When it comes to beginning investors, bonds are not a very popular choice, but it is getting to be a convenient choice. It also gives options to help make one's financial portfolio a diverse one; oftentimes, it is the best hedge to a stock portfolio that's primarily a stock portfolio. It may be a very tricky topic, and jargon will sound like gibberish to the beginner. But, it's increasing accessibility means it?s a good idea to learn about ways to invest in it.
If you want to be a successful stock investor, you must study companies, its market and how it compares to the competition. If you want to go into bonds, the same principles will apply, but you also need a much more rigid analysis of a company's ability to pay back debt. Also have a good grasp of the economy and where it?s heading, if you're interested in investing in treasury bonds.
You'll need to monitor housing starts, movements in the commodities markets, measures of inflation and employment figures if you want to go into bond investing. Remember that the farther the maturity date for a bond is, the much more susceptible it will be to interest-rate fluctuations. If you're one of those beginning to try out the market, short-term bonds may be what's best.
Investing in bonds will not be fit to everyone's investment priorities. You'll be able to get into a position where you can meet your income needs, and all the while maintaining your principal. For the younger set of investors who do not need to live off their interest income, they may not want to put too much bonds into their portfolio.
Maybe the best investment is to focus on the more volatile stocks, for these people. If you're still young, and you have no immediate plans to touch your investment in years or possibly decades to come, stock that is granted by a stable average income may be much more to your tastes. Having just the right portfolio exposure is a good idea, as bonds usually go the other way, when other investments turn right.
Monday, April 20, 2009
Eur/usd Daily Forecast___
Rate consolidates but is capped at 1.3580 with stops likely above 1.3600 now. Rate is solid above the 100 day MA. Foothold over the 1.3500 handle fails today but support is solid ahead of 1.3330 area. Rate likely has stops building in both directions; shorts lose control of the market after rate clears stops above the 1.3430 area.
Action remains two-way; any move lower is likely supported on dips. Overhead resistance at 1.3330/50 area now support on a pullback; aggressive traders can ADD on a dip. Possibly more official and semi-official bids overnight with traders noting Middle-eastern names on the bid. Long-term bulls are likely still in control of the market and this significant pullback is a buying opportunity in my view.
Data due Tuesday: All times EASTERN (-5 GMT)
NONE
Resistance 3: 1.3620/30
Resistance 2: 1.3580
Resistance 1: 1.3520
Latest New York: 1.3397
Support 1: 1.3380
Support 2: 1.3350
Support 3: 1.3330
Action remains two-way; any move lower is likely supported on dips. Overhead resistance at 1.3330/50 area now support on a pullback; aggressive traders can ADD on a dip. Possibly more official and semi-official bids overnight with traders noting Middle-eastern names on the bid. Long-term bulls are likely still in control of the market and this significant pullback is a buying opportunity in my view.
Data due Tuesday: All times EASTERN (-5 GMT)
NONE
Resistance 3: 1.3620/30
Resistance 2: 1.3580
Resistance 1: 1.3520
Latest New York: 1.3397
Support 1: 1.3380
Support 2: 1.3350
Support 3: 1.3330
The Best Pairs To Trade In Forex
The forex markets is a place where you trade in currencies. The trade is based on currency pairs, which actually translates into trading on the value of one currency against another. When you make a trade, you are in fact buying the base currency (the first name in a pair) and selling the counter currency (the second name in a pair).
It is important to know the best pairs in the forex market. The term ‘best pairs’ is no reflection on the strength or quality of currencies but simply another way of classifying currency pairs those are widely traded, have a liquid market and have potentials of fast movements. The following currency pairs are worth trading in because of the instant profits that they are able to provide.
EUR/USD (Euro/US Dollar)
GBP/USD (British Pound/US Dollar)
USD/JPY (US Dollar/Japanese Yen)
USD/CHF (US Dollar/Swiss Franc)
USD/CAD (US Dollar/Canadian Dollar)
AUS/USD (Australian Dollar/US Dollar)
If you stick to these currency pairs you will not have to waste time to find potential trades. The trends that emerge in these pairs are also stronger and better than those that have low turnovers. You will be able to easily get in and out of trades if you trade in these currency pairs. You can even go a step further and limit your trades to EUR/USD and GBP/USD.
If you wish to learn more about forex trade and how to use rapid movements in currency pairs you should try to do the Forex profit accelerator course created by Bill Poulos. Bill Poulos is a committed teacher who has been trading in the forex markets for a long period and is well versed in the intricacies of forex markets. His teaching methods are simple and his strategies are effective in providing instant profits.
It is important to know the best pairs in the forex market. The term ‘best pairs’ is no reflection on the strength or quality of currencies but simply another way of classifying currency pairs those are widely traded, have a liquid market and have potentials of fast movements. The following currency pairs are worth trading in because of the instant profits that they are able to provide.
EUR/USD (Euro/US Dollar)
GBP/USD (British Pound/US Dollar)
USD/JPY (US Dollar/Japanese Yen)
USD/CHF (US Dollar/Swiss Franc)
USD/CAD (US Dollar/Canadian Dollar)
AUS/USD (Australian Dollar/US Dollar)
If you stick to these currency pairs you will not have to waste time to find potential trades. The trends that emerge in these pairs are also stronger and better than those that have low turnovers. You will be able to easily get in and out of trades if you trade in these currency pairs. You can even go a step further and limit your trades to EUR/USD and GBP/USD.
If you wish to learn more about forex trade and how to use rapid movements in currency pairs you should try to do the Forex profit accelerator course created by Bill Poulos. Bill Poulos is a committed teacher who has been trading in the forex markets for a long period and is well versed in the intricacies of forex markets. His teaching methods are simple and his strategies are effective in providing instant profits.
Wednesday, April 8, 2009
Forex – Factors Affecting Market Movement
What exactly are the factors which determine the strength of one currency against another and, consequently, the direction of the foreign exchange (FOREX) market? Is there a precise formula for plugging in various factors and getting a foolproof timetable and map for currency movement? This article highlights certain factors relied upon by experienced currency traders in formulating a trading plan.
It is in understatement to say that every currency trader wishes to know which direction the FOREX market will be moving next in order to maximize profits. While no guru can prediction market direction with flawless accuracy, probability of market movement may be a more realistic aim. Innumerable strategies, trading models, and software packages have been built in response to the insatiable desire to harness the erratic FOREX. As in any arena, some approaches are more successful than others. Regardless of which approach is used, they all must realistically defer to several very germane factors.
State of the Economy
The general economic conditions of a country whose currency is being traded has a marked impact on the strength and movement of the currency. If the economic conditions are languishing, the currency may also lag in the marketplace, as investors start to lose confidence. Because currencies are traded in pairs, a comparative analysis becomes necessary as between the respective economies of both countries underwriting the currency.
Specific Economic Reports
Various countries regularly issue economic reports reflecting specific aspects of that nation’s economy. Examples of such reports include those that review the retail sales, home building, trade balance and manufacturing data. Depending, in part, on the size and worldwide economic ranking of the particular republic, the economic reports will vary regarding the impact on its currency in the face of other currencies. Naturally, reports from countries like the United Kingdom, United States, Canada and those comprising the European Economic Union tend to have the greatest impact on the market. Reports which emphasize the employment statistics and interest rate changes (e.g. the U.S. Non-farm payroll and FOMC, respectively) generate tremendous interest and activity on the part of traders, causing the market to make drastic movements.
Inflation Rate
When domestic prices in a country go up, the affiliated currency tends to decrease in value internationally. An extreme example to illustrate this would be the nation of Zimbabwe. Suffering from an inflation rate of about.7,000%, this African country has seen its currency go from 57:1 five years ago to now almost 31,000:1 against the U.S. Dollar. This of, course, makes imports more expensive which, in turn, continues the upward thrust of inflation.
Political Outlook
Certain countries, such as those comprising the G8 (Canada, France, Germany, Italy, Japan, Russia, U.K and the USA) generally enjoy political stability. This helps to strengthen their currencies against other countries that do not share such stable governments. If the political future of a country is threatened by disrupting events such as a coup, civil war, international war on its own soil, nationalization of private resources, etc., foreign and some local investors tend to shy away from direct investment as well as investment in the currency and equity markets of that country. When a currency is not traded in large amounts, it is said to have minimal or no liquidity. When the liquidity of a currency is insubstantial, the spread—i.e. the broker’s compensation—tends to be very high, to accommodate for the high risk associated with an illiquid currency.
There is no doubt that the ultimate factor determining the movement of a given currency is the amount of trust the universe of investors have in its ability to withstand all of the factors affecting it. If there is no trust, the value will fall.
Sandy Robinson, J.D., Copyright 2007
It is in understatement to say that every currency trader wishes to know which direction the FOREX market will be moving next in order to maximize profits. While no guru can prediction market direction with flawless accuracy, probability of market movement may be a more realistic aim. Innumerable strategies, trading models, and software packages have been built in response to the insatiable desire to harness the erratic FOREX. As in any arena, some approaches are more successful than others. Regardless of which approach is used, they all must realistically defer to several very germane factors.
State of the Economy
The general economic conditions of a country whose currency is being traded has a marked impact on the strength and movement of the currency. If the economic conditions are languishing, the currency may also lag in the marketplace, as investors start to lose confidence. Because currencies are traded in pairs, a comparative analysis becomes necessary as between the respective economies of both countries underwriting the currency.
Specific Economic Reports
Various countries regularly issue economic reports reflecting specific aspects of that nation’s economy. Examples of such reports include those that review the retail sales, home building, trade balance and manufacturing data. Depending, in part, on the size and worldwide economic ranking of the particular republic, the economic reports will vary regarding the impact on its currency in the face of other currencies. Naturally, reports from countries like the United Kingdom, United States, Canada and those comprising the European Economic Union tend to have the greatest impact on the market. Reports which emphasize the employment statistics and interest rate changes (e.g. the U.S. Non-farm payroll and FOMC, respectively) generate tremendous interest and activity on the part of traders, causing the market to make drastic movements.
Inflation Rate
When domestic prices in a country go up, the affiliated currency tends to decrease in value internationally. An extreme example to illustrate this would be the nation of Zimbabwe. Suffering from an inflation rate of about.7,000%, this African country has seen its currency go from 57:1 five years ago to now almost 31,000:1 against the U.S. Dollar. This of, course, makes imports more expensive which, in turn, continues the upward thrust of inflation.
Political Outlook
Certain countries, such as those comprising the G8 (Canada, France, Germany, Italy, Japan, Russia, U.K and the USA) generally enjoy political stability. This helps to strengthen their currencies against other countries that do not share such stable governments. If the political future of a country is threatened by disrupting events such as a coup, civil war, international war on its own soil, nationalization of private resources, etc., foreign and some local investors tend to shy away from direct investment as well as investment in the currency and equity markets of that country. When a currency is not traded in large amounts, it is said to have minimal or no liquidity. When the liquidity of a currency is insubstantial, the spread—i.e. the broker’s compensation—tends to be very high, to accommodate for the high risk associated with an illiquid currency.
There is no doubt that the ultimate factor determining the movement of a given currency is the amount of trust the universe of investors have in its ability to withstand all of the factors affecting it. If there is no trust, the value will fall.
Sandy Robinson, J.D., Copyright 2007
Monday, April 6, 2009
Spanish Hills Estates in Las Vegas, Nevada - Luxury Living
If you are looking for luxury living in Las Vegas, Nevada, Spanish Hills Estates is one luxurious place to live. To find MLS listings in Spanish Hills Estates in Las Vegas, Nevada, one online resource that you can use is Luxury Homes Las Vegas Nevada, located online at luxuryhomeslasvegasnevada.com. At this website, you are guaranteed a free MLS search of luxury homes in Spanish Hills Estates or in any of the luxury home areas of Las Vegas.
At Luxury Homes Las Vegas Nevada's website, there are approximately 21 different luxury home communities to search for the perfect luxury home located in the Las Vegas area. The MLS listing for luxury homes at this website affords potential home buyers the opportunity to look at custom home sites, luxury homes communities, and luxury high-rise condominiums and gives details on the exact address and specific driving directions. When you use this online MLS service, it gives you the opportunity to view the real estate that you would like to view before you go through a real estate agent.
After you have had a chance to view this MLS property list, there are plenty of real estate agents in the Las Vegas area that are qualified to help you in your real estate transactions.
How Do I Find My Paycheck Stubs Online?
Are you wondering "how do I find my paycheck stubs online?" Well, there are a number of ways to find out just how to go about finding your paycheck stubs online. First of all, the company in which you work has to offer the service for your convenience in finding your paycheck stubs online. From my experience with finding my own paycheck stubs online, here's what the situation really is when it comes to having the convenience of seeing your paycheck stubs online. If you are working for a company that only offers paycard services or direct deposit for your checks, such as a lot of staffing companies and other companies are doing now, you will have the opportunity to see your paycheck stub online if the company does not send your paycheck stub to you in the mail after depositing your paycheck into your paycard or your bank account. Find out, for sure, whether your company offers this service via their own website, and, if they do offer the service via their own website, you will need to sign up online with your company's online paycheck stub service and get yourself a pin number where you can access your checks online at the company's website.
Another option for finding your paycheck stubs online is that some companies subscribe to an online service that keeps their employees' paycheck information updated currently all the time. If that is the case, you will need to find out the URL and the process for going online to find your paycheck stub, and that is the normal way of doing it, whether your company offers direct deposit and sends you a paycheck stub in the mail or doesn't. The best way to find out whether your company subscribes to this paycheck database service is to ask your human resources department what the procedure is for finding your paycheck stubs online.
Next, there are payroll companies that offer companies payroll services, and the company that you work directly for does not have anything to do with either cutting your paycheck or the payroll process; they outsource this service to an outside company, and to find out how to access your paycheck stub online from the outsourcing payroll company, you will need to contact the company that you actually work for, the human resources department, and ask questions of how you can obtain your paycheck stubs online. They may or may not refer you to the payroll company directly, but they are the best people to ask for instructions on how you can find your paycheck stubs online.
One service that is helpful in answering questions for people and is free to use online to pose paycheck stub and other payroll issues questions to is located at Blink, blink.ucsd.edu online; using an online service such as Blink can help answer questions in regard to tax issues for your income, including questions dealing with W-2's, which most companies now have online access to services that publish your W-2's online for your convenience. Try utilizing this service for any questions that you may have in regard to how to find your paycheck stubs online, as well.
Sunday, April 5, 2009
Applying Unique Tools For Forex Trading
Trading in the Forex market is not an easy task and it is even much complex and intricate to the beginners into the Forex market. But despite the complexity, there is sufficient help for those who need constant guidance. With no specifics in the tools one can apply in the field of Forex trade, there are those that have been in constant use and have served as efficient Forex trading tools that will guide one in the understanding of the currency trade market. Thorough preparation is vital before disembarking into the Forex market so as to have the basic concepts of the world of Forex trading.
A few basic necessities that are necessary to ensure profitable forex trading are the following; a reliable computer that has fast internet access, good forex trading software that will track all the currency movements in real time and that will efficiently analyze forex trading, an internet forex trading account with a reliable broker, and appropriate training that will help you to master the techniques and discipline of the forex trading market.
Different trading tools will work differently for each individual and you therefore have to choose the one, that work best for you and tailor them to suit your needs. A tool that is essential for any trading is up-to-date forex charting software. You must make sure that the software you buy is legitimate. The software must have a proven track record and must be automated. If you choose reliable software, it will do most of the work for you and you will not have to spend every second in front of your computer tracking your trades.
The other trading tools that you need to learn to be a successful trader are the two forex indicators that are placed into two categories; continuation indicators and price indicators. A thorough understanding of these indicators will help you to tell what market forces are in play at any given moment Continuation indicators keep track of the trends in moving averages, which show the underlying market movements. These movements are essential when making buy and sell decisions.
Momentum indicators on the other hand assist in analyzing the rate of price changes contrary to the price levels.The analysis shows the strength or weakness of a currency pair. Good examples include MACD, RSI and stochastics; which are mostly used in side ways marketers. They are good indicators compared to moving averages since they move before the occurrence of price changes. Combining this two willproduce better results.
Other useful tools that may be of help are trading advisory services, a pivot calculator to calculate the support and resistance points, and trading platforms.
A few basic necessities that are necessary to ensure profitable forex trading are the following; a reliable computer that has fast internet access, good forex trading software that will track all the currency movements in real time and that will efficiently analyze forex trading, an internet forex trading account with a reliable broker, and appropriate training that will help you to master the techniques and discipline of the forex trading market.
Different trading tools will work differently for each individual and you therefore have to choose the one, that work best for you and tailor them to suit your needs. A tool that is essential for any trading is up-to-date forex charting software. You must make sure that the software you buy is legitimate. The software must have a proven track record and must be automated. If you choose reliable software, it will do most of the work for you and you will not have to spend every second in front of your computer tracking your trades.
The other trading tools that you need to learn to be a successful trader are the two forex indicators that are placed into two categories; continuation indicators and price indicators. A thorough understanding of these indicators will help you to tell what market forces are in play at any given moment Continuation indicators keep track of the trends in moving averages, which show the underlying market movements. These movements are essential when making buy and sell decisions.
Momentum indicators on the other hand assist in analyzing the rate of price changes contrary to the price levels.The analysis shows the strength or weakness of a currency pair. Good examples include MACD, RSI and stochastics; which are mostly used in side ways marketers. They are good indicators compared to moving averages since they move before the occurrence of price changes. Combining this two willproduce better results.
Other useful tools that may be of help are trading advisory services, a pivot calculator to calculate the support and resistance points, and trading platforms.
Forex Trading In A Recession
Unlike the stock market the Forex market is recession proof. Forex trading is the trading of currencies of different countries and when there are price fluctuations in the markets then the value of one currency will fluctuate relative to another. So when one loses the other gains!
A person who comes to trade Forex with a Stock or share trading background fail to understand that the Forex market is entirely recession proof. A bear market is something, you will never experience in Forex trading.
So it happens that when there is a devaluation of dollar in the market, most investors will dislike it, but it can be a superb opportunity for a Forex trader to reap the profits being on the same fray.
In Forex trading the currency changes are the best opportunities to make money regardless of the currency value going up or down. But in stock trading this is not the case. Here you can make money only when the stocks appreciate in value.
The market is structured in such a way that you are entitled to buy or sell stocks depending on the perceived value and you will either make or lose money with the appreciation or depreciation of the stocks respectively.
In Forex trading, unlike stocks, you will have to trade with a currency pair or more to make the most of it. Trading with just one currency will not enable you to en-cash on the exchange rate fluctuations. As all currencies are traded in pairs, the relativity factor comes into play in the Forex trading business.
A savvy trader, who has been trading currency pairs in Forex, can be reaping profit even if his/her own currency depletes in value relative to another. If he/she is trading dollar and the value has declined he or she can still make money from currency depreciation by selling the dollar and simultaneously buying Euro and other currencies.
With the recent global recession Forex trading has emerged as one investment which has not been affected. A drop in a currency value is a result of shrinking economic growth, imbalances in trade, and recession.
So Forex traders can study the economic trends of a country through the economic indicators and can position themselves much ahead to make the most of these currency depreciations.
So if you are still not into Forex trading business, its time you did. The investments are also too little to keep you out of it.
Even if you are busy and not wanting to put in a considerable sum, you can invest some amount of your savings into an automated Forex trading system. This will surely prove to be an excellent idea to diversify against the risks involved due to your own currency depreciating in value.
A person who comes to trade Forex with a Stock or share trading background fail to understand that the Forex market is entirely recession proof. A bear market is something, you will never experience in Forex trading.
So it happens that when there is a devaluation of dollar in the market, most investors will dislike it, but it can be a superb opportunity for a Forex trader to reap the profits being on the same fray.
In Forex trading the currency changes are the best opportunities to make money regardless of the currency value going up or down. But in stock trading this is not the case. Here you can make money only when the stocks appreciate in value.
The market is structured in such a way that you are entitled to buy or sell stocks depending on the perceived value and you will either make or lose money with the appreciation or depreciation of the stocks respectively.
In Forex trading, unlike stocks, you will have to trade with a currency pair or more to make the most of it. Trading with just one currency will not enable you to en-cash on the exchange rate fluctuations. As all currencies are traded in pairs, the relativity factor comes into play in the Forex trading business.
A savvy trader, who has been trading currency pairs in Forex, can be reaping profit even if his/her own currency depletes in value relative to another. If he/she is trading dollar and the value has declined he or she can still make money from currency depreciation by selling the dollar and simultaneously buying Euro and other currencies.
With the recent global recession Forex trading has emerged as one investment which has not been affected. A drop in a currency value is a result of shrinking economic growth, imbalances in trade, and recession.
So Forex traders can study the economic trends of a country through the economic indicators and can position themselves much ahead to make the most of these currency depreciations.
So if you are still not into Forex trading business, its time you did. The investments are also too little to keep you out of it.
Even if you are busy and not wanting to put in a considerable sum, you can invest some amount of your savings into an automated Forex trading system. This will surely prove to be an excellent idea to diversify against the risks involved due to your own currency depreciating in value.
Forex Trading In A Recession
Unlike the stock market the Forex market is recession proof. Forex trading is the trading of currencies of different countries and when there are price fluctuations in the markets then the value of one currency will fluctuate relative to another. So when one loses the other gains!
A person who comes to trade Forex with a Stock or share trading background fail to understand that the Forex market is entirely recession proof. A bear market is something, you will never experience in Forex trading.
So it happens that when there is a devaluation of dollar in the market, most investors will dislike it, but it can be a superb opportunity for a Forex trader to reap the profits being on the same fray.
In Forex trading the currency changes are the best opportunities to make money regardless of the currency value going up or down. But in stock trading this is not the case. Here you can make money only when the stocks appreciate in value.
The market is structured in such a way that you are entitled to buy or sell stocks depending on the perceived value and you will either make or lose money with the appreciation or depreciation of the stocks respectively.
In Forex trading, unlike stocks, you will have to trade with a currency pair or more to make the most of it. Trading with just one currency will not enable you to en-cash on the exchange rate fluctuations. As all currencies are traded in pairs, the relativity factor comes into play in the Forex trading business.
A savvy trader, who has been trading currency pairs in Forex, can be reaping profit even if his/her own currency depletes in value relative to another. If he/she is trading dollar and the value has declined he or she can still make money from currency depreciation by selling the dollar and simultaneously buying Euro and other currencies.
With the recent global recession Forex trading has emerged as one investment which has not been affected. A drop in a currency value is a result of shrinking economic growth, imbalances in trade, and recession.
So Forex traders can study the economic trends of a country through the economic indicators and can position themselves much ahead to make the most of these currency depreciations.
So if you are still not into Forex trading business, its time you did. The investments are also too little to keep you out of it.
Even if you are busy and not wanting to put in a considerable sum, you can invest some amount of your savings into an automated Forex trading system. This will surely prove to be an excellent idea to diversify against the risks involved due to your own currency depreciating in value.
A person who comes to trade Forex with a Stock or share trading background fail to understand that the Forex market is entirely recession proof. A bear market is something, you will never experience in Forex trading.
So it happens that when there is a devaluation of dollar in the market, most investors will dislike it, but it can be a superb opportunity for a Forex trader to reap the profits being on the same fray.
In Forex trading the currency changes are the best opportunities to make money regardless of the currency value going up or down. But in stock trading this is not the case. Here you can make money only when the stocks appreciate in value.
The market is structured in such a way that you are entitled to buy or sell stocks depending on the perceived value and you will either make or lose money with the appreciation or depreciation of the stocks respectively.
In Forex trading, unlike stocks, you will have to trade with a currency pair or more to make the most of it. Trading with just one currency will not enable you to en-cash on the exchange rate fluctuations. As all currencies are traded in pairs, the relativity factor comes into play in the Forex trading business.
A savvy trader, who has been trading currency pairs in Forex, can be reaping profit even if his/her own currency depletes in value relative to another. If he/she is trading dollar and the value has declined he or she can still make money from currency depreciation by selling the dollar and simultaneously buying Euro and other currencies.
With the recent global recession Forex trading has emerged as one investment which has not been affected. A drop in a currency value is a result of shrinking economic growth, imbalances in trade, and recession.
So Forex traders can study the economic trends of a country through the economic indicators and can position themselves much ahead to make the most of these currency depreciations.
So if you are still not into Forex trading business, its time you did. The investments are also too little to keep you out of it.
Even if you are busy and not wanting to put in a considerable sum, you can invest some amount of your savings into an automated Forex trading system. This will surely prove to be an excellent idea to diversify against the risks involved due to your own currency depreciating in value.
Making The Switch From Stock Market Investing To Currency Trading
With stock markets performing so poorly in recent years and therefore investors' savings being substantially reduced, many people have decided to try their hand at forex trading. However although forex trading can potentially be very lucrative if you can develop a profitable system, it does differ greatly from stock market investing.
Firstly there is the obvious fact that in general forex trades are made over significantly shorter time frames. Whereas share investments can be held for weeks, months or years, forex trades are generally executed either within the same day or within no more than a few days or weeks. Indeed it doesn't really make sense to hold on to long-term positions when trading currencies because you can incur extra costs if you hold onto positions overnight or roll over positions after their expire, for example.
Also if you are a traditional stock market investor, you will often be impressed by just how easy it is to enter and exit positions. Many people salivate at the prospect of entering and exiting positions within just a few minutes and racking up huge gains on a daily basis trading several positions a day, but the reality is that this is exceptionally difficult to do. Indeed many investors will start reverting to trading longer term positions after initially losing money from short-term trading.
Another noticeable difference is that forex trading is a much purer method of trading. You don't have to worry about waking up one morning only to find your investment has halved due to a profits warning, for instance. Although there are a few economic data releases that move the markets, on the whole you can trade currencies 24 hours a day using nothing more than simple technical analysis.
Indeed another benefit of trading currencies is that you will generally find that they respond much better to technical analysis than shares do. There are many reasons why this is the case but the main one is possibly due to the fact that there are only a limited number of currency pairs available to trade, particularly if you stick to the majors. Therefore technical analysis works because many traders from all over the world see the exact same technical patterns forming and place their trades accordingly.
So overall there are some things you will need to learn if you are switching from stock market investing to currency trading but you should find that trading forex is substantially more exciting, and potentially more rewarding as well if you can develop your own profitable system.
Firstly there is the obvious fact that in general forex trades are made over significantly shorter time frames. Whereas share investments can be held for weeks, months or years, forex trades are generally executed either within the same day or within no more than a few days or weeks. Indeed it doesn't really make sense to hold on to long-term positions when trading currencies because you can incur extra costs if you hold onto positions overnight or roll over positions after their expire, for example.
Also if you are a traditional stock market investor, you will often be impressed by just how easy it is to enter and exit positions. Many people salivate at the prospect of entering and exiting positions within just a few minutes and racking up huge gains on a daily basis trading several positions a day, but the reality is that this is exceptionally difficult to do. Indeed many investors will start reverting to trading longer term positions after initially losing money from short-term trading.
Another noticeable difference is that forex trading is a much purer method of trading. You don't have to worry about waking up one morning only to find your investment has halved due to a profits warning, for instance. Although there are a few economic data releases that move the markets, on the whole you can trade currencies 24 hours a day using nothing more than simple technical analysis.
Indeed another benefit of trading currencies is that you will generally find that they respond much better to technical analysis than shares do. There are many reasons why this is the case but the main one is possibly due to the fact that there are only a limited number of currency pairs available to trade, particularly if you stick to the majors. Therefore technical analysis works because many traders from all over the world see the exact same technical patterns forming and place their trades accordingly.
So overall there are some things you will need to learn if you are switching from stock market investing to currency trading but you should find that trading forex is substantially more exciting, and potentially more rewarding as well if you can develop your own profitable system.
ITS NOT THE SYSTEM
After more than 2 years of trading, I can tell you a story about forex system. Forex system is a way to trade to have higher chances of profit. Unfortunately not all forex system works. This is because its not the system that is not working. It is you.
What if I tell you that I have a system that consist of Moving Average only. The system can make profit and will minimize you loses or even give you a chance to break even during hard times.
You would be thirll to test it out only to find out that in the end you are losing money and you say the system is crap. The truth is if one person is making money using the exact same system yet you are losing money. So where do you think the fault is? Is it with the system or is it with yourself?
You can never gain profit in Forex until you figure out what is wrong with you. Most of the time when you are losing money you would blame it on the market, news, system etc but never on yourself. Until you figure out what you did wrong, any system no matter how good will fail in your hands. After you realize what you did wrong, then you can make money, seriously.
When you know what not to do, you can trade without any indicator. I myself is trading using only MA now. Took me a while to understand but once you see it, you no longer depending on any indicator. It is your judgement that counts.
I never know what I would learn the further I go in this world or Forex. Right now I am starting to understand why some traders trade without any indicator. The best indicator is in your brain. You just need to develope it. It will take some time. No hurry.
What if I tell you that I have a system that consist of Moving Average only. The system can make profit and will minimize you loses or even give you a chance to break even during hard times.
You would be thirll to test it out only to find out that in the end you are losing money and you say the system is crap. The truth is if one person is making money using the exact same system yet you are losing money. So where do you think the fault is? Is it with the system or is it with yourself?
You can never gain profit in Forex until you figure out what is wrong with you. Most of the time when you are losing money you would blame it on the market, news, system etc but never on yourself. Until you figure out what you did wrong, any system no matter how good will fail in your hands. After you realize what you did wrong, then you can make money, seriously.
When you know what not to do, you can trade without any indicator. I myself is trading using only MA now. Took me a while to understand but once you see it, you no longer depending on any indicator. It is your judgement that counts.
I never know what I would learn the further I go in this world or Forex. Right now I am starting to understand why some traders trade without any indicator. The best indicator is in your brain. You just need to develope it. It will take some time. No hurry.
Forex Strategies Revealed: The Secrets Of The Forex Profit Accelerator Trading Method --- In Detail
As a Forex Trader looking for the best trading method that will work for you, one of the proven courses out there is the Forex Profit Accelerator method/s. For those of you who have not heard anything of it, or maybe heard a thing or two about it, here is where I explain more on where and how was it made. I have made reviews on this forex training course, here is more of a background check behind the curtains of the Forex Profit Accelerator.
This was put together by the 30+ year veteran Bill Poulos, maybe you have heard a thing or two about him. Bill Poulos has made courses in trading Forex, Stocks and even the Futures market. He has made students successful in one way or another and has made a great reputation of himself for a long time.
You may have probably encountered of every Forex mentor out there that offer courses, this is based on their experiences and self-opinions. The difference of the Forex Profit Accelerator is that it was based on research, study and survey among hundreds of Forex Traders themselves. They have addressed issues on the problems and difficulties that have been encountered and gave solutions directly and as simple as possible.
To Forex for beginners, the approach is so simple yet so effective. Organized and explained in detail, this covers all topics every beginner should get a head start on. A special thing about this is that you get to ask questions on Bill Poulos and the staff themselves, so you get your direct answers --- fast.
This is pretty much like a special course of study, you have access to the course materials online, other materials at home such as cds, books and cards. This careful and organized approach of added Forex learning is for every one serious enough to make a living or a gold mine out of the Forex Market. Even to those who want to learn Forex at home.
The methods of trading explained and practiced here are based on the rules of trading by end of day. There are certain guidelines and approaches that differ between Day Trading and End of Day Trading. Focusing more on being patient and disciplined, you can trade for 20-30 minutes a day including all the processes involved in it.
After learning four specific trading methods, forex risk management is one of the 'special' ingredients before completing this course. The course is devoted a specific amount of time educating on how to incorporate forex risk management into your trading plan, more than any course available.
Discipline and emotions are part of a traders factors to success so it is also discussed here how to have control over emotions that directly affects the decision making in trading. Combined with the four methods, and risk management, the main goal is to grabs lots of pips in the currency market as possible.
Complete and covering all the essential topics in Forex, from the basics to forex risk management, included also in the course is the investment guidelines for you in how you can easily plan your trades, based on your learning to speed up your decision making process everyday.
One of the things that makes this known among Forex Traders is that a full time staff and website is there for trader's support 24/7. Known for prompt and thorough in answering, Bill Poulos himself also answers questions, which is most important. If other 'gurus' in Forex disappear when you have bought that course, well--- not Bill Poulos.
The members only website has all the resources you need for easy reference. Guidelines and forex trading tutorials saves you time staring at charts and focus traders attention right away on what pairs to consider when trading.
One of the most interesting part of this course is that you get a 90-day money back guarantee. Based on forums and reviews, there is little to none refunds because of the comprehensive and utmost detail in the course. Traders are finding so much value in the Forex Profit Accelerator, no wonder it is evolving everytime it launches since 2007, getting better.
After the smoke clears, the Forex Profit Accelerator is one of the most comprehensive, complete trading methods on the market. It doesn't matter if you are a newbie or experienced, there are lessons for everyone. Simple and easy to understand, this course, with all the information is truly an investment that can pay you as long as you trade. In Forex education, not learning useful and effective methods such as this can be more expensive than the course itself.
The teaching style is simple, effective and easily understandable by all experience levels, ask the hundreds of thousands of Forex traders who are consistently earning profits. Once you are through this course -- the education is yours for life.
Bill Poulos transparency, honesty and strong emphasis on the essential elements every trader should learned has sealed the deal with Forex Profit Accelerator. Aren't you tired with the overnight claims of BIG profits? It is so refreshing to hear Bill say that he has also losing trades. Nobody wins 100% indeed. Hearing from him how to manage trades, because you will lose some to gain more, made thousands of believers in Traders.
This was put together by the 30+ year veteran Bill Poulos, maybe you have heard a thing or two about him. Bill Poulos has made courses in trading Forex, Stocks and even the Futures market. He has made students successful in one way or another and has made a great reputation of himself for a long time.
You may have probably encountered of every Forex mentor out there that offer courses, this is based on their experiences and self-opinions. The difference of the Forex Profit Accelerator is that it was based on research, study and survey among hundreds of Forex Traders themselves. They have addressed issues on the problems and difficulties that have been encountered and gave solutions directly and as simple as possible.
To Forex for beginners, the approach is so simple yet so effective. Organized and explained in detail, this covers all topics every beginner should get a head start on. A special thing about this is that you get to ask questions on Bill Poulos and the staff themselves, so you get your direct answers --- fast.
This is pretty much like a special course of study, you have access to the course materials online, other materials at home such as cds, books and cards. This careful and organized approach of added Forex learning is for every one serious enough to make a living or a gold mine out of the Forex Market. Even to those who want to learn Forex at home.
The methods of trading explained and practiced here are based on the rules of trading by end of day. There are certain guidelines and approaches that differ between Day Trading and End of Day Trading. Focusing more on being patient and disciplined, you can trade for 20-30 minutes a day including all the processes involved in it.
After learning four specific trading methods, forex risk management is one of the 'special' ingredients before completing this course. The course is devoted a specific amount of time educating on how to incorporate forex risk management into your trading plan, more than any course available.
Discipline and emotions are part of a traders factors to success so it is also discussed here how to have control over emotions that directly affects the decision making in trading. Combined with the four methods, and risk management, the main goal is to grabs lots of pips in the currency market as possible.
Complete and covering all the essential topics in Forex, from the basics to forex risk management, included also in the course is the investment guidelines for you in how you can easily plan your trades, based on your learning to speed up your decision making process everyday.
One of the things that makes this known among Forex Traders is that a full time staff and website is there for trader's support 24/7. Known for prompt and thorough in answering, Bill Poulos himself also answers questions, which is most important. If other 'gurus' in Forex disappear when you have bought that course, well--- not Bill Poulos.
The members only website has all the resources you need for easy reference. Guidelines and forex trading tutorials saves you time staring at charts and focus traders attention right away on what pairs to consider when trading.
One of the most interesting part of this course is that you get a 90-day money back guarantee. Based on forums and reviews, there is little to none refunds because of the comprehensive and utmost detail in the course. Traders are finding so much value in the Forex Profit Accelerator, no wonder it is evolving everytime it launches since 2007, getting better.
After the smoke clears, the Forex Profit Accelerator is one of the most comprehensive, complete trading methods on the market. It doesn't matter if you are a newbie or experienced, there are lessons for everyone. Simple and easy to understand, this course, with all the information is truly an investment that can pay you as long as you trade. In Forex education, not learning useful and effective methods such as this can be more expensive than the course itself.
The teaching style is simple, effective and easily understandable by all experience levels, ask the hundreds of thousands of Forex traders who are consistently earning profits. Once you are through this course -- the education is yours for life.
Bill Poulos transparency, honesty and strong emphasis on the essential elements every trader should learned has sealed the deal with Forex Profit Accelerator. Aren't you tired with the overnight claims of BIG profits? It is so refreshing to hear Bill say that he has also losing trades. Nobody wins 100% indeed. Hearing from him how to manage trades, because you will lose some to gain more, made thousands of believers in Traders.
Learning To Trade Overnight Trading Range Breakouts
Trading breakouts is one of the most tried and tested methods of trading the forex markets because when the price breaks out of an established trading range, it often continues to move strongly in that direction. Therefore there are some excellent profits to be made.
There are lots of different ways you can trade breakouts. You can wait for a quiet period of the day for instance when the price is barely moving and is confined to a very narrow range, and wait for a breakout to take place, or you can use bollinger bands and wait for them to narrow because this often precedes a strong breakout. However in this article I want to talk about a particular strategy that involves opening ranges.
I've been experimenting with this strategy on the GBP/USD and EUR/USD pairs recently and it seems to work very well. What you basically do is to look at the opening hours between 00.00 and 06.00 GMT (or 08.00 if the price is still within this range up until this time) and draw two horizontal lines marking the high and low points for this period.
Then you simply wait for the price to break out and close above (or below) one of these lines and take a corresponding long or short position. This method works well when there is a narrow opening range and the reason it works is simple. Every pair has an average daily range (the GBP/USD is roughly 220 points and the EUR/USD is roughly 180 points according to 2008 figures) so if the opening range is a small fraction of this number, then you know that there are a lot of points to be made either above or below the current opening range.
It's not a method that can be used every day on a certain currency pair because sometimes the price will move quite substantially in the opening few hours, but it's well worth putting into practice when the opening range is very narrow.
There are various ways you can actually trade this system. You can either jump in as soon as the breakout bar or candle closes, or if you want to place the odds substantially in your favour, you can wait for an initial breakout followed by a pull-back into this trading range, then trade the subsequent breakout (if there is one) because this continuation pattern is a very profitable signal.
Either way you should find that these strategies (or variants of these strategies) are generally very effective because the price will very often move strongly out of this opening range at some point during the day.
There are lots of different ways you can trade breakouts. You can wait for a quiet period of the day for instance when the price is barely moving and is confined to a very narrow range, and wait for a breakout to take place, or you can use bollinger bands and wait for them to narrow because this often precedes a strong breakout. However in this article I want to talk about a particular strategy that involves opening ranges.
I've been experimenting with this strategy on the GBP/USD and EUR/USD pairs recently and it seems to work very well. What you basically do is to look at the opening hours between 00.00 and 06.00 GMT (or 08.00 if the price is still within this range up until this time) and draw two horizontal lines marking the high and low points for this period.
Then you simply wait for the price to break out and close above (or below) one of these lines and take a corresponding long or short position. This method works well when there is a narrow opening range and the reason it works is simple. Every pair has an average daily range (the GBP/USD is roughly 220 points and the EUR/USD is roughly 180 points according to 2008 figures) so if the opening range is a small fraction of this number, then you know that there are a lot of points to be made either above or below the current opening range.
It's not a method that can be used every day on a certain currency pair because sometimes the price will move quite substantially in the opening few hours, but it's well worth putting into practice when the opening range is very narrow.
There are various ways you can actually trade this system. You can either jump in as soon as the breakout bar or candle closes, or if you want to place the odds substantially in your favour, you can wait for an initial breakout followed by a pull-back into this trading range, then trade the subsequent breakout (if there is one) because this continuation pattern is a very profitable signal.
Either way you should find that these strategies (or variants of these strategies) are generally very effective because the price will very often move strongly out of this opening range at some point during the day.
Forex Trading Facts
Forex trading, or foreign exchange current exchange trading, is a global phenomenon. This is the single largest market in the world. There are many different market sectors that are involved with Forex trading. These include, but are not limited to; " Banks" Corporations" Governments" Individuals
What is Forex trading you ask? At its simplest, Forex trading is currency being traded for another currency. However, Forex trading is anything but simple. The market has massive trade volume and is very fluid. Not to mention the hundreds of different currencies being traded and their ever changing value.
Forex trading is a very focused area of trading, but the amount of time and energy most people and companies spend getting trained and educated on Forex trading and its inner workings and pitfalls, is at least as much time as it takes to learn the stock market.
Because of the complexity, Forex Trading is not your typical overnight success operation. There are many large corporations, such as GCI Financial which is a market leader in this space.
Forex trading is unique in that everyone does not have access to all of the same information and prices at the same time, as they do with the stock market. I won't get into specifics here, but basically there is a tiered level whereby different levels of access are given to the Forex traders and Forex firms.
The other main thing to remember about Forex trading is, until such time that the world adopts a single currency, Forex Trading will be around for a very long time.
What is Forex trading you ask? At its simplest, Forex trading is currency being traded for another currency. However, Forex trading is anything but simple. The market has massive trade volume and is very fluid. Not to mention the hundreds of different currencies being traded and their ever changing value.
Forex trading is a very focused area of trading, but the amount of time and energy most people and companies spend getting trained and educated on Forex trading and its inner workings and pitfalls, is at least as much time as it takes to learn the stock market.
Because of the complexity, Forex Trading is not your typical overnight success operation. There are many large corporations, such as GCI Financial which is a market leader in this space.
Forex trading is unique in that everyone does not have access to all of the same information and prices at the same time, as they do with the stock market. I won't get into specifics here, but basically there is a tiered level whereby different levels of access are given to the Forex traders and Forex firms.
The other main thing to remember about Forex trading is, until such time that the world adopts a single currency, Forex Trading will be around for a very long time.
Trading Options Without Losing Your Shirt
Due to the turbulence in today's financial market, many people have increased financial concerns. The downward trend that is presented has reduced employment opportunities for many, including losing their job, which was the only source of income they had. Financial institutions with solid foundations have even collapsed and vanished.
With these developments people lost their confidence on the banking system itself. Some people who are fortunate enough to maintain an attractive bank balance, have started exploring safer ways to invest their funds so that they can get attractive return from them.
If you're lucky enough to be one of those who has all sorts of discretionary capital in the bank, you have a good chance of multiplying your money many times over if you do option trading. However, you first need to locate a good option tutorial on the internet and put in some time learning the terms, the strategies, and all the other ins and outs of options trading.
An option is a contract by which you either buy or sell for a set price within a previously determined period. If you makes a comparison between this sort of trading and other kinds, you can see its benefits clearly. However, if you expect your trades to be profitable, you'll need some degree of expertise in the area. Find an internet option tutorial and spend some time mastering it.
By opting for a tutorial about trading options, you will receive examples of successful trades, trading tips, techniques and you will realize that through this tutorial, you will receive a complete stock option education. Once you are familiar with the basics and terminologies used in this trading system, you can enter the market with the help of a professional expert who can guide you in a right way.
It is a good idea to spend some amount on tutorials and option education. The scope for having big profits in option trade is about 20 times more than one can get by trading on shares. There might be some confusion initially about the various option types like call and put options, timing one's moves, etc. So the best option is to get or buy advice on trading from a professional expert including a tutorial and make good profits in the market.
With these developments people lost their confidence on the banking system itself. Some people who are fortunate enough to maintain an attractive bank balance, have started exploring safer ways to invest their funds so that they can get attractive return from them.
If you're lucky enough to be one of those who has all sorts of discretionary capital in the bank, you have a good chance of multiplying your money many times over if you do option trading. However, you first need to locate a good option tutorial on the internet and put in some time learning the terms, the strategies, and all the other ins and outs of options trading.
An option is a contract by which you either buy or sell for a set price within a previously determined period. If you makes a comparison between this sort of trading and other kinds, you can see its benefits clearly. However, if you expect your trades to be profitable, you'll need some degree of expertise in the area. Find an internet option tutorial and spend some time mastering it.
By opting for a tutorial about trading options, you will receive examples of successful trades, trading tips, techniques and you will realize that through this tutorial, you will receive a complete stock option education. Once you are familiar with the basics and terminologies used in this trading system, you can enter the market with the help of a professional expert who can guide you in a right way.
It is a good idea to spend some amount on tutorials and option education. The scope for having big profits in option trade is about 20 times more than one can get by trading on shares. There might be some confusion initially about the various option types like call and put options, timing one's moves, etc. So the best option is to get or buy advice on trading from a professional expert including a tutorial and make good profits in the market.
Forex Trading Tools
There is no one single super smart Forex trading tool which gives you profit, profit and more profit. The only possible solution is to use a combination of different tools to identify the favorable market forces to get a maximum number of high probability trades over a period of time. Trendlines are the most popular and reliable Forex trading tool which many successful traders give their testimonial for.
The Three Trend line Strategy
Trend Lines are an important tool for trend identification and confirmation in technical analysis. It is a straight line that connects two or more price points and then extends into the future to guide you.
There will be lines drawn across significant lows in an uptrend, and significant highs in a downtrend. To roughly classify trend lines, we can divide them into three as short term trendlines, medium term trendlines and long term trendlines.
1. Short Term Trendlines
Draw these lines across the most recent two lows for an uptrend or across most recent two highs for a downtrend. Best observations are found on a smaller time frame such as a 15 minute or 30 minute chart.
2. Medium Term Trendlines
These are best observed on a higher time frame like a 60 minute chart. It either connects the nearest significant low to current price action to the previous significant low in an uptrend or the nearest significant high to current price action to the previous significant high in a downtrend.
3. Long Term Trendlines
It uses higher time frames such as the 4 hour chart or the daily chart to draw long term trendlines using the same method of Medium Term Trendlines. The long term trend line is considered as an effective Forex trading tool. The daily chart is used mostly by traders of big institutions who do not usually engage in small moves on an intra day level.
By drawing a trend line on a daily chart you can graphically analyze where price is and where it is likely to bounce. But employ trendlines as a Forex trading tool with caution and discretion. Covering your charts with every trend line possible will result in confusion and blurry analysis.
It is not a good idea to rely completely on a short time trend line. They merely give you a defined picture of current price action. These are broken often during the course of a day. Their main use is to give you a clear, instantly recognizable graphical representation of current price behavior.
If you notice price coming back to test a trend line on the higher time frames, look at other factors. Draw in horizontal lines to mark key support and resistance using previous highs and lows. Draw Fibonacci retracement and extension levels. Calculate the daily pivot points and put them on your chart. Have the 200 EMA (Exponential Moving Average) shown on your charts.
The Three Trend line Strategy
Trend Lines are an important tool for trend identification and confirmation in technical analysis. It is a straight line that connects two or more price points and then extends into the future to guide you.
There will be lines drawn across significant lows in an uptrend, and significant highs in a downtrend. To roughly classify trend lines, we can divide them into three as short term trendlines, medium term trendlines and long term trendlines.
1. Short Term Trendlines
Draw these lines across the most recent two lows for an uptrend or across most recent two highs for a downtrend. Best observations are found on a smaller time frame such as a 15 minute or 30 minute chart.
2. Medium Term Trendlines
These are best observed on a higher time frame like a 60 minute chart. It either connects the nearest significant low to current price action to the previous significant low in an uptrend or the nearest significant high to current price action to the previous significant high in a downtrend.
3. Long Term Trendlines
It uses higher time frames such as the 4 hour chart or the daily chart to draw long term trendlines using the same method of Medium Term Trendlines. The long term trend line is considered as an effective Forex trading tool. The daily chart is used mostly by traders of big institutions who do not usually engage in small moves on an intra day level.
By drawing a trend line on a daily chart you can graphically analyze where price is and where it is likely to bounce. But employ trendlines as a Forex trading tool with caution and discretion. Covering your charts with every trend line possible will result in confusion and blurry analysis.
It is not a good idea to rely completely on a short time trend line. They merely give you a defined picture of current price action. These are broken often during the course of a day. Their main use is to give you a clear, instantly recognizable graphical representation of current price behavior.
If you notice price coming back to test a trend line on the higher time frames, look at other factors. Draw in horizontal lines to mark key support and resistance using previous highs and lows. Draw Fibonacci retracement and extension levels. Calculate the daily pivot points and put them on your chart. Have the 200 EMA (Exponential Moving Average) shown on your charts.
Forex Trading
So what is is Forex trading you may ask? Forex is the exchange you can buy and sell currencies. For example, you might buy British pounds (by exchanging them to the dollars you had), then, after pounds / dollar ratio goes up, you sell pounds and buy dollars again. At the end of this operation you are going to have more dollars, then you had at the beginning.
The Forex market has much higher liquidity, then the stock market, as much more money is being exchanged. Forex is spread between banks all over the planet and as a result it means 24 hour trading.
Unlike stocks, Forex trades are performed with high leverage, usually it is 100. It means that by investing $1000 you can control $100,000, and increase potential profits accordingly. Some brokers provide also so called mini-Forex, where the size of minimum deposit equals $100. It makes possible for individuals to enter this market easily.
The name convention. In Forex, the name of a "symbol" is composed of two parts — one for first currency, and another for the second currency. For example, the symbol usdjpy stands for US dollars (usd) to Japanese yen (jpy).
As with stocks, you can apply tools of the technical analysis to Forex charts. Trader's indexes can be optimized for Forex "symbols", allowing you to find winning strategy.
Example Forex transaction
Assume you have a trading account of $25,000 and you are trading with a 1% margin requirement. The current quote for EUR/USD is 1.3225/28 and you place a market order to buy 1 lot of 100,000 Euros at 1.3228, expecting the euro to rise against the dollar. At the same time you place a stop-loss order at 1.3178 representing a maximum loss of 2% of your account equity if the trade goes against you, 50 pips below your order price, and a limit order at 1.3378, 150 pips above your order price. For this trade, you are risking 50 pips to gain 150 pips, giving you a risk/reward ratio of 1 part risk to 3 parts reward. This means that you only need to be right one third of the time to remain profitable.
The notional value of this trade is $132,280 (100,000 * 1.3228). Your required margin deposit is 1% of the total, which is equal to $1322.80 ($132,280 * 0.01).
As you expected, the Euro strengthens against the dollar and your limit order is reached at 1.3378. The position is closed. Your total profit for this trade is $1500, each pip being worth $10.
What is Forex?
FOREX - the foreign exchange market or currency market or Forex is the market where one currency is traded for another. It is one of the largest markets in the world.
Some of the participants in this market are simply seeking to exchange a foreign currency for their own, like multinational corporations which must pay wages and other expenses in different nations than they sell products in. However, a large part of the market is made up of currency traders, who speculate on movements in exchange rates, much like others would speculate on movements of stock prices. Currency traders try to take advantage of even small fluctuations in exchange rates.
In the foreign exchange market there is little or no 'inside information'. Exchange rate fluctuations are usually caused by actual monetary flows as well as anticipations on global macroeconomic conditions. Significant news is released publicly so, at least in theory, everyone in the world receives the same news at the same time.
Currencies are traded against one another. Each pair of currencies thus constitutes an individual product and is traditionally noted XXX/YYY, where YYY is the ISO 4217 international three-letter code of the currency into which the price of one unit of XXX currency is expressed. For instance, EUR/USD is the price of the euro expressed in US dollars, as in 1 euro = 1.2045 dollar.
Unlike stocks and futures exchange, foreign exchange is indeed an interbank, over-the-counter (OTC) market which means there is no single universal exchange for specific currency pair. The foreign exchange market operates 24 hours per day throughout the week between individuals with forex brokers, brokers with banks, and banks with banks. If the European session is ended the Asian session or US session will start, so all world currencies can be continually in trade. Traders can react to news when it breaks, rather than waiting for the market to open, as is the case with most other markets.
Average daily international foreign exchange trading volume was $1.9 trillion in April 2004 according to the BIS study.
Like any market there is a bid/offer spread (difference between buying price and selling price). On major currency crosses, the difference between the price at which a market maker will sell ("ask", or "offer") to a wholesale customer and the price at which the same market-maker will buy ("bid") from the same wholesale customer is minimal, usually only 1 or 2 pips. In the EUR/USD price of 1.4238 a pip would be the '8' at the end. So the bid/ask quote of EUR/USD might be 1.4238/1.4239.
This, of course, does not apply to retail customers. Most individual currency speculators will trade using a broker which will typically have a spread marked up to say 3-20 pips (so in our example 1.4237/1.4239 or 1.423/1.425). The broker will give their clients often huge amounts of margin, thereby facilitating clients spending more money on the bid/ask spread. The brokers are not regulated by the U.S. Securities and Exchange Commission (since they do not sell securities), so they are not bound by the same margin limits as stock brokerages. They do not typically charge margin interest, however since currency trades must be settled in 2 days, they will "resettle" open positions (again collecting the bid/ask spread).
Individual currency speculators can work during the day and trade in the evenings, taking advantage of the market's 24 hours long trading day.
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