Forex

Forex Glossary Terms

2010-11-12T02:29:00.000-08:00

American-style option An option contract that may be exercised at any time before it expires.

Ask The quoted price at which a customer can buy a currency pair. Also referred to as the 'offer', 'ask price', or 'ask rate'.

Base Currency For foreign exchange trading, currencies are quoted in terms of a currency pair. The first currency in the pair is the base currency. For example, in a USD/JPY currency pair, the US dollar is the base currency. Also may be referred to as the primary currency.

Bid The quoted price where a customer can sell a currency pair. Also known as the 'bid price' or 'bid rate'.

Bid/Ask Spread The point difference between the bid and ask (offer) price.

Call A call option gives the option buyer the right to purchase a particular currency pair at a stated exchange rate.

Counterparty The counterparty is the person who is on the other side of an OTC trade. For retail customers, the dealer will always be the counterparty.

Cross-rate The exchange rate between two currencies where neither of the currencies are the US dollar.

Currency pair The two currencies that make up a foreign exchange rate. For example, USD/YEN is a currency pair.

Dealer A firm in the business of acting as a counterparty to foreign currency transactions.

Euro The common currency adopted by eleven European nations (i.e., Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain) on January 1, 1999.

European-style option An option contract that can be exercised only on or near its expiration date.

Expiration This is the last day on which an option may either be exercised or offset.

Forward transaction A true forward transaction is an agreement that expects actual delivery of and full payment for the currency to occur on a future date. This term may also be used to refer to transactions that the parties expect to offset at some time in the future, but these transactions are not true forward transactions and are governed by the federal Commodity Exchange Act.

Interbank market A loose network of currency transactions negotiated between financial institutions and other large companies.

Leverage The ability to control large dollar amount of a commodity with a comparatively small amount of capital. Also known as 'gearing'.

Margin See Security Deposit.

Offer See ask.

Open position Any transaction that has not been closed out by a corresponding opposite transaction.

Pip The smallest unit of trading in a foreign currency price.

Premium The price an option buyer pays for the option, not including commissions.

Put A put option gives the option buyer the right to sell a particular currency pair at a stated exchange rate.

Quote currency The second currency in a currency pair is referred to as the quote currency. For example, in a USD/JPY currency pair, the Japanese yen is the quote currency. Also referred to as the secondary currency or the counter currency.

Rollover The process of extending the settlement date on an open position by rolling it over to the next settlement date.

Retail customer Any party to a forex trade who is not an eligible contract participant as defined under the Commodity Exchange Act. This includes individuals with assets of less than $10 million and most small businesses.

Security deposit The amount of money needed to open or maintain a position. Also known as 'margin'.

Settlement The actual delivery of currencies made on the maturity date of a trade.

Spot market A market of immediate delivery of and payment for the product, in this case, currency.

Spot transaction A true spot transaction is a transaction requiring prompt delivery of and full payment for the currency. In the interbank market, spot transactions are usually settled in two business days. This term may also be used to refer to transactions that the parties expect to offset or roll over within two business days, but these transactions are not true spot transactions and are governed by the federal Commodity Exchange Act.

Spread The point or pip difference between the ask and bid price of a currency pair.

Sterling Another term for British currency, the pound.

Strike price The exchange rate at which the buyer of a call has the right to purchase a specific currency pair or at which the buyer of a put has the right to sell a specific currency pair. Also known as the 'exercise price.

About Forex Trading Evo

2010-11-12T02:25:00.001-08:00

FOREX.com is a global provider of online trading services,
servicing customers in over 140 countries.

Forex Trading Evo is the pioneer in Forex Currency Education. Our online forex currency trading courses will help you throughout your Currency trading. Our education is not only for pros but also very necessary for newbie. This course will teach you all aspect of forex currency trading. Online currency trading is become very simple and understandable through our course. Our Currency trading courses are highly tested by the forex pros. Now you enjoy the Free Forex Currency Trading Course.

Forex trading (also called Forex, FX, or currency trading) describes trading of many currencies of the world. Forex is the biggest and least regulated market providing the high liquidity to investors. Daily volume in the currency or forex markets is around $4.0 trillion per day. By comparison with NYSE daily volume averages $30 billion a day. We are new but very best in forex trading education. We will teach you all aspects of online Forex Trading or currency trading using the latest and up to date courses.

Currency Trading is the best online trading that will give you maximum result but if you know how to play in currency or forex trading market. We will teach you how to control your own order flow by using “state-of-the-art” Forex Trading Platforms with some of the best of breed Forex Dealers. We will teach you how the forex trading professionals make money and learn the differences between Forex currency trading and equities trading. Decide for yourself which is the best instrument for you. Forex currency trading offers 500 to 1 leverage and 24/5 trading hours – trading online currency in morning before going to school, college or job or in the night before sleeping… Forex Trading market is open 24/5 in a week. Learn to trade forex with discipline, a plan and the technical tools that the World Currency Traders use.

Whether you are a beginner or an advanced currency trader, now you can have the most comprehensive and professional learning experience available today in forex trading market. We offer this experience in our website forextradingevo.com in free of cost… yes free of cost…We just need your support and courage to provide this knowledge and forex education free of cost.

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Understand how the Forex trading market works
Learn all aspects of technical analysis of Currency Trading
What moves the market and Fundamental analysis
Understand and steps to avoid common forex mistakes
Where to open your first live account, best brokers
Know how to develop a system that fits your trading style
Online Certificate for completion of course. (Launch very soon)

Our modules are based on the following courses:

The Basics of Currency Forex Trading
The Understanding of Currency Forex Trading
The Logistics of Currency Forex Trading
What Moves the Forex or Currency Market?
Forex Chart Patterns
Candlestick Chart Formations
Forex Technical Analysis Basics
Technical Indicators Explained
Introduction to Fundamental Analysis
Economic Releases that Move the Markets
Trading the US Dollar>
Trading the Euro
Trading the Japanese Yen
The Pound, Swiss Franc, and Commodity Currencies
How to Choose a Currency Forex Broker
Position Sizing
Intraday Trading
Pulling It All Together
The Psychology of Currency Trading
Emotional & Behavioral Part of Currency Trading
Forex Risk & Money Management

FOREX IS AN ART

2010-11-12T02:23:00.001-08:00

When you say trading, people will say trading is an art. Look at all the books that has been published on the subject. They will say the art of trading forex.

In that sense, we must take forex as an art and not a science. I know, some people may not agree with me and all the post that is in this blog. I don't blame them coz I was actually in the same place as they were when I started trading. Trying to find the answer to forex using every logical explanation.

This is the answer that you have been looking for. I am going to give it to you straight away. Let see if your mind can accept it.

Forex is not a science. There is not a single mathematical equation that can explain it. Do not forecast, do not predict, do not anticipate. All you need to do to make profit is to follow the market. If the price is going up, you buy. If the price is going down, u sell. You may not win all the time but if you follow the market, in the end you will be in profit. Make profit and build up your capital up to a point where a few winning trades per month will bring huge profit.

Can you accept it? Can you mind admit it? Is your logical mind challenged? Do you feel helpless? Welcome to the real world :)

OVERCOMPLICATED TRADING

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Human tends to over-complicate things. It is in our nature to try and improve what we have but most of the time we overcomplicated things and forget about the simple solution.

In my previous post, I posted a chart of a basic system. It consist of candle stick chart, moving average and macd. Only 3 indicators and it is a very simple system rite?

The answer is, it is not so simple actually. Candle stick alone tell you 4 things that is, open, close, high and low price. MA tells you direction of trend, entry point, start and end of trend. Macd tell you trend, entry point, reversal point.

From only 3 indicators there are actually 11 information cramp into that small chart. Too much info and decision making is a hard job. Though i filter comments, no one has actually ask about the amount of information on chart. It seems people can accept 11 information at once. Can you manage 11 input at once and make a decision out of it??

Trading is actually much simpler. It is actually possible to make profit with only 1 information. Believe it or not??

FOREX 4TH ANNIVERSARY

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Today marks the end of 4th year I am in Forex and I am still here. Most of the friends that I know trade has already stop. It must mean something to stay here for so long when most people quit. Its either I am really stubborn or I am not losing money. Which one you think?

After 3 days of demo trading I got over 25k of profit from 10k max lot trading. Its over 250pip net profit. Not bad for a part time trader and a 7th place so far. I dont think I can be number 1 coz of limited time I trade. Its a good progress, it shows where I am after 4 years. How about you?

TRADER'S TOOLS

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A mechanic has many tools. Each tools with its own usage and purpose. It is only down to intelligence and creativity that separates a good mechanic and a bad one.

Like a mechanic, a trader has many tools as well. Each indicator is a tool for the trader and a combination set of tools with rules is a trading system. A good trader has not 1 but many system. Each system has different purpose. It is down to knowledge and creativity that separates a good trader and a bad one apart from portfolio.

The best time frame to trade is the lower time frame but due to noise and spikes it is difficult to trade using lower timeframe. It is the reason why most trades fail in short time frame.

EurUsd has been ranging for the past few days and due to it, has hit my stop loss twice. Being a trend trader myself, I just cannot trade during these ranging period. So I stopped trading and try to make a new trading system using lower time frame to catch these ranging market.

It seems with a new set of tools (not new actually, had not used them for a while), I have manage to create an almost perfect trading system for all time frame but with the target of 15m chart. The only thing that this new system doesnt show is when not to trade which i made up with a new set of rules.

If any of you would like to try the new trading system please leave your email. I will try to get back to you ASAP.

ITS NOT PIPS BUT PROFIT IN FOREX

2010-11-12T01:57:00.001-08:00

You can actually tell if someone is new in Forex by the way they count their pips or profit. When people starts forex they count pips. They can have hundreds of pips a day and yet their profit is low. This is due to the low risk reward ratio they have taken.

Once you are older in Forex, you will see the ratio. No point of taking hundreds of pips when the profit is low. So you start to take high risk high return trade. These trades do not give you high pips but the profit margin is high.

That is how money is to be made in Forex. You actually manage your risk and take profit from it. For today as of now, I already taken 3 trades. 2 profit trades and 1 lost trade. My account grows 37%. Not bad for a slow Monday.

For the answer to Forex, once you know it you will feel helpless. No matter how smart or brilliant you are it counts for absolutely nothing here. I have Banking and IT qualification. Did that help me? 2 different qualification did not help me one bit here. Made me want to cry when I found it out.

Engulfing Candlestick Pattern

2010-11-07T03:29:00.001-08:00

The engulfing candestick pattern can be both a bullish and bearish signal depending on how the candlesticks form. The first candlestick is comprised of a small body candlestick followed by a large candlestick (either positive or negative) that “engulfs” the previous candlestick.
Here is an example of the engulfing candlestick pattern:

Candlestick Charts

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Candlestick charts are the most popularly used charts of all forex charts. Candlesticks offer all the data of bar (OHLC) charts, all in an easy to read and graphical dataset. After learning the basics of candlestick charts, you’ll be able to decipher data faster and make decisions quicker, a valuable skill in the world of forex trading.

What are Candlestick Charts

Candlesticks have been in use for centuries, first created as a way to easily see the changes in price of rice on Japan commodity exchanges. The image below will give you a better idea of what candlestick charts are:

Reading the Candlestick

Colors are used to differentiate between a candlestick that is positive (price going up) and a negative candlestick (price going down). For this tutorial, we have utilized the colors green for advancing candlesticks and red for declining candlesticks, a popular color combination on a plurality of forex trading platforms.

Candlestick Terminology

Candlesticks show all the data of a OHLC bar, but do so in a graphical way and utilize a different terminology. The middle colored portion of the candlestick is called the “real body” or “solid body.” The real body indicates the total realized changed in price of the currency pair during trading. The sticks or “wicks” below the candlestick are called shadows. Just like a bar chart, this is where the price dipped or rose to reach, but did not stay at this price.

Why Candlestick Charts

Why not? Candlestick charts are arguably the best type of chart to use due to the fact that they allow you to easily understand the changes in price of a currency, but also allow you to employ candlestick analysis to decided how to place your trade. Candlestick analysis is a very profitable and easy to learn, and later in the tutorial we’ll teach you everything you need to know about candlestick analysis.

Bar Charts and OHLC Charts

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Bar charts and OHLC charts are one step up from line charts, in that they offer more data about the price changes that happen during the bar, not just one point in time. Bar charts and OHLC are excellent, but are still one step lower than candlestick charts, which show all relevant data in graphical form and can be read more quickly, but we’ll get to candlesticks in the next tutorial

Bar Charts and OHLC, What Do You Mean?

Bar charts and OHLC are virtually the same. OHLC means Open, High, Low and Close, representing all the data that is shown in just one bar within the chart. A typical bar in an OHLC or Bar Chart looks like the image below:

Reading a Bar (OHLC) Chart

Just as you are reading this tutorial, bar charts are read left to right. As you can see, the stick coming off the left side of the bar is the open price, or the price at which the currency pair opened that bar. At the top of the bar is the highest price the currency pair reached during that time period, and likewise the bottom point on the line is the lowest price the currency pair hit. The right most stick coming off the bar is the price the currency pair closed that time period. As you can see, the price rose during the time period, with the open price lower than the close price, however, the price also dipped lower than the open and also, at one point, moved higher than the price at which it closed.

Bar Charts vs. Line Charts vs. Candlestick Charts

As you can see from the illustration above, there is simply no comparison between bar charts and line charts. The comparison between bar (OHLC) and candlestick charts is irrelevant, as both show the same data. However, all things considered the difference is staggering. Rather than have just one point in time reflect the overall strength or weakness of a currency pair, bar chart (OHLC) users have much more data to reflect upon before making a trade.

Forex Line Charts and Graphs

2010-11-07T03:21:00.000-08:00

Line charts are some the least used charts in all of trading. Though line charts are incredibly simple to read and understand, often they do not show enough data to make intelligible decisions. Though the use of these charts is not at all recommended, I will explain what they are and how they work so you can make your own decision.

How Forex Line Charts Work

Line charts are generally calculated by using the open or close value of a currency pair, then drawing a straight line to connect the points. What this does it show a relatively smooth chart, factoring in only the values at which the currency was priced at certain times.

What The Charts Don’t Show

The worst part about forex line charts is not what they show, but what they do not. For the sake of this discussion, we’ll use a one hour line chart with each point on the chart equal to the price the currency pair opened for that hour.
Here are a few fictional values for our example currency pair, EURUSD, over a 3 hour period. For educational purposes, a value will be posted for 2:30, to show the inherent problems of a line chart.
EURUSD
1:00 value = $1.50
2:00 value = $1.4950
2:30 value = $1.47
3:00 value = $1.50

What You Don’t See In the Data

Now, when we draw the chart with the price being calculated each hour, we see very little in the price. For all we know, the price fell 50 pips to $1.4950 by 2:00 but rose back to $1.50 by 3:00. Because line charts only show the price for one point in time each hour, there is a lot of market data missing. As you can see, the price actually fell more than 300 pips to $1.47 before rebounding, but according to our line graph it only fell as low as 50 pips to $1.4950.

Only Half the Story

You see, a line chart set on a hourly timeframe will only accurately report the price of a currency once every 60 minutes. You’ll only know the price at one point during the whole trading time. This is insufficient data, and making trades based on a lack of data is a sure way to lose money. For this reason, we at ForexOnlineLearning.com suggest utilizing bar or OHLC charts, or candlestick charts as a more accurate way to trade.

What is a Pip?

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In the Forex market, prices are quoted in pips. Pip stands for “percentage in point” and is the fourth decimal point, which is 1/100th of 1%.
In EUR/USD, a 3 pip spread is quoted as 1.2500/1.2503
Among the major currencies, the only exception to that rule is the Japanese yen. In USD/JPY, the quotation is only taken out to two decimal points (i.e. to 1/100 th of yen, as opposed to 1/1000th with other major currencies).
In USD/JPY, a 3 pip spread is quoted as 114.05/114.08
The smallest price increment in a currency, so instead of a point like in stocks, in the forex market it is called a pip.

Forex Signal Services

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Forex signal services offer investors the ability to trade the foreign-exchange market without their own analysis and with the ability to follow an expert with their own trades. Unlike managed forex accounts, forex signals are merely information on which a trader can trade, it is not access to an account managed by an expert. You have to make the trades yourself.

Using Forex Signal Services

Forex signal services usually offer their positions in a variety of mediums. Some forex signal services broadcast messages through text message or email in order to get the position to the trader as quickly as possible.

What’s in a Signal

Forex signals will often be sent with an entry price, a stop loss, and a take profit. The numbers can then be analyzed by the end user, and traded. Usually a signal service will cater to a certain currency pair, and a certain type of trading. Most signal services offer day trading advice, or swing trading advice and charge by the month.

Cost of a Signal Service

Signal services vary wildly. Some services may cost just a few dollars per month while others will run into the thousands of dollars. Typically, signal service providers will offer a trial period, where the trader can use the service for a period of weeks or months. In this time, if a signal service is attractive the the trader, he or she can subscribe for future updates at a cost.

Finding a Signal Service that Works for You

Finding the right signal service is difficult, as you have to find one that fits within your budget, but also your allotted time to trade. With the foreign-exchange market being a 24/7 marketplace, many signal services may offer trades while you’re sleeping, which is of little benefit. If you work full-time, you may not have the time necessary to make use of a signal service. The full-time worker may be more interested in a signal service that finds long-term trades, where entry times and costs are not as important as in short term trading.

Forex Stop Loss and Take Profit

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Arguably, the stop loss and take profit orders are the two most important order types for foreign exchange traders. The two orders are essentially orders on top of another order. The stop loss allows you to determine at what price you want to cut your losing trades and the take profit allows you to enter what price you’d like to close a position for a profit.

The Stop Loss

A stop loss should be entered for each and every trade you ever make on the foreign exchange market. A stop loss prevents you from runaway losers, due to the fact that it will automatically close a losing position before your account balance is depleted. It would never be recommended to trade without a stop loss as doing so is like risking your entire account balance on one trade.
If you were to buy a lot of GBP/USD but wished not to lose more than $250 on this single trade, you would set your stop loss 25 pips below the price at which you entered the trade. If you bought GBP/USD at $1.50, you’d want to enter a stop loss at $1.4975, thus preventing a loss greater than $250.

The Trailing Stop

The trailing stop is a different kind of stop loss order offered by a few brokerage accounts. Many investors, particularly momentum traders, like to use trailing stops to both limit their losses, and also to lock in gains. The trailing stop lags the current price by the amount set. For instance, if you were to buy EUR/USD at 1.3150, and wish to lose no more than 50 pips, your trailing stop would sit at 1.3100. If the price were to advance to 1.3175, your trailing stop would then move to 1.3125, lagging the market by the 50 pip differential that you set.
The trailing stop is a more advanced type of stop loss but can be used by any trader. Ultimately, the trailing stop will activate at a price that is X number of pips lower than the price you set. If the EUR/USD was to advance from 1.3150 to 1.3350 without ever dipping more than 50 pips at any given time, you would be in the position all the way to 1.3350. If it had dipped deeper than 50 pips, your stop loss would have been executed.

Take Profits

Take profit orders are the opposite of a stop loss. The take profit is a price at which you would like to close your position for a profit, above or below the current price of the currency. Just like a stop loss, you can enter this order either during your initial entry to buy a currency, or after, and it can be changed at any time.

Types of Forex Market Orders: Market and Limit

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Now that we know what goes into a trade, we need to also know how to enter the trade to a broker. There are two main types of orders to buy currency, the first of which is a market order, the second is a limit order.

Market Orders

A market order is an order at the current market ask price for a certain currency pair. This type of order is filled instantaneously at whatever price the broker can match up with your entry. Market orders are used by virtually every trader, but are more often used by traders that want to buy at a certain time (now) rather than a certain price.

Limit Orders

A limit order is a special order put into a broker to buy a currency pair at a predetermined price. Let’s say that the current value of the GBP/USD pair is 1.5050 and you want to buy the pair, but at a price lower or higher than the current price. For the sake of discussion, we’ll say you’re interested in buying GBPUSD only at a price of $1.5025 and do not wish to buy it at the current price.
By entering a limit order, you are able to enter the price at which you’d like to buy ($1.5025) and how long you’re willing to wait for the order to be filled. If at any time the price falls to $1.5025, your broker will automatically enter the trade, choosing to buy X number of lots at this predetermined price.

Limit Order Operations

Most brokers will not require you, or your platform, to be logged into your account to execute a limit order. This is both a benefit and a negative, as you’ll be able to log out of your account and still have your orders in place, but should you forget, you might find yourself holding a position that you forgot about. Holding positions unknowingly is dangerous, due to the fact that the market may move wildly without you to close the position either for a profit or loss.

Rollovers and Carry Interest, The Money You Make For Making Money in Forex

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Believe it or not, you can actually make money when a currency pair goes neither up nor down in price. Yes, that is right, you can make money for just holding a position in forex!

Carry Trade Interest

You remember from the third article of our comprehensive guide that when you buy or sell a currency pair, you’re essentially moving money from one currency denominated bank account to another. And the crazy thing about borrowing and lending money, is that you receive interest for it!

How Carry Trade Interest Works

Carry trade interest works by borrowing in one currency to buy another currency. Back to the original example, when you buy the GBP/USD at 1.6000, you are trading $160,000 for 100,000 British Pounds. In effect, you debited $160,000 from one account, in which you owe interest, and credited another with 100,000 British Pounds, in which you gain interest.
Let’s assume that the bid and ask interest rates for US Dollars and Great British Pounds are as follows:
GBP Bid 2.5% Ask 3%
USD Bid 1% Ask 1.25%
Just like the spreads, the bid price is the price you get paid for depositing. The ask price, is the price the lender asks in interest.

Calculating Your Profit/Loss

Each year, you will pay $2,000 in interest to borrow the US Dollars, and you will gain 2,500 Pounds ($4000) in interest for depositing. Your net gain, even if the currency prices go absolutely nowhere, will be $2000 each and every year. Per day, it equates to $5.48, or about ½ pip per day.

It Really Adds Up

The cost of carry, or in some cases, the gain of carrying, really adds up over time. In the example above, an investor would have made $2000 with a leveraged investment of $160,000. In real terms, at 50:1 leverage, the profit would have been $2000 on a $3200 investment, not too shabby! Many investors have started trading forex just to make money from carry trades, but we’ll get to that later.

The Spread, A Forex Brokers Profit

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n our example from the previous article, we actually alluded to a few things. The first, is that there were a few costs in our example trade of 1 lot of GBP/USD. The hidden cost is the “spread” or the commission the broker earns for completing our trade.

How Forex Spreads Work

Unlike stocks or other tradeable securities, there is no set commission rate. With stocks, you may be accustomed to paying $6.95 to complete an online trade. In forex, we don’t pay commissions, instead the cost to trade is built into the forex bid and ask prices.

Bid and Ask

The bid and ask prices can be confusing, but we’ll make as much sense of the two prices as we can. The bid price is the price you would get when selling the pair. The ask price, is the price the market is asking for the pair. For instance, the pair GBP/USD may offer a bid price of 1.6101 and an ask price of 1.6104. If you bought the pair at 1.6104, you would immediately be able to sell the pair, at a loss, for 1.6101. Your net profit/loss would be negative 3 pips.

Why the Difference?

The difference between the bid and ask price is the illusive spread mentioned above. This spread is for the broker, for completing our trades. By selling to traders at one price, and buying from traders at another price, the broker is able to make money by completing our trades. A spread of 3 pips would create a profit of $30 for the broker, for each lot traded. This may seem to be horribly expensive, $30 a trade vs $6-7 for stocks, however the spread in forex is actually less than in the stock market.

Stock spreads vs. Forex Spreads

Spreads occur naturally in the stock market as well as in the foreign exchange market. The difference is that the forex market is not a centralized market like the stock markets. When you go to buy stock, there is a spread in the bid/ask price which is profit for the marketmaker, or the person who sits on an exchange and completes orders. In forex, the spread goes to the broker, who is a market maker in that they pair two orders to complete a trade.
All in all, spreads on the stock market are much, much higher than on the foreign exchange. The spread on the foreign exchange market adds up to roughly .03% of a trade. In the stock market, the spread is often 20 times greater, or about .6% of the cost of the trade PLUS the commission to complete the trade. All in all, the costs of trading the foreign exchange market are much cheaper than the stock market.

How Money is Made With Forex

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So, you know how the forex market works, now its time to find out how investors make money with forex. The premise of the foreign exchange market is simple, to exchange one currency for another currency which you believe will go up in value. The basics are much like the stock market, so anyone with any financial experience should pick up the foreign exchange market rather quickly.

Making Money With Forex

You make money in the foreign exchange market when one currency rises in value against another. For this portion of the tutorial, we’ll use the pair GBP/USD as our example.
We’ll start with 1 lot, or 100,000 units of GBP/USD. We think the Pound will strengthen against the US Dollar, so we buy one lot at 50:1 leverage and a price of 1.60. This means that we are buying $160,000 of the Pound, and staking $3200 and “borrowing” the other $156,200 through leverage. In the backend, our forex broker is moving $160,000 from a US bank account to a Pound denominated account. We’ve essentially sold, or traded, $160,000 for 100,000 pounds.

Cashing In

Four hours have passed and the GBP has strengthened against the USD by 50 pips. The forex broker’s quote is now 1.6050 and our 100,000 pounds are now worth $160,500, giving us a total profit of $500 on a $3200 investment. That’s not a bad return at all, it’s a gain of nearly 15% in just a few hours. Granted, we have used 50:1 leverage, but even then, results like these are more than typical!

Is Making Money in Forex Really That Easy?

Actually, it is. Making money on the foreign exchange market is as easy as knowing in which direction a currency pair is likely to travel. See, the difficulty is not in making money itself, but in knowing how to make money. In the following chapters we’ll reveal how to know in which direction a currency pair will go, but we still have a lot more to learn about the foreign exchange market itself.

Forex Market Trading Times

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The foreign exchange market is the only market in the world that is open 24/7. Investors are able to place trades every single day of the week, however, most pairs will move very little on the weekends as very few investors stick around to trade.

When Various Markets Open

When one market closes, another one opens, allowing traders to trade the market 24/7. Below is a list of the various open and closing times for the Tokyo, London, and New York forex markets.

The Best Times to Trade Forex

The best times to trade the foreign exchange market is when the most traders are trading. As such, investors should look to trade when more than one major market is open. As you can see in the chart above, the Tokyo and London markets overlap for 1 hour each day, and the London and New York markets overlap for 4 hours each day. This is when the most currency is traded, as more than one location is actively buying and selling different currency pairs.

Different Times, Different Currencies

Though anyone can trade any currency regardless of their country of origin, some currencies are more often traded during certain periods of the day. During the London trading session, the US Dollar (USD), the Great British Pound (GBP), and the Euro (EUR) are the most actively traded currencies. During the Tokyo session, the Japanese Yen (JPY) grows in volume. If your broker offers sliding spreads, those that change depending on volume, your best bet is to place trades during these market times in order to pay the lowest price in spreads and maintain the highest amount of market movements.

The Basics of The Forex Market

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The foreign-exchange market, or forex, is the largest market in the world by volume. That is, more money exchanges hands on the foreign exchange than in any market in the world. Some $1.5 Trillion is exchanged daily, compared to $25 billion on the New York Stock Exchange. Across the world, the daily volume of stock exchanges is till just one third of the volume of the foreign exchange market! It’s easy to see why the foreign exchange market has grown to be so big, brought about by greater interest in the market by retail investors like you and I.

So What is the Foreign Exchange?

The foreign exchange market is simply a market for money. Currency pairs, such as GBP/USD and USD/JPY are simply the value of one currency against another, in effect the exchange rate of the currencies. In the pairs above, the pairs represent the value of the Great British Pound against the Dollar (GBP/USD) and the US Dollar against the Japanese Yen (USD/JPY).

A Uncentralized Market

There is no central processing market for the foreign exchange. Instead, the market is made up of interbanks, which operate the foreign exchange market by processing orders to trade one currency for another. The market exists only among banks, it does not exist as a market itself. This makes the foreign-exchange market a over-the-counter (OTC) marketplace.
Until the internet opened up online trading for people like you and I, the foreign exchange market was dominated by the banks and other larger players. Small investors could not easily trade the forex market, and could not access leverage and other tools which make it so profitable. In fact, in order to trade the foreign exchange market, you would have to have as much as $10 to $50 million dollars. Today, many brokers allow investors to open up an account for as little as $500, and some even $1!

Tools of the Trade

Today’s investors need little more than a high speed internet connection, a computer and a willingness to learn the foreign exchange market. In the next many pages, we’ll explain everything you need to know about trading the market. From opening an account, to making your first trade, we’ll cover it all at ForexOnlineLearning.com.

Forex Education

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Blog

FOREXYARD's blog with articles from our analysts

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A brief yet comprehensive overview of what is forex

Glossary

A complete glossary of forex terms and jargon

Forex Technical Analysis

Look into the world of forex through the technical analysis perspective

Forex and Equities

What's the difference between stocks and forex?

Software Download

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Books about Advanced Forex Trading

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Here you will find the Forex e-books that contain more advanced information than the average popular book about financial trading. In some cases, understanding these books is impossible without a lot of experience in Forex and sometimes the extended knowledge of mathematics.
Almost all Forex e-books are in .pdf format. You'll need Adobe Acrobat Reader to open these e-books. Some of the e-books (those that are in parts) are zipped.
If you are the copyright owner of any of these e-books and don't want me to share them, please, contact me and I will gladly remove them.
A New Interpretation of Information Rate — by J. L. Kelly Jr.
CCI Manual — by James L. O'Connell.
Nicktrader and Jeff Explaining Reverse and Regular Divers — from Woodies CCI Club Discussion From January 15,16 2004.
NickTrader on No Price CCI Divergence Trading — by Nicktrader.
Are Supply and Demand Driving Stock Prices? — by Carl Hopman.
The Sharpe Ratio — by William F. Sharpe.
The Interaction Between the Frequency of Market Quotes, Spread and Volatility in Forex — by Antonis A. Demos and Charles A. E. Goodhart, a scientific article from the Applied Economics.
Trend Determination — by John Hayden, a quick, accurate and effective methodology for trend determination on the financial markets.
Trend vs. No Trend — by Brian Dolan an article from TRADERS' Magazine July 2005 issue, which deals with the trend/no trend paradox encountered by many traders who think that "the trend is your friend".
A Six-Part Study Guide to Market Profile — by CBOT professionals — it describes the concept of the market profile in the smallest details.
How George Soros Knows What He Knows — by Flavia Cymbalista — the study of George Soros' market reflexivity.
Core Point and Figure Chart Patterns — by BlueChipOptions.com — a set of point-and-figure chart patterns and explanations of their application.
Coder's Guru Full Course — by Coder's Guru — a full course on MQL development (programming for MetaTrader 4) that will help you develop your own custom indicators, trading scripts and automated expert advisors.

Forex Strategies

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Forex trading can't be consistently profitable without adhering to some Forex strategy. It takes time and effort to build your own Forex trading strategy or to adapt an existing one to your trading needs and style. It's important to choose a strategy or system that is easy to follow with your daily trading schedule and that can be applied successfully with your account balance size. In this Forex strategy repository you'll find various strategies that are divided into three major categories:

Indicator Forex Strategies
Price Action Forex Strategies
Fundamental Forex Strategies

Indicator Forex Strategies are such trading strategies that are based on the standard Forex chart indicators and can be used by anyone who has an access to some charting software (e.g. MetaTrader platform). These Forex strategies are recommended to traders that prefer technical analysis indicators over everything else:
Moving Average Cross Strategy
Parabolic SAR Strategy
Stochastic Oscillator Strategy
MACD Divergence Forex Strategy
Combined Stochastic Oscillator/MA Strategy

Price Action Forex Strategies are the trading strategies that don't use any chart or fundamental indicators but instead are based purely on the price action. These strategies will fit both short-term and long-term traders that don't like the delay of the standard indicators and prefer to listen as the market is speaking. Various candlestick patterns, waves, tick-based strategies, grid and pending position systems — they all fall into this category:
Inside Bar Strategy
Simple Price Based Trading System
Martingale Trading System
Scalping Forex Strategy
Support and Resistance Strategy

Fundamental Forex Strategies are the based on purely fundamental factors that stand behind the bought and sold currencies. Various fundamental indicators, such as interest rates and macroeconomic statistics, affect the behavior of the Forex market. These strategies are quite popular and will benefit long-term traders that prefer fundamental data analysis over technical factors:
Important News Trading Strategy
Carry Trade Strategy
Wednesday AUD/JPY Strategy
Forex Gap Strategy

Books on Trading Strategies

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Forex strategy e-books that are listed here provide information on the specific trading strategies as well as the use of particular Forex trading instruments. Basic knowledge of Forex trading is required to correctly understand and use these strategies.
Almost all Forex e-books are in .pdf format. You'll need Adobe Acrobat Reader to open these e-books. Some of the e-books (those that are in parts) are zipped.
If you are the copyright owner of any of these e-books and don't want me to share them, please, contact me and I will gladly remove them.
1-2-3 System — a simple pattern trading system by Mark Crisp.
Bollinger Bandit Trading Strategy — a trading system based on Bollinger bands indicator by unknown author.
Value Area — from The Likos Letter.
The Dynamic Breakout II Strategy — by unknown author.
Ghost Trader Trading Strategy — by unknown author.
King Keltner Trading Strategy — by unknown author.
Scalp Trading Methods — by Kevin Ho.
LSS - An Introduction to the 3-Day Cycle Method — by George Angell.
Market Turns And Continuation Moves With The Tick Index — by Tim Ord.
The Money Manager Trading Strategy — by unknown author.
Picking Tops And Bottoms With The Tick Index — by Tim Ord.
The Super Combo Day Trading Strategy — by unknown author.
The Eleven Elliott Wave Patterns — by unknown author.
The Thermostat Trading Strategy — by unknown author.
Intraday trading with the TICK — by Christopher Terry.
Traders Trick Entry — by Traders Educators of Traders University.
Fibonacci Trader Journal — a journal covering different trading techniques based on Fibonacci indicators, by Robert Krausz. 12 issues.
Rapid Forex — a set of aggressive Forex trading strategies (Rapid Forex) by Robert Borowski and Stephen A. Pierce.
Microtrading the 1 Minute Chart — a small e-book aimed on Forex newbies to teach them the basics of M1 scalping.
BunnyGirl Forex Trading Strategy Rules and FAQ — set of rules for a BunnyGirl trading strategy based on WMA crossing.
The Daily Fozzy Method — by Michael Dunbar.
Forex Trader's Cheat Sheet — real Forex cheat sheet for position entry times/conditions by Quantum Research Management Group.
Offset Trading — a basic Forex news trading range breakout system by Dana Martin.
How to Trade Both Trend and Range Markets by Single Strategy? — by S.A. Ghafari.
A Practical Guide to Technical Indicators; Moving Averages — by S.A. Ghafari.
FX Wizard — essential Forex trading rules by Rob Walton.
FX Destroyer — a description of a rather simple Forex trading strategy, involving moving averages, parabolic SAR and ADX indicators, by Izu Franks.
A Practical Guide to Swing Trading — a simple and practical guide to the swing trading strategy, by Larry Swing.
Practical Fibonacci Methods for Forex Trading — practical guide to Fibonacci levels with the real trade examples of the Forex strategy based on these levels, by Ken Marshall and Rob Moubray.
Using The Heikin-Ashi Technique — a short but detailed guide to trading using Heikin-Ashi charting technique, by Dan Valcu.
The Day Trade Forex System — an indicator-based strategy with detailed description, chart examples and minor advertising, by Erol Bortucene and Cynthia Macy.
5/13/62 — a revised and updated EMA-based Forex trading strategy explained in the 3-grade language, by Rob Booker.
Not So Squeezy Trading Manual — a description for the rather interesting trading strategy that utilizes indicators package under the same name, by Akuma99.
KobasFX Strategy — a simple MA+MACD Forex trading strategy by Obaseki O. A.

Forex VPS Hosting

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VPS (Virtual Private Server) hosting allows the Forex traders to use the virtual environment on the hosting company's servers to run the MetaTrader expert advisors non-stop 24 hours a day, 7 days a week. The VPS is always on-line, it won't reboot during the trading week, it's not affected by the power outages and you don't need to worry about keeping your PC on permanently. If you want to run your expert advisors continuously without the unplanned interruptions then Forex VPS hosting for MetaTrader is what you really need. The purpose of the list presented below is to help traders in finding the best VPS hosting for MetaTrader 4 expert advisors.