THE PRINCIPLE OF FOREX TRADING

By Oladeni Ayoola

It is simply to sell when it is hot and buy when it is not. It involves investment on some specific currencies. The currency being chosen is then compared to its dollar equivalent. In forex terms, the simultaneous buying and selling of currency pairs is called CROSSTRADING.

Forex brokers do not charge commissions in forex trading. They do earn their fees on lending money to traders to finance purchases called LEVERAGE. Because the forex Market is very dynamic (not stable) with constant ongoing opportunities to trade, active traders work almost around the clock to test their skills and strategies on the global Spot Exchange market. Spot exchange is the function trading between the US dollar and other major global currencies. As different form putting deposits in the bank with low interest rates, major trading companies, with a positive cash flow, now deal in spot exchange and earn profits.

There is no doubt that forex trading involves there is an element of risk, therefore, anyone interested in trading will have strong nerves, analytical mind and some knowledge of global currency trends.
Major Forex Currencies
· US Dollar
· Japanese Yen
· British Pound
· Euro
· Swiss Franc

These are the leading world currencies accounting for 70% of all forex trades in North America. Traders who want to come up with their own trading styles do so based on dealings in these currencies as they have a chance of learning their characteristics and ways to make profit on them.

Know How to Deal

This is a primary decision that is based on how much capital a trader will have at his disposal and the expected return on investment. If in a market brokers are prepared to underwrite 99% of all purchases, a trader has a lot of scope to make major purchases and build varied portfolio. When a trader evolves a fixed trading style, a format is established such that neither too much money can be lost or earned on a trade. This is because they place a limit and top orders through the broker which will allow them to sell the currency when it reaches either a top or bottom ceiling. In short, these brokers actively monitor trading trends for the trader. The theory behind this system is that a trader does not need to be active. The less active they are, the more profitable they can become.
Through a long-term view of the market, they will be able to show profits over a period of time that is rarely gained on a daily basis. Taking profits in small bundles, over a time frame of 3 months or more has proven to be a very profitable strategy in forex trading but this largely depends on how much equity (capital investment) is at the disposal of a trader.

Research

This is a condition for a successful foreign exchange. 99% of those who try their skills and strategies at foreign currency trading retire early and wounded. Some lose their stake while others just realize much hours, days and months are spent without making money.
The remaining successful 10% have been able to by developing hidden personality traits such as investing money in equipment, software, training and acquiring knowledge. Since foreign currency exchange gives no room for a second chance, risks have to be calculated and good decisions made. This is by researching, sharpening and applying a dealing strategy that will earn money steadily. Also, profit made at a time does not guarantee the next as every trade is independent of the other.

About the author: Oladeni Ayoola is a Consultant to Learning World (Information, Education and Communication-based Organization) in Lagos, Nigeria.

You can check his other hot articles at http://loseweigt-in-days.blogspot.com

THE IMPORTANCE OF TRADING ON A FOREX DEMO ACCOUNT

By John J Callingham

A Forex demo account is essentially a practice account allowing investors to use "paper credits" in place of real money when making their trades on the foreign exchange market. In recent years, demo accounts have gained immense popularity following the increased interest towards Forex trading as a form of financial investment.

To understand the rise of this phenomenon, it is necessary to examine the importance of trading on a Forex demo account. To start things off a little, it is important to understand that the business of Forex trading is in essence a form of financial investment.

Treating the Forex market as a casino would ultimately result in horrifying consequences as losses in Forex trading can be massive. Thus, it is important for the would-be investor to first acquire a firm grounding in financial literacy. This would entail having a firm grasp of the various types of investment concepts such as technical analysis and fundamental analysis. Yet, theory without practice is often useless, which is where the importance of trading on a demo account kicks in place.

A Forex demo account would allow novice investors to familiarize themselves with an online trading platform. Direct entry into actual trade can be pretty much daunting given the plethora of tools on modern day online Forex trading platforms. Worse still, wrong decisions may be made resulting in potential losses.

In comparison, a Forex demo account would allow the novice investor to learn the basic functions of an online trading account such as placing the buy/sell order, the stop loss order and the profit limit function. Knowledge of when to use these features of an online Forex trading platform is invaluable in guiding you to the path of success in Forex trading.

Moreover, a demo account would allow investors to put theory into practice. What this means here is that the investor would be able to apply knowledge acquired through Forex investment books in practical fashion without the fear of making actual losses. This is extremely important to novice investors as it would allow them to learn the ropes to Forex trading, allowing them to critically evaluate their various trading strategies before they make their first real trades with money. While many have criticized the lack of realism with the use of paper credits, a demo account is by far the best way for novice investors to learn the ropes of Forex trading before they dive into the actual market.

Forex demo accounts also provide the seasoned investor with a useful platform to put untried trading strategies into practice. Wish to make a modification to your current trading strategies but unsure of its effects? Try things out on your demo account before you proceed into the actual market. You would be able to evaluate the results of your decisions from a safe distance, sans the possibilities of making any actual losses. Many veteran investors today make use of Forex demo accounts as a means to refine their trading strategies for even greater investing success in the future. In short, it is important to trade on a Forex demo account. Whether you are a novice investor or a battle-hardened veteran, there is much to be gained in terms of practical knowledge and investing experience.

Click Here to get FREE access to the secret Forex Trading newsletter where you can learn about Forex Currency Trading.

John Callingham is an authority on Forex Trading providing valuable advice at http://www.forexsimpletrading.com.

Source:www.isnare.com

THE FIBONACCI METHOD OF FOREX TRADING

By Justen Robert Case

I'm sure you have heard of the great mathematician Leonardo of Pisa, also known as Leonardo Fibonacci? He was a highly influential Italian who lived almost 800 years ago, so you're probably wondering what Fibonacci has to do with forex trading, I'll get to that shortly. He is most famous for developing the numerical sequence that is widely known as the Fibonacci Numbers or the Fibonacci Sequence (he is also credited with introducing the decimal system in Europe).

The very first number of the sequence is 0 and the second is 1. The sequence develops as each subsequent number is the sum total of the previous two numbers. In mathematics it's known as a recurrence relation. Below are the first numbers in the sequence: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, 1597, 2584, 4181, and so on. e.g. 2 + 3 = 5, 3 + 5 = 8, 5 + 8 = 13 etc.

Leonardo Fibonacci discover that the Fibonacci sequence and their ratios could be found everywhere throughout the natural world, existing in the most unlikely places, almost as universal rule. So how does Fibonacci and forex trading go hand in hand?

The Fibonacci numbers are important for charting, spotting patterns and indicators in the forex markets, and are used as an important method of analysis Why? When you analyse the currency markets carefully, you often find the same ratios as those in the Fibonacci number sequence. You'll also find them in investments such as stocks.

The main three numbers you need to be aware of, and ideally should commit to memory are 0.618, 0.500 and 0.382. There are other numbers, but for starters these are the big 3 and most important. So what are they used for?

The Fibonacci numbers are used by forex traders to calculate what are known are retracement levels, which are used to determine when to place buy orders or sell orders. It works like this: If a currency pair is trending upward lets assume, then history will tell us then at some point it's going to hit a peak and go into at least a temporary decline or reversal, and then resume the upward trend. When it starts the reversal, that's where the Fibonacci numbers come into play.

The prices of the currency pair that are following the upward trend is usually predicted to reverse/decline backwards to one of the key Fibonacci numbers, and then bounce back again to follow the upward trend.

The key is to forecast this point accurately so that you can buy in before the trend continues upward, so that you capitalise on the reversal and then profit. You should have a charting mechanism built into your online trading platform which will chart the Fibonacci numbers. Your retracement levels should be automatically mapped on your chart when you simply draw a line up from the low point to the high point. Obviously there are other things to take into account, it's not as simple as just buying into a trade when the price hits a Fibonacci number.

For a start you never know which retracement level the price will drop to and stop at. If you opted for 0.382 and the price ended up dropping to 0.618, you've just lost a whole load of pips. Conversely, if you buy in at the wrong high or low points, the retracement levels are going to be completely out of sync. It can be problematic. They sometimes don't work at all. The forex market is such a dynamic complex system with so many variables at play it would be foolish to rely solely on one method to predict price changes. Moral of the story?

Find a trading system or strategy that incorporates as many elements and variables as possible, do lots of research, data mining and plenty of good old hard work.Do you make these forex trading mistakes? Don't lose your shirt.

Discover how to trade forex for big profits.

Visit: http://realforexsecrets.com Or click here for more forex trading strategies.

Source:www.isnare.com

HOW TO ACCURATELY CALCULATE YOUR PROFITS (AND LOSSES) IN YOUR FOREX TRADES

By Justen Robert Case

Most forex brokers that you will use online have developed their trading platforms so that they calculate your profits/losses for you. So why am I writing this article? Well, it's pretty simple really.
If you are serious about being a successful forex trader you need to understand the mathematics behind your trades. Plus it makes sure that you can keep tabs on your forex broker, so you can make sure they are not 'cooking the books'.

As a forex trader, I'd expect you to be numerate, so it should be pretty easy for you to calculate your profits and losses. But I can understand if you are new to forex trading it might not be initially self-explanatory.

The 2 formulae you need to commit to memory. (In this calculation I'm assuming you are trading in USD.) When the US Dollar is the second currency (the quote currency), the formula to use is: 1 - Profit is equal to: the price change in PIPs multiplied by the units traded. (e.g. profit = pips price change x traded units)

Secondly if the US Dollar is the first currency in the pair (base currency), the formula to use is: 2 - Profit is equal to: the change in price in PIPs multiplied by the units traded divided by the exit price. e.g. profit = price change in pips x units traded / exit price So to 'hammer this home' and make sure you really understand this process I want to give you a few examples.

To start with we'll use an example where the US dollar is the second currency, the quote currency, and to make things easy we're going to use a 1% broker margin. So you can trade up to 100,000 USD with only 1000 USD. OK? Great. We'll take the EUR/USD which for example is trading at 1.5618/9. Your analysis has led you to predict that the Euro is going to rise in value against the dollar so you start a trade to buy more Euros and sell US Dollars.
So you end up buying $100,000 worth of units at a price of 1.5619 - remembering that you are buying so you have to buy at the ask price - this is the last/second number in the quote (so you buy at the ask price of 1.5619 not 1.5618). Your predictions turn out to be correct. Congratulations, the price rise to 1.5635/6.

So you start another trade to sell the Euros and buy USDs. For this trade you use the bid price as you are selling, which is 1.5635. So here's where your maths comes in. As you purchased the Euros at 1.5619 and then sold at 1.5635 your profit is 16 pips, or 0.0016. So before that makes any sense we need to convert that into proper money. So this is where we use our formulae. Profits = 0.0016 (price change in pips) x 100,000 (units traded) = $160.00
If you are trading standard sized lots of a currency pair as we did above of 100,000, in which you use the USD as the quote currency, a quick rule to remember is that a pip is equal to c.$10. Hence 16 pips = $160. So let's take another quick example, but this time we'll use the USD as the base currency.
You place a buy order for 100,000 units of USD/JPY at 103.20. The price increases and you sell at 103.33. You just made a quick 13 pips. So to calculate your profit in your second formula: Profit = .13 (pips) x 100,000 (units traded) / 103.33 (exit price) = $110.78 Easy huh?Do you make these forex trading mistakes? Don't lose your shirt.

Discover how to trade forex for big profits. Visit: http://realforexsecrets.com Or click here for more forex trading strategies

Source:www.isnare.com

A SIMPLE FOREX TRADING APPROACH

By Adrianne Geyer

Some people call Forex the "Best Kept Secret in the Investment World" because even though the Forex market is the largest and most liquid financial market in the world, the average person doesn't even know it exists.

Investment Trading is not a Get-Rick-Quick scheme. It is a skill that takes time to learn. Unlike stocks or futures, investment trading in the Forex market is a 24 hour market. With the ability to trade during the US, Asian, and European market hours, you can customize your very own trading schedule. Here are a few ways you can participate in Forex trading.

1. Hiring Someone to Trade for You
By doing this, you hire a money manager to make the trades for you, pay them a commission, and pretty much relinquish control of your money.

2. Learn Investment Trading On Your Own
This can be quite expensive if you enroll in a workshop, not to mention time consuming. To get you started, I would recommend you go through any search engine to look for a free online course to introduce you to investment trading. Most courses will explain how the currency pairs work including the interest you will earn from your trades.

3. Subscribe to an investment trading software package.

In many cases when you order a subscription, there will be a monthly fee to use the software but it will also give you access to the tools and education you will need need to setup your own investment trading account.

Forex Investment Trading Strategies

It's important to understand that most investment trading strategies do NOT teach people how to be directional traders. This means you will not learn how to "guess" which direction the market will move next. Neither do they provide you with a signal service.
What you will receive from most investment trading strategies is unlimited access to the internet-based software and unlimited access to training webinars that will show you exactly how to use the program and how to place your trades on various broker platforms. It will also show you how to set up your own account where you can manage your very own portfolio.

There generally are no charts or graphs to read and no research or signals to follow. You will trade currency pairs which, historically speaking, move in opposite directions and then be told when to enter or exit your positions. Most investment trading strategies relieve you from having to watch the markets all night, when they are most active, waiting for a trading opportunity. After you make 3 basic decisions based on your personal preferences, the investment trading program will calculate the number of lots to buy along with the corresponding buy and sell points for each currency pair you choose to trade.

3 Ways to Generate Revenue
Buy Low & Sell High
Many investment trading strategies will use the amount of money you plan to invest, the currency pairs you choose to trade, and the level of volatility that you are comfortable with to give you a preset price point to enter into a free brokerage account of your choice.
Once your account is set up, it will buy or sell a certain number of lots of each currency pair, even while you're at work or asleep. Since no one knows which way the market will go, the price points are preset to either buy low or sell high. Some programs actually give you the option to receive a cell phone text message or email letting you know that one of the price points had been reached. What you need to do next is tell the program what happened so that it will give you new buy and sell points to set up again.

Collect Daily Interest
By using an investment trading strategy, you can earn passive income on the difference in interest rates. After your portfolio is set up, you will be paid daily interest on the money you control in the market. When you buy a currency pair, you receive interest from the first currency listed in each pair, and pay out interest on the second currency in the pair.
For example, interest on the dollar swiss would be:USD 5.00% minus CHF 1.36%. The net difference of 3.64% is what you would earn annually. These calculations are done automatically by your broker without any intervention from you. This interest is paid on the money you invested and also on the number of lots you own.

The Power of Leveraging
Leveraging means that for every $1 you use to buy currencies in your investment trading account, the broker you are trading through will make available to you as much as $400 to control in the open foreign exchange market.
Without question, the potential returns from investment trading in the Forex market are great. The decision you need to make now is how you would like to participate.
Adrianne Geyer has a Computer Networking degree and has been a full-time Internet Marketer since July 2000. She began Forex Trading in January 2006 and use this Forex Trading Software to trade in the open currency market.

Article Source: http://EzineArticles.com/?expert=Adrianne_Geyer

FOREX TRADING - HOW TO START MAKING A PROFIT IN FOREIGN CURRENCY TRADING

By Fred Jay

Ah the complex world of Forex currency trading.
If your just a beginner in forex and need a simple way to begin turning a profit, then this might be just the thing for you! You might also be an experienced trader who's had previous trouble turning a profit. There are some simple steps you can take to aim for success.

-Using a proven system. You obviously need to use a proven system or else your doomed to fail. So how do you get a proven system?
You can search online, in online forums and discussion groups. In these places you can find proven systems for sale but in general, you will have to avoid generically commercial looking websites. These are often put together by people that know nothing about proper trading. The system must be a proven one for you to win.

-Avoid systems that don't provide proof of their earnings. A lot of forex trading systems don't work at all and are just there to suck hard earned money out of your wallet
Try to make it easy on yourself, instead of a difficult task. Do your research with forex currency trading! Make sure that the forex robot will make you money. It is also smart to purchase a couple of forex robots and see which ones profit the best.

-Make sure the system can make small trades. Try to find a broker that offers micro lots. As most won't blatantly advertise this, you might have to write a few and ask them personally. Micro lots are typically sized at $1000 instead of mini lots prices at $10,000.

Do you want the very best forex software? Well I have some good news for you, I bought and tested the top 7 forex software's and put a review of the top 2 on my website: ForexTradingReview.Info I made over 900 dollars a day with one of the softwares listed on that site.

Just Imagine if you purchase a couple of profitable softwares!You have to be very careful when purchasing a software though. Some of the software's just sit around and never make you any money. If you want to make thousands every week with forex I suggest you take a look at the website: Forex Trading Review

Article Source: http://EzineArticles.com/?expert=Fred_Jay

UNCOVERING THE BEST FOREX TRAINING PROGRAMS

By John Robert

It has been statistically proven that only about 5% of Forex traders actually maintain consistently profitably results. Although there are other factors involved experts agree that the main culprit for this is a lack of education and knowledge of the Forex market. Nothing can guarantee your success, but choosing the best Forex training program or Forex trading course will definitely put the odds in your favor.

There are many programs available, but not all of them suits the needs of every trader. Below are some important things to consider when searching for the best Forex training program.
One of the first indicators of a good program is the content. Many programs and courses spend most of the time going over the basics, and although they are important, just learning the basics isn't going to allow the student to create consistent results in the long run.

The best Forex training program will cover much more in depth subjects like technical and fundamental analysis and the three pillars of Forex trading. Lets take a brief glance at these.
Technical and fundamental analysis are the two main approaches adopted by all successful Forex traders. Technical analysis attempts to forecast future price movements by examining past market data while fundamental analysis studies the core underlying elements that influence the economy of a particular entity.

Now lets look at the three pillars. If a course does not mention these then it is definitely not the best Forex training program.

1) Money Management.
Many professional Forex traders consider this to be the most vital aspect of trading. It not only helps to increase profits, but at the same time helps to limit your losses.

2) Emotional Barriers.
Everyone experiences emotional swings and this is one of the most dangerous things when it comes to trading of any kind. You need to teach yourself the discipline to ignore your emotions and stick with your system no matter what.

3) Developing a Forex Trading System.
If you want to have consistent profitable results it is a necessity to have a good system in place. If you ever second guess your system then it is not the right system for you and you need to move on and try something different.

Trading the Forex market is no easy task. It requires a lot of hard work. However, finding the best Forex training program will definitely put the odds in your favor. Just remember to take your time and find the program that will give you all the tools to ensure your success as a Forex trader.

Learn more about how you can earn money with forex trading and get your very own complete 114 page forex manual for free when you sign up to my 5 day email course at http://www.explosiveonlineprofits.com/.

Article Source: http://EzineArticles.com/?expert=John_Robert