Wednesday, 27 February 2008

Forex Trade: Main Drawbacks of a Forex Trader

Why is it that very few traders succeed in the Forex trading environment while the grand majority of traders fail to achieve success? Although there is no hard answer to this question, there are a few things that will put you one step ahead and will definitely put the odds in your favor.

The main purpose of this article is to guide you through some important aspects of Forex trading. But in a different way, instead of telling you what to do or the best way to do it, it will tell you what to avoid. Sometimes it is better to identify the main drawbacks on a discipline and then isolate them so we have the best results at a certain level of development.

The search for the Holy Grail

Fact: Well, there is no magic indicator, nor a set of indicators that will make anyone rich in a short period of time. The main reason of this is because market changes, every single moment is unique. Every Forex trading system will fail from time to time. Our work here is to find a Forex trading system that fits our personality as traders, otherwise the trader will find it hard to follow it.

Looking for Easy Money

Unfortunately most traders are attracted to the Forex market for this reason. Mainly because of the publicity showing or rather trying to show how easy is to trade and make money in the Forex market.

Fact: Yes, it is very easy to trade, anyone can do it. It is as hard as one click. But the second part of it isn't that easy. Making money or achieving consistent profitable results is hard. It requires lots of education, patience, discipline, commitment, and this list could go to infinite. In a few words, it is possible to have consistent profitable results, but definitely it is not easy.

Looking for Excitement

Some other traders are attracted to the Forex market or any other financial market because they think it is exciting to be a trader.

Fact: Yes, it is very exciting to trade the Forex market. But if this is the main reason you are still trading the Forex market, sooner or later you will discover the most expensive adventure you have ever known. Do some thinking on it.

Not Using Money Management.

Most traders forget about this important aspect of trading. They think they shouldn't be using money management until they achieve consistent profitable results. They totally forget about the risk side of trading.

Fact: Money management allows your profits to increase geometrically, but also limits your risk on every single trade. Money management tells you how much to risk on each trade. Using money management is a must if you want to achieve your trading goals. By using money management you make sure you are going to be able to trade tomorrow, the next week, month and the following years.

Not Being Psychology Tuned

Lack of Education

Education is the base of knowledge on every discipline. As lawyers and doctors require several years of college until they get their degree, Forex traders also require long years of study. It is better to have someone experienced to guide you through your trading, since some information could take you in the wrong path.

Fact: The market teaches us invaluable lessons on every single trade made. The process of education for a Forex trader could take for ever. That's right, we never stop learning. We should be humble about the markets and our knowledge; otherwise the market will prove us wrong.

These are some of the most important barriers every trader faces when trying to trade successfully.

Trading successfully the Forex markets is no easy task, it requires a lot of hard work to do it right, but with the right education, you will put yourself closer to your trading goals.


Sunday, 24 February 2008

What Is Forex Trading?

The currencies of the world are on a floating exchange rate, and they are always traded in pairs. About 85 percent of all daily transactions involve trading of the major currencies. Four major currency pairs are usually used for investment purposes. They are: Euro against US dollar (EUR/USD), US dollar against Japanese yen (USD/JPY), British pound against US dollar (GBP/USD) and US dollar against Swiss franc (USD/CHF).

If you think one currency will appreciate against another, you may exchange that second currency for the first one and be able to "stay" in it. If everything goes as you plan it, eventually you may be able to make the opposite deal in that you may exchange this first currency back for that other and then collect profits from it. As a note bear in mind that no dividends are paid on currencies.

The fact is that the FOREX market never stops; even on September 11, 2001 you could still get your hands on two-side quotes on currencies. The currency market is the largest and oldest financial market in the world. It is also called the foreign exchange market or FX market for short. It is the biggest and most liquid market in the world, and it is traded mostly through the 24 hour-a-day inter-bank currency market.

When you compare them, you will see that the currency futures market is only one per cent as big. Unlike the futures and stock markets, trading currencies is not centered on an exchange. Trading moves from major banking centers of the U.S. to Australia and New Zealand, to the Far East, to Europe and finally back to the U.S. it is truly a full circle trading game. In the past, the forex inter-bank market was not available to small speculators because of the large minimum transaction sizes and strict financial requirements. Banks, major currency dealers and sometimes even very large speculator were the principal dealers. Only they were able to take advantage of the currency market's fantastic liquidity and strong trending nature of many of the world's primary currency exchange rates.

Today, foreign exchange market brokers are able to break down the larger sized inter-bank units, and offer small traders like you and me the opportunity to buy or sell any number of these smaller units. These brokers give any size trader, including individual speculators or smaller companies, the option to trade at the same rates and price movements as the big players who once dominated the market.


Friday, 22 February 2008

The 6 Advantages Forex Trading Has Over Other Investments

There are many different advantages to trading forex instead of futures or stocks, such as:

1. Lower Margin

The positions that you have in your account could be partially or completely liquidated on the chance that the available margin in your account falls below a predetermined amount. You may not actually get a margin call before your positions are liquidated. Because of this, you should monitor your margin balance on a regular basis and utilize stop-loss orders on every open position to limit downside risk.

2. No Commission and No Exchange Fees

When you trade in futures, you have to pay exchange and brokerage fees. Trading forex has the advantage of being commission free. This is far better for you. Currency trading is a worldwide inter-bank market that lets buyers to be matched with sellers in an instant.

Even though you do not have to pay a commission charge to a broker to match the buyer up with the seller, the spread is usually larger than it is when you are trading futures. For example, if you were trading a Japanese Yen/US Dollar pair, forex trade would have about a 3 point spread (worth $30). Trading a JY futures trade would most likely have a spread of 1 point (worth $10) but you would also be charged the broker's commission on top of that. This price could be as low as $10 in-and-out for self-directed online trading, or as high as $50 for full-service trading. It is however, all inclusive pricing though. You are going to have to compare both online forex and your specific futures commission charge to see which commission is the greater one.

3. Limited Risk and Guaranteed Stops

When you are trading futures, your risk can be unlimited. For example, if you thought that the prices for Live Cattle were going to continue their upward trend in December 2003, just before the discovery of Mad Cow Disease found in US cattle. The price for it after that fell dramatically, which moved the limit down several days in a row. You would not have been able to leave your position and this could have wiped out the entire equity in your account as a result. As the price just kept on falling, you would have been obligated to find even more money to make up the deficit in your account.

4. Rollover of Positions

When futures contracts expire, you have to plan ahead if you are going to rollover your trades. Forex positions expire every two days and you need to rollover each trade just so that you can stay in your position.

5. 24-Hour Marketplace

With futures, you are generally limited to trading only during the few hours that each market is open in any one day. If a major news story breaks out when the markets are closed, you will not have a way of getting out of it until the market reopens, which could be many hours away. Forex, on the other hand, is a 24/5 market. The day begins in New York, and follows the sun around the globe through Europe, Asia, Australia and back to the US again. You can trade any time you like Monday-Friday.

6. Free market place

Foreign exchange is perhaps the largest market in the world with an average daily volume of US$1.4 trillion. That is 46 times as large as all the futures markets put together! With the huge number of people trading forex around the globe, it is very hard for even governments to control the price of their own currency.

Wednesday, 20 February 2008

Forex Technical Analysis for 02/18—02/22 Week

EUR/USD trend: hold.

GBP/USD trend: sell.

USD/JPY trend: hold.

EUR/JPY trend: hold.

Floor Pivot Points:
Pair3rd Sup2nd Sup1st SupPivot1st Res2nd Res3rd Res

Woodie’s Pivot Points:
Pair2nd Sup1st SupPivot1st Res2nd Res

Camarilla Pivot Points:
Pair4th Sup3rd Sup2nd Sup1st Sup1st Res2nd Res3rd Res4th Res

Tom DeMark’s Pivot Points:

Fibonacci Retracement Levels:

Tags: EUR/JPY, EUR/USD, Fibonacci, GBP/USD, pivot points, technical analysis, USD/JPY

Interview with FXCM

This my first interview with a major Forex broker. Jaclyn, Public Relations Coordinator of the FXCM broker. Decided to answer some of the questions I’ve sent them via e-mail. The questions touch various topics and should be interesting not only to the current customers of the FXCM, but also to any trader who is interested in a current on-line Forex trading situation. Bad thing is that answers sound too commercial, in my opinion. But that shouldn’t be a problem anyway.

What important features distinguish FXCM among other Forex brokers of your kind? Why do traders pick you among others?

FXCM principally stands out for the high quality of our execution and our excellent trading signals. Our No Dealing Desk system gets prices and liquidity from 7 of the world’s largest global banks and financial institutions (we plan to add more in future). FXCM streams the best available prices we receive from these institutions, plus a clearly disclosed markup, to our clients. The markup is typically one pip on either side. This pricing model clearly aligns our interests with that of the trader. Furthermore, FXCM has very strong credit relationships with these financial institutions, based on over $350 billion in monthly notional trading volume. These credit relationships aim to provide FXCM clients access to both excellent prices and deep liquidity.

All live clients at FXCM also receive free trading signals. We have collected together a number of powerful trading signals and tools from both third party providers and the DailyFX research team into a site called DailyFX PLUS. This site includes over 100 technical trading signals per day, specialized strategy pieces, and twice daily SSI positioning and Open Interest data.

What qualities are vital for every successful Forex broker, in your opinion, those things that make brokers grow?

Clients care about making money. Giving clients the best system which helps them try to make money is the most vital growth strategy. Having excellent execution with deep liquidity, low spreads, and fast confirmation is essential. We feel our No Dealing Desk system provides these things, as well as a level playing field free of dealer intervention. Having high quality trading signals and tools, such as our interactive charts and DailyFX PLUS, are also important for the client’s success. Finally, traders need to be able to concentrate on their trading. They should not be distracted by worrying about their broker’s financial stability. FXCM comfortably exceeds all current and currently proposed minimum capital requirements in the USA, is regulated on 3 continents, and is now the only retail Forex broker to post its balance sheet publicly on its website. Our clients’ ability to trade with confidence is the key to FXCM’s future growth.

Being a big company, FXCM had more than $200 million revenue in 2006. Since then, how has it grown?

The FXCM Group continues to grow strongly. We can now boast over 100,000 accounts trading on our platform, and our nominal trading volume has risen from over $100 billion per month to over $350 billion. I August 2007, we set a new record of over $500 billion in nominal volume.

MetaTrader 4 trading platform is rather popular among Forex traders. Checking your site some time ago I didn’t find any signs of its support. But now you announce that you are going to add it soon. Will it be some FXCM customization of the platform or will you go with the generic MetaTrader 4?

We are planning a soft launch of the popular MetaTrader 4 platform in February 2008, with a full launch in March. MT4 is a very popular and useful front-end platform. We’re matching that with our excellent trading backend, the No Dealing Desk system. We expect Metatrader enthusiasts will enjoy taking advantage of our great execution system, and also enjoy being able to use Metatrader with a regulated and financially secure broker.

Being one of the leading Forex brokers, do you invest in the development of new instruments or features? Something innovative, that can only be achieved with the large team of professionals.

We are constantly bringing our extensive resources to bear on developing new products. We have recently introduced a large number of platform improvements, including fractional pip pricing, one-click trading, and the ability to trade from charts. We have also added many trading resources, such as trading signals in DailyFX PLUS and the innovative SSI. The DailyFX team of analysts is constantly expanding their scope and depth of coverage, providing insightful fundamental and technical analysis as well as actionable trading setups every day for range traders, news events, hedging, and carry traders. We plan to continue expanding our offerings in the coming years and to remain on the forefront of retail Forex innovation.

Please, tell us more about FXCM managed Forex accounts. Do you plan on adding more types of them?

FXCM currently offers two Managed Account Programs, the Sentiment Program and Sentiment Aggressive Program. These automated active funds utilize FXCM’s unique SSI data to trade, and have performed well in 2007.* You can view updated results on our managed accounts webpage. We are planning to release several new managed account programs that are not correlated with our current programs, further expanding our clients’ options for managed products.

FXCM has been involved in the controversial Refco bankruptcy case. How did this fact affect your business, if at all?

Refco held an investment stake in FXCM, but was not involved in FXCM’s day-to-day operations. This stake has been sold to a very large investment bank and a number of other investors. You can read more about it on our website.

Considering the recent popularity of the e-currencies and the on-line payment systems, does FXCM plan on adding such options for the funds deposits and withdrawals, PayPal, at least?

As a trading firm regulated in the USA, UK, Hong Kong, and Canada, FXCM exercises strict anti-money laundering (AML) procedures. While these e-currency services are convenient, they are also fairly anonymous, and do not satisfy these strict AML standards. We do not currently plan to offer them.

What do you think about allowing trading accounts’ size below $300? With micro-lots maybe?

As I mentioned before, FXCM is compensated through a disclosed markup to the prices we get from several global financial institutions, acting as sort of an agency-model broker. That means that FXCM’s revenues are purely based on volume. So, FXCM is concentrating on attracting high-volume traders. We offer an expansive Gold Program for large accounts, which offers free professional charts with backtesting, specialized reps, free wire transfers, and exclusive trading commentary from our senior strategists, Kathy Lien and Boris Schlossberg. Of course, as one of the inventors of the Mini Account, FXCM has many advantages for small traders as well, including No Dealing Desk trading. All mini accounts get the same powerful trading signals in DailyFX PLUS that all other accounts get, and any new mini account holder at FXCM can get our popular FX Power Course for free. I believe the FX Power Course is a great introduction to the market, as it covers many of the basic skills that all traders need to develop.

Does FXCM plan to acquire any smaller Forex brokers in future? To increase your market presence, or to enter regional or very specific markets?

FXCM already has a worldwide presence, with clients in nearly every country. We are planning to expand our support for the Middle East by opening a Dubai office this year. As for smaller Forex brokers, it is important to note that legislation has been proposed in Congress to raise the minimum capital requirement for US-based Forex Dealer Members again, this time to $20 million. The recent raising of requirements to $5 million has already resulted in significant consolidation in the Forex market, and we expect that if this new requirement passes, there will be further consolidation.

Currently FXCM is offering a very useful Forex informational resource — DailyFX. Are there any plans do provide more such helpful resources in future?

One area that we have greatly expanded our offerings is the DailyFX Forum. You can access it from the DailyFX website. Our analysts are active participants in the forums, creating and facilitating discussion amongst traders. FXCM plans to add new sections and services here. We are also constantly improving and expanding our offerings on DailyFX, as well as our free webinar series and popular online courses.

In my opinion Forex is far from gambling, but taking in attention the current U.S. governmental campaign against on-line gambling, do you think it is possible that the Forex trading (at least through "dealing desks") will be banned as gambling?

Forex is a newly regulated industry, and we need to uphold a higher standard of conduct. Dealing desks can work well for both client and broker, but there is a very real perception that dealing desks have an inherent conflict of interest between their clients’ profit/loss and their own firm’s bottom line. FXCM’s No Dealing Desk system eliminates this potential conflict of interest, and I think it is in the industries best interest to move in this direction.

* Past performance is not indicative of future results, as returns may vary according to market conditions.

Tags: Forex broker, FXCM, interview

CPI Advances Moderately, Moves Dollar Up

CPI release for January along with some moderate data on housing lifted traders’ expectations and spurred some good growth of the U.S. dollar with both EUR/USD and GBP/USD losing about a half percent for the day. It may be a good sign for the dollar bulls eventually as it is almost definite now that the recession is either ending or is not going to happen at all.

January CPI grew at the same pace as in December — 0.4% up above the expected by the markets 0.3% growth.

Housing starts during the same month increased from 1,004k to 1,012k, but were slightly below the expected 1,015k level, while building permits decreased from 1,080k to 1,048k and were slightly above the expectations (1,040k).

Tags: CPI, dollar, Forex, fundamental analysis, housing starts and building permits

Trading Forex To Advance Your Financial Position

Everyday, currencies are traded in an international foreign exchange market, otherwise known as the forex market, with the main marketplaces (otherwise known as bourses) existing in the world's financial centes New York, London, Tokyo, Frankfurt and Zurich. Historically, the only way to participate was from the trading floor of one of these bourses, but today, people can trade forex from anywhere through a secure internet connection and a PC.

Today's traders operate in a global network, taking positions in the market and making investment decisions based on either relative value between two currencies, or a particular currency's actual price. Currency value fluctuations are constantly renegotiated through trading activity, and this activity, and the corresponding currency values are also indicators of the levels of currency supply.

An example of market behaviour greater demand for the Euro might indicate a weakening supply. Low supply and increased demand will drive the price of the Euro up against other currencies like the dollar, until the price better reflects what traders are prepared to pay when short supply exists. Another way to look at this situation is this higher demand means it will cost more dollars to buy the Euro, which equates to a weakening of the dollar in comparison. Analysis of situations such as in this example forms the basis for a trader's investment decisions, and they will purchase or sell currency accordingly.

This should be remembered, as while many see the foreign exchange market as the vehicle for converting their home currency while travelling abroad, many others choose to use the market to advance their financial position and secure their future.

Sunday, 17 February 2008

The Benefits of Trading The Forex Market

Historically, the FX market was available most to major banks, multinational corporations and other participants who traded in large transaction sizes and volumes. Small-scale traders including individuals like you and I, had little access to this market for such a long time. Now with the advent of the Internet and technology, FX trading is becoming an increasingly popular investment alternative for the general public.

The benefits of trading the currency market:

It is open 24-hours and it closes only on the weekends;

It is very liquid and efficient;

It is very volatile;

It has very low transaction costs;

You can use a high level of leverage (borrowed money) with ease; and

You can profit from a bull or a bear market.

Continuous, 24-Hour Trading

The currency exchange is a 24-hour market. You may decide to trade after you come home from work. Regardless of what time-frame you want to trade at whatever time of the day, there would be enough buyers and sellers to take the other side of your trade. This feature of the market gives you enough flexibility to manage your trading around your daily routine.

Liquidity And Efficiency

When there are a lot of buyers and a lot of sellers, you can expect to buy or sell at a price that is very close to the last market price. The currency market is the most liquid market in the world. Trading volume in the currency markets can be between 50 and 100 times larger than the New York Stock Exchange (Source: Oanda.)

Note about price gaps:

For those people who have already traded other markets, you probably know about price 'gaps'. 'Gaps' occur when prices 'jump' from one price level to another without having taken any incremental steps to get there. For example, you may be trading a share that closes at $10 at the end of today but due to some event that happens overnight; it opens tomorrow at $5 and continues to go downwards for the rest of the day.

Gaps bring about another degree of uncertainty that may meddle with a trader's strategy. Probably one of the most worrying aspects of this is when a trader uses stop-losses. In this case, if a trader puts a stop-loss at $7 because he no longer wants to be in a trade if the share price hits $7, his trade will remain open overnight and the trader wakes up tomorrow with a loss bigger than he may have been prepared for.

After looking at a couple of forex charts, you will realize that there are little price 'gaps' or none at all, especially on the longer-term charts like the 3-hour, 4-hour or the daily charts.


Volatility is a measure of maximum return that a trader can generate with perfect foresight. Volatility for the most liquid stocks are between 60 to 100. Volatility for currency trading is 500. (Source: Oanda.)

In this respect, currencies make a better trading vehicle for day-traders than the equity markets.

Low Transaction Costs

A currency transaction typically incurs no commission or transaction fees. For a forex trader, the spread is the only cost he or she needs to cover in taking on a position. In addition, because of the currency market's efficiency, there is little or no 'slippage' costs.

Due to lower transaction costs, minimum slippage and strong intra-day volatility, individuals can trade frequently at small costs. As an approximate, you may only expect to have a spread of 0.03% of your position size. To give you an example, you can buy and sell 10,000 US Dollars and this will only incur a 3-point spread, equivalent to $3.


There are not a lot of banks or people who would lend you money so that you can use it to trade shares. And if there are, it would be very hard for you to convince them to invest in you and in your idea that a certain share is going to go up or down. Therefore, most of the time, if you have a $10,000 account, you can only really afford to buy $10,000 worth of stocks.

In currency trading however, because you use 'borrowed money', you can trade $10,000 of a currency and you only need anywhere between fifty (For a margin lending ratio of 200:1) to two hundred dollars ( For a margin lending ratio of 50:1) in your trading account. This makes it possible for an average trader with a small trading account, under $10,000 to be able to profit sufficiently from the movements of the currency exchange rates. This concept is explained further in The Part-Time Currency Trader.

Profit From A Bull And Bear Market

When you are trading shares, you can only profit when the price of a stock goes up. When you suspect that it is about to go down or that it is just going to be moving sideways, then the only thing you can do is sell your shares and stand aside. One of the frustrations of trading shares is that an individual cannot profit when prices are going down. In the currency market, it is easy for you to trade a currency downward so that you can profit when you think it is going to lose value. This is easy to do because currency trading simply involves buying one currency and selling another, there is no structural bias that makes it difficult to trade 'downwards'. This is why the currency market has been occasionally referred to as the eternal bull market.

This is an excerpt, modified from the book: The Part-Time Currency Trader.

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Introduction To Forex Trading

There are many markets: markets for stocks, futures, options and currencies. These are probably the most accessible markets for everyday traders like you and I. People easily understand the basics of trading shares, so I will occasionally use examples from that market.

I began trading shares first and then I moved on to trading currencies; therefore, most of the examples I will be using in this book are derived from trading currencies.

If you do not know a lot about currency trading, allow me to introduce it to you. It is what I trade and I believe that it is one of the best markets to trade because of its efficiency. The transaction costs to execute a trade are minimal and most brokers provide you with the tools and data you need to make your trading decisions, they usually provide them for free. The market is open 24 hours a day which allows you to design your trading hours around your daily commitments. It is very volatile, which is great for those people who are looking for day-trading opportunities.

The foreign exchange market is the market in which currencies are bought and sold against one another. People may loosely refer to this market under different labels, including foreign exchange market, forex market, fx market or the currency market.

The foreign exchange market is the largest market in the world, with daily trading volumes in excess of $1.5 trillion US dollars. All transactions involving international trade and investment must go through this market because these transactions involve the exchange of currencies.

It is the most perfect market that exists because it has a large number of buyers and sellers all selling the same products. There is a free flow of information and there are little barriers to participate.


The five broad categories of participants are: consumers, businesses, investors, speculators, commercial banks, investment banks and central banks.

Consumers, including visitors of countries, tourists and immigrants, do need to exchange currencies when they travel so that they can buy local goods and services. These participants do not have the power to set prices. They just buy and sell according to the prevailing exchange rate. They make up a significant proportion of the volume being traded in the market.

Businesses that import and export goods and services need to exchange currencies to receive or make payments for goods they may have bought or services they may have rendered.

Investors and speculators require currencies to buy and sell investment instruments such as shares, bonds, bank deposits or real estate.

Large commercial and investment banks are the 'price makers'. They are the ones who buy and sell currencies at the bid-and-offer exchange rates that they declare through their foreign exchange dealers.

Central banks participate in the foreign exchange market in their effective duty as banks for their particular government. They trade currencies not for the intention of making profits but rather to facilitate government monetary policies and to help smoothen out the fluctuation of the value of their economy's currency.

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Forex Enterprise - A Full Review

After purchasing you are given a login page where you are introduced to the system which is in website format. Everything is easy to access and well organized.

After Nick gives you a little pep talk about positive thinking and goal setting, you will be introduced to his first recommendation: join Coastal Vacations. While not a part of his main Forex system this is a recommendation I could've done without.

In the pay per click section you are given a large list of keywords that Nick found convert really well with his system. Some of the keywords in the list have bid prices already attached to them so you can get front page exposure.

The course also has $50 in free adwords credit that unfortunately only works with new accounts so I was out of luck. If you don't already have an account this is worth the price of the course alone.

He has an ebook package that seemed like it was going to be really cool as there were dozens of bonus ebooks and software programs covering everything from creating ebooks and website templates, to getting top positions in the major search engines.

As I took a closer look at this package I realized there were some bargain bin informational products included. However, there were also alot of goodies in there as well that I found rather useful. You get so many ebooks and software in here that it really is worth far more than the price of the course.

There is a section on becoming an Ebay power seller in 90 days that goes into a fair amount of detail and wasn't bad. However, Ebay isn't something I have ever been particularly interested in doing. There is also a section on baccarat strategies that I had no interest in.

One of the last sections of his course introduces you to e-currency exchanging using the DXINONE system. It is a great way to acquaint yourself with this increasingly popular opportunity without having to buy standalone e-currency courses which can cost a couple hundred dollars.

The author has combined several effective ways to earn money online and rolled them all into one course. While I didn't jump up and down about all of his strategies, the free ebooks, software, and adwords credit make Forex Enterprise worth the money.

This content was originally posted on © 2008 If you are not reading this text from the above site, you are reading a splog

Thursday, 14 February 2008

4 Ways in Which the Weather can Affect the Forex Markets (by Heather Johnson)

Currency trading can be approached using a number of different methods. Many mathematical purists will tell you that technical analysis is the only way to go, swearing that they can see the future by poring over chart after chart after chart. Others glance at the trends, ruminate for a minute or two, then go with a hunch and ride a pair wherever it wants to go. Some forex traders, however, attempt to accumulate as much information as they possibly can before investing in a currency pair. These thorough individuals stay apprised of politics, trade and investment, interest rates, consumer trends, the housing market, inflation, capital markets, industry indicators, and the latest economic theory. But even these studious individuals can overlook a resource that offers great insight into developments in the forex markets. This important font of knowledge is, of course, your local weatherman.

While this comment is made at least partially tongue-in-cheek, the idea that the weather could affect the forex markets is not at all far-fetched. Weather conditions have a profound effect on local economies, on energy consumption, and on the all-important agricultural industry. A change in the weather can have a tremendous impact on the economy, causing currency values to fluctuate. This article will examine the affects of North American weather on the Dollar, though the observations herein can easily be applied to most developed countries and their currencies.

So without further ado, here are four ways that the weather affects the dollar: a must-read list for the truly obsessive forexer.

  1. Tornados, hurricanes, floods and the like: Hurricane Katrina is a prime example of how natural disasters can affect the Dollar, but these incidents don’t need to be on the scale of Katrina to have an influence on the forex markets. Any weather event that damages property or impacts citizens to the point that they require assistance from local or federal government agencies can put a strain on the Dollar. Sizeable disasters can also affect national morale, causing unease or even panic, neither of which is ever good for the Dollar.
  2. Droughts and deluges: Anyone who has ever watched the local news in Iowa knows where the agricultural industry’s priorities lie. By the sixth appearance of the weatherman in the first fifteen minutes of the broadcast, it is evident that the weather is a major economic concern. Any conditions that cause crop failure or harm livestock not only hurt farmers, but they drive up prices and force food retailers to look abroad for substitute products. When this occurs, the trade deficit increases and the Dollar takes a hit.
  3. Cold cold winters: An extraordinarily cold winter results in unexpected increases in energy costs for both industries and consumers. As the bulk of the gas and oil used in the US is imported, the Dollar suffers as Americans try to stay warm.
  4. Hot hot summers: An abnormally hot summer also leads to higher energy costs for consumers. The summer months are normally spending months, when Americans travel and shop for big-ticket items. If Americans have less disposable income because of increased electricity bills, then everyone is more likely to stay home and enjoy the AC rather than venture out into the heat to buy a new car and start that cross-country trip. In this way, a hot summer can slow the economy and have a deflating effect on the Dollar.


Heather Johnson is a freelance finance and economics writer, as well as a regular contributor for, a site for currency trading and forex trading information. Heather welcomes comments and freelancing job inquiries at her email address heatherjohnson2323@gmail.

Tags: Forex, Forex articles, fundamental analysis

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Wednesday, 13 February 2008

Forex Trading

So what is is Forex trading you may ask? Forex is the exchange you can buy and sell currencies. For example, you might buy British pounds (by exchanging them to the dollars you had), then, after pounds / dollar ratio goes up, you sell pounds and buy dollars again. At the end of this operation you are going to have more dollars, then you had at the beginning.

The Forex market has much higher liquidity, then the stock market, as much more money is being exchanged. Forex is spread between banks all over the planet and as a result it means 24 hour trading.

Unlike stocks, ForexForex, where the size of minimum deposit equals $100. It makes possible for individuals to enter this market easily.

The name convention. In Forex, the name of a "symbol" is composed of two parts - one for first currency, and another for the second currency. For example, the symbol usdjpy stands for US dollars (usd) to Japanese yen (jpy).

As with stocks, you can apply tools of the technical analysis to Forex charts. Trader's indexes can be optimized for Forex "symbols", allowing you to find winning strategy.

Example Forex transaction

Assume you have a trading account of $25,000 and you are trading with a 1% margin requirement. The current quote for EUR/USD is 1.3225/28 and you place a market order to buy 1 lot of 100,000 Euros at 1.3228, expecting the euro to rise against the dollar. At the same time you place a stop-loss order at 1.3178 representing a maximum loss of 2% of your account equity if the trade goes against you, 50 pips below your order price, and a limit order at 1.3378, 150 pips above your order price. For this trade, you are risking 50 pips to gain 150 pips, giving you a risk/reward ratio of 1 part risk to 3 parts reward. This means that you only need to be right one third of the time to remain profitable.

The notional value of this trade is $132,280 (100,000 * 1.3228). Your required margin deposit is 1% of the total, which is equal to $1322.80 ($132,280 * 0.01).

As you expected, the Euro strengthens against the dollar and your limit order is reached at 1.3378. The position is closed. Your total profit for this trade is $1500, each pip being worth $10.


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Forex Avenue: The Road to Riches

In my continuing quest to provide visitors of my site with a large amount of options to chose from when considering working from home I have done some research on Forex trading. I first learned of Forex trading while pursuing my MBA program. For those of you who have never heard of this, Forex trading is the exchange of foreign currency.

I know I would have never even know this was an option for making money had I not found out in class. Most of the really big corporations have departments of people that do this for a living because it can be very lucrative if done correctly. The best news I have learned about this process of exchanging currencies is that many of the websites that you can sign up with to do this offer free trial accounts to help you learn before you invest your money into trying it. You won't make any money in the trial accounts if you do well, it is just pretend money essentially but with the real market conditions. If you do well in the trial account you will know if this is something you want to try on your own.

Benefits to Forex trading are that is can be done 24/7 whereas the stock market is a business hours only exchange. It is 24/7 because it is done with countries around the world so clearly there are countries that are awake and working while we sleep. Another benefit is you are in control of the trading on your account. You do not need to hire a licensed broker to make your trades and charge you fees. Along those same lines, anyone who does any investing most likely knows that some funds require you to own then for a certain period of time or pay early withdrawal fees. You do not need to concern yourself with this either. One last benefit that I would like to point out is the fact that Forex is not really subject to the same kinds of swings in the market that stocks are subject to. Of course if you always buy and sell the same currencies then there will be market swings. But, because there are hundreds of currencies out there, there is always going to be something for you to make money on because while one currency is up in value another one is down and vice versa.

While there are many benefits to this type of training, as I mentioned above, there are certainly risks involved as well. There are risks with exchange rates, central banks in foreign countries, and risks involving interest rates and credit. Forex is quickly becoming a popular way to help diversify your investment portfolio. If you are good with understanding investing concepts and enjoy doing it this may be the home business opportunity for you. Just do your research and try to find one of the sites offering the free trial account to practice with and you are well on your way down the Road to Riches.


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Why Trade the FOREX?

My purpose for writing this article is to demonstrate to you the advantages of trading on the Forex market. However, there is one myth that I want to dispel before I go further. The myth is that there is a difference between trading and investing. To dispel that myth I quote from Al Thomas, President of Williamsburg Investment Company, who wrote "If It Doesn't Go Up, Don't Buy It". He said "Everyone who invests is a trader, only the time period is different." It is a lesson that I took seriously after taking a beating in the stock market in 2000.

So now, let's compare features of currency trading to those of stock and commodity trading.

Liquidity - The Forex market is the most liquid financial market in the world around 1.9 trillion dollars traded everyday. The commodities market trades around 440 billion dollars a day, and the US stock market trades around 200 billion dollars a day. This ensures better trade execution and prevents market manipulation. It also ensures easily executable trading.

Trading Times - The Forex market is open 24 hours a day (except weekends) which means that in the US it opens at 3:00 pm Sunday (EST) and closes Friday at 5:00 (EST), allowing active traders to choose the times they want to trade. Commodities trading hours are all over the board depending on which commodity you are trading. Including extended trading times US stocks can be traded from 8:30 am to 6:30 pm (ET) on weekdays.

Leverage - Depending on your Forex account size, your leverage may be 100:1, although there are Forex brokers that offer leverage of up to 400:1 (not that I would ever recommend that kind of leverage). Leverage in the stock market can be as high as 4:1, and in the commodities market, leverage varies with the commodity traded but it can be quite high. Because the commodity markets are not as liquid as the Forex

Trading costs - Transaction costs in the Forex market is the difference between the buy and sell price of each currency pair. There are no brokerage fees. For both the stock and the commodity markets, there are transaction costs and brokerage fees. Even when you use discount brokers, those fees add up.

Minimum investment - You can open a Forex trading account for as little as $300.00. It took $5,000 for me to open my futures trading account.

Trade execution - In the Forex market, trade execution is almost instantaneous. In both the equity and commodity markets, you count on a broker to execute your trades and their results are sometimes inconsistent.

While all of these features make trading the Forex market very attractive, it still requires a lot of education, discipline, commitment and patience. All trading can be risky.

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Explosive Profits: 7 Reasons to Trade Forex

There are many money-making opportunities out there and we've been involved with quite a few, namely property marketing, web development, residential construction security, multi-level marketing businesses etc.

We've come to a few conclusions with the help of some well-known properity coaches.

Often people with the income they desire don't have the time to enjoy it. Those that have time don't often have money. You don't have to sacrifice your life-style to earn an above-average income. If you focus on the for a few months you can make that dream a reality and create time and money to do what you REALLY want.

To earn a living money is given in exchange for a product or service rendered. It needs to be sold continuously otherwise your income stops abruptly unless it's a repeat type of product or service.

Money is a medium of exchange. There's no magical formula to possess it, you need to exchange something of value for it.

What if, you could have access to thousands of customers who are ready, willing and able to buy from you whenever you wanted? Wouldn't it be great to avoid any hassles like money collection problems (just had a delayed payment from my web business), keeping difficult customers happy (we all know what that's like), competition stealing your business without providing the same value etc.

All that is possible with . You can also trade from anywhere. Take your laptop with you, find an internet connection and away you go.

Another advantage is that you don't need experience to get started. Get a traditionally job involves accumulating specialized experience, having a well-polished resume and having the right contacts. With the right training course, you can get started straight away.

Here's 7 more reasons to trade :

1. It never closes. It's open around the clock, worldwide. Trading positions open at Monday 7am, New Zealand time and close 5pm New York time on Friday. During this time, you can enter or exit the market whenever you like. It's a continuous electronic currency exchange. This is great because you can trade whenever you have spare time.

2. Leverage. Standard $100 000 currency lots can be traded with as little as $1000. This is mainly because of the ease with which you can buy and sell, some brokers will leverage up to 200 times, so with $100 you can control a 200 000 unit currency position. It's the best use of trading capital around, even banks lending on property investments don't come close.

3. Accurately predict the outcomes. Currency prices generally repeat themselves in predictable cycles so you can see what the trends are. 'Technical Analysis' helps to see these trends and profit from them.

4. Low Transaction Cost. In other words, you mistakes won't cost you a fortune. Good brokers won' charge commissions to trade or maintain an account even if you have a mini account and trade small volumes.

5. Unlimited Earning Potential. has a daily trading volume of over 1.5 trillion, the largest financial market in the world. It dwarfs the equities market (50 billion daily) and the futures market (30 billion).

6. You can make money in any market conditions. Each market is one currency against another, so when you buy in one, you're selling in another so there's no biase towards either currency moving up or down. This means it's up to you to choose which currency to buy or sell with. Yu can make money going up or down.

7. Market transparency. This is an advantage in any business or trading environment. It means you can manage risk and execute orders within seconds. It's highly efficient and allows you to avoid unexpected 'surprises'.

I hope you're now convinced that is the best investment and income opportunity around.

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Forex The Future Investment

There are many many advantages over the various other ways of investing. First of all it is a 24 hr market, except for weekends of course. You have the US market then the european and then the Asian. One of the great times to trade is during the over lapping periods. The USA and european overlap between 5am & 9am eastern and the Euro & Asian between 11pm & 1am eastern. Usually the busiest time and best to trade.

The is also the risk factor for the accounts. With futures and options you can get margin calls that can wipe you out. If you get caught in a bad trade not only do you lose the money in the account but you may have to come up with alot more from your pocket. It can be very risking. But not in Forex. Worst case senerio you could lose whats in you account. But you would have to do something really stupid. Like making a big trade on a Fundamental day and leave it alone. If market takes a bad move and you weren't there. OOOPS. But That wouldn't happen with a smarth trader.

Then there are the demo accounts which is an account where you can trade using all the right things, platform,charts,and information. But you are using play money, or what we call paper trading too.

Plus with Forex you have a mini account. Instead of needing thousands of dollars to get into it. You can open an account with as little as $300.00. Now of course you will be trading at 1 tenth of a trade. IN other words you controling 10,000 instead of 100,000.00 These are call lots. Which also means you will only risk 1 tenth too!

So if you would love to learn to do investing and not have near the risk you really need to take a closer look at Forex trading.


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Investing in Forex

Investing in foreign currencies is a relatively new avenue of investing. There are considerably fewer people are aware of this market than there are people aware of several other avenues of investing. Trading foreign currency, also known as forex, is the most lucrative investment market that exists. There are several factors that make this true among which, successful forex traders earn realistic profits of one hundred plus percent each month. Compared to some of the better known investment markets such as corporate stocks, this is an unheard of return on investment. It's very necessary to mention here that a person who invests in forex must, without exception, make it a point to learn the detailed, but simple strategies and information surrounding the market. This very fact is what makes the difference between successful forex traders and other traders.

A few additional points, which create such powerful leverage for investors within the forex market are: The amount of capital required to begin investing in the market is only three hundred dollars. For the most part, any other investment market is going to demand thousands of dollars of the investor in the beginning. Also, the market offers opportunities to profit regardless what the direction of the market may be; In most commonly known markets investors sit and wait for the market to begin an up trend before entering a trade. Even then, investors, as a rule must sit and wait some more to be able to exit the trade with a nice profit. Given that the forex market produces several up, down, and sideways trends in a single day, it can easily be seen that forex stands head and shoulders above other markets. Additionally there are trading strategies, which are taught that provide for compounded profits; these are profits on top of profits. In addition, free demo accounts are available within the industry of forex trading, which facilitate the sharpening of skills without the risk losing any capital. And the advantage regarding the time factor in trading foreign currency is a very attractive point for any investor. Compared to one of the most sought after avenues of investing, which often requires forty or more hours each week, namely in the real-estate market, the forex market requires a much smaller demand on the investor's time. Forex

I hope this information gives you a clear understanding of how you can turn your investing into a true method of making your money work harder for you.


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Advantages of the Forex Market

What are the advantages of the Forex Market over other types of investments?

When thinking about various investments, there is one investment vehicle that comes to mind. The Forex or Foreign Currency Market has many advantages over other types of investments. The Forex market is open 24 hrs a day, unlike the regular stock markets. Most investments require a substantial amount of capital before you can take advantage of an investment opportunity. To trade Forex, you only need a small amount of capital. Anyone can enter the market with as little as $300 USD to trade a "mini account", which allows you to trade lots of 10,000 units. One lot of 10,000 units of currency is equal to 1 contract. Each "pip" or move up or down in the currency pair is worth a $1 gain or loss, depending on which side of the market you are on. A standard account gives you control over 100,000 units of currency and a pip is worth $10.

The Forex market is also very liquid. When trading Forex you have full control of your capital.

Many other types of investments require holding your money up for long periods of time. This is a disadvantage because if you need to use the capital it can be difficult to access to it without taking a huge loss. Also, with a small amount of money, you can control

Forex traders can be profitable in bullish or bearish market conditions. Stock market traders need stock prices to rise in order to take a profit. Forex traders can make a profit during up trends and downtrends. Forex Trading can be risky, but with having the ability to have a good system to follow, good money management skills, and possessing self discipline, Forex trading can be a relatively low risk investment.

The Forex market can be traded anytime, anywhere. As long as you have access to a computer, you have the ability to trade the Forex market. An important thing to remember is before jumping into trading currencies, is it wise to practice with "paper money", or "fake money." Most brokers have demo accounts where you can download their trading station and practice real time with fake money. While this is no guarantee of your performance with real money, practicing can give you a huge advantage to become better prepared when you trade with your real, hard earned money. There are also many Forex courses on the internet, just be careful when choosing which ones to purchase.

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Monday, 11 February 2008

U.S. Dollar Regains Positions on Mixed Fundamentals

Today, EUR/USD lost a small part of the pips that were gained yesterday after the Fed’s interest rate cut by 0.50%. Even the bad employment statistics didn’t prevent dollar from recovering from 1.4860 to 1.4814 against European currency. This can be also partially explained by the major resistance level that has formed near 1.4870 rate on EUR/USD.

Personal income in December rose by 0.5% — better than the analysts expected (0.4%), which can be a good sign for U.S. economy. Personal spendings were at 0.2%, higher than the expected value, but lower than 1.1% growth a year earlier. Core PCE inflation, as expected, didn’t change and was at 0.2% last month.

Initial jobless claims report showed a very disappointing dynamic this time — last week claims grew up from 306,000 (revised from 301,000) to 375,000 — that’s much more than 320,000 predicted by the economic experts.

Chicago PMI — the index of business purchasing activity — fell below the expectations (53.0) fro, 56.4 to 51.5.

Crude oil inventories in U.S. continued weekly growth trend and rose 3.6 million barrels last week, which is nothing but a good sign for the dollar, as the oil prices may stop affecting it negatively.

Tags: Chicago PMI, core PCE inflation, initial jobless claims, personal income

Falling Nonfarm Payrolls Fail to Support EUR/USD

Nonfarm payrolls is one of the most important indicators of the U.S. economy’s health. Market analysts expected it to grow up in January by 50,000. But in reality it didn’t grow at all, instead it dropped by 17,000. At first, this fueled dollar bears’ activity and drove EUR/USD up close to the historical borders, but then, after release of some other important indicators, it went down to about 1.4800.

The part of the employment report was the U.S. unemployment rate in January — it fell down from 5.0% to 4.9%.

Construction spendings in December fell down by 1.1%, faster than the analysts expected (0.5% drop).

Non-manufacturing ISM report on business activity in January resulted in PMI at 50.7%, showing an increase from the last month’s 48.4% and that it’s significantly better than the forecasted 47.5%.

Index of Consumer Confidence, reported by Reuters and University of Michigan, fell to 78.4 in January from 80.5 in December. Expected value for this indicator was 79.0.

Tags: construction spending, ISM services, Michigan Sentiment Index, nonfarm payrolls, unemployment rate

USD Rallies Up as BoE Cuts Interest Rate

Dollar (and, actually, Japanese yen too) showed a major triumph on Forex market today after the Bank of England decided to go down from 5.50% to 5.25% on the main interest rate. And despite, while BoE lowered the rate, ECB held the rate at the same 4.00% value, dollar bulls pushed EUR/USD down as well as the GBP/USD currency pair. And that’s on the disappointing fundamental data coming out in U.S.

U.S. initial jobless claims improved from the previous report at a little worse pace than market strategists expected — it fell from 378,000 (revised up from 375,000) to 356,000. That’s still a very high number for this indicator and it’s a clear sign of the current elevated recession risks.

Consumer credit in the United States in December grew by $2.4 billion — a very low number compared to the November’s $15.4 billion increase. Even pessimistic expectations of $8.0 million growth were above the released value.

Tags: BoE, consumer credit, ECB, EUR/USD, initial jobless claims, interest rates

Forex Technical Analysis for 02/11—02/15 Week

EUR/USD trend: sell.

GBP/USD trend: sell.

USD/JPY trend: sell.

EUR/JPY trend: sell.

Floor Pivot Points:
Pair3rd Sup2nd Sup1st SupPivot1st Res2nd Res3rd Res

Woodie’s Pivot Points:
Pair2nd Sup1st SupPivot1st Res2nd Res

Camarilla Pivot Points:
Pair4th Sup3rd Sup2nd Sup1st Sup1st Res2nd Res3rd Res4th Res

Tom DeMark’s Pivot Points:

Fibonacci Retracement Levels:

Tags: EUR/JPY, EUR/USD, Fibonacci, GBP/USD, pivot points, technical analysis, USD/JPY

Wednesday, 6 February 2008

Happy lunar new year


Happy lunar new year, to everyone whom it corncern ;)

Gong Xi Fa Cai! Xin Nian Kuai Le! Wan Shi Ru Yi! Xin Xiang Shi Cheng! Ying Chun Jie Fu!

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