Currencies are traded on a price/ point (pip) system. Each currency pair has its own pip value.

When you see a FOREX price quote, you’ll see something listed like this:

EUR/USD 1.2210/13

Explanation:

a) If you want to BUY the EUR/USD ( meaning you BUY EUROS and SELL US$ ) you buy 100,000 EUROS and you SELL 122,130 US$, or in other words you receive
122,130 US$ for 100,000 EUROS.

B) If you want to SELL the EUR/USD ( meaning you SELL EUROS and BUY US$ ) you buy 122,100 US$ and sell 100,000 EUROS, or in other words you receive 100,000 EUROS for 122,100 US$.

The difference between the bid and the ask price is referred to as the spread. In the example above, the spread is 3 or 3 pips.

Since the US dollar is the centerpiece of the FOREX market, it is normally considered the ‘base’ currency for quotes. In the “Majors”, this includes USD/JPY, USD/CHF and USD/CAD. For these currencies and many others, quotes are expressed as a unit of $1 USD per the second currency quoted in the pair.

For example a quote of USD/CHF 1.3000 means that fore one U.S. dollar you receive 1.30 Swiss Francs. or in other words, you receive 1.30 Swiss Franc for each 1 US$.

When the U.S. dollar is the base unit and a currency quote goes up, it means the dollar has appreciated in value and the other currency has weakened. If the USD/CHF quote above increases to 1.3050 the dollar is stronger because it will now buy more Swiss Franc than before.

The three exceptions to this rule are the British pound (GBP), the Australian dollar (AUD) and the Euro (EUR). In these cases, you might see a quote such as EUR/USD 1.2080, meaning that for EURO you receive 1.2080 U.S. Dollars.

In these three currency pairs, where the U.S. dollar is not the base rate, a rising quote means a weakening dollar, as it now takes more U.S. dollars to equal one Euro, British pound or an Australian dollar.

In other words, if a currency quote goes higher, that increases the value of the base currency. A lower quote means the base currency is weakening.

Currency pairs that do not involve the U.S. dollar are called cross currencies, but the calculation is the same. For example, a quote of EUR/JPY 134.50 signifies that one Euro is equal to 134.50 Japanese yen.

HOW TO BUY ( going “ LONG ”)and SELL ( going “ SHORT ”) in the FOREX Market?

Keep in mind 2 very important rules:

RULE # 1) Cut your LOOSING trades and let your WINNING trades RUN

YOU WILL HAVE LOSING TRADES. Every FOREX trader has. The secret is, that a consistent, disciplined trader, at the end of the day, adds up more winning trades than losing trades.

When you and see on your charts, without any doubt, that you are in a losing trade, don’t keep losing money. Most of the novice traders are lowering their stop loss just to “prove they are right” or “hoping that the market will reverse”. 99% of these trades, are ending up with more losses. Most of the profitable trades are usually “right” immediately.

Remember, smart traders know there are many other opportunities. CUT your losses short and compound those winning positions.

RULE 2) NEVER EVER trade FOREX without placing a Stop Loss Order.

PLACE a STOP order, right along with your ENTRY order, via your online trading station, to prevent potential losses.

Before initiating any trade, you have to calculate at what point ( price) you would be wrong, because the market changed direction, and would want to cut your losses.

To make profits, in the FOREX, a trader can enter the market with a *buy position* (known as going “long”) or a *sell position* (known as going “short”).

As an example let’s assume you’ve been studying the EURO. The EURO is paired first with the U.S. dollar or USD.

Your trading methods, rules, strategies, etc., tell you that the EURO will rice in the next 2 weeks, So you buy the EUR/USD pair meaning you will simultaneously buy EUROS, and SELL dollars).

You open up your excellent trading station software (provided to you for free by Fenix Capital Management, LLC www.fenixcapitalmanagement.com ) and you see that the EUR/USD pair is trading at:

EUR/USD: 1.2010/1.2013

As you you believe that the market price for the EUR/USD pair will go higher, you will enter a *buy position* in the market.

As an example, lets say you bought one lot EUR/USD at 1.2013. As long as you sell back the pair at a higher price, then you make money.

To illustrate a typical FX SELL trade, consider this scenario involving the USD/JPY currency pair:

REMEMBER Selling (“going short”) the currency pair implies selling the first, base currency, and buying the second, quote currency. You sell the currency pair if you believe the base currency (USD) will go down relative to the quote currency (JPY), or equivalently, that the quote currency (JPY) will go up relative to the base currency (USD).

HOW TO CALCULATE PROFIT OR LOSS?

The Profit Calculations, on the Short-sell trade scenario below, may seem somewhat complicated if you’ve never been in the FOREX market before, but this process is continually calculated through your broker trade station (software). I show you this process below so you can SEE how a PROFIT might occur.

The current bid/ask price for USD/JPY is 107.50/107.54, meaning you can buy $1 US for 107.54 YEN, or sell $1 US for 107.50 YEN.

Suppose you think that the US Dollar (USD) is overvalued against the YEN (JPY). To execute this strategy, you would sell Dollars (simultaneously buying YEN), and then wait for the exchange rate to rise.

Your trade would be the following: you sell 1 lot USD (US $100,000) and you buy 1 lot JPY (10,754.000 YEN). (Remember, at 0.25 % margin, your initial margin deposit for this trade would be $ 250.)

As you expected, USD/JPY falls to 106.50/106.54, meaning you can now buy $1 US for $106.54 Japanese YEN or sell $1 US for 106.50.

Since you’re short dollars (and are long YEN), you must now buy dollars and sell back the YEN to realize any profit.

You buy US $100,000 at the current USD/JPY rate of 106.54, and receive 10,654,000 YEN. Since you originally bought (paid for) 10,754,000 YEN, your profit is 100,000 YEN.

To calculate your P&L in terms of US dollars, divide 100,000 by the current USD/JPY rate of 106.54

Total profit = US $938.61

Simply knowing how to trade Forex and about the major currencies traded, like the US dollar, the Japanese Yen, and others are just the basics. Knowing when to trade and what to trade is equally essential to be successful in Forex.

Fore these you need to have a trading strategy. So, what exactly are the trading strategies involved in Forex? There are a number of money making strategies that you can use when trading in the Forex market.

If you use these strategies correctly, you will earn huge amounts of money in a very short time. Firstly, you have to realize that Forex trading is very different from stock trading. Therefore, strategies are also very different.

The first strategy that you can use to earn a lot of money in the Forex market is the leverage forex trading strategy. In leverage Forex trading strategy, it allows you, as an investor in the Forex market, to borrow money to increase your earning potential.

With this strategy, you can easily turn your money to 1:100 ratio. However, the risk involved can be great. This is why there are stop loss orders you can use to minimize the risk and also to minimize the loss. The leverage Forex trading strategy is one of the most commonly used strategy by Forex traders to maximize profits.

In the stop loss order strategy, the Forex trader creates a predetermined point in the trade where the investor will not trade. As mentioned before, you can use this strategy to minimize risk and minimize loss. However, this strategy can also backfire to you, as the Forex trader. This is because you may run the risk of stopping your trades when the value of the currency goes higher than expected.

It is up to you to decide if you will be using this strategy or not.

These are some of the strategies you can use when trading in the Forex market.

Forex trading is a 24 hour market where you can trade anytime and anywhere you are. If you think that the Forex market conditions are good at a specific time, then you can trade at that specific time.

Also, the Forex market is the most liquid market in the world. This means that you can enter or exit the market anytime you wish to. This is to minimize the risk and there is also no daily trading limit.

Here are other tips that you should remember in order to earn money in the Forex market and be good in doing so:

• The first and the last ticks are usually the most expensive. So, for most traders, the rule of thumb is getting in late and get out early.

• When you are losing, you want to minimize the risk of losing more money. So, don’t add money when you are losing.

• Select trades that move along with the trend. This can minimize the risk of losing money and maximize your chances of profits.

There are quite a few tools you can use when trading in the Forex market. One is the Forex charts. For the speculator, the chart is the most important tool that you can use to determine market trends and accurately predict the future value of the currency. Although it isn’t actually 100% accurate, you can use the Forex charts as a guide to what’s happening in the market.

You need to know how to read the different charts involved in the Forex market. There are daily charts, hourly charts, 15 minute charts and even 5 minute charts to get you closer to the action. You can compare each of the data in the chart to spot market trends and at the same time, spot potential money making trends.

This can also help you minimize the risk when trading in Forex. Learn how to read charts effectively and you will be well on your way to become successful in the Forex market.

These are some the strategies and tips that you should keep in mind in order to minimize the risks in Forex trading and maximize your earning potential. Depending on your skills and how you apply your strategies, you can really make a lot of money in the Forex market. However, to be a truly successful Forex trader, you need to accept the fact that you will sometimes lose money. Never get discouraged when you do. Analyze where you made your mistake, think of a solution to get back what you lost and continue trading.

What forex brokers offer automated services?

GFT Forex is an automated forex broker, whose DealBook FX 2 software offers the investor both a demo and a live forex trading tool in the currency market. This forex trading software offers the investor direct access to some of the tightest spreads, through a stable, standalone forex trading platform, 24 hours a day.

The DealBook FX 2 software shows live, dealable prices, real time data, free real time world and financial news, forex charts, more than 65 technical indicators, and the ability to build the investor’s own indicators.

GCI Financial Ltd., another automated forex broker, provides trading software that tracks real time prices in 20 major currencies, live charts, and real time profit and loss account tracking. The software is offered as a demo also. Market orders are confirmed within seconds at prices clicked on or accepted by the client.

The FX3K is an online automated dealing and trading platform used by automated forex brokers. The FX3K online trading environment includes real time quotes, charting, technical analysis tools, and news. FX3K integrates the client, dealer, back office and system administrator functions. Product features include high speed execution of client orders and the ability to monitor real time margin availability, net exposure and profit and loss on all open positions. FX3K has chat options to allow trader-dealer conversations.

The COESfx Level 1 Trading Platform is used by automated forex broker as an Electronic Currency Network for the execution of best prices for buyers and sellers of foreign exchange. It offers traders live and executable prices, thereby making each participant a market maker. Traders gain access to “best bid/best offer” quotes directly from price providers and other traders. COESfx pricing is derived from a number of partners in the network such as banks, Futures Commission Merchants (FCM’s), Introducing Brokers (IB’s), fund managers and other traders on its Electronic Currency Network.

When you start currency trading you’ll learn what a market trend is and how it will affect your trading. Trends move up, down and sideways. There are also trend classifications within market trends. These classifications are intermediate, short-term and long-term trend. You’ll learn how to look at and understand basic trend lines, which is the most valuable trading. You’ll learn about channel lines and support levels.

When you enter currency trading you’ll be able to make sales online 24 hours a day, 7 days a week, unlike the Stock Market. Many online brokers offer commission free trading and you’ll want to make sure that you have instant execution of your market orders.

A new addition to many currency trading online business sites is the ability to set up a free demo account. This is a good way to get practice about trading and learn about live quotes, charts and streaming news before you start investing with real money.

When you set up your demo account it’s a good time to test the software that the company offers. If you don’t like the software program, contact the company and see how similar it is to the software program you would get if you signed a contract with them. If you don’t like the software program try another broker. Also, decide if you want web based or client based software. Web based software is housed on your brokers website, you won’t have to install any software onto your computer. A web based software program will allow you to log in from any computer that has an internet connection. Client based software is loaded onto your computer, and can only be accessed from that computer, potentially limiting your usage.

Another thing you’ll want to check before choosing an online broker is how quickly they respond to your need for help. Seeing how quickly they respond to your questions could be key in how they respond to customer needs. If you don’t get a speedy and accurate reply you may not want to trust them with your business.

You’ll need to have high speed internet connection in order to succeed in currency trading online. The currency trading market is a fast moving one and dial up internet access will not work well for this. Another consideration could be the location of the servers used by your broker. If your broker’s servers are located quite a distance from you, say in another country, this could potentially slow down your transmissions.

Take you time and investigate online brokers. Talk with friends and family about their dealings with online brokers. Take time and do a thorough evaluation of your options before you trust anyone with your money.

Everyone has heard the term for every action there is a reaction, and every negative has a positive, and what goes up must come down; you get the picture. Well the same applies for the currency markets we refer to it as hedging using negative correlations, or simply one pair goes up when the other pair goes down and vice versa. It is very important for any one involved in the forex market to understand this basic concept of risk management. This technique is used all the time by banks, and especially major international corporations that do business in other currency besides the dollar. This is simply a logical choice when you are trading multiple currency pairs to ensure that your trading account does not get depleted very rapidly.

Negative as well as positive correlations exist between all currency pairs and are susceptible to change based on the a variety of factors, and of course monetary policy in that country being one of if not the biggest influence. A trader should check the currency pair correlation often to ensure that there has not been any major changes in the way currency pairs are affecting each other. This can be done in any number of ways; most forex trading software packages include the ability to view historical and daily currency prices which will allow you to determine a correlation between currency pairs. In closing I highly recommend if you trade currency you become familiar with Correlation Coefficient between currencies pairs so hedge your positions and limit your market exposure for maximum profit.

“The art of contrary” thinking is one of the most powerful tools a trader can use, and is a trait with which all true great traders are familiar with.

What is the Art of Contrary Thinking?

Humphrey Neill’s book, “the art of contrary thinking,” the best known work on the subject, is based on a simple powerful idea that:

“When everybody thinks alike, everybody is likely to be wrong”

“The art of contrary” thinking consists in training your mind to ruminate in directions opposite to general public opinions; but basing your opinion in the light of current events and human behavior”.

Why Contrary Trading Works

By spotting situations when the consensus of a currency is either extremely bullish or bearish, means that a trend change is imminent, as it is likely the emotions of greed and fear have pushed prices too far away from true value.

If you can step aside from the crowd and take a contrary view at these turning points, you can make big currency trading profits. Contrary thinking can be used in any market and is highly effective in currencies.

Contrary thinking can be used to make really big currency trading profits and if used selectively, when markets are extremely over bought or oversold, you can be in right at the start of the trend for maximum profitability.

In any currency you look at – The Yen, Euro, British Pound Swiss Franc Canadian or Australian dollar and many others, there are always occasions where a currency trend in the news is forecast to continue, due to overwhelming evidence in its favor and it then promptly collapses!

Big profits from currency trading can therefore be made by using the art of contrary thinking when the market is extremely bullish or bearish.

Why? Because everyone who has bought has taken positions and there are no buyers left. Prices have moved away from fair value. When there is no more buying to enter the market, a trend change is imminent.

It is clear that to succeed and make big profits in currency trading you need to think independently of the majority at important market turning points.

You can make big profits in currency trading from trend following, but you can with a little practice spot potential turning points in currencies as well which will help you bank profits, tighten stops or open new trades right on the turn, for maximum profitability.

Contrary trading will not only make you big profits in currency trading but in ANY market and has worked for centuries, as human nature never changes.

forex brokers are individuals or companies that assist individual traders and companies when they are trading in the Forex market. These individuals can really give you that extra edge you need in order to be successful in the Forex market. Although they will be trading your funded account, all the decisions are still yours to make if you want to.

forex brokers are there to assist you with your trading needs in exchange for a small commission from what you earn. Here are some of the services that a Forex broker can give you:

•A Forex broker can give you advice regarding on real time quotes.
•A Forex broker can also give you advice on what to buy or sell by basing it on news feeds.
•A Forex broker can trade your funded account basing solely on his or her decision if you want them to.
•A Forex broker can also provide you with software data to help you with your trading decisions.

Searching for a good Forex broker can prove to be a very tedious task. Since there are a lot of advertising in the internet about Forex brokers, Forex traders get confused on which Forex broker they should hire. With all the Forex brokers out there that offers great Forex trading income and quotations, you will find it hard to choose a good and reputable Forex broker.

With a little research, you can find the right Forex broker who can be trusted. If you lack referrals for Forex brokers, you can try and do a little research of your own. The first thing you need to find out about a particular Forex broker with the amount of clients they serve. The more clients they serve the more chances that these brokers are trusted. You should also know the amount of trades these brokers are conducting.

Knowing the broker’s experience in the Forex market is also a great way to determine if he or she is the right broker to hire. Experienced Forex brokers will increase your chances of earning money from the Forex market.

If you have questions or complaints, you should call or email the company and ask questions regarding their trading system. You should never be uncomfortable doing this. Besides, they will be the one who will manage your money. And, it is your right to know about what they are doing with your money.

When choosing a Forex broker, you should also consider their trading options. You should also know that Forex brokers are different from what they can offer you. They differ in platforms, spreads, or leverage. You have to know which of the trading options is very important to you in order to be comfortable when you trade in the Forex market.

Most online forex brokers offer potential clients with a demo account. This will allow you to try out their trading platform without actually risking money. You should look for a demo platform that works just like the real thing and you should also determine if you are comfortable with the trading platform.

Look for the features you want in a trading platform in order for you to know what to expect if you trade with them. If you are comfortable with a trading platform, you should consider trading with them, and if you are not, scratch them off your list. This is a great way to test their trading platform and not risk your money.

If a Forex broker is not willing to share financial information about their company, you shouldn’t trade with them because they are reluctant to share company information. They should answer your questions regarding on how they manage their client’s money and how they trade that money.

Always remember that if you see an offer that’s too good to be true by Forex traders, it probably is too good to be true. The Forex market is a very risky place to trade and Forex brokers must tell you that there are certain risks involved when trading in the Forex market. Avoid hiring a Forex broker who says that trading in Forex is easy and a very good money making market with very low risks.

These are the things you should consider when you look for a Forex broker. If you find that right broker, you can be sure that you can really earn money.

Know your forex trading market.
Educate yourself about the currencies that you trade. The more you know about the country whose currency you’re trading in the forex market, the more accurately you’ll be able to predict which way the money will move.

Pick a forex trading system – and stick with it.
Savvy forex traders will tell you that system is everything. Forex trading by system lets you automate your trades based on history, following the traditional peaks and valleys. Set up a system and live with it to make the most of your forex trading.

Practice makes perfect – but it’s not the real world.
Practice forex trading accounts are great for learning how a particular trading account works – but they’re not the real world. Many experienced traders recommend starting off with a mini forex account to minimize your losses while you get acclimated.

Keep your eye on the margin.
Margin trading is a great way to lose a lot of money quickly. Stay away from forex margin trading until you’re sure you know what you’re doing.

The only win that counts in forex trading is the bottom line.
In forex trading, the bottom line is how much money you made at the end of the day. Don’t count won or lost trades – only dollars and cents.

Such rule applies on all types of investments, including foreign currency trading, or mostly known as Forex trading. It cannot be denied that Forex is the largest existing market around the world, which is estimated to have an excess of 2 trillion U.S. dollars worth of foreign currencies are traded each day. It is larger than the magnitude of the New York Stock Exchange, which is approximately 50 billion U.S. dollars. Thus, Forex market exceeds all combined equity markets around the world.

With such huge wealth circulating around the Forex market, one of your financial goals is to grab a major slice of that $2 trillion average daily turnover in the market. How you will be able to get a substantial portion of that average turnover if you do not know how you will handle your Forex business? Although you cannot live in the market alone (you need business partners and/or financial advisers to help you along), only you can determine what the best Forex business there is for you.

To get huge profits out of your Forex trading career, you need to build your own profitable system—a trading system that will bring your not just hundreds but thousands of dollars worth of Forex revenues. Such trading system is available on the market, but as previously mentioned, you need to be independent—and you need to have your own forex trading system that will help you achieve your financial goals.

For new traders, it is difficult for them to device their own trading system since they do not have too much knowledge about the Forex market. However, even a neophyte trader can device a trading system that will fit on his personal preference and needs—in just five easy steps!

Before we discuss the five easy steps towards a profitable Forex trading system, you need to learn first the three main characteristics of a successful Forex trading system. These are as follows:

1. A successful Forex trading system is simple. There is no need for a complicated trading system with too many rules. It is a proven truth that simple systems work better than complicated ones, and they have higher chances of success despite of the “brutal” characteristic of Forex trading.

2. A successful Forex trading system cuts losses and runs profits. Keep in mind that you need a trading system that gets the huge possible profits and eliminates losses quickly, if not instantly.

3. A successful Forex trading system follows long-term trends. You will never cover your losses if you are just generating small profits. Keep in mind that the Forex market is worth $2 trillion U.S. dollars, thus there is no point in trading in exchange for just small profits if you have the opportunity to make trades for larger revenues. Focus on long-term trends and you will be able to see better results.

Now, here are the five easy steps in building a profitable Forex trading system:

1. As previously mentioned, your trading system must be as simple as possible. Integrate few yet essential rules and an extensive investment management system.

2. Always look for long-term trends (preferably on a weekly basis), then shift to daily charts and to time entry. This will help you analyze market trends efficiently.

3. The ideal way of trading foreign currencies is through breakout method.

4. Always watch for any break that you will note on your chart, which is commonly confirmed by stochastic crossed with bearish divergence. This will be your great timing tool whether you will enter a certain deal or not.

5.You must integrate effective time management within your system. Time is gold and is one of your precious resources. Design a trading system that is time efficient—where you can maximize the potential of your time resources to generate huge profits.

Get away with complicated systems; it will just ruin your entire Forex trading career. Build a simpler one and see for yourself how profitable it is.

There’s so much information about Forex trading online that it’s understandable for the novice trader to feel overwhelmed. Here are some guidelines on how to get started in the Forex market.

First of all, study. Read everything you can find on the basics of the Forex market, starting with these articles and continuing with whatever else you can find. With all the free information about the Forex market currently available online, you shouldn’t have to purchase anything at this stage.

When the data makes sense to you, choose a broker. This decision should be based on your trading needs. If money is going to be tight, find a broker that offers a micro account, so you don’t blow your entire trading budget in the first week.

Also, make certain there are no hidden fees. If you’re trading on a small account, it would be inconvenient, to say the least, if your entire monthly profit was eaten up by a maintenance charge.

When you’ve found the perfect brokerage, open a demo account with them. This gives you access to their live feed, with up-to-the-second price quotes and charts and your choice of indicators, and his economic calendar and knowledge base.

Of course, with all this fresh information, you’ll want to read it, too. While you’re studying, get to know the brokerage’s online trading platform. You should be able to open the chart of the currency pair that interests you, add and remove indicators, change the time frame of the chart and the parameters of the indicators, and use the graphic interface to draw trend lines. You should also be able to open market and entry orders, add and change stops and limits, manage a trailing stop, and close a trade quickly should the market be moving against you.

Then paper trade using the technique of your choice. Pick one currency pair for in-depth study; many people choose the EUR/USD or GBP/USD, because their volatility creates a lot of trading opportunities. But be aware that the best trading opportunities will be during the hours that market is open; for the European markets, that’s five to seven hours before the United States, depending upon your time zone. Getting up at three in the morning to watch charts can get old fast, especially with a job or family. If that’s the case, consider working with the USD/JPY, the Japanese yen, as Tokyo’s trading hours begin during our evening.

Watch the chart of your selected currency pair for the parameters that signal a trade using your technique. Remember to start with the long-term charts before moving to the short-term. When it seems right to you, enter the trade.

Realize up front that paper trading doesn’t involve that “Yikes!” feeling you get when real money is involved. In that sense, it’s not realistic, but it will teach you the mechanics of working in the Forex market.

Don’t quit paper trading until you reach the number of pips you’ve set as your goal more often than not. This is a very important step; if you quit paper trading too soon, you won’t know enough to trade successfully in the “real world” of the Forex market.

When you do deposit funds into your brokerage account and begin trading with real money, start small to give yourself a chance to adjust to that added stress. Don’t increase the stakes by adding additional lots or by stepping up to a larger account until you’ve learned to adjust for your emotions and again become an efficient trader.

When you feel comfortable with these simpler techniques, go on to study Fibonacci retracements, Bollinger bands, candlestick chart patterns, and the Elliott wave theory.

Congratulations! You’re there!