Forex Trading Education and Training

Should new Forex traders take Forex trading courses or join a Forex training program? Definitely yes; by now you have probably heard that only 5% of Forex traders achieve consistent profitable results when trading the Forex market. The main reason for this is the lack of education. Don’t get me wrong here, taking a Forex training program or a Forex trading course won’t guarantee profitable results, nothing can, but choosing the right Forex training program or Forex trading course will definitely put the odds in your favor.

Before spending any amount of money on any Forex trading course or Forex training program there are some important aspects you need to take in consideration. There are many Forex training programs available, but not every one of them suits the needs of every Forex trader.

The first thing you should be looking in a Forex training program is the content of the material. Unfortunately, most Forex courses or Forex training programs focus or spend most of the time on basic concepts. Though these basic concepts are important, spending most of the course on them won’t help the trader to make consistent results.

The following subjects are what I consider the most important aspects of Forex trading and every Forex training program or Forex trading course should address:

Forex trading basics:

Review Forex Trading basic concepts such as: Forex Trading margin, Forex Trading type of orders, a little Forex Trading background, Forex Trading bid/ask rollover, etc. You need to make sure you understand every Forex Trading single concept to perfection.

Main drawbacks of Forex traders.

Being aware of the common Forex Trading mistakes made by Forex traders and knowing how to handle them will prevent new Forex traders from making those Forex Trading mistakes.

Technical and fundamental Forex Trading analysis.

These are the two main approaches adopted by Forex traders. Knowing how to properly apply each concept will definitely put the odds in your favor.

The three pillars of Forex trading. I consider that these three subjects have the most impact on every Forex trader trading account.

Forex trading system development.

Having the right Forex Trading system is a must if you want to have consistent Forex Trading profitable results. Having a Forex Trading system that doesn’t fit you will cause a series of problems that will make your Forex Trading account vanish away (second guessing the Forex Trading system, not following your system, etc.)

Money management.

This is considered by many successful traders to be the most important single aspect of trading. Money management helps to increase your profits geometrically and at the same time limit your losses (i.e. a good risk reward ratio of about 2:1 will make you money in a Forex trading system that is right only 38% of the time.)

Trading psychology.

Being aware and knowing hot to handle the psychological barriers that affect every trader decision will put the odds in your favor.

Other important aspects every Forex training program should include are:

Developing habits for success (such as discipline patience, taking responsibility of every action, commitment, etc.,) understanding and taking our trading as a business, risk and trade management.

Another important aspect you should take into consideration when choosing a Forex training program is the mechanics of it, getting to know how the Forex training program works.

A good Forex Trading course will have the following:

A live conference room, where you can apply everything learned under live market conditions.
One-on-one feedback, every Forex trader has different needs and requires special attention. For instance a Forex trader wanting to improve the system and requires individual feedback from the instructor about it.

Online Forex Trading course, a course that could be accessible through internet. A plus is a course where you are able to access the course at the convenient time for you, so you don’t have to change your lifestyle.

A Forex forum, where members can talk just about everything related to the Forex market and the Forex training program.

Trading the Forex market is no easy task. It requires a lot of hard work. Making the right decision will definitely put the odds in your favor. Take your time when doing your diligence because it is a big and important step in a trader’s trading career.

Six Forex Trading Tips for Forex Trading Newbie's

You have decided to be a Forex trader in the forex market, and you have no idea on how to begin. Let's first start by defining what the forex market is and what it does.

The term "forex", also known as the foreign exchange is a market for the sale and purchase of all kinds of currencies. It originated in the early 1970's when floating currencies and free exchange rates were first introduced. At this time, the forex market traders were the ones who set the value of one type of currency against another.

Nowadays, the Forex Trading market forces determine the value of a currency against another. One unique aspect of the Forex Trading market is that very little trading qualifications are required of anyone intending to trade therein.

Independence from external control ensures that only the market forces influence the currency prices. As the largest financial market, with trades reaching up to 1.5 trillion U.S. dollars, the money moves so fast, it’s impossible for a single investor or Forex Trader to substantially affect the price of any major foreign currency.

In addition, unlike any stock that is rarely traded, forex traders are able to open and close any positions within seconds, because there are always a number of willing buyers and sellers.

1. The first thing you need to do is open a forex Trading account. You will have to fill an application form which includes a margin agreement stating if the Forex Trading broker will be allowed to intervene with any Forex trade when it appears too risky. Since most Forex trades are done using the Forex Trading broker's money, it is only logical that he protect his interests. However, once you have established an account, you can fund it and begin trading in the forex market.

2. Adopt a Forex trading strategy that has proven to be successful for you. Remember that Forex Trading strategies will work differently for different Forex traders, so don't try to adopt a Forex trading strategy that works well for another Forex trader. It might backfire on you. The two available approaches are either Forex Trading technical analysis or Forex Trading fundamental analysis. A combination of the two is a more preferred choice for experienced Forex traders.

3. Understand that prices move by trends. Forex Trading has a popular saying, “The trend is your friend.” There are certain movements that have been studied over many years in order to identify a pattern in the trend. These Forex Trading trends need to be understood in order to understand a good Forex trading strategy. For small Forex Trading accounts that are $25,000 and under, trading with a trend may help improving your odds when compared to bi-directional trading. Most Forex Trading newbie’s will look to trade Forex in any direction, when they should be trading Forex with a trend.

4. Ensure you know which are the top five currencies pairs in the foreign exchange. These are USD/Yen, Swiss franc/USD, Euro/Yen, Euro/USD and Pound/USD.

5. For Forex Trading newbie's, it is advisable to maintain two Forex Trading accounts to ensure you learn to play the Forex trading game. Keep one real Forex Trading account, one that you will actually use to trade real money; and the second Forex Trading account should be a Forex Trading demo account, one that you can use to test alternative moves in the Forex trading game. You can easily use your Forex Trading demo account to shadow the trades in your real Forex Trading account so you can widen your stops to see if you are being too conservative or not.

6. Always examine the one hour, four hour and daily charts that concern your trades. Although you can trade Forex at 15 and 30 minute time intervals, doing so requires a handful of dexterity.

Basics of Forex Trading

Forex trading or Foreign Exchange Trading refers to the simultaneous trading—that is, buying and selling-of two different currencies. It is done between and among major financial institutions, central banks, retail currency traders or speculators, large international companies, government institutions, companies with overseas operations and the like.

The Forex Market operates 24 hours through a global electronic network where trading occurs over the telephone and computer networks.

The Top Forex Currencies

Each world currency is given a three letter code which is used in FOREX quotes, the instrument traded by Forex traders and investors are currency pairs. A currency pair is the exchange rate of one currency over another. The most traded currency pairs are:
EUR/USD, GBP/USD, USD/CAD, USD/JPY, USD/CHF, AUD/USD.

The Trade

Trade happens when you accept the offered price and when the dealer confirms.

A currency can never be traded by itself. So you can not ever trade a EUR by itself. You always need to compare one currency with another currency to make a trade possible.

Lets have the EUR/USD and AUD/USD for example.

So, for instance, if a trader goes long or buys the Euro, she or he is simultaneously buying the EUR and selling the USD. If the same trader goes short or sells the Aussie, she or he is simultaneously selling the AUD and buying the USD.

The first currency of each currency pair is referred as the base currency, while second currency is referred as the counter or quote currency. Each currency pair is expressed in units of the counter currency needed to get one unit of the base currency. If the price or quote of the EUR/USD is 1.2545, it means that 1.2545 US dollars are needed to get one EUR.
There are no further costs in the trade. There are no commissions and other fees as well.

Bid/Ask Spread

All currency pairs are commonly quoted with a bid and ask price. The bid is the price your broker is willing to buy at, thus the trader should sell at this price. The ask is the price your broker is willing to sell at, thus the trader should buy at this price.

Margin Trading

In contrast with other financial markets where you require the full deposit of the amount traded, in the Forex market you require only a margin deposit. The rest will be granted by your broker.
The leverage provided by some brokers goes up to 400:1. This means that you require only 1/400 or .25% in balance to open a position (plus the floating gains/losses.) Most brokers offer 100:1, where every trader requires 1% in balance to open a position.

The standard lot size in the Forex market is $100,000 USD.

For instance, a trader wants to get long one lot in USD/YEN and he or she is using 100:1 leverage.

To open such position, he or she requires 1% in balance or $1,000 USD.

Of course it is not advisable to open a position with such limited funds in our trading balance. If the trade goes against our trader, the position is to be closed by the broker.

It’s very important to understand every aspect of trading. Start first from the very basic concepts, then move on to more complex issues such as Forex trading systems, trading psychology, trade and risk manage

Forex Education

Although currency trading has a long history dating back to the middle ages, it is the changes that we have seen during the twentieth century which have created the Forex market we see today.

During the first half of the twentieth century the British pound was the world's principal trading currency and was the currency held by many as their main 'reserve' currency. As a result, London was also seen as the leading center for foreign exchange. However, the Second World War severely damaged the British economy and so the United States dollar took over as the world's principle trading and reserve currency and retains that position today. This said, there are now a number of other currencies, principally the Yen and the Euro, which are also seen as reserve currencies.

Since the Second World War there have been a number of events which have proved instrumental in shaping today's Forex market.

Until the start of the Second World War, as we said the British Pound Sterling was the World’s most prominent currency.

At the end of the Second World War the World’s economy, with the exception of the United States of America, was in disarray. Representatives from the United States of America, Britain and France met at Bretton Woods, New Hampshire with the objective of creating an infrastructure that would allow the rebuilding of the World’s economy. The result was the Bretton Woods Accord.

The Accord decided that the US Dollar would become the World’s benchmark and all other countries would measure the value of their currencies against it. Part of this agreement was the Gold Standard which fixed the price of Gold at $35 an ounce. All other currencies were pegged to the dollar at a certain rate. This rate was not allowed to fluctuate more than 1% in either direction (higher or lower). If a fluctuation greater than 1% did occur then the relevant central bank had to enter the market and restore the exchange rate to within the accepted band.
The Bretton Woods Accord also set in motion the establishment of the International Monetary Fund (IMF) which was designed to provide a stable system for buying and selling currencies and to ensure that currency transactions could take place smoothly and in a timely fashion.
In addition, the aim of the IMF was to create a consultative forum to promote international co-operation and to facilitate the growth of world trade, while at the same time breaking down exchange restrictions which hindered international trade.

It was also part of the established role of the IMF to make financial resources available to member states on a temporary basis where this was considered necessary to further the aims of the IMF. Such loans were normally only made on the understanding that the country concerned would make substantial changes to rectify the situation which gave rise to the need for the loan in the first place.

There are mixed opinions as to whether the Bretton Woods Accord was successful in restoring economic stability to Europe and Japan. Despite this, the agreement eventually failed in 1971. It was superseded by the Smithsonian Agreement.

The Smithsonian Agreement tried to succeed where Bretton Woods had failed. Rather than give a 1% margin, greater room for manoeuvre was introduced. Not long into this agreement, Europe made its first attempt at breaking free from the Dollar dominated system. In 1972 Europe formed the European Joint Float. Member nations included West Germany, France, Italy, the Netherlands, Belgium and Luxembourg. This agreement was very similar to Bretton Woods but with a larger band for rate fluctuation.

Just as their predecessors had failed, these agreements were flawed and subsequently fell apart. However, this time there was no new agreement to take its place. For the first time since WWII there was a ‘free float’ system in place. The value of each currency is now governed completely by the laws of supply and demand. Large banks, private companies and individual speculators are all active participants in the Forex market.

The next major milestone was the establishment of European Monetary System which effectively came into force in 1979. The European Monetary System got off to something of a shaky start when Britain (one of the principle members of the European Community) decided not to join the system and Italy joined only under special arrangements. Britain did however later agree to participate to a limited degree by joining the exchange mechanism of the European Monetary System in 1990.

The final major development to affect the Forex market was the establishment of the Euro as a single currency for European Union member states in 1998 with eleven of the participating states replacing their national currency with the Euro.

Of all these developments it was the free-floating of currencies in 1978 which did more than anything else to boost the growth of the foreign exchange market. In 1978 Forex trading showed a daily turnover of about 5 billion US dollars and this figure rose in the following ten years to reach 600 billion US dollars by 1988. By 1992 this figure had reached 1 trillion US dollars, Today The Forex market has is the largest Trading market with daily turnover of around 2 trillion US dollars.

Forex Trade TIPS & TRICKS

Always keep your trading systems simple. Too much information at one time on your trading screen could confuse and delay your decision to trade.

Broker - A lot of Forex brokers are in business only to make money from yours. Read forums, blogs and chats around the net to get an unbiased opinion before you choose your broker.

Sample the Environment - It is important to remember that many registered and online trading agents have fictitious platforms which mirror the real-time, live platform clients register and trade on. It is not only advisable, but it is also actively encouraged to initially open a 'dummy' account where fictitious Forex trades can be undertaken that closely reflect what real trades may be like when they are eventually undertaken. Such platforms are designed to give those that are new to Forex a feel and an idea what real trades on live markets will be like when the decision is made to begin trading.

Buy low, Sell high - Forex trading does not involve the physical purchase of the currencies, but rather involves contracts for amount and exchange rate of currency pairs. The potential for profit comes from the fluctuations in the currency exchange market. Regular daily fluctuations in the value of one currency against another give a clear advantage over conventional stock market equities and instruments.

Manage Losing Positions - Trades will sometimes inevitably on occasion go against you. It is important to accept them as an inherent part of trading. Cut your losses and move on having learned from any mistakes made. Always remember however that you will not be able to trade without losing some positions. It is important to manage these well.

Patience - Do not over-trade your account. Good money management practice is important and will help with profitability. This will go a long way in helping you develop a strategy which fits with your personal trading capital. Operate a trailing stop loss policy say 15 to 20 pips behind the trade. Minimize your good trades as long as you are confident.

Flexible Mindset - Don't set yourself false targets and expectations. Experts will tell you trading is not an exact science and setting oneself unattainable targets will only lead to frustration and feeling of failure when these targets are not met. Always maintain an open mind. The market is a constantly changing environment tunes your mindset to understand this.

And lastly but definitely not least, it is most important for all market participants to remember that unique experiences and past performances do not guarantee future results. Trading results can vary in any combination of circumstances. If you do not have extra capital that you can afford to lose, you should not trade in the foreign exchange market.

Invest wisely and take advantage of the resources and technology available to you in the market.

Dollar-Euro Currency Exchange

This article provides an overview of the factors affecting the leading currency pair: Euro-dollar exchange, commonly expressed as EUR/USD.

The euro to dollar exchange rate is the price at which the world demand for US dollars equals the world supply of euros. Regardless of geographical origin, a rise in the world demand for euros leads to an appreciation of the euro.

Factors affecting exchange ratesFour factors are identified as fundamental determinants of the real euro to dollar exchange rate:

* The international real interest rate differential

* Relative prices in the traded and non-traded goods sectors

* The real oil price

* The relative fiscal position

The nominal bilateral dollar to euro exchange is the exchange rate that attracts the most attention. Notwithstanding the comparative importance of euro to US dollar bilateral trade links, trade with the UK is, to some extent, more important for the Euro zone than is trade with the US. The dollar and the euro have a strong predisposition to run together in the very short run, but sometimes there can be significant discrepancies. The very strong appreciation of the dollar against the euro in 2003 is one example of these discrepancies.

In the long run, the correlation between the bilateral dollar to euro exchange rate, and different measures of the effective exchange rate of Euroland, has been rather high, especially if one looks at the effective real exchange rate. As inflation is at very similar levels in the US and the Euro area, there is no need to adjust the dollar to euro rate for inflation differentials, but because the Euro zone also trades intensively with countries that have relatively high inflation rates (e.g. some countries in Central and Eastern Europe, Turkey, etc.), it is more important to downplay nominal exchange rate measures by looking at relative price and cost developments.

The fall of the dollarThe steady and orderly decline of the dollar from early 2002 to early 2004 against the euro, Australian dollar, Canadian dollar and a few other currencies (i.e., its trade-weighted average, which is what counts for purposes of trade adjustment), while significant, has still only amounted to about 10 percent.

There are two reasons why concerns about a free fall of the dollar should not be worth consideration. The first is that the US external deficit will stay high only if US growth remains vigorous. But if the US continues to grow strongly, it will also retain a strong attraction for foreign capital, which should support the dollar. The second reason is that the attempts by the monetary authorities in Asia to keep their currencies weak will probably not work.

The basic theories underlying the dollar to euro exchange rate:Law of One Price: In competitive markets free of transportation cost barriers to trade, identical products sold in different countries must sell at the same price when the prices are stated in terms of the same currency.

Interest rate effects:

If capital is allowed to flow freely, exchange rates become stable at a point where equality of interest is established.

The dual forces of supply and demand determine euro vs. dollar exchange rates. Various factors affect these two forces, which in turn affect the exchange rates:

The business environment:

Positive indications (in terms of government policy, competitive advantages, market size, etc.) increase the demand for the currency, as more and more enterprises want to invest there.
Stock market: The major stock indices also have a correlation with the currency rates.

Political factors: All exchange rates are susceptible to political instability and anticipations about the new government. For example, political or financial instability in Russia is also a flag for the euro to US dollar exchange because of the substantial amount of German investments directed to Russia.

Economic data:

Economic data such as labor reports (payrolls, unemployment rate and average hourly earnings), consumer price indices (CPI), producer price indices (PPI), gross domestic product (GDP), international trade, productivity, industrial production, consumer confidence etc., also affect fluctuations in currency exchange rates.

Confidence in a currency is the greatest determinant of the real euro-dollar exchange rate. Decisions are made based on expected future developments that may affect the currency. A EUR/USD exchange can operate under one of four main types of exchange rate systems:

Fully fixed exchange ratesIn a fixed exchange rate system, the government (or the central bank acting on its behalf) intervenes in the currency market in order to keep the exchange rate close to a fixed target. It is committed to a single fixed exchange rate and does not allow major fluctuations from this central rate.

Semi-fixed exchange ratesCurrency can move inside permitted ranges of fluctuation. The exchange rate is the dominant target of economic policy-making, interest rates are set to meet the target and the exchange rate is given a specific target.

Free floatingThe value of the currency is determined solely by market supply and demand forces in the foreign exchange market. Trade flows and capital flows are the main factors affecting the exchange rate. A floating exchange rate system: Monetary system in which exchange rates are allowed to move due to market forces without intervention by national governments. For example, the Bank of England does not actively intervene in the currency markets to achieve a desired exchange rate level. With floating exchange rates, changes in market demand and supply cause a currency to change in value. Pure free floating exchange rates are rare - most governments at one time or another seek to "manage" the value of their currency through changes in interest rates and other controls.

Managed floating exchange ratesGovernments normally engage in managed floating if not part of a fixed exchange rate system.

The advantages of fixed exchange rates are the disadvantages of floating rates:Fixed rates provide greater certainty for exporters and importers and, under normal circumstances, there is less speculative activity - although this depends on whether the dealers in the foreign exchange markets regard a given fixed exchange rate as appropriate and credible.

Advantages of floating exchange ratesFluctuations in the exchange rate can provide an automatic adjustment for countries with a large balance of payments deficit. A second key advantage of floating exchange rates is that it gives the government/monetary authorities flexibility in determining interest rates.

Exchange Rates

Because currencies are traded in pairs and exchanged one against the other when traded, the rate at which they are exchanged is called the exchange rate. The majority of the currencies are traded against the US dollar (USD). The four next-most traded currencies are the Euro (EUR), the Japanese yen (JPY), the British pound sterling (GBP) and the Swiss franc (CHF). These five currencies make up the majority of the market and are called the major currencies or "the Majors". Some sources also include the Australian dollar (AUD) within the group of major currencies.

The first currency in the exchange pair is referred to as the base currency and the second currency as the counter term or quote currency. The counter term or quote currency is thus the numerator in the ratio, and the base currency is the denominator. The value of the base currency (denominator) is always 1. Therefore, the exchange rate tells a buyer how much of the counter term or quote currency must be paid to obtain one unit of the base currency. The exchange rate also tells a seller how much is received in the counter term or quote currency when selling one unit of the base currency. For example, an exchange rate for EUR/USD of 1.2083 specifies to the buyer of euros that 1.2083 USD must be paid to obtain 1 euro.
At any given point, time and place, if an investor buys any currency and immediately sells it - and no change in the exchange rate has occurred - the investor will lose money. The reason for this is that the bid price, which represents how much will be received in the counter or quote currency when selling one unit of the base currency, is always lower than the ask price, which represents how much must be paid in the counter or quote currency when buying one unit of the base currency. For instance, the EUR/USD bid/ask currency rates at your bank may be 1.2015/1.3015, representing a spread of 1000 pips (also called points, one pip = 0.0001), which is very high in comparison to the bid/ask currency rates that online Forex investors commonly encounter, such as 1.2015/1.2020, with a spread of 5 pips. In general, smaller spreads are better for Forex investors since even they require a smaller movement in exchange rates in order to profit from a trade.

Margin

Banks and/or online trading providers need collateral to ensure that the investor can pay in case of a loss. The collateral is called the margin and is also known as minimum security in Forex markets. In practice, it is a deposit to the trader's account that is intended to cover any currency trading losses in the future.

Margin enables private investors to trade in markets that have high minimum units of trading by allowing traders to hold a much larger position than their account value. Margin trading also enhances the rate of profit, but can also enhance the rate of loss if the investor makes the wrong decision.

Leveraged financing

Leveraged financing, i.e., the use of credit, such as a trade purchased on a margin, is very common in Forex. The loan/leveraged in the margined account is collateralized by your initial deposit. This may result in being able to control USD 100,000 for as little as USD 1,000.

There are three ways private investors can trade in Forex directly or indirectly:

* The spot market * Forwards and futures * Options

A spot transaction

A spot transaction is a straightforward exchange of one currency for another. The spot rate is the current market price, also called the benchmark price. Spot transactions do not require immediate settlement, or payment "on the spot." The settlement date, or "value date," is the second business day after the "deal date" (or "trade date") on which the transaction is agreed to by the two traders. The two-day period provides time to confirm the agreement and arrange the clearing and necessary debiting and crediting of bank accounts in various international locations.

Forwards and Futures

Forwards make up about 46% of currency trading. A forward transaction is an agreement between two parties whereby one party buys a currency at a particular price by a certain date that is greater than two business days (a spot transaction).

A future contract is a forward contract with fixed currency amounts and maturity dates. They are traded on future exchanges and not through the interbank foreign exchange market.

Options

A currency option is similar to a futures contract in that it involves a fixed currency transaction at some future date in time. However the buyer of the option is only purchasing the right but not the obligation to purchase a fixed amount of currency at a fixed price by a certain date in future. The price is known as the premium and is lost if the buyer does not exercise the option.

Risks

Although Forex trading can lead to very profitable results, there are risks involved: exchange rate risks, interest rate risks, credit risks, and country risks. Approximately 80% of all currency transactions last a period of seven days or less, while more than 40% last fewer than two days. Given the extremely short lifespan of the typical trade, technical indicators heavily influence entry, exit and order placement decisions.

Euro Market

The rapid development of the Eurodollar market, where US dollars are deposited in banks outside the US, was a major mechanism for speeding up Forex trading. Likewise, Euro markets are those where assets are deposited outside the currency of origin.

The Eurodollar market first came into being in the 1950s when the Soviet Union's oil revenue -- all in US dollars -- was being deposited outside the US in fear of being frozen by US regulators. This resulted in a vast offshore pool of dollars outside the control of US authorities. The US government therefore imposed laws to restrict dollar lending to foreigners. Euro markets then became particularly attractive because they had fewer regulations and offered higher yields. From the late 1980s onwards, US companies began to borrow offshore, finding Euro markets an advantageous place for holding excess liquidity, providing short-term loans and financing imports and exports.

London was and remains the principal offshore market. In the 1980s, it became the key center in the Eurodollar market when British banks began lending dollars as an alternative to pounds in order to maintain their leading position in global finance. London's convenient geographical location (operating during Asian and American markets) is also instrumental in preserving its dominance in the Euro market.

Forex Forecasting

This article provides insight into the two major methods of analysis used to forecast the behavior of the Forex market. Technical analysis and fundamental analysis differ greatly, but both can be useful forecast tools for the Forex trader. They have the same goal - to predict a price or movement. The technician studies the effect while the fundamentalist studies the cause of market movement. Many successful traders combine a mixture of both approaches for superior results.
Technical analysisTechnical analysis is a method of predicting price movements and future market trends by studying charts of past market action. Technical analysis is concerned with what has actually happened in the market, rather than what should happen and takes into account the price of instruments and the volume of trading, and creates charts from that data to use as the primary tool. One major advantage of technical analysis is that experienced analysts can follow many markets and market instruments simultaneously.
Technical analysis is built on three essential principles:
1. Market action discounts everything! This means that the actual price is a reflection of everything that is known to the market that could affect it, for example, supply and demand, political factors and market sentiment. However, the pure technical analyst is only concerned with price movements, not with the reasons for any changes.
2. Prices move in trends Technical analysis is used to identify patterns of market behavior that have long been recognized as significant. For many given patterns there is a high probability that they will produce the expected results. Also, there are recognized patterns that repeat themselves on a consistent basis.
3. History repeats itself Forex chart patterns have been recognized and categorized for over 100 years and the manner in which many patterns are repeated leads to the conclusion that human psychology changes little over time.
Forex charts are based on market action involving price. There are five categories in Forex technical analysis theory:
* Indicators (oscillators, e.g.: Relative Strength Index (RSI) * Number theory (Fibonacci numbers, Gann numbers) * Waves (Elliott wave theory) * Gaps (high-low, open-closing) * Trends (following moving average).
Some major technical analysis tools are described below:

Forex Market Overview

The Forex market is a non-stop cash market where currencies of nations are traded, typically via brokers. Foreign currencies are constantly and simultaneously bought and sold across local and global markets and traders' investments increase or decrease in value based upon currency movements. Foreign exchange market conditions can change at any time in response to real-time events.
The main enticements of currency dealing to private investors and attractions for short-term Forex trading are:
* 24-hour trading, 5 days a week with non-stop access to global Forex dealers. * An enormous liquid market making it easy to trade most currencies. * Volatile markets offering profit opportunities. * Standard instruments for controlling risk exposure. * The ability to profit in rising or falling markets. * Leveraged trading with low margin requirements. * Many options for zero commission trading.
Forex tradingThe investor's goal in Forex trading is to profit from foreign currency movements. Forex trading or currency trading is always done in currency pairs. For example, the exchange rate of EUR/USD on Aug 26th, 2003 was 1.0857. This number is also referred to as a "Forex rate" or just "rate" for short. If the investor had bought 1000 euros on that date, he would have paid 1085.70 U.S. dollars. One year later, the Forex rate was 1.2083, which means that the value of the euro (the numerator of the EUR/USD ratio) increased in relation to the U.S. dollar. The investor could now sell the 1000 euros in order to receive 1208.30 dollars. Therefore, the investor would have USD 122.60 more than what he had started one year earlier. However, to know if the investor made a good investment, one needs to compare this investment option to alternative investments. At the very minimum, the return on investment (ROI) should be compared to the return on a "risk-free" investment. One example of a risk-free investment is long-term U.S. government bonds since there is practically no chance for a default, i.e. the U.S. government going bankrupt or being unable or unwilling to pay its debt obligation.
When trading currencies, trade only when you expect the currency you are buying to increase in value relative to the currency you are selling. If the currency you are buying does increase in value, you must sell back the other currency in order to lock in a profit. An open trade (also called an open position) is a trade in which a trader has bought or sold a particular currency pair and has not yet sold or bought back the equivalent amount to close the position.
However, it is estimated that anywhere from 70%-90% of the FX market is speculative. In other words, the person or institution that bought or sold the currency has no plan to actually take delivery of the currency in the end; rather, they were solely speculating on the movement of that particular currency.

History of Forex Market

An overview into the historical evolution of the foreign exchange market

This article will follow the historical roots of the international currency trading from the days of the gold exchange, through the Bretton Woods Agreement, to its current setting.

The Gold exchange period and the Bretton Woods Agreement.

Prior to Bretton Woods, the gold exchange standard -- paramount between 1876 and World War I -- ruled over the international economic system. Under the gold exchange, currencies experienced a new era of stability because they were supported by the price of gold.

However, the gold exchange standard had a weakness of boom-bust patterns. As a country's economy strengthened, its imports would increase until the country ran down its gold reserves, which were required to support its currency. As a result, the money supply would diminish, interest rates escalate and economic activity slowed to the point of recession. Ultimately, prices of commodities would hit bottom, appearing attractive to other nations, who would rush in and amid a buying frenzy inject the economy with gold until it increased its money supply, driving down interest rates and restoring wealth into the economy. Such boom-bust patterns abounded throughout the gold standard until World War I temporarily discontinued trade flows and the free movement of gold.

The Bretton Woods Agreement, established in 1944, fixed national currencies against the dollar, and set the dollar at a rate of USD 35 per ounce of gold. The agreement was aimed at establishing international monetary steadiness by preventing money from taking flight across countries, and to curb speculation in the international currency market. Participating countries agreed to try to maintain the value of their currency within a narrow margin against the dollar and an equivalent rate of gold as needed. As a result, the dollar gained a premium position as a reference currency, reflecting the shift in global economic dominance from Europe to the USA. Countries were prohibited from devaluing their currency to benefit their foreign trade and were only allowed to devalue their currency by less than 10%. The great volume of international Forex trade led to massive movements of capital, which were generated by post-war construction during the 1950s, and this movement destabilized the foreign exchange rates established in Bretton Woods.

The year 1971 heralded the abandonment of the Bretton Woods in that the US dollar would no longer be exchangeable into gold. By 1973, the forces of supply and demand controlled major industrialized nations' currencies, which now floated more freely across nations. Prices were floated daily, with volumes, speed and price volatility all increasing throughout the 1970s, and new financial instruments, market deregulation and trade liberalization emerged.

The onset of computers and technology in the 1980s accelerated the pace of extending the market continuum for cross-border capital movements through Asian, European and American time zones. Transactions in foreign exchange increased intensively from nearly billion a day in the 1980s, to more than $1.9 trillion a day two decades later.

Don't Be a Forex Trading Failure

Have you ever wondered why is it that very few traders succeed in the forex trading market while 95% of forex traders fail to achieve success? Below are 9 major reasons:

1. Get Rich Quick

It is this simple forex trading currency is not a get rich quick scheme, it will not make you a million dollars is days. Getting success requires patience and knowledge. It requires some forex education, patience, discipline, emotion control, etc. to get you into the world of successful Forex trading.

2. One Big Win-

What is the best systemPeople are always asking, "What is the best forex trading system around?" Sorry to disappoint you but there is no trading system that will make you rich. Many forex traders spend years trying to find the ultimate of forex trading but failed to find one. The main reason is the forex market changes every second and the forex markets move very quickly

3. No Education- No Knowledge

One of the reasons forex traders do not make money is because they don't have the right education or understanding of the Forex Market. You need certain forex training education, a forex course, a Forex Trading System and then a mentor to coach you. It does take time to learn and to get the right knowledge.

4. Discipline is the Key to Success

Discipline is so important in currency trading that it will reward you by accumulating your profits if you abide to it, and without it you will go broke. Do not chase loses.

5. It takes time-

Have some patienceForex traders chase after the price because they do not want to miss a golden trading opportunity. If you miss a trade let it go, remember the Forex Markets are open 24 hours a day 6 days a week so there is plenty of time and opportunity to make money.

6. You must manage your money and Trades

Most traders forget about risk and money management as they have the belief that they are never wrong and put all their money into every trade. The professionals never risk anymore than 10% per trade.

7. Learn to Control Your Emotions

Have a trading plan, plan the trade and then trade the plan. Most people will fail because they fail to have a trading plan without a plan you are trading blind and will go broke.

8. Keep it Real

If I had $1 for every person that thinks they can turn $1000 into $1,000,000 then I would have $1000,000. It takes time to build up your bank. Make sure you have realistic expectations.9. You Don't Have to Do it AloneOnce you have a trading plan, find a mentor, find someone that can help you. Remember it is strength in numbers. For more education lessons feel free to visit CFD FX REPORT they are the leading forex and stock market educators offering free education lessons, trading ideas. They can also help you find the best Forex brokers in the markets.

How to Trade Forex Part Time?

All traders live by the dream of trading Forex Full-Time for living, however most if not all start trading Part-Time first. Here are my tips on how you can achieve your dream:

When I first started trading I faced a lot of challenges, such as what indicators to use, which broker, what strategy etc. Eventually I found answers to all those questions nevertheless the biggest challenge was how to manage trading around my Full-Time day job. In this article I would like to share my experience as how it all worked out for me.

Trade more, or Trade Less:As any new trader I was faced with dilemma of how often to trade or look for trades everyday . From my experience so far I believe that trading more often is better when you first start. It helps in learning the use of trading platform, understanding market rhythm and getting used to other aspects of live trading. To gain such experience I started off with 1 hr and 5 minute systems, trading several times every day after work. Though sometimes hard to concentrate after an exhausting day at work, my strong motivation overcame any such impediments.

I carried on with this kind of trading for good 3-4 months. However I soon realized that this form of trading won’t help in long run. Constantly watching 5 minute chart is not only tiresome but boring at times. I knew that I need to do better and look for a system that is based on daily or weekly timeframes.Best of Both Worlds:My recommendation to any new trader is to develop two strategies of different timeframes. One for longer timeframe such as Daily and other for shorter timeframe such as 30 minutes or 5 minutes. Now here is the most important point, only trade the best setup from both strategies. Every strategy has both high and low probable trades. If you only practice to take high probable trades then you have more chances of succeeding. New traders struggles here, they want to trade more often and when the trade fails they look for more ways or indicators to overcome those losing trades. This creates a ever going process of changing and modifying the system which would work just fine on its own.

Also when trading shorter timeframe strategy find out the time of the day when it works best. Trade only during those hours. This way you can minimize time you need to sit in front of pc and maximize mental concentration.

I hope these tips were helpful. I would love to hear from people who are trading Part-time on how they manage trading around their day job.

Forex Trading- The four key things to learn

Do you want to be a Forex Trader, a forex trading millionaire? Well then you have 4 hurdles that you must overcome and then Forex trading success is all yours.

Now we sill show you what the hurdles are and more importantly how to overcome them and then your in control of your own forex trading success. Lets look at some interesting statistics 95% of Forex traders lose money and most follow a robot or sure fire system, where they think their going to win with no effort and they lose. Think about if it was as simply as turning on a machine to make money, one would you sell it? No! If it was that easy everyone would be successful, not 95% fail. Success normally comes at a price, education which equates to spending time to learn and which gives you knowledge.

So if you want the success see the hurdles then overcome them.

1. Education= Knowledge, you don’t always have to work hard but sometimes smarter Firstly almost anyone can make money from trading Forex but most fall for the it’s easy, or the numerous myths and one of the commonest errors is that hard work guarantees success - it doesn’t. In forex trading you don’t get rewarded for effort, you get rewarded for being right and that’s it. Forex trading is very black and white, either you are right or you are wrong. There is a saying though the Market is never wrong. You can learn everything you need to know in a few weeks and get on the road to Forex trading success and the reason for this is Forex trading is simple to learn if you do it the right way. Understand the market and what is required.

2. Find a Method that works and Stick it-

So many people come up with systems that start working and then they want to change it, make it better, does it get any better than working, than making you money? Isn’t this what we all want to achieve. So the first point to keep in mind is simple Forex trading strategies work better than complex ones and the reason is you are dealing with an odds based market and simple systems are more robust than complicated ones, with fewer elements to break.

Point Two- Throw away the Crystal Ball and Stop trying to Predict the Market!

This is simply hoping or guessing and you won’t be rewarded for that. You should trade the reality of price change on a chart and a great method to use is breakout methodology. It’s simple to understand, easy to learn and makes huge profits. So many people get in losing trades and then they become hope traders, I hope it goes up, wrong if you hope you know you should cut the trade and move on

3. Can’t Pick a Winning- Dealing with Failure- Deal with failure well and you can become a success

This is the hard part of Forex trading, forget all you have read from vendors of forex robots and sure fire systems that losses can always be small and last just a few days, this is not the reality. The reality is the market is going to hand you losses for weeks on end at some point and its in this period, you need to keep your losses small and keep trading your trading signals, as the market takes your money and makes you look a fool. You need to trade through these periods until you hit profits again. Think it’s easy? You probably haven’t traded, its tough to keep going and to do this you need the following key trait.

4. Golden Key to Success- Discipline- Stick your rules

To trade through losing periods, you must have the discipline to keep going - it’s the key to success. If you think about it, if you don’t have the discipline to rigidly apply your system, you don’t have one. You are a hope trade and sure enough you will go broke. Discipline is not easy, but is certainly worth learning. The way to achieve discipline is through the right Forex education and confidence in what you’re doing and the courage to apply your method.

Anyone Can Win Become a Winner

Anyone can win at Forex trading if they get the right education and overcome the above obstacles and when you have done this you could be making big Forex profits and earning a great second or even life changing income, in around 30 minutes a day. Or you can find a great forex broker that can help make you money, if you are looking for a Forex Broker then the CFD FX REPORT has recently researched Forex Brokers and have come up with who they believe to be the Best Forex Broker in the market.

Popular pairs in Forex

Without a doubt the EUR/USD and GBP/USD, as currency pairs, receive a great deal of attention by online Forex traders. Each provides tradable patterns almost every day. Why some traders prefer trading one of these pairs versus the other is almost a matter of personal preference. Both pairs will reflect global sentiment regarding the dollar. As a result, it is usually the case that they will share the same trend patterns. If world reaction to economic news is positive for the US economy, as a general rule, both the Euro and the GBP will tend to weaken. The chart below, for example, shows how the EUR/USD and the GBP have moved on the 1 hour pattern. Notice how similar the patterns are. The hour charts below show that both pairs provided a similar reaction to the Nov 4th economic release of the non-farm payroll report.Clearly, it is hard to develop an argument of which pair is better to trade. But there is more that the online Forex trader can do with these pairs. online Forex traders can generate totally new trading opportunities by dropping the US dollar component of the pair and, thereby, creating a Cross-pair known as the EUR/GBP Before we take a look at the EUR/GBP chart, let's try to understand what makes this pair a good source of trades, particularly, in the coming year.The best way to understanding this Cross-pair is to realize that it generates a picture of the battle between two different economies- the EU vs. the British economy. The EU countries experience different levels of economic growth and expectations of growth than that of Great Britain.

Forex - Historical Inauguration Fails to Ease the Markets Negative Tone

Market optimism which was anticipated from the transition of power at yesterdays historical Inauguration failed to translate into market gains. Equity markets plunged in the US, led by losses in the financial sector, sending risk appetite lower again, as the S&P closed down over 5% (the biggest drop on inauguration day in history). President Obama didn’t provide any real details of importance in his speech. He stated that the US was at war with a ‘badly weakened economy’. He noted that the economic crisis was the consequence of ‘greed and irresponsibility on the part of some’, and promised to keep a ‘watchful eye’ to ensure that markets do not spin out of control. He also added that people in charge of managing Americas money ‘will be held to account’. 

Yesterday the Bank of Canada cut its policy rate by 50bp to 1.00% as expected. The BoC's accompanying statement was moderately hawkish with the key policy portion being " the Bank will continue to monitor carefully economic and financial developments in judging to what extent further monetary stimulus will be required to achieve the 2 per cent target (inflation target) over the medium term...," which the market viewed as a signal that the BoC would not commit to further easing and this gave the CAD a momentary support before risk aversion trade began weighing on the rally. 

Read more at: http://www.ac-markets.com/forex-news/daily-forex-news.aspx

Saudi Forex Reserves Reach $250 Billion

By some measures, Saudi Arabia’s reserves are the fastest growing in the world.  The country’s reserves recently crossed the $250 Billion threshold, and are now growing at a pace equivalent to nearly 40% per year.  The source of the reserves should be a mystery to no one: oil.  Oil prices have surged over the last five years, bestowing a windfall of profits to the entire Middle East region.  Plus, as summer gets underway, oil prices are sure to climb further, which will ensure continued growth in Saudi forex reserves.  Fortunately for the US, the majority of the world’s oil contracts are settled in USD, which means the boom in oil prices has actually stabilized the USD, despite its contribution to the US trade deficit.  In addition, Saudi Arabia is one of the world’s most reliable investors in US capital markets, which means Dollar bulls can breathe a cautious sigh of relief that reserve “diversification” will probably be given short shrift by the Sauds

China PBOC Mulls Raising Gold Reserve By 4,000 Tons

BEIJING --China's central bank is considering raising its gold reserve by 4,000 metric tons from 600 tons to diversify risks brought by the country's huge foreign exchange reserves, the Guangzhou Daily reported, citing unnamed industry people in Hong Kong.

The Guangzhou-based newspaper didn't elaborate on the plan.

China's forex reserves, at US$1.9056 trillion at the end of September, is the world's largest. U.S. dollar-denominated assets, including U.S. treasury bonds and mortgage agency bonds, account for a big proportion of the forex reserves.

Characteristics of Forex Market

st, It consists market but no trading field
The finance industry in the western countries consist two sets of systems, namely the centralism business central operation and there is no fixed place for such business network. Stock trading is being traded through stock exchange. Like the New York Stock Exchange, the London stock market, the Tokyo stock market, respectively is American, English, the Japanese stock main transaction place, it is a centralism business financial commodity, its quoted price, the transaction time and hand over to the procedure all consist of unification the stipulation, and has established the same business association, it has formulated the same business rules. The investor could buy and sells the commodity through the broker company, this is known as "consist of trading market and trading field".

But foreign exchange business is done without any unification operation market and business network, it has no centralism unified place like the stock transaction. But, the foreign currency trading network actually is globally, and it has formed a organization which has no formal organization, the market is relied through an approval way and the advanced information system, Forex traders do not consist any membership qualification for any organization, but must obtain colleague’s trust and approval. This kind of Forex market which has no trading field is known as "consist of market but no trading field". Each day, the trading volume in the global Forex market involves billions of U.S dollars, the so huge large amount fund, is being control under both the non-centralism place and non central governance system, plus it is settle based on non-government governance.

2nd, Circulation work
Due to the different geographical position of the various financial centre, the Asian market, the European market, the Americas market because of the time difference relations, it has become an entire day 24 hour continued operation whole world foreign exchange market.

Early morning 0830 (New York time) New York market opens, 0930 Chicago market opens, 1830 Sydney opens, 1930 Tokyo opens, 2030 Hong Kong, Singapore open, before dawn 1430 Frankfurt opens, 1530 o'clock London market opens. So 24 hours uninterrupted movements, the foreign exchange market becomes a day and night market, only on Saturday, Sunday as well as the various countries' significant holiday, the foreign exchange market only then can close.

This kind of continued operation, provided no time and spatial barrier ideal outlet for investors, the Forex trader may seek the best opportunity to carry on the transaction. For instance, Forex trader buys up the Japanese Yen in the morning at the New York market, in the evening Hong Kong market opens the Japanese Yen rises, the Forex trader sells in the Hong Kong market, no matter Forex trader in where, he all may participate in any market, any time business. Therefore, the foreign exchange market may say is does not have the time and the spatial barrier market.

3rd, Zero and Game
In the stock market, the rise or the drop of stock market could influence the value of the stock whether to rise or drop, for example the Japanese new date iron stock price falls from 800 Japanese Yen to 400 Japanese Yen, the value of this stock has been reduced to half. However, in the foreign exchange market, the value of a stock and a currency is being calculated differently, this is because the exchange rate is refers to the exchange ratio both countries currency, the exchange rate change will influence one kind of monetary value to reduce and at the same time another kind of monetary value increase. For instance in 22 years ago, 1 US dollar exchanges 360 Japanese Yen, at present, 1 US dollar exchanges 110 Japanese Yen, this explains the Japanese Yen currency value rise, but US dollar currency value drops, in the end the value will not reduce or increase. Therefore, some people described the foreign currency trading is "zero and the game", exactly said is the wealth shift.

In recent years, investment foreign exchange market fund has continuously increased, the exchange rate fluctuation expands day by day, urges the wealth shift to be larger, the daily trading volume of the global foreign exchange involves 150 billion US dollars, the rise or falls 1%, means that the 150 billion funds has been shifted. Although the foreign exchange rate change is very big, but, any kind of currency will not become waste paper, even if some kind of currency unceasingly falls, however, but generally it represents certain value, only if such currency has been abolished.

A Detailed Overview of Forex Market

Introduction The following facts and figures relate to the foreign exchange market. Most of the information comes from the Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity conducted by the Bank for International Settlements (BIS) in April 2004, and published in March 2005. 52 central banks and monetary authorities participated in the survey, collecting information from approximately 1200 market participants. Structure Decentralised, over-the-counter market, also known as the 'interbank' market Main participants: Central Banks, commercial and investment banks, hedge funds, pension funds, corporations & private speculators The free-floating currency system began in 1973, and was officially mandated in 1978 Online trading began in the mid to late 1990's Trading Hours 24 hour market Sunday 5pm EST through Friday 4pm EST. Rollover at 5pm EST Trading begins in New Zealand, followed by Australia, Asia, the Middle East, Europe, and America Size Largest market in the world $1.9 trillion average daily turnover, equivalent to: More than 10 times the average daily turnover of global equity markets 1 40 times the average daily turnover of the NYSE 2 $300 a day for every man, woman, and child on earth An annual turnover more than 10 times world GDP 3 The spot market accounts for about one-third of daily turnover 1. About $167 billion - World Federation of Exchanges aggregate 2004 2. About $46 billion - NYSE 2004 3. About $36 trillion - World Bank 2003 Major Markets The US & UK account for more than 50% of turnover Major markets: London, New York, Tokyo Trading activity is heaviest when major markets overlap Nearly two-thirds of NY activity occurs in the morning hours while European markets are open 4 Concentration in the Banking Industry 16 banks account for 75% of turnover in the U.K. 11 banks account for 75% of turnover in the U.S. 11 banks account for 75% of turnover in Japan Note: The reference here is to individual banking offices rather than banking organisations. Source: BIS Triennial Survey 2004 Trading An estimated 95% of transactions are speculative More than 40% of trades last less than two days About 80% of trades last less than one week Brokers research: 90% of traders lose money, 5% break even, 5% make money Technical Analysis Commonly used technical indicators: Moving averages RSI Fibonacci retracements Stochastics MACD Momentum Bollinger bands Pivot point Elliott Wave Currencies The US dollar is involved in approximately 90% of all foreign exchange transactions, equivalent to over $1.5 trillion a day Currency Codes USD = US Dollar EUR = Euro JPY = Japanese Yen GBP = British Pound CHF = Swiss Franc CAD = Canadian Dollar AUD = Australian Dollar NZD = New Zealand Dollar Average Daily Turnover by Currency N.B. Because two currencies are involved in each transaction, the sum of the percentage shares of individual currencies totals 200% instead of 100%. Source: BIS Triennial Survey 2004 Currency Pairs Majors: EUR/USD, USD/JPY, GBP/USD, USD/CHF Dollar bloc: USD/CAD, AUD/USD, NZD/USD Major crosses: EUR/JPY, EUR/GBP, EUR/CHF

US Open: Sterling Price Action Once Again Takes Center Stage

With the exception of Sterling, the story in the overnight session was one of relative stability and consolidation following yesterday’s flight to safety price action.

US Open – With the exception of Sterling, the story in the overnight session was one of relative stability and consolidation following yesterday’s flight to safety price action. An article in today’s London Times entitled "Mervyn King paves way to start BoE print presses" set the tone for the initial GBP weakness with the currency also weighed down by yet another wave of selling in the local equity markets on more uncertainty over the outlook for the UK banking sector. Various names on the offer overnight included some corporate and real money accounts. In Euroland, ECB President Trichet has been on the wires this morning talking more about the outlook and challenges for the ECB and Eurozone economy. Trichet has addressed any concerns over the talk of a potential Euro breakup saying that these rumors are unfounded. The more balanced outlook and approach out from the ECB over the past several months in the face of the current global turmoil continues to be a great benefit to the Euro against Sterling with the cross once again mounting impressive gains over the past few days, looking to retest the recent life-time highs by 0.9800.USD/JPY action has been quiet thus far today with the market trading by 90.00 as a reported $7B option barrier is set to roll off today at the New York cut. Stable equity futures and unchanged commodity prices have helped to keep the antipodeans flat overnight with Aussie trading a fraction lower on the day, while Kiwi is slightly better bid primarily on the back of the better than expected overnight retail sales data coming in flat versus a -1.2% consensus. USD/CAD has given back some of its gains following yesterday’s as expected Bank of Canada decision to cut rates by 50bps to 1.00%. However, with a plethora of option expiries set to roll off here as well, the market isn’t expected to move all that much until the New York cut. There is not a lot ofevent risk on the table today with Canadian wholesale sales (1.5% expected) due up at 13:30 GMT followed by US NAHB housing data (9 expected) later in the day at 18:00 GMT.

Read More at: www.dailyfx.com

Dollar/Yen Drops Sharply Intraday; Flow Related

Dollar/Yen – Price action in the pair has been quite aggressive this morning with the yen showing rapid appreciation over the past hour, dropping off from 90.15 to j.ust match the critical 87.15 (17Dec) trend lows thus far. Equity and commodity related activity shows no real explanation for the move. However, the moves could be flow related with rumors circulating that a very large US investment house has been on the offer from 90.15, selling well over $500M. The downside break is significant with the price now matching the 87.15 base in such a short time.  The 88.45 level that was broken earlier also coincided with the 78.6% fib retracement off of the 87-15-94.60 move and the break back below the latter now ends any recovery prospects in favor of a fresh downside extension now below 87.15 towards intial support at 84.45 (July 1995 low). Setbacks have stalled by 87.15 but there are significant stops reporeted below which are expected to open the flood gates. 

Read Mor at: http://www.dailyfx.com

Forex News

With US markets closed for the Martin Luther King holiday, focus moved to European stocks and all the action was in the banking sector which continues to hemorrhage. With RBS announcement yesterday, the market awaits details of the UK government’s proposal to insure banks’ toxic assets, but with increasing fears of nationalisation, risk sentiment has not been spared. The sharp drop in European bank shares yesterday signaled that the banking crisis is far from over and has the potential to disrupt the euro zone, whose economies get significantly less support from their governments when compared to the US and UK.

S&P downgraded Spain to AA+ raising fears of further downgrades in European sovereign ratings and the European Commission published updated forecasts for 2009 which included forecasts for a 1.9% contraction in the economy in 2009 and a feeble 0.4% growth in 2010 recognizing that the recovery in unlikely to be V shaped. JC Trichet spoke during European time saying that the outlook for the EZ economy is "substantially worse" than the ECB predicted a month ago. Oil finished down following the cease fire in Gaza and the signing of 10 year gas supply deal between Russia and Ukraine.

Full Article at: http://www.ac-markets.com/forex-news/daily-forex-news.aspx

Forex News

EurUsd below 1.3025, is finding support on former trend lines. A rebound above 1.3025 would argue for a return towards 1.3120. Further downside pressure is expected later on (below 1.2970, in direction of 1.2855).

GbpUsd is challenging a break of 1.4275, finding support (1.4135 this morning). A closing price below 1.4275 would argue for further downside pressure. The currency pair is seen choppy, between 1.4135 and 1.4360.

UsdJpy within a narrow range is finding support on 90.10. Below that level, a return towards 89.65 might be seen (the bullish break point is at 90.75).

UsdChf is seen doing a pullback towards 1.1285 (former bullish break level), encountering strong resistance between 1.1390 and 1.1440 (ascending resistance line).

Full Article at: http://www.ac-markets.com/forex-news/daily-forex-news.aspx

Pakistan's Major Financial

Weekly inflation up more than 20pc

ISLAMABAD: The Federal Bureau of Statistics (FBS) on Friday reported that weekly inflation, measured by the Sensitive Price Index (SPI) of 53 daily-use kitchen items for the week ended on January 15, has increased by 20.50 per cent as compared to the corresponding week of the last fiscal year.

The figures showed a slight increase in inflation percentage during the week and went up from 19.25 per cent in the previous week to 20.50 per cent. The bulletin, based on data collected from 17 urban centres, showed increase in prices of 12 essential commodities, decline in 12, while prices of 29 items remained stable.

Full Article at:
http://www.forexpk.com/internal_major_fin.asp?file=pakistan_major_Weekly_inflation_up.asp

Iran to punish firms trading with Israel

TEHRAN: Iran's government has endorsed a bill that will sanction foreign companies doing business with Israel, in the face of Israel's deadly assault on Gaza, an Iran newspaper reported on Monday.

The sanctions will apply to multinationals which have branches in Iran and which "invest in the occupied lands (of Palestine) or help the Zionist regime," the government-run paper said. The draft bill adopted on Sunday will now be put before parliament, which is expected to pass it overwhelmingly.

The report gave no details of the nature of the envisaged sanctions. Iranian President Mahmoud Ahmadinejad on Sunday called on Muslim countries to unite to bring about an end to Israel's "genocide" against the people of Gaza.

The Iranian foreign ministry called for "any measure to stop the blockade, invasion and violence" in Gaza. "In all areas, including economic, the parliament and the government are seriously following it up and are identifying Zionist companies," foreign ministry spokesman Hassan Ghashgavi told reporters when asked about the sanctions and if they apply to companies such as Swiss group Nestle.

Nestle has been the target of protests by Islamists since the Gaza onslaught began, some Iranian websites said. It is among a small number of foreign companies which have factories in Iran, which notably also includes French automaker Renault.

Full article at: http://www.forexpk.com/internal_exclusives.asp?file=international_desks_Iran_to_punish_firms.asp

Forex Trading Basics

The global foreign exchange market is the biggest market in the world. The 3.2 trillion USD daily turnover dwarfs the combined turnover of all the world's stock and bond markets.

There are many reasons for the popularity of foreign exchange trading, but among the most important are the leverage available, the high liquidity 24 hours a day and the very low dealing costs associated with trading.

Of course many commercial organisations participate purely due to the currency exposures created by their import and export activities, but the main part of the turnover is accounted for by financial institutions. Investing in foreign exchange remains predominantly the domain of the big professional players in the market - funds, banks and brokers. Nevertheless, any investor with the necessary knowledge of the market's functions can benefit from the advantages stated above.
Margin Trading

Foreign exchange is normally traded on margin. A relatively small deposit can control much larger positions in the market. For trading the main currencies, Saxo Bank requires a 1% margin deposit. This means that in order to trade one million dollars, you need to place just USD 10,000 by way of security.

In other words, you will have obtained a gearing of up to 100 times. This means that a change of, say 2%, in the underlying value of your trade will result in a 200% profit or loss on your deposit. See below for specific examples. As you can see, this calls for a very disciplined approach to trading as both profit opportunities and potential risks are very large indeed.
Base Currency and Variable Currency

When you trade, you will always trade a combination of two currencies. For example, you will buy US dollars and sell euro. Or buy euro and sell Japanese yen, or any other combination of dozens of widely traded currencies. But there is always a long (bought) and a short (sold) side to a trade, which means that you are speculating on the prospect of one of the currencies strengthening in relation to the other.

The trade currency is normally, but not always, the currency with the highest value. When trading US dollars against Singapore dollars, the normal way to trade is buying or selling a fixed amount of US dollars, i.e. USD 1,000,000. When closing the position, the opposite trade is done, again USD 1,000,000. The profit or loss will be apparent in the change of the amount of SGD credited and debited for the two transactions. In other words, your profit or loss will be denominated in SGD, which is known as the price currency.

Dealing Spread, but No Commissions

When trading foreign exchange, you are quoted a dealing spread offering you a buying and a selling level for your trade. Once you accept the offered price and receive confirmation from our dealers, the trade is done. There is no need to call an exchange floor. There are no other time-consuming delays. This is possible due to live streaming prices, which are also a great advantage in times of fast-moving markets: You can see where the market is trading and you know whether your orders are filled or not.

The dealing spread is typically 3-5 points in normal market conditions. This means that you can sell US dollars against the euro at 1.7780 and buy at 1.7785. There are no further costs, commissions or exchange fees.

This ensures that you can get in and out of your trades at very low slippage and many traders are therefore active intra-day traders, given that a typical day in USDEUR presents price swings of 150-200 points.

Spot and forward trading

When you trade foreign exchange you are normally quoted a spot price. This means that if you take no further steps, your trade will be settled after two business days. This ensures that your trades are undertaken subject to supervision by regulatory authorities for your own protection and security. If you are a commercial customer, you may need to convert the currencies for international payments. If you are an investor, you will normally want to swap your trade forward to a later date. This can be undertaken on a daily basis or for a longer period at a time. Often investors will swap their trades forward anywhere from a week or two up to several months depending on the time frame of the investment.

Although a forward trade is for a future date, the position can be closed out at any time - the closing part of the position is then swapped forward to the same future value date.

Interest Rate Differentials

Different currencies pay different interest rates. This is one of the main driving forces behind foreign exchange trends. It is inherently attractive to be a buyer of a currency that pays a high interest rate while being short a currency that has a low interest rate.

Although such interest rate differentials may not appear very large, they are of great significance in a highly leveraged position. For example, the interest rate differential between the US dollar and the Japanese yen has been approximately 5% for several years. In a position that can be supported by a 5% margin deposit, this results in a 100% profit on capital per annum when you buy the US dollar. Of course, an even more important factor normally is the relative value of the currencies, which changed 15% from low to high during 2005 – disregarding the interest rate differential. From a pure interest rate differential viewpoint, you have an advantage of 100% per annum in your favour by being long US dollar and an initial disadvantage of the same size by being short.

Such a situation clearly benefits the high interest rate currency and as result, the US dollar was in a strong bull market all through 2005. But it is by no means a certainty that the currency with the higher interest rate will be strongest. If the reason for the high interest rate is runaway inflation, this may undermine confidence in the currency even more than the benefits perceived from the high interest rate.

Stop-loss discipline

As you can see from the description above, there are significant opportunities and risks in foreign exchange markets. Aggressive traders might experience profit/loss swings of 20-30% daily. This calls for strict stop-loss policies in positions that are moving against you.
Fortunately, there are no daily limits on foreign exchange trading and no restrictions on trading hours other than the weekend. This means that there will nearly always be an opportunity to react to moves in the main currency markets and a low risk of getting caught without the opportunity of getting out. Of course, the market can move very fast and a stop-loss order is by no means a guarantee of getting out at the desired level.

But the main risk is really an event over the weekend, where all markets are closed. This happens from time to time as many important political events, such as G7 meetings, are normally scheduled for weekends.

Business Invest Tool

Besides financial market, property and Internet, business is also an Invest Tool. In fact, business is the most common Invest Tool around.

What is Business?

Anything that makes us busy to make some profit Business as Invest Tool:

return : high
risk : high
capital : high

Business as Invest Tool offers high return; it is can be seen from a fact that most of wealthy people in the world are a businessman.

Remember the principle of investing? High return, high risk?

This principle also applies to business as Invest Tool. Because this is the most common Invest Tool, the competition is also very tight.

Business needs a lot of capital, in terms of knowledge and money. So if you want to use business as Invest Tool, please prepare yourself at very best. Invest Tool .