The Forex Nitty Gritty

The Forex Industry’s Nasty Secrets Finally Revealed!

Archive for October, 2010

Forex: How to Trade the NFP

Posted by TFNG Admin On October - 29 - 2010

In trading foreign exchange, economic events and reports are important. One report that can move the value of the dollar is the Non Farm Payroll Report known as the NFP. In Forex how to trade the NFP is an important factor in anticipating and profitably responding to market changes brought on by this economic report. When the NFP goes up it is usually in response to there being more jobs in the USA and this fact will typically drive the value of the dollar up versus other currencies. If you are Forex trading the Euro versus the dollar you will want to sell Euros and buy dollars ahead of any market movement caused by such an NFP report. When the entire market responds to the NFP the price Euro will drop versus the dollar and at the time the trader will sell dollars for Euros and exit his position with a profit. In Forex how to trade the NFP is to use its information to establish and execute profitable trading positions ahead of the crowd.

In Forex how to trade the NFP most successfully is to trade the reaction to the report. The markets will typically consolidate in advance of a Non Farm Payroll Report and then prices will jump just after. Depending upon the accuracy of the trader’s predictions he may profit or lose money the moment the report hits and the market corrects. Therefore in Forex how to trade the NFP is to trade the reaction, or more correctly, the over reaction. Over reacting is a characteristic of many markets whether one is trading stocks, options, futures, or commodities. Using technical analysis tools the trader can anticipate the reaction to an NFP report and identify opportunities to buy or sell dollars versus other currencies. In Forex how to trade the NFP means being at the trade station when the NFP report is coming out. Trading a report will provide a number of opportunities as the market corrects and re-corrects but in the end the market will reach a new equilibrium and the NFP report trading opportunity will need to wait for the next report. Good Forex advice is to be there at your trade station with a clear Forex strategy when the NFP comes out, trade as appropriate, and count your profits.

There are other reports that Forex traders will watch as well as the comments of the US Federal Reserve Chairman or his Japanese or European counterparts. In each case the market will commonly anticipate what the news will be and will consolidate ahead of the report or comments. It is when the report, such as the NFP, or comments are different than expected that the dollar, Euro, Yen, and others will rise or fall unexpectedly. For the trader who guessed correctly there will be profits to be made trading the first break in the market after the news. However, in Forex how to trade the NFP report and other breaking news most successfully and with less risk is to wait for the report and trade the reaction. How to plan your trading day should always be to check the news to see what reports or comments are coming out that day and be ready to profit from the resulting market fluctuation.

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Forex Trading, Non Farm Payroll

Learn How to Trade Forex Online

Posted by TFNG Admin On October - 21 - 2010

To learn how to trade Forex online there are a number of steps. First of all the trader will need to understand how foreign exchange markets work. Then the trader will need to sign up with a Forex broker. To trade online he will need trading software that is compatible with that of the broker. He will need computer hardware, a trade station, and a fast internet connection capable of moving the large amounts of data needed for online trading. After setting up a brokerage account, buying hardware, and choosing online software the trader will begin to learn how to trade Forex online using simulation trading on his trade station. It will also be wise to consider an online tutorial to help learn how to trade Forex online. The trader will choose a currency pair or pairs to trade and will begin to learn the economic and central banking factors that drive the relative prices of the two currencies in the pair. To set up a successful Forex trading system the trader will need to be thorough in reviewing every aspect of Forex trading. To learn how to trade Forex can be the start of a lifetime of success in the Forex markets for the trader who does his homework and applies what he learns.

How to trade Forex online has a technical aspect which is the software and hardware involved. How to trade Forex online has a purely nuts and bolts aspect as well. This aspect will, in the end, prevail in determining if the trader makes money or not trading Forex. Foreign exchange is traded currency to currency. A trader simply buys one currency with the other. By following fundamental and technical factors in the currency market the trader will attempt to do what traders do, buy low and sell high. The currency market in major currency pairs, such as when Forex trading the Euro versus the US dollar, does not necessarily fluctuate all that much. However, the leverage offered in trading Forex can allow the astute trader to profit from even small variations in a currency pair throughout the day. For a trader to successfully learn how to trade Forex online he will need to learn the ins and outs of his chosen currency pair. Forex is traded virtually around the clock as the major markets in London, New York, and Tokyo span the globe. However, the degree of interest in a given currency pair may vary from market to market, especially for minor currency pairs.

Understanding the Forex markets is not just learning fundamentals of the currencies involved. It is very much a case of understanding group psychology. Just like all other markets the Forex market can respond to rumor and fast breaking news. Traders will attempt to correct their positions based on new fundamentals. However, the market will commonly overshoot and correct again. This sort of volatility, whether day long or just for minutes, is where an astute trader can profit by reading the technical signs of the market, buying or sell appropriately, and then exiting the position before the market corrects back. Before entering the market for real the trader will learn how to trade Forex online through simulation so as to learn how the market reacts and corrects. By doing so and developing a strong Forex strategy the trader will most successfully learn how to trade Forex online.

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Forex Education, Forex Trading

Does Anyone Make Money in Forex?

Posted by TFNG Admin On October - 19 - 2010

Does anyone make money in Forex? This may be the cry of a trader who entered the foreign exchange markets unprepared. “Does anyone make money in Forex” may well be what the naive trader says after going into the market without spending time trading in simulation. “Does anyone make money in Forex?” is not what professional Forex traders with years of profits say about Forex. The question is not about if anyone can make money in Forex. Obviously people do or no one would ever trade again. The pertinent question is how to trade Forex. There are a number of potentially profitable approaches to trading Forex and there are certainly a number of good currency pairs to trade. The Forex market is huge and liquid providing that you stick with the major currency pairs. To be successful the trader needs to pick a currency pair, learn about the factors that drive that pair’s relative values, and devise a Forex trading strategy.

When trading foreign exchange currency pairs it is important to review your results. Traders will complain, “Does anyone make money in Forex?” when they have not been diligently reviewing their trading results and learning from their mistakes. Overtrading is a mistake, for example. The fledgling trader will try to force his trades instead of reviewing the possibilities, reading his technical analysis cues, and waiting for the trade to come to him. Understanding the Forex markets is important. Without a deeper understanding of what drives currency values, the role of central banks, and the influence of big traders a new trader can easily get lost in the mechanics of technical trading. Without an overall perspective it is all too easy for the Forex trader to get ambushed by a major market move even when just reading the newspapers would have given him the perspective to avoid such a situation.

“Does anyone make money in Forex” has the taste of sour grapes. Of course people make money Forex or there would not be a market. The fact is, however, that after every trade the market goes up or it goes down for one currency versus the other. Thus there is always a “winner” and always a “loser” in every Forex trade. It would be a vanishingly rare trader who has never “lost” after a trade. Making money in Forex means making more profitable trades than losing trades and not eating up profits with over active trading and excessive cost of commissions. Does anyone make money in Forex? Certainly! It is a matter of learning a strategy such as scalping or trend trading very well and then applying that knowledge with discipline. Whether the trader is Forex trading the Euro or more concerned about the Yuan exchange rate it is the studious application of skills that results in profits in the Forex market. The question is not “does anyone make money in Forex?” but what are various and most effective ways to profit from the constant fluctuation in foreign exchange rates.

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Forex Trading

What is Forex Trading?

Posted by TFNG Admin On October - 17 - 2010

What is Forex trading? Forex trading is the trading of pairs of national currencies. It is the foreign exchange market whose main exchanges are London, New York, and Tokyo. What is Forex trading? It is the means by which international companies and nations can buy and sell currencies and effectively set exchange rates. What is Forex trading? It is a market where an ordinary trader can profit from the huge volume and high liquidity as trillions of dollars worth of currencies are traded around the world. Today’s Forex markets emerged in the 1970’s when the post World War II Breton Woods agreement on currency values broke down. National currencies were allowed to “float” in value against each other on open markets. Today traders concern themselves with factors influencing the EUR/USD pair or the Yuan exchange rate as they seek to profit from the varying rates of exchange among the currencies of the world.

Traders typically trade what are called the major currencies in the Forex market. These are the US dollar, the Euro, the Yen, the British Pound, the Swiss franc, the Canadian dollar and the Australian dollar. These currencies trade against each other in extremely high volume and with high liquidity. These factors typically make technical trading more accurate and more profitable. Traders will follow the market for the US dollar versus the Euro, for example, looking for price patterns that predict a price breakout either up or down for one currency versus the other. By reading these patterns successfully and executing trades in a timely manner a trader can profit from even small movements in currency value. This is because the trader can trade with a large amount of leverage in Forex trading. Understanding the Forex markets entails knowing where you can trade, how to set up with a broker and get compatible software for online trading, and how to successfully read technical trading patterns to profit from swings in the market for a given currency pair. What is Forex trading? It is trading a highly liquid and high volume market with the potential for substantial profits for the trader who does his homework and executes effective trades.

The big traders in Forex trading are central banks and, to a lesser degree, large institutional traders. What is Forex trading to the central banks? It is a means of influencing, some say manipulating, the value of their nation’s currency. An example that has been going on for years is the exporting economies of Asia who have habitually purchased US dollars to keep the dollar strong and their own currency relatively devalued. The reason for this is that these nations can then sell cheaper products to North America especially but also to Europe. If the currencies were allowed to truly float products from Japan, Taiwan, and China would be more expensive in their export markets and they would lose customers. Forex traders can profit from this phenomenon by anticipating when foreign banks will intervene in currency markets and in what manner. Typically the question is not what they will do but when they will do it, so timing is important. Good Forex advice is to keep track of what central bankers are saying and what they typically do when they attempt to adjust foreign exchange rates.

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FX Trading, Forex, Forex Advice, Forex Trading

How to Trade Forex Successfully

Posted by TFNG Admin On October - 8 - 2010

The goal of any beginning Forex trader is to learn how to trade Forex successfully. Successful Forex trading comes for developing a trading system and following that system while avoiding the twin trading demons of fear and greed. How to trade Forex successfully is simply to find out what works and to do it. If you are going to change how your trade then base the change on your experience and not on outside “tips.” Learning the principles of technical trading is a large part of how to trade Forex successfully. Forex currency pairs do not establish the sort of long, long term trends that can be seen in the stock market. One currency may double its value in relation to another currency over several month or years. However, among the major currency pairs there is rarely a hundred fold increase of one currency over the other. A successful Forex trading system takes into account the fact that Forex markets can be choppier and trend less than other markets.

Understanding the Forex markets is essential for how to trade Forex successfully. In Forex one trades one currency versus the other. Being familiar with the economies of the countries, their monetary policies, and their politics is essential. Keeping up with the news as it relates to the relative values of their currencies is a big part of how to trade Forex successfully. Whether the Forex market is trading sideways or the downward direction of the Euro is the news of the day knowing what is going on in the world will help with how to trade Forex successfully on an ongoing basis. China is slowly allowing its currency, the Yuan, to float against other currencies. This is a big issue with the North Americans and Europeans as a more expensive Chinese currency will eventually make European and North American exports cheaper and improve trade for Western nations. Having a clear idea of the politics and political pressures involved will help the trader predict where a given currency will go versus the one he is trading against.

The largest amount of movement in Forex trading is back and forth, not in sustained trends. Thus how to trade Forex successfully has a lot to do with understanding the technical aspects of currency trading and becoming skillful at executing short term trades to profit from market fluctuations. Successful traders are ones who become knowledgeable about trading patterns such as Forex double bottoms which predict market reversal when a currency has been in a slide. Good Forex advice for the beginner is to learn the principles of technical trading as he is learning the basics of the market and the fundamentals of currency values. Because the trader only makes money when there is market movement he or she needs to be there at the trade station when this happens. That is where discipline and periodic review of trading results comes into play. How to trade Forex successfully is to set up a system that works and follow it. How to trade Forex successfully is to do honest reappraisals of trading results to improve successful trades and learn from mistakes.

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FX Investing, FX Trading, Forex, Forex Trading, Forex Trading Tips
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Disclaimer - Forex, futures, stock, and options trading is not appropriate for everyone. There is a substantial risk of loss associated with trading these markets. Losses can and will occur. No system or methodology has ever been developed that can guarantee profits or ensure freedom from losses. No representation or implication is being made that using this methodology or system or the information in this site will generate profits or ensure freedom from losses.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN OR MENTIONED.

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