Forex market depression

Depression is visible on the foreign exchange market since a few days. The bad news continues to accumulate, especially on the American side, although the dollar has a resistance to any race. Indeed, despite the setbacks of the automaker General Motors seems to be on the verge of bankruptcy and huge losses registered by Fannie Mae and insurer AIG, the dollar sells a few decimal places to the euro. Despite the difficulties of the U.S. economy, investors of the foreign exchange market continued to show their confidence in the dollar, which benefits from its status as a safe haven and a vertiginous drop in the price of a barrel of oil. It is indeed a long time ago when a barrel flirting with $ 130.

Nevertheless, traders remain cautious. In this holiday in many countries because of the celebrations of the armistice of 1918, exchanges are limited. The only really notable for the day is the new fall of the pound sterling against the euro. The pound sterling, weighed down by recession and also handle the prospect of further rate cuts to cope with slower growth, has now reached its lowest level since the launch of the single European currency.

Finally, the effect of the announcement of fiscal stimulus plan unveiled by Beijing has failed to fire because the awards have again fallen into the red today. Rumors announce a new monetary easing by the central bank of China to support the relaunch plan.

Forex trading issues

The main role of the exchange rate is to allow international regulations related to international trade: an exporter wants to be paid in foreign currency, because they need currency to pay its employees or its suppliers, while the importer does not have a priori that its own currency to pay. Every time there is an international commercial transaction, there will be a foreign exchange transaction.

The exchange rate fluctuations will affect the prices of export goods. For example, if a product sold in France and the USA is 100 €, with an exchange rate of $ 1.25 per euro, therefore it will cost $ 125 (100 x 1.25) to U.S. consumers . A decline in the exchange rate at $ 1.10 per euro will drop the export price at 110 € (100 x 1.10), while a rise in the exchange rate will rise. Conversely, a well made in the USA, sold in France and worth $ 100, cost 80 € (100 / 1.25) to French consumers in the first case and 90.10 € (100 / 1.10) in the second case. Thus, any decline in the exchange rate of the national currency promotes exports and imports disadvantage, and vice versa for an increase in the exchange rate. So there is a possibility for a country to improve its balance of trade (and hence growth) if it gets a drop in the value of its currency. Countries that consistently under-estimate their currencies to facilitate their exports are accused of making monetary protectionism.

To prevent this form of protectionism that countries may agree on a system of fixed exchange rates - such as the Bretton Woods (1944-1971) or the European Monetary System (1979-1992). But some economists point out that a flexible exchange system allows you to balance trade. The reasoning is based on the functioning of the foreign exchange market. If a country has a deficit in its current payments, this means that the country lacks foreign currency to pay for purchases with the rest of the world, and must be requested in the foreign exchange market which lowers the value of its currency in relation to other currencies. Accordingly, the exchange rate of the national currency down, which encourages exports and restricts imports, which, ultimately, the foreign trade balance. The mechanism is reversed in case of current account surplus.

This idea that fluctuations in the exchange rate alone could balance the trade has been highly criticized, if only because the exchange rate movements do not depend on that of international trade rules, and therefore a deficit may be accompanied by an increase in the rate of change - as in the case of the USA in the 1980s or late 1990s.

Brokers and Frauds

Before you start with forex trading you must have a broker. Be careful choosing the right forex broker because this market is not regulated like the other financial markets.

About $2 trillion Dollars per day are traded on the currency market each and every day. It is bigger than any other financial market out there. The main market participants are big companies, central and commercial banks and other institutional traders.

Compared to the stock or futures exchange, there is no forex exchange market. The trades are made directly between the traders. A forex broker gives you access to this market but only to a part of it. A currency broker can make his own prices. If you would open two accounts at two different brokers then you would notice that you will get two different prices for the same buy or sell.



This system of pricing and trading opens a door for fraud and scams. There are forex brokers out there that do not play correctly. It is also allowed for FX brokers to trade against their customers.

When you choose a broker be careful with everything. Check where the money is held, if there is any form of guarantee or security. Check the spread, that means how much is the average difference of the buy and sell price in your currency. Find out for how long your broker is in the game and if the company has any references.

Verify their address and phone numbers, test out the phone support of the trading desk. Check and verify any of the brokers licenses and find out if the broker is regulated by any trusted third party company or authority.

There are some great and serious forex brokers out there which offer excellent trading platforms and support. They are not necessarily more expensive than other currency brokers because they trade more volume instead.

Forex Trading tips

Forex stand for Foreign Exchange Market (FX) which is always marked for its geographical dispersion. Currencies from all over the world are bought and sold for profit in the forex market. Investors are the real players in forex trading. Forex market welcomes the investors of all income size and any background. If you are thinking to make profit in the forex market you should have a sound knowledge of the currency market.

To start your global Forex trading you need to open a Forex account first. Just fill in the application form and sign the margin agreement which let’s the broker intervene at any time. Here are some tips one must know before dealing with the forex trading or forex exchange


• Know your forex trading market

Know about the currencies that you want to trade with. Try to get the details about the country whose currency you’re trading in the forex market. The more you know about the country more profit you can make, currency you are trading with. With the knowledge of the country you can better understands the strategies of the market and will be able to predict the movement of the money.

• Pick a forex trading system – and stick with it

The better strategy to win the forex trading game is picking a forex trading system and sticking to it. Being a forex trader one should analyze the market and certain calculated risks associated with the market. Market analysis is based on technical analysis which is the interpretation of facts and data based on the data generated by the market. Fundamental analysis seeks to trace out the factors and conditions which influence the market economy and play a pivotal role in altering opinions. Several economic, political, social events affect the forex and its workings. A perfect trader in forex is one who can understand these factors and feel the pulse of the market before striking gold.

• Practice makes one perfect

Practice makes one perfect whether it is forex trading or some other field. Take some time to be a smart player of the currency trading game. If you are not making profit initially, never make a rush.

• Keep your eye on the margin

If you are not properly aware of the margin trading try to keep away. It is often said to be a great way to lose a lot of money quickly. Stay away from forex margin trading until you are not properly aware of it. In forex trading, the bottom line is how much money you made at the end of the day.

• One should try to start with Micro Forex

Micro forex is a boon for the beginners in the forex trading. With the help of micro forex trading, a novice with limited knowledge can make profit in the forex trading market.

• Try to Keep the Trading System Simple and look for Long Term Trends

Your trading must be as simple as possible. Try to follow the guide lines and look for long term trends in the currency market. Analyze the market efficiently and then invest.

Forex Trading signals

In the Forex exchange market fluctuations can occur at any time. You need to read those fluctuations even before they occur. Hence the trader should pay attention even to the slight changes in the present market. In this way you can predict profit and loss.

Trading signals are buy and sell recommendations delivered by a third party. Forex markets have compiled some of the most effective trading signals. Many Forex traders can improve profitability significantly by using the top trading signals.

Forex trading signals always predicts the certain trends in the movement of the Forex prices. Hence each Forex trading signal has to be taken into account all the time.

Forex trading signals refers to the activity of purchasing foreign currencies at particular rates and then selling the foreign currencies at other rates. The Forex trader here takes advantage of the fact that a particular currency has different exchange rates in the money markets all over the world. Thus the forex trader earns profits when the selling rate is higher than the purchasing rate.

To achieve success in Forex trading it is important for the trader to have his own trading strategy and follow it diligently in order to maximize his profits. The Forex trading signal uses technical indicators such as the minute-by-minute candlestick charts, hourly candlestick charts and daily candlestick charts.

From these charts the trader has to perceive noticeable patterns and act accordingly. It is up to the Forex trader to maintain discipline when it comes to trading on the signal and to pull out of a trade when the signal says to. This is often referred to as "mechanical trading." In my opinion it is the most advantageous and profitable trading structure.

Forex future

Our modern futures market originated in the 19th century when farmers began selling contracts to deliver agricultural products at a later time. They did this to attempt to anticipate market needs and to smooth the supply and demand during the off-season.

The futures market has changed dramatically since then, in current times the futures market is no longer restricted to agricultural products. This worldwide commodities market now includes such things as manufactured goods and financial products as well as agricultural products. A futures contract is a guarantee that a certain product will be sold at a fixed price on a certain date.

When speculators play the futures market

there is no expectation of the products being delivered and the actual goods are not even important. It is actually just the contracts themselves that are traded and the value of these contracts is in constant fluctuation.

In every futures contract there are two positions a long position and a short position. The short position is filled by the seller and the long position is the buyer. Futures accounts are settled on a daily basis.

As an example a farmer enters into a contract with a grocer to sale him 1000 bushels of corn at $10 a bushel. At the end of the specified time the contract is settled, if the current market price of corn is at $9 a bushel the farmer will realize an extra profit of $1000 dollars on the contract and the grocer will have lost the same amount. In this situation the farmer now sells his corn at $9 a bushel on the open market but his loss is covered by the profit from the contract. The grocer now will buy his corn for $9 a bushel but in reality he is still paying $10 a bushel because of the cost of the contract. If he had not entered into a contract he could have bought his corn for $9 and saved $1000. However if the price of corn had risen significantly to $13 a bushel he would have saved himself $3000.

Speculators try to guess the direction of the market fluctuations and make a profit by buying and selling contracts.

FOREX

The FOREX market has numerous advantages over the futures market. Since it is the largest financial market in the world it is far larger than the futures market. The FOREX market is also far more fluid, which makes it easier to execute stop orders with very little slippage.

The futures market is usually only open 7 hours a day where as the FOREX exchange is open 24 hours a day 5 days a week. This extra time makes the FOREX market more fluid and allows traders to take advantage of this by trading at any time instead of waiting for the markets to open.

There are no commissions in FOREX trades; the brokers make their profit through the spread. This is the gap between the currency buy price and selling price. In futures contracts the trader has to pay commission fees on every transaction.

Due to the extremely high volume of trades in the FOREX market most transaction are executed almost immediately, this allows for better price control of your trades. In future contracts the price the broker quotes will be from the last transaction and your price could be significantly different.

In the futures market debits are a constant possibility due to daily fluctuations. The FOREX exchange has many built-in safeguards in the trading system that helps protect the traders.

Forex analysis

You have traded Forex exchange market for quite a while now. You have read hundreds of Forex guides and ebooks or Forex trading advice widely spread over internet. Those gave you basic knowledge about forex. Now you know the terminology, rules, currency movement trends and all factors influencing whole Forex market.

There is a lot to take at once.But let me tell you something here,Forex is something people learn all their lives and still there is something left.
You have probably wondered many times before which tactic to take.

• Will I rely on technical analysis?
• Should I look at the bigger picture and consider all economic conditions?
• Will I trade news for quick profits or maybe invest long term.
• I believe you went through many demo trading accounts to try them out.

If you picked up your strategy and you decided to go and trade technical chart analysis here is so much else left to consider. At this stage your knowledge should extend to whole terminology including:
support, resistance, chart names. You should know about moving averages, Bollinger band, Fibonacci or Elliot wave theory, Pivot points etc. Now all you have to do is apply all the above rules on your chart and here we go happy pips. Well it is not as easy as it seems to be!
There is one piece of advice that we would like to give you.








Not all the rules apply to all the currencies. That is right. If you have had enough experience and spent thousands of hours watching charts moving you have probably noticed that almost every single combination of currencies have their own flings and this makes them difficult to predict. Not all pairs would create head and shoulders, double top or bottom to signal the potential major movement. Some of them will but that may mean nothing.
Another combination would not necessarily bounce back from 55 or 200 hours moving average or follow pivot points. Other will not create hammers to indicate diversion. All above rules would apply to successful technical analysis trading.

We strongly advise you to do your homework and research. Before you select certain rules for certain pairs make sure that there is a pattern to follow. Adjust moving averages, Play with a few values and backtrack to see where there is a rule that you could use in the future forex trade.



There are many examples to learn from. If you study eurjpy and euraud pairs you will see how different they are. Euraud seems to have a strong trend on daily charts where eurjpy has not got one.
Take also eurusd and we will see that there was strong head and shoulder with the bottom formed on 22 Jan 2008 and instead moving significantly up it did not. Compare the daily chart of eurchf which on the other hand follows nicely its double top and bottom pattern.
We encourage all beginner traders to consider those factors before trading real money.
Select your indicators to your pairs in the way they are most suitable for each one of them.
Make sure it is backtracked and there is evidence for such a selection.
Remember: plan your trade and trade your plan.