By Amar Mahallati

Do you know who Leonardo Fibonacci is? Now, when you think of the name “Leonardo,” perhaps you think of Leonardo da Vinci, but unlike Leonardo da Vinci, Leonardo Fibonacci did not paint the Mona Lisa. No, Leonardo Fibonacci was a mathematician who lived from about 1175 to 1250. He was well known in his day and contributed greatly to the world of mathematics. One of the things he did was that he introduced the decimal system to Europe.

He also studied a sequence of numbers that are known today as the “Fibonacci numbers.” Alternatively, they are known as the “Fibonacci sequence.”

The Fibonacci sequence begins with a zero and one. Each new number is the sum of the two previous numbers; for instance, zero plus one equals two, one plus two equals three, two plus three equals five, and so on.

Therefore, the first numbers in the sequence appear as follows: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, ad infinitum.

Fibonacci discovered that this series of numbers and their ratios to each other occurred throughout nature and in fact are incredibly commonplace in the world.

So what does this have to do with forex trading? Well, the ratios that the Fibonacci numbers displayed are also apparent in the price movement of currencies, as well as in stocks and other types of investments.

Although it’’s too detailed to go into here, there are three numbers you need to concentrate on from this sequence. They are 0.382, 0.500, and 0.618. There are others as well, but these are the most important.

These numbers help to calculate what are called “retracement levels.” Many traders use retracement levels when they need to figure out where they should place buy and sell orders. It works like this:

Let’’s assume that the price of a currency pair, or a company stock, is trending upward. The history says that prices tend to hit a peak and then go into temporary reversal. Then, they continue to trend upward. This is where Fibonacci numbers come into play.

When a currency is trending, the price can be expected to reverse back to one of the Fibonacci numbers. Then, it “bounces” back to its original level or nearly so to continue the trend. Assuming you forecast this right, you can buy just before the upward trend continues and profit handsomely.

Whatever the online trading platform you use, it should give you the means to chart the Fibonacci numbers. To do this, you draw a line from a low point to a high point. Retrace the levels will automatically be mapped on the chart for you.

There are the things to consider besides trading when the price hits a particular Fibonacci number.

For instance, you don”t know at what retracement level the price will stop. If you choose 0.382 and it drops to 0.618, you could lose a great deal. Additionally, if you choose the wrong high or low point, the retracement levels will not reflect what actually happens and will be of no use to you.

Finally, even though Fibonacci numbers are a good tool, sometimes they don”t forecast accurately at all. Again, remember that many variables come into play in the forex market. Therefore, don”t rely just on one method, like Fibonacci numbers, to predict what price movement is going to be.

About The Author

Visit http://www.123onlinetrading.com to find more great information about forex trading. Besides a large selection of free educational articles you can also find powerful books about online trading in general.

By Abhishek Agarwal

Currency trading, or Foreign Exchange trading is rapidly becoming very popular around the world because of the exciting rewards it promises to offer.

Earlier, currency trading was available only to huge corporations and monopolies. They had unlimited resources and investment capabilities. Small scale investors or individuals were unable to participate because it was just too overwhelming.

Fortunately things are fast changing now. For the first time in the history of currency trading, even individuals and small-scale investors can think of currency trading. Because of the advent of the Internet and advancement in technology, a lot of information is now available to individuals. They now have the resources to speculate and make investments, oftentimes
free of cost.

Currency trading is most certainly not risk free. Like any other work that involves financial transactions, it has its own negative points. Just one example is the unpredictability of currencies. Since currencies rise and fall almost every second, they might be extremely high one minute and absolutely useless the next.

Thus, currency traders must be on guard at all times to be in touch with the changes that keep taking place on the market. Since the foreign exchange market runs 24 hours a day, monitoring it every moment can be quite a tedious task.

Another important thing to remember is that when one currency value falls, another shoots up. After all, these currencies are trading against each other and this balance has to be maintained. Thus, to minimize risks, trade on major currencies such as the Dollar, the Pound or the Yen. Since they are the most traded currencies, their value will not catapult too drastically - these are valuable currencies.

Make sure your research on the subject of currency trading is thorough before you delve into the actual trading. The returns might look tempting to you, but if you jump into it rashly then you stand to lose rather than gain these returns. The amounts of energy and finances you need to invest in this trade are considerable and thus it would be better to exercise caution about delving into the trade.

Keep yourself up-to-date by either doing this yourself or hiring an expert to do it for you. Knowledge about the market also lessens the chances of you being duped into trading at the wrong time. You will not be dependent on anyone else to know when to sell or buy and thus invulnerable to cheats.

About The Author

Download Abhishek’’s FREE Trading Report “Selecting An Online Broker” and learn some amazing Trading tips and tricks - And save a lot of your time, money and effort!
Visit : http://www.trading-masters.com

By Abhishek Agarwal

Most people are of the opinion that foreign exchange market trading and trading currency options are the same. They have this misconception because both these markets involve buying and selling of money. So it is natural for people to believe that both are the same. Because of this, currency options trading is less popular.

There are many advantages of currency options trading

1. The main difference between the two is that in currency options trading, their values are determined at a specific time period. This is a big advantage unlike the foreign exchange market that operates 24 hours a day, five days a week.

2. At this point, it is important to highlight that currency options trading is the only option trade that operates for 24 hours, which is good news to those who prefer to dabble in this sort of trade.

3. A trader dealing with currency options will know how unpredictable the market of the foreign exchange is. He is aware that you can win or lose within the blink of an eyelid. However, currency options have better predictive potential because the movements are more constant due to their being in a stable and fixed time framework.

For this reason many companies use currency options as a risk reducing option - because a trader will have a tentative idea of how much the trader will profit when it comes to this particular trade.

4. Potential losses too, can be foreseen beforehand. You always have a second chance when it comes to trading currency options - the chance to change your position before the trading actually commences. However, it also means that you will not win every single time just like any other trade - but you still have some knowledge of what will happen before it actually does.

5. Even with currency options trading and its degree of predictability, you are not exempt from the constant tracking of market conditions. Since currencies change value from high to low very randomly, a great deal of foresight is required from the trader in order to attribute a particular value to your chosen currency.

A longer while in trading options results in greater
windfalls but also leads to greater expenditure on the trader’’s part to keep it like that. So if you have a good foresight, you can benefit immensely.

Of course there are pitfalls with currency trading, but experienced traders stand to gain from delving into this particular trade.

About The Author

Download Abhishek’’s FREE Trading Report “Selecting An Online Broker” and learn some amazing Trading tips and tricks - And save a lot of your time, money and effort!
Visit : http://www.trading-masters.com

By David Silva

The Forex market has been available to individual traders for nearly ten years now. In the past, it was only available to large financial institutions, such as banks, big companies, multi-national corporations and top currency dealers. However, now that it’’s open to individual traders, it’’s become a hot topic that many new traders are eager to learn more about.

So what is it? Forex is short for foreign exchange. Forex trading is trading in the currencies of the world through the Forex market, which is the largest financial market in the world. In fact, it generates trillions of dollars of currency exchanges everyday.

In addition, it operates 24 hours a day, seven days a week, making it the most liquid market in the world. Though trading starts in Sydney and ends in New York, Forex trading is not centralized in a single location. This means you can trade in Forex market whenever you wish, regardless of the local time. A big advantage for traders, especially for those in search of optimal liquidity.

Trading in Forex requires trades to done in pairs. When you purchase a currency, you sell another currency at the same time. The most commonly traded currency pairs in the Forex market are: USD/GBP, USD/JPY, USD/CHF, and GBP/USD. As you can see, each currency is represented by three letters. USD is the United States dollar. GBP is the British pound sterling. JPY is the Japanese yen. CHF is the Swiss franc.

The first three letters of a currency pair represent the currency you used for the investment, while the last three letters represent the currency in which you invested. For example, USD/GBP means you used United States dollars to purchase British pound sterlings.

To get started in the Forex market, you”ll need a computer with a high speed internet connection, a funded Forex account, and a trading system. Most individual Forex traders will also use a broker, an individual or company that offers assistance to the trading process.

A broker earns his money off a small commission from your trades. In addition, although he”ll be trading your funded account, all decisions will remain yours, assuming that’’s your wish. Here’’s what else a Forex broker can do for you:

- Offer you advice regarding real time quotes.
- Offer you advice on what to buy or sell based on news feeds.
- Trade your funded account basing solely on his or her decision if that’’s your wish.
- Provide you with software data to help you with your trading decisions.

Many experts say that you”ll never really understand how Forex works until you”ve traded in the market. To help you gain this experience without having to risk your money, you can set up a demo account at many of the Forex educational sites available on the Internet. You can also invest a modest amount for a Forex simulator, which allows you to explore a never-ending variety of market conditions and see the impact they”ve had on currencies in the past.

There’’s no question Forex offers the trader the opportunity to earn a boat load of money. However, as with any other form of trading, and particularly because this is such a liquid market, it does have its risk. No trader will make money on every trade, and even seasoned traders can get caught and face substantial loses if they aren”t careful and wise.

About The Author

Discover everything you ever wanted to know about mastering Forex trading, including Forex strategies, how to find a broker, managed accounts and much more … all at absolutely no charge … Mastering Forex Trading (http://masteringforextrading.com).

By Steve Welker

Foreign Exchange market trading in a very fast growing field that offers some significant advantages over other investment methods. However many people are reluctant to become involved simply because they lack the necessary knowledge. This guide will help explain the basics of FOREX trading so that you can participate in this market trend.

At one time the Foreign Exchange market was restricted to very large players such as national banks and corporations. In the 1980′’s though the rules controlling the market were changed to allow smaller investors the chance to participate using margin accounts. Margin accounts are the primary reason that FOREX trading has become so popular, with margins of 1:100 you can control $100,000 with only a $1000 investment.

There are risks involved with FOREX trading, and even though getting started trading is not difficult FOREX trading is not simple. It is very important for someone interested in trading on the foreign exchange to learn as much as possible about the market before they start trading.

You will need to go through a broker to actually make trades on the exchange. You should be sure to find a reputable broker that is associated with an established financial institution such as a bank. To help protect yourself from fraud be sure that the broker you select it registered with the Commodity Futures Trading Commission (CFTC) as a Futures Commission Merchant (FCM).

Opening a FOREX account will involve filling out paperwork and providing an acceptable form of ID. You will need to sign a Margin Agreement, this form will state that the broker can interfere with any trade, if the broker feels it is too risky. This form is to protect the broker since most of the trades will actually be done with the brokers money, in a margin account. Then you will need to fund your account so you can start trading. You can fund the account several different ways such as wire transfer or even credit card depending on the broker.

Most brokers will provide several different account types. Usually there will be a mini account that you can open with as little as $250. The standard accounts will usually take an investment of $1000 or more. The actual margin rate will also vary by account, this is the amount of money you can control per each dollar of your money. Higher level accounts will provide you with greater leverage and allow you to control more money.

It is highly recommended that you perform paper trades for at least a month before you attempt any real trades. Paper trades are where you record the trade you want to do with out actually investing any money and then see how much money you would have made or loss accordingly. This allows you to learn how the system works without losing money to do so. I would recommend that you continue to paper trade until you can consistently show a profit doing it.

Most brokers will have demo system that you can use for free for at least 30 days. This allows you to practice your paper trades online just like a real trade except there will be no money gained or lost. This not only teaches you about the market but also allows you to learn the software system used for trading.

Each broker will have their own system for making trades and gathering information. Most brokers though will provide the following tools: real time quotes, news feed, technical analyses and charts and profit and loss analyses.

Almost all brokers have an online system that will you to make your trades online. You will need a pc with internet access to take advantage of this. You can also make trades over the phone with most brokers. There are no commission charges on the trades, the brokers make their money on the spread between the bid and ask price.

About The Author

Steve Welker
Owner & Operator of http://www.forex-tradingonline.com

By Steve Welker

In FOREX trading there are two common types of analysis that most traders utilize, they are fundamental and technical analysis. Fundamental analysis attempts to predict currency movement based off of political and economy indicators. Technical analysis uses historical economic information to predict changes in the FOREX market. This is the first of two articles that will explore technical analysis.

Technical Analysis is based on the following assumptions:

1. Price movements are a result of combined market forces. Political events, economic conditions, seasonal fluctuations, supply and demand are all things that can effect currency prices. Technical analysts do not concern themselves with why the market moves, they are only interested in the movements themselves.

2. Currency prices on the FOREX market follow trends. Predictable consequences have been linked with many recognized market patterns.

3. Historical trends can be used to predict current price movements. Data on the FOREX market has been collected for the last 100 years, over that time certain patterns have become emergent. Human psychology and the way people react to certain circumstances are the basis of these patterns.

Most traders consider technical analysis to be of critical importance even though they may also use fundamental analysis to support and confirm the strategy suggested by technical analysis. Unlike fundamental analysis technical analysis can be applied to many different currencies and markets at the same time. Since fundamental analysis requires detailed knowledge of the economic and political conditions of a certain country it is nearly impossible for any single trader to perform proper fundamental analysis on more than a few countries.

For the beginning trader the complexities of technical analysis may seem overwhelming and they may even wonder if it is actually necessary. If you wish to be successful at FOREX trading you must have a strategy. Any strategy can work but technical analysis has been proven as a reliable and effective method of predicting market changes. Many forces can effect currency prices though so technical analysis is no guarantee, most successful traders utilize a combination of technical and fundamental analysis.

Any quality online FOREX broker should be able to supply you with a large variety of online charts for technical analysis. You can purchase in-depth professional charts, there is usually a monthly fee involved in gaining access to this information. There is also free software available to help you with charting. Charts provide different snapshots of timeframes and usually can also have analytical overlays. These charts will provide a broad over view and can also be zoomed into the tick level. Good charts are updated in real time. These may be available on your brokers site or could be part of their software.

You should learn the market and study trends before for a period of time before you begin actively trading. Most brokers will provide you with a practice account where you can place “paper trades”. Paper trades are just practice trades where no real money is made or lost. They act just like a real trade though so you can see exactly how your trade would have turned out if you had placed it for real. This allows you to become familiar with your brokers system and software as well as learning about the market and how it moves without risking any money while you learn.

The second part of this article will explore the various charts and technical indicators.

About The Author

Steve Welker
Owner & Operator of http://www.forex-tradingonline.com