Forex Profit Essentials

Learn Currency Trading The Easy Way

admin — Wed, 10 Mar 2010 13:59:28 +0000

So you want to learn currency trading – the easy way? Currency exchange does not have to be so complicated. Of course there are many different systems and methods, but you only need one that works in order to make money.

If you have ever exchanged money for a vacation or business trip to another country, you will know that the exchange rates of two currencies are constantly fluctuating. You will get a certain rate for the money you change before you leave, and then when you return a few weeks later you will probably find you get a slightly different rate for any leftover foreign notes that you change back into your own currency.

So if you think about this for a moment it is easy to see that there is a potential for making money here. Say your own currency is the US dollar and you change 300 USD into Canadian dollars. Instead of taking a trip to Canada and spending your Canadian, you just keep the money because you think that the Canadian dollar will increase in value. Sure enough it does, so you change back and at the new rate you end up with more US dollars, say 310 USD. You just made a $10 profit from currency exchange.

Foreign exchange or forex traders are doing something similar to this all of the time, but instead of going to the bank and drawing out actual foreign currency in cash, they simply place orders in the currency market. Like stock traders, they do not expect their orders necessarily to ever be filled, but they can profit on the fluctuations or changes in the exchange rate that happen in the time between their opening order and their closing order.

The closing order is an exchange in the other direction that cancels out the first order and leaves nothing but profit, assuming that the fluctuation in the exchange rate went the right way for them. Of course if it went the wrong way, they would lose money on the transaction, and that is why forex trading is a risky business!

This is how foreign exchange trading works, in very simple terms. As you get further into it you will find out a lot more, and sometimes you will see terms and explanations that it is hard to get your head around until you have practical experience. At that point come back and revisit this article to remind yourself of the simple exchange process that is the foundation of forex trading. This will help you to learn currency trading without getting lost in the complexities of the forex world!

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Currency Trading Program: Finding The Best

admin — Sun, 07 Mar 2010 11:34:18 +0000

If you ask any real successful forex traders you will find, for sure, that just about all of them use some kind of a currency trading program. Automation is everywhere these days and forex trading is no exception. In fact in many ways the forex market is ahead of the game because it is so open to online innovation and automation.

What you will find however is that many traders struggle before they find the right automated forex trading system. Some buy them off the shelf and others have a programmer automate their own successful manual system, but they will certainly have used a lot of 'money' in demo accounts testing them before they found the right one.

Even designing a robot yourself from a system that you know to be profitable is not guaranteed to make money. Automated trading is a different experience than manual trading and even the best forex systems need some tweaking when they are translated into currency trading software.

So assuming that you are not a mega successful trader with a manual system that you are burning to have automated just for your own personal use, then probably you will be looking for something to buy off the shelf. How do you find the best currency trading program out there?

Testing a currency trading program in a demo account before you go live is absolutely essential, of course. You must accept that this will take time and not rush into real money trading.

It is also important to understand that the first currency trading program that you test will not necessarily be the best for you. Regardless of profits on paper or other people's recommendations, you need to get something that you will understand and be able to operate successfully, something that is a good fit for you.

The best attitude to take is to assume from the outset that you will have to test several forex robots before you find the one that works best for you. This does require some investment of time and money but it is worth it. And before you panic at the idea of buying many robots in order to find one that works, remember that most of them come with a money back guarantee for at least one month, often two. Take advantage of this.

Many of the robots are sold through the online retailer Clickbank who will refund any returns with no question. Just be sure to apply to Clickbank for your refund and not the product developer's support team. After all, if you bought some Nike running shoes that didn't fit you, you wouldn't expect a refund from the president of Nike, would you? You would return them to the store where you bought them.

At the same time, you will want to be sure that the product developer's support team is there for you when you have technical questions about the software that you bought. That's what they are for. Phone support is best, then you can have someone walk you through any problems. Emails should be answered in less than 24 hours. If you do not get that level of technical support, you may want to look for another currency trading program.

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Global Forex Trading: Why Prices Change

admin — Thu, 04 Mar 2010 07:56:40 +0000

When you are involved in global forex trading or any kind of currency trading, you need to know a little about what makes prices change. If you understand this then you can protect yourself against many common causes of loss and perhaps also take advantage of these factors to open a profitable trade.

So what are the most important fundamental factors in global forex trading? Which reports and announcements have the power to shake the forex market?

1. Interest Rates

Probably the most important fundamental indicator for a nation's currency prices is the interest rate. High interest rates are generally associated with strong currencies. Of course they can also have a relationship with inflation rates.

Announcements of interest rate cuts or increases in any of the major currencies can have a massive and sudden effect on the forex market. In the short term, a cut in the interest rate will lead to investors selling that currency and so the price drops. At the same time of course they will buy another currency whose price will rise. You can often predict which other currency will benefit from this and get involved for a profitable trade.

Often, the effect can be longer term too. An interest rate change announced by the central bank is often an indicator of a steady fall or rise in the economy. This can lead to a trend that traders can profit from.

2. Gross Domestic Product (GDP)

GDP is the primary indicator of the economic strength of a nation. You could consider it as being like a profit or loss figure for a country. A higher GDP tends to be associated with a strong currency. Confidence will rise in times of high GDP.

Most countries report their GDP figures quarterly. There are usually predictions of the expected figures and the short term effect on currency prices at the time of the announcement may be more to do with whether the predictions were met than with the results themselves. For example if the prediction is for good results, and the results announced are good but not as good as expected, the currency price might actually fall. However, longer term the currency will usually show a fairly strong correlation to GDP.

3. Consumer Price Index (CPI)

Again a high CPI is an indicator of a strong economy. Currency prices in the global forex trading market will often respond accordingly.

4. Producer's Price Index (PPI)

Less well known but equally important for the economy, the PPI is an earlier indicator of inflation because changes in prices for producers will affect the consumer price index a little further down the line.

5. Retail Sales

The retail sales figure is a measure of the receipts of retail stores and therefore also of consumer spending. Rising sales usually indicate a strong economy and rising currency prices.

6. Employment figures

Employment is another indicator of the health of an economy. Large job losses indicate a weak economy and are likely to lead to lower retail sales as people have less money to spend. More jobs being created shows an active economy and is likely to result in consumer confidence, higher retail sales and a higher GDP.

7. Durable Goods Orders

This figure measures orders placed with manufacturers in a country. Again a rise is associated with a strong economy. This is an important indicator for the manufacturing sector and also for export figures and the GDP. Correlation with global forex trading prices is not as strong as for some of the other factors but it can have an effect.

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Forex Trading Strategies: What To Do When You Lose

admin — Mon, 01 Mar 2010 05:37:39 +0000

First off let me say congratulations on your decision to check out this article on forex trading strategies. That title, what to do when you lose, would have put off most people who do not have any idea how important of a subject this is.

We all want to hear about winners and how we can win. We do not want to hear about losing and what do when we lose. And yet the way to become a winner is to know how to deal with the losses. It's that important.

In forex trading there is no possibility of having 100% successful trades. Every experienced trader knows that. Of course you go into every trade believing that it has an excellent chance of being profitable, otherwise you would be crazy to even open the trade, but at the same time you know that losing trades are part of the game. The aim is not to win every time, but simply to gain more than you lose.

So the first thing to do when you have a loss is to treat it as something normal. I'm assuming here that you operated a stop and didn't lose a huge amount. Do not be devastated; forgive yourself and move on. You might want to stop trading for the day if you are kicking yourself real hard but come back to it next day.

If you followed your trading plan then you should not even be kicking yourself at all. Your system may allow for 1 in 10 losing trades and you just had one of them. There is no blame here and no reason to act any differently at all. In fact you could call this a balancing trade, and not really a loss at all, since your system plans and accounts for it.

If things are going badly wrong, you may need to rethink your approach. I'm thinking here about a very large loss or series of losses that almost wipes you out, or if you observe that your trades over a period of time are producing a small but steady loss rather than a balance on the plus side.

In this type of situation the first thing to do of course is to ask yourself whether you are applying your trading strategies and your trading plan correctly. If your losses are the result of straying from your system and taking unplanned risks, you need to work on self discipline. One way of doing this is to open a mini or micro account and train yourself to apply your system exactly with a lot size that is just 10% of your normal position. Only when you are following your plan 100% of the time and showing a profit, do you return to trading with your usual lot size.

Another option is to get back to basics. Stop trading for real and take time out to go back to school by signing up for some kind of forex trading training. This can be a very useful option if your system seems to be at fault and is no longer giving you the results that it should. It can also help you a lot if your problem was over confidence. Concentrate on mastering various methods of analysis and you will almost certainly find yourself improving your system or developing new forex trading strategies that you can test on a demo account.

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Forex Trading Robots: Are They Right For Beginners?

admin — Fri, 26 Feb 2010 02:11:31 +0000

Forex trading is a great way to make money for those who are skilled at it, but without forex trading robots (also known as automated trading systems) it takes a lot of time and knowledge. Beginners who are starting out trying to trade for themselves have a lot to learn before they can consistently make money. Not only do they have to master what seems like a whole new language, but they have to get to grips with all kinds of charts and graphical indicators that help them to see when currency prices are taking a turn in a certain direction. In short, they have to learn how to predict the market.

On top of that, unless new traders are willing to tie up their money in a long term trade, they often feel they have to watch the markets at every waking moment and sometimes in their sleep too. Because of their global nature, the foreign exchange markets are open 24 hours a day from Monday to Friday. Experienced traders know the importance of scheduling their time so that they can have some kind of life away from the computer screen, but beginners can easily be sucked into the fast moving currency trading world until their health and family life start to suffer.

Automatic forex trading systems seem to offer a way around these problems. They will watch the market for you 24 hours a day; you just have to leave your computer connected. They will open and close trades automatically, according to their settings, which you can adjust to suit your own position size and risk comfort zone.

They do have some possible issues which you should be aware of before you start trading. First, they can take a while to set up. Do not assume that you will have your forex robot running perfectly within a few minutes of purchase. Software does not always run the same on every computer and there are quite a few variables that you will need to set for yourself. For example you need to open a broker account that is compatible with the software, and then hook up the two. Of course you will receive instructions on all of this but you cannot expect it to be instant. Do not give up, just contact the program's support service if you run into an issue that you cannot solve alone.

Second, sadly even forex trading robots are not infallible. They do not exactly make mistakes, they always do what they are programmed to do, but they apply a predetermined system. Nobody has ever invented a system that works 100% of the time so you are bound to have some losing trades. This is true for every currency trader that ever existed, no matter how skilled. It should not be a problem if the system is profitable and if you know how to manage your funds.

The most important thing is not to risk too much on one trade. 2% to 5% is usually about right depending on the system that you are running. Most automated trading robots come with advice on the level of risk that is appropriate to their system. Keep on the cautious side, especially at first.

If you want to get into foreign currency trading in any form, you must understand that it is a risky business. It is possible to make a lot of money but it is possible to lose a lot of money too. Do not try to make too much too soon or you will probably fall on your face. But if you take this advice into account, then one of the best forex trading robots on the market could be a good choice for you.

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Metatrader EA: What You Need To Know About Expert Advisors

Metatrader EA: What You Need To Know About Expert Advisors

Forex Mentor: The Secret Of Success

admin — Mon, 22 Feb 2010 23:43:26 +0000

Are you looking for a forex mentor? Read on and we can teach you the secret of success in forex trading right now – for free.

FX trading is a risky business as I am sure you know. It can also be extremely confusing. If you do an internet search you will find so many forex systems, plans, strategies, tactics and techniques that it will make your head spin. All of this seems designed to get you to buy into yet another system that will probably be no better and no worse that the one that you have already.

Many times, traders are easily diverted even though they know that if they could only stick to one thing consistently they would have a much better chance of success. So what drives us away from the path that we know could lead us to success? The answer, most all of the time, is fear.

Fear of failure

We may be under a lot of pressure to make money with forex trading. The pressures can be internal, in our own minds, or external, coming perhaps from a spouse or friends who challenge us to make good and make money. At the same time, we may lack confidence either in ourselves or in our system.

Getting over fear of failure is pretty simple if you can start to see everything as a learning experience. In this way of looking at life, there are no mistakes, only learning opportunities. It will help if you reduce your stress by keeping your risk low and testing your system thoroughly in demo before going live.

Fear of success

Fear of success is often harder to deal with and it is surprisingly common in our culture, especially if we have grown up in a family or subculture where successful people are disliked or mistrusted. Parents often instill the fear of success into their kids without even realizing it.

For example, your parents may have taught you that being good or popular was more important than being financially successful. Fine, except that it is easy for a kid to interpret this as meaning that successful people are not good or popular.

Often this belief will be internalized so that as you grow up you are not even conscious of it. But as soon as you get anywhere near financial success, something always goes wrong. You screw up. Why? Because somewhere deep inside, you believe that if you are successful, you will be a bad person and everyone will hate you. That's fear of success, and it will wreck your chances of making money from forex trading if you do not deal with it.

Master your fears: the secret of success

You can help yourself out by taking small steps to success. Trick yourself by setting small, easily achievable goals that pretty much anybody could do. Do not have goals that involve huge amounts of money or luxury goods. Do not let yourself daydream about those things, either. Concentrate on increasing your funds by 20%, then when you did that, another 20%. Nobody is going to hate you for having 20% more in your investment account.

If you need further reinforcement, take a look at some successful forex traders that you know online. It will soon be clear that they have not become different people since they learned to trade currency profitably. Give yourself permission to be successful. If you still have trouble, consider finding a forex mentor to help you on your path to success without fear.

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Forex Managed Account: Does It Make Money?

admin — Fri, 19 Feb 2010 20:41:40 +0000

If you want a hands free way to make money from the foreign exchange or forex trading market, a forex managed account can seem like a great opportunity. Foreign exchange trading can be very lucrative but it can also be very risky and it takes time to learn your way around.

With a managed forex account you have someone else trade for you on commission, saving you all the time of learning the ropes and also, hopefully, reducing the risk because your accounts will be handled by a skilled trader.

But is it really that simple, or is there a risk that you will be scammed?

The first thing that you should know is that there are two main types of forex managed account. They work in very different ways and offer a different service. It is important to choose the one that is right for you.

Standard Forex Managed Accounts

In a standard account, you retain control of your funds. You sign up with a broker and the money is always held in your name. The trader from the management company simply has access in order to trade. You can always log in to see how things are going, and you can withdraw the funds whenever you want, unless you signed a contract for a specific time period. In summary, it remains your money all of the time.

The downside of a standard account is that you will probably find there is a fairly high minimum investment. You are not going to be able to open a $100 micro forex account and have someone trade it for you for a few cents. It would not be worth their time at that level.

You should also be aware that even with an experienced trader working for you, you could lose money. There are no guarantees with speculative financial trading. Every trader makes some losing trades and may go through a period of losses from time to time. All you can be sure of is that you could probably not do better yourself.

In some cases the management company will ask you to sign up with a specific broker. This may be because they are receiving commission from the broker. In a sense that is not a problem because if they are earning something from the broker, they don't need to charge you so much, so this can keep your costs down. On the other hand you need to be sure that they are not paid on a per trade basis because that could motivate them to make a lot of small trades, not necessarily the most profitable plan for you. Check this out with them before you sign up.

Pooled Forex Managed Accounts

The second type of forex managed account pools your money with funds from other investors. The managers hold the funds, trading with them and paying you a share of the declared profits. There is likely to be a lower minimum investment with this type of account, because they can centralize the funds and split the costs between all investors.

Obviously there is much more potential for fraud with this type of account. You have to entrust your funds to the managers and you rely entirely on their reports. Withdrawal requests must be made through them. You cannot gain access to the account yourself. So if they are fraudulent, they could simply keep your money and pay you a small amount each month calling it 'profits' until they decide to disappear.

Of course, there are some genuine pooled account managers but you will want to do your due diligence even more carefully than usual before handing over your money. Even the best run companies can suffer losses from time to time in something as risky as the forex market. When that happens, it is possible that a lot of clients will try to pull out their funds at the same time and that could cause financial collapse.

So you should always do your due diligence. Check where the company you are considering is registered, and be suspicious if its official address is not in one of the major nations with strong regulatory laws. Make sure that the company is a member of a regulatory body too, such as a national association of financial managers. Check out the regulatory body to see if they offer protection to clients if the company should fail, especially if the company will be holding your funds in a pooled forex managed account.

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Online Currency Trading Explained In Simple Terms

admin — Tue, 16 Feb 2010 17:24:17 +0000

What is online currency trading? Put simply, it is a way of making money from the daily changes in currency prices by trading in currency on the internet. It is often called forex or FX trading, which are just short names for 'foreign exchange'. It is a speculative form of investment, so it is risky. At the same time, it allows many people to make money from their home computers by working just a few hours each day.

One of the benefits of forex trading over stock trading is that it is a 24 hour market so you can trade in the evenings. Currency trading can be done in any part of the world, you are not limited to your own country's currency. So you can take advantage of the different time zones which mean that the market is constantly open from Sunday night to Friday night.

In other respects you may think of it as being a lot like stock trading. You are dealing in rising and falling prices, submitting buy orders for currencies that you think will rise and sell orders for currencies that you think will fall in value. You can make these trading decisions on the basis of world economic events or more simply, you can look at charts which show patterns and indicators that many traders follow to make successful trades.

Currency is always traded in pairs because it has to be an exchange: in order to buy one currency you always have to sell another. A common pair for beginners to use is EUR/USD, or the euro and US dollar. These are the most heavily traded pairs so costs are usually low and a lot of information is available, making it one of the easier and cheaper pairs to trade.

When you are trading this pair you are always either buying or selling euros, with the dollar as the quote currency. If you want to buy dollars when trading this pair, you have to place a sell order for euros, and that will automatically mean that you are investing in dollars. This is called 'going short' on EUR/USD. If you want to buy euros, that is called 'going long'.

The aim, of course, is to place a closing order on the trade after the price has moved the right way so that you are in profit. Of course if it goes against you, you can lose, so you need to place stop orders. A stop order cancels out your trade at a certain level of loss so that you are protected from large losses.

Many brokers will accept a very small minimum investment to attract new traders. At the same time, the use of leverage and margins means that you can control large position sizes with a small account balance. You may only have to supply 1% of your trade amount in order to open a trade. The broker guarantees the rest, protecting their position with automatic stops. All of this means that online currency trading does not require a large investment to get started.

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What Is Online Forex Trading

admin — Sat, 13 Feb 2010 14:35:38 +0000

Online forex trading can be a lucrative source of income for those who can do it successfully. It is a speculative form of investment a little like stock trading. As with most speculative investment, it is risky and you can lose money, but there is the potential to make a lot of money if things go your way. The skill, of course, is in knowing how to trade so that things go your way more often than not.

The word Forex is simply made up of the first letters from the words Foreign Exchange so it is a short way of saying foreign exchange trading. It may also be written as FX, and it is often called currency trading. It involves buying and selling different world currencies according to whether you think they will rise or fall in value.

This may sound like it would be a difficult thing to do, but there are many systems available that can help you to identify signals and trends indicating that the price of a currency pair is likely to move in one direction or another. There are even automated forex trading systems, otherwise known as forex robots, that will identify the signals for you and even open and close your trades automatically so that you are trading the forex market on autopilot.

Unlike most financial markets, the forex market is active 24 hours a day during the business week. This is because of its global nature. The major financial centers of the world operate in different time zones and you can trade whenever any one of them is open. Between them they cover the whole 24 hours.

It is a very high liquidity market with an average daily turnover that is now estimated to be close to $4 trillion a day. This is more than the combined turnover of all the stock markets in the world. This makes it a very attractive market to trade because if you pick a popular currency pair you can be almost sure of getting all of your trades matched.

Of course there are some businesses and individuals who are exchanging currencies for the purpose of trade or travel to foreign countries, but an estimated 70% to 90% of foreign exchange transactions are speculative. That means that the person ordering a currency purchase or sale will never take delivery of that currency, but will trade it back with the aim of making a profit.

There is no fixed exchange location although people talk about the dealing floors in the various financial capitals like New York and London. In reality the forex market is simply the communication between all of the large banks and institutions that have dealing desks. They deal directly with each other and the smaller investors get involved through a broker who can enter this market.

Trading can take place by phone but these days, more and more is done on the internet. This has allowed many private individuals to begin online forex trading and you do not even need a lot of capital to get started.

Currency Trading Strategy: A Recipe For Success

admin — Wed, 10 Feb 2010 11:32:32 +0000

If you ever visit any of the many online forex forums, you will see that most every beginner trader is hoping to find some miracle currency trading strategy that will make them rich overnight. In their desperate search to make money fast, newbies tend to believe that every new strategy they encounter is the one that will make them a millionaire, so they immediately ditch whatever they were doing to follow the next new system. They never learn to apply any system profitably or even sort out the good systems from the bad. Inevitably they finish up by taking a loss.

That, of course, is a surefire recipe for failure. So let's take another look and see if we can construct a recipe for success.

First, the reality is that there is no perfect forex system, no set of instructions to follow that will guarantee you make millions. What works in practice is sound analysis that enables you to spot a trend and then open an order to back it.

This is very different from trying to predict the market. If you trade on predictions you are effectively gambling on which way the market will jump. If you follow trends, you are waiting until a movement is clearly established before opening an order.

Of course you need to be sure that it is a solid trend and not just a momentary fluctuation that will soon go the other way. That is where the analysis comes in. Use indicators to give you a clear idea of whether the market is oversold or overbought so that when you see a movement in the right direction you can be fairly sure it will continue that way for long enough for you to profit from it.

This is the first step in setting up your successful currency trading strategy – identifying the emerging trend. It is something that will become easier with experience. In order to minimize your losses, you probably want to gain that experience in a demo account.

The next step needs to be taken as soon as you have entered the market, and it involves setting up a stop order. This is an order that will be triggered if the price goes against you and it prevents you taking a large loss. Never hang on to a losing order hoping that the movement will reverse. It probably will not, and you could be wiped out waiting. So get out, then take a good look at what went wrong. You should be glad to have losses like this in the beginning because you can learn a lot more from a mistake than from a winning trade.

Where to set your stop can vary according to your system and the risk that you are prepared to take, but 10% is a good working figure to start with. If you find that your stop is being triggered too often, move it out. Equally if you find that a shorter stop would have saved you money almost every time without being triggered by random fluctuations, you can move it in a little.

Does that sound too simple? Remember, the secret is not in the strategy itself but in how you implement it. That's why it is pointless to hop from system to system. Develop your trading techniques and discipline, and you will soon be in a position to see that a successful currency trading strategy is very simple indeed.

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