Month: October 2010

By GCI Forex Research

Fundamental Outlook at 0800 GMT (EDT + 0400)

USD

The dollar steadied a little during a quiet Asia session, having found itself on the defensive on Friday after at least two Fed speakers gave their conditional support to further easing measures. EURUSD traded 1.3746-1.3807 and USDJPY 83.23-83.87. New York Fed President Dudley, an FOMC voter, sounded especially dovish and clearly favours further policy accommodation. He noted that “the current levels of employment and inflation, and the timeframe over which they are likely to return to levels consistent with our mandate, are unacceptable”. Chicago Fed President Evans, who becomes an FOMC voter in January, worried aloud that the economic recovery seemed to have lost some forward momentum. However, Dallas Fed President Fisher, who also obtains FOMC voting rights in January, sounded less convinced about the merits of further easing, saying that the efficacy of further asset purchases is unclear. On the data front, the September manufacturing ISM index came in just below consensus at 54.4 (cons. 54.5, prev. 56.3). Looking into the detail, our US economics team notes that the new orders, employment, and export orders components all softened. The University of Michigan confidence reading was stronger than expected, rising to 68.2 (cons. 67.0).
EUR

China’s Premier Wen said China supports a stable euro and will not reduce its holdings of European bonds. He also offered to increase holdings of Greek debt when Greece returns to debt markets in search of funding. Wen continues his visit to Europe this week to propose what Xinhua call “practical actions” to help solve Europe’s continuing woes. The three countries on his itinerary, Greece, Italy and Belgium, are the most indebted in the Eurozone.
ECB Governing Council Member Draghi struck a hawkish note, observing that many banks have a “serious exposure” to the risk of a sudden rise in interest rates. Referring to the ECB’s unconventional measures, he said that their withdrawal should be timed so as not to sow the seeds of future crises by leaving too much liquidity in the system. Like some of his ECB colleagues, he noted that some banks remain addicted to ECB funding but that this issue should be addressed by national authorities, and not the central bank.
EU Commissioner Almunia expressed some satisfaction with the Irish government’s plans to restructure parts of the domestic banking system, and said the EU Commission would “proceed rapidly” towards making a final decision on whether the plan would be permitted under EU rules.
JPY

The BoJ’s latest policy meeting gets underway today, with a decision expected on Tuesday. The local press reports that the policy board is close to taking further easing steps. Possible measures reportedly include an expansion of the scale of fixed-rate liquidity operations from ¥30 trn to ¥40 trn, combined with a maturity extension from 6 months to “around one year”. An increase in the monthly intake of JGBs is also reportedly under consideration, along with the purchase of private sector assets and further “yen-selling operations”.
On Friday, a Japanese government official indicated that the MoF would seek to impress upon the BoJ that any future interventions should remain unsterilized. The local press also reported that the T-bill issuance calendar for October, published on Friday, shows that the MoF does not plan to issue financing bills this month to repay funds borrowed from the BoJ to fund the recent intervention operations. Any such issuance would have absorbed the excess yen liquidity the BoJ injected through its yen selling operations.
GBP

Our analysts team has pushed back his BoE rate call by six months, and now sees the first hike coming in Q3 2011. They  also lowered the end-2011 policy rate forecast to 1.0% from 2.0%.

TECHNICAL OUTLOOK

EURJPY clears 114.74.
EURUSD BULLISH Bull trend continues; targets 1.3896 next with scope for 1.4194. Near-term support comes in at 1.3619 ahead of 1.3381.
USDJPY BEARISH Focus is back on the downside; break of 82.88 would expose 79.75. Resistance remains at 84.50 ahead of 85.40.
GBPUSD BULLISH Bull stalls in front of 1.5999 key high; support at 1.5670 ahead of 1.5503.
USDCHF BEARISH Bearish pressure held at 1.9709 ahead of 0.9625. Resistance at 0.9918 breakout low.
AUDUSD BULLISH The pair is expected to target 0.9850 with scope for 1.000 psychological resistance next. Support is at 0.9559 ahead of 0.9463.
USDCAD BEARISH Break below 1.0192 opens up the way towards 1.0108 and 0.9931 next. Resistance comes in at 1.0380.
EURCHF BULLISH Expect recovery to targets 1.3651; need a break above 1.3924 to confirm the positive trend. Downside risk capped at 1.3361.
EURGBP BULLISH Violation of 0.8736 exposes 0.8808 next. Support holds at 0.8659 ahead of 0.8563.
EURJPY BULLISH Clears 114.74; expect gains to extend towards 116.68 and 119.33 next. Near-term support comes in at 113.76 ahead of 112.67.

Forex Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Source: ForexYard

The U.S dollar held near its lowest levels in 6 months against the euro on Monday after Federal Reserve officials said more quantitative easing might be needed if the U.S. economic outlook remained weak.

Economic News

USD – Dollar near Latest Lows vs. Euro

The U.S currency was not far from an 8 month low against a basket of currencies on Monday with expectations increasing that the Fed would resort to a second round of bond purchases.

U.S. manufacturing growth slowed last month and inflation remained subdued in August, leaving the door open for the Federal Reserve to launch a fresh round of monetary policy easing.
How fast that happens will depend on economic indicators to be released before the Fed’s next policy meeting on November 2-3.

The dollar looked vulnerable against a basket of currencies, hovering near Friday’s 8 month low, but had edged up 0.2% against a basket of currencies in early trade on Monday.

EUR – Euro Falls On Debt Issues Concern

The euro weakened from a six-month high against the U.S dollar as Europe’s sovereign debt concerns reduced demand for the region’s assets.

The euro ended 4 days of gains versus the greenback after the Financial Times reported Ireland’s budget deficit this year will be higher than previously forecasted. The Financial Times said, citing unidentified officials, that Ireland’s budget figures, due out today, are a result of a slowing economy rather than a reduction in project tax receipts.

Analysts said that the euro remains under pressure because some countries such as Germany are running trade surpluses while Ireland, Portugal, Greece and others have deficits, which may lead to selling of the euro and buying of the dollar and the yen.

JPY – Yen Declines on BOJ Economic Outlook

The yen retreated from near a 2 week high versus the U.S dollar as gains in Asian shares boosted demand for higher- yielding assets and on prospects Japanese importers sold the currency to take advantage of recent strength. Japan’s currency weakened against all of its 16 major counterparts as the Bank of Japan begins a two-day policy meeting today.

Japan’s currency also fell to a 4 month low against the euro on speculation the Bank of Japan will take more credit-easing measures at a meeting starting today. The market is waiting to see if the BOJ eases policy further to shore up the economy and dampen strength in the yen.

OIL – Oil Ends at 7 Week High

Oil was steady on Monday after earlier touching a 2 month high near $82 on expectations that the slow pace of the U.S. economic recovery will prompt a monetary boost that would spur energy consumption.

Oil becomes relatively cheaper for buyers outside the U.S. when the greenback weakens. But a stronger dollar against a basket of currencies, up 0.15 percent on Monday, capped oil’s gains.

The International Energy Agency said on Friday it anticipated upward pressure on oil prices in the second half of 2011 due to a projected decline in oil stocks.

Technical News

EUR/USD

The daily chart shows the pair may be relatively moving higher. The Relative Strength Index has the pair’s price floating in the oversold zone, hinting at the possibility of further price appreciation. Traders may see this as a buy opportunity to go long on this pair.

GBP/USD

The hourly chart is showing a tightening of the pair’s Bollinger Bands, indicating the potential for an imminent breach. On the daily chart, the price is floating near the lower border, indicating the potential for the pair’s break out to be higher. Traders may want to be long on the pair with take profit at the significant resistance level of 1.5850.

USD/JPY

Signals are pointing to a correction for the pair. The daily chart is displaying a bearish cross on the pair’s Slow Stochastic Oscillator, indicating the potential for a downward correction. The chart has the pair floating in the oversold range on the Relative Strength Index, signaling further potential for downward movement. Being short on this pair today may be the right move.

USD/CHF

This pair is in the middle of a very intensive downtrend that was initiated 3 days ago and it still shows great momentum that on a bigger scale appears to have more room to run. In the shorter time frame, there might be a minor bullish correction before the bearish move resumes. Selling on highs appears to be preferable today.

The Wild Card

Silver

The violent bullish trend continues as all technical indicators on the daily and the 4 hour charts are showing that the direction is up and the momentum is high. This provides forex traders with a great chance of enjoying the additional upwards momentum which still reigns for this commodity.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

By Jared Ingram – Online forex trading has a lot of differences with futures trading. However, there are futures traders who see that trading to futures is just a natural transition into trading to forex. Market liquidity, structure of pricing, and existing leverage are just few of the differences.

The online forex market has very smooth trends that are available in today’s financial markets. There’s no other market that can match the participation and volume in forex trading so it becomes a haven for forex traders who want smaller gaps on prices and inconsistent spikes and other changing and uncontrollable conditions that are common in other low-volume markets like futures. Since the market is closed for a short time on weekends, market gaps are limited but possible that’s why forex trading is consistently liquid.

Given the trending nature of forex trading, a trader, whether technical or fundamental, is attracted to it. Fundamental traders monitor the cash flows globally and position themselves between mid-term and long-term depending on the analysis of the demand and supply of a particular currency. For technical traders, they observe and wait for recurring patterns that are displayed on forex price charts and these are utilized as indicators whether there is overbuying or overselling of a currency.

Some investors may not know it, but all financial trade markets have a spread which is the difference between the bidding and asking price. In futures market, you also have to pay for commission, exchange fees and clearing. In forex trading, your broker may earn profit from his activities as a dealer of currency.

In forex market, real time price is utilized for the price offer and this is the price used when buying or selling. In the case of futures, the selling and buying price is dependent on the last trading or tick price. Since futures utilizes tick prices, it is expected that the moment your order is put into place, the price that you actually buy or sell is different from the recognized tick price.

In online forex, an investor has one margin rate for trading that is placed 24 hours per day. Your margin requirement may be less than one percent but it depends on the size of your trade. In futures market, the margin rate is varying the whole day and it is dependent on the volatility of the market. Also, the rate becomes higher at night as the market closed down and the brokers make their move to cover up their risks.

Online forex trading is open 24 hours a day for 5.5 days per week. Take note that, when one market is closing up in one time zone, another market is just opening up. So, as the markets in the Pacific begin to slow down, the markets in Europe like England, Germany and Switzerland are just beginning their operations.

There’s no need to hang around while the market you want is closed when there is news that future pits have actually closed as the day ends. This is an advantage for forex traders since there’s flexibility and non-stop opportunities are available in forex market which are not true in futures. Keep in mind, however, that forex and futures markets are both risky markets. So, be careful when investing your money.

About the Author

Are you looking for more information regarding online forex trading ? Visit http://www.globalonlineforextrading.com/ today!

By Bob Moore – The Average True Range (ATR) is not only useful in setting stop loss limits, but also is helpful in determining entry/exit points for day and swing trading.

But first, let’s review what ATR is and how it is derived. ATR is exactly what the name implies. That is, it is a numerical value that depicts the average of the true, daily range of an instrument (the range is the difference between an instrument’s high and low within one day).

Simply stated, the ATR is an average of the daily True Ranges of an instrument. The daily True Range is derived by taking the greatest of the following: 1) Difference between the High and Low for the day; 2) Difference in the day’s high and yesterday’s close, if there is a gap up at the open; and 3) Difference in the day’s low and yesterday’s close, if there is a gap down at the open.

So how is ATR useful? ATR is useful because it tells you that, on average, an instrument’s price should be trading within the Average True Range during any given day.

Setting Stop Loss Limits with ATR

When traders use Stop Loss Limits (SLL) based on the ATR, they are basically stating that they believe the instrument will not decline more than the ATR (SLL = entry price – ATR) or some percent of the ATR (SLL = entry price – ?%ATR). The amount of ATR used in the calculation is determined, in part, by your tolerance for risk. Depending on your tolerance for risk, 50% of ATR may be an appropriate stop limit for day trades, whereas 100% or more of ATR may be appropriate for longer held trades.

Determining Entry and Exit Points using ATR

Let’s consider the perspective of an S&P 500 eMini (ES) trader considering a trade near market opening on February 16, 2010. Overall Market momentum certainly appeared to be positive based on the following: 1) The S&P 500 and Nasdaq Composite were poised to penetrate their Key Resistance Levels of 1085 and 2184, respectively, indicating possible development of upward Elliott Wave 3’s (assuming the trader followed Elliott Wave patterns);

2) Short-Term Trends in most instruments had changed to Positive from Negative (assuming the trader followed Short-Term Trend analysis); and

3) A new Taylor Trading Technique 3-Day Cycle had just begun (assuming the trader followed Taylor Trading Methods).

Before placing an order, however, the trader predetermines a Stop Loss Limit. Since the trader planned to hold the position intra-day to no more than a day, a Stop Loss Limit derived from 50% Average True Range (ATR) was determined to be appropriate.

The trader assesses the appropriateness of entering the trade by assessing the likelihood of the position reaching his/her Stop Loss Limit. In the case of ES on February 16th, 50%ATR=10.75. Therefore, if the day trader entered an order at, say, 1080, then he/she would set the Stop Loss Limit at 1069.25 (1080 – 10.75). Upon review by the trader, the ES shows support at 1073.5 (Buy Day Low) and had not been at 1069.25 during the regular trading session since the week before. Therefore, there appeared to be a good chance the ES would not decline to the Stop Loss Limit considering the Market’s currently upward momentum.

The trader also predetermines when to exit the position to keep emotion (in the form of greed) out of his/her decision. Again considering ATR, the upward limit for the ES determined by ATR would be 1095 (ie, 1073.5 (day’s low) + 21.5[ATR]). The trader decides on an exit point lower than the upper limit of 1095 to increase the probability of completing the trade during the day.

The ES established a high of 1094 on February 16th and a high of 1100 on February 17th. If the trader had decided to make an intra-day trade, he/she would have made a 7-point profit (minus expenses) if he/she exited at 1087, or a 12-point profit (minus expenses) if he/she exited at 1092, both conservatively below the upward ATR limit of 1095. If the trader had decided to hold onto the trade overnight, he/she would have made an 15 point profit (minus expenses) if he/she exited at 1095, the upward ATR limit of the day before.

Either trade is a winner. And the point is to eliminate, or at least reduce, the losers, so you can keep the profits from your winners.

About the Author

Bob Moore is with Taylor Trading Plus, an international data-exchange trading service using George Taylor’s Book Method, Value Area trading, Elliott Wave analysis, and Short-Term Trend analysis to identify trading entries/exits in select instruments of Futures, ForEx, Commodities, Metals and Oil, ETF’s, and Stocks. To request chart example pertaining to this article, please go to ‘Contact’ tab at: http://www.taylortradingplus.com.

After touching the lower border of the rising price channel on 4-hour chart, GBPUSD rebounded from 1.5669. Range trading between 1.5669 and 1.5921 is expected in a couple of days. As long as 1.5669 support holds, the price action in the trading range is treated as consolidation of uptrend from 1.5296, and another rise towards 1.5997 (Aug 6 high) is possible. However, a breakdown below 1.5669 will indicate that the rise from 1.5296 has completed at 1.5921 already, then the following downward move could bring price back to 1.5200 area.

Daily Forex Analysis

By Cedric Welsch – The securities market offers a lot of opportunity for individuals to build long term wealth or make some quick cash buying and selling stocks. It is common knowledge that public companies offer shares of stock for sale on centralized exchanges such as the New York Stock Exchange. Not many people know however about the numerous other securities that are traded every day in markets around the world. One of the most interesting markets that aren’t well known still by many is the foreign currency exchange market also known as FOREX, FX or simply the currency exchange.

What is the FOREX market?

This exchange is different than other securities exchanges around the world. It is known as an over the counter market in which there is no centralized trading authority that handles transactions such as the NASDAQ or NYSE entities. So if you go to your broker and say you want to exchange your 500 dollars in American currency for the equivalent in Japanese Yen, he won’t be of much help. One of the main reasons that the FOREX market exists is to facilitate investment and international trade. Businesses and investors around the world can change one form of money to another in order to do business or to participate in investment activities with money. For example, some investors will borrow less valuable monies and lend or invest in higher value monies in order to turn a profit. The FX market is one of the most liquid financial markets in the world because all that is being traded is money.

Who invests in the FX market?

The currency market is a bit different than other securities markets and as such the participants are also very different. Instead of individual investors, there are huge centralized banks, corporations, currency speculators, governments, large banks and other financial institutions. Small investors would have trouble realizing any profits or other gains by participating in this market. Central banks makeup the bulk of trading volume followed by smaller banks and then by large international corporations that have needs like paying people that work in different countries or the importation of goods that requires a different currency for payment. Trading occurs in these levels and the top tier levels of trading have information that is not known to the lower tiers.

The FOREX market does trillions of dollars in volume every day and helps foster international trade. Without this decentralized market, it would be very difficult for international business to thrive. Major participants such as central banks, commercial companies, speculators and corporations use the market to their advantage for investment purposes. However the average Joe off of the street will have a hard time making any money on this type of market unlike other securities exchanges such as the New York and NASDAQ exchanges.

About the Author

Do you want to really make profits with forex? Make sure you get fresh updates ahead of everybody else here: Forex News

Also, you need to know how to read and analyze the trading market well. Learn Currency Trading News

By Jared Ingram – If you are a forex trader, one of the questions that is necessary to be answered is “who’s the best online forex broker?” There are certain criteria to consider when you are in the search for your broker but the term “best” is relative to what situation you are in and what your requirements are as a trader. Here are some pointers you can use as you look for the best forex broker.

First of all, you should do a test drive. This is comparable to purchasing a car. It makes sense that you take it for a test drive first before buying it, right? In forex trading, it is highly recommended that you begin first a practice account with a particular broker you are thinking of becoming your main broker. A lot of brokers are now offering practice accounts so that you can get a feel on how it’s going to work with the broker before you commit your money. If the broker doesn’t offer practice accounts, you should not waste time transacting with them. It is safer and much better if you look for brokers that provide practice accounts and do not put time constraints.

Make sure that you utilize your time to this practice account in making mistakes, contact the customer service about different issues and get the general view of how the broker is going to work for you. One note of caution, though. Since there are a lot of brokers, the process will be quite different from a practice to an actual and live account. However, if the failure of practice account is so significant, you should expect that a live account cannot be far better.

The next thing you do is to do a research and find out the legitimacy and financial steadiness of your target online broker. Some of the things that you should find out about brokers are the following:

– Their compulsory registration with regulating bodies such as National Futures Association.
– Their longevity in doing forex trading.
– Their current standing based on records of Better Business Bureau.
– The stability of the company’s financial situation.

Generally, brokers earn profit from fees trader’s pay so you should be aware of these fees. The major source of profit of your broker and an operating expense on your part is the spread which is actually the difference in amount between ask and bid prices. You should be aware on how you broker handles these spreads. At least, find out whether the spreads are variable or mixed, what are the maximum and average spreads for every currency pairs and if the commission is per trade aside from the spread.

It is also your job as a trader to find out how a broker works on rollover credits and debits. Some forex brokers rollover both the debit and credit account of the trader while others only debit your forex account which means that you won’t gain any credit for carry trades.

It is quite a tough task to know everything about a specific online forex broker and it’s almost impossible to have all the information you want. However, knowing these pointers can help you in doing your research to get very important information so you can have the best forex broker.

About the Author

Are you looking for more information regarding online forex broker? Visit http://www.globalonlineforextrading.com/ today!

By Harold Reno – Forex tutorials are very useful, especially for a newbie who wish to enter the currency trading business. Such tutorials explain how to start trading and this knowledge ensures that a beginner trader does not end up getting frustrated by a lack of success. Without doubt, an untutored trader has a greater chance of failing than one who has been tutored in the finer points of currency trading.

Learn How to Find Success

The number one reason why it pays to make use of Forex tutorials is that the material provided by the tutorial will go a long way in helping a trader succeed in this market. To make full use of these materials, it is important to master the information that is provided in the material which includes learning how Forex works and what it takes to succeed. It is also necessary to understand the strengths of foreign exchange trading as an investment as well as its drawbacks.

The more you learn about the system and by also learning to follow the rules; you can become a better trader in a short span of time. The aspiring trader has to use the materials to understand this market and know its rules. The key to success lies in understanding the market and following rules established over many years. Anyone that does not do this is bound to fail.

Find a Suitable Tutorial

However, not all Forex tutorials are the same and so it is important to learn which one suit your business personality and which will be easier to learn. Free tutorials are an excellent place to start as you can use them to get an idea about what this market is all about and how you should enter it. However, these tutorials should not be used to become a real time trader because their main use is to help you learn the basics.

To find suitable Forex tutorials, it makes more sense to go online to research what is available. It also pays to pick one that comes with video instructions and which also provides hard copies as well. By making full use of the video(s) and hard copies it becomes must easier to master the material.

Desirable Features

There are several good Forex tutorials available. Before picking one, be sure to look for certain features that include the likes of an introduction to currency trade, definition of Forex trading, learning how to read quotes and understanding the currency market jargon. In addition, look for information on foreign exchange risk and benefits, history of the FX market and market participants.

It also pays to look for information on economic theories, models, feeds, data and how to make fundamental analyses as well as apply fundamental trading strategies. In addition, see whether there is any material on technical analyses as well as technical indicators and how you can open a trade as well as open your FX account.

Finally, look for a summary on currency trading. There will be two basic types of analyses that a trader must learn about. So, when choosing the best Forex tutorials, look for those that provide useful material on fundamental and technical analyses. The million dollar question in this business is which of these two types of analyses is best.

Most would argue that fundamental analyses are the best but there are many that believe in technical analyses. Perhaps, the answer is to learn both because focusing on one type is a risky option and one that can easily turn into a disaster.

About the Author

Harald Reno is publisher of http://www.ForexWealth4U.com. On his website he provides information on importance of taking Forex tutorials to succeed as trader. You can also register for FREE Mini-Course on “Forex Trading Tips” to gain rare insight into Forex Trading.

Good day lads! Like gold (see my gold-related post here), the price of silver has recently marked a new all-time high when it broke above its previous high at 21.34. As you can see, a break out from a symmetrical pattern managed to propel it towards the uncharted territory. With its uptrend line still well intact, it would most likely continue to to head north. In the interim, however, the price of silver could weaken given its overbought conditions. If it does, its previous high and its uptrend line should act as supports to prevent the commodity from crashing. The sky is the limit for this second-tier metal and with its price far cheaper than of gold (presently trading below $22.00 per ounce), it has a greater propensity between the two, in my opinion, to deliver handsome gains.

It appears that the broad-based weakness in the US dollar has forced investors to place their funds in other instruments, making gold and now silver rockstars of the trading arena. With the Fed announcing its intention to increasing the money supply through quantitative easing (non-traditional monetary tool that allows the Fed to directly buy debt instruments from the US government, increasing the supply of the USD in the process) to encourage more lending and spending, the dollar’s strength would fundamentally be anemic. Risk appetite sparked from optimism in the other regions of the world also places a lot of downward pressure on the greenback. If these two factors, Federal QE and negative sentiment on the dollar, continue then the demand for gold as well as silver would likely remain at least in the near term.

More on LaidTrades.com …

By James McKee – It is a very simple and at the same time a very complex question, simple in that you could define it as the exchange of one currency for another during a period of change in which the currency you made an exchange for either increases or decreases in value against the one you used to purchase it. Of course the value of currency doesn’t change a whole lot (under 1% in a day typically) when compared to stocks, bonds, etc… So how do you make money by trading in Forex? That is where the complicated elements of defining it begin, and go on for a very long time.

It all begins with leverage, if you were to take $1000.00 and invest it for a return of .0025% that would be a profit of $2.50. What this means is that you’d have to invest a whole lot more money to ever see any profit that really makes gluing your eyes to charts worth it. This is where leverage comes in. A recent regulation in the US stipulates leverage can only go as high as 50:1 (before the regulation it was limited only by the prerogative of the broker, but no longer), meaning that if you give your broker $1000.00 they add another $49,000.00 to it and so now if you see that .0025% profit your $2.50 becomes $125.00 and so on, of course your broker will take a cut but even if you only take a total of $100.00 an hour well…you get the idea.

As I said before however, I have only begun to address the often maddening complexity present in the Forex market, international currency exchange also brings about the numerous aspects of one country’s currency being bet against in favor of another. There are many things which can influence the value of currency which can include (but are not limited to) employment rates, interest rates, current events (of all sorts), and so on. So while taking in and understanding the data from these events is crucial it is not the sum total of a solid decision making process by any means. Knowing when to get in and when to get out, having a solid stop loss and always remaining versatile is key to success in the Forex market. Of course everyone will put their own spin on things, have a “system” which suits their earning goals and personality.

An example of this would be an individual who thinks quickly, acts quickly and is not scared to take risks, the right system for that person could be “scalping”. It is a system in which a trader is constantly buying and selling currencies at 15 minute (sometimes less) intervals. A glance at a Forex chart reveals many peaks and lows which can take only minutes to form, getting in while it is cheap to purchase and selling at a premium all in 15 minutes can overwhelm many people, and many think it is foolish. Also bear in mind that this is not a system in which every broker allow for you to utilize for a variety of reasons.

Just remember to always take information in with a grain (or a boulder) of salt, information is only valuable in this market if it is useful to you and your system.

About the Author

James McKee is a Forex trader from Denver, Colorado

http://www.forex.tradingcharts.com