Saturday, August 29, 2009

International organizations of Finance and Trading

International organizations European Common Market GATT = General Agreement on Tariffs and Trade G8 IMF = International Monetary Fund OPEC = Organization of the Petroleum Exporting Countries Basically trade means exchange of goods, services, or both. Trade is also called commerce. The actual face of trade was barter, which was the direct exchange of goods and services. Today traders generally negotiate through a medium of exchange, like money, which then makes buying separate from selling, or earning. The invention of money has made trade simpler. Trade between two traders is called bilateral trade, while trade between more than two traders is called multilateral trade. Trade exists for many reasons. It can be due to specialization and division of labor. Trade exists between regions because different regions have a comparative advantage in the production of some tradable commodity, or because different regions' size helps getting benefits of mass production. History of Trade: Trade originated in prehistoric times. It was the main facility of prehistoric people, who bartered goods and services from each other when modern money was never even thought of. Peter Watson dates the history of long-distance commerce from circa 150,000 years ago. Trade is believed to have taken place throughout much of recorded human history. Materials used for the creation of jewelry were traded with Egypt since 3000 BC. Long-distance trade routes first appeared in the 3rd millennium BC, by the Sumerians in Mesopotamia when they traded with the Harappan civilization of the Indus Valley. Trading is greatly important to the global economy. From the very beginning of Greek civilization to the fall of the Roman Empire in the 5th century, a financially worthwhile trade brought valuable spice to Europe from the Far East, including China. The fall of the Roman Empire, and the succeeding Dark Ages brought insecurity to Western Europe and a near end of the trade network. However some trade did occur, the Radhanites were a medieval group of Jewish merchants who traded between the Christians in Europe and the Muslims of the Near East. The Sogdians ruled the East-West trade route known as the Silk Road from the end 4th century AD to the 8th century AD. The Vikings and Varangians also traded from the 8th to the 11th century as they sailed from and to Scandinavia. Vikings sailed to Western Europe, while Varangians to Russia. Vasco da Gama restarted the European Spice trade in 1498. Earlier to his sailing around Africa, the flow of spice into Europe was controlled by Islamic powers, especially Egypt. The spice trade was of major economic importance and helped encourage the Age of Exploration. Spices brought to Europe from distant lands were some of the most valuable commodities for their weight, sometimes rivaling gold. In the 16th century, Holland was the centre of free trade, imposing no exchange controls, and advocating the free movement of goods. In 1776, Adam Smith published the paper “An Inquiry into the Nature and Causes of the Wealth of Nations”. This paper criticized Mercantilism, and argued that economic specialization could benefit nations just as much as firms. Since that time the division of labor was restricted by the size of the market, he said that countries having access to larger markets would be able to divide labor more efficiently and thereby become more productive. The Great Depression was a major economic collapse that ran from 1929 to the late 1930s. There was a great setback in trade and other economic indicators during this period. The lack of free trade was considered by many as a root cause of the depression. Only during the World War II the recession ended in United States. History of Money: The first instances of money were objects with fundamental value are called commodity money and includes any commonly-available commodity that has intrinsic value; historical examples include rare seashells, whale's teeth, and cattle. In medieval Iraq, bread was used as an early form of money. Roman denarius Currency was introduced as a standardized money to facilitate a wider exchange of goods and services. This first stage of currency metals were used to represent stored value. As the system of commodity money evolved in many instances it then became representative money. Current Trends: Doha round The Doha round of World Trade Organization negotiations aims to lower barriers to trade around the world, focusing on making trade fairer for developing countries. Talks have been hung over a divide between the rich, developed countries, and the major developing countries. Agricultural subsidies are the most significant issue upon which agreement has been hardest to negotiate. By contrast, there was much agreement on trade facilitation and capacity building. The Doha round began in Doha, Qatar, and negotiations has subsequently continued in: Cancun, Mexico; Geneva, Switzerland; and Paris, France and Hong Kong.

10 Forex Trading Essentials

These 10 Forex trading essentials are a high-level peek at the pitfalls that catch many traders. Compare your trading style with these simple fixes and if you are not employing some or all of them, you are placing yourself at a higher risk level. 1) Increase your time perspective - If you are not a well seasoned Forex trader, you shouldn't even look at a price chart of less than 60 minutes. The randomness of the normal transactions which occur in Forex will distort your judgment of the true picture. Use longer time frames, such as 60 minute, 4 hour and daily charts when planning your trades. 2) Reduce your position size to 5% Maximum - Having more than 3 to 5 percent of your trading capital on the table is a major no no. High leverage makes it very easy to get in away over your head. This combination snares many traders and can rapidly destroy your account. You need to have the ability to ride the volatility waves common in Forex. 3) Give your trade time to work - You can only use this option effectively if your position is sized safely... as per 2) above. Prices will fluctuate dramatically in Forex, and you need to be sure that a loss really is a loss before you close a trade that is moving against your plan. A 30 pip stop loss will often kick you out of a trade, just as it's about to turn in your direction. You need to allow for larger price swings... if you have determined the major price trend, be patient and let the odds work in your favor. 4) Reduce your dependence on technical indicators - Due to the fact that technical indicators get their data from past events, the reality is they have no ability to predict the future. Pro's that enjoy success using these indicators, often profit from the knowledge of how the masses are likely to react to this data, rather than the information itself. You need to determine the major trend (a simple moving average will show you this) and hop aboard. Use a longer time frame, as in 1). The largest players in Forex rely about 25% on technical indicators when making their trading decisions. 5) Trade only one or two currency pairs - And stick to the majors... not the crosses. Currency prices are driven primarily by fundamental data. In order to anticipate what is likely coming down the road, you need to follow some basic data for each of the countries involved. Trading too many currencies will make it difficult to keep up to date. There is equal opportunity to profit from each of the pairs, so wait until your experience level has matured and the information tends to sink in without as much effort on your part before you start to trade more currencies. 6) Average in and out of your trades - If your trading account is less than $50,000 have your broker enable mini-lots for your account. This will allow you to average in and out of your trades... a great way to add more flexibility to your account. If this applies to you and your broker doesn't offer mini lots, find a new broker... this is an important need to do. 7) Follow the data for your currency pair(s) - Know what data is pending for release. Volatility often increases dramatically when these releases occur. The safe strategy is to exit your positions prior to major releases... this is the way many of the larger accounts handle these situations. Data releases can often cause a change to the trend. Take them seriously. 8) Determine the trend and get aboard - As with any type of trading, the safest bet is to determine which way prices are trending, and then trade in that direction. You don't need anything fancy... a simple moving average on your candlestick chart is sufficient. Zoom your chart out to be sure you have the big picture. Compare where the price is now, relative to where is has been for a significant amount of time (at least a month). Use caution if the current price is near upper or lower extremes, as there may be a trend change once that extreme is reached. 9) Know when to take a profit - A winning position can quickly turn into a loser if you set your sights too high. Don't be afraid to take your profit - or a part of your profit at 20 or 30 pips. The price waves in Forex make it ideally suited to averaging into and out of positions by using multiple entry and exit points for each position. This is exactly where your mini lots can help! The benefit of spreading out your position is that your overall risk is reduced. 10) Stop listening to "Gurus" - Don't fall into the trap of believing everything, or even most things, you hear. The trading world is overflowing with gurus only too willing to offer their opinion on the future. It will only be an opinion, nothing more. They may seem to have convincing data, but trust your own brain. You need to weigh the economic data from your countries... that is what drives currency prices. The enormous size and nature of Forex ensure there is no insider information. You have access to the same data as everyone else in the game. In time, your own instinct will guide you to your goals, and that is what you need to trust.

Forex Trading, What Hours Should I Be Ready For Trading?

Once you have decided to enter the Forex trading world you will find that FX trading has many advantages over other capital markets. Including among others; very low margins, free trading platforms, high leverage and around-the-clock trading. It is my main concern in this article to let you know what hours you should be ready and focus for start trading, so you can expect the highest profits in your trades, and not just consider that around-the-clock trading means you should randomly trade through out the day. In short, it is important to know what the best hours to trade are because if you want to find an appreciable number of profitable trades you need to enter the forex market at the best period of time, i.e., when the activity, the volume of transactions, is the highest. At any given time; somebody, somewhere in the world is buying and selling currencies. As one market closes, another market opens. Business hours overlap, and the exchange continues as day becomes night and night becomes day. Giving you 5.5 entire potential trading days. Forex Trading begins in New Zealand at Sunday 5pm EST, and then is followed by Australia, Asia, the Middle East, Europe, and America in this order and through out the day and through out the week until Friday 4pm EST when the American market closes. Other important facts every Forex trader should know are: the US & UK markets account for more than 50% of the forex market transactions; Forex major markets are: London, New York and Tokyo. Nearly two-thirds of NY activity occurs in the morning hours while European markets are open. And maybe one of the most important characteristics; Forex Trading activity is heaviest when major markets overlap. So, the answer to the question; “What hours should I be trading?” is dictated by this last characteristic, you should trade when the major markets overlap. Now, when do they overlap?. Considering the different time zones of the world and open and close times for Australian, New Zealand, Japan, America and Europe markets. We can arrive to the conclusion that there are two major time gaps when two of the major markets overlap during trading hours. These hours are between 2 am and 4 am EST (Asian/European) and between 8 am to 12 pm EST(European/N. American). So if you want to catch the best trading opportunities of the day and you are in the American continent you must be ready to wake up early or go to sleep late some times. Of course things change around the world. What's the best region where to trade from if you can't wake up early?… Maybe the Ukraine.

A Good Forex Trading System And Its Main Characteristics.

Forex trading is one of the great money making opportunities available these days. People from many walks of life, men and women, decide to join the forex trading world everyday looking for the great style of life a profitable forex trader can achieve. But once you enter the world of Forex trading the first thing you will realize is that it's not easy to become a profitable trader. The more you learn about the currency markets the more you realize the urgent need of a good forex trading system in order to make money and not just spend your time entering trades as a hobby taking you nowhere. There are many companies and individuals out there offering you forex trading systems that promise to be the real thing and that will teach you how to earn tons of money easily. But you must be aware that not all of them are always sincere and you should be ready to look for some specific characteristics good forex trading systems must have. For example; they must be willing to let you know part or the basics of their trading system for free, so you can evaluate their claims and be sure of what you will be buying from them. Also, they should offer you a money back guarantee in case the complete system doesn't stand to their initial claims. A very good sign of the “goodness” and utility of the system would be if the company offering you their services offers to follow up with you about any doubts and questions arising from the use of their trading system. This follow up can include a users forum, contact phone number, email direct contact, etc. Also the forex trading system you are acquiring should be recession-proof and go beyond the traditional linear models that are based mostly on past results, it is difficult to make decisions about the future moves of the currency markets based just on past performance. Ideally, the currency trading system you get should allow you to go with the market direction, either up or down, instead of hoping and believing it will go one way or another, and then find out it was all wrong. And, of course. The system should be given to you with software that performs the complex math behind it, making it simple for you to use at any time and without strange formulas. Look for these main characteristics in the forex trading system you are planning to buy, and if it full fills them; then you are quite certainly making a good decision by planning about using it in your trading career.

Are You Trading to Your Strengths?

In your trading, are you playing to your strengths, or are you simply being an "opportunity seeker"? There is a huge difference between the two and if you're just an opportunity seeker, then you are leaving yourself open to frustration and losses. There are many parallels between trading, business and gambling, and your ultimate success long-term will be determined by how you approach any of the three. Playing to your strengths is critical in all three. In any of the pursuits, there is competition and you always want to make sure that you're playing to your strengths and not your weaknesses. The objective is winning, that is profiting, and you want every advantage that you can get. Too often, the opportunity seeker will go after an opportunity just because they see that there's money to be made, and they figure that they can shore up their weaknesses (learn more) enough to go get that money. Let's take a brief look at how this applies in each area, keeping in mind the parallels between them. In business, the long term successes are built by those with an end goal in mind, a vision of what the business will look like when it's mature. This is critical because the company must stay on a course that is consistent with its vision while it is growing. Distractions and deviations from the path only serve to slow it down or even take it backwards. Successful business leaders know when to pursue an opportunity and when to say "no". Saying "no" is essential to keeping the company's activities (investments of time) focused where competitive advantages exist and avoiding those where the company is at a disadvantage. In gambling, the poker player will stay at the BlackJack table and make his money there. He won't jump up and run to the Roulette table just because he heard somebody just won $50,000 over there. He knows what he's good at and will only venture over to other tables for entertainment, not to make money. In Trading, let's say investing for the sake of argument, a good real estate investor that knows how to make $1 million a year isn't necessarily going to do well in trading. They are completely different games. Just because a person knows how to buy properties right, increase their value through rehab or raising rents, does not mean that they will have the talents or skills to make money in the Futures or Forex markets. Even an experienced trader should be hesitant to jump from one game to the next. A buy-and-hold position trader should exercise great caution before jumping into day-trading, and a spread better should hone his skills before thinking about buying (or selling) outright futures contracts. Each strategy (or game let's say) has different skills associated with it, and different emotional requirements. The other serious consideration is your proficiency level - period. This combined with your ability to devote time to trading. If you are completely new to trading or you haven't yet become proficient at the necessary skills to trade, then you definitely should seek out help. The learning curve can be very costly in trading, and if you don't have the time or a plan to become proficient, how do you ever expect to make regular profits from it? If you don't have the proficiency, the strengths, needed to be a good trader, nor do you have the time and resources to become one, you may want to consider other choices available to you. If you have neither the skills nor the time to develop them, but want to take advantage of the nice money to be made in trading, you may want to consider a managed account. Why settle for an amateur trading with your money (YOU), when you can have a pro do it for you? Do your Due Diligence first though!!! Ask for the track record and the plan going forward. Your next option if you're "starting from scratch" is to trade with the assistance of a seasoned broker. That's what they are there for. Of course you can find very low commission brokers to deal with, but you may get just what you pay for. A good broker can be found for $50-$100 round turn commission, and they'll give you the best advice they can. In the long run, you're likely to be way better off - if you'll follow their advice! Again, ask for their track record, and check with the NFA to see if they have any complaints. It wouldn't hurt to see if the broker you're considering is recognized within the trading community as being good. Many very good brokers publish regular articles or advisory columns on respected websites and in established periodicals. Generally, if you see that the person has been published for a period of years, then that is a good sign. The wackos and charlatans bounce around too much and aren't allowed to stay in one place for long before their reputation catches up with them. Until you have the strengths yourself, borrow them from someone who has them while you're developing. When you have the proficiency, the skills, and the resources, only then should you venture out on your own. And that is only if you are so inclined to actually becoming a trader and doing it all yourself. If your true objective is to make money, then play it smart. Make use of other people's knowledge and skills until you have developed your own. Of course, if you really don't want to devote the time to being a full-time or highly active trader, but still want trading to be part of your income portfolio, consider your other choices. Whatever you do, don't simply chase another "opportunity" to make money if it doesn't play to your strengths. For Trading, those strengths need to be discipline, emotional control, coach-ability, ability to focus, follow-through, decisiveness, understanding of probabilities, dealing with uncertainty, and a slew of others. There are activities for entertainment and others for making money. Trading can be both, but if it is not taken seriously, with a sincere review of your own characteristics and desires, then it can wind up being neither. In any endeavor where money is the end result, get help from a trusted friend. Rememer, a good mentor is there to show you the right steps to take and those to avoid.

Investing - How To Profit Using Formulas

A classic Wall Street yarn, concerning a young man who was in the early stages of learning to be a professional speculator goes something like this. The young man had a problem, so he went to an elderly gentleman noted for his shrewd investment judgment, for advice. The young man had taken on quite an extensive line of stocks, but the market looked a bit over-valued and so he was thinking that his positions carried too many risks. He wondered if he shouldn't perhaps sell. He was so worried about it that he was having trouble sleeping. The old man's advice was simple and direct: "Sell" he said. "Sell back to the sleeping point." Although there is no doubt that this advice smacks of ambiguity, there is a simple wisdom in it. We may safely assume that neither the young man nor his elder adviser knew which way the market was going, but both were aware that the market was sufficiently shaky to cause legitimate worry. Translated into somewhat more orthodox investment terms, the advice meant - Sell enough of your stocks so that a market collapse won't destroy you, but keep enough so that if your fears turn out to be groundless, and the market rises, you'll still profit to some extent - in the meantime, get some sleep. At first glance, it may seem a bit cynical on the old man's part not to outline for his young disciple an exact and detailed course of action. But he couldn't be honest and at the same time guarantee that he knew exactly what action might turn out to be best. Furthermore, the young man didn't want someone to tell him precisely what to do. All he wanted was some help in easing the pressure and the help he received was clearly sensible. How to Find the Sleeping Point In a real sense, investment formulas are designed to help you in the same way that the old man's advice helped his young friend - they inject an element of caution in your investing when caution seems advisable, they reduce the provision for caution when risks seem relatively low and permit you to benefit when prices rise. In addition, once you incorporate a formula into your investment program, it works more or less automatically, allowing you to sleep nights in the full knowledge that you are continuously hedged against various unforeseen possibilities. But just as the investment sage left it up to the young man to decide exactly what his "sleeping point" might be, you can select a formula appropriate to your own temperament, financial circumstances and proclivity to insomnia. Any formula can be adjusted to suit the needs and preferences of any investor. Although formulas are designed to give un-hedged, unambiguous and unbiased indications for action, the investor should not feel that he is surrendering all personal control over his investments when he adopts a formula. The reason behind this logic is clear. It's because each investor selects the formula that will fit his own individual comfort level. A formula doesn't try to tell you what to do - it merely helps you do what you are already doing more profitably. For example, formulas cannot tell you which stocks to buy or currency to trade. The whole premise of using formulas is based on the fact that those using them are normally quite sophisticated and that they know what kind of investment vehicle they are interested in, how to select them and where to go for advice in their particular area(s) of interest. However, by supplementing their knowledge with considerations of the equally important questions of when to own and in what quantity - formulas can supply a valuable added dimension to their investment results and assist in the management of their portfolio on a more professional level. Along this same line, it is worth mentioning that although the true purpose of a formula is to supply the investor with an investment policy which is definite in its instructions at all times, you need not feel that you must follow the formula precisely in order to profit from it. You cannot, of course, ignore it altogether if you expect to benefit from it, but you can profitably use it as a touchstone or a general guide without swearing eternal allegiance to its dictates. You might, for example, want to use a formula, but also desire to increase or decrease your risks at various times for a variety of reasons. Your use of the formula will show you how far you are departing from your original plan and will give you a well-ordered program to come back to when you are ready.

Forex Trading - A Simple, Easy Tip to Increase Your Profits

Forex trading is all about getting the odds in your favor to reduce rsik and increase reward. The simple tip below is ignored by most traders - yet if you include it in your trading plan, will see your risk decrease and profits increase and that’s what all traders want! Most novice traders don’t use this tip and lose. Learn the significance of this tip and use it and it is simply: Trade with Price Momentum Many traders like to predict where prices are going to go – but they should really be trading on the facts and that’s exactly what looking at shifts in price momentum does. It gives you clues to where prices may go next. Lets Loom at a common error that novice traders make to illustrate the point. Many traders love to buy dips to support and many will use trend lines or moving averages. As prices approach the support level, they buy into the support and hope that it holds. This is a huge mistake! If you rely on “hope” you are going to lose. This is why looking at price momentum is so important. If the momentum of price starts to weaken into support and turns the odds of support holding have increased. Acting on the Facts To watch prices come into support and rather than diving in and taking a position - WAIT for price momentum to weaken into support and turn back up away from support. This is the cue to take a position, as price momentum is now moving away from support and odds favour the bulls. Why dont traders fo this more often? Traders find this hard to do, as they don’t like the fact they missed a bit of the move by waiting, but this is the only way to get the odds on your side. Consider this: Support obviously can either hold or break and you don’t know which will occur in advance it’s impossible to predict – you are simply guessing and that’s a good way to lose. If you look at price momentum you will be acting on confirmation that the odds are in your favour. A trader who is patent and disciplined and acts on confirmation has a far better chance of success than one who guesses or predicts where prices may go. So what are good indicators to look at? The best indicator by far in our opinion is the stochastic indicator – we don’t have enough room to cover it in detail here but it’s a great indicator for graphically showing shifts in price momentum. We like to combine the above indicator with the Relative Strength Index(RSI), another great momentum indicator. We never take a trade unless price momentum points the same way as our trade. Forex trading is an odds game and by using momentum indicators you will increase your chances of success and of course your profit potential.

Why Forex Trading Is So Popular

The Forex market is often more appealing to people that like to live on the edge. The Forex market is often more appealing to people that like to live on the edge. There is more uncertainty by far and the rewards of knowing when to buy and sell can be immense. For those of you who do not know, the Forex stands for, Foreign Exchange Market. The Forex deals in all different types of currencies and pits them all against each other. For example: the English pound might be worth more than the American dollar but if there is a natural disaster or a nasty political event, then the pound could drop below the value of the American dollar and thus would make money for the individual who had bought the English pound, when they sell. The people who trade on the Forex market are known as day traders. The reason for this is that the day trader buys at the beginning of the market for that day and then sells off all that he or she had bought by the end of the day. This type of trading is not for the inexperienced. There is potential to make a lot of money on the Forex market, but it takes a person knowledgeable in all the different facets of this slippery exchange to make money. A neophyte to this market can easily be wiped out in a matter of minutes! The Forex market is also a liquid market with currencies exchanging hands moment to moment. Since transactions are handled electronically around the world, it only takes moments for funds to transfer to different accounts. It is easy to make some trades, watching news events in the country of the currency bought, and then sell it all, in order have money in your bank account by dinner time. The Forex market is also open twenty-four hours a day since it encompasses the larger markets all over the world. Theoretically, a trader can work all day and all night. This makes the foreign exchange market very popular since people can trade any time they wish. A person can be trading on the Paris exchange until they close at which time the New York exchange is just opening up for the day. There are five major foreign exchange market around the world. They are New York, London, Frankfurt, Paris, Tokyo, and Zurich. Many people like to invest in the Forex market since there is a lot of leverage available to the day trader. For instance, five thousand dollars can be leveraged to purchase five hundred thousand dollars through margins. What this means is that individual investors can trade with much more money than they actually have. However, one must be careful; it is quite easy to lose the money and thus has to pay much more than is actually in the bank account. The Forex market is a challenging market to understand and can be hazardous to those not experienced in day trading. Nevertheless, for those who are experienced and can see the patterns of the market, it can be thrilling and extremely lucrative.ere is more uncertainty by far and the rewards of knowing when to buy and sell can be immense. For those of you who don not know, the Forex stands for, Foreign Exchange Market. The Forex deals in all different types of currencies and pits them all against each other. For example: the English pound might be worth more than the American dollar but if there is a natural disaster or a nasty political event, then the pound could drop below the value of the American dollar and thus would make money for the individual who had bought the English pound, when they sell. The people who trade on the Forex market are known as day traders. The reason for this is that the day trader buys at the beginning of the market for that day and then sells off all that he or she had bought by the end of the day. This type of trading is not for the inexperienced. There is potential to make a lot of money on the Forex market, but it takes a person knowledgeable in all the different facets of this slippery exchange to make money. A neophyte to this market can easily be wiped out in a matter of minutes! The Forex market is also a liquid market with currencies exchanging hands moment to moment. Since transactions are handled electronically around the world, it only takes moments for funds to transfer to different accounts. It is easy to make some trades, watching news events in the country of the currency bought, and then sell it all, in order have money in your bank account by dinner time. The Forex market is also open twenty-four hours a day since it encompasses the larger markets all over the world. Theoretically, a trader can work all day and all night. This makes the foreign exchange market very popular since people can trade any time they wish. A person can be trading on the Paris exchange until they close at which time the New York exchange is just opening up for the day. There are five major foreign exchange market around the world. They are New York, London, Frankfurt, Paris, Tokyo, and Zurich. Many people like to invest in the Forex market since there is a lot of leverage available to the day trader. For instance, five thousand dollars can be leveraged to purchase five hundred thousand dollars through margins. What this means is that individual investors can trade with much more money than they actually have. However, one must be careful; it is quite easy to lose the money and thus has to pay much more than is actually in the bank account. The Forex market is a challenging market to understand and can be hazardous to those not experienced in day trading. Nevertheless, for those who are experienced and can see the patterns of the market, it can be thrilling and extremely lucrative

Incorporating Price Action Into a Forex Trading System

For the past couple of years Forex market has become very famous. It is a common question that how many dealers make it in the Forex trading. Sadly only fiver percent are able to make it. One point can be that Forex dealers are not aware of the right area to concentrate their focus, in which direction and what decisions have to be taken. Price factor plays an important factor which is not given much importance by the Forex dealers. Technical indicators comprises of the majority of the Forex trading methods such as moving average, overbought/oversold state in an oscillator, crossover etc. The question arises that what are indicators? They are just a sequence of data points that are planned in a chart and these points are obtained from mathematical methods which are used for the price for any currency. In simple terms it is a chart of price planned in a such a way that we are also introduced to other price also. As a matter of fact that the majority of the readings acquired are totally derived from the price action. For example a long MA crossover signal the price has increased considerably to make the shorter period MA cross the long period MA producing a major signal. It is generally believed that MA crossover is the reason behind the increased price which is not a genuine reason as MA crossover signal appeared as the price rise. What I am trying to say is that eventually it is the price factor that will decide the functioning of the indicator and the outcome can be decided on any decision trading. If we try to figure out the trading outcome derived from technical indicators without including the price factor then you cannot get positive effects. For instance, a long signal produced by the MA crosses with the advancement of the market reaches to its resistance stage. There is no point of making use of the signal where the price all of a sudden makes a comeback from that important stage. The price factor justifies that the market is not yet ready to experience an increase. In this situation the market will definitely crash down ignoring MA crossover. Technical indicators are very essential feature of the trading. These assist us to see all those state those are sometimes difficult by only watching price factor. The involvement of the price factor in the Forex trading methods certainly will turn the difficulties in our support and will assist in increasing the trade. The question is how to prepare an accurate Forex trading method? First and foremost, it is very important to choose a trading system that matches your individuality so that you can easily follow it. The requirements and objectives are different for every trader and no system is complete in itself. It is you who have to take the decision of which style and technical indicators to adopt till the time you find the appropriate one. It is very important to know about what technical indicator you are using. The second step is to add in the price factor to the system that you have adopted. It is beneficial for you as it will guide you to take the long signals if the price factor informs that if the market it going to rise or not and taking short signals just in case the market is decreasing. Thirdly it is very essential to follow the method religiously you have selected for your Forex trading. It is recommended to try out first on a demo account then moving to the small accounts and in the end when you are comfortable in using and operating then shift it to the real account.

Why gold should be part of your stockmarket portfolio

One of the great advantages of CFD trading is that it permits you to seamlessly move within asset classes at little cost, and opens up a wealth of new contracts not just in stocks, but across a range of investment classes. Clients of Blue Index will be aware that we carry out analysis of the gold price on a daily and weekly basis, and our track record in pinpointing the regular movements in the price of the metal has been excellent. Our long term stance has been bullish since gold ended its 20 year bear market at the turn of the millennium, and for those CFD traders who are not aware of the big picture, this article updates our rationale for long term investment in gold. It should be noted that since we began daily coverage two years ago, gold is up 80% in dollar terms, and over 50% for sterling based investors. We think there is a lot more to come. Why the outlook for gold is so bullish The starting point for the analysis of any commodity is supply and demand, and for gold the simple fact is that supply is declining and demand rising. As it stands, and because of the previous lack of profitability in exploiting new mines, most major sources of supply are declining and the global gold market currently faces an annual supply shortage of about 600 tonnes. The gold supply World mine production began to level off in the 1990s as gold traded a wide range but remained significantly lower than previous peaks, and by 2004, production was falling at a rate of 5% p.a. according to the World Gold Council. This as yet has not changed significantly and is a long term factor because it can take almost a decade for a rise in gold prices to generate exploration and eventual exploitation of new mines. In terms of the existing supply, much of this has come from ongoing central bank offloading of gold, and here many developed countries have now stopped both official and unofficial sales of gold. Previously, and as a result of the need to diversify, central banks carried out regular gold sales, but in some cases (see below) the reverse is happening as finance ministers see the need to protect against the inflationary consequence of fiat monetary policies that are rampant across major western economies. Another aspect of supply that is changing is forward selling from gold producers, where output prices were traditionally locked in to protect against potential future falls in gold. This was a normal part of commodity hedging, and to some extent it might have helped keep the price down, but given the ongoing bull market, mining companies now run the risk of losing potential future profits if they hedge into rising prices. It is estimated that global gold producers have reduced forward sales by over 40%, which would result in a drop in supply of almost 1000 tonnes. Demand for gold A big change in demand has come from central banks in China, Japan, India and Russia as a result of the need to diversify their vast US dollar reserves to some extent. The Russian central bank has hinted more than once that it plans to double its gold reserves, and the subject has regularly been mentioned by the Chinese central bank. All this is mainly as a result of the high proportion of trade-related US dollars flowing into their coffers, which has made them proportionately more reliant on the value of those dollars held. As an example of potential demand, Japan and China have the eighth and tenth largest gold holdings in the world, but their current gold holdings are equivalent to just 1% of respective reserves. An increase of 50% in their gold reserves for just these two central banks would be the equivalent of buying over 600 tonnes, which is around a quarter of world annual mine production. Russia and India’s gold as a percentage of total reserves is slightly higher but stands at just 4%, so there is scope for additional demand here. Asset allocation and investment in gold Back in the 1970s commodity investment was an essential part of asset allocation for diversified portfolios, but despite the long term bear market ending just after the turn of the millennium, many investors continue to shun gold stocks. The two biggest gold stocks in the world are Barrick Gold Corporation, now valued at $36bn, and Newmont Mining, worth £21bn, and the total value of the top ten gold stocks is less than $150bn. If you compare this with the current value of Exxon Mobil at $505bn and it can be seen how insignificant gold stock valuations remain given the continued potential of this sector. The total market for physical gold is also small, and stands at around $3.5 trillion, but the total value of the US stock and bond markets alone is close to $40 trillion. For asset allocation purposes, a 1% move into gold and gold stocks would equate to the purchase of eight times the annual production of gold worldwide. M3, inflation and the gold price With M3 money supply growing rapidly in most of the developed economies, the only outcome other than drastically higher interest rates, which looks unlikely, is a devaluation of currencies as has been the case throughout the last century. Should the dollar continue to move to lower ground as measured by the dollar index, which looks likely, further diversification into gold and other asset classes as a protection against the falling value of dollar reserves is likely to accelerate. In 1980, the gold price peaked at $850 in times of raging inflation and 27 years later it is still below that peak level. For it to get back to those levels, which might be seen as extreme at the time, it would now need to be closer to $2000. In real terms though it looks dirt cheap, and long term investors should view $1000 as a realistic target in the next couple of years, which is 25% higher than the price right now.

Make money on the Internet

If you read my other articles, you know already that there are many ways to make money on the Internet. I personally can't understand why people don't do it more often when it is so easy. "Variety is the spice of life." That's a fact. This subject is precisely huge because there is not one, two or three ways to make money online, but many. In fact this is what I would do if I were you. Instead of focusing on one specific business only, I would set up different ones at least to try and find out which one is better for me. If I realize that it does not consume too much time and I can do it at ease I would then go to the next level . . . I would set up different streams of internet income. This way I would be assured that even if I am not making that much money with one business, other streams of revenues would keep producing profits for me anyway. Most people are so afraid to lose their jobs. That's because it is the only job they have. It is the only thing they do to make money. They are just earning a living. Even if you love your current job, it is a smart decision to set up a few automatic businesses and let them produce residual income for you. Then, how can you do this? 1. Creativity. As you will read in my book Easy Web Riches creativity is very important. Most wealthy people are also creative people. There is no limit to what you can create. Then, there is no limit to what you can earn. This is easy. Trust me! 2. Publishing To publish your own products and sell them to others on the Internet. You will see how many people out there are seeking information nowadays. They know that by educating themselves on certain fields they can improve their standard of living a lot. Often knowledge makes the difference. This kind of business will make you money too. 3. Affiliate Marketing. Many of you have tried this already. I know. In the other hand this is not just any kind of affiliate marketing. I am talking about affiliating with products or services that sell like crazy! These companies pay you 50% or more for every product you sell. So, if you get $50 per product, you only have to sell 10 products per week to make $500. I am not talking about ClickBank only either. I am talking about implementing different advertising techniques that can help you make more money from any affiliate marketing program that you choose to join. 4. Trading. It is easier to trade today than ever before. You don't have to pick up the phone and call anybody. You can trade all major markets like Forex, The Stock Market, Futures, Options anything, right on your computer screen. This is an automatic business that allows you to earn automatic income. You do it from home. You set up your own hours. You are the boss. The only problem with trading is that most novice traders rush into it wishing to make a quick buck, without taking time to learn the basics of this business. Reading a few good books about it could increase your profit rate by at least 1000%, specially if you have never traded before online. 5. Join ventures. Some business owners need money to develop a project. It could be real estate, a new technology, etc. Selling shares of the company stock on The Stock Market is a good method to raise capital for the business. Other popular method is through a joint venture. A company makes an offer and let interested investors participate on it. There are thousands of joint ventures on the Internet. If you like this business your job will be to find the companies that pay you the highest profits and invest your money with them. Above you can find five of the biggest businesses you can start to make money one the Internet. Now, the truth is that there are hundreds of ways to do this. That's where the multiple stream of income concept comes from. Replication is the key to your online business. This means that once you establish the base, the backbone for your businesses, you can start duplicating your success more and more. In other words, with the same amount of effort, you will double your income through the passage of time. Notice that if you are an employee, it happens usually the opposite. Every day they demand that you accomplish more tasks for about the same salary. If you like your job you can be an employee, but at the same time start your own online business. It is a smart decision to start a business and make some extra cash every day. That's how you will have another stream of income when unexpected money problems suddenly hit you from nowhere. You know that sometimes things just don't happen like we plan them. It is always wise to have a cash reserve. Now why an online business and not an offline one. To start a traditional brick and mortar business requires strong will power. There are lots of requisites, forms, legal aspects, procedures, etc., to take into consideration. In a few words, there are so many hassles that most people don't even think about it. Now, analyze how different it is when you choose to start your very own online business. For example, you can build your first web site within a few hours and start promoting the products. Instead of spending months or years on the set up process, you spend a few hours or days. You get paid 50% or more for every sale you generate. You can also create your own services and let other people take care of the marketing for you. It is a win - win situation since the beginning. Other thing to take into consideration is the investment. How much do you have to invest to start a traditional business? Usually tens of thousands of dollars or more. How much do you pay to start making money on the Internet? Usually $0 - $100. How much do you need to wait to start seeing results with an offline business? Probably years. How much do you need to wait to make money online? Probably days. Do you notice the difference?

Investing In Foreign Currencies - The FOREX

Building a diversified portfolio gives you a lot more stability with your investments and enables you to keep on the profit side of things more easily. But if you already have a rather diversified portfolio and think you are now rather knowledgeable of the stock market, then you may be ready to expand your investments into FOREX - the foreign exchange. When currencies in the United States may take a plunge, or a lack of growth, markets in other countries are doing quite well and this is something that you can draw a profit from. The FOREX market, listed simply as "FX," is the biggest market of all. A lot of money can be gained from it - and rather quickly, too. This market deals entirely with the exchange rates between two currencies on 5 days of the week. Two currencies are always in every exchange and they are exchanged the one for the other with a buy rate and a sell rate - at the same time. For instance, if you believe that the Japanese yen is about to increase in value, then you may offer to buy it at $1.10 and sell it at $1.25 - making a possible $.15 per yen purchased. Here are a few things you need to know about how to get started in the FOREX market. Learn The System Trading on the FOREX is generally more difficult than the regular stock exchange. It is easier to lose money if you do not know what you are doing. In order to prepare people to learn to deal with the FOREX, though, most online brokerages have specialized software that provides training - up to about 30 days, with "free money" to use to practice until you start being able to regularly see a profit. Only then is it wise to start doing some real trading. You also need to know how to determine the state of national economies and be able to predict their fluctuations. Other online companies provide many free booklets that they will mail to you only for the asking. Potentially Safer Investing Since all deals with the FOREX require a broker, your money is potentially safer. Every contract made with a broker will have a clause in it that allows the broker to actually stop the transaction if they feel it is a poor investment. The primary reason for this is because you are actually using the broker’s money to make the deal. When you use FOREX, you create a sort of "loan" that gives you an operating ratio of up to 100:1. This means that, for $3,000, you are actually controlling $300,000. The FOREX is also a better investment because there cannot be any insider trading. Dealing with currencies means that the things that effect it would make national news. This kind of event would be known almost instantly around the world - and everyone has access to the same news. Easy Liquidity Trading in currencies occurs every single day - many trillions of dollars worth of it. Because of this feature, there is always someone who will buy or sell dollars, enabling you to have a very quick liquidity when needed. No Fees Brokers do not charge you a fee when you make a FOREX transaction. This enables you to be able to control even better the amount of money that you invest and it allows you to chart it a little better. Brokers make their money through the spread of what is sold, the difference between what is bid and the actual selling price.

Friday, August 28, 2009

Forex Trading Pivot Points

Many traders and novices are looking to make money in Forex, however only 5% of Forex traders ever make a dime. The question then becomes what are the 5% that are making money in Forex doing that the other 95% are not. The truth is anyone can make money in Forex as long as they educate themselves and learn how the market reacts. Trades can use key support and resistance zones for entry and exits within the market, however there is another key component that will help determine price movement and that is pivot points. Pivot points help determine where price is going as well as reversals in trends. If one knew the range parameters used by floor traders then one may have a handle on significant areas where off floor and position traders may take over the market. Determining key support and resistance zones coupled with pivot points is essential to forecasting price movement in the Forex. Even if you are not a day trader, knowing the key pivot point, support and resistance points can help the short term trader and intermediate positional trader to identify potential entry points and stop loss levels. Getting into a trade near key support and resistance zones is a double edged sword. Pivot points can be seen as both dangerous and a great opportunity to enter a trade. Stop orders to enter at pivot points are readily whipsawed by the local market and noise, meaning price may bounce up and down around pivot points before heading in one direction. The question then becomes how are pivot points used to determine a good entry and exit point in the market? Pivot points can be used in two ways. The first way is for determining overall market trend: if the pivot point price is broken in an upward movement, then the market is bullish, and vice versa. Keep in mind, however, that pivot points are short-term trend indicators, useful for only one day until they need to be recalculated. The second method is to use pivot point price levels to enter and exit the markets. For example, a trader might put in a limit order to buy 100 shares if the price breaks a resistance level. Alternatively, a trader might set a stop-loss for his active trade if a support level is broken. Calculating pivot points is not an easy task. There are some really great training courses online that will train you on how to trade using pivot points as well as calculate them for you and teach you how to use them in a real-time.

Eliminating Risks of FOREX Investing

It is quite unwise to remain under the notion that FOREX trading is free of risks; just as some websites would have you believe. If you are going to trade in heavy sums of money, chances are that the trades will work in your disfavor. But, a wise investor will know exactly how to identify and avoid those risks. Such an investor could make great profits at the FOREX. The FOREX is rife with scams. Of course, the incidences of these scams have gone pretty low in recent years, but that doesn’t mean one will trade in it throwing all caution to the winds. You must be very particular about your broker; it helps to do some background check to verify credentials. If the broker is affiliated to a reputable bank, insurance company or some such financial institution, then you may be well confident of his/her genuineness. The registering body for FOREX traders is Commodities Futures Trading Commission (CFTC) or the broker must be a member of the National Futures Association (NFA). It is also advisable to get a report from the Better Business Bureau and the Consumer Protection Bureau. There are several more risks that one needs to know of, even after getting a reputable broker. The following are some of the risks:- (i) There are unexpected rate changes at the FOREX that the trader must know about. Fluctuations can occur while the trading is still going on. If prices fall, then there could be severe losses to the trader. These could be minimized by issuing stop orders, but all traders may not be aware of this order. A stop loss order will close all the positions if the currency prices fall lower than a predetermined cutoff. There are also limit orders that close the positions when a profit target is achieved. A wise investor will make use of both the stop loss and the limit orders in order to reduce losses and make profits at the FOREX. (ii) Sometimes the interest rates of two countries are different. If this happens in the FOREX quote, then there could be a deviation from the projected profit or loss. (iii) Lack of honesty is occasionally encountered at the FOREX. If one of the parties in the transaction dishonors their debt when the deal is closed, there could be a credit risk. This could also happen when the party declares insolvency. (iv) Governments of the countries associated at the FOREX could limit the flow of currency. This is seen much more in the lesser-used currencies in the FOREX. Even though there are so many risks at the FOREX, there are also ways in which these risks can be reduced or even eliminated. The first step in reducing risks is to develop a strategy including a plan of when to enter and when to exit the market. This would require a good research of market trends of the FOREX in advance. Also, the wisest investor is one who put only that excess money in the FOREX which doesn’t make much difference to the financial position if lost. Knowing about the technical analysis and how to read and understand the financial charts is very important. These can be learnt through the internet and by reading books written by FOREX gurus. However, the greatest of education cannot guarantee profit-making at the FOREX. This is because the market can move in unpredictable ways. Stop loss orders and limit orders must be used to prevent losses from any eventualities. Most traders use stop loss orders. But even these need careful understanding of the market trends. If the trader is looking for a long position and expecting the price to rise, then the stop loss order would be ideally placed at below the current market price. The converse is also true. Let us understand this with an example. Suppose a trader takes a short position with the following quote: USD/CDN = 1.2138/43 This quote means that the trader can sell 1 USD for 1.2138 CDN or sell 1.2143 CDN for 1 USD. Let us also suppose that the investor is taking a short position. In the above case, a good order would be: Sell USD: 1 standard lot USD/CDN @ 1.2138 = $121,380 CDN Pip Value: 1 pip = $10 Stop Loss: 1.2148 Margin: $1,000 (1%) Here the trader is selling 100,000 USD and buying 121,380 CDN. If the USD value goes above 1.2148, then the stop loss order would be executed. Here, the trader would lose $100. But if the USD/CDN falls to 1.2118/23, the trader can sell 1 USD for 1.2118 CDN or sell 1.2123 CDN for 1 USD. Since the trader entered in the transaction by selling USD, then he/she must now buy back the USD and sell CDN to make the profit. So, the trader buys back 100,000 USD at the current rate for a total cost of 121,233 CDN. Since the original sale was for 121,380 CDN, the trader would have made a profit of 157 CDN or 129.51 USD.

Currency Exchange Terms Every Forex Trader Should Know

Before getting into the forex trading business, you need to arm yourself with some terminology that will be used in any course or software on trading forex. The following terms were put together to provide the novice forex trader with the fundamental concepts of the forex (currency exchange) trading business. While they may sound technical, most are simple to understand and apply. Let us begin with the instruments that are traded in the forex markets. Currencies are traded in pairs so the instrument will always be in this double denomination. The reason for this is simple – the basis of forex currency trading is to exchange one currency for the other. So if the pair is the Euro and the US Dollar, and the forex trader is taking a long position or buying the Euro in hopes that it will appreciate, effectively the trader is also selling US Dollars to buy the Euros. The most widely traded pairs are the Great Britain Pound and the US Dollar (indicated as GBP/USD), the Euro and the US Dollar (the EUR/USD pair), the Aussie Dollar and the US Dollar (AUD/USD pair), the USD and the Japanese Yen (USD/JPY pair), and the Canadian Dollar and the USD (USD/CAD pair). These pairs account for over 80% of the total volume of the trading in the forex market. The advantage to trading in these currency pairs is that they are highly liquid and allow the investor to convert their portfolio to cash very quickly to realize a profit. In every pair, the first currency is called the base currency, over which the second one is countered to imply the price of the pair, or commonly referred to as the "cross currency". The second is therefore called the quote currency and the pair price is recorded in terms of the units of the quote currency required to buy one unit of the base currency. Thus, assuming the price of the GBP/USD pair is 1.5, this implies that 1.5 USD will buy 1 GBP. Every pair is quoted in terms of a bid ask spread. The bid price means that this is the rate at which your forex broker bids to buy the currency at, while the ask price is the rate which the forex broker is asking to sell the currency to the forex trader. The bid price will always be lower than the ask price and the forex trader will buy at the ask price and sell at the bid price. The bid ask price will be quoted as: GBP/USD 1.532/5, meaning the bid price is 1.532 and the ask price is 1.535. A pip price interest point), as it is commonly called, is the smallest incremental change a currency pair will experience, for instance, a change in the GBP/USD price from 1.532 to 1.542 is a change of 10 pips. A trading margin is a deposit which is a minimum amount or a small percentage of your traded amount that you have to put up. The remaining amount is supplied by your broker. This amount can vary from 1% to 0.25%, also referred to as 100:1 and 400:1. Commonly, forex brokers will offer 100:1 or 200:1 to most clients. This is risky but enables the trader to leverage a large amount that he or she would not otherwise have access to. Finally, a margin call can happen when the forex trader allows the balance in the trading account to go below the margin deposit percentage agreed upon with the forex broker. The broker will automatically sell your long positions or buy your short positions and clear the entire trading account, returning the margin amount to the trader to protect the trader from losing more money than they have.

Knowing the Differences in Forex Trading Systems

There are a wide variety of forex trading systems available online. Every investing niche has a group of people who claims to be experts. Foreign exchange trading is no different. While some may find it helpful at first to pay for forex trading strategies, they are generally redundant; and after getting started, many traders go on to develop their own successful strategies. Most of the companies that are selling forex trading systems offer a free online simulator. It is a very good idea to spend some time investing with play money so you can carefully track the performance of a particular strategy. If you feel, after some time, that you just aren't comfortable with the forex trading strategy that they are producing, don't think twice about walking away. The tools are there for a reason, and it may just be to keep you from making a costly mistake. Once you have done some research and have found several forex trading systems with which you are comfortable, you should do some additional research to check on the validity of those few. Consumer advisory sites keep running listings of companies that have been found to the fraudulent, or that have made false claims about earnings potential. The chances are pretty good that theses companies haven't actually made a dime trading forex. Instead, they make their money selling promises to unsuspecting investors. There are several ways that these companies dupe new traders into believing that their forex trading systems are legit. The first is that they offer hypothetical results. You, as an investor, shouldn't be nearly as concerned with what their system could have accomplished, as you should be with what it actually accomplished. Anyone can use a little common sense and hindsight to create a hypothetical trail of forex trades that will look good on paper. Make sure you see actual return on investment numbers before you commit any money to a forex trading system. Another way that these fraudulent companies get foreign exchange traders to buy into their forex trading systems is by guaranteeing profits. If a company promises high returns with minimal or no risk, then they are trying to sell you something. Any type of investing comes with inherent risk. When trading forex, that risk can be fairly substantial, especially when you start dabbling in the 60 some odd currencies that are not considered majors. The world economy is volatile by nature. Therefore, the markets that are controlled by it are volatile as well. As with anything else available to consumers, there are different levels of quality available in forex trading systems. The best information that you can get will always be from other customers who have used the product. Service providers will always have great things to say about themselves, but a true test of their worth is to find another consumer who believes in the one you are considering.

How To Find A Forex Broker That Won`t Rob You Blind

It`s not always easy to know what to look for in a forex broker, especially in any market, much less a market as complex as currency. But, if you want to trade in the market you need a good firm to work with. While it might be tempting to simply ask the brokers what they can do for you, you can`t always depend on them to give you a straight answer. So instead, I`ve put together a few things to consider when choosing your forex broker. You will want a forex broker that has low spreads. The spread, which is calculated in pips, is the difference between the price at which a currency can be bought and the price at which it can be sold at any specific point in time. Since forex brokers don`t charge a commission, this difference is how they make money. Low spreads will save you money. Along with this, you should be looking for a forex broker attached to a reputable institution. Unlike equity brokers, they are usually attached to large banks or lending institutions. The firm should also be registered with the Futures Commission Merchant (FCM) as well as regulated by the Commodity Futures Trading Commission (CFTC). Once you`ve narrowed your choices down to brokers that won`t cost you too much, and that are reputable, consider the trading tools that they are offering you. Forex brokers have many different trading platforms for their clients, just like brokers in other markets. These often show real time charts, technical analysis tools, real time news and data, and may even offer support for the various trading systems. Before you commit to any one company, request free trials of their tools. Brokers generally provide technical as well as fundamental commentaries, economic calendars, and other research to help you make good trades. Shop around until you find a forex broker who will give you everything that you need to succeed. The next item that you will need to evaluate carefully is the number of leverage options your potential partner has. Leverage is a necessity in forex trading because the price deviations in the currencies are set at fractions of a cent. Leverage is expressed as a ratio between the total capital that is available to be traded and your actual capital. For example, when you have a ratio of 100:1, your forex broker will lend you $100 for every $1 of actual capital you have. Many brokerage firms will offer you as much as 250:1. If you have low levels of capital you will need a brokerage with high levels of leverage to make reasonable profits. If capital is not a problem, any forex broker that has a wide variety of leverage options would be a good choice for you. A variety of options will let you vary the amount of risk you choose to take. For example, less leverage (and therefore less risk) may be preferable if you are dealing with highly volatile (exotic) currency pairs. Along with different levels of leverage, look for brokers that offer different types of accounts. Many brokers will offer you two or more types. The smallest account is known as a mini account and it requires you to trade with a minimum of around $300. The mini account also generally offers a high amount of leverage. The standard account allows you to trade at a variety of different leverages, but it requires minimum initial capital of $2,000. And finally, there are premium accounts, which often require significant amounts of capital. They also generally have different levels of leverage available to the traders who use them, and often offer additional tools and services. You will need to make sure that the partner you choose has the right leverage, tools, and services for the amount of capital that you are able to work with. A brokerage firm that meets all of these needs should be a good forex broker for you, but you still need to be certain that they are honest. Dishonest brokers can be prone to prematurely buying or selling near preset points (commonly referred to as sniping and hunting) or may indulge in other habits that will cost you money. Obviously, no brokerage firm admits to doing things like these, but there are ways to know if they have. The best ways to find out more about your potential forex broker is to talk to fellow traders. There is no list or organization that reports dishonest activity, but a visit to online discussion forums, or a simple conversation will often reveal who is an honest forex broker. You should also watch to see if a brokerage firm has strict margin rules. Since you are trading with borrowed money, your forex broker has a say in how much risk you are able to take. You agree to this when you sign a margin agreement for your account. This means your firm can buy or sell at his discretion, to cover the brokerage firm's interests, which could have repercussions for you. Say you have a margin account, and your position takes a headlong nosedive before it begins to rebound to all time highs. Even if you have enough cash to cover it, some brokers will liquidate your position on a margin call at that low point. This action on their part can cost you dearly. You can only find out whether the firm is prone to this kind of activity by talking to other traders. Being informed on all aspects of a forex broker before you make the decision to trade with them will allow you to start trading the forex market with confidence.

Forex Day Trading - The Profit Illusion That Sees Traders Lose

Forex day trading simply doesn’t work and you will never find a trader with a track record of real time profits, however more novice traders try this method than any other type of trading. This is desite the fact it will never work, because you can't get the odds in your favor. If you are considering day trading then you should read this article. First let’s look at why forex day trading doesn’t work. The time period is to short! Volatility in short time frames is random - PERIOD This means daily support and resistance levels are meaningless and you can never get the odds on your side longer term. Now let’s look at the illusion of profits. The Marketing Illusion You have seen them the headlines promising you 100% annual profits or a regular monthly income - all for just a few hundred dollars. Of course the reality is they profits do not exist and it's simply clever marketing copy. Look at the facts and you will see no substantiation whatsoever to back up the claims. You will of course get a hypothetical track record, done in hindsight but the key word to consider here is hindsight! The person presenting the track record knows the closing prices when they do the track record. If I knew tomorrow’s closing price today, I would be a multi millionaire but that’s not the reality of forex trading. The people who create the illusion you can make money forex day trading can never present a long term track record of real profits – that’s real dollars made in the market by them. Why Create The Illusion? These people are mostly failed brokers or marketing organizations that actually have the sense not to trade the system themselves. Why? Becuase they can make a guaranteed return selling the system to naive forex traders. Patterns that don’t repeat Many traders look at back data and see patterns. They think they can trade themselves but this is a bit like roulette wheel paterns - there appears to be an order but the same sequence never repeat again – its an illusion, that fools many traders and when they try and trade for real they lose their equity. Still Not Convinced Day Trading Doesn’t Work? Here is a simple test you can do for yourself: Ask anyone who claims they make money day trading, to produce to you a real time track record of profits, with supporting bank statements and trades. You won’t get one. Day trading does not make money, apart for the vendors who sell e-books and forex day trading systems and they cheerfully let you take the losses, while they bank a fee for their services thats guaranteed. Don’t fall into the forex day trading can make you money trap! If you do you will lose your equity quickly.

Automatic 20 Pip Forex Trading System

Creating a forex trading system that works is a task some people assign to a divine entity who magically manifests itself as a marketer selling the latest "holy grail" forex trading system. When it comes to an automatic 20 pip forex trading system, the search is likely to be long and arduous, because of the old adage "if he's doing it, why isn't everyone doing it". In fact, I don't believe there can be an automatic 20 pip forex trading system because there is always the element of the forex market which is totally unpredictable. It's not irregular for a forex analysts whose automatic 20 pip forex trading system is based entirely on his fundamental and technical analysis has to come back the following day and explain an unexpected reversal due to fundamental (socio-economic) news being announced lower or higher than expected resulting. Another example of why this may happen in these times is a decision made about the war in Iraq for example that has resulted in emotional buying or selling of the USD for instance and therefore rendering the automatic 20 pip forex system another forex loser for the day at least. So, if fundamental analysis can not be predicted, and as one author puts it "no one knows whats going to happen" in the forex market, how can an automatic 20 pip forex trading system be created? The answer lies in the understanding of the word "automatic" If you truly want an automated automatic 20 pip forex trading system, you are going to be hard pushed. This is because there are going to have to be rules, such as not trading in the vicinity of newstime where the market reaction can be unpredicatable based on technical indicators due to the reaction of the market to the news as opposed more than predetermined technical levels which tend to get overidden particularly during major announcement such as the non-farm payroll data once per month. However, you could call a manual trading strategy which makes a fairly consistent 20 points an automatic 20 pip trading system, but there has to be a footnote really, and that footnote must include various rules about the automatic 20 pip trading strategy as to when and how the system can and should be used exactly. The system itself is automatic in the way it roduces buy and sell signals, but, due to the nature of the forex market, it must be traded manually in reality using intuition and skill to not trade during false signals. If you decided you were going to create the makings of an automatic 20 pip trading strategy, you cannot call it that immediately, because at first it sometimes will be good only for 10-15 pips rather than the full 20. At other times, it may give you automatic signals which tell you to get into a trade which goes for 50, 70 or even 100 pips at a time, which for an intraday forex trading system would be borderline outstanding considering the market may move in a range of only 120-150 pips on a reasonable trading day, For an automatic 20 pips forex trading system then, one must know the online currency market fairly well. One must have education and mentoring and at least training in some indicators and strategies to understand the reading of the market technically, as well as a sound understanding of the fundamental analysis aspects of the forex market. For myself, the automatic 20 pip forex trading system I utilise contains a good deal of classic trading rules, fibonacci retracement zones are mapped in, moving averages abound and there is use also of momentum and strength of the market indicators with as much lag reduction as I have found possible with fairly foolproof fail-saftey measures to reduce false signals to an absolute minimum. Contrast that with a trader I spoke to today and I was flabbergasted to hear together we brainstorm from being technicals-crazy to having an automatic 20 point trading system that gives at least 2 signals per day across three currency pairs (a total 40 points daily target for the system) using only 3 lines on-chart and absolutely nothing offchart - not even a care about news (fundamentals) particularly because it 'does his head in'. So, just as the fat lady sings when its all over, so expect that anything may be possible. A system is automatic in that it one to be confident to enter trades. A forex strategy is manual in that it is the forex trader who pulls the trigger on a trade. Its automatic though in terms of generating the entry signal based on the lining up of a few indicators on the chart and off the chart. Rules include the times of trading being particular market hours and avoidance of important announcements is key. This article concludes that it is possible to create an automatic 20 pip forex trading system, but it takes a lot of trial and error to create an automatic 20 pip forex trading system that does not generate a whole bunch of false entry signals and actually captures trades that go the 20 pip distance.

Forex Day Trading - 3 Facts You Need To Know To Prevent Losses

If you are a forex day trader or considering it, then you need to know the above facts, if you do they will save you a lot of money. Forex day trading is more popular than ever but how do you make profits? Let’s find out. If you look online you will find more forex day trading courses than any other type of trading methodology and they will all lose you money here’s why: Let’s start first of all with the vendors who sell courses 1. Why are they selling them? To make money for themselves! They don’t normally trade their day trading systems because they know they don’t work. If these systems could produce regular profits they would be to busy making money for themselves and not have the time to bother you for a few hundred dollars they would be to busy making money. 2. The Evidence That day trading doesn’t work If you ask for a track record of profits from any of these vendors you won’t get one – What you will normally get is a hypothetical track record of huge gains but this is done in hindsight - KNOWING the closing prices. If I knew tomorrow’s price today, I would be a multi millionaire but of course forex trading is a bit more difficult - you have to work out where prices are going without knowing them in advance! These vendors use great advertising copy to dupe people but the logic of day trading simply doesn’t work. Why? Because: 3. All short term volatility is random! Day traders will claim that it’s not - but of course it is! Volatility can and does, take prices anywhere in a day and daily support and resistance levels are meaningless. When day traders lose, they blame the system or the indicators they use, however if volatility is random, then it is of course the logic of day trading that is at fault - NOT the indicators. If you think that you can make money day trading go ahead and try but you will learn a very expensive lesson and lose. I would love a day trader to prove me wrong and produce a real time track record of gains over the longer term (3 years or more), but have the feeling I will be waiting for a long time. The belief that you can make money day trading, is one of the biggest myths of forex trading and despite the evidence it doesn’t work, traders still think they can win at it – they can’t.

Forex Charts - Bigger FX Profits Using Techncial Analysis The RIGHT Way

If you look at any Forex chart, you’ll see repetetive price trends. If you use technical analysis to act on these trends in your Forex trading strategy, turn them into big profits, if you do it the right way. There are many misconceptions about using Forex charts and technical indicators - here we’ll provide some tips on using technical analysis for bigger profits from your forex trading. Technical Analysis Defined Technical analysis is simply the study of price action to identify trends, in various time frames. FOREX chart patterns repeat themselves becuase human nature repeats itself and remains constant in currency trading and ALL markets. Many traders think that simply studying Forex charts won't work - because it doesn’t take into account the supply and demand situation or the fundamentals. However it does work becuase: it does actually work. Market Perception (human perception) + Fundamentals (supply & demand) = Price Price action reflects all the fundamentals that are known - and more importantly, how the participants who determine price see them. In today’s world of instant communications, the fundamentals show up in price action in seconds - so technical analysis simply assumes that all known fundamentals are discounted in the price. Some of the largest price moves in history have occurred with little or no change in the fundamentals. These price moves were caused by human psychology with emotions to the Currency technical analysis is able to study this. This gives you a huge advantage i your forex trading – when you accept that ultimately, it’s participants determine value. The right price is of course the market price - so you see the reality, rather than listening to the opinions of others or letting your emtions get in the way. Techncial anlysis of forex markets or any market assumes the following: 1. Markets Discount All fundamentals show up quickly in the price. You are therefore seeing the impact of the fundamentals in the price action. 2. Trends Persist In currency trading, you get great trends. Simply look at any currency chart and you’ll see long-term trends – lasting weeks, months or years. History Repeats Itself The basis of currency technical analysis is that what has happened in the past will happen again - as human psychology never changes ie our nature is constant. As chart patterns reflect shifts in human psychology, certain patterns and trends will repeat. Keep in mind that charting is an art. While human behavior does repeat itself, humans can be unpredictable as well - so you’re trading the odds NOT a scinetific theory. The good news is that by using technical analysis of currencies, you can get the odds in your favor and win longer term. Now, lets look at some tips on using technical analysis: 1. Longer term trends Currencies tend to reflect the underlying health of the economy. This creates longer-term trends that last for months or even years, by focusing on the these trends, you have the best odds and the best profit potential. 2. Use a simple system If you want to develop an effective Forex trading system, keep it simple - support and resistance, and a few confirming indicators can make big gains. In online currency trading, it’s a fact that simple systems work best. Why? There are fewer elements to break, in the real and brutal world of FX trading. 3. Isolate Yourself This is a key factor that needs to be learned in ANY Forex trading education. Don’t be influenced by the opinions of others, or the news! You’ll hear convincing stories, but that’s NOT going to make you money, journalists are not traders! If you follow the news, or let your emotions get involved then you will join the 90% of losing traders. 4. Be disciplined Don’t trade all the time or for the sake of trading. Only trade when your currency trading system generates trading signals, then follow the trade with discipline. A Simple way to make Big Online Profits Using Forex charts, the right way can make you a lot of money - as they represent the most time efficient and powerful way for any trader to get the odds on their side and win big in online forex trading.

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 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 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 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 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.

Economic Indicators

Auto and Truck Sales
Importance (A-F): This release merits a C-.
Source: Individual auto manufacturers, seasonal factors by the Commerce Department.
Release Time: Varies by auto maker from the first business day to the third business day of the month (data for month prior).
In Brief
Auto and Truck Sales measure the monthly sales of all domestically produced vehicles. They are considered an important indicator of consumer demand, accounting for roughly 25% of total retail sales. Demand for big ticket items such as autos and trucks tends to be interest rate sensitive, making the motor vehicle sector a leading indicator of business cycles.
Each auto maker reports sales individually. The reports are typically released over the course of the first three business days of the month. Using the individual reports, a total annual sales pace can be calculated after applying Commerce Department seasonal factors. It is this annual sales pace that the market refers to when discussing auto and truck sales for the month.In Depth
Vehicle sales figures rarely grab the attention of the market probably for two reasons. First, though the specifics of the data are not terribly difficult to understand, their implications are a little hard to trace. Second, unlike many economic releases, vehicle sales are not released all at once and at the same time every month. This makes it difficult for the market to quickly interpret what the numbers mean for the overall consumption picture and to react accordingly.
This is what happens in terms of vehicle sales during the course of any given month:
The individual vehicle manufacturers report their sales results during the first three or four days of the month.
A day after the last manufacturer reports the Bureau of Economic Analysis releases its estimate of unit auto sales.
About a week after that the BEA releases its estimate of unit truck sales.
The Census Bureau releases its retail sales report, including a measure of sales at automotive dealers, usually around the 13th of the month.
Roughly two weeks after that the BEA releases its personal income and outlays release, including a measure of spending on motor vehicles and parts.
Each item in this list warrants a more detailed discussion.
ManufacturersMost vehicle manufacturers usually always report sales results on the first business day of the month; Ford does not report until the third business day. As these individual results trickle out over the news wires throughout the day, diligent economists and market analysts are busy calculating running totals and applying seasonal factors to them--the BEA supplies factors for the coming six months in advance--in order to come up with approximations for auto and truck sales rates. These figures are some of the first hard spending data for any given month; comparing these derived rates to those from months and years prior is a big help when it comes to formulating a consumption forecast for the month.
Unit SalesOnce economists and analysts have translated individual sales results into annual rates, they turn to the BEA to provide "official" unit sales rates. Unfortunately, though the BEA is using the same seasonal factors as the rest of us, more often than not it produces unit rates that are modestly different than the ones that market previously had in mind. Thankfully, however, these differences usually pop up in the individual sales categories--domestic car sales, import car sales, domestic truck sales, and import truck sales--but wash out when all the vehicle types are aggregated.
Retail SalesWith unit sales rates in hand we can proceed to forecast the auto sales contribution to the retail sales figure. And this link is important. In fact, autos often prove to be such a significant swing factor that retail sales are scrutinised on both a total and an excluding-autos basis. It is also worth remembering that the auto term in the retail report is notoriously difficult to estimate; it is not at all rare to see it decline (increase) during a month when unit auto sales rise (fall). Still, by the time the retail sales report rolls around, a few other preliminary spending gauges can be used in conjunction with the unit auto data to get a pretty good read on whether retail consumption rose or fell for the month.
Personal Consumption ExpenditureWith unit sales rates and retail auto spending data in hand analysts can hone their estimates for the auto category in the personal consumption release. Many analysts place relatively more emphasis on the retail auto figures to sharpen their PCE estimates, but the unit auto numbers typically have better predictive power for that series. Besides, it is not commonly known that the BEA does not rely at all on the the retail sales data to produce its consumption estimates. Thus, as an important component of the monthly consumption figures that go directly into the quarterly GDP calculation, the PCE auto data are most important to economic forecasters.

Forex Glossary

Ask (Offer) — price of the offer, the price you buy for.
Aussie — a Forex slang name for the Australian dollar.
Bank Rate — the percentage rate at which central bank of a country lends money to the country's commercial banks.
Bid — price of the demand, the price you sell for.
Broker — the market participating body which serves as the middleman between retail traders and larger commercial institutions.
Cable — a Forex traders slang word GBP/USD currency pair.
Carry Trade — in Forex, holding a position with a positive overnight interest return in hope of gaining profits, without closing the position, just for the central banks interest rates difference.
CFD — a Contract for Difference — special trading instrument that allows financial speculation on stocks, commodities and other instruments without actually buying.
Commission — broker commissions for operation handling.
CPI — consumer price index the statistical measure of inflation based upon changes of prices of a specified set of goods.
EA (Expert Advisor) — an automated script which is used by the trading platform software to manage positions and orders automatically without (or with little) manual control.
ECN Broker — a type of Forex brokerage firm that provide its clients direct access to other Forex market participants. ECN brokers don't discourage scalping, don't trade against the client, don't charge spread (low spread is defined by current market prices) but charge commissions for every order.
ECB (European Central Bank) — the main regulatory body of the European Union financial system.
Fed (Federal Reserve) — the main regulatory body of the United States of America financial system, which division — FOMC (Federal Open Market Committee) — regulates, among other things, federal interest rates.
Fibonacci Retracements — the levels with a high probability of trend break or bounce, calculated as the 23.6%, 32.8%, 50% and 61.8% of the trend range.
Flat (Square) — neutral state when all your positions are closed.
Fundamental Analysis — the analysis based only on news, economic indicators and global events.
GDP (Gross Domestic Product) — is a measure of the national income and output for the country's economy; it's one of the most important Forex indicators.
GTC (Good Till Cancelled) — order to buy or sell of a currency with a fixed price or worse. The order is alive (good) until execution or cancellation.
Hedging — maintaining a market position which secures the existing open positions in the opposite direction.
Jobber — a slang word for a trader which is aimed toward fast but small and short-term profit from an intra-day trading. Jobber rarely leaves open positions overnight.
Kiwi — a Forex slang name for the New Zealand currency — New Zealand dollar.
Leading Indicators — a composite index (year 1992 = 100%) of ten most important macroeconomic indicators that predicts future (6-9 months) economic activity.
Limit Order — order for a broker to buy the lot for fixed or lesser price or sell the lot for fixed or better price. Such price is called limit price.
Liquidity — the measure of markets which describes relationship between the trading volume and the price change.
Long — the position which is in a Buy direction. In Forex, the primary currency when bought is long and another is short.
Loss — the loss from closing long position at lower rate than opening or short position with higher rate than opening, or if the profit from a position closing was lower than broker commission on it.
Lot — definite amount of units or amount of money accepted for operations handling (usually it is a multiple of 100).
Margin — money, the investor needs to keep at broker account to execute trades. It supplies the possible losses which may occur in margin trading.
Margin Account — account which is used to hold investor's deposited money for FOREX trading.
Margin Call — demand of a broker to deposit more margin money to the margin account when the amount in it falls below certain minimum.
Market Order — order to buy or sell a lot for a current market price.
Market Price — the current price for which the currency is traded for on the market.
Momentum — the measure of the currency's ability to move in the given direction.
Moving Average (MA) — one of the most basic technical indicators. It shows the average rate calculated over a series of time periods. Exponential Moving Average (EMA), Weighted Moving Average (WMA) etc. are just the ways of weighing the rates and the periods.
Offer (Ask) — price of the offer, the price you buy for.
Open Position (Trade) — position on buying (long) or selling (short) for a currency pair.
Order — order for a broker to buy or sell the currency with a certain rate.
Pivot Point — the primary support/resistance point calculated basing on the previous trend's High, Low and Close prices.
Pip (Point) — the last digit in the rate (e.g. for EUR/USD 1 point = 0.0001).
Profit (Gain) — positive amount of money gained for closing the position.
Principal Value — the initial amount of money of the invested.
Realized Profit/Loss — gain/loss for already closed positions.
Resistance — price level for which the intensive selling can lead to price increasing (up-trend).
Scalping — a style of trading notable by many positions that are opened for extremely small and short-term profits.
Settled (Closed) Position — closed positions for which all needed transactions has been made.
Slippage — execution of order for a price different than expected (ordered), main reasons for slippage are — "fast" market, low liquidity and low broker's ability to execute orders.
Spread — difference between ask and bid prices for a currency pair.
Standard Lot — 100,000 units of the base currency of the currency pair, which you are buying or selling.
Stop-Limit Order — order to sell or buy a lot for a certain price or worse.
Stop-Loss Order — order to sell or buy a lot when the market reaches certain price. It is used to avoid extra losses when market moves in the opposite direction. Usually is a combination of stop-order and limit-order.
Support — price level for which intensive buying can lead to the price decreasing (down-trend).
Swap — overnight payment for holding your position. Since you are not physically receiving the currency you buy, your broker should pay you the interest rate difference between the two currencies of the pair. It can be negative or positive.
Technical Analysis — the analysis based only on the technical market data (quotes) with the help of various technical indicators.
Trend — direction of market which has been established with influence of different factors.
Unrealized (Floating) Profit/Loss — a profit/loss for your non-closed positions.
Useable Margin — amount of money in the account that can be used for trading.
Used Margin — amount of money in the account already used to hold open positions open.
Volatility — a statistical measure of the number of price changes for a given currency pair in a given period of time.
VPS (Virtual Private Server) — virtual environment hosted on the dedicated server, which can be used to run the programs independent on the user's PC. Forex traders use VPS to host trading platforms and run expert advisors without unexpected interruptions.