Forex Trading

Forex Online Option Trading - Maximizing Profits and Minimizing Losses

2009-11-13T20:49:00.000-08:00

Forex Online Option Trading - Maximizing Profits and Minimizing Losses

The year 2007 was a year of great excitement and anticipation for many traders when Forex online option trading broke into the surface of foreign currency trading. While they are traded the exact same way as stock options, Forex options are presented with different symbols on the chart.

Prior to this, traders dealt in Forex market makers and Forex futures. With the foreign exchange market the complicated environment that it is, the degree of difficulty in trading market makers and futures remained double. Losses were unlimited in positions that moved against traders, and a majority of speculators on the foreign exchange market continued to lose a lot of money.

Forex online option trading opened the doors for Forex traders in a new way. Options presented an opportunity for them to minimize their losses and maximize their risk. The only amount placed in danger would be the cost of the option itself. With online brokers getting into Forex options, more and more traders started to segue into options trading to improve their prospects the Forex market.

By identifying the trends of currencies in the Forex market, traders involved in Forex online option trading bought options and held it for three months or more, and sold the options once the price trend of the currencies went up, bringing the option with them. With this sure method of maximizing profits, Forex options went through the roof and brought with it many successful traders who know a good method of trading when they see one.

Timothy Stevens is a Forex Options Trader who owns http://www.NonDirectionTrading.com - He has helped hundreds of people on Trading Forex with Options.

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Forex Market vs the Stock market

2009-11-13T20:48:00.000-08:00

Forex Market vs the Stock market

The foreign exchange market
has advantages over the stock market. The Forex market is fairly new to the average person but it is no secret it is the biggest financial market in the world.

Like I said before the Foreign Exchange market is the biggest financial market in the world, three times bigger than the Stock market. The Foreign exchange market handles about three trillion dollars daily; that is why trades are done instantly, with no waiting period. On the contrary the Stock market has a waiting period over trades.

Another advantage the Forex market has over the Stock Market is time. The Foreign Exchange market is open 24 hours from Sunday night until Friday night. The Stock market opens daily in the morning and closes daily in the evening. The Forex Market being open continuously means more trades can be made at any time during the day or during the night; it is particularly good for those individuals that work during the day and only have the time to execute trades in the evening.

Trading in the Forex market also means trading with no more than about 12 currencies which are the most popular in the Currency market. The stock market on the other hand has a myriad of options on stocks which means more time has to be spent on research and research. The Stock market having only about a dozen currencies to choose from means one can concentrate on a particular currency instead of having to research for too many in the stock market.

The Foreign Exchange Market clearly has some advantages over the Stock market. It is true that the stock market seems to be more stable and not as volatile as the Forex market so fortunes can be made or can be lost within seconds if one does not take the necessary training to make one is ready to start trading with currencies.

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Foreign Exchange Trading System - 3 Tips Every Trader

2009-11-13T20:43:00.001-08:00

Foreign Exchange Trading System - 3 Tips Every Trader

Did you know every day in the Forex currency exchange
, that $1.8 trillion USD will exchange hands? This numbers so huge I could barely read my head around it the first time I heard it.

What if, by using three small trading tips we could increase our chances of getting our hands on even the smallest, miniscule percentage of that $1.8 trillion? I think most people could live with that, and even consider that a lavish lifestyle.

1. Learn to play stop and limit orders effectively: placing the fact of stop-orders is beneficial to a trader because it limits losses and it takes advantage of the potential for an upside breakout.

But placing limit orders it allows traders create new positions or get out of a current position at the selected limit or better price. With a limit sell order, a currency trader can place a limit sell order at above the current market price to make profits.

With a limit by order, a currency trader can place a limit by order at below the current market price, in order to buy below the current market norm.

2. Learn to use leverage correctly: what makes the foreign exchange market different than other stock markets is the ability to use leverage. Leverage in the Forex market, is the ability to control more currency pairs than the trader has deposited in to his or her trading account.

For example, if an investor wanted to control $10,000 USD/JPY, the investor would only have to have the margin requirement of the total transaction value. For instance if the margin requirement is 1% of the transaction value than the trader is expected to have $100 in his or her account.

This can be advantageous to the investor because they can control more investment than what is in his or her actual account. By using leverage correctly that investor has the potential to increase their return on investment (ROI).

3. Control the frequency of your trades: a real killer to the newbie currency exchange investor is the number of risky trades. A lot of beginner traders become excited and impatient and make way too many low probability trades.

Forex trading is about evaluating probabilities in the rise and fall of currencies. Therefore, by limiting the frequency of your trades choosing good if quality trades you will reduce your failing trades.

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FXOpen introduces incremental ECN lot trading

2009-11-13T20:39:00.000-08:00

FXOpen introduces incremental ECN lot trading

FXOpen is one of the companies that are most responsible for Metaquotes’ (the company behind Metatrader) success simply because it introduces features that Metatrader should have but it doesn’t. Alpari is another of these companies and occasionally serves as Metaquotes’ beta-site.

FXOpen recently introduced the first ever MT4 ECN platform and also added PAMM accounts making money managers’ life much easier.

Today FXOpen announced (http://forum.fxopen.com/showthread.php?t=62155) that it completed the development and testing of another very important feature – incremental lot trading. With the exception of MB Trading small time traders could not have traded ECN style due to the very large minimal order requirements.

If opening an account with an ECN broker like Dukascopy requires a minimal deposit of $10,000 and a minimal trade size of 1 lot, with FXOpen you can start trading with 0.1 lots. For now, FXOpen’s commissions are about 30% lower than MB Trading’s.

FXOpen’s solution doesn’t mean that anyone can display any size of order inside the spread – this would obviously worsen the ECN feed with its liquidity providers. What it means is that orders less than 1.00 lot will be aggregated and processed via STP and will be filled when the market moves. These small orders have a slightly higher chance of not being filled than the large orders but it’s a small price to pay for the ability to trade ECN with as low as 0.1 lot (10,000 order size).

The minimal deposit and trade size limitations were one of the reasons why small retail traders haven’t jumped on the ECN bandwagon yet. With it being lifted it should become much easier. While it obviously doesn’t appeal to large traders, who never had problems trading at least 1 lot any way, but it does appeal to people who would like to try ECN with small amounts to see how it works and then make larger investment decisions based on their experience. It also makes the market more accessible to Martingale and Grid style traders who place large number of small sized orders in the market.

Traders can give this feature a test (I will appreciate any feedback) by using the demo or live environments which FXOpen claims to be identical.

It remains to be seen how the market will accept this new feature and FXOpen’s test would be the ability to successfully place as many orders as possible.

All in all, I think it’s an important move in the right direction for all brokers as innovation and transparency are one of the key factors driving growth in this market.

It is also interesting to see how non-US, non-NFA, brokers are giving the US industry a decent fight. With 4% of the clients already having left the US looking for a better option, some decent offshore brokers are destined to profit as they can offer more trading tools such as hedging and they also don’t have a burdensome and time consuming registration processes.

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Forex Training Materials at Online Forex Trading

2009-08-21T10:47:00.001-07:00

Forex Training Materials at Online Forex Trading

Forex Online Learning is not the prettiest website -- in fact, the user interface can be downright ugly at times. However, the Forex training materials are easy to understand, and the training revolves around the disply of images, charts, and situations that you will actually run into while trading with "real money". Reading the charts at Forex Online Learning will get you used to the actual materials used at most online Forex trading sites, preparing you for the real game even better than video display websites. The Forex glossary here is equal in scope to the glossaries at other sites, but the site's combination of graphic material, text, and video will give you the option of learning the way you want to.

Though there are plenty of good things to say about this free Forex training site, there are some reasons to be wary. First of all, there are tons of popups offering everything from subscriptions to the Wall Street Journal to "free credit checks" and other spam. Also, I'd be wary of any financial training site that just happened to also offer "cash advances" to their customers. Though you can train for free with Forex Online Learning, and the information there is accurate, check the site out first and be sure you're comfortable with all the spamming and popup ads.

Forex trading training is more than just a good idea. If you want to have any chance of avoiding the loss of your capital investment, you should participate in some kind of free online Forex trading. Look for a site that offers an interface you like, a teaching system you're comfortable with, and a solid reputation and membership.

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Trade Forex Online: Factors to Consider

2009-08-20T10:26:00.001-07:00

Trade Forex Online: Factors to Consider

The value of a country's currency is influenced by a number of factors: The economics of the country, its trade deficit, political and social environment.If the current government's deficit increases, its currency's value will fall. As the government decreases its deficit, the currency can begin to recover value and the exchange rate will become more favorable. The same relationship holds true with a country's trade deficit. If the country imports more goods and services than it exports it will have a negative influence on the currency.Inflation lessens the ability of a unit of currency to buy less and less, so the currency loses value. If the inflation becomes rampant the currency is valued less because it's also viewed as unstable. As the rate of inflation begins to decline the currency begins to increase in value.Politics and social changes can play havoc with the currency exchange rates. Changes in the regime that are viewed negatively can lower the value of the country's currency in the short term and continue into the long term. If the present government makes decisions that are looked at negatively it can decrease the currency value as well. The opposite can happen. Current government officials can make policy changes that are viewed positively by the rest of the world and that can increase the value of the currency.For the United States, interest rates and the price of oil can have a major impact on the value of the US dollar.Interest rates effect how much it's going to cost to borrow money and how much can be earned on investments. Historically if the US raises its interest rates it attracts foreign investors. Those investors have to sell their own currency in order to buy U.S. dollars to purchase treasury bonds. If the interest begins to drop, or the perception is that the rates won't rise any more, investors may purchase Euros as an alternative investment which lowers the value of the US dollar.The United States is dependent on foreign oil production. Many US industries are dependent on oil and an increase in the price of oil means an increase in their expenses and a drop in profits. In a similar way, a country's dependency on oil influences how the country's currency is valued and will be impacted by changes in oil prices. The US's dependency on oil makes the dollar more sensitive to oil prices than countries who aren't so dependent. As the price of oil increases the value of the dollar drops.

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Preventing Investment Mistakes

2009-08-20T10:25:00.000-07:00

Preventing Investment Mistakes

Most investment mistakes are caused by basic misunderstandings of the securities markets and by invalid performance expectations. The markets move in totally unpredictable cyclical patterns of varying duration and amplitude. Evaluating the performance of the two major classes of investment securities needs to be done separately because they are owned for differing purposes. Stock market equity investments are expected to produce realized capital gains; income-producing investments are expected to generate cash flow.Losing money on an investment may not be the result of an investment mistake, and not all mistakes result in monetary losses. But errors occur most frequently when judgment is unduly influenced by emotions such as fear and greed, hindsightful observations, and short-term market value comparisons with unrelated numbers. Your own misconceptions about how securities react to varying economic, political, and hysterical circumstances are your most vicious enemy.Master these ten risk-minimizers to improve your long-term investment performance:1. Develop an investment plan. Identify realistic goals that include considerations of time, risk-tolerance, and future income requirements--- think about where you are going before you start moving in the wrong direction. A well thought out plan will not need frequent adjustments. A well-managed plan will not be susceptible to the addition of trendy speculations.2. Learn to distinguish between asset allocation and diversification decisions. Asset allocation divides the portfolio between equity and income securities. Diversification is a strategy that limits the size of individual portfolio holdings in at least three different ways. Neither activity is a hedge, or a market timing devices. Neither can be done precisely with mutual funds, and both are handled most efficiently by using a cost basis approach like the Working Capital Model.3. Be patient with your plan. Although investing is always referred to as long- term, it is rarely dealt with as such by investors, the media, or financial advisors. Never change direction frequently, and always make gradual rather than drastic adjustments. Short-term market value movements must not be compared with un-portfolio related indices and averages. There is no index that compares with your portfolio, and calendar sub-divisions have no relationship whatever to market, interest rate, or economic cycles.4. Never fall in love with a security, particularly when the company was once your employer. It's alarming how often accounting and other professionals refuse to fix the resultant single-issue portfolios. Aside from the love issue, this becomes an unwilling-to-pay-the-taxes problem that often brings the unrealized gain to the Schedule D as a realized loss. No profit, in either class of securities, should ever go unrealized. A target profit must be established as part of your plan.5. Prevent "analysis paralysis" from short-circuiting your decision-making powers. An overdose of information will cause confusion, hindsight, and an inability to distinguish between research and sales materials--- quite often the same document. A somewhat narrow focus on information that supports a logical and well-documented investment strategy will be more productive in the long run. Avoid future predictors.6. Burn, delete, toss out the window any short cuts or gimmicks that are supposed to provide instant stock picking success with minimum effort. Don't allow your portfolio to become a hodgepodge of mutual funds, index ETFs, partnerships, pennies, hedges, shorts, strips, metals, grains, options, currencies, etc. Consumers' obsession with products underlines how Wall Street has made it impossible for financial professionals to survive without them. Remember: consumers buy products; investors select securities.7. Attend a workshop on interest rate expectation (IRE) sensitive securities and learn how to deal appropriately with changes in their market value--- in either direction. The income portion of your portfolio must be looked at separately from the growth portion. Bottom line market value changes must be expected and understood, not reacted to with either fear or greed. Fixed income does not mean fixed price. Few investors ever realize (in either sense) the full power of this portion of their portfolio.8. Ignore Mother Nature's evil twin daughters, speculation and pessimism. They'll con you into buying at market peaks and panicking when prices fall, ignoring the cyclical opportunities provided by Momma. Never buy at all time high prices or overload the portfolio with current story stocks. Buy good companies, little by little, at lower prices and avoid the typical investor's buy high, sell low frustration.9. Step away from calendar year, market value thinking. Most investment errors involve unrealistic time horizon, and/or "apples to oranges" performance comparisons. The get rich slowly path is a more reliable investment road that Wall Street has allowed to become overgrown, if not abandoned. Portfolio growth is rarely a straight-up arrow and short-term comparisons with unrelated indices, averages or strategies simply produce detours that speed progress away from original portfolio goals.10. Avoid the cheap, the easy, the confusing, the most popular, the future knowing, and the one-size-fits-all. There are no freebies or sure things on Wall Street, and the further you stray from conventional stocks and bonds, the more risk you are adding to your portfolio. When cheap is an investor's primary concern, what he gets will generally be worth the price.Compounding the problems that investors face managing their investment portfolios is the sensationalism that the media brings to the process. Step away from calendar year, market value thinking. Investing is a personal project where individual/family goals and objectives must dictate portfolio structure, management strategy, and performance evaluation techniques.Do most individual investors have difficulty in an environment that encourages instant gratification, supports all forms of speculation, and gets off on shortsighted reports, reactions, and achievements? Yup.

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JPY

2009-07-31T10:22:00.000-07:00

JPY

Japanese Yen (JPY)

Several small European states (The Vatican, Monaco, and San Marino), although not EU members, have adopted the euro due to currency unions with member states. Andorra, Montenegro, and Ko Japanese Yen (JPY) . The yen or en is the currency of Japan. It is also widely used as a reserve currency after the United States dollar, the euro and the pound sterling. The ISO 4217 codes for the yen are JPY and 392. The Latinized symbol is ¥ while in Japanese it is also written with the kanji .

The yen was introduced by the Meiji government in 1870 as a system resembling those in Europe. The yen replaced the complex monetary system of the Edo period, based The New Currency Act of 1871 stipulated the adoption of the decimal accounting system of yen, sen, and rin, with the coins being round and cast as in the West.

While not a usage specific to currency, large quantities of yen are often counted in multiples of 10,000 in the same way as values in the United States are often quoted or rounded off to hundreds or thousands. The yen was legally defined as 0.78 troy ounces (24.26 g) of pure silver, or 1.5 grams of pure gold. The same amount of silver is worth about 1181 modern yen while the same amount of gold is worth about 3572 yen. The Act also moved Japan onto the gold standard. (The sen and the rin were eventually taken out of circulation at the end of 1953.)

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U.S. dollar regained some ground

2009-07-31T10:19:00.000-07:00

U.S. dollar regained some ground

The U.S. dollar regained some ground versus major rivals in otherwise range-bound action Wednesday, boosted by safe-haven flows as U.S. equities faltered.

"The market is vexed with uncertainty and uncertainty is one of the main ingredients of a range-bound market," said Jessica Hoversen, a Chicago-based currency strategist at MF Global Research, in a strategy note.

"Today's trade continues to focus on earnings and the economics calendar," she said.

The dollar index (DXY), which tracks the greenback against a trade-weighted basket of six major currencies, rose to 79.141, up from 78.863 in North American action late Tuesday. The index slipped to a new 2009 low below 78.40 earlier Tuesday.

One euro bought $1.4103, down from $1.4160 late Tuesday. The British pound bought $1.6366, down from $1.6433.

The dollar rebounded from earlier losses Tuesday as U.S. stocks lost ground. Asian shares saw a mixed finish early Wednesday. European shares were higher, while U.S. stock index futures pointed to further weakness for Wall Street.

U.S. June durable goods orders data are scheduled for release at 8:30 a.m. Eastern, and are expected to post a decline after a 1.8% rise in May. The Federal Reserve's "beige book," a compilation of anecdotal economic observations from regional Fed banks, will be released at 2 p.m.

The European Central Bank's quarterly lending survey showed banks continued to tighten credit conditions in the second quarter, although at a milder rate than in previous quarters.

Meanwhile, consumer price inflation data from German regions indicate the euro-zone's largest economy likely saw negative inflation in July.

"While a rebound in inflation is expected towards the end of the year, for now it seems likely that the ECB (European Central Bank) will maintain its policy of generous liquidity provision," wrote Jane Foley, head of market research at Forex.com.

Lending data from the Bank of England showed lending to the U.K. household sector and non-financial corporations continued to slow in June.

June mortgage approvals continued to rise, however, to total 47,600, up from 44,200 in May.

The U.S. dollar bought 95.03 yen, up from 94.51 yen in late North American trading on Tuesday and erasing a small loss seen earlier Wednesday.

"Improving risk appetite should tend to foster [U.S. dollar] drops versus European and commodity currencies and broad [Japanese yen] declines on Japanese capital outflows," said Tomoko Fujii, a rates and currency strategist at Bank of America Securities-Merrill Lynch Japan.

"However, given sharp [Japanese yen] gains in the risk asset correction phase in the first half of July as well as global investors' continued reductions of the net underweighting of Japanese equities and a bottoming of Japan's external surplus, we now expect a more moderate downward path" for the yen, she said in emailed comments.

The bank now expects the dollar to rise to 100 yen at the end of the third quarter of 2009, compared with a previous estimate of 105 yen. It forecasts the greenback to buy 105 yen at the end of the fourth quarter, down from a previous forecast of 110 yen, and 110 yen at the end of the first quarter of 2010, down from 112 yen.

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USD/CAD Spotlight: Indicator of the Day

2009-07-20T10:21:00.000-07:00

USD/CAD Spotlight: Indicator of the Day

Usd/Cad: The recent break back above the 50-Day SMA for the first time in several weeks is viewed as a bullish sign and could potentially open the door for more significant upside over the medium-term. As such, we look for any pullbacks inter-day to now be well supported on a close basis by the SMA which currently resides by 1.1400. We do not see any setbacks below 1.1400 as sustainable, and would recommend looking for opportunities to buy any dips below the 50-Day SMA on Tuesday. Ultimately, only a close below the 50-Day SMA would give reason for concern.

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SigmaForex Explains The Concept Of Fair Value

2009-07-20T10:18:00.000-07:00

SigmaForex Explains The Concept Of Fair Value

SigmaForex devotes serious effort to serve the emerging retail segment of the Forex community. Its commitment to providing an excellent customer service, innovative currency trading technology, and dealing practices, establishes SigmaForex as a notable force that traders look forward to for an advanced Forex charting, Forex news, and fund safety.

If you want to understand forex markets and trade them for bigger profits, then you need to understand the concept of fair value. Most traders don’t - but if you do, you can turn this to your advantage and make huge long term profits.

So what moves forex markets? Here is a simple equation:

Forex Fundamentals + Investor Perception of them = Price.

It’s a fact that the fundamentals are unimportant by themselves - it’s how investors perceive them, that is vital to understanding price. We all have the same facts to look at but we all draw our own conclusions about them, colored by the emotions of greed and fear.

Over the longer term prices tend to respond to the long term fundamentals - but in the short term traders always push prices to far up or down with there emotions and we see prices spike away from fair value.

You can see them easily on a forex chart and these forex price spikes never last and prices eventually come back to more realistic levels. This is simply the way any free market works not just forex markets but how do you take advantage of fair value and how do you judge it?

One of the simplest ways to judge fair value is to use a longer term moving average.

In big bull trends the 40 ma will normally act as great support for the longer term trend and dips back to the 18 day ma, are normally a good area to load in positions in the direction of the prevailing trend.

Look at any trend and you will see how effective these averages are to buy or sell into, after a surge up or down.

When prices dip to these averages you don’t just buy into them, you wait for momentum to turn up in the direction you wish to trade. Here you should use some momentum indicators to time your trading signal.

There are a lot of them and we have written frequently about them - but the stochastic and the RSI, are good ones to use so check them out.

The trend is your friend, as the old saying goes and a trend in motion is more likely to continue than reverse.

This is why this strategy works. Check a forex chart and you will see how often buying back to key moving averages supported by momentum works. Forex trends last for months or years and by buying back to these areas of fair value, you can make a lot of money.

A forex trading strategy that buys back to fair value can make you a lot of money.

This is a simple forex trading strategy and it’s highly effective, when a market is trending and you want to get in on the direction of the major trend at the best price in terms of risk to reward.

In part 2 of this article series, we will look at how to take advantage of price spikes to initiate counter trend trades which, can offer spectacular profits with low risk.

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Newbie As A Forex Trader

2009-07-20T10:17:00.000-07:00

Newbie As A Forex Trader

Day by day, week by week, month by month and year by year there will always be a new comer for forex trading. Lately the forex trading market are full with newbie traders. All of them notice that they can earn a handsome earning by involving into forex trading online. I have ask some senior forex trader that have being involved with forex market so many years. He asked me to learn and understand about forex market first. Forex market is so big and it is so difficult to predict the forex market. The forex market is so active and we must always notice how the forex movement. I want to advise some newbies same as me, we should read more books about the forex market or attending classes and personal coaching with the senior forex trader that really knows about forex market and currency. Otherwise, we will suffer on forex trading online.

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Fading False Forex Breakouts

2009-07-20T10:14:00.000-07:00

Fading False Forex Breakouts

In this article I will share a simple strategy that many professional traders use with a great deal of success. There are a lot of variations of this strategy that, combined with proper risk management, can give a particular trading system an edge.

Simple Trading Strategy

I run an fairly large introducing brokerage company. By observing the successes and failures of my clients and interacting with them, I am able to pick up on what successful traders use to make money and the mistakes that unsuccessful traders make to lose money. This is all backed up by hard numbers, since I am able to view the performance of my clients.

After talking to a lot of my forex clients, it became evident to me that they use pivot points quite a bit in their trading. Two particular areas that traders like to focus on is the previous day’s high and low.

A crowd usually has the psychology that if the previous day’s high is crossed up the general price move is up and they are more likely to buy than sell. The opposite is true for when the previous day’s low is crossed down.

To add to that many traders use the previous day’s highs and lows as their stops. So if the price crosses below the low traders will be stopped out and the price will drop. The opposite is true for the previous day’s high.

Taking this information into consideration, I feel that I will have an edge in the market by going long if the previous day’s high is crossed up and going short if the previous day’s low is crossed down. I feel that the price move will continue to go in the direction of the cross for at least a little bit.

Many traders however play this trade completely the opposite way. They look at these price points as support and resistance and they dollar cost down into their trades. In other words if the price crosses below the low of the previous day they will go long and add to their positions until their average entry price is lowered. It is for this reason that I give these trades a little wiggle room by placing my stops around 30 pips away.

By using this edge and back-testing it I have developed some simple rules.

Basic Rules for trading EUR/USD:

Price Action Strategy

To us a trading day is from 5pm EST to 5pm EST in forex.

1. Enter long on a stop order if the previous day’s high was crossed.

2. Exit on a limit if the trade gains approximately 10 pips. Exit on stop if the trade looses approximately 30 pips.

3. Enter short on a stop order if the previous day’s low is crossed down.

4. Cover your short position if the trade gains approximately10 pips using a limit order. Exit on a stop if the trade goes approximately 30 pips against you.

5. Only take the first high/low cross of the day.

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Forex Made Easy for Everyone

2009-07-06T09:19:00.000-07:00

Forex Made Easy for Everyone

Forex made easy is as simple as you would want it to be. The foreign exchange market is a worldwide market and according to some estimates is almost as big as thirty times the turnover of the US Equity markets. That is some figure to chew on. Forex is the commonly used term for foreign exchange. As a person who wants to invest in the forex market, one should understand the basics of how this currency market operates. Forex can be made easier for beginners to understand it and here's how.

Foreign exchange is the buying and the selling of foreign exchange in pairs of currencies. For example you buy US dollars and sell UK Sterling pounds or you sell German Marks and buy Japanese Yen. Why are currencies bought or sold? The answer is simple; Governments and Companies need foreign exchange for their purchase and payments for various commodities and services. This trade constitutes about 5% of all currency transactions, however the other 95% currency transactions are done for speculation and trade. In fact many companies will buy foreign currency when it is being traded at a lower rate to protect their financial investments. Another thing about foreign exchange market is that the rates are varying continuously and on daily basis. Therefore investors and financial managers track the forex rates and the forex market it on a daily basis.

Those who are involved in the forex trade know that almost 85% of the trading is done in only US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar. This is because they are the most liquid of foreign currencies (can be easily bought and sold. In fact the US Dollar is most recognizable foreign currency even in countries like Afghanistan, Iraq, Vietnam etc).

Being a truly 24/7 market, the currency trading markets opens in the financial centers of Sydney, Tokyo, London and New York in that sequence. Investors and speculators alike respond to the ever-changing situations and can buy and sell simultaneously the currencies. In fact many operate in two or more currency market using arbitrage to gain profits (buying in one market and selling in another market or vice versa to take advantage of the prices and book profits).

While dealing in forex, one should have a margin account. Quite simply put if you have US$ 1,000 and have a forex margin account which leverages 100:1 then you can buy US$ 100,000 since you only need 1% of the US$100,000 or US$1,000. Therefore it means that with margin account you have US$ 100,000 worth of real purchasing power in your hand.

Since the foreign currency market is fluctuating on a continuous basis, one should be able to understand the factors that affect this currency market. This is done through Technical Analysis and Fundamental Analysis. These two tools of trade are used in a variety of other markets such as equity markets, stock markets, mutual funds markets etc. Technical Analysis refers to reading, summarizing and analyzing data based on the data that is generated by the market.

While fundamental Analysis refers to the factors, which influence the market economy, and in turn how it would affect the currency trading. Of course there are other economic and non economic factors which can suddenly affect the trading of the forex markets such as the 9/11 tragedy etc. One needs to have a shrewd acumen and a few number crunching abilities to strike gold in the forex market.

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Three Concepts All Forex Traders Must Know

2009-07-03T08:32:00.000-07:00

Three Concepts All Forex Traders Must Know

There are three important concepts inForex trading that you must understand in order to find your way in the currency markets. These concepts are “Pips”, “Volume”, and “Buying” and “Selling Short”. They may look more like four concepts but buying and selling are like the two faces of the same coin so we can consider them as a single concept.

Lets first talk about what Pips are. It is common when reading literature about forex trading to find statements about how many pips a day you can make using some trading system or the other. In short, currency pairs prices will go out to 4 significant digits. For example; if one currency pair is trading for 1.3458 then an increase to 1.3459 would be a “one-pip” increase in the price of this particular currency. This is an increase of one hundredth of a percent of the value of the currency pair you are trading. And depending if you have a regular or mini account, each pip will have a value of $10 or $1.

Now lets talk about what Volume is; the Trading Volume is a quantity that tells forex traders how much money is being traded at one particular moment in the market. The currency markets are known by their high trading volume during most of the time markets are open. Usually there are spikes in the volume during some type of news breaks and during the time New York stock exchange is open. The volume of transactions in Forex, even in a slow day, will always be much higher than the volume traded in other large exchanges at their full capacity.

Perhaps the most obvious of the concepts in forex is that of Buying. It refers to the acquisition of a particular currency pair to open a trade. Selling short refers to the selling of a particular currency to open a trade. When you Buy, you do this because you are expecting the price of the currency pair to increase with time, i.e., you buy cheap to sell high. In the case of Selling short, it’s a bit more complicated, but just at the beginning. Here the way to make money is to initially sell a currency pair that you think will lose value in a given period of time and then, once it happened, you will buy it back at the new price but now you can sell it at the previous greater price the currency had when you opened the trade, so you earn the difference in prices. It may seem kind of tricky for new traders to grab this concept of earning by Selling but once you are in front of your trading station it will look much simpler.

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How and Why Investors Short Bonds

2009-07-03T08:30:00.003-07:00

How and Why Investors Short Bonds

We have advocated a long term, diversified approach as the investing methodology that will produce the best results for the majority of your portfolio for a long time. However, mixing some shorter term positions, options strategies and even a few speculative bets into your portfolio can often have the affect of improving your overall returns and reducing portfolio volatility. The current market environment is the perfect example of why investors need to be thinking about investing strategies beyond a generic buy-and-hold methodology.

The economy in late 2008 and early 2009 has been a tug-of-war between the threats and serious risks of deflation and the disadvantages of high inflation. The extraordinary deficits planned by the U.S. Government and the massive intervention in the U.S. treasuries market by the Fed to fight deflation has shifted investor expectations more towards high inflation over the next several quarters.
Savvy traders observing this shift towards inflation expectations are likely getting their inflation-based investing plans ready to deploy. When traders talk about opportunities in a market like that they will often mention short bonds or treasuries positions. A short bonds position has the potential to produce big profits during high inflationary periods but how does a individual trader do any of that within their regular stock account?

Shorting an actual bond is complicated and probably outside the scope or interest of most individual traders. However, shorting a bond ETF could accomplish the same thing with a lot less hassle. As bond prices drop (due to inflation) bond ETFs will also decline in value. There are many bond ETFs to choose from but the iShares 7-10 year treasury bond fund (IEF) is an ideal instrument for this short strategy.
However, what if you are not even interested in the complexity of shorting a stock? There are even easier ways to take advantage of a decline in bond prices by buying a short bond ETF. That means that the ETF itself is investing in short bonds and by buying the ETF you will profit when bond prices drop. There is a leveraged ETF that has become very popular as a way to execute this strategy called the ProShares Ultra-short 7-10 year treasury ETF (PST).
There are some inherent risks in shorting bonds that you should be aware of.
1. Bonds are mean-reverting, which means that they don't "trend" for long periods of time. This makes your holding period fairly short term.
2. Leveraged positions using margin and leveraged ETFs include higher costs.
3. Leveraged funds will underperform in the long run because they lose some of the benefits of compounding.

You will notice that the disadvantages of this strategy mostly concern the fact that a short bond strategy is a short-term strategy. Short term trading costs more and is more difficult than longer term investing. However, when faced with an extraordinary market and an evolving economic environment, looking outside the long-term box for new opportunities can be quite attractive.

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Learn how to make consistent forex profits

2009-07-03T08:27:00.000-07:00

Learn how to make consistent forex profits

It was a bitter cold Friday morning and I was just about to place my 32nd trade of the week. I remember the trade and that particular morning very well, I had every reason to, because the previous 31 trades had all been losing trades. I remember thinking how on earth is this possible? How could someone take 31 losing trades even if they were trying?

With shaking hands and a sick feeling in my stomach, I picked up the telephone to call my broker. (yes we still had to use telephones in those days) I placed my order, and my 32nd trade was live in the market.

Ten minutes later my world caved in

Less than 10 minutes later I was stopped out and took another trading loss. That was it! I had wiped out yet another trading account, yet again I would have to explain to my wife where all the money had gone. It was devastating. I sat with head in hands in the depths of despair. Learning to trade properly had to be number one priority.

Six months later I was living in Spain on the Costa del sol, in a beautiful house with views out across the clear blue Mediterranean Ocean, paid for in cash! Today I live in spectacular New Zealand and spend a great deal of my time playing golf with my sons and fishing the world famous Mataura river. Its paradise all over again.

From failure to success in such a short time

What happened? How did I go from complete trading failure to living in Spain on the Costa del Sol (Coast of Sunshine) without a financial care in the world, in such a short time? How was it that 6 months ago I was a just another failing trader and now 6 months on I was sought out by the media to get my story of trading success. Here is a link to a major feature article in Futures and Options World Magazine that came out in 1999.

So.. In 1999 I had a trading methodology that predicted *Note. predicted trending days better than 8 times out of 10.
Just what did I discover about trading that turned me from trading failure into trading success, so fast?

I discovered something that was blatantly right under my nose

And its right under your nose, right now. Most can't see it because they are to busy looking at totally misleading candle or bar chart patterns, instead of learning to trade professionally. They are continually developing trading strategies that completely ignore what really drives the market, and they are listening to the blind leading the blind.

The biggest time and money wasting experience for many traders is that they get caught up, and buy into the false believe that there is a failsafe automatic computerized trading system out there.
This elusive and mystically trading solution is nonsense, pure nonsense, but it doesn't stop some traders wasting years of their lives, and a whole heap of money in search of it.

Just how do you make money trading forex?

The first thing is to stop spending money on forex trading nonsense, second you give up on the pipe dream that you are going to send someone (normally $97.00) for a newly discovered forex trading secret. Third you do not get suckered into the belief that say 'the more something cost the better it must be.

Many would be traders spend a few hundred on $97.00 secrets, find out they don't work and then create a completely irrational belief within themselves, that the latest offering costing several 1,000's just HAS to be good, as that is why it's so expensive. There is a whole heap more daft things that traders do, but hey lets leave that behind and get to the core of how to make money trading forex.

Ok so now we know exactly what not to do. If you have already done the above then kiss the money goodbye, its gone and its not coming back. Its time to move on, its time to turn this all around by learning what really moves the market and how you are going to profit from that knowledge.

The Route to Trading Success

The complete understanding of what really moves a market.
The ability to use that knowledge to make profitable trading decisions.
A set of reliable trading tools
Acceptance that its your responsibility.
A complete appraisal of just what your trading is for and who it is effecting.
Use the single force that drives every market in any direction.

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Forex Brokers -Quality of the Institution

2009-07-01T08:23:00.000-07:00

Forex Brokers -Quality of the Institution

Unlike equity brokers, forex brokers are usually attached to large banks or lending institutions because of the large amounts of capital that is required. Also, forex brokers should be registered with the Futures Commission Merchant (FCM) as well as regulated by the Commodity Futures Trading Commission (CFTC).

You will want to make sure that your forex broker is registered and backed by a reliable institution.

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Forex brokers --Low Spreads

2009-07-01T08:22:00.000-07:00

Forex brokers --Low Spreads

The spread, which is calculated in pips, is the difference between the price at which a currency can be bought and the price at which it can be sold at any specific point in time. Forex brokers don't charge a commission, so this difference is how they are going to make money.

When you are comparing brokers, you will find that the difference in spreads in Forex trading is as large as the difference in commissions in the stock arena. What this means is that lower spreads will save you money and therefore, look for forex brokers that offers low spreads.

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Rumors Pound Sterling

2009-06-26T08:15:00.000-07:00

Rumors Pound Sterling

The greenback jumped sharply higher against the sterling and euro on rumors circulating earlier in the session over uncertainty over the UK political outlook. The dollar relinquished some of its strength to trade near 1.4180 versus the euro and 1.6190 against the pound.

The key May jobs data is due out tomorrow at 8:30 AM and traders will closely analyze the data to gauge the extent of the deterioration in the labor market. The unemployment rate is seen edging up further to 9.2% from 8.9% a month earlier while the non-farm payrolls are expected to post another loss of 520k jobs from 539k loss lost in April.

If the unemployment report is sharply better than expected, the likely scenario to materialize would be a rally in the US equity bourses, prompting a return to riskier assets which would ultimately be detrimental to the dollar.

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Forex Money Managment

2009-06-07T09:10:00.001-07:00

Forex Money Managment

Forex Education Forex, which is the short form for Foreign Exchange, although just a term, is an entire topic by itself! Every ambitious investor believes in involving himself / herself in Forex trading. However, like every field that you like to venture into requires enough knowledge and education regarding the related topics, Forex education is also extremely essential so that your investment bears fruit without proving to be futile! However, like there are institutions which provide education on several subjects, are there educational institutions which deal exclusively with Forex education?? Because if this is field which requires prior knowledge, it is inevitable that you learn it! But the question then arising would be “HOW??” And the answer to this is right here on Trading Intl. Forex education to the highest level possible.

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Tokyo Stock Exchange

2009-06-03T09:22:00.000-07:00

Tokyo Stock Exchange

The Tokyo Stock Exchange, or TSE, located in Tokyo , Japan , is the second largest stock exchange market in the world by market value, second only to the New York Stock Exchange. As of 31 December 2007, the Tokyo Stock Exchange had 2,414 listed companies with a combined market capitalization of $4.3 trillion. The TSE is incorporated as a kabushiki kaisha with nine directors, four auditors and eight executive officers. Its headquarters are located at 2-1 Nihombashi Kabutocho, Chūō, and Tokyo , Japan . Its operating hours are from 9:00 to 11:00 am and from 12:30 to 3:00 pm. From April 24, 2006, the afternoon trading session started at its usual time of 12:30 p.m. Stocks listed on the TSE are separated into the First Section (for large companies), the Second Section (for mid-sized companies), and the "Mothers" section (for high-growth startup companies). As of March 2006, there are 1,721 First Section companies, 489 Second Section companies and 156 Mothers companies. The main indexes tracking the TSE are the Nikkei 225 index of companies selected by the Nihon Keizai Shimbun (Japan's largest business newspaper), the TOPIX index based on the share prices of First Section companies, and the J30 index of large industrial companies maintained by Japan's major broadsheet newspapers. 89 domestic and 19 foreign securities companies participate in TSE trading. Other TSE-related institutions include:

.The exchange's press club, called the Kabuto Club which meets on the third floor of the TSE building. Most Kabuto Club members are affiliated with the Nihon Keizai Shimbun, Kyodo News, Jiji Press, or business television broadcasters such as Bloomberg LP and CNBC. The Kabuto Club is generally busiest during April and May, when public companies release their annual accounts.

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Portuguese Stock Exchange

2009-06-03T09:19:00.000-07:00

Portuguese Stock Exchange

The BM&F Bovespa is a São Paulo-based stock exchange. It is the fourth largest stock exchange in the Americas in terms of market capitalization, behind NYSE, Nasdaq, and Toronto Stock exchange. It is also the thirteenth largest in the world in terms of market capitalization (see list of stock exchanges). On May 8, 2008 , the São Paulo Stock Exchange (Bovespa) and the Brazilian Mercantile and Futures Exchange (BM&F) merged, creating the new BM&F Bovespa. The BM&F Bovespa is linked to all Brazilian stock exchanges, including Rio de Janeiro 's Boverj (BVRJ), where only government bonds are traded. The benchmark indicator of Bovespa is the 50-stock Índice Bovespa. There were 450 companies traded at Bovespa as of April 30, 2008 . On May 20, 2008 the iBovespa index reached its 10 th consecutive record mark closing at 73,516 points, with a traded volume of USD 4.2 billion or BRL 7.4 billion.The exchange has a pre-market session from 09:45am to 10:00am, a normal trading session from 10:00am to 05:00pm and a post-market session from 05:30pm to 07:00pm on all days of the week except Saturdays, Sundays and holidays declared by the Exchange in advance.

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Korea Stock Exchange

2009-06-01T07:27:00.000-07:00

Korea Stock Exchange

Korea Exchange (KRX) was created through the integration of the three existing Korean spot & futures exchanges (Korea Stock Exchange, Korea Futures Exchange and KOSDAQ) under the Korea Stock & Futures Exchange Act. The securities and futures markets of former exchanges are now operated as the business divisions of the KRX: the Stock Market Division, KOSDAQ Market Division and Derivatives Market Division. As of 31 December 2007, the Korea Exchange had 1,757 listed companies with a combined market capitalization of $1.1 trillion. The exchange has normal trading sessions from 09:00am to 03:00pm on all days of the week except Saturdays, Sundays and holidays declared by the Exchange in advance. Stock Market Division (former Korea Stock Exchange)

Stocks

Bonds

Exchange Traded Funds (ETFs)

Real Estate Investment Trusts (REITs)

KOSDAQ Market Division (former KOSDAQ Stock Market, Inc.)

Stocks

Derivatives Market Division (former Korea Futures Exchange)

Index Instruments: KOSPI 200 Index Futures, KOSTAR Futures, KOSPI 200 Options

Single Stock Futures on 15 underlying stocks

Equity Options on 30 alternative underlying stocks

Interest Rate Instruments: 3-Years KTB Futures, 5-Years KTB Futures, 3-Years KTB Futures Options, MSB Futures

Foreign Exchange(FX) Instruments: USD/KRW Futures, JPY/KRW Futures, EUR/KRW Futures, USD/KRW Options

Commodity Instruments: Gold Futures, Lean Hog Futures.

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New York Stock Exchange

2009-05-31T07:30:00.000-07:00

New York Stock Exchange

New York Stock Exchange is an equity (stock) exchange located at 11 Wall Street in lower Manhattan , New York , USA ). It is the largest stock exchange in the world by dollar value of its listed companies' securities. As of October 2008, the combined capitalization of all domestic New York Stock Exchange listed companies was US$10.1 trillion. The NYSE is operated by NYSE Euronext, which was formed by the NYSE's 2007 merger with the fully-electronic stock exchange Euronext. The NYSE trading floor is located at 11 Wall Street and is composed of four rooms used for the facilitation of trading. A fifth trading room, located at 30 Broad Street , was closed in February 2007. The main building, located at 18 Broad Street, between the corners of Wall Street and Exchange Place, was designated a National Historic Landmark in 1978, as was the 11 Wall Street building. The origin of the NYSE can be traced to May 17, 1792, when the Buttonwood Agreement was signed by 24 stock brokers outside of 68 Wall Street in New York under a buttonwood tree on Wall Street. On March 8, 1817, the organization drafted a constitution and renamed itself the "New York Stock & Exchange Board". Anthony Stockholm was elected the Exchange's first president (for other presidents, see List of presidents of the New York Stock Exchange). The first central location of the Exchange was a room, rented in 1817 for $200 a month, located at 40 Wall Street . After that location was destroyed in the Great Fire of New York (1835), the Exchange moved to a temporary headquarters. In 1863, the New York Stock & Exchange Board changed to its current name, the New York Stock Exchange. In 1865, the Exchange moved to 10-12 Broad Street . The volume of stocks traded increased six fold in the years between 1896 and 1901, and a larger space was required to conduct business in the expanding marketplace. Eight New York City architects were invited to participate in a design competition for a new building; ultimately, the Exchange selected the neoclassic design submitted by architect George B. Post. Demolition of the Exchange building at 10 Broad Street , and adjacent buildings, started on May 10, 1901. The new building, located at 18 Broad Street , cost $4 million and opened on April 22, 1903. As the NYSE introduced its hybrid market, a greater proportion of trading came to be executed electronically, and due to the resulting reduction in demand for trading floor space, the NYSE decided to close the 30 Broad Street trading room in early 2006. As the adoption of electronic trading continued to reduce the number of traders and employees on the floor, in late 2007, the NYSE closed the rooms created by the 1969 and 1988 expansions. The Stock Exchange Luncheon Club was situated on the seventh floor from 1898 until its closure in 2006. In the mid-1960s, the NYSE Composite Index ( NYSE : NYA) was created, with a base value of 50 points equal to the 1965 yearly close, to reflect the value of all stocks trading at the exchange instead of just the 30 stocks included in the Dow Jones Industrial Average. To raise the profile of the composite index, in 2003 the NYSE set its new base value of 5,000 points equal to the 2002 yearly close.

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