Wednesday, January 13, 2010

How can you earn money in Forex?

You have for certain been looking into how the Forex market works and you have questions like if you can or not make money in Forex. Many web pages assure you that it is very easy to make money in the exchange market and tell you that you can make loads of money overnight, but this is not the way things works, allow me to explain:~Many web pages assure you that it is very easy to make money in Forex and they even tell you that you can make loads of money overnight, but this is not the way things works, allow me to explain:~Many web pages assure you that it is very easy to make money in the Forex market and they even tell you that you can make loads of money overnight, but this is not the way things works, allow me to explain:}~Many web pages assure you that it is very easy to make money in Forex and they even tell you that you can make loads of money overnight, but this is not the way things works, allow me to explain:~Many web pages assure you that it is very easy to make money in Forex and they even tell you that you can make loads of money overnight, but this is not the way things works, allow me to explain:~Many web pages assure you that it is very easy to make money in the Forex market and they even tell you that you can make loads of money overnight, but this is not the way things works, allow me to explain:}~Many web pages assure you that it is very easy to make money in Forex and they even tell you that you can make loads of money overnight, but this is not the way things works, allow me to explain:~Many web pages assure you that it is very easy to make money in Forex and they even tell you that you can make loads of money overnight, but this is not the way things works, allow me to explain:~Many web pages assure you that it is very easy to make money in the Forex market and they even tell you that you can make loads of money overnight, but this is not the way things works, allow me to explain:}

Forex gives you hundreds of opportunities daily to make small and great amounts of money, but it can only be achieved if you are well instructed and you practice with a demo account before entering the market with real money. Just like any job you may have in life, you must prepare in theory and in practice to reach success.

You can make a lot of money in Forex, if you apply strategies and do a technical analysis of every movement of the market, skills you acquire from a specialized education. You probably ask yourself if you need to make a considerable investment to make money, which comes to you do not need a great amount of money; it all depends on your investment capacity, which allows you to open an account that better fits you.

Types of Accounts:

1. Micro Account: Opens with less than $2000. You may operate mini and micro lots.
2. Mini Account: Opens with $2001 to $20000. You may trade mini and micro lots.
3. Standard Account: Opens with more than $20000. You may only operate full lots.

Forex allows you to open accounts and make money through leverage, which means that a broker, with solid finances, lends you money for you to trade in the market and this way get earnings from the differentials in the appreciation or depreciation of the operating currencies. Forex can become a risky activity when the leveraging takes novice traders to over leverage, because they get greedy and they want to make a fortune with little capital at hand. This way, from 2 or 3 operations that end up in losses, the trader loses all of his capital. This is why it is important to know how to manage every operation.

You may leverage from:

• 2:1 = give $1 you will get $2
• 10:1= give $1 you will get $10
• 100:1= give $1 you will get $100
• 200:1= give $1 you will get $200
• 400:1 = give $1 you will get $400

So, the amount of money that you can make depends on the number of pips you obtain and the size of the account that you opened. For this reason it is vital to be realistic on how much you can invest at first in relation with what you can make.

Also, the amount to lose depends on the number of pips lost and the size of the account. From the time an trader enters into a position, he loses because of the spread or differential from the brokers in each pair. If you use good strategies and correct money and risk management techniques, this will not be a relevant factor.

It is even more important to be able to increase earnings in the winning operations and minimize the amount lost in those operations where we lose money. This should be clear. With good money and risk management, a Forex trader can make money even in a strategy where he loses 6 out of 10 times. How? In the remaining 4, his earnings are higher than his losses in the 6 that ended up in loss.

The same way, a trader could lose money even winning in 8 out of 10 operations, following the same logic.

For this reason you will notice the first time that you enter the demo account, that when you take a position in the market, immediately it will show a “loss” in your money, which really is not a loss, but rather it is the commission that your broker charges from that moment for each position that you take in the market. In the demo accounts they add this commission for you to always have this in mind when getting a real account.

It is important to realize that you must look for a trustworthy broker, since unfortunately there are people that try to take advantage of others. For this, we recommend you to examine the history of the broker. You may be able to select a broker from a variety of countries but you must make sure they are legally established. For example: in the USA, a broker must be registered with the CFTC (Commodities Futures Trading Commission), or be a member of the NFA (National Futures Association). You may also verify this with a Costumer Protection Office, depending on his country of origin and its IT laws.

To make money, it is important that you know it will not happen overnight, it will take a whole process for you to become an expert trader. In this money making market intervene probability and consistency. Success is measured with profitability, and it does not matter the amount of operations, but also perseverance to reach your set goals in this business. As an example, constantly following a strategy and not searching every week or month a better strategy than the one before (a very common mistake among new traders).

You may also get long term or short term earnings, meaning that you may choose to make only 1 or 2 operations in a year to reach your goal, which is possible only if you use the correct strategies. You can make 10 operations or more a day, a week or a month, to reach the same goal and get earnings and vice versa.

The recommendation if you are new at this is to start with few operations, but strong ones, in longer periods of time, like daily.

You can make money in Forex if you:

• Receive the proper education and training.
• Learn to determine in the Forex market when to enter into a position and more importantly when to leave, either with losses or earnings.
• Use the correct leverage offered by brokers and you are realist when thinking of earnings.
• Are patient. Patience to practice, as well as for waiting the correct settings to enter into a position, as well as waiting to see for the right time to reach your goal for earnings.
• Do not get obsessed with reaching your earnings goal in the first week.
• Accept losses as part of the “investment game”.
• Properly manage your emotions and the psychological aspect of trading.

The Forex University specializes in courses for beginners and more advanced traders, and teaches how to obtain earnings in a constant manner, managing it as a business. For more information, you may go to the following link:

In short, it is possible to make money in Forex, but do not forget it requires: consistency, discipline, constant growth of our account, effort, time and study. Of course you will not become rich overnight; you will only be able to make enough money in the long run to considerably improve your quality of life. Remember that the reliability that you obtain monthly from your capital, you may not be able to find in any other type of investment.

If you would like more information about Forex, please click here: The Forex Market

Wednesday, January 6, 2010

How to use the Moving Average Indicator: Forex Trading

What are moving averages?

Moving averages are indicators of technical analysis used in Forex, which will help to identify trends to take the market over a period of time determined by the trader with the currency of their choice, taking as reference the average price currency. (Also known as MA). It's called “moving” because it always indicates which will be the average price of the current pair. Thus, the average is in constant motion, this will keep prices of the currencies in the market.

There are four types of moving averages:

• The simple moving average (SMA: Simple Moving Average): This is the average mentioned above, this has the characteristic that each day that passes, it eliminates the first day of the series in the calculation and adds the last day.

• The exponential moving average (EMA: Exponential Moving Average): Includes all historical data, applying a weighting exponential (the exponential average of the first day is the closing of that day). This average places priority on closing prices (current data) and less priority to older data. It is determined by the following formula:

Today’s Average = yesterday + (Today’s Close - Yesterday´s Average) x (2 / n +1)

• The weighted moving average (WMA: Weighted Moving Average). It gives priority to the most recent prices, so that recent prices have more influence than the former ones.

• The smoothed moving average: Assigns the same weight on past prices, but not to recent prices.

The big difference between the simple moving average and the last two indicators is that the moving average uses the same weight for each period and the EMA and WMA assign more value to the periods that are closer.

Using the moving average indicator to invest in Forex

It is important to first establish the time period you want to trade in Forex; you can take long periods of years or months or you may take periods of days and hours. But it is important to note that like any technical indicator, the time frame in which you trade is very important because it determines the probability of the success of a trade.In theory, if you trade in major timeframes, more exact your signals will be. In this case, while the shorter the time period moving average is it will be more sensitive to price changes but less robust. However if it provides long periods of time it will be less sensitive to price changes but also more solid.

For example, for you can determine the simple moving average of the USD/EUR over a period of 20 days. In that period the data collected of prices that has had this pair during this time and then it will divide it by the same number the period you set (in this case 20). When you determine the average, you will be able to identify trends in the market.

The common formula for calculating the moving average is:

The moving average is the result of the sum of the last N values of the price or price in the market, divided by N

Formula: μ=∑xi/n

• μ should be read as mu and it is the moving average we want to calculate.
• N is the period for which we calculate the moving average.
• Xi (where i takes different values from 1 to n) are n values of the share price in the N days considered.

Moving averages are also used to establish significant levels of support and resistance. The periods in this indicator that are more used to establish support and resistance levels are: SMA (50), SMA (100), SMA (200), EMA (144), EMA (89) and EMA (34).

How to read moving averages signals?

If the price is located above the moving average it is considered that the Forex market is in an uptrend. If the price is set below the moving average it is considered that the market has a downward trend. At the same time you can determine the strength of the trend by observing the pending of the moving average indicator. When there is no pending this means that the market has no specific trend.

You can observe buy and sell signals when there are crossings between short periods of moving averages with long periods in the direction of the market trend. So also when there is disruption of the moving average. This you can see it with more detail in the following graphic.

Moving averages give you signals:

• When 2 moving averages cross
• When there are breakouts in the moving averages

Now let's see it in the graphic:

1. To see the trend

For example, here we are using the moving average indicator to identify the trend. In this case we are using the rule's position in the market price in relation to the moving average.

• We see a 20 in yellow
• 100 in red
• 200 in blue

Here is an upward trend since the price is above the moving average.

The rule is: When price is above the moving average it will show an upward trend and on the other hand, when the market is below the moving average then it will follow a downtrend.

The following chart shows a downtrend, since the market is below the moving average.

2. When the averages are growing:

Other methods are for example when crossing moving averages may be an indication to buy or sell in the market

• We see yellow at 20
• In 100 red
• In 200 blue

When the yellow line crosses (short period to 20) with the line with the long-period moving average (200) it indicates that it activates the signal to sell.

When a short-period moving average (yellow line) goes down and crosses a long-period moving average (blue line) it activates the signal to sell.

When a short-period moving average (yellow line) goes up and crosses a long-period moving average (blue line) it activates a buying signal.

3. When used as support/resistance

The moving average can also be used as support/resistance, on the graph the level of support we see rejects the growing market that is approaching.

Remember that no investment is risk free and the moving average indicator in Forex will help you most effectively when used in conjunction with other tools.

If you would like to have more information please click here: Moving Average Indicator

Thursday, December 17, 2009

Making the transition from Paper Trading to Real foreign exchange trading

Assuming that you feel you are ready to delve into the forex market, take a step backwards at the moment and think this through fully : have you got all the understanding that you need? Have you got all of the tools that you need? Have you at least gathered some experience with paper trading?

If you answered 'yes' to all 3 of the questions that we just posed, then you almost certainly are ready to start trading for real.

However although you've taken every preparatory step possible the reality is that there's more to come and the genuine educational process begins from the moment you make your first trade onwards.

For one thing, you're now actually dealing with real money. Your cash. And that is going to prove to feel different from back when you were just making paper trades with virtual money. Now you are really going to be risking something of worth to you, and you are sure to doubtless feel a little nervous.

candidly talking, feeling apprehensive isn't bad, while you be sure not to let it hamper your decision making process. If your apprehensiveness just makes you extra-careful, that's's fine. But if you find that you're 'chickening out' of making trades that you knew were good but had no wish to take a chance on, then you're going to end up having a lot of regrets.

Also, now that you are actually trading cash of your own, when you do make a loss the disappointment factor is also going to be amplified tenfold. Once more, disappointment in itself isn't a bad thing, and can usually help you to make sure that you're not making the same mistake twice.

However if you let every loss that you make get to you, you can quickly find that you're at your wits end and everything that looked to be so easy while you were paper trading suddenly winds up feeling that much more difficult.

All claimed and done, the core point that we are driving at is this : Paper trading and real foreign exchange trading are 2 different ball games. Sure, paper trading is a vital preparation apropos the abilities that you require to play the currency market, but it is still just like a simulation, and doesn't compare to the real deal.

But because you've gone thru that simulation, you must have the talents that you need right there with you, and the single thing that's standing in your way is getting used to the emotions and pitfalls that come as part and parcel of trading for real .

Trust yourself and the experience that you've built up while you were paper trading. Imagine as though you were still doing that, and remember how successful you were at it. Then, try your best to emulate exactly what you were doing previously.

Sure, you might still fail here and there, but in the long term the particular mechanisms of the trades are no different, and so, sooner or later, you'll find yourself starting to profit just like you probably did in the paper trading run.

Once you have accomplished that, you would have successfully made the transition!

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Friday, December 11, 2009

Finding a Good Forex Training Method

If you are studying this report, you're likely interested in entering the foreign exchange market, but do not know where to start. There are loads of folks and associations out there claiming to supply you with all the answers to a successful forex trading experience. The only way to truly begin learning forex is to find a solid tool for learning and practicing forex trading such as Forex Tester 2.

keep a look out for folk and corporations saying that the forex training they offer is guaranteed to make you rich. You want to target learning all you can about forex trading and the foreign exchange market itself, before you even think about profits. Profits are significant, but you can't get to those profits without a proper forex trading education. If you're actually interested by earning a return trading in foreign currency, you must study the market, its fluctuations, as well as the chance and rewards.

Prior to signing up for a forex trading course, reflect on how much information you already have about foreign exchange. If you have basic understanding but feel you need more to be successful in the foreign exchange market, you may need to consider a forex educational course that you can take online for the extra information. With some background information on foreign currency, you may need to consider register for a free forex coaching course.

Time is money, this old addage is even more true when it comes to trading forex. For that reason many people depend on a machine to do their trading. Afterall machines are fast and efficient at analyzing info and can trade 24 hours per day. The drawback to machines is they are limited by the algorithm which controls them and will all too often loose money more money than the make.

There is no substitute to learning the art of forex trading from forex gurus such as Bill Poulos of Profit's Run. Forex Time Machine is Bill's latest forex coaching course is the culmination of years of experience both as a professional trading and forex coach. Read additional information about Forex Tester 2.

If on the other hand, you don't have any idea the simplest way to figure out U.S. Bucks ( dollars ) to EU Bucks ( EUR ), there are numerous beginners' forex trading courses available. Many of those forex coaching classes are available on the web for convenience and at local learning centers for a more detailed study of trading foreign currency.

Since you are looking into foreign exchange trading to beef up your revenue, it's also critical that you don't become a victim of expensive forex trading courses. While you should expect to pay some fee for these courses, you should not over extend yourself learning how to make money. If your forex coaching instructor charges too much money, simply move on to the subsequent tutor.

With such a lot of information, available, learning forex is so simple as getting a book or enrolling for a class. There isn't just one forex guru from whom you want to learn. Find a forex coaching class that promises to educate you the basics at a price that you are feeling comfortable with. Since the forex market isn't bound to one single location,eg the Manhattan Stock Exchange, you can find classes online that provide you with free demos.

If your budget doesn't allow for costly forex trading courses, a little research will yield masses of results for free forex training. More about Forex study courses See more about Forex Tester 2.

the only way to start learning forex is to enroll for a training course. If you decide to sign up for a free forex coaching course, supplement what you learn with books on foreign currency, watch the marketplace for changes, and learn all you can through other inexpensive means. You don't have to be a millionaire to find success in forex trading ; all you want are the proper tools for success. Learning forex and changing your financial future all begin with the right forex coaching.

Monday, December 7, 2009

Bucketshop or Honest Broker - Can You Tell?

To a lot of Foreign Exchange clients, few things cause more consternation than their choice of an online broker. The prevailing assumption is that whenever you try to make money in forex trading you are plying your ability against 'the market' and that's the only enemy you should be thinking about. Sadly, the broker that a person uses will have as much to do with how much success he has as anything else.

Many traders stay away from so-called Bucketshops; companies which give inaccurate prices, appear to manipulate them for their own gain, and actually work to the detriment of their clients. Very few companies will admit to having such a policy, primarily because it provides them a strong incentive to make their clients lose. A different term used for this kind of agencies is 'Market Makers'. These brokers are making the market that their clients trade in, instead of simply relaying their trades on to the broader market. A truthful examination of the environment of Forex, though, shows us that this kind of practice is actually necessary to making it possible for small retail trades to happen, and although it As unsettling as these truths may are, small capital trading would be unfeasible were it not for there kinds of practices, and not all companies use them to cheat their customers.

To understand why this is true, one must start with the understanding that the 'Forex market' is very dissimilar to typical investment opportunities in that it isn't actually there in a real-world sense. Stocks for companies, as an example, are bought and sold on a physical exchange such as the New York Stock Exchange or the AMEX in the USA. These exchanges are governing bodies that qualify each corporation to be traded, lay out the specifics of the standard trading contracts, monitor brokers, and finally clear all trades financially. They have a specific address, do business at predetermined hours and are given the authority to shut down trading of any and all stocks or the trades of any broker whom they feel are acting unlawfully or in a way that hinders fair and legal trade.

On the other hand, the Foreign Exchange market is just the aggregate trading of corporations who desire to transfer cash from one specific currency to another. The actual Forex market is made up of giant global corporations and international financial institutions who transfer money around in order to manifest global trade. Suppose a corporation from Australia markets some goods in Canada. The money will come as Canadian Dollars, but the company will need to pay for its costs in Australian Dollars. It will require a convenient way of converting its funds almost each business day. This is the real Forex market; businesses and banks who move trillions of dollars worth of currency back and forth on a daily basis. Small time traders like us could never trade in that arena -- we clearly can't access that much money.

Because of this a Forex broker must be free to buy and sell currency directly with their clients. Brokers provide small trading opportunities for the little guys (like us) who might not ever be able to trade in the Foreign Exchange market. Then they turn around and make much more substantial transactions with their 'Liquidity Provider'; a bank willing to transact with brokers for the purpose of making some profit from us retail traders. With our tiny accounts we'd never be able to catch the eye of the large banks. When a broker bundles our trades together, trading opportunities abound.

As a result, the trader must rely on their broker to provide their own currency prices instead of receiving a unified value from a central exchange. Each broker executes transactions with their specific liquidity providers and different brokerages are likely to use different banks. These disparities are evident in the disparity between broker quotes. It is not an attempt to cheat the clients (although some unethical brokerages likely do) it is merely a necessary part of opening the market for small traders to participate in. A broker could be ethical yet still have the need to trade against its clients, even though they're not attempting to misquote prices and make those clients lose.

So you see, with regard to many trades a retail brokerage will need to 'trade against' their customers, though they are required by legal and ethical conventions not to do so in a way that harms those customers. This creates a significant situation of 'caveat emptor' - that is, let the buyer (and those hoping to learn forex) be careful. It is crucial to always keep a close eye on the price quotes and trading practices of their brokerage, and to select that broker prudently. It would be improper, however, to presume that a broker who takes the other side of a client's trades is doing so to screw them. It might sound bizarre and also a trice disquieting, but it is a necessary and crucial part of the small capital foreign exchange business model.