Forex Pairs: Understanding How Forex Currency Trading Works

If you want to be able to effectively trade the Forex, then you need to understand how Forex pairs work.  “Forex pairs” is another way of saying “currency pair.” All trading in the Forex market is done not with individual currencies, but with currency pairs. To trade the U.S. Dollar (USD) you have to choose another currency to trade it against. This is why understanding Forex pairs is so important. It’s not enough to understand one currency. You have to understand how two currencies are going to relate to one another.

The major currencies, and major currency pairs, will account for nearly 80-85% of all Forex trades world wide. The reasons for this are fairly simple and straight forward. The strongest economies are often the most stable and come from the most stable governments. This security and strength of economy is what makes these main currencies strongest and the best to trade.

Look at Zimbabwe’s hyperinflation as a reason why smaller nations and nations with dictators aren’t trusted in currency trading. There are too many variables, and an economy can completely change overnight.  Governments that operate by Democracy and that are strong aren’t likely to fold. Economies given freedom to operate on their own also tend to work in a stable way. Even the most unstable weeks or months in the United States would have less effect on the currency than if China’s leadership decided to shut out all foreign investment tomorrow.

This is part of the reason China’s currency hasn’t broken into the major players, while nations like Canada and New Zealand have. While it’s unlikely that China would have a sudden shift like this, it is possible. That type of insecurity is why China’s Yuan isn’t going to be in position to stand up with the CAD, NZD, or CHF any time soon.

The most common Forex pairs will get traded the most because the Forex market is volatile enough without the dangers of governments shutting down foreign investment, military coups, or any of the other common worries associated with these nations.

So when you’re looking for a good currency pair to trade, don’t get cute with Yuans, Pesos, or Rubles, but stay with the big dogs.

And now I would like to offer you free access to a Forex trading system that is 89.1% accurate, so you can literally start trading the Forex today. You can access it now by going to: http://www.foreximpact.com/reports/89percent/

From Jason Fielder: Founder, ForexImpact.com

Day Trading Forex Currency: Not for the Beginning Trader

This might sound a little repetitive if you’ve read all of my blog posts about the Forex market, but it seems like every commercial you see on television about trading the Forex is touting day trading as the easy way of trading the Forex. There is no easy way to trade the Forex market, and day trading Forex currency is definitely not for the beginning Forex trading. Day trading is an advanced strategy and shouldn’t be jumped into by inexperienced traders.

Day trading the Forex might be a popular fad style right now, and there probably are Forex traders who make some decent money with this style, but the very nature of day trading with all the short term trades makes it more difficult to have accurate technical analysis of the upcoming trends. You may avoid most of the major losses by having such short term trades, but you’ll also miss out on any major breakouts that could have made you far more money with a long term strategy.

Day trading is all around the short time, and requires an enormous amount of attention, skill, and concentration. While there are probably many Forex traders who prefer this method, the real money to be made is learning how to use technical and fundamental analysis on longer trades where you can take advantage of channel breakouts.

Without ever taking advantage of the breakouts in the Forex market, day trading Forex currency will never be able to match the profits of traders who have systems that allow them to take advantage of long term runs in the currency market.

While there is certainly a place for day trading the Forex, there are just other Forex trading systems that could offer more profits with less risk. If you’re dead set on day trading, make sure you understand the intricacies of the Forex market first to make sure you understand the markets before jumping to advanced Forex trading strategies like day trading.

And now I would like to offer you free access to a Forex trading system that is 89.1% accurate, so you can literally start trading the Forex today. You can access it now by going to: http://www.foreximpact.com/reports/89percent/

From Jason Fielder: Founder, ForexImpact.com

Margins in Forex Trading - Importance of Margins for Profit

Trading in the Forex market is done with “lots” and “mini-lots” of currency pairs.  These lots and mini-lots are leveraged money, which is what allows you the potential to make so much profit from trading currency in the Forex.  The standard size for a lot is $100,000 in currency, while a mini-lot usually represents $10,000 in currency.  What leverage allows, is that you don’t need $100,000 to trade $100,000 worth of currency.  That’s where leverage comes in. 

If you have leverage of 100:1 then you only need $1,000 to trade a lot, since the money is leveraged at around 100 to 1.  Most leverage comes at levels of 50:1, 100:1, and rarely at 200:1.

These are the most common amounts used, though sometimes you might hear about a “micro-lot” being traded.  A micro-lot is 10% of a mini-lot and has a value of $1,000 of currency.  Usually, though, all trading will be done with lots and mini-lots. The use of lots allows more trading because a smaller amount of money (the margin) can allow a trader to control a much larger stake of actual currency. Margin, leverage, and lots and mini-lots are very much connected and allow the common trader to be involved in the Forex market.  Traders can trade larger amounts of money with leverage than they could otherwise afford, allowing them to make a much larger return on their trades.  This occurs because money is being returned on the entire lot, not just on the initial amount in the trader’s account.

This is how a trader can make profit on a .0001 raise in a currency value, because the sheer amount of currency involved is likely leveraged 100 times over.

The same can happen the other way, however, so while the Forex market offers unmatched opportunities in gaining profit, leverage also magnifies losses when the trader is on the wrong side of a market swing. 

You need a good proven trading system to avoid being on the wrong end of a market swing.

And now I would like to offer you free access to a Forex trading system that is 89.1% accurate, so you can literally start trading the Forex today. You can access it now by going to: http://www.foreximpact.com/reports/89percent/

From Jason Fielder – Founder, ForexImpact.com
 

Understanding Pips in Forex Currency Trading

As a new Forex trader, one of the most important things you will need to learn is how to figure out the value of a pip for any currency pair.  A pip is the smallest measure of value in a currency pair in Forex, so it’s critical that you understand this concept. 

When someone is saying “30 pips,” they’re talking about thirty units of value in a trade.  Both profits and losses are measured in pips, though a pip for USD/JPY is not the same as a pip for USD/CAD.  The simplest way to put it is this: one pip is one unit of the smallest measured decimal place. For example, if you are trading USD/JPY at 114.95, then one pip is .01 Yen, since that is the smallest decimal place of measurement used in this pair.  The JPY is measured in two decimal spaces, and almost all other currencies are measured in four, though it does vary.

For example, if the USD/CAD is trading at 1.0621 CAD than a pip for this transaction is .0001 CAD.  If you trade AUD/USD while it’s at 1.2433, then one pip for this trade is .0001 since that combination has four decimal places, as well.  See how that works?  Like many parts of Forex trading, it is easy once you get used to it. So if the USD/JPY is quoted to only two decimal places, so Yen .01 is the value of this pip.  If this pair goes from 114.95 to 115.00, it gained 5 pips.  Likewise, if the USD/CAD goes from 1.0621 to 1.0611, it lost 10 pips. 

That simple math is all that’s needed at that point. So if USD/JPY went from 88.25 to 88.29 that would be a 4 pip increase.  On the other hand, if it went from 88.25 to 87.90, that would be a 35 pip loss. As a note, many non-Yen currencies are figured out four places, making many pips involving USD in the currency pair .0001, but just remember that a pip is one unit of the furthest listed decimal point and you’ll do fine.  This also means that for each currency pair the pip can be a different value.  You will want to keep track of this.

And now I would like to offer you free access to a Forex trading system that is 89.1% accurate, so you can literally start trading the Forex today. You can access it now by going to: http://www.foreximpact.com/reports/89percent/

From Jason Fielder – Founder, ForexImpact.com 

Forex Currency Trading - Making Money in the Forex Market

Forex currency trading is becoming increasingly popular as more and more traders want to take their shot at the largest trading market in the world.  The lure of nearly $2 trillion in trading going on each and every day is too much for most traders to resist.  So what is the Forex market, and how does currency trading work? Forex is an abbreviated term for foreign exchange market.  The Forex is the largest financial market in the entire world, with an average trade volume of nearly two trillion dollars per day.  The modern Forex market is what evolved from initial currency trading.

The idea is to use fluctuating currency rates to make money out of money.  For example, let’s say you buy one mini lot (1 mini lot = 10,000 currency) of the EUR/USD at a rate of 1.1500.  Two days later the markets shift and the EUR/USD is now 1.1525, and so you decide to sell.  Using the formula to figure out profits/losses, 1.1525-1.1500 is .0025 * 10,000 (the size of the mini-lot) = $25.  In this case, a $100 investment for one mini lot yielded a $25 profit, or 25% in only two days.

Not a bad percentage by any count.  That’s quite a profit for two days.

This is a simplified example, and as with any trading there is always the chance of loss, but this gives you an idea of what traders are shooting for when investing in Forex currency trading and why the potential for profits is so high. Forex currency trading is conducted using “pairs.”  The reason for this is that to trade Forex you are basically simultaneously buying one of the currencies, while selling the other.  If you are selling the EUR/USD pair, then you are selling Euros in order to buy dollars.

Let’s use the earlier pair as an example.  If you are trading the Euro versus the US Dollar, your currency pair is EUR/USD.  The Euro (EUR) is referred to as the base currency while the US Dollar (USD) is referred to as the cross currency.  The base currency is the one you are selling, while the cross currency is the one you are buying.  There always has to be a pair.  To buy one currency, you have to do it with another.  To sell a currency, you need to get your profits back in another.  There must always be two currencies in any Forex currency trading.

The far majority of the Forex trading done in the world takes place between eight currencies: the United States Dollar (USD), Australian Dollar (AUD), Great Britain Pound (GBP), Canadian Dollar (CAD), Swiss Franc (CHF), Japanese Yen (JPY), and the Euro (EUR).  Other nations’ currencies may be used, but these are the currencies that are most often used and profited from because they have the most demand and come from the most stable economies.

I hope that gets you started into learning about forex currency trading, but you should know that you will always need a good proven system to make a profit in this volatile market.

And now I would like to offer you free access to a Forex trading system that is 89.1% accurate, so you can literally start trading the Forex today. You can access it now by going to: http://www.foreximpact.com/reports/89percent/

From Jason Fielder – Founder, ForexImpact.com

Two Types Forex Brokers: Which Forex Broker is Right for You?

There are two types of Forex brokers, and which is best for you can depend on your trading strategies.  There are Market Makers (MM) and Electronic Communications Network (ECN).

Market Makers (MM) are brokerage firms that set both the asking price, and the bid price.  No matter if you are buying or selling, the MM is your trading partner and taking the other side of that trade.

Electronic Communications Networks (ECNs) take the bid and ask prices from several different market participants (such as individual traders, banks, MMs) and then the bid and ask prices are displayed as bid/ask quotes.  When you place an order to buy, it’s matched with a sell order set at the same price.  If there is no match, then your order simply will not be executed.  Unlike the MMs, the broker does not take the other side of the trade, it’s whatever trader wants to go the other way with the same currency pair.

Three positives of an MM:

• Most market makers have set spreads.
• Market makers normally have user-friendly, downloadable trading platforms that include free charting software
• MMs, since they are your trading partner, tend to guarantee that your orders will almost always be filled.

Three positives of using an ECN:

• The bid/ask prices are normally better because there are multiple sources used to derive them.
• You can make trades within the spread itself and take the role of an MM.
• Prices are more volatile, which is better for scalping.

Many traders who use diverse styles of trading will have accounts with both.  In fact, I have accounts with both.  Knowing the differences between these broker types will help you know how to have the best set up for each type of trading strategy your system calls for you to use. 

And now I would like to offer you free access to a Forex trading system that is 89.1% accurate, so you can literally start trading the Forex today. You can access it now by going to: http://www.foreximpact.com/reports/89percent/

From Jason Fielder – Founder, ForexImpact.com

Choosing a Forex Broker - 9 Questions to Ask Every Forex Broker

Looking for a Forex broker can be a difficult search for traders who just don’t know where to look. If you are looking for a broker, then there are certain questions you need to be sure to ask prospective brokers to make sure you find the reputable broker you wish to work with. There are more questions that are good to ask, and each person may have others they want to add to the list, but these are a great base for what you will need to ask to make sure the brokerage firm is one you actually want to consider.

1. What regulatory authority is your brokerage firm registered with, and in what country?  The NFA (National Futures Association) audits books and is one of the best current regulators. The Forex market is currently far less regulated than stocks, bonds, and commodities—and so this is a very important question.
2. How fast is the order execution?  It should be a second or less than a second. With modern technology there’s no reason for it to take any longer.
3. Are you attached to any bank or lending institution? Banks are more heavily regulated, which gives extra peace of mind, as well as financial security.
4. What country is your corporation held?  The right answer is any country with strict banking laws and oversight.  The wrong answer is anywhere else.
5. What type of a broker are you?  There are Market Makers (MM) and Electronic Communications Networks, and you’ll want to know the difference between the two and which fits your needs best.
6. What is the minimum account trading size?  This is important to remember to make sure your position isn’t closed out because you’re short on funds to cover.
7. What is the margin requirement?  1% is standard, but lower is better.  The more control you have, the better.
8. Is my money held by a public or private company?  You want it held by a public company, because they are insured.  If a company goes bankrupt, you have a better chance of getting your money back.
9. How long have you been in business and how many clients do you have?  Obviously the longer they have been around, the better the sign.  Having a large number of customers for a long time can also help to allay any fears.

If you ask these questions, you’ll be much more likely to find the right brokerage that works for you.

And now I would like to offer you free access to a Forex trading system that is 89.1% accurate, so you can literally start trading the Forex today. You can access it now by going to: http://www.foreximpact.com/reports/89percent/

From Jason Fielder – Founder, ForexImpact.com

Forex Winners - 5 Tips to Forex Trading Success

Forex trading is where the big money is for traders, but the currency market can also be a place where you can lose a fortune if you don’t know how to approach it right. Making a profit at Forex trading takes many different factors going the right way, but here are five tips that will help you be a Forex winner instead of a Forex loser.

1) Don’t trade on emotion. There is no place for worry, panic, gut feelings, feelings of invincibility, or anything else here.  You don’t make trades based on gut feelings or what you want to see happen. You need to trade using the fundamentals and technicals. You can’t be scared or overconfident.

2) Lots of Analysis. If you have one method of technical analysis saying you have a good trade, that’s only a start. If you have three, then you’re really on to something. It’s not always necessary to get multiple confirmations, but it does help.

3) Follow the indicators. When it’s time to enter a position, don’t wait and see if it starts trending the way you predict. Just enter the market. Likewise, when it’s time to get out, get out.

4) Use a proven trading system. This one can’t be emphasized enough. Especially if you’re just starting trading the Forex market, you will want to use a system that has been used and proven to work over a long period of time.

5) Don’t try to “outsmart” the market. Some of the best investing minds in the world have lost millions trying to dictate what the market will do or to “outsmart it.” There is no holy grail of perfect trading patterns. Learn how the markets work and choose a system that fits your personality.

Use these five tips and you’ll be on your way to being a Forex winner!

And now I would like to offer you free access to a Forex trading system that is 89.1% accurate, so you can literally start trading the Forex today. You can access it now by going to: http://www.foreximpact.com/reports/89percent/

From Jason Fielder: Founder, ForexImpact.com

Forex Trading Education - Learn the Markets

One of the major parts of learning to become a successful Forex trader is getting a proper Forex trading education. The Forex market is a difficult thing to master and there are so many variables that affect every single currency pair. It’s almost always more complex than many beginners imagine, but that doesn’t mean that it’s impossible to become a successful Forex trader or that you need to be some kind of rocket scientist to pull it off. Getting a good Forex trading education is the first step, and that’s available to anyone who is willing to work and invest in themselves.

There are many different ways to get a good Forex trading education. There are tons of free resources online, but make sure to check each one to see how reliable it is. If every other paragraph is touting a new fool proof system, look somewhere else. There are many free Forex e-books online that will at least outline the basics of the Forex market and help you become familiar with how trading works. Many member sites or trading systems will also offer a similar free e-book as a sign up gift.

There are some absolutely excellent print books out there, as well, and Forex trading forums online. While the information coming from forums is worth a grain of salt (as is the case with any online forum interaction) you can often get good information on basic websites to check up on, print books that are excellent teaching tools, and warnings on sites or paid programs that are scams.

Forex trading is not an area where a trader can get lucky and profit. The traders who are smart, have a good system, and have an in depth and respectable Forex education are the ones who are going to prosper.  Whether you are a green newbie who has only just heard of Forex trading, or a long time trader who has done pretty well, there is always room to learn more and to refine your skills. Only a solid Forex trading education offers that.

And now I would like to offer you free access to a Forex trading system that is 89.1% accurate, so you can literally start trading the Forex today. You can access it now by going to: http://www.foreximpact.com/reports/89percent/

From Jason Fielder: Founder, ForexImpact.com

Forex Day Trading - Short Term Trading, Not for Beginners

Day trading is exactly what it sounds like: trading that all takes place in one day. In day trading the short term is the main focus, meaning all entrances into, and exits from, the market need to take place on the same day. Often times day trades can take only a few hours to enter and end, with the hope that each trade nets a small profit, and that those small profits add up.

Day trading requires a quick entry and exit and the ability to efficiently use technical analysis and apply it directly to your trades. The strategy used by day traders isn’t to find one long term trade that does well, but to find several smaller trades that make a few pips here and a few pips there. At the end of the day the strategy is to have enough wins over losses that they add up to a solid profit for the trader.

Scalping is an extreme example of day trading in the Forex markets. Traders who employ scalping trading methods (appropriately nicknamed “scalpers”) are traders who buy into a position intending to see quick movement and profit off a short transaction, often times within a minute or a couple minutes of making their entry into the market. True scalping involves when a trader opens and closes a position in literally minutes—or sometimes even less than a minute!

This quick in and out is hoping that after a quick movement and show of profit, and immediate exit will in theory help minimize risk while collecting smaller profits bit by bit. This is an advanced type of trading, that shouldn’t be tried by pure beginners into the Forex market, though if you get a good system and some experience, this could become an option down the line.

And now I would like to offer you free access to a Forex trading system that is 89.1% accurate, so you can literally start trading the Forex today. You can access it now by going to: http://www.foreximpact.com/reports/89percent/

From Jason Fielder – Founder, ForexImpact.com

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