By Louis Vozza

You have heard that currency trading is a quick way to financial freedom. You see stories about the billions ,no trillions,of dollars traded each day and think you can do this,no problem. Maybe you can but first read about the past three weeks in the forex market.

January 2008 was a interesting month for currency traders. The Housing market was teetering on collapse. Lending institutions were taking huge writedowns for bad real estate loans. Brokerage firms and banks had recently fired their CEOs because of excessive losses in their Mortgage Trading units. The US equity markets were falling. Measures of consumer confidence were at levels not seen since the early nineties. And to top it off the initial report for US employment released in January for December of 2007 showed that the US economy had added only 18,000 jobs, a miniscule number.

Recession was on virtually every economist and Forex traders lips. To combat this bad news the US Federal Reserve, which had already cut short term interest rates one hundred basis points in the past four months, cut Fed fund rates another 125 basis points in January alone. This included a mid meeting cut of 75 basis points on January 22, the first time that serious an action had been taken since September 17, 2001 which was necessitated by the concern of possible financial fallout from the September 11 attacks.

Also, consider that the multiplier effects on the economy of poor housing data is truly compelling. It lends itself to purchasing fewer big ticket items like furniture, washing machines etc. and less services like landscaping and painting etc. Reduced consumer confidence means less consumer spending thereby not putting money to work in the economy. A consumer nervous about his or her finances spends less money. And of course fewer jobs created needs little or no explanation.

It seemed as if a perfect storm had brewed for the US economy. So what is a seasoned currency trader going to do given all this fundamental information? He or she is going to sell US dollars right? After all, the Fed had reduced interest rates 225 basis points in five moths. This made the dollar less attractive on a yield basis. Furthermore, fixed income markets through the Fed Funds futures contract had priced in an additional 100 basis points of rate cuts out to December of 2008. As every good forex trader knows, currency forward dealers will take this into account when rolling your positions.

Plus, given all the poor economic data,selling the dollar seemed like a sure thing. Well as the man said, other than death and taxes, there are no sure things. It is February 19 as I write this . On January 29, the night before the last rate cut by the Fed, the Euro closed at 1.4775 against the US dollar and the Japanese Yen closed at 107.10. As I write this three weeks later,the Euro is trading 1.4740 and the Yen is at 107.50 . Virtually unchanged from three weeks ago.

All this in spite of worse economic news being released in February. So What happened ? To start, currency markets might be rewarding countries that take swift action to cure what ails them instead of punishing them. For example,in addition to the monetary easing, the US has added a 150 billion dollar fiscal stimulus package. So that is a factor.

Secondly,both the Euro and the Japanese Yen have already gained almost eleven percent against the US dollar since mid summer of 2007. Also there are signs from recent economic data in Europe that growth may be slowing and that rate cuts might be in the offing. The UK has already eased. So maybe the move is over? Looking at the long term technical charts it is not over yet. But how much money are you willing to risk in case you are wrong?

This proves that currency trading is not just about buy or sell and take your profits and go home. It involves careful economic and technical analysis,risk control, discipline and most of all your time. Forex trading has its rewards but they do not come easily.

About The Author

http://www.YourCurrencyTradingProfits.com helps educate people who want to trade the Forex markets. Whether you are a beginner or experienced there’’s plenty of real information for real traders.Check out his site today at http://www.YourCurrencyTradingProfits.com

By James Hunaban

Forex trading is certainly becoming popular with currency traders. Although Foreign exchange trading can be confusing for newbie’’s the market still lures many people in because it has numerous advantages when compared to other types of trades. Forex trading is somewhat different from stock exchange markets and there are opportunities for those who take part in it. So let’’s answer the question - what is this thing called forex?

Foreign exchange trading or forex is the term used to describe the trading of the various currencies in the world. There is a special market for this called, unsurprisingly, the forex market. This trading does not happen at one location but through use of the telephone and networks, although there some main trading centres in major cities all over the world. The idea of forex trading is to buy one currency while at the same time selling another, so of course you must keep up to date on currency exchange rates. There exist several common currency combinations designed to get the most out of a trade.

These common exchanges are termed a cross. Here are two common terms that can help anybody who is starting out in forex trading. The term pips refers to the least amount a cross price quote can alter. The term spread refers to the price difference between the selling and buying price of the currency in question. As with anything in life that is worth doing it can take a fair bit of time and effort to learn thoroughly but it can be a fun ride.

The forex market is open 24/7 and is always busy with buyers and sellers almost always available, thanks to the telephone and other forms of electronic transmission. Forex trading, like other forms of trading, is a skill which has to be learnt. It takes a good deal of knowledge and concentration to prosper on the forex market, but the advantages entice many traders to invest in it.

Forex or foreign exchange trading is the world’’s largest trading market and the reason for this is the fact that it offers much more to buyers and sellers than any other market is able to. In the currency markets prices will rise and fall but they do not vary as much as they do in the stock market thus the foreign exchange market is stable when compared to other markets. If this is all new to you, I would suggest you get out there on the net and get researching the wonderful world of forex.

About The Author

Find out a lot more about the Forex Trading world at
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