****What is FOREX trading ???****

[jotuk6771]

Hello everybody  ,

Here i would try to post some links what can explain what is Forex trading to those who are not familiar with it ...

Those explications are copy / paste from broker sites , or web links.

Before you get rolling $$$$ eyes  , Please, never forget that Forex is an HIGH RISK INVESTEMENT.... 
I already experienced it by myself ... 

Cheers 

    
 Warning

High Risk Investment
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

 

[jotuk6771]

Online Forex Trading - What's it all about?

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Learn Forex Currency TradingForex trading is an activity that has been around for many years yet is unknown or misunderstood by many.

Those that do know what Forex trading is all about usually come to love the excitement trading can bring and several of these people go on to devote their whole lives to the skill.

It could be said that regardless of whether you have even heard of Forex trading before, the chances are you have already done it in one form or another without actually realizing it.

If you have ever been to a foreign country before and had to exchange currencies at your local bank then you have already taken part in Forex albeit in a far less profitable, less exciting and less lucrative way.

The term Forex is derived from the words 'Foreign' and 'Exchange' and quite simple means to take part in trades involving the exchange of one countries currency with another. Other terms often used to refer to Forex include 'Spot FX' or simply 'FX'.

Of course there are some major differences and benefits from trading Forex online through established brokers over simple currency exchange for your holiday, yet the core principles are the same.
Profitable Forex Opportunities 24 Hours a Day

Currency rates are forever fluctuating depending on supply and demand and economic and political influences in countries all over the world. The aim of any Forex trader is to spot which currency will next rise or fall in value against another currency.

Since profit can be made from both increases and decreases in a currency it means the Forex market is extremely appealing and potentially very lucrative for anyone willing to give it a go.

You can think of Forex as the currency equivalent of stocks and shares although it should also be noted that Forex has many big advantages over stock trading.

As mentioned money can be made no matter whether a currency rises or falls, Forex is traded with a leverage which means if you trade with say $100 you do not get $100 of currency, you will get many times more than this perhaps as much as $40,000.

This does not mean you physically have $40,000 for a $100 deposit but rather that you can earn a percentage of that $40,000 if the currency fluctuates in your preferred direction.

This is useful because in Forex currency trading fluctuations are often merely fractions of a cent. With a high leverage you are able to profit much more substantially from these small fluctuations than you would if you had no leverage and only a small amount to trade.
All About Forex Currency TradingSmall Investments - Incredible Returns!

Therefore, the leverage means that even with only small amounts of money you can still quickly earn big profits from trading Forex online!

This is not a luxury that any other form of trading can usually offer. What's more you can now open mini Forex accounts online with less than $100 leaving Forex trading open for anyone to take part.

Despite the fact that stocks and shares is more commonly known and understood than Forex currency trading, the Forex market remains the worlds largest trading market with more than 1.8 Trillion dollars trading hands on a daily basis.

It is the fantastic benefits and earning potential of Forex that makes it such an attractive proposition to both individuals and major corporations.

It is no secret that multinational banks have been trading the Forex market for years, many rely on it for a substantial income stream that allows them to be much more competitive in the key areas of their business.

In summary then, Forex trading is all about trading currencies and benefiting from fluctuations in exchange rates. It is surprisingly easy to learn Forex trading and begin making profits, however, we must stress that before rushing to deposit money and start trading you should ensure you fully understand the market.

[jotuk6771]

A History of Trading the Forex Market
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A History of Forex TradingForex currency trading has made massive advancements over recent years and is becoming on the Internets most searched for trading opportunities.

Technological advancements have made Forex an opportunity to make money for everyone from small individual speculators to large multi-national companies.

In reality the principles of Forex trade have existed for centuries but it wasn't until 1967 when the idea of a global system of currency exchange first began to be put together.

A college professor named Milton Friedman famously wanted to take a bank loan in Pounds Sterling (feeling that the currency was overpriced against the dollar) and then sell it before buying it back once the price against the dollar had fallen.

This would allow him to repay the bank and pocket a nice profit for himself. His loan application was declined due to the bretton woods agreement that was in place at the time but this set the wheels in motion for worldwide Forex trading.


The Birth of the Foreign Currency Exchange
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In 1971 when floating exchange rates began to materialize and the bretton woods agreement was abandoned, the foreign currency exchange market was born.

This advancement was welcomed with open arms by the International companies who had often noticed big profit changes both positive and negative simply based on the value of their native currency against the value of the currencies in the markets in which they traded their day to business activities.

These companies would see fluctuating exchange rates effect their profit and loss accounts, often with millions being made or lost simply on the value of one currency against another.

It was also these companies that were first to spot the huge money making opportunity currency fluctuations offered and these same companies were the first to leap on to the Forex trading bandwagon and attempt to increase their profit margins through brave yet profitable currency exchange decisions.

Online Forex Trading Advances
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Of course when Forex first began the Internet was a distant dream and therefore trading was carried out exclusively by the cash rich worldwide organizations.

These were companies who could afford to throw a few million in to the mix in an attempt to make some big money trading currencies.

Trading was carried out over the telephone via several exchange centers all over the world. A trader would monitor global activity and then ring their broker in order to commence or complete a trade order.

The transfer of funds to complete trades was done through bank transfers which often took a few days to go through. This meant that whilst the Forex market offered a fantastic earning opportunity, trading was both time consuming and a hassle.

With the advent and then increasing popularity of the Internet, Forex trading online opened up the doors to millions of people who had never previously had the resources to take part.

Gone are the days of having to phone through your intended trade, Credit and Debit cards are even accepted with some online brokers for depositing funds. Even more recently the Forex market has opened up to individual traders even with very small amounts to invest.


Huge Forex Profits even from Small Investments
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Historically, traders would need several thousands of dollars to be able to trade. Thanks to the ever increasing competitive nature of currency trading online this has been reduced so far that an individual can now begin trading a mini Forex account with as little as $25.

With the often huge leverages on offer even such a small amount can produce considerable returns.

Forex trading is forever increasing in popularity due to the many benefits it offers and more and more trading resources becoming available online.

The Internet is a wonderful thing and when you combine it with the magic of Forex trading you suddenly have an amazing and exciting hobby or profession right in front of you.

[jotuk6771]

Forex Trading Offers Huge Earning Potential
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 OnlineForex currency exchange trading is one of the fastest growing trade markets in the world. It is also the biggest with an estimated 1.8 trillion dollars being exchanged every single day.

With these stats to it's name it should come as no surprise that one of the major reasons for this exponential growth is the fact that Forex trading offers incredible earning potential.

This is also why large multi-national corporations have been investing in foreign exchange for years and more and more individuals are utilizing currency trading to supplement their incomes and some are even living purely off the profits they make.


Incredible Forex Leverage Ratios
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So why does Forex trading offer such incredible earning potential? Well firstly the currency exchange market operates through brokers who offer some significant leverage ratios to their traders.

For example, you decide to purchase 10,000 US Dollars against Japanese Yen at 125.00. Next day you sell 10,000 US dollars and buy Yen at 126.00 making a profit of approximately $79. To fund this position you need a deposit of $100 not $10,000 since the rest of the amount is leveraged to you by your Forex broker.

If you were to try and trade without any form of leverage you would make very minimal profits and it would not be worth your time trading.

This is the beauty of Forex trading, any individual trader, no matter what their starting capital, can experience the thrill ride of trading large amounts of currency and making big profits without depositing thousands of dollars.


Massive Earning Potential
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Another factor that lends itself favorably to the earning potential of Forex trading is the fact that the market is open 24 hours a day. As one market is closing another is opening, Forex literally follows the sun around the earth - where the sun is shining the Forex is trading! This means you can be making profit 24 hours a day on Forex, particularly if you make use of an automated trading system.

The speed at which things change in Forex is also a major factor behind why currency exchange can be so profitable. Barely a second goes by without currency changing in value.

Unlike stocks are shares where you can be sitting on a trade for month, even years, waiting for the price to move favorably, currencies can make you a substantial profit within minutes or even seconds of you commencing a trade.

There are also no expensive commission fees to pay anyone in Forex. Brokers make their money from the difference between the buy and sell price of a currency. This means you never need to concern yourself with the thought that you will lose some of your profits to your broker - whatever you earn you can keep!
Foreign Exchange Currency Trading Earning Potential


Stop-Loss Functions for Safer Currency Trading
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The stop-loss functions of Forex trading platforms will also help you to make huge profits trading currencies. These work by you pre-setting an entry and exit point you are happy to complete a trade at.

For example, you know the figure you want to make from a trade and you also know the most you are willing to lose if things go wrong, so you set this up when you start your trade.

If the value of your trade reaches either of these upper and lower limits you trade will automatically execute. This puts a limit on your losses and ensures that you never lose more than you intend but you always profit as much as you envisage if things go in your favor.

All of these factors and more contribute to making online Forex trading one of the most profitable trading opportunities in the world. Those that get their strategy right are well known to be making millions every year from trading Forex.

If you are willing to put in the time to properly educate yourself and do not try to run before you can walk then you have a fantastic chance at making sums of money you never dreamed possible simply by trading currencies online.

[jotuk6771]

Forex Market Terminology - Understanding The Basics
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Achieve Instant Forex IncomeWhen you first start trading the Forex market you can become overwhelmed with the amount of information there is to consume.

One of the hardest parts for a new trader is learning the lingo. Some of the terms used in currency exchange are self-explanatory, whereas others are not. In this section I provide brief definitions of some of the most common Forex trading terms.
Spot Deal

A deal taking part between two parties who can deliver a certain amount of different currencies to each other within 2 business days of each other (excluding Canadian dollar where the trade is executed within 1 business day)
Market Order

This is the execution you make when deciding to buy a currency. In other words you see a currency exchange rate quote on screen and you place a ‘market order’ when you click the button to execute the trade.
Entry Orders

This is basically and advance order, you decide at what price you want to buy or sell a currency and you place an ‘entry order’. As soon as the currencies reaches this rate your trade is executed.
Stop-Loss Order

This is a function offered by some brokers which is aimed at reducing your risk, you can decide the maximum and minimum amount of profit or loss you want to exit a trade at. In other words if you decide you are happy to make $1,000 from one trade but don’t want to lose anymore than $1,000 should the trade go the other way you can place this safety net on your trade.
Bid

This is the currency rate that you wish to buy or sell at.
Offer

This is the currency rate you will actually get when buying or selling
Free Forex Spread

The difference between the bid and offer rates
Pip

This is the last decimal of the exchange rate with the exception of the Japanese Yen where it is the second decimal.
Lot

The amount of units of the base currency when you enter the market.
Margin

The minimum amount of money you need for each lot to trade, for example the margin may be 1 lot for $100 and therefore you would need $300 in your account to trade 3 lots.
Trend

The direction the market is currently moving in.
Long Position

This is used to describe a market in a long-term buy trend
Short Position
This is used to describe a market in a short-term sell trend

I hope that these helped clear up any uncertainties you had about common Forex terms.

[jotuk6771]

The Forex Currency Pairs
Major Forex Currency Pairs

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Foreign Exchange trading is in general the trading of many currencies of the world. It is emerging as the largest and least regulated market providing the greatest liquidity to investors.

This trading is always done in pairs – Currency Pairs, one currency is bought and the other is sold. Together, they make up what is known as the "exchange rate".

For example, you may buy Euros with Dollars, anticipating that the Euro to increase in value relative to the Dollar. If the Euro rises relative to the Dollar, you sell the position and can earn a profit.

Most commonly traded currencies or the “majors” are:

US Dollar (USD)
Japanese Yen (JPY)
Euro (EUR)
British Pound (GBP)
Canadian Dollar (CAD)
Australian Dollar (AUD)
Swiss Franc (CHF)

Most commonly traded currency pairs are:

US Dollar and the Japanese Yen (USD/JPY)
Euro and US Dollar (EUR/USD)
US Dollar and Swiss franc (USD/CHF)
British Pound and US Dollar (GBP/USD)

While quoting currency pairs, the first currency is referred to as the base currency and the second as the counter or quote currency. The base currency is always equal to 1 monetary unit of exchange, for example, 1 Dollar, 1 Pound, 1 Euro.



Trading Forex Currency Pairs for Maximum Profit
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It is also known as domestic currency or accounting currency and sometimes also referred to as the primary currency of a Forex currency pair. The price represents how much of the quote currency is needed to get one unit of the base currency.

When a currency is quoted against US Dollar, it is known as direct rate. Any currency not against the US Dollar is called a cross rate.

The quote currency is translated into a certain number of units of the base currency. This is also referred to as the foreign currency, secondary currency or counter currency. For example, if you find that a quote of USD/JPY is at 1.30, it says that for every 1 US Dollar, you get 1.30 Japanese Yen. When you quote for AUD/JPY of 67.73, it says that for every 1 Australian Dollar, you get 67.73 Japanese Yen.

Currency pairs are generally traded as 100,000 units of the base currency. For example, if you were buying EUR/USD at 0.95 you would be paying Dollars for Euros as follows:

100,000 x .95 = $95,000 for 100,000 Euros

When you find a quote going up, it means that the value of the base currency is rising or in other words, it is getting stronger. If a quote is going down, it means that the base currency is weakening.

The dominant base currencies are:

Euro - EUR/USD, EUR/GBP, EUR/CHF, EUR/JPY, EUR/CAD
British Pound - GBP/USD, GBP/CHF, GBP/JPY, GBP/CAD
US Dollar - USD/CAD, USD/JPY, USD/CHF

The currency pairs are usually traded and quoted with a ‘bid’ and ‘ask’ price. The ‘bid’ is the price at which you are willing to buy and the ‘ask’ is the price at which price you are willing to sell.

For example, if the USD/EUR currency pair is quoted as - USD/EUR = 1.5 and you purchase the pair, this means that for every 1.5 euros that you sell, you get US$1. If you sold the currency pair, you receive 1.5 euros for every US$1 you sell.

The key to successful trading lies in selecting one or two pairs of currencies that you wish to trade in as a beginner. As you gain confidence, you may wish to add more pairs in your trading portfolio. But for a new trader or investor it is always advised to have limited pair just to ensure simplicity.

[jotuk6771]

Forex Pips & Spreads - The Brokers Commission
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Forex Broker ReviewsThe pip is the smallest measure of price move used in forex trading. For instance, if the currency pair EUR/USD is trading at 1.3000 and then changes to 1.3010, the pair is said to move by 10 pips. It is an acronym for Percentage in Point (pip).

In the wholesale market, currencies are quoted out to four decimal places, with the last placeholder called a point or a pip. A pip in most currencies is one/10,000th of an exchange rate or in USD/JPY, it is one/100th, likewise you can find for others.

Spread on the other hand is the difference between buy (long) or sell (short) for a currency pair. The bid/offer spread is the difference between the buying (bid) and selling (offer) price. The ask prices are the immediate execution prices for quick buyers or traders and bid prices are for quick sellers.

In Forex market you will find brokers who generally do not charge any commission from you. But they get their money by charging you a spread. As spread is the difference between the bid price and the ask price for any currency being traded, the broker will add this spread onto the price of the trade and keep it as their fee for trading.


Lower Pips & Spreads = Higher Forex Profits
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Wider spreads will result in a loftier asking price versus a slashed bid price. The consequence is that you have to pay more when you buy and get less when you sell. This spread is charged only on one side of the transaction, usually on the "buy" side of the trades. To find out which brokers offer the best pips and spreads read our Forex broker reviews.

If the quote between EUR/USD is said to be 1.2222/4, the spread equals 2 pips as the difference between 2 and 4 is 2. But if the quote is 1.22225/4, the spread is 1.5 pips. So spread is the primary cost of trading for you and in differences in them makes a big impact.

Although it may not seem like much of a difference to be trading with a 5 pip spread vs. a 4 pip spread, it can add up very quickly when you multiply it with how many trades you make and how much money you're trading. You will find the difference to be as high as 25% on your trading costs.

Spreads affect the return on your trading strategy in a big way. As a trader your sole concern is buying low and transaction high. Wider spreads mean buying higher and having to sell lower. A half-pip lower spread can even affect your profitability.
Low, Fixed Forex Pips and Spreads


Choose a Low Spread Forex Broker
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Spreads can vary based on the currencies you're trading and what type of account you open. Most brokers will be offering different spreads for different currencies. For the most popular currency pairs like the EUR/USD or GBP/USD you will get the typical lowest spreads, while for currencies that have less demand will be traded with higher spreads.

The spreads will vary depending on the types of accounts. A mini account may have higher spreads than a full contract account.

It is important to realize that as the spread is the difference between bid prices and ask prices as determined by the free market they are not always guaranteed. So with a fluctuating market when the spreads widen, you will be charged with that wider spread. Spreads are tighter when there is good market liquidity but it will widen as liquidity dries up.

Fixed Spread Forex Trading Helps Secure Profitability

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Forex spreads are only meaningful when they are supported with good execution. For example, when you find a tight spread, but your trade is filled a few pips in the wrong direction, or your transaction is rejected, you are in trouble.

It means that your broker is showing tight spreads but in effect delivering wider spreads. Be aware of such rejected trades, and delayed execution, which are strategies to deceive the traders.

[jotuk6771]

The Best Time to Trade The Forex
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We all know by now that forex is a highly dynamic market with lots of price swings in a single minute. This characteristic allows you to enter the market many times a day and gain some profit from the trades.

You can easily find out an appropriate time to enter into the forex market when the activity or the volumes of transactions are the highest. When we consider the working hours of the market, we must remember three facts:

    * There are three major markets -- London, New York, and Tokyo

    * The working hours are throughout the day – it starts from Sunday 5pm (EST) through Friday 4pm (EST).

    * Like any other active markets, there are good times and bad times to trade in forex also. Choosing to trade when the market is at its best can increase productivity and generate significant financial benefits. It will be wise to assume that trading intermittently throughout the day will produce the best results.

Forex Trading activities are found to be heaviest when major markets overlap. Statistics says, nearly two-thirds of New York activity occurs in the morning hours when European markets are also open. So you can figure out that at any given time, somebody somewhere in the world is buying and selling currencies.
Free Forex Newsletter

Forex Trading Offers Fantastic Liquidity
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The great liquidity offered by the forex trading and a market that is open for five and a half days a week offers you an exceptional array of choices to trade when you want.

But the volume of transactions reaches its peaks when the major market hours overlap -- the time when Asian market including Australia & New Zealand, the European market and the U.S. market are open simultaneously.

A typical trading day starts with New Zealand, before moving across to Australia, Japan and Asia, Europe and North America. The UK and the US markets account for around half of the total world market, therefore the times at which both are open are particularly busy.

Let’s find out quickly what are the overlapping timings:

* New York Market trade times: 8am - 4pm EST
* London Market trade times: 2am - 12Noon EST
* Great Britain Market trade times: 3am - 11am EST
* Tokyo Market trade times: 8pm - 4am EST
* Australia Market trade times: 7pm - 3am EST

So there are two times when two of the major markets overlap during trading hours -- between 2am and 4am EST for Asian/European markets and between 8am to 12pm EST for European/U.S. markets.

The market is open 24 hours a day doesn’t mean that it is always active. You can make money when the market is moving up or when it is moving down. It will be very difficult to make profit when the market doesn’t move at all.



Forex Trading is Open 24 Hours a Day

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From practical experience it has been found out that the session when the London market is open with any other major market, the volume of transaction and market movement reaches its zenith.

Another interesting fact is - from actual trading figures you can see that during the middle of the week (Tuesdays and Wednesdays) the movement of all major currency pairs reaches their highest.

Choosing the right time between the start and the end of the week can also make differences to your trading success. If you are operating outside America you may have to wake up extremely early to catch the European markets and end your day extremely late to catch the Asian market.

[jotuk6771]

All what you need to know about Forex Trading  , simple and complete

http://www.babypips.com/school/

[jotuk6771]

What is a Carry Trade  ?


All that is needed to understand the carry trade concept is a basic knowledge of foreign exchange and interest rates differentials. Each currency has a different interest rate attached to it determined partly by policy authorities and partly by market demand. When taking a foreign exchange position a trader holds long position one currency and short position in another. Each day, the trader will collect the interest on the long side of their trade and pay the interest on the short side. If the interest rate on the purchased currency is higher than that of the sold currency, the result is a net inflow of interest. If the sold currency’s interest rate is greater than the purchased currency’s rate, the trader must pay the net interest.

Carry Trade As A Strategy


For many years, money managers and banks have utilized the inflow and outflow of yield to collect consistent income in times of low volatility and high risk appetite. Holding only one or two currency pairs would invite considerable idiosyncratic risk (or risk related to those few pairs held); so traders create portfolios of various carry trade pairs to diversify risk from any single pair and isolate exposure to demand for yield. However, even with risk diversified away from any one pair, a carry basket is still exposed to those conditions that render this yield seeking strategy undesirable, such as: high volatility, small interest rate differentials or a general aversion to risk. Therefore, the carry trade will consistently collect an interest income, but there are still situation when the carry trade can face large drawdowns in certain market conditions. As such, a trader needs to decide when it is time to underweight or overweight their carry trade exposure.