Trading foreign currencies is a tough task; however, it is potentially a money-making opportunity for those who are educated and are knowledgeable about their investments.
Nevertheless, prior to choosing to participate in trading in the Forex market, you should:
* Cautiously judge the purpose of investment
* Your familiarity with risk factors
Forex is meant for the money you put aside and are prepared to loose. It might not be a wise idea to Forex trade to pay your regular bills.
Forex (Foreign Exchange market) is an inter-bank market that got a form in 1971; this was the period when the international trade transited from fixed exchange rates to floating rates. This transition paved way for the set of transactions between forex market brokers relating to the exchange of specific sums of money in a currency unit for the currency of some other country at an approved rate for any specified date.
During any trade day, the exchange rate of one currency to another currency is decided basically by supply and demand – to which both parties will be in agreement. The price of a currency is mentioned in terms of one more currency.
The possibility of transactions in the international currency market is frequently increasing, which is due to growth of global trade and eradication of currency limits in many countries.
Online Forex is the one of the most innovative forex trading method of Foreign Exchange trading over the Internet. You can start trading with a basic account. Beware of margin trading because unless you are a careful market watcher trading with borrowed money can be risky.
The online forex trading method gives fast implementation of foreign exchange (Forex) trading through the Internet, with cutting edge software and well-organized trustworthy service guarantying an excellent trading experience.
Forex Main Tools Of Trade
In the forex market, the forex traders do their trading in online forex trading if they use Technical Analysis for finding trades. In the online trading forex there are a lot of technical analysis strategies that helps a forex trader in to forex trade to become a profitable trader. The Technical analysis monitors many indicators and also important price activity. If the forex trader needs some information the Technical analysis gets together large amounts of the data that the trader wants to include in his analysis and there by engineer some plans to go for good investments.
There are advantages of being a long term trader, it is mainly because a trader can isolate himself from the huge up and downs in the markets.
It is also a golden rule, (unwritten rule in forex) that a forex trader stops its losses and there by protect the capital. A forex trader is recommended to sell a little by little because if he sells the whole he might miss a huge profit when the currency value rises again as soon as he sells. But at the same time if he waits and then at the end of the day it comes down then the trader will feel guilty of not selling it at the right time.
With the development of technology, like the introduction of internet, mobile phones- it has become a possible to trade from anywhere in the world. A forex trader should select a good forex broker to perform well. To know more about the online forex brokers, the CFD Report is the one that forex traders should go for good selection.
---Forex Education - No Pain , No Gain---
Forex trading breakthroughs have a lot to do with your ability to get comfortable with being uncomfortable. Success usually comes from staying in the here and now, as well as accepting the fact that the market literally can do anything at anytime.
Many of your actions now may seem frustrating - such as designing a trading plan, sticking to just a few currency pairs, learning the intricacies of a strategy. It can seem downright overwhelming too. Just remember that each step you take in the process is adding value to your eventual trading success.
Why is it that so many people are always seeking the easy way out? I guarantee the amount of time searching will be less than just digging in and climbing that learning curve as fast as possible. Just imagine where you're going to be a year from now with a little bit of effort and determination!
Here are some thoughts to get you through that learning curve at lightning speed:
1. Hard Work Now Will Pay Off Later
All the work you do now mastering the process of trading through Forex education will pay off. Will it pay off today or tomorrow? Probably not, however, the small things done consistently in the right places will pay huge dividends later.
2. Every Experience Is A Lesson
Learn from both your mistakes and your success equally. As the question - what lesson am I meant to learn from this and journal it!
3. Focus On The Positive
Losing is a part of trading. Except it and keep your self-talk 100% positive. You will find that at the end of your Forex Journey you were your own worst enemy.
4. Choose The Difficult Action Over The Easy
Doing this will make you a stronger person, not just as a trader. You will find that your characteristics follow you in trading. When you grow as a person you will enhance your ability as a trader. Ask yourself - what action would a profitable trader take and then do it!
Remember this when you get frustrated by learning a new trading technique or in transitioning from demo to live trading -- if you are uncomfortable you're growing as a trader -- and take comfort in being uncomfortable.
Happy Trading!
---Forex Education Success Formula---
You read about the risk trading the Forex market every day. I talk to many successful traders and investors about the Forex market and it is mind blowing the fear this market produces amongst the conservative investors and daredevil attitude of the aggressive traders. Yes, it is a fact that 95% of traders lose money in Forex. I was taught that if you want a better answer then you have got to ask a better question and my question is why?
The answer is rather simple – most traders seek the path of least resistance and that will inevitably lead to failure. They failed because they didn’t take the time to gain a proper understanding and cheated their Forex Education!
Look, the market is neither for you nor against you. It makes profit opportunity equally available as the chance to take a loss. It will take money from you no matter your age, sex, experience or effort you put into your trading. The Forex market only rewards those who are correct and nothing else. It’s the old saying – work smart and not hard.
That leads to the next question; how can I be correct and smart? The answer is simple – through Forex Education. I have put together my Success Formula for trading the Forex market.
1. Strategy – it’s not a one size fits all world. Different strategies play to us based on our individual trading personalities. Understanding the rules and tools are critical when applying them to the market. This comes with time and experience. Don’t short change your learning curve. It will eventually lead you to profit.
2. Money Management – planning your risk will keep you in the game as you climb the learning curve as well as exploding your account once you’ve gained the experience and knowledge. Mastering this skill is not optional!
3. Self-Mastery - is having the discipline and emotional control to manage your strategy and money management plan. Knowing yourself will be skill that catapults you in to the elite 5%. It takes self-awareness training, accepting full responsibility for all of your trading actions and the ability to go beyond trading and finding your true personality. Talk to any successful trader and you will quickly see the control they exert not only in their trading, but in their lives in general.
Learning to trade Forex isn’t rocket science. Keeping things simple and working smarter will lead you to success in this market and the path forward can only b accomplished by investing in your Forex Education.
Happy Trading!
Forex Management
This may be my quick version of forex money management, but there is nothing more important. As I have been told over and over again, any one can get into a currency trade, but those who are profitable forex traders know when to exit a trade.
This is for profits as well as loses!
I find that the best forex trades I put on are those trades where my emotions are not a factor in the currency trade to begin with. To do this there are some basic principals I follow regardless of the strategy or time period I am trading.
* I set a pip goal for the trade based on my trade plan and technicals. If you do not have a trade plan where you have outlined your currency trading goals and objectives then stop reading this blog and create one now!
* I never risk more than 5% of my account on any given trading opportunity. To calculate the amount I will risk I divide my trading account principal by 0.05 and then divide that by my stop loss (dictated by the strategy I employ) to give me the number of lots I will place on the forex trade. This is the number I am personally comfortable losing. Yes, I said losing! I always approach risk management in forex trading from a “what if I am wrong” point of view.
* I always trade with a stop loss and limit order! This takes the emotions right out of the equation. I have learned with experience to employ trailing stops and fine tuning of my technicals to lock in profit and provide ever increasing better entry and exit points. Over time I have been able to let more winners run and cut loses shorter than when I first began trading.
* Here is my forex money management “golden nugget!” If take pause after a draw down of 25% AND after a run up of 25%. During this 2-5 day period I trade in my demo account, practicing new strategies or reviewing the basics. This keeps me grounded when I am too down or too up.
These are my rules. By keeping a good forex trade journal you will be able to recognize your strengths and weaknesses, and employ them in your money management plan.
Trading Thoughts
Trade to be great and not just good.Trade to be profitableDon’t trade not to lose.Embrace the challenges of the day.Dismiss the distractions.Be decisive.Know your expected outcome before executing the trade.Don’t focus on the results.Focus on the execution.Take responsibility for the outcome.Be realistic and committed.Believe in yourself without doubt.Focus on the pips and not the balance.Become your own coach and cheering section.
Happy Trading!!
,Trust in Yourself
When you turn on the TV (especially mainstream media) you are inundated with news of the demise of the dollar. Business news, national news and even your local news channels are leading into events with reports of the dollar and the economy. Analysts are featured and opinions are smattered across the airwaves in an attempt to provide an oracle response to current economic events.
Beware the source and follow your system.
In these volatile times it is easy to get caught up in the hype provide by all the news media and analyst. It is natural to want to look for guidance. Remember to trust your system and more important trust yourself. You, after all, are the single largest determinant of your success.
Your approach should remain consistent, almost impervious to the events occurring because you follow your plan with discipline and ruthless detail to executing at optimum performance.
Be disciplined and follow your plan. If market conditions don’t suite your style – sit this one out until conditions provide your with your personal edge!
Happy Trading!!
Become a successful
Forex trading, or any trading for that matter, is an occupation that requires experience and the accumulation of proficiency not unlike any other highly skilled profession. Whether you are a leading executive at a major publically traded company, a professional golfer or trading from your kitchen table, there are 5 key ingredients that one must possess in order to become successful.
1. You must be Passionate about what you do.
As Forex traders we all face one unique set of circumstances that does not exist in any other profession. We get rewarded for when we succeed and equally punished when we don’t! Could you image a corporate worker one quarter receiving a significant accomplishment bonus and the next quarter actually getting money taken from their paycheck for missing performance targets? Not on your life!
We do as Forex traders and that is why passion for what you do will carry you through the tough times that are part of your trading business. Asked yourself why you trade currencies and would you still do it if Forex were not potentially lucrative? Your answers will be quite revealing. You’ve got to feel your passion for trading!
2. You have to Apply Yourself and work hard at it.
I talk to so many people that enter into Forex trading with the aspiration of getting rich quick. Without putting the time and energy into really getting good at trading I see them jump from strategy to strategy looking for the goose that will lay the golden egg and eventually quitting while blaming everything else, except the true cause.
I got news for you – you are the goose and your Forex education is the golden egg. The magic has always resided with the magician and not some strategy. Work hard at trading and the rewards will eventually come your way. Remember what Tiger Woods said, “Funny, the harder I work the luckier I get.” Apply yourself as a trader and it will be no accident when your account begins to blossom.
3. You must Focus to really get good at what you do.
Now here is the hurdle most Forex traders struggle to get over. You have the passion and you are applying yourself to your trade, now focus and really get good at just at what you are doing. Be the expert to the experts at just that one thing. Become the master of a strategy or risk management methodologies. Really focus on getting good at it.
Stop jumping around or getting pulled from the last “latest and greatest” into the next “latest and greatest” and focus on one aspect of Forex trading and know it inside out. Know it strengths and weakness. Set your sights on becoming expert on just one aspect of trading and watch it spill over in all other aspects for your currency trading. This is the time to fail forward fast, use every setback as a learning opportunity that will propel you 3-steps ahead!
4. You must Push Yourself beyond the point everyone else might have quite.
In Forex Trading this is simple. Assume there is someone on the other side of your trade that is pushing themselves and sharpening their edge. To be successful you must you must do the same thing. Now is the time to examine your mental edge. Do you know the single most critical factor in any currency trade? It is you, the trader! Sharpening you mental edge is the most difficult aspect of trading, but also the most rewarding.
Start with your Forex education and gain the self-awareness necessary to maximize your strengths and suppress your weaknesses. Any expert will tell you that trading is 80% mental. It’s time to sharpen your trading to the razor’s edge and you do this through Forex education. A constant and never ending process that will become the cornerstone of your Forex experience.
5. You must, without wavering, be Determined and Persist to your objective.
You will fail. I can state that emphatically. However, you will not be defeated unless you allow your failures to control your trading. It is the old adage; failure is not falling of your horse, failure is refusing to get back on. Your success depends on your ability to dismiss the criticism, rejection, self-doubt and pressures associated with Forex trading.
Defining what is a winning trade, losing trade and bad trade will go a long way into developing you as a successful trader. Without the determination and persistence in all aspects of your trading life, obstacle will definitely appear closer and larger than they actually are.
Take a moment and assess yourself and your trading. Do you have the key elements to succeed? Which areas are presents development opportunities? When conducting a self-evaluation it is critical to be totally upfront and honest with yourself. After all, you will only be dishonest with yourself. One of the most interesting observations you can make is that all key success factors are interwoven. One factor supports the other. This is why your Forex education is a continuous journey of forex strategy, money management and self-mastery. Set these factors as your Forex education goals and take your currency trading to new heights.
Happy Trading!!
BIG PLAYERS
I am typing this from my pc. It a bit of a mess now, the new house still needs a little work and I am not feeling well lately. Maybe its the change in climate.
This week I am going to talk about numbers only. Forex is after all based on numbers. Example, I have a long position on GBPUSD @ 1.4700 with a profit of 320 pips at the moment and still holding.
What I am going to say is big players only see big number. The do not see the last 2 digit. The last 2 digit is for scalpers. Big players only see the 1st 3 or 4 digit only. So if a bank wants to buy or hedge a currency they will give an instruction to buy at 1.47. Thats it. Simple yet people fails to see it.
So what happens at 1.47? The price will bounce of or hover around it but things arent always what they appear to be. What happen is price will have a range between 1.46 - 1.48. That is almost 200 pips wide range. Imagine what happen to your 50 or 100 pip SL?? Now you know why people lose money even though they have the right direction.
These big players have big money they dont mind to stand few hundreds negative pips coz in the end they will profit big time. What they do is they will have a standing order to trade at certain level. Because the total amount of order, the market cannot fill the order in 1 transaction and so price will hover or bounce of a certain level. This is where double top or bottom appear. Behind it is the action of filling orders by these big players.
Example EJ currently have a top of 1.34 and a bottom of 1.30. Big players are playing the game here. At the moment EJ is climbing and there is a big possibility that it will reach 1.34 again. I have a standing order to buy EJ at 1.30. If it hits there is a very big chance for 400 pips gain. Only time will tell.
Support and Resistance Indicator
Support and Resistance MT4 indicator - as the name implies this indicator (translates as support and resistance), it shows the level of support and resistance. He shows them on the schedule, providing quick help when you want to set the levels of stop-loss and take-profit, or if you want to see the next goal of the market. This indicator uses the standard indicator MetaTrader Fractals (fractals, based on the method of Bill Williams), and no change of input parameters.
Picture speaks for itself. Use levels are marked with blue dots, as the support and the levels are marked by red dots, as the resistance. And do not forget that the support could be as follows in its resistance of Perforation and - on the contrary.
DIFFICULT MARKET CONDITION
veraticsIt is not looking particularly well for GBPUSD. In the other hand, EURUSD and AUDUSD is looking good for a long term trade. I am taking the long position. It may take a very long time to profit but looking at the chart from a technical view, EURUSD and AUDUSD is in a good position for a long term trading.
I dont exactly know the entry point but I do know the direction. It is time to monitor the shorter time frame in order to find the best possible entry and to minimize stop loss.
It may take sometime but I dont care. I have been waiting for this moment almost 2 months. Look at the charts and see the formation of daily, 4 hour, 30 minute and 5 minute. You may see something that took me over 2 years to see.
Only time can tell if my calculation is correct. At the moment I am still waiting for the 5 minute chart to give and entry signal.
Good luck to us all.
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.
Rules
At the moment I am rather busy. Moving to a new place and house. The house still needs a lot of work. As a result, I do not have time to update this blog. Trading is still going on but on a shorter timeframe. Result is consistent now. AudUsd is very kind at the moment with no sudden movement.
In the next few weeks I will show you how to trade using only MA. As usual what works for me may not work for you. This is because some of you may not be able to follow the rules of the game.
RULES OF THE GAME
1. Trade based on your capital and the time that you have. The bigger your capital the longer the TF. The more time you have the longer the TF. Vice versa.
2. Only trade at the direction pointed by the MA pairs. If the MA pairs is showing mixed direction, do not trade. The MA pairs must be pointing at the same direction.
3. If a trade suddenly change direction, do not hesitate to close it at a loss and turn the trade. This is the hardest part where most of you failed. Free your mind or become a loser all your life.
4. Keep in mind, there is no such thing as winning all the time. Just make sure you win a lot more than you lose. In the end your profit will grow along with your confident.
Simple system with simple rules. I like to keep it simple. No point of having the most complex system when simple system can have the same result. With this system you will be out of the market most of the time. This is because you will only be taking the big move and avoiding the small move and market noise.
Last advise.
Do not anticipate. Forex is not a game of inteligence eventhough this system at full swing will show you possible turning point. I am having a possible turning point for audusd at 0.7200 but I will not take it coz there will be market swing before the actual turn. Why wast time waiting for the big move when you can actually see when its going to move.
In the mean time, good luck for all of you. I will be back once my pc is online again. At the moment I am posting this on a laptop. I dont like laptop, too small keypad, makes it hard to do speed typing.
---CFD FX---
If you want to get involved in Forex trading and win you can, by getting a good solid Forex education and good Forex mentoring. In some cases you can find a Best Forex Brokerthat can assist you. If you are looking for a great Forex Broker, look at the CFD FX Report they have recently researched all the Forex Brokers and have come back with who they believe to be the best.
You can win and enjoy huge rewards for your effort, if you understand the challenge of Forex trading and what the reality really is. If you understand this, you're on your way to long term currency trading success.Also make sure that you have a good trading plan and stick to that trading plan.
Price of Trading Scenario & Falling Prices
If, on the other hand, you believe that the euro will weaken against the dollar, you'll want to sell EURUSD.• You sell euro We quote EURUSD at a Bid price of 0.9875 and Ask price of 0.9880 and you decide to sell euro 100,000 at a Bid price of 0.9875.• The market moves in your favour The euro weakens against the dollar and the EURUSD is now quoted at bid 0.9744 and ask 0.9749.• Now you buy back your euro You buy EUR at an ask price of 0.9749.• Your profit/loss is then sell price-buy price x size of trade(0.9875 minus 0.9749) multiplied by 100.000 = USD 1260 ProfitRemember that trading EUR 100,000 as we have done in our examples, does not mean that you have to put up euro 100,000 yourself. On a 2% margin means that you have to deposit 2.0% of euro 100,000, which is euro 2,000 on margin as a guarantee for the future performance of your position.Further ReadingTo see how you can trade the Forex market and benefit from our toolbox of information and live quotes, please proceed to the Forex Quick Start found under the Trading menu of SaxoTrader
European Forex Trading Preview
raders continued to punish the greenback following yesterday¡¯s unprecedented rate cut by the FOMC to lower its key interest rate to a target range of 0 to 0.25%. The dollar plunged to a fresh 13-year low against the yen at 87.16 and a new two-month low versus the euro, losing nearly 5-big figures for its largest one-day decline to 1.4437.With the Japanese currency trading at its highest level in over a decade, markets will remain vigilant against possibly BoJ intervention. Government officials have offered conflicting sentiments with Chief Cabinet Secretary Kawamura expressing his desire for the Bank to Japan to take appropriate action to stem the currency¡¯s sharp gains. However, Japan¡¯s Finance Minister Nakagawa said intervening in the currency market was not a consideration at this point, suggesting the movements had not been too sharp. With trading volume likely to wind down over the coming holidays, we would not rule out the possibility for the Bank of Japan to step in during thinly traded markets to quickly move the dollar/yen pair back toward the 100-level.The dollar breached through several key support levels against the majors, suggesting the sell-off may pick up steam over the coming sessions. With thin markets expected over the coming weeks, we anticipate heightened volatility that could possibly send the euro toward 1.4865.
Important Forex Trading Terms
The spread is the difference between the price that you can sell currency at (Bid) and the price you can buy currency at (Ask). The spread on majors is usually 3 pips under normal market conditions. For more information on the trading conditions at Saxo Bank, go to the Account Summary on your Client Station and open the section entitled “Trading Conditions” found in the top right-hand corner of the Account Summary.* PipsA pip is the smallest unit by which a cross price quote changes. When trading Forex you will often hear that there is a 3-pip spread when you trade the majors. This spread is revealed when you compare the bid and the ask price, for example EURUSD is quoted at a bid price of 0.9875 and an ask price of 0.9878. The difference is USD 0.0003, which is equal to 3 “pips”.On a contract or position, the value of a pip can easily be calculated. You know that the EURUSD is quoted with four decimals, so all you have to do is cancel out the four zeros on the amount you trade and you will have the value of one pip. Thus, on a EURUSD 100,000 contract, one pip is USD 10. On a USDJPY 100,000 contract, one pip is equal to 1000 yen, because USDJPY is quoted with only two decimals.
---FOREX 101----
For those unfamiliar with the term, FOREX (FOReign EXchange market), refers to an international exchange market where currencies are bought and sold. The Foreign Exchange Market that we see today began in the 1970’s, when free exchange rates and floating currencies were introduced. In such an environment only participants in the market determine the price of one currency against another, based upon supply and demand for that currency.
FOREX is a somewhat unique market for a number of reasons. Firstly, it is one of the few markets in which it can be said with very few qualifications that it is free of external controls and that it cannot be manipulated. It is also the largest liquid financial market, with trade reaching between 1 and 1.5 trillion US dollars a day. With this much money moving this fast, it is clear why a single investor would find it near impossible to significantly affect the price of a major currency. Furthermore, the liquidity of the market means that unlike some rarely traded stock, traders are able to open and close positions within a few seconds as there are always willing buyers and sellers.
Another somewhat unique characteristic of the FOREX money market is the variance of its participants. Investors find a number of reasons for entering the market, some as longer term hedge investors, while others utilize massive credit lines to seek large short term gains. Interestingly, unlike blue-chip stocks, which are usually most attractive only to the long term investor, the combination of rather constant but small daily fluctuations in currency prices, create an environment which attracts investors with a broad range of strategies.
How FOREX Works
Transactions in foreign currencies are not centralized on an exchange, unlike say the NYSE, and thus take place all over the world via telecommunications. Trade is open 24 hours a day from Sunday afternoon until Friday afternoon (00:00 GMT on Monday to 10:00 pm GMT on Friday). In almost every time zone around the world, there are dealers who will quote all major currencies. After deciding what currency the investor would like to purchase, he or she does so via one of these dealers (some of which can be found online). It is quite common practice for investors to speculate on currency prices by getting a credit line (which are available to those with capital as small as $500), and vastly increase their potential gains and losses. This is called marginal trading.
Marginal Trading
Marginal trading is simply the term used for trading with borrowed capital. It is appealing because of the fact that in FOREX investments can be made without a real money supply. This allows investors to invest much more money with fewer money transfer costs, and open bigger positions with a much smaller amount of actual capital. Thus, one can conduct relatively large transactions, very quickly and cheaply, with a small amount of initial capital. Marginal trading in an exchange market is quantified in lots. The term "lot" refers to approximately $100,000, an amount which can be obtained by putting up as little as 0.5% or $500.
EXAMPLE: You believe that signals in the market are indicating that the British Pound will go up against the US Dollar. You open 1 lot for buying the Pound with a 1% margin at the price of 1.49889 and wait for the exchange rate to climb. At some point in the future, your predictions come true and you decide to sell. You close the position at 1.5050 and earn 61 pips or about $405. Thus, on an initial capital investment of $1,000, you have made over 40% in profits. (Just as an example of how exchange rates change in the course of a day, an average daily change of the Euro (in Dollars) is about 70 to 100 pips.)
When you decide to close a position, the deposit sum that you originally made is returned to you and a calculation of your profits or losses is done. This profit or loss is then credited to your account..
Investment Strategies: Technical Analysis and Fundamental Analysis
The two fundamental strategies in investing in FOREX are Technical Analysis or Fundamental Analysis. Most small and medium sized investors in financial markets use Technical Analysis. This technique stems from the assumption that all information about the market and a particular currency’s future fluctuations is found in the price chain. That is to say, that all factors which have an effect on the price have already been considered by the market and are thus reflected in the price. Essentially then, what this type of investor does is base his/her investments upon three fundamental suppositions. These are: that the movement of the market considers all factors, that the movement of prices is purposeful and directly tied to these events, and that history repeats itself. Someone utilizing technical analysis looks at the highest and lowest prices of a currency, the prices of opening and closing, and the volume of transactions. This investor does not try to outsmart the market, or even predict major long term trends, but simply looks at what has happened to that currency in the recent past, and predicts that the small fluctuations will generally continue just as they have before.
A Fundamental Analysis is one which analyzes the current situations in the country of the currency, including such things as its economy, its political situation, and other related rumors. By the numbers, a country’s economy depends on a number of quantifiable measurements such as its Central Bank’s interest rate, the national unemployment level, tax policy and the rate of inflation. An investor can also anticipate that less quantifiable occurrences, such as political unrest or transition will also have an effect on the market. Before basing all predictions on the factors alone, however, it is important to remember that investors must also keep in mind the expectations and anticipations of market participants. For just as in any stock market, the value of a currency is also based in large part on perceptions of and anticipations about that currency, not solely on its reality.
Make Money with Currency Trading on FOREX
FOREX investing is one of the most potentially rewarding types of investments available. While certainly the risk is great, the ability to conduct marginal trading on FOREX means that potential profits are enormous relative to initial capital investments. Another benefit of FOREX is that its size prevents almost all attempts by others to influence the market for their own gain. So that when investing in foreign currency markets one can feel quite confident that the investment he or she is making has the same opportunity for profit as other investors throughout the world. While investing in FOREX short term requires a certain degree of diligence, investors who utilize a technical analysis can feel relatively confident that their own ability to read the daily fluctuations of the currency market are sufficiently adequate to give them the knowledge necessary to make informed investments.
CURRENCIES: Dollar Gains On Yen Amid Weak Japanese Data
The dollar fell against most major counterparts Friday, but gained ground versus the yen helped by better-than-expected U.S. manufacturing data and weak Japanese economic data. The dollar index (DXY), a measure of the greenback against a trade-weighted basket of six major currencies, slipped to 84.551, down from 84.764 in North American trade late Thursday. But the dollar rose to 99.29 yen versus the Japanese currency, up from 98.55 yen. The factory sector contracted again in April, but the pace of decline slowed, according to the Institute for Supply Management index released Friday. Separately, consumer sentiment improved more than estimated earlier in April, according to the University of Michigan's latest survey. "Today's U.S. reports provided an array of upside surprises that have reinforced the view that the pace of GDP decline will moderate significantly into [the second quarter], while the [first-quarter] GDP figures now face a likely small upward bump," said Mike Englund, chief economist at Action Economics, in a note. Earlier, Japanese reports had already put the yen under the pressure.
The Japanese government reported Friday that the country's core consumer-price index fell 0.1% in March, the first year-over-year decline since late 2007, raising concerns of a potential deflationary spiral. The nation's unemployment rate, meanwhile, rose to 4.8%, the highest level in four years. Traders said activity in foreign-exchange markets was subdued due to May Day holidays in Asia and continental Europe. London markets were open Friday but will be closed on Monday. The euro rose to $1.3286 versus the dollar in quiet trade, up from $1.3224 late Thursday. The British pound rose 0.8% to $1.4892 from $1.4783. Sterling extended gains after the purchasing-managers index for the U.K. manufacturing sector indicated that activity at factories continued to shrink in April, but at a slower-than-expected pace. The purchasing-managers index produced by Markit Economics and the Chartered Institute of Purchasing and Supply rose to 42.9 in April from an upwardly revised 39.5 in March, continuing a recovery from a record low of 34.9 in February. The reading remains well below the neutral 50 mark, however. A reading of less than 50 indicates a majority of purchasing managers saw declining activity. A figure of more than 50 signals expansion
Forex Money Rain:
Money rain corporation is a Forex broker with a MetaTrader 4 platform that offers quite interesting conditions to its traders. Its description was uploaded to my site today. MRC offers trading mini accounts from $100. The most interesting advantage it has is the interest on the trade balance, which is quite generous. Trading accounts can be kept in several currencies — the yearly interest rate depends on the account’s currency and it’s quite close to the refinancing rate set by the central bank of the given currency. Other highlights of Money Rain broker include:
- 1-3 pip spread on EUR/USD; depends on the account type.
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- Trade Forex, CFD, commodities and precious metals.
EUR/USD Rises for Third Day as GM Goes Bankrupt:
Euro continued to advance sharply against the U.S. dollar today as the U.S. are witnessing their biggest bankruptcy case in history. Economic indicators that came out from the United States today (other than GM bankruptcy) were better than expected. EUR/USD is now trading near 1.4209.
Personal Income rose by 0.5% in April after decreasing by 0.2% in March (revised up from -0.3%).Personal spending decreased by 0.1% in April, following 0.3% drop in March (revised down from -0.2%). Forecasts for both indicators showed -0.2%.
Construction Spending at seasonally adjusted annual rate rose by 0.8% in April after 0.4% gain in March (revised up from 0.4% growth). Median forecast by the analysts pointed at 0.8% decline.
ISM in Manufacturing Sector rose from 40.1% to 42.8% in May — almost the same as expected (42%).
I’d like to share 5 interesting chart patterns that I’ve spotted on the market recently and some of them I currently use in my trading. I won’t give any recommendations regarding their usage here, but if you are familiar with pattern trading then you’ll know how to interpret these images. You can click on any image for a much better and clear picture. Use them on your own risk.
1. EUR/USD, Weekly, 2 Falling Wedges:
2. EUR/JPY, Daily, Ascending Wedge (Triangle):
3. GBP/JPY, Daily, Ascending Triangle:
4. USD/CHF, Daily, Falling Wedge:
5. NZD/JPY, Daily, Ascending Triangle:
Forex Achiever New Prominence:
The credit crisis has resulted in a collapse in prices for nearly every type of investable asset class (i.e. stocks, bonds, commodities, real estate)- with the notable exception of one: currencies. Of course, this is an inherent quality of forex: a rise in one currency must necessarily be offset by a fall in another currency. While you are probably rolling your eye at the obviousness of this observation, it is still worthwhile to make because it implies that there is always a bull market in forex. Accordingly, capital from both institutions and retail investors continues to pour in to the forex markets, causing daily turnover to surge by 41% (according to one survey), which would imply a total of $4.5 Trillion per day!
Investment banks, especially, are trying to increase their forex business in order to compensate for a decline in other divisions. Said one representative: ”We have probably made more of an aggressive leapfrog in growing our revenue base, which has virtually doubled in 2008 versus 2007. With the situation that has been developing over the past six months, where banks are clearly re-embarking on a new role leading back to basics, foreign exchange has to be one of the products that tops that list.”
Based on New York data, which generally reflects global forex activity, transactions between the Dollar, Euro, and Yen (i.e. not involving outside currencies) now account for more than half of the total.
Contrary to popular belief, however, most foreign exchange transactions involve derivatives, rather than spot trades. In the case of swaps, it is the nominal value of the swap that is reported, which well exceeds the total amount of currency that is exchanged, and thus results in an inflated estimate of total daily turnover. Regardless, all measures point to increasing volume.
One would expect that the increase in both liquidity and the role of derivatives in forex markets would result in a corresponding decrease in volatility. Of course, this is quickly belied by the turbulence of the last six months, in which many currency pairs set daily, weekly, and/or monthly records for fluctuations and volatility.
I recently read an article about so-called “predictive markets,” which use a grassroots approach to make forecasts by “by giving people virtual trading accounts that allow them to buy and sell “shares” that correspond to a particular outcome. Shares in an outcome that is considered more likely to occur then trade at a higher price than those that represent a less likely outcome.” Given that the forex ‘experts’ are almost invariably wrong, I think this idea has tremendous potential to make forex markets even more transparent. Of course, that also means that it will become more difficult to turn a profit, which is why “it’s vitally important to be well-informed when investing in forex so as to enter and exit trades only at levels that are ‘fundamentally’ sound.”
Forex Technical Analysis:
EUR/USD trend: buy.
GBP/USD trend: buy.
USD/JPY trend: hold.
EUR/JPY trend: buy.
| Floor Pivot Points | |||||||
|---|---|---|---|---|---|---|---|
| Pair | 3rd Sup | 2nd Sup | 1st Sup | Pivot | 1st Res | 2nd Res | 3rd Res |
| EUR/USD | 1.3533 | 1.3663 | 1.3909 | 1.4039 | 1.4285 | 1.4415 | 1.4661 |
| GBP/USD | 1.5487 | 1.5631 | 1.5909 | 1.6054 | 1.6332 | 1.6476 | 1.6754 |
| USD/JPY | 91.27 | 92.84 | 94.08 | 95.66 | 96.90 | 98.48 | 99.72 |
| EUR/JPY | 128.17 | 129.82 | 132.38 | 134.03 | 136.59 | 138.24 | 140.80 |
| Woodie’s Pivot Points | |||||
|---|---|---|---|---|---|
| Pair | 2nd Sup | 1st Sup | Pivot | 1st Res | 2nd Res |
| EUR/USD | 1.3692 | 1.3968 | 1.4068 | 1.4344 | 1.4444 |
| GBP/USD | 1.5665 | 1.5976 | 1.6087 | 1.6398 | 1.6510 |
| USD/JPY | 92.76 | 93.92 | 95.58 | 96.74 | 98.39 |
| EUR/JPY | 130.04 | 132.83 | 134.25 | 137.04 | 138.47 |
| Camarilla Pivot Points | ||||||||
|---|---|---|---|---|---|---|---|---|
| Pair | 4th Sup | 3rd Sup | 2nd Sup | 1st Sup | 1st Res | 2nd Res | 3rd Res | 4th Res |
| EUR/USD | 1.3949 | 1.4053 | 1.4087 | 1.4122 | 1.4190 | 1.4225 | 1.4259 | 1.4363 |
| GBP/USD | 1.5955 | 1.6071 | 1.6109 | 1.6148 | 1.6226 | 1.6264 | 1.6303 | 1.6419 |
| USD/JPY | 93.78 | 94.55 | 94.81 | 95.07 | 95.59 | 95.84 | 96.10 | 96.88 |
| EUR/JPY | 132.62 | 133.78 | 134.17 | 134.55 | 135.33 | 135.71 | 136.10 | 137.26 |
| Tom DeMark’s Pivot Points | ||||
|---|---|---|---|---|
| Pair | EUR/USD | GBP/USD | USD/JPY | EUR/JPY |
| Resistance | 1.4350 | 1.6404 | 97.69 | 137.41 |
| Support | 1.3974 | 1.5982 | 94.87 | 133.20 |
| Fibonacci Retracement Levels | ||||
|---|---|---|---|---|
| Pairs | EUR/USD | GBP/USD | USD/JPY | EUR/JPY |
| 100.0% | 1.4168 | 1.6199 | 97.23 | 135.68 |
| 61.8% | 1.4024 | 1.6037 | 96.16 | 134.07 |
| 50.0% | 1.3980 | 1.5987 | 95.82 | 133.57 |
| 38.2% | 1.3936 | 1.5938 | 95.49 | 133.07 |
| 23.6% | 1.3881 | 1.5876 | 95.08 | 132.46 |
| 0.0% | 1.3792 | 1.5776 | 94.42 | 131.46 |
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