The Key to Make Money in Currency Trading

What is the key to make money in currency trading? Some people believe it is the ability to predict the market. They work day and night with Fibonacci methods, Elliott Wave methods, trends, charts, fundamental analysis, technical analysis, intuition, dreams, you name it. They work very hard to predict the exact moment to get in and the exact moment to get out.

Do they make money? Hardly.

The key to make money in foreign exchange trading is not predicting the markets, but having a sound strategy to manage the cash flow and control the risks of losing money.

You can have the most specific fundamental and technical analysis, the best software in the world, the most detailed charts, the best tools ever, but if you do not have a money and risk management strategy in place, all your tools are not worth much. You will most likely to lose money in your trades.

And here is the difference between a successful trader and an unsuccessful one: the ability and the discipline to set and to follow solid strategies to manage your money and control your risks.

Discipline means knowing when to enter the market and why, when to exit it and why, and where to place stops and why.

Every successful trader does not care if the indicators look good or not, but watches his/her cash flow and the level of risk on each trade. A successful trader is in control of his/her money and risks, not of the market and its behavior.

If you are new to currency trading, it might be difficult to follow a money management discipline. But it is precisely how you manage your cash flow what will give you the confidence and the wisdom to trade the markets correctly, minimizing your risks of losing money.

You cannot predict the foreign exchange market. Nobody can. But what you can do is trade the market correctly applying solid strategies and getting rid of emotions like anxiety, fear or greed. Those emotions only make you react and make decisions by impulse, with no reasoning, and just hope your reaction was the correct one. Most likely it was not.

My best advice to you is, detach yourself emotionally, set up a solid money management and risk strategy, be in control and start making money today

The Important Steps of Day Trading Forex

Before I talk about how to succeed with day trading forex, I must let you know that many forex traders will lose money. It happens to us all.

If reading that didn’t scare you, then you might be one of the few people who have the courage to day trade the forex market carefully, and not fall into the dangers of overconfidence which many traders suffer from.

But even beyond that, the problem that many day traders have is that they just don’t understand the market.

That’s why you see so many of these day traders inundate their chart with useless indicators that provide absolutely no insight to the market such as stochastics, MACD, RSI, and other bells and whistles that may look pretty on the charts, but don’t amount to a hill of beans.

All these indicators are good for, is to tell you what has already happened. They are completely lagging by nature.

The best way to get over this hurdle is to simply learn price action. Take a forex chart that you happen to be looking at, and strip it of every indicator that you have on it. You’ll be able to see the market in its most raw,and truest form.

If you really study price action the right way, one thing will become very evident to you, and that is future price movement can, in fact be predicted. The opportunities are endless for a hard nose forex day trader. You’ll see so many entries, you won’t know which way to choose.

It’s just so difficult to see this when you have staring back at you, are these indicators that are of no help. If you want to learn day trading, you better learn price action. They are synonymous with each other.

Be Realistic When You Start Trading The Forex Market

Ill be addressing an ongoing problem Ive increasingly noticed over the years with many of the traders in the industry. Most are dreamers at best, irresponsible at worst, each with some grand theory or scheme for getting the most bang for their buck with trading, especially in the area of FX trading. These people have little to no foundation in trading, instead preferring to do things the fast and easy way instead of the right way. And all of them think if they can just make that perfect trade then theyll be sitting pretty.

I would like to greet the roughly 99% of newcomers to the market, the people who help the professionals and giant firms generate so much money daily. These traders from all over the globe surrender a few hundred million dollars to those who actually use their heads.

Starting off, you need to know two extremely important things: focus and help. To be focused, you must know what you want, how you are going to get there, and your own ability.

Its a waste of time, resources and energy to jump at every glamorous and potentially dubious opportunity out there. Frankly that kind of behavior leads to failure, which works out well for your rivals in the zero-sum game.

Day in and day out, I witness traders who become investors immediately, retaining a lot of the cash they acquired in the market without having the first clue about how to put it to work. This strategy has its advantages in any market, but it will pay off big only when the market goes through its next upheaval, and that won’t come for decades.

Consider what you want from your career. The time has come to pay attention to people who know what they are doing. These people have lots of experience in the trading market and can point out the errors you are making.

Earlier the second thing I mentioned you need to know is help and help can also come in two ways, either mental or technical. Right now I want to talk about technical help which can be either Forex systems or EAs. EAs have lately become a sort of fad in todays market. Investing your money in a low level EA may be to your advantage. They are sold over the internet, just buy one and use it on your live account.

When I started out I tried all the EAs I could buy and although a few of them cost me precious money, others made me money consistently. Additionally, some systems are trader dependent. This means your trade can be best optimized by a certain EA. By applying these two concepts, focus and help, you should do just fine in the FX Trade.

Forex Trading Training: The Principles To Success!

Currency trading experts understand the power of maximizing every dollar they invest into the forex market. Their approach to investing stems from a heavy set of fundamentals and principles gathered through a solid forex education. This is one of the keys to succeeding in the forex market.

There are plenty of software programs that all claim to yield a high return on the dollar but the safest approach to using software to forecast market trends and swings is to use a proven system. For this reason, it is always good to look for a system that has already been proven by a wide group of investors. Successful traders would not continue to use a particular program if they were losing money.

Automated software bots have been gaining momentum for many years. Savvy investors and traders use these programs to help them track and monitor key pieces of information such as trading start and stop signals. They are an essential tool to an investor.

With many new investors hitting the market, they can attest to the power of using bots to help them look for key market indicators and signals. The biggest advantage of using these bots is that they facilitate the monitoring of signals without the need of the trader?s constant involvement. The signals alerting the trader is in real time and therefore keeps the investor on the edge for making profits and issuing stop loss orders.

Becoming a success in trading does not mean that you have to use bots. There is a human element involved too. While using bots can be a good idea, it cannot replace the intuitive nature of the human experience. Those who reply heavily on bots never sharpen their intuitive investing strategies. As you gain experience in learning to interpret market signals, you will know when to stop or enter a trade.

The trading strategies you use will play a vital part of your success. There are several strategies that you will want to study and learn. They not only serve as entry and exit guides, but they help you stay on course depending on your preference for trading. These strategies can be easily learned online or under the training of a broker.

As an example, many traders use the leverage based strategy. This type of strategy gives you access to more money to make trades above the amount you initially invested. The amount you can use is normally determined by your broker and is subject to specific terms. See a currency exchange broker to get more information.

With the right forex education, you can learn to trade in currency exchange market. If you do not have any experience, this training can be gained by working closely with a broker. Their knowledge, insight and experience will shorten your learning curve and accelerate your success. The key to success is to find a broker with a proven track record for investors

The Risk And Reward Of Online Forex Trading With Margins

The associated risks of using a margin account for online forex trading percentage wise could be said to measure up to the rewards. It is key to know what you are doing when you take these risks. When any potential for making large profits is increased the risks also increase. What the foreign exchange trader has to be careful of is not losing his margin account deposit.

Generally speaking a margin account is leveraged on an amount of $100 000 lot. The ratio for this leverage is 100:1 meaning he investor has to deposit the nominal amount of $1000 to open a margin account with a broker. If a currency moves even one cent in the wrong direction, and the forex trader is not aware of what he is looking out for. His entire margin account deposit can be lost.

Safeguards can be put in place to prevent this from happening, and these are called “stop loss orders”. Stop loss orders will mean that your account automatically closes the transaction when the currency you are trading falls to a certain low. These stop loss orders can limit losses, while allowing for profitable trading

One of the problems which is often overlooks by foreign currency traders is the broker, on seeing a currency drop may intervene and counteract your transaction. They see your deposit margin account is falling low because of a shift in currency, and they may close it. If you are riding out a downturn, expecting the trend to change and your broker closes your position you will lose your deposit funds. In order to continue riding this downturn until the shift to an upwards trend occurs; you will be required to make an additional deposit into your margin account.

As we said previously, there are both large risks and large rewards in online forex trading. Professional people are seeing the benefit in trading and are leaving traditional professions to become traders. They need to understand that it is vital to know what they are doing in order to ensure success. Stop loss orders are not the only way to protect your investment in this market. Knowledge is vital! It is important to know how to read market trends and traits, and understand how both profits and losses are made.

Choose Forex Broker This Way

One of the hardest decisions you face when starting out as a forex trader is which forex broker to go with. If you do a search online you will find hundreds of different forex brokers to choose from. The trouble is that some are better than others, and furthermore there are some that you should avoid like the plague.

So let me give you a list of things you should look out for when choosing a forex broker:

1. Regulation

This is arguably the most important factor because whichever broker you decide to go with, you must make sure that they are fully regulated with the relevant authority. So if they are based in the US, for example, then you should ensure that they are regulated by the NFA (National Futures Association) or the CFTC (Commodity Futures Trading Commission). Similarly if they are a UK-based company, then they should be regulated by the FSA (Financial Services Authority).

If you go with an offshore forex broker that is completely unregulated, for example, then you are taking a huge risk because you may never see your money again.

2. Spreads

If you are a relatively long-term trader and mainly use the 4 hour or daily charts, for instance, then the spreads offered by your chosen forex broker is not so much of an issue. However if you intend to trade the shorter time frames then your points gains per trade will obviously be a lot less, and therefore the spreads will start to eat into your profits. So as a general guide you ideally want to choose a broker that offers spreads of around 2 or 3 pips for the EUR/USD and GBP/USD pairs, and certainly no more than 4.

3. Leverage

The amount of leverage offered by different forex brokers varies greatly. Some may only offer 100:1 leverage while some may offer as much as 400:1. My own personal view is that 100:1 is more than enough, but if you are more of a risk taker then you may want to look for brokers that offer higher leverage.

4. Demo Accounts

If you are relatively inexperienced or if you want to test out a broker's trading platform before deciding whether or not you wish to open a live trading account, then you should choose a broker that provides a free demo account. Most reputable brokers offer demo accounts nowadays so I would always recommend you take advantage of this facility.

5. Account Types

Although all forex brokers cater for the well capitalized traders, not all of them cater for those traders who wish to trade smaller positions. Therefore if you yourself fall into this category, then you should look out for brokers that allow you to trade mini-lots (equivalent to around $1 per pip) or micro-lots ($0.1 per pip).

6. Minimum Deposit

If money is tight or you want to start off small (which is always a good idea), then you will want to choose a forex broker that requires a relatively low minimum deposit when opening a live trading account.

7. Charting Software

Nearly all forex brokers provide some kind of charting software free of charge when you open an account with them. It may be the highly popular Metatrader 4 platform or it may simply be a no-frills charting package. So therefore if you do want to use some of the more advanced charts, then I suggest you go with a broker that provides the Metatrader 4 or ProRealTime platform, for instance, otherwise you will have to fork out some money to access some decent charts elsewhere.

8. Additional Services

As well as charting software, you may also want your broker to provide a range of additional services such as daily commentaries, market analysis, educational materials and the option to deal through your mobile phone.

9. Customer Service

If you are just starting out as a forex trader you will probably have several questions and queries when you first open an account with a broker. So therefore you should try and join a broker that offers a high level of customer service. One way of testing this out is to contact the help desk of the brokers you are considering joining, ask them a particular question, and see how long they take to get back to you.

10. Customer Comments And Reviews

Finally your ultimate choice of forex broker will often be swayed by what other traders have to say about them. There are several websites which contain customer reviews of all of the leading brokers and you will find no shortage of opinions on all of the different forex forums.

However one thing I will say is that you will never come across brokers that have nothing but positive reviews, so don't waste too much time looking for the perfect broker because it simply doesn't exist. Just look for brokers that have a high number of positive comments and you should be fine.

Fibonacci method in Forex

Fibonacci Retracement Levels are:
0.382, 0.500, 0.618 — three the most important levels
Fibonacci retracement levels are used as support and resistance levels.

Fibonacci Extension Levels are:
0.618, 1.000, 1.618 — three the most important levels
Fibonacci extension levels are used as profit taking levels.

So, what we will learn today is how to apply Fibonacci tool and how to interpret results that we see on the screen

To set up Fibonacci on the chart we need to find out:
1. Is it uptrend or downtrend?
2. Highest and lowest swings in the chart formation (A, B points).
And go with the trend!

Some Tips For Forex

1.Any attempt to trade without analysis and studying the market is equal to a game. Games are fun except when you lose real money
2.Allow at least 2 months for demo trading. Consider this: 90% of beginners fail to succeed in the real money market due to lack of knowledge, practice and discipline. Those remaining 10% of successful raders had been sharpening and shaping their skills on demo accounts for years before entering the real market.
3.Trend is your friend. Trade with the trend to maximize your chances to succeed. Trading against the trend won't "kill" a trader, but will definitely require more attention, nerves and sharp skills to rich trading goals.
4.It gives the bigger picture of market price movements and thus helps to clearly define the trend. For example, when trading with 15 minute time frame, take a look at 1 hour charts.
In the same way:trading with 1 hour charts would require obtaining a picture of daily, weekly price movements.
5.Don't try to revenge after losing a trade. Don't be greedy by adding lots of positions when winning.
Overreaction blocks clear thinking and as a result will cost you money. Overtrading can shake your money management and dramatically increase trading risks.

Know Forex

Learn How to trade forex just view this video and learn about it.

Forex Market Information Easily Accessible

Information about stocks is abundant, but so are the stocks. Finding a trade opportunity in the equities markets may mean sifting through data on thousands of stocks, while the forex trader has only six major currencies to research. Additionally, the vital information that moves equity markets, such as revenues and profits, is proprietary and private. In contrast, virtually all of the news that bears on the forex market is in publicly disseminated reports from governments or research institutions, and released to everybody at the same time.

We feel that the knowledge you've gained in analyzing stocks can easily be transferred to the forex market. Many of the economic indicators familiar to equity traders, such as payroll data and interest rates, affect the currency markets. And many technical traders have found the forex market to be particularly attractive, since currencies respond well to many of the common technical indicators, such as MACD, RSI, and Candlestick charting.

To learn more about transitioning from trading equity markets to trading in the Forex market, contact the FXCM staff today at 888-503-6739.

Why to trade forex??

The forex market is a near-seamless 24-hour market. Subject to available liquidity, FXCM offers trading from Sunday, starting after 5:15 PM EST, until Friday, 4PM, EST (FXCM Client Service is available 24/7). With the ability to trade around the clock, currency traders have the advantage of customizing their own trading schedule; they can usually get in or out of the market at any time without waiting for an opening bell or encountering a market gap. While trading stocks after usual market hours is possible, very often that possibility is negated by a lack of order flow or a drastic widening of the bid-ask spread.

Pip and Pip Value


The smallest price increment a currency can make. Also known as points. For example, 1 pip = 0.0001 for EUR/USD, or 0.01 for USD/JPY.

Pip Value

The value of a pip. Pip value can be fixed or variable depending on the currency pair and base currency of your account. e.g. The pip value for EURUSD is always $10 for standard lots and $1 for mini-lots. To calculate the pip value, divide 1 pip by the exchange rate and multiply it by the unit lot size to get the base currency pip value. To convert this back to your account currency, multiply it by the appropriate exchange rate. e.g. EURUSD = 0.0001 / 1.30000 * 100,000 = 7.69 Euro * 1.30000 = $10.00 pip value (fixed). USDJPY = 0.01 / 120.00 * 100,000 = $8.33 pip value (variable)


The extent to which you are using borrowed funds to gear your account. Increasing your leverage magnifies both gains and losses. To calculate leverage used, divide total open positions by account equity to get the leverage ratio. e.g. If a trader has $1,000 in his account and opens a $100,000 position, he is leveraging his account by 100 times, i.e. 100:1 leverage. If he opens a $200,000 position with $1,000 in his account, he is leveraging his account by 200 times, i.e. 200:1 leverage.

What is Broker??

The broker’s main function is to facilitate trade between two parties.

They normally have links to other brokers, banks and institutions and often become mini market makers themselves.

Because of the varied source of clients who use brokers it is quite common to find the best rates through a broker as opposed to a bank.

With a broker you can shop for the best rates in order to transact your business.

The broker makes his commission from either the difference between the buying and selling rate or as a flat fee per transaction

All of the three main groups will also speculate in the market, which is why the market has so much volume and liquidity.

Buying and selling process

Order Basics :

  • Sellers are asking for a high price.
  • Buyers are Bidding at a lower price.
  • Trading is an auction.
  • Slippage occurs with most Market Orders.
  • The diffrence between the ASK and the BID price is the spread.

A trader must understand what each order is, what it and what part it plays in capturing profit.

A FOREX Trader must use three types of orders: a Market Order, a Limit Order, and a Stop Order.

The two primary orders used for entering and exciting the market are a Limit Orders, and a Stop Orders. Once an order is placed your order to enter the market, there are two critical procedures: One-Cancels-the-Other( OCO ) and Cancel-and-Replace. Properly exectuing orders and understanding these procedures are a vital step to profitables trading.

Forex Informatiom

View this video to know more and have information on how Forex helps on making money.

Technical Analysis

The technical trader is concerned with studying patterns of price movement on the chart in order to predict the direction of current and future trends in the Forex market. The decision to buy, sell, or hedge a current position – or to stay out of the market entirely – is made upon this analysis. Identify recurring patterns and make educated assessments to guide your decisions; should you initiate a trade at the current price, or set your system to open a position at a future price? The goal of the technical analyst is simple: to make profitable Forex trades by identifying past patterns that have historically led to a predictable outcome. However, the potential risk should always be considered. A recurring pattern is not precise and does not guarantee a desirable or expected price movement.

Trading forex

Using fundamental and technical analysis, the individual trader attempts to determine trends in the price movements of currencies, and by buying or selling currency pairs, attempts to gain profits. The most often traded currencies, the major currencies, are those of countries with stable governments and respected central banks that target low inflation. Currencies that often trade along with the U.S. Dollar include the European Euro, the Japanese Yen, and the British Pound as they are the most liquid. A trader can trade these currencies in any combination. CMS Forex also offers the Swiss Franc, and the Canadian, Australia and New Zealand Dollars making for 19 total trading instruments when accounting for all the cross pairs. More "Exotic" currencies are not offered as they are often tightly regulated and simply too illiquid

Federal reserve bank of new york

Seeing the Federal Reserve Bank of New York, visitors' first impressions are of the building's striking architecture. Inside the vault of this Renaissance-inspired structure is stored billions of dollars of gold. But what is most significant about the Bank is its broad policy responsibilities and the effects of its operations on the nation's economy.

The Federal Reserve Bank of New York is one of 12 regional Reserve Banks which, together with the Board of Governors in Washington, D.C., make up the Federal Reserve System. The Fed, as the system is commonly called, is an independent governmental entity created by Congress in 1913 to serve as the central bank of the United States. It is responsible for

  • formulating and executing monetary policy,
  • supervising and regulating depository institutions,
  • providing an elastic currency,
  • assisting the federal government's financing operations, and
  • serving as the banker for the U.S. government.

In addition, the Federal Reserve System has important roles in operating the nation's payments systems, protecting consumers' rights in their dealings with banks and promoting community development and reinvestment.

The New York Fed oversees the Second Federal Reserve District, which includes New York state, the 12 northern counties of New Jersey, Fairfield County in Connecticut, Puerto Rico and the U.S. Virgin Islands. Though it serves a geographically small area compared with those of other Federal Reserve Banks, the New York Fed is the largest Reserve Bank in terms of assets and volume of activity.

The New York Fed employs about 2,700 officers and staff at the head office and the regional office in East Rutherford, New Jersey.

In addition to responsibilities the New York Fed shares in common with the other Reserve Banks, the New York Fed has several unique responsibilities, including conducting open market operations, intervening in foreign exchange markets, and storing monetary gold for foreign central banks, governments and international agencies. Foremost among its functions is the implementation of monetary policy, one of the three missions of the New York Fed. The other two are supervision and regulation, and international operations

why to trade??

Daily turnover in the world's currencies comes from two sources:

* Foreign trade (5%). Companies buy and sell products in foreign countries, plus convert profits from foreign sales into domestic currency.

* Speculation for profit (95%).

Most traders focus on the biggest, most liquid currency pairs, known as "The Majors". These include US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar. In fact, more than 85% of daily forex trading happens in the major currency pairs.

What is forex??

"Forex" stands for foreign exchange; it's also known as FX. In a forex trade, you buy one currency while simultaneously selling another.

Currencies trade in pairs, like the Euro-US Dollar (EUR/USD) or US Dollar / Japanese Yen (USD/JPY).

Forex trading is used to speculate on the relative strength of one currency against another. The foreign exchange market is an over-the-counter market, which means that it is a decentralised market with no central exchange.
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