Thursday, July 20, 2006

The Way Forex Brokers Work

A known way in which experienced brokers and traders in the Forex market use to forecast the trends is called fundamental analysis. This method is used to forecast the future of price movements based on events that have not taken place yet. This can range from political changes, environmental factors and even natural disasters. Important factors and statistics are used to predict how it will affect supply and demand and the rates of the market. Most of the time, this method is not a reliable factor on its own, but is used in conjunction with technical analysis to form opinion about the changes in the market.

For those interested in being involved with the Forex trading market, a basic understanding of how the system works is essential. Understanding both forecasting systems and how they can predict the market trends will help new traders become successful with their trading. Most experienced traders and brokers involved in the market use a system of both technical and fundamental information when making decisions about the market. When used together, they can provide the trader with invaluable information about where the currency trends are headed.

Always leave the forecasting to the pros unless you are playing the Forex market as a hobby and don't have a lot of money invested. Do so, or you’ll find out the hard way there’s a price you have to pay for trying to jump to high, and usually it hurts. If you still want to do things yourself - consider taking the time to learn a lot about the market and the different ways to determine its future trends.

Sunday, July 16, 2006

Greed and Fear in Forex Trading

The Forex Trading world is an atmosphere rich in the emotions of greed and fear. The current price of a given security or financial instrument at any point in time can be thought of as the confluence of greed (bulls) and fear (bears). These two emotions make up the core of humanity itself. When market information is released, trading can be a high intensity experience.

Sensing danger, your body releases adrenaline that acts to accentuate both your greed (fight) and your fear (flight). Because these emotions are so strong, they can cause you to act irrationally, ignore your system, stated set of rules or trading plan and to act upon impulse. Indeed, this is a genetically programmed response - but it is often also the forex trading trader's downfall, especially when he's playing with much better capitalized, more sophisticated and experienced rivals that know how to manipulate those emotions.

When you are a trader - you are always under the influence of at least one of these two emotions, even if you don't have any trades on.

When you go for demo accounts, you are neither not scaring to lose your money, nor greedy because it’s not your money to win. That’s why, when you go from the demo account to the real account you start experiencing the feelings and it starts affecting on your trading and your behavior. Soon after, you discover how it is so different than you thought it would be, but it’s too late to back now, when your money’s on the line.

That’s why you have to be prepared to the option of losing in forex trading - that’s the only way to win.

Tuesday, July 11, 2006

What affects the forex market?

The foreign exchange market, sometimes known as the Forex market, is one that is affected by several things. The market itself is becoming one of the most popular forms of trading today (and it is already the bigger by far). It once was reserved for the richest of the rich, but today, with lower minimums, this is a market that draws people from all financial levels.

The attractive thing about this market is both its leverage and it liquidity. Many people with a grand background in the Forex system can take very little money and turn it into a lot using the foreign exchange market. However, when you have expertise in the foreign exchange market, you must also be aware of things that affect it. Being aware of these things is part of making logical and rational decisions of trading.

Interest rates are something that drives the foreign exchange market. While currency prices are what the market is all about, interest rates have a direct affect on those prices. Therefore, to be able to understand the current foreign exchange market, one must understand the current conditions of each individual interest rate. While economic and political conditions are also among the things that greatly affect the Forex market, there is nothing that affects it more than interest rates. Something to remember is that money often follows interest rates. When the interest rates raise, investors will want to capitalize high returns and you will see money flowing into the country. When one country’s interest rates rise, their currency is seen as being stronger than other currencies. This happens because investors seek more of that currency to profit from.

Sunday, July 09, 2006

Forex Mentor

How to find Your Mentor? - Do your FOREX research. It is very easy. Use Internet to get very good free content on that topic. Subscribe to several free e-courses. The number of e-courses can run from 3 to 11. Visit as much websites as you can feel comfortable to handle, without being overload.

Read the information carefully and try to soak the new terminology. Do not force your self. If you are really passionate about it you’ll find how quickly and easily the information will be learned. Dedicate a few weeks to accomplish this process.

There are many websites offering free ebooks and reports on FOREX. Download as much as you want and study those materials. They usually contain a lot of valuable information. Some of them are even better then the highly overpriced ebooks, seminars and training packages.

Once you follow the above carefully, start to eliminate those sources you do not like. Raise the bar and sources of the information you are going to follow. Keep on learning from what they offer for about 2-4 weeks.

When you feel you are ready, make your decision and pick ONE source, only. Choose your Mentor. Now you can buy what is offered by your Mentor. Start research study process on the materials. Open DEMO account and test what you learn with fake money.

As you acquire more and more knowledge about FOREX, you’ll need to open another DEMO accounts. Apply the lessons immediately on the market and watch carefully for the results.

In this point, your loosing trades are your best gifts. Allow yourself to loose a lot and learn as much as possible from those “bad” trades. Do not skip any lesson the market deliver to you for free.

Wednesday, June 28, 2006

Forex - technical analysis, introduction

When you begin your forex trading journey, you need to have a little control over some simple tools in the technical analysis field. Technical analysis is simply a way to study the prices using their reflection on the charts. The analysis assumes that prices should represent all existing information about the markets and the goods.

Forex prices reflect fundamental facts as well as varied array of emotion and fluctuations in the market, caused by different influences of the mood of the moment. At the bottom line, prices are a function derived of the supply and demand, but those are affected by many types of emotions: fear, greed, panic, hysteria, euphoria, etc. we have to bear in mind that markets may change upon people's expectations, which in time, has little to do with the facts. A good "technician" tried as hard as possible to neglect the emotional aspect (though impossible to cancel fully) of trading by basing his decisions upon the charts solely.

Standard bar charts transform the “impossible to grasp” figures into an “easy to read” and clear way of analyzing data. A bar chart is comprised of four elements (usually) - the Open, High, Low, and Close for the time period chosen for the chart. The time period is completely user-controlled starting at 1 minute and can go to 1 month. The top of the bar stands at the highest price of the period, and the bottom of the bar represents the lowest price of the period - that means that the total vertical length (height) of the bar represents the entire trading range for the period. A small dash at the left of the bar stands for the Open rate, and a small dash at the right of the bar stands for the Close rate for the session.

Next - how to take all the information from the forex rates charts and use it to your best interest.