4x currency trading - Forex Information

Exchange Rates 1/12/2010

Beginners Guide to Forex

So what is the Forex Market? well, fx or commonly called Forex is global market set up by international banks that is used for the buying and selling of diverse currencies. The Forex market has been used by many as a means to make money online since the market, for the most part, is open for trade all day long.

The key to profiting from the Forex / fx market is research and being able to read the trends. Many have found it as an avenue for wealth, while others have not done as well. As with anything that is a risky investment, knowledge of the market is key.

The Forex market exists with the majority of its trading done on line or over the phone. Traders have Forex brokers which secure their trades in major trading centers such as London, New York, and Tokyo. Other major areas of Forex trading are Singapore, Frankfurt, Geneva & Zurich, Paris and Hong Kong.

The Forex market is created of a variety of traders, individuals, corporations, institutions and governments. The market has an estimated daily transaction value of over 3 trillion US dollars.

The 3 trillion daily trade is mostly made up from financial institutions, governments, banks, and countries trading through their central banks. Individual traders get into the trading through their Forex brokers which combine or pool all the individual daily traders together to make up the amounth needed to trade on the currency exchange.

Since the Forex market is worldwide it reaches every section and it is difficult if not impossible to actually get a real figure on how many players are in the market at any given time, especially, since brokers must pool individuals together to get the trades at the prices needed.

The Forex market and the history of the market goes back 40 years or so to the early 1970’s. In 1971 there was an agreement called the Bretton Woods Agreement. The agreement set forth the market by stating that the US Dollar could not be convertible into gold any longer. That agreement paved the way for currencies of foremost industrialized nation becoming controlled primarily by the forces of supply and demand.

After the 1970’s, the Forex market grew, prices were floated day after day as trade volume increased.

To understand growth of the Forex market one just needs to reflect on its numbers. In 1980 the Forex market was at a level of billions per day. Today that same exchange is in the trillion range.

Obviously, many have found that there is money to make in exchanging it.

Today, technology and computers make the Forex market available to all who are skilled enough to tackle it. A simple brokerage account and a few bucks can make anyone a world currency trader.

As technology gets better and better we are even more in tune with what is going on around the globe. The technology has also given us real time exchange rates.

The Forex market is and has been volatile, so traders really need to be cautious. But the money making opportunity may be too much to resist. Really, some have seen insane profits within days while others have seen great losses in the same time.

As with anything, the key to success is education and analysis. While a hunch may gain a few 1000’s of dollars in minutes, for most, a hunch does not work out the way they planned.

As with any money market, knowledge is power and the key to a financial win….

The Forex trade or Foreign currency trade is the trading of one counties monies for another. The market fluctuates and those that can read the trends stand to make some money in those exchanges.

Recent trends in currency trading - Below are the graphs of the markets movement for a few of the worlds traded currencies as compared to the US dollar.

Last 6 month trends:

Japan’s Yen last 6 months

Euro last 6 months:

Israeli Shekel 6 month change

Mexican Peso 6 month forex trend

SWISS-  Swiss Franc 6 month trend

Kuwait Dinar 6 month trend

Argentina 6 month currency exchange trend

Now we’re trading one county’s money for another region’s money because You can see by the graphs above that one countries currency may not be equal to anothers. The Forex or fx trade is a market that allows people to buy and sell currencies from different countries in an almost 24 hour a day marketplace.

Fx is traded on a World clock, the trading day starts in Sydney, Australia and steps from time zone to time zone around the world until it reaches New York City, the last marketplace to open each day. And it does these five days a week. The Forex market does close on weekends.

Every county has its own currency that it trades and for the most part the ups and downs are measured against the US dollar even though there may be some other standards.

Typically, when getting exchange rates, especially in the US, those rates are measured against the US dollar. But in other countries and on some websites it may be other currencies they are measured against. Below are a few sample figures for Jan 7 2010.

As of Jan 7 2010, the currency market for that day looked like this for major currencies.
EUR/USD +0.217 %
CAD/USD +0.162 %
JPY/USD +0.112 %
AUD/USD +0.211 %
GBP/USD -0.474 %
GBP/EUR -0.689 %
JPY/EUR -0.105 %
GBP/AUD -0.683 %
JPY/AUD -0.098 %

Rates 1/10/2010

Large market rates for 1/ 10 2010 from Interbank

_______________________

USD/EUR Rates

USD/EUR January 10, 2010 Interbank rate

Selling 1.0000 USD
for 0.6936 EUR
-
Buying 0.6936 EUR
for 1.0000 USD

___________________________________

USD/GBP Rates

USD/GBP January 10, 2010 Interbank rate

Selling 1.0000 USD
for 0.6238 GBP
-
Buying 0.6238 GBP
for 1.0000 USD

____________________________________

USD/AUD rates

USD/AUD January 10, 2010 Interbank rate

Selling 1.0000 USD
you get 1.0805 AUD
-
Buying 1.0805 AUD
you pay 1.0000 USD

_____________________

USD/CAD rates

USD/CAD January 10, 2010 Interbank rate

Selling 1.0000 USD
you get 1.0293 CAD
-
Buying 1.0293 CAD
you pay 1.0000 USD

___________________________________________

USD/JPY Rates

USD/JPY January 10, 2010 Interbank rate

Selling 1.0000 USD
you get 92.60 JPY
-
Buying 92.60 JPY
you pay 1.0000 USD

Choosing a Forex Broker

Choosing a Forex Broker is one of the most important steps in making money with Forex.

There are may things to consider but below are the most important factors to picking the right 4x broker.

The Initial Deposit

How much can you afford to start with is huge. Depending on the broker, initial deposits can be anywhere from a few hundred to a few thousand. If you are just starting out, you want to deposit the least you can with a reputable broker.  If a broker requires a large sum of money just to start, you should question it and maybe keep looking for one that does not.  Normally, a few hundred dollars should be a sufficient deposit to get going.

Relations and Customer Service

This is huge! You need to be able to get a hold of your Forex broker quickly and easily. Remember that the Forex market is a 24 hour market and as so, customer service should be available to help you with your problems. Test their call centers. Make sure the people they have on the phone are knowledgeable and helpful. Keep calling and asking questions until you are satisfied that you are comfortable with the company handling YOUR money.

Make Sure They are Regulated

Yes, we know there is no central agency in Forex, however, that does not meen they are not regulated. In the U.S. Forex brokers are registerd under the Commodity Futures Trading Commission as a Futeres Commission Merchant. They are also members of the National Futures Assoc. Most reputable brokers will be listed in the National Futures Association (NFA). To check if your broker is listed, simply, go to the site NFA web site and make sure your broker is listed and has a good track record with them.

Forex Trading Platform

The trading platform is the computer programs that the broker has created and uses to facilitate the trades and do the reporting for customers. The Forex broker you choose must have a platform that is easy to use and understand. If you have never used the Forex platform supplied by your fx broker, then create a Forex demo account to test it out before commiting in cash.

Currency traded

If you have specific requirements for the currency you want to trade, make sure the broker offers it. What you want to do is find a broker that has a large variety of currency traded so your options are always open and you have the best opportunity to make money.

What others say

Take a look at what other traders are saying about the broker you are thinking of using. Do your homework and check their reputation. You are the customer and customer satisfaction should be a should be a key point of interest in your research of Forex brokers.

Develop Forex Strategy With Forex Demo Accounts

Choosing a Strategy when trading in the Forex market is a must if you plan on making money rather than losing. Any solid investor will tell you the same, you must have a plan to work off.

Having the fundamental knowledge of the market as a base will get you pointed in the right direction but the road you travel in that direction may not always be straight.

On a basic level, developing a strategy means looking for market indicators and having a plan in place on what to do once you have spotted them. There are many Forex strategies available that other investors have created. Some you need to buy and others are available freely. The trick is finding one that works for you.

The best way to find the Forex strategy that works into your plan is to experiment with “play money”. Build your knowledge and experience in spotting indicators using a demo. Get your trading skills down before actually diving in with “real money”. There are many companies that allow you to trade with Demo Accounts. Demo accounts allow you to learn and track your profits and losses without ever risking any real money.

To start out in Forex or 4x trading you must first find a broker. Most Forex brokers allow their clients to set up Demo accounts. Demo accounts are usually set up for free though some brokers may have time restrictions on how long you may use it. Brokers want your business and if allowing you to play before you pay, so to speak, will get them your trades in the end, they are happy to do it.

Once you have found a reputable broker and created your demo account, you can test as many systems as you want. A demo account that has no monetary risk will keep you comfortable and allow you to explore the strengths and weaknesses of popular trading systems without ever spending a dime.

Another plus of demo accounts is that they allow you to explore the trading platform of the broker.  A brokers site may seem to have all the bells and whistles at first glance but committing money to shiny service may backfire. A Forex demo account allows you to try out the site, the functionality of the trading system and learn the platform before a monetary commitment.

There are some great positives to Forex demo accounts, but also some drawbacks. Make sure you always keep both in mind. The biggest drawback of a Forex demo account is that you know it is “play money” and treat it as so. Your mind already knows that it is not “real money” and you may take risks you would not normally if it was real cash. Remember, you are using this as a learning tool and a way to develop a working stragegy that works for you. Refrain from doing things you wouldn’t normally with your own cash.

The other thing to remember is that demo accounts normally allow you to have a lot of investment money to play with. You must understand money management and if you are playing with a 50k demo and only have 1k of real cash to invest… you may not learn much at all.

Remember that a big investment in a demo account 50k to 100k, will bring big profits in your demo. When applied to your real situation, those profits may be considerably less. Watch your expectations and try to setup your demo as close to your real life situation as possible to get the most out of the learning experience.

The Flow of the Forex Market

The Foreign Exchange Market is open as long as there are banks open in one of the major markets. Since the major markets are spread out accross the planet, you can pretty much trade currency 24 hours a day for most of the week. More specifically from Sunday night Eastern time to Friday night Eastern.

Money in the FX market flows between parties as so…

The Big Boys of Currency Trading: The large banks that trade with each other and other large entities they choose to trade with. Those are large volume trades and not open to the public directly. Unlike other markets, the 4x market has no central body or exchange. Banks form their own relationships with market makers and their quotes may not be easily accessible to the public. The banks use a brokerage system, EBS (Electronic Brokerage System) to make their quotes available to each other only.

The Little Guys: Individuals, retailers, institutions and businesses around the globe do not trade directly with the large banks nor are the quotes from the EBS directly available to them. On their own they do not have the volume needed to interest them.

Come the middle man: As with most business dealings, there is a middle man in the FX Market, companies that developed relationships with the commercial banks and have access to the EBS. These markets pool together trades from many to create the volume needed to trade with the banks. The more volume they can pool together the more banks may trade with them. Most of thesemarkets accessible to the public are available online and do most of their business through their website applications.

Because there is a lack of centralization, it is possible to get different quotes and trade the same currency at a different price at the same time. For that reason, you want to be able to make sure that the broker you are using is established enough and large enough to get you the best rates out of the big banks.

Forex Trading Basics

Forex trading has really grown in the last decade. Today the foreign currency exchange market is one of the most active around.  As in all markets, traders must do their research and homework before even attempting any real trading. To dive in before fully understanding not only the fx market but its history and terminology can be a recipe for disaster.

Foreign Exchange is often abbreviated as Forex and fx and deals with the trading of international currencies. As with any market,  a good amount of knowledge and analysis is required before any large investment is made. The Forex market has become  popular with traders due to high liquidity and low transaction costs.

The Forex market is very risky to the newcomer. With promises of high return inflating expectations, newcomers fail to do the needed research and training needed to turn a profit. Many new traders get distracted from the facts and follow their “gut instinct” which proves unreliable in the long run.

Yes, many traders have turned some profit on instinct alone, but that model is not sustainable and will prove to be their downfall down the line.

Forex is a multi trillion dollar market where 80% to 90% of investors consistently fail to turn a profit or break even. The other 10% to 20% due well. So, what makes the difference between consistently failing or gaining? Experts agree that its training, patience, methedolodgy, available funds and maybe a wee bit of luck.

The first thing that new traders need to do is let go of the unrealistic expectations that the internet trading age has brought upon us. Yes, there are a few cases where people made a killing overnight but the chances of that happening to you are as good as winning the lottery. You already came to the realization that you will not win the lottery tomorrow, so come to the same realization with Forex. You are not that lucky… or at least most of us are not.

Next, develop a clear understanding of the changing market and create your own methedology behind when its time to buy or sell. You must learn to spot the signals.  Those signals are not always clear and it takes time to fiigure out when you are right and wrong.

Be patient, trading is like gambling in many ways and overcome the urge to just buy, buy, buy, just to do it and stay in the game. Unless you have thousands to throw away, it’s not a game, it’s an investment. Learn to see it as so and not a impulsive gamble as many do. Wait for the right time. Market trends are short. In any market, in most years, there are only a few great opportunities. Watch market trends carefully, and use that knowledge to pick the best time to trade.

Lastly, keep your risk small. Remember that it is always a risk and you only want to risk a few percent of your portfolio. For any trade your stop points need to be realistic when compared to your portfolio size. Any trade above 5% to 10% of your trading portfolio may be too much of a gamble. Remember that pro-traders do not trade over a few percent of their portfolio value.  Limit your risk to 1% to 5% or less, so failure in a ceratin transaction does not put you “out of business” so to speak.

Recent Forex Market Changes

Here is a list of graphs showing the recent market changes in the currency exchange (x-rates) between Dec. 2008 and April 2009.

ARS vs. Euro

Ars vs Euro

AUD Vs. Euro

AUD vs Euro

Canada’s Dollar Vs. Euro

Canadian Dollar Vs. Euro

Dinar Vs. Euro

Dinar Vs. Euro

Mexico’s Peso

Mexican peso vs. euro

Indian Rupee

Indian Rupee

How to Succeed in Forex Trade

How to Succed in Forex? Training, training and some research. One way to fail is to just jump in and guess.  Unless you have great analytical skills and can read trends from graphls and charts like a pro, I suggest you do your homework and look to ways others have succeeded at the forex trade game.

Many experts in Forex have developed systems that give you step by step instructions on what to do and how to do it. Many experts have also put software packages together that do the analytics for you and give you information based on the numbers on what to do next.

Trading Systems and Forex Software help you make the best choices by setting up rules for when to get in and when to get out.

Forex trading systems have been a staple of savvy investors and once they find a system that works, they may even modify it to their own needs creating a new system… so there are tons of systems available.

Forex systems can be found all over the web, most you will have to pay for since the expertise does not come free, but with that said, tons of info can also be found for free on forums, blogs and books.

Where do you find a comprehensive Forex system? well, you really gotta look. Like anything else that is a worthwhile investment, time must be spent in reasearch of the opportunity.

Forums, blogs and other sites may get you a great system at a cost of your time, or you can look into some of the paid Forex training courses online that usually come with a Forex system and the information to use it.

Either way success starts with knowledge.

A recap of Forex Systems and where to get them…

1. Buy the thing, There are many sound Forex systems created by experts on the internet. Many have training courses and a lot of extras that go with them. But again do your research and make sure that the system is sound with great reviews and not just something someone copied from a bad source.
2. Buy a book, this way you can look through it before purchase and get the reviews
3. Do your research, make your graphs and create your own. This option is time consuming,  but you will end up an expert in the field.