By Nathan Navachi

Understanding the relationship between inflation and interest rates for a particular currency can help you decide whether or not that currency is growing stonger or weaker, and whether you should be buying or selling that currency. Inflation tends to be a constant factor in today’’s monetary system, and typically inflation is an indication of economic strength and an expanding economy.

As employment levels and wages rise, people have more money to spend and prices will tend to rise as a result of the increase in the money supply. This is the basic cause of inflation, and while inflation levels that are kept in check can lead to sustainable economic growth, unchecked inflation levels can spell economic disaster as the economy can literally collapse under its own weight leaving hard-working citizens with money that has had its value and buying power eroded. Understandably, the Federal Reserve and all other central banks will monitor inflation levels very closely, and one of the best ways to combat inflation levels is by raising interest rates.

When interest rates are low, you may not be earning as much money on your savings but it is much easier to borrow money for a house, car, business, or any other type of credit. It is this ease of access to new money that can contribute to the cycle of inflation. However there can come a time when inflation levels are rising too far too fast, and instead of creating economic growth in a sustainable fashion it can lead to an out of control economy in overdrive that can lead to something that Alan Greenspan called “confiscation by inflation,” meaning that the value of each person’’s money is eroded by the large increases in the overall money supply.

Raising interest rates will keep inflation in check by tightening the credit markets and making more difficult to gain access to new money, thereby shinking the growth of the monetary supply and making harder to gain access to loans. The relationship between interest rates and inflation levels is an important one to understand if you are a forex trader, because keeping tabs on these simple metrics can help you determine where the overall trend of the currency is and whether you should be buying or selling. A lower interest rate will mean that your money does not grow as quickly as a factor of time, but it can also mean that the country is experiencing economic growth as loans and credit are more easily available, which means the value of a currency can increase in the foreign exchange markets despite the higher inflation levels.

However, inflation does not always indicate economic growth. There have been historical instances of inflation coupled with increasing unemployment and decreasing wages, and this type of economic condition is called stagflation. Stagflation can be crippling to a country’’s economy and is a central bank’’s worst nightmare in terms of figuring out how to solve this problem. Back in the 1970s when the United States first abandoned the Gold Standard under President Nixon, there was rampant stagflation that had to be countermanded with extremely high interest rates that went as high as 20%. This is an example of what can happen when inflation levels are left to run wild, and it can leave you with more money but far less buying power.

About The Author

Nathan Navachi is a professional trader who built http://TheCurrencyMarkets.com to introduce the world to forex trading.

Go to http://TheCurrencyMarkets.com/forex2.htm right now to discover the exciting world of forex.

By Nathan Navachi

Although it is only natural for most traders to focus on the potential profits that they are hoping to see in their trading account, it is also important to pay attention to any potential losses or risks that might take a bite out of your profits. Risk management is probably the most important attribute of a fully formulated trading plan that can be profitable in any market conditions, and it is the risks that traders do not know about or think about that can sometimes be the most devastating. There are five main components of a good risk management plan, and each one of these five plays an important role in allowing a trader to earn profits and keep them without giving them back to the market.

Pillar 1: Limit Orders and Market Entry

Figuring out the right time to enter into the market can be difficult in a live trading environment, and one of the tools that can be used to find the right time and price to open a new trading position is a limit order. With a limit order you can set a specific price level, and if the market touches this level then it will open up a buy or sell order accordingly for that currency pair. This is better than trading the immediate prices you see on the screen because you can set your limit order just outside of a range trading zone or an established support or resistance level, and it can be a price where if the market ever reaches this level than it is highly probable that it will continue moving in that direction.

Pillar 2: Market Volatility

Volatility is important to take into account because any extreme price movements or whipsaws can have the effect of triggering your limit order prematurely and then retracing in the wrong direction, or once you are in the market any volatile movements can trigger your stop loss orders prematurely. A good way to anticipate market volatility is to look at an economic calendar and see if any significant announcements are to be made that day for the two currencies in the pair that you are trading. While this obviously cannot take into account any unanticipated breaking news stories for the day that might affect the markets, it can still give you a sense of whether or not to anticipate large rapid movements for the day.

Pillar 3: Market Liquidity

Despite the fact that the foreign exchange market is the largest and most liquid market in the world, it is still possible to get trapped in the market without being able to close your open position. If you are trading with a market maker forex broker that guarantees constant liquidity then this is not as big of a factor as when you are trading with an ECN broker or when you are trading on the true interbank market.

Pillar 4: Stop Loss Orders or Cutting Your Losses

One of the hardest things to do as a trader is to humble yourself and cut your losses before you lose any more money. For this we have the ability to set stop loss orders, and you must use logic and reason when deciding at which level to set your stop order at. If you set your stop order too short then you may need to exit the market prematurely when it was actually going to continue in the right direction, and if you set it too far away then you may lose too much money by not exiting out of a losing position quickly enough.

Pillar 5: Profit Targets and Market Exit

Setting your profit targets is maybe the most important component of your risk management strategy, because you need to exit the market with as many pips as possible without giving any back. If you are trading only one lot at a time then setting your profit target can be pretty straightforward as you can simply use a fibonacci retracement level or you can set your target above or below an established support or resistance level. However if you are trading multiple lots, you may want to use a cascading exit order strategy where you exit out of the market with one lot at a time in sequence until your entire position is liquidated.

About The Author

Nathan Navachi is a professional trader who built http://TheCurrencyMarkets.com to introduce the world to forex trading.

Go to http://TheCurrencyMarkets.com/forex5.htm right now to discover the exciting world of forex.

By Dee Power

There are a number of differences between trading currencies and trading on the stock market. Here are a few.

Volatility is much less with Forex.
An individual stock can increase or decrease in value tremendously during a one day period. The stock market itself can climb 100 points and then spiral downward in a two day period. Currencies change much more slowly. On a day by day basis, volatility of the major currencies is less than 1%. Profits are made on fractions of a percentage point in change in value

Buy in pairs: sell one currency and buy another one in the same transaction.
Forex trading is done by selling one currency to buy another currency in the same transaction at the same time. Stocks are sold one stock at a time. Each transaction is independent and has no effect on the other if more than one stock is bought and sold at the same time.

Buying on margin
Trading on the margin or leveraged trading, as it is also called, means that you are not required to deposit, or put up, the full value of the trade or position. When trading stocks you can usually only buy 50% of the value of the stock on margin. The remainder has to be deposited in your brokerage account. The brokerage house charges interest on the balance. Trading through a Forex trading platform on the margin means only a small percentage of the lot has to be deposited and there is no interest charged. In fact up to 200 times the value of your account can be leveraged. In either case the buying and selling on margin can substantially increase profits and losses.

There is no centralized exchange system for forex trading. It’’s all OTC, over the counter. The transactions between the seller and buyer is conducted by telephone or via an electronic network. There are websites that provide the required network. Forex Trading can take place through accounts set up through the networks. Trading is not centralized on an exchange, as with the stock and futures markets.

24 hours a day from Sunday through Friday
Stock markets open in the morning and close every evening. Not so with forex. The trading begins on Sunday 5:00 PM ET and continues until Friday 5:00PM ET. FX begins in Sydney as the business day starts then continues around the world as each market opens. Tokyo is first, then London, and New York. Forex traders don”t have to wait for a market to ”open” to respond to currency fluctuations. They can react to changes caused by economic, political or social events in real time as they happen.

About The Author

More Forex trading tips at http://www.capital-connection.com/investorsonly.html Dee Power is the author of Business Plan Basics, http://www.businessplan-basics.com and several other nonfiction books, as well as the novel Over Time http://www.overtimethenovel.com

By Dee Power

If the current government’’s deficit increases, its currency’’s value will fall. As the government decreases its deficit, the currency can begin to recover value and the exchange rate will become more favorable. The same relationship holds true with a country’’s trade deficit. If the country imports more goods and services than it exports it will have a negative influence on the currency.

Inflation lessens the ability of a unit of currency to buy less and less, so the currency loses value. If the inflation becomes rampant the currency is valued less because it’’s also viewed as unstable. As the rate of inflation begins to decline the currency begins to increase in value.

Politics and social changes can play havoc with the currency exchange rates. Changes in the regime that are viewed negatively can lower the value of the country’’s currency in the short term and continue into the long term. If the present government makes decisions that are looked at negatively it can decrease the currency value as well. The opposite can happen. Current government officials can make policy changes that are viewed positively by the rest of the world and that can increase the value of the currency.

For the United States, interest rates and the price of oil can have a major impact on the value of the US dollar.

Interest rates effect how much it’’s going to cost to borrow money and how much can be earned on investments. Historically if the US raises its interest rates it attracts foreign investors. Those investors have to sell their own currency in order to buy U.S. dollars to purchase treasury bonds. If the interest begins to drop, or the perception is that the rates won”t rise any more, investors may purchase Euros as an alternative investment which lowers the value of the US dollar.

The United States is dependent on foreign oil production. Many US industries are dependent on oil and an increase in the price of oil means an increase in their expenses and a drop in profits. In a similar way, a country’’s dependency on oil influences how the country’’s currency is valued and will be impacted by changes in oil prices. The US’’s dependency on oil makes the dollar more sensitive to oil prices than countries who aren”t so dependent. As the price of oil increases the value of the dollar drops.

About The Author

More Forex trading tips at http://www.capital-connection.com/investorsonly.html Dee Power is the author of Business Plan Basics, http://www.businessplan-basics.com and several other nonfiction books, as well as the novel Over Time http://www.overtimethenovel.com

By Pat Jackson

With the growing popularity and easy access to the foreign exchange (ForEx) market, more and more people are drawn to it as their financial vehicle of choice. Along with this popularity come all the extras. This includes all kinds of software, trading systems for sale, books, videos, and third party signal party providers. Today I”m going to touch on a few points when seeking out a third party forex signal provider.

Before we get into choosing a provider we need to have a good understanding of what a third party signal provider is. A signal provider is a trader or analyst that generates trades that in turn get placed on your account. You can have several signal providers trading your forex account or just one.

Like anything else, all third party signal providers are not created equal. At first glance a trader may look like a home run. That same trader may well end up completely torpedoing your entire account in one afternoon. To help make sure this doesn”t happen we”ll set down a few guidelines. These guidelines will give us something to look for when choosing our third party signal provider.

1. The first thing I look at is weather the trader is a winner or a loser. This may seem obvious to nearly everyone, but I often see losing signal providers with 50-100 people trading their signals.

2. The next thing I look at is how long they have been a winner. If a trader has been winning for a week that means nothing to me. I recommend that you don”t trade any signal provider with less than a few months of results to show you. Any one can place a few good trades one week and get lucky. If you are going to be trading this traders signals they need to be established.

3. Look at the max draw down. This is the largest peak to trough draw down in equity that the trader has historically had. Some traders refuse to take a loss. This causes them to hold on to losing trades forever or until they turn to a winner. Turning a loser into a winner sounds great, but it will eat up a huge chunk of margin and may never turn around. If it doesn”t turn in your direction, you will have your entire account destroyed by a trader that could have taken a 30 pip loss but held on until it was an 800 pip loss.

4. The first three are easy to look at. They will be displayed right on the main screen of signal providers to choose from. Once you get a few signal providers you are thinking of using, its time to dive a bit deeper into their history.

a. Look at their actual trades. Do they have a good win rate because they have opened a ton of trades all at the same time on the same currency pair? They may have 20 winners in a row. This looks great, but if you look a bit deeper you will see that its really only 1 winning trade places 20 times. Not as impressive is it?
b. Look at their draw down on individual trades. Do they let a trade go 300 pips against them and then close it out when it hits 5 pips of profit? This is a trader who lets their losses run out of control and cuts their winning trades short. Its not a trader that you want in control of your money.
c. Do they add to losing positions? A trader who constantly adds to losing positions hoping it will turn for them is not someone you want trading your account.

5. Choose a signal provider that suits you. Some traders may provide larger returns over time, but take bigger risks leading to bigger draw downs. This might be OK with you. If you are more conservative and cannot stomach large drops in equity you probably should choose a more conservative trader.

These are just a few things to look for when choosing a third party signal provider to trade your forex account. You should always trade a demo account before opening a live account with real money. Remember its your account. In the end you choose the signal providers, and you are responsible for what happens.

About The Author

Are you looking for more forex information? Discover plenty of free tips at http://www.AForexCurrencyTradingSystem.info/

By Pat Jackson

Below you will find the six common beliefs followed by the bulk of traders - and if you believe these myths as well, then they will restrict your chances of making significant currency trading profits.

Ninety percent of currency traders believe at least one or more of these myths - which explains why ninety percent of traders don”t make much profit by trading currencies!

1. You should always be in the Market in Case you Miss a Move

Traders love excitement, and their view is, if they are in the market they may catch the big move. Well they may - but chances are they won”t.

The big trends only come a few times a year in each currency - and you should stay out the market until they come, otherwise you will take losses, and run up commissions that will deplete your account.

Wait for the big trades - patience is a virtue in trading.

2. Diversification Reduces Risk, and Increases Profit Potential

Diversification simply dilutes your profits.

You hit a big move, and your other trades that lose, or give you only marginal profits, eat up all your currency-trading profits.

You need to have confidence to go for the big moves, when they occur, and load up these trades.

Currency trading is about calculated risks - if the trade looks good, hit it hard for big profits.

3. Day Trading is Better than Long Term Trend Following, as its Less Risky.

Many brokers spread this myth - and why not? - They make more commission if you believe it!

You will end up having more losses than profits in your trading. You will never make enough money in a day to cover your inevitable losses. When you add in commission and slippage, its inevitable that you will lose.

You need to hold longer-term trends, as these yield the big profits to cover your smaller losses.

4. Timing the Market is the Correct Way to Make Profits

Timing the market means you are trying to PREDICT where prices are going to top and bottom - this is not a good way to trade and the odds are against you.

A better way to trade is to wait for the market to CONFIRM a trend is under way, and jump on board. You may not buy the bottom or sell the high, but you can catch the major chunk in between - and with currency trends lasting for many months or years, you can still get plenty of profits from the trend.

5. Markets are the Same Today as they Were Hundreds of Years Ago

Rubbish! Trends now are much more volatile than they were even 50 years ago. Why? Today, with the Internet, price information reaches every corner of the globe in a split second. This increases volatility as everyone has the same information at once - and everyone tries to enter the market at the same time.

This was not the case even 50 years ago - the trends are still there, but volatility is much higher - traders get the direction of the trend right, but they find themselves stopped out by the volatility. How often has this happened to you? - It happens to all traders. Look at using options to give you staying power.

6. You can use a Black Box System to Make Money

You can buy a system from a vendor for a few thousand dollars - and it can make 50 to 100% profit per annum.

These systems normally have a hypothetical track record - and use price information where the results are already known, and of course, the logic of the system remains hidden from you - as its unlikely to have a sound basis.

Have you ever wondered why these vendors sell systems, when they could simply get a bank loan and trade their own systems?

Enough said on this one!

How about some Positive Advice?

If you want to make big currency trading profits, you need to do it for yourself.

Get a plan you have confidence in, and execute the plan with discipline - and have the courage to trade for large gains when they occur.

Good luck!

About The Author

Are you looking for more forex information? Discover plenty of free tips at http://www.AForexCurrencyTradingSystem.info/

By Ryan Moxie

In recent years managed Forex accounts have proven to be extremely beneficial for a host of traders. Such accounts give traders flexibility to have a constant eye over market conditions without having to sit in front of the computer screen. The various managed Forex accounts available in the market have this useful service to offer.

Know what you are getting into

There are numerous such managed systems at bay such as the Forex Brotherhood and the Forex Tracer. Through these channels you can get a professional and efficient account manager to handle your account. This would increase the chances of you making profits in the Forex market without having to monitor every change in the market yourself.

Whether you want to escape the hassle involved with monitoring your own account or a day time job commitment, you can continue to yield profits on the side through the managed Forex accounts. You can spend the saved time in earning through other means.

Be on the winning side

There are certain pointers that you need to keep in mind when looking to operate in the Forex market. With over 2 trillion dollars being traded everyday, you would want to make sure you are not on the losing side. Managed accounts help to minimize the losses for investors by managing the tolerance of risks in the buying and selling process. Such features are ideal for individuals that have the time but lack sufficient experience that enables them to analyze risks involved in the transactions.

Know that the ideal managed account will be relative to your financial strength and intentions. If you are looking for a short term stay in the Forex market then automated programs would work just fine. They are highly convenient and offer a steady growth to the investors. Furthermore, they have a low required initial investment which suits almost every investor’’s pocket.

On the other hand, employee managed forex accounts work in the favor of long run investors. Most companies offering such programs will suggest that you stick with them for duration of two years during which time you will not only have earned a considerable amount of profit, but also have picked up the tricks of the forex trade.

Retain authority while letting them do the hard work
After making the right choice based on your situation you will be free from all the hassle as the professionals will be doing all the hard work for you while you get to enjoy the spoils and make the calls! The best thing about such plans is that you retain complete authority over the decision making process but have expert advice to guide you.

The internet offers you an easy way to explore the various managed Forex accounts at bay. It is however, advised that you read up on the specifications, benefits and guidelines of operating managed forex accounts prior to going with one. After all, it’’s a matter of making money and you wouldn”t want to lose out by making a hasty decision.

About The Author

Ryan Moxie helps you understand how to make a wise forex investment using a managed forex account at http://forexmanagedinvestment.com

By Pat Jackson

Did you start day trading after buying a book on technical analysis, and getting a charting program - probably a free one that you found online - in order to save money? While reading your book you learned about trading indicators which could ”predict” price movement, and what do you know, the ”best” indicators were actually included in your free charting program - let the games begin.

Now that you have all the day trading tools that are necessary, the book for education AND the free charting program with those ”best” day trading indicators, you now need a day trading plan so you can decide which ones of those ”magic” day trading indicators you are supposed to use. This really is a great book, besides telling you how to day trade using indicators to ”predict” price - it also said that you need a trading plan to day trade.

So what should this plan be? The book told you about trend following using an indicator called macd, and it also told you how it was possible to pick the top or bottoms using an indicator called stochastic; my guess is that you picked the stochastic indicator to start your day trading - this must be the ”best of the best” since this indicator was going to ensure you of entering your trades with the ”best” price. Amazing, simply amazing how easy this day trading stuff really is. In fact, why even bother taking the trades, each time your indicators give a signal - just call up your broker and tell him to stick $100 in your account.

My book was Technical Analysis of the Futures Markets. My charting program was TradeStation with an eSignal fm receiver; that was the one that if you hung the antennae wires just right, and you put enough foil on the tips, you might even get quotes. I had sold a business before I started trading so I did have some capital - isn”t that how everyone gets into trading, you either sell a business or you lose your job? My indicator was the macd as I had decided that I was going to be a ”trend follower” instead of a ”top-bottom picker”. I also decided that I was going to be ”extra” clever, if one indicator was good than two indicators must be better, so I added a 20 period moving average. My first trade was a winner, then after many months of extensive therapy, I was finally able to forget the next twelve months - ahhh the memories

Learning To Day Trading - The Learning Progression

Beginning to day trade, or learning to day trade, as an indicator trader is very typical. This is also logical when you consider - HOW are you supposed to initially learn how to trade? Trading indicators are available to anyone who has a charting program, and simply using line crosses, or histogram color changes, provide ”easy” signals to understand. If you will also take the time to learn the arithmetic behind your indicators, as well as learning what each indicator is specifically intended to do, not only is this a logical way to begin, it is also a good ‘’step” in your learning progression - understanding the WHAT you are doing, instead of attempting to create ”canned” indicator only trading systems, without any regard as to WHY you are trading this way.

This does become one of the ‘’sticking” points in your learning progression, as you come to find out that you are unable to profitably trade indicators as signals only - now what? Now what - you ”can”t” develop your own indicators, so you start doing google searches for day trading indicators and start buying your ”collection” - they don”t ”work” either. Now what - you buy a mechanical trading system - what does hypothetical results may not be indicative of real trading or future results mean? Now what - you start subscribing to signal services OR you start joining the ”latest and greatest” chat room - am I really the only person using the signals who isn”t profitable?

Now what - you never learn how to trade.

I began trading as an indicator trader, and I did try to learn everything that I could about the various indicators, as well as trying to combine indicators that were consistent with how I wanted to trade - I just could never develop a mechanical day trading system from what was available to me. I read a couple more books that didn”t really help me, so I then started looking for someone who could teach me. From what I now know about gurus -vs- teachers, I am very lucky that I got involved with a money manager-trader who taught me a tremendous amount, but I still couldn”t get profitable, in part because there was also ”pressure” to learn how to trade using real money. As well, any discussions or thoughts about trading psychology and the issues involved, especially to beginning traders, was non-existent.

Now what - learning but losing - I stopped trading.
Learning to trading using real money, and ‘’scoffing” at trading psychology as simply individual weakness, really was something that I now regard as misinformation. I always mention this as I now feel that this cost me as much as a year of time, and was very close to costing me my trading future, as stopped trading was VERY close to quitting trading. How can”t trading psychology be real to a beginner, when you consider that you are risking losing money at a very fast pace as a day trader, and when you further consider that you are also doing this when you really don”t know what you are doing - this is NOT by definition being weak. And if trading psychology is real, how are you going to learn to make ”good” trading habits with real money while you are fighting the implications?

Now what - not trading and not ready [quite] to quit - still studying and searching.

Probably the single most important ”thing” that got me to a next step in learning how to trade, was the concept of a trading setup, and that a setup and a signal were not the same. This was extremely meaningful to me, as it also led to an understanding of how to better use trading indicators for the information that they can provide, but not to use them as trading signals - in essence I began learning about trading method where discretion could be consistently applied -vs- trading system that was mechanical and arithmetic rules.

Traders who are indicator only traders, are also what I refer to right side only traders, that is they are always looking at the right side of their charts for an indicator signal. BUT what about the left side of the chart, what about price and patterns, what about market conditions - WHAT about the relevant ”things” that are ”moving” price, instead of indicators only as an arithmetic derivative of price, and thus, one that is dependant on the time frame that you have chosen to trade from? These ”thoughts”, along with the concept of trade setup, became instrumental in the development of a trading method, and how I came to turning my trading around.

When I think about the steps in my learning progression - I would list them as follows:

2/95 - 6/96
indicators only
teaching service that included signals
learning to trading with real money and trading psychology issues
stop trading

6/96 - 3/97
understanding of trading psychology issues
learning about trading setups concept
trading method -vs- trading system
trade setup - trade trigger are not the same
method development
understand the importance of the left side of the chart and what is happening ”across” the chart
related trading setups and how/when they triggered
indicators + pattern
indicators + pattern + price
indicators + pattern + price + market conditions

3/97 - 11/97
able to paper trade profitably
able to real money trade profitably
able to trade for a living

Indicator Only Day Trader - Setup Including Indicators Method Day Trader

I have attempted to discuss the way I started day trading, and the way I think many-most traders typically begin. Along with this, I have pointed various issues and problems that I had - those regarding how to learn to trade, and then progressing into a profitable trader. My experiences have been both personal, as well as those of many traders that I have worked with over the last 8-9 years through Tactical Trading - that a very large number of these problems are due to day trading only with indicators, the specific indicators used, along with trying to turn these indicators into a mechanical trading system. This is not to say that this can”t be done - I simply couldn”t do it. However, I would strongly suggest that anyone who is in the early stages of day trading, or struggling with their day trading, consider these things that have been discussed.

About The Author

Are you looking for more forex information? Discover plenty of free tips at http://www.AForexCurrencyTradingSystem.info/forex-simulator.html

By Pat Jackson

Have you heard about FOREX? How currencies are traded?

When you think about Forex, what do you think of first? Which aspects of Forex are important, which are essential, and which ones can you take or leave? You be the judge.

Lets talk about FOREX and advantages of FOREX trading.

The good thing about FOREX is that the amount of money you need to place a trade (known as “margin”) is all that can be lost!

Of course, with the proper self-taught education you will win more than you will lose, but you should know that despite the high leverage of FOREX trading (200:1 is possible, which means that when you put up $1 the trading vendor will allow you to trade it as if you have $200), its still less risky than futures (commodities) trading. And when you trade stocks you can”t get this type of leverage.

Because of the FOREX markets liquidity and twenty four hours continuous trading, dangerous trading gaps and limit moves are eliminated. Orders are executed very quickly, without slippage. If you do your research and find good brokers, they will automatically close some or all of your open positions if your accounts equity falls below the level required to hold the positions. You”ll never lose more than you have in your FOREX account.

Currencies are traded in dollar amounts called *lots* — One lot is equal to $1,000, which controls $100,000 in currency.
This is the “margin” I talked about above. You can control $100,000 worth of currency for only 1,000 dollars.

Currencies are always traded in pairs. The most popular currencies and their symbols are:

USD - The US Dollar
EUR - The currency of the European Union “EURO”
GBP - The British Pound
JPN - The Japanese Yen
CHF - The Swiss Franc
AUD - The Australian Dollar
CAD - The Canadian Dollar

A currency can never be traded by itself, so you can”t trade a USD by itself. You always need to compare one currency with another currency to make a trade possible.

The most commonly traded currency pairs are:

EUR/USD Euro / US Dollar
“Euro”

USD/JPY US Dollar / Japanese Yen
“Dollar Yen”

GBP/USD British Pound / US Dollar
“Cable”

USD/CAD US Dollar / Canadian Dollar
“Dollar Canada”

AUD/USD Australian Dollar/US Dollar
“Aussie Dollar”

USD/CHF US Dollar / Swiss Franc
“Swissy”

EUR/JPY Euro / Japanese Yen
“Euro Yen”

The currency on the left is called the base currency. The currency on the right is the counter currency. For example, when you place an order to buy EUR/USD pair, you are actually buying the EUR and you are selling the USD. When you place an order to sell EUR/USD you are selling the EUR and you are buying the USD. Buying or selling a currency PAIR means buying or selling the base currency, and doing the opposite with the counter currency.

It might seem a little confusing, but actually it is easier to treat the currency PAIR as one item. It means when you place trades you simply sell or buy the pair. The base/counter concept is only important for fundamental analysis.

To decide when to sell or buy you will need to learn technical analysis and/or fundamental analysis.

In currency trading you can make money both, when the currencies go up or down.

The FOREX currency trading is a great way to work from home in your free time. You can trade any time you want, from Monday to Friday. But you must know that you can lose money in FOREX. So, getting the proper education and trading before doing any real trades is a must. Fortunately you can first practice on a demo account, until you get to the point that you win 70% of your trades. Nobody wins 100%. But you can be in profit even with 50% wins.

There are plenty of books and courses to learn currency trading, but be careful with all those $1000+ courses. Usually you can find courses with the same content for much less.

About The Author

Are you looking for more forex information? Discover plenty of free tips at http://www.AForexCurrencyTradingSystem.info/forex-day-trading-system.html

By Pat Jackson

Currency trading is a platform where individuals speculate on the exchange rate between two currencies. Traders buy and sell currencies hoping to realize a profit. In order to succeed in currency trading you will need a source of accurate and timely information. You”ll need to familiarize yourself with a whole new language.

When you start currency trading you”ll learn what a market trend is and how it will affect your trading. Trends move up, down and sideways. There are also trend classifications within market trends. These classifications are intermediate, short-term and long-term trend. You”ll learn how to look at and understand basic trend lines, which is the most valuable trading. You”ll learn about channel lines and support levels.

When you enter currency trading you”ll be able to make sales online 24 hours a day, 7 days a week, unlike the Stock Market. Many online brokers offer commission free trading and you”ll want to make sure that you have instant execution of your market orders.

A new addition to many currency trading online business sites is the ability to set up a free demo account. This is a good way to get practice about trading and learn about live quotes, charts and streaming news before you start investing with real money.

When you set up your demo account it’’s a good time to test the software that the company offers. If you don”t like the software program, contact the company and see how similar it is to the software program you would get if you signed a contract with them. If you don”t like the software program try another broker. Also, decide if you want web based or client based software. Web based software is housed on your brokers website, you won”t have to install any software onto your computer. A web based software program will allow you to log in from any computer that has an internet connection. Client based software is loaded onto your computer, and can only be accessed from that computer, potentially limiting your usage.

Another thing you”ll want to check before choosing an online broker is how quickly they respond to your need for help. Seeing how quickly they respond to your questions could be key in how they respond to customer needs. If you don”t get a speedy and accurate reply you may not want to trust them with your business.

You”ll need to have high speed internet connection in order to succeed in currency trading online. The currency trading market is a fast moving one and dial up internet access will not work well for this. Another consideration could be the location of the servers used by your broker. If your broker’’s servers are located quite a distance from you, say in another country, this could potentially slow down your transmissions.

Take you time and investigate online brokers. Talk with friends and family about their dealings with online brokers. Take time and do a thorough evaluation of your options before you trust anyone with your money.

About The Author

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