An overview of the Forex market

The Forex market is a non-stop cash market where currencies of nations are traded, typically via brokers. Foreign currencies are constantly and simultaneously bought and sold across local and global markets and traders' investments increase or decrease in value based upon currency movements. Foreign exchange market conditions can change at any time in response to real-time events.

The main enticements

The main enticements of currency dealing to private investors and attractions for short-term Forex trading are:

* 24-hour trading, 5 days a week with non-stop access to global Forex dealers.
* An enormous liquid market making it easy to trade most currencies.
* Volatile markets offering profit opportunities.
* Standard instruments for controlling risk exposure.
* The ability to profit in rising or falling markets.
* Leveraged trading with low margin requirements.
* Many options for zero commission trading.

The forex market

The forex market has become one of the fastest growing industries on the internet today. The secret's out and many people are making money on forex currency trading as retail traders and these are people like you and me. Average people with computers, internet connections and a forex trading account can start trading immediately. This opens up a whole new opportunity for the average Joe investor and the advent of the internet into all our homes has given us a currency trading platform. For small investors, forex currency trading has become a lucrative source of income and everybody is trying to get in on the action.

Before you get started

Before you get started, you need to learn and understand what foreign currency trading is and how it works. There's lots of information out there to help you learn this business, but remember that much of this supposed information and free forex trading strategy advise can be misleading. But don't let this keep you from seeking real, quality forex education, because this will be critical to your success as a forex trader. The second piece of advice that you should keep in mind is to start small. You can always start out by trading a demo account from your broker that allows you to use fake money with real charts and tools. That way you risk none of your money while you're learning how to trade. If you do well as a forex trader, you can move on to trading a real money account. As you get better at trading, increase your budget slowly, and make certain you don't over leverage your account and blow your money. Money management is also very important in this business so make sure you maintain a good balance between your risk/reward.

seek good forex training courses and resources in currency trading

Also, seek good forex training courses and resources in currency trading. There are plenty of these resources online or find out where you can attend workshops in your local area. There are also online workshops where you can trade along live with professional traders to see how they analyze the market and execute trades. You not only can make profit while trading with professional traders, but you will be learning a life long skill you can use to trade on your own one day without having to rely on services like these. You can ask questions, which will be answered by experts on live chat, message boards and forums. There are courses on forex currency trading that give you instant access to their library where you can see historical trends and all types of useful literature. Professional forex traders run these forex training courses and offer videos with their own forex trading systems explained in detail.

Many of these currency experts

Many of these currency experts have written a number of books on the subject, so try and look for one that is authored by a well-known currency exchange trader, or someone with reliable credentials instead of a self proclaimed guru with no background on the subject. Anyone can claim to have made a fortune but trust only someone who has traded professionally for a number of years with a large financial company or someone newspapers and magazines cite in their articles. The more you research this business, you'll start to see the same names. Write these down and research them further. You'll quickly formulate a list of forex trading gurus and find the services they offer so you can trade along with them.

There are a number of forex brokers

There are a number of forex brokers, both smaller firms and large companies, who offer basic forex training when you register with their service. If you're new to forex currency trading, this can be quite useful. Most forex broking firm have their own charting platform and tools that will teach you to trade and allow you to trade directly from their trading platform. As we mentioned earlier, you can practice your forex currency trading without using real money by demo trading. When you're ready, you can use your real cash and start generating an income from your trading. It's very advisable to combine some of your own reading and forex training with some amount of experience of forex trading platform.

Finally

Finally, if you're extremely risk averse and would rather not trade yourself, many forex brokerages offer managed accounts. You simply sign the appropriate paperwork and add money to your trading account. The brokers professional forex traders will manage your trades for you while you watch your account balance grow. You will pay a fee for this service and it can be as high as 25%, but if they're making you money, it doesn't matter. They're in this business to make money too, so it's a win-win for you and the forex account manager.

It is recommended that you search yourself

It was then I decided to write this article and explain briefly what it is and how it could be used. If this investment system interests you I suggest you research further before investing your money.

WHAT IS FOREX ?

The Foreign Exchange, called "Forex" market, is the largest financial market in the world, with over $1.2 trillion changing hands every single day. It is many times larger than the New York Stock Exchange.

What is traded on the Forex Exchange?

What is traded on the Forex Exchange? The easy answer is money. Forex trading is where the currency of one nation is traded for that of another. Therefore, Forex trading is always traded in pairs. The most commonly traded currency pairs are traded against the US Dollar (USD).

The major currency pairs

The major currency pairs are the Euro Dollar (EUR/USD); the British Pound (GBP/USD); the Japanese Yen (USD/JPY); and the Swiss Franc (USD/CHF).

Because there is no central exchange for the Forex market, these pairs are traded over the telephone and online through a global network of banks, multinational corporations, brokers and currency traders.

BENEFITS OF FOREX TRADING:

LEVERAGE

When you trade in the Forex market, a small margin deposit can allow you to control a much larger total contract value. Leverage gives the trader the ability to make very nice profits and at the same time keep the risk of losing your cash to a minimum.

LIQUIDITY

Because the Forex Market is so very large, it is normally very easy to sell and turn your trade to cash. This means that by clicking your mouse you can quickly buy and sell.

PROFIT IN BOTH 'RISING' AND 'FALLING' MARKETS:

One of the most exciting advantages of the Forex market is the ability to generate profits whether a currency pair rising or falling.

24HRS: From Sunday evening to Friday Afternoon EST the Forex market is open for business.

DEMO ACCOUNTS

These are available so you can practice without the chance of losing any capital.

In Forex Trading, there is a bid price and an ask price, and the difference of the two is called the spread. The bid is the price at which buyers are willing to buy, and the ask is the price that sellers are willing to sell at any particular time.

The prices are always 5 digit numbers, and it doesn't matter where the decimal is placed. For example, GBP/USD (British Pound) has a bid price of 1.3745 and an ask price of 1.3748, thereby yielding a 3 pip spread.

A long position is a trade

A long position is a trade when the investor buys a currency at one price, with the expectation of selling it some point in the future at a higher price.

A short position is one in which the investor sells a currency with the expectation of buying it back at a lower price, expecting the currency to fall.

If you have found this subject at all interesting I suggest you research Forex Trading and really understand this format before investing.

You will find some very exciting systems available that will put your Forex Trading on auto pilot.

Today we have advanced forecasting

Today we have advanced forecasting methods at our disposal as the power of computers has increased, they can do more in less time than ever before and the computer that sits on your desk top, is far more powerful than the one that helped land man on the moon. So let's look at advanced forecasting methods in more detail...

Before we start

Before we start lets quote a simple fact which may make you think.

Despite all the advances we have seen in technology over the last 20 years the ratio of winners to losers still remains the same - well over 90% lose and 10% win and make the big profits. So all these advances in technology and forecasting have done nothing in terms of increasing the ratio of winners and the reason is obvious!

Scientific methods CANNOT help when you are trading an odds based area like forex.

There is no scientific movement of prices

There is no scientific movement of prices and that's obvious, because humans are emotional beings.

You will hear many people who say there is but if there was, we would all know the price beforehand and there would be no market.

I see lots of clever systems based on neural networks, chaos theory and artificial intelligence but most are junk and fail. Not because they are not clever but because scientific theories don't work on a market that doesn't move to a scientific formula!

If You Want to Win Understand This!

Simple systems work best as they are more robust than complicated ones, with fewer elements to break and are ideal forex trading an odds based market such as forex.

This has been the case since trading began and all the computer geeks and mathematicians who try and beat the market learn a lesson as the market beats up and destroys their equity.

The markets don't reward you for being clever or having a complicated trading system, you get rewarded for being right with your trading signal - nothing more

I always find it highly amusing

I always find it highly amusing when I see the sales copy for many systems and how they proudly say the developer is a mathematician, or wiz kid at physics - big deal. It proves nothing and these people tend to be the worst traders as they think being clever gives them a right to win and it doesn't.

In forex trading all you need is a simple system, the confidence and discipline to follow it and you will probably beat any of the systems with fancy names, which are applied in the brutal world of forex trading and fail.

So forget advanced forecasting, stick with simple forecasting and you will find you will probably make a lot more money.

What is Forex?

The FOREX (Foreign Exchange Market), is the international market, started in the 70's where currencies are bought and sold.

What currency is traded in the Forex market?

The item traded by Forex traders and investors are currency pairs. A currency pair is the exchange rate of one currency over another. The most popular currency pairs are:

USD/CHF: Swiss franc
GBP/USD: Pound
USD/CAD: Canadian dollar
USD/JPY: Yen
AUD/USD: Aussie
EUR/USD: Euro

The first currency of each currency pair is referred as the base currency, while second currency is referred as the counter or quote currency.

All currency pairs are quoted with a bid and ask price. The bid (always lower than the ask) is the price your broker is willing to buy at, thus the trader should sell at this price.

When dealing in Forex

When dealing in Forex you will frequently hear the term pip. A pip is the minimum move a currency pair can make. Pip means price interest point. A move in the EUR/USD from 1.2545 to 1.2554 equals 9 pips.

The purpose of trading is to buy low and sell high. The foreign currency market FOREX is no different. The product traded are rates of currencies of different countries.

FOREX is a really unusual market for a variety of reasons

FOREX is a really unusual market for a variety of reasons. First, it is one of the few markets that it is free of any outside controls and that it cannot be manipulated. It is also the largest liquid financial market, with trade reaching between 1 and 1.7 trillion US dollars a day.

When this amount of money moves this fast, you can easily understand why a few investors would find it almost impossible to radically increase or decrease the price of a major currency.

The liquidity of the market means that unlike some stocks, traders are able to open and close positions within a few seconds as there are many buyers and sellers.

Margin Trading:

Margin trading refers to the leverage dollars given to the traders in the market.

One of the best features in Forex trading

One of the best features in Forex trading is that traders are able to trade foreign currencies with high margin.

In Forex, normal trade margins are 100:1 and 150:1, or even 200:1 trade margins. You get 1:1 margin for stock exchanges, 2:1 margin for equity trading, 15:1 margin for futures market. You can easily see how much more attractive Forex Trading is for the average trader.

Traders should be very aware

This very attractive feature can also be dangerous. Traders should be very aware of the margin call and should always avoid them at all cost.

The typical broker will require a minimum account size, also known as account margin or initial margin. Once you have deposited your money you will then be able to trade. The broker will also specify how much they require per position (lot) traded.

There are many automatic trading systems available. Do your research!

If you want to succeed at forex trading

If you want to succeed at forex trading then you need to be able to answer the question in this article. If you can't answer it then you are going get wiped out by the markets so here it is...

What's your Trading edge (defined)

Now before you answer this question let me tell you what a trading edge is NOT:

- You have a day trading or forex scalping system

- You think you can predict forex prices

- You think forex moves to a scientific formula

- You have a simulated track record from a vendor you have bought

- You like to buy low and sell high

- You think you can trade expert opinion and news

- You think you are clever

- You think you have a complicated system that can beat the market

Most forex traders think the above will give them a trading edge - but believe any of the above and the market will take all your money and do it quickly.

Think about this simple fact:

Think about this simple fact:
95% of traders lose money in the market and you need to think what your edge is i.e why you should succeed while others fail.

Now let's be clear - anyone has the potential to be a successful forex trader yet few succeed. The reason most fail is they believe common myths like the ones on the above list, or they don't have the right mindset.

Successful forex trading

Successful forex trading is built on three pillars:

- Knowledge and understanding and getting the right forex education

- Confidence in your method to make money longer term

- The discipline to follow your forex trading system through periods of drawdown to ultimate success

Your trading edge

Your trading edge is not just about a method, it's about having confidence in it, so you can have the discipline to apply it through drawdown and emerge a long term winner.

Forex trading is simple

Forex trading is simple and your method needs to be too.

A simple method works best because it is more robust in the face of brutal market conditions and has fewer elements to break than a complicated one. Furthermore, it will be easier to understand and have confidence in.

If you think

If you think that you need to be clever or put a lot of effort into your trading think again - you get rewarded for being right with your trading signal and market timing, nothing else. Sure in many jobs you get paid for effort but in forex trading it's all about being right.

So do you know what your trading edge is? If you don't and you can't define it, then its back to learning forex and your forex education until you do.