Forex Basics

FOREX or the foreign exchange market is where one currency is traded for another. It is the largest financial market in the world, and it includes trading between large banks, central banks, currency speculators, multinational corporations, governments, and other financial markets and institutions.

Unlike the stock market, where participants have access to the same prices, the FOREX market is divided into top and lower levels. The inter-bank market is at the top, which is made up of the largest investment banking firms. This level is usually unavailable, and not known to traders outside the inner circle.

As you go down the inner levels, the difference between the biding (buyer) and asking (sellers) prices widens. If a trader guarantees a large number of transactions for large amounts, they can then demand a smaller difference between the biding and asking price. Investors can only buy currency (which is assigned a three-letter code) from a seller with an asking price that is the same as the biding price. There are smaller investment banks, followed by large multi-national corporations, large hedge funds, and even some of the retail FOREX market makers. Insurance companies, mutual funds, and other institutional investors are also playing an increasingly important role in the financial market and in FOREX markets in particular.

FOREX is an extremely competitive market. To be successful, traders have to concentrate on a set of simple strategies that they can put into practice without hesitation. These strategies are used to determine trading prospects in the FOREX market. They involve using technical and mathematical analysis, charts, and the like, along with fundamental analysis using monetary, political, and economic information, to opt for trading calls.

There are some people who say that you need to suffer a few blowouts (wiping out your trading account) before you can become successful.

I don't buy into this at all, simply because what this doesn't teach you is discipline, and if you want to become a successful forex trader, then discipline is one of the key attributes you will need.

When starting out you shouldn't just throw some money into a trading account, and say to yourself “well it's money I can afford to lose, so what the hell, let's go for it”. Instead you should protect that money as if it's your life savings and losing it all and being blown out is simply not an option.

This will teach you to be disciplined both in your mind and in your trading where you should therefore be placing stop losses with every single trade to protect your capital in case you do incur any losses.

The key to becoming a successful profitable trader is to keep your losses small and contained and let your winners run, so your trading pot grows over time.

Unfortunately this is a lesson that even seemingly successful traders fail to learn. They may have built up large profits over a number of years, but if they don't use stop losses then eventually they can potentially be wiped out.

Indeed I know several traders who have sadly suffered this fate (mainly due to their ego and overconfidence) so please don't let this happen to you. Accepting a small loss when your stop loss is triggered is easy to swallow, but suffering a blowout and being completely wiped out due to not having controlled stop losses in place is not.

Trading forex for a living from the comfort of your own home can be extremely profitable, but it can also drive you insane at times, so for today's post I thought I'd offer my 6 top tips for keeping yourself sane when trading.

1. Check the day's economic calendar at the start of every session.

There's nothing more infuriating than taking the time to find a good position which goes nicely into profit, before suddenly turning into a losing position due to economic data releases or Ben Bernanke opening his big mouth, for example, which you'd completely forgotten about. So always check the scheduled announcements for the day before you do anything else, and make a note of them so you're never caught out. (The best site for this, in my opinion, is http://www.forexfactory.com).

2. Visit trading forums and chat to other traders online.

Trading from home is a lonely profession, and the frustrating thing is that you have no-one to share trading ideas with, so forums and trading rooms are great for this. Obviously you don't want to spend too much time doing this otherwise you might miss some great opportunities, but they're worth visiting during quiet periods, of which there are many during the day.

3. Leave the house and speak to real people.

Following on from the last point, the loneliness factor is a very real one and for that reason I always say that you should make a point of going out and mixing with people as much as possible when you're not trading. If you're not careful, after long periods of time it's very easy to go out less and less and find yourself becoming more and more introverted, so try not to fall into this trap.

4. Take plenty of exercise.

It's an old saying, “a healthy body is a healthy mind”, but it's completely true. Apart from the fact that you need to be completely switched on when making trading decisions, sitting down staring at a computer screen for hours on end is really not good for your eyes, your back or your health in general. Therefore you should take plenty of exercise during the day and in your spare time to keep yourself healthy.

5. Take regular breaks and reward yourself occasionally.

As well as exercising, it's also a good idea to take regular breaks during the day just to relax and chill out. Trading can really get the pulse racing at times, and can be very stressful, so take a break occasionally. Also if you've made a highly profitable trade and achieved your daily target, if you have one, why not reward yourself with a DVD or a shopping spree, for example. After all there's more to life than just making money.

6. Invest your profits into other areas.

Trading forex is great, but why spend all your time busting a gut trying to make more and more money. If you do become a successful trader, invest some of it into stocks and property and make your money work for you. This way you will take some of the pressure off of yourself and you can become a more relaxed trader knowing you have other sources of income.

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

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

Foreign exchange consists of a simultaneous buying of one currency and selling of another. Currency is traded in pairs, in other words, one currency is traded for another. The major currencies are:

USD - United States Dollar
EUR - Euro members Euro
JPY - Japan Yen
GBP - Great Britian pound
CAD - Canadian dollar
AUD - Australia dollar

here are many reasons investors take a great interest in FX trading Some of the major reasons are:

No fees
No middlemen
No fixed trade sizes
Low transaction cost
High liquidity

Happy Forex Trading

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

The benefits of trading the currency market:

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

It is very liquid and efficient;

It is very volatile;

It has very low transaction costs;

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

You can profit from a bull or a bear market.

Continuous, 24-Hour Trading

The value of currencies on the other hand is affected by so many factors and so many participants that the likelihood of any one individual or group of individuals drastically affecting the value of a currency is minute. Because of its sheer size, the currency market is hard to manipulate. The ability for people to engage in ‘insider trading’ is virtually eliminated. As an average trader, you are less disadvantaged. You are likely to be playing on relatively equal ground along with all the other traders and investors whom you are competing against.

Most FOREX traders use a broker to handle their transactions. What exactly is a broker? Strictly speaking, a broker is an individual or a company that buys and sells orders according the investor’s decisions. Brokers earn money by charging a commission or a fee for their services.

A FOREX broker needs to be associated with a large financial institution such as a bank in order to provide the funds necessary for margin trading. In the United States a broker should be registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) as protection against fraud and abusive trade practices.

Before trading FOREX you need to set up an account with a FOREX broker. You may feel overwhelmed by the number of brokers who offer their services online. Deciding on a broker requires a little bit of research on your part, but the time spent will give you insight into the services that are available and fees charged by various brokers.

The best advertising is word-of-mouth advertising, and this is just as valid in FOREX trading as it is for any other type of business. Talk to friends and associates to see who they are dealing with and find if they have any complaints or difficulties in dealing with a particular broker.

You could try selecting a few online brokers and contact their Internet help desks to see how quickly they respond to enquiries and whether or not they answer questions to your satisfaction. Keep in mind, however, that pre-sales service may be better than after sales service. This can be true for any online business, not just FOREX brokers.

Forex Trading can be something very simple. However, you may still need some beginner Forex tips if you have zero experience about it. You may also treat this article as a beginner course in currency Forex trading. Nowadays most people will be go for online trading since it is extremely convenient. You can download the demos from some websites of Forex brokers to get a pilot experience before you really go for the trading.

You will probably need an account in order to start to trade. It is better to open it with a registered broker. They will usually provide online trading platform which is free of charge. You can use it to see the charts and information such as the trends of the exchange rates.

For the platforms, there are some which are quite sophisticated. On the contrary, there are some which are simpler and easier to use. Again, as a piece of beginner Forex Tips, you should download the demo platform to get a feel to see if you can use it comfortably. You should take this as an opportunity to take a beginner course in currency Forex trading, in terms of using the platform.

Besides, you should also make sure that the platform can give you the charts of the indicators you need. You will certainly need them to help to make your decisions. If the platform is not able to plot the charts you need. I will recommend that you try another one.

Another important piece of beginner Forex tips is that you should never open a live Forex account when you are still using the demo. As discussed before, you are taking the opportunity of using the demo as a beginner course in currency Forex trading. And you may not have enough knowledge to manipulate a live account and trade.

When you try to start to trade, you should firstly select the pair of commences. Then you will fix the volume. The volume is the amount you would trade for the Forex deal. And then you can just deposit the margin needed. In most cases, it will only be something like 1% of the totally amount you need for the whole deal. And before you activate it, you can think about it again for a second. You will change the terms if you wish. Of course you can also just accept what you have selected.

When the deal is running, you can always check the status of it. This is probably the most essential advantage for trading online. You can check it whenever you want, provided that you can have internet access. You may also set a so called take profit rate, and the deal will be automatically closed when it reach the rate you have set.

There are in fact a lot of beginner Forex tips. And you can just learn while you trade. Of course you should have some basic knowledge before you start. When your forex deal is running, you can monitor its status and check scenarios online whenever you wish. You may change some terms in the deal or close it. Ultimately, you remain in control and only you can decide when the tune is right to cash in your profit. However, the best beginner course in currency Forex trading is always a “course” you are taking in the real scenarios.

The Forex market is among the most advantageous and profitable in the world, and is worth more than a trillion and a half dollars a day! With all that money going around, it makes sense to get in on the action. There are a few things that you should remember, however, before you invest large sums of money in the enterprise. Here are a few tips to help you on your way.

There are not many Forex tips that are more important than that of training and knowledge. While there are many professionals who will be willing to help you on your way, it is important that the final say on the matters will be yours. Hence, when you do invest, know the ins and outs of the market, and take the power into your own hands. Another of tips of Forex is that you invest wisely and take advantage of the technology available to you in the market, since most trades are made online. All you have to do in order to make a trade is go online, and there you will find all the resources that you will need. While you are investing, it may be a good idea to will you children some money, as well.

Why do hundreds of thousands online traders and investors trade the forex market every day, and how do they make money doing it?

This two-part report clearly and simply details essential tips on how to avoid typical pitfalls and start making more money in your forex trading.

1. Trade pairs, not currencies - Like any relationship, you have to know both sides. Success or failure in forex trading depends upon being right about both currencies and how they impact one another, not just one.
   
2. Knowledge is Power - When starting out trading forex online, it is essential that you understand the basics of this market if you want to make the most of your investments.
   

   The main forex influencer is global news and events. For example, say an ECB statement is released on European interest rates which typically will cause a flurry of activity. Most newcomers react violently to news like this and close their positions and subsequently miss out on some of the best trading opportunities by waiting until the market calms down. The potential in the forex market is in the volatility, not in its tranquility.
   

3. Unambitious trading - Many new traders will place very tight orders in order to take very small profits. This is not a sustainable approach because although you may be profitable in the short run (if you are lucky), you risk losing in the longer term as you have to recover the difference between the bid and the ask price before you can make any profit and this is much more difficult when you make small trades than when you make larger ones.
   
4. Over-cautious trading - Like the trader who tries to take small incremental profits all the time, the trader who places tight stop losses with a retail forex broker is doomed. As we stated above, you have to give your position a fair chance to demonstrate its ability to produce. If you don't place reasonable stop losses that allow your trade to do so, you will always end up undercutting yourself and losing a small piece of your deposit with every trade.
   
5. Independence - If you are new to forex, you will either decide to trade your own money or to have a broker trade it for you. So far, so good. But your risk of losing increases exponentially if you either of these two things:
   

   Interfere with what your broker is doing on your behalf (as his strategy might require a long gestation period);
   

   Seek advice from too many sources - multiple input will only result in multiple losses. Take a position, ride with it and then analyse the outcome - by yourself, for yourself.
   

6. Tiny margins - Margin trading is one of the biggest advantages in trading forex as it allows you to trade amounts far larger than the total of your deposits. However, it can also be dangerous to novice traders as it can appeal to the greed factor that destroys many forex traders. The best guideline is to increase your leverage in line with your experience and success.
   
7. No strategy - The aim of making money is not a trading strategy. A strategy is your map for how you plan to make money. Your strategy details the approach you are going to take, which currencies you are going to trade and how you will manage your risk. Without a strategy, you may become one of the 90% of new traders that lose their money.
   
8. Trading Off-Peak Hours - Professional FX traders, option traders, and hedge funds posses a huge advantage over small retail traders during off-peak hours (between 2200 CET and 1000 CET) as they can hedge their positions and move them around when there is far small trade volume is going through (meaning their risk is smaller). The best advice for trading during off peak hours is simple - don't.
   
9. The only way is up/down - When the market is on its way up, the market is on its way up. When the market is going down, the market is going down. That's it. There are many systems which analyse past trends, but none that can accurately predict the future. But if you acknowledge to yourself that all that is happening at any time is that the market is simply moving, you'll be amazed at how hard it is to blame anyone else.
   
10. Trade on the news - Most of the really big market moves occur around news time. Trading volume is high and the moves are significant; this means there is no better time to trade than when news is released. This is when the big players adjust their positions and prices change resulting in a serious currency flow.
    
11. Exiting Trades - If you place a trade and it's not working out for you, get out. Don't compound your mistake by staying in and hoping for a reversal. If you're in a winning trade, don't talk yourself out of the position because you're bored or want to relieve stress; stress is a natural part of trading; get used to it.
    
12. Don't trade too short-term - If you are aiming to make less than 20 points profit, don't undertake the trade. The spread you are trading on will make the odds against you far too high.
    
13. Don't be smart - The most successful traders I know keep their trading simple. They don't analyse all day or research historical trends and track web logs and their results are excellent.
    
14. Tops and Bottoms - There are no real "bargains" in trading foreign exchange. Trade in the direction the price is going in and you're results will be almost guaranteed to improve.
    
15. Ignoring the technicals- Understanding whether the market is over-extended long or short is a key indicator of price action. Spikes occur in the market when it is moving all one way.
    
16. Emotional Trading - Without that all-important strategy, you're trades essentially are thoughts only and thoughts are emotions and a very poor foundation for trading. When most of us are upset and emotional, we don't tend to make the wisest decisions. Don't let your emotions sway you.
    
17. Confidence - Confidence comes from successful trading. If you lose money early in your trading career it's very difficult to regain it; the trick is not to go off half-cocked; learn the business before you trade. Remember, knowledge is power.

The second and final part of this report clearly and simply details more essential tips on how to avoid the pitfalls and start making more money in your forex trading.

1. Take it like a man - If you decide to ride a loss, you are simply displaying stupidity and cowardice. It takes guts to accept your loss and wait for tomorrow to try again. Sticking to a bad position ruins lots of traders - permanently. Try to remember that the market often behaves illogically, so don't get commit to any one trade; it's just a trade. One good trade will not make you a trading success; it's ongoing regular performance over months and years that makes a good trader.
   
2. Focus - Fantasising about possible profits and then "spending" them before you have realised them is no good. Focus on your current position(s) and place reasonable stop losses at the time you do the trade. Then sit back and enjoy the ride - you have no real control from now on, the market will do what it wants to do.
   
3. Don't trust demos - Demo trading often causes new traders to learn bad habits. These bad habits, which can be very dangerous in the long run, come about because you are playing with virtual money. Once you know how your broker's system works, start trading small amounts and only take the risk you can afford to win or lose.
   
4. Stick to the strategy - When you make money on a well thought-out strategic trade, don't go and lose half of it next time on a fancy; stick to your strategy and invest profits on the next trade that matches your long-term goals.
   
5. Trade today - Most successful day traders are highly focused on what's happening in the short-term, not what may happen over the next month. If you're trading with 40 to 60-point stops focus on what's happening today as the market will probably move too quickly to consider the long-term future. However, the long-term trends are not unimportant; they will not always help you though if you're trading intraday.
   

6. The clues are in the details - The bottom line on your account balance doesn't tell the whole story. Consider individual trade details; analyse your losses and the telling losing streaks. Generally, traders that make money without suffering significant daily losses have the best chance of sustaining positive performance in the long term.
   

7. Simulated Results - Be very careful and wary about infamous "black box" systems. These so-called trading signal systems do not often explain exactly how the trade signals they generate are produced. Typically, these systems only show their track record of extraordinary results - historical results. Successfully predicting future trade scenarios is altogether more complex. The high-speed algorithmic capabilities of these systems provide significant retrospective trading systems, not ones which will help you trade effectively in the future.
   

8. Get to know one cross at a time - Each currency pair is unique, and has a unique way of moving in the marketplace. The forces which cause the pair to move up and down are individual to each cross, so study them and learn from your experience and apply your learning to one cross at a time.
9. Risk Reward - If you put a 20 point stop and a 50 point profit your chances of winning are probably about 1-3 against you. In fact, given the spread you're trading on, it's more likely to be 1-4. Play the odds the market gives you.
   

10. Trading for Wrong Reasons - Don't trade if you are bored, unsure or reacting on a whim. The reason that you are bored in the first place is probably because there is no trade to make in the first place. If you are unsure, it's probably because you can't see the trade to make, so don't make one.
    

11. Zen Trading- Even when you have taken a position in the markets, you should try and think as you would if you hadn't taken one. This level of detachment is essential if you want to retain your clarity of mind and avoid succumbing to emotional impulses and therefore increasing the likelihood of incurring losses. To achieve this, you need to cultivate a calm and relaxed outlook. Trade in brief periods of no more than a few hours at a time and accept that once the trade has been made, it's out of your hands.
    

12. Determination - Once you have decided to place a trade, stick to it and let it run its course. This means that if your stop loss is close to being triggered, let it trigger. If you move your stop midway through a trade's life, you are more than likely to suffer worse moves against you. Your determination must be show itself when you acknowledge that you got it wrong, so get out.
    

13. Short-term Moving Average Crossovers - This is one of the most dangerous trade scenarios for non professional traders. When the short-term moving average crosses the longer-term moving average it only means that the average price in the short run is equal to the average price in the longer run. This is neither a bullish nor bearish indication, so don't fall into the trap of believing it is one.
    

14. Stochastic - Another dangerous scenario. When it first signals an exhausted condition that's when the big spike in the "exhausted" currency cross tends to occur. My advice is to buy on the first sign of an overbought cross and then sell on the first sign of an oversold one. This approach means that you'll be with the trend and have successfully identified a positive move that still has some way to go. So if percentage K and percentage D are both crossing 80, then buy! (This is the same on sell side, where you sell at 20).
    

15. One cross is all that counts - EURUSD seems to be trading higher, so you buy GBPUSD because it appears not to have moved yet. This is dangerous. Focus on one cross at a time - if EURUSD looks good to you, then just buy EURUSD.
    

16. Wrong 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.
    
17. Too bullish - Trading statistics show that 90% of most traders will fail at some point. Being too bullish about your trading aptitude can be fatal to your long-term success. You can always learn more about trading the markets, even if you are currently successful in your trades. Stay modest, and keep your eyes open for new ideas and bad habits you might be falling in to.
    

18. Interpret forex news yourself - Learn to read the source documents of forex news and events - don't rely on the interpretations of news media or others.

An introduction to the foreign exchange market and trading currencies with FX Solutions.

Foreign Exchange

Foreign exchange trading is the simultaneous buying of one currency and selling of another. The foreign exchange market (Forex or FX) is the largest financial market in the world with a daily turnover of over $2.6 trillion. Examples of currency trading pairs are Euro/US Dollar (EUR/USD) and US Dollar/Japanese Yen (USD/JPY). Most currency transactions involve the "Majors" - US Dollar, Euro, Japanese Yen, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar.

Unlike most financial markets, the foreign exchange market has no physical location and no central exchange. The Forex market operates 24 hours a day through an electronic network of banks, corporations and individual traders. Forex trading begins every day in Sydney, then moves to Tokyo, followed by London and then New York. The major market makers, or dealers, consist of the commercial and investment banks, the exchange traded futures, and registered futures commission merchants (FCMs) such as FX Solutions. FX Solutions' dealing desk is open 24-hours a day from Sunday 16:00 to Friday 16:30 Eastern Time.

Foreign Exchange Prices

Foreign exchange markets and prices are mainly influenced by international trade flows and investment flows. The FX markets are also influenced, but to a lesser extent, by the same factors that influence the equity and bond markets: economic and political conditions especially interest rates, inflation, and political instability. Those factors usually have only a short-term impact, which makes Forex attractive as it offers some of the diversification necessary to protect against adverse movements in the equity and bond markets.

Foreign Exchange prices, or quotes, include a "Bid" and "Ask" similar to other financial products:
Bid: Price at which Dealer is willing to Buy and Traders can Sell Currency
Ask: Price at which Dealer will Sell and Traders can Buy Currency

The difference between the Bid and Ask is called the "Spread", which is the Trader's cost of the transaction.

Currencies are usually quoted to four decimal places, such as the Euro/US Dollar trading at 1.2400/1.2403, with the last decimal place referred to as a point or "pip". A pip for most currencies is 0.0001 of an exchange rate; the exception to this is all pairs that we offer with a JPY denominator have pips of .01.

Analysis of Foreign Exchange Markets

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 trading
The 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.

Global fund NFOs (new fund offers) are the latest trend in the mutual fund industry and are fast catching the investor’s fancy. Several fund houses have already launched their global fund offerings; we understand that there are many more in the pipeline. As the name suggests, global funds invest in global stocks and/or mutual funds (that in turn invest in global markets). So what do global funds offer to investors?
Investing in global funds can also prove advantageous if you have a future liability in that currency/country. For instance, if you plan to send your child to the US for higher studies, investing in an US fund can be an option for you. By doing so you would have done away with the currency risk (explained later in this note).

We present a checklist that will help you evaluate global funds and make an informed investment decision.
1. Factoring the expenses
Investors in mutual funds incur expenses at two levels.
The first is a one-time expense (in the form of an entry/exit load) and the other is the recurring expense related to fund management expenses, market and sales expenses, administration expenses to cite a few. The recurring expenses are incurred by the mutual fund, but passed on to the investor. If you never realised this fact, it is because the daily NAV (net asset value) that is declared factors in the expenses.
It is equally important to evaluate a global fund from the ‘expense’ perspective. This is more so since many of the global funds that are being launched have opted for the FoF (fund of funds) route as opposed to direct investments in global markets. While FoFs add the diversification edge to your portfolio, this comes at a cost. FoFs have a double-layered expense structure. So all expenses (one-time as well as recurring) are incurred twice in an FoF; first for the FoF itself and second for the underlying scheme. Although the underlying schemes often waive off the entry load, there is still the matter of the FoF’s recurring expense. While calculating the FoF’s expense ensure that you add both the recurring expenses (FoF’s plus that of the underlying funds) and both the loads (FoF’s plus that of the underlying funds, if any).
The reason why investors have to be very concerned about the expenses incurred by their mutual fund investments is because over a period of time, higher expenses can and will erode returns significantly.
2. Don’t ignore Currency risk one of the more vital factors associated with global investing. Let’s understand this risk with the help of an illustration. Suppose you invest Rs 4,000 in a US$ fund. The Rs 4,000 will be converted into US$ 100 (approximating, for convenience). This US$ 100 is then invested over a one year period; now assume you earned 10% return i.e. the value of your investment is now US$ 110. But what is the value in terms of Indian Rupees? Let’s again assume, that the India Rupee actually appreciates vis-à-vis the US Dollar and touches Rs 36 per US Dollar in a year. So, effectively, the US$ 110 translates to Rs 3,960! So, even though in US Dollar terms you earned 10%, in Indian Rupee terms you actually lost 1%! But this is just a hypothetical example to illustrate currency risk. The situation could reverse and your gains could actually be magnified. In our view, investors can take on this risk under certain circumstances; for instance if you plan to send your child abroad for higher studies, then you can consider investing in a global fund domiciled in the country where your child will be studying.
3. Then there is country/market segment risk Another type of risk related to the currency risk is the country/market segment risk. There is no doubt that by investing in global funds, investors get an opportunity to diversify their portfolio across countries, but the same also amounts to taking on country/market segment risk. For instance, if a global fund invests in a particular country (say the US) or a market segment (emerging markets), then its investors are exposed to the negatives and positives of that economy (over here the US) or that market segment (over here emerging markets). In our view, it is best to select a well-managed fund that can invest across global markets. That would be diversification at its best. Such a fund would give its fund management team the much-needed flexibility while deciding where to invest.

4. Check the track record of the underlying investments Through global funds Indian investors are venturing into an investment universe to which they have had little or no exposure. Investing in an avenue without adequate information enhances the risk level of that investment considerably. Hence, it is advisable for investors to check the track record of the underlying investments of global funds (particularly in a FoF global fund), before investing in them.
At Personalfn, we are presently not capacitated to give a view on the underlying investments; hence we recommend that investors evaluate the underlying investments based on a rating wherever available

5. Ensure that you have an adequate investment time frame We believe that investments in equities and related assets should be made with at least a 3-5 Yr investment time frame. In an open-ended global fund this should not be a problem because you stay invested for as long as required. But in a close-ended global fund you should consider funds that have an investment tenure of a minimum of 3-Yrs (preferably more than 3-Yrs) and if it is lower than that, then it is best to avoid such funds. For equity investments, longer the tenure, the better it is in our view.

6. Is it diversified adequately and appropriately? Investors are meant to get the benefit of diversification by investing in global funds; hence it is surprising when global funds deprive investors of this benefit. Many of the global funds that have been launched (and are going to be launched) are investing predominantly in emerging markets, which to an Indian investor is not particularly exciting because India by itself is an important emerging market. So by being invested in domestic markets, the Indian investor already has a flavour of emerging markets. Ideally, he wants to diversify by investing in other markets (like developed markets for instance) that behave differently vis-à-vis emerging markets. So go for global funds that invest across market segments.
7. Ensure that Your Portfolio is in place We welcome the move to launch global funds and believe that investors must make the most of this opportunity by investing in them to diversify their portfolios (and in this way de-risk them). However, first they must ensure they have an portfolio consisting of well-managed funds with established track records and investment processes. Only then must they invest in global funds. Put simply, global funds must not be considered as a stand-alone investment, rather they must form part of a portfolio.

8. How much to invest in global funds? Since global funds must be considered primarily for the purpose of diversification and asset allocation, they should not form a large chunk of your portfolio. Typically, such funds should account for a smaller portion of your portfolio (typically less than 10%); the precise allocation can be assessed only after discussing the same with your financial planner.
9. Don’t rush into investing in global funds Like with investments in domestic funds, investments in global funds need to be evaluated thoroughly after drawing comparisons with comparable offerings. So avoid the urge to rush into investing in a global fund for whatever reasons (media hype, distributor’s persuasion). Evaluate a global fund across parameters (the investment proposition it offers, the fund’s investment processes, long-term track record across market phases, especially the downturns) by comparing it with other global funds of a similar nature. And keep in mind that many open-ended global mutual funds are likely to be launched in the next several months. So don’t just invest thinking you will otherwise be missing an opportunity. Invest only for the right reasons

The U.S. dollar got slammed in the first half of 2007, especially in July when the euro and pound sterling reached multi-year highs against the dollar. Most of the analysts we spoke with agree the dollar may have set a bottom, but for the dollar to make a serious recovery, economic reports need to support it.
One sign of a change in the dollar’s current downtrend is that the psychological support of 80.00 in the U.S. Dollar Index is holding. The Dollar Index took out the 2005 lows and briefly broke the 80.00 level on Sept. 24 and again on Aug. 6, but it rebounded both times (see “ Is this the bottom?” below). The Dollar Index hasn’t been this low since 1992.
“If Dollar Index futures do fall below 80.00, this sets up a potential test of the 1992 lows in the 78.50 to 79.00 area” says Heather Mitchell, market analysts at optionsXpress. But the consensus see ms to be that 80.00 will hold. The key factor for the U.S. outlook is going to remain the health of the U.S. consumer.

Investors monitor falling share prices in front of a panel displaying the Hang Seng Index at a brokerage in Hong Kong, on Tuesday, January 22, 2008. Hong Kong shares prices have fallen dramatically, tumbling 8.0 per cent in the morning session as investors dumped stocks amid fears of a US recession. The benchmark Hang Seng Index fell 1,914.73 points to 21,904.13, the government radio said.

* For the first time in many months, value has emerged, at least in pockets. Not just for stocks, even the Sensex at around 17,000 trades only at 16 times 2008-09 earnings, not including the embedded value that lies in many large-caps. Sensex falls off 19th floor, plunges to 17th as US Panic and FII sell-offs trigger biggest-ever crash on Dalal Street.
* Sensex recorded its biggest ever single-day drop of 1,408.35 points, and investors lost notional wealth worth Rs. 6,63,975 crore.
* Philippine shares close 5.5 percent lower
* South Korean shares down 6.23 per cent
* Aussie stocks extend losses to 6 per cent
* Chinese share prices were sharply lower in Tuesday morning trade, losing 4.07 per cent, amid growing fears of a US recession after sharp selloffs overnight in overseas markets.
* Every fall has a lesson though: empty stories can run till a point but finally the market will whip the froth off. It is best to learn from this fall and move on, perhaps even use the next few difficult weeks to construct a high quality portfolio that is based on hard cash and earnings, shorn of hype and dreams. These may be tough days but it may well turn out to be the best buying opportunity of 2008.

If you are anything like me, you probably imagine that it is difficult to become a foreign currency trader. Perhaps there are rules, regulations and other hoops that have to be jumped through. Maybe you need large amounts of cash in order to get started.

No.

Becoming a Forex currency trader is incredibly simple!

As mentioned on the right hand sidebar, I signed up with a mini account, used my credit card to add $100 to that account, and downloaded the trading software. It was that simple. That same night I was making trades. I'd say the process took about half an hour. However, I do need to fax in a copy of my identification in order to meet paperwork requirements.

Sweet! I'm a (mini account) Forex trader.

However, I realize that now the more difficult process starts. Now that I have a few dollars on the table I'm ready to start learning the lessons of the trade. Frankly, I won't be able to trade realistically if I am not actually risking my own money, so I have to do it this way. Of course, for most people, $100 is not a big enough sum of money to be a hardship if lost anyway.

So, I'm just blathering because the markets are currently closed for their regular weekend respite. I'm sitting in a precarious position because I have some open trades on my account and there is no telling what shape the market will be in when Sunday evening rolls around. I may be lucky and end up way ahead or I may be unlucky and lose my initial $100 payment. Another potential lesson is looming...

Oh, I should mention, these days Forex trading is quite safe. While there are large risks and large rewards, my risks are essentially limited to the capital that I have put into my account. With wise strategies I can limit risks further, but as a beginner it is comforting to know that I can't lose more than I let sit in my account no matter how foolish a beginner mistake I might make.

UPDATE:

I should stress that you could lose all the capital you put in your account, so do not start out with a large account with the idea that you will only conduct small trades. At the very least, create some sub-accounts and keep the majority of your capital out of harms way until you have blown up your play money account, learned a few lessons, and know how to protect your capital.

Forex Fibonacci Calculator v2.1 is a simple and useful tool that will help you to calculate Fibonacci extension and retracement levels for the market price. You will be able to anticipate market price moves and plan future trades according to the calculated results.

Note, that calculation formulas will differ for uptrend and downtrend moves, therefore use appropriate panel in the Calculator to input price values.
You can also find those formulas used for calculating Fibonacci levels on the program panel below.

In order to calculate Fibonacci levels with this program traders need to fill in High and Low values for the price and click on "Calculate!"

Tip: Change default field "Decimal places" to get desired number of decimal places for calculated results.

Fibonacci calculations can be used for any currency pair and with any time frame. However, the bigger the time frame, the more accurate results traders should expect applying Fibonacci calculations.

Forex Fibonacci Calculator must be used only as a helping(!) tool for planning future trades. No liability will be taken for any losses or unwanted results caused by following the calculations obtained by using Forex Fibonacci Calculator.

We wish you profitable trading and hope this tool will help you to make one step forward in achieving your trading goals.

Three most used Fibonacci retracement levels are 0.382 or 38.2%, 0.500 (50%) and 0.618 (61.8%).

Three most used Fibonacci extension levels are 0.618, 1.000 and 1.618. Also 1.382 extension can be applied as well.

Let's take a look at the next picture:

In the example above we are in the uptrend. Lowest swing — point A — is 120.75;
highest swing — point B — 121.44.

To calculate retracement levels and enter Long at some point C we do next:

Calculations for Uptrend and Buy order:

B — A = ?
121.44 — 120.75 = 0.69

0.382 (38.2%) retracement = 121.44 — 0.69 x 0.382 = 121.18
0.500 (50.0%) retracement = 121.44 — 0.69 x 0.500 = 121.09
0.618 (61.8%) retracement = 121.44 — 0.69 x 0.618 = 121.01

Fibonacci retracement levels formula for an uptrend:

C = B — (B — A) x N%

Now we need to calculate extension levels:

0.618 (61.8% ) extension = 121.44 + 0.69 x 0.618 = 121.87
1.000 (100.0%) extension = 121.44 + 0.69 x 1.000 = 122.13
1.382 (138.2%) extension = 121.44 + 0.69 x 1.382 = 122.39
1.618 (161.8%) extension = 121.44 + 0.69 x 1.618 = 122.56

Fibonacci extension levels formula for an uptrend:

D = B + (B — A) x N%


Our next example is downtrend.

Highest swing — point A — is 158.20; lowest swing — point B — is 156.44.

Calculations for downtrend and Sell order:

A — B = ?
158.20 — 156.44 = 1.76

Because of the downtrend we need to add to the lowest point B to find retracement.

0.382 (38.2%) retracement = 156.44 + 1.76 x 0.382 = 157.53
0.500 (50.0%) retracement = 156.44 + 1.76 x 0.500 = 157.32
0.618 (61.8%) retracement = 156.44 + 1.76 x 0.618 = 157.11

Fibonacci retracement levels formula for downtrend:

C = B + (A — B) x N%

Now let's find Fibonacci extension levels (downtrend):

0.618 (61.8%) extension = 156.44 — 1.76 x 0.618 = 155.35
1.000 (100%) extension = 156.44 — 1.76 x 1.000 = 154.68
1.382 (138.2%) extension = 156.44 — 1.76 x 1.382 = 154.01
1.618 (161.8%) extension = 156.44 — 1.76 x 1.618 = 153.59

Fibonacci extension levels formula for downtrend:

D = B — (A — B) x N%

Fibonacci Fan is another Fibonacci retracement tool that takes both price and time into consideration. Comparing to horizontal Fibonacci lines it offers an additional feature — price movement projection far further in time.

The price projection is based on fan-like trend lines that represent already familiar to us Fibonacci numbers: 0.382, 0.500 and 0.618.

That how it looks on the sketch:

Fibonacci fan sketch

To place Fibonacci Fan on the chart, choose Fibonacci Fan tool from menu on your trading platform and then look for the highest high and lowest low points (in other words two opposite peaks) at any given time to plot the tool on. Simply click on one peak and drug all the way to the other peak, the trading platform will build a fan for you.

Let's now take a look at the real chart:

Fibonacci fan


Fibonacci Fan represents price future support and resistance levels. Traders can expect for the price either to stay in the fan and move in between lines, or break out of it.

When a price holds at any Fan line it indicates presence of support/resistance there. Once the price breaks through the line, it won't usually stop till the next Fan line is met.
If the price quickly passes a Fan line (which means there was no support/resistance there), it will freely move to the next Fan line.

Even trading outside the Fibonacci Fan, price can find strong support/resistance when approaching Fibonacci Fan line.

So, Fibonacci Fan gives traders a simple but effective way to predict future price movements.
However, it is recommended that Fibonacci Fan tool be traded along with other indicators or tools to avoid fake signals.

Now let's have a look at a real forex chart.

Using Fibonacci in the uptrend

Same steps will also apply to downtrend price movement.

Using Fibonacci in the downtrend

A little bit of theory:
Leonardo Fibonacci is a founder of a simple series of numbers related to the natural proportions of things in the universe. Fibonacci numbers create ratios that arise from the following number series: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144: Calculated this way: 0+1=1, 1+1=2, 1+2=3 and so forth.

The ratio of any number in relevance to the next higher number is 0.618. E.g. 55/89=0.618.
There is no need to perform calculation each time you get into a trade, your trading platform is going to do it for you.

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.

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.

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.

The forex trade is fast becoming the buzzword in the international arena and the forex trade is trying to attain its place on the top of the popularity chart at a steady pace. The forex trade always seemed as a lucrative proposition since its early days, but the requirement of huge investments somewhat restricted this trade from the general masses. After the popularity boom of the internet this trade also went through a vast change and that opened it up for the general masses. Lack of information about this trade made it relatively unknown for most of the people in the past. But slowly the situation changed and at present you can lot of information about this trade with expert advice too. The forex trade became the center of attraction among the masses due to its capacity to earn huge profits in a very short span of time. Here the question arises how much of profit you can actually earn from the forex trade?

If you pose this question you may get the answer like huge amount of profits and if you try to look at the forex exchange rates, they always move from 0.5% to 1.5% at the maximum, the movement is very small practically unnoticeable, then where from the huge amount of profit is coming, if you look at the investment required to trade in the forex market then you may find that it ranges from $50 to $300 with most of the online brokers and the forex dealers. The catch lies with the leverage allowed on your trading account. The leverage allowed on your account makes it possible to actually trade for $100,000 forex lot for every $1000 invested by you. If you are able to earn say about 0.75% return on the whole lot of forex then the return on your own investment comes out to be 75% flat. That is the actual catch and makes the forex trade attractive for the masses.

No expert in the forex trade can assure you about any specific rate of return on your investment but as portrayed earlier it is quite high and the earning of profits solely depend on the moves made by you. It is not always possible to register the profits only you can lose your investment sometimes, but the best part of the current forex trade is that in case of any loss you stand to lose the initial investment made by you only. This makes the proposition further attractive for the masses. The online forex broker/dealer sites made it quite easy for the people to get into the forex trade and reap the profits. These sites provide you with initial training on the forex trading by providing you the host of articles on the forex trading that enables you to get the initial knowledge required to get into the trade. Beside that it also provides you the demo trading account where you can trade in a virtual forex market that behaves like the real one without investing anything from your pocket. The demo accounts are quite capable of training you for the real forex trading. The demo accounts also provide you the facility to test and sharpen your skills in the forex trading arena.

The present forex trading format offers you the high amount of profit with the initial investment of $50 to $300 only and the risk of losing the initial amount in the case of a loss. This proposition I far better proposition as compared to the investment in the stock exchanges and hence the forex trade is getting popularity at a brisk pace.

In a famous experiment a group of traders had 14 days forex training and made $100 million in four years and went on to become some of the most famous traders of all time. If you want to trade forex then their story should be an essential part of your forex education.

The group were nicknamed "the turtles" and they were trained by legendary trader Richard Dennis. He set out to prove that anyone could learn currency trading, if they had the right education and mindset.

The group were of all ages, men and women, of various educational backgrounds and the only thing they had in common was - none of them had any trading experience.

The method they were taught was a long term trend following system which was based on breakout methodology and it was extremely simple; so simple in fact that anyone could learn it.

Now you may ask, if it's that simple to trade and learn a system, why do 95% of traders lose money?

Dennis knew the answer to this.

Rather than just teach them blindly to follow a system, he taught them how and why it worked, so they could have the confidence and discipline to follow it, through a string of losing trades.

The method had more losers than winners - but Dennis taught them to stay with the system, take the losses with strict money management and hold the big profitable trades.

So could you become as rich as "the turtles"?

Maybe not, life isn't like that but the opportunity is there for all.

There is nothing to stop you or anyone else, learning a similar method and enjoying currency trading success over the longer term.

All you need to do is get a simple system, understand it, have confidence in it and the vital element of discipline to apply it.

Discipline is the key, because if you don't have the discipline to follow your trading system, you don't have one!

Discipline is not easy to acquire but it's a learned skill. If you want to be disciplined trader you can be - it's as simple as that.

The turtles should be an inspiration to any trader and it shows what can be achieved and by anyone. I read about the story in 1983 and it inspired me to trade and I hope that it does the same for you.

Forex trading can offer a life changing income - sure it's a challenge but if you like a challenge, then you could be on the road to a life changing income.

Forex scalping systems are over the net and it's one of the most popular ways for novice traders to get into Forex trading - but how do you find a system that can make you big regular profits? Let's find out.

Forex scalping systems don't work and never will. Before we go into the reasons why you will always see the disclaimer below on any system sold that claims to have made money.

"CFTC RULE 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown".

Now - anyone can make money in hindsight but forex trading is a bit more difficult you have to trade not knowing the closing price!

Most vendors who sell forex scalping systems simply make track records up that appeal to the greed of the buyer. The buyer takes the loss in the market and the vendor as a guaranteed profit in his pocket.

Day trading doesn't work and it never will because all short term volatility within a day or a few hours is random and any day traders should look at standard deviation of price in daily time frames.

You have countless millions of people all trading with different motivations and personalities and this huge diverse mass can do anything (and they do) in a short time frame.

As volatility is random this means you cannot use support or resistance levels because they mean nothing in short time frames and if you can't use them, you cant get the odds in your favor and will lose - it's as simple as that.

If You Want to Win at Forex Trading:

You need to get the odds on your side and that means using valid data and getting the odds on your side. You can swing trade or you can forex trend follow the choice is yours but please forget day trading or forex scalping systems - they don't work.

Let me know if you find a forex scalping system that has a real track record, I have been looking for over 20 years and have yet to find one.

Day trading is popular with huge numbers of novice traders yet you are guaranteed to lose in the longer term, as the logic it is based upon is simply not true and can never work. ..

Lets look at the two reasons why if you day trade you will lose.

Before we get started on the reasons why day trading is a guaranteed route to losses lets look at why you see track records with huge profits on many day forex day trading systems.

Here is the reason they all carry a disclaimer like the one below which means they have NEVER been traded:

"CFTC RULE 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown".

So you can make anything up you like and the track record is not worth the paper it's written on.

What's the point in having a track record if it isn't real and also you would think that the person selling the system would actually show confidence and trade it!

The reason they don't is most are sold by marketing companies looking to dupe naïve and greedy investors. Try and find a forex day trader with a real time track record and let me know if you find one you won't

So why doesn't day trading work?

The reason is obvious all volatility in short time frames is of a random nature and all support and resistance levels are not valid.

You cannot get the odds in your favor when day trading and if you can't get the odds in your favor you will lose - Period.

You simply can't judge in such a short time span what prices will do.

You have millions of people all with different motivations and personalities and to say you can measure what this vast diverse group will do in under a day is simply destined to failure.

So the next time you see that tempting day trading track record check the small profit, as chances are its never been traded. Then think about the above and you will see that day trading is a total mugs game.

There are lots of forex trading signal services to choose from and if you find the right one can be making good forex profits but you need to consider two key points when using a service.

Here are the 2 points that can lead you to success with forex trading signals.

1. Beware Of This!

The fact is most of the forex signal services that claim top have made profits haven't as the forex trading system has never been traded and this applies to well over 90% of services. Always check for the disclaimer below and if you see it don't buy the service - here it is:

"CFTC RULE 4.41 - Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown".

This disclaimer allows anyone to make up any track record they like. Of course we would all be multi millionaires if we knew the closing price in advance - but we don't forex trading is a bit harder than that.

Only choose currency trading systems that have a real time track record (audited) over 2 years or more - if you find one you need to consider the next point

2. Discipline

If you do find a forex signal service that has a good track record, don't make the mistake of following it blindly. All forex systems will lose and have periods of loses and to stay with the system you need discipline.

Discipline only comes from understanding and confidence so make sure you learn the logic and have confidence in it to give you currency trading success.

If you don't have the discipline to follow a trading system you have no method at all.

Lots of people will tell you discipline is easy but it's not when your losing hard earned cash - make sure you are prepared for drawdown and losses every system has them.

You won't find many good forex trading signal services on the net but if you follow the two points above the first to get rid of the junk and the second to ensure you follow your trading signals correctly, you will have a profitable and quick way to forex profits - just do your homework first

There one error that traders make more than any other when using forex charts and technical analysis and it ensures a wipeout of equity. This article will show how to avoid it and the best way to achieve forex charting success.

The most common mistake of all is trying to predict forex prices

Why?

Because if you predict all you are doing is hoping and guessing and that's not a way to make money in any venture in life least of all forex trading. What you need to do is forget about predicting forex prices and simply confirm every trading signal via price action.

The Wrong way to Trade

Many traders simply look at a support level or resistance level and as prices approach it they buy or sell. Of course a trend in motion is more likely to continue than reverse and more often than not the level gets taken out and the trader loses their equity.

The Correct Way to Trade

You need to get some momentum indicators to help you gauge price momentum. If you don't know what momentum indicators are look them up in our other articles but good ones to start with are:

Relative Strength Index (RSI) and the stochastic

These will tell you if velocity or strength of price is strong or weak.

For example if you are waiting for a support level to hold - you wait for the above indicators to prove that it has, before executing your trading signal. Sure you miss a bit of the move - but as you don't know where the turn is going to be that's not a problem.

If you trade with confirmation, you trade with the odds on your side. Using momentum indicators for timing is essential, if you want to enjoy currency trading success.

And one final point:

Never ever believe anyone who tells you there is a scientific theory to market movement - there isn't. If there were we would all know the answer in advance and there would be no market!

Just remember

Trade with momentum, trade the odds and you will pile up big forex profits with your forex charts

When you open up your trading charts each day, do you feel calm and confident or do you feel uncertain and nervous? Many traders often find themselves feeling the latter.

To be a successful trader, you’ll need to constantly feel confident about the happenings in the market. Good traders are certain about whether it’s a bull market, a bear market or a ranging market. They either understand what they’re seeing in the trading charts today, or they don’t. They’re confident about their opinions, and aren’t afraid to say that they’re uncertain when they are.

Gaining Confidence

One of the best ways to start each trading day with confidence is to keep to a concise, carefully-considered ‘plan of action’ just before you begin bring up your trading charts. Here are 3 aspects you should consider to include in your ‘plan of action’…

Aspect #1: Monitor the market with a check list

Have a list of news websites and analyst reports where you can find out the latest happenings all over the world. This is helpful in alerting you of world events that occurred while you were sleeping. The Forex market runs around the clock and doesn’t go to sleep at all, except on weekends. You’ll thus need to have a handy list of news sites to update you on the events that you’ve missed out on.

Aspect #2: Be an expert of few setups

Most new traders spend too much time trying to learn all the different trade setups in the hopes that they can have the most money-making opportunities. Unfortunately, they usually get mixed signals and mess up their trades. You should instead strive to master two or three types of trade setups and become an expert on them. Don’t worry about the lack of trading opportunities; the market is large enough and you’ll find usually be able to find good trade entries at least once every week.

Aspect #3: Money Management

It’s almost impossible to over-stress the importance of this aspect. A reliable money management system will make it almost impossible for a trader to feel scared and uncertain. It’s your safety net. Never trade without one.

Its good to see so many people getting interested in trading Forex :) . I've been into forex for the past 8 months. I see a lot of newbie�s trying to find Help. Well I�ve been there n ill tell u wot i did so it might help u guys. Ill be postin helpful info in this thread so keep ur eyes open. I spent 6 months Reading and learning everything I can from the internet without paying a Dime because I am a student at University lol. I finally opened a demo account 2 months ago and started practicing and testing out over 50 strategies. Trying to copy another persons strategy is not very rewarding because everyone�s style of trading n strategies are different. So u need to develop your own style and strategy from all the strategies and indicators u learn to use.


Let me try n walk through wot u need to know

1. FOREX has a HUGE amount of information to learn so u will never stop learning even if u trade for 50 years. So learn to accept this and remember the following:

!!!LEARN WOT U NEED TO MAKE MONEY AND LEAVE WOT U DONT NEED TO KNOW!!!

This is wot i did:

1. EDUCATE YOURSELF

Read and understand all the basic stuff on forex ie all the free materials from the internet and how some indicators work e.g. MACD, Bollinger Bands, Stochastic, RSI, Pivot Points etc. A really good and simple place to learn them free is: http://www.fxstreet.com/education/fxstrategy.asp

2. JOIN THE FORUMS AND MAKE A NETWRK OF TRADER FRIENDS
I cant stress the importance of joining Moneytec http://www.moneytec.com/index.php and elite trader http://www.elitetrader.com/. It will help u immensely and learn things in an hour which might normally take a week to learn. It has loads of strategies n advice from other traders. It is also a great place to make a network of trader friends to help u on the way :) .

3. PRACTICE ON A FREE DEMO ACCOUNT - U know wot they say PRACTICE MAKES PERFECT. I recommend u practice all the strategies n indicators on all the 6 major currency pairs. JUMP INTO THE DEEP END n practicing on a demo account its the best way to learn forex. Always keep your eyes open and observe carefully how all the indicators work. Also flip back n forth on the time charts 1min, 5min, 15min 30 mins 1 hr, 4hrs etc n look at the trends. The BEST trading platform that i found to trade on is Metatrader 3.0 or 4.0 http://www.metaquotes.net/metatrader because it has tons of indicators, its pretty easy to learn compared to others, u can automate strategies n its free.
Oanda http://www.oanda.com/ is another very good one, its probably the easiest one to use but it doesn�t have many indicators to use.

4. CONTROL YOUR EMOTIONS, GREED AND DICIPLINE YOURSELF TO A CERTAIN STRATEGY TO WIN THE GAME OF FOREX :) .

Control your emotions and don�t be Greedy because u will end up losing more. Its always good to take small bites at the apple instead of trying to Swallow the whole thing lol. Forex is not for everyone as u may know the famous figure of 90 to 95% fail. So if u try it out n think its not for u !!!LEAVE AT FIRST SITE!!!. From day one Practice n in your mind set a goal to develop your own style and strategy. From months of practice i have noticed i like short trades which lasts 10 - 30 mins per trade (sometimes up to an hour) on a 5 mins chart picking up 3 - 10 pips per trade :). I am suited to this style and i have developed a strategy to go with it AND DECEPLINED MYSELF TO FOLLOWING IT.

*NEVER THINK U WILL FIND A STRATEGY THAT WORKS 100% OF THE TIME*

You WILL lose money in forex ladies n gents but U can win MORE time than u LOSE in forex that is the key to remember. Its possible to develop strategies that will win 90% of the trades u take and lose 10 % :) . That�s wot u have to aim for.... U will get there if u put in the hours and work SMART N HARD. It is really worth it at the end. Like all things "the first step is the hardest to take". When u know your stuff its simple.

5. HAVE A REALISTIC AIM

Before u start trading make sure u have a clear head otherwise u WILL LOSE. Aim for 10 to 15 pips of profit a day for starters. It�s pretty simple to catch 10 - 15 pips per day if u know your stuff if u dont u WILL LOSE. when u'r fairly consistent at getting that aim for 20 - 30 pips this is possible when u get experienced and understand how different currencies behave n also develop ur senses for predicting accurately, u become a PRO at using a number of good indicators and DECEPLINE URESELF at using them. Occasionally u will catch 80 - 100 pips a day when u are at it so there is somthin good to look forward to :rolleyes:.

Well thats how far i got up to folks with my trading. I hope it helps u guys. I have heard of people getting over 100 pips a day consistently n i think it is possible when u become a GURU in forex :lol: :lol: . I am not online as much as i like to because of my busy lifestyle but feel free to ask questions when iam online on MMG or post it here. So good luck n work ur way through smoothly "DONT LEARN TO RUN BEFORE U CAN WALK".