Wednesday, June 9, 2010

Forex Like Sex .. !!!

I maintain that forex trading is kind of like sex. I apologize if this is a bit risqué for you, and you may want to leave if it is. I'm not make it all tawdry here, but I want to draw a few examples to make some forex principles clear.

When it comes to sex, most people are focused on the end -- the climax. This is of course all backwards as the whole experience is to be enjoyed and savored. It's very similar in forex. Most forex traders are trading with some ultimate target in mind. It might be making $1 million, or it might be making enough to live on, or it might be just having a profitable year, etc.

Now not saying that you need to savor the experience of every forex trade. That's not the point here. The point of trying to make is if you don't focus on the minutia, then you won't ever get to your end goal.

This is because the devil is in the details when it comes to forex trading. It's all the small things like where do you place the stop, do you even use a stop, where you place your take profit, will it reach that Fibonacci level, should I take this trade with the pending news release, etc.

The point I'm trying to drive home here is not to get too farsighted or "big picture" in your view. Each trade is very important; each exit is very important.

Tuesday, June 8, 2010

Forex trading, what the hype is all about

Forex trading is all about making big money. Some investors have found it quite easy to make a large amount of money as the forex market changes daily. Forex, is the foreign exchange market. Online and offline you will find references to the forex market as FX as well. Forex trading takes place through a broker or a financial institution often where you are able to purchase other types of stocks, bonds and investments.

When you are thinking about getting involved in the forex markets you should know you are sending money to be invested with other countries. This is done to prop up the investments of people involved in certain types of hedge funds, and in the markets overseas. The forex market could have your money invested in one market one day, and the next day your money is invested in another country. The daily changes are determined by your broker or financial institution. When reading your statements and learning more about your account, you will find that every type of currency has three letters that will represent that currency.

For example, the United States dollars is USD, the Japanese yen is JPY, and the British pound sterling will read as GBP. You will also find that for every transaction on your account listing you will see information that looks like this: JPYzzz/GBPzzz. This means that you took your Japanese yen money and invested it into something in the British pound market. You will find many transactions from one currency to another if you have money that is scattered through out the forex markets.

Forex markets trading by investment management firms are the companies you can trust with your money. You want to find a company that has been dealing with forex trading since the early seventies, and not someone just new on the block so you get the most for your hard earned money. It is important that you beware of companies that are popping up online, and often times from foreign countries that are stating they can get you involved in the forex markets and trading. Read the fine print, and know whom you are dealing with for the best possible protection.

If you are interested in trading on the forex market, you will find limits for investing are different from company to company. Often times you will learn that you need a minimum of $250 or $500 while other companies will need $1000 or $10,000. The company you are dealing with will set limits in how much you need to open an account with their company. The scams that are online will tell you, that you only need a $1 or $5 to open an account, but you need to learn more about that company and where they are doing business before investing any money, this is for your own protection while dealing in forex trading and markets online.

The World Wide Forex market

Forex is a trading 'method' also known as FX or and foreign market exchange. Those involved in the foreign exchange markets are some of the largest companies and banks from around the world, trading in currencies from various countries to create a balance as some are going to gain money and others are going to lose money. The basics of forex are similar to that of the stock market found in any country, but on a much larger, grand scale, that involves people, currencies and trades from around the world, in just about any country.

Different currency rates happen and change every day. What the value of the dollar may be one day could be higher or lower the next. The trading on the forex market is one that you have to watch closely or if you are investing huge amounts of money, you could lose large amounts of money. The main trading areas for forex, happens in Tokyo, in London and in New York, but there are also many other locations around the world where forex trading does take place.

The most heavily traded currencies are those that include (in no particular order) the Australian dollar, the Swiss franc, the British pound sterling, the Japanese yen, the Eurozone eruo, and the United States dollar. You can trade any one currency against another and you can trade from that currency to another currency to build up additional money and interest daily.

The areas where forex trading is taking place will open and close, and the next will open and close. This is seen also in the stock exchanges from around the world, as different time zones are processing order and trading during different time frames. The results of any forex trading in one country could have results and differences in what happens in additional forex markets as the countries take turns opening and closing with the time zones. Exchange rates are going to vary from forex trade to forex trade, and if you are a broker, or if you are learning about the forex markets you want to know what the rates are on a given day before making any trades.

The stock market Is generally based on products, prices, and other factors within businesses that will change the price of stocks. If someone knows what is going to happened before the general public, it is often known as inside trading, using business secrets to buy stocks and make money - which by the way is illegal. There is very little, if any at all inside information in the forex trading markets. The monetary trades, buys and sells are all a part of the forex market but very little is based on business secrets, but more on the value of the economy, the currency and such of a country at that time.

Every currency that is traded on the forex market does have a three letter code associated with that currency so there is no misunderstanding about which currency or which country one is investing with at the time. The eruo is the EUR and the US dollar is known as the USD. The British pound is the GBP and the Japanese yen is known as the JPY. If you are interested in contacting a broker and becoming involved in the forex markets you can find many online where you can review the company information and transactions before processing and becoming involved in the forex markets.

Sunday, June 6, 2010

Who is participating in forex market trades?

The forex market is all about trading between countries, the currencies of those countries and the timing of investing in certain currencies. The FX market is trading between counties, usually completed with a broker or a financial company. Many people are involved in forex trading, which is similar to stock market trading, but FX trading is completed on a much larger overall scale. Much of the trading does take place between banks, governments, brokers and a small amount of trades will take place in retail settings where the average person involved in trading is known as a spectator. Financial market and financial conditions are making the forex market trading go up and down daily. Millions are traded on a daily basis between many of the largest countries and this is going to include some amount of trading in smaller countries as well.

From the studies over the years, most trades in the forex market are done between banks and this is called interbank. Banks make up about 50 percent of the trading in the forex market. So, if banks are widely using this method to make money for stockholders and for their own bettering of business, you know the money must be there for the smaller investor, the fund mangers to use to increase the amount of interest paid to accounts. Banks trade money daily to increase the amount of money they hold. Overnight a bank will invest millions in forex markets, and then the next day make that money available to the public in their savings, checking accounts and etc.

Commercial companies are also trading more often in the forex markets. The commercial companies such as Deutsche bank, UBS, Citigroup, and others such as HSBC, Braclays, Merrill Lynch, JP Morgan Chase, and still others such as Goldman Sachs, ABN Amro, Morgan Stanley, and so on are actively trading in the forex markets to increase wealth of stock holders. Many smaller companies may not be involved in the forex markets as extensively as some large companies are but the options are stil there.

Central banks are the banks that hold international roles in the foreign markets. The supply of money, the availability of money, and the interest rates are controlled by central banks. Central banks play a large role in the forex trading, and are located in Tokyo, New York and in London. These are not the only central locations for forex trading but these are among the very largest involved in this market strategy. Sometimes banks, commercial investors and the central banks will have large losses, and this in turn is passed on to investors. Other times, the investors and banks will have huge gains.

Practicing in the Forex Market

So you want to learn about the Forex market, and trading internationally but you are risking your personal wealth if you jump in before knowing all about how trading takes place. Online, you will find many games and simulations while learning the methods involved in forex market trading. The forex markets include countries from around the world, where all countries involved are using different currencies, and when faced against each other are worth more or less than the original valued currencies that are being traded. The forex markets are used to build wealth in, for governments, banks, and brokers, and for many countries.

To get started in learning about forex trading, you will need to locate the forex trading software, education-learning system you want to use. As you find the games, as they are called, you will enter information about yourself, about what you are interested in learning and then you will download software to your computer. In following the 'game', you will learn how to make and lose money in the forex market. This type of game is going to make you more aware of what happens daily, how the markets open and close, and how different the various countries currencies really are.

You will open an online 'account' using the gaming system. You will then be able to read the news, find and compare markets, and you will be able to make 'fake' trades so you can watch your money build or be eaten away in losses. As you learn the system, using it a few times a week, you are going to be more prepared, more educated and you will be ready to use the forex trades to make money. Of course, you may still need the aid of broker or a company to make your transactions happen but you will better understand the process, what will happen, and what calls you may want to make when you read about the news, the markets, and the currencies in other countries.

The forex market is also referred to as the FX market. If you are interested in joining the millions who are making money in the forex markets, you want to ensure you are dealing with a reputable banker or company involved in forex trading. With the spur of interest in the forex markets, there are many types of companies that are popping out on the Internet appearing to be genuine forex trading companies but in reality, they are not. Forex trading can be completed through a broker, a company that deals in the funds, and from within your own country. For example, the US has many regulations and laws regarding forex trading and what companies are permitted to work with the public dealing with international trading and markets.

Saturday, June 5, 2010


Trading forex is like watching a school of fish move. One minute is total harmony, the next, complete chaos. As the observer of this school of fish, do you believe you can accurately predict the direction the school of fish will move each time? Would you bet on it?
What causes the fish to move the way they do? Why do they work together in one moment, moving with force and precision, and move in what seems to be an infinite number of directions the next? There’s no way to know unless you can sense what the fish sense each time they move. The fish have an instinct about the nature of their environment. They understand the context of all things around them – natively – and can react accordingly. Surely if you shared this understanding you’d be a much more accurate predictor of fish movement!
Trading forex is not much different - we need to develop that keen sense of what is happening around us. Will we ever be able to predict every move in the forex markets? Absolutely not. But we can use our understanding of the context of the market – the six forces of forex – to make better, more profitable trading choices. Once we understand these forces, we can create and operate within a comprehensive trading plan:

  •  Who trades forex? Understand who participates in the markets, why they are successful, and how you can emulate them.
  •  Why trade forex? There are superior returns in forex, but not for all investors. Are you one of them?
  •  Where should you trade? Choose to work with service providers who can efficiently enable your style of trading.
  •  What should you trade? Select the currency pair, entry, exit and money management methods that will maximize your returns.
  •  When should you trade? Trade when the environment is most likely to produce the best conditions for executing your system.
  •  How should you trade? Trade using methods that maximize your ability to emulate the proven winners.

Knowledge of these forces and how they work is a major determinant of your success as a trader. Figure 1 shows these 6 forces, their relative rarity, and their effect on profitability.


Forex trading has surged in recent years, as more individuals earn their living trading and the popularity of riskier investment vehicles like hedge funds has increased. The bottom line for these investors is superior returns, and in foreign exchange four major factors create a unique investment environment:

  1.  Liquidity
  2.  Leverage
  3.  Convenience
  4.  Cost

In no other market can you find a playing field that is so biased to the investor, at least on the surface. But to take advantage of these factors you have to be constantly aware of their downside.
In a liquid market there is a high degree of transparency, even when large transactions change hands. The sophisticated investor understands what this means: forex attracts huge players. As a trader grows in sophistication, they understand that these huge players have significant price impact, and watch for their market entry.
The low margin requirements in the forex markets make everyone’s what-if analysis yield forecasts with 1000% growth annually. What those forecasts fail to account for is the multiplying effect of leverage during periods of consecutive losses.

FOREX, trading foreign currency

FOREX trading is all about trading foreign currency, stocks, and similar type of products. The currency of one country is weighed against the currency of another country to determine value. The value of that foreign currency is taken into consideration when trading stocks on the FOREX markets. Most countries have control over the value of that countries value, involving the currency, or money. Those who are often involved in the FOREX markets include banks, large businesses, governments, and financial institutions.

What makes the FOREX market different from the stock market?
A forex market trade is one that involves at least two countries, and it can take place worldwide. The two countries are one, with the investor, and two, the country the money is being invested in. Most all transactions taking place in the FOREX market are going to take place through a broker, such as a bank.

What really makes up the FOREX markets?
The foreign exchange market is made up of a variety of transactions and counties. Those involved in the FOREX market are trading in large volumes, large amounts of money. Those who are involved in the FOREX market are generally involved in cash businesses, or in the trade of very liquid assets that you can sell and buy fast. The market is large, very large. You could consider the FOREX market to be much larger than the stock market in any one country overall. Those involved in the FOREX market are trading daily twenty-four hours a day and sometimes trading is completed on the weekend, but not all weekends.

You might be surprised at the number of people that are involved in FOREX trading. In the years 2004, almost two trillion dollars was an average daily trading volume. This is a huge number for the number of daily transactions to take place. Think about how much a trillion dollars really is and then times that by two, and this is the money that is changing hands every day!

The FOREX market is not something new, but has been used for over thirty years. With the introduction of computers, and then the internet, the trading on the FOREX market continues to grow as more and more people and businesses alike become aware of the availablily of this trading market. FOREX only accounts for about ten percent of the total trading from country to country, but as the popularity in this market continues to grow so could that number.

Forex trading, where do customers go?

Forex trading uses currency and stock markets from a variety of countries to create a trading market where millions and millions are traded and exchanged daily. This market is similar to the stock market, as people buy and sell, but the market and the over all results are much much larger. Those involved in the forex trading markets include the Deutsche bank, UBS, Citigroup, and others such as HSBC, Braclays, Merrill Lynch, JP Morgan Chase, and still others such as Goldman Sachs, ABN Amro, Morgan Stanley, and so on.

To get involved in the forex trading markets, contacting any of these large broker assistance firms is going to be in your best interest. Sure, anyone can get involved in the forex market, but it does take time to learn about what is hot, what is not, and just where you should place your money at this time.

International banks are the markets biggest users on the forex markets, as they have millions of dollars to invest daily, to earn interest and this is just one method of how banks make money on the money you save in their bank. Think about the bank that you deal with all the time. Do you know if you can go there, and obtain money from 'another' country if you are heading out on vacation? If not, that bank is most likely not involved in forex trading. If you have to know if your bank is involved in forex trading, you can ask any manager or you can look at the financial information sheets that banks are to report to the public on a quarterly baiss.

If you are new to the forex market, it is important to realize there is no one person or one bank that controls all the trades that occur in the forex markets. Various currencies are traded, and will originate from anywhere in the world. The currencies that are most often traded in the forex markets include those of the US dollar, the Eurozone euro, the Japanese yen, the British pound sterling and the Swiss franc as well as the Australian dollar. These are just a few of the currencies that are traded on the forex markets, with many other counties currencies to be included as well. The main trading centers for the forex trading markets are located in Tokyo, New York and in London but with other smaller trading centers located thought out the world as well.

FOREX (Foreign Exchange Market)

The foreign exchange market is also known as FX or it is also found to be referred to as the FOREX. All three of these have the same meaning, which is the trade of trading between different companies, banks, businesses, and governments that are located in different countries. The financial market is one that is always changing leaving transactions required to be completed through brokers, and banks. Many scams have been emerging in the FOREX business, as foreign companies and people are setting up online to take advantage of people who don't realize that foreign trade must take place through a broker or a company with direct participation involved in foreign exchanges.

Cash, stocks, and currency is traded through the foreign exchange markets. The FOREX market will be present and exist when one currency is traded for another. Think about a trip you may take to a foreign country. Where are you going to be able to 'trade your money' for the value of the money that is in that other country? This is FOREX trading basis, and it is not available in all banks, and it is not available in all financial centers. FOREX is a specialized trading circumstance.

Small business and individuals often times looking to make big money, are the victims of scams when it comes to learning about FOREX and the foreign trade markets. As FOREX is seen as how to make a quick buck or two, people don't question their participation in such an event, but if you are not investing money through a broker in the FOREX market, you could easily end up losing everything that you have invested in the transaction.

Scams to be wary of
A FOREX scam is one that involves trading but will turn out to be a fraud; you have no chance of getting your money back once you have invested it. If you were to invest money with a company stating they are involved in FOREX trading you want read closely to learn if they are permitted to do business in your country. Many companies are not permitted in the FOREX market, as they have defrauded investors before.

In the last five years, with the help of the Internet, FOREX trading and the awareness of FOREX trading has become all the rage. Banks are the number one source for FOREX trading to take place, where a trained and licensed broker is going to complete transactions and requirements you set forth. Commissions are paid on the transaction and this is the usual.

Another type of scam that is prevalent in the FOREX markets is software that will aid you in making trades, in learning about the foreign markets and in practicing so you can prepare yourself for following and making trades. You want to be able to rely on a program or software that is really going to make a difference. Consult with your financial broker or your bank to learn more about FOREX trading, the FX markets and how you can avoid being the victim while investing in these markets.


As a trader in the Eurodollar futures pit at the Chicago Mercantile Exchange, Angelo Reynolds cites mental toughness and
courage as two of the necessary factors to successful pit trading. "I knew I always wanted to be involved in the markets,"
Reynolds said. After graduating from the University of Pennsylvania in 1984, Reynolds. took a job as a runner at the Philadelphia
Stock Exchange.
After paying his dues on the trading floor, Reynolds worked his way up into a brokering position and began filling foreign
currency options. In 1987, a Chicago trading firm approached Reynolds regarding the possibility of a move to the Chicago Board
of Trade bond pit. However, at that time, Reynolds said, "the market was good in Philadelphia and I wasn't really ready to move."
However, a few years later, the currency options market began to slow in Philadelphia. "As the market got slow, I began to
think about a move to Chicago," Reynolds explained. In June 1991, Reynolds made the move to the Midwest and began filling
paper in the Eurodollar futures pit for Quantum.
After successfully filling orders in the Eurodollar pit for three years, Reynolds began to consider shifting to the trading side. "I
had been a broker for about eight years and there is more of a challenge and more financial opportunity in trading." In June 1994,
Reynolds took the leap and joined Deerpark Derivatives as a trader in the Eurodollar pit.
"It was kind of scary the first couple of months," Reynolds admitted. However, he sticks to a couple of "basic rules that
everyone knows" that has allowed him to achieve success.
"In my type of trading-scalping-you have to cut your losers and let your winners ride.” Every day Reynolds squeezes into the
Eurodollar pit, with roughly 1,000 other people, and looks to take advantage of short-term inefficiencies in the market.
Another basic rule Reynolds trades by is trading within your means. "You can't trade outside your capital, you can only trade
5% of your capital." As a "scalper," Reynolds' average time frame for trades is minutes. "Right after a number, it could be a split
second (that I hold a trade) or it could be two to three hours ... the average is five to 10 minutes.”
On the transition from broker to trader, Reynolds said "you have to be more sophisticated to be a trader than a broker because
you have to understand the underlying reason the market is moving.”
When he began trading, Reynolds studied a book on fundamentals in order to gauge the importance of various economic
releases throughout the month. "I study (the figures) a lot. You have to if you are going to be an effective scalper. When the 7:30
a.m. government economic reports flash on the board, Reynolds said, "I look at the numbers to see if they are inflationary.”
For example, if the monthly release of the Producer Price Index came in 0.2% above expectations, "you start looking (to hit)
bids-because that means it's inflationary and the bonds are going to go down."
As Eurodollar futures often trade in tandem with T-bond futures at the Chicago Board of Trade, Reynolds notes that he
watches cash Treasury bond prices closely throughout the day as well. "If we see cash bonds turn around (to the upside) the
locals will come in and just start buying Euros," Reynolds said.
In recent weeks, Eurodollar futures have been trading within extremely narrow ranges-a four- to five-tick range is not
uncommon for the March Eurodollar contract lately. The major factor confining Eurodollar prices is that most analysts believe
Federal Reserve will keep monetary policy steady between now and year-end.
Nonetheless, Reynolds said, "even in a one- or two-tick range you can still make money .. there will be 1,500 (contracts) on
the bid and 2,000 on the offer."
Eurodollar futures are known for having great liquidity. "There's always 2,000 (contracts) at every price," Reynolds said. Total
open interest for Eurodollar futures currently stands near 2,398,012.
So even if the Eurodollars fluctuate within narrow ranges, "when the Euros move, there could be a 1,000 lot you can hit, so it
makes it worth the wait," Reynolds said. "I'll do 700, 800 or 900 contracts because I know there will be 500 at the next price. I
know I'll be able to get out.”
While some traders leave early in the morning if they've had a good trade, Reynolds said, "I'm the type of guy to stay all day. I
love to trade.” However, he added, "I'll cut my losses and go home" if he's having a bad day. "It's usually 1,000 ticks either way,"
Reynolds said for his cut-off point for leaving. One tick in the Eurodollar contract is worth $25.
When asked what are some of the qualities that make a successful pit trader, Reynolds answered, "Number one is confidence.
Number two is mental toughness. Number three is interpersonal skills. Number four is a basic understanding of the markets and
number five-have enough capital-not necessarily in that order.”
"You have to have mental toughness because if you are wrong you have to be able to take defeat and not lose your courage.”
For beginning traders, Reynolds recommends the path he took-beginning as a runner. It is important "to take your time to
build your foundation of understanding of the industry otherwise you won't last long. I just take it one day at a time and try to
build on what I've done and hope I can continue to be successful in the future,” Reynolds concluded.