The Forex Market has 46 currency pairs on a conservative estimate. Telling you that you would need to keep an eye on developments on all the countries of the globe would be asking too much of you. For starters, you could keep an eye on developments of the countries whose currencies who have invested in the Forex Market. Look for economic and political developments that could create a stir in the forex market.
Why monitoring the political and economic scenarios of countries are important to global Forex trading?
As it has been observed statistically, the value of currency of a country changes a lot due to the economic and political climate of the country. For example, the Federal Rate cuts on Interest rates aimed at controlling the sub-prime crisis in USA increased the value of the US Dollar. Don’t get carried away of you get a cue from one such indicator. Please make a list of all such factors that would impact a currency in the Forex Trading Market.
A long pending factor to a currency movement is the price of crude oil per barrel. As the price of crude oil inches towards $100 per barrel, the US Dollar is inching towards new lows by the day. In such a scenario, you would think that the US Dollar could be undermined severely.
The sentiments of traders across the globe should also be considered
It is important that you stay updated with other traders of the forex market too. At the end of the day, traders and the developments in a country impact the pricing of a currency at 50:50 ratio. A classic example of this is the rebound of US Dollar. It has been observed that the Dollar has hit new lows almost every other day of the trading. Last week, a lot of people realized that the Dollar has much more potential than what it shows. This triggered widespread buying of the Dollar.
How would all this impact you as a trader?
Let’s take the example of EUR/USD. Let us assume that you had bought some USD two months ago when it was getting battered. Now with the correction taking place, you are more or less in a position to decide if you wish to stay in the market or exit booking your profits. The correction trend is expected to continue to till the new year after which the forecast for the Dollar looks a bit bleak.
Ideally, a smart trader would book his profits partly on the resounding correction of the US Dollar. He would keep a part of the money invested in the market to see how the Dollar behaves. The point being made here is that your eye on the economic developments of the country could be the best indicator for you to analyze your buy and sell points in the trade.
Which factors to be considered in forex trading?
Growth, Inflation, Crude Oil Prices - are three important factors in no order of priority would need to be taken into count when you make a sell or a buy call in a currency. Please note that there is no direct correlation between these three but all these impact the movement of a currency.
Successful Forex trading is about how you look at the developments of a country. Taking macro and micro economic factors into consideration will make you a smart trader instead of a speculative trader. As it goes, the speculative trader may make a lot of money but will also lose a lot of money.
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History of the Forex Market
The Foreign Exchange market, also referred to as the "Forex" or "FX" market is the largest financial market in the world, with a daily average turnover of well over US$1 trillion -- 30 times larger than the combined volume of all U.S. equity markets.
"Foreign Exchange" is the simultaneous buying of one currency and selling of another. Currencies are traded in pairs, for example Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY).
There are two reasons to buy and sell currencies. About 5% of daily turnover is from companies and governments that buy or sell products and services in a foreign country or must convert profits made in foreign currencies into their domestic currency. The other 95% is trading for profit, or speculation.
For speculators, the best trading opportunities are with the most commonly traded (and therefore most liquid) currencies, called "the Majors." Today, more than 85% of all daily transactions involve trading of the Majors, which include the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar.
A true 24-hour market, Forex trading begins each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, London, and New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night.
The FX market is considered an Over The Counter (OTC) or 'interbank' market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network. Trading is not centralized on an exchange, as with the stock and futures markets.
"Foreign Exchange" is the simultaneous buying of one currency and selling of another. Currencies are traded in pairs, for example Euro/US Dollar (EUR/USD) or US Dollar/Japanese Yen (USD/JPY).
There are two reasons to buy and sell currencies. About 5% of daily turnover is from companies and governments that buy or sell products and services in a foreign country or must convert profits made in foreign currencies into their domestic currency. The other 95% is trading for profit, or speculation.
For speculators, the best trading opportunities are with the most commonly traded (and therefore most liquid) currencies, called "the Majors." Today, more than 85% of all daily transactions involve trading of the Majors, which include the US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar.
A true 24-hour market, Forex trading begins each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, London, and New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night.
The FX market is considered an Over The Counter (OTC) or 'interbank' market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network. Trading is not centralized on an exchange, as with the stock and futures markets.
How To Avoid Some Common Forex Scams
There is an old saying that states, "A Fool and his Money are Easily Parted". With the proper strategy and resources from which to educate yourself, there is no reason to be foolish. With all of the opportunities to make money from home there are plenty of people who can't wait to get right in and get started. The problem is, there are also plenty of scam artists out there who are all too willing to rip you off if you give them half a chance. In the Forex industry, experienced traders don't fall for the scams, but people who are new to the industry are ripe targets. Therefore, you need to know what to look out for.
The government agency that regulates Forex trading, as well as other futures and commodities markets, cautions newcomers to watch out for the scammers that try to paint unrealistic pictures of huge profit potential in Forex and other trading markets. Recently they have also put out numerous fraud alerts for consumers specifically about scams involving the foreign currency exchange market. Here are a few of the tips from the CFTC to give you some insight on how to avoid scams.
First off, you always need to be wary of people who promise huge returns at low or no risk. If you see ads that say things like, "Make $2500 in minutes" that is a pretty good sign that they are not a reputable company. A reputable company will always temper the allure of large profits with warnings that you can also lose just as big or bigger. The Forex market is not a cash cow; there are risks just as there is with any investment opportunity. People who are unaware of the risks involved usually quit trading when they begin losing money.
You were equipped at birth with the ability to question and reason. Use it and be suspicious of everything until you verify that a company is reputable. Use the CFTC and investigate the company or broker you are thinking of doing business with by checking their fraud alert pages. Another good thing to do is see if the company is registered with the CFTC or if they belong to the National Futures Association. By using these resources you can easily find out if there have ever been disciplinary actions taken against the company you are investigating. You can also verify addresses and phone numbers. With the ease of access on the Internet, it has become increasingly easy to run fraud scams with false credentials and fake names.
Just think about how easy it is to have an online presence now. A Domain name is less than ten bucks and you can get web hosting for less than $10 a month. That is a pretty cheap investment for the opportunity to reach millions of people and part them and their money. Be sure to take the time to investigate and verify the people you are considering with the agencies I mentioned above before you give them any private information or credit card numbers. Forex trading can be a wonderful experience and business. Just make sure you work with a reputable company and do your homework.
The government agency that regulates Forex trading, as well as other futures and commodities markets, cautions newcomers to watch out for the scammers that try to paint unrealistic pictures of huge profit potential in Forex and other trading markets. Recently they have also put out numerous fraud alerts for consumers specifically about scams involving the foreign currency exchange market. Here are a few of the tips from the CFTC to give you some insight on how to avoid scams.
First off, you always need to be wary of people who promise huge returns at low or no risk. If you see ads that say things like, "Make $2500 in minutes" that is a pretty good sign that they are not a reputable company. A reputable company will always temper the allure of large profits with warnings that you can also lose just as big or bigger. The Forex market is not a cash cow; there are risks just as there is with any investment opportunity. People who are unaware of the risks involved usually quit trading when they begin losing money.
You were equipped at birth with the ability to question and reason. Use it and be suspicious of everything until you verify that a company is reputable. Use the CFTC and investigate the company or broker you are thinking of doing business with by checking their fraud alert pages. Another good thing to do is see if the company is registered with the CFTC or if they belong to the National Futures Association. By using these resources you can easily find out if there have ever been disciplinary actions taken against the company you are investigating. You can also verify addresses and phone numbers. With the ease of access on the Internet, it has become increasingly easy to run fraud scams with false credentials and fake names.
Just think about how easy it is to have an online presence now. A Domain name is less than ten bucks and you can get web hosting for less than $10 a month. That is a pretty cheap investment for the opportunity to reach millions of people and part them and their money. Be sure to take the time to investigate and verify the people you are considering with the agencies I mentioned above before you give them any private information or credit card numbers. Forex trading can be a wonderful experience and business. Just make sure you work with a reputable company and do your homework.
Key elements of Peter Bain's Forex Course
This trading system has five key elements or indicators as listed below.
Some fellow traders I spoke to told me that they already knew all these indicators. My point to them is not how much or how detail one knows about each particular indicator.
The power of this strategy comes from the use of these indicators as a combination rather than as a stand-alone indicators. It works just like a combination lock.
It revolves mainly around Pivot Points and Price Action. In any trading , no indicators can beat Price Action.
Pivot points
Trend lines
Chart Pattern - Candlesticks
MACD - divergences
COT - Commitment of Traders
Watch this video ... to see how this combination lock is been opened.
Below is a Forex Chart which shows how the various indicators and price action are working together as a trading system ...
Some fellow traders I spoke to told me that they already knew all these indicators. My point to them is not how much or how detail one knows about each particular indicator.
The power of this strategy comes from the use of these indicators as a combination rather than as a stand-alone indicators. It works just like a combination lock.
It revolves mainly around Pivot Points and Price Action. In any trading , no indicators can beat Price Action.
Pivot points
Trend lines
Chart Pattern - Candlesticks
MACD - divergences
COT - Commitment of Traders
Watch this video ... to see how this combination lock is been opened.
Below is a Forex Chart which shows how the various indicators and price action are working together as a trading system ...
