Go Learn ForeX

ForeX 101 Classroom

2010-09-23T04:36:00.000-07:00

The class is now over .. may be will meet soon at class 202.

Here is a List of what we talk about in this class

Simple Moving Average (SMA)

2010-09-23T04:07:00.001-07:00

Simple Moving Average (SMA) is one of the easiest indicators to use as Technical Analysis for Forex trading. SMA indicates the average price (closing/opening) of a given time period, where each of the chosen periods carries the same weight for the average.

The maths behind SMA is simple. For example, let's say that you are developing an SMA chart for the USD/JPY closing price in a 5-day time frame. The first 5 days USD/JPY closing prices are 125.0, 124.0, 126.0, 123.0, 127.0 -- thus the first dots of your SMA graph will be 125.0 (average of the first 5 days USD/JPY closing price). Assume the USD/JPY closing price is 126.0 for day sixth, your second SMA point will be (124.0 + 126.0 + 123.0 + 127.0 + 126.0)/5= 125.2. The calculation goes on for the following dots and SMA chart is defined by joining these SMA dots.

SMA graph "moves" because for each calculation, we use the 'latest number of time periods' data and drop the oldest data.

Relative Strength Index (RSI) in Forex trading

2010-09-23T04:06:00.000-07:00

The Relative Strength Index (RSI) is one of the most popular Technical Indicators in oscillator charting methods. RSI is normally used to compare the currency strength and to predict currency price movements.

The RSI, developed by J. Wilder, contrasts the downtrend and uptrend prices over a period of time. The RSI gives more emphasis to the latest data and provides a better indication than what is provided by other oscillators. As the RSI is less sensitive to sharp price fluctuations, it helps to sift unwanted “noise” in the Forex market.
Mathematics calculations behind RSI charting:

RSI= 100 - 100/(1+RS) where RS = sum of positive closing prices divide by sum of negative closing prices. RSI helps traders to predict price movements and to identify market turning points. A rise in RSI will normally be followed by a rise in the currency price; and vise versa, a downtrend RSI indicates that the currency price is more likely dropping.

In addition to being a momentum indicator, Forex traders also use the RSI as a volume indicator. Because of the nature of the Forex market as an ”Over the Counter” market (OTC), real time volume reporting is not possible. The RSI has a scale from 0 to 100. Any reading that is below 30 denotes an oversold market condition while any reading above 70 denotes an overbought market condition.

The chart below indicates a RSI reading of below 30:

This chart shows an RSI reading of above 70 meaning that the currency pair is getting overbought:

Five Different Ways of Using the RSI:

1. To indicate overbought or oversold market conditions. These conditions are indicated by reading at 30 or 70.

2. Divergences – if the price of a currency reaches a new high and the RSI doesn’t show the same situation, this normally indicates that a price reversal is imminent.

3. Support & Resistance - The RSI can also be used to indicate the support and resistance levels of a currency trend.

4. To indicate chart formations more clearly. Chart patterns like “double tops” or “Head & Shoulder” can be seen more clearly with the RSI than on the price chart itself.

5. Failure Swings – if the RSI breaches its previous peak or low, this may mean that a price breach may be on the way.

Parabolic SAR in Forex trading

2010-09-23T04:03:00.000-07:00

Parabolic SAR is a technical analysis method to predict entry and exit points in Forex Market. It's widely used in Forex trading market because of its accuracy during trending period. Parabolic SAR is a time/price system. It was first introduced by J.Welles Wilder in his acclaimed book "New Concepts in Technical Trading Systems" (1978). SAR stands for 'stop and reverse' and the term 'parabolic' comes from the shape of the curve (resembling a parabola) created on the technical chart.

Trading Forex in MACD: Moving Average Convergence/Divergence

2010-09-23T04:01:00.000-07:00

MACD uses exponential moving averages (EMA), which are lagging indicators, to include some trend-following characteristics. These lagging indicators are turned into a momentum oscillator by subtracting the longer period of EMA from the shorter period of EMA. Translating the words into mathematics, this is what a MACD calculation looks like:

MACD = EMA [shorter period] - EMA[longer period]

The resulting plot forms a line that oscillates above and below zero (positive when EMA[shorter] > EMA[longer] and negative whenever EMA[shorter] < EMA[longer]), without any upper or lower limits. MACD is a centered oscillator and the guidelines for using centered oscillators apply. Besides the resulting plot, a standard signal line (or some call it trigger line) is added in the MACD graph for the indication. In maths form, this is how we get the signal line:
Signal = EMA [certain period] of MACD
Generally, a 12 day EMA is often userd as the EMA[shorter period]; 26 day EMA for the EMA[longer period]; and 9 day EMA of MACD is used as the signal line. These are the standard figures used by the creator of MACD, Gerald Appel, when the technical indicator first used in 1979. Another popular calculation periods in modern days is 7, 13, 5; where EMA[7] is used for the short period, EMA[13] is used for the long period, and 5 days for EMA of MACD (the signal line).
Again, translating words into a maths presentation, this is how a standard MACD calculation looks:

MACD = EMA [12] - EMA[26]
Signal = EMA [9] of MACD

Green line = MACD
Black line = Signal
Purple blocks = MACD - Signal

MACD Indications

Here's how traders take MACD as trading indicators. From the maths of MACD,

MACD = EMA [12] - EMA[26]
Signal = EMA [9] of MACD

A bullish signal (buy in signal) is triggered whenever

A positive MACD (12-day EMA is trading above the 26-day EMA, EMA[12] > EMA[26])
Moving average positive crossover (MACD is trading above the EMA[9] of MACD)
Center line positive crossover (MACD=0 and MACD is trading above the EMA[9] of MACD)

A bearish signal (sell off signal) is triggered whenever

A negative MACD (12-day EMA is trading below the 26-day EMA, EMA[12] < EMA[26])
Moving average negative crossover (MACD is trading below the EMA[9] of MACD)
Center line negative crossover (MACD=0 and MACD is trading below the EMA[9] of MACD)

MACD is more than just about market momentum, it also gives the signal in the trend indication.
If MACD is positive and rising, then the gap between the 12-day EMA and the 26-day EMA will be widening. This indicates that the rate-of-change of the faster moving average is higher than the rate-of-change for the slower moving average. Positive momentum is increasing and this would be considered bullish. If MACD is negative and declining further, then the negative gap between the faster moving average and the slower moving average will be expanding. Downward momentum is accelerating and this would be considered bearish.
Often in reality, the Forex exchange price may drop to new selloff low but the MACD does not hit the new low, this maybe the sign of end of bearish. Or vise versa, the Forex exchange price may hit new high but the MACD might not be hitting on the new high point, this often indicates the change of trend from bullish to bearish.

Usage of MACD divergence in Forex trading

The major usage (or benefit) of trading with MACD divergence is that the MACD chart has the ability to overshadow on trend change, which in turn trigger the sell off or buy in signal. Simply said, negative divergence indicates a change of bullish trend to bearish, while a positive divergence indicates a change of bearish trend to bullish. As MACD trading is taking a relative simple approach on the market, MACD is often used along with other technical analysis (stochastic oscillator for example).

Fibonacci Numbers in Forex Trading

2010-09-23T03:59:00.000-07:00

Fibonacci Retracements:

Fibonacci ratios are actually a series of numbers that are used to help describe a natural progression of proportions. These numbers were discovered by the mathematician Leonard Fibonacci. The main idea behind Fibonacci ratios is to use them as indicator for resistance and support levels. They can be used to indicate the levels where traders can realize their profits.
In brief, these are the Fibonacci Numbers:

0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144 ....

Note what's the relationship in this series of numbers? The answer is each number is the sum of the previous two numbers: 0+1= 1, 1+1= 2, 1+2=3, 2+3= 5 ....and so on. The series of number seems like just another numbers game but there are infinite proves that show natural phenomena tends to go according to Fibonacci Numbers (for example bee lines).
Another term that often goes along with Fibonacci Numbers is 'The Golden Ratio'.
In Fibonacci Numbers series, if we take the ratio of two successive numbers in the Fibonacci series (that is, we divide each number by the number after it in the sequence) we will move towards a particular constant value. That value is 0.6180345 which has been referred to as “the golden ratio”. If you also calculate the ratios using alternate numbers in the Fibonacci series (that is, do the same calculation but skip over a number) the resulting ratios approaches 0.38196.
In technical trading, these two figures are widely used to predict the market movement (0.382 and 0.618 retracement). Commonly known, a 0.382 retracement indicates a 'follow' or 'continuation' in trend; while for 0.618, it is normally refers to a change in trends.

When the market is bullish, the idea is to go long on the market position. With your trading platform software, you can calculate the Fibonacci Retracements levels so you know at which points that you have to realize your profits. Due to the fact that the majority of Forex traders are relying on the Fibonacci Retracements levels for their trading strategies, the Fibonacci Retracements levels actually become a self fulfilling prophecy.
The following example illustrates how the concept of Fibonacci Retracement levels work.

The following chart is a daily chart of the USD/CAD currency pair. Based on the chart, the swing high is at 1.3063 while the swing low is at 1.0784. The plotted Fibonacci Retracements levels are at:

•    1.1670 (0.382)
•    1.1970 (0.500)
•    1.2200 (0.618)

Thus, if the USD/CAD currency pair retraces its movement back from its bottom, traders will react by placing sell orders at the levels indicated as the market continues its downward swing. Typically, the price will halt their gain at one of the plotted levels as the sell order generates enough resistance for the price. With reference to the chart, they tried to rally but however just closed at 1.17 without breaching the 0.382 Fibonacci Retracements levels.

Any trader who had taken out a short position at the 0.382 Fibonacci Retracements level would have been able to realize a big profit.

Where Can I Get a Forex Trading Account for Free?

2010-09-23T03:55:00.000-07:00

To get your Forex trading started, you first need to sign up with a Forex broker - and only with this FX trading account, can you start making trades.

Now the problem with Forex brokers is not about picking up a Forex broker - there're plenty of brokers around, both on and off the Internet. What matters is that as a serious FX trader, you need a reliable Forex brokerage account - where you're comfortable to put your money in, can maximize your ROI with their competetive service, and can quickly withdraw your cash when you need to.
Forex traders generally have a choice of two-four types of account. These include Mini, Standard, Gold and sometimes the Islamic account. Standard account holders can usually trade a minimum of around $10,000. So if there is a leverage ratio of 1 to 10, traders are required only to deposit $1000 of their own money into their trading account.
Nevertheless, the advantage of leveraging can cause a trader to lose more than he has in his account.

Trading Platforms:
There are two kinds of trading platforms. A trader can use a web based platform, which they can monitor without the need for a download. Alternatively, a trader can download a Forex trading software to setup his trading platform. Some brokerage firms have both options.

Before commencing trading, a Forex trader must always familiarize himself with his trading platform first. The demo account that is available should be fully utilized to get you fully acquainted with the trading platform.

You also need to accept that there is also an element of risk when you take a position in the market. With that in mind, you have to place Stop orders and Limit orders to minimize your losses. No market position is foolproof and it is a given fact that your stop orders and limit orders will hit sooner or later. At least with a Stop order, losses are curtailed the minute the prices drop to the threshold of the stop order.

Take note that the nature of the Forex market is always fluid and fluctuating. Whenever you position your stop order or limit orders, ensure that it is not too tight or too wide. Otherwise, it will defeat the purpose of you using the stop or limit orders. If the Stop orders are too wide, this will result you incurring more losses than necessary before the stop orders are triggered. If the stop orders are positioned too close, the stop orders will be triggered prematurely due to the volatility of the Forex market.
Always keep your composure when trading and don’t let your emotions cloud your judgment. By preparing yourself mentally beforehand, you will be aware of what to expect and not let the situation get the better of you.

Before you choose a forex broker you need to ask them a series of questions to find out if they suit your needs. Here are some questions we've compiled to point you in the right direction:
a. Are you open 24 hours?

b. Do you charge commission or a transaction fee?

c. Do you offer fixed spreads?(it' s better for you if spreads are fixed as you always know what you'll be paying them)

d. What level of customer support do you offer? (ideally phone, email and live chat support)

e. What currencies and commodities do you offer?

f. How quickly do you process withdrawals? (ideally 3 days to 1 week)

g. Are you regulated by an organisation such as the NFA or FSA? (this protects you as a trader if they are)

It's a good idea to test a brokerage before you deposit with them, so email customer support and see how long they take to get back to you. This is often a good indication of how the rest of the company works.

Top ForeX Sites

2010-09-23T02:01:00.000-07:00

Most Visited Forex Sites

Rank	Change	Alexa Rank	Compete Rank	Quant Rank	Review / Trend Graphs / URL	Site Description
1	--	2,205	4,856	4,191	www.oanda.com	Provides foreign currency exchange services to traders and online businesses.
2	2	6,969	8,075	6,716	www.easy-forex.com	Provides an online foreign exchange trading system which includes forex charts, analysis, and forecasts. Exchange rates, news and forex tutorials.
3	-1	2,317	16,856	10,833	www.iforex.com	Currency broker.
4	-1	7,754	15,610	10,406	www.forex.com	Forex broker providing trading tools, 24-hour customer support, and a secure online trading experience.
5	--	14,875	19,418	13,100	www.fxcm.com	Offers 24 hour online currency trading for institutions and professional traders.
6	--	7,347	23,833	17,553	www.dailyfx.com	Provides foreign exchange analysis, currency news updates, FX forum, currency forecasts and charts.
7	-7	5,154	34,166	15,561	www.etoro.com	Trading platform.
8	--	5,062	43,807	31,580	www.forexfactory.com	Features a Forex forum, an advanced Forex calendar, and breaking Forex news from top sources.
9	-2	9,428	29,032	20,008	www.fxstreet.com	Offers real-time exchange rates, currency charts, news, market forecasts, technical analysis and a c(...)
10	-1	22,632	19,840	89,883	www.forexautopilot.com	Automated forex trends analysis program.
11	2	45,602	23,143	15,085	www.forexmicrolot.com	Trader forex with low spreads, FXCM Micro execution, and 1K lot sizes.
12	-1	23,978	61,444	37,763	www.babypips.com	BabyPips.com is a free, funny, and easy-to-understand guide for teaching beginners how to trade in the foreign exchange market.
13	1	17,115	49,609	85,777	www.ac-markets.com	Online forex trading, 2-3 pip spreads on main currency pairs. Real-time price feed on all majors cur(...)
14	-4	34,729	17,189	109,994	www.cmsfx.com	Provides 24-hour online foreign exchange currency trading. Unlimited demo account, dealing services,(...)
15	-4	37,848	33,668	64,659	www.gftforex.com	Offers 24 hour online forex trading, offering over 40 currency pairs featuring DealBookFX, and free (...)
16	-1	15,428	146,885	54,056	www.gcitrading.com	Online currency broker providing 24 hour commission-free trading, free charts and quotes, and insure(...)
17	18	36,343	45,892	82,501	www.forexyard.com	Offering 24 hour online forex trading. Accept voice orders for liquidation of open positions only. F(...)
18	-1	31,944	85,513	85,032	www.forexpeacearmy.com	Reviews on forex brokers, signals, education, and more.
19	2	19,078	118,552	91,165	www.avafx.com	Online forex broker.
20	-4	25,058	167,428	66,898	www.mataf.net	Provides forex trading tools, daily exchange rates, currency analysis and currency converter.
21	-3	37,294	135,691	49,108	www.actionforex.com	Features forex news, analysis, and educational materials.
22	-2	56,133	107,297	54,615	www.hotstockmarket.com	Forex education forum in a stock trading website which focuses on Forex education & trading education.
23	-4	18,704	145,968	152,429	www.mql4.com	Home of metatrader.
24	-3	35,511	126,093	136,530	www.fxdd.com	Currency Trading Platforms, mobile trading software, fx chart analysis, 24 hour fx trading support, forex trading news and commission-free trading.
25	4	49,197	79,106	201,400	www.ibfx.com	Forex broker registered FCM with CFTC.
26	1	97,570	93,670	127,512	www.cftc.gov	US Commodity Futures Trading Commission ensuring the integrity of futures and options markets.
27	-2	28,824	200,262	154,939	www.saxobank.com	Real time quotes, charts, news, analysis and online trading in spot, forward and options
28	-3	31,378	126,393	228,878	www.livecharts.co.uk	Free real-time trading charts for indices, stocks, forex, oil, and gold.
29	-6	68,465	59,268	277,298	www.forexpros.com	Forex portal.
30	-2	28,688	191,874	271,571	www.forex-tsd.com	Focusing on forex trading system development. Including analysis and signal generation tools.
31	8	98,648	234,632	101,689	www.forex-markets.com	Portal for currency traders offering free real-time forex quotes, charts, news, and trading strategi(...)
32	--	95,614	233,667	134,229	www.ratesfx.com	Provides daily foreign exchange rates, charts and other visualizations, market summaries, currency v(...)
33	-3	78,021	205,098	163,660	www.forexnews.com	Currency news updates, articles and in depth technical analysis.
34	10	92,578	261,140	148,090	www.finotec.com	Online Forex Trading : Crude Oil Prices
34	3	114,882	131,684	209,436	www.traderslog.com	Portal for active traders and investors.
34	-4	138,476	193,679	146,698	www.dbfx.com	Foreign exchange trading platform for individuals and small institutions.
34	4	115,555	121,071	226,744	www.informedtrades.com	Collects and organizes the best information from around the web to help traders learn to trade the forex market.
38	-2	64,682	179,139	287,220	www.goforex.net	Offers a guide to online currency trading. Includes a market overview, forex broker ratings and comparison, charts, bookstore and a link directory.
39	-15	7,391	177,285	0	www.finexo.com	Daily signals.
40	3	174,785	199,044	114,107	www.forexrealm.com	Technical and fundamental analysis: forex indicators, articles and additional information for beginn(...)
40	-8	137,385	199,780	159,328	www.alpari-idc.com	Forex Broker registed in the UK which offers Metatrader as primary platform.
40	4	76,617	338,191	101,229	www.hymarkets.com	Trade all Capital markets.
43	-11	108,121	126,280	293,423	www.mbtrading.com	Direct access brokerage firm.
44	-4	52,049	248,452	256,678	www.ozforex.com.au	Offering foreign exchange information and resources for investors, corporations and currency risk managers.
45	3	176,908	273,524	100,475	www.mgforex.com	Online currency broker providing commission-free trading, free charts, news and alerts on forex quot(...)
46	-5	38,265	203,433	632,960	www.betonmarkets.com	Speculate on the movement of the major financial markets without actually owning the market, stock or currency you are buying.
47	-1	110,503	31,544	0	currencies.thefinancials.com	FX market reports, newsletters, quotes, historical data downloads, news, and research.
47	3	94,269	216,467	322,311	www.earnforex.com	Information about Forex market including articles, e-books, Forex brokers descriptions, free tools, MT4 expert advisers and Forex blog.
49	4	79,623	527,208	76,468	www.crownforex.com	Forex broker.
50	-1	278,627	89,007	189,682	www.forextv.com	Featuring real-time charts, fx quotes, forex news, technical analysis, and research.
51	13	327,158	105,516	190,368	www.citifxpro.com	Forex trading for individuals, from Citi.
52	-10	106,841	184,882	0	www.fxpro.com	Online forex trading company.
53	-1	138,678	286,019	303,317	www.moneytec.com	FX community resource portal. Event calendar and discussions forums.
54	-3	236,565	238,903	189,730	www.forexhound.com	Forex portal with news, rates, education, and more.
55	8	65,317	384,376	410,736	www.forexdirectory.net	Links to live quotes, charts, news, research, chat and clubs, educational resources, and online brokers.
56	-9	46,239	297,926	0	www.marketiva.com	Providing online spot forex trading. Company profile, list of services and forex resources.
57	--	221,808	275,993	205,776	www.fxtrek.com	Provides desktop charting software and web-based packages. Contains educational materials for forex (...)
57	-4	179,215	332,681	204,225	www.odlsecurities.com	Offers online foreign exchange trading. Additionally global CFDs, equities, futures, options trading and spread betting available
59	2	99,469	248,405	0	www.fxfisherman.com	Covers tutorials, trading and analysis. Provides a collection of forex and metatrader indicators, trading systems, and tools.
60	4	223,885	255,565	232,446	www.gaincapital.com	Independent provider of online currency trading.
61	-3	247,463	303,359	174,280	www.aboutcurrency.com	Provides free education to currency traders which includes fx tutorials, currency tools and many articles.
62	--	204,287	296,031	284,296	www.forexproject.com	Forex day trader blog. Follows daily trends and changes. Knowledge base, trading history and podcast(...)
62	-7	157,981	457,241	198,451	www.deltastock.com	Offers commission-free online Forex trading on 40 currency pairs through proprietary trading platforms - Delta Trading, Delta Trading Web and Delta Trading WAP - for desktop, remote and wireless trading. Free Forex Demo account, monthly Forex contest
64	-4	182,786	382,903	215,999	www.kshitij.com	Foreign exchange consultants. Offers daily forecasts and charts.
64	3	146,208	236,980	0	www.forex4noobs.com	Free forex site with free signals blog, form, and more.
66	3	123,568	261,816	0	www.forexrate.co.uk	Daily currency trading news, live charts, and historical data downloads.
66	-2	143,408	349,673	418,711	www.global-view.com	Offers tools for Forex and currency trading, a forex forum, real-time rates, news, and brokers. Registration required.
68	-13	102,660	369,753	661,209	www.forexmentor.com	Peter Bain's video course on forex trading for beginners.
69	1	66,173	427,636	0	www.fxsol.com	Currency trading in the major pairs and the crosses, live demo and flash tutorial.
70	7	121,987	499,518	474,859	www.migfx.ch	Swiss regulated forex broker. Offers online trading accounts. Company profile, news and contact information.
71	2	258,647	314,490	300,244	www.forexblog.org	Forex news blog with daily commentary. Has a good beginner's article.
72	-14	290,525	147,881	0	www.gracecheng.com	Full-time forex trader who contributes to trading magazines and coaches people in their trading.
73	-2	209,177	347,381	580,498	www.kathylien.com	Kathy Lien's forex blog.
74	28	202,682	711,760	147,207	www.dailyforex.com	Forex market guide.
75	-1	178,946	379,541	0	www.forexforum.net	Forex Forum on forex related subjects, software, trading platforms, forecast techniques, daily market views, trading partners and managed funds.

Fundamental Analysis in Forex Trading

2010-09-22T10:58:00.000-07:00

In order for a Forex trader to make profit from trading in the market, he must be able to predict the movements of the prices. To do this, he can resort to using “Fundamental Analysis” or “Technical Analysis” to help him formulate his prediction about the Forex price movements.

Fundamental analysis looks at the macro economic factors that can affect a currency exchange rate such as news and economic events and indicators.

The focus of fundamental analysis mainly lies on the political, social, and economic force that drives the supply/demand trends the currency. Government policies, bank policies, natural disasters, social stability, overall economic trends are some of the major factors that draw a fundamentalist’s attention.

Fundamental analysis comes very handy in making mid-long term invesment decisions. However as the analysis method is mainly focus on the major thing, it will not be a good tool for Forex day traders.

It is easy to understand that fundamental skills are useful in forecasting currencies overall trends but in term of detailing job, technical analysis seems to be more appropriate.
Economic Indicators

Fundamental analysis involve a lot of analysis on the macroeconomic situation.

Thus, economy indicators of the country such as GDP growth rates, unemployment rates, retail sales, and interest rate are used heavily in when valuating a country's currency. Some of the frequent used economy indicators in Forex trading are as below :

Interest Rate:

In each country whose currency is traded in the Forex market, the Central Bank of the respective country will determine the overnight lending rate the commercial banks. The control of interest rate is essential for the central bank of a country to implement its monetary policies. Hence, the interest rate is used as a tool to expand or contract the money supply. Generally, a lower interest rate will cause a country’s currency to depreciate.

This is because of the Forex traders who indulge in carry trades. This is a trading strategy where a Forex trader sells a currency that is yielding low interest for another currency that is earning a higher interest rate. This is because currencies with higher interest rates will normally rise in value. In addition, with trading rollover, traders are also able to earn interest daily.

Unemployment Rate:

This is one of the primary indicators of how well a country’s economy is doing. Thus, high unemployment rate will indicate the country’s economy is performing poorly and this will lead to a depreciation of a country’s currency.
Geopolitical Scenario:

All significant global political events will affect the financial markets and not just the Forex market.
Using Fundamental Analysis:

The use of fundamental analysis is particularly useful in predicting the long term trend of a currency and its corresponding pair. By concentrating on those long term factors which affects a country economic growth, traders are able to generally predict which way a currency pair will move in the long term.

Examples of Fundamental Analysis Application in Trading Major Currencies:

EUR/USD

Typically, when the US dollar weakens, the Euro will rise in relation. Conversely, when the US dollar strengthens, Euro’s value will decline in relation. Thus, when the US economy faces increasing higher unemployment rate, this will result in the US dollar weakening. Therefore a trader will buy (Ask) the Euro with the expectation that it will appreciate against the US dollar.

Similarly, if there is a surge in demand for US financial instruments like treasury bonds or equities, this will help push the value of the US dollar up in relation to the Euro. In this case, a trader will want to sell (Bid) the Euro as the value of US dollar will appreciate.

USD/JPY

If the Japanese Government wishes to boost the demand for their exports, they will seek to try to weaken the Japanese yen in relation to the US dollar. When that happens, the USD/JPY will rise in its price. Traders wishing to benefit from this scenario should buy the USD/JPY (Ask) in anticipation of the increase in US dollar. Similarly, when the level of Foreign Direct Investment (FDI) increases in Japan, this will help push up the value of the yen in relation to the US dollar. If that is the case, traders should sell (Bid) the USD/JPY hoping to profit from the appreciation in the yen.

GBP/USD

If the money supply in the UK economy increases, this will result in the supply of money exceeding the demand of money. This will mean that the banks will have more money to lend resulting in lower interest rates as a result will depreciate the value of the British pound in relation to the US dollar. Hence, a trader will want to sell (Bid) the GBP/USD currency pair. Conversely, due to prudent monetary policies, the UK’s economy is enjoying robust growth as reflected in the increasing growth rate of its Gross Domestic Product (GDP). This will result in the value of the British pound appreciating in relation to the US dollar. Therefore, traders will want to buy (Ask) the GBP/USD currency pair.

USD/CHF

The Swiss franc is normally seen as a safe haven currency. Thus, during times of global instability, the Swiss franc becomes a highly demanded currency. Therefore, it will appreciate in value in relation to the USD. Therefore, traders should sell (Bid) the USD/CHF. On the other hand, during times of stability, the demand for the US dollar will increase as people will see less need for parking their money in Swiss franc as a safe haven currency. In this situation, traders will buy (Ask) the USD/CHF as the US dollar continue to strengthen against the Swiss franc.

EUR/CHF

In this scenario, high inflation rates in the European Union (EU) countries will drive down the value of EUR/CHF. Traders will respond by selling (Bid) the EUR/CHF currency pair. On the other hand, increasing GDP of the EU countries will show that the EU economies are healthy. This will drive up the value of the EUR/CHF. Hence, traders in this situation will react by buying (Ask) the EUR/CHF currency pair.

AUS/USD

One of the biggest export earners for Australia comes from the mining sector. Hence, any increase in commodities prices will boast the export earning of Australia. This will benefit the value of the Australian dollar. Here, traders will react by buying (Ask) the AUS/USD currency pair since the Australian dollar will strengthen against the US dollar. Another major export earner for Australia comes from the agricultural sector. Therefore, if Australia is facing widespread drought, this will cause the agricultural sector to decrease its contribution to export earning for the Australian economy. As a result, the Australian dollar will depreciate in relation to the US dollar. Therefore for traders to profit for this situation, they should, sell (Bid) the AUS/USD currency pair as the Australian dollar will slide in value against the US dollar.

USD/CAD

Continuing high unemployment rates suffered by the Canadian economy will result in the Canadian dollar depreciating against the US dollar. In order to take advantage of this scenario, traders should buy (Ask) the USD/CAD currency pair. On the contrary, if the Canadian economy is going to rebound due to lower unemployment rates, this will result in the Canadian dollar appreciating against the US dollar. For traders to profit for this, they should sell (Buy) the USD/CAD currency pair.

NZD/USD

New Zealand controls a third of the global trade in dairy and meat products. In essence, this country’s economy is centered on its agricultural sector. Therefore any factors that affect this sector of its export earnings will affect its exchange rate. As such, a decline in dairy output in the US as a result of natural disaster will result in increased demand for New Zealand dairy exports. This will definitely cause the New Zealand dollar to appreciate in value in relation to the US dollar. To benefit from this, traders should buy (Ask) the NZD/USD currency pair. On the other side of the coin if however due to widespread foot & mouth disease, this will cause a decline in dairy and meat production in New Zealand. The subsequent effect will be a decline in export earnings and hence a depreciating New Zealand dollar. To profit from this, traders ought to sell (Bid) the NZD/USD currency pair.

Besides those listed above, other fundamental factors used to analysis the currency strength include Industrial Production Reports, Consumer Price Index (CPI), Manufacturing PMI-ISM, and Manufacturing Production. We will cover each of these indicators from time to time.
How are indicators used in Forex fundamentals trading?

A country's economic situation refelects directly onto the currecny trading world. Hence, it is important for a Forex traders to keep an close eye on the financial clalender release by it country itself or private sectors. It is important to keep in mind, however, that the indicators discussed above are not the only things that affect a currency's price. There are third-party reports, technical factors, and many other things that also can drastically affect a currency's valuation.

Also, it is recommended to study the fundamental aspects of several country whenever trading in the forex market. For those countries that have strong political/economical connection, currencies value flux hand-in-hand. Thus researching a few countru in a trade is necessary.

Some useful tips when implementing fundamentals analysis in Forex trading are:*

* Economic calendar: When and where. Currency values response sharply to certain release of economic indicators. Keep an close eyes on the currency price trend whenver there is a release on related economy indicators.
* Be informed about the economic indicators that are capturing most of the market's attention at any given time. Such indicators are catalysts for the largest price and volume movements. For example, when the U.S. dollar is weak, inflation is often one of the most watched indicators.
* Know the market expectations for the data, and then pay attention to whether or not the expectations are met. That is far more important than the data itself. Occasionally, there is a drastic difference between the expectations and actual results and, if there is, be aware of the possible justifications for this difference.

*References from http://www.investopedia.com/articles/trading/04/031704.asp
From Fundamentals to Technicals in FX Market

Pure fundamental trading is very problematic. Without a doubt the analysis is very effective in predicting the overall economic condition and the market behavior.

It gives a clear picture on general economy health of certain entity (a country in case of Forex) and shows how economic situation became what it is now as well as predicting the overall economic growth trend in the future.

However, information obtained through fundamental studies often fail to signify short term fluctuation in Forex market. Thus, it is wise to apply precise techniques to convert fundamental study’s results into accurate entry/exit price indicators.

Managing Risks in Forex Trading

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There are risks in all sort of trading. As we said in the very first chapter - there are, in fact, many Forex traders lost their money in FX market. While other online brokers always try to sounds optimistic, we do not want you to get the wrong idea that there's easy money to be made in Forex market.
It is common that one afraid of being involved in Forex market because of high risk in this trading field. Although every capital market involves certain level of risk, the risk of loss in foreign currency trading market can be extensive.
It would be wise to learn about the potential risk (and managing it) if you wish to trade in Forex market. Here's how you can manage your risks in Forex trading to the minimum value.

Knowledge

As we had repeat and repeat again within this website, knowledge deficiency is one of the main reason traders lose their money. Most new FOREX traders don’t take the time to learn what drives currency rates. When news or a statement is due out they must close out their positions and sit out the best trading opportunities. They are taught to only trade after the market calms down.
So essentially they miss the whole move and then trade the random noise that follows a fundamental price move. Just think for a moment about technically trading the aftermath of a price move; there is no potential.
Seminars, eBooks, Internet, papers, video courses -- take all the time you need to learn this new trading skill well. The return of Forex trading can be very lucrative but the risk lie beneath is equally great. Invest smartly, and I wish you all the best in the trading world.

Forex Brokers

Often we heard that getting started in Forex trading is easy and instant.
All you need is a computer with Internet connection and a funded Forex account with foreign currency exchange broker. However, the hard part is who to open the Forex account with? Who should we appoint as our Forex dealer?
Choosing the right FX dealer is crucial to avoid unnecessary risks. Forex dealers are not all regulated the same way.
Although Forex dealers must be regulated by law, firms and individuals can solicit retail accounts for Forex dealers and manage those accounts without being regulated.
As a trader you should take up the responsibility of finding out if your Forex dealers are regulated. If they are not, you may be exposed to additional risks.
Also, beware of dealers with investment schemes that sounds too good to be true. Pay extra cautions to dealers that you first knew and always look into the investment offers.
If you are from United States, you can always refer to CFTF or NFA for further information of a particular Forex retailing firm or individual disciplinary history.

Maintaining Your Risk Profile

A Good dealer in Forex market might gives free professional advice, free trading system, or free related education.Some dealers provide trading system and info such as analysis charts and pivot data; some provide trading tools to help you define the overall trend from a position trading point-of-view. All these are useful in maintaining your risk in Forex trading.
Nevertheless, out of all this extra benefits, the most important role of Forex dealers is maintaining your risk profile.
Forex traders should have rock-solid risk profile when investing in Forex market. A good Forex dealer should have pre-arranged agreements with you regarding on your risk profile – meaning how much percentage of the invested capital that you are willing to risk.
Further more, you can avoid losing your investment totally setting up a stop loss order with the Forex dealer. A stop loss order is a pre-defined limit to exit from the FX market. Examples, you long Euro in EUR/USD at price of 1.2075, stop loss order at 1.2035.
If things turn into your unfavorable direction and drop to 1.2030, you can still exit market with the price of 1.2035. Needless to say, a stop loss order is very useful in limiting the risks you are taking.

Avoid Overleveraging

Leverage is the key for profiting in Forex.
Forex dealers often allow their clients to trade with high margin. Margin trading refers to the leverage amount given to the traders to make purchase in the FOREX market. Typical FOREX margins can go up to 100 to 1 or even 200 to 1 where traders are given the power to buy 100 to 200 times more than what they can afford. With high leverage rates in Forex market, traders often find themselves controlling a big sum of money with a little cash put on the table.
Yes, margin trading might sounds attractive as 1,000 cash in a 200 to 1 margin rates account will have the power of purchasing currency worth $200,000. It magnifies the ROI of the trades with less money outlay on the table.
But, as most experts say, leverage is a two way street. The brokers want you to use high leverage because that means more spread income because your position size determines the amount of spread income; the bigger the position the more spread income the broker earns.
Not to forget the market does not always go in the direction you want, leveraging can magnifies your ROI in your Forex trade but it as well can turn your losses big. It would be stupid for someone to believe that there is no risk involve in Forex market.
Yes, there is an inherit risk in Forex market, but the risk is not in the market itself. The risk of losing money in Forex can be greatly reduce by working with the right dealers, having proper training and education, as well as diversifying your model.
Manage risk, instead of thrilled bu risks. The return of Forex trading can be very lucrative but the risk lie beneath is equally great. Invest smartly, and we wish you all the best in the trading world.

Forex Trading Frequently Asked Questions

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Q & A is one of the fastest way to learn about Forex. Get quick answers for all your doubts regarding Forex trading here in our Forex FAQ session.

What is Forex trading?
How Forex trading works?
How high are the risk in Forex trading?
Forex vs traditonal stocks/mutual funds trading: How does they match up?
What are the major traded currencies?
Who are the major players in Forex trading?
What tools do i need to start trading Forex?
Who do you recommend to learn Forex from?

Forex Beginner's FAQ Answered

Q: What is Forex trading?

Forex, Foreign Exchange Market, is an international exchange market where currencies from all around the world are traded. It involves buying and selling different currencies of the world.

Forex market is the largest trade market in the world, yielding $1.9 trillion daily. It is traded all around the world but United States, Japan, United Kindom, and Europes have the most active Forex traders.

Q: How Forex trading works?

Forex is often traded in pairs, for example USD/Euro, USD/JPY, Euro/JPY, GBP/CHF, and CAD/USD. You get 'short' in one currency and you will get 'long' in the other one. Unlike conventional stocks market, Forex trading does not have a centralized trade market.

It is considered as Over-the-Counter or Inter-bank as trades are done between two counterparts via electronic network or telephone connections. Forex works truly as a 24-hour market.

Everyday Forex trade begins when the financial centers in Sydney start their day, and moves around the globe to Tokyo, London, and then New York. Traders can always response to the market regardless of the local time.

Q: How high are the risk in Forex trading?

The risks of losing money in Forex trading is high, but it is controllable via proper education and trading system. Trading system is a must in Forex trading. Charts, graphs, or pivot points are handful to indicate the right time to enter or exit the market. An 'automated system', such as make your easierAs in any trade market, discipline, control of emotion, and money management are the traits needed to be succeed in Forex trading.

Rewards in Forex trading can be very lucrative if traders manage their risk nicely. One benefit to using our recommended brokerage firm is that they guarantee fills at your Limit and Stop-Loss order prices with no slippage.

This means you can have total control over the amount you risk on each trade. But remember, FOREX Trading is speculative and any capital used should be risk capital. In fact, we recommend that you trade on a demo account until you have shown profit for at least three consecutive months before trading real money.

Q: Forex vs traditonal stocks/mutual funds trading: How does they match up?

Forex and conventional stocks are different type of trading. When trading Forex, most trader's objectives are to predict short term movement in the currency exchange values. Most Forex tradings are done in day-trading style where traders will buy and sell in the same day. Different from Forex, stocks and mutual funds trading are more to long term style where trades may last for years or even decades!

Q: What are the major traded currencies?

Major traded currencies are United States dollars, Australian Dollars, Japanese Yens, British Pounds, Swiss Francs, Canadian Dollars, and the Euro Dollars.

Q: Who are the major players in Forex trading?

According to Wall Street Journal Europe, 73% of the trade volume is covered by Deutsche Bank, who covered 17% of the total currency trades; followed by UBS, Citi Group, HSBC, Barclays, Merril Lynch, J. P. Morgan Chase, Coldman Sachs, ABN Amro, and Morgan Stanley.

Q: What tools do i need to start trading Forex?

It does not need a lot to start trading Forex: a funded Forex account and a computer with Internet connections are basically sufficient for you to start trading foreign currencies. However, proper Forex education and systematic trading tools are highly recommended to minimize your risks in Forex market.

Also, beginner traders are advised to start off their trading in Forex with a demo account first. A demo account is an account set up with 'play' money for the purpose of training and shapen your trading skills. It's free to open a demo account with most of the Forex online brokers and it does not risk your real money in the trades.

Q: Who do you recommend to learn Forex from?

For beginners, our Forex 101 Classroom is a very good place to start off.

Books List

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I made a list of books that could be useful for you.

Especially when you are a biginner!

FX Glossary

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Reading articles and news regarding Forex can sometimes be confusing due to the specific terms/jargon used by traders. Find Forex keyterms meanings here and stop scratching your head now!

A

Accrual - The apportionment of premiums and discounts on forward exchange transactions that relate directly to deposit swap (Interest Arbitrage) deals , over the period of each deal.
Adjustment - Official action normally by either change in the internal economic policies to correct a payment imbalance or in the official currency rate or. Adjustment - Official action normally by either change in the internal economic policies to correct a payment imbalance or in the official currency rate or.
Appreciation - A currency is said to 'appreciate' when it strengthens in price in response to market demand.
Ask Price - The price at which the market is prepared to sell a specific Currency in a Foreign Exchange Contract or Cross Currency Contract. At this price, the trader can buy the base currency. In the quotation, it is shown on the right side of the quotation. For example, in the quote USD/CHF 1.4527/32, the ask price is 1.4532; meaning you can buy one US dollar for 1.4532 Swiss francs.
At Best - An instruction given to a dealer to buy or sell at the best rate that can be obtained.
At or Better - An order to deal at a specific rate or better.

B

Balance of Trade - The value of a country's exports minus its imports.
Base Currency - The first currency in a Currency Pair. It shows how much the base currency is worth as measured against the second currency. For example, if the USD/CHF rate equals 1.6215 then one USD is worth CHF 1.6215 In the FX markets, the US Dollar is normally considered the 'base' currency for quotes, meaning that quotes are expressed as a unit of $1 USD per the other currency quoted in the pair. The primary exceptions to this rule are the British Pound, the Euro and the Australian Dollar.

Bear Market - A market distinguished by declining prices.
Bid Price - The bid is the price at which the market is prepared to buy a specific Currency in a Foreign Exchange Contract or Cross Currency Contract. At this price, the trader can sell the base currency. It is shown on the left side of the quotation. For example, in the quote USD/CHF 1.4527/32, the bid price is 1.4527; meaning you can sell one US dollar for 1.4527 Swiss francs.
Broker - An individual or firm that acts as an intermediary, putting together buyers and sellers for a fee or commission. In contrast, a 'dealer' commits capital and takes one side of a position, hoping to earn a spread (profit) by closing out the position in a subsequent trade with another party.
Bull Market - A market distinguished by rising prices.

C

Cable - Trader jargon referring to the Sterling/US Dollar exchange rate.
Candlestick Chart - A chart that indicates the trading range for the day as well as the opening and closing price.
Cash Market - The market in the actual financial instrument on which a futures or options contract is based.
Central Bank - A government or quasi-governmental organization that manages a country's monetary policy. For example, the US central bank is the Federal Reserve, and the German central bank is the Bundesbank.
Chartist - An individual who uses charts and graphs and interprets historical data to find trends and predict future movements. Also referred to as Technical Trader.
Cleared Funds - Funds that are freely available, sent in to settle a trade.
Closed Position - Exposures in Foreign Currencies that no longer exist. The process to close a position is to sell or buy a certain amount of currency to offset an equal amount of the open position. This will 'square' the postion.
Clearing - The process of settling a trade.
Collateral - Something given to secure a loan or as a guarantee of performance.
Counter Currency - The second listed Currency in a Currency Pair.
Counterparty - One of the participants in a financial transaction.
Country Risk - Risk associated with a cross-border transaction, including but not limited to legal and political conditions.
Cross Currency Pairs or Cross Rate - A foreign exchange transaction in which one foreign currency is traded against a second foreign currency. For example; EUR/GBP
Currency - Any form of money issued by a government or central bank and used as legal tender and a basis for trade.
Currency Pair - The two currencies that make up a foreign exchange rate. For Example, EUR/USD
Currency Risk - the probability of an adverse change in exchange rates.

D

Day Trader - Speculators who take positions in commodities which are then liquidated prior to the close of the same trading day.
Dealer - An individual or firm that acts as a principal or counterpart to a transaction. Principals take one side of a position, hoping to earn a spread (profit) by closing out the position in a subsequent trade with another party.
Deficit - A negative balance of trade or payments.
Delivery - An FX trade where both sides make and take actual delivery of the currencies traded.
Depreciation - A fall in the value of a currency due to market forces.

E

Economic Indicator - A government issued statistic that indicates current economic growth and stability.
End Of Day Order (EOD) - An order to buy or sell at a specified price. This order remains open until the end of the trading day which is typically 5PM ET.
EURO - the currency of the European Monetary Union (EMU). A replacement for the European Currency Unit (ECU).

F

First In First Out (FIFO) - Open positions are closed according to the FIFO accounting rule. All positions opened within a particular currency pair are liquidated in the order in which they were originally opened.
Flat/square - Dealer jargon used to describe a position that has been completely reversed, e.g. you bought $500,000 then sold $500,000, thereby creating a neutral (flat) position.
Foreign Exchange - (Forex, FX) - the simultaneous buying of one currency and selling of another.
Forward - The pre-specified exchange rate for a foreign exchange contract settling at some agreed future date, based upon the interest rate differential between the two currencies involved.
Forward Points - The pips added to or subtracted from the current exchange rate to calculate a forward price.
Fundamental Analysis - Analysis of economic and political information with the objective of determining future movements in a financial market.

G

Going Long - The purchase of a stock, commodity, or currency for investment or speculation.
Going Short - The selling of a currency or instrument not owned by the seller.
Gross Domestic Product - Total value of a country's output, income or expenditure produced within the country's physical borders.
Gross National Product - Gross domestic product plus income earned from investment or work abroad.
Good 'Til Cancelled Order (GTC) - An order to buy or sell at a specified price. This order remains open until filled or until the client cancels.

H

Hedge - A position or combination of positions that reduces the risk of your primary position.

I

Inflation - An economic condition whereby prices for consumer goods rise, eroding purchasing power.
Initial Margin - The initial deposit of collateral required to enter into a position as a guarantee on future performance.
Intervention - Action by a central bank to effect the value of its currency by entering the market. Concerted intervention refers to action by a number of central banks to control exchange rates.

K

Kiwi - Slang for the New Zealand dollar.

L

Leading Indicators - Statistics that are considered to predict future economic activity.
Leverage - Also called margin. The ratio of the amount used in a transaction to the required security deposit.
Limit order - An order with restrictions on the maximum price to be paid or the minimum price to be received. As an example, if the current price of USD/YEN is 117.00/05, then a limit order to buy USD would be at a price below 102. (ie 116.50)
Liquidation - The closing of an existing position through the execution of an offsetting transaction.
Liquidity - The ability of a market to accept large transaction with minimal to no impact on price stability.
Long position - A position that appreciates in value if market prices increase. When the base currency in the pair is bought, the position is said to be long.

M

Margin - The required equity that an investor must deposit to collateralize a position.
Margin Call - A request from a broker or dealer for additional funds or other collateral to guarantee performance on a position that has moved against the customer.
Market Maker - A dealer who regularly quotes both bid and ask prices and is ready to make a two-sided market for any financial instrument.
Mark-to-Market - Process of re-evaluating all open positions with the current market prices. These new values then determine margin requirements.

N

Net Position - The amount of currency bought or sold which have not yet been offset by opposite transactions.

O

Offer (ask) - The rate at which a dealer is willing to sell a currency. See Ask (offer) price
Offsetting transaction - A trade with which serves to cancel or offset some or all of the market risk of an open position.
Open order - An order that will be executed when a market moves to its designated price. Normally associated with Good 'til Cancelled Orders.
Open position - An active trade with corresponding unrealized P&L, which has not been offset by an equal and opposite deal.
Over the Counter (OTC) - Used to describe any transaction that is not conducted over an exchange.

P

Pips - The smallest unit of price for any foreign currency. Digits added to or subtracted from the fourth decimal place, i.e. 0.0001. Also called Points.
Political Risk - Exposure to changes in governmental policy which will have an adverse effect on an investor's position.
Position - The netted total holdings of a given currency.
Premium - In the currency markets, describes the amount by which the forward or futures price exceed the spot price.
Profit /Loss or "P/L" or Gain/Loss - The actual "realized" gain or loss resulting fromtrading activities on Closed Positions, plus the theoretical "unrealized" gain or loss on Open Positions that have been Mark-to-Market.

Q

Quote - An indicative market price, normally used for information purposes only.

R

Rally - A recovery in price after a period of decline.
Range - The difference between the highest and lowest price of a future recorded during a given trading session.
Rate - The price of one currency in terms of another, typically used for dealing purposes.
Resistance - A term used in technical analysis indicating a specific price level at which analysis concludes people will sell.
Revaluation - An increase in the exchange rate for a currency as a result of central bank intervention. Opposite of Devaluation.
Risk - Exposure to uncertain change, most often used with a negative connotation of adverse change.
Roll-Over - Process whereby the settlement of a deal is rolled forward to another value date. The cost of this process is based on the interest rate differential of the two currencies.
Round trip - Buying and selling of a specified amount of currency.

S

Settlement - The process by which a trade is entered into the books and records of the counterparts to a transaction. The settlement of currency trades may or may not involve the actual physical exchange of one currency for another.
Short Position - An investment position that benefits from a decline in market price. When the base currency in the pair is sold, the position is said to be short.
Spot Price - The current market price. Settlement of spot transactions usually occurs within two business days.
Spread - The difference between the bid and offer price. Big Figure Quote - Dealer expression referring to the first few digits of an exchange rate. These digits are often omitted in dealer quotes.. For example, a USD/JPY rate might be 117.30/117.35, but would be quoted verbally without the first three digits i.e. "30/35".
Stop Loss Order - Order type whereby an open position is automatically liquidated at a specific price. Often used to minimize exposure to losses if the market moves against an investor's position. As an example, if an investor is long USD at 156.27, they might wish to put in a stop loss order for 155.49, which would limit losses should the dollar depreciate, possibly below 155.49.
Swap - A currency swap is the simultaneous sale and purchase of the same amount of a given currency at a forward exchange rate.

T

Technical Analysis - An effort to forecast prices by analyzing market data, i.e. historical price trends and averages, volumes, open interest, etc.
Tick - A minimum change in price, up or down.
Tomorrow Next (Tom/Next) - Simultaneous buying and selling of a currency for delivery the following day.
Turnover - The total money value of all executed transactions in a given time period; volume.
Two-Way Price - When both a bid and offer rate is quoted for a FX transaction.

U

Unrealized Gain/Loss - The theoretical gain or loss on Open Positions valued at current market rates, as determined by the broker in its sole discretion. Unrealized Gains' Losses become Profits/Losses when position is closed.
Uptick - a new price quote at a price higher than the preceding quote.

V

Value Date - The date on which counterparts to a financial transaction agree to settle their respective obligations, i.e., exchanging payments.
Variation Margin - Funds a broker must request from the client to have the required margin deposited. The term usually refers to additional funds that must be deposited as a result of unfavorable price movements.
Volatility (Vol) - A statistical measure of a market's price movements over time.

W

Whipsaw - slang for a condition of a highly volatile market where a sharp price movement is quickly followed by a sharp reversal.

Getting Started in Forex Trading

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Taking the First Steps in Forex Trading

It's really not that hard to get started in trading Forex . The key factor is to keep going - keep learning and focus on your training, with education and practice through a demo account. Here are the steps we recommend you to follow on getting started with Forex trading.

1. Learn how to trade Forex

Nope, reading a few articles online or browsing every page in www.golearnforex.net is not what we call learning Forex trading.
To win and maximize your profits in foreign currency exchange market you definitely need to do more than that! Attend seminars and trading courses organized by professionals. Learn from the experience and from your network with other FX traders to exchange information and latest trading strategies.

2. Paper trade Forex in a demo account

Start your Forex trading with 'play-money'!
Many FX noobs go into the Forex market too soon and lose a lot of money due to margin trading. The best way to learn Forex, traders are always encouraged test their skills first and to build up their confidence level with demo account before committing their own capital.

3. Maximize your FX trading tools and systems.

It is very important for Forex traders to know their trading tools well. Various FX brokers offers an array of tools that are used for trading the Forex markets.
Practically, traders often use one or more than one trading system/software to trade Forex online. These software are often come in a package when you open an account with Forex brokers.
In brief, this is how this software works: The Forex trading software is connected to the broker’s system via Internet, currency prices are updated live, and you make your call on trade via the software.
Such trading software often requires minimum computer powers thus it can be run on most home computers nowadays as long as it is connected to the Internet.

In normal case, automated trade order functions are embedded in Forex trading software. For Forex trading, stop loss order and limit order are the two most used function.

Limit orders:
As a trader, you can place these orders when you wish to buy/sell the currency at a better price compare to current market. Limit orders are often used to take win automatically when the price reaches certain level. For example, current EUR/USD is at 1.2693 and your predetermined limit order is to sell all at 1.2700. The order will auto-execute whenever the price reach 1.2700.

It is important to learn that limit orders can be only placed at least the minimum distance from the current market price. Also, such order can be cancelled or modified anytime by you as long as the limit order price tag is set further than the minimum distance allowed.

Stop orders:
Stop orders, or sometimes known as stop loss orders, are automated orders used to restrict and limit the losses of an open position. It can also be used to lock on a profit in your trade when the market is going in your favored direction.

Stop orders work similarly to limit sell orders, it predetermine what is the lowest price to sell in certain deals. For example, EUR/USD 1.2693 with stop order at 1.2685, the system will sell your portion of USD if the price touches the 1.2685 level. The price 1.2685 is guaranteed on such case, meaning even if the market sink too fast and it falls below 1.2685, you still can sell your money in the price that you set earlier.

4. Selecting a Forex broker

There are many Forex brokers to choose from, just as in any other market. When you are browsing for Forex, ask questions below:

Does the FX broker offers low spread value?
Is the FX broker registered with related authorizations such as FCM?
What kind of tools does the FX broker provides?
What kind of margin options are there?
Does the FX broker provides live customer supports?
Does the FX broker offers demo account for beginner traders?
If you do not have sufficient capital, check whether the FX broker offers mini account that requires low startup funds.

Asking questions above will help you in choosing the right Forex brokers.

5. Avoid Forex trader's common mistakes.

Avoid trading with your emotions, avoid over trading your account, avoid over-staying at your positions, avoid bad money management, avoid risking what you cannot afford in Forex trading ...Forex trading involved a lot of risks and traders are always advise to trade and learn in the same time.
Get aware of common mistakes done by most Forex traders and set your own rules during trading in FX market. Trade with discipline and always prepare to learn new concepts from others.

6. Keep investing in your trading education.

We just cannot resists to keep stressing that investment education is always the most crucial things in starting your trade in Forex market. If you are new to Forex trading; learn, get hands-on experience and read as much FX books as you can to educate yourself regarding FX market.

Once you are ready, it is time to take a look into risks factor in Forex trading. Next, we will have a look on managing risks in Forex trading.

Managing risk: Using Technical Analysis

2010-09-22T04:23:00.000-07:00

Technical analysis in Forex trading

What is Technical Analysis?

Technical Analysis is an effort to forecast price movements by analyzing market data such as historical price trends, volumes, open interest, etc. Technical analysis is conducted based on the principal of 'history repeats itself', it does not result in absolute predictions about the future.
Instead, indicators generated by technical analysis will help investors anticipate what is "likely" to happen to prices over time.
Ever heard of Japanese candle stick? Fibonacci numbers? Relative Strength Index? Moving averages? Pivot points? Elliot Wave? These are some of the charting method that FX traders like to use during trades.

Technical Indicators in Forex

Unlike fundamentals, technical trading relies heavily on graphs and charts. Practically, a technical trader will need at least one charting software to read and plot the related charts for his own references.
As in our case, we will include some common technical indicators in Forex trading as well as its brief explanations. Charts and graph examples will be provided from time to time for the usage of learning.

Simple Moving Average (SMA)
Relative Strength Index (RSI)
Moving Average Convergence/Divergemce (MACD)
Parabolic SAR
Fibonacci Numbers

List of major technical indicators in trading.

Limitations on Technical Tradings

Technical analysis looks secure with proven tracks in the past times, however, trading Forex purely based on Technical Indicators would be extremely unsafe as we all knew thatt 'future does not equal to the past'.
A lot of unexpected variables are not considered in Technical Analysis: change of country leaders, change of government, natural disasters, change of bank policies, investor’s mood, war, or even terrorism attacks migh affect the currency value dramatically. These incidents are most likely not happening in the past thus Technical Analysis is not effective enough to predict the price movement.

Trading Forex Purely Based on Technical Analysis

A combined of two approaches (Fundamental and Technical) is always encourage to get the optimum plots on your investment plan.

Next, we will take a look on how to get started in Forex trading.

Managing risks: Using Fundamental Analysis

2010-09-22T04:03:00.000-07:00

Fundamental analysis in Forex trading

Fundamental analysis, in short, is referring to the dynamic studies of distinct plans, erratic behaviors and unforeseen events that influence the economic of certain entity.
The focus of fundamental analysis mainly lies on the political, social, and economic force that drives the supply/demand trends the currency. Government policies, bank policies, natural disasters, social stability, overall economic trends are some of the major factors that draw a fundamentalist’s attention.
Fundamental analysis comes very handy in making mid-long term invesment decisions. However as the analysis method is mainly focus on the major thing, it will not be a good tool for Forex day traders.
It is easy to understand that fundamental skills are useful in forecatsing currency overall trends but in term of detailing job, technical analysis seems to be more appropriate.

Economy Indicators

Fundamental analysis involve a lot of analysis on the macroeconomic situation.
Thus, economy indicators of the country such as GDP growth rates, unemployment rates, retail sales, and interest rate are used heavily in when valuating a country's currency. Some of the frequent used economy indicators in Forex trading are as below (Click in each for detail explanations):

The Gross Domestic Product (GDP)
Retail Sales
Interest Rates
Unemployment Rate

How are indicators used in Forex fundamentals trading?

A country's economic situation refelects directly onto the currecny trading world. Hence, it is important for a Forex traders to keep an close eye on the financial clalender release by it country itself or private sectors. It is important to keep in mind, however, that the indicators discussed above are not the only things that affect a currency's price. There are third-party reports, technical factors, and many other things that also can drastically affect a currency's valuation.
Also, it is recommended to study the fundamental aspects of several country whenever trading in the forex market. For those countries that have strong political/economical connection, currencies value flux hand-in-hand. Thus researching a few countru in a trade is necessary.
Some useful tips when implementing fundamentals analysis in Forex trading are:*

Economic calendar: When and where. Currency values response sharply to certain release of economy indicators. Keep an close eyes on the currency price trend whenver there is a release on related economy indicators.
Be informed about the economic indicators that are capturing most of the market's attention at any given time. Such indicators are catalysts for the largest price and volume movements. For example, when the U.S. dollar is weak, inflation is often one of the most watched indicators.
Know the market expectations for the data, and then pay attention to whether or not the expectations are met. That is far more important than the data itself. Occasionally, there is a drastic difference between the expectations and actual results and, if there is, be aware of the possible justifications for this difference.

*References from http://www.investopedia.com/articles/trading/04/031704.asp

From Fundamentals to Technicals in FX Market

Pure fundamental trading is very problematics. Without a doubt the analysis is very effective in predicting the overall economic condition and the market behavior.

It gives clear picture on general economy health of certain entity (a country in case of Forex) and shows how economy situation become what it is now as well as predicting the overall economic growth trend in the future.
However, information obtained thru fundamental studies often fails to signify short term fluctuation in Forex market. Thus, it is wise to apply precise techniques to convert fundamental study’s results into accurate entry/exit price indicators.
This will then bring us to the topic of Technical Analysis in Forex trading.

Currencies Traded in Forex Market

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The most traded currency in the Forex market (the major seven) are United States dollar, Eurozone Euro , Japanese Yen , British Pound Sterling, Swiss Franc, Australian dollar , and the Canadian dollar. The Forex market is USD-centric, whereby the United States currency is involved in more than 80% of the trades. Major traded pairs in FX market are EUR/USD, which yields 28% from total trades. USD/JPY and GBP/USD come second and third, with take up 17% and 14% from the global forex trading respectively.

United States Dollar (USD)

The U.S. dollar uses the decimal system, consisting of 100 (equal) cents (symbol ¢).

In another division, there are 1,000 mills or ten dimes to a dollar; additionally, the term eagle was used in the Coinage Act of 1792 for the denomination of ten dollars, and subsequently was used in naming gold coins. In the second half of the 19th century there were occasional discussions of creating a $50 gold coin, which was referred to as a "Half Union," thus implying a denomination of 1 Union = $100.
However, only cents are in everyday use as divisions of the dollar; "dime" is used solely as the name of the coin with the value of 10¢, while "eagle" and "mill" are largely unknown to the general public, though mills are sometimes used in matters of tax levies and gasoline prices.
When currently issued in circulating form, denominations equal to or less than a dollar are emitted as U.S. coins while denominations equal to or greater than a dollar are emitted as Federal Reserve notes (with the exception of gold, silver and platinum coins valued up to $100 as legal tender, but worth far more as bullion). (Both one-dollar coins and notes are produced today, although the note form is significantly more common.)
In the past, paper money was occasionally issued in denominations less than a dollar (fractional currency) and gold coins were issued for circulation up to the value of 20 dollars.
More details on USD at Wikipedia.

Pound Sterling (GBP)

The pound (symbol: £; ISO code: GBP), divided into 100 pence, is the official currency of the United Kingdom and the Crown dependencies.
The slang term "quid" is commonly used in place of "pound(s)". The official full name pound sterling (plural: pounds sterling) is used mainly in formal contexts and also when it is necessary to distinguish the currency used within the United Kingdom from others that have the same name.

The currency name — but not the names of its units — is sometimes abbreviated to just "sterling", particularly in the wholesale financial markets; so "payment accepted in sterling", but never "that costs five sterling". The abbreviations "ster." or "stg." are sometimes used. The term British pound is commonly used in less formal contexts, although it is not an official name of the currency.
The pound was originally the value of one pound Tower weight of sterling silver (hence "pound sterling"). The currency sign is the pound sign, originally ₤ with two cross-bars, then later more commonly £ with a single cross-bar. The pound sign derives from the black-letter "L", from the abbreviation LSD – librae, solidi, denarii – used for the pounds, shillings and pence of the original duodecimal currency system. Libra was the basic Roman unit of weight, which in turn derived from the Latin word for scales or balance.
The ISO 4217 currency code is GBP (Great Britain pound). Occasionally the abbreviation UKP is seen, but this is incorrect. The Crown dependencies use their own (non-ISO) codes. Stocks are often traded in pence, so traders may refer to Pence sterling, GBX (sometimes GBp), when listing stock prices.
More details on GBP at Wikipedia.

Euro (EUR)

The euro (currency sign: €; banking code: EUR) is the official currency of the Eurozone (also known as the Euro Area), which consists of the European states of Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Slovenia, and Spain, and will extend to include Cyprus and Malta from 1 January 2008.
It is the single currency for more than 317 million Europeans. Including areas using currencies pegged to the euro, the euro directly affects more than 480 million people worldwide.
With more than €610 billion in circulation as of December 2006 (equivalent to US$802 billion at the exchange rates at the time), the euro surpasses the U.S. dollar in terms of combined value of cash in circulation.
While all European Union (EU) member states are eligible to join if they comply with certain monetary requirements, not all EU members have chosen to adopt the currency. All nations that have joined the EU since the 1993 implementation of the Maastricht Treaty have pledged to adopt the euro in due course. Maastricht obliged current members to join the euro; however, the United Kingdom and Denmark negotiated exemptions from that requirement for themselves. Sweden turned down the euro in a 2003 referendum, and has circumvented the requirement to join the euro area by not meeting the membership criteria.
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 Kosovo have adopted the euro unilaterally.
More details on EUR at Wikipedia.

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 Latinised symbol is ¥ while in Japanese it is also written with the kanji 円.
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 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.
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.)
More details on JPY at Wikipedia.

Knowing the Currency Symbol

When starting in Forex trading, it would be wise to start trading with the major seven. It is also recommended to start with your own country currency if you are living in one of the major seven country as you are in a better position to judge the value of the currency.
You should be aware that currencies are normally stated in a three-alphabate symbol in FX market.
For the major seven, currency symbol are as below:

Currency	Symbol	Nickname
Australian Dollar	AUD	Aussie
Canadian Dollar	CAD	Loonie
Euro	EUR	Fiber
Japanese Yen	JPY	Yen
British Pound	GBP	Cable
Swiss Franc	CHF	Swissy
United States Dollars	USD	Buck

Forex currency symbols are always three letters, where the first two letters identify the name of the country and the third letter identifies the name of that country’s currency.
These symbols and names are set according to ISO4217 standard. For more information on world currency symbols and numeric codes, visit official website of ISO-4217 Standard.
Moving on, we will talk about risks management in Forex trading. As in any trade market, Fundamental and Technical analysis techniques are used in Forex trading.

Leveraging your money in Forex margin trades

2010-09-22T03:40:00.000-07:00

Leverage and its Significance

In Forex, the concept of leverage refers to the situation where a trader borrows the money of the Forex brokerage firm and uses that money specifically for trading in the Forex market. Because of leveraging, a trader with just a small capital outlay is able to invest in significantly larger value contracts.

It is common to find Forex brokerage firms offering up to a ratio of 1:100 for an account holder. In contrast, in the equity market, a trader needs to come with 50% of the transaction value for every trade that they make. Leveraging is all about profit maximization as well as risk minimization.

With leverage, the Forex trader is able to profit more with each trade that he makes. At the same time, the risk factor of his transaction is also multiplied many times over and hence the need for proper risk management. Margin trading refers to the leverage amount given to the traders to trade in the market.
One of the best features in Forex trading is that traders are able to trade foreign currencies with high margin.
You get 1:1 margin for stock exchanges, 2:1 margin for equity trading, 15:1 margin for futures market; but in Forex, normal trade margins are 100:1 and 150:1, or even 200:1 trade margins.
Typically the broker will require a minimum account size, also known as account margin or initial margin. Once you have deposited your money you will then be able to trade. The broker will also specify how much they require per position (lot) traded.
For example, for every $1,000 you have, you can trade 1 lot of $100,000. So if you have $5,000 they may allow you to trade up to $500,000 of Forex.
The minimum security (margin) for each lot will vary from broker to broker. In the example above, the broker required a one percent margin. This means that for every $100,000 traded, the broker wants $1,000 as a deposit on the position.
Trading Forex in huge margin with allows traders to control a large sum of money with little cash put on the tables. This in turns magnify the ROI dramatically.

Margin Trades and ROI in Forex

This example below shows how margin trading in Forex can magnify your investment ROI.
Taking $1,000 in a 100:1 margin account as example, you are now granted the purchase power of $100,000.
Say that you execute the trade between USD/JPY: Long Japanese Yen in USD/JPY 109.2 (meaning buying 109.2 Yens with 1 USD) and short JPY at the price of USD/JPY 109.0.

Trading without margin

If you are trading without margin, you have only $1,000 of buying power. The the max you can go is buying (1000 x 109.2) Yens = 109,200 Yens.

Later when you sell off your Japanese Yen in higher price (USD/JPY 109.0), the returns you are getting back is $1001.8.

Profit made in the trade: $1.8
ROI of the trade: 1.8/1000 x 100% = 0.18%

Trading with margin

Now in case you are trading with margin of 100:1, the calculation of the trade will be giving you a total different picture:

Buying Japanese Yen when USD/JPY 109.2:

Long Japanese Yen = (100 x 1000 x 109.2) Yens = 10,920,000 Yens;
Short USD $100,000.Selling of Japanese Yen when USD/JPY 109.0:

Short Japanese Yen = 10,920,000; Long USD = (10,920,000 / 109) = $100,183.5.

Profit made in the trade: $183.5.
ROI of the trade: 183.5/1000 x 100% = 18.35%

Trading Margin vs Return of Investment: A Quick View

The Power of Leverage
Trading Margin	Capital	Purchase Power	Money value of 1% Profit	ROI of capital
2:1	$1,000	$2,000	$20	2%
10:1	$1,000	$10,000	$100	10%
50:1	$1,000	$50,000	$500	50%
100:1	$1,000	$100,000	$1,000	100%
150:1	$1,000	$150,000	$1,500	150%
200:1	$1,000	$200,000	$2,000	200%

Managing a Margin Forex Account

Although the example given is much simpler than what's happening in real market situation.

But it cleary illustrates that trading in can easily magnify trade's ROI in a dramatic way. Although trading on margin sounds extremely easy to gain profits, but it is important that traders understand well the risks they are undertaking.

Traders should be very aware of the margin call and should always avoid them at all cost. Note that in the event that money in your account falls below predetermined threshold (Margin Call), the positions in the account could be partially or totally liquidated, even it's in a highly volatile, fast moving market. Also, traders should always monitor own margin balance on a regular basis and utilize stop-loss orders on every open position to limit downside risk.

In most cases, you might need a computer aided trading tools to determine the entry point as well as stop loss order.

Next, we will learn about the major currency traded in Forex market.

Reading and Understanding Forex Quotes

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Understanding Forex Quotes

Reading Forex quotes is easy although it looks a bit confusing at first.

Quoting Foreign Currency

Currencies are always quoted in pairs. Each pair of currencies thus constitutes an individual product and is traditionally noted XXX/YYY, where YYY is the ISO 4217 international three-letter code of the currency into which the price of one unit of XXX currency is expressed.
The first currency in the quotes act as the 'base currency'.
For example USD/JPY, EUR/GBP, and GBP/AUD, in such cases, USD, Euro Dollar, and British Pound are acting as the base currency. The Base currency in a Forex quote will always have a value of 1. USD/JPY indicates how much Japanese Yens you can buy with 1 United States Dollar; similarly EUR/GBP indicates the exchange rate of Great Britain Pound with 1 Euro Dollar.

FX Quoting: Bid/Ask and Spread

Sometimes you only see one number in the quote but often currency exchange prices are displayed in pairs with the 'bid price and the ask price'.
For example EUR/USD 1.2385/1.2390, 1.2385 is known as the bidding price, while 1.2390 is the asking price. Bidding price is the price that you sell the base currency (EUR in our case here); asking price is the price that you buy the base currency. The different of the bidding and the asking price is called 'spread'.
You might notice that bidding price is always lower than the asking price. Ever wonder why? The different of the bid-ask price (socall 'spread') is how currency brokers make profits without charging commissions to their clients (sell high and buy low in the same time.)

What's a pip?

A pip is the smallest value in a Forex quote. Take our example earlier on EUR/USD. If the exchange rate goes from 1.2385 to 1.2386; that's one pip. In mathematical definition, a pip means the last decimal place of a quotation.
Note that as each currency has its own value, the value of a pip is different from one another. Say USD/JPY rate at 120.75, a pip would be 0.01 (the second decimal place); while for EUR/USD 1.2385, a pip would be 0.0001 (the fourth decimal place).

Example of Forex Quotes

Confused about the quotes? Don't worry too much about it, you'll get used to them as soon as you move on and start your trading.
For the beginners, here are some quick examples. Try not tolook at the answer and determine the value of bid price, ask price, spread value, and the pip value.
EUR/USD 1.2385/1.2390

Base currency= Eur
Bid price= 1.2385; Ask price= 1.2390
When selling Euros, 1 Euro = USD$1.2385; when buying Euros, USD$1.2390 = 1 Euro.
Spread = | 1.2385 - 1.2390 | = 0.0005
Pip value= 0.0001

EUR/JPY 127.95/128.00

Base currency= Eur
Bid price= 127.95; Ask price= 128.00
When selling Euros, 1 Euro = JPY127.95; when buying Euros, JPY128.00 = 1 Euro.
Spread = | 127.95 - 128.00 | = 0.05
Pip value= 0.01

GBP/USD 1.7400/10

Base currency= GBP
Bid price= 1.7400; Ask price= 1.7410
When selling Pound, 1 Pound = USD$1.7400; when buying Pound, USD$1.7410 = 1 Pound.
Spread = | 1.7400 - 1.7410 | = 0.001
Pip value= 0.0001

USD/JPY 119.8

Base currency= USD
No bid-ask price is displayed, spread value not available.
Pip value= 0.1

Getting used to currency quotes now? Well, don't feel down if you're still a little slow... you'll be picking up on reading them as you move along.

Advantages in Forex currency trading

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Why trade in foreign currency exchange market?

Why trade Forex instead of stocks, futures, commodities, or options? Why more and more people nowadays started trading Forex at home? Perhaps the list of advantages in Forex trading has the answer.
In this chapter of Forex 101 Classroom, we will take a look on advantages in Forex trading.

Advantages in Forex currency trading

Equal Prospective in Rising or Falling Market Trend

There is no structural bias to the market and there are no restrictions on short selling in FX market. Trading in Forex gives you an equal prospective in rising and falling market.
As trades are always done in pair of currency pairs, Forex traders can always find chance to make money in anytime, regardless on the fall or rise period of one single country currency.

Trade Forex 24 hours a day

Forex market never sleeps. In Forex trading, you do not need to wait the market to open, you can always response to world latest movement and news immediately.
Every Sunday 5.00pm in New York, Forex market starts its week from Sydney, followed by Tokyo, Singapore, Hong Kong, London, and New York. In Forex tradng, you can always response to the market trend a lot faster than in any other trading market.
Leverage trading in Forex market
Also, with the flexibility of Forex market trading time, you can work on your trade in Forex during your free time. This means you can start small and work as part time trader before going full time on FX trading.

High Leverage Margin

Forex brokers offer trade margin of 50, 100, 150, or even 200 to 1 of trade margin.
Forex traders often find themselves controlling a huge sum of money with little cash outlay on the table. For example, a $1,000 in a 150:1 Forex account will gives you the purchase power of $150,000 in the currency market.
While certainly not for everyone, the substantial leverage available from online currency trading firms is a powerful, moneymaking tool. Rather than merely loading up on risk as many people incorrectly assume, leverage is essential in the Forex market.
This is because the average daily percentage move of a major currency is less than 1%, whereas a stock can easily have a 10% price move on any given day.
Table below demostrate how a high trading margin can impact on the trades ROI.

The Power of Leverage
Trading Margin	Capital	Purchase Power	Money value of 1% Profit	ROI of capital
2:1	$1,000	$2,000	$20	2%
10:1	$1,000	$10,000	$100	10%
50:1	$1,000	$50,000	$500	50%
100:1	$1,000	$100,000	$1,000	100%
150:1	$1,000	$150,000	$1,500	150%
200:1	$1,000	$200,000	$2,000	200%

Trade Forex anywhere from the world virtually

Forex market - 24/7 trading via computer
A computer with Internet connection plus an active Forex account are sufficient for you to execute a trade in Forex market.
Professional Forex traders have the privilege to travel around the world but yet still connected to the market anytime, anywhere. The freedom of this is something you could not get else where by being an employee of a cooperation.

High Liquidity Market

Turnover value in Forex is $1.9 trillion per day. It is the largest trade market in the world and the liquidity of the market is huge. Traders can easily cash in or cash out their capital in Forex market.

Ability to Profit from a Bull’s or Bear’s Market

Regardless of whether the market is moving up or down, a trader is able to profit from the market situation depending on whether he undertakes a “Short” or “Long position”.
No Commission Charges Payable:

In the Forex market there is no commission charges payable when you buy or sell a currency. Instead what you pay is a “spread”. This is the difference between the Bid and Ask price.

Learning and Investing in Forex trading

Wrapping things up, we believe that Forex trading give a whole new option to individual traders to success financially. Learning Forex and listing Forex trading into one of your financial plans is a must.
This lead us to our next chapter, which is about reading and understanding Forex quotes.

Introducing Foreign Currency Exchange (Forex) Trading

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Hello and welcome to the Go Learn ForeX.

So, you wanna make some money through Forex trading? Before you read further, let us warn you that 7 out of 10 traders keep losing money in the Forex market; while the rest of the 30% work freely from their home and earn millions annually.
What makes the difference between the two types of trader? Well, the top 30% are those with Forex skills and knowledge.
It is no secret that the foreign currency exchange (FOREX) market is a market full of obstacles, so much so infact that you can lose your hard-earned money in a fraction of second. So, If you want to make money in Forex trading, you'll need to educate yourself well enough to succeed.
The Forex market is definitely not a game for a newbie and you need to brush up your skills before getting your hands wet.

A very brief intro on Forex trading

Foreign currency exchange (Forex) market is the largest trading market in the world. It yields an average turnover of $1.9 trillion daily. The figure is nearly 30 times larger than the total volume of equity trades in United States.
Forex is a very unique market.
Forex is actually the short form of the word Foreign Exchange. It refers to the simultaneous buying and selling of a currency pair. In Forex, currencies are always traded against one another and quoted in pairs. For example, USD/JPY refers to the US dollars and Japanese Yen pair. Some of the major currencies being traded on the Forex market are Swiss Franc (CHF), Euro (EUR), British Pound (GBP) and the Japanese Yen (JPY). All these currencies are traded against the US dollar (USD).

All currencies are traded in pairs. Within the pair itself, the first currency is known as the base currency while the second currency is known as the quote or counter currency. All quotes for Forex are quoted in terms of the base currency. When you ask for a currency quote, you will be given two prices, the bid price and the ask price. The Bid price is the price that you will get for selling a currency while the Ask price is the price that you will get for buying a currency. Both these prices are expressed in terms of the base currency. Let us say that the exchange rate for the USD/CHF currency pair is 1.6550. This means that one dollar is equivalent to 1.6550 Swiss francs.

As mentioned earlier, all currency quotes have two prices. For example if you requested a quote for EUR/USD, you will be given a quote like EUR/USD 1.4550/55. The price on the left side of the quote is the Bid price (1.4550) while the price on the right side is the Ask Price (1.4555). In Forex, any fluctuation of the rates is referred to by how many “pips”. A pip is actually the smallest movement a currency quote can have. For example, if the EUR/USD Bid price moves to 1.4553, this means the rate had move by 3 pips from 1.4550. In this case, depending on the account type that you are trading with, a pip can worth $1 (for a mini account) or $10 (for a 100K account).
Unlike any other financial market, investors can respond to money-value fluctuations caused by economic, social and political events at the time they occur - day or night.

Now you briefly know what Forex trading is, next we'll look at the advantages of FX as well as how to

Why should I learn FOREX ?

2010-09-22T03:07:00.000-07:00

Why learn forex? Why trade forex?By reaching GoLearnForex, you must already be aware that Forex trading is a very lucrative way to make money from home or from work. Moreover, I'm sure you know someone, or have heard of someone who's already making good money in FX trading.Why not you ?

What you might not know though, is that 7 out of 10 traders keep on losing money in Forex! That's right, 70% of individual FX traders keep losing their hard-earned money in the market; while the other 30% work freely at home and make a solid living out of Forex.
So what is the major difference between the losing 70% and the winning 30%?

Forex trading knowledge and a sound trading system! If you want to have financial freedom by trading Forex and confidence in your trades; you need to get educated in Forex before you start trading it. Those who trade the Forex market with some knowledge and practice are taking advantage of one of the most lucrative markets anywhere in the world.

This site gives you all the resources and education materials you need to become a successful Forex trader. It's time to GoLearnForex!