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Forex Basics

How to develop an overview of forex trading? You need to understand these forex basics. I’ve identified 4 forex basics for you to note because I’m someone who firmly believes in getting the fundamentals right first!

1. Choosing a broker

One of the first step is to choose a right broker to start your currency exchange trading. Today trading is done online and the brokers allow you to open trade accounts in their site after investing an initial capital.

Select the broker that operates on low spreads. Your broker must have tie ups with large banks. Check to ensure that they are registered with futures commission merchant (FCM) and regulated by commodity futures trading commission (CFTC). Now you must know that many forex brokers behave like bucket shops. All the time they play games against their client. Is your forex broker like that? You bet! Never ever trust your forex broker. Know these forex broker games!

2. Fundamental analysis of the market

Fundamental analysis is done to understand long term trends. If you find it difficult to value a company, then you can try valuing a country. Different meetings will be conducted often and you must get the quotes and comments from the reports of these meetings to better understand the market. Fundamental analysis depends on a general economic analysis of the country. You need to compare the GDP figures, the unemployment ratio, the inflation rate, the trade balance, the budget deficit and a host of other stuff.

3. Technical analysis of the market

The technical analysis is done to understand and analyze the price trends as a result of change in the currency conversion rate. The strategy used in other equity markets can be used to analyze the foreign currency exchange market but they must be modified appropriately to suit this market which is open 24 hours on all working days. Technical analysis is the stuff that you must learn, understand and master overtime. Without mastering technical analysis, you can never master forex trading. Technical analysis uses charts and technical indicators to study the price action. Learn candlestick charting and get your 82 page candlestick guide free!

4. Money management

The sole purpose of currency exchange business is to generate profit and make big money. Hence you must have tools to manage your money you are trading. Your broker must provide you these tools. You must be aware of how much you are investing and how much you are getting back. You have to measure your success from the profit made after a day and not after each trade. Money management is something that many traders try to ignore in the start. Later on after losing money, they come back to it with vengeance. You don’t need to do that. Give proper importance to money management principles from the very start. First practice on your forex demo account before you start trading live.

Learn Trading - Active Times Of Currency Trading

I would like to touch such an important issue as time of trading in Forex market. If you think that a successful trader is one who sits in front of the computer day and night making short brakes for food and sleep, then you are mistaken. Another option is to use Expert advisor

Traders with signs of exhaustion like red eyes are not the ones who make money consistently trading currencies. Successful traders are very well aware when they need to be watching the price charts and when they can shut down the computer and get away form trading.

No one became rich by trading in an exhausted state. Clear mind and alert state are necessary for making right trading decisions. Then when we should be trading and when taking the rest?

I would like to share my experience and hopefully it will help you to avoid unnecessary tiredness and headaches. I just want to note that the hours I mention here are in US Eastern Time (GMT -5), so make adjustments accordingly.

Asian Forex Session

Asia wakes up during evening time in US. Banks and other financial institutions of Japan, China and Australia are most active from 5 pm until 11 pm (EST).

Trading during this time is not very active. Most currency pairs are not too volatile. European and American financial institutions are closed for the night. There is almost no price movement for major currency pairs. There are some exceptions though. For example important economic news releases in Japan can make some currencies more volatile.

The only profitable strategy that can work in such market is scalping. However I wouldn’t recommend to anyone to scalp Forex. It seems less risky but it takes more effort with very little return. In case you have any open order running into Asian session I would recommend to make sure the stop loss is set. Then just close your charts and go and take a brake from trading.

The following couple of hours 11 pm - 1 am are usually the slowest time in the market. Even Asian financial institutions and traders are getting ready to go home. If you do decide to trade during this time the best currency pair to watch is any cross with Japanese Yen: GBP/JPY, EUR/JPY etc.

London Open

Time period from 1 am to 4:30 am one of the most important trading times in Forex. European financial institutions and traders are fully active. Usually this time period can set the trend for the rest of the day.

In my opinion European session can be one of the most profitable time periods for traders. However you need to watch market very closely since it can present a good opportunity for a trade as well as a strong move against your position. Also do not forget about economic news releases at this time. Usually the come between 4 am and 5 am.

Time frame from 4:30 am until 6 am is time when London financial institution and traders are most active. Usually around 5 am, 6 am British economic news can be released. The best currency pairs to trade in this session are crosses with Euro and British pound.

NY Trading Session

The most active time in Forex market is the morning of the New York session. We have overlap of European session with the New York open therefore the volatility is probably the highest during the day. The World’s largest banks and financial institutions are active during this time.

Being the most active trading period NY session gives many high probability trading opportunities. Therefore many day traders like to trade during this time only. Many fundamental news releases that can move the price dramatically happen during 8:30 - 9 am. This activity goes away in afternoon around 1-2 pm.

After that the volatility of the currency pairs gradually slow down. There can be news releases from the Federal Reserve. It comes around 2:15 pm. Sometimes it can affect the volatility in the market.

Looking at these time periods you can see that it is not necessary to be glued to your charts all day long. There are not many time periods when the market can present you high probability trading opportunities. Therefore most successful traders don’t spend to much time trading the currencies.To know all this nuances you need to learn Forex on a regular basis.

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Forex Trading Tips - Basics Of Forex Market For Beginners

The worldwide market where currencies of different countries are exchanged is called Forex of FX market. Forex is a decentralized market. Since it’s a global market it takes place in many countries around the globe. In this article I would like to give you a few foreign exchange tips

On the other hand a separate market for each currency pair exists. Any currency pair has its own price. You may see some correlation between prices at the same time they may seem to act differently.

It is obvious that if the economy of some country goes through the crisis the price of its currency also will go down compare to currency prices from other countries. On the other hand the economic indicators of certain country may show even worse situation, that’s why the currency price against that country’s currency will rise. For instance the US dollar is falling against the Euro for a long time by now, however the same dollar may be rising against the Japanese yen.

The big participants who can influence the currency prices are banks and large financial institutions. These financial institutions hire professional Forex traders who trade for them. Those days when only big players could afford to trade currencies are over. Today anybody can get involved in Forex.

If you decide to join trading Forex you need a computer with high speed Internet. Trying to trade Forex with dialup Internet may be very frustrating if you day trade. Since prices move quite fast to react with the dialup connection, you may lose money.

One of the most important thing to do is to find a good broker. Most of them will give you high leverage. Fore example 200 leverage means you can trade a mini lot of 10,000 units only with $50. The rest amount is covered by your broker. That’s the reason why Forex is so popular; anybody can open a mini account with a couple of hundred dollars.

Another advantage of Forex market is its high volatility and liquidity. Liquidity indicates how simple and quick the investment can be turned back into cash. Traders in Foreign exchange trade nothing more but currencies that is cash already. Liquidity also means how easy it is to buy and sell. In Forex you can do it every time you decide to do it.

The volatility of the market shows how often the price changes. Liquidity and volatility of the Forex market attracts many people however it also a very risky type of investment. Forex is a great opportunity to make big profit in a short period of time. At the same time only traders who know how to calculate the risk and who are ready to work hard and learn from mistakes can become consistently profitable traders.

There are many traders who use indicators and chart patterns in order to predict the currency price movement. The goal of such technical analysis is to predict the price movement direction in the future. But you need to learn to trade in Forex market before you will be able to make money trading currencies.

But to become a profitable trader you also need to know about worldwide events that influence the currency prices. It can be very helpful to know the dates of such news releases. You can tighten the stop losses before the news come.

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Make Money Trading Forex - Can It Be Benefitial For You?

The number of people who want to make money from home increases every day. A person who works from home does not have to commute. He does not have a boss. There is no schedule to be tied to that gives time to be with family. Another advantage is of course in today’s economy it’s harder and harder to find a good job. That’s why the idea of working form home is so appealing to many. Practically anyone can make money trading Forex.

Trading currencies in Forex market is one way to start making money form home. Development of communication technologies like Internet allows people to trade from home. Some of us may start trading while having full time job, others get into the Forex market because they loose their jobs or get retired. Soon many of us get so much involved in Forex so we want to turn trading career into our full time business. The most important thing is to educate yourself in Forex

Even though we all have big dreams we need to start with the realistic goals. The truth of Forex market is that 90% of traders who start trading currencies lose their money. What is the main cause of it and how to avoid failing?

The main problem, I think, with those people is that they base their trading decision on luck and intuition not skills and knowledge. This is a gambler mindset. Such people take trades as if they were betting in casino.

Unfortunately more and more traders enter the market with such mindset in the last few years. That’s probably because online casinos were outlawed in the USA. People who get excited taking unnecessary risk and loosing money found Forex market.

Trading Forex is not gambling, even though they have some similarities. The similarities are in that trading is taking advantage of probabilistic nature of currency price change. Trading currencies is a form of investing. You need to learn skills, techniques and systems that are profitable.

In my opinion the most important thing when you start trading Forex is to abandon your ideas about luck and intuition. You should stop using words like ‘playing’ while working on your trading in currency market.

Therefore before you commit your money you need to devote your time and effort in understanding the market and finding the reliable trading system. You probably already heard it and I repeat again, you need to spend a lot of time and effort before you start making money consistently in Forex trading.

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Forex Trading – What Makes It So Popular?

Trading in foreign exhhange market is becoming more and more popular.We all know that Forex market is one of the largest markets. This fact alone makes it so attractive to many people to join trading currencies. The same fact makes brokers to advertise it everywhere to attract more and more clients. There are number of other reasons why people come to Forex.And why you need to educate yourself in Forex trading

Promise of High Profitability

First of all what makes Forex market so popular is the promise of high return on smaller investment. Nowadays brokers offer people to trade with leverage. That allows people to fund their trading accounts with small amount of money and contronl large lots.

Many brokers will give you up to 100 leverage. Therefore having only $100 the leverage will allow you to control a mini lot of 10,000 units of currency pair. Do you see now how powerful this concept is. Tiny amount of money have a potential of big return.

Large Daily Volume of Money Exchanged in Forex

As I said before the first reason is the daily volume that is being traded. The daily amount of trades is close $4 trillion. Even though Forex does not have the central exchange there are banks and financial institutions that play major role in exchange. There are three major centers with such institutions: New York, London and Tokyo. Currencies of these three countries (US, Britain and Japan) are being traded the most.

Very High Liquidity

If you are already involved in Forex then you know that orders are filled almost instantly. That is still because of the high volume that results in high liquidity. Therefore you will not get stuck with your position.

Currency of Different Countries

What makes Forex unique is that traders trade currencies all around the world. That’s one of the differences between foreign exchange and some other exchange markets. Currencies of many countries involved in trading. However some of them preferred more by traders than others. For instance Euro, Dollar, Yen and Pound have higher trading volumes than New Zealand Dollar for example.

Forex Can be Traded Any Time of The Day or Night

Since it is a global market the time when currencies are traded travels with the Sun from one country to another. That makes Forex open 24 hours a day. It closes only on weekends. Therefore you can choose your own time to trade. Also you can chose the time of volatility that you prefer. New York session is highly volatile and unpredictable for USD crosses. London session is also volatile but more predictable. And Asian session goes with much less volatility for US dollar pairs.

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