There is an old saying that a picture paints a thousand words.

My turn on this phrase is that a good video is often better than a book!!

Hopefully you are probably aware that it’s been scientifically proven in various prestigious studies (which I won’t go into detail here..) that a visual presentation can often be up to 3 times more effective than the written version.

And video is a very powerful presentation method, especially for forex trading…

But what about the myraid of forex trading videos out there - to be honest most are junk. So I’ve spent some time checking over a few of them so as to keep you informed with good content and not waste your valuable time!

Anyway, what I thought I would do was to direct you to a really good video that I’ve sourced for you…

This is an introduction to a charting style known as Candlestick, actually it’s more properly known as the Japanese Candelstick style.

I’ve always liked this chart type it because it’s so informative of the way the market has behaved and I’ve found that it is an incredibly good indicator of major turning points.

If you’re reading this post tell me what you think- leave a comment…

Here’s to your profitable success ……

Some facts on Fibonnacci Ratios that you need to be aware of in order to trade profitably.

Why? Simply because these numbers or rather the relationship between these numbers and their ratios often indicate important points in analysing charts for profit.

In fact I would say that there isn’t a trader out there that hasn’t heard or used them and more importantly many of the ‘auto-trading’ platforms use them exclusively as signals.

So what is a Fibonacci ratio?

These ratios appear in nature and in the financial markets they often indicate levels at which strong resistance and support will be found. They are easily seen in nature seashell spirals and flower petals, in art, geometry, architecture and even in music.

The ratios are made up from a sequence of numbers as follows: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc. Each term in this sequence is simply the sum of the two preceding terms and sequence continues infinitely.

One of the major characteristics of this sequence is that each number is approximately 1.618 times greater than the preceding number.

This common relationship between every number in the series is the foundation of the common ratios used in retracement studies.

The key Fibonacci ratios are 23.6%, 38.2%, 50%, 61.8% and 100%. Fibonacci retracement is created by taking two extreme points which is usually a major peak and trough on a chart and dividing the vertical distance by the key Fibonacci ratios listed above.

How are these numbers related and how are the ratios calculated?

The 23.6% ratio is found by dividing one number in the series by the number which is three places to the right. For example: 13/55 = 0.2364.

The 38.2% ratio is found by dividing one number in the series by the number that is found two places to the right. For example: 13/34 = 0.3824.

The key Fibonacci ratio of 61.8% - also referred to as “the golden ratio” or “the golden mean” - is found by dividing one number in the series by the number that follows it. For example: 13/21 = 0.6190.

We don’t know why these ratios seem to play an important role in the stock market, just as they do in nature, and can be used to determine critical points that cause an asset’s price to reverse. The direction of the prior trend is likely to continue once the price of the asset has retraced to one of the ratios listed above.

How are Fibonacci Ratios of any use?

Because the markets tend to reverse right at levels that coincide with the Fibonacci ratios.

For example, if the GBP/USD rallies 100 pips and then corrects, it will often correct 61.8%. Right at, or close to the 61.8% retracement the pair is likely to reverse and start advancing again.

Of course it is not always this simple. Fibonacci support and resistance levels can and do fail. But the fact is that it does happen and is often called a trader’s “edge.”

A trader has an edge when he knows the probabilities of a particular action are greater than normal and Fibonacci ratios help provide this edge!

Foreign exchange trading (also called Forex trading, for short) is a very popular means by which people can trade on currency pairs. Different than stock trading, foreign exchange trading deals with currency pairs; you place trades based upon the assumption that one currency in your pair is going to do better than the other currency in your pair.

The foreign exchange market is the largest in the world and operates 24 hours a day, six days a week. Because it operates globally, you can place trades that literally anytime of the day or night, whenever you choose. The Internet has made Forex trading a very popular and sometimes lucrative pastime for many people. And in fact, some people have even made it their full-time occupations.

If you want to be successful in foreign exchange trading, you have to do a number of things to get started. First of all, you have to learn the Forex market, inside and out. How do you do this? The best way may be to simply get hands-on practice. In fact, this can be free to do so. Simply research a number of Forex brokers and choose the best one for you. The Forex broker you choose likely has something called “demo trading.” Demo trades are trades that beginning Forex traders can use to practice Forex trading before they risk their own money.

As you participate in demo trades, you’ll also need to be learning other ins and outs of the market. Among the skills you have to learn will be technical and fundamental analysis. Technical analysis is the means by which you analyze and then predict how a particular currency is going to do based upon past behavior. For example, if a particular currency has been doing well and has been for some time, it’s likely that it’s going to continue to do so for at least the short-term. You’ll need to keep abreast of any changes and be able to make snap decisions based upon those changes in the event you should have to get out of that particular trade.

Fundamental analysis predicts how well a particular currency is going to do based upon its country’s social, economic and political stability. Again, as examples, if a country is very stable in these three areas, and its currency is likely also going to be strong. If the country, on the other hand is very unstable in any of these three areas, its currency is not going to be as stable or as strong. Therefore, strong currencies are likely to have strong countries, in essence.

Now, with foreign exchange trading, there is a lot of data to keep track of, and you have new data coming in all the time. There is Forex software available that can help you keep track of your data and be able to analyze it “in a glance” once you know what you’re doing, even as it changes rapidly. There are programs available both through Forex brokers (sometimes for free to their clients) and there are also independent programs you can buy. Read reviews and choose carefully if you do decide to use a software program. Nonetheless, be aware that you will still need to know how to read and analyze the data independently in order to use the foreign exchange software. You should not rely exclusively on the software to tell you what trades should be made.

Your best advice however is to use Forex trading software that is NOT provided by the Forex broker. Why? Because just about everyone who uses that broker will be using the same software, and therefore likely to be making the same trade decisions, which will dilute your profits. You are much further ahead to use a very capable Forex software package that will likely not make the same trading recommendations as the software from your broker, which can then maximize your trade profits.

Foreign exchange trading gives you the means to make some pretty decent money once you know what you’re doing, and in fact, some people make very good livings just by engaging in Forex trading and nothing else. That said, you’re going to have the psychological and technical skills to be successful. Don’t engage in real money trades until you know what you’re doing. And never risk money you can’t afford to lose; even successful Forex traders lose money sometimes, and you will, too. With that said, though, foreign exchange trading can be a very lucrative pastime or even full-time profession, if you find it exciting and challenging.

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For more insights and additional information about Foreign Exchange Trading as well as reading review of three of the most popular and successful Forex trading software programs, please visit our web site at http://www.forexcurrencysystems.com

Have you heard about currency trading? Do you know how currencies are traded? What are advantages and disadvantages of currency trading?
Let’s first learn some basics about forex currency trading.
Good thing about currency trading is that you can’t lose more money than you placed.

forex currency trading

Of course, with the proper self-taught education you will win more often than lose, but you should know that despite the high leverage of forex currency trading (200:1 is possible, which means that when you put up $1 the trading vendor will allow you to trade it as if you have $200), it is still less risky than futures (commodities) trading. Because of the forex currency trading market’s liquidity and twenty four hours continuous trading, dangerous trading gaps and limit moves are eliminated. You’ll never lose more than you have in your currency trading account.

currency trading

Currencies are traded in dollar amounts called *lots* — One lot is equal to $1,000, which controls $100,000 in currency. You can control $100,000 worth of currency for only 1,000 dollars.
Currencies are always traded in pairs. The most popular currencies and their symbols are:

USD - The US Dollar

EUR - The currency of the European Union “EURO”

GBP - The British Pound

JPN - The Japanese Yen

CHF - The Swiss Franc

AUD - The Australian Dollar

CAD - The Canadian Dollar

A currency can’t be traded by itself, so you can’t trade a EUR by itself. You always need to compare one currency with another currency to make a trade possible.
The most commonly traded currency pairs are:

EUR/USD Euro / US Dollar
“Euro”
USD/JPY US Dollar / Japanese Yen
“Dollar Yen”
GBP/USD British Pound / US Dollar
“Cable”
USD/CAD US Dollar / Canadian Dollar
“Dollar Canada”
AUD/USD Australian Dollar/US Dollar
“Aussie Dollar”
USD/CHF US Dollar / Swiss Franc
“Swissy”
EUR/JPY Euro / Japanese Yen
“Euro Yen”

The currency on the left is called the base currency. The currency on the right is the counter currency. For example, when you place an order to buy EUR/USD pair, you are actually buying the EUR and you are selling the USD. When you place an order to sell EUR/USD you are selling the EUR and you are buying the USD. Buying or selling a currency PAIR means buying or selling the base currency, and doing the opposite with the counter currency.
It means when you place trades you simply sell or buy the pair. The base/counter concept is only important for fundamental analysis.

forex currency trading

To decide when to sell or buy you will need to learn technical analysis and/or fundamental analysis. You can also use some good software to help you with that.
In currency trading you can make money both, when the currencies go up or down.
The FOREX currency trading is a good way to work from home in your free time. You can trade any time you want, from Monday to Friday. You can lose money in forex currency trading, so you must be careful. Getting the proper education and trading on demo before doing any real trades is a must. You should practice on demo until you get to the point that you win 70% of your trades. No one wins 100%. There are lots of books and courses to learn forex currency trading currency trading and some good software, too. It is rarely necessary to buy the expensive, over $1000 courses. There are the good ones that are much cheaper.

First you need to understand what forex trading is. Forex is short for foreign exchange. Forex trading is the simultaneous exchange of one countries currency for another countries currency. By doing so at the right times, you can gain a profit. A forex trading education can teach you how to do this.

The first part of a forex trading education is to learn the market background. The foreign exchange market is always changing. With forex trading education, you will learn how to monitor these changes to be beneficial for you.

The next part of your forex trading education is to learn about risk control and risk management. You learn to control yourself and not over invest at the thrill of the chance of making money. You will also learn how to cut your losses (how to exit losing trades before your losses exceed your limits). You will always lose money when you first begin forex trading. This part of your forex trading education is absolutely crucial to whether you will make it big or end up in a hole.

Another important part of your forex trading education is to learn how to open and manage your forex trading account. Your forex trading education should first have you practice with a demo account. This way you learn the ropes by practicing forex trades with play money. There is no risk involved, but it is just as realistic as the real thing. Your forex trading education should also let you know when you are ready for the real thing. You should then, and only then, open up a live forex trading account.

There are many ways to get a forex trading education. The best place to get a forex trading education is online. There are many free websites available that let you open free demo accounts to practice your forex trading. There are also free seminars that are avaiable at random times. The best thing to do is to get some advice from someone who is a current forex trader. They can give you some down to earth insight on the subject of forex trading.

Now that you know a little bit about forex trading it is time for you to go out and get a good forex trading education. Don’t rush into it and take your time. There is a lot of money involved with forex trading. It is best not to get ahead of yourself.

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Jay Moncliff is the founder of http://www.forexreviews.info a blog focusing on the forex, resources and articles. This site provides detailed information on forex. For more info visit his site at:forex

Hi Guys

It’s hard to believe how quickly the weeks go in.

Welcome back!

As promised in the last Newsletter I am going to define some of the most common terms and discuss their importance for you.

I will split them up into basic forex terms and then I will discuss two types of trading which are commonly employed by most traders.

‘Pips’

These are the units that comprise a forex currency quote. For example the USD/CHF (dollar/swiss) is trading at 1.0250. This means that you would get 1.0250 Swiss Francs for every $1. Now say that the price is now 1.0265. This means that there is a difference of 15. This number is the pips i.e. ‘15 pips’.

What you may not know is that the pips per currency differ in how they are applied. For example JPY (Japanese Yen) are quoted against the USD as follows 103.75 or 103.60 - the pips in this case are to 2 decimal places whereas the CHF and most other major currencies are quoted to the 3rd and 4th decimal place.

A good place to see these ‘pips’ in action is your local bureau de change or your banks quoted currency rates for travellers’ checks etc.

‘Pairs’

Forex is quoted in pairs i.e. GBP/USD, that is pounds (often referred to as Cable or Stirling) against USD, that is £1 to $1 i.e. how many dollars to the pound. This is a bit of an anomaly which is historical but just bear with it for the present. You are probably more familiar with USD/JPY, USD/CHF, USD/CAD - now do you get the picture?

You can’t buy a currency unless you sell the one its ‘paired’ with!

‘Position’

A position is a purchase/sale of a currency pair at any one time that is currently open and is the net amount exposed to the market. This position would be ‘long’ dollars (bought) against ’short’ currency (sold), or vice versa.

‘Quotes’

A currency will always be quoted as a buy/sell price i.e. 1.0250/65. The price that is offered by the bank/broker can be a little confusing at first but remember it this way. The left price is the bank buys USD off the customer and the right side is to sell USD to the customer. So lets say that you deal i.e. buy and sell at these two prices - what is the net effect on your bank balance?

OK, lets assume you have $100,000 and there are no broker charges.

You sell $100,000 at 1.0250 (remember, that’s the price the bank buys the USD at) you get CHF 102,500

i.e. -$100,000 +CHF 102,500

You then sell CHF 102,500 i.e. buy back USD from the bank and they are buying at the rate 1.0265, this means that you have to ‘pay’ CHF 102,650 to get the $100,000 back or receive 102,500/102,650 x $100,000 = $99,854.

i.e.

-$100,000 +CHF 102,500
+$100,000 -CHF 102,650
_________ ______________
0 -CHF 150

This difference in this case a loss is CHF150 or $146 and represents the spread of the bank/broker - the cost to you or me. Spreads are usually no more than 5 pips but it is always best to get the buy/sell quote so as you can see the spread - remember the narrower the spread the cheaper the deal.

You should practice with rates and familiarize yourself with this concept - it is a vital first step in understanding forex. It is also not unusual for your broker to give you a buy price or a sell price - I have found that it’s best get both sides!

‘The majors’

This is shorthand for the major currencies traded. There are 7 of them, these are the USD ($), GBP (£), JPY, AUD (Australian dollar), CAD (Canadian dollar), CHF (Swiss franc) and the EUR (Euro). These 7 currencies make up the bulk of the $3 trillion dollars traded daily.

Now onto Trading Styles

Day Trading

Day trading is pretty self explanatory. This involves the trading of currencies daily and can involve the taking of one position or many positions depending on market conditions.

Rarely are trades held for longer than a day as there is an added cost to rolling over a position to the following day - I will go into this in more detail in a future Newsletter. This is usually the ’safer’ of the two types that I will be discussing today.

Scalping

This is an opportunistic form of trading and positions may be taken for a few minutes and then squared (liquidated). This type of trading usually requires a specialist broker as many brokers frown upon scalpers and terminate their accounts.

I hope you have found some of these forex definitions useful

Next week we will look in more detail at charts and chart patterns!

See You then!!

Hi Guys

A Brief Introduction.

The primary reason for setting up the blog is to help individuals to be successful in trading currencies - that is making consistent profits!

First Things First!

You may already have asked the question - Why should you listen to me? What have I got that sets me apart from the vast majority of traders out there?

Well, the answer is simple. EXPERIENCE!

A Brief Biography is in order!

After University, where I gained a first degree in Business I worked for the merchant banking arm of one of the big 3 Australian Banks. I spent two years trading spots, forwards and crosses on an interbank basis.

I then spent the next six years working for one of the premier British merchant banks working my way up from junior dealer to assistant treasurer. My main speciality was trading crosses and managed positions (Investment currency positions).

After returning to the U.K. I spent 7 years working in corporate finance consulting and continued trading on personal account, mainly gold futures, CFDs and margin trading currencies.

So basically I have both “interbank” and “private account” trading experience. I have been successfully trading for 15 years.

So now you know a bit about me, let me provide you with the first nuggett of information which you may or not have been aware of but makes a crucial difference in the first step to making money.

Interbank trading is NOT the same as private account trading!!

The main reason: KNOWLEDGE!

This knowledge comes in two forms, Market Intelligence and Experience!

Interbank traders see moves “before” they happen. They see the back of large corporate buy/sell orders before John Doe does. They have better market intelligence than private account traders.

Secondly, they have access to information from other traders and can gain experience that helps make the right risk/trading decisions in an instant - their profit - your loss! (Never forget it’s a Zero sum game!)

So, what you must do is recognise that you have some “weaknesses” to initially overcome. These are knowledge about how to best exploit your position in the market i.e. recognising that your market intelligence is more limited and secondly you have to be smarter with the knowledge you will gain and use it!

Keep tuned for my next article which will cover essential terms that you must know and the “types” of trading available to you.