By James McKee – Green, paper, frog skin, dollars, cash…the whole world once looked on US currency as the gold standard in purchases both foreign and domestic. The perceived stability and value of the US Dollar has until recent times been a given, it has been a guiding light and something to strive for in the eyes of individuals and countries worldwide. In the blink of an eye this has all changed, and the dollar has become more of a guaranteed “whirling dervish” of a currency than the stoic and valuable entity it once was. For Forex traders an unstable or unpredictable currency can bring about wealth if they are willing to glue their eyes to their charts and hang on for the ride. Indeed the statement I hear time and time again is “Bet against the dollar, and you’ll never lose.”

This has certainly proven to be the case with the euro, a currency whose value has trumped the dollar’s for several years now. Having your own native currency as the reliable loser is certainly an interesting situation, but it should never deter someone from making the right call and entering the right investment. There is nothing personal when it comes to investments outside of what you win and lose.

Indeed it is an interesting situation, traders betting against their native currency and actively undermining its value for the sake of their own profit. While this is certainly true any seasoned trader will tell you that nothing lasts forever and whenever there is a drop or surge in the value of a currency it will eventually come back to its former state. The dollar has however for ten years begun and maintained a downward spiral where the euro is concerned. This trend is a sign of upheaval and overall economic instability in the United States but for Forex traders it is something to be examined and considered when looking for a worthwhile investment.

This is and has been the situation for quite a while now and as a trader it is in our best interest to seek out opportunity no matter where it is. The US Dollar’s continued instability is a great lesson for us all in that there are no “sure things”, we as traders and moreover as people in general need to remain nimble and never make assumptions. Of course a lot of what I’m discussing here is common sense, but you’d be surprised at just how many traders learn these lessons the hard way and while they never forget them due to how expensive these mistakes can be, they are mistakes you don’t have to even make in the first place!

About the Author

Author is a Forex trader and financial analyst residing in Denver, Colorado with 5 years of experience in trading with an attitude of cooperation through education. It is vital to remain in the loop where new technologies are concerned, make sure to stay up to date and aware of forex exchange rates and developments

By M. Faulkes – Lots of people new to trading get confused by the concept of leverage in Forex, how it is calculated and how it should be used. If you are just starting out trading, you should approach leverage with caution because this very powerful tool can also work against you.

The Basic Concept:

A standard trading account with a regular broker will usually deal in lots of $100,000. To make a single trade with your account, you are going to need $100,000 to place on it. This figure is beyond the reach of most of us, and so this is why brokers offer leverage.

The way leverage allows us to trade these large lots is by the brokers lending the trader most of the money involved, with the trader putting up a percentage of the trade as security. Should your trade move against you by more than what you gave the broker as security then you are out of the game and your money lost, should it move your way then you should make a good profit.

More Details On Leverage In Forex:

You will usually see brokers advertising leverage in the form of 2 numbers separated by a colon, e.g. 100:1. In this case, the figures mean the broker is willing to let you trade with only 1% security. Similarly, 200:1 means they are offering trades with only 0.5% security (1 / 200 * 100(%)) and so on. You may see brokers go as high as 400:1 (0.25%).

You may also see the word ‘margin’ used when leverage in Forex is talked about. The margin is the percentage of the trade which you provide as collateral against it, and it is always expressed as a percentage. In the case of 100:1 leverage, the margin is 1%. Forex margin trading and leverage trading are generally used interchangeably to refer to the same thing.

Leverage In Use:

From the examples above it should now be clear that leverage could allow you to borrow $99,000 form your broker to make a $100,000 trade, with only $1000 of your own money at risk. As mentioned previously though, your trade will get closed by your broker if it falls by the $1000 security you used. Once your $1000 is wiped out, the broker isn’t going to risk his money on your trade if it continues to fall.

Because you traded with a 1% margin, you couldn’t afford your trade to drop by more than 1%. The Forex market is a highly volatile one, and movements of 1% are common. Your trade may have turned around and made a profit after it dipped, but your trade was already gone. Your small margin for error meant you lost your stake because your broker had to close the trade too early, this is commonly referred to as being too heavily leveraged.

Avoiding Small Margins And Heavy Leveraging:

Follow this link to learn more about forex trading strategies that don’t put you at risk of being too heavily leveraged, which is vital in protecting your trading account.

Many traders are using leverage as a way of controlling large lot sizes without the full investment, because they have learned to use it responsibly and to their benefit.

About the Author

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By Cedric Welsch – The US seems to be getting serious about pushing the Yuan up such that the indirect export subsidy that an artificially undervalued Yuan offers is negated. An undervalued Yuan effectively makes Chinese goods cheaper compared to those manufactured elsewhere. Thus the undervalued Yuan hits industry in other parts of the world and it is effectively being transferred to China, making it’s the world’s factory.

This may have been an acceptable situation, when the economic scenario in the world and the US was good. The US and European nations were happy as polluting industries had moved to another part of the world and their currencies could buy goods cheaper. However, it appears that with the US not managing to pull itself out of the weak economic cycle it has got stuck in, it wants to push up the Yuan up so that the US industry becomes more competitive and can start generating employment and get itself out of the economic mess it is in.

The Bill that has been passed by the US House of Representatives treats the Chinese exchange rate mechanism as a substitute to providing an export subsidy. However the Bill yet needs to get the approval of the US Senate and the President’s signature, before it becomes a law. While the US has been expressive over this issue for a long time and denounced China’s exchange rate policy, it’s the first time that a serious step is being taken in the direction. The Bill has provisions for imposition of extra duties on Chinese goods imported into the US to counter the effect of the alleged export subsidy being provided by the Chinese government.

Meanwhile, the Chinese are up in arms against the US move and have termed it an anti WTO step. China has claimed that while it has a trade surplus with the US, it runs deficits with several Asian economies and such a step by the US is uncalled for. Partly the move is politically motivated, with US midterm elections due in November. China has long been blamed for the high unemployment rate in the US arising out of the undervalued Yuan leading to transference of manufacturing capacity to China.

This move by the US could lead to a full blown trade war between the two nations, which already seemed to have begun when the US imposed extra duties on steel pipe imports from China. In retaliation, China had imposed extra duties on imports of Chicken from the US. There was some hope earlier in June this year, when China pledged to move to a more flexible exchange rate mechanism. However, since then, the Yuan appreciated barely by 2%.

Critics in the US believe that the Yuan is undervalued by nearly 40%. US is China’s biggest export customer and an upward revaluation of the Yuan vis-à-vis the US dollar will lead to Chinese exports to the US becoming more expensive. This will result in a reduction in demand for Chinese exports to the US and can lead to a slowdown in the Chinese rate of growth. Thus, it appears that China will do all that it can to protect its position and resist moves that can lead to any sudden or major appreciation in the Yuan.

About the Author

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By James Woolley – If you go online or go to one of the larger book retailers in your local area, you will find that there are lots of books on forex trading. They are becoming increasingly popular as forex trading continues to grow and grow, but how useful are these books in reality?

Well the important thing to remember is that the people who write these books are not usually professional full-time traders. If they were they wouldn’t be spending months and months putting together a book in the hope of earning a bit of extra money, because they could be earning far more from forex trading.

Therefore when you pick up a book written by someone who claims to be a full-time trader, you should be very wary because most of the time this isn’t the case. The same is true regarding many of the courses and products being sold online by so-called professionals.

As a result of all this you should keep your expectations low because if you are looking for a tried and tested forex trading system, you are likely to be disappointed. Some books will provide you with various trading strategies, but from my own personal experience most of these will turn out to be unprofitable in the long run.

Any pro trader who has a proven trading method will generally keep it to themselves, and will definitely not give it away in a cheap $20 book that’s available to the general public. They would either trade it themselves and reap the rewards, or sell it for a much higher price online.

Forex books do still serve a purpose, however. Whilst they may not necessarily provide you winning trading strategies, they can provide you with a great education in general. They can teach you the basics of forex trading, for instance, and they can also teach you about the more technical aspects of forex trading. So you will find books on technical analysis, pivot points, fibonacci trading and day trading, for example.

So to summarize, I would say that you cannot expect to learn how to become a profitable forex trader just by reading a few books. However you can learn about every single aspect of this lucrative industry and arm yourself with the knowledge needed to take your trading to the next level. Therefore you could argue that forex books are ideally suited for the beginner and intermediate traders rather than the more experienced traders.

About the Author

Click here to read a full review of the Currency Trading For Dummies book and to read a full Forex Profit Multiplier review to learn about the new forex course that’s due to be released very shortly.

By Taro Hideyoshi – For traders, learning risk/reward ratio in trading is worth your time and essential for trading success. In daily live, we unconsciously weight risk before we do anything, including buying something, quitting your job or even putting your hand on hot stove. However when it comes to trading, traders are often careless about this.

If you have ever read my articles, you may notice that I have always mentioned that a complete trading system must consist of rules for entry, exit and stop loss. The key of exit and stop loss is you have to set them before enter a trade.

There are many reasons behind this approach. One reason is it enables you to calculate your risk/reward ratio for your trade. Since you have your specific target price and stop price, you are able to measure your risk (when you are stopped out) against your reward (when the price reaches your target).

A general criterion for risk/reward ratio is to enter a trade only when your profit target (reward) is at least two or more times greater than your stop loss point (risk).

Let’s take a look at the following scenario of trading. Learn to recognize trades that are high risk and try to minimize its risk.

Let says that you follow the breakout system when you trading a stock. You are taking chance when you buy it on a breakout.

Before the breakout, the price level at breakout usually works as a resistance, therefore there is chance that the price will go down again and form the double top reversal pattern. Actually, it is often to be that way rather than the price really breaks the level out.

So the questions are:

1. Where is your stop loss point? If you place the stop at the support level before the breakout, it will be several ticks away from your entry.

2. Where is the next resistance level? How far is it when compare to the stop.

By answering these two questions, you will get the idea of your risk and reward. If you place the stop at the support level before the breakout, you are taking high risk. It is better for you to set the stop fewer ticks below the breakout level, this way you can minimize your risk and it requires lower level of target price to be at least two times greater than your possible loss.

The bottom line of the story is you must consider your risk and reward for your trade according to your entry, stop and exit! Do not take that trade if it is not worth.

About the Author

Taro is an experience trader who trades in stocks, futures, forex. He strongly focuses on technical analysis, trading systems and money management.

If you would like to find more articles on MetaStock Tutorials, MetaStock Formulas, Trading Systems and Money Management. Please go to MetaStock Trading System.

By James Woolley – The whole subject of technical analysis can be quite daunting for anyone new to forex trading. However most of the indicators are fairly easy to use once you get the hang of them, and with that in mind I want to talk about some of the technical indicators that are ideal for beginners.

At the end of the day the whole purpose of indicators is to help you come up with plenty of winning trades, and more specifically trades where the odds are firmly stacked in your favour. They aren’t essential of course because if you wanted to you could simply look at price action and focus on things like fibonacci levels, pivot points, etc, in order to trade areas of support and resistance.

However your chances of success will improve greatly if you incorporate one or two other indicators into your trading. One of the most reliable indicators you can use is the MACD indicator. When you get crossovers on the MACD, it is often a good indication that a new trend is emerging. Furthermore if you get divergence on this indicator (which is where, for instance, the price is making new highs but the MACD is failing to make new highs) it will suggest that the latest trend is running out of momentum.

Another good indicator to use is the ADX indicator because this tells you the strength of the current price trend. If it is below 20 it is basically telling you that there is no trend present at the moment, or if there is it’s a very weak trend. Anything above 20, and certainly above 25, suggests that the price is trending strongly, with the higher the reading the stronger the trend.

You may also like to use oscillating indicators such as RSI and Stochastics. These will tell you when the price is price is at extreme highs and lows (above 70 or 80 and below 30 or 20 respectively), and therefore likely to reverse. Finally you may also like to use moving averages to help you find winning positions. I like to use exponential moving averages and you can get some excellent signals when the EMA(5) crosses through the EMA(20) on the longer term charts.

It is of course entirely up to you which indicators you decide to use. I should point out that your chances of success don’t improve simply by adding more and more indicators to your charts. You are best off by using a small handful of indicators because these are often more than enough to provide you with lots of high probability set-ups.

About the Author

Click here for more information about a forex trading course that will teach you all the basics of currency trading, and to read a full Forex Nitty Gritty review.

By James McKee – At its core the market is comprised of people, not numbers or goods or even units of currency, the market is a living entity in much the same way that its parts (people) are living entities. This is why large companies fear unions, and why companies spend huge amounts of money to address the needs of their individual employees, individuals make decisions (good or bad) and the market reflects them through stock price, the price of goods, and of course the value of currency. Recognizing the impact of not only individuals but that the status of various companies and even their host country is critical in assessing the stability of a given stock or currency at any given moment.

Currently Japan and China are a great example of a eminent global market shift due to political tensions, a couple weeks ago a Chinese fishing boat captain collided with Japanese coastguard vessels and was arrested. The Chinese government contested the arrest and threatened Japan with political action if the man was not released. Several days later the ship captain was released into Chinese custody. Despite his release Chinese officials are still posturing against Japan politically and have recently arrested (and subsequently released) 3 Japanese chemical disposal experts who were in China disposing of chemical weapons left there by the Japanese during WW2. One Japanese employee remains detained and China has begun threatening to place an embargo on Japan in regard to precious and rare minerals, which are used in the manufacturing process of many Japanese automobiles and electronics.

Such an embargo with have an immense ripple effect on not only many businesses in Japan, but retail outlets around the world and particularly in America. The implications for forex exchange rates are open to interpretation but it is clear that the US dollar and Japanese Yen may be effected in ways which would depress their value if the Chinese embargo moves forward. American imports from Japan would decrease and the availability of many US goods including hybrid cars, many electronic devices and other unknown components of devices I can’t begin to speculate on.

Information such as this is presented daily not only online but in newspapers as well, having the foresight to connect the dots and realize that being in the know in regard to current events is critical in the stock market as well as in the forex exchange market. Even though it might seem boring reading that newspaper and dropping in on the Wall Street Journal is truly the first line of defense against business related ignorance. So don’t hesitate to pick up the newspaper and find out where your favorite stock or currency might be standing, never hesitate to think outside the box and remember that if you observe an oncoming trend or series of events before someone else does it doesn’t mean that you’re being unconventional or taking a risk…it means that you have discovered something valuable, and the best strategy is the one you do NOT share with others (hence the reason no one else has mentioned it).

About the Author

Author is a Forex trader and financial analyst residing in Denver, Colorado with 5 years of experience in trading with an attitude of cooperation through education. It is vital to remain in the loop where new technologies are concerned, make sure to stay up to date and aware of forex exchange rates and developments

By James Woolley – One of the first things people learn about when they enter the world of forex trading is technical analysis. The reason why is because by using specific technical indicators you can create your own profitable trading system and use these indicators to find lots of high probability set-ups.

I should start by explaining what technical indicators are first of all. Quite simply they are basically just mathematical calculations based usually on price and/or volume. The calculations are derived from the past behaviour of a currency pair and are used to predict the future price movements of this pair.

The key word is ‘predict’ because they are not foolproof by any means. They are only there to provide you with guidance. However when you combine a few of these indicators you will find that when they all indicate that either an upward or downward movement is most likely to occur in the near future, you get plenty of high probability set-ups where the odds are in your favour.

It’s up to you to decide which indicators you wish to use, but it’s important that you don’t go overboard and use too many. If you do, you will simply end up getting lots of conflicting trading signals, and therefore very few opportunities to place a trade with any confidence.

The best strategy is to test out different indicators on your chosen time frame and choose a few which seem to offer the best results. They should hopefully produce the same signals at approximately the same time and help provide you with more than enough high probability set-ups.

Indeed once you have produced some kind of trading system that incorporates a few of these technical indicators, your subsequent success or failure is then often determined by how well you manage your money. In an ideal world you want to cut your losing trades early using a strict stop loss and let your winning trades run for as long as you can.

I personally like to close half the position for around 40 or 50 points, and then let the second half of the position run for as long as possible. If you move your stop loss to break-even after you close the first half of the position, you’re essentially creating a free trade for yourself, which is a great position to be in.

Anyway the point is that technical indicators can be an invaluable tool for any forex trader. They are not 100% accurate at predicting future price movements, but when a few of them are used in conjunction with each other, they can provide lots of decent trading opportunities where the odds of success are firmly in your favour.

About the Author

Click here for more information about a forex course that will teach you all the basics of currency trading, and to read a full review of Forex Nitty Gritty.

By ProIndicators – The most popular trading software is produced by MetaQuotes and is known as Metatrader4. The reason indicator mt4 is most popular and sought after software are numerous and the article will try to explain why it is considered so much popular. In today’s market traders as well as brokers both use Metatrader4 which in short form we can say as mt4. Serious forex traders use this platform because it is considered the best in the market and therefore most of the brokers provide the facility of interface with Metatrader4.

The major benefit of using indicator mt4 for individuals is that it is totally free for them. The company MetaQuotes does not take a penny from the individual traders but it covers its cost through the brokers, because this software is so good that need to have special software interface for their computers through which their different clients are able to use indicator mt4 from home. Moreover, the indicator mt4 comes with an interface that is unique. The interface allows you to access tools and 50 built-in indicators. Many people argue that the best advantage which indicator mt4 is its ability to trade automatically.

What automated trading means is that even if you are not present the software will still trade? All you need do is create rules and let the software do the work. Not only just some basic rules but also complex mathematical trading system. If you are not capable of producing such complex rules you can still easily find them. You will come across many people who have made their own trading systems that you can use as your own. Moreover, in order to see if these systems would work, you can test it with historical data to see if it’s profitable. This testing is known as “backtest”.

One of the recent innovations in the last few years is the Forex EA’s. Many people including traders, former hedge fund managers and Ivy League graduates have tested with metatrader4 so that they can produce automated systems that have all the features. Such systems have been produced and they are profitable at short as well as long run. Forex Expert advisors, EA’s, boot and robots are such programs and they now have become very common and are being used at an individual level.

At present, many traders do want create their own systems instead they rely on systems created by someone who has the ability and knowledge of trading to use in their own trading. People who are best in their field usually create theses robots. What this has done is that for individuals who do not have the ability to make use of complex mathematical trading system but still can use these systems by plugging it in indicator mt4 and use it through the software. Another reason why people need such programs is that market conditions change so rapidly that unless or until you don’t have an automated complex system to work with you won’t do well as a trader. This automated system helps to do the trade faster and easier.

About the Author

ProIndicators.com is providing high precision TradeStation. The indicator mt4 comes with an interface that is unique.

By Taro Hideyoshi – The winning traders are not ones who have never lost. To be a winner in trading game, you have to think in terms of long run. Hence, if you want to be one of winners, you have to find trading methods that work over the long run what is known in gambling as an edge.

By thinking in terms of long run, one question that you ask yourself is “What happens if I keep doing this?” If there is more chance to win the game, it is a positive expectation game while the negative expectation is vice versa. The negative expectation game is the one that you have more chance to lose.
An edge refers to one’s systematic advantage over an opponent. Without an edge in games of chance, you will lose money in long run.

So, what about your trading? Consider your trading method, what happens if you keep using it? If it will give you profits over long run. That means you are trading with an edge.

To find your trading edge, you need to locate entry points where give you greater than normal probability that market will move in the same direction with your trades and within your desired time frame. Besides entry strategy, as I have always mentioned that good trades also comprise of exit strategy. Therefore you have to pair the designed entry with an exit strategy in order to maximize your edge.

Entry strategy must be paired with appropriated exit strategy. Thus, trend-following entry strategies can be paired with many different types of trend-following exit strategies. Also, swing trading entries can be paired with many different types of swing exit strategies and so on.

Elements of an Edge

To get more understanding of an edge, let’s dig further into the components that make up the edge for a trading system. The following are the elements of an edge described by Curtis M. Faith in his book “Way of the Turtle“.

Portfolio selection: The algorithms that select which markets are valid for trading on any specific day

Entry signals: The algorithms that determine when to buy or sell to enter a trade

Exit signals: The algorithms that determine when to buy or sell to exit a trade

It is possible for an entry signal to have an edge that is significant for the short term but not for the medium term or long term. So, find the signals that give you an edge to your trading styles, personality and money management.

About the Author

Taro is an experience trader who trades in stocks, futures, forex. He strongly focuses on technical analysis, trading systems and money management.

If you would like to find more articles on MetaStock Tutorials, MetaStock Formulas, Trading Systems and Money Management. Please go to MetaStock Trading System.