Forex Currency Trading

Forex trading ( FX trading ) is buying and selling the foreign currencies of different countries. There is a similarity between stock trading and Forex trading. Foreign currencies can go up and down with time-dependent volatility, and they act like shares of currency institutions. Like stock prices, you can buy long and sell short another high currency. A successful Forex trader must keep up with the basic of the market to make the most of his investment.

Global news and events have important influence in Forex trading. For instance, if there is a new war, traders may react violently to the news. A wise investor need to pay close attention to current events. In fact, the best time to trade is when the news is released, because most of the big market will move around the news.

Some investors get advice from too many resources. Although it is important to be knowledgeable, you need to take a position. If you are seeking help from a broker, you should not interfere with his strategy. Some plans may have a long gestation period.

Don’t be overly cautious. You do not need research all the historical trends. It is important to keep your trade simple. Remember, Forex market is at its highest potential in the volatility. Do not go after the small profits all the time. You may end up undercutting yourself.

If you discover that your trade may not work out, get out. Some investors make a mistake by staying, because they hope for a reversal.



By: Pauline Go

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Have you thought about trading on the Forex Markets? Do you understand what is involved in the process? Forex is another word for the foreign market exchange. When you trade on the stock market, you are trading on the value of different companies. When trading on the Forex markets, you are trading on the value of different currencies from around the world.

Just like in the stock market, you hope to buy currency when it is low and sell the currency when it is high. Currencies change value almost constantly, hence you have a greater number of opportunities to make or lose more money (you hope to make more money, of course). Three areas where Forex trading happens in great amounts include Tokyo, London, and New York. Many locations besides these exist around the world.

Forex trading includes currencies such as the Euro, Dollar, Franc, Pound Sterling, Yen, and Australian Dollar. Forex trading takes place in many different places and is the trading closes and opens depend on the location. The price at one location may be different at another location depending on information that may have not reached the different markets. Once you have gotten a little experience, you may be able to take advantage of the differences in prices.

As mentioned before, the stock market trades on the value or perception of value of a company. If someone knows something before the public, he or she may have a chance to make money based on inside information, which is illegal. You don’t have to worry about this in the Forex market because it is almost impossible for people to have outside information on how a countries currency will be valued.

Forex markets are based on currencies from designated countries. Each currency has a three-letter code to differentiate it such as the EUR for the Euro and USD for the US dollar. You can find these codes on the Forex market. Brokers are available to help anyone who is interested in making trades. Of course, each broker will charge some fees and possibly a commission on transactions.

If you look online for a broker, be sure you find out what fees (including hidden fees) may be charged. Each transaction can make you a profit or lose you money. Make sure you do the research before you begin to trade. Most importantly, don’t invest more money than you can afford to lose in the Forex Markets.



By: Richard J. Thomas

When it comes to trading the Forex having a trading system is the number one key to success. Making currency trades as “mechanical” as possible is the only way to sanely trade a market where the traders fear and greed are always in play.

This is where a trading system shines. Having a system that says when “A” happens you automatically execute trade “B.” This kind of system has a great effect at removing much of our emotional trading.

How The Systems Work

As you probably know, Forex trading is based on the relationship of one currency to another – called pairs. And these pairs are used to create a trade. For instance you believe that the Euro is due to rise against the Dollar – or said another way – you believe the Euro is strong and the US Dollar is weak. Based on this assumption you would expect to see the Euro rise in value over the dollar and if it did you would profit.

So the pair you would be trading is the EUR/USD pair where the first currency listed, in this case the Euro is called the base currency. The second, in this case the US Dollar, is called the counter or quote currency. Each pair is quoted with a single number that expresses the relationship between the pairs. So if a quote of 1.4525 were quoted that would mean that it would take 1.4525 Dollars to exchange for a single Euro.

The Fibs

Fibonacci, often called the fibs, are a method of gaining some measure of predictive pricing in the Forex markets. They are based on the famed number sequence developed by a mathematician named, you guessed it, Fibonacci. The sequence that he developed is a sum where each of the two preceding numbers are added to form the next in the sequence. So a sequence starting from the number 1 would look like 1,1,2,3,5,8…and so on.

The Forex is especially sensitive to the fibs. If you spend any time with your currency charts you will notice how prices turn at or near Fibonacci numbers.

Now of course then numbers are not as neat and clean as 1,1,2,3,5 etc. In the currencies they look more like. .236, .50, .382, .618, etc., Using this type of number sequence you will find that you can use the Fibs as a price point to enter or exit a trading position. They offer a seasoned trader a certain measure of predictive capability.

They can be used in you trading system as the response to other market signals so if you get a market signal that tells you to enter the market long the Euro, then your mechanical response would be to wait until the prices broke through the next Fibonacci resistance line and then enter your position. Waiting for this type of movement would help prove that the price was on the rise.

Of course this is assuming that you expect the price of the Euro to go up, and that is not the only way the market could move, but this is the beauty of the Forex, you can trade the market up or down. It lets you make money in both directions.



By: Nigel Banks

Many Forex currency trading systems suggest the promise of steady profits, often hypothetically with minor to zero losses. In all facets of monetary speculation, from laying bets to the stock market, people are forever attempting to create clever means to “beat the system” and guarantee their success. Forex currency trading is no different.

Is there a forex currency trading method that will eliminate all risk and assure only income for the investor? If you think there is, then I regrettably have bad news for you!

Gamblers who sell their “system” to others are rarely the ones who are actually winning! They’re the people who want to win and who have convinced themselves that their “system” will in time pay off, as long as they stick to it for long enough.

The same can usually be said about forex currency trading systems. The Internet is loaded with people selling some system or other. The ones to be cautious of are always very mysterious (the sites never explain the actual system, nor give any real information about it) instead the entire site is dedicated to “genuine, voluntary” testimonials about how effortless that specific system is, how quickly they learned it, and how affluent they have become by using it.

No “system” can guarantee success. It’s illogical to do so! The forex market changes daily, and even though traders can use previous historical data and external factors to make “educated guesses” as to how the market will perform, they are still basically only guesses, hopefully with the odds in their favour if their theory is right. You can still lose your wealth, regardless of which Foreign Exchange system you are using.

Are all systems rubbish? Not completely. A few include good information and common sense hints. Have a keen eye; if they promise you the “holy grail” with no real proof, odds are pretty good that it’s a scam!

You can by and large tell that a Foreign Exchange method is suspect simply by the way it is advertised. Web sites full of big fonts and exclamation marks are ones to be cautious of, including sites full of grammar and spelling errors, written in a plainly unprofessional manner. Before you spend money on any Forex currency trading system, you should consider the following questions:

1. If this system is so infallible, why haven’t the authors acquired a fortune with it? If they claim that they are making a fortune, then why are they even wasting their time selling it?
2. Why are they selling a system regarding Foreign Exchange Trading instead of trading it themselves?
3. Why can’t they find the money to pay for a proof-reader to check their site for errors?

Finally when researching forex currency trading systems, bear in mind: If it sounds too good to be true, it very likely is!



By: Ruggero Sandri-Boriani

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Back in 1997 major financial slump rocked number of countries in Asia, an event that became known as “Asian currency crisis”. Effected countries included Taiwan, Thailand South Korea and others. One of the memorable comments of the time came from one of leading Thai politicians. He blamed this whole mess on speculators, with George Soros being the main culprit. The remarks went so far as to public statement of “not being able to guarantee his safety if he visited Thailand”. Quite ominous.

The fallout in South Korea was brutal. The US Dollar has about doubled in value against the Won, with USD-KRW moving from just above 800 in early 1997, to 1600 by the year’s end. Local stock market suffered similar fate, as did all areas of economy. Perhaps most telling was an enormous spike in unemployment, as the jobless rate soared to almost double digits, with about 9 million people out of work.

This author observed the aftermath first hand, during one of his business trips to South Korea at that time. Collapse of once high flying conglomerate Daewoo under burden of debt. The sight of many construction projects suspended or stopped all over Seoul and Pusan. Daily failure of scores of small business. It was good time to visit South Korea, due to low prices, but very difficult period for residents.

The country has rebounded nicely since then and became one of Asia’s most dynamic economies. KRW strengthen considerably reaching level 900 against USD in 2007. The stock market has recorded double digit gains in four of the last five years, gaining 32% in last year alone. Korean companies like Samsung Electronics Co, and Hyundai Motors Co, have established themselves as some of the world’s leading corporations.

Things have changed in 2008. Challenges like high oil prices, inflation, external debt and account deficit have shaken investors confidence. While many countries have seen outflow of funds into the dollar, this process became especially painful in South Korea. The Won has become the Asia’s worst performing currency, loosing 20% to date. Stock market was no better, falling 25%, with farther sell off of equities expected.

These developments created widely spread comparisons to situation from 1997 and were quick to be picked by the press. International Monetary Fund disagrees with this assessment and expressed confidence by saying that South Korea is a mature and resilient economy with country’s fundamentals much stronger than a decade ago. Korean financial authorities, however, felt obligated to act by intervention on Wons behalf in the open market. This seemed to stop the bleeding for now.

What can be expected next? In all reality, 1997 type sell off is extremely unlikely. As South Korean economy is cooling down together with the rest of the world, Seoul might not be able to stop bleeding of the stock market but there is one thing they can do- keep intervening on behalf of its currency. Unlike before, there are huge foreign reserves, about 250 billion dollars worth of, and they can be used to support Won.

Very likely scenario, as of this writing, is continued fall of Korean equities, in tune with broader stock declines. The Won should also keep dropping, but in much more measured and steady pace. Central Bank has not mentioned what the comfortable level for USD-KRW is, but as we noticed over last few years, major trends are very powerful and can go through any “line in the sand’ drawn by anybody.

Current rate is around 1150. Even with expected interventions, Won can easily weaken to 1300 and maybe 1400, but far short of the previous low of 1600. Also, one shouldn’t look for a fast move, but rather steady depreciation, lasting a year or two. This is not a situation for active traders, but for those who prefer longer term positions current development might present good opportunity for farther selling of KRW.



By: Mike Kulej