FOREX Market: Currencies Set To Move Higher On Central Bank No-Show

Another Reserve Bank of New Zealand meeting has come and gone. The verdict: rates will likely be cut no further. This is according to recent statements made by RBNZ Governor Alan Bollard as the benchmark overnight cash rate was left at a record low.

Stating that economic policy seems stable, along with the current monetary policy, Bollard noted that the central bank will “expect to keep the official cash rate at or below the current level.”

As a result, the recent statements negate indications by the bank in late July that rates may need to move further lower in order to boost adequate economic expansion. The country itself has been on the recovery, although not as paced as its trading partner Australia. However, signs are beginning to surface that economic recovery may well help to back current central bank notions.

Recent economic figures point to a more positive GDP outlook as exports picked up in the quarter as imports fell on consumers seemingly turning their backs on foreign made goods. This turn of events will likely keep the currency supported in recent sessions as traders seem to be taking advantage of the higher yield in an anti-dollar environment.

(Figures taken as of January 2009)

Tonight’s monetary policy outcome is likely to set the stage for further gains in the higher yielding currency pairs as the market now turns its attention to two other central bank announcements. Both the Monetary Policy Committee and the Bank of Canada are schedule to announce rate moves (or the lack thereof) tomorrow.

Although market participants are already able to tell the future with both banks likely to hold rates steady, currency bulls will be targeting on the accompanying statements. In regards to the Loonie, it’s a straightforward expectation that commentary on the recent economic expansion and further rate direction will be eyed. However, Pound bulls will forever be focused on any mention of further quantitative expansion as an increase in asset purchases will further damage the underlying cable currency.

Further directional bias is unlikely to be established as we come towards the end of a shortened trading week. Rounding out the data ahead of the weekend will likely be a very bland University of Michigan Consumer Sentiment report, anticipated to show a slight pickup in positive sentiment.

6 Critical Factors For Successful Forex Trading

Online, Day trading has exploded across America. Some investors have been very successful and boast of huge gains made in incredibly short periods of time. However, there are many others who experience devastating losses because they have not tapped into the 6 critical factors necessary for successful Futures and FOREX Trading.

Success in any profession can be broken down into a number of critical factors. Trading is no different. A successful trading strategy incorporates the following 6 factors.

1. Determination of An Edge: Trading Futures is a zero sum game. There must be an identifiable edge over the other market participants.

2. Disciplined Execution:There is no point in identifying an edge if there is no discipline to follow thru. Create a plan, stick with it, then determine if the plan is successful. If it is not, change the plan. The important thing is disciplined execution.

3. Money Management: If the risk per trade is too aggressive, then there is the risk of blowing an account. If trades are too conservative, then the opportunity to optimize returns is missed. It is critical to establish the maximum expected draw down of any system and set money management rules accordingly.

4. Create a Trading Plan: A trading plan will determine what will be done in any given situation during the trade day. A plan helps keep one focused on execution and not distractions.

5. Responsibility: Responsibility lies with the trader. Gains, losses, success, or failure is determined by the skill, determination and discipline of the trader.

6. Commitment: There must be commitment to placing every trade according to plan, even through the losing periods where every trade seems to end up a loser. Trading seems to throw up extremes of good times and bad times. One must not be over confident during the good times, and one must not give up in the bad times. There also must be adequate time every day to compare actual performances against the trading plan.

Internet Marketing VS Forex Currency Trading

Have you noticed that when someone's trying to sell you something — such as a system for making money — they always make it look far easier than it is?

Let's look at two Internet businesses, almost as diametrically opposed as it's possible to be — Internet Marketing and Forex Currency Trading.

You've probably heard the old Internet adage — build a better website and they will come. Well it ain't true!

You could put up a site advertising dollars for a dime and they still wouldn't come — because they wouldn't know where to look!

Let's look at what you need to have in place in order to build a successful Internet marketing business.

First of all, you need a product. If you've been reading the recent Internet marketing blurb you'll know you need a niche product.

Actually, the new thing is sub-niche but whatever they call it, you need a product for which there is high demand but low supply.

Finding a suitable niche is the hardest part of the whole process but let's say you have a killer product, what else do you need?

The List.

Ask any Internet marketeer and they will say that the most important part of your business is your opt-in list.

For people to join your list you usually have to give them something of value such as a free eBook or report on a subject related to your main product line.

To keep them interested, you need to keep in touch with them offering them additional information, advice and tips.

Website.

To promote your opt-in list you need a website (although there are other ways of promoting your list, too) with features that will encourage people to sign up to your list.

You also need a killer website with killer copy to describe — and sell — your killer product. This may or may not be the same as the one you use for your opt-in list.

Killer copy.

Maybe you're not a good copywriter. There are many eBooks on the subject that can help you or you can pay someone to write copy for you.

You need a domain name, preferably one with some relation to the product but good domain names are becoming increasing difficult to find.

Ads.

To get people to visit your website in the first place you need to register it with the search engines.

SEO (Search Engine Optimisation) is an art in itself. You can mug up on the subject or pay someone to do the job for you (but be aware that not all experts are!).

You might also want to place ads for your list in newsletters and ezines. The better ones will charge you although you might get a free ad in return for an article.

Autoresponder.

To automate your business you need an autoresponder. These clever devices automatically send emails to everyone on your opt-in list at predetermined intervals, and contain predetermined copy.

For example, you could create a series of emails containing, say, five parts of a free course to be sent one a day over the first five days.

Then emails would be sent once a week advertising a different product each time.

Whenever anyone signs up to your list they automatically start at the beginning so everyone gets the full cycle of marketing material.

We haven't even looked at affiliate sales and marketing but I'm sure you get the picture.

The basic idea of selling over the Internet sounds good but there's a lot more to it than most people realise.

Forex Currency Trading

Someone said that trading is the last frontier, the last place where men and women can stand up and pit themselves against the world.

It sounds very Wild Westish but most of it is true! You win or lose entirely by your own efforts and if you win, it's like having your very own bank.

However, even owning a bank is a business and you still have to work hard to put the money there — and to keep it!

Unlike Internet marketing where all your efforts, in one form or another, are geared towards making people join your list and then selling them stuff,

Currency Trading has no customers. That's worth repeating — with currency trading, you don't need customers.

No customers means you don't need any of the associated accoutrements that go with Internet marketing such as:

Products

Web site

Domain name

Opt-in list

Ads

eBooks and reports

Autoresponder

Any other marketing aids

So far so good, but what do you have to do and what do you need? Well, you need to know what currency prices are doing.

You can get a list of prices at the close of each trading day free from many web sites. If you want to trade during the day — intraday trading, you can get real-time prices for a nominal fee from several data suppliers.

In the foreign exchange currency market, commonly called forex, you can get this data and charting software free from many web sites.

Okay, that's the easy bit. In order to trade currencies, you need to analyse the data and determine which way price is heading.

In other words you need a system and this will require study and dedication.

There's lots of other stuff you have to know, too — trading terminology, margin, leverage, money management, order types, trader psychology and more.

But all of this is available in eBooks and courses and on the Net.

You also need some money upfront to fund your trading account. With forex you can begin with as little as $300-500 although you would be advised to start with more.

So while you don't have the ongoing quest for new customers, new products and inventive sales techniques, you do need some sort of education or training before you begin and you need discipline while you're trading.

Explosive Profits: 7 Reasons to Trade Forex

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

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

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

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

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

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

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

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

Here's 7 more reasons to trade :

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

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

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

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

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

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

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

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

The 6 Advantages Forex Trading Has Over Other Investments

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

1. Lower Margin

Just like futures and stock speculation, a forex trader has the ability to control a large amount of the currency basically by putting up a small amount of margin. However, the margin requirements that are needed for trading futures are usually around 5% of the full value of the holding, or 50% of the total value of the stocks, the margin requirements for forex is about 1%. For example, margin required to trade foreign exchange is $1000 for every $100,000. What this means is that trading forex, a currency trader's money can play with 5-times as much value of product as a futures trader's, or 50 times more than a stock trader's. When you are trading on margin, this can be a very profitable way to create an investment strategy, but it's important that you take the time to understand the risks that are involved as well. You should make sure that you fully understand how your margin account is going to work. You will want to be sure that you read the margin agreement between you and your clearing firm. You will also want to talk to your account representative if you have any questions.

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

2. No Commission and No Exchange Fees

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

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

3. Limited Risk and Guaranteed Stops

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

4. Rollover of Positions

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

5. 24-Hour Marketplace

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

6. Free market place

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

Forex Technical Analysis for 07/20—07/24 Week

EUR/USD trend: sell.
GBP/USD trend: sell.
USD/JPY trend: sell.
EUR/JPY trend: sell.

Floor Pivot Points
Pair	3rd Sup	2nd Sup	1st Sup	Pivot	1st Res	2nd Res	3rd Res
EUR/USD	1.3581	1.3706	1.3821	1.3946	1.4061	1.4186	1.4301
GBP/USD	1.5605	1.5793	1.6002	1.6190	1.6399	1.6587	1.6795
USD/JPY	86.59	89.18	90.87	93.46	95.15	97.74	99.43
EUR/JPY	118.92	122.96	125.97	130.01	133.02	137.06	140.07

Woodie’s Pivot Points
Pair	2nd Sup	1st Sup	Pivot	1st Res	2nd Res
EUR/USD	1.3704	1.3815	1.3944	1.4055	1.4183
GBP/USD	1.5798	1.6011	1.6195	1.6408	1.6592
USD/JPY	88.95	90.42	93.24	94.70	97.52
EUR/JPY	122.70	125.45	129.75	132.50	136.80

Camarilla Pivot Points
Pair	4th Sup	3rd Sup	2nd Sup	1st Sup	1st Res	2nd Res	3rd Res	4th Res
EUR/USD	1.3803	1.3869	1.3891	1.3913	1.3957	1.3979	1.4001	1.4067
GBP/USD	1.5992	1.6101	1.6137	1.6173	1.6246	1.6283	1.6319	1.6428
USD/JPY	90.21	91.38	91.78	92.17	92.95	93.34	93.74	94.91
EUR/JPY	125.10	127.03	127.68	128.33	129.62	130.26	130.91	132.85

Tom DeMark’s Pivot Points
Pair	EUR/USD	GBP/USD	USD/JPY	EUR/JPY
Resistance	1.4004	1.6493	96.45	135.04
Support	1.3764	1.6096	92.17	127.99

Fibonacci Retracement Levels
Pairs	EUR/USD	GBP/USD	USD/JPY	EUR/JPY
100.0%	1.4072	1.6379	96.05	134.06
61.8%	1.3980	1.6227	94.42	131.36
50.0%	1.3952	1.6181	93.91	130.53
38.2%	1.3923	1.6134	93.41	129.70
23.6%	1.3888	1.6076	92.78	128.67
0.0%	1.3832	1.5982	91.77	127.01

Forex Brokers

One of the hardest decisions you face when starting out as a forex trader is which forex broker to go with. If you do a search online you will find hundreds of different forex brokers to choose from. The trouble is that some are better than others, and furthermore there are some that you should avoid like the plague.

So let me give you a list of things you should look out for when choosing a forex broker:

1. Regulation

This is arguably the most important factor because whichever broker you decide to go with, you must make sure that they are fully regulated with the relevant authority. So if they are based in the US, for example, then you should ensure that they are regulated by the NFA (National Futures Association) or the CFTC (Commodity Futures Trading Commission). Similarly if they are a UK-based company, then they should be regulated by the FSA (Financial Services Authority).

If you go with an offshore forex broker that is completely unregulated, for example, then you are taking a huge risk because you may never see your money again.

2. Spreads

If you are a relatively long-term trader and mainly use the 4 hour or daily charts, for instance, then the spreads offered by your chosen forex broker is not so much of an issue. However if you intend to trade the shorter time frames then your points gains per trade will obviously be a lot less, and therefore the spreads will start to eat into your profits. So as a general guide you ideally want to choose a broker that offers spreads of around 2 or 3 pips for the EUR/USD and GBP/USD pairs, and certainly no more than 4.

3. Leverage

The amount of leverage offered by different forex brokers varies greatly. Some may only offer 100:1 leverage while some may offer as much as 400:1. My own personal view is that 100:1 is more than enough, but if you are more of a risk taker then you may want to look for brokers that offer higher leverage.

4. Demo Accounts

If you are relatively inexperienced or if you want to test out a broker’s trading platform before deciding whether or not you wish to open a live trading account, then you should choose a broker that provides a free demo account. Most reputable brokers offer demo accounts nowadays so I would always recommend you take advantage of this facility.

5. Account Types

Although all forex brokers cater for the well capitalized traders, not all of them cater for those traders who wish to trade smaller positions. Therefore if you yourself fall into this category, then you should look out for brokers that allow you to trade mini-lots (equivalent to around $1 per pip) or micro-lots ($0.1 per pip).

6. Minimum Deposit

If money is tight or you want to start off small (which is always a good idea), then you will want to choose a forex broker that requires a relatively low minimum deposit when opening a live trading account.

7. Charting Software

Nearly all forex brokers provide some kind of charting software free of charge when you open an account with them. It may be the highly popular Metatrader 4 platform or it may simply be a no-frills charting package. So therefore if you do want to use some of the more advanced charts, then I suggest you go with a broker that provides the Metatrader 4 or ProRealTime platform, for instance, otherwise you will have to fork out some money to access some decent charts elsewhere.

8. Additional Services

As well as charting software, you may also want your broker to provide a range of additional services such as daily commentaries, market analysis, educational materials and the option to deal through your mobile phone.

9. Customer Service

If you are just starting out as a forex trader you will probably have several questions and queries when you first open an account with a broker. So therefore you should try and join a broker that offers a high level of customer service. One way of testing this out is to contact the help desk of the brokers you are considering joining, ask them a particular question, and see how long they take to get back to you.

10. Customer Comments And Reviews

Finally your ultimate choice of forex bro

ker will often be swayed by what other traders have to say about them. There are several websites which contain customer reviews of all of the leading brokers and you will find no shortage of opinions on all of the different forex forums.

However one thing I will say is that you will never come across brokers that have nothing but positive reviews, so don’t waste too much time looking for the perfect broker because it simply doesn’t exist. Just look for brokers that have a high number of positive comments and you should be fine

How to Make Forex Give the Lifestyle You Want

In order to be rich and make loads of money with forex, it is a must for anyone who is serious to have accurate knowledge with the trade. Sure there is no need for any diploma in trading Forex, but in order to succeed, investing time and effort to learn profitably is a dogma.

Lately people have been buzzing about how a great income potential is forex. Getting tired of a monotonous life in the corporate world, there will come a time that people want to be free from all and have a rich lifestyle, to work from home and enjoy the greater things in life. Indeed Forex is a serious consideration and worth inveting on.

Before Forex was not accesible to anybody. But thanks to the modernization and internet, everybody has the fighting chance to get rich and be merry.

Yes Forex has low cost to operate, lower cost to start, very abundant information resources, flexible trading hours and very high income potential, everybody can get started in Forex in one way or another.

It is one thing to start trading and being profitable Forex trader is different. In order to become profitable in every trade, you will find it imperative to invest some time in learning courses and practicing in a demo account rather than saving all the pain of losses. Concepts such as Moving Averages, Fibonacci levels, Bollinger Bands, etc; are the basic knowledge every trader must have.

But having a good knowledge of these concepts is not everything you need. Fear is your worst enemy. To become a profitable trader, one thing that can free you of this fear is education. As you learn in the ways of the trade, you will find yourself more confident to what trading plans you have. You have to understand that there will be losses and it has happend to the richest traders today. If you truly understand that, there is no way that you can get poor in Forex.

You want to change the way you live for the better? A profitable forex trader must be ready with education and psychological preparation. This is the only way to make the market work in your favor.

Invest in learning Forex. You'll be glad you did.

Tips to Make Money Fast in Forex

This is all about making a fortune with Forex. Most traders just go with the flow and make average gains, with this article you will learn what makes some traders stand out and a lot richer than others!

We are going to assume that you know how to trade, and has quite an experience in trading.

With simple changes in your trade selection, money and risk management, and mindset, you can change that average gains into larger ones!

Fast money is in Forex, it is a lifestyle. here is it how its done.

Tip 1 . Embrace Changeability and Risk With a Smile

Forex systems have instability.

If you cannot manage and calculate your risk, then don't ever think about trading in Forex. Many traders back away from forex because of this ( why do you even traded in the first place?). But taking manageable risks has its rewards.

It's just simple, you know what your losing if ever it doesn't work out, yet what you gain is unpredictable but sure is high! That is what I call excitement, my friend.

To a well-educated Forex trader, this is something you shouldn't be afraid of, might as well embrace it.

Tip 2. Trade Less, gain more

Most traders think that if they don't trade, another door has closed, or miss some move. The tendency, they trade frequently. Most of the trades that come big come a few times in a year. Focus on the trades that make the really big gains. Be alert, and informed.

Tip 3. Diversify is a no-no

Most Investors accept the fact that diversification can make money fast - in reality it does exactly the opposite.

Tip 4. Money and Risk Management

This article has been concentrating on the Big gains, because this is your money, so every penny should be controlled, this is where money management kicks in.

Control your risks, but increase your chances of success:

- Give yourself staying power by buying options at or in the money, this prevents you from getting stopped out. Many traders lose not by the market direction, but because they were stopped out by a instable move, and options will give you staying power.

- Keep your stop in its original position - until the move is well in profit, before moving it up.

- Trading fast and selectively - have the courage to trade when you feel it is good. and enjoy the cash.

Tip 5. Compound growth has its benefits

The way to make money fast in forex, is to understand the power of compound growth. For example, if you target 50% a year in your trading, you can grow an initial $20,000 account, to over a million dollars, in under 10 years.

Break the norm, and gain more. Follow some of these tips and make your way into the big gains!

What is Forex?

FOREX - the foreign exchange market or currency market or Forex is the market where one currency is traded for another. It is one of the largest markets in the world.

Some of the participants in this market are simply seeking to exchange a foreign currency for their own, like multinational corporations which must pay wages and other expenses in different nations than they sell products in. However, a large part of the market is made up of currency traders, who speculate on movements in exchange rates, much like others would speculate on movements of stock prices. Currency traders try to take advantage of even small fluctuations in exchange rates.

In the foreign exchange market there is little or no 'inside information'. Exchange rate fluctuations are usually caused by actual monetary flows as well as anticipations on global macroeconomic conditions. Significant news is released publicly so, at least in theory, everyone in the world receives the same news at the same time.

Currencies are traded against one another. Each pair of currencies thus constitutes an individual product and is traditionally noted XXX/YYY, where YYY is the ISO 4217 international three-letter code of the currency into which the price of one unit of XXX currency is expressed. For instance, EUR/USD is the price of the euro expressed in US dollars, as in 1 euro = 1.2045 dollar.

Unlike stocks and futures exchange, foreign exchange is indeed an interbank, over-the-counter (OTC) market which means there is no single universal exchange for specific currency pair. The foreign exchange market operates 24 hours per day throughout the week between individuals with forex brokers, brokers with banks, and banks with banks. If the European session is ended the Asian session or US session will start, so all world currencies can be continually in trade. Traders can react to news when it breaks, rather than waiting for the market to open, as is the case with most other markets.

Average daily international foreign exchange trading volume was $1.9 trillion in April 2004 according to the BIS study.

Like any market there is a bid/offer spread (difference between buying price and selling price). On major currency crosses, the difference between the price at which a market maker will sell ("ask", or "offer") to a wholesale customer and the price at which the same market-maker will buy ("bid") from the same wholesale customer is minimal, usually only 1 or 2 pips. In the EUR/USD price of 1.4238 a pip would be the '8' at the end. So the bid/ask quote of EUR/USD might be 1.4238/1.4239.

This, of course, does not apply to retail customers. Most individual currency speculators will trade using a broker which will typically have a spread marked up to say 3-20 pips (so in our example 1.4237/1.4239 or 1.423/1.425). The broker will give their clients often huge amounts of margin, thereby facilitating clients spending more money on the bid/ask spread. The brokers are not regulated by the U.S. Securities and Exchange Commission (since they do not sell securities), so they are not bound by the same margin limits as stock brokerages. They do not typically charge margin interest, however since currency trades must be settled in 2 days, they will "resettle" open positions (again collecting the bid/ask spread).

Individual currency speculators can work during the day and trade in the evenings, taking advantage of the market's 24 hours long trading day.

FOREIGN EXCHANGE MARKET

The foreign exchange market (currency, forex, or FX) trades currencies. It lets banks and other institutions easily buy and sell currencies.

The purpose of the foreign exchange market is to help international trade and investment. A foreign exchange market helps businesses convert one currency to another. For example, it permits a U.S. business to import European goods and pay Euros, even though the business's income is in U.S. dollars.

In a typical foreign exchange transaction a party purchases a quantity of one currency by paying a quantity of another currency. The modern foreign exchange market started forming during the 1970s when countries gradually switched to floating exchange rates from the previous exchange rate regime, which remained fixed as per the Bretton Woods system.

The foreign exchange market is unique because of

• its trading volumes,
• the extreme liquidity of the market,
• its geographical dispersion,
• its long trading hours: 24 hours a day except on weekends (from 22:00 UTC on Sunday until 22:00 UTC Friday),
• the variety of factors that affect exchange rates.
• the low margins of profit compared with other markets of fixed income (but profits can be high due to very large trading volumes)
• the use of leverage

Main foreign exchange market turnover, 1988 - 2007, measured in billions of USD.

As such, it has been referred to as the market closest to the ideal perfect competition, notwithstanding market manipulation by central banks. According to the Bank for International Settlements, average daily turnover in global foreign exchange markets is estimated at $3.98 trillion. Trading in the world's main financial markets accounted for $3.21 trillion of this. This approximately $3.21 trillion in main foreign exchange market turnover was broken down as follows:

• $1.005 trillion in spot transactions
• $362 billion in outright forwards
• $1.714 trillion in foreign exchange swaps
• $129 billion estimated gaps in reporting

The Benefits of Forex Trading

There are five things give trading the forex market some unique advantages.

1. 24 Hour Market

Since the forex market is worldwide, trading is continuous as long as there is a market open somewhere in the world. Trading starts when the markets open in Australia on Sunday evening, and ends after markets close in New York on Friday.

2. High Liquidity

Liquidity is the ability of an asset to be converted into cash quickly and without any price discount. In forex this means we can move large amounts of money into and out of foreign currency with minimal price movement.

3. Low Transaction Cost

In forex, typically the cost for a transaction is built into the price. It is called the spread. The spread is the difference between the buying and selling price.

4. Leverage

Forex Brokers allow traders to trade the market using leverage. Leverage is the ability to trade more money on the market than what is actually in the trader's account. If you were to trade at 50:1 leverage, you could trade $50 on the market for every $1 that was in your account. This means you could control a trade of $50,000 using only $1000 of capital.

5. Profit Potential from Rising and Falling Prices

The forex market has no restrictions for directional trading. This means, if you think a currency pair is going to increase in value; you can buy it, or go long. Similarly, if you think it could decrease in value you can sell it, or go short.

Mistakes That Forex Traders Make

When getting started in forex trading, there are common mistakes to be avoided. This is a list of common forex trading mistakes.

1. Using Too Much Leverage

One of the biggest advantages of forex trading is the ability to use leverage or trading on margin. One of the most common mistakes that forex traders make is using too much leverage. Using too much leverage is when you have a small account balance, but make a big trade. If the market moves against your position by just a small amount, it can result in large losses. Commonly, the beginning forex trader will get emotional and nervous and close the trade for a sizable loss.

2. Over Trading

Over Trading occurs when traders try to look for trading opportunities that are not really there. It happens to new traders very often, because they just want to trade. The result is usually a poorly executed trade that results in an eventual loss. Over trading can also result in traders making too many trades at once and using too much margin.

3. Picking Tops and Bottoms

Many new traders attempt to try to pinpoint where a currency pair will turn around and start moving the opposite direction. This is something that is difficult even for professional traders.

The Best Times to Trade the Forex Market

The forex markets are great because they are open almost all of the time and there are a wide range of currencies to choose from. This brings up an important question.

What are the most active hours for forex trading?

Generally speaking, the most active hours all around are between the London markets opening around 8:00 GMT and end with the markets in the US closing around 22:00 GMT. The absolute busiest time in the forex markets are during the London to US overlap between 13:00 GMT to 16:00 GMT. These are the hours that are the most liquid or when the most traders are in the markets making trades. If your intention is to do daytrading, these are key hours!

What are the major sessions for forex trading?

There are 3 major sessions each day in the forex markets. They are the London session, the US session, and the Asian Session.

The London Session

The London session starts around 8:00 GMT and winds down around 1600 GMT. The currencies that are the most active during these hours are EUR, GBP, and USD.

The US Session

The US session starts around 1300 GMT and winds down around 22:00 GMT. The currencies that are the most active during these hours are AUD, EUR, GBP, JPY, and USD.

The Asian Session

The Asian session is a reasonable quiet session on most days. All pairs are pretty slow moving and it is not a good time to day trade. The only real currency that has noteworthy activity is the JPY and the activity is slow unless a major financial event happens.

Summary

The best hours for trading the forex markets, no matter your method, are during the London and US session overlap. The markets are full of active participants during these hours and the currencies really move. For the most part, even the larger fundamental news comes out during these times. Trading during these hours is your best chance to get in while the market is making decisive moves and it will be your best chance to score quick profits.

How to Get Started with Forex Trading?

Before you can get started with forex trading, there are so many questions to answer. How do I choose a broker? Should I use a demo account? What do I need to know before making my first trade?

Let’s answer these questions one at a time, in order of importance.

1. Choose a broker

Making a decision on which broker to use is personal for each trader. Some brokers offer certain options that some traders will thrive on, while other traders will hate the broker for those same options. It is important to review and compare the options of each broker closely and choose the one that makes you feel most comfortable.

2. Open a Demo Account

Once you have made your decision on which broker you like the best, it is time to open a demo account. Most brokers will offer at least a 30 day trial of their trading platform giving you a chance to trade on the platform using play money. Using a demo account is a good opportunity to make sure that you feel comfortable using the broker’s trading tools. You would not want to trade real money without being fully comfortable with the trading platform. A demo account will not only help you get a grip on how to use the broker’s trading platform, but also trading the market in real time.

3. Learn About Leverage

Forex trading is typically carried out using leverage, or trading on margin. Margin is a useful tool, but it can be very dangerous if it isn’t used correctly. Forex brokers typically offer anywhere from 50:1 leverage up to 400:1 leverage. The higher the number, the less money required to put on a large trade. The use of leverage is something that needs to be taken with a lot of care.

4. Practice Reading Charts

Before you start making trades you should get familiar with charts and how they work. It is a good idea to get familiar with the different time frames and the different types of charts. The shorter time frames will give you an idea of how the market is moving minute to minute. The longer time frames can show you how the market moves over longer periods and will show the larger trends. Most charting software will offer charts as lines, candlesticks, or bars. Take plenty of time to try out different looks and time frames to find the style that you are comfortable with.

5. Making the first live trade

The first trade is a nervous and exciting experience. The demo account prepares you for the technical aspects of trading, but when real money is on the line, emotions will come into play. It is important that you keep a level head and do your best to trade with the same methods that you practiced on the demo account. It may prove to be difficult, but if you master your emotions and use sound money management, anything is possible after this step. If your first trade loses money, do not give up, just piece together where you think you went wrong, and try again.

Forex trading is a constant learning experience. Trading mistakes can be expensive. If you learn from those mistakes and do your best to avoid them in the future, you can become a very successful forex trader.

What is Forex Trading?

Forex Trading is the act of trading currencies from different countries against each other. Forex is acronym of Foreign Exchange.

For example, in Europe the currency in circulation is called the Euro (EUR) and in the United States the currency in circulation is called the US Dollar (USD). An example of a forex trade is to buy the Euro while simultaneously selling US Dollar. This is called going long on the EUR/USD.

How Does Forex Trading Work?

Forex trading is typically done through a broker or market maker. As a forex trader you can choose a currency pair that you feel is going to change in value and place a trade accordingly. For example, if you had purchased 1,000 Euros in January of 2005, it would have cost you around $1,200 USD. Throughout 2005 the Euro’s value vs. the U.S. Dollar’s value increased. At the end of the year 1,000 Euros was worth $1,300 U.S. Dollars. If you had chosen to close your trade at that point, you would have made $100.

Forex trades can be placed through a broker or market maker. Orders can be placed with just a few clicks and the broker then passes the order along to a partner in the Interbank Market to fill your position. When you close your trade, the broker closes the position on the Interbank Market and credits your account with the loss or gain. This can all happen literally within a few seconds.