Understanding Forex Statistics

Once you become somewhat familiar with how the forex market works, and you understand to a point what is involved in trading on the Foreign Exchange Market, you would want to start to gauge market trends in order to profit from your business ventures on the open market.The name of the game is statistics, and the first rule is that you must be aware there is no such thing as a sure thing on the forex market. While you can never be 100% sure at any given time of the next move that will be made on the market as a whole, being able to read statistics and interpret them will place you ahead of the pack in regards to "guessing" what will happen next.Forex trading is a lot like gambling. If you can keep track of the cards that have already been played, you are more informed, statistically, regarding what is likely to be dealt next, meaning you can place a bet with greater insight than someone who has no clue what has already been played. With the forex market, if you have information as to what has already occurred over the past few days, months, or even years, you are again placed in a better position to more logically conclude what will happen next. You simply learn the pattern and follow it to the end, reaping the financial rewards.

Charts And Chartists Wait, did you think you were going to have to research and map out the market's past all by yourself? Of course not! There are people who get paid to do that sort of work. They monitor the market hourly, daily, weekly, monthly, and yearly so that they can provide big-time traders with the same knowledge mentioned before. The more a trading company knows about the market, the more money they can make.The best part of this is that you have access to the same information as these VIP clients. Chartists, who are essentially market analysts that publish their findings in easy to read charts, produce what is referred to as a candlestick charts. These charts are basically a combination of a line graph and a bar graph that show the trend of various stocks, indexes, or other interests over a specified period of time. Therefore, you can easily determine if the currency is on an uptrend or if it is taking a downturn, when the last major change occurred, and how long it is predicted that the currency pair will continue on the current path.If your broker does not supply you with these charts, then you should easily be able to draw them yourself with the modern day charting software or trading platform that you get from your broker. These software platforms can draw most charts for you by entering a couple of parameters and viewing the result.It is recommended however that you learn at least the basics of charting and statistics before you start trading live.

Why so Many Traders Fail at Forex?

The old battlefields of the middle ages are not gone, they have merely changed form. Hundreds of years ago normal men would set out to build their empires by conquering lands through the force of arms. Today, normal men like you and i set out to build our financial empires by conquering markets throught the force of self. The blood soaked battlefields of yesterday have made way for the cash soaked commercial battlefields of today, with the large private armies of Family warlords making way for large pools of family capital. Just as armies were needed to shape empires of the past, so too is capital needed today in order to put modern commercial plans of conquest into action.
In there, lies the reason as to why many forex traders fail. They go into battle risking too many soldiers (capital) and without the knowledge of tactics needed to win the fight.
Lets look at that again. 1. They risk too much capital, 2. They do not understand Forex markets.
Many traders both successful and miserable have made these mistakes, the main reason for me writing this article is so you can learn this lesson here and do not have to make this mistake and lose money, or at the very least be cautious enough to minimise your losses.
No general will risk a majority of his men in a battle that he has no plan for and where he has no idea about his enemy. So my question to you is, why would you risk your capital in market conditions you know nothing about? Luckily two remedies exist for the forex general who finds himself in this situation.
1. Make it a rule to only risk 1% of your capital in any one trade. This is to minimise your losses.
2. Educate yourself so you can recognise your chance to strike but also recognise when it is neccessary to withdraw. Learn to read the conditions of the forex battlefield. Great generals of the past would spend years learning battlefield tactics, luckily we can achieve this in a couple of months.
So in summary only risk 1% of your capital in any trade, and educate yourself about how forex markets work.

Forex Signal Provider? Which One?

So you decided to make full time leaving from foreign exchange market? Or you are going to supplement your income from here? You have set up yourself with proper broker available. I believe you spent hundred of hours in front of PC trying to put together all maths and physics involving currency market. Now you watching business news in the morning paper and following CNBC channel to be on the top with latest information from exchange market. You trading your demo account trying to figure out how to make it all work? So? Does it? No?Face the fact that in currency market all is possible and there is no golden rule to follow. There are so many aspects to consider that you will need at least another head to set this puzzle together.But do not worry there is a hope that can make it work.Signal solutions for forex trading. People who traded forex for a long time and developed their own systems to enter and exit with profit strategies. They will share this knowledge with you for varieties of prices from usd49 to usd499 a month for those precious information.

Problem is which one will suit you best. Are they scams? How do I know?For medium advanced forex trader is almost impossible to choose proper forex signal system, which is not a scam, or at least not profitable. There is bulk of forex signals providers out there. They all offer their signal solution to trade currency with success.Advice is that you will have to establish what type of trader are you? Do you want to trade quickly or maybe over the days or weeks? What losses can you manage and how much money you want to invest.As long as you know al that it is a time to pick up signal trade provider.Few things worth researching are: performance, service offered and rewievs of the signal. Search on forum for another users of the product you are interested in and ask for comment. Every profitable system should be up on collective2 with real track performance. Look for service offered. You will quickly find out that only few offer free trail-option to try signals before you pay. Demand performance evidence.But while doing all that hard work choosing your automat forex signal system remember that you will have to totally follow it without exceptions to make most out of it. Any even small innovation may have dramatic results in your own gains.Remember that your future profits will depend on your signal provider so calculate carefully and make smart decisions.

Choosing a Forex Broker That Wont Rip You Off

At the best of times Forex currency trading can be a risky business with a huge potential for profit or loss. As a fulltime trader i have seen the best and the worst that the forex market has to offer, the dizzying highs of large wins, and the gut wrenching lows of people going bust.
You might be a forex trader yourself, or maybe you are just curious about how forex markets work, whomever you are, you need to learn how to seperate the legit forex brokers from the scam merchants. The internet has a great deal of genuine forex dealers offering quality services, it is also unfortunately infected with just as many thieves dressed up as companies who will gladly take your money and then dissapear. This fear of being taken advantage of puts a lot of people off the idea of trading forex, this shouldn't be the case.
Now there are a few key differences between stock markets and forex markets that you are going to have to learn:
1. Forex has no centralised exchange house.
2. Forex trading is 24/7.
3. Forex is a largely unregulated market.
Looking at that list, it kind of seems that the forex market is akin to a wild west town full of outlaws and gunslingers. In this market there is noone to complain to, noone who will hold your hand. So how can you find the genuine dealers amid all the garbage? Do not trust any broker whose reputation cannot be confirmed, and whose company is not tied to the forex market.
The attraction of the forex market can be overwhelming. The scent of huge profits often overpower the common sense of the average person. They enter eagerly, just waiting to invest their life savings.Lying in wait are the scammers with huge promises, they capture the new investors money, and suddenly dissapear.
The good news is, is that many genuine forex brokers do actually exist. Easy-Forex, Oanda, and many more have proven track records that justify their positions in the market. Usually if a company is small, has no affiliation to forex or a financial institution, then stay away. Also a word on looking for reviews about brokers online. You can find honest reviews on forex brokers online, however there seems to be a habit of late of competing forex companies, and/or traders engaging in negative marketing of each other. Dig deeper and you will usually find an honest answer.
So remember:
1. Validate the companies reputation.
2. Make sure they are tied to the forex legitimatly.
3. If the company is small and unheard of, stay away.
4. Finally if the broker has a proven online track record, a legitimate financial institution affiliation, and a few good reviews, give them a try.
My ultimate advice is, if unsure, invest the smallest amount you can, and find out for yourself. This is how i usually used to find brokers, and it worked for me.

Successful Forex Trading: Forex Hates Procrastinators

What have you put off today? Something important you had to do that you ended up not doing? Well i am sorry to say this but Forex doesn't like you very much, it won't actually come out and say this, but it will definatley show you by eating all your money.
Why do lazy people flounder in the forex market?
1. They put off getting a broker too long and then often make a bad choice.
2. They don't do any research or engage in education and therefore end up gambling.
3. They clutter up informative blogs and forums with their incessant whines about how forex is a scam and can anyone lend them $20 because they are good for it.
4. They are often emotional about trades and will either get too excited after a good trade or try to take revenge on the market after a bad loss.
Does this look like a successful traders mindset to you? Of course it isn't. Are you guilty of any of these things? If you are get it sorted ASAP, not or my sake, but for your own. It isn't my money you are gambling away. "But i thought forex is investing not gambling?" Thank you! I don't gamble in forex, i invest, many other traders i know invest as well. Whats the difference? Education my friend, education. We know what we are doing, and make educated decisions about where we want our money, a forex gambler wakes up in the morning and just decides then and there where he is going to flush away some more money. They don't research, they don't even know what a chart looks like, they just go with uneducated gut feelings.

Forex Glossary

Ask (Offer) — price of the offer, the price you buy for.
Aussie — a Forex slang name for the Australian dollar.
Bank Rate — the percentage rate at which central bank of a country lends money to the country's commercial banks.
Bid — price of the demand, the price you sell for.
Broker — the market participating body which serves as the middleman between retail traders and larger commercial institutions.
Cable — a Forex traders slang word GBP/USD currency pair.
Carry Trade — in Forex, holding a position with a positive overnight interest return in hope of gaining profits, without closing the position, just for the central banks interest rates difference.
CFD — a Contract for Difference — special trading instrument that allows financial speculation on stocks, commodities and other instruments without actually buying.
Commission — broker commissions for operation handling.
CPI — consumer price index the statistical measure of inflation based upon changes of prices of a specified set of goods.
EA (Expert Advisor) — an automated script which is used by the trading platform software to manage positions and orders automatically without (or with little) manual control.
ECN Broker — a type of Forex brokerage firm that provide its clients direct access to other Forex market participants. ECN brokers don't discourage scalping, don't trade against the client, don't charge spread (low spread is defined by current market prices) but charge commissions for every order.
ECB (European Central Bank) — the main regulatory body of the European Union financial system.
Fed (Federal Reserve) — the main regulatory body of the United States of America financial system, which division —

FOMC (Federal Open Market Committee) — regulates, among other things, federal interest rates.
Fibonacci Retracements — the levels with a high probability of trend break or bounce, calculated as the 23.6%, 32.8%, 50% and 61.8% of the trend range.
Flat (Square) — neutral state when all your positions are closed.
Fundamental Analysis — the analysis based only on news, economic indicators and global events.
GDP (Gross Domestic Product) — is a measure of the national income and output for the country's economy; it's one of the most important Forex indicators.
GTC (Good Till Cancelled) — order to buy or sell of a currency with a fixed price or worse. The order is alive (good) until execution or cancellation.
Hedging — maintaining a market position which secures the existing open positions in the opposite direction.
Jobber — a slang word for a trader which is aimed toward fast but small and short-term profit from an intra-day trading. Jobber rarely leaves open positions overnight.
Kiwi — a Forex slang name for the New Zealand currency — New Zealand dollar.
Leading Indicators — a composite index (year 1992 = 100%) of ten most important macroeconomic indicators that predicts future (6-9 months) economic activity.
Limit Order — order for a broker to buy the lot for fixed or lesser price or sell the lot for fixed or better price. Such price is called limit price.
Liquidity — the measure of markets which describes relationship between the trading volume and the price change.
Long — the position which is in a Buy direction. In Forex, the primary currency when bought is long and another is short.
Loss — the loss from closing long position at lower rate than opening or short position with higher rate than opening, or if the profit from a position closing was lower than broker commission on it.
Lot — definite amount of units or amount of money accepted for operations handling (usually it is a multiple of 100).
Margin — money, the investor needs to keep at broker account to execute trades. It supplies the possible losses which may occur in margin trading.
Margin Account — account which is used to hold investor's deposited money for FOREX trading.
Margin Call — demand of a broker to deposit more margin money to the margin account when the amount in it falls below certain minimum.
Market Order — order to buy or sell a lot for a current market price.
Market Price — the current price for which the currency is traded for on the market.
Momentum — the measure of the currency's ability to move in the given direction.
Moving Average (MA) — one of the most basic technical indicators. It shows the average rate calculated over a series of time periods. Exponential Moving Average (EMA), Weighted Moving Average (WMA) etc. are just the ways of weighing the rates and the periods.
Offer (Ask) — price of the offer, the price you buy for.
Open Position (Trade) — position on buying (long) or selling (short) for a currency pair.
Order — order for a broker to buy or sell the currency with a certain rate.
Pivot Point — the primary support/resistance point calculated basing on the previous trend's High, Low and Close prices.
Pip (Point) — the last digit in the rate (e.g. for EUR/USD 1 point = 0.0001).
Profit (Gain) — positive amount of money gained for closing the position.
Principal Value — the initial amount of money of the invested.
Realized Profit/Loss — gain/loss for already closed positions.
Resistance — price level for which the intensive selling can lead to price increasing (up-trend).
Scalping — a style of trading notable by many positions that are opened for extremely small and short-term profits.
Settled (Closed) Position — closed positions for which all needed transactions has been made.
Slippage — execution of order for a price different than expected (ordered), main reasons for slippage are — "fast" market, low liquidity and low broker's ability to execute orders.
Spread — difference between ask and bid prices for a currency pair.
Standard Lot — 100,000 units of the base currency of the currency pair, which you are buying or selling.
Stop-Limit Order — order to sell or buy a lot for a certain price or worse.
Stop-Loss Order — order to sell or buy a lot when the market reaches certain price. It is used to avoid extra losses when market moves in the opposite direction. Usually is a combination of stop-order and limit-order.
Support — price level for which intensive buying can lead to the price decreasing (down-trend).
Swap — overnight payment for holding your position. Since you are not physically receiving the currency you buy, your broker should pay you the interest rate difference between the two currencies of the pair. It can be negative or positive.
Technical Analysis — the analysis based only on the technical market data (quotes) with the help of various technical indicators.
Trend — direction of market which has been established with influence of different factors.
Unrealized (Floating) Profit/Loss — a profit/loss for your non-closed positions.
Useable Margin — amount of money in the account that can be used for trading.
Used Margin — amount of money in the account already used to hold open positions open.
Volatility — a statistical measure of the number of price changes for a given currency pair in a given period of time.
VPS (Virtual Private Server) — virtual environment hosted on the dedicated server, which can be used to run the programs independent on the user's PC. Forex traders use VPS to host trading platforms and run expert advisors without unexpected interruptions.

Forex Broker Interviews

Getting to know your Forex broker is very important if you want to trade with a large amount of money, or if you can't decide between two or more brokers. Interviews with the Forex brokers help to understand the broker's structure and its vision on the traders. If you are already trading actively with some broker, reading its answers on important questions will help you to get some insight on its future plans. Anyway, it is always interesting to know what some Forex broker thinks about what it is doing.
Interview with FXcast Forex Broker — my first interview with FXcast (at that time) rather new Forex broker, which is known for its no-spreads Swing trading platform and the variety of e-currencies accepted as a payment method.
Interview with FXOpen Forex Broker — questions to FXOpen head manager generally were about their rebranding, Islamic Forex trading and some other Forex related issues.
Interview with eToro — this interview is about eToro innovative Forex trading platform, which offers some of the most original ways to make money via Forex market combined with the intuitive interface.
Interview with FXCM — my first interview with such a large broker, it's mainly about various issues with FXCM, including managed accounts, Refco bankruptcy and other topics.
Interview with FxCompany — this interview with a rather new (at that time) MetaTrader broker goes about regulation, new features in trading and the competitiveness of the Forex brokers.

Forex for Dummies

Forex Basics:
If you've already read the "What is Forex?" section then you should know what Forex market is and what it is all about. If not, please, do it. Understanding and mastering these sides of trading are crucial to organize your Forex trading experience.
Forex Fundamental Analysis:
Fundamental analysis is the process of market analysis which is done regarding only "real" events and macroeconomic data which is related to the traded currencies. Fundamental analysis is used not only in Forex but can be a part of any financial planning or forecasting. Concepts that are part of Forex fundamental analysis: overnight interest rates, central banks meetings and decisions, any macroeconomic news, global industrial, economical, political and weather news. Fundamental analysis is the most natural way of making Forex market forecasts. In theory, it alone should work perfectly, but in practice it is often used in pair with technical analysis. Recommended e-books on Forex fundamental analysis:
Reminiscences of a Stock Operator
What Moves the Currency Market?
Forex Technical Analysis:
Technical analysis is the process of market analysis that relies only on market data numbers - quotes, charts, simple and complex indicators, volume of supply and demand, past market data, etc. The main idea behind Forex technical analysis is the postulate of functional dependence of the future market technical data on the past market technical data. As well as with fundamental analysis, technical analysis is believed to be self-sufficient and you can use only it to successfully trade Forex. In practice, both analysis methods are used. Recommended e-books on Forex fundamental analysis are:
The Law Of Charts
Candlesticks For Support And Resistance
Trend Determination
Money Management in Forex
Even if you master every possible method of market analysis and will make very accurate predictions for future Forex market behavior, you won't make any money without a proper money management strategy. Money management in Forex (as well as in other financial markets) is a complex set of rules which you develop to fit your own trading style and amount of money you have for trading. Money management play very important role in getting profits out of Forex; do not underestimate it. To get more information on money management you can read these books:
Risk Control and Money Management
Money Management (A chapter from The Mathematics of Gambling).

Forex Brokers

MetaTrader 4 Forex Brokers — a list of Forex brokerage firms that support MetaTrader 4 Forex trading software as their trading platform.
PayPal Forex Brokers — a list of Forex brokers accepting PayPal on-line payment system as a way to deposit/withdraw money to/from customers' accounts.
WebMoney Forex Brokers — a list of Forex brokers that accept WebMoney e-currency system as the fast deposit/witdhrawal method, offering high security combined with the fast transfers.
Oil Trading Forex Brokers — those Forex brokers that allow trading commodities, and more specifically, oil, are listed in this category.
Gold Trading Forex Brokers — if you wish to find a Forex broker that offers precious metals trading then this list will help you.
Muslim Friendly Forex Brokers — a list of Forex brokers that try to be friendly to Muslim Forex traders offering "no-interest" margin accounts.
Forex Brokers with Web Based Platform — a list of Forex brokers that fully support Forex trading without installing any trading software.

Moneybookers Forex Brokers — a list of Forex brokers that accept Moneybookers electronic payment system as for trading funds transfers.
Forex Brokers with CFD Trading — a list of Forex broker companies that allow their traders to trade not only Forex, but also CFDs (Contracts for Difference).
Forex Brokers with Advanced Trading Platform — a list of Forex brokers with unique and powerful Forex trading software.
Institutional Forex Brokers — a list of on-line Forex brokers that are backed by strong and respected off-line financial companies.
ECN Forex Brokers — a list of on-line Forex brokers that act as ECNs (Electronic Communication Network) offering Forex traders highly competitive spreads.
Liberty Reserve Forex Brokers — a list of Forex brokers that accept Liberty Reserve payment system as the method of depositing/withdrawing funds to/from the trading accounts.

What is Forex?

FOREX - the foreign exchange market or currency market or Forex is the market where one currency is traded for another. It is one of the largest markets in the world.
Some of the participants in this market are simply seeking to exchange a foreign currency for their own, like multinational corporations which must pay wages and other expenses in different nations than they sell products in. However, a large part of the market is made up of currency traders, who speculate on movements in exchange rates, much like others would speculate on movements of stock prices. Currency traders try to take advantage of even small fluctuations in exchange rates.
In the foreign exchange market there is little or no 'inside information'. Exchange rate fluctuations are usually caused by actual monetary flows as well as anticipations on global macroeconomic conditions. Significant news is released publicly so, at least in theory, everyone in the world receives the same news at the same time.
Currencies are traded against one another. Each pair of currencies thus constitutes an individual product and is traditionally noted XXX/YYY, where YYY is the ISO 4217 international three-letter code of the currency into which the price of one unit of XXX currency is expressed. For instance, EUR/USD is the price of the euro expressed in US dollars, as in 1 euro = 1.2045 dollar.
Unlike stocks and futures exchange, foreign exchange is indeed an interbank, over-the-counter (OTC) market which means there is no single universal exchange for specific currency pair. The foreign exchange market operates 24 hours per day throughout the week between individuals with forex brokers, brokers with banks, and banks with banks. If the European session is ended the Asian session or US session will start, so all world currencies can be continually in trade. Traders can react to news when it breaks, rather than waiting for the market to open, as is the case with most other markets.
Average daily international foreign exchange trading volume was $1.9 trillion in April 2004 according to the BIS study.
Like any market there is a bid/offer spread (difference between buying price and selling price). On major currency crosses, the difference between the price at which a market maker will sell ("ask", or "offer") to a wholesale customer and the price at which the same market-maker will buy ("bid") from the same wholesale customer is minimal, usually only 1 or 2 pips. In the EUR/USD price of 1.4238 a pip would be the '8' at the end. So the bid/ask quote of EUR/USD might be 1.4238/1.4239.
This, of course, does not apply to retail customers. Most individual currency speculators will trade using a broker which will typically have a spread marked up to say 3-20 pips (so in our example 1.4237/1.4239 or 1.423/1.425). The broker will give their clients often huge amounts of margin, thereby facilitating clients spending more money on the bid/ask spread. The brokers are not regulated by the U.S. Securities and Exchange Commission (since they do not sell securities), so they are not bound by the same margin limits as stock brokerages. They do not typically charge margin interest, however since currency trades must be settled in 2 days, they will "resettle" open positions (again collecting the bid/ask spread).
Individual currency speculators can work during the day and trade in the evenings, taking advantage of the market's 24 hours long trading day.