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What is Forex? Forex stands for foreign exchange. Forex is a market that deals with
the exchanging currencies in real time all over the world. If you are looking for a
great opportunity to trade foreign currencies, Forex can be a great market totrade in.
Forex is the largest financial market in the world. The Forex market accounts for
almost 2 trillion dollars in average daily turnover each day. Forex can be a great way
to trade, because with the foreign exchange market, you simultaneously buy and sell
currencies, exchanging one currency for another. For instance, trading the US dollar
for the Japanese Yen.
Today, many investors can easily trade Forex from the privacy of their own home.
There are many platforms and software that can allow almost any investor to buy,
sell and check charts and information instantly. There is no center market for Forex,
Forex runs on a network and continues 24 hours a day, starting from Sydney,
For most investors that are interested in trading Forex, the good news is that you
don’t have to have lots of capital to trade Forex. Most investors can start with a
relatively small investment of about $250. A great advantage to Forex trading is that
you can leverage the initial investment amount up to 200 times your investment in
certain situations. So if you are looking for a great way totrade, with a low initial
investment, research Forex, to see if this type of trading is right for you to invest in.
Being a forex or foreign exchange trader no longer means you have towork for a
bank in one of the world's financial centers. These days you can trade on your own
behalf, from anywhere.
Since the rise of the internet many people are doing this from their own homes,
making money in their spare time or even making a full time income. But what is
forex trading and how does it work?
A foreign exchange trader deals in currencies. He or she will sell one currency that
seems to be falling in value, to buy another that seems to be rising. There are always
two currencies involved in a trade (a currency pair) because when you want to buy
dollars you have to have another currency to exchange for them.
In the beginning it is best to be involved with just one currency pair. Most people
start out trading in the EUR/USD market, that is the euro against the US dollar. This
is the biggest forex market. There is plenty of information available for this market
and it tends to have lower costs and be relatively stable.
Nevertheless forex is a very volatile market. This means that the prices can rise and
fall steeply and quickly. The risk is high. It is easy to lose money. In fact, some losses
are inevitable, so you should manage your account so that you never risk too much
on one trade. You can use stop losses so that your broker will automatically sell if the
price goes a certain way against you. The aim is not to have no losses, but to make
sure that your profits are higher than your losses so that you end up with a net gain.
You will need access to a computer with a high speed internet connection any time
that you want to trade. Unless you use a robot to control your currency trading, you
will also need time where you can concentrate on learning a profitable system and
then on trading itself. You pretty much need to be able to lock yourself away in a
room to do this, at least for a couple hours a day. It is no good trying to trade from
your desk at your day job with your boss interrupting you, or using a computer in the
family den with kids climbing on your knees wanting to play games. You must be
fully concentrated on the movements in the market or you could miss the right
moment to either open or close a trade.
If you are a cautious person who likes a solid investment with predictable low
returns, you should not become a currency trader. Forex traders are people who
enjoy risk and love the challenge of trying to turn a profit in a fast moving market.
It helps if you are strongly focused on your goals and not easily swayed by emotion. It
is important not to let fears of losses or dreams of huge wealth divert you from your
strategy. You also need to stay aware of financial news, not only in your own country
but in all of the major world powers, because this will affect the forex markets. With
these characteristics and a good trading system in place, a foreign exchange trader
can reap substantial gains from his or her investment.
The foreign exchange markets are situated all around the world. Currency trading is
a global activity. Every country in the world uses money and needs to change that
money into other currencies in order to trade or interact with other nations.
Currency exchange happens at every level of society. As an individual, you may have
changed money when traveling on business or on vacaation. Or maybe you have sold
something on eBay to somebody in another country. Their payment comes in to your
account in their own currency, and the bank or other payment processor such as
PayPal changes it for you. That is currency exchange at the root level.
Foreign exchange or forex trading has a different purpose, however. When you are
trading on the foreign exchange markets you are not buying another currency
because you need it. You are buying it in the hope that it will rise in value, so you can
change it back and end up with more money than you started out with.
Of course, it is risky. The price movement could go against you and then you would
end up with less money instead of more. So you will want to gather plenty of
information about currency trading before you start.
Forex trading began in the 1970s when the major currencies were deregulated so that
their values were no longer fixed. The banks and large investors quickly saw the
potential for making money from the changing prices.
The main forex marketplaces are the big financial centers of the world. London sees
the highest activity with New York second and Tokyothird. Other major players are
Sydney, Zurich and Frankfurt.
Originally you had to be in one of those places to trade money, or at least have a
telephone connection with a broker who was there. It was very difficult for somebody
who was not on the spot to act fast enough to react to the sudden fluctuations in price
that can happen in the forex markets.
But modern advances in technology have changed all of that. Since the rise of the
internet it has been possible to trade on your own account from anywhere. This
means that it has become easier and easier for the little guy to get a piece of the
While some people never think about foreign currency from one overseas trip to the
next, others are studying charts and financial information or even using automated
software in the form of forex robots to make money from the rising and falling prices
with the aim of becoming financially free by trading on the foreign exchange
You can trade Forex from home with relative ease. Trading Forex from home is one
of the most popular ways day traders and small investors are able to reach their
investment goals from the privacy and comfort of their own home. If you are
interested in trading Forex from home, here are some tips.
Trading Forex from home is incredibly simple. There are plenty of brokers that
enable you to trade in real time with great features. Finding a Forex broker is
relatively simple, however you should put lots of thought into which features you
would like, the information they provide their members and the ease of use of their
Trading Forex from home is relatively easy once you have your computer set up and a
broker picked out. Before you start totrade Forex with actual money, it is important
to know all the ins and outs of trading Forex as well as how to conduct research and
use your brokers Forex trading software. Many brokers allow you to try simulation
trading. A simulation trading environment is where you can trade in real time
foreign currencies with the actual software and features. The only difference
between simulation and real trading is that with simulation software you don’t have
trade real money. This can be an excellent tool to learn how to trade Forex from
Finding information from home regarding Forex is also very easy with the help of
Forex forums, broker trading resources and Forex charts. Many investors use the
Forex forums to find out about new tools, spot trends in the market and hear
commentary on new products or forecasts. You can also find loads of information at
your broker’s site. Most brokers usually offer great charts to track currencies and
plenty of articles that can fill you in on information that can help you trade. So
follow the above suggestions to trade Forex from home.
One of the most basic Forex terminologies is ask price. Ask price is the price a
currency is offered for. When trading Forex, you will usually see both the ask price
and sell price for each currency listed next to each other.
Base currency, stands for the currency that all your currencies are converted to once
you close the trade. The base currency usually is the US Dollar for people doing
business in America.
Going long and going short are also popular basic Forex terminologies. Going long
means that you invest in a currency for the long term. Going short means that you
sell a currency that is not yet owned by you- the seller. Going short can be a great
way to profit in certain situations, but can involve high risk.
Pip is also a popular basic Forex term. Pip stands for the difference between the bid
price and the asking price. The range is also an important term because it offers the
seller information on the highest and lowest prices of currencies being offered.
So if you are interested in trading Forex, it is important that you read and
understand the above basic Forex terminology.
If you are into trading Forex, then you probably take analyzing Forex data very
seriously. Most Forex investors choose their trades each day by going over lots of
information, charts and opinions in order to analyze Forex data. Here are some great
tips and resources for analyzing Forex data.
Analyzing Forex data can be easy if you have and utilize the right tools. Most Forex
brokerages supply their traders with a wealth of information and many tools in order
to analyze their Forex data and make well educated and prudent trades. Just like any
other investment vehicle, Forex does have risks involved and you can lose your
money very easily if you make ill conceived trades, analyze your Forex data the wrong
way, or hit a patch of bad luck.
A great resource to use when analyzing Forex data are specialized Forex charts, Forex
reports, and opinions written about the Forex trading market. Many people also look
to Forex simulation platforms to test out their Forex analysis process. On simulation
platforms, you can trade real time, just like normal, except you don’t have towager
real money. This way you can test your systems, strategies and analysis.
Not only do Forex brokerages give you great resources, but they try toeducate their
traders on how to use them properly. For instance you can read online tutorials on
how to use certain tools, how to analyze data, and how data can be viewed. There are
many great ways to learn how to analyze Forex data, however, you have to learn how
to use it to your advantage.
Most Forex brokerages have their own software program to trade Forex. Forex
software is an important part of trading Forex, because it dictates how easy and
quickly you can interact with your brokerage to buy, sell and trade Forex. If you are
looking for great a great brokerage, here are some tips on choosing a brokerage with
great Forex software.
For most people trading Forex, a minute or two can be an eternity. If you need to
make a trade, your Forex software should be extremely easy tooperate and navigate
quickly on almost any computer and help you make the right trade according to your
Most Forex brokerages have simulation trading environments, where you can learn
to trade Forex, use their Forex software to do your trading and wager credits instead
of real money. Most Forex traders when starting out should take advantage of these
simulation environments to learn how to interact with their Forex software and trade
the foreign currency markets.
Almost all Forex brokerages offer many of the same features, however the ease of
using the software can make a big difference in how you navigate, employ important
features and feel comfortable over all trading Forex. So if you are looking into
trading Forex, check out different brokerages Forex software, it can have a definite
impact on your Forex trading.
About The System
This system is an Intraday trading system, works best on the 1 hour chart for all
currency pairs. However, it would give best results with trending pairs ( currency
pairs with strong trend, like JPY pairs ) .
In this system we are going to use moving averages toidentify the trend – visual
guidance only – and we are going to use price patterns to enter the market. Our exit
strategy will be based on support and resistance levels.
It’s very important to pay attention to news releases and economic announcements
and STOP trading until the market reacts to the news. Usually after 15 to 30 minutes.
As an intraday trader, it’s also very important toknow what time of the day is best for
trading and NOT to trade anytime of the day, or any day of the week.
If you’re not an experienced trader, please do not make any changes to this system.
Test it on demo account for at least one month and more than one currency pair.
SMA ( smooth moving average ) :
Apply to : weighted close
Apply to : weighted close
UP Trend = Blue Line Above Red line – Down Trend = Red line above Blue line
We are going to use the Triangle pattern as a trigger or setup to enter the market in
the direction of the main trend.
The Triangle pattern is simply Two small trends ( upper trend – lower trend )
crossing each other and form a shape that looks like a triangle.
Price usually moves inside that triangle and then we should see a breakout. The
direction of the main trend is not important at all. We are not following the trend.
We are trading breakouts.
At the above example, the breakout happened in a down trend movement.
But it could also be an Up trend breakout.
Your main job now is to practice on recognizing triangle patterns. Once you learned
this skill, the rest should not be a problem at all.
Remember, you only need to see an uptrend crossing a down trend and form a
Try topractice on 1 hour time frame or 4 hour time frame. Smaller time frames are
not recommended in the beginning.
It doesn’t matter where the shape is formed, in the middle or at the beginning/end of
a trend. The direction that the triangle is pointing at, also doesn’t matter.
One thing you should keep in mind, this pattern happens all the time. No matter
what currency pair you are trading or what time frame you are using. And that’s a big
So, feel free to practice on any currency pair you like. 1 hour/4 hour time frames for
now. And when you feel that you are ready to take the next step .. keep reading!
The first thing to do is to know the direction of the trend according to the trend
indicator. If it’s a down trend, then we only enter sell trades. If it’s up trend then we
only enter buy trades.
The next thing to do is to draw the support/resistance levels. We are going to use
those levels for targets.
1 – Up Trend
2 – Triangle Pattern (Up Trend Breakout )
1 – Down Trend
2 – Triangle Pattern ( Down Trend Breakout )
Targets and Stoploss
Support and resistance. If you don’t know how to work with support and resistance
levels, please take some time to read about it and understand it before you start using
Support and resistance levels are identified based on the price patterns and price
turning points that took place in the past. Support levels try tostop falling price as it
attempts todrop even further. Resistance levels resist to the rising price that
attempts togo even higher.
Support or resistance levels that were tested by the price and sustained the pressure
by not allowing market tosurpass them, are considered as strong levels. If Support
level is broken it becomes future resistance level. If resistance level is broken it plays
a role of support for future market moves.
EUR/USD – 1 Hour Chart
After an Up trend was confirmed by Moving averages cross, a triangle pattern was
formed and we waited for a breakout in the direction of the trend.
Few hours later, a breakout happened and we opened a BUY order based on the
signal we had.
We placed our stop loss at the last support level, and placed our target at the
You can always use a trailing stop to lock your profits and protect your trade from
In this example our profits were 100+ pips
Next Example ..
EUR/USD – 4 Hour chart
My favourite time frame is 4 hour chart. It gives more clear signals and more time to
spend with friends and family without having to watch the chart all day long .. and it
also gives more pips to collect.
In this trade, the major trend was up trend. So I knew that I’m only allowed to open
We had a triangle pattern formation, followed by an up trend breakout .. perfect!
All we had to do is to set the stop loss at the last support level and set the target at the
next resistance level.
This time, profit was 400+ pips
Sometimes, price would move in the opposite direction of the current trend for a
while before it reverses back.
Usually, it’s not recommended to trade in this case and just wait until price reverse.
But .. for experienced traders ONLY there is another option: trading reversals!
EUR/USD – 4 hour chart
This kind of trades are risky, and only recommended for experienced traders only.
It’s also recommended to follow other strong reversals signs besides the triangle
pattern, like double tops/bottoms or heads and shoulders.
And with this kind of risky trades, it’s highly recommended to use maximum money
Example : if you usually trade with 1.0 lot size and 3% risk of your invested capital.
Then at this case you should trade with only 0.5 lot size and 1% risk.
I know that sometimes it not easy to spot support and resistance levels or set them
correctly, especially for new traders.
So here is a way to get this done automatically for you, even if you don’t know the
difference between a support a resistance!
We are going to use .. Fibonacci levels!
This is a very powerful tool .. just look at it! Notice how price – religiously – follows
Fibonacci levels and moves between them.
All you need to do is to place the Fibonacci levels indicator – comes free with almost
all trading platform like Metatrader – at the high/low of the last wave before the
If it’s an up trend breakout, place the 0 level at the low of the wave, and 100 level at
the high. The exact opposite if it’s a down trend breakout. Place the 0 level at the high
and the 100 level at the low.
Here is another Example ..
The forex market hours stretch from Monday morning in Sydney, Australia to Friday
afternoon in New York. During that time the market is open somewhere around the
globe at all hours of the day or night.
However it is not a 24/7 market because it does shut down on weekends. 24/5 would
be more accurate.
If you need to know the exact times that the markets open and close, you have to take
time zones into consideration. It is very simple when expressed in UTC. This is
Universal Coordinated Time, formerly known as Greenwich Mean Time. This is the
standard (winter) time in Greenwich, London which is the point of zero longitude on
So, the normal forex market hours are 22.00 Sunday UTC to 22.00 Friday UTC. This
is 10 pm in the UK in winter time.
New York is 5 hours behind the UK so the global forex market opens and closes at 5
pm Sunday/Friday in New York, 2 pm on the US west coast, 11 pm in Germany, 8 am
Monday/Saturday in Sydney.
Things get a little complicated when you start totry totake summer time daylight
saving into account. This makes one hour difference in countries that observe it. But
daylight saving operates in a different way in the southern hemisphere countries
such as Australia which have summer time from September toMarch instead of
March to September.
The hours of the different major national markets are as follows:
Sydney: 10 pm to 7 am UTC
Tokyo: 12 midnight to 9 am UTC
London: 8 am to 5 pm UTC
New York: 1 pm to 10 pm UTC
Or we can express that in EST (Eastern US time):
Sydney: 5 pm to 2 am EST
Tokyo: 7 pm to 4 am EST
London: 3 am to 12 noon EST
New York: 8 am to 5 pm EST
You can see that these correspond to 24 hour cover.
However, this does not necessarily mean that trading will be good at all of these
times. Just after a major market opens, the prices can be very volatile and
unpredictable. Many traders will stay out of the forex market for up to an hour four
times a day when the financial markets are waking up in these major cities.
The US dollar is the most traded currency by a long way, involved in 2.5 times as
many trades as its nearest rival the euro. This means that events in the USA have a
greater impact on the financial markets than events in other countries. The New York
market tends to slow down around 3 pm local time (8 pm UTC) and if you are
involved in a US dollar pair, this can be a good time to stop trading for the day.
So theoretically you can trade 24 hours a day from Sunday night to Friday night.
Automated software in the form of a forex robot can even make this physically
possible. However, a cautious trader will choose his times and will not be active
during all of the forex market hours.
Forex margin trading is a way of applying leverage toincrease the purchasing power
of your money. Leverage simply means using a small sum to control a much larger
sum. This is possible because it is unlikely that the value of a currency will change by
more than a certain percentage over a short time. So you can place a few hundred
dollars in your brokerage account to trade on the margin - the amount that you think
the price will fall. Your broker will in effect lend you the balance.
Trading on margins is also known in stock and futures trading, but because of the
special nature of currencies, you can get a lot more leverage in the forex market.
Depending on your broker's terms, you may be able to control 50, 100 or even 200
times your account balance.
This can lead to big profits if you are successful, but it can also mean big losses if not.
In general, the more leverage you use, the more risky your trading is.
We can understand leverage and margins if we consider an example.
Imagine that the current rate on the British pound to US dollar forex market is
shown as GBP/USD 1.7100. So to buy one British pound you would need $1.71. If you
expected the value of the dollar to rise against the pound you might decide to sell
enough pounds to buy $100,000. If your broker used lots of $10,000 each, this
would be 10 lots. Then you would sit back and wait for the price to go up.
A few days later you might find that the price had moved to GBP/USD 1.6600. Sure
enough, the dollar has risen and the pound is now worth only $1.66. If you sell your
dollars now and buy back into pounds, you will have made a profit of 2.9% less the
spread. 2.9% of $100,000 is $2,900, so that would be an excellent trade.
But most of us do not have $100,000 spare cash that we want to trade on the
currency exchange market. So here is where the principle of forex margins comes
Since you are buying and selling different currencies at the same time, your own
money only has to cover any loss that you might make if the dollar falls instead of
rising. And you would put a stop loss into place to limit that loss, so $1,000 might be
all you needed to have in your account to make this $100,000 purchase. Your broker
guarantees the other $99,000.
In fact many brokers now operate limited risk amounts where the account will
automatically close out the trade if whatever funds you have in your account are lost.
This prevents margin calls which can be disastrous for a trader because they mean
that you can lose more than you have. But with a forex limited risk account that is
not a possibility. The broker's software that you use to control your account will not
let you lose more than your account balance.
Using leverage in this way is so common in currency trading that you will soon do it
without even thinking about it. Still it is important to keep in mind the risks. Lower
leverage is always safer and you may never want togo to the maximum forex margin
that your broker would allow.
Always remember that Forex trading like any investment is not a sure thing. Just
like any type of investment or investment vehicle there are risks involved. No matter
how much you research your data or how much thought you put into your trading,
you can always lose money.
Another important Forex trading tip is that if you are just starting out, learn as much
as possible about foreign exchange trading. There are many theories, strategies and
tools to help you trade Forex. Learn which tools are available and how to use them
effectively. You shouldn’t decide to just throw money around into an investment and
go with the flow. Forex trading is not a casino game and you can lose thousands of
dollars of your investment.
One of the most important Forex trading tips is to choose your trading broker
carefully. Don’t just enroll with a trading broker because they offer you great
incentives or have a great web site. Shop around; find a Forex trading broker that
can help you reach your investment goals. There are plenty of Forex trading brokers
and many of them might not have the resources to help you with your individual
investment needs. So if you are looking to trade Forex, follow these Forex trading
Many people choose to invest and trade in the Forex markets because it is very easy
to get started. Many Forex brokerages require a small minimum investment, usually
about $250. With this small investment, you can leverage your money to invest in
the market by up to 200 times in certain situations.
Finding a Forex broker is also important because each broker’s tools and resources
are different. You might find that a Forex broker has great resources and
information to analyze and spot trends in currency trading. Finding a Forex broker
is also important because you can pick and choose which software platform to use to
make trades. You might experience that some brokers have awkward software
platforms that can be difficult to understand or to execute a trade on. Doing
important research in the beginning can help you find the right Forex broker to
facilitate your trades and research.
Another great tip when finding a Forex broker is to see if the broker offers simulation
trading. Simulation trading is a great way to use the broker’s software and tools in
real time without wagering real money. So if you are interested in investing and
trading in the foreign currency market, look at different Forex brokers for the best
software, information and resources. Doing lots of research on brokers will help
finding the right Forex broker to fit your needs.
Most Forex brokers help you trade by providing you with up to the second, real time
information in the form of Forex charts. Most Forex charts are available on any
major currency, exotic currencies and major market indices that can help you predict
trends and performance. Not only can you check out information fast and easy with
charts, most brokers allow you many features that can help you view charts in
different ways. For instance you can view a standard bar chart, dot chart, or even
forest chart which can easily show you the up and downs of your specific focus.
Many Forex brokerages also include daily commentary and information on how to
get the most out of your charts, by teaching you technical analysis and the ways to
tease information from your Forex chart. If you would like to trade Forex, look into
using powerful tools such as Forex charts in order to make educated investments.
U.S. Government Required Disclaimer - Commodity Futures Trading Commission Futures
and Options trading has large potential rewards, but also large potential risks. You must be
aware of the risks and be willing to accept them in order to invest in the futures and options
markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an
offer to Buy/Sell futures or options. No representation is being made that any account will or
is likely to achieve profits or losses similar to those discussed on this web site/ebook. The
past performance of any trading system or methodology is not necessarily indicative of
CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE
CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED
RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE
NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED
FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF
LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO
THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO
REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO
ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
No representation is being made that any account will or is likely to achieve profits or losses
similar to those shown. In fact, there are frequently sharp differences between hypothetical
performance results and the actual results subsequently achieved by any particular trading
program. Hypothetical trading does not involve financial risk, and no hypothetical trading
record can completely account for the impact of financial risk in actual trading.
All information on this website or any e-book purchased from this website is for educational
purposes only and is not intended to provide financial advise. Any statements about profits
or income, expressed or implied, does not represent a guarantee. Your actual trading may
result in losses as no trading system is guaranteed. You accept full responsibilities for your
actions, trades, profit or loss, and agree to hold the authors/publishers and any authorized
distributors of this information harmless in any and all ways. The use of this system
constitutes acceptance of our user agreement.