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I WILL POST HERE TOMORROW MY FIRST FOREX FREE SIGNALS, (EUR/USD).

Time of entry should be 0600H (phil. time, GMT+8)

Good luck and happy trading!

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Fundamental Outlook for US Dollar: Bullish

- US marks the biggest drop in payrolls since 1974
- NBER confirms the domestic economy has been in a recession since December 2007
- Record lows for manufacturing and service sector activity last month point to a deepening recession

It’s difficult to assign the US dollar a bullish fundamental bias considering the acceleration of the economy’s recession and the fact that American markets are the epicenter to a global financial crisis; but regular economics do not apply in times like these. In normal market conditions, expected returns hang in a delicate balance with a general tolerance for risk. When yield income – valued through assets in a specific country – drops relative to its international equals, that currency depreciates against its counterparts. This sums up capital flows, carry interest and fundamental speculation in interest rates. However, the setting for the markets is clearly far from normal – just look at the advance in the US dollar last week immediately following the report of a 533,000-person drop in national payrolls. Normal market theory has been thrown out the window as investors are no longer concerned about the potential for return. With volatility holding at levels many times greater than what it was just a year or two ago and global economies sliding into a grim recession, large investors and fund managers are merely looking for a place that their accounts won’t shrink. With time we have seen that that place is US Treasuries. Surely, the market must be desperate for a safe haven with three-month T-bills yielding little more than one basis point and two-year T-notes are paying out 0.9 percent per year. In fact, the entire yield curve is at record lows.

How long can a market go against such a basic law of market theory? That depends on speculators. As long risk sentiment holds as the dominant trend across all asset classes and all markets, caution will keep capital flowing towards safe havens. However, that is not to say that the US will always be the currency that panicked traders will turn to. Massive bailout efforts, rate cuts and stimulus packages have offered a sense of stability for the world’s largest economy; but this combined endeavor cannot prevent a recession or even a natural bear market. And, when financial conditions worsen and the economy continues its slide, policy makers will find they have few options left to curb the pain on a national level. Since US officials have been the most aggressive in their efforts, they could reach their limit first; and then the sanctity of US government debt will come into question. There are other countries that are less liquid but are experiencing better stability. As the global recession and financial crisis deepen, these alternatives will grow more and more appealing.

Characteristic of a primary fundamental theme, a shift in this market driver will not change over night - but will happen gradually. The calendar for the week ahead will help steer the bigger trend. Dollar traders have no doubt already priced in a recession; but how severe and lengthy of a contraction have they accounted for? A few growth-related indicators will test this. Pending home sales will gauge the ongoing housing market recession while the trade balance will reveal how effective a cheaper dollar is at drawing less international demand. The consumer will be the more important focus with retail sales for November accounting for the build up in spending trends into the holiday season while consumer sentiment will guide speculation for it going forward. Also thematic is inflation. Though factory and import-level price gauges are usually second tier readings, an expected plunge in annual readings would spell deflation which the Fed has little to no chance at fighting. This will be important considering the FOMC will decide rates on the following Tuesday.

The greenback fell against the majors at the start of the week, tumbling just shy of the 1.29-level against the euro and dropping toward 1.5176 versus the sterling. The US equity market extended Friday’s gains with the Dow Jones up by over 3.6% and the Nasdaq advancing by more than 4% by afternoon trading amid a bailout plan to inject $20 billion into Citigroup and guarantee over $300 billion in toxic assets.

The housing market continues to struggle with existing home sales in October posting a 3.1% decline to 4.98 million units, down from 5.18 million units a month earlier. Several key reports are due out on Tuesday including Q3 preliminary GDP, Q3 PCE, September Case-Shiller home prices, November consumer confidence, and the Richmond Fed survey. The US economy is estimated to have contracted by 0.5% in Q3 while the Conference Board’s consumer confidence survey is estimated to slip to 37.9.


Euro Rallies, Shrugs off Dismal Data
Economic conditions in the Eurozone remain bleak with data from Germany revealing further deterioration. Germany’s October Ifo sentiment survey plunged by more than expected to its lowest level in nearly 16-years at 85.8 versus calls for a slide to 88.7 from 90.2 a month earlier. The expectations component tumbled to 77.6 from 81.4 while the current conditions index fell to 94.8 from 99.9 a month earlier. The drop in the Ifo sentiment survey was its sixth consecutive monthly decline and underscores the dour outlook for the Eurozone’s largest economy. Ifo President Sinn said, “The economic downturn has hardened and will now also affect the labor market”. With Germany’s economy already in recession, the latest data raises fears of a deep and prolonged recession and will likely prompt the ECB to ease rates aggressively at the coming meetings.

Looking at the retracement analysis on the EUR/USD from the 11/05 high to the 11/13 low, we see that the pair was unable to fully retrace the early November highs. Although the move north might not be complete for the pair ahead of year end, we will be watching the full retracement level (~1.3114) as short-term resistance. We will also be watching the converging moving averages to provide support as they move higher with the pair.

The euro / dollar could still drop below 1.2330 in order to complete a 5th wave within a 5 wave decline from 1.6040 as an ending diagonal (not likely at this point). It is just as probable however that the pair pushes through 1.3302 in a larger recovery from 1.2330. Fibonacci resistance would begin at 1.36. Bottom line; the EURUSD remains in a range, so trade accordingly.

here's the chart

Pair: EUR/USD
Position: BUY
Entry Price: 1.3065
Target Price: 1.3155 (+95 PIPS)
Stop Loss: 1.2865 (-200 PIPS)
Remarks: To Be Posted Later


EUR/USD continued its upward trend for the past few days, especially during the last hours of trading for the day. It broke its 1.30 mark, and still going strong in an uptrend. And as I was saying yesterday, the EUR/USD will have a small correction, and it happened at around 100 pips more or less before it went straight up again.

Time: 0600H Phil Time (GMT +8)
Pair: EUR/USD
Position: BUY
Entry Price: 1.2908
Target Price: 1.2980 (+72 PIPS)
Stop Loss: 1.2807 (-100 PIPS)
Remarks: Target Hit (+72 pips)


Euro has made a massive uptrend in the last 12 hours, from its lowest for the day of 1.25262 to a sudden spike to 1.2932. there's a big possibility of a major correction coming but I my calculation suggests that it will continue up to tomorrow before the US market opens. So I grab the strong uptrend for a small 70 pips.. Let's see later on!

Time: 0600H Phil Time (GMT +8)
Pair: EUR/USD
Position: BUY
Entry Price: 1.2625
Target Price: 1.2680 (55 PIPS)
Stop Loss: 1.2525 (-100 PIPS)
Remarks: Target hit (55 PIPS)

Entry based on my daily pivot point, rsi, ema. I hope this might help you my fellow traders.

Date: November 21, 2008
Time: 0600H Phil Time (GMT +8)
Pair: EUR/USD
Position: SELL
Entry Price: 1.2455
Target Price: 1.2425 (30 PIPS)
Stop Loss: 1.2555 (-100 PIPS)
Remarks: Target Price Hit (30 PIPS)

Date: November 20, 2008
Time: 0600H Phil Time ( GMT +8)
Pair: EUR/USD
Position: SELL
Entry Price: 1.2486
Target Price: 1.2430 ( 51 PIPS)
Remarks: Hit Stop Loss (-100 PIPS)


My Forex Trading Journey Nov 15

Tragic trading day as it seems as of this week. EUR/USD gone wild early in the morning (Phil time)spiking a very huge uptrend candles in its first hours, I positioned SHORT and set my TP at 1.2600. I'm 13 pips shy of my target and it went straight back up again hitting my SL, so I lost more that 10% of what I have earned this week. But still this is an excellent week for me. 8.82% is not bad. Gain is gain no matter how small or big it is.

no. of trading days: 6
platform/broker: fxcm
initial capital: $5,000.00
pair: eur/usd
leverage: 1:400
trading system: pivot point/grid systems (with sma/ema, rsi) for short/medium/long term trends
money management: 1% and 0.5% total capital per trade
open trade/s: 0
open order/s: 0
equity: $5,440.82
floating p/l: $0.00
ending balance: $5,440.82
gain percentage: 8.82%

Learning to stop trading: an introduction

We talk a lot in the trading world about when to trade; we talk about entries and exits and profit targets and stop losses and moving average crossovers. There are endless threads on massive online discussion boards about trading the news, or whether inside price action "Wicked Fairy" candles are better than "Samurai Warrior Face" inside bars. The arguments about the best place to get into a trade are so extensive that, by now, it's difficult to tell the difference between the methods.

But we don't talk enough about when it's time to quit.

I found that learning when to stop trading was just as difficult -- or maybe more difficult -- than knowing when to take a trade in the first place. For me, one of the real breakthroughs in my trading was when I realized that I didn't have to trade, that not every day (or every hour) was suitable for trading, and a day off could be just as valuable as a day spent staring at the dual-screen setup.

The fact that the currency markets are open nearly 24 hours a day for 5.5 days per week -- and that a holiday in one country doesn't necessarily shut down trading for the rest of the world -- makes it very tempting to open up the trading platform at nearly any time of the day.

You've certainly got to make your own decisions about what's right for you in your trading, but here are some ideas about why it's a good idea to stop, or when the right time might be.


Stopping when you're losing money

This is probably the hardest thing to do, and I've seen hundreds of traders lose more money than they ever thought they could, or wanted to, because they just simply couldn't stop trading when the chips were down.

For example, when we've just lost money, we often react hyper-emotionally. I know that when I have a losing trade (especially one that happens really quickly), I want the money back right away. And that desire to get the money back right away leads to a nearly overpowering urge to trade again -- now that I've seen where the market is really going (or at least that's what I am thinking), I want to take advantage immediately.

If I can get that money back right away, then I don't have to suffer any indignity that comes with a losing trade.

The truth is that we rarely recoup all those lost profits back in one big counter-trade, or one big "reaction" trade. This can be the type of situation where we start spiraling out of control, taking trade after trade and losing a significant amount of money.

It's sometimes just best to quit for a bit when we have lost. This might be for an hour, for a day, even for a week or month. This time away from the market can give us the space we need to think clearly and get ourselves in a productive state of mind again.


Stopping when we are hyper-emotional

One of the worst times to trade is when we've had a distressing experience. Ever made a trade after you've had an argument with your spouse or partner about money? Or when you've had a particularly tragic event in your life?

These can be terrible times to trade, because our focus is on the recent emotional experience, and not on what we're doing. When we're not focused or attentive, we make stupid mistakes that can cost us a lot of money.

I have seen emotional traders remove stop losses to "prove a point," or get back at someone through their trading. The trading becomes an expression of their emotions, or an outlet for feelings that they can't say, or didn't say, or can't express in any other way.

The market, unfortunately, doesn't know us personally and couldn't care less about our individual difficult life experiences. It's not going to give us a break or go easy on us because we've had a bad day.

So if you've had a bad experience, consider taking some time to sort out your feelings before you fire up the trading account.


Stopping when we've made money

This might sound strange at first, but it can be one of the most powerful additions to your trading plan: a goal for when you are going to stop trading if you've made money.

Perhaps you set a goal to make 50 pips a week, or a month. That's a goal, mind you, and I'm not implying that everyone or anyone can make 50 pips, or that the majority of traders can make that many pips (remember, trading forex is risky, and the majority of traders lose money -- that's a topic for another week) . The fact is, I don't know what the right number goal-wise is for you. But if you look back over your trading history, can you start to get a sense for what you are able to achieve, if you are a profitable trader?

I have seen traders, time after time, start the week off strong, and get to Tuesday or Wednesday with a reasonable amount of profit, only to see them lose the money in reckless trading during the rest of the week.

In fact, some of these traders consistently lose money week after week, even though early in the week -- for most weeks -- they are actually profitable.

We sometimes treat profits as "found money," or money that we can afford to lose. We have a few winning trades and then we give ourselves room to take an "experimental" trade, or a trade just for the hell of it. This is tantamount to gambling.

Idea: go back in your account and see if you recognize a pattern of making money during the beginning of the day, week, or month. Are you more successful at the start of the week or the end of the week? In what ways are the trades you take different at the start of the day compared to the end of the day? Or week? Or month?

Question: Does this mean that there's never a good time to trade?
It sounds like it's always time to stop!


Trading is not right for everyone. And trading all the time is probably not right for many people at all.

But that doesn't mean that stopping your trading before you start is a good idea. I'm not saying that there are never good times to trade. Here are some thoughts:

1.Consider having some quiet time at the start of each day before you trade. My friend Chris McCloughlin has a rule that he never trades unless he's been awake for an hour -- because he realizes (big surprise) that he doesn't trade well if he is super tired.

2.Measure your emotional state. This doesn't have to be a sit-down with a professional therapist every time you are about to trade. But it's not so difficult to take a moment and gauge your own emotional state at the start of the day. If you think you're a complete wreck today, maybe it's a better day to go feed the ducks. Or see a movie.

3.Have a trading plan, and use it. Make a version of your trading plan that you can keep near you, or keep you focused. Not every trader needs to have the entire plan in plain sight, but most of us can benefit from a regular reminder of what kind of trades we're looking for. It's important to allow yourself to be picky with your trades and wait for the setups that you know you like best.

4.Are you a better trader at a certain time? When you go back through your trade history, do you recognize times that you are more successful? It doesn't have to be a time of day or day of the week; it could be near the time of some fundamental news. It could be around the time when the currency pairs you watch consolidate in a specific pattern. Recognizing when you do best as a trader can help you get more specific about when you are going to dedicate time to take and manage your trades.

Do you really need to do all this analysis, or all this thinking about stopping and starting your trading? Maybe that's not your thing. And it's up to you how deep you go into efforts to learn more about yourself and your trading. I've found it to be true that this kind of deep thinking about what you're doing pays personal dividends -- regardless of how useful it is specifically to your trading. I hope you'll consider some of the things I've mentioned here.

Most of all, I invite you to keep in touch with me about this topic, and let me know what you've learned about the best times that you trade, or how you know when it's time to stop trading. We always love to hear from you, and the folks at IBFX are here to talk with you anytime.

Happy trading!

My Forex Training Journey Nov 14

Hello dear visitor. I bagged all my positions and closed everything in profit! With an 18.82% rise form my original capital. Cool huh! Hitting almost 20% within 5 days. If this trend continues, I may hit more trades before the end of the trading week.

no. of trading days: 5
platform/broker: fxcm
initial capital: $5,000.00
pair: eur/usd
leverage: 1:400
trading system: pivot point/grid systems (with sma/ema, rsi) for short/medium/long term trends
money management: 1% and 0.5% total capital per trade
open trade/s: 0
open order/s: 0
equity: $5,940.82
floating p/l: $0.00
ending balance: $5,940.82
gain percentage: 18.82%

My Forex Trading Journey Nov 13

Good day dear visitor, how's trading going on for you? I suffered some losses today. Market went the other way and my open positions we're hit by stop losses. But I managed to recover and recoup some of my losses and gain a little more, making my total profit to 10.76%

no. of trading days: 4
platform/broker: fxcm
initial capital: $5,000.00
pair: eur/usd
leverage: 1:400
trading system: pivot point/grid systems (with sma/ema, rsi) for short/medium/long term trends
money management: 1% and 0.5% total capital per trade
open trade/s: 1
open order/s: 0
equity: $5,543.82
floating p/l: -$6.00
ending balance: $5,537.82
gain percentage: 10.76%

Have you ever said to yourself, "Well, going long (or short) the EUR/USD looked good at the time I took the trade!"

Perhaps you've had an experience where for the past several weeks, you've been haplessly watching a poor little EUR/USD trade spiral out of control to the point where you can hardly contain pulling your hair out by the roots. You’ve witnessed this innocent little trade morph into a horrifying beast which you are now referring to as the "drawdown monster."

We’ve all been there, haven’t we? Paralyzed by fear or -- if you’re anything like me sometimes -- just stubbornly unwilling to admit defeat and close the darn trade. It’s a difficult thing to confess when we’re wrong, but at what point do we say enough is enough?

So, the question is simply this—what should my next move be? How long should I hang onto this trade that just seems to be going from bad to worse to absolute train wreck? Should I cut my losses and consider it a painful lesson learned or do I hang on to this bad boy and hope it comes back? Stranger things have happened, right?
Well, let’s put something into perspective.

Losing Money
Let’s say I have $10,000 in my margin account and I lose $5,000. My drawdown in this case would be 50 percent. Now, what percentage of that $5,000 would I have to make in order to get back my original $10,000? 50 percent, right? Wrong! I would have to make back 100 percent of my $5,000 to get back to my original $10,000!

The point of this harrowing example is this—it’s very easy to lose money and a whole lot harder to get it back.

“But Rob, I would never lose 50% of my account in one trade.” For your sake, I certainly hope not. But for the sake of argument, let’s just say you do. How on earth do you get yourself out of this pickle?

Perhaps this question is best answered through the sad and forlorn tale of my good friend and currency trader, Shasty McButterknuckle, who is actually the alter-ego personality of a member of the marketing department at IBFX.

Shasty has a heart as good as his intentions, but he perpetuates three tendencies that seem to get him in trouble and constantly keep him in the red:

Tendency #1—A little thing called pride!
Shasty has a penchant for hanging on to trades for nothing more than his heightened sense of ego. He is so committed to proving that his original decision was right that he's willing to stubbornly cling to it until the very end. And interestingly enough, the more pips he loses, the more convinced he is that his original premise was justifiable. Shasty holds on to losers in an effort to prove that he was right—both in his own eyes and in the eyes of others.

Solution: There should ALWAYS be a reason for your trading moves. A decision based on ego will inevitably come back to haunt you. A trader who fails to maintain a strict trading plan won’t know where to exit a trade or how much money he could make or lose. This “fly by the seat of your pants” style trading more often than not leads to disappointment and frustration.

Tendency #2—Adding to losing positions
Shasty sometimes not only holds on to a losing trade but also actually adds positions to it, rationalizing that his targets will be hit when the currency changes direction. Of course, this method is super-terrific if the currency does, indeed, change direction, but if it doesn't and he maintains that losing position, it simply hastens the painful demise of that poor little trade.

Solution: Adding to losing positions in order to “save yourself” is an entirely different ballgame than doing so because it’s a valid part of your trading strategy. If a trader is adding positions for the right reason, the key to remaining competitive lies squarely within his psychological ability to ride out a big drawdown—a feat that should never be taken lightly—and then allowing the trade to reach its maximum potential.

Tendency #3—Loyalty
Perhaps Shasty's biggest downfall is his undying love and commitment to a particular currency pair. In this case, his strength is also his weakness. His sense of loyalty holds him back from making sound, educated trading decisions.

Solution: Fundamentally speaking, your feelings about a given currency pair don’t mean squat. The key to remaining competitive in Forex trading is allowing the market to tell you about the currency and then pouncing, not vice versa. Give more weight to what is happening in the market than to your attachment to the pair.

So, we find ourselves back at the beginning—Riding a losing trade and wondering what to do next.

A dear friend once told me, “Wise people learn from their own mistakes, but super wise people learn from the mistakes of others.” So what can we learn here? Firstly, don’t trade like Shasty! Be ye not so foolish. Learn from his mistakes and your margin account will thank you.

Secondly, take heed to these sound trading principles:
* Grasp a bigger picture perspective on the market. Before you begin trading for the day, have a look at the weekly and/or monthly chart. They can often provide you a broader perspective of a particular currency pair.
* Accept responsibility for your own actions. When you have a losing trade, don’t look for others to blame. You made the decision to place the trade. You control your trading destiny. You and you alone.
* Maintain a strict adherence to sound money management. Buying into the “get rich quick” scheme of Forex trading has left countless numbers of traders with dwindled margin accounts. Manage your assets well and you will be a much happier—and much more competitive—currency trader.

We’re experiencing a once-in-a-decade event in the Forex market, my friends, and it isn’t going away anytime soon. An extraordinary confluence of events has thrown nearly every financial market into chaos and, sadly, Forex was not immune. I’m reminded of a rather macabre but ever so appropriate phrase I once heard that went a little something like this—adapt or die.

Drawdown is a painful reality in Forex trading and despite how much you punch, kick, and fight, it will undoubtedly happen to you at some point. It’s up to you to decide how you’ll handle it. It can make you angry and vengeful or it can make you wiser and more disciplined. I can’t speak for you but I most certainly prefer the latter.

As fellow currency traders, we always welcome your thoughts, comments and questions. We’re always here to help.

Happy trading!

My Forex Trading Journey Nov 10

Hello dear visitor, I made a couple of wining trades yesterday and my equity rose 6.75%. Though market as of this time is very shaky, trading seems to be a GAMBLE. But just stick to your system. Follow your indicators and limit your losses.

no. of trading days: 2
platform/broker: fxcm
initial capital: $5,000.00
pair: eur/usd
leverage: 1:400
trading system: pivot point/grid systems (with sma/ema, rsi) for short/medium/long term trends
money management: 1% and 0.5% total capital per trade
open trade/s: 2
open order/s: 9
equity: $5,298.58
floating p/l: $50.00
ending balance: $5,337.41
gain percentage: 6.75%

Hi, here is my new forex demo account. I made a lot of modifications since the last time I used this. I hope this time it will work. And luckily, and I wish that I can open my live trading account soon.

So I invite other forex traders to post their comments on my blog and give me more ideas how to improve this. I hope this thing will WORK out fine and profitable.

here's my system:

no. of trading days: 1
platform/broker: fxcm
initial capital: $5,000.00
pair: eur/usd
leverage: 1:400
trading system: pivot point/grid systems (with sma/ema, rsi) for short/medium/long term trends
money management: 1% and 0.5% total capital per trade
open trade/s: 1
open order/s: 7
completed trades: 0
gain trade/s: 0
loss trade/s: 0
trading percentage: 0%
equity: $4.995.00
floating p/l: -$5.00
ending balance: $5,000.00
gain percentage: -0.001%

Make Money Trading Forex
In the FX market, you buy or sell currencies. Placing a trade in the foreign exchange market is simple: the mechanics of a trade are very similar to those found in other markets (like the stock market), so if you have any experience in trading, you should be able to pick it up pretty quickly.

The object of Forex trading is to exchange one currency for another in the expectation that the price will change, so that the currency you bought will increase in value compared to the one you sold.

Example of making money by buying euros

Trader's Action:EUR/USD
You purchase 10,000 euros at the EUR/USD exchange rate of 1.18
+10,000(EUR) -11,800*(USD) = -1,800

Two weeks later, you exchange your 10,000 euros back into US dollars at the exchange rate of 1.2500.
-10,000(EUR)+12,500**(USD)= +2,500

You earn a profit of $700.(+700)
-*1,800 +**2,500 = $700

An exchange rate is simply the ratio of one currency valued against another currency. For example, the USD/CHF exchange rate indicates how many U.S. dollars can purchase one Swiss franc, or how many Swiss francs you need to buy one U.S. dollar.

How to Read an FX Quote
Currencies are always quoted in pairs, such as GBP/USD or USD/JPY. The reason they are quoted in pairs is because in every foreign exchange transaction you are simultaneously buying one currency and selling another. Here is an example of a foreign exchange rate for the British pound versus the U.S. dollar:

GBP/USD = 1.7500

The first listed currency to the left of the slash ("/") is known as the base currency (in this example, the British pound), while the second one on the right is called the counter or quote currency (in this example, the U.S. dollar).

When buying, the exchange rate tells you how much you have to pay in units of the quote currency to buy one unit of the base currency. In the example above, you have to pay 1.7500 U.S. dollar to buy 1 British pound.

When selling, the exchange rate tells you how many units of the quote currency you get for selling one unit of the base currency. In the example above, you will receive 1.7500 U.S. dollars when you sell 1 British pound.

The base currency is the “basis” for the buy or the sell. If you buy EUR/USD this simply means that you are buying the base currency and simultaneously selling the quote currency.

You would buy the pair if you believe the base currency will appreciate (go up) relative to the quote currency. You would sell the pair if you think the base currency will depreciate (go down) relative to the quote currency.
Long/Short

First, you should determine whether you want to buy or sell.

If you want to buy (which actually means buy the base currency and sell the quote currency), you want the base currency to rise in value and then you would sell it back at a higher price. In trader's talk, this is called "going long" or taking a "long position".

Just remember:

long = buy.

If you want to sell (which actually means sell the base currency and buy the quote currency), you want the base currency to fall in value and then you would buy it back at a lower price. This is called "going short" or taking a "short position".

Short = sell.

Bid/Ask Spread
All Forex quotes include a two-way price, the bid and ask. The bid is always lower than the ask price.

The bid is the price in which the dealer is willing to buy the base currency in exchange for the quote currency. This means the bid is the price at which you (as the trader) will sell.

The ask is the price at which the dealer will sell the base currency in exchange for the quote currency. This means the ask is the price at which you will buy.

The difference between the bid and the ask price is popularly known as the spread.

Let's take a look at an example of a price quote taken from a trading platform:

Forex Spread On this GBP/USD quote, the bid price is 1.7445 and the ask price is 1.7449. Look at how this broker makes it so easy for you to trade away your money.

If you want to sell GBP, you click "Sell" and you will sell pounds at 1.7445. If you want to buy GBP, you click "Buy" and you will buy pounds at 1.7449.

In the following examples, we're going to use fundamental analysis to help us decide whether to buy or sell a specific currency pair. If you always fell asleep during your economics class or just flat out skipped economics class, don’t worry! We will cover fundamental analysis in a later lesson. For right now, try to pretend you know what’s going on…

EUR/USD
In this example Euro is the base currency and thus the “basis” for the buy/sell.

If you believe that the US economy will continue to weaken, which is bad for the US dollar, you would execute a BUY EUR/USD order. By doing so you have bought euros in the expectation that they will rise versus the US dollar.

If you believe that the US economy is strong and the euro will weaken against the US dollar you would execute a SELL EUR/USD order. By doing so you have sold Euros in the expectation that they will fall versus the US dollar.

USD/JPY
In this example the US dollar is the base currency and thus the “basis” for the buy/sell.

If you think that the Japanese government is going to weaken the Yen in order to help its export industry, you would execute a BUY USD/JPY order. By doing so you have bought U.S dollars in the expectation that they will rise versus the Japanese yen.

If you believe that Japanese investors are pulling money out of U.S. financial markets and converting all their U.S. dollars back to Yen, and this will hurt the US dollar, you would execute a SELL USD/JPY order. By doing so you have sold U.S dollars in the expectation that they will depreciate against the Japanese yen.


GBP/USD
In this example the GBP is the base currency and thus the “basis” for the buy/sell.

If you think the British economy will continue to do better than the United States in terms of economic growth, you would execute a BUY GBP/USD order. By doing so you have bought pounds in the expectation that they will rise versus the US dollar.

If you believe the British's economy is slowing while the United State's economy remains strong like bull, you would execute a SELL GBP/USD order. By doing so you have sold pounds in the expectation that they will depreciate against the US dollar.

USD/CHF
In this example the USD is the base currency and thus the “basis” for the buy/sell.

If you think the Swiss franc is overvalued, you would execute a BUY USD/CHF order. By doing so you have bought US dollars in the expectation that they will appreciate versus the Swiss Franc.

If you believe that the US housing market bubble burst will hurt future economic growth, which will weaken the dollar, you would execute a SELL USD/CHF order. By doing so you have sold US dollars in the expectation that they will depreciate against the Swiss franc.

I don't have enough money to buy 10,000 euros. Can I still trade?
You can with margin trading! Margin trading is simply the term used for trading with borrowed capital. This is how you're able to open $10,000 or $100,000 positions with as little as $50 or $1,000. You can conduct relatively large transactions, very quickly and cheaply, with a small amount of initial capital.

Margin trading in the foreign exchange market is quantified in “lots”. We will be discussing these in depth in our next lesson. For now, just think of the term "lot" as the minimum amount of currency you have to buy. When you go to the grocery store and want to buy an egg, you can't just buy a single egg; they come in dozens or "lots" of 12. In Forex, it would be just as foolish to buy or sell 1 euro, so they usually come in "lots" of 10,000 (Mini) or 100,000 (Standard) depending on the type of account you have.

For Example:

* You believe that signals in the market are indicating that the British Pound will go up against the US dollar.
* You open one lot (100,000), buying with the British pound at 1% margin and wait for the exchange rate to climb. When you buy one lot (100,000) of GBP/USD at a price of 1.5000, you are buying 100,000 pounds, which is worth US$150,000 (100,000 units of GBP * 1.50 (exchange rate with USD)). If the margin requirement was 1%, then US$1500 would be set aside in your account to open up the trade (US$150,000 * 1%). You now control 100,000 pounds with US$1500. Your predictions come true and you decide to sell.
* You close the position at 1.5050. You earn 50 pips or about $500. (A pip is the smallest price movement available in a currency).

Your Actions:GBP/USD
You buy 100,000 pounds at the GBP/USD exchange rate of 1.5000
+100,000(GBP)-150,000(USD)= -50,000

You blink for two seconds and the GBP/USD exchange rate rises to 1.5050 and you sell.
-100,000(GBP)+150,500(USD)** = +50,500

You have earned a profit of $500.(+500)

When you decide to close a position, the deposit that you originally made is returned to you and a calculation of your profits or losses is done. This profit or loss is then credited to your account.

We will also be discussing margin more in-depth in the next lesson, but hopefully you're able to get a basic idea of how margin works.


To read more about forex, visit www.babypips.com

What is a Spot Market?
A spot market is any market that deals in the current price of a financial instrument.

Which Currencies Are Traded?

The most popular currencies along with their symbols are shown below:

Symbol Country Currency
USD United States Dollar
EUR Euro members Euro
JPY Japan Yen
GBP Great Britain Pound
CHF Switzerland Franc
CAD Canada Dollar
AUD Australia Dollar
NZD New Zealand Dollar


Forex currency symbols are always three letters, where the first two letters identify the name of the country and the third letter identifies the name of that country’s currency.

When Can Currencies Be Traded?
The spot FX market is unique within the world markets. It’s like a Super Wal-Mart where the market is open 24-hours a day. At any time, somewhere around the world a financial center is open for business, and banks and other institutions exchange currencies every hour of the day and night with generally only minor gaps on the weekend.

The foreign exchange markets follow the sun around the world, so you can trade late at night (if you’re a vampire) or in the morning (if you’re an early bird). Keep in mind though, the early bird doesn’t necessarily get the worm in this market - you might get the worm but a bigger, nastier bird of prey can sneak up and eat you too…

Time Zone New York GMT

Tokyo Open 7:00 pm 0:00
Tokyo Close 4:00 am 9:00

London Open 3:00 am 8:00
London Close 12:00 pm 17:00

New York Open 8:00 am 13:00
New York Close 5:00 pm 22:00


The Forex market (OTC)
The Forex OTC market is by far the biggest and most popular financial market in the world, traded globally by a large number of individuals and organizations. In the OTC market, participants determine who they want to trade with depending on trading conditions, attractiveness of prices and reputation of the trading counterpart.

Why Trade Foreign Currencies?
There are many benefits and advantages to trading Forex. Here are just a few reasons why so many people are choosing this market:

* No commissions.
No clearing fees, no exchange fees, no government fees, no brokerage fees. Brokers are compensated for their services through something called the bid-ask spread.

* No middlemen.
Spot currency trading eliminates the middlemen, and allows you to trade directly with the market responsible for the pricing on a particular currency pair.

* No fixed lot size.
In the futures markets, lot or contract sizes are determined by the exchanges. A standard-size contract for silver futures is 5000 ounces. In spot Forex, you determine your own lot size. This allows traders to participate with accounts as small as $250 (although we explain later why a $250 account is a bad idea).

* Low transaction costs.
The retail transaction cost (the bid/ask spread) is typically less than 0.1 percent under normal market conditions. At larger dealers, the spread could be as low as .07 percent. Of course this depends on your leverage and all will be explained later.

* A 24-hour market.

There is no waiting for the opening bell - from Sunday evening to Friday afternoon EST, the Forex market never sleeps. This is awesome for those who want to trade on a part-time basis, because you can choose when you want to trade--morning, noon or night.

* No one can corner the market.
The foreign exchange market is so huge and has so many participants that no single entity (not even a central bank) can control the market price for an extended period of time.

* Leverage.
In Forex trading, a small margin deposit can control a much larger total contract value. Leverage gives the trader the ability to make nice profits, and at the same time keep risk capital to a minimum. For example, Forex brokers offer 200 to 1 leverage, which means that a $50 dollar margin deposit would enable a trader to buy or sell $10,000 worth of currencies. Similarly, with $500 dollars, one could trade with $100,000 dollars and so on. But leverage is a double-edged sword. Without proper risk management, this high degree of leverage can lead to large losses as well as gains.

* High Liquidity.
Because the Forex Market is so enormous, it is also extremely liquid. This means that under normal market conditions, with a click of a mouse you can instantaneously buy and sell at will. You are never "stuck" in a trade. You can even set your online trading platform to automatically close your position at your desired profit level (a limit order), and/or close a trade if a trade is going against you (a stop loss order).

* Free “Demo” Accounts, News, Charts, and Analysis.
Most online Forex brokers offer 'demo' accounts to practice trading, along with breaking Forex news and charting services. All free! These are very valuable resources for “poor” and SMART traders who would like to hone their trading skills with 'play' money before opening a live trading account and risking real money.

* “Mini” and “Micro” Trading:
You would think that getting started as a currency trader would cost a ton of money. The fact is, compared to trading stocks, options or futures, it doesn't. Online Forex brokers offer "mini" and “micro” trading accounts, some with a minimum account deposit of $300 or less. Now we're not saying you should open an account with the bare minimum but it does makes Forex much more accessible to the average (poorer) individual who doesn't have a lot of start-up trading capital.

What Tools Do I Need to Start Trading Forex?
A computer with a high-speed Internet connection and all the information on this site is all that is needed to begin trading currencies.

What Does It Cost to Trade Forex?
An online currency trading (a “micro account”) may be opened with a couple hundred bucks. Do not laugh – micro accounts and its bigger cousin, the mini account, are both good ways to get your feet wet without drowning. For a micro account, we'd recommend at least $1,000 to start. For a mini account, we’d recommend at least $10,000 to start.

To read more about forex, visit www.babypips.com

What is FOREX?
The Foreign Exchange market, also referred to as the "FOREX" or "Forex" or "FX" or "Spot FX" or just "Spot" is the largest financial market in the world, with a volume of over $4 trillion a day. It actually equates to more than three times the total amount of the stocks and futures markets combined! Forex rocks!

What is traded on the Foreign Exchange market?
Of coursed the answer is simple: MONEY. Forex trading is the simultaneous buying of one currency and the selling of another. Currencies are traded through a broker or dealer, and are traded in pairs; for example the euro and the US dollar (EUR/USD) or the British pound and the Japanese Yen (GBP/JPY)so on and so forth.

Because you're not buying anything physical, this kind of trading can be confusing. Think of buying a currency as buying a share in a particular country. When you buy, say, Japanese Yen, you are in effect buying a share in the Japanese economy, as the price of the currency is a direct reflection of what the market thinks about the current and future health of the Japanese economy.

In general, the exchange rate of a currency versus other currencies is a reflection of the condition of that country's economy, compared to the other countries' economies.

Unlike other financial markets like the New York Stock Exchange, the Forex spot market has neither a physical location nor a central exchange. The Forex market is considered an Over-the-Counter (OTC) or 'Interbank' market, due to the fact that the entire market is run electronically, within a network of banks, continuously over a 24-hour period.

Until the late 1990's, only the "big guys" could play this game. The initial requirement was that you could trade only if you had about ten to fifty million bucks to start with! Forex was originally intended to be used by bankers and large institutions - and not by us "little guys". However, because of the rise of the Internet, online Forex trading firms are now able to offer trading accounts to 'retail' traders like us.

All you need to get started is a computer, a high-speed Internet connection, and the information contained within this site.

To read more about forex, visit www.babypips.com