Being new to FOREX trading? Dont worry, getting started in FOREX trading is easy and you can always test your skills first in a demo account before you go live with real money. To get started in FOREX trading, we have to get to know what FOREX is. For the inexperienced, FOREX trading involves buying and selling the different currencies of the world. A FOREX deal is made when one buys one currency and sells another at the same time. It is always traded in pairs, Euro/USD, CHF/USD, USD/JPYyou get short in a currency every time to buy another and the profit is made when you buy-low and sell-high.

Be on the FOREX market

FOREX market is the largest trading partner in the world. There is an average turnover of $ 1.9 trillion per day and the number is almost 30 times greater than the volume of shares trading in the United States. FOREX trading is very unique, because the transactions are between two partners over electronic network or telephone connections. There is no central place, such as equities or futures markets and trade around the clock. Everyday FOREX trading begins, if the financial centers in Sydney start their day, and moves around the globe in Tokyo, London and New York. Dealer may, at any time on the market, regardless of local time.

Although FOREX trading involves such a big volume of trades nowadays, it is not made available for the publics until year 1998. In the past, the FOREX market was not offered to small speculators or individual traders due to the large minimum business sizes and extremely strict financial requirements. At that time, only banks, big multi-national cooperation and major currency dealers were able to take advantage of the currency exchange market’s extraordinary liquidity and strong trending nature of world’s main currency exchange rates. Only until the late 90s, FOREX brokers are allowed to break huge sized inter-bank units into smaller units and offer these units to individual traders like you and me. Nowadays with the rapid growth of Internet and communications technology, FOREX trading has become one of the hottest make-money-at-home-businesses for those who wish to avoid conventional 9-5 day job.

As a fact in FOREX trading, FOREX is mainly traded in large international bank. According to Wall Street Journal Europe, 73% of the trade volume is covered by the major ten. Deutsche Bank, topping the table, had covered 17% of the total currency trades; followed by UBS in the second and Citi Group in third; taking 12.5% and 7.5% of the market. Other large financial cooperation in the list is HSBC, Barclays, Merril Lynch, J. P. Morgan Chase, Coldman Sachs, ABN Amro, and Morgan Stanley. For market participants segment, approximately half of the transactions done were strictly between dealers (i.e. Bank, or large currency dealer); others are mainly between dealer and non financial institutions.

Why FOREX is popular?

There are several reasons why FOREX had such a popular investment among world wide speculators.

In FOREX trading, you can always use technology for your own advantage. The FOREX market has made an amazing transformation since the advent of the internet. Technology has now made it possible for smaller investors to play on the same level as larger corporations and banks. Anyone with a computer and a will to succeed can start trading currencies from the privacy of their home or office. Online FOREX trading has changed the way that investors do business. With access to your portfolio 24-hours a day, it is really very simple to get started. You can choose whether to hire a professional to handle your transactions, or you could choose to do them yourself.

In addition, Forex trading provides relative large leverage rates to individual traders. FOREX traders can do business with a maximum of 200 to 1 leverage rates. With this advantage, ROI is increased dramatically and traders can always start small with a capital of up to $ 1,000.

Getting started in FOREX trading

You do not need much to work with FOREX trading. A computer with Internet access, a funded FOREX account with foreign currency exchange broker, and a trading system should be sufficient to start things.

To reduce the risk of losing money, some basic graphics are also recommended before you start trading FOREX. FOREX charts assist the investor by providing a visual representation of fluctuations in exchange rates. Many variables affect currency exchange rates, as interest rates, bank policies, geopolitics, and even the time of day may affect exchange rates. As stated by experts FOREX trader Peter Bain, is a graphical tool in Forex Trading. In his newsletter, he reveals that daily charts, hourly charts, and 15-minutes, while the charts are used in FOREX trading. As quoted from his newsletter – “Daily chart will help you define the general trend from a position trading point of view, and time (hour) chart will give you a feeling of intraday trend. The 15-minutes chart is used for entry and exit – with the help of five minutes chart, in which the price is moving quickly, and you need to be closer to the action. ”

Being one of the technical method, FOREX charting is based on the principal history repeats itself. FOREX traders who study charts predict the market future by evaluating past market performance. The time frame used for charting might differs for different traders, some analyze the past one week, some prefer six months analysis, and there are also traders who analyze the market for the past five to ten years before getting involved in a FOREX trade. A huge variety of FOREX charts are available in the market. Some charting methods are very simple, using a few FOREX indicators to show trading direction; other charts may include up to forty indicators and those are mainly for advance traders that are more skillful. MACD Divergence, RSI, RSI range, and price are some of the well known indicators in charting.

Choosing the right FX dealer is a way to avoid unnecessary risks. FOREX dealers are not all regulated the same way. Although FOREX dealers must be regulated by law, firms and individuals can solicit retail accounts for FOREX dealers and manage those accounts without being regulated. As a trader you should take up the responsibility of finding out if your FOREX dealers are regulated. If they are not, you may be exposed to additional risks. Also, beware of dealers with investment schemes that sounds too good to be true. Pay extra cautions to dealers that you first knew and always look into the investment offers. If you are from United States, you can always refer to CFTF (at http://www.cftc.gov) or NFA (at http://www.nfa.org) for further information.

Conclusions

You come to this article, probably because you are new to FOREX and were looking for some readings on the internet. To be honest, FOREX can be very profitable, but is below the risk is equally large. Remember to always trade with proper investment plan and strategy. Read books, attend courses, seminars, videos, read documents, or even practice first with a dealer demo account to get ready. Trade smartly, and gain maximum FOREX – good luck!

Lets first define what Technical Analysis is. Technical Analysis is the study of historical and ongoing price data through charts, price patterns and chart indicators. Charts display price in time intervals using bars and candlesticks.

Technical Analysis is based on the following assumptions. The most important is that all available information is already impounded in the market prices of the currencies. The second assumption says that prices always move in trends or patterns. The third assumption says that history repeats itself meaning you can predict the future market by studying the past market prices.

Studies have shown that once a trend is in motion, it is most likely to continue rather than reverse it. The more one studies chart patterns in technical analysis, the clearer it becomes that reading and interpreting chart patterns and technical analysis are more an art form than a skill.

Two charts are important in technical analysis. Bar charts and Candlesticks charts. Bar charts display price data in vertical lines that represents price action during a given time period. The tip at the bottom of a bar chart is the low for the period. The tip at the top is the high for the period. The open and close are represented by small horizontal dashes called tics. The tic to the left of the vertical line is the open. The tic to the right of the line is the close.

Candlestick charts are similar to bar charts in many ways but different in other ways. Candlestick charts were developed by Japanese rice traders. They are used extensively in technical analysis. Like the bar charts, the top of the vertical line represent the high. The bottom of the vertical line represents the low. However, the price action between the open and the close is represented differently by the use of candlestick bodies. A shaded body represents a lower closing price below a higher opening price. A hollow body represents a higher closing price above a lower opening price.

The price action that takes place above and below the body is referred to as tails or wicks. As a forex day trader, you may use any one of the 3, 5, 10, 15, 30, 60 and 180 minutes charts for technical analysis. As a swing and position trader, you may use a daily, weekly or a monthly chart. These charts all use the Greenwich Mean Time (GMT) or the Eastern Standard Time (EST) depending on the software that your broker platform uses. But you can always adjust these times according to your local time.

While doing technical analysis, you need to understand markets patterns? You need to understand what are Uptrends? You should also know what downtrends are and what are sideway trends? Forex markets expand and retrace constantly. Currency prices may continue to expand for sometimes either upward or downward. It is the nature of the currency markets to surge then pause and retrace.

Trends in markets make a series of peaks and troughs as they move. An uptrend consists of a series of ascending peaks and troughs, each peak higher than the last peak and each trough lower than the last trough. A downtrend consists of a series of descending peaks and troughs. A sidways trend consists of a series of horizontal peaks and troughs meaning all peaks and all troughs are almost on the same level.

Part of becoming a good investor in forex is learning to understand that the markets evolve and changes with time. As it does, your trading strategies should also evolve and adjust. You will need to make a little tweak here and a little tweak there sometimes in your trading strategies.

There will be periods of low returns or losses. But once you have made the changes and adjusted your trading strategies, you will start making profits again. Don’t get stuck with only one currency pair and one trading strategy. Start looking at macroeconomic events and how different currency pairs react to them.

Oil drives the global economy. High oil prices put recessionary pressures on the global economy. Lets discuss a currency trading strategy that depends on following oil prices in the global markets. There are many sources of oil. Some countries export oil. Most of the countries in the world import oil. So oil prices tend to affect almost all the currencies. Some currency pairs react more strongly. Others less so when oil prices change. When oil prices rise, they continue to rise for several months. Fortunately for you, oil prices trend for extended periods.

Likewise when oil prices decline, they tend to continue declining for several months. Last year in 2008, we saw a major upsurge in oil prices for several months then a sudden collapse, oil prices than stabilized around $55 for quite sometimes. Some of the currencies that react strongly to oil price changes are GBP and CAD. Lets focus on USD/CAD currency pair in our oil following strategy.

As United States imports more oil from Canada, the value of CAD should increase with increase in oil prices in relationship to USD. This means that the pair USD/CAD should start trending downward with the increase in oil prices. This is an example of a trend trade.

Watch for times when the oil prices are rising and the exchange rate USD/CAD is decreasing. Similarly, watch for times when oil prices are declining and the exchange rate USD/CAD is increasing.

Use CCI (Commodity Channel Index) to trigger your trade. Watch for the 14 period CCI to cross above 100 and then cross back below 100. This tells you that the buyers have made a temporary upward push on the currency pair USD/CAD but was not able to turn the trend around.

Enter the trade. Set a limit order of 300 pips and a stop loss order of 75 pips. Go short on USD and long on CAD. This setup gives you a risk to reward ratio of 1:4. This risk to reward is very good and it allows you to be wrong a few times but without ruining your chances of being profitable. 300 pips mean $3000 profit and 75 pips means $750 loss if the trade goes against what you anticipated. Usually such a trade will continue for a month.

You can also look to trade the USD/CAD pair in the opposite direction if the oil prices start to decline. However, prolonged downtrend in the oil prices is usually unlikely. This trading strategy just depends on knowing which way the oil prices are moving right now so that you can take advantage of it. Oil prices have again started to climb and reached above $68. You can take advantage of the rising oil prices by trading USD/CAD pair as described above.

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Opportunities in learning about forex are available on the internet, but do not expect that joining the forex market will allow you to make money automatically. While you will be able earn a steady income off the forex exchange, it will require you to stay in the business in order to realize your potential earnings.

When dealing with forex trading you will encounter many types of trends, some short spiking trends, and other trends that are more drawn out. When starting to trade, dont worry about the short trends because usually they are impulsive changes. They will not truly represent what you would expect. Short trends are also unpredictable and can lead you down the wrong path.

However, the longer trends are more reliable and will be easier for you to deal with. For example, the trend between the British Pound and the US Dollar at the time this article was written was a reliable trend.

This may sound difficult but it is possible to purchase software designed for forex trading and make money. These softwares get rid of the guess work involved by using a specially designed programmed algorithm to monitor data on currency trends. They not only find currency pairs with the greatest profit potential but they also monitor trending information to now the perfect moment to buy or sell.

The computer programs are very user-friendly. A demo mode installed in the software helps even a layman to understand better. This is very useful and I recommend that you go in for this.

Money back guarantees on these products are very important so make sure you only but one that offers it. When a business believes in their software, they do not find it hard to reassure their customers by offering them a guarantee. Moreover you will be in a position to discover whether the software gives you the desired results.

Many people who dont have experience in forex trading, getting into it can be quite daunting. Luckily with the advent of forex trading software, many of the complexities surrounding forex trading can be dealt away with. Especially at the beginning since novice traders will greatly benefit from the algorithms the softwares utilize to make profitable trades.

The advancements of this software has improved so much that within the last few months the number of traders using forex has increased 30%, proving to be a growing trend in the world of trading.

Day trading has made fortunes for many stock traders; this is one of the few types of trading where large profits can be made quickly by those with a limited amount of capital. However, there is always risk associated with investing and traders can lose large sums as well as reap sizeable profits, leading many to be wary of this market. A lot of day trading ebooks focus on futures these days.

Even though the futures market has a reputation as one of the riskier investment avenues, there are many experts who say that futures trading need be only as risky as you allow it to be. With carefully planned investment strategies, there is a lot to be gained while keeping risks to a minimum.

What Are Futures?

Futures are transferrable contracts which represent the purchase of a stock (or a commodity) at a particular price at a specified time. The contract obligates the contract holder to make this purchase and obligates the seller to deliver on the asset represented by the contract. Futures differ from options in that they are an obligation to buy and sell rather than contracts simply giving the buyer and seller the right to buy or sell the asset named in the contract.

Profiting from futures involves speculative trading based on fluctuations in the price of the asset on the open market. These fluctuations can represent gains or losses which may potentially be very large.

Emini contracts are very popular futures contracts to trade. Most ebooks and courses today are really some form of emini trading system.

How And Why Are Futures Traded?

Futures trading is particularly popular with day traders, since many futures contracts can be traded at a low initial investment and there are a wide range of markets which can be traded in this way. You can trade futures whether the market is expected to go up or down. If the trader expects the market (and thus the value of the futures contract) to go up, then they will perform a long trade, purchasing the contract and selling it once the value has increased. If the trader expects a decline in the market and the value of their futures contract with it, they will perform a short trade, selling one contract to enter and buying another to exit.

A trader that is good at what they do will manage to make a profit regardless. Many traders worry about what direction the market is moving in instead of what direction things are moving in because of this.

This can be very risky, or it can be very profitable. A knowledge of the stock market will go a long way in helping you to navigate the market, and anyone who knows the stock market well should have no trouble navigating the futures market.

It’s not hard to get started in futures trading, but it’s not something to be jumped into headfirst if you’re not an experienced trader already. Educate yourself about the market and read everything you can about this potentially very rewarding investment venue before you make a serious financial commitment in futures trading.