Signal Forex Trading

Destructive Emotions

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Greed Greedy investors tend to be over- condent and want to make as much money as they can in a short period of time. They want big prots and they want them now. The desire to make money, however, is in many instances unrealistic. If, for example, I gave you a small vegetable patch and told you to feed your family from it, you would probably think about it logically and deduce that you had insufcient resources at your disposal to achieve the aim. Contrast this with the amount of people I speak to who want to invest $5,000 in a commodity account, and earn a living from it and retire from their job. The chance of achieving their desire is almost nil, but over condence and desire overcome logic and objective thinking.

Fear All people fear losing money, worrisome news in relation to their investments and savings stimulates more fear. Fear then spreads; a fearful man’s psychology is contagious. If people around us are fearful, so are we. If we have suffered fear in the past, we retain all our past experiences in our subconscious mind. Finally we have the fear of losing. Also, if we see other people making money, we want to be in on the action as well.

Hope This is dened as the expectation of something desired. However, investment decision making should not be based purely on desire, but on a rational assessment of the facts. When a trader loses he hopes that things will get better when he really should be being objective.

If you read the great traders, you will constantly see them refer to Hope and Fear and their destructive power.

“Hope and fear: I have written about this often in my books, and I feel I cannot repeat it too often. The average man or woman buys commodities because they hope they will go up or because somebody advises them they will go up. This is the most dangerous thing to do, never trade on hope. Hope wrecks more people than anything else. Face the facts and when you trade, trade on facts, eliminating hope.”

“Fear causes many losses. People sell out because they fear commodities are going lower, but they often wait until the decline has run its course and sell near the bottom … never make a trade on fear.”
W.D. Gann

“The successful trader has to ght … two deep-seated instincts, instead of hoping he must fear, instead of fearing he must hope. He must fear that his loss may develop into a much bigger loss, and hope that his prot may become a big prot. It is absolutely wrong to gamble in stocks the way the average man does.”

“The speculator’s chief enemies are always boring from within. It is inseparable from human nature to hope and to fear.”
Jesse Livermore

After greed the average speculator, to achieve his desire, falls victim to both hope and fear and ultimately loses his money

Emotions at Work

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“When dealing with people, let us remember that we are not dealing with creatures of logic. We are dealing with creatures of emotion, creatures bursting with prejudices and motivated by price and vanity.”

Dale Carnegie

Intelligence, knowledge and talent have to be applied. Any person who is successful knows that application requires discipline, self-control and condence in one’s abilities. Bjorn Borg was a great tennis player, he had talent. However, what always gave him the edge when playing was his mental control, which earned him the nickname “Iceman”. He combined talent and discipline to achieve his success and you must do the same.

We are all put in situations where, after they have occurred, we look back and feel that if only our emotional control had been better. You are going for a job interview and role-play Th a friend beforehand. You come over as assertive and condent. In the interview itself, however, the condence goes. You practise a best man’s speech, it ows well and sounds great; however, on the day, delivery suffers as you feel nervous and shy.

All the above we can associate with. The fact of the matter is, when the pressure is on, our actions are inuenced by our emotions. The more important the scenarios, the greater the inuence will be.

Trading is no different. As soon as money is committed, logic can go out of the window and basic emotions take over. Consider the difference between paper trading and trading real time. Whilst paper trading, you earn very good prots, you are condent and optimistic. You see a very lucrative business opportunity, so you now decide to open an account and trade for real.

On studying your charts you see an opportunity, a perfect double bottom and prices low in historical terms, now is the time to buy. You ring your broker to place the trade; however, the overwhelming condence of paper trading has now deserted you. Perhaps you had better double-check the formation. After much deliberation you decide to phone the broker and the trade enters the market. For the next two days prices rise dramatically, your prots grow; you feel great, what an easy way to make a living. The next day prices drop and your prots are cut in half. You feel uncertain; perhaps you should take the prot now before it gets away. You decide to wait. The next day prices fall further and close below your mental stop loss. Your system is telling you that you should be cut. However, you only have a small loss and it should turn around and you will soon be back in prot. The next day, to your horror, prices have collapsed and the majority of your equity is now lost. Your reaction is now one of anger, why didn’t you bank the prot when you had it! The market’s move is totally illogical, you feel anger, pain and frustration, you are now totally disillusioned and fed up, and all you want to do is exit the trade.

Welcome to the real world of trading!

“Seeing is believing, but feeling is the truth.”
Thomas Fuller

The above is a hypothetical yet common example of how traders who have made money on paper suddenly crumble under the strain of real trading. Many people deride paper trading and say it is of little use. However, providing you know the pitfalls in advance, it is a great way to mentally prepare yourself for the day you have to trade real money.

“The mainstay of training her is condence. That’s why we show them how to let a tank run over them - it gets their condence up.”
Ofcer in Charge US Special Operations Command

Of course nothing will take the place of the real trading arena; however, practicing the basics on paper is a very useful exercise. To ridicule paper trading is similar to saying soldiers should not go on manoeuvres because the bullets are not for real! In conclusion, paper trading is useful if we adopt the right attitude to it, (i.e. we make it as realistic as possible and we don’t cheat).

Going back to our hypothetical example,it is clear that the trader was making investment decisions based upon his emotions rather than logic. No matter how good the trading system was that he used, he would still fail due to his lack of discipline and self-control. This is not to imply that you can trade any system with discipline and be successful; however, a disciplined trader with a mediocre trading system has the edge on the best trading system in the world if its operator lacks discipline.

To develop discipline you need to acquire total condence in your abilities, i.e. acquire self-control. You can do this by acquiring knowledge, practicing on paper and real time trading experience. Nothing replaces real time trading, but preparation in terms of understanding the markets and how you should relate to them will give you a distinct edge in the quest for the big
prots.

Destructive Emotions & The Markets

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“Money alone sets all the world in motion.”
Pubilius Syrus Maxims 1st century BC

Most people dream of being totally independent and self-sufcient nancially. These people spend millions of pounds on lottery tickets, hoping to be the lucky one to scoop the jackpot. There is another way to make a million, the highly leveraged futures markets. Everyone has heard stories of investors turning small stakes into vast fortunes, and it is this chance that attracts traders to open futures accounts and dream, just like the lottery ticket buyers, of receiving the big payout. The reality of futures trading is different; the prots always seem to be elusive so each time the trader trades he suffers consistent losses rather than consistent prots.

Trading looks deceptively simple, yet few succeed. If you read interviews with the great traders, you will perhaps be quite surprised to learn that very few are intellectuals, many have never been to college, and a considerable number even dropped out of school. Additionally, most will claim they have simple trading systems that almost anyone can understand.

So what separates winners from losers? The answer is not just knowledge of the trading environment, but also an understanding of our personality make-up and how it needs to interact with the market in order for the trader to emerge with consistent prots. In the following pages you will learn why an understanding of our own personality is the key to successful trading, and how the emotions of greed, fear, pride and hope are fatal to trading success.

“A cloud does not know why it moves in such a direction at such speed, it just feels

a compulsion that this is the place to go now. By the sky knows the reasons and patterns behind the movements, and you’ll know too if you lift yourself high enough to see beyond the horizon.”
Richard Bach - Illusions

Take any price of any commodity and you will notice trends over a sustained period of time, where the price moves in a specic direction for a sustained period of time. Many analysts believe that prices are random and that trying to predict future price movement is futile and doomed to failure. However, behind the seemingly chaotic price movements there is order.

In the following pages I will give you an insight into how and why price movements occur and how, over a period of time, you can capitalise on these moves and how you can trade with the odds of success being rmly in your favour.

SELF CONTROL & DISCIPLINE
“To the destructive element submit yourself.”
J. Conrad

Successful trading is 80% psychological and 20% methodical. As I have already said, self-knowledge is the key to market success. A trading method by itself, no matter how well thought out, cannot be successful if it is not applied in the correct manner. It is in the application of a trading method that many traders end up losing. Consider the analogy of a high performance-racing car. No matter how aerodynamic or technically advanced, it needs to be driven. An advanced piece of engineering such as racing car needs to be driven by a person who can drive it with care. Just as a disciplined driver is needed to race a car, a disciplined trader is needed to apply a trading method. All traders have heard the word “discipline”, but few really understand what it is and why it is so important to develop it.

Players in the Forex Market

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Central Banks - The national central banks play an important role in the (FOREX) markets. Ultimately, central banks seek to control the money supply and often have official or unofficial target rates for their currencies. As many central banks have very substantial foreign exchange reserves, their intervention power is significant. Among the most important responsibilities of a central bank is the restoration of an orderly market in times of excessive exchange rate volatility and the control of the inflationary impact of a weakening currency.

Frequently, the mere expectation of central bank intervention is sufficient to stabilize a currency, but in case of aggressive intervention the actual impact on the short-term supply/demand balance can lead to the desired moves in exchange rates.

If a central bank does not achieve its objectives, the market participants can take on a central bank. The combined resources of the market participants could easily overwhelm any central bank. Several scenarios of this nature were seen in the 1992-93 with the European Exchange Rate Mechanism (ERM) collapse and 1997 throughout South East Asia.

Banks - The Interbank market caters to both the majority of commercial turnover as well as enormous amounts of speculative trading. It is not uncommon for a large bank to trade billions of dollars daily. Some of this trading activity is undertaken on behalf of corporate customers, but a banks treasury room also conducts a large amount of trading, where bank dealers are taking their own positions to make the bank profits.

The Interbank market has become increasingly competitive in the last couple of years and the god- like status of top foreign exchange traders has suffered as equity traders are again back in charge. A large part of the banks’ trading with each other is taking place on electronic booking systems that have negatively affected traditional foreign exchange brokers.

Interbank Brokers - Until recently, foreign exchange brokers were doing large amounts of business, facilitating Interbank trading and matching anonymous counterparts for comparatively small fees. With the increased use of the Internet, a lot of this business is moving onto more efficient electronic systems that are functioning as a closed circuit for banks only.

The traditional broker box, which lets bank traders and brokers hear market prices, is still seen in most trading rooms, but turnover is noticeably smaller than just a few years ago due to increased use of electronic booking systems.

Commercial Companies - The commercial companies’ international trade exposure is the backbone of the foreign exchange markets. A multinational company has exposure in accounts receivables and payables denominated in foreign currencies. They can be protected against unfavorable moves with foreign exchange. That is why these markets are in existence. Commercial companies often trade in sizes that are insignificant to short term market moves, however, as the main currency markets can quite easily absorb hundreds of millions of dollars without any big impact. It is also clear that one of the decisive factors determining the long-term direction of a currency’s exchange rate is the overall trade flow.

Some multinational companies, whose exposures are not commonly known to the majority of market, can have an unpredictable impact when very large positions are covered.

Retail Brokers - The arrival of the Internet has brought us a host of retail brokers. There is a numbered amount of these non-bank brokers offering foreign exchange dealing platforms, analysis, and strategic advice to retail customers. The fact is many banks do not undertake foreign exchange trading for retail customers at all, and do not have the necessary resources or inclination to support retail clients adequately. The services of such retail foreign exchange brokers are more similar in nature to stock and mutual fund brokers and typically provide a service-orientated approach to their clients.

Hedge Funds - Hedge funds have gained a reputation for aggressive currency speculation in recent years. There is no doubt that with the increasing amount of money some of these investment vehicles have under management, the size and liquidity of foreign exchange markets is very appealing. The leverage available in these markets also allows such a fund to speculate with tens of billions at a time. The herd instinct that is very apparent in hedge fund circles was seen in the early 1990’s with George Soros and others squeezing the GBP out of the European Monetary System.

It is unlikely, however, that such investments would be successful if the underlying investment strategy was not sound. It is also argued that hedge funds actually perform a beneficial service to foreign exchange markets. They are able to exploit economical weakness and to expose a countries unsustainable financial plight, thus forcing realignment to more realistic levels.

Investors and Speculators - In all efficient markets, the speculator has an important role taking over the risks that a commercial participant hedges. The boundaries of speculation in the foreign exchange market are unclear, because many of the above mentioned players also have speculative interests, even central banks. The foreign exchange market is popular with investors due to the large amount of leverage that can be obtained and the liquidity with which positions can be entered and exited. Taking advantage of two currencies interest rate differentials is another popular strategy that can be efficiently undertaken in a market with high leverage. We have all seen prices of 30 day forwards, 60 day forwards etc, that is the interest rate difference of the two currencies in exchange rate terms.

Types of Forex Orders

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Market Order – An order where you can buy or sell a currency pair at the market price the moment that the order is processed.

Example: If you are looking to place an order for JPY when the dealing price is 104.00/05, a market order will request to buy JPY at 104.00 or will request to sell JPY at 104.05.

Entry order – An order where you can buy or sell a currency pair when it reaches a certain price target. In theory, this can be any price. You can set an entry order for the low price of a time period or the high price of a time period.

“I want to buy this currency pair at a certain price, if it never reaches that price, I don’t want to purchase the pair”.

The entry order allows you to choose a price and place an order to buy at that price.

Stop Order - An order that becomes a market order when a particular price level is reached and broken. A stop order is placed below the current market value of that currency.

Example: If you have an open buy JPY position, which you bought at 104.00 and you want to set

a stop order in case JPY’s value starts to depreciate (to stop your loss). Since the JPY’s currency appreciates when the dealing rate moves from 104.00 closer to parity with the USD (102 JPY/1USD), a movement in the opposite direction would necessitate a stop order. For instance, you could set a stop order rate to sell JPY at 103.50, thus closing your position at a 50-pip loss.

Limit Order - An order that becomes a market order when a particular price level is reached. A limit order is placed above the current market value of that currency.

Example: If you have an open buy JPY position, which you bought at 104.00, and you want to set a limit order to protect your profit, you would set a limit order at a number, which indicates that JPY has appreciated, such as 104.5. When the market reaches 104.5, your position will automatically be closed, resulting in a 50-pip gain.

OCO Order – One Cancels Other. An order placed so as to take advantage of price movement, which consists of both a Stop and a Limit price. Once one level is reached, one half of the order will be executed (either Stop or Limit) and the remaining order canceled (either Stop or Limit). This type of order would close your position if the market moved to either the stop rate or the limit rate, thereby closing your trade, and, at the same time, canceling the other entry order.

Example: If you have an open buy JPY position, which you bought at 104.00, and you want to set a limit and a stop order, you could place an OCO order. If your OCO limit rate was 103.5 and OCO stop rate was 104.50, once the market rate reaches 103.5, the original JPY position would be closed and the stop rate would be canceled.

If Done Order – If Done Orders are supplementary orders whose placement in the market is contingent upon the execution of the order to which it is associated.

Trade Intervals

The chart software will list, for each interval, an open price, a low price, a high price and a close price. The open price is the price at the beginning of the period. The low price is the lowest price achieved during the period while the high price is the highest price achieved during the period. The close price is simply the last price achieved during the period.

You can choose the time interval that you would like to trade under. Possibilities are: 1 minute, 5

minutes, 15 minutes, 30 minutes, 60 minutes, 4 hours, daily and week.

The larger the time interval is, the wider the price movement will be. For example, you should expect to see a higher price gain from a trade entered using daily charts than you would normally see when using 15 minutes charts. The daily chart based trade may take weeks or even months to run its course On the other hand, the 30 minutes charts will have higher profits then the 15 minutes charts. However, you can get more profits in trading more trades using the 15 minutes charts.

History of The Forex

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Money, in one form or another, has been used by man for centuries. At ﬁrst it was mainly Gold or Silver coins. Goods were traded against other goods or against gold. So, the price of gold became a reference point. But as the trading of goods grew between nations, moving quantities of gold around places to settle payments of trade became cumbersome, risky and time consuming. Therefore, a system was sought by which the payment of trades could be settled in the seller’s local currency. But how much of buyer’s local currency should be equal to the seller’s local currency?

The answer was simple. The strength of a country’s currency depended on the amount of gold reserves the country maintained. So, if country A’s gold reserves are double the gold reserves of country B, country A’s currency will be twice in value when exchanged with the currency of country B. This became to be known as The Gold Standard. Around 1880, The Gold Standard was accepted and used worldwide.

During the first WORLD WAR, in order to fulfill the enormous financing needs, paper money was created in quantities that far exceeded the gold reserves. The currencies lost their standard parities and caused a gross distortion in the country’s standing in terms of its foreign liabilities and assets.

After the end of the second WORLD WAR the western allied powers attempted to solve the problem at the Bretton Woods Conference in New Hampshire in 1944. In the first three weeks of July 1944, delegates from 45 nations gathered at the United Nations Monetary and Financial Conference in Bretton Woods, New Hampshire. The delegates met to discuss the postwar recovery of Europe as well as a number of monetary issues, such as unstable exchange rates and protectionist trade policies.

During the 1930s, many of the world’s major economies had unstable currency exchange rates. As well, many nations used restrictive trade policies. In the early 1940s, the United States and Great Britain developed proposals for the creation of new international financial institutions that would stabilize exchange rates and boost international trade. There was also a recognized need to organize a recovery of Europe in the hopes of avoiding the problems that arose after the First World War.

The delegates at Bretton Woods reached an agreement known as the Bretton Woods Agreement to establish a postwar international monetary system of convertible currencies, fixed exchange rates and free trade. To facilitate these objectives, the agreement created two international institutions:

the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (the World Bank). The intention was to provide economic aid for reconstruction of postwar Europe. An initial loan of $250 million to France in 1947 was the World Bank’s first act.

Under the Bretton Woods Exchange System, the currencies of participating nations could be converted into the US dollar at a fixed rate, and foreign central banks could convert the US dollar into gold at a fixed rate. In other words, the US dollar replaced the then dominant British Pound and the parities of the world’s leading currencies were pegged against the US Dollar.

The Bretton Woods Agreement was also aimed at preventing currency competition and promoting monetary co-operation among nations. Under the Bretton Woods system, the IMF member countries agreed to a system of exchange rates that could be adjusted within defined parities with the US dollar or, with the agreement of the IMF, changed to correct a fundamental disequilibrium in the balance of payments. The per value system remained in use from 1946 until the early 1970s.

The United States, under President Nixon, retaliated in 1971 by devaluing the dollar and forcing realignment of currencies with the dollar. The leading European economies tried to counter the US move by aligning their currencies in narrow band and then float collectively against the US dollar.

Factors Affecting and the Market Hours

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Factors Affecting Market

Currency prices are affected by a variety of economic and political conditions, most importantly interest rates, inflation and political stability. Moreover, governments sometimes participate in the Forex market to influence the value of their currencies, either by flooding the market with their domestic currency in an attempt to lower the price, or conversely buying in order to raise the price. This is known as Central Bank intervention. Any of these factors, as well as large market orders, can cause high volatility in currency prices. However, the size and volume of the Forex market makes it impossible for any one entity to «drive» the market for any length of time.

Another factor affecting the market, with an effect as important as the other factors mentioned above, is the news. Once released, the news have a direct outcome on the currency price as per news are always directly related to the economic stability of the market. Here’s a list of channels that will provide you useful information on currency news:

CNBC – USD News

Rob TV – CAD News

Bloomberg TV – EUR News

The Market Hours

The trading begins once the markets are officially open in Tokyo, Japan at 7:00 PM Sunday, New York time.

Afterwards, at 9:00 PM EST, Singapore and Hong Kong opens followed by the European markets in Frankfurt at 2:00 AM and in London at 3:00 AM.

When the clock reaches 4:00 AM, the European markets are in the hot spot and Asia just concluded its trading day.

Around 8:00 AM on Monday, the US markets opens in New York while Europe is slowly going down. Australia will take the lead around 5:00 PM and when it is 7:00PM again, Tokyo is ready

to reopen.

Daily or Position Trader

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Their strengths and weaknesses

Day-trading overview

Day-trading, which was once the exclusive domain of the floor trader, is now fair game for all speculators. Inspired in part by large intraday price swings, instant availability of quotes, affordable high-powered computers and competitive commissions, the new wave of day-trading methods and systems has attracted thousands of traders in recent years. The undeniable thrill of trading within the time span of one day is, however, a double-edged sword: one that can hurt as well as heal. To be successful, a day-trader must have the discipline of a machine, the instincts of a fox, the emotions of a rock, the skills of a surgeon and the patience of a saint. (And a little luck wouldn’t hurt either.) The day trader works more with the emotions along with the fundamental analysis.

Definition

Very active currency trader who holds positions for a very short time and makes several trades each day. Day traders are individuals who are trying to make a career out of buying and selling stocks very quickly, often making dozens of trades in a single day and generally closing all positions at the end of each day. Day trading can be costly, since the commissions and the bid/ask spread add up when there are so many transactions.

Position Trading Overview

Position Trader looks for occasional significant moves that may unfold quickly or over time. It patiently waits for ideal trade setups to occur during minor and major trend reversals in certain sectors, indexes or entire broad markets. Determination of these potential setups is derived from technical indicators, chart patterns, point and figure charts and fundamental news events. Once a move shows sign of development, hourly and intraday charts are monitored for optimum entry.

Definition

Currency trader who, unlike most traders, takes a long-term, buy and hold approach. In currency trading, «long-term» refers to holding until the delivery date is close, usually 5-7 months.

Basically, a position trade approach is to enter the markets only during times of key reversal probability in order to capture large moves as they gradually or quickly unfold. It is designed for traders who favor a gradual, buy and hold approach when ideal trade conditions exist for high-odds success.

Currency pairs

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The currencies are always traded in pairs. For example, EUR/USD, which means Euro over US dollars, would be a typical pair. In this case, the Euro, being the first currency can be called the base currency. The second currency, by default USD, is called the counter or quote currency. As mentioned, the first currency is the base, therefore in a pair you can refer the amount of that currency as being the amount required to purchase one unit of the second currency.

So, if you want to buy the currency pair, you have to buy the EURO and sell the USD simulta- neously. On the other hand, if you are looking forward to sell the currency pair, you have to sell the EURO and buy the USD. The most important thing to understand in a currency pair, or more precisely in a Forex tran- saction, is that you will be selling or buying the same currency.

Major currencies

US Dollar – The United States dollar is the world’s main currency – a universal measure to evaluate any other currency traded on Forex. All currencies are generally quoted in US dollar terms. Under conditions of international economic and political unrest, the US dollar is the main safe-haven currency, which was proven particularly well during the Southeast Asian crisis of 1997-1998.

As it was indicated, the US dollar became the leading currency toward the end of the Second World War along the Bretton Woods Accord, as the other currencies were virtually pegged against it. The introduction of the Euro in 1999 reduced the dollar’s importance only marginally.

The other major currencies traded against the US dollar are the Euro, Japanese Yen, British Pound and the Swiss Franc.

Euro – The Euro was designed to become the premier currency in trading by simply being quoted in American terms. Like the US dollar, the Euro has a strong international presence stemming from members of the European Monetary Union. The currency remains plagued by unequal growth, high unemployment, and government resistance to structural changes. The pair was also weighed in 1999 and 2000 by outflows from foreign investors, particularly Japanese, who were forced to liquidate their losing investments in euro-denominated assets. Moreover, European money managers rebalanced their portfolios and reduced their Euro exposure as their needs for hedging currency risk in Europe declined.

Japanese Yen – The Japanese Yen is the third most traded currency in the world; it has a much smaller international presence than the US dollar or the Euro. The Yen is very liquid around the world, practically around the clock. The natural demand to trade the Yen concentrated mostly among the Japanese keiretsu, the economic and financial conglomerates. The Yen is much more sensitive to the fortunes of the Nikkei index, the Japanese stock market, and the real estate market.

British Pound – Until the end of the World War II, the Pound was the currency of reference. The currency is heavily traded against the Euro and the US dollar, but has a spotty presence against the other currencies. Prior to the introduction of the Euro, both the Pound benefited from any doubts about the currency convergence. After the introduction of the Euro, Bank of England is attempting to bring the high U.K. rates closer to the lower rates in the Euro zone. The Pound could join the Euro in the early 2000’s, provided that the U.K. referendum is positive.

Swiss Franc – The Swiss Franc is the only currency of a major European country that belongs neither to the European Monetary Union nor the G-7 countries. Although the Swiss economy is relatively small, the Swiss Franc is one of the four major currencies, closely resembling the strength and quality of the Swiss economy and finance. Switzerland had a very close economic relationship with Germany, and thus to the Euro zone. Therefore, in terms of political uncertainty in the East, the Swiss Franc is favored generally over the Euro.

Typically, it is believed that the Swiss Franc is a stable currency. Actually, from a foreign exchange point of view, the Swiss Franc closely resembles the patterns of the Euro, but lacks its liquidity. As the demand for it exceeds supply, the Swiss Franc can be more volatile than the Euro.

The Canadian Dollar and the Australian Dollar are also part of the currencies traded on the Forex market but do not count as being part of the major currencies due to their insufficient volume and circulation. They can only be traded against the US Dollar.

Canadian Dollar - Canada decided to use the dollar instead of a Pound Sterling system because of the ubiquity of Spanish dollars in North America in the 18th century and early 19th century and because of the standardization of the American dollar. The Province of Canada declared that all accounts would be kept in dollars as of January 1, 1858, and ordered the issue of the first official Canadian dollars in the same year. The colonies that would come together in Canadian Confederation progressively adopted a decimal system over the next few years.

Australian Dollar - The Australian Dollar was introduced in February 14, 1966, not only replacing the Australian Pound but also introducing a decimal system. Following the introduction of the Australian Dollar in 1966, the value of the national currency continued to be managed in accord with the Bretton Woods gold standard as it had been since 1954. Essentially the value of the Australian Dollar was managed with reference to gold, although in practice the US dollar was used. In 1983, the Australian government «floated» the Australian dollar, meaning that it no longer managed its value by reference to the US dollar or any other foreign currency. Today the value of the Australian Dollar is managed with almost exclusive reference to domestic measures of value such as the CPI (Consumer Price Index).

Best Times to Trade

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EUR/USD

During the Tokyo session, the Euro only trades 15% of all volume so it is best to start watching the Euro late in the Tokyo session. It trades 39% of all Forex volume during the London session. It can also be traded during the New York session.

GBP/USD

The pound trades extremely lightly during the Tokyo session. Start watching it near the end of

the Tokyo session as it can start moving then. In the London session, GBP/USD accounts for approximately 23% of all Forex trading volume. The pound can be traded in the New York session also.

USD/JPY

During the Tokyo session, USD/JPY accounts for approximately 78% of all Forex volume. This drops to about 17% during the London session. There are occasional days when these 3 pairs make significant price moves outside the sessions which normally have the most trading volume.

News Releases / Economic Data Releases

23:50 GMT Japan Fundamentals

07:45 GMT Euro Fundamentals

13:30 GMT USA Economic Figures

Definitions

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Pips

Price Interest point (Pip) is the term used in currency market to represent the smallest price increment in a currency. It is often referred to as ticks or points in the market. In EUR/USD, a movement from .9018 to .9019 is one pip. In USD/JPY, a movement from 128.50 to 128.51 is one pip.

Pip Values – according to your trading platform from $7.00 to $10.00 USD.

Pip Spreads – according to your trading platform from 3 to 20 pips.

Volume

The trading volume measures how much “money” is being traded. During some types of news breaks and when the New York’s exchange is open, the volume is obviously higher. The volume indicates us that more things can change. There no real strong correlation for volume, good trades

is being developed even when the Forex volume is relatively low.

Buying and Selling short

Buying = term to use when buying a currency pair to open a trade.

Selling short = term to use when selling a currency pair to open a trade. Both terms, refer to things we do to open a trade.

On the other hand, to exit a trade, you will have to use the terms “selling” and “buying-back”. The term “selling” refers to what we do to exit a trade that initially started by “buying”. The term “buying-back” refers to what we do to exit a trade that initially started by “selling-short”.

Basically the term, “selling-short” can be referred to the futures and commodities market. For instance the mentality of buying a field to plant vegetables that will grow in the future is the same thing than buying a currency and to predict that it will eventually go short.

Bid/Ask Spread

A spread is the difference between the bid and the ask price. The bid price is the price at which you may sell your currency pair for. The ask price is the price at which you must buy the currency pair. The ask price is always higher then the bid price. Profits in the market are made from charging the

ask price for a currency pair and buying it from someone else at the bid price.

The bid/ask spread increases when there is uncertainty about what is going to happen in the market.

Technical Definitions

Trading Platform

A trading platform is, along with the charts, one of the most important tools that a trader will be using while trading on the Forex market. By definition, a trading platform is an exchange account where you can buy and sell a currency.

Entry Stop

An entry stop is executed when the exchange rate breaks through a specific level. The client placing a stop entry order believes that when the market’s momentum breaks through a specified level, the rate will continue in that direction. The execution of a stop entry order may involve a limited degree

of slippage, usually two pips or less.

Entry Limit

An entry limit is executed when the exchange rate touches (not breaks) a specific level. The client placing a limit entry order believes that after touching a specific level, the rate will bounce in the opposite direction of its previous momentum. Limit entry orders are always executed at the specified level.

Benefits of Online Investing

2009-04-19T01:29:00.002+07:00

Online trading has caused a major paradigm shift in investing. At the turn of the millennium, there are over 6 million online investment accounts, up from 1.5 million in 1997. As a result, start-up firms now compete directly with financial institutions to serve investors in the new Economy, and the clear winner is the customer. The competition between the brick and mortar institutions and the Internet-based companies has dramatically lowered the costs of investing, and empowered the individual investor to take control of their own investment strategy.

On-line trading will revolutionize the currency markets by making it accessible to the small and medium sized investor. For the first time, these investors have the ability to execute transactions of between $100,000 and $10,000,000 at the same prices the Interbank market offers for deals well over $10,000,000. This benefits both those who wish to speculate on the direction of the currency markets for profit, as well as the money manager or corporate treasurer looking to hedge against unwanted exposure to future price fluctuations in the currency markets.

Benefits of Trading FX on the Internet

• Deal directly from live price quotes

• Instantaneous trade execution and confirmation

• Fast and efficient execution of deals

• Lower transaction costs

• Real-time profit and loss analysis

• Full access to market information

Deal directly from live price quotes

Very few on-line brokers are able to offer their clients real-time bid/ask quotes, which facilitates instantaneous deal execution - no missed market opportunities. Real-time prices also allow investors to compare an on-line broker’s dealing spread with that of other pricing services, to ensure they are receiving the best possible price on all their Forex transactions.

Many on-line Forex brokers require their clients to request a price before dealing. This is disadvantageous for a number of reasons, primarily because it significantly lengthens the execution process from just a few seconds to possibly as long as a minute. In a fast paced market, this could make a significant difference in an investor’s profit potential. Also, some of the more unscrupulous brokers may use the opportunity to look at an investor’s current position. Once they have determined whether the investor is a buyer or a seller, they ‘shade’ the price to increase their own profit on the transaction.

Instantaneous trade execution and confirmation

Timing is everything in the fast-paced Forex market. On-line trades are executed and confirmed within seconds, which ensures that traders do not miss market opportunities. Even the incremental extra time it takes to complete a transaction over the phone can mean a big difference in profit potential.

Lower transaction costs

Simply, executing trades electronically reduces manual effort, thereby lowering the costs of doing business. On-line brokers are then able to pass along the savings to their client base.

Real-time profit and loss analysis

The fast-paced nature of the Forex market compels traders to execute multiple trades each day. It is vital for each client to have real-time information about their current position in order to make well-informed trading decisions.

Full access to market information

Access to timely and relevant information is critical. Professional traders pay thousands of dollars each month for access to major information providers. However, the very nature of the Internet affords users free access to reliable market information from a variety of sources, including real- time price quotes, international news, government-issued economic indicators and reports, as well as subjective information such as expert commentary and analysis, trader chat forums etc.

Benefits of Forex Trading vs. Equity Trading

• 24 hour trading

• Liquidity

• 50:1 Leverage to 400:1 Leverage

• Lower transaction costs

• Equal access to market information

• Profit potential in both rising and falling markets

24-hour trading

The main advantage of the Forex market over the stock market and other exchange-traded instruments is that the Forex market is a true 24-hour market. Whether it’s 6pm or 6am, somewhere in the world there are always buyers and sellers actively trading Forex so that investors can respond to breaking news immediately. In the currency markets, your portfolio won’t be affected by after hours earning reports or analyst conference calls.

Recently, after hours trading has become available for US stocks - with several limitations. These ECNs (Electronic Communication Networks) exist to bring together buyers and sellers when possible. However, there is no guarantee that every trade will be executed, nor at a fair market price. Quite frequently, stock traders must wait until the market opens the following day in order to receive a tighter spread.

Liquidity

With a daily trading volume that is 50 times larger than the New York Stock Exchange, there are always broker/dealers willing to buy or sell currencies in the FX markets. The liquidity of this market, especially that of the major currencies, helps ensure price stability. Investors can always open or close a position, and more importantly, receive a fair market price.

Because of the lower trading volume, investors in the stock market and other exchange-traded markets are more vulnerable to liquidity risk, which results in a wider dealing spread or larger price movements in response to any relatively large transaction.

50:1 Leverage to 400:1 Leverage

Leveraged trading, also called margin trading, allows investors in the Forex market to execute trades up to $250,000 with an initial margin of only $5000. However, it is important to remember that while this type of leverage allows investors to maximize their profit potential, the potential for loss is equally great. A more pragmatic margin trade for someone new to the FX markets would be 5:1 or even 10:1, but ultimately depends on the investor’s appetite for risk. On the other hand, a 100:1 leverage would be the foremost suggested margin trading to use for the best risk and reward return.

Lower transaction costs

It is much more cost efficient to invest in the Forex market, in terms of both commissions and transaction fees. Commissions for stock trades range from a low of $7.95-$29.95 per trade with on-line brokers to over $100 per trade with traditional brokers. Typically, stock commissions are directly related to the level of service offered by the broker. For instance, for $7.95, customers receive no access to market information, research or other relevant data. At the high end, traditional brokers offer full access to research, analyst stock recommendations, etc.

In contrast, on-line Forex brokers charge significantly lower commission and transaction fees. Some, like FCStone FX, charge LOW fees, while still offering traders access to all relevant market information. In general, the width of the spread in a FX transaction is less than 1/10 as wide as a stock transaction, which typically includes a 1/8 wide bid/ask spread. For example, if a broker will buy a stock at $22 and sell at $22.125, the spread equals .006. For a FX trade with a 5 pip wide spread, where the dealer is willing to buy EUR/USD at .9030 and sell at .9035, the spread equals .0005.

Equal access to market information

Professional traders and analysts in the equity market have a definitive competitive advantage by virtue of that fact that they have first access to important corporate information, such as earning estimates and press releases, before it is released to the general public. In contrast, in the Forex market, pertinent information is equally accessible, ensuring that all market participants can take advantage of market-moving news as soon as it becomes available.

*Forex Trading Academy*

Description of the Forex Trading

2009-04-19T01:19:00.002+07:00

The Forex market, established in 1971, was created when floating exchange rates began to materialize. The Forex market is not centralized, like in currency futures or stock markets. Trading occurs over computers and telephones at thousands of locations worldwide.

The Foreign Exchange market, commonly referred as FOREX, is where banks, investors and speculators exchange one currency to another. The largest foreign exchange activity retains the spot exchange (i.e.., immediate) between five major currencies: US Dollar, British Pound, Japanese Yen, Eurodollar and the Swiss Franc. It is also the largest financial market in the world.

In comparison, the US stock market may trade $10 billion in one day, whereas the Forex market will trade up to $2 trillion in one single day. The Forex market is an opened 24 hours a day market where the primary market for currencies is the 24-hour Interbank market. This market follows the sun around the world, moving from the major banking centres of the United States to Australia and New Zealand to the Far East, to Europe and finally back to the Unites States.

Until now, professional traders from major international commercial and investment banks have dominated the FX market. Other market participants range from large multinational corporations, global money managers, registered dealers, international money brokers, and futures and options traders, to private speculators.

There are three main reasons to participate in the FX market. One is to facilitate an actual transaction, whereby international corporations convert profits made in foreign currencies into their domestic currency. Corporate treasurers and money managers also enter the FX market in order to hedge against unwanted exposure to future price movements in the currency market. The third and more popular reason is speculation for profit. In fact, today it is estimated that less than 5% of all trading on the FX market is actually facilitating a true commercial transaction.

The FX market is considered an Over The Counter (OTC) or ‘Interbank’ market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network. Trading is not centralized on an exchange, as with the stock and futures markets. A true 24-hour market, Forex trading begins each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, London, and New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night.

*Forex Trading Academy*

Fundamental Outlook for Japanese Yen

2009-04-13T01:42:00.004+07:00

Fundamental Outlook for Japanese Yen: Bullish

- Japanese Yen Forecast to recover versus US Dollar
- Holiday-shortened trading week benefits Yen
- Japanese Yen Monthly Outlook points to potential for recovery

The Japanese Yen finished the week almost exactly unchanged against the US Dollar despite a sharp recovery in risky asset classes. Yen speculators kept the currency stable in spite of a sizeable S&P 500 rally—the key US equity index now trades at its highest levels in two months. There seems to be a general air of complacency surrounding risky assets, and early signs of hope in macroeconomic data and financial earnings reports have emboldened traders buy into risk-sensitive markets. Yet the sheer pace of financial market recovery suggests that recent developments are far from sustainable. The Japanese Yen would likely benefit if risk sentiment sours through near-term trade.

The US S&P 500 has now rallied over 25 percent off of its March lows at a massive 1000+ percent annualized pace. Early financial earnings reports have led downtrodden bank stocks sharply higher, but assets can only maintain such an incredible pace of appreciation for so long. The Japanese Yen subsequently stands to benefit when and if risky assets turn lower through the near term. Given that the USD/JPY likewise trades at key medium-term resistance near the 101.00 mark, overall risk-reward favors going long the Yen against its US counterpart (short the USD/JPY).
Japanese economic developments have had relatively little effect on USD/JPY price action, and we expect the week ahead to be no different. We will instead watch key economic reports out of the US economy and subsequent implications for risky asset classes. As we discuss in our “Top 5 Forex Events of the Week” report, any surprises out of US Advance Retail Sales and a Consumer Price Index report could potentially shake confidence across financial markets. We will keep a close eye on US Data, and a reversal in the S&P 500 will give signal that the USD/JPY may finally reverse after several months of appreciation. – DR
Source : Dailyfx.com

Fundamental Outlook for British Pound

2009-04-13T01:36:00.003+07:00

Fundamental Outlook for British Pound: Bearish

NIESR estimates show that UK GDP may have fallen by 1.5% during Q1
UK industrial production fell for the 15th straight month, bringing the annual rate to a new record low.
Check out our GBP/USD outlook based on technicals, interest rates, and PPP

The British pound ended the past week within a tight range versus the US dollar of 1.4600-1.4750 following the March 9 rate decision from the Bank of England, as they left the Bank Rate at a record low of 0.50 percent, as expected. This was the first “no change” decision since September 2008, but the BOE Monetary Policy Committee’s (MPC) statement was short and sweet, providing little in the way of new information. The MPC did indicate that they would continue with the quantitative easing efforts announced on March 5, but that it would take another two months before the program was completed because they had only purchased 26 billion pounds in assets of the planned total of 75 billion pounds.

Ultimately, there are still significant downside risks for the UK’s economy and financial system, but as it stands, the markets are broadly anticipating that the BOE will continue to leave the Bank Rate at 0.50 percent throughout the remainder of the year, since further reductions are unlikely to have much of an impact. In the near-term, it may be worth looking for a GBP/USD break out of its recent range, and if risk aversion returns, the pair’s break could be a bearish one below 1.4600.

From an event risk perspective, there will be very little news on the wires to shake up the UK’s national currency. On Tuesday night at 19:01 ET, the RICS house price balance is forecasted to show that 77 percent of home surveyors saw a decline in prices during March, down from 78 percent in February. On Wednesday at 19:01 ET, the BRC retail sales monitor is likely to show persistently weak consumption on a same-store sales basis as the UK recession continues to put pressure on nearly every aspect of the economy.

Fundamental Outlook for Euro This Week

2009-04-13T01:33:00.001+07:00

Fundamental Outlook for Euro This Week: Bearish

- European CPI data could shed light on future Euro interest rates
- Evidence mounts that the ECB will cut interest rates further
- Traders punish the Euro following ECB Monthly Bulletin
- Forex sentiment points to bearish Euro forecast against US Dollar

The euro was the worst-performing major currency against the US Dollar on the week, as a slew of evidence suggested the European Central Bank could match the US Federal Reserve in extraordinarily low official interest rates. Indeed, the single currency generally fell out of favor following the release of the ECB’s Monthly Bulletin. The report showed clear risks of Euro Zone deflation and implied that the ECB could cut rates further through the foreseeable future. The single currency maintains a slim yield advantage over its US counterpart, as the US Federal Reserve’s aggressive monetary policy has taken US Dollar interest rates near zero percent. Whether or not the Euro may recover against the resurgent USD may subsequently depend on several interest rate-linked economic reports in the week ahead.

European macroeconomic trends point to further sharp contractions in regional economies, but bearish consensus forecasts for upcoming economic reports suggest that markets have largely discounted Euro Zone fundamental weakness. Indeed, there have been very few data releases that have forced major moves in the Euro or elicited strong shifts in trader sentiment. Recent sensitivity to European Central Bank interest rate expectations nonetheless implies that upcoming Consumer Price Index results could spark major EUR/USD volatility. Consensus forecasts call for a 0.6 percent year-over-year CPI inflation rate—a full 1.4 percentage points below ECB targets of 2.0 percent. Traders will certainly scrutinize the inflation release, and any significantly above or below-consensus print would almost definitely force sympathetic moves in the Euro and domestic assets.

Euro traders will otherwise monitor overall risk trends—especially as they relate to European markets and the single currency itself. The Euro/US Dollar exchange rate had previously moved almost tick-for-tick with the US S&P 500 and other risk barometers. A recent recovery in financial market conditions has meant that the Euro is far less correlated to risk sentiment. Yet the severity of the S&P 500 comeback suggests that such moves are unsustainable. The heavily-traded US equity market index has now rallied over 25 percent off of its March lows—an incredible annualized pace of over 1000%. When the correction comes, the Euro could almost certainly suffer alongside major risky asset classes. It will be important to watch overall market trends—especially as they relate to the EUR/USD exchange rate. - DR

Fundamental Outlook for US Dollar: Bullish

2009-04-13T01:10:00.005+07:00

Dollar’s strength called into question as fundamentals deteriorate and G20 offering little tangible assistance
FOMC Minutes say financial markets are “fragile and unsettled” as economy at risk of “feedback” look
April Technical and fundamental forecasts for the majors still leaning in the dollar’s favor

How often has the term ‘depression’ been used to describe the conditions in the US and global economies? What are the symptoms of this infrequently experienced economic storm? These are the questions that will shape the dollar’s future not just a week ahead but for months to come. Considering the broad rebound in market sentiment over the past month, the US dollar has struggled to find its place in the currency market. There is still a hold over for the greenback’s function as a safe haven. However, as demand for yield rises, investors may more closely focus on the fundamental health of the US economy and the potential for returns on the nation’s assets – and neither is promising.

In recent months, the best way to benchmark the strength of the dollar has been through its association to risk trends. Though liquidity has not been a serious issue for the capital markets since October, the terrible pace of growth behind the global economy and the mere presence of toxic derivatives in the market’s system has bolstered the greenback’s presence. This is not likely to change anytime soon. Despite the rise in risk appetite recently, investors are keenly aware to the state of economic activity and the vulnerability of the financial markets. A rebound in consumption, production and capital investment are essential elements for positive returns. However, each of these components are still contracting on a global level. At the same time, the level of risk behind the scenes continues to grow. This past week, the FOMC minutes referred to credit conditions as “very tight” and suggested financial markets were “fragile and unsettled” as pressure was intensifying.

Banks are refusing to open credit lines as they attempt to bolster reserves as defaults rise, earnings drop and growth naturally leads demand to dry up. This means the potential for another crisis and panic exodus of capital from the market is a constant threat. One of the most menacing triggers for such a dramatic shift in sentiment is the ‘stress test’ the US federal government has performed on the country’s 19 largest banks. Rumors have circulated that the Treasury has instructed target banks not to disclose any results from their evaluation as officials want to wait until after earnings season (to avoid what could be another ‘perfect storm’ should the assessment be bad). However, as more earnings data crosses the wires, speculation on the results will no doubt grow.

As long as the market’s fear the possibility of another crisis, the dollar will be coveted for its deeply liquid markets and the aggressive actions of the US government. However, should markets maintain their calm and risk appetite slowly recover, investors will once again be put to task in grading which economy will recover first while supporting the most lucrative yields (within reason of some level of safety). As this is a market dynamic that is slowly developing now, we have to put the US on that scale; and the results are not promising. In the Fed’s minutes, the policy authority mentioned its concern of “feedback effects.” This refers to a situation where financial strains feed the economic troubles and vice versa such that the cycle maintains itself. Bailouts, liquidity injections and efforts to remove toxic debt from the system has tried to correct a vital component of this bleak spiral; but it has clearly not corrected the larger issue. So, in the meantime, concentration will fall back on economic activity with a round of notable indicators. From the list, the market will look to benchmark the health of the housing market, production and consumer spending. The University of Michigan confidence survey and retail sales report will gauge consumer health. Industrial production and regional manufacturing reports will measure business activity. While housing starts and building permits offer a better gauge of construction than sales of existing homes or the creation of mortgages. - JK

Money Management

2009-04-12T22:37:00.000+07:00

Signal Forex Trading @. Forex trading are classified as investment is high risk. This means that forex trading has classified as high risk. One of the highest among other financial investment instruments.

Risk factors that you must know before you start forex trading:

Possible loss of funds has a 100%
Flow of funds very quickly (very liquid)
There is no method of trading that can guarantee you 100% sure hit. There are many methods of trading a good but no one can guarantee 100% sure hit

Forex trading is not a "rich quick scheme" that can suddenly make you rich without working hard. There is no success without hard work. Hard work is the part that is not separated from those who have experienced financial success in life. Including those who are successful through forextrading.

Hard work necessary to learn the analysis and market behavior so that we can guess the direction of price movement accurately. So also needed extra mental results when trading is not in accordance with what we expect.

Ask the trader-trader success that you know, whether they had experienced in the fall up trading them.And the answer is almost certainly "yes." The success is only provided for those who want to try and learn continuously meperbaiki himself.

Now associated with the risk that must be faced if we want to start investing in forex, you need a special trick-tips to minimize or even reverse our position that was minus a positive return and get lucky. Here are some tips and risk management that you can take:

1. Cut loss

Action is close your position with the opposite movement of the market price. Cut loss is used to limit losses experienced so that it does not cause a loss greater.

For example, say we are opening our position on the Open Buy GBPUSD at 1.8000 price. Buy to open a position means that we expect the price increase exceeds 1.8000, so we get hit. We hope the price moves up to 1.8100 for example so that we can get a 100 point profit. But what power, the prices move opposite to what we expect. In fact the price continue to move down from 1.8000 into 1.7980 and still show drift down.

So, than we lose more and finally a margin call then the better position is closed even though we bear the 20-point loss (1.8000 to be 1.7980 = -20 point). This action is called the loss that is cut close position to prevent the loss of large losses.

Case Details Other:

Mr. Ronny open position Buy GBP / USD at 1.8850 with a number of quantity 10,000. Mr A predicts that presently he can liquidate the position at 1.8900. Therefore, he created the position for Risk Management: Stop Loss at 1.8800 and Stop Limit at 1.8900.

In fact the price move down to the uncertain range of 1.8820.

With all considerations, Mr. A would like to close the position at 1.8825 only. So Mr. Ronny 25-point loss (1.8825-1.8850 = -0.0025)

Profit and Loss is calculated with the formula as follows:

Note:

Position Close: 1.8825

Position Open: 1.8850

Quantity: 10000

Then:

Profit / Loss = (1.8825 - 1.8850) x 10000

Loss = -0.0025 x 10000

Loss = $ -25 (Mr. Ronny lose $ 25)

2. Switching

This action is similar to cut loss, but the difference after we close the position the losers, we open a new position with the same direction with the movement of market prices.

In the case of the same cut over the loss, then we close our position at 1.7980 then we opened a new position as the Open Sell prices tend to decline. Thus, if prices continue to go down, say to reach 1.7900 so overall we have 20-point loss, but profit gain of 80 points (1.7980-1.7900 = 80) so that the total profit we still get 60 points.

Example case

Neng Cantik akan NAIK price estimate. So to get the benefits he decided to buy (Buy) in the hope that prices will rise so that he can sell the more expensive the price difference and get the advantage. But it was not increased, even TURUN price.

And after re-analysis, a conclusion Neng Beautiful estimates that the price was increased akan Error. So what should he do? Than the market price and suffer losses, Moreover the price will go down further from now he decided the position of the losers Buy it and then open a new position Sell (with the expectation the price will go down). And in fact the price down so that he continues to experience losses that exceed the benefits received in the position that he Buy previous close. Then he closes the position and Sell benefit.

Tips For You:

Do only if the predicted benefits switching melebihinilai the first loss position will be closed.
If it turns out that the price changed in accordance with the input first, then you will suffer loss 2 times, the first position and second position also

Case Details:

Mr. Ronny open position Buy GBP / USD at 1.8850 with a number of Quantity 30,000. Mr. Ronny predict that presently he can liquidate the position at 1.8900. Therefore, he created the position for Risk Management: Stop Loss at 1.8800 and Stop Limit at 1.8900. In fact the price move down to the uncertain range of 1.8820. With all considerations, Mr. Ronny simply want to close the position at 1.8825. So that Mr A 25-point loss (1.8825-1.8850 = -0.0025)

Note:

Position Close: 1.8825

Position Open: 1.8850

Quantity: 30000

Then:

Profit / Loss = (1.8825 - 1.8850) x 30000

Loss = -0.0025 x 30000

Loss = $ -75 (Mr. Ronny lose $ 75)

Then again, Mr. Ronny analyze and predict the price and the price will continue moving down, then open a position, Mr. Ronny Sell with 20,000 on the Quantity of 1.8820. Not some long hold down the price to be in the range 1.8730. In the end, Mr. Ronny position close to the 1.8740. Mr. Ronny get the 80 point advantage (1.8820 - 1.8740 = 0.0080)

Profit / Loss = (1.8820 - 1.8740) x 20000

Profit = 0.0080 x 20000

Profit = $ 160

Overall results from two earlier trading is

Trading I = - $ 75

Trading II = $ 160

Profit = $ 160 - $ 75 = $ 85 or Rp765.000, - ($ 1 = Rp 9000)

3. Averaging

This requires extra capital to maintain the position we have open that move opposite to the market price.

Say in the same case with the Loss Cut above example, if we want to do action averaging then we open a new position, but in this case is not like switching a closed position that we lose ago to open a new position at variance with our previous position with reasons the price has moved down. On averaging, we're not closing the position that we have been opened (in this case the Open Buy) and even our menambahinya with a new position with the same direction, namely the Open Buy again!

Why? We do not have the Open Buy and previous loss experience, and why we do the Open Buy again?The reason is simple, we hope because the price came down so prices will rise again so that when we perform the Open action Buy the second price move is expected to increase even beyond the Open Buy us first so that we gain ganda.

Example Cases

Neng Cantik predict that prices will rise then he opened Buy positions. But the price was moving down.Neng Cantik more quickly analyze and sum price will only go down shortly, and will rise again according to the analysis before he decided to open a new buy position when the price came down so prices rise again when she not only has a 1 position that profit but at the same time 2. In fact true, not long after the price increase and then Neng Cantik close to its second position, the first and second.

Case Details:

Mr. Ronny open position Buy GBP / USD at 1.8850 with a number of Quantity 20,000. Mr. Ronny predict that presently he can liquidate the position at 1.8900. Therefore, he created the position for Risk Management: Stop Loss at 1.8800 and Stop Limit at 1.8900.

In fact the price corrected and move down to 1.8825.

Mr. Ronny back the position Buy GBP / USD at 1.8825 with the number of

10000. He also installed at 1.8800 Stop Loss and Stop Limit at 1.8900.

Then not long after the price back corrected and touched 1.8900.

Thus, Mr. Ronny get 2 benefits from that position 2 has been opened:

Position I:

Profit / Loss = (1.8900 - 1.8850) x 200,000

Profit = 0.0050 x 20000

Profit Position I = $ 100

Position II:

Profit / Loss = (1.8900 - 1.8825) x 10000

Profit = 0.0075 x 10000

Profit Position II = $ 75

The number of second positions Profit: $ 160 + $ 75 = $ 235 or Rp2.115.000, - ($ 1 = Rp9000)

The three risk management over the very simple and easy to do. So, unfortunately we could lose just because we do not know the things above. But to know whether the three risk management we have never ascertained the loss?

The answer is of course not. If you cermati, a third above the risk management focus on one thing: our ability to analyze price movements. Yes, indeed that is the core of forex trading. Risk management did not even become effective when we can not afford to do the analysis correctly and accurately. Thus, the analysis is imperative to know in starting the investment in forex trading.

Still much to be learned in the world to invest and enter into forex. We just learn the terluar from this investment. Important that you learn and learn continuously

"Save Your Trading"

Forex Risk

2009-04-03T14:08:00.000+07:00

FREE FOREX SIGNAL @. There are 2 statements that are frequently heard on the investor or by a forex trader:
1. Do not Investing in the forex world, because it is very risky
2. Investing in the forex world, because the investment is the most high returnnya

Two of the mutual back-off occurs because of differences in perspective. The first statement from the point of view risk, while the second statement from the point of view the potential income which is very arouse.

Ok, Fine, let's Simplify this problem by looking at the example below:

1. Mr. X, a civil servant, has a desire to get additional revenue. Then he decided to open a small shop front of the house. Initial capital for the bank loans he took 10 million with a guarantee PNSnya SK. After filling warungnya with the needs of different types of goods, and ask him to guard his wife. What happens, a month after the first warungnya in the open, it appeared that Mr. X warungnya was found that less pelanggangnya. Neighbors more often shopping in the stalls, which are one house from Mr stalls. X. Once observed, .. oh, Mr X sells more expensive price of a stall disebelahnya. This is because Mr X to buy goods more expensive jualannya of stalls disebelahnya. Several months later, because lesunya sales to stall in with other issues, such as a lack of knowledge about financial management. Finally Mr. X decided to close with the loss warungnya around 10 million in outstanding loans to banks every month.

2. Mr. Y, A asongan traders. After several years selling asongan, Mr. Y a new age of 15 years, have a desire to increase their incomes. Once thought of cooked and menyususn plan, Mr. Y, then do the survey. The result he found a shop that would give the price 10-20% cheaper, from the store during this menyuplainya. Second, Mr. Y, promised a bonus, if omzet sales over 10 million monthly. After evaluating a simple, Mr. Y decided to switch suppliers. The result, Some of the Moon and Mr. Y is able to increase the incomes of 50%, because he is also a sub-Suplier asongan seller for each other.

From a simple example above conclusions can be drawn:

Mr. X does not lose because business feasibility analysis and tergesa2. In addition, because Mr. X does not have basic knowledge about how to manage a stall
Mr. Y is able to increase revenue because Mr Y knew about the true business of running and Mr Y would like to do an analysis before making a decision about the development business.
Risk is the lack of knowledge.
Risks can dimanage with the knowledge of how to improve

The formula:

LESS Knowledge = LOSS
More Knowledge = PROFITS

This simple formula applies to all matters, including in the FOREX.
Wisely proverb says "do not do something, if you have no knowledge therein. But if you want to get knowledge, then berbuatlah and do not stop because the more often you do this, then you will be the MASTER.

"Do not ride a bicycle if you do not know how, but if you want to know how to ride a bicycle, then kendarailah. Once, twice, three times you fall, do not be a problem, because the more often you fall in the near future with your success. "

"Save Your Trading"

Forex Strategy

2009-03-20T14:25:00.000+07:00

Signal Forex Trading @. Forex online trading world, are very promising, not only because the initial investment is very affordable, there are even brokers who provide a bonus when registered, but the forex potensi extraordinary income. Nah, how or the steps to be get profit? Below are described step by step:

Manage emotions. Should open before the computer, ask your subconscious, whether you are ready to trade, whether you are mentally ready to face the market, (Rich, 'like war aja, he .. he). If you are mentally and emotionally unstable, should not impose Trading. Want to know the Trading with the emotional consequences, Read Here
Perform analysis. Once your account login, do the fundamental analysis, including news or news that will be released on that day. Then proceed with the technical analysis to determine the characteristics and movement kecendrungan a pair. From the analysis it will be level-level confirmation.
Ready-prepared entry movement if the pair i-level confirmation. Hardware prohibited entry if not conf pair, except for the scalp or swing technique.
Make the entry-level corrections. That is, when the pair touched a level of confirmation, kecendrungannya will have a correction. Each pair is different karaktaristiknya, such as eur / usd, koreksinya 15-25 pips, gbp / usd, 20-35 pips, etc.. But the pair are also sometimes koreksinya between 50-100 pips. That is the importance of considering the characteristics of daily and weekly a pair.
Set Target Profit (TP) and Stop Loss (SL).
Once you reach the target profit, you should sign out. because if you go, the disease will come tempt greedy. Or vice versa, if you experience loss let alone 3 times in a row, should also have to sign out, because if you go, 90% will be your loss again. REMEMBER, there is still tomorrow!

" Save Your Trading "