An averaging of economic forecasts predicts a 3 percent US economic growth for the current quarter. So, it appears that things are getting better. Now that the worst is supposedly past, what does the future hold for various currency pairs? Which currencies will slide and which currencies will thrive? And which currency pairs will experience extreme fluctuations? What will be your Forex strategy in the post recession era where bailouts occurred in virtually every economy? What will be your Forex strategy when both sides of every currency pair have taken on huge amounts of debt?

We read the other day about the Russian government bailing out a large company with virtually no clear set of rules about how they may or may not get any money back. Although the US is concerned about the “too big to fail” policy that may have set up the recent financial debacle, the Chinese apparently are embracing it with both arms.

Who will emerge strong and have the stronger side of currency pairs in the coming years? We saw recently that short and medium term US securities are selling well. It would appear that some have faith in the US system, with all of its failings, as being more transparent and likely to succeed. One thinks of Japan, seemingly, ready to conquer the world economically twenty years ago and then promptly going into a prolonged economic slowdown because of hidden debt.

How currencies are managed, and the degree of transparency of an economy, are important to take into account in a Forex strategy. Relative values of currency pairs do not just hinge upon gross national product and national debt. Currency pair relative values also hinge upon expectations of sound fiscal management and transparency in financial dealings. A Forex strategy that takes these factors into consideration will likely succeed while a more narrowly focused Forex strategy will be more likely to fail.

A Forex strategy that takes economic transparency and good governance into account will more likely be able to pick trends in currency pairs successfully. More importantly a Forex strategy that is more knowledgeable is more likely to anticipate seemingly abrupt changes in relative currency pair values as economic problems cause obvious problems in “non-transparent” economies. A knowledgeable Forex strategy will help keep you from being surprised and help you take advantage of swings in currency pair values whether the news is another bailout or the collapse of a country’s economy.

Bailouts in the full light of day in the USA are one thing and a bailout that mimics those in the USA but really just means a political payoff to the “good old boys” in a country with corrupt governance is another. It took Western Europe, Japan, and the United States well over a hundred years to come to workable laws concerning property, trading, economic policy and the like. A free press has a lot to do with success in these matters. Seeing into what was going on in China or Russia used to be nearly impossible. Now, with more open borders it is easier, but still nowhere nearly as easy as dealing with Great Britain, the European Union, or Switzerland.

Remember, Forex trading profits come from a sound and knowledgeable Forex strategy.

A little known fact regarding the Forex market is that during the last few years, “robot” trading has grown exponentially. Robots are just automated programs designed mathematically and based on market patterns.

What’s wrong with Robots: They are not successful.

Of course, people boast about someone who converted a few thousand into a hundred thousand in only a week… yet this is false. The hype is based on historical trading that is ‘hypothetical’.

Fact: The majority of Forex traders who rely on Forex robots lose money.

Fact: The reason that robots don’t make a profit is the unbalanced risk management strategy integrated into their system.

Three pips, seven pips, nine pips – the quick, small profits are what the Robots seek. Naturally, over the period of trades, the Robot’s ‘Winning Percentage’ will be high percentages of 85-95% winners.

However, there is a serious problem with the Robots: their stop losses are out of whack with typical reward to risk ratios, normally approximately 1:5 or 1:10. (In other words you, the trader, are putting $10 at risk to try to win $1. In betting circles, this is referred to as a sucker’s bet, with you in the losing role.)

This is the true situation regarding those Robots: The stop losses are set so wide that any profits from all your winners can evaporate with just ONE TRADE. The reason is that the gains you realize on the winners pale in comparison to the losses you take with the risk that is built-in – or not.

The amount of winning trades is the opposite of the size of the reward/risk ratio. The higher your percentage of winning trades, the lower your reward ratio will be; conversely, the lower the percentage of your winning trades, the higher your reward ratio will be.

Your reward to risk ratio will be around 1:10 if the Robot claims to have 90% winning trades.

The facts? Do not focus on the ‘winning percentages‘; rather concentrate on risk management in each trade and in maintaining the risk to reward ratio in YOUR favor.

View this video and see the proof that this concept can make a major change in your Forex trading:
http://www.theforexnittygritty.com/private-forex-training

US treasury securities have been selling well at recent auctions. Foreign investors are still buying US debt. For those involved in Forex trading it is instructive to note that foreign US debt buyers are not all that concerned about a huge fall in the value of the dollar. The recent prediction is that the US debt, total national US debt as opposed to the debt entailed in individual US treasury securities, will climb by several trillion dollars. One would think that investors would be predicting that the climbing US debt would eat away at the dollar’s long term as well as short term value. Looks like a lot of foreign buyers of US treasury securities are betting the other way.

In Forex trading it is obviously useful to have an accurate sense of which way the relative values of various currency pairs are heading. The US dollar being a, if not the, major player. The direction of the dollar is paramount. One would think that with the mounting US debt that each of the major currency pairs including the US dollar would gradually move to decrease the dollar’s value. However, the betting of medium term investors in US treasury securities, read US debt, are betting that the interest they will gain will outdistance any drop in the dollar’s buying power.

Despite the devastating collapse of the stock market and the near collapse of the US economic system last year, the US is still seen by many as the best bet for medium and long term investment. The US dollar is still seen as a better alternative to holding assets denominated in other world currencies. It is hard to believe that many people can be that wrong.

Thus, in Forex trading, one can trade the ups and downs of the Forex market but probably not place medium term bets against the dollar. The US treasury securities that are selling well are for two, five, and seven year US debt. No one said that the thirty year US treasury securities are that great of a seller.

Nevertheless, Forex trading is in the here and now. As a lot of folks are betting on near term stability of the dollar one should take that fact into account in Forex trading. As your trading software will direct you in most of your trading, the news about US treasury securities will not be all that important for most of the day. The question will be what to do when you sold dollars and now the dollar is going up. Do you ride it out figuring that the dollar is generally going to correct downward anyway? If that is your choice be aware that a lot of foreign investors with a lot of money are betting on US dollar stability in the next few years.

No one knows who the winners or the losers will be in tomorrow’s Forex trading but those who are better prepared, more knowledgeable, and who stick to their Forex trading plan will generally succeed. Knowing about US treasury securities is only part of keeping up with important information relating to trading any currency pair that includes the dollar.

It is more than likely that you’ve heard the term Forex recently – it is quickly becoming one of the hottest trading options in today’s markets. This trend is likely to continue, but it is also important to consider trading foreign currencies for several reasons.

Several years past, brokers and large banks controlled the foreign exchange market. Today, the “little guys” are in the mix — and currency trading has almost doubled (from $1.9 trillion to nearly $3 trillion) in a very short period of time (that’s the same as the average turnover in the markets each day — a 50% increase in turnover).

Is Forex trading for me?

Forex markets are more stable and will follow trends, despite what may be happening in the traditional stock, commodity, and bond markets; additionally they are very liquid.

With that liquidity there is also constant volatility – and it is the volatility that creates the opportunity to profit from those trends. The bigger the risk, the greater the potential profit.

Stock markets are likely to be subjected to another major fall, and are regularly plagued with problems. The uncertainty in the stock markets is preventing them from taking any specific direction, or establishing a trend. Currencies are always being traded, and thus always bear a trend of some sort, so there is no worrying about bull and bear markets when trading in the Forex markets.

Moreover, the financial upheaval occasioned by the credit crisis and the overwhelming government responses means investing or trading in the stock markets will inevitably change – but these same events opened up even bigger opportunities in the Forex markets.

Understand, like any other trading Forex trading has its risks – and frankly, the majority of people come to the Forex markets with a completely wrong approach. The present economic and financial conditions make this an optimal time to jump into Forex trading, provided you do it right.

Bill Poulos, with more than 35 years as a trading veteran and Forex educator, has recently come out with a brand new video focused on the correct approach to Forex trading.

The average trader begins Forex trading with a focus on the notion of getting rich quick. But they are made very poor.

Bill will teach you how to properly trade Forex: first and foremost, to consider the risks; and second, to generate a profit. It’s totally turning the Forex community on its head.

Click on this link to a free video, and see if you agree:
http://www.theforexnittygritty.com/private-forex-training

According to our research, quite a few new and inexperienced Forex traders are clueless about how to manage risk in each trade. The result is often predictable: they lose all their money.

This is what appears to be occurring. Forex has become so popular, in such a short time, that many new traders have just jumped in feet first, opening accounts and trading without any preliminary thought or planning as to how to go about it.

It is obvious that this approach is problematic due to limited understanding of how to deal with trading foreign currencies and the major monetary risks involved. Frequently, new traders attempt to trade before they have taken the time to educate themselves.

And the result is a total wipe-out of their account balances. In all honesty, trading using a demo account is just not the same as trading with real money. The emotional control, trading principles, and rules differ, and you will find yourself taking more risks with the demo account and not enough risks with the live account — often to your detriment.

Change the way you think: educate yourself first, trade second. As a matter of fact, just about everyone needs to change their mindsets about Forex. First learn how to trade correctly, and THEN use that knowledge to trade in the market.

An integral part of that approach is that the FIRST element to trading Forex that should be learned by new, inexperienced or unsuccessful traders is to MANAGE RISK FIRST each time they trade.

Recently a video by Bill Poulos, one of the best, most highly respected Forex educators, has come out, and it educates traders as to EXACTLY what they should do when trading Forex. Plus, it shows how traders can eliminate risk, thereby putting more trades in their favor. It’s a fresh approach that is completely different than what other experts teach.

Go here to see an informative video:
http://theforexnittygritty.com/private-forex-training/

By first learning how to manage risk, you will change your trading because you will approach Forex trading in a totally different manner, including a plan for eliminating risk, and establishing a solid set of ground rules to govern your trading.

The Wall Street Journal has a video wherein Treasury Secretary Timothy Geithner answers questions submitted by the Digg online community but asked by the WSJ interviewer. The questions had an angry town hall forum flavor to them but when Geithner answered a question about raising the mandatory federal deficit limit past $12 Trillion he did not blink. The days of Senator’s Everett Dirkson’s ironic comment, “A billion here, a billion there, pretty soon you are talking real money,” are long gone, unless you substitute trillion. So, what does this sort of monetary policy mean for the Forex market and Forex trading?

The dollar will go up, go down, or stay the same in relation to other currencies over the next years. However, there will always be swings along the way wherein lies Forex trading opportunity. It is the Forex expectation that drives the Forex market and trading in currency pairs.

When the previous Federal Reserve chairman, Alan Greenspan testified before congress the stock and currency markets reacted immediately to any voice inflection that implied a change in interest rates or modification of the federal deficit. Forex trading, likewise, responded to the Forex expectations.

Although the current Federal Reserve chairman, Ben Bernanke, is new on the job and not a legend yet, like Greenspan, his words still drive Forex and market expectations. Knowing when the Federal Reserve chairman will testify or when the Federal Reserve announces rates changes will mean you are ready to trade your chosen currency pair as the news comes out and Forex expectations are modified. Currency pairs will adjust and you can make your profit during the ensuing high trading volume.

The US economy is not going to collapse despite the huge addition to the Federal Deficit. In fact, if you believe Geithner and Bernanke, economic collapse may have been staved off by keeping credit markets open with the substantial amount of money poured into the system. The Forex expectation may well be a long term decrease in the purchasing power of the dollar and a long term decrease in the value of the dollar in relation to other currencies. However, no one knows how fast that will happen, or if it will. Forex trading profits are made as much by the contrarians as by those who follow the herd’s Forex expectations.

Forex trading still gets down to having a sense of what the currency markets are about and concrete knowledge of the currencies in which one trades. Then Forex trading has to do with your Forex expectations and how you read and anticipate the Forex expectations of the bulk of other Forex traders.

In the interview mentioned above Geithner is very critical of tax cuts in the face of enhanced benefits in Medicare and Social Security. He makes the point that the bailout money spent earlier this year needed to happen to avert economic collapse. If one’s Forex expectation is that Geithner and the rest of those formulating economic policy in the USA are serious about fixing things then we can expect to see them start to nibble away at the federal deficit. If that happens then Forex expectations will change and folks will start to buy dollars instead of selling dollars.