Forex Currency Trading System - A Basic Guide

If you are about to start doing it yourself and get into foreign exchange, make sure you have the right system to succeed.
Making money is fairly easy if you get the timing right. The right currency trading system helps you get the right timing. By definition, a trading system is well known for its use to invest money so you can make more money. The Forex exchange to be precise is all about investing money for a different currency, to make money and profits.
Forex is dependent only on the success of the stock markets.Using a Forex trading system can give you many advantages
1) in which you could invest in your own currency rates,
2) your money can be changed to another currency, and
3) can invest with a foreign company right from your own country.
So that you know, a currency Forex system was initiated by world-renowned investors, multinational corporations, and worldwide currencies.
Currency exchange Forex online system may have the same results as in a currency offline Forex trading system. However in a trading system online, access is definitely faster and you can see trade changes faster than offline systems. Also, in an online system, you could invest, trade, move investments and withdraw money faster. In addition, systems currency swap Forex can build wealth to potential investors willing to learn about their investments and whom to trust as their brokers to have other decisions.
However, making up your mind on the kind of Forex system to trust can be a decisive factor for your company. Typically in the treatment of any type of investment, whatever you want to meet other traders have met at another time. Thus, when the currency Forex trading system agent cant be contacted in person, by telephone, e-mail or fax, it is possible that you are working with a false company. A society that currently uses Forex trading systems currencies and offers many opportunities for global investments should contact you at different times of the trade.
Also, having to invest and work with a currency system Forex company that puts your money first and listens to whatever you need is a good thing. However, if they call you with suggestions opposing your decisions at regular intervals, it can get irritating. So it is advised to avoid doing business with such a currency system Forex business. Always remember that to cope with any type of investment, you should understand that you need time to learn the ropes before you get in.
Sometimes, a currency trading system Forex agency will call and ask you for money, because it could help you get involved in the scene, and here you have to be careful. Any good agent will give you time to make decisions without pressure. So look for one you are comfortable with investing.
Lastly, when you are sure you have a good agent, you will be able to work relaxed and feel your money is secure.

The Importance Of Day Trading Margin In The Forex Market

The day trading margin is a common method in the forex market where traders buy and sell currencies as dollars, pounds, euros, yen and so on.
The profit possibility in this peculiar market is based on the fluctuation of the different currencies. This fluctuation is the consequence of from daily forecasts of the gross domestic product of the world nations and other factors that influence the value of a currency as the political stability, the inflation rates, official economic reports and the general economic conditions.
If the financial news regarding Europe are negative, for example, the foreign exchange traders will want to sell off their Euros because they fear the Euro is going to less value. When the Euro recovers, the same marketers will sell it for another currency, in order to make a profit.
All these currencies transactions are not literal, however, they are performed on margin, i.e. the buyer has not to pay all the sum he's buying but only the 1%. This is what is called "buying on margin" or "buying on leverage".
In the forex market you have to invest only $1000 to actually get $100,000. It's possible because the fluctuations of the major world currencies are less than 1% a day, so your investment normally covers the gains and losses.
This fact alone marks an important difference between the forex market and the stock exchange where the typical fluctuation can be as much as 10% in one day.
The basic lot for trading the forex is normally 100.000 units (remember, the traders has to pay only 1000 for this lot) and many foreign exchange brokers don't handle any lower sum.
However some firm allows to establish a day trading margin account with as little as $100. This solution is ideal for beginners traders because it offers a safe possibility to practice the currency trading market avoiding the risk of the standard trading account.

Forex Education - 6 Vital Tips for Novice Traders

If you want to make money in currencies you need the right forex education and it's a fact any trader can learn forex trading and be successful but most fail to make money. This article will give you 6 tips so you can enjoy currency trading success.
Here are your forex tips in no order of importance but there all essential to your trading success.
1. Success Rests On Your Shoulders
No one else can make you rich you have to understand what you are doing to get the confidence to follow your path with discipline. If you don't understand what you are doing then your discipline will go as soon as you have some losses.
If you cannot follow a forex trading strategy with discipline you have no system.
2. Forex trading is NOT easy
Anyone can learn to trade but the really hard part is the mindset to succeed.
Do not believe anyone who tells you that it is and sells systems saying that you will make money every month or they can predict prices they can't. There is a huge market for these systems and there mostly junk and come with a worthless simulated track record. As we said success comes from understanding what you are doing and self education is the key that will make you successful.
Forex trading is not easy and wouldn't expect it to be with the rewards to be had but the good news is - it's not that hard either.
3. Work Smart Not Hard
Most traders think the harder they work the more money they will make. In many areas of life this is true but not in forex markets! You get paid for being right with your trading signal and that's it.
Work smart and learn the right knowledge and avoid all the common myths that most traders fall for which include:
- Day trading systems make money.
- You need to predict forex prices to win.
- The more complicated your trading strategy the more likely you are to win.
- Trading news stories is a great way to make money.
None of the above are true - there all myths we have covered even more in our other articles so look them up.
4. Use Forex Technical Analysis
It's simply the most time efficient and best way to trade.
You can learn it in around two weeks and then spend just 30 minutes a day executing your trading signals - and that's it. All you need to do is learn to act on the reality of price change and not predict.
5. Keep it Simple!
Simple currency trading systems work better than complicated ones, as they tend to be more robust.
Complicated systems fail in real time trading as they have too many elements to break.
6. Know Your Trading Edge
Your trading edge is something that will give you an advantage that will allow you to make profits when 95% of traders lose. You must understand it and be confident that it will lead you to forex trading success. If you don't know what it is you don't have one and its time to continue with your forex education until you do.
As you can see form the above your forex education is all about working smart not hard and getting the right knowledge and mindset to succeed. If you can learn currency trading the right way, a life changing income could be yours.

What's Forex Got To Do With Leaning To Drive A Car?

Forex trading is a lot like learning to drive, you have to get some good training before your able to drive your car safely. Currency trading is a business and it is vitally important that you become properly educated before committing your hard-earned money to the markets. This type of trading is still less riskier than the stock market or trading futures, where you can loose much more than you have in your account. Forex trading is interesting to some because of it's liquidity and high leverage. This market is the biggest financial market in the world so it opens up wide opportunities for small traders to make huge profits by investing a small amount of money.
The Forex market is a technical market and it does takes some time to come to understand the basic principles of this market and to develop the necessary skills in the use of it's tools (like technical and fundamental analysis tools) to be able to trade currency profitably. Depending on your trading profile, you will build your strategy either according to technical or fundamental analysis or both. With the right understanding of how currency markets behave, and having the tools available to you the trader, you will gain a view on how to approach trading that will allow you to know what to do and when to do it. As forex trading online becomes more and more popular you will want to keep up to date with the very latest financial market trends and Forex forecasts.
Other financial markets trade from an office, or they have some specific physical location. This market does not have any physical location or central exchange. The forex market is made of about 6000 financial institutions around the globe. The foreign exchange is an international, 24 hours a day, 7 days a week, over-the-counter financial market bought and sold through in house or online brokers.
If you are serious about your trading and want to build a strategy then try a demo account first and learn about forex online trading. Once you've gained a bigger picture of what it takes to succeed in trading, it's time to move to real money accounts. While there are many trading systems as there are approaches, it's usually best that you have a knowledge of the forex trading strategy that is suited to your personality, financial situation and desired objectives. The key to being a winning trader in Forex is having patience and a good trading strategy. A good strategy is all about keeping it simple but yet making it work.

Forex Trading - 3 Basics

Outlined are three important elements into the Forex Trading System:
First You must have a good forex trading system. The forex system should be profitable in the long run and must be easy to implement. It is better if it is of a mechanical nature, allowing little or no discretion or judgment from the traders part. Especially if you are a starting trader, it is important that you follow mechanical hard-and-fast rules: if A=B than do C and D. The reason for this is simple. There are a lot of emotions that come into play when trading forex. If you have a set of rules to follow than you know exactly what to do and no matter what your feelings are telling you, you can ignore them and simply follow the precise rules dictated by your system. Remember, your emotions are your biggest enemy when trading. Accept it and approach it accordingly.
FirstYou must have a good set of money management rules. Throughout my trading career I have come to learn that success in trading is not only about having a good trading system (of course that is VERY important) but also about having a good set of money management rules and principles. Trading without following these precise money management rules is a sure way to fail.
For those of you that are new to the business of trading let me explain what I mean by money management. The term refers to the principles and discipline you use in order to control your risk exposure when entering a trade or set of trades. How much of your total capital you will risk on any individual trade, where will you place you stop loss, where will you place your profit objective, the ratio between your profit objective and your stop loss etc.
Another parameter in the money management area that is very important (but not used by most) is diversification. No, I don’t mean the common and simple diversification theory of trading two completely uncorrelated markets. That is good, yes. However, my approach goes one step further.
I will trade the same currency pair and will still be properly diversified. How? Simply by using different trading systems. By this I mean systems that exploit completely different aspects and opportunities in the market. For example, I might use a forex day trading system on GBP/USD and at the same time I will use a swing trading system on the same pair. As you can see, one has nothing to do with the other. They approach the market in very You must be able to control your emotions. This is a very important rule a trader must learn to master. While trading, you are constantly presented with feelings such as fear, greed, and excessive excitement (for example, as a result of a winning streak). The reason many traders experience these type of feelings is simple, they don’t have a good trading plan. They don’t have a good and clear set of rules to follow. They will trade based on emotions rather than on signals issued by a robust and profitable forex trading system. They will not respect stop losses, profit objectives or any other important parameter essential for profitable forex trading.
Different circumstances, their rules are different, their time frame is different, parameters are different etc.
FirstI strongly believe in emotion-free trading. It is essential for success and that is how you will be the best of the best, by following a precise set of rules that are easy to implement and require absolutely no discretion.
So there you have it. I stress this again, the above is by no means all that you need to be a successful forex trader. However, it is the basis that you build success on. Trading is like a building. You build strong foundations as the basis of your structure.
Dan Katz the owner of Forex Trading Tutor, a Forex Trading Education website, developed to guide new forex traders get into the forex market and update professionals with new concepts.

EU Leaders Include Strong Euro Reference

European leaders decided to include the strong euro reference to their two-day Brussels meeting conclusion, which is to be released today.
Earlier today, this conclusion was expected to come out without a notice about the fast appreciation of the euro against the U.S. dollar. But that point didn’t please the French delegation including the president Nicolas Sarkozy.
The French finance authorities started to insist on some real actions against the current pace of the euro’s appreciation a while ago — in February, during the world finance ministers’ meeting.
The conclusion just summed up the words that were said yesterday and today during the meeting. EUR/USD broke through 1.5600 level this week, adding a lot of Forex related pressure on the European producing companies.
For the traders, investors and common people, including such conclusion can possibly mean a beginning of the official EU’s measures against the European currency’s strength. If Jean-Claude Trichet gets convinced with it, we may even see a benchmark rates’ cut in the Eurozone soon.

The Best Forex Trading Indicator

The Best Forex Trading Indicator - A Must Try Strategy

Most Forex traders would agree that currency trading can be very difficult at times and earning consistent winnings are hard to come by for most. As a result, I have attempted to provide an easy to follow but extremely useful Forex trading strategy. The Relative Strength indicator (RSI) is a very helpful tool in the Forex trader's arsenal. This oscillator is usually used on the basis of 14-day, 9-day and 25-days. Let's take a look at the best way to use the RSI and how this forex trading indicator can make you consistent winnings.
With regards to the Forex market, the Relative Strength Indicator shows the forex market activity in terms of if it is over bought or over sold. The RSI provides the Forex trader with an indication in terms of the direction the Forex market is moving. One of the great advantages of this indicator is that it is a leading indicator and as a result this indicator shows forex traders what the market is going to do, allowing traders to act accordingly.
It is important to remember that the greater the RSI number, the greater resulting over bought market there is. Of course the opposite is true: The smalle4 the RSI number, the more over sold it is.
So how does this really help us on the Forex market? It is an exceptional tool when looking for micro reversals as well as macro reversals in the Forex market.
Here is a really helpful tip: Try applying the Relative Strength Indicator on the one minute chart with an eighteen period. This should give you a real nice entry signal and you can also apply this to a five minute chart as well. remember that the most critical numbers as far as entry is concerned are twenty-five and seventy-five.
The place for consistent winning trades: http://www.fx-indicators.com
Cal Relerd has been involved in the Forex market and investment world for many years. He is a firm believer in the Forex market being one of the greatest and most accessible means to building substantial capital in a relatively short period of time.

Is Forex Killer a Scam

Whenever a revolutionary new piece of software is launched making impressive claims, there are always skeptics. Some people just flat out refuse to believe that something could be that good, and others may have been burnt before by a similar product that didn't deliver. This is probably even more so when it comes to products that make you money.
What am I talking about? I am referring to the latest Forex trading software known as Forex Killer. The claims are huge, the profits are massive, the testimonials are all positive but whats the final verdict. I must say that Forex Killer is definitely not a scam, trust me folks this is the real deal.
If Forex Killer was a scam then I must be the luckiest man alive. I have been using the software now for just over 1 month and since starting I have consistently made over $2500 every week. That is more than I used to make in a month using my old techniques. I wasn't a Forex newbie either, I knew all about the systems I just didn't have the knack for predicting and analyzing. Luckily with Forex Killer I don't have to predict or analyze, it does everything for me.
The official website now has 5 pages of glowing reviews for the software, and I'm fairly tempted to believe that they are all legitimate. Not only legitimate, but some of the people were so happy with the product that they went to the trouble of sending in video testimonials. Even if they were asked for them, the fact that they'd do it is proof enough for me.
Is Forex Killer a scam? After giving the software a thorough going over in the last month, I would have to say that there is no way that it is a scam. If someone says Forex Killer is a scam I would have to assume that they are very unlucky, or perhaps didn't follow the signals exactly.
So, I hope you enjoy as much success trading Forex as I did, and you may want to consider purchasing the software to do so.

Dollar at New Lows against Euro, Yen

The U.S. dollar went down to the new record low levels against the European and Japanese currencies today during the Asian trading session on Forex as the Federal Reserve cut the discount interest rate in emergency.
Posted in Euro, Japanese Yen, U.S. Dollar No Comments »
EU Leaders Include Strong Euro ReferenceFriday, March 14th, 2008
European leaders decided to include the strong euro reference to their two-day Brussels meeting conclusion, which is to be released today.
Posted in Euro No Comments »
Euro above 1.5 vs. DollarWednesday, February 27th, 2008
The U.S. dollar fell below its absolute record low level against the European currency today. If the day closes above $1.5 per euro, it will be a signal for a definite return of dollar to its bearish trend of the 2007.
Posted in Euro, U.S. Dollar 2 Comments »
Trade Idea: Buy Australian Dollar with EuroWednesday, February 13th, 2008
According to the new research note by Richard Grace from the Commonwealth Bank of Australia, it would be better to buy Australian dollar with euro in 2008 to earn from the interest rates difference.
Posted in Australian Dollar, Euro 1 Comment »
Jean-Pierre Jouyet: Euro is Ready, U.S. is notTuesday, February 12th, 2008
Jean-Pierre Jouyet said that during the last G7 meeting (which was on February 10th in Tokyo), that there weren’t any signals from the U.S. representatives, that the States are going to try correcting the current unbalanced situation in Forex.
Posted in Euro No Comments »
Joaquin Almunia: Euro Above EquilibriumSaturday, February 9th, 2008
Today before the G7 meeting in Tokyo, Japan, Joaquin Almunia, who is currently European Commissioner for Economic & Financial Affairs, told the reports that the European currency is still above its fair value.
Posted in Euro 1 Comment »
Pound Recovers against Euro, Dollar, YenFriday, February 8th, 2008
Today the Great Britain pound started to recover from the week-long losses against the other major currencies, such as the U.S. dollar, euro and the Japanese yen.
Posted in Euro, Great Britain Pound, Japanese Yen, U.S. Dollar No Comments »
BoE Lowers Rates, ECB Holds ThemThursday, February 7th, 2008
Today two important interest rates decision were highly anticipated by the markets — the monetary policy decisions by the European Central Bank (ECB) and the Bank of England (BoE).
Posted in Euro, Great Britain Pound No Comments »
Euro Stronger after Business Climate ImprovesThursday, January 24th, 2008
Euro stood stronger against the U.S. dollar and the Japanese yen on Forex market after the Business Climate Index for January 2008 in Germany was released by the Ifo Institute for Economic Research today.
Posted in Euro No Comments »
ECB Should Prefer Inflation FightingSunday, January 20th, 2008
The European Central Bank council member and the governor of the Bank of Italy, Mario Draghi said yesterday that the monetary policy should be tightened in case the inflation in Eurozone will start to cross the target borders.

How Many Kinds Of Main Strategies

There may be dozens of strategies in Forex trading. Let's just talk about the roots.
Nature Of Market:
Every thing in the universe has its NATURE. So is Forex market. So is every currencies pair in this market. For example, GBP/JPY always moves faster, and its wave range is longer than other pairs, such as a hundred pips during a day or even a hour. EUR/GBP generally waves narrowly several pips only within a day. For American, EUR/USD and GBP/USD like to sleep in day and dance at night. AUD/USD and NZD/USD look like twin, they commonly act in the same style, if one of they goes north, another one does not like to go south. But EUR/USD and USD/CHF are doomed to be enemy, while one of them flies up like a hydrogen balloon, the counterpart mostly will drop like a lead ball. And so on, so on.
Once we find this kind of "Nature of Market", we can develop and figure out some strategies for particular currencies pairs, just follow their nature, predict their moving direction and range. Then we will get our own trading strategy and system.
Fundamental Trading:
In Forex market, many professional analysts like to use a kind of method to predict the future. It is so-called "Fundamental Analysis". Based on this method, they develop many kinds of strategies to trade Forex. These are strategies of forecasting the future price movements of currencies based on economic, political, environmental and other relevant factors and statistics that will affect the basic supply and demand of whatever underlies the foreign currencies.
If you like to try Fundamental Trading, you need learn and understand a lot of finance knowledge. Actually, not only finance knowledge, you need to be interested at many things of this world, including politics, economy, geography, culture, diplomacy, even military affairs. And you need to study the core underlying elements that influence the economy of a particular entity. For example, when the USA's GDP or employment report is strong, you begin to get a fairly clear picture: the general health of America's economy is good. So the US dollar should be stronger than other currencies. But how far can the US dollar go? Fundamental Trading may not answer this question very accurately. You may need to come up with other precise tools as to how best to translate this information into entry and exit points for a particular trading strategy.
Hedge:
In finance, a hedge is an investment that is taken out specifically to reduce the risk in another investment. Hedging is a strategy designed to minimize exposure to an unwanted business risk, while still allowing the business to profit from an investment activity.
In FOREX, there are two kinds of similar "hedging" strategies:
1, Buy and Sell the same currencies pair, same lots, same timing. Then let it go. While one of those orders goes north, the counterpart will go south. After the winner takes profit, we can wait for the loser turning around. In a yo-yo market, this method works well.
For example, buy 2 lots GBP/USD at 2.0003, at the same time sell 2 lots GBP/USD at 1.9997. While the rate rises up to 2.0053, we close the buy order and take profit 50 pips. Now, the sell order will draw down around 50 pips. Let's wait for the rate falling down, it will fall down usually, especially in yo-yo market environment. If the rate drops down to 2.0037, close the sell order, the sell order will lose 40 pips. Does it hurt? No. Don't forget the 50 pips we have taken at the buy order. Totally, we can get 50-40=10 pips. Furthermore, if the rate keeps falling, let's say down to 2.0027, we can take 50-30=20 pips, etc.
Some people would doubt it... doesn't this "strategy" sound like hedging flat for nothing, just paying double spread? Why bother? Well, they are right, because we forgot mentioning the key point: timing of closing orders. When to close the winning order to set a foundation and when to close the losing order to lock the profit, there are some tricks inside. Experienced traders use technical analysis skills to decide this vital timing. Believe it or not, those experienced traders say that this method helps them screening false signals out.
This kind of "Yo-Yo Hedge" can work at any currencies pair.
2, Buy (or sell) unequal lots of special currencies pairs and buy unequal quantities of another kinds of currencies pairs which usually move in the opposite direction. This seems a "Semi-Hedge" trading strategy. It is created based on "Correlation" between some particular currencies pairs. So it is not suitable for every currencies pair.
Actually, this kind of hedge has another feature: earning SWAP! You earn interest daily on the held position which can yield up to 50% per year of your full account balance.
There are several pairs can do it. Such as EUR/USD Vs. USD /CHF, GBP/USD Vs. USD/CHF, AUD/USD Vs. NZD/USD, EUR/JPY Vs. CHF/JPY, GBP/JPY Vs. CHF/JPY.
Let's take the EUR/USD and the CHF/USD pairs.
These pairs are historically negatively correlative 93-98% of the time. That is when one pair goes up the other goes down, and vice versa, up to 98% of the time. In a high leverage account (as high as 400:1 or 500:1), you could earn 50% SWAP interest in a year. How? Let's say you have $5,000 in your account and a 10% risk margin set. If the net interest we receive is 1.25% annually, this 1.25% interest will be enlarged to 50% per annum, by the 400:1 leverage.
And, this return does not include the buy low/sell high profits.
But, if the base of this kind of hedge collapses, it means the "Correlation" does not exist any more, for example the "Correlation" drops under 50% or lower, there will be a disaster.
Arbitrage:
Some people call "Arbitrage" as a risk free strategy. But other people call it as a trick which looks like the cat pawing chestnuts from a fire. But in theory, its risk is minimum in deed. We introduce three types of arbitrage strategies here:
1, Triangle Arbitrage: Searching for two highly fast-moving pairs (like EUR/USD and USD/JPY), the price of a not-so-fast moving pair like EURJPY should always be derived by multiplying (or dividing, etc) the fast-moving pairs. So for example, if EUR/USD is 1.4871 and USD/JPY is 108.24, the logical price of EUR/JPY should be 1.2 x 120 = 160.96. But at the same time, the real EUR/JPY rate is 160.90. The slower moving pair lags behind the logical price, then profit opportunity comes.
In practice currencies are quoted with a bid ask spread, so a trader should be careful that he is actually buying at the quoted ask price, and selling at the quoted bid price. Other transaction costs, such as commissions, might also invalidate the apparent free lunch.
More pairs:
AUD/CAD CAD/JPY AUD/JPY AUD/CAD GBP/CAD GBP/AUD AUD/CAD USD/CAD AUD/USD AUD/CHF CHF/JPY AUD/JPY AUD/CHF GBP/CHF GBP/AUD AUD/CHF USD/CHF AUD/USD AUD/JPY EUR/JPY EUR/AUD AUD/JPY GBP/JPY GBP/AUD AUD/JPY USD/JPY AUD/USD AUD/USD GBP/USD GBP/AUD AUD/USD USD/CAD AUD/CAD AUD/USD USD/CHF AUD/CHF AUD/USD USD/JPY AUD/JPY CAD/JPY EUR/JPY EUR/CAD CAD/JPY GBP/JPY GBP/CAD CAD/JPY USD/JPY USD/CAD CHF/JPY EUR/JPY EUR/CHF CHF/JPY GBP/JPY GBP/CHF EUR/AUD AUD/CHF EUR/CHF EUR/AUD AUD/JPY EUR/JPY EUR/AUD AUD/USD EUR/USD EUR/AUD GBP/AUD EUR/GBP EUR/CAD AUD/CAD EUR/AUD EUR/CAD GBP/CAD EUR/CAD EUR/CAD USD/CAD EUR/USD EUR/CHF AUD/CHF EUR/AUD EUR/CHF GBP/CHF EUR/GBP EUR/CHF USD/CHF EUR/USD EUR/GBP GBP/AUD EUR/AUD EUR/GBP GBP/CAD EUR/CAD EUR/GBP GBP/CHF EUR/CHF EUR/GBP GBP/JPY EUR/JPY EUR/GBP GBP/USD EUR/USD EUR/JPY GBP/JPY EUR/GBP EUR/JPY USD/JPY EUR/USD EUR/USD GBP/USD EUR/GBP EUR/USD USD/JPY EUR/JPY GBP/JPY USD/JPY GBP/USD
2, Hedging Arbitrage:
This technique is the safest ever, and the most profitable of all hedging techniques while keeping minimal risks. This technique uses the arbitrage of roll over interest rates (SWAP) between two brokers.
One broker which pays or charges roll over interest at end of day, and the other should not charge or pay this kind of roll over SWAP interest. The main idea about this type of Hedge Arbitrage is to open a position of currency (Fore example, the highest SWAP GBP/JPY) at a broker which will pay you a high interest for every night the position is carried, and to open a reverse of that position for the same currency with the broker that does not charge interest for carrying the trade. This way you will gain the interest or SWAP that is credited to your account, risk-free.
3, Netting Arbitrage:
The main idea behind the strategy is, using differences between cross rates (such as EUR/USD, GBP/USD, and EUR/GBP) at different markets.
For example, suppose you had opened the following positions:buy 1 lot EUR/USD at 1.4867;sell 1 lot EUR/GBP at 0.7600;and sell 0.76 lot GBP/USD at 1.9586.
The netting/clearing gives the following results:Long EUR from the first pair and short EUR from the second pair gives zero exposure in EUR.Long position in GBP from the second pair and short position from the third pair gives zero exposure in GBP.Short position from the first pair ($148,670.00) in USD and long position from the third pair ($195,860.00*0.76) in USD gives you $183.60 profit without open positions and exposures. Simple? Not really for small traders, may be for those "big brothers" only. Because it is really hard to play spread, slippage, stop loss hunting or so on games against brokers.
Carry Trading:
Carry trading is a well known trading strategy which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase a different currency yielding a higher interest rate. Then this investor can make profit from the difference of these two interest rates.
JPY is currently considered to be the most popular currency to use as the low interest yielding currency in the carry trade, because its interest rate is the lowest of the world almost at 0. And GBP is currently considered to be the high yielding currency. So are NZD and AUD.
When we buy these currencies pairs: GBP/JPY, AUD/JPY, GBP/CHF, USD/JPY, or EUR/CHF; Or sell: EUR/AUD, EUR/GBP, AUD/NZD; Both actions can yield positive SWAP roll over interest. If combining with some kinds of hedge trading, we can make as high as 100% profit annually and keep the risk low.
The big risk in a carry trading is the uncertainty of exchange rates. Also, these transactions are generally done with a high leverage, so a small movement in exchange rates can result in huge losses unless hedged appropriately.
Martingale:
Originally, martingale referred to a class of betting strategies popular in 18th century France. In Forex trading, the strategy let the trader double his/her order lots after every loss, so that the first win would recover all previous losses plus win a profit equal to the original investment. In the example below, you bought 1 lot EUR/USD at 1.4650. Unfortunately, the rate drops. You play it in martingale way, "double down", buy two lots, you need the EUR/USD to rally from 1.4630 to 1.4640 to break even. As the price moves lower and you add four lots, you only need it to rally to 1.4625 instead of 1.4640 to break even. The more lots you add, the lower your average entry price. Even though you may lose 100 pips on the first lot of the EUR/USD if the price hits 1.4550, you only need the currencies pair to rally to 1.4569 to break even on your entire holdings. Once the rate goes up one more pip, you will win a lot.
EUR/USD Lots Average or Breakeven Price 1.4650 1 1.4650 1.4630 2 1.4640 1.4610 4 1.4625 1.4590 8 1.4605 1.4570 16 1.4588 1.4550 32 1.4569
The Martingale strategy needs a very strict money management and you must understand that in the beginning money will be coming slowly, but if you lose the patience and raise risk level up to much, you may not hang on to the end to see the turn-around.
Anti-Martingale:
The anti-martingale strategy is the opposite of the better known martingale approach. This approach instead increases order lots after wins, while reducing them after a loss. Using an anti-martingale risk management scheme will increase profits during time periods when a trading approach is working well, while automatically decreasing exposure during portions of the cycle where trading is unprofitable. This is believed to decrease the risk of ruin for trading.
Grid:
Basically the trader sets a series of entry limit orders X pips from the current price, for example 15 pips. Some experienced traders like to use the Fibonacci Series Numbers (0, 1, 1, 2, 3, 5, 8, 13, ...) or Golden Section Numbers to make this grid. Once price hits the level the limit order is executed. Then every 15 pips there is another order at limit price executed. And so on. In a yo-yo market, while the price moves up or down, there always be some limit orders executed. Once the order is taken profit, and the price moves to its original level again, a new limit order shall be executed again, then repeat the same process. Just open orders and take profits in a set of "grid". It is simple and easy, but hard to deal with when and how to close all orders, especially the Stop Loss. Some experts say we do not need stop loss, but will you take the chance to hold your all positions till "Margin Call?"
Day trading:
This refers to the practice of buying and selling currencies pairs such that all positions will usually be closed within the same Forex the trading day. The day trading idea comes from stock market. Day traders rapidly buy and sell stocks throughout the day in the hope that their stocks will continue climbing or falling in value for the seconds to minutes they own the stock, allowing them to lock in quick profits. Day trading is extremely risky and can result in substantial financial losses in a very short period of time. Under the rules of NYSE and NASD, customers who are deemed "pattern day traders" must have at least $25,000 in their accounts and can only trade in margin accounts.
But in Forex market, every one can be a day trader to do day trading. Actually, more than day trading, they can do "scalping".
Scalping:
Scalping is a trading style where small price gaps created by the bid-ask spreads are exploited. It normally involves establishing and liquidating a position quickly, usually within minutes or even seconds. It means trying to get a few points (1~3 pips only, no greed, no long term) off the market every time. This strategy is based on a fact: approximately 70 to 80% of the time, the market is in a consolidation pattern. What this means is that for the majority of time the market is not making significant moves. For example, after the USA market is closed and before the Europe market is open, the Forex market tends to range in a consolidation channel for hours at a time before making another significant move in one direction. This kind of market behavior pattern is ideal for Forex scalping. Every time you enter the market, wait 10 or 20 minutes, once you have several pips gain then cash it and go.
Scalping has some features:
1, Lower exposure, lower risks. Scalpers are only exposed in a relatively short period.
2, Smaller moves, easier to obtain. The normal wave of the market will give you several pips easily.
3, Large volume, adding profits up. Since the profit obtained per share or contract is very small due to its target of spread, they need to trade large in order to add up the profits. Scalping is not suitable for small-capital traders.
But be careful, not every broker welcomes this kind of scalping strategy. If you scalp it too quick and thin, let's say you just hit 1 pip every 2 or 3 minutes then run, and repeat it again and again within a day, every day, you must feel high, eh? But the broker may be not happy and bans you. You will be kicked out because of your successful scalping!
Break-Out:
Using the Bollinger Bands indicator on a chart, we will find every Forex currencies pair is waving in a "band", or a channel. By finding major support and resistance levels with technical analysis, a Break-Out strategy trader will buy this pair at the lower level of support (bottom of the band/channel) and sell them near resistance (top of the band/channel). Till now there is not a Break-Out yet.
Once the price breaks the upper range line with larger-than-average volume, or the opposite: the price breaks the lower range line with larger-than-average volume, the chance is coming. The idea of this strategy is that when a currencies pair breaks out of the channel, it usually experiences a large price movement in the direction of the breakout. So buy it at the price breaks the upper range line and continue to hold it until the rate has risen a distance comparable to the height of the range. If it goes down instead, stop losses as it penetrates the upper range line. Or, sell it at the price breaks the lower range line, and continue to hold it until the rate has fallen a distance comparable to the height of the range. If it goes up instead, stop losses as it penetrates the lower range line.
Pivot:
Besides Support and Resistance levels, many foreign exchange traders like to use another indicator to analyze and predict currency pairs' price changes, it is so-called: the Pivot Point. To calculate and analyze pivot is a subset of technical analysis, with this bench mark, traders can locate the rotation point of the trend, and this is very helpful for deciding when and where to buy or sell.
Classical Pivot Point, Support and Resistance Formulas are as follows:
Look at any one chart, the pivot is an average of the previous bar's high, low, and closing prices. In the following formula, "H" represents the previous bar's high, "L" represents the previous bar's low, and "C" represents the previous bar's closing price.
Current Bar's Pivot Point (P)=Previous Bar's (H+L+C)/3 First level of support and resistance can be calculated as follows: First Resistance Level (R1)=(2*P)-L First Support Level (S1)=(2*P)-H Likewise, the second level of support and resistance: Second Resistance Level (R2)=P+(R1-S1) Second Support Level (S2)=P-(R1-S1)
Since many currency pairs tend to fluctuate between Support and Resistance levels, and these levels are calculated based on Pivot points, so when a trend or breakout trader knows where the pivot point is, it will enable him/her to find out key levels that need to be broken for a move to qualify as a breakout.
News Trading:
The system is developed based on economic news events from around the world. Nearly half of those announcements have moved the market significantly. Before a big news is coming, we can buy and sell some currencies pairs at the same time, same lots, set stop loss prices for them. After the news is released, especially for the big one, both sides of buy order and sell order will jump significantly. No matter which order is a winner, just let it go. And the loser will hit the Stop Loss, just let it be. The winner's gain minus the loser's loss, it is your news trading profit. For example, Non-Farm Payrolls/Employment Report - The NFP is the most influential news release of every month. It's announced on the first Friday of the month at 8:30am EST for the prior month. We can put a buy order and a sell order at market prices for GBP/USD, at 8:29 am EST. Don't forget, set 30 pips Stop Loss level for them. Wait 2 minutes only, the news is announced, it is a big one! Then the sell order jumps over 100 pips, and the buy order drops like a brick. The brick hits the Stop Loss and the pain is over. Totally, your gain could be 100-30=70 pips. Quick and easy, cool enough?
Trend Following:
It is so simple, just follow the trend. Buy it is the most difficult strategy because no one can tell you 100% for sure what is the right TREND. Go to look at a weekly chat of USD/CAD, if you had shorted this pair in September 2001 and held it till September 2007, you know what the trend means.
The most famous trend analysis tool seems the Wave Principle. In the 1930s, Ralph Nelson Elliott discovered that stock market prices trend and reverse in recognizable patterns. Elliott isolated five such patterns, or "waves," that recur in market price data.
Another trend analysis guru should be W. D. Gann. In 1908, Gann discovered what he called the "market time factor", which made him one of the pioneers of technical analysis. To test his new strategy, he opened one account with $300 and one with $150. It turned out to be wildly successful: Gann was able to make $25,000 profit with his $300 account in only three months; meanwhile, he made $12,000 profit with his $150 account in only 30 days! After his results were verified, he became famous on Wall Street as one of the best forecasters of all time.
Back to the chat of USD/CAD, now, please tell me, how to follow the trend? Will USD/CAD continue the trend which is going south further to 0.6000, or, another trend going north reversely back to 1.6000?
If you would like to find out more about Forex trading, come and visit us at http://www.vdux.com
If you want to download our Raingull Automated Trading Software EA, please come to http://www.raingull.com

Forex - Robots Vs Humans

The Foreign currency Exchange (FOREX) market is the largest and most liquid financial market in the world. The average daily trade in the global FOREX markets exceeds US$1.9 trillion (Source: 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). These huge funds are traded by governments, banks, and large institutions. For comparison, the biggest stock market on the Earth - NYSE Group (The New York Stock Exchange), has a daily trading volume of approximately $86.8 billion (Source: NYSE Group, Inc. 2006). FOREX has a 18.4% average growth rate per year since 1989. It offers trading 24 hours a day, five days a week, non-stop over Internet. This kind of massively liquid and long uninterrupted trading hours mean that under normal conditions there is no problem entering or exiting a trade.
But, in this huge market, as the story goes, at least 90% of new FOREX traders lose all their money within their first 3 months of trading. Why? Most losing traders who inquire about FOREX trading are quite intelligent, they just lack the right tools, the "Secret Weapons" to win. They are not beaten by other traders, they simply are beaten by themselves, by humans' weaknesses.
Talking about humans' weaknesses, let us list some as follows:
1. What is the first big weakness of human beings? if I say it should be "greed", is there anybody will disagree? Many times we have got 1% profit, but we feel it is not fat enough. We want more, 2% or 3% will be better. While the profit really goes to 3%, we will think how about 10%? Not enough forever. But the market is so volatile, especially in Forex market, we often encounter this depressive situation: profit turns into negative from positive. and this kind of depression happens again and again.
2. Fear. All people have fear. In Forex trading, currency rate is easily jumping or dropping hundreds of pips. Few of people can make sure how the market will go. In Forex market, people all use leverage to trade, from 50:1 to 500:1, leverage will enlarge the profit or loss from 50 times to 500 times. Leverage is the wonderful feature of Forex, and it lead fear into people's heart too. If the market goes against people, big drawdown comes, their fear comes too. Is there anybody not scary to lose money? Under the pressure of fear, people easily and often make wrong decisions, stop loss too early, then regret soon.
3. Lack of confidence. Seems better than fear, huh? But it is still not a good thing. Many times human traders are so happy once they see a little bit profit in their accounts. They are worrying what if the profit turns into loss? People always take a tiny profit and run, then regret while they see the market goes further and further along the right track. If they were confident, they would have made ten times or even a hundred times of profit.
4. Hesitation. Not only newbies, but also old-hands easily hesitate to act in Forex market. You've probably heard the saying "past performance does not predict future performance". Even a very experienced trader who has made many successful trades in his/her history, while he or she is facing a new situation, needs thinking twice before making a so simple decision: Buy or Sell? For new traders or amateurs, they need longer time to think, and this kind of hesitation always leads them to confusion and missing the best and fleeting chance.
5. Weariness. How many people can keep working for 24 hours? No sleep, no rest? How about 48 hours, 72 hours, etc? Even an iron man can not use his eyes watching computer monitor, his brain thinking fast changing questions and his hands calculating complex formulas, day and night, 24 hours a day, 6 days a week, non stop. Especially, no mistakes allowed!
Nobody can!
None!
No doubt!
Don't mention the Super Man. He has weariness too.
6. Negligence. Have you ever got trouble just because of a small negligence? such as took a wrong bus, missed an exit on highway, dialed a wrong number, misunderstood boss' order, ignored a no-parking sign, omitted a whole page of questions in an examination, left resume at home while a vital interview, misspelled a keyword in a quote form for a VIP customer, etc. Hi, man, when was the last time you forgot your mama's birthday, or worse, the wife's, or the worst, girl friend's? Mama always forgive your negligence. Wife... well, it depends. Girl friend? Huh, wish you good luck.
But unfortunately, in Forex market, no one will forgive your negligence, even yourself. Any negligence must be punished! You could get a margin call, only pennies left in account, may just because a tiny negligence.
7. Lack of discipline. Humans always think that we are smarter than machines. Sure we are. Not only we are smarter, we have freedom too. But everything has its nature, character, and rules. Rule means discipline. If we just feel smart and free in Forex trading, making decisions based on our feelings or knowledge only, and ignore discipline, there will be endless disasters waiting us ahead. Forex trading is like fighting in war, soldiers can not survive in war without discipline, neither can traders in Forex market. While we have to stop loss we must cut off and run, in spite of how bloody and painful it is, when we must take profit we can not hate the profit is too small. Discipline is discipline, perhaps some smarties can win a while, but only those people can keep obeying discipline forever can win forever.
8. Inconsistency. Long term or short term? buy or sell? prosperity or depression? over bought or over sold? high or low? support level or resistance level? fundamental analysis or technical analysis? including automated trading or manual trading? etc. There are too many inconsistent news, facts, information and methods, strategies in Forex market, easily cause human traders make inconsistent judgments and decisions. And these inconsistencies will cause only one same result: failure!
To overcome these terrible weaknesses of humans, people have developed many methods. One of them is called "Automated Trading". Automated (or Automatic) Forex Trading means to trade Forex (Foreign Currencies) using some trading systems, programs, software or robots (on Metatrader MT4 platform it is called as Expert Advisors - EA), without needing a human to physically trade. An automated trading system is a group of specific rules and parameters, governing entry and exit points, having the ability to both generate signals and execute trades automatically. An EA is an automated trading "robot". Robots can beat human beings at chess games, EA robots can beat humans at FOREX trading also.
Programmers consider many components synthesize while they are developing an automated trading system or EA robot, including: Nature of Market, Math Modeling, Time Frame, Entry and Exit Signals, Stop Loss Trigger, and Profit Target, etc. After the system is created, they do back testing and forward testing rigorously both in demo and live accounts. A fully automatic trading system created like this way is able to analyze the market independently, work completely on its own and constantly generate signals, auto-execute in a trading platform. Alternatively, programmers can design the system as a kind of 'semi-automated' w

Australian Bank Lower U.S. Dollar Forecasts

According to Australia’s largest mortgage provider, Commonwealth Bank of Australia, the U.S. dollar will perform worse than experts previously expected for this year.
The strengthening financial crisis in the United States forced the Federal Reserve to cut rates at a greater pace than it was expected in the bank’s previous forecast. The U. S. dollar has already dropped about 5% against the Australian dollar and 3.9% against the New Zealand dollar from the beginning of the year. A major interest rate cut in U.S. is expected today, that can also hurt the dollar’s Forex positions.
Commonwealth Bank of Australia now says that the U.S. dollar is going to depreciate to 0.90 on AUD/USD by the year end; the previous estimate was at 0.85. As of 9:45 GMT AUD/USD is trading at 0.9260.
New Zealand dollar’s estimate was also lifted against the U.S. dollar — NZD/USD is now expected to trade at 0.75 against the 0.70 previous estimate. Currently NZD/USD is trading at 0.8078.
Richard Grace, chief currency strategist of the Commonwealth Bank of Australia explains the forecasts change:
There is a growing likelihood that the recovery in the U.S. economy is more drawn-out than previously anticipated given the severity of the credit crisis currently impacting the U.S. financial sector… The U. S. dollar is entering a period where the risk of a large overshoot in the foreign exchange market has increased substantially. The possibility of coordinated central bank intervention has increased. The most obvious intervention would come via the euro and the yen.

Currency Trading Basics - 10 Errors You Must Avoid to Win at Forex

Here we are going to give you some currency basics and this involves 10 essential tips you must do and 10 tips on common mistakes which you must avoid to enjoy long term currency trading success
Let's start with 10 common errors you just avoid

1. Don't Day Trade
It doesn't work as all short term volatility is random and prices can and do anywhere in a day and you have the odds firmly against you and will lose longer term

Ever seen a day trader with a long term track record of success? No neither have I avoid it and trade longer term trends where you can get the odds on your side

2. Don't Try and Predict
Predicting is simply hoping and guessing and won't get you far - trade the reality of price change. No one knows the future and your predictions will end up as accurate as your horoscope

3. Don't use Science
Don't believe anyone who tells you markets move to a scientific formula they don't - if they did we would all know the price in advance and their would be no market

Trading is a game of odds - not certainties but you can win if you know and trade the odds. You won't win every trade but over the longer term you can pile up huge FX profits4. Don't Trade Scared Money
If you can't afford to lose stay away, forex markets are extremely risky and if you are worried about losing your discipline will break down and you will lose
5. Don't follow a guru blindly
To follow a forex trading system you must have confidence in it and know how it works or you won't be able to follow it with discipline - if you can't follow it with discipline you have no system at all6. Don't believe experts
News stories are convincing - but that's all they are stories from journalists and there normally dead wrong about every major market turning point. Don't believe everything you read
7. Don't buy low and sell high
Great theory - doesn't work, it means you must predict again where highs or lows will formThe fact is most major market moves start from new market highs NOT market lows. Learn to buy these breaks as the odds are in your favor and you normally see huge trends develop if, the breakout is from a valid resistance level
8. Complicate your trading system
Simple systems work best, as they are more robust in the face of brutal market conditions - over complicate your forex trading system and it will have to many inputs - which will break9. Acquire Knowledge for the sake of it
You will often here people say the more knowledge you have the better - but in forex trading you need just the right knowledgeYou don't get paid for work rate you get paid for being right and that's it
10. Don't overtrade
Most novice traders simply over trade and loseThey think the more often they trade with their forex trading system, the more chance they have of winning or if their in the market their bound to catch a major move - dead wrong

You don't get a reward for trading often so don't - only trade high odds set ups and be patient and wait for themIf you want to learn forex trading correctly and get the right forex education to enjoy forex success these are all errors to avoid. When developing your forex trading strategy keep the above points firmly in mind their currency trading basic errors that must be avoided if you want to get on the road to regular profits