following problem:

How many pairs of rabbits can be produced from one single pair, if each month each pair produces a new pair, which, from the second month, starts producing more rabbits?

The definition of the sequence is that it’s formed by a series of numbers where each number is the sum of the two preceding numbers; 1, 1, 2, 3, 5, 8, 13…

In forex trading what is important is – the Fibonacci ratios derived from this sequence of numbers, i.e. .236, .50, .382, .618, etc. These Fibonacci retracements many forex traders believe are tradable for profit.

The two Fibonacci percentage retracement levels considered the most critical are: 38.2% and 62.8%. Other important retracement ones are: 75%, 50%, and 33%.

So can the Fibonacci number sequence help you trade more successfully?

The answer is no.

In fact, its amazing that such a dumb theory is believed by so many traders, this is no disrespect to Leonardo Fibonacci who was a brilliant thinker, its just these levels have nothing to do with trading and the great man himself (were he alive today) would probably be bemused at the way his thinking has been hijacked by the far out investment community.

Many traders believe that Fibonacci levels are a natural law that re-occurs as human psychology is constant – but if you think about it, human nature is not predictable and NOT scientific.

Trading is an odds game.

Fibonacci traders are like the followers of Gann or Elliot, they all believe the market is scientific but if they were, we would all know the price in advance and there would be no market!

This is common sense to most people but not some traders, who constantly say it works when it doesn’t.

Sure, you can see the levels hold sometimes but pick any number you like and you will see that hold to sometimes!

If it’s scientific it should hold ALL the time, otherwise it’s NOT a scientific theory by definition – period.

Fibonacci numbers are a great story and vendors realize this and sell ridiculous systems based upon it, that don’t work. If you see one ask for the real time track record to prove this, you won’t get one.

You will get a simulated one done in hindsight but we can all do that – the problem with forex trading is you have to trade going forward not knowing the closing prices.

If you want to win at forex trading remember this:

There is no science involved and if anyone had found the secret of market movement they wouldn’t reveal it to you. OF COURSE Fibonacci numbers are available to all so why are the traders who use them not rich?

Well you already know the answer to that!

Forex trading is a game of odds, NOT certainties and there is no scientific formula or hocus pocus that makes them move on their own. They move due to what people do and how they see facts and humans are not predictable with scientific accuracy.

So leave the Fibonacci numbers to the dreamers and far out crowd and concentrate on a system that trades the odds.

Sure, you won’t win all the time, but if you know how to trade the odds you can make a lot of money.

by Monica Hendrix

About the Author

On all aspects of becoming a profitable trader including: Free critical trader PDFS, and more FREE Forex Education visit our website at:
http://www.learncurrencytradingonline.com/index.html

By Ian Wright – Like many people I am sure you are interested to know more about Forex trading. To put it bluntly Forex trading can be either one the best ways to make or lose LOTS of money. Only those who take the Forex market seriously will be able to make money with it in the long term.

The Forex trading market is beyond a doubt the world’s largest market where all exchanges happen instantaneously. Thus, trades are a key challenge for even the most knowledgeable Forex bankers and traders. They have to learn and consider many factors before performing even a single trade.

At first when currencies began to be traded openly, only large banks were allowed to perform trades. These days, due to the advent of internet trading and margin accounts almost anybody can begin Forex trading. This in turn, has added to the liquidity of the Forex market, and has resulted in a huge increase in the number of individuals who are now active in the market.

So, does this mean it is easy to earn money through Forex trading? To answer this we must consider a few things.

Some data by Forex brokers seems to suggest that 90 percent of traders end up of losing their capital, 5 percent of traders have been able to break even and only 5 percent of them attain steady beneficial results. Thus, it seems that trading successfully is no simple task.

However, if you can learn to be among the 5 percent who make consistent money you can do extremely well by using Forex trading. To help you in this end I have listed five key ways to improve your odds dramatically of making money in the Forex market.

1. Education

Successful traders are knowledgeable about the Forex market. They have chosen to educate themselves about every single vital detail of Forex trading. The best traders know that every trade that they perform is an opportunity to learn something new.

2. Forex Trading System

All of the profitable traders have a Forex trading system or strategy. Furthermore, they have the will power to stick strictly to that system, because the best traders know that by sticking with their system they stand a far greater chance of earning money.

3. Price Behavior

Knowledgeable and successful traders also include price behavior in their systems. They have learned that prices can change quickly and suddenly but are prepared to deal with those situations when they arrive.

4. Trading Psychology

First-rate traders are aware of psychological issues that affect the choices of other traders make when Forex trading. They know that people do not always act rationally, and as a result this can alter the expected outcome of a trade. This can help them both when deciding to enter into a trade or when to exit.

5. Money Management

This is far and away the most important factor that will determine whether or not you become a successful trader. Averting the hazard of financial ruin is the main concern of all top traders. This means both adequately funding your trading account (only with money you can afford to live without of course) and never entering into trades that can potentially wipe out all of your assets. Better to start trading small and always use stop-loss orders to guarantee that your first trades are not also your last.

This is by no means an exhaustive list of everything you need to know but it outlines some of the areas you need to consider before making even that first trade. Now you know that it is not easy to earn money in the Forex market, however it is achievable.

However, success does not happen overnight and anyone promising you that it can is trying to sell you snake oil. It is an ongoing processes not something you pick up in a weekend. Trading success depends on the trader, and how hard you are willing to work to achieve your Forex trading goals.

Also, remember to try to have some fun. The clearest sign that Forex trading is not for you is if you find the prospect of learning about how the Forex market works boring or dull. If this is the case you won’t stick with it long enough to make money and you will be among the 90 percent who fail. Just remember these three important things: be disciplined in your trading habits, manager your money wisely and enjoy the experience of Forex trading.

About The Author

Ian Wright has always been fascinated with all forms of investing. Most recently, he has created a Free Forex Training Guide: http://www.free-forex-training-guide.com and has started a Forex trading blog: http://forex–trading–blog.blogspot.com.

By Marquez Comelab – There are many markets: markets for stocks, futures, options and currencies. These are probably the most accessible markets for everyday traders like you and I. People easily understand the basics of trading shares, so I will occasionally use examples from that market.

I began trading shares first and then I moved on to trading currencies; therefore, most of the examples I will be using in this book are derived from trading currencies.

If you do not know a lot about currency trading, allow me to introduce it to you. It is what I trade and I believe that it is one of the best markets to trade because of its efficiency. The transaction costs to execute a trade are minimal and most brokers provide you with the tools and data you need to make your trading decisions, they usually provide them for free. The market is open 24 hours a day which allows you to design your trading hours around your daily commitments. It is very volatile, which is great for those people who are looking for day-trading opportunities.

The foreign exchange market is the market in which currencies are bought and sold against one another. People may loosely refer to this market under different labels, including foreign exchange market, forex market, fx market or the currency market.

The foreign exchange market is the largest market in the world, with daily trading volumes in excess of $1.5 trillion US dollars. All transactions involving international trade and investment must go through this market because these transactions involve the exchange of currencies.

It is the most perfect market that exists because it has a large number of buyers and sellers all selling the same products. There is a free flow of information and there are little barriers to participate.

The currency exchange market is an over-the-counter (OTC) market which means that there is not one specific location where buyers and sellers can actually meet to exchange currencies. Instead, transactions are conducted by phone, fax, e-mail or through the websites of brokers who specialize in currency trading.

The major dealing centres at the time of writing are: London , with about 30% of the market, New York , with 20%, Tokyo , with 12%, Zurich , Frankfurt, Hong Kong and Singapore , with about 7% each, followed by Paris and Sydney with 3% each. Because of the fact that these centres are all over the world, foreign exchange traders can execute transactions 24 hours a day. The market only closes on the weekends.

THE MAIN ‘PLAYERS’ IN THE FOREX MARKET

The five broad categories of participants are: consumers, businesses, investors, speculators, commercial banks, investment banks and central banks.

Consumers, including visitors of countries, tourists and immigrants, do need to exchange currencies when they travel so that they can buy local goods and services. These participants do not have the power to set prices. They just buy and sell according to the prevailing exchange rate. They make up a significant proportion of the volume being traded in the market.

Businesses that import and export goods and services need to exchange currencies to receive or make payments for goods they may have bought or services they may have rendered.

Investors and speculators require currencies to buy and sell investment instruments such as shares, bonds, bank deposits or real estate.

Large commercial and investment banks are the ‘price makers’. They are the ones who buy and sell currencies at the bid-and-offer exchange rates that they declare through their foreign exchange dealers.

Commercial banks deal with customers on one hand, and with the Interbank or other banks, on the other hand. They profit by utilizing the bid-and-offer spread. The bid price is the exchange rate that the buyer is willing to buy and the offer price is the exchange rate at which the seller is willing to sell. The difference is called the bid-offer spread. They also make profits from speculating about whether the exchange rate will rise or fall.

Central banks participate in the foreign exchange market in their effective duty as banks for their particular government. They trade currencies not for the intention of making profits but rather to facilitate government monetary policies and to help smoothen out the fluctuation of the value of their economy’s currency.

WHAT CURRENCIES TO TRADE IN THE FOREX MARKET

You can trade any country’s currency by exchanging it to another country’s currency, however the list below are the ones that are the most popular and are usually made available by most online brokers for you to trade.

ISO | * CODE | Currency | Symbol
AUD |Australian Dollar a.k.a. ‘Aussie’ or ‘Oz’ |A$
CAD | Canadian Dollar |Can$
CHF | Switzerland Franc a.k.a ‘Swissi’ | SwF
DKK | Denmark Krone | Dkr
EUR | European Dollar a.k.a ‘Euro’ | €
GBP | Great Britain Pound a.k.a ‘ Sterling ‘ or ‘Cable’ | £
HKD | Hong Kong Dollar | HK$
JPY |Japanese Yen |¥
MXN | Mexican Peso | Mex$
NOK | Norway Krone | NKr
NZD |New Zealand Dollar a.k.a ‘Kiwi’ | NZ$
PLN |Poland Zloty | z dashed
SAR |Saudi Arabia Riyal |SRls
SEK |Sweden Krona |kr or Sk
SGD |Singapore Dollar | S$
THB |Thailand Bhat |Bht or Bt
USD |United States Dollar |$
ZAR |South Africa Rand | R
* ISO-International Organization for Standardization ||

To trade the currencies above, you need to trade currency pairs. Think of these currency pairs as your trading instruments – instruments that you can buy or sell. Listed below are the most popular currency pairs that people trade:

AUD/JPY |Australian Dollar – Japanese Yen
AUD/USD | Australian Dollar – US Dollar
EUR/CHF | European Dollar – Switzerland Frank
EUR/GBP | European Dollar – Great Britain Pound
EUR/USD | European Dollar – US Dollar
EUR/JPY | European Dollar – Japanese Yen
GBP/CHF | Great Britain Pound – Switzerland Frank
GBP/USD | Great Britain Pound – US Dollar
USD/CAD | US Dollar – Canadian Dollar
USD/CHF | US Dollar – Switzerland Frank

The currencies on the left can be exchanged for the currencies on the right.

Marquez Comelab, © 2006

This is an excerpt, modified from the book: The Part-Time Currency Trader.

About The Author

Marquez Comelab is a private forex trader and is the author of the book: The Part-Time Currency Trader – A Trading Guide For Working Men And Women, which can be purchased from www.marquezcomelab.com. He is also a major contributor of articles at TheFreedomToChoose.Com, where other articles on trading can be found.

By Joseph Plazo – When it comes to trading on the Forex market, winning is a matter of the mind rather than mind over matter. Any trader who’s been in the game for any length of time will tell you that psychology has a lot to do with both your own performance on the trading floor and with the way that the market is moving. Playing a winning hand depends on knowing your own mind – and understanding the way that psychology moves the market.

Studying the psychology of the market is nothing new. It doesn’t take a genius to understand that any arena that rides and falls on decisions made by people is going to be heavily influenced by the minds of people. Few people take into account all the various levels of mind games that motivate the market, though. If you keep your eye on the way that psychology influences others – including the mass psychology of the people that use the currency on a daily basis – but neglect to know what moves you, you’re going to end up hurting your own position. The best Forex coaches will tell you that before you can really become a successful trader, you have to know yourself and the triggers that influence you. Knowing those will help you overcome them or use them. Are you saying ‘Huh?” about now? Believe me, I understand. I felt the same way the first time that someone tried to explain how the mind games we play with ourselves influence the trades and decisions that we make. Let me break it down into more manageable pieces for you.

Anything involving winning or losing large sums of money becomes emotionally charged.

All right. You’ve heard that playing the market is a mathematical game. Plug in the right numbers, make the right calculations and you’ll come out ahead. So why is it that so many traders end up on the losing end of the market? After all, everyone has access to the same numbers, the same data, the same info – if it’s math, there’s only one right answer, right?

The answer lies in interpretation. The numbers don’t lie, but your mind does. Your hopes and fears can make you see things that just aren’t there. When you invest in a currency, you’re investing more than just money – you make an emotional investment. Being ‘right’ becomes important. Being ‘wrong’ doesn’t just cost you money when you let yourself be ruled by your emotions – it costs you pride. Why else would you let a loser ride in the hope that it will bounce back? It’s that little thing inside your head that says, “I KNOW I’m right on this, dammit!”

Bottom line: You can’t keep emotions out of the picture, but you can learn not to let them control your decisions.

To most people, being right is more important than making money.

Here’s the deal. The way to make real money in the forex market is to cut your losses short and let your winners ride. In order to do that, you have GOT to accept that some of your trades are going to lose, cut them loose and move on to another trade. You’ve got to accept that picking a loser is NOT an indication of your self-worth, it’s not a reflection on who you are. It’s simply a loss, and the best way to deal with it is to stop losing money by moving on – and really move on. Moving on means you don’t keep a running total of how many losses you’ve had – that’s the way to paralyze yourself. This brings us to the next point:

Losing traders see loss as failure. Winning traders see loss as learning.

Not too long ago, my twelve year old son told me that before Thomas Edison invented a working light bulb, he invented 100 lightbulbs that didn’t work. But he didn’t give up – because he knew that creating a source of light from electricity was possible. He believed in his overall theory – so when one design didn’t work, he simply knew that he’d eliminated one possibility. Keep eliminating possibilities long enough, and you’ll eventually find the possibility that works.

Winning traders see loss in the same way. They haven’t failed – they’ve learned something new about the way that they and the market work.

Winning traders can look at the big picture while playing in the small arena.

Suppose I told you that last year, I made 75 trades that lost money, and 25 that made money. In the eyes of most people, that would make me a pretty poor trader. I’m wrong 75% of the time. But what if I told you that my average loss was $1000, but my average profit on a winning trade was $10,000? That means that I lost $75,000 on trades – but I made $250,000, making my overall profit $175,000. It’s a pretty clear numbers game – but how do you keep on trading when you’re losing in trade after trade? Simple – just remember that one trade does not make or break a trader. Focus on the trade at hand, follow the triggers that you’ve set up – but define yourself by what really matters – the overall record.

About The Author

More of Joseph Plazo’s killer articles:
http://www.xtrememind.com

By Andrew Daigle – While the market is swamped with websites and books offering advice on the ‘best’ and ‘newest’ forex currency trading systems, it is important to do a thorough check of the system to ensure that it really works. There are a large number of such forex trading systems that are completely fraudulent or simply do not work, and have been created with the sole intention of making a quick buck. But despite this, there are plenty of forex currency trading systems out there that do work and can be quite reliable if used in a disciplined and consistent manner.

Everyone is looking for a forex trading system that works and gives them high and continuous profitability over a period of time. One must be realistic in searching for a good system, and keep in mind some essential factors when selecting a forex trading system. Firstly, it is critical to fully understand the logic on which the trading system is based. Only a complete understanding will enable you to use the system effectively over a long period of time. Not only grasping the basic logic, but also agreeing with the forex trading system it is important. The forex trading system of your choice must seem logical and intuitive to you or else you will find it impossible to stick with it.

Secondly, you should embrace a good forex currency trading system for the long term, and put in the appropriate amount of research and trial based on this idea. A solid system will tap in to long term patterns and the potential for sustained success of any system in the short term is negligible. Thirdly, be ready for a hit. Be financially prepared for a downturn and based on the assumption that at some point you will face this event, plan for your staying-afloat strategy. Emotionally and money-wise, be ready for the big one when it comes.

When you commit to a forex currency trading system, ensure that you give the system adequate time to start showing profitability. This may be not be months, but possibly years, since every system experiences a time when it produces losses or lowered returns. Give your selected system a fair trial and try to trade consistently and logically. Additionally, some systems will not offer real trading data, but will be simulations that are based on a particular logic and work with historical data. As long as the logic is solid, there is no reason to reject these systems outright.

The simplest forex trading systems tend to work most effectively in a rapidly shifting market place. Just because a system seems complicated, there is no reason to think that it will perform better. Pick something user friendly and intuitive that appeals to you. Identify the major trends that affect a currency and select a forex trading system that works in tandem with it. Finally, a cardinal rule of the trade: Always use on a trading system that is disciplined and rational. Do not be swayed by emotions. This has spelled the downfall of some of the most influential and successful forex traders, including the pros, and must be avoided at all costs. While it may seem unlikely to you now, once you are in the midst of your forex trading experience, you will find it easy to be moved by your emotions.

The biggest advantage of a forex trading system is that it works completely without emotions and if it can be followed mechanically, it will be the key towards a long term profitable career in forex trading.

About The Author

Andrew Daigle is the owner, creator and author of many successful websites including a free forex trading and educational website called ForexBoost at http://www.ForexBoost.com and http://www.cashcurve.com, a website for learning about other online business opportunities.