Author : Dave Logen

Forex is where currency trading takes place It is where banks and other official institutions facilitate the buying and selling of foreign currencies Forex transactions typically involve one party purchasing a quantity of one currency in exchange for paying a quantity of another The forex market that we see today started evolving during the 1970s when worldover countries gradually switched to floating exchange rate from their erstwhile exchange rate regime, which remained fixed as per the Bretton Woods system until 1971 The forex market is currently one of the largest and most liquid financial markets in the world, and includes trading between large banks, central banks, currency speculators, corporations, governments, and other institutions

Ask (Offer) — the price of the offer, the price you buy for


Bear - If someone has a negative view of a particular currency and believes that its price will decrease, they are said to be 'bearish' about that currency


Bid (Demand) —the price of the demand, the price you sell for


Bull - If someone has a positive view of a particular currency and believes that its price will increase, they are said to be 'bullish' about that currency


ECB (The European Central Bank) — the main regulatory body of the European Union financial system


Fed (The Federal Reserve) — the main regulatory body of the United States of


America financial system, a division of which, the FOMC (Federal Open Market Committee), regulates, among other things, federal interest rates


Fundamental Analysis — a Forex trading analysis based only on news, economic indicators and global events


GDP (Gross Domestic Product) — this is a measure of the national income and output for a given country's economy It is one of the most important online forex indicators


Limit - A limit is placed on a trade so as to exit it after a speculator has gained the expected number of pips


Long - Trading a currency under the assumption that its price will rise - a 'buy' trade


Loss — the loss from closing long position at lower rate than opening or short position with higher rate than opening, or if the profit from a position closing was lower than broker commission on it


Lot — definite amount of units or amount of money accepted for operations handling (usually it is a multiple of 100)


Momentum — the measure of the currency's ability to move in any given direction


Moving Average (MA) — one of the most basic technical indicators It shows the average rate calculated over a series of time periods Exponential Moving Average (EMA), Weighted Moving Average (WMA) etc are just the ways of weighing the rates and the periods


Open Position (Trade) — position on buying (long) or selling (short) for a currency pair


Order — order for a broker to buy or sell the currency with a certain rate


Pip - Means Price Interest Point and refers to the smallest digit in any pricing, so if GBPUSD rose from 1 9443 to 1 9450, it rose 7 pips


Pivot Point — the primary support/resistance point calculated basing on the previous trend's High, Low and Close prices


Principal Value — the initial amount of money of the invested


Profit (Gain) — positive amount of money gained for closing the position


Forex analysis based only on news, economic indicators and global events


Etoro com - Forex Exchange

Dave Logen is a forex trader and strategy analyst. Other than writing, he designs software for market analysis of forex trading. For more information regarding forex and forex news, you may visit http://www.etoro.com

FOREX TRADING 102: Learning the Forex Trading Strategies

If you’re a potential investment player who’d like to make it big in the business and financial world, then you go for forex trading. The FOREX, also known as the foreign exchange market is one of the largest financial markets in the world with and estimate of $1.5 trillion turn-overs every day. Here are a few strategies on how to make it big in the forex market.

Strategy One: Know your market. The best way to get advantage, earn profit and minimize losses is to familiarize yourself with the market and how the whole system works. In the forex market, the players are usually commercial banks, central banks and firms involved in foreign trade, investment funds, broker companies and other private individuals with large capital. With the speed and high liquidity of asset, most companies engage in this business than in any other trading venture. Transactions are done in a jiffy; there are no membership fees and there is always the allure and promise of big, big profit.

Trading is done in pairs. The most commonly traded currencies are usually the US Dollar, Japanese Yen, Euro, British Pound, Canadian Dollar, Australian Dollar and the Swiss Franc. The more commonly traded currency pairs are the US Dollar and the Japanese Yen, the Euro and the US Dollar, the Swiss Franc and the US Dollar. In Forex trading, everything is speculative and virtual. There is no actual product being sold or bought. The activity mostly consists of computed entries made on the value of one currency against another. Say for example, you can buy Euros with US Dollar, hoping that the Euro will increase it value. Once its value rises, you can sell the Euro again, thus earning you profit.

Strategy Two: Learn the language. There are three concepts you need to know in the currency market. Pips refer to the increase of one hundredth of a percent of the value of the currency pair you are trading. Usually each pip has a value of $10 or $1. Volume is the quantity or amount of money being traded at one particular time in the market. Buying is the acquisition of a particular currency. A trader buys with the hopes that the price of the currency will increase. Selling is putting a currency up for grabs in the market because of a potential or possibility of a decrease in its value. There are also two techniques of analysis usually used in this business – the fundamental and the technical analysis. Technical analysis is usually used by small and medium players. Here, the primary point of analysis revolves on the price. Fundamental analysis, on the other hand, is used by bigger companies and players with higher capital as it involves looking at the other factors affecting the value of a particular currency. In this type of analysis, the player also looks at the situation of the country, particularly issues like political stability, inflation rate, unemployment rate, and tax policies as these are seen to have an effect on the currency’s value.

Strategy Three: Develop a sound trading strategy. Your trading strategy would depend on what kind of trader you are. The basic thing with developing a trading strategy is to identify what kind of forex trader you are. A good trading strategy should lessen, if not, eliminate losses. Plan also the size of your transactions. It is better to conduct many different trades than one huge transaction. Not only does it develop discipline, but it also lessens any possible loss as only a fraction of the capital is affected. Part of a trading strategy is developing the values of discipline and proper money management.

Strategy Four: Practice. Try paper trading, a great way to practice your skills, see how the market works and get acquainted with the software and tools being used. There are online brokers who allow free paper trades, which allows practice and experience before doing it with real money.

Strategy Five: Choose the right forex dealer. Make sure that they are regulated by the law. Take not of dealers with investment schemes that give out too-good-to-be-true-just-false-hopes promises. Look at investment offers before getting started.

Forex trading may seem easy and manageable. But the emotional stress, the demands and challenges of being a forex trader requires more than just the knowledge of the market. It requires more than just a keen and sensible head for business. It’s all about a gameplan, a strategy.

The Realm of Automated Forex Trading System

Just how important is an automated system to the Forex trading system?

Before we answer that question, let us first determine how large Forex trading market is. From there, we will know the importance of automated systems for the Forex market.

It is true that the Forex market is the largest market around the world not just in terms of average daily turnover and average revenue per trader. It is also the largest market in terms of participants.

You name it, we’ve got it. Take a look at the following:

BANKS- they are not just for saving money and lending capital to entrepreneurs, but they are one of the major players in Forex market. Banks cater both to large quantity of speculative trading and daily commercial turnover. Well-established banks can trade billions of dollars worth of foreign currencies everyday. Some of the trades are undertaken on behalf of their clients, but most are through proprietary desks.

COMMERCIAL COMPANIES- these commercial companies trade small quantities of foreign currencies compared to larger banks and their trades produce small and short-term impact on the market rates. However, the trade flows from transactions made by commercial companies are essential factors with regards to the long-term direction of the exchange rate of a certain currency.

CENTRAL BANKS- central banks play an important function in the Forex market. They have the control over the supply of different currency, inflation, and interest rate. In addition, they have also official target rates for the currencies that they are handling. They are responsible for stabilizing the Forex market through the use of foreign exchange reserves. Their intervention in the market is enough to stabilize a certain currency.

INVESTMENT MANAGEMENT FIRMS- these firms commonly manage huge accounts on behalf of their clients such as endowments and pension funds. They are using the Forex market to facilitate transactions, specifically in foreign securities. For example, an investment manager bearing an international equity portfolio needs to purchase and sell several pairs of foreign currencies to pay for foreign securities purchases.

RETAIL FX BROKERS- they handle a fraction of the total volume of Forex market. A single retail Forex broker estimates retail volume of between 25 to 50 billion dollars each day, which is estimated to be at 2% of the total market volume.

SPECULATORS- these are individuals who purchase and sell foreign currencies and profit through fluctuations on its price as opposed to popular methods such as interest and dividends. They perform the important role of transferring the risk to individuals who do not wish to bear it.

In Forex market alone, there are already six major players partaking on the $1.8 trillion worth of daily turnover. With a large number of Forex players, there is really a need in switching from manual to automated Forex trading system.

Among the aforementioned major Forex players, the automated trading system is of great advantage to the speculators. Since they focus on the price fluctuations of various foreign currencies in order to profit, the real time data analysis will help them determine trades that will give advantage to them.

There are several automated Forex trading systems available in the market. There are also automated Forex systems that are offered for free or as part of their trading account acquired from their Forex brokers or agents. Such complimentary system packages are typically elementary trading system. Thus, if you are looking for more features, you can avail of it through additional payments.

There are two types of automated Forex trading system. These are discussed in the following:

Desktop-based system- all Forex-related data are stored on your desktop’s hard drive. This system is unpopular to Forex traders because all data are susceptible to computer virus contamination and other security problems. Worse, when the computer malfunctions, all essential information might be lost and cannot be retrieved (unless you have some back-up files of your own). However, it is little expensive compared to the other types of automated trading system.

Web-based system- the security of your Forex account and other data are provided by your web-based provider. These are hosted on secured servers. It is also convenient in the sense that there will be no software required and it is universally compatible with your Internet browser.

You may also try different automated trading system demos first so that you will be able to determine the automated Forex trading system that suits your personal preference and needs.

Even if you are just a small-time Forex player, it will be to your advantage if you will use an automated Forex trading system for your future trades.

Author : Casey Stubbs

The candlestick chart is what we watch to see where the price is moving in the forex market Did you ever stop to think about what is happening behind the candlesticks to think of why a price is moving the way that it is? Many forex traders do not understand the reason that currency pairs move the way that they do and that is one of the biggest keys in becoming a profitable forex trader

Some traders just rely on indicators instead of knowing what is going on to make the market move If you just trade indicators without having a greater understanding of the market over a period of time the market will beat those traders because if you understand what is happening you can make more educated trades

To move the price of a currency takes a large amount of money, for example it takes 35 million dollars just to move the price half a pip So where does all this money come from? The answer to that is the big time movers in the forex market These movers are the central banks corporate investors, brokers and investment fund companies The other smaller players in the market are the retail traders or the dumb money as the big boys call retail traders The retail traders are the individual investors and do not have enough money to move the price at all Many times larger players will move the market in opposite direction to stop out retail traders There are also scalpers, those are the ones that are putting up large amounts of money for very small price movements in off market hours

So now that we know who is behind the candles, now we need to know what are they doing and how can I profit from this information The big boys trade at the beginning of the trading session in the U S the session starts at 8 am Est They are attempting to get there trades in early in the trading session an make a minimum of 55 pips, but probably more That is because they are putting large amounts of money at risk and they do not want to make small gains for such a large amount of risk Now they put up large amounts of money an the market begins to move because they put up enough money to make it start to move The only way a retail trader will be profitable is to follow the big boys

So how do you know when the big boys are entering a trade? First thing is they only trade at the market open that is why there is so much movement in the beginning So that means since the forex players will be in at the open that is when we the retail players should be in the market following there moves Don't trade after hours with the scalpers stay in for the larger price movements Next you will know when you see the candle moving in one direction very quickly when you see a five minute candlestick moving 15 pips you know that billions of dollars are getting into the market So that automatically tells you who it is the big boys There is another key that can help you and that is find charting software that gives indicators when large amounts of money comes into the market at one time There are software services out there that provide these type of indicators which proves invaluable to retail traders

Casey Stubbs is a Forex Trader that publishes a web site dedicated to educating traders for success. He has a daily trding blog, a interactive trading school, trading tutorials, articles and more. His web page is Winners Edge Trading

Author : Daniel Su

The key to making money in the Forex Trading is understanding what makes currency pairs move Well, it's the fundamentals that make currency pairs move but yet not all the economic indicators are important So which are the ones that can really shake the currency market? Below are some of the important ones which you can use as forex trading strategies:

1 Interest Rate: This is the most important economic indicator and it rules the forex market
Economies with higher interest rates tend to have stronger currencies and investors are always looking for the greatest possible investment returns

You will realise that if there is any changes to the interest rate to countries like United Kingdom, Europe, U S etc, be it cutting or raising, most of the time there will be big movements in the forex trading market

For example, if Europe has an interest rate cut, investors will sell Euro, which has a weaker currency now and invest in Great British Pound instead, which has a higher interest rate

Central banks have to raise interest rate if there is too much inflation and you have to watch these two economic inflation indicators as the central banks will be looking at it too:

2 Consumer Price index(CPI): The higher the index is, the stronger the economy will be Thus, forex traders may push the currency of that particular country higher if they find confidence in the index

3 Producer's Price Index(PPI): If prices for producers are rising, they will most likely pass those costs onto consumers This lead to higher inflation and stronger currencies

4 Gross Domestic Product(GDP): It is reported quarterly and is the primary indicator of economic strength A higher GDP is often associated with higher interest rate, which is frequently positive for the currencies

A forex trading tip: Sometimes you may see a currency pair dipped drastically because the actual results of the GDP is much lower than the forecast, so you might want to consider following the trend and sell that currency pair

5 Payroll Employment: Monthly measure in payroll employment reflects the number of new jobs created or lost and is an important indicator of economic activity In forex markets, large increases in payroll employment means that the strong economic activity could lead to higher interest rates, which is seen positive for the currencies

6 Retail Sales: It is a measure of the total receipts of retail stores and is a major indicator of consumer spending Rising retail sales are associated with a strong economy, which leads to rising currencies

7 Durable Goods Orders: It is a measure of the new orders placed with domestic manufacturers for immediate and future delivery of factory hard goods It is a major indicator for manufacturing sectors Rising durable goods orders are associated with a strong economy which leads to stronger currencies

You may learn to trade forex by catching some good opportunities when there are news releases for the above economic indicators Although the forex market is fundamentally driven, the best way to trade forex is to combine them with forex technical analysis and a forex trading system

To learn more forex tips and get trading signals, click here to download my FREE 56-page ebook Forex Trading To Riches.
The author, Daniel Su, is the founder of ForexTradingPower.com where you can get free premium forex trading tips and resources.

The Advantages of Forex Trading in the Stock Markets

Forex is the popular term for foreign exchange markets. The banks and brokerage firms are linked via electronic network to do business in the stock markets. The network allows them to convert currencies worldwide. It became the chief and largest liquefied financial market around the globe. Take for instance, the volume of dollar currencies can rapidly increase in trillions of dollars within a day in currency markets. It even goes beyond the total volume of the total equities in the U.S. as well as future markets.

Forex trading is dominated often by commercial banks, investment banks, and government central banks. This is the main reason why many private investors are dealing on currency exchanges. They find it easier to access the market through technological innovations such as the internet. It also provides the needed information in the stocks market regarding trading forex. The currencies which are widely traded include British Pound, US Dollar, Japanese Yen, Swiss Franc, Australian Dollar, and Canadian Dollar. Forex trading is done 5 days within a week and the traders can have constant access to various dealers all around the world. The trading does not mainly focus on any exchange or physical location and the transaction happens between two persons via electronic network or a phone line.

Forex trading has grown rapidly on the global market. The restrictions on the flow of capital have even been put off in various countries. This factor leads to market independence settling the forex rates on its perceived values. There are different reasons why forex trading is very popular. It include utmost liquidity, available leverage, lower trading costs.

There are different advantages of forex trading in the stock markets. Traders are making bigger sums of money by selling and buying foreign currencies. However, some people might ask of its advantages on the stock market.

1. Liquidity. Forex market can handle transactions even if it reaches 1.5 trillion dollars every day. Take note, this is a very large volume. It only denotes that sellers and buyers are always available regardless of the currency types. So, if the trader wanted to buy, there is always an available seller, and if the trader wanted to sell, there is always an available buyer.

2. There is no insider in the trading systems. Remember, constant value fluctuations of several currencies are caused by economic change. Some traders may obtain the information before others get it. So, they can sell or buy it within the stock markets. However, the nation’s economy is accessible to every trader so nobody can take an inside advantage to anyone.

3. It has accessibility. It is operational for five days within a week and accessible for twenty four hours. Trading can be made during this period.

4. It has more predictability. It always follow the market trends even the trends that are well established.

5. It can allow smaller investments. The potential traders can open mini accounts even for a few bucks of dollars. Forex trading has high leverage which is around 100:1. It only signifies that your assets can be controlled 100 times over your invested money.

6. It has no commissions. The forex trading brokers can earn money through setting their spreads where they weigh the process between selling and buying currencies.

Forex trading can be one of the best systems in day trading. Since it deals with currency trades, it can have the largest volumes of trading. Although it can be labeled as high risks trading systems, it can bring the traders higher returns within minutes.

However traders should be aware that forex trading needs a thorough research before starting it. Never confine yourself with only one source. Always make it a part of your plan to research first before engaging yourself in the real forex trading. It is not enough to know its advantages. As a trader, you need to clearly understand the systems involved in forex trading. It is helpful if you read the latest forums posted in the community boards.

It is also important to find the best forex trading systems. In this manner, you can incorporate a course, software, or method developed by forex trading experts. Take note, there are various system types that are available. It is important to find the right system that will fit in your goals in the industry of trading forex to achieve success.

Forex Trading Platforms: Trading Forex Right in the Comforts of Your Own Home

Trading in financial institutions is one of the best ways to earn money. It is also one of the most promising career choices that people make today. With the opportunity to earn a lot of money, more and more people who are interested in trading in the financial institution have left their jobs to get a piece of the action in the financial market.

Today, the Forex market is the best choice for people who are considering making a career out of trading in the financial market. Besides, who wouldn’t want to trade in the largest and the most liquid market in the planet which involves all the countries in the world?

The Forex market operates 24 hours a day with currency exchanges that can go as high as 2 trillion dollars each trading day. Also, it is the most liquid market in the world which also means that traders can enter the market anytime they want and get their profits easily.

In the past, Forex was limited to large financial institutions and multinational companies. Only banks, central banks and large companies were allowed to participate in the Forex market. However, thanks to modern communications technology and high speed internet and decreased sanctions in the Forex market, ordinary people can now trade and participate in the world’s largest financial market.

Because the Forex market is now open to everyone and because it is a very profitable industry, online Forex brokerage firms began improving their services and accessibility. They now also designed different trading platforms suitable for different Forex traders. Not only has online Forex brokerage firms made their trading platforms accessible, they also began and still continuing to improve their software.

They also allow people to register with a Mini Forex account that can let them trade with a minimum margin of 100 dollars only or even less.

If you are interested in joining the Forex market, you only have to have a few things to get you started.

First, you need a computer with a high-speed internet connection. The high-speed internet connection is very important for an effective trade to work. It will also minimize the risk of slippages that can cause you to lose money. So, if your area doesn’t have any high-speed internet connection available, you should forget about trading in the Forex market online. This will only make you lose a lot of money.

Second, you need to choose which Forex brokerage company you should hire. These companies will provide you with the Forex trading platform that you can easily download and install in your computer. The Forex trading platform is simply a software program that is essential for an online Forex trader.

It is important for you to choose a trading platform that you are comfortable using. You should also make sure that the trading platform you choose provides accurate and up to date real time information, security, and stability.

It is also recommended that the trading platform you choose should provide information on at least 16 currency pairs, execute orders with just a click of the mouse, have charting tools to perform technical analysis, and should also have a recording feature that will store your trading history.

With all these features, you can really improve the way you trade in the Forex market and also minimize the risk of losing money.

Look for a Forex trading platform that is simple to use and easy to understand. If you wish to know more about the Forex trading platform that a Forex trading brokerage firm offers, you can consider opening a dummy or practice account. By doing this, you will never risk real money on trades while learning the ropes.

You will also get hands on experience on the Forex trading platform and really determine if the platform is for you or not.

Risk management is also a very important feature that you should look for. If it takes too long to select a risk management order, you should consider looking for another Forex trading platform.

These are some of the things you should look for in a Forex trading platform. With a little practice in the dummy account, you can be sure that you can get the hang of it in no time at all and start making money through online Forex trading with a reliable Forex trading platform.

Just how important is an automated system to the Forex trading system?

Before we answer that question, let us first determine how large Forex trading market is. From there, we will know the importance of automated systems for the Forex market.

It is true that the Forex market is the largest market around the world not just in terms of average daily turnover and average revenue per trader. It is also the largest market in terms of participants.

You name it, we’ve got it. Take a look at the following:

BANKS- they are not just for saving money and lending capital to entrepreneurs, but they are one of the major players in Forex market. Banks cater both to large quantity of speculative trading and daily commercial turnover. Well-established banks can trade billions of dollars worth of foreign currencies everyday. Some of the trades are undertaken on behalf of their clients, but most are through proprietary desks.

COMMERCIAL COMPANIES- these commercial companies trade small quantities of foreign currencies compared to larger banks and their trades produce small and short-term impact on the market rates. However, the trade flows from transactions made by commercial companies are essential factors with regards to the long-term direction of the exchange rate of a certain currency.

CENTRAL BANKS- central banks play an important function in the Forex market. They have the control over the supply of different currency, inflation, and interest rate. In addition, they have also official target rates for the currencies that they are handling. They are responsible for stabilizing the Forex market through the use of foreign exchange reserves. Their intervention in the market is enough to stabilize a certain currency.

INVESTMENT MANAGEMENT FIRMS- these firms commonly manage huge accounts on behalf of their clients such as endowments and pension funds. They are using the Forex market to facilitate transactions, specifically in foreign securities. For example, an investment manager bearing an international equity portfolio needs to purchase and sell several pairs of foreign currencies to pay for foreign securities purchases.

RETAIL FX BROKERS- they handle a fraction of the total volume of Forex market. A single retail Forex broker estimates retail volume of between 25 to 50 billion dollars each day, which is estimated to be at 2% of the total market volume.

SPECULATORS- these are individuals who purchase and sell foreign currencies and profit through fluctuations on its price as opposed to popular methods such as interest and dividends. They perform the important role of transferring the risk to individuals who do not wish to bear it.

In Forex market alone, there are already six major players partaking on the $1.8 trillion worth of daily turnover. With a large number of Forex players, there is really a need in switching from manual to automated Forex trading system.

Among the aforementioned major Forex players, the automated trading system is of great advantage to the speculators. Since they focus on the price fluctuations of various foreign currencies in order to profit, the real time data analysis will help them determine trades that will give advantage to them.

There are several automated Forex trading systems available in the market. There are also automated Forex systems that are offered for free or as part of their trading account acquired from their Forex brokers or agents. Such complimentary system packages are typically elementary trading system. Thus, if you are looking for more features, you can avail of it through additional payments.

There are two types of automated Forex trading system. These are discussed in the following:

Desktop-based system- all Forex-related data are stored on your desktop’s hard drive. This system is unpopular to Forex traders because all data are susceptible to computer virus contamination and other security problems. Worse, when the computer malfunctions, all essential information might be lost and cannot be retrieved (unless you have some back-up files of your own). However, it is little expensive compared to the other types of automated trading system.

Web-based system- the security of your Forex account and other data are provided by your web-based provider. These are hosted on secured servers. It is also convenient in the sense that there will be no software required and it is universally compatible with your Internet browser.

You may also try different automated trading system demos first so that you will be able to determine the automated Forex trading system that suits your personal preference and needs.

Even if you are just a small-time Forex player, it will be to your advantage if you will use an automated Forex trading system for your future trades.