Saturday, November 24, 2007

FOREX - HELPFUL TIPS


Foreign Exchange also called as Forex simply means the buying of one currency and selling another at the same time. We buy low and sell high inorder to make profit. The currency is traded in pairs, for example, USD/CAD.

The first one is the base currency and the second one is the quote currency. In this case when we buy, it means we are buying USD and selling CAD at the same time.

Think of currency pair as Goods/Money. When the value of goods is low, we buy paying a low price expecting that the price will go up and then we can sell.

In Forex, we can make money when the market goes up and also when the market is moving down. This is possible only in forex. When the price is moving up, we buy expecting it to move further and vise versa.

In normal trades, we buy first and sell later. In forex, it is possible to sell first when the price is high and buy later when it goes down.

In forex terms, buying first means we are entering LONG position and selling first means we are entering a SHORT position.

LONG = BUY AT LOW PRICE
SELL AT HIGH PRICE
(In LONG position, we wait for the price to rise)


SHORT = SELL AT HIGH PRICE
BUY AT LOW PRICE
(In SHORT position, we wait for the price to fall)

The purpose of any trade should be to make profit. So one has to learn how to trade profitably. One should know to read the chart, how the trend moves etc. There are many indicators that helps us to learn the trading. For example, MACD, PAR SAR, FIB RETRACEMENT, MOVING AVERAGES, AROON OSC, AND MANY MORE. Different people use different trading system. Some prefer to learn the candle stick chart, some prefer to stick with moving averages. Moving averages are most commonly used. Once you master the art of trading, you can make good money and make a living.

Even if you are not a good trader then you can take advantage of signal services for which we have to pay. There are many companies that offer trading signal. One of them is Pipqueeen. They guarantee you profit. There are many othes too in this market. Whatever your choice is, the main thing is that you make profitable trades.

All the best for a profitable trade.

Saturday, November 3, 2007

Economic Indicators 101


Those trading in the foreign-exchange market (forex) rely on the same two basic forms of analysis that are used in the stock market: fundamental analysis and technical analysis. The uses of technical analysis in forex are much the same: price is assumed to reflect all news, and the charts are the objects of analysis. But unlike companies, countries have no balance sheets, so how can fundamental analysis be conducted on a currency?

Since fundamental analysis is about looking at the intrinsic value of an investment, its application in forex entails looking at the economic conditions that affect the valuation of a nation's currency. Here we look at some of the major fundamental factors that play a role in the movement of a currency.

Economic Indicators
Economic indicators are reports released by the government or a private organization that detail a country's economic performance. Economic reports are the means by which a country's economic health is directly measured, but do remember that a great deal of factors and policies will affect a nation's economic performance.

These reports are released at scheduled times, providing the market with an indication of whether a nation's economy has improved or declined. The effects of these reports are comparable to how earnings reports, SEC filings and other releases may affect securities. In forex, as in the stock market, any deviation from the norm can cause large price and volume movements.

You may recognize some of these economic reports, such as the unemployment numbers, which are well publicized. Others, like housing stats, receive little coverage. However, each indicator serves a particular purpose, and can be useful. Here we outline four major reports, some of which are comparable to particular fundamental indicators used by equity investors:

The Gross Domestic Product (GDP)
The GDP is considered the broadest measure of a country's economy, and it represents the total market value of all goods and services produced in a country during a given year. Since the GDP figure itself is often considered a lagging indicator, most traders focus on the two reports that are issued in the months before the final GDP figures: the advance report and the preliminary report. Significant revisions between these reports can cause considerable volatility. The GDP is somewhat analogous to the gross profit margin of a publicly traded company in that they are both measures of internal growth.

Retail Sales
The retail-sales report measures the total receipts of all retail stores in a given country. This measurement is derived from a diverse sample of retail stores throughout a nation. The report is particularly useful because it is a timely indicator of broad consumer spending patterns that is adjusted for seasonal variables. It can be used to predict the performance of more important lagging indicators, and to assess the immediate direction of an economy. Revisions to advanced reports of retail sales can cause significant volatility. The retail sales report can be compared to the sales activity of a publicly traded company.

Industrial Production
This report shows the change in the production of factories, mines and utilities within a nation. It also reports their 'capacity utilizations', the degree to which the capacity of each of these factories is being used. It is ideal for a nation to see an increase of production while being at its maximum or near maximum capacity utilization.

Traders using this indicator are usually concerned with utility production, which can be extremely volatile since the utilities industry, and in turn the trading of and demand for energy, is heavily affected by changes in weather. Significant revisions between reports can be caused by weather changes, which in turn, can cause volatility in the nation's currency.

Consumer Price Index (CPI)
The CPI is a measure of the change in the prices of consumer goods across over 200 different categories. This report, when compared to a nation's exports, can be used to see if a country is making or losing money on its products and services. Be careful, however, to monitor the exports - it is a focus that is popular with many traders because the prices of exports often change relative to a currency's strength or weakness.
Some of the other major indicators include the purchasing managers index (PMI), producer price index (PPI), durable goods report, employment cost index (ECI), and housing starts. And don't forget the many privately issued reports, the most famous of which is the Michigan Consumer Confidence Survey. All of these provide a valuable resource to traders, if used properly.

So, How Are These Used?
Since economic indicators gauge a country's economic state, changes in the conditions reported will therefore directly affect the price and volume of a country's currency. It is important to keep in mind, however, that the indicators discussed above are not the only things that affect a currency's price. There are third-party reports, technical factors, and many other things that also can drastically affect a currency's valuation. Here are a few useful tips that may help you when conducting fundamental analysis in the foreign exchange market:

The Gross Domestic Product (GDP)
The GDP is considered the broadest measure of a country's economy, and it represents the total market value of all goods and services produced in a country during a given year. Since the GDP figure itself is often considered a lagging indicator, most traders focus on the two reports that are issued in the months before the final GDP figures: the advance report and the preliminary report. Significant revisions between these reports can cause considerable volatility. The GDP is somewhat analogous to the gross profit margin of a publicly traded company in that they are both measures of internal growth.

Retail Sales
The retail-sales report measures the total receipts of all retail stores in a given country. This measurement is derived from a diverse sample of retail stores throughout a nation. The report is particularly useful because it is a timely indicator of broad consumer spending patterns that is adjusted for seasonal variables. It can be used to predict the performance of more important lagging indicators, and to assess the immediate direction of an economy. Revisions to advanced reports of retail sales can cause significant volatility. The retail sales report can be compared to the sales activity of a publicly traded company.

Industrial Production
This report shows the change in the production of factories, mines and utilities within a nation. It also reports their 'capacity utilizations', the degree to which the capacity of each of these factories is being used. It is ideal for a nation to see an increase of production while being at its maximum or near maximum capacity utilization.

Traders using this indicator are usually concerned with utility production, which can be extremely volatile since the utilities industry, and in turn the trading of and demand for energy, is heavily affected by changes in weather. Significant revisions between reports can be caused by weather changes, which in turn, can cause volatility in the nation's currency.

Consumer Price Index (CPI)
The CPI is a measure of the change in the prices of consumer goods across over 200 different categories. This report, when compared to a nation's exports, can be used to see if a country is making or losing money on its products and services. Be careful, however, to monitor the exports - it is a focus that is popular with many traders because the prices of exports often change relative to a currency's strength or weakness.
Some of the other major indicators include the purchasing managers index (PMI), producer price index (PPI), durable goods report, employment cost index (ECI), and housing starts. And don't forget the many privately issued reports, the most famous of which is the Michigan Consumer Confidence Survey. All of these provide a valuable resource to traders, if used properly.


So, How Are These Used?
Since economic indicators gauge a country's economic state, changes in the conditions reported will therefore directly affect the price and volume of a country's currency. It is important to keep in mind, however, that the indicators discussed above are not the only things that affect a currency's price. There are third-party reports, technical factors, and many other things that also can drastically affect a currency's valuation. Here are a few useful tips that may help you when conducting fundamental analysis in the foreign exchange market:

Keep an economic calendar on hand that lists the indicators and when they are due to be released. Also, keep an eye on the future; often markets will move in anticipation of a certain indicator or report due to be released at a later time.
Be informed about the economic indicators that are capturing most of the market's attention at any given time. Such indicators are catalysts for the largest price and volume movements. For example, when the U.S. dollar is weak, inflation is often one of the most watched indicators.
Know the market expectations for the data, and then pay attention to whether or not the expectations are met. That is far more important than the data itself. Occasionally, there is a drastic difference between the expectations and actual results and, if there is, be aware of the possible justifications for this difference.
Don't react too quickly to the news. Oftentimes, numbers are released and then revised, and things can change quickly. Pay attention to these revisions, as they may be a useful tool for seeing the trends and reacting more accurately to future reports.


Conclusion
There are many economic indicators, and even more private reports that can be used to evaluate the fundamentals of forex. It's important to take the time to not only look at the numbers, but also understand what they mean and how they affect a nation's economy. When properly used, these indicators can be an invaluable resource for any currency trader.
Keep an economic calendar on hand that lists the indicators and when they are due to be released. Also, keep an eye on the future; often markets will move in anticipation of a certain indicator or report due to be released at a later time.
Be informed about the economic indicators that are capturing most of the market's attention at any given time. Such indicators are catalysts for the largest price and volume movements. For example, when the U.S. dollar is weak, inflation is often one of the most watched indicators.
Know the market expectations for the data, and then pay attention to whether or not the expectations are met. That is far more important than the data itself. Occasionally, there is a drastic difference between the expectations and actual results and, if there is, be aware of the possible justifications for this difference.
Don't react too quickly to the news. Oftentimes, numbers are released and then revised, and things can change quickly. Pay attention to these revisions, as they may be a useful tool for seeing the trends and reacting more accurately to future reports.

Monday, October 15, 2007

Making Money with Forex

Foreign exchange occurs when you buy and sell currencies at the same time. This simultaneous transaction occurs in the foreign exchange market that is made up by foreign banks and other institutions or participants that take place in the buying and selling of currencies. There is no exchange in foreign exchange so it is considered OTC or over the counter transactions. Transactions can occur quickly or be rolled over. The spot market is used for settlement of trades within two business days and rollover occurs when open transactions are “rolled over” to the next value date.

Even though it has been somewhat of a loosely guarded secret, every day more and more investors are turning to the all-electronic world of FOREX trading for income and profit because of its numerous benefits & advantages over traditional trading vehicles, like stocks, bonds and commodities.

Start FOREX Trading with Marketiva

Marketiva was founded at the beginning of 2005 by a group of financial professionals and computer scientists. Our team has over 30 years of combined experience in financial markets. Marketiva is one of the most popular over-the-counter market makers in the world.

Novativa Streamster™ is a client application you need to download and install on your computer in order to subscribe to and use services provided by Marketiva. When you download and install the application on your local computer, you will be able to access Streamster Server at Marketiva that accepts connections from the client application.

Register free with Marketiva, and you can start trading with as little as $1. They give you $5 real money as signup bonus to help start trading. Also, we receive $10,000 virtual money to practive trading.

You can find lot of helpful information in the Resources section. First read and understand how forex works. Practice trading with the virtual money.


When you start the client application on your local computer, you will be asked to type-in your username, password and the server address where you want to connect to. You then need to type-in your username and password that you received through the registration process on Marketiva.com Web Site. For the server address, please type-in the server address specified above. After a few seconds your client application will connect to the Streamster Server at Marketiva and you will be able to subscribe to and use the services provided by Marketiva.

Few things I would like to share with you that I have acquired in teh process of learning how to trade FOREX with Marketiva

  • Marketiva provides over-the-counter market making services in Forex and Funds; $5 cash reward, so you can start trading right away without depositing your own funds; trading on 1% margin; zero-interest on open positions, no market commissions; virtual and live desks within one account; industry standard variable spreads; latest news, alerts on market events, chat channels, 24-hour support, sophisticated and easy-to-use direct-trading charting tool, and the best online trading experience.
  • The easiest way to start trading is to click on a market instrument in a price window. When [Send Order] dialog shows up, you can set [Quantity] field to 1 or more (depending on the amount of money you have on currently active trading desk). When you click button, the order will go into the market. You can find a collection of introductory articles and various other resources to help you understand trading basics at http://www.marketiva.com/index.ncre?page=resources page
  • The margin requirement on margin trading desks is 1%, which means that if you want to trade with quantity 300, you will need to have at least $3 in your account. When you open a position with quantity of 300, we will lock $3 until you close that position. We temporarily lock the margin ($3) as a security if there are huge movements in the market.
  • Here is an example that will help you understand margin requirements: if you have $15 on your trading desk and you open position with quantity of 1000, used margin will be $10 and you will have $5 left as the available margin. If your loss on the position reaches $5, the position will be closed by a margin call.
  • Long (buy then sell) position and short (sell then buy) position are: a long position is simply one in which a trader buys a market instrument at one price and aims to sell it later at a higher price. In this scenario, the trader benefits from a rising market. A short position is one in which the trader sells a market instrument in anticipation that it will depreciate. In this scenario, the trader benefits from a declining market. For more details, please check http://www.marketiva.com/index.ncre?page=re-orders-and-positions page.
  • If the position is long, close mean sell, Long (buy then sell) position and short (sell then buy) position are: a long position is simply one in which a trader buys a market instrument at one price and aims to sell it later at a higher price. In this scenario, the trader benefits from a rising market. A short position is one in which the trader sells a market instrument in anticipation that it will depreciate. In this scenario, the trader benefits from a declining market. For more details, please check http://www.marketiva.com/index.ncre?page=re-orders-and-positions page
  • As a general rule, a position is kept open until one of the following occurs: 1) realization of sufficient profits from a position; 2) the specified stop-loss is triggered; 3) another position that has a better potential appears and you need these funds.
  • Here is an example that will help you understand margin requirements: if you have $15 on your trading desk and you open position with quantity of 1000, used margin will be $10 and you will have $5 left as the available margin. If your loss on the position reaches $5, the position will be closed by a margin call.
  • No matter if a customer uses the $5 reward or makes additional deposits to create profits, he / she will be able to withdraw all funds at any time.
So, after joining just practice with the virtual money $10,000 for few weeks. It helps you to understand how the trade works and introduce you to new terms which can be understood with the help of live support.

So, within a few weeks time, you should have managed to understand all the terms used in trading and understand the real trade.

You can then start trading with your real money that you received as signup bonus $5. Start with $1 and make yourself confident to do more and more trades.

I hope I have provided you all the necessary details to get you started. i will post new tips on trade that I will learn in my process of learning to trade with profit.

All the best.






Tuesday, October 2, 2007

What is a PIP?

In the Forex market, prices are quoted in pips. Pip stands for "percentage in point" and is the fourth decimal point, which is 1/100th of 1%.

In EUR/USD, a 3 pip spread is quoted as 1.2500/1.2503


Among the major currencies, the only exception to that rule is the Japanese yen. In USD/JPY, the quotation is only taken out to two decimal points (i.e. to 1/100 th of yen, as opposed to 1/1000th with other major currencies).

In USD/JPY, a 3 pip spread is quoted as 114.05/114.08

The smallest price increment in a currency, so instead of a point like in stocks, in the forex market it is called a pip.

Wednesday, September 5, 2007

Pivot Point Trading

Here's Your Lesson on Pivot Point Trading

You are going to love this lesson. Using pivot points as a trading strategy has been around for a long time and was originally used by floor traders. This was a nice simple way for floor traders to have some idea of where the market was heading during the course of the day with only a few simple calculations.
The pivot level and levels calculated from that are collectively known as pivot levels.
Every day the market you are following has an open, high, low and a close for the day (some markets like forex are 24 hours but generally use 5pm EST as the open and close). This information basically contains all the data you need to calculate the pivot levels.

The reason pivot point trading is so popular is that pivot points are predictive as opposed to lagging. You use the information of the previous day to calculate potential turning points for the day you are about to trade (present day).

Saturday, August 4, 2007

How Do Forex quotes work?

Reading a FOREX quote may seem a bit confusing at first. However, it's really quite simple if you remember two things: 1) The first currency listed first is the base currency and 2) the value of the base currency is always 1.

The US dollar is the centerpiece of the FOREX market and is normally considered the 'base' currency for quotes. In the "Majors", this includes USD/JPY, USD/CHF and USD/CAD. For these currencies and many others, quotes are expressed as a unit of $1 USD per the second currency quoted in the pair. For example, a quote of USD/JPY 110.01 means that one U.S. dollar is equal to 110.01 Japanese yen.

When the U.S. dollar is the base unit and a currency quote goes up, it means the dollar has appreciated in value and the other currency has weakened. If the USD/JPY quote we previously mentioned increases to 113.01, the dollar is stronger because it will now buy more yen than before.

The three exceptions to this rule are the British pound (GBP), the Australian dollar (AUD) and the Euro (EUR). In these cases, you might see a quote such as GBP/USD 1.7366, meaning that one British pound equals 1.7366 U.S. dollars.

In these three currency pairs, where the U.S. dollar is not the base rate, a rising quote means a weakening dollar, as it now takes more U.S. dollars to equal one pound, euro or Australian dollar.

In other words, if a currency quote goes higher, that increases the value of the base currency. A lower quote means the base currency is weakening.

Currency pairs that do not involve the U.S. dollar are called cross currencies, but the premise is the same. For example, a quote of EUR/JPY 127.95 signifies that one Euro is equal to 127.95 Japanese yen.

When trading FOREX you will often see a two-sided quote, consisting of a 'bid' and 'offer'. The 'bid' is the price at which you can sell the base currency (at the same time buying the counter currency). The 'ask' is the price at which you can buy the base currency (at the same time selling the counter currency).

Monday, July 16, 2007

Margin Trading:

Marginal trading is simply the term used for trading with borrowed capital. It is appealing because of the fact that in FOREX investments can be made without a real money supply. This allows investors to invest much more money with fewer money transfer costs, and open bigger positions with a much smaller amount of actual capital. Thus, one can conduct relatively large transactions, very quickly and cheaply, with a small amount of initial capital. Marginal trading in an exchange market is quantified in lots. The term "lot" refers to approximately $100,000, an amount which can be obtained by putting up as little as 0.5% or $500.

EXAMPLE: You believe that signals in the market are indicating that the British Pound will go up against the US Dollar. You open 1 lot for buying the Pound with a 1% margin at the price of 1.49889 and wait for the exchange rate to climb. At some point in the future, your predictions come true and you decide to sell. You close the position at 1.5050 and earn 61 pips or about $405. Thus, on an initial capital investment of $1,000, you have made over 40% in profits. (Just as an example of how exchange rates change in the course of a day, an average daily change of the Euro (in Dollars) is about 70 to 100 pips.)

When you decide to close a position, the deposit sum that you originally made is returned to you and a calculation of your profits or losses is done. This profit or loss is then credited to your account.

Sunday, July 1, 2007

FOREX Trading for Beginners

Forex, an acronym for foreign exchange, is as simple as trading one currency against another. And while you might be interested in joining the forex market learning all there is to know about forex trading in a short article is impossible; however a basic introduction is what you need to give you a basic understanding and get you going. However, even if you are a novice you have probably been involved in forex before if you have ever exchanged money in a foreign country or even engaged in business internationally. This is forex trading at its most elementary level and concentrated forex trading is when you invest money to make money on the trading of currencies.

If you don’t know much about forex then you probably are unaware of exchange rates, spot markets, currency pair, and other similar terms that apply to foreign exchange. However, when you finish reading you will have a basic understanding of Forex as well as the terms associated with it.

What is Foreign Exchange?

Foreign exchange occurs when you buy and sell currencies at the same time. This simultaneous transaction occurs in the foreign exchange market that is made up by foreign banks and other institutions or participants that take place in the buying and selling of currencies. There is no exchange in foreign exchange so it is considered OTC or over the counter transactions. Transactions can occur quickly or be rolled over. The spot market is used for settlement of trades within two business days and rollover occurs when open transactions are “rolled over” to the next value date.

Currencies

The currencies also have their own set of terms that apply to them. The first currency in a transaction is called the base currency and the second currency is known as the counter or terms currency.

Each currency has an abbreviation that is used for trading. For example, the US Dollar is USD while the Euro is simply Eur and the British Pound is the GBP. Each world currency has its own abbreviation so to be really successful in forex means you should learn the abbreviations of all currencies. Also, there are nicknames that apply to currency pairs. For example, the USD/CHF is called the “swissy” and the GBP/USD is called “sterling” or “cable.”

Once you begin trading foreign currencies you will need a broker, or someone to connect you with other buyers and sellers. Generally, your broker will charge you a per transaction fee or simply take a commission on your earnings. Of course, some individuals who have a lot of experience in foreign exchange choose to act as their own brokers. However, if you are just getting started a broker can really help you learn the ropes and be as successful as possible.

Buying and Selling

To engage in buying and selling of Forex you will need to understand the abbreviations and what they stand for as well as how to find the prices, values, pips, and selling points.

The sell quote is the amount of money you are able to sell the currency for and is also called the bid price. It is always displayed on the left as a fraction like 1.32000/03 for CHF/USD quotes or other currencies. This simply means you can sell CHF for $1.32 US dollars.

On the other side is the buy quote, known as the offer price or ask price. It is located on the opposite side as the sale quote and is the price that you are able to purchase the base currency for. Knowing the price to buy a currency for is the same as the way the sell quote is displayed. So, if you have 1.32000/03 for CHF/USD you can buy CHF for $1.32 US dollars.

The difference between the sell and buy quote is known as the spread. The spread is easy to calculate once you learn to do so. If the CHF/USD is 1.32000/3 then the spread is 1.32 minus 1.3203, or in forex terms 3 pips.

Another important term in Forex is the pip. The pip, short for price interest point, stands for price increments that are allowable among currencies. Each pair of currencies has a minimum allowable pip. For example, the USD/JPY minimum pip is 0.01. The pip value is also important to understand and is simply the value of a pip. However, this can get a bit complicated and should be researched for thorough understanding. The pip value is fixed in regards to most US dollar transactions at $10 for 100k unit lots. A lot simply being the standard size of a transaction. Usually, base currency lots are measured at a standard of 100,000 units and mini lots are measured at a standard of 10,000 units. However, pip value is not always the same and research and studying the pip values is really important to fully understand how these work.

Trading Forex

Trading foreign exchange can be really profitable if you know what you are doing and completely understand the terms and process. However if you jump into foreign exchange without any knowledge of the process and how things work you might be setting yourself up for some serious losses. So, the brief review here should enlighten you a bit and help you continue your research on forex investing. Once you feel more or less knowledgeable all you need to do is find a broker or online programs that will help you get started trading foreign exchange. Remember, at first you might want to take it slow and be conservative while you are learning the ropes, but in the end the amount of risk you want to take is up to you.

Monday, June 25, 2007

Entering the Forex Market

You have decided to be a trader in the forex market, and you have no idea on how to begin. Let's first start by defining what the forex market is and what it does.

The term "forex", also known as the foreign exchange is a market for the sale and purchase of all kinds of currencies. It originated in the early 1970's when floating currencies and free exchange rates were first introduced. At this time, the forex market traders were the ones who set the value of one type of currency against another.

Nowadays, the market forces determine the value of a currency against another. One unique aspect of the Forex market is that very little trading qualifications are required of anyone intending to trade therein.

Independence from external control ensures that only the market forces influence the currency prices. As the largest financial market, with trades reaching up to 1.5 trillion U.S. dollars, or USD, the money moves so fast, it’s impossible for a single investor to substantially affect the price of any major foreign currency.