FOREX INFO: October 2008

Oct 28, 2008

Key factors For Your Forex Software

Prior to buying any forex software package there are some requisite items that had better be included. The most significant is security and your internet forex trading package should include a 128 bit SSL encryption which will keep cyberpunks from getting at any of your private details and data such as your account balance, dealing history, etcetera.

Supplying the top-quality security system for your forex trading will include a company that allows for twenty-four hr technical server support for your forex software, twenty-four hr upkeep should anything fail, every day backups of all data, and a security system that has been configured to keep any illegitimate access. Along with these security system communications protocols there are likewise a few forex trading companies that apply smart cards and fingerprint digital scanners to guarantee that only their employees can get admittance to their hosts.

A different useful element when it comes to selecting your forex software package is to see what the company’s downtime is like. When it pertains to trading in forex and especially your cyberspace forex trading you want to see to it that the forex software package you pick out is dependable and available twenty-four hrs a day. The forex software system you pick out for your forex dealing had better come with technical help accessible at all times should your session break off.

Seeing to it that all the preceding features are listed in the forex software system you pick out will help to secure your forex trading success.

Forex Killer

Whenever you are searching an automatic, forex trading signal generator that may assist you better your forex trading results, you have got to check into the Forex Killer Trading System.

Among the biggest troubles that traders face is determining when to get into a trade. This indecisiveness as to whether the signal is “correct” or “wrong” makes an unbelievable quantity of uncertainness which may cause you to overlook extremely rewarding trades!

With Forex Killer, you receive a entirely impartial, automated and mechanised trading signal source that takes away any doubt from making a trade. This means you no longer will question “if only” you had acquired that trade that soared sky high into revenues.

There is no longer imagining whether you had better acquire a trade since your trading scheme is entirely and wholly generated by the Forex Killer software package. It is unemotional, it is indifferent, and it may be extremely advantageous for you.

Whether you're a day-trader or position trader, the Forex Killer system of rules works good in ascertaining your advantageous trades to acquire. With the probability calculator, you will be able to determine whether to acquire only trades that come with a seventy% or greater chance of being fruitful!

By acting so, you're already utilising statistical analysis to set the odds in your favor. It means you could have to pass by on a few signals, but hey, you are able to still confirm those shorter chance swops with any different filters or indicants you have. Nonetheless, Forex Killer already takes away a big burden of coming up with rewarding trades off your spine!

Emotions are a hard matter to suppress, and it is the scourge of a lot of traders who may have progressed to gain 100s of thousands of bucks from trading the forex marketplaces.

I have discovered that the Forex Killer can and does take away emotion and guessing from trading, and when applied correctly you will be able to make 100s of pips a calendar month. Just verify the trading out comes that forexusa.com and the Forex Killer squad make each month!

Forex Market Trading

The Forex currency market is open for everyone who wants to learn how to increase their wealth, but it requires not only knowledge that you can obtain with the help of currency Forex market trading guidelines, but also a lot of practice as the practice is the only way to gain the precious experience. The goal of forex market trading is to exchange one currency for another in the expectation that the currency you bought will increase in value compared to the one you sold.

Lots of beginner traders often make the following mistakes: starting their trading without having a strategy and trading lead by emotions. Traders must decide which style and/or combination of analysis works best for them. They often read news, analyst reports, and Web site bulletin boards to get a sense of the general market sentiment and then trade either with or against that sentiment. The forex traders need to be disciplined speaking about a market renowned for its volatility, besides being aware of analysis. Currency traders make decisions by analyzing technical factors and economic fundamentals. Technical traders make their decisions using two primary tools: Charting tools (trend lines, support and resistance levels, etc,) Quantitive Trading Models (mathematical analysis to identify trading opportunities). Fundamental traders analyze key economic data, including news and government reports, to evaluate trading opportunities. The Forex trading world is tough and most newbie traders bail out in the first year. Timing is very important for traders as most securities are volatile and a small change in price can result in big gains or losses.

Carry Trade

The system of borrowing or selling a financial instrument with a low interest rate is called Carry trade. It enables you to turn around and purchase a financial instrument with a higher interest rate. This allows you to collect a higher interest on the financial instrument you purchased while you are paying the lower interest rate on the instrument you sold or borrowed—and this becomes you profit. These interest payments occur every trading day, depending on the trader’s position. Every position is closed at the end of the forex day, but if a trader holds a position to the next day, he or she won’t see it. Brokers will usually then credit the trader overnight interest rate between the two currencies.

Reaping the Awards of Electronic Trading

Traders owe their real-time access in the market to electronic trading. Because of electronic trading, physical presence on the trading floor is no longer required. Traders have the luxury of trading from their own homes on their own time. The market has increased because recent technologies have provided easy access to the market.

More and more people who normally wouldn’t trade are turning to the market. The flexible access allows individuals to trade before and after they go to work. Many enjoy trading on the side of their occupation. The electrification of markets has also provided easier access to market news, live charts, price alerts, and other trading tools. Market volume has reached an all-time high and firms compete to provide traders with the newest information and tools. Although firms are forced to develop the latest technologies in order to keep up with electronic trading, they can also take advantage of its movements. Firms are now able to provide their clients with real-access data and a wide-spread of activity is now done online, firms utilize the web for advertising.

The flexibility that electronic provides is helpful for traders who are developing their strategies. Traders can now implement more reaction time into their systems, including entry and exit. They can now access all their information through one place: online. Electronic trading has created a boom in the market, and more and more people are turning to it.

FXCM Micro, the New Discount Forex Division of FXCM

FXCM (www.fxcm.com) has announced the opening of its discount brokerage division FXCM Micro (www.forexmicrolot.com).

FXCM Micro allows traders to trade with super-low spreads, automated execution, and 1K lot sizes. FXCM Micro is offered for individual, self-traded accounts.

FXCM Micro successfully launched on June 22 with existing clients and has since fully launched, accepting new clients both domestic and internationally. Currently there are over 15,000 clients trading through FXCM Micro.

FXCM Micro is for traders who prefer the flexibility and convenience of trading in small (1K, 2K) lots, but are not willing to sacrifice tight spreads or quality execution.

With FXCM Micro, you can open an account with as little as $25, yet trade with competitive spreads.

In order to provide clients with tight spreads for 1K lot sizes (as little as 15 cents per lot for EUR/USD), FXCM controls expenses, such as costly support services. Instead of providing these services to clients by phone or IM, FXCM has innovated extensive self-help sections so that clients can find immediate answers on the Web site.

For more information and to see lower spreads, open a live FXCM Micro account with only $25, sign up at http://www.forexmicrolot.com/open-an-account.jsp.

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FXCM Facts

Forex Capital Markets LLC is one of the Largest Forex Dealer Members
More than 100,000 live accounts are traded on FXCM trading platforms
As of January 2008, an average of $350 billion in notional volume is traded each month on FXCM trading platforms
As of January 2008, there is in excess of $700 million in customer funds trading on platforms offered by FXCM
FXCM provides customer support with native speakers in more than a dozen languages in 6 offices around the world

Registered with the CFTC as a Futures Commission Merchant, FXCM (Forex Capital Markets LLC) has received numerous awards from the investment community, including Best Currency Broker from Shares , Best Retail Foreign Exchange Platform from FX Week and Best Foreign Exchange Specialist from Technical Analysis of Stocks & Commodities . In addition to currency trading, FXCM offers educational courses on forex trading, and provides research through DailyFX.com.

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Leveraged foreign exchange trading carries a high level of risk, and may not be suitable for all investors. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose.

More Information:
Jaclyn Sales
Public Relations Coordinator
FXCM
Financial Square
32 Old Slip, 10th Floor
New York , NY 10005
Dir (646) 432-2463
Tel (212) 897-7660
jsales@fxcm.com

Oct 27, 2008

The coming economic crash caused by world debt

Almost every nation of the world has such severe debt that just making the interest payments takes a large amount of their financial resources. Much of this world debt is owed to world bankers that then dictate their own economic policy to these countries. These policies do not favor the poor.

The largest economy in the world is the United States. The US government is currently 10 trillion dollars in debt and that is projected to go to 11 trillion or more in two years. Paying the interest on that huge debt in future years will cost about as much as what is spent on national defense (using modern historical interest rates and the cost of defense under normal peace time conditions).

The United States is now by far the biggest debtor nation in the world. For many years we have been importing hundreds of billions more dollars in goods and services than we are exporting each year. In 2005 through 2008 the trade imbalance averaged well over 700 billion dollars per year! Trillions of US dollars are now in the hands of foreign investors who at any time could dump the dollar causing a devaluation of the currency.

Just a few years ago, the US government was forecasting surpluses of trillions of dollars based on the stupid assumption that there would not be a downturn in the economy for decades. This foolish assumption was of course proven wrong and deficit spending has returned to well over "four hundred billion dollars" a year. The only reason the United States is not feeling the pinch of spending beyond its means has been the record low interest rates. The low interest rates were brought about by Federal Reserve manipulation to stimulate the economy but interest rates now will rise. Soon all who need loans will be making higher payments and the US government will be paying much more to service the national debt.

Debt and unfunded liabilities promised through entitlement programs is now over 50 trillion dollars. This amount of money in non inflationary dollars is impossible to raise! Thus, the US is now technically bankrupt. In order to keep up the facade that the US is solvent for even another decade or two one or more of the following must happen.

1. Taxes must be raised.

2. Government spending will have to be drastically cut.

3. Deficit spending will dramatically increase.

If taxes are raised, it will kill the economy and the debt load will get worse and not better. Spending will not be drastically cut because these types of cuts would never get through the political system. Therefore, massive deficit spending will take place. The monetary system will be inflated so that this debt can be paid by using a dollar worth only a fraction of what it is today. This means a much weaker dollar in the future and much higher prices for all goods and services imported to the United States (in short it means we should expect hyper-Inflation). The recent rise in all commodity prices might just be the start of what is to come.

The best long term scenario is that the economy will expand for decades and we will partly grow our way out of this debt crunch (like we temporarily did under Ronald Reagan). But, I do not see stability for that length of time as even a remote possibility in this world full of crises. I think it is only a matter of time before a downturn in the economy or an unforeseen world event brings about the collapse of this house of cards.

The catalyst for a crash can come in any number of ways. One likely scenario is that confidence in the US dollar will falter. When this happens interest rates will have to rise dramatically to try to lure foreign investors to re-service our debt. Higher interest rates will then shut down our economy and less tax money will be raised. The debt will still have to be paid at the higher interest rate so the government will print even more money and deficit spending will increase. The dollar will fall in value against other currencies bringing about an inflation spiral in the United States and even more dumping of US dollars for a more stable currency.

Banks and financial institutions holding today's unrealistic low interest loans on property will go under, causing a collapse of pension systems and/or a taxpayer bailout that will worsen the deficits even further. Many with adjustable rate mortgages will not be able to make the payments and they will default on their loans. The foreclosed houses will be dumped on the market bringing a collapse in all home values. All this in effect will cause an inflationary depression in the largest economy in the world.

Emerging Markets Currencies Hurt by Derivatives

Emerging Market currencies are becoming the latest victims of financial derivatives, proving Warren Buffet's claim that such contracts represent "financial weapons of mass destruction." Apparently, companies throughout the developing world (although predominantly in Latin America) had used derivatives to bet on the strength of their home currencies, relative to the US Dollar. Given their record appreciation over the preceding few years, such bets probably appeared risk-less. As investors have fled emerging markets en masse, however, such currencies have tumbled. This has forced companies that had bet against the Dollar to rapidly unwind their derivative positions, which only caused their currencies to decline further. The Mexican Peso and Brazilian Real, to name the most prominent examples, are now in a virtual tailspin. Another "short squeeze" is probably not far away. The Wall Street Journal reports:

[Investors] had begun pulling money out of Mexico and other emerging markets. Since Aug. 1, the peso has dropped 24% against the dollar, and in October careened through its biggest daily drops since a 1994 currency crisis.

End of the Dollar Carry Trade

One can usually assume that any talk of the carry trade is in reference to the Japanese Yen. In this case, however, it is the Dollar that is being driven by a shift away from the popular strategy of borrowing in one currency and investing the proceeds in assets dominated in another. In explaining the recent Dollar rally, analysts have tended to focus on the pall of risk aversion that has descended upon global capital markets, coupled with the spread of the credit crisis from the US to the rest of the world. While these are certainly contributing factors, perhaps they should also look at the repatriation of Dollars that were initially sent abroad over the last decade in search of loftier returns. Hedge funds and other institutions, including those based outside of the US, took advantage of record-low interest rates to borrow Trillions of Dollars and invest them abroad. Due to a combination of margin calls and client "withdrawals," however, such investors have been forced to not only unwind such positions, but return the proceeds of the US. The Guardian UK reports:

Data collected by the Bank for International Settlements shows that European and UK banks have five times as much exposure to emerging markets as US and Japans banks, with surprisingly big bets in Latin America and emerging Asia - where they rely on dollar funding rather than euros.

Oct 15, 2008

20 Most Influential People in FX - Forex Market

Written by Boris Schlossberg, Currency Strategist

Who are the people that influence FX markets? Generally they tend to be the top monetary and Treasury officials from the nations with the world's most liquid currencies. In many subtle ways these men and women can often exercise a greater degree of control over our lives than even elected officials. Certainly they possess tremendous power in the FX market.
Generally, three factors tend to move prices in the FX market

Fundamental economic data

Geo-Political events

Comments from the world's top policy makers

While enormous amount of time is spent analyzing the two topmost categories, we thought it might be quite useful to focus in on the third.

Who are the people that influence FX markets? Generally they tend to be the top monetary and Treasury officials from the nations with the world's most liquid currencies. In many subtle ways these men and women can often exercise a greater degree of control over our lives than even elected officials. Certainly they possess tremendous power in the FX market.

You will note that we have consciously omitted national leaders. Thus, George Bush, Gerhard Shroeder, Tony Blair and many others are not on the list. This is no way diminishes their importance or capacity to impact the market. However, given the fact that in FX markets we trade money, it is the monetary authorities that have the most immediate and persistent effect on day to day trading and therefore are most worthy of note.

Thus without further ado we present our 1st list of 20 Most Influential People in FX - a list that we will be sure to update as conditions change. We hope you find it useful and as always invite any comments to be sent to bschlossberg@fxcm.com.

The Americans

Alan Greenspan
Ben Bernake
John Snow
Janet Yellen
William Poole
Jack Guynn

The Europeans

Jean-Claude Trichet
Otto Ossing
Hans Eichel
Herve Geymard

The Japanese

Toshihiko Fukui
Sadakazu Tanigaki
Hiroshi Watanabe

The British

Mervyn King
Gordon Brown

The Swiss

Jean-Pierre Roth
Philipp Hildebrand

Commodity Currencies

David Dodge - Canada
Ian Macfarlane - Australia
Alan Bollard - New Zealand

The Americans

Alan Greenspan, Chairman of the Federal Reserve

As the principal monetary policy official for the world's reserve currency Alan Greenspan is viewed as the most powerful man not only in FX but all financial markets. Fiscally conservative yet monetarily accommodative, he has served under four different Presidents in both Republican and Democrat administrations. Originally an advocate for the return to the gold standard, he admitted, during the most recent Humphrey Hawkins testimony, that he no longer held such views. As the Chairman of President Reagan's 1983 Commission on Social Security he was the architect of Social Security reforms which imposed some of the largest one time tax increases on the American workforce but at the same time guaranteed solvency for the program through the year 2052. Yet he never fully supported the policy recommendations of his own work, often questioning the viability of the Social Security program during his tenure.

For this, as well as his tepid criticism of the massive Federal deficits incurred over the past 4 years, he has been vilified by critics for the philosophical inconsistency of his positions. Nevertheless, he has managed to navigate the nation through 1987 Stock Market crash, the 1991 post-Gulf War recession, the collapse of LTCM in 1998, the year 2000 burst of the NASDAQ bubble and 9/11 with only minimal setbacks for the economy. During his tenure as Chairman, US GDP increased in 16 out of 17 years - one of the smoothest periods of economic growth in US history. Ironically enough, the Chairman who is an ardent believer in laissez-faire capitalism and is a fan of Ayn Rand, had never hesitated to use the full power of government printing press at his disposal to quickly generate liquidity and re-establish confidence in times of market crisis. Perhaps this steak of steely pragmatism has been the key to his success. The Chairman is scheduled to step down January 31st 2006. In the meantime he reaffirmed his determination to increase the Fed funds rate to a more neutral level assuring that the dollar's carry spread differential against the euro and the yen will continue to expand.

and more...

What Happens to Currencies If Oil Goes to $60? - Forex Market

Source FXCM

In the currency market, the single biggest beneficiary of rising oil prices is the Canadian Dollar. As of January 2004, Canada's total proven crude oil reserves stood at 178.9 billion barrels trailing only Saudi Arabia, which holds the most proven crude oil reserves in the world. However, the vast majority of Canadian oil inventory is trapped in the sands of the Alberta province.

Some analysts estimate that the region could contain as much as 300 Billion barrels – enough crude to supply US needs for over 40 years. Until recently, the cost of extraction have been prohibitive, reaching as high as $15-$20 per barrel because of the need for massive filtration equipment. However, recent advances in extraction technology have lowered the price to only $9 per barrel making the Alberta Oil Sands venture highly competitive in the present market prices.

If oil reaches $60 per barrel, Canada which is already the biggest exporter of oil to the United States, will experience a tremendous boost to its economy. The energy sector comprises 8% of the Canadian GDP while its indirect contribution to the Canadian economy is far greater. Therefore, if oil rises the CAD is likely to closely follow.

Oct 7, 2008

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Essential Elements of a Successful Trader

Courage Under Stressful Conditions When the Outcome is Uncertain

All the foreign exchange trading knowledge in the world is not going to help, unless you have the nerve to buy and sell currencies and put your money at risk. As with the lottery “You gotta be in it to win it”. Trust me when I say that the simple task of hitting the buy or sell key is extremely difficult to do when your own real money is put at risk.

You will feel anxiety, even fear. Here lies the moment of truth. Do you have the courage to be afraid and act anyway? When a fireman runs into a burning building I assume he is afraid but he does it anyway and achieves the desired result. Unless you can overcome or accept your fear and do it anyway, you will not be a successful trader.

However, once you learn to control your fear, it gets easier and easier and in time there is no fear. The opposite reaction can become an issue – you’re overconfident and not focused enough on the risk you're taking.

Both the inability to initiate a trade, or close a losing trade can create serious psychological issues for a trader going forward. By calling attention to these potential stumbling blocks beforehand, you can properly prepare prior to your first real trade and develop good trading habits from day one.

Start by analyzing yourself. Are you the type of person that can control their emotions and flawlessly execute trades, oftentimes under extremely stressful conditions? Are you the type of person who’s overconfident and prone to take more risk than they should? Before your first real trade you need to look inside yourself and get the answers. We can correct any deficiencies before they result in paralysis (not pulling the trigger) or a huge loss (overconfidence). A huge loss can prematurely end your trading career, or prolong your success until you can raise additional capital.

The difficulty doesn’t end with “pulling the trigger”. In fact what comes next is equally or perhaps more difficult. Once you are in the trade the next hurdle is staying in the trade. When trading foreign exchange you exit the trade as soon as possible after entry when it is not working. Most people who have been successful in non-trading ventures find this concept difficult to implement.

For example, real estate tycoons make their fortune riding out the bad times and selling during the boom periods. The problem with trying to adapt a 'hold on until it comes back' strategy in foreign exchange is that most of the time the currencies are in long-term persistent, directional trends and your equity will be wiped out before the currency comes back.

The other side of the coin is staying in a trade that is working. The most common pitfall is closing out a winning position without a valid reason. Once again, fear is the culprit. Your subconscious demons will be scaring you non-stop with questions like “what if news comes out and you wind up with a loss”. The reality is if news comes out in a currency that is going up, the news has a higher probability of being positive than negative (more on why that is so in a later article).

So your fear is just a baseless annoyance. Don’t try and fight the fear. Accept it. Have a laugh about it and then move on to the task at hand, which is determining an exit strategy based on actual price movement. As Garth says in Waynesworld “Live in the now man”. Worrying about what could be is irrational. Studying your chart and determining an objective exit point is reality based and rational.

Another common pitfall is closing a winning position because you are bored with it; its not moving. In Football, after a star running back breaks free for a 50-yard gain, he comes out of the game temporarily for a breather. When he reenters the game he is a serious threat to gain more yards – this is indisputable. So when your position takes a breather after a winning move, the next likely event is further gains – so why close it?

If you can be courageous under fire and strategically patient, foreign exchange trading may be for you. If you’re a natural gunslinger and reckless you will need to tone your act down a notch or two and we can help you make the necessary adjustments. If putting your money at risk makes you a nervous wreck its because you lack the knowledge base to be confident in your decision making.

Patience to Gain Knowledge through Study and Focus

Many new traders believe all you need to profitably trade foreign currencies are charts, technical indicators and a small bankroll. Most of them blow up (lose all their money) within a few weeks or months; some are initially successful and it takes as long as a year before they blow up. A tiny minority with good money management skills, patience, and a market niche go on to be successful traders. Armed with charts, technical indicators, and a small bankroll, the chance of succeeding is probably 500 to 1.

To increase your chances of success to near certainty requires knowledge; acquiring knowledge takes hard work, study, dedication and focus. Compile your knowledge base without taking any shortcuts, thereby assuring a solid foundation to build upon.

Taking Advantage Of A Weak U.S. Dollar

Between 2003 and 2008, the value of the U.S. dollar fell compared to most major currencies. The depreciation accelerated during 2007-2008, impacting both domestic and international investments. The impact of the rise or fall of the U.S. dollar on investments is multifaceted. Most notably, investors need to understand the effect that exchange rates can have on financial statements, how this relates to where goods are sold and produced, and the impact of raw material inflation.

The confluence of these factors can help investors determine where and how to allocate investment funds. Read on to learn how to invest when the U.S. dollar is weak.

The Home Country
In the U.S., the Financial Accounting Standards Board (FASB) is the governing body that mandates how companies account for business operations on financial statements. FASB has determined that the primary currency in which each entity conducts its business is referred to as "functional currency". However, the functional currency may differ from the reporting currency. In these cases, translation adjustments may result in gains or losses, which are generally included when calculating net income for that period.

What does all this technical-speak mean when investing in the U.S. in a falling dollar environment? If you invest in a company that does the majority of its business in the U.S. and is domiciled in the U.S., the functional and reporting currency will be the U.S. dollar. If the company has a subsidiary in Europe, its functional currency will be the euro. So, when the company translates the subsidiary's results to the reporting currency (the U.S. dollar), the dollar/euro exchange rate must be used. For example, in a falling dollar environment, one euro buys $1.54 compared to a prior rate of $1.35. Therefore, as you translate the subsidiary's results into the falling U.S. dollar environment, the company benefits from this translation gain with higher net income.

Why Geography Matters
Understanding the accounting treatment for foreign subsidiaries is the first step to determining how to take advantage of currency movements. The next step is capturing the arbitrage between where goods are sold and where goods are made. As the U.S. has moved toward becoming a service economy and away from a manufacturing economy, low-cost provider countries have captured those manufacturing dollars. U.S. companies took this to heart and started outsourcing much of their manufacturing and even some service jobs to low-cost provider countries to exploit those cheaper costs and improve margins. During times of U.S. dollar strength, low-cost provider countries produce goods cheaply; companies sell these goods at higher prices to consumers abroad to make a sufficient margin.
Continue Reading Article...

Oct 6, 2008

Why opt for Forex trading?

With more than $1.5 trillion USD being traded daily, the foreign exchange market has managed to become the world's largest financial market, over the last three decades. With the large minimum deal sizes and rigid financial requirements, the Forex market, till recently, was not explored by the common trader or individual investor. But now the average investors can also engage in Forex trading. Some of the advantages of Forex trading are as follows:

24 hours trading
Forex gives its traders a 24 hour trading opportunity. Being a Forex trader, you can trade 24 hours a day from Sunday 5:00 pm (ET) to Friday 4:30 pm. This gives traders an opportunity to trade according to their convenience, going by their own schedule and also a chance to react instantly to any breaking news of the markets.

High levels of liquidity
Also, acting as a huge attraction is the high liquidity. With almost 90% of all the currency transactions consisting of 7 major currency pairs, helps these currencies display price stability, smooth trends, narrow spreads and high levels of liquidity. This liquidity mainly comes from the banks which offer cash flow to companies, investors and market players.

No commission
With “free of commission” trading, Forex trade lets you keep 100% of your trading profits. This makes Forex trading even more attractive as a business opportunity, especially for those who want to deal on a regular basis.

Steady trading prospects
The market is constantly moving and since Forex trading involves buying and selling of currencies, so traders can easily operate in a rising or falling market. This is because, there are always trading prospects, whether a currency is rising or deteriorating in relation to another currency. So there is always profit potential in the Forex market, whether it’s a rising one or a falling one.

Along with these major advantages, the Forex market also has some other merits such as, Forex trading gives its traders, an opportunity to bigger profits as returns on their invested money. Also, since the market is open 24 hours a day, 5.5 days a week, it gives the investors can make their deals anytime they want to.

With such superior speed of the market, and fine liquidity, even the largest of transactions are conducted within a few seconds. You can study the Advantages and Disadvantages of Forex Trading as well on our website.

What is Forex Market?

The biggest money market in the world, Foreign Exchange or Forex or FX is a platform where money is sold and bought freely between buyers and sellers. With over $1.5 trillion USD being traded daily, the foreign exchange market has now become a market which is open to trading by an average investor as much as it is open to a high investor.

Launched over three decades back, in the early seventies, Market Forex introduced free exchange rates worldwide, according to which, the price of the currencies was determined on the basis of demand and supply only. No external regulatory authority was and still is, allowed to set or fix prices or rates.
The power of setting or fixing a price for each currency is with the participants of the market, the buyers or the sellers, who decide the price of one currency against the other.

Forex Market is also free and independent from all or any outside control and is open to all, as far as free and fair competition is concerned, making it the perfect market to invest in.

Today, Forex market deals in over hundred times the every day trading done in the New York Stock Exchange. The Forex market is an over-the-counter market in which buyers and sellers trade through different means of communication such as telephone, fax or internet network rather than being physically present on the exchange location.

The major reason for this is that contrasting to other money markets, the Foreign Exchange market neither has a physical location nor any central exchange. And it is this lack of physical exchange, which enables the Forex market to trades incessantly, 24 hours a day, going from one time zone to the other, from the world’s one major economic center to another, day after day.
Beginning since 1997 till date, more than a trillion dollars of foreign exchange activity has been taking place at Forex, day after day. The every day forex trading quantity escalated from US$5 billion to US$1.5 trillion approximately. At this pace, it can be said for sure that the Forex market continues to grow at an exceptional rate.
Going back to the time when Foreign Exchange market had been launched, before the Internet geared up its popularity, Forex was only limited to big companies, transnational or global banks and affluent corporate individuals, who could trade currencies in the market through the bank-owned trading systems.
During that time, opening an account for trading required a deposit of as much as US$1 million. It was only with the advent of Internet and online technology, that today, investors can open an account as well as trade successfully, with only a few thousand dollars.

Brokers are a significant part of this trading industry. It is only because of these Forex Brokers, that this Foreign Exchange market is a nonstop cash market, with a continuous buying and selling of currencies of different nations.
Forex market conditions are highly unpredictable in nature and change every second, with fluctuation in price being the only constant factor in this trading. This is the main reason why, at times, Forex is also known as a highly fickle and fragile market.

Forex today, provides a great substitute to the stock market trading for the traders and investors. Although Stock Exchange provides a far larger variety of stocks to trade in, Forex offers only a few major currencies to trade for, where in the US Dollar, Yen, British Pound, Swiss Franc, and Euro, are the most popular ones.

Trading such big currencies is definitely more exciting for the investors than the stocks, and it can be seen that more and more traders and investors are now turning towards Currency trading to get the real thrill of the trading business.

What Is Your Trading Style?

When I first started trading forex almost 2 years ago, I would hold trades for longer than a day. This was mostly due to the fact that I didn't know what I was doing and I was either looking for unrealistic profit targets based on my time frame or it was because I would keep moving my stop loss hoping for the price to bounce back my way.

I've never held a trade more than a couple of days and in the past year, I've rarely held a trade for longer than 24 hours. Therefore I would have to classify myself as a day trader. I feel most comfortable technically day trading but does day trading suit me? Based on my hectic schedule and already my challenge for sleep, I don't think it would be smart for me to attempt any day trading strategies at this point in my life. My h-system is a day trading strategy but it's systematic so I'll continue trading it but if the performance continues to suffer and the only option is for manual intervention, I might have to put this off also.

So what I'm doing now is trying to look more at trades that last a couple of days. I'm not sure what style of trading this can be classified as but from what I mention below, it could be swing trading. I'll continue to look at 1-hour charts but I'll also start concentrating my efforts on the 4-hour and daily charts. Position trading is the style that ultimately may suit me best.

I was reading the Special Trader's Issue of Stocks & Commodities that I received this month and they have an article that looks at the different trading styles. According to the author of this article, there are actually 7 types:

Intraday trading - This style of of trading is very short-term, mostly holding for only minutes. This style requires extensive knowledge of the market and also extensive capital, both of which I'm short on. Traders of this style may want to use 15-minute to 1-hour support levels. This style is impossible for me at this point.
Day Trading - Trades may be held a bit longer than intraday but not much. Traders of this style may want to use end-of-day intraday support levels.
Momentum Trading - This style of trading tries to take advantage of a sudden rise or drop in the price of a currency pair. Trading this style is very similar to day trading in that traders would mostly want to use end-of-day intraday support levels and also have a moderate sized capital base.
Swing Trading - Traders of this style typically hold positions for several days to a few weeks. Swing traders use weak support levels that form over several days.
Position Trading - This style requires a smaller capital base and less experience in the market. Position traders can use weekly charts to start their analysis and moderate support levels that form over weeks to 3-months.
Intermediate-term trading - These traders look longer-term and at quarterly support levels.
Long-term investing - This style of trading requires holding trades for a years at a time. I don't see myself trading Forex long-term. If I'm investing long-term, I'll look at mutual funds and dollar cost averaging.

My Forex Trading Slumber

In the past two years, a reliable indicator that my forex trading is up in the air are the limited number of new posts on this website. This is my 28th post of March. In February, I had 37 posts and in January, I had 40 posts. The trend is obviously down. When my trading is in a state of flux and uncertainty, it's not easy to find anything to say. Like I've said over the last couple of weeks, I just haven't found the time to dedicate to trading or posting. From my experience, if you want to be successful, trading needs to be pretty high up on your list of priorities. Whereas last year I was able to concentrate my energies on forex trading and less on my full-time job, the opposite now seems to have taken hold. My full-time job has been very hectic and longer hours in the office have meant less time for everything else. I'm being tested more than I ever have in the past 2 years and the easiest thing for me to do would be to put all forex related activity on hold. I don't think I've ever been away from trading more than a couple of days and I really don't want to take a leave of absence. These are not excuses, just a fact of life. I'm not about to call it quits, far from it but I'm hoping that as I get accustomed to my overall schedule, I'll be able to find the time to continue to strive for the goal of trading forex full-time. I use Google Calendar to keep track of a lot of the non-trading tasks I have to do on a daily basis but maybe I should try to schedule particular times in the day that I will dedicate to forex. I'm also in a bit of a transition where I'm moving away from day trading and more towards trading longer term. I have yet to define a plan for this transition and it is probably the first thing that I need to do before anything else. I welcome this challenge because I never thought this goal was ever going to be an easy one.

Make The Currency Cross Your Boss

In the stock market, a trader has the opportunity to choose from more than 5,000 companies - hundreds of which will rally in the most vicious of bear markets and thousands of which will crash during the strongest of bull runs. But in the currency market, such divergent possibilities do not seem to exist. In this article, we'll look at how forex traders can use currency crosses to make a wide variety of trades that are unaffected by the day-to-day fluctuations of the greenback. All Currency Bets Are the Same
When dealing in the major currency pairs, most traders are presented with only one choice: dollar bull or dollar bear? Regardless of whether a trader is long the GBP/USD (British pound-U.S. dollar) or the EUR/USD (euro-dollar), or short the USD/CHF (dollar-Swiss franc) or USD/JPY (dollar-Japanese yen), the unifying theme in all of these positions is that the trader is bearish on the greenback. Therefore, the question of which of the four trades should be taken is immaterial, since all of them will likely be profitable if the dollar is weak and all will lose money if the dollar is strong.

Granted, this may sound like a gross oversimplification of the forex market. We'll be the first to acknowledge that some currencies can and do challenge this paradigm - the Canadian dollar is one good recent example of such a dynamic. Buoyed by skyrocketing oil prices, the loonie has turned into a petrocurrency as Canada has become the United States' No.1 supplier of crude. As a result, while other major currencies like the euro, the yen and the pound have recently declined against the U.S. dollar, the Canadian dollar has gained in value. However, this is an exception that proves the rule.

To better understand how this works, let's take a look at the two charts below. Figure 1 looks at the performance of the seven most liquid currency pairs in forex, composed of the four majors:

* EUR/USD
* USD/JPY
* GBP/USD
* USD/CHF

and the three commodity pairs:

* USD/CAD
* AUD/USD
* NZD/USD

Figure 1 looks at activity on a single trading day - Oct 12, 2005. To normalize the data, we converted every pair so that its performance could be analyzed accurately. Typically, if the dollar were weak, the EUR/USD would rise and the USD/CHF would decline; however, in Figure 1 we have made the adjustment so that the returns are consistent vis a vis the dollar.

The Bad About Forex Automated Trading

I’ve read a lot about how automated forex trading systems just don’t work in the long run but I can’t conclude this from personal experience. I’ve never seriously traded forex using automation. The following is an email from a trader who can conclude this from his experience. I found it totally worth sharing.

I came across your blog this afternoon whilst casually surfing the various forums in lieu of watching rubbish on TV.

I find your search for trading success an interesting one as in many respects it mirrors my own experience in many ways.

I spent well over two years, pretty much full time, searching for automated solutions to trading, having been in the process automation business for 25 years. To summarise, I have concluded it is a futile exercise with the technologies currently open to the average retail trader. I have yet to find any expert that is reliable enough to be left trading on its own and have pretty much concluded that most are really curve fitting solutions. I have seen no strategies posted anywhere that are consistent or reliable and capable of being automated without significant risk. I see some that pertain to be profitable (Artemis would be an example) but it needs constant adjustment and tuning which makes it akin to semi automation, not full automation.

However, there are manual strategies that are available that are profitable; they just do not lend themselves to automation due to the ability of the human braoin to make decisons based on proce movement that are pretty much impossible for any expert to make. So I abandoned my search for full automation solutions a year ago and concluded semi - automation was probably the right route. I trade manually today, with a few automated aids.

Linked with that, money management and certainly trading psychology are massive keys to success, the first to ensure you are alive to trade tomorrow and the latter because it takes time to get your mental state right to be able to trade at all, and that is what takes the time Rich. Sure, you need to understand the basics of trading, but without the right mental state, you’ll never be consistently profitable.

Your target of 50% per annum is achievable so keep up your search.

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Fed is Ahead of the Curve

The rapid and insidious spread of the credit crisis to Europe and even farther afield is catching Central Bankers completely off guard. In fact, they have been forced to rapidly shift gears from fighting inflation to preventing recession. Depending on how you look at it, the Fed was actually ahead of the curve in this regard, having moved to adjust its monetary policy and facilitate greater liquidity in credit markets nearly one year ago, well before other Central Banks. Since such policymaking usually takes about 18 months to trickle down to the grassroots of the economy, the US could conceivably begin the long road to economic recovery well before the rest of the world. As a result, the Dollar is rapidly reversing the multi-year decline it has suffered against the Euro, and analysts are predicting that in a few years the flow of tourists across the Atlantic Ocean will reverse directions. The Times Online reports:

In the longer term, rising productivity and lower domestic inflation, should enable Americans to stomp across the pleasure spots of Europe, paying only $1.25 for each euro.

Read More: A bailout won't wreck economy

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