FOREX ARTICLES

In my continuing quest to provide visitors of my site with a large amount of options to chose from when considering working from home I have done some research on Forex trading. I first learned of Forex trading while pursuing my MBA program. For those of you who have never heard of this, Forex trading is the exchange of foreign currency.

I know I would have never even know this was an option for making money had I not found out in class. Most of the really big corporations have departments of people that do this for a living because it can be very lucrative if done correctly. The best news I have learned about this process of exchanging currencies is that many of the websites that you can sign up with to do this offer free trial accounts to help you learn before you invest your money into trying it. You won't make any money in the trial accounts if you do well, it is just pretend money essentially but with the real market conditions. If you do well in the trial account you will know if this is something you want to try on your own.

Benefits to Forex trading are that is can be done 24/7 whereas the stock market is a business hours only exchange. It is 24/7 because it is done with countries around the world so clearly there are countries that are awake and working while we sleep. Another benefit is you are in control of the trading on your account. You do not need to hire a licensed broker to make your trades and charge you fees. Along those same lines, anyone who does any investing most likely knows that some funds require you to own then for a certain period of time or pay early withdrawal fees. You do not need to concern yourself with this either. One last benefit that I would like to point out is the fact that Forex is not really subject to the same kinds of swings in the market that stocks are subject to. Of course if you always buy and sell the same currencies then there will be market swings. But, because there are hundreds of currencies out there, there is always going to be something for you to make money on because while one currency is up in value another one is down and vice versa.

There are many resources available to someone interested in becoming involved in this type of training. The Federal Reserve Bank's website is just one example of the information available, http://www.ny.frb.org/markets/foreignex.html. Here is another article that you will find helpful in starting out in this field. http://www.forex.com/pdf/pro2.pdf . I have also included one of the sites that does offer a free lesson. http://www.shareasale.com/r.cfm?b=44910&u=155496&m=8912 .

While there are many benefits to this type of training, as I mentioned above, there are certainly risks involved as well. There are risks with exchange rates, central banks in foreign countries, and risks involving interest rates and credit. Forex is quickly becoming a popular way to help diversify your investment portfolio. If you are good with understanding investing concepts and enjoy doing it this may be the home business opportunity for you. Just do your research and try to find one of the sites offering the free trial account to practice with and you are well on your way down the Road to Riches.

by Scott Bianchi

www.best-internet-bargains.com

articles@bestinternetbargains.com

In my continuing quest to provide visitors of my site with a large amount of options to chose from when considering working from home I have done some research on Forex trading. I first learned of Forex trading while pursuing my MBA program. For those of you who have never heard of this, Forex trading is the exchange of foreign currency.

I know I would have never even know this was an option for making money had I not found out in class. Most of the really big corporations have departments of people that do this for a living because it can be very lucrative if done correctly. The best news I have learned about this process of exchanging currencies is that many of the websites that you can sign up with to do this offer free trial accounts to help you learn before you invest your money into trying it. You won't make any money in the trial accounts if you do well, it is just pretend money essentially but with the real market conditions. If you do well in the trial account you will know if this is something you want to try on your own.

Benefits to Forex trading are that is can be done 24/7 whereas the stock market is a business hours only exchange. It is 24/7 because it is done with countries around the world so clearly there are countries that are awake and working while we sleep. Another benefit is you are in control of the trading on your account. You do not need to hire a licensed broker to make your trades and charge you fees. Along those same lines, anyone who does any investing most likely knows that some funds require you to own then for a certain period of time or pay early withdrawal fees. You do not need to concern yourself with this either. One last benefit that I would like to point out is the fact that Forex is not really subject to the same kinds of swings in the market that stocks are subject to. Of course if you always buy and sell the same currencies then there will be market swings. But, because there are hundreds of currencies out there, there is always going to be something for you to make money on because while one currency is up in value another one is down and vice versa.

There are many resources available to someone interested in becoming involved in this type of training. The Federal Reserve Bank's website is just one example of the information available, http://www.ny.frb.org/markets/foreignex.html. Here is another article that you will find helpful in starting out in this field. http://www.forex.com/pdf/pro2.pdf . I have also included one of the sites that does offer a free lesson. http://www.shareasale.com/r.cfm?b=44910&u=155496&m=8912 .

While there are many benefits to this type of training, as I mentioned above, there are certainly risks involved as well. There are risks with exchange rates, central banks in foreign countries, and risks involving interest rates and credit. Forex is quickly becoming a popular way to help diversify your investment portfolio. If you are good with understanding investing concepts and enjoy doing it this may be the home business opportunity for you. Just do your research and try to find one of the sites offering the free trial account to practice with and you are well on your way down the Road to Riches.

by Scott Bianchi

www.best-internet-bargains.com

articles@bestinternetbargains.com

There are many many advantages over the various other ways of investing. First of all it is a 24 hr market, except for weekends of course. You have the US market then the european and then the Asian. One of the great times to trade is during the over lapping periods. The USA and european overlap between 5am & 9am eastern and the Euro & Asian between 11pm & 1am eastern. Usually the busiest time and best to trade.

The is also the risk factor for the accounts. With futures and options you can get margin calls that can wipe you out. If you get caught in a bad trade not only do you lose the money in the account but you may have to come up with alot more from your pocket. It can be very risking. But not in Forex. Worst case senerio you could lose whats in you account. But you would have to do something really stupid. Like making a big trade on a Fundamental day and leave it alone. If market takes a bad move and you weren't there. OOOPS. But That wouldn't happen with a smarth trader.

Then there are the demo accounts which is an account where you can trade using all the right things, platform,charts,and information. But you are using play money, or what we call paper trading too.

Plus with Forex you have a mini account. Instead of needing thousands of dollars to get into it. You can open an account with as little as $300.00. Now of course you will be trading at 1 tenth of a trade. IN other words you controling 10,000 instead of 100,000.00 These are call lots. Which also means you will only risk 1 tenth too!

So if you would love to learn to do investing and not have near the risk you really need to take a closer look at Forex trading.

by Mike Pachuta

http://www.SUCCESSFUL-FOREX.COM/

mpachuta@yahoo.com

There are many many advantages over the various other ways of investing. First of all it is a 24 hr market, except for weekends of course. You have the US market then the european and then the Asian. One of the great times to trade is during the over lapping periods. The USA and european overlap between 5am & 9am eastern and the Euro & Asian between 11pm & 1am eastern. Usually the busiest time and best to trade.

The is also the risk factor for the accounts. With futures and options you can get margin calls that can wipe you out. If you get caught in a bad trade not only do you lose the money in the account but you may have to come up with alot more from your pocket. It can be very risking. But not in Forex. Worst case senerio you could lose whats in you account. But you would have to do something really stupid. Like making a big trade on a Fundamental day and leave it alone. If market takes a bad move and you weren't there. OOOPS. But That wouldn't happen with a smarth trader.

Then there are the demo accounts which is an account where you can trade using all the right things, platform,charts,and information. But you are using play money, or what we call paper trading too.

Plus with Forex you have a mini account. Instead of needing thousands of dollars to get into it. You can open an account with as little as $300.00. Now of course you will be trading at 1 tenth of a trade. IN other words you controling 10,000 instead of 100,000.00 These are call lots. Which also means you will only risk 1 tenth too!

So if you would love to learn to do investing and not have near the risk you really need to take a closer look at Forex trading.

by Mike Pachuta

http://www.SUCCESSFUL-FOREX.COM/

mpachuta@yahoo.com

Investing in foreign currencies is a relatively new avenue of investing. There are considerably fewer people are aware of this market than there are people aware of several other avenues of investing. Trading foreign currency, also known as forex, is the most lucrative investment market that exists. There are several factors that make this true among which, successful forex traders earn realistic profits of one hundred plus percent each month. Compared to some of the better known investment markets such as corporate stocks, this is an unheard of return on investment. It's very necessary to mention here that a person who invests in forex must, without exception, make it a point to learn the detailed, but simple strategies and information surrounding the market. This very fact is what makes the difference between successful forex traders and other traders.

A few additional points, which create such powerful leverage for investors within the forex market are: The amount of capital required to begin investing in the market is only three hundred dollars. For the most part, any other investment market is going to demand thousands of dollars of the investor in the beginning. Also, the market offers opportunities to profit regardless what the direction of the market may be; In most commonly known markets investors sit and wait for the market to begin an up trend before entering a trade. Even then, investors, as a rule must sit and wait some more to be able to exit the trade with a nice profit. Given that the forex market produces several up, down, and sideways trends in a single day, it can easily be seen that forex stands head and shoulders above other markets. Additionally there are trading strategies, which are taught that provide for compounded profits; these are profits on top of profits. In addition, free demo accounts are available within the industry of forex trading, which facilitate the sharpening of skills without the risk losing any capital. And the advantage regarding the time factor in trading foreign currency is a very attractive point for any investor. Compared to one of the most sought after avenues of investing, which often requires forty or more hours each week, namely in the real-estate market, the forex market requires a much smaller demand on the investor's time. Forex trading requires approximately ten to fifteen hours each week to earn a full time income. It's easy to see that the advantages and great leverage that exist in the forex market, make it among the most lucrative, time liberating, and easy to enter by far.

I hope this information gives you a clear understanding of how you can turn your investing into a true method of making your money work harder for you.

by Joe Clinton

www.joeforex.com

Investing in foreign currencies is a relatively new avenue of investing. There are considerably fewer people are aware of this market than there are people aware of several other avenues of investing. Trading foreign currency, also known as forex, is the most lucrative investment market that exists. There are several factors that make this true among which, successful forex traders earn realistic profits of one hundred plus percent each month. Compared to some of the better known investment markets such as corporate stocks, this is an unheard of return on investment. It's very necessary to mention here that a person who invests in forex must, without exception, make it a point to learn the detailed, but simple strategies and information surrounding the market. This very fact is what makes the difference between successful forex traders and other traders.

A few additional points, which create such powerful leverage for investors within the forex market are: The amount of capital required to begin investing in the market is only three hundred dollars. For the most part, any other investment market is going to demand thousands of dollars of the investor in the beginning. Also, the market offers opportunities to profit regardless what the direction of the market may be; In most commonly known markets investors sit and wait for the market to begin an up trend before entering a trade. Even then, investors, as a rule must sit and wait some more to be able to exit the trade with a nice profit. Given that the forex market produces several up, down, and sideways trends in a single day, it can easily be seen that forex stands head and shoulders above other markets. Additionally there are trading strategies, which are taught that provide for compounded profits; these are profits on top of profits. In addition, free demo accounts are available within the industry of forex trading, which facilitate the sharpening of skills without the risk losing any capital. And the advantage regarding the time factor in trading foreign currency is a very attractive point for any investor. Compared to one of the most sought after avenues of investing, which often requires forty or more hours each week, namely in the real-estate market, the forex market requires a much smaller demand on the investor's time. Forex trading requires approximately ten to fifteen hours each week to earn a full time income. It's easy to see that the advantages and great leverage that exist in the forex market, make it among the most lucrative, time liberating, and easy to enter by far.

I hope this information gives you a clear understanding of how you can turn your investing into a true method of making your money work harder for you.

by Joe Clinton

www.joeforex.com

Although every investment involves some risk, the risk of loss in trading off-exchange Forex contracts can be substantial. Therefore, if you are considering participating in this market, you should understand some of the risks associated with this product so you can make an informed decision before investing.

As stated in the introduction to this topic, off-exchange foreign currency trading carries a high level of risk and may not be suitable for all customers. The only funds that should ever be used to speculate in foreign currency trading, or any type of highly speculative investment, are funds that represent risk capital – i.e., funds you can afford to lose without affecting your financial situation. There are other reasons why Forex trading may or may not be an appropriate investment for you, and they are highlighted below.

In Forex you are trading substantial sums of money, and there is always a possibility that a trade will go against you. There are several trading tools that can minimize your risk, yes, but eliminate it, no. With caution, and above all education, the Forex trader can learn how to trade profitably and minimize loss.
The Scams and fraud

Forex scams were fairly common a few years ago. The industry has cleaned up considerably since then. Still, you should exercise caution before signing up with a Forex broker by checking their background.

Reputable Forex brokers will be associated with large financial institutions like banks or insurance companies, and they will be registered with the proper government agencies. In the United States, brokers should be registered with the Commodities Futures Trading Commission or a member of the National Futures Association. You can also check with your local Consumer Protection Bureau and the Better Business Bureau.
The market could move against you

No one can predict with certainty which way exchange rates will go, and the Forex market is volatile. Fluctuations in the foreign exchange rate between the time you place the trade and the time you close it out will affect the price of your Forex contract and the potential profit and losses relating to it.
You could lose your entire investment

You will be required to deposit an amount of money (often referred to as a "security deposit" or "margin") with your Forex dealer in order to buy or sell an off-exchange Forex contract. As discussed earlier, a relatively small amount of money can enable you to hold a Forex position worth many times the account value. This is referred to as leverage or gearing. The smaller the deposit in relation to the underlying value of the contract, the greater the leverage. If the price moves in an unfavorable direction, high leverage can produce large losses in relation to your initial deposit. In fact, even a small move against your position may result in a large loss, including the loss of your entire deposit. Depending on your agreement with your dealer, you may also be required to pay additional losses.
You are relying on the dealer's creditworthiness and reputation

Retail off-exchange Forex trades are not guaranteed by a clearing organization. Furthermore, funds that you have deposited to trade Forex contracts are not insured and do not receive a priority in bankruptcy. Even customer funds deposited by a dealer in an FDIC-insured bank account are not protected if the dealer goes bankrupt.
There is no central marketplace

Unlike regulated futures exchanges, in the retail off-exchange Forex market there is no central marketplace with many buyers and sellers. The Forex dealer determines the execution price, so you are relying on the dealer's integrity for a fair price.
The trading system could break down

If you are using an Internet-based or other electronic system to place trades, some part of the system could fail. In the event of a system failure, it is possible that, for a certain time period, you may not be able to enter new orders, execute existing orders, or modify or cancel orders that were previously entered. A system failure may also result in loss of orders or order priority.
You could be a victim of fraud

As with any investment, you should protect yourself from fraud. Beware of investment schemes that promise significant returns with little risk. You should take a close and cautious look at the investment offer itself and continue to monitor any investment you do make.
Types of Risks

Even through you are dealing with a reputable broker, there are risks to Forex trading. Transactions are unexpected and depend on volatile markets and political events.

Exchange Rate Risk: refers to the fluctuations in currency prices over a trading period. Prices can fall rapidly unless stop loss orders are used.

Interest Rate Risk: can result from discrepancies between the interest rates in the 2 countries represented by the currency pair in a Forex quote.

Credit Risk: is the possibility that 1 party in a Forex transaction may not honor their debt when the deal is closed. This may happen when a bank or financial institution declares insolvency.

Country Risk: is associated with governments that may become involved in foreign exchange markets by limiting the flow of currency. There is more country risk associated with "exotic" currencies than with major countries that allow the free trading of their currency.
How to limit risks?

There are some ways to limit risk and financial exposure. Every trader should have a trading strategy; i.e., knowing when to enter and exit the market, and what kind of movements to expect. Developing strategies requires education, which is the key to limiting risk. The basic rule which trader follows aal time: Never use money that you cannot afford to lose.

Every Forex trader needs to know at least the basics about technical analysis and how to read financial charts. He should study chart movements and indicators and understand how charts are interpreted.
Stop-Loss Orders

Even the most knowledgeable traders, can't predict with absolute certainty how the market will behave. For this reason, every Forex transaction should take tools to minimize loss.

Stop-loss orders are the most common way to minimizing risk. A stop-loss order contains instructions to exit your position if the price reaches a certain point. If you take a long position (expecting the price to rise) you would place a stop loss order below the current market price. If you take a short position (expecting the price to fall) you would place a stop loss order above the current market price.

Stop loss orders can be used in conjunction with limit orders to automate Forex trading.

Although every investment involves some risk, the risk of loss in trading off-exchange Forex contracts can be substantial. Therefore, if you are considering participating in this market, you should understand some of the risks associated with this product so you can make an informed decision before investing.

As stated in the introduction to this topic, off-exchange foreign currency trading carries a high level of risk and may not be suitable for all customers. The only funds that should ever be used to speculate in foreign currency trading, or any type of highly speculative investment, are funds that represent risk capital – i.e., funds you can afford to lose without affecting your financial situation. There are other reasons why Forex trading may or may not be an appropriate investment for you, and they are highlighted below.

In Forex you are trading substantial sums of money, and there is always a possibility that a trade will go against you. There are several trading tools that can minimize your risk, yes, but eliminate it, no. With caution, and above all education, the Forex trader can learn how to trade profitably and minimize loss.
The Scams and fraud

Forex scams were fairly common a few years ago. The industry has cleaned up considerably since then. Still, you should exercise caution before signing up with a Forex broker by checking their background.

Reputable Forex brokers will be associated with large financial institutions like banks or insurance companies, and they will be registered with the proper government agencies. In the United States, brokers should be registered with the Commodities Futures Trading Commission or a member of the National Futures Association. You can also check with your local Consumer Protection Bureau and the Better Business Bureau.
The market could move against you

No one can predict with certainty which way exchange rates will go, and the Forex market is volatile. Fluctuations in the foreign exchange rate between the time you place the trade and the time you close it out will affect the price of your Forex contract and the potential profit and losses relating to it.
You could lose your entire investment

You will be required to deposit an amount of money (often referred to as a "security deposit" or "margin") with your Forex dealer in order to buy or sell an off-exchange Forex contract. As discussed earlier, a relatively small amount of money can enable you to hold a Forex position worth many times the account value. This is referred to as leverage or gearing. The smaller the deposit in relation to the underlying value of the contract, the greater the leverage. If the price moves in an unfavorable direction, high leverage can produce large losses in relation to your initial deposit. In fact, even a small move against your position may result in a large loss, including the loss of your entire deposit. Depending on your agreement with your dealer, you may also be required to pay additional losses.
You are relying on the dealer's creditworthiness and reputation

Retail off-exchange Forex trades are not guaranteed by a clearing organization. Furthermore, funds that you have deposited to trade Forex contracts are not insured and do not receive a priority in bankruptcy. Even customer funds deposited by a dealer in an FDIC-insured bank account are not protected if the dealer goes bankrupt.
There is no central marketplace

Unlike regulated futures exchanges, in the retail off-exchange Forex market there is no central marketplace with many buyers and sellers. The Forex dealer determines the execution price, so you are relying on the dealer's integrity for a fair price.
The trading system could break down

If you are using an Internet-based or other electronic system to place trades, some part of the system could fail. In the event of a system failure, it is possible that, for a certain time period, you may not be able to enter new orders, execute existing orders, or modify or cancel orders that were previously entered. A system failure may also result in loss of orders or order priority.
You could be a victim of fraud

As with any investment, you should protect yourself from fraud. Beware of investment schemes that promise significant returns with little risk. You should take a close and cautious look at the investment offer itself and continue to monitor any investment you do make.
Types of Risks

Even through you are dealing with a reputable broker, there are risks to Forex trading. Transactions are unexpected and depend on volatile markets and political events.

Exchange Rate Risk: refers to the fluctuations in currency prices over a trading period. Prices can fall rapidly unless stop loss orders are used.

Interest Rate Risk: can result from discrepancies between the interest rates in the 2 countries represented by the currency pair in a Forex quote.

Credit Risk: is the possibility that 1 party in a Forex transaction may not honor their debt when the deal is closed. This may happen when a bank or financial institution declares insolvency.

Country Risk: is associated with governments that may become involved in foreign exchange markets by limiting the flow of currency. There is more country risk associated with "exotic" currencies than with major countries that allow the free trading of their currency.
How to limit risks?

There are some ways to limit risk and financial exposure. Every trader should have a trading strategy; i.e., knowing when to enter and exit the market, and what kind of movements to expect. Developing strategies requires education, which is the key to limiting risk. The basic rule which trader follows aal time: Never use money that you cannot afford to lose.

Every Forex trader needs to know at least the basics about technical analysis and how to read financial charts. He should study chart movements and indicators and understand how charts are interpreted.
Stop-Loss Orders

Even the most knowledgeable traders, can't predict with absolute certainty how the market will behave. For this reason, every Forex transaction should take tools to minimize loss.

Stop-loss orders are the most common way to minimizing risk. A stop-loss order contains instructions to exit your position if the price reaches a certain point. If you take a long position (expecting the price to rise) you would place a stop loss order below the current market price. If you take a short position (expecting the price to fall) you would place a stop loss order above the current market price.

Stop loss orders can be used in conjunction with limit orders to automate Forex trading.

These terms - cross rate and pip - are ones of the main terms in forex trading.

First of all some words about cross-rates.

Cross-rate is the parity between two currencies which follows from their Forex currency exchange rate in relation to a Forex rate of the third currency.

Pairings of non-US dollar currencies are known as “crosses.” We can derive cross exchange rates for the GPB, EUR, JPY and CHF from the aforementioned major pairs. Exchange rates must be consistent across all currencies or else it will be possible to “round trip” and make profits without risk.

Example

Assume that the following major exchange rates are known:
EUR/USD = 1.0060/65
GBP/USD = 1.5847/52
USD/JPY = 120.25/30
USD/CHF = 1.4554/59

To calculate GPB/CHF
GBP/USD: Bid: 1.5847 Offer: 1.5852
USD/CHF: 1.4554 1.4559
GBP/USD X USD/CHF = 1.5847 X1.4554 1.5852 X 1.4559

"Pips" - point - a minimal possible currency fluctuation. Different instruments (currency pairs) are quoted with different accuracy, i.e. with different number of characters in the quotation. The major part of currencies are quoted with 0.0001 accuracy, some, for example, yen and its cross-rates - with 0.01 accuracy. As big figures of quotations change quite slowly, quotations, as a rule, are given in contracted form: EUR 10/15, which means, for example, EUR/USD 1.1310/1.1315. When quotations change, for example, USDJPY=121.44 to USDJPY = 121.45 or GBPUSD = 1.6262 to 1.6263, they say, that the price has changed by 1 point. In the above examples dollar went up by 1 point relatively to yen (which went down by 1 point), pound went up by 1 point, as well.

The value of 1 point in US dollars differs not only for various currencies, but also for one and the same currency with different quotations this value can be different, besides, the value of one point depends on the amount of deal.

In general, the algorithm used to calculate the value of one point of each currency in US dollars can be expressed with the following formula:

Value of the point = Amount of deal * Point

When using this formula, you get the results of calculations in the quoted currency. In order to recalculate the value of one point from the quoted currency to US dollars, you should divide the result by ASK (Offer) rate of the quoted currency against US dollars - if the quoted currency has direct rate, or to multiply by BID rate of the quoted currency against US dollar - if the quoted currency has reverse rate.

For example:
There's a position USD 200000, on the market of USDJPY
Accordingly, value of one point = 200000 * 0.01 = JPY 2000
If now the current rate is USDJPY 118.62/68, then value of one point in USD will be 2000/118.68 = USD 16.85
There's a position EUR 300000, on the market of EURGBP
Accordingly, value of one point = 300000 * 0.0001 = GBP 30
If now the current rate is GBPUSD 1.6101/07, then value of one point in USD will be 30*1.6101= USD 48.30
There's a position GBP 100000 on the market of GBPUSD
Accordingly, value of one point = 100000 * 0.0001 = USD 30

And one more term is "figure".

The following example will demonstrate the connection between pips and figures:

Currencies are quoted using four positions after the decimal point, which means that one pip is 1/10,000 of the currency unit. In the above example, EUR/USD, there is a difference of 4 pips between “buy” and “sell,” but there is no difference in the value of the figures.

This is not the case when the Japanese yen is the currency being quoted. Due to the high denomination of the yen against the USD, e.g. 121.23 – 121.39, the yen is quoted two positions after the decimal point only. In this case one pip is equal to 1/100 of the Japanese currency unit.

When asked over the phone, the dealer will tell you only the values of the pips, presuming that you are aware of the market and know the value of the figures. If you are not sure about the figure, don’t forget to ask.

These terms - cross rate and pip - are ones of the main terms in forex trading.

First of all some words about cross-rates.

Cross-rate is the parity between two currencies which follows from their Forex currency exchange rate in relation to a Forex rate of the third currency.

Pairings of non-US dollar currencies are known as “crosses.” We can derive cross exchange rates for the GPB, EUR, JPY and CHF from the aforementioned major pairs. Exchange rates must be consistent across all currencies or else it will be possible to “round trip” and make profits without risk.

Example

Assume that the following major exchange rates are known:
EUR/USD = 1.0060/65
GBP/USD = 1.5847/52
USD/JPY = 120.25/30
USD/CHF = 1.4554/59

To calculate GPB/CHF
GBP/USD: Bid: 1.5847 Offer: 1.5852
USD/CHF: 1.4554 1.4559
GBP/USD X USD/CHF = 1.5847 X1.4554 1.5852 X 1.4559

"Pips" - point - a minimal possible currency fluctuation. Different instruments (currency pairs) are quoted with different accuracy, i.e. with different number of characters in the quotation. The major part of currencies are quoted with 0.0001 accuracy, some, for example, yen and its cross-rates - with 0.01 accuracy. As big figures of quotations change quite slowly, quotations, as a rule, are given in contracted form: EUR 10/15, which means, for example, EUR/USD 1.1310/1.1315. When quotations change, for example, USDJPY=121.44 to USDJPY = 121.45 or GBPUSD = 1.6262 to 1.6263, they say, that the price has changed by 1 point. In the above examples dollar went up by 1 point relatively to yen (which went down by 1 point), pound went up by 1 point, as well.

The value of 1 point in US dollars differs not only for various currencies, but also for one and the same currency with different quotations this value can be different, besides, the value of one point depends on the amount of deal.

In general, the algorithm used to calculate the value of one point of each currency in US dollars can be expressed with the following formula:

Value of the point = Amount of deal * Point

When using this formula, you get the results of calculations in the quoted currency. In order to recalculate the value of one point from the quoted currency to US dollars, you should divide the result by ASK (Offer) rate of the quoted currency against US dollars - if the quoted currency has direct rate, or to multiply by BID rate of the quoted currency against US dollar - if the quoted currency has reverse rate.

For example:
There's a position USD 200000, on the market of USDJPY
Accordingly, value of one point = 200000 * 0.01 = JPY 2000
If now the current rate is USDJPY 118.62/68, then value of one point in USD will be 2000/118.68 = USD 16.85
There's a position EUR 300000, on the market of EURGBP
Accordingly, value of one point = 300000 * 0.0001 = GBP 30
If now the current rate is GBPUSD 1.6101/07, then value of one point in USD will be 30*1.6101= USD 48.30
There's a position GBP 100000 on the market of GBPUSD
Accordingly, value of one point = 100000 * 0.0001 = USD 30

And one more term is "figure".

The following example will demonstrate the connection between pips and figures:

Currencies are quoted using four positions after the decimal point, which means that one pip is 1/10,000 of the currency unit. In the above example, EUR/USD, there is a difference of 4 pips between “buy” and “sell,” but there is no difference in the value of the figures.

This is not the case when the Japanese yen is the currency being quoted. Due to the high denomination of the yen against the USD, e.g. 121.23 – 121.39, the yen is quoted two positions after the decimal point only. In this case one pip is equal to 1/100 of the Japanese currency unit.

When asked over the phone, the dealer will tell you only the values of the pips, presuming that you are aware of the market and know the value of the figures. If you are not sure about the figure, don’t forget to ask.

In Forex market you may buy or sell currencies. The objective is to earn a profit from your position. If you have bought a currency, for example, and currency appreciates in value, then you will earn a profit by closing your position. When you close your position and sell the currency back in order to lock in the profit, you are in actuality buying the counter currency in the pair. By trading currency pairs, one currency valued against another, a rate of worth has been established. After all, a country’s currency has value only relative to the currency of another country.

So, what is the position?

Position is the netted total commitments in a given currency. A position can be either flat or square (no exposure), long, (more currency bought than sold), or short (more currency sold than bought).

In the Forex market, currencies are always priced in pairs; therefore, all trades result in the simultaneous buying of one currency and the selling of another. The objective of currency trading is to exchange one currency for another in the expectation that the market rate or price will change so that the currency you bought has increased its value relative to the one you sold. If you have bought a currency and the price appreciates in value, the trader must sell the currency back in order to lock in the profit. An open trade or position is one in which a trader has either bought/sold one currency pair and has not sold/bought back the equivalent amount to effectively close the position.

If you want to buy the base currency, you are considered to be "buying" the currency pair. Also know as “going long” (or longing the market). Going long the EUR/USD pair implies buying the base currency and selling an equivalent amount of the second, quote currency. It is not necessary to own the quote currency prior to selling, as it is sold short on the open market and used to secure your long position on the base currency.

The same rules apply to going short as they do to going long, only in the opposite manner. If you think the base currency is going to depreciate in value against a particular currency (or equivalently, that the secondary currency will go up relative the base currency), instead of buying that currency pair, you would sell it. This is known as shorting the market. Going short the EUR/USD pair implies selling the base currency so you can buy an equivalent amount of the second, quote currency (at the current exchange rate, of course).

In other words, when you buy a currency, you are said to be “long” in that currency. Long positions are entered into at the offer price. Thus if you are buying one GBP/USD lot quoted at 1.5847/52, then you will buy 100,000 GBP at 1.5852 USD.

When you sell a currency, you are said to be “short” in that currency. Short positions are entered into at the bid price, which is 1.5847 USD in our example.

Because of the symmetry of currency transactions, you are always simultaneously long in one currency and short in another. For example if you exchange 100,000 GBP for USD you are short in sterling and long in US dollars.

An open position is one that is live and ongoing. As long as the position is open, its value will fluctuate in accordance with the exchange rate in the market. Any profits and losses will exist on paper only and will be reflected in your margin account.

To close out your position, you conduct an equal and opposite trade in the same currency pair. For example, if you have gone long in one lot of GBP/USD (at the prevailing offer price) you can close out that position by subsequently going short in one GBP/USD lot (at the prevailing bid price).

Your opening and closing trades must the conducted through the same intermediary. You cannot open a GBP/USD position with Broker A and close it out through Broker B.

In Forex market you may buy or sell currencies. The objective is to earn a profit from your position. If you have bought a currency, for example, and currency appreciates in value, then you will earn a profit by closing your position. When you close your position and sell the currency back in order to lock in the profit, you are in actuality buying the counter currency in the pair. By trading currency pairs, one currency valued against another, a rate of worth has been established. After all, a country’s currency has value only relative to the currency of another country.

So, what is the position?

Position is the netted total commitments in a given currency. A position can be either flat or square (no exposure), long, (more currency bought than sold), or short (more currency sold than bought).

In the Forex market, currencies are always priced in pairs; therefore, all trades result in the simultaneous buying of one currency and the selling of another. The objective of currency trading is to exchange one currency for another in the expectation that the market rate or price will change so that the currency you bought has increased its value relative to the one you sold. If you have bought a currency and the price appreciates in value, the trader must sell the currency back in order to lock in the profit. An open trade or position is one in which a trader has either bought/sold one currency pair and has not sold/bought back the equivalent amount to effectively close the position.

If you want to buy the base currency, you are considered to be "buying" the currency pair. Also know as “going long” (or longing the market). Going long the EUR/USD pair implies buying the base currency and selling an equivalent amount of the second, quote currency. It is not necessary to own the quote currency prior to selling, as it is sold short on the open market and used to secure your long position on the base currency.

The same rules apply to going short as they do to going long, only in the opposite manner. If you think the base currency is going to depreciate in value against a particular currency (or equivalently, that the secondary currency will go up relative the base currency), instead of buying that currency pair, you would sell it. This is known as shorting the market. Going short the EUR/USD pair implies selling the base currency so you can buy an equivalent amount of the second, quote currency (at the current exchange rate, of course).

In other words, when you buy a currency, you are said to be “long” in that currency. Long positions are entered into at the offer price. Thus if you are buying one GBP/USD lot quoted at 1.5847/52, then you will buy 100,000 GBP at 1.5852 USD.

When you sell a currency, you are said to be “short” in that currency. Short positions are entered into at the bid price, which is 1.5847 USD in our example.

Because of the symmetry of currency transactions, you are always simultaneously long in one currency and short in another. For example if you exchange 100,000 GBP for USD you are short in sterling and long in US dollars.

An open position is one that is live and ongoing. As long as the position is open, its value will fluctuate in accordance with the exchange rate in the market. Any profits and losses will exist on paper only and will be reflected in your margin account.

To close out your position, you conduct an equal and opposite trade in the same currency pair. For example, if you have gone long in one lot of GBP/USD (at the prevailing offer price) you can close out that position by subsequently going short in one GBP/USD lot (at the prevailing bid price).

Your opening and closing trades must the conducted through the same intermediary. You cannot open a GBP/USD position with Broker A and close it out through Broker B.

There are two main, but at the same time confronting schools in forex analysis. They are the fundamentalists and technicians.

There is no clear answer as to which is right. Sometimes it appears that the technicians make better picks. Other times it seems the fundamentalists are making the right call. One thing is certain, when one group of analysts is wrong the other will surely emerge saying, "We told you so." So, which is right for you? There are many potential answers to that question. Three variants of popular answers are:

If you are a "long-term" Forex investor looking for companies with solid foundation, growth and income potential, the fundamentals may sway you.

If you are a "short-term" Forex investor (Forex market trader) looking for companies who are "on the verge" of being discovered, fundamentals will be useful to you.

If you are a "long-term" investor who is not as concerned about one company's basics because you will diversify to minimize risk, or you are a "short-term" investor waiting for investor sentiment to change, then technical analysis will be helpful to you.

Today, many investors use both fundamental analysis and technical analysis. The technicians can tell you about the broad market and its trends. The fundamentalists tell you whether an issue has the "basics" necessary to meet your investment objectives.

Fundamental and Technical analysis differ radically in their approaches. There isn't clear answer, which method has yielded better returns over a suitable period of study. Try using the best ideas from each camp and you should be pleased with the results.

There are two main, but at the same time confronting schools in forex analysis. They are the fundamentalists and technicians.

There is no clear answer as to which is right. Sometimes it appears that the technicians make better picks. Other times it seems the fundamentalists are making the right call. One thing is certain, when one group of analysts is wrong the other will surely emerge saying, "We told you so." So, which is right for you? There are many potential answers to that question. Three variants of popular answers are:

If you are a "long-term" Forex investor looking for companies with solid foundation, growth and income potential, the fundamentals may sway you.

If you are a "short-term" Forex investor (Forex market trader) looking for companies who are "on the verge" of being discovered, fundamentals will be useful to you.

If you are a "long-term" investor who is not as concerned about one company's basics because you will diversify to minimize risk, or you are a "short-term" investor waiting for investor sentiment to change, then technical analysis will be helpful to you.

Today, many investors use both fundamental analysis and technical analysis. The technicians can tell you about the broad market and its trends. The fundamentalists tell you whether an issue has the "basics" necessary to meet your investment objectives.

Fundamental and Technical analysis differ radically in their approaches. There isn't clear answer, which method has yielded better returns over a suitable period of study. Try using the best ideas from each camp and you should be pleased with the results.

Marc Chaikin has created this volume indicator, continuing work of his predecessors Joe Granville and Larry Williams. Chaikin's Oscillator is a difference of moving averages of the accumulation/distribution indicator.

Marc Chaikin presents an explanation of the volume indicator of accumulation/distribution. " The technical analysis both market indexes, and separate shares should include studying of tenders' volume to help an analyst to make true impression about inwardness of the concrete market.

The analysis of volume allows to make out internal force or market weakness. Frequently only on a divergence of volume and the prices it is possible to learn about a forthcoming important market turn. Though technical analysts always gave great value to tenders' volume, some effective researches in this area practically were not spent up to the end of the 60th years when Joe Granville and Larry Williams have approached to studying interrelation of the price and volume more creatively. For many years it was considered, that the price and volume should grow and fall simultaneously, and any infringement of this interrelation is an attribute of possible change of the price tendency. The Granville's concept of balance volume (IAV), - according to which all volume in day of a rise in prices is considered as accumulation, and in day of recession - as distribution, - is comprehensible, but is too simplified and consequently is unvaluable.

Point is that in very many cases the important peaks and hollows of the prices (both short-term, and intermediate term) prove to be true by IAV. However, if formation of a price extremum nevertheless is accompanied by a divergence of IAV line, this as a rule, serves as a reliable technical signal which the turn of the prices follows. Larry Williams has developed and has improved the concept of balance volume.

To define, what occured in the given day in the market - accumulation or distribution - Granville compared current close price with previous, but Williams - close price with open price.

Williams has created the cumulative indicator, adding to its cumulative value some share of day time volume of the tenders if the close price was above the open price, and deducting some share of volume if the close price was below the open price.

Accumulation/distribution indicator has appeared much more effectively the classical method of the analysis of volumetric divergences created by Granville. Then Williams has gone further, having created oscillator on the basis of an accumulation/distribution line. New oscillator allows to receive even more exact buy or sell.

In the beginning of 70th daily newspapers have ceased to publish data about the share's open price. That is why calculations under Williams's formula became impossible without daily calls to the broker. After that Chaikin created Oscillator, in which the open price in Williams's formula was replaced by the average day.

Chaikin's Oscillator is an excellent tool of the market analysis and a source of reliable buy or sell signals.

The concept of this oscillator is based on three basic positions.

The first: If the share or an index are closed above the average value for a day (which is defined as [maximum + minimum] / 2) - so this day there was an accumulation. The more close the level of share close or an index to a maximum, the more active accumulation. And on the contrary, if the share is closed below the average day price - that the distribution occured this day. The more close to a minimum, the distribution is more active.

The second position: the steady rise in prices is accompanied by growth of tenders' volume and strong volume accumulation. As the volume is some kind of the fuel feeding market growth so backlog of volume at a rise in prices testifies to lack of fuel for continuation of rise. And on the contrary, falling of the prices is usually accompanied by low volume, and comes to an end with panic liquidation of institutional investors' positions.

The third position consists that it is possible to trace volume of the money resources acting on the market and leaving it by means of Chaikin Oscillator. Comparison of volume and prices dynamics allows to reveal tops and the bases of the market - both short-term, and intermediate term.

As there are no correctly operating methods of the technical analysis, the author recommends to apply this oscillator together with other technical indicators.

There is also other way of use of Chaikin Oscillator at whom change of its direction is considered a buy or sell signal but only if it coincides with a direction of the price tendency.

So, if the share on the rise and its price above a 90-day's moving average turn of oscillator curve upwards in the field of negative values is considered as a buy signal (only if the share price above 90-day's moving average - not below it). Turn of the oscillator downwards in the field of positive values (above zero) is considered as sell signal (only if share price during this moment below a 90-day's moving average of close price).

Marc Chaikin has created this volume indicator, continuing work of his predecessors Joe Granville and Larry Williams. Chaikin's Oscillator is a difference of moving averages of the accumulation/distribution indicator.

Marc Chaikin presents an explanation of the volume indicator of accumulation/distribution. " The technical analysis both market indexes, and separate shares should include studying of tenders' volume to help an analyst to make true impression about inwardness of the concrete market.

The analysis of volume allows to make out internal force or market weakness. Frequently only on a divergence of volume and the prices it is possible to learn about a forthcoming important market turn. Though technical analysts always gave great value to tenders' volume, some effective researches in this area practically were not spent up to the end of the 60th years when Joe Granville and Larry Williams have approached to studying interrelation of the price and volume more creatively. For many years it was considered, that the price and volume should grow and fall simultaneously, and any infringement of this interrelation is an attribute of possible change of the price tendency. The Granville's concept of balance volume (IAV), - according to which all volume in day of a rise in prices is considered as accumulation, and in day of recession - as distribution, - is comprehensible, but is too simplified and consequently is unvaluable.

Point is that in very many cases the important peaks and hollows of the prices (both short-term, and intermediate term) prove to be true by IAV. However, if formation of a price extremum nevertheless is accompanied by a divergence of IAV line, this as a rule, serves as a reliable technical signal which the turn of the prices follows. Larry Williams has developed and has improved the concept of balance volume.

To define, what occured in the given day in the market - accumulation or distribution - Granville compared current close price with previous, but Williams - close price with open price.

Williams has created the cumulative indicator, adding to its cumulative value some share of day time volume of the tenders if the close price was above the open price, and deducting some share of volume if the close price was below the open price.

Accumulation/distribution indicator has appeared much more effectively the classical method of the analysis of volumetric divergences created by Granville. Then Williams has gone further, having created oscillator on the basis of an accumulation/distribution line. New oscillator allows to receive even more exact buy or sell.

In the beginning of 70th daily newspapers have ceased to publish data about the share's open price. That is why calculations under Williams's formula became impossible without daily calls to the broker. After that Chaikin created Oscillator, in which the open price in Williams's formula was replaced by the average day.

Chaikin's Oscillator is an excellent tool of the market analysis and a source of reliable buy or sell signals.

The concept of this oscillator is based on three basic positions.

The first: If the share or an index are closed above the average value for a day (which is defined as [maximum + minimum] / 2) - so this day there was an accumulation. The more close the level of share close or an index to a maximum, the more active accumulation. And on the contrary, if the share is closed below the average day price - that the distribution occured this day. The more close to a minimum, the distribution is more active.

The second position: the steady rise in prices is accompanied by growth of tenders' volume and strong volume accumulation. As the volume is some kind of the fuel feeding market growth so backlog of volume at a rise in prices testifies to lack of fuel for continuation of rise. And on the contrary, falling of the prices is usually accompanied by low volume, and comes to an end with panic liquidation of institutional investors' positions.

The third position consists that it is possible to trace volume of the money resources acting on the market and leaving it by means of Chaikin Oscillator. Comparison of volume and prices dynamics allows to reveal tops and the bases of the market - both short-term, and intermediate term.

As there are no correctly operating methods of the technical analysis, the author recommends to apply this oscillator together with other technical indicators.

There is also other way of use of Chaikin Oscillator at whom change of its direction is considered a buy or sell signal but only if it coincides with a direction of the price tendency.

So, if the share on the rise and its price above a 90-day's moving average turn of oscillator curve upwards in the field of negative values is considered as a buy signal (only if the share price above 90-day's moving average - not below it). Turn of the oscillator downwards in the field of positive values (above zero) is considered as sell signal (only if share price during this moment below a 90-day's moving average of close price).

There are a lot of fraud and scams from the direction of intermediaries such as brokers and dealers in Forex business. The United States Commodity Futures Trading Commission (CFTC) is the federal agency that regulates the trading of Forex currency, commodity futures and options contracts in the United States and takes action against firms suspected of illegally or fraudulently selling Forex currency, commodity futures and options. Off-exchange trading of Forex, foreign currency futures and options contracts with retail customers by a counterparty that is not a regulated financial entity as set forth in the CFMA is unlawful and may be a fraud or scam.

There are some forex broker's or dealer's strategies sometimes not honest and respectable.

If you become a victim of such a broker you may put your broker's review.

Using the "kitchen" method, management of the dealing center is based on the assumption, that the majority of players (clients) will lose the money sooner or later. It is promoted by a lot of the reasons. The cores are the lowest vocational training of the client, excessive aggression and practically absolute ignorance of foreign language. Such clients are very often completely out of the basic information streams.

Brokerage is the overlapping of absolutely all client transactions (positions) during their performance. "Brokerage" can be profitable only at a great deal of clients and their activity at transactions' performance. Broker can earn money "moving" of the market against the client. It is possible to shift the market in the various ways. Since any client transaction passes through dealer of dealing center, the dealer forms the quotation, giving to the client.

Basis of this broker strategy is the following thesis: dealing center doesn't use brokerage as the basic technology, a basis of profit are the client's losses. The client transactions completed in current of one day, as a rule, do not bring to dealing center neither greater profits, nor heavy losses. In a total sum these transactions make small profit. The basic money appears when positions open in current of several bank days and lead the client to greater, significant losses.

At "pseudo-brokerage" any position has moments during which client is incured losses, accordingly, dealing center has some profit on this position (provided that this position is not blocked at the foreign broker).

Some dealers guarantee that you will not lose more than you invest, which includes both the initial deposit and any subsequent deposits to keep the position open. There are two significant differences between buying off-exchange Forex currency options and buying options on futures contracts. First, when you exercise an option on an exchange-traded futures contract, you receive the underlying exchange-traded futures contract. When you exercise an off-exchange Forex currency option, you will probably receive either a cash payment or a position in the underlying currency. Second, NFA’s options brochure only discusses American-style options, which can be exercised at any time before they expire. Many Forex options are European-style options, which can be exercised only on or near the expiration date. You should understand which type of option you are purchasing.

Retail off-exchange Forex currency trades are not guaranteed by a clearing organization and are the most sustainable to fraud and scams. Furthermore, funds that you have deposited to trade Forex currency contracts are not insured and do not receive a priority in bankruptcy. Even customer funds deposited by a dealer in an FDIC-insured bank account are not protected if the dealer goes bankrupt. There is no central marketplace unlike regulated futures exchanges in the retail off-exchange. Forex currency market there is no central marketplace with many buyers and sellers. The Forex currency dealer determines the execution price, so you are relying on the dealer’s integrity for a fair price.

You should ask the dealer how it is regulated and check with the dealer’s regulator about the dealer’s registration status. You should also ask the dealer if its regulator has adopted rules to regulate its retail Forex activities.

Unlike Forex dealers, firms and individuals that solicit retail accounts for Forex currency dealers and manage those accounts do not have to be regulated or affiliated with a regulated firm. Therefore, you should find out if the person’s Forex activities are regulated and by whom.
Warning Signs of Fraud

Watch for the warning signs listed below, and take the following precautions before placing your funds with any currency trading company.

* 1. Stay Away From Opportunities That Sound Too Good to Be True
* 2. Avoid Any Company that Predicts or Guarantees Large Profits
* 3. Stay Away From Companies That Promise Little or No Financial Risk
* 4. Don't Trade on Margin Unless You Understand What It Means
* 5. Question Firms That Claim To Trade in the "Interbank Market"
* 6. Be Wary of Sending or Transferring Cash on the Internet, By Mail or Otherwise
* 7. Currency Scams Often Target Members of Ethnic Minorities
* 8. Be Sure You Get the Company's Performance Track Record
* 9. Don't Deal With Anyone Who Won't Give You Their Background
* 10. Warning Signs Of Commodity "Come-Ons"

Most Forex fraud and commodity fraud is committed by either firms located in South Florida (Boca Raton was voted by CNBC the telemarketing fraud capital of the world in 2000), Southern California or outside the United States. Never make a check or bank wire payable to ANYONE other that a FCM registered with the NFA. In the majority of cases Forex fraud is perpetrated by firms located in the United States and the principals and brokers of the firm and were at one time registered with the National Futures Association (800) 621-3570 and have had their licenses revoked.

There are a lot of fraud and scams from the direction of intermediaries such as brokers and dealers in Forex business. The United States Commodity Futures Trading Commission (CFTC) is the federal agency that regulates the trading of Forex currency, commodity futures and options contracts in the United States and takes action against firms suspected of illegally or fraudulently selling Forex currency, commodity futures and options. Off-exchange trading of Forex, foreign currency futures and options contracts with retail customers by a counterparty that is not a regulated financial entity as set forth in the CFMA is unlawful and may be a fraud or scam.

There are some forex broker's or dealer's strategies sometimes not honest and respectable.

If you become a victim of such a broker you may put your broker's review.

Using the "kitchen" method, management of the dealing center is based on the assumption, that the majority of players (clients) will lose the money sooner or later. It is promoted by a lot of the reasons. The cores are the lowest vocational training of the client, excessive aggression and practically absolute ignorance of foreign language. Such clients are very often completely out of the basic information streams.

Brokerage is the overlapping of absolutely all client transactions (positions) during their performance. "Brokerage" can be profitable only at a great deal of clients and their activity at transactions' performance. Broker can earn money "moving" of the market against the client. It is possible to shift the market in the various ways. Since any client transaction passes through dealer of dealing center, the dealer forms the quotation, giving to the client.

Basis of this broker strategy is the following thesis: dealing center doesn't use brokerage as the basic technology, a basis of profit are the client's losses. The client transactions completed in current of one day, as a rule, do not bring to dealing center neither greater profits, nor heavy losses. In a total sum these transactions make small profit. The basic money appears when positions open in current of several bank days and lead the client to greater, significant losses.

At "pseudo-brokerage" any position has moments during which client is incured losses, accordingly, dealing center has some profit on this position (provided that this position is not blocked at the foreign broker).

Some dealers guarantee that you will not lose more than you invest, which includes both the initial deposit and any subsequent deposits to keep the position open. There are two significant differences between buying off-exchange Forex currency options and buying options on futures contracts. First, when you exercise an option on an exchange-traded futures contract, you receive the underlying exchange-traded futures contract. When you exercise an off-exchange Forex currency option, you will probably receive either a cash payment or a position in the underlying currency. Second, NFA’s options brochure only discusses American-style options, which can be exercised at any time before they expire. Many Forex options are European-style options, which can be exercised only on or near the expiration date. You should understand which type of option you are purchasing.

Retail off-exchange Forex currency trades are not guaranteed by a clearing organization and are the most sustainable to fraud and scams. Furthermore, funds that you have deposited to trade Forex currency contracts are not insured and do not receive a priority in bankruptcy. Even customer funds deposited by a dealer in an FDIC-insured bank account are not protected if the dealer goes bankrupt. There is no central marketplace unlike regulated futures exchanges in the retail off-exchange. Forex currency market there is no central marketplace with many buyers and sellers. The Forex currency dealer determines the execution price, so you are relying on the dealer’s integrity for a fair price.

You should ask the dealer how it is regulated and check with the dealer’s regulator about the dealer’s registration status. You should also ask the dealer if its regulator has adopted rules to regulate its retail Forex activities.

Unlike Forex dealers, firms and individuals that solicit retail accounts for Forex currency dealers and manage those accounts do not have to be regulated or affiliated with a regulated firm. Therefore, you should find out if the person’s Forex activities are regulated and by whom.
Warning Signs of Fraud

Watch for the warning signs listed below, and take the following precautions before placing your funds with any currency trading company.

* 1. Stay Away From Opportunities That Sound Too Good to Be True
* 2. Avoid Any Company that Predicts or Guarantees Large Profits
* 3. Stay Away From Companies That Promise Little or No Financial Risk
* 4. Don't Trade on Margin Unless You Understand What It Means
* 5. Question Firms That Claim To Trade in the "Interbank Market"
* 6. Be Wary of Sending or Transferring Cash on the Internet, By Mail or Otherwise
* 7. Currency Scams Often Target Members of Ethnic Minorities
* 8. Be Sure You Get the Company's Performance Track Record
* 9. Don't Deal With Anyone Who Won't Give You Their Background
* 10. Warning Signs Of Commodity "Come-Ons"

Most Forex fraud and commodity fraud is committed by either firms located in South Florida (Boca Raton was voted by CNBC the telemarketing fraud capital of the world in 2000), Southern California or outside the United States. Never make a check or bank wire payable to ANYONE other that a FCM registered with the NFA. In the majority of cases Forex fraud is perpetrated by firms located in the United States and the principals and brokers of the firm and were at one time registered with the National Futures Association (800) 621-3570 and have had their licenses revoked.

Before venturing into your trading journey there are some things you need to be aware of, otherwise you could succeed on your trading adventure, and we don't want that to happen, do we? This Forex training guide will help you track the most costly mistakes Forex traders do.

First of all, make sure you don't have a trading system. Having a trading system might increase the odds of your success. If you have a system, you will have an objective way to get in and out the market. When traders create their trading systems they think objectively since there is no position to be taken at the moment. If there is no position to be taken, there is also no money at risk, if there is no money at risk, we do think objectively and are open to every possibility, thus we are able to find low risk trading opportunities. So make sure you don't have a system and trade based on a randomly approach.

If you have already created your system, then don't follow it, be undisciplined. If you follow your system, there is a possibility that you can profit from the Forex market based on the trading opportunities you have found. If you want to fail on your trading, be sure to be undisciplined.

Don't get educated. Most successful traders are very well educated in the market they trade (stocks, Forex, futures, etc.) If you get educated, you might acquire the knowledge and experience you require to master the Forex market. Don't read about the Forex market, don't enroll into Forex training programs and don't even look at historical charts.

Don't use any money management technique. The purpose of money management is to avoid the risk of ruin, but at the same time it helps you boost your profits, allowing them to grow geometrically. For instance, by using no money management techniques, there is a possibility that in loosing 10 trades in a row you could empty your trading account. On the other hand, by applying simple money management techniques you can avoid it. So make sure, if you want to fail, don't even consider money management.

Forget about psychological issues. You need to get every trade to win. Successful traders know that they don't need to win every trade in order to profit from the market. This is one characteristic that is hard to understand and really apply. Why? Because we are taught, since kids, that any number below 70% is a bad number. In the Forex trading environment, this is not true.

Don't even consider using a Risk-reward (RR) ratio greater than 1-1. If you use a RR ratio of 1-2 (willing to make twice the amount risked in one trade) then you only need a system that is right around 50% to make money. If you use a RR ratio of 1-3 (willing to make three times the amount risked in one trade) then you will need a system that is right around 40% of the time to make money. So make sure to use a RR ratio below 1-1.

By applying every point outlined in this Forex training guide, you will almost assure your failure in your Forex trading journey. Do the opposite, and you will have the possibility to achieve what every trader is looking for: consistent profitable results.

STRAIGHT FOREX © 2005, 2006, 2007

Before venturing into your trading journey there are some things you need to be aware of, otherwise you could succeed on your trading adventure, and we don't want that to happen, do we? This Forex training guide will help you track the most costly mistakes Forex traders do.

First of all, make sure you don't have a trading system. Having a trading system might increase the odds of your success. If you have a system, you will have an objective way to get in and out the market. When traders create their trading systems they think objectively since there is no position to be taken at the moment. If there is no position to be taken, there is also no money at risk, if there is no money at risk, we do think objectively and are open to every possibility, thus we are able to find low risk trading opportunities. So make sure you don't have a system and trade based on a randomly approach.

If you have already created your system, then don't follow it, be undisciplined. If you follow your system, there is a possibility that you can profit from the Forex market based on the trading opportunities you have found. If you want to fail on your trading, be sure to be undisciplined.

Don't get educated. Most successful traders are very well educated in the market they trade (stocks, Forex, futures, etc.) If you get educated, you might acquire the knowledge and experience you require to master the Forex market. Don't read about the Forex market, don't enroll into Forex training programs and don't even look at historical charts.

Don't use any money management technique. The purpose of money management is to avoid the risk of ruin, but at the same time it helps you boost your profits, allowing them to grow geometrically. For instance, by using no money management techniques, there is a possibility that in loosing 10 trades in a row you could empty your trading account. On the other hand, by applying simple money management techniques you can avoid it. So make sure, if you want to fail, don't even consider money management.

Forget about psychological issues. You need to get every trade to win. Successful traders know that they don't need to win every trade in order to profit from the market. This is one characteristic that is hard to understand and really apply. Why? Because we are taught, since kids, that any number below 70% is a bad number. In the Forex trading environment, this is not true.

Don't even consider using a Risk-reward (RR) ratio greater than 1-1. If you use a RR ratio of 1-2 (willing to make twice the amount risked in one trade) then you only need a system that is right around 50% to make money. If you use a RR ratio of 1-3 (willing to make three times the amount risked in one trade) then you will need a system that is right around 40% of the time to make money. So make sure to use a RR ratio below 1-1.

By applying every point outlined in this Forex training guide, you will almost assure your failure in your Forex trading journey. Do the opposite, and you will have the possibility to achieve what every trader is looking for: consistent profitable results.

STRAIGHT FOREX © 2005, 2006, 2007

In this Forex course we will review some steps you need to take care before you venture into your trading journey. Most traders venture into the Forex market with little or no experience in the Forex market. This results in painful experiences like loosing most of the risk capital, frustration because it seemed so easy to make money, etc.

The first thing you need to realize is that, it is not easy to make money. As every other endeavor in life, where important rewards are to come after mastering it, you need to work hard. You need to get very well educated and experienced before having the possibility to receive important rewards on it. The key on mastering the Forex market relies on commitment, patience and discipline.

Ok, you have decided you are going to trade the Forex market, you have seen several advertisings featuring how easy is to make money in the Forex market. You might think this is your opportunity to reach your financial freedom, right away, time is money, why waiting any longer if you have the opportunity to make money now. I know, I've been there, but you have a chance now, I didn't, no body told me what I am going to tell you.

We, Forex traders, make transactions based on a set of rules. These sets of rules are what we call a Trading System. Our systems tell us the exact time where we need to get in the market and out the market in order to make a profit (i.e. buy low sell high.)

Creating a system is the first big step you need to take care first. Why is this so important? Because you need to build a system that suits your personality, otherwise you are going to find hard to follow it, thus hard to profit from.
A system can be based on technical indicators or what we called a mechanical system or based on experience and intuition or what we call discretionary systems. I highly recommend using and trying first a mechanical system, because discretionary systems are dangerous during the early stages of a Forex trader (can lead to indiscipline.) With experience, on later stages, you will find out which signals work better and which ones to avoid.

The next step in this Forex course is to try your system on a demo account. Most Forex brokers offer a demo account, an account with virtual money. This is an excellent choice to test your trading system as there is no money at risk. In this step you will figure out if the strategy works for you. If you feel comfortable trading it, then it is most likely to produce good results. How much time should you stay in this step? It varies, but you shouldn't go one step further until your system gets consistent profitable results over a period of time. It can take many months, but remember, you need to be patient.

You must be honest to yourself; you need to take every single signal generated by your system, not only the signals you thought were going to work, otherwise, you are going to have problems in the next two steps.

Ok, by know you had consistent profitable results on your demo account. You might think its time to go full. Nope, nope, nope. There is a big difference between trading a demo and a real account. The most important difference lies on emotions (fear, greed, anger, etc.) These are psychological barriers that affect every single decision made by traders regardless of what he/she is trading (stocks, bonds, Forex, futures, grains, etc.) These emotional factors, in my opinion, are the most determinant factor that separates profitable traders from the others.

The next step in this Forex course is specially designed to deal with emotions and to confirm the results obtained in the prior step (consistent results in a demo account.) At this step you need to trade in a real account with limited funds. Some brokers offer fractional lot trading. Meaning you are able to trade any desired amount (even cents.) The important thing here is that these emotions we've been talking about are present only when there is real money at risk. At this stage, you are going to see if you are really comfortable trading your system and if you are able to trade with such system, remember different systems produce different emotions. If you are able to produce similar results than those obtained in a demo account, then ready for the next step. If you didn't, then you might need to create another system, there is chance your system never fit you. If you created consistent profitable results on this stage, you have a chance to produce similar results in the next one, on the other hand, if you didn't produce good results in this stage, you will not be able to make on the next stage. Remember, you need to do things right, and be honest to yourself.

The last stage is trading in a real account with sufficient funds. If you are at this stage, and have passed successfully every prior stage, then you have a chance to make it, go ahead and try it, you need to be confident in yourself and in your system, your strategy have already produced consistent profitable results, there are reasons to believe you are going to make it. Very few traders fail at this stage (if passed successfully prior stages.)

Trading successfully is no easy task, it requires a lot of work, patience, discipline, and education. By completing the steps outlined in this Forex course, you have a chance to produce profitable results. I repeat it again, you need to be honest to yourself about the results obtained in every stage. Some times you might need expert guidance regarding your system development strategies.
STRAIGHT FOREX © 2005, 2006, 2007

In this Forex course we will review some steps you need to take care before you venture into your trading journey. Most traders venture into the Forex market with little or no experience in the Forex market. This results in painful experiences like loosing most of the risk capital, frustration because it seemed so easy to make money, etc.

The first thing you need to realize is that, it is not easy to make money. As every other endeavor in life, where important rewards are to come after mastering it, you need to work hard. You need to get very well educated and experienced before having the possibility to receive important rewards on it. The key on mastering the Forex market relies on commitment, patience and discipline.

Ok, you have decided you are going to trade the Forex market, you have seen several advertisings featuring how easy is to make money in the Forex market. You might think this is your opportunity to reach your financial freedom, right away, time is money, why waiting any longer if you have the opportunity to make money now. I know, I've been there, but you have a chance now, I didn't, no body told me what I am going to tell you.

We, Forex traders, make transactions based on a set of rules. These sets of rules are what we call a Trading System. Our systems tell us the exact time where we need to get in the market and out the market in order to make a profit (i.e. buy low sell high.)

Creating a system is the first big step you need to take care first. Why is this so important? Because you need to build a system that suits your personality, otherwise you are going to find hard to follow it, thus hard to profit from.
A system can be based on technical indicators or what we called a mechanical system or based on experience and intuition or what we call discretionary systems. I highly recommend using and trying first a mechanical system, because discretionary systems are dangerous during the early stages of a Forex trader (can lead to indiscipline.) With experience, on later stages, you will find out which signals work better and which ones to avoid.

The next step in this Forex course is to try your system on a demo account. Most Forex brokers offer a demo account, an account with virtual money. This is an excellent choice to test your trading system as there is no money at risk. In this step you will figure out if the strategy works for you. If you feel comfortable trading it, then it is most likely to produce good results. How much time should you stay in this step? It varies, but you shouldn't go one step further until your system gets consistent profitable results over a period of time. It can take many months, but remember, you need to be patient.

You must be honest to yourself; you need to take every single signal generated by your system, not only the signals you thought were going to work, otherwise, you are going to have problems in the next two steps.

Ok, by know you had consistent profitable results on your demo account. You might think its time to go full. Nope, nope, nope. There is a big difference between trading a demo and a real account. The most important difference lies on emotions (fear, greed, anger, etc.) These are psychological barriers that affect every single decision made by traders regardless of what he/she is trading (stocks, bonds, Forex, futures, grains, etc.) These emotional factors, in my opinion, are the most determinant factor that separates profitable traders from the others.

The next step in this Forex course is specially designed to deal with emotions and to confirm the results obtained in the prior step (consistent results in a demo account.) At this step you need to trade in a real account with limited funds. Some brokers offer fractional lot trading. Meaning you are able to trade any desired amount (even cents.) The important thing here is that these emotions we've been talking about are present only when there is real money at risk. At this stage, you are going to see if you are really comfortable trading your system and if you are able to trade with such system, remember different systems produce different emotions. If you are able to produce similar results than those obtained in a demo account, then ready for the next step. If you didn't, then you might need to create another system, there is chance your system never fit you. If you created consistent profitable results on this stage, you have a chance to produce similar results in the next one, on the other hand, if you didn't produce good results in this stage, you will not be able to make on the next stage. Remember, you need to do things right, and be honest to yourself.

The last stage is trading in a real account with sufficient funds. If you are at this stage, and have passed successfully every prior stage, then you have a chance to make it, go ahead and try it, you need to be confident in yourself and in your system, your strategy have already produced consistent profitable results, there are reasons to believe you are going to make it. Very few traders fail at this stage (if passed successfully prior stages.)

Trading successfully is no easy task, it requires a lot of work, patience, discipline, and education. By completing the steps outlined in this Forex course, you have a chance to produce profitable results. I repeat it again, you need to be honest to yourself about the results obtained in every stage. Some times you might need expert guidance regarding your system development strategies.
STRAIGHT FOREX © 2005, 2006, 2007

How difficult is it to make money trading the Forex market? How much time does it take to actually be able to make a living trading the Forex market? These and other important aspects of trading are to be discussed in this article.

Trading the Forex market has many benefits over other financial markets, among the most important are: superior liquidity, 24hrs market, better execution, and others. Traders and investor see the Forex market as a new speculation or diversifying opportunity because of these benefits. Does this mean that it is easy to make money trading the Forex Market? Not at all.

Forex brokers agree that 90% of traders end up losing money, 5% of traders end up at break even and only 5% of them achieve consistent profitable results. With these statistics shown, I don't consider trading to be an easy task. But, is it harder to master any other endeavor? I don't think so, consider musicians, writers, or even other businesses, the success rates are about the same, there are a whole bunch of them who never got to the top.

Now that we know it is not easy to achieve consistent profitable results, a must question would be, Why is it that some traders succeed while others fail to trade successfully in the Forex market? There is no hard answer to this question, or a recipe to follow to achieve consistent profitable results. What we do know is that traders that reach the top think different. That's right, they don't follow the crowd, they are an independent part of the crowd.

A few things that separate the top traders from the rest are:

Education: They are very well educated in the matter; they have chosen to learn every single and important aspect of trading. The best traders know that every trade is a learning experience. They approach the Forex market with humility, otherwise the market will prove them wrong.

Forex trading system: Top traders have a Forex trading system. They have the discipline to follow it rigorously, because they know that only the trades that are signaled by their system have a greater rate of success.

Price behavior: They have incorporated price behavior into their trading systems. They know price action has the last word.

Money management: Avoiding the risk of ruin is a primary subject to the best traders. After all, you cannot succeed without funds in your trading account.

Trading psychology: They are aware of every psychological issue that affects the decisions made by traders. They have accepted the fact that every individual trade has two probable outcomes, not just the winning side.

These are, among others, the most important factors that influence the success rate of Forex traders.

We know now that it is not easy to make money trading the Forex market, but it is possible. We also discussed the most important factors that influence the rate of success of Forex traders. But, how much time does it take to have consistent profitable results? It is different from trader to trader. For some, it could take a life time, and still don't get the desired results, for some others, a few years are enough to get consistent profitable results. The answer to this question may vary, but what I want to make clear here is that trading successfully is a process, it's not something you can do in a short period of time.

Trading successfully is no easy task; it is a process and could take years to achieve the desired results. There are a few things though every trader should take in consideration that could accelerate the process: having a trading system, using money management, education, being aware of psychological issues, discipline to follow your trading system and your trading plan, and others.
STRAIGHT FOREX © 2005, 2006, 2007

How difficult is it to make money trading the Forex market? How much time does it take to actually be able to make a living trading the Forex market? These and other important aspects of trading are to be discussed in this article.

Trading the Forex market has many benefits over other financial markets, among the most important are: superior liquidity, 24hrs market, better execution, and others. Traders and investor see the Forex market as a new speculation or diversifying opportunity because of these benefits. Does this mean that it is easy to make money trading the Forex Market? Not at all.

Forex brokers agree that 90% of traders end up losing money, 5% of traders end up at break even and only 5% of them achieve consistent profitable results. With these statistics shown, I don't consider trading to be an easy task. But, is it harder to master any other endeavor? I don't think so, consider musicians, writers, or even other businesses, the success rates are about the same, there are a whole bunch of them who never got to the top.

Now that we know it is not easy to achieve consistent profitable results, a must question would be, Why is it that some traders succeed while others fail to trade successfully in the Forex market? There is no hard answer to this question, or a recipe to follow to achieve consistent profitable results. What we do know is that traders that reach the top think different. That's right, they don't follow the crowd, they are an independent part of the crowd.

A few things that separate the top traders from the rest are:

Education: They are very well educated in the matter; they have chosen to learn every single and important aspect of trading. The best traders know that every trade is a learning experience. They approach the Forex market with humility, otherwise the market will prove them wrong.

Forex trading system: Top traders have a Forex trading system. They have the discipline to follow it rigorously, because they know that only the trades that are signaled by their system have a greater rate of success.

Price behavior: They have incorporated price behavior into their trading systems. They know price action has the last word.

Money management: Avoiding the risk of ruin is a primary subject to the best traders. After all, you cannot succeed without funds in your trading account.

Trading psychology: They are aware of every psychological issue that affects the decisions made by traders. They have accepted the fact that every individual trade has two probable outcomes, not just the winning side.

These are, among others, the most important factors that influence the success rate of Forex traders.

We know now that it is not easy to make money trading the Forex market, but it is possible. We also discussed the most important factors that influence the rate of success of Forex traders. But, how much time does it take to have consistent profitable results? It is different from trader to trader. For some, it could take a life time, and still don't get the desired results, for some others, a few years are enough to get consistent profitable results. The answer to this question may vary, but what I want to make clear here is that trading successfully is a process, it's not something you can do in a short period of time.

Trading successfully is no easy task; it is a process and could take years to achieve the desired results. There are a few things though every trader should take in consideration that could accelerate the process: having a trading system, using money management, education, being aware of psychological issues, discipline to follow your trading system and your trading plan, and others.
STRAIGHT FOREX © 2005, 2006, 2007

It is useful to have a map and be able to see where the price is relative to previous market action. This way we can see how is the sentiment of traders and investors at any given moment, it also gives us a general idea of where the market is heading during the day. This information can help us decide which way to trade.

Pivot points, a technique developed by floor traders, help us see where the price is relative to previous market action.

As a definition, a pivot point is a turning point or condition. The same applies to the Forex market, the pivot point is a level in which the sentiment of the market changes from “bull” to “bear” or vice versa. If the market breaks this level up, then the sentiment is said to be a bull market and it is likely to continue its way up, on the other hand, if the market breaks this level down, then the sentiment is bear, and it is expected to continue its way down. Also at this level, the market is expected to have some kind of support/resistance, and if price can't break the pivot point, a possible bounce from it is plausible.

Pivot points work best on highly liquid markets, like the spot currency market, but they can also be used in other markets as well.

Forex Pivot Points

In a few words, pivot point is a level in which the sentiment of traders and investors changes from bull to bear or vice versa.

Why PP work?

They work simply because many individual traders and investors use and trust them, as well as bank and institutional traders. It is known to every trader that the pivot point is an important measure of strength and weakness of any market.

Calculating pivot points

There are several ways to arrive to the Pivot point. The method we found to have the most accurate results is calculated by taking the average of the high, low and close of a previous period (or session).

Pivot point (PP) = (High + Low + Close) / 3

Take for instance the following EUR/USD information from the previous session:

Open: 1.2386

High: 1.2474

Low: 1.2376

Close: 1.2458



The PP would be,

PP = (1.2474 + 1.2376 + 1.2458) / 3 = 1.2439

What does this number tell us?

It simply tells us that if the market is trading above 1.2439, Bulls are winning the battle pushing the prices higher. And if the market is trading below this 1.2439 the bears are winning the battle pulling prices lower. On both cases this condition is likely to sustain until the next session.

Since the Forex market is a 24hr market (no close or open from day to day) there is a eternal battle on deciding at white time we should take the open, close, high and low from each session. From our point of view, the times that produce more accurate predictions is taking the open at 00:00 GMT and the close at 23:59 GMT .

Besides the calculation of the PP, there are other support and resistance levels that are calculated taking the PP as a reference.

Support 1 (S1) = (PP * 2) – H

Resistance 1 (R1) = (PP * 2) - L

Support 2 (S2) = PP – (R1 – S1)

Resistance 2 (R2) = PP + (R1 – S1)

Where , H is the High of the previous period and L is the low of the previous period

Continuing with the example above, PP = 1.2439

S1 = (1.2439 * 2) - 1.2474 = 1.2404

R1 = (1.2439 * 2) – 1.2376 = 1.2502

R2 = 1.2439 + (1.2636 – 1.2537) = 1.2537

S2 = 1.2439 – (1.2636 – 1.2537) = 1.2537

These levels are supposed to mark support and resistance levels for the current session.

On the example above, the PP was calculated using information of the previous session (previous day.) This way we could see possible intraday resistance and support levels. But it can also be calculated using the previous weekly or monthly data to determine such levels. By doing so we are able to see the sentiment over longer periods of time. Also we can see possible levels that might offer support and resistance throughout the week or month. Calculating the Pivot point in a weekly or monthly basis is mostly used by long term traders, but it can also be used by short time traders, it gives us a good idea about the longer term trend.

S1, S2, R1 AND R2...? An Objective Alternative

As already stated, the pivot point zone is a well-known technique and it works simply because many traders and investors use and trust it. But what about the other support and resistance zones (S1, S2, R1 and R2,) to forecast a support or resistance level with some mathematical formula is somehow subjective. It is hard to rely on them blindly just because the formula popped out that level. For this reason, we have created an alternative way to map our time frame, simpler but more objective and effective.

We calculate the pivot point as showed before. But our support and resistance levels are drawn in a different way. We take the previous session high and low, and draw those levels on today's chart. The same is done with the session before the previous session. So, we will have our PP and four more important levels drawn in our chart.

LOPS1, low of the previous session.

HOPS1, high of the previous session.

LOPS2, low of the session before the previous session.

HOPS2, high of the session before the previous session.

PP, pivot point.

These levels will tell us the strength of the market at any given moment. If the market is trading above the PP, then the market is considered in a possible uptrend. If the market is trading above HOPS1 or HOPS2, then the market is in an uptrend, and we only take long positions. If the market is trading below the PP then the market is considered in a possible downtrend. If the market is trading below LOPS1 or LOPS2, then the market is in a downtrend, and we should only consider short trades.

The psychology behind this approach is simple. We know that for some reason the market stopped there from going higher/lower the previous session, or the session before that. We don't know the reason, and we don't need to know it. We only know the fact: the market reversed at that level. We also know that traders and investors have memories, they do remember that the price stopped there before, and the odds are that the market reverses from there again (maybe because the same reason, and maybe not) or at least find some support or resistance at these levels.

What is important about his approach is that support and resistance levels are measured objectively; they aren't just a level derived from a mathematical formula, the price reversed there before so these levels have a higher probability of being effective.

Our mapping method works on both market conditions, when trending and on sideways conditions. In a trending market, it helps us determine the strength of the trend and trade off important levels. On sideways markets it shows us possible reversal levels.

How we use our mapping method?

We use the mapping method in three different ways: as a trend identification (measure of the strength of the trend), a trading system using important levels with price behavior as a trading signal and to set the risk reward ratio of any given trade based on where the is the market relative to the previous session.
STRAIGHT FOREX © 2005, 2006, 2007