Trade FX Currency » currency trading strategy

What are Forex Scams?

admin — Tue, 07 Apr 2009 23:01:16 +0000

So what are forex scams? Some people jump to the conclusion that anything that doesn’t make them rich overnight is a scam. Developing skills is not something they want to do- they are after something that is like a magic spell they can cast over their computer so it gives them money. This isn’t going to happen. The whole world would be follow such a system if it existed … and when you think about the economics, even if something like that was invented, it wouldn’t be effective for very long. This is how to look at forex trading software.

Talking realistically money doesn’t grow on trees it has to come from somewhere. Advances in technology can improve the efficiency at which goods are produced so we can all own mobile phones and televisions and have a better standard of life compared to before. But industries without a tangible product such as trading or gambling rely solely on the flow of money and nothing else from one party to another and so someone wins and someone loses.

While there is some truth that in currency trading bad trades are taken by parties or institutions that either don’t know what they are doing or do not care. People in the import export business ususally carry on regardless of exchange rates on any given day at any given time. People taking a vacation overseas are the same. Nevertheless, there are so many people and institutions in the ‘pure’ forex market these days that it is simply not possible for everybody to make money from forex trading.

So when you are in an internet forum and you are trying to decide whether negative comments that you read about a product are really a sign of a scam, it is useful to picture the situation happening in the real world, i.e. offline. Perhaps the comments where made by someone whose skill level was not high enough. Or perhaps it was the basics of forex that they didn’t really get.

Whatever the case check out the best forex trading software before you make any decisions about your trading future.

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Forex Trading Online

admin — Tue, 07 Apr 2009 23:01:15 +0000

The internet has been a giant contributor to the advancement of technology. It has changed the communication industry and now it is being used for different kinds of tasks. Almost everything is possible with the internet. Before the internet, Forex could only be traded if you were there physically. But now, you can trade even in your own home or in the office as long as there is an internet connection.

If you think that only the intelligent individuals are involved Forex trading, you’re wrong because at present, average individuals can already trade in the market, provided they have adequate capital. The behavior of different currencies in the Forex market can be compared to the movements of regular stock. Fluctuating economics are an attribute of most countries. Currency pricing ranges from high to low. Access the Forex market whenever you want, night or day. If you have an internet connection you can monitor the Forex market and other information pertaining to it. The internet holds a treasure chest of information. Gather all the possible information you can get about Forex trading; you must read, comprehend, and learn from the information sources because that’s one way to attain success. With the internet in your home or in the office, you can monitor all the real time market information without much difficulty.

Forex trading also have mechanics. For you to understand the trade’s mechanics, you will need some helpful tools. Before you invest in the Forex market, you have to ensure that you’ve already developed the right trading skills to prevent possible loses.

There are a number of sources that offer free Forex trading demos. You can even start investing in the Forex market with only $300. Getting started is the hardest part. With the aid of the internet, it’s much easier to learn about the current Forex market trends. You can also rely on a good Forex broker especially if you’re new in Forex trading. Ask your broker to help you develop trading strategies and an efficient system. A good broker can point you in the right direction to find fundamental and technical analysis data.

Great profits can be had if you are willing to assume some risks in Forex trading. Don’t lose your investment by taking too many risks. Online tools are available to educate you on Forex trading.

Take into account what your needs are? Identify you needs so that you can select the best broker or trading system for your situation. There is a never-ending supply of trading systems in the internet. Take your time researching them. Be sure to check out the background of the broker.

Use the tools talked about earlier to help you obtain more profits in the Forex market. The best traders are disciplined and make decisions careflully.

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Beginning Forex – How Are Lots Traded & What The Heck is a PIP?

admin — Tue, 13 Jan 2009 11:42:26 +0000

If you are new to Forex, no doubt you are confused by all of the strange and unfamiliar terminology. For example, what is a pip? Also, you are probably already aware that Forex trading can be risky. How can you limit your loss and best protect your funds? This article briefly covers how currency lots are traded to help you better understand how to plan your trading strategy and manage your funds.

In Foreign Currency Exchange (FOREX), earnings are expressed in “pips”. Pip is short for Price Interest Point, also called points. Whereas the smallest denomination in USD is the penny ($.01), in Currency Exchange, funds can be traded in an even smaller denomination, $0.0001. This means that very small movements in currency prices can create large profits.

So, a PIP is the smallest unit a currency can be traded in. The actual value of a pip is not a set price. If you are trading with a standard account, a pip is worth $10. If you are trading a mini account, a pip is only worth $1.

The value of a pip changes based upon the size of your account, because the size of your account affects how much currency you can leverage. A standard full size trading account is 100,000 units of the base currency. If you are trading in USD, a standard account has a value of $100,000 USD.

A mini lot is 10,000 units of base currency. If you are trading mini lots, you can leverage $10,000. This is why a pip in a mini account is worth less than a pip in a standard full sized account.

While Forex trading allows you to leverage more funds than you actually have, this can be a double edged sword. While you can make profits on funds that you leverage (rather than own), you can also have losses amplified as well. There are several ways, however, to manage your risk when trading Forex. If you are interested in trading Forex, you should have a definite trading strategy. You must educate yourself to know when to enter and exit the market and what kind of movements to anticipate.

You can also place something known as a stop loss order. Stop-loss orders the typical way traders minimize risk when placing an entry order. A stop-loss order to exit your position if the currency price reaches a certain point.

If you are taking a long position, you would place the stop loss order below current market price. For a short position, you would place a stop loss order above current market price. This technique allows you to manage your risk and, just as the name suggests, stop your losses at a certain point.

As you can see, Forex trading can be complex, but once you understand the basic fundamental principals of how lots are traded, its starts to come together for you. Foreign Currency Trading can be quite profitable and and exciting way to invest.

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Is China beginning to see the US as a liability it can’t afford ?

admin — Sat, 10 Jan 2009 13:35:07 +0000

The evil of the US dollar
By Asif Salahuddin

http://www.atimes.com/atimes/Global_Economy/JK21Dj05.html

(This is actually a brilliant analysis of fiat currency – but partisan )

CHINA AND THE GLOBAL CRISIS
Beijing holds key to prosperity
China’s best contribution to stabilizing the world economy is to develop the country’s domestic market, raise earnings and pursue full employment – a strategy opposite to that being pursued in the United States. It should also cease importing dysfunctional economic systems such as predatory, neo-liberal, cowboy market capitalism. – Henry C K Liu (Dec 5,’08)

http://www.atimes.com/atimes/Global_Economy.html

China’s yuan set to reverse course
By Kosuke Takahashi

TOKYO – China, faced with factory closures and slowing export growth as the global economy slows, is apparently prepared to weaken the value of its currency
against the US dollar in defiance of a key policy goal of the United States, even as US Treasury Secretary Henry Paulson visits Beijing this week.

A weaker yuan, which would signal an about-turn by Beijing after three years of appreciation, will help to hold down prices of China’s exports, raising the likelihood of further increases in its already contentiously high trade surplus with the US. At the same time, a lower yuan will make imports to China from the US more expensive at a time when American workers are fast losing jobs

http://www.atimes.com/atimes/China_Business/JL05Cb04.html

Dumdum

I agree with you – but isn't it quite clear they don't care about anyone else but themselves?

Isn't it also clear they are going to follow the message of Thomas Jefferson to the letter ?

Trade with everyone ally to no one.

Once they begin to see the US as a liability they will pull the plug no matter the cost to the US – they will see it as short term suffering for their people in exchange for long term gain and remember they don't care about their own people all that much – and your 3rd in line behind them

Are we still importing poison pet food ? Are we still importing period from them ? What are the Wallmart shelves filled with

Your elites don't care about you the Chinese elites aren't going to sweat it if a few of theirs starve either

Firstly brilliant first article. At the moment China relies on the US and the US also relies heavily on China. China does invest heavily in the US which helps the US economy and allows China to get a large return on its capital. However I think now because of the economic crisis China is beginning to see the US as a liability.

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Help with business question homework?

admin — Thu, 08 Jan 2009 16:39:12 +0000

A main purpose on tariffs on imports is to ______.
[a] maintain domestic competitiveness
[b] promote free trade
[c] stabilize foreign currencies
[d] increase imports

China and India require that when foreign firms enter into joint ventures with local firms, the local partners must have the controlling ownership stake. What does this illustrate?
[a] business ethics
[b] local content laws
[c] tariffs
[d] social responsibility

After managers determine the firm’s goal, what do they do next?
[a] develop tactics
[b] develop a comprehensive strategy
[c] develop an operational plan
[d] develop a mission

Which of the following statements about conceptual skills is most correct
[a] Conceptual skills are most important to top managers
[b] Conceptual skills are most important to first-line managers
[c] Conceptual skills are most important to middle managers
[d] Conceptual skills are equally important at all levels of management

ACTUALLY SOME HAVE A COUPLE OF GOOD ANSWERS, I hope I helped you make the right choice though
A—-a
B—-d
C—-b
D—-d

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If you were elected leader of a mythical country where:?

admin — Tue, 06 Jan 2009 17:45:34 +0000

*Its only net exports (excepting food) were technology for war and weapons for war.
* its world economic dominance was soon to evaporate, due to a massive changeover to a newer rising currency, we'll call 'urow's', as the world's petro-dollar and trade currency.
*your country had lost political leverage as the only world's superpower by attacking other countries pre-emptively and was now alienated by other countries which formed alliances against it.
* your country was trillions of dollars in debt and sinking under the weight of failed strategies to prop it up financially artificially.
AND
YOU HAD AN IGNORANT CITIZENRY WHO WAS OBLIVIOUS TO ECONOMIC LAW'S IMPACT ON COUNTRY FUTURE STABILITY.
What actions would you take first to 'right the ship and prevent the fall of this newest 'last of the roman empires'……….before it's currency was removed as the world trade standard and its resulting inflationary times rendered it a third world country? Would the people listen, to change?

Wow, lots of problems…where to begin, eh? When we think of a nation in the world today I don't think that we have the luxury to take these problems one at a time. So as I explain what I think should be done, keep in mind that most of it will have to happen at the same time, and not nice and neatly broken into single steps. A country in today's modern world needs to be flexible and ready to change to what happens in the world around it, especially when we think about economics, and government policies, pertaining to economics.
OK so to answer the question, two most important things that should be done would be 1) To regain the trust and support of other major economic players in the world. While every country is important, the countries I would want to have the support of would be China, the western countries of the European Union (UK, France, etc…), India, and Brazil. Again while every country is important these countries have special economic influence. Weather with a developed economy, a developing economy, or a potentially rapidly developing economy, that I feel in gaining the trust and support of these major countries will help spread trust with other smaller countries that have strong ties with these countries and not with mine. 2) Fix our budget. Hmm…where to begin eh? Id start with our current currency loosing value to this other currency "urow's." How does one strengthen ones own currency? Well lets think about what can reduce a currency's value? Inflation is the major problem that I would try and fix, to increase our currency's value. Having a strong dollar is very important, it help when other countries have faith in your economy, and when you start to pay back your debt, you are paying it back with good solid money. I know that my country borrows money/capital from other countries, we don't use "urow's" so we borrow a amount in our dollar. The country that loaned us that money is/was confident in our strong dollar, so when we pay them back it will be worth what we borrowed. With a weakened dollar, the lender would loose money when the borrower paid them back because the dollar lost value, unless they adjusted for inflation in the dollar. With a weak dollar other economies are hesitate to loan us money, and they might try and collect now, before the dollar gets weaker to save themselves from a potential loss of money/loaned funds. So I would increase our dollars value by beating back inflation. To combat inflation, consumption will HAVE to decrease dramatically. Interest rate will go up to increase savings and decrease borrowing. Without as much borrowing, we combat inflation because there is less money in the market. This will come at a cost of decreased economic activity, because economic growth is driven by spending (aka consumption). In order to put the nation back on the right track these are problems that must be weathered.
Ugg, well these are the first two things I would do to to put my mythical country back on the correct economic plan, according to me. There are many, many, many different economic soutions that can be presented. With my limited knowledge I think what I mentioned above is the first right steps to fix the problems you stated. There would be so much more to do, but I really dont feel like typing anymore. So there you go, if you have any questions about anything I said, hollar.

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Trading Double Tops And Double Bottoms

admin — Tue, 06 Jan 2009 16:27:26 +0000

Traders need to look out for indicators that make patterns that trigger long or short positions by following the trend reversal signals they give. Patterns like double tops and double bottoms are significantly important for a forex trader as it is for an equity trader.

What Are Double Tops and Double Bottoms
Double tops signal out a long drawn bearish trend. Double tops form usually close to the 52 week high with an intervening trough. Both the tops are roughly equal in price with the first having formed after long advance trending of currency pairs. Patient observation is critical here to pick the accurate tops without getting misled by fake tops. The declining trend after the second top finds a support near the intervening trough level which if broken is the signal for entering short positions or closing long. The target is equal to the difference to the difference between the tops and the intervening bottom. When perfectly formed, the double tops appear like the letter ‘M’.

There are two things of importance when judging the double tops.
1. The first top should have formed after sufficiently long advance trending and the gap in between the tops must take at least a few weeks to a couple of months.
2. The second top must be within 3% of the first and breaking the support line is marked with high volumes under selling pressure.

Double bottoms are different from double tops in only one way that the pattern is exactly reverse of double tops. When accurately formed, the double bottoms formation appears like the letter ‘W’. The trend following the second bottom is associated with increased buying pressure as reflected by the volumes chart. Volume further picks up once the resistance is broken effectively.

Entering in till the support or resistance is broken could be mistakes as has proved. Patience is the key in trading double tops and double bottoms. The exact entry levels are when the support/resistance is broken. Any anticipatory entry prior to this is a strategy that runs a high risk and the trader finds himself in an excruciating task of deciding where to get out.

For speculative traders, it is wise to put a ‘stop-loss’ just at the bottom or top respectively for double tops or bottoms, whichever the case may be. The amount of stop depends on the trader’s personality and isn’t a statistical function.

There are criticisms on trading double tops and double bottoms that they appear perfect only retrospectively and implementing them in real time is impractical. Even exiting the market early is unwise for the markets are not that simplistic.

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If you were the next president, how would you fix the looming economic meltdown in a country where?

admin — Sun, 04 Jan 2009 17:01:28 +0000

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Could someone please explain why the US dollar has plunged in value to a 15 year low?

admin — Fri, 02 Jan 2009 13:36:58 +0000

The US Stock market has reached new highs. I am sure that there are infinitely more macro factors (ie interest rates…), but the dollar seems to be a continual down spin that has hurt many companies that import. What does the US have to do to strengthen its currency? Whose in the position of power to guide the US this way?

For bonus points, could you explain the strategy China uses to gain advantages many would call unfair to trade with the US. I understand the fact that they peg their currency… what about investing in the US directly? What does that mean? I understand they have taken a position in a large amount of the US dollar. What are the consequences of such action in relation to trade?

Thank you all for answering, it is greatly appreciated!!!

well, what happened to the USA 15 years ago that is the same of today? War.
It costs plenty of money to keep soldiers at war and last time they threw the world into a recession.
Hope this isn't too bad a thing to say for the yahoo moderation team, it is the truth, lol.
The chinese do well because they are capable of finding out what is bringing the money in then they'll do the same thing for half of the money so they'll steal the market. The others won't work for less so they'll give up.
At that point the chinese are the only ones on that particular niche so they are able to charge more money as the competition is all dead.
They have done that with tons of niches, good luck to them, I wish they weren't soo insular though.

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How does this shorting strategy work?

admin — Wed, 31 Dec 2008 12:51:59 +0000

I was reading an article and it said, "If you wanted to short the Canadian dollar (CAD), the simplest way would be to take out a loan in Canadian dollars that you will be able to pay back at a discount as the currency devalues (assuming you're correct)."

I do not understand how this works out. Can somebody explain it to me? I mean, I understand if one were to convert CAD to something different but assuming the CAD were to trade into USD for example, then there's risk with the USD too, right?
I understand the risk and the strategy if one converts a currency. What I don't understand is how an investor can make money if he/she doesn't convert. Basically, if somebody could elaborate on Thor's point, that would be awesome. Thanks!
Let me make something clear, I am after how to short a currency without matching it up with another currency pair. I already know how to short a currency when given a currency pair, but I cannot wrap my mind around how it is possible to be profitable when one takes a loan out on a currency as a shorting strategy. For example, I borrow 1,000 USD with an interest rate of 5%. The Dollar index falls significantly by $10. I still have to pay my interest ($50) and I still have $1000. I am not making any additional money and when I pay back the loan (my understanding is it will be $1050 total, assuming simple interest), I have not done anything profitable. So again, how is this a shorting strategy, without converting it to a different currency or doing something with the $1000 that i borrowed?

yes that would be the simplest way to short a currency (without having to trade margin Forex which is much riskier). but what this article meant is that if you expect CAD to devalue against the US dollar. While youre making money by the devaluation of the CAD you borrowed, the USD you are holding could also devalues against other currencies.

the way you make money is like this: lets say you borrowed 1000 CAD from the bank. You think that CAD is going to devalue against USD so you changed all the CAD to USD. lets say the exchange rate now between the two currencies is 1USD to 1CAD. meaning you changed the 1000 CAD and you got USD1000.

Later, the price of CAD devalues to 0.80 to 1. Meaning USD0.80 to 1 CAD. you see now it is cheaper to purchase CAD. you use USD800 and change it back to 1000 CAD. Pay back the bank what you owe them and you still got an extra USD200.

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