Keeping a Forex Trading Journal to Follow Your Progress

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When you first start in Forex trading probably the last thing on your mind is keeping a Forex trading journal. After all this is an extra step in your already busy Forex trading day. The fact is that keeping a Forex trading journal will help you to become a more profitable trader.

One of the first things that comes to mind when many beginning traders think of a Forex trading journal is that it might have a negative impact on their trading. The main reason for this type of thinking is that in the trading journal your recording winning as well as losing trades. Inexperienced traders don’t often realize exactly how important losing trades are. By recording your losing trades you are giving yourself the opportunity to continually evaluate your Forex trading and learn from your mistakes. This does not mean that just because you have a losing trade that you made a mistake. Losing trades are a part of Forex trading and losing trades can be the end result of a good Forex trader executing a good Forex trading system.

Recording your trades in your trading journal gives you of the opportunity to know what happened rather than try to guess what happened during a particular trading day. Studying a trading loss on a particular day can provide you with invaluable insight that can help you to improve your Forex trading system and your trading overall. For instance, you may refer to your journal and notice that a large percentage of your losing trades are happening during periods of extreme market volatility. This is extremely valuable information and further research may dictate that you filter your trades during periods of extreme market volatility.

Based upon what we’ve looked at so far you can clearly see the value of keeping a Forex trading journal. Let’s take a look at some of the things we would like to list in our Forex trading journal:

Date and time — The trading day as well as the time you’re making the entry into your journal.

Currency pair traded — Here you will list the currency pair your trading such as the euro dollar US dollar.

Entry price and time — List your actual entry price as well as the entry price dictated by your Forex trading system.

Exit price and time — List your actual exit price as well as the exit price dictated by your system…if there is one.

Name of broker — The name of a Forex broker you’re using for this trade.

Reason for entering the trade — This could be as simple as writing, “I entered the trade based upon my XYZ trading system”.

How you were feeling — A few words about your mental and physical state during the trade.

Additional notes — List any additional information that you feel may be pertinent. You can list such items as the economic reports that came out on that particular day or your own notes on the general state of the market.

The list we’ve just covered is by no means comprehensive, but it is an excellent start for your Forex trading journal. Your journal can be in any number of formats such as one created by your word processor, a journal in Microsoft Excel, or a physical notebook where you write in your entries during the trading day.

Remember that your Forex trading journal shouldn’t be viewed as an extra task that has to bog you down, but rather as an educational experience to further your growth as a successful Forex trader.

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Why Are Traders Interested In The Forex Market

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As the biggest financial market in the world the Forex market draws the attention of millions of potential investors. Currency trading is a very trendy and popular way for traders to grow their investments. Few other methods of investment have grown or continues to grow at the rate that currency trading does. Founded in 1971 as a cash inter-bank and inter-dealer system the Forex market is not a market in the traditional sense of the word. The market does not physically exist in any country or location. The actual buying, selling, and trading of currency is done either by telephone or computer. In that sense it is only a market in name only. Since its founding the Forex market has grown into one of the of the most popular forms of investing worldwide with over 3.5 trillion dollars in turnover every day.

When does the Market Open?

The Forex market is distinctive from other trading markets because it essentiallynever closes. It remains open all day 5 days a week with no breaks from the action. Every country has people who are willing to trade amongst each other at any time of day. This is the reason why the market is so appealing to people. Traders appreciate this aspect of the Forex market and use the flexibility of trading at any time of the day to their advantage. They do not have to worry about the market closing at a certain time every day or what would happen to the market during the overnight hours.

How Exciting is the Market?

While around the clock trading is already a big draw for traders they are also drawn in by the atmosphere of the market. Trading can be very exciting for investors and the Forex market has no shortage on excitement for its participants. There is a great sense of liquidity in the market thanks to trillions of dollars changing hands every day. The amount of money being exchanged each day and the seemingly endless number of traders makes trading in the market thrilling. Any trader or potential trader looking for endless excitement should look into the Forex market. It is set apart from other markets in that you can enjoy it all day long without worry about when the starting or ending bell would ring. That lack of day to day stress over such things adds a certain fun element to the Forex market that cannot be duplicated.

Is the Forex Market for me?

Originally the trading market was only for the rich. A starting trader had to deposit at least a million dollars with their bank to begin trading on the market. Since the amount of the initial investment was so high it was very difficult for anyone but the rich to trade. As time went on the market opened to traders who had less money to invest. The more accessible market allowed many small time traders to begin trading from the comfort of their own homes. The lower margin requirements allowed smaller traders to trade with larger traders on equal terms. This made the Forex market even more attractive to the small investors. The explosive growth of the Internet allowed smaller home based traders to get in on the action via their home computers. It was not until recently that anyone but the larger traders were allowed to access or use of the Forex on any level. Now the Forex market works with all types of investors.

The Forex market is one that clearly offers a number of opportunities, flexible hours, and a high level of excitement. Millions of people are drawn to the Forex market on these reasons. The sheer number of options in the market is what makes it a popular discussion topic in top business schools today. Check for classes about this exciting opportunity at your local college if you’re interested in learning more. Taking a class will help you get informed about the rules and regulations that all traders need to know. Once you learn the rules of the game you can jump right in and begin trading in this exciting marketplace!

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What To Look For In A Forex Broker

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Let s face it: Very few of us actually succeed in teaching ourselves how to do something we ve never done before. If we wanted to play the guitar, we probably found a good guitar instructor. If we wanted to take up skiing, we probably availed ourselves of a good ski instructor. And if we want to trade in foreign currencies, odds are we re going to start looking around for a Forex broker who knows what he or she is doing.

What should we look for when we choose such a broker? There are at least eight different criteria to look for, and they include (1) trust, (2) experience, (3) favorable reviews from past clients, (4) a favorable track record, (5) the amount of advice they give, (6) convenience, (7) the amount of margin they offer, and (8) speed.

While all the abovementioned criteria are extremely important, perhaps the two most important ones are trust and experience. Obviously, you want to trust the broker you choose, and it stands to reason that the more experience they have, the greater your trust level would tend to be. This is not to say that you can t get good service from a new broker; in fact, some of them are very trustworthy. The fact remains, however, that most people feel more comfortable retaining an experienced broker, which is why many new brokers find a firm to which they can attach themselves and gain a mentor and additional experience.

Evidence of the success of a broker can be found in references from satisfied clients. The more you can speak with past clients who can attest to his or her performance, the more confident you can be that the broker will give you the same degree of service other customers have enjoyed. And while you are ultimately the captain of your own financial ship, you ll have more confidence in a broker who is willing to give you as much information and advice as possible. After all, knowledge is power. Furthermore, whether your broker is conveniently located may be yet another factor in your decision to retain him. If you live in New York or California, you will probably not want to retain a broker who resides in Ohio, though the age of the Internet has certainly made this consideration of less import than it used to be. After all, you can communicate with your broker no matter where you are by email or fax.

The amount of margin a broker is willing to offer you cannot be overstated as a consideration. Margin is a means to leverage your money, so a broker who will give you a 50 to 1 margin is more valuable than one who is only willing to offer you a 20 to 1 margin. Also, speed is another great concern. Does your broker return your phone calls and emails in a timely fashion? Also, is their speed of trade execution fast enough for the way you trade?If not, you may want to choose someone else.

Since your broker is someone you can trust and work with for a very long time, make the effort to choose wisely when you pick your broker. Ask for references from friends or family members who may have traded in Forex. It is perhaps quite possible to get a reference to a broker that you know you can trust.

If you don t have family or friends who have ever used a broker to trade in Forex, you can go online and do some research. Message forums, chat rooms and email groups through Yahoo, Google and other portals have tons of information that you can freely utilize for finding a broker. Just go online and start asking people how they found their broker. One of the best indicators as to whether you ll be happy with your broker is finding several clients in an online community who can attest to the success they have found by retaining this or that particular broker.

While you should take advantage of all the resources the Internet has to offer, including the number of people who are now online, you should not forget to ask your own questions online to learn what experiences people have had with this or that particular broker. You can also read trade journals and ezines to further supplement your education. In other words, read as much about the Forex industry as you can before you jump into the pool. This will make you a smarter shopper, and also a better trader.

Remember that finding a Forex broker is a process. You might even say that it s really its own job. Why? Because when you search for a Forex broker, you re conducting an employment interview so that you can determine whether this is the broker you want to retain to oversee your financial matters. Ask questions, ask for references, and otherwise don t be shy. Check with other people in the office to determine whether you would trust them to oversee your accounts in the event that your broker were incapacitated. Moreover, see if your potential broker will offer you the opportunity to take advantage of a demo account so that you can practice investing before embarking on the real thing. If the broker treats you fairly and seems to want to educate you, odds are he s more focused on the customer than on filling his treasury, so you know you ve done well if the situation feels right. Ultimately, though, a good broker will be able to unwaveringly answer your questions and help you make it through the learning curve.

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What Are Forex Charts And How To Read Them

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For online forex trading, there are two basic approaches involved while learning to read Forex Charts, namely fundamental analysis and technical analysis. In the fundamental analysis approach, political and economic factors are used to determine trade trends and the charts are used as a reference only. Technical analysis studies the relationship between the price and the time by analyzing the historical price activity. This involves the prediction of forex price trends with reference to time.

Let s select the most traded pair of currencies, the US dollar and the Euro, as an example to illustrate the process. The dollar is placed on the right hand side of the chart while the Euro is on the left side and both are expressed in relation to each other during the pairing process. Forex charges involved indicate the amount of currency on the right side that is needed to buy a unit of the currency on the left side. The last price displayed on a given date is always highlighted on the chart. The time is recorded horizontally at the bottom of the chart while the price scale is displayed vertically on the right hand side edge of the chart. The time and prices are often displayed in caps to remind the trader that technical analysis is in progress and it involves relationship of price with reference to time, which is the fundamental rule of this type of analysis of relationships.

Many graphics like bars, lines, point and figure and Japanese candle sticks are employed to observe the price and time movements on a chart, the most popular one being the candle stick method. In this method, a fat red or green section represents the body of the candle stick while the lines protruding from top and bottom form the upper and lower wicks. The body size of the candle as well as the size of the wicks will be varying as per the price range for the candle. Longer candles indicate more price movements during its trading time. The top end of the wick indicates the highest and the bottom wick shows the lowest traded prices for that particular currency. A bullish trend of a candle or currency is indicated by the green color and by a higher closing price of the currency compared to its opening price, indicating a higher demand for the currency and a lower supply of the same. A candle with no wicks indicates continuously falling or rising prices for the currency after the opening of the candle’s time period.

Forex charts can be tools of immense help to a trader, though they are not coming in the category of sure fire methods. Many forex traders are regularly using charts to track historical trends, which has become quite popular in forex trading. Using charts to analyze these historical trends can be of great help in predicting the correct trends and making the right decisions at the right time.

Today, internet has enabled the traders to have access to on line charts, thus enabling them to stay abreast of the current and future trends on the currency prices. For the traders who are primarily doing their trading as per the historical trends, these online charts, which can be checked on a minute to minute basis, are of great help. Most forex traders prefer to use a combination of the two approaches that are mentioned above. While charting the historical trends, they keep their eyes and ears open to political, economic and cultural events within a country to enable them to predict the trends of their chosen currency with a better accuracy. Further, they employ charts and other methods to track down historical parallels for a particular political event and the associated behaviour of the currency during that occasion. This type of analysis and assimilation of information can lead to accurate predictions, as far as the trends are concerned. Instead of following a system blindly, a smart forex trader must hone his skills, at least in history and economics, so that he can enhance his ability to foresee the trends. If you want to be a successful and strong forex trader, you must collect all the necessary tools of the trade and use all of them in a timely and effective manner, to obtain optimum advantage.

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Ways To Prevent Forex Scams

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People are eager to make easy money and whenever they find a possible way of making good money they just go for it without even thinking of the consequences. There are notorious persons in all fields looking for such people, and it is the new investors who always become victim to such persons. Experienced persons are relatively unsusceptible to these ploys.

The CFTC of U.S which regulates futures and commodity trading has asked newcomers in the field to be on guard against people who promise huge returns for their investments in the foreign exchange market. The CFTC has published many consumer fraud alerts related to foreign currency trading. The following tips are issued in interest of new investors.

Be skeptical towards high profit-low risk returns

“Make $1900 in one minute”, read an ad for forex trading company. Be on guard against such ads that promise high return with minimum or no risk at all. The truth is that huge profit and large risk go hand in hand in forex. Most investors give up active trading by the end of one year as they cannot afford the risk factor prevailing in the industry.

Be suspicious

Don t spare a penny without going through all the details regarding the company you are planning to do business with. Get a valid address and phone number and verify if it is dependable, verify with the CFTC s consumer fraud alert page check whether it as a member of the National Futures Association (NFA) or is registered with CFTC. Rule out all the possibility of the company being a fraudulent one. Be more careful if you are working on the internet because you can fall for the tempting “get-rich-quick” bait of scammers. Make sure the person you work with is working for that company itself.

Be careful while transferring money through internet. Before giving details regarding credit card number, bank account transfer permission or wire transfers be sure to check the credibility of the company you are dealing with. It has become really easy for scammers to work through internet. It cost a minimal amount to have a professional web site that lures investors.

Be on the look out for high pressure sales tactics A legitimate dealer won t force you to do business with them right at the spot. He will give time so that one can check his credibility and reputation. But as far an illegitimate dealer is concerned he will ask you to accept the deal right on the spot. He cannot afford to let you check his credibility. Don t fall in the trap of those who ask you invest right there.

Stay away from firms that promise to trade for you in the interbank market. Keep away from those who say that they will trade for you when the market prices are better. The interbank market consists of financial institutions, large corporations and currency traders that include banks. Take it as a warning signal when ever you hear such promises. Also be careful while paying huge amount for training centers which offer you to help earn huge amount in a short span of time. Make deals with those companies that are transparent, those which let us have and scrutinize their details.

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Ways To Guarantee Failure In Forex Trading

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There are a number of common misconceptions that can spell failure in Forex trading. The pulse pounding excitement of quick money has designated Forex trading as the best game in town. Nearly anyone can scrape together enough money to start to play and the thought of rolling in huge profits with minimal efforts keeps many people interested in becoming permanent players. Shades of Casino Royale dance in the average participant’s mind, even those that usually display a distinct conservative bent in their financial dealings. The tremendous size of the Forex market and the flash of literally trillions of dollars changing hands on a daily basis makes it seem a fail safe method for generating great wealth in spite of the fact that for very winner there is a loser in the selfsame transaction. Here are nine failure proof facts that everyone knows are “true”, but they can ensure your future failure in the Forex.

The smart trader makes money on every trade There is no way to make every trade a sweet deal. By their very nature each trade has an upside and a down side. It is the chance of the draw that sometimes you are bound to be on the down side no matter what you do or what you know. If you try to come out on the winning end in every trade, you my fail to make an exit from the market when it is most advisable. You will tend to lose more than necessary and for a longer period of time than is warranted.

The market is so lucrative training isn’t really necessary to cash in. Lack of knowledge just about guarantees you will make every blunder possible in the Forex at some time in your career. A casual glance at a few news articles will not give you a sound background in Forex trading. You have to make a real effort to decipher the ins and outs of the Forex to be able to spot opportunities to enter or exit with minimal losses.

Make enough trades and you are bound to turn at least minimal profits. Trading frequently only guarantees a profit at the end of the day for the broker handling your trades. While you may end up making a few hundred dollars in a day, or not as the case may be, you are guaranteed to leave a lot of cash on the table with this tactic and never live up to your trading potential.

Just hoping to turn a profit is enough strategy for the Forex currency market. You do not have a winning football team without planning the plays and the same applies to trading in the Forex. Establishing a short term and a long term plan is necessary to keep you focused when losses inevitably occur. Loss of focus is the primary reason over 95% of novice traders give up on the Forex within the first year. Vision to see beyond immediate losses is necessary to maintain your enthusiasm in trying times.

Hang in there long enough and you’ll come out rosy in the end. It is difficult to step back, reassess a situation when it is not working, and then change course. Instinct sometimes tells you to just keep going and not change horses in mid stream, but markets never heard of horses. Markets can change their flow in a moment and it is up to you to clearly see the change and know when you are throwing good money after bad. You have to know when to cut losses and when to take profits and never fall in love with any particular trade. No one trade will make your fortune or break it.

If it sounds great it has to be a winner and you need to jump on it before it is gone. Gossip in trading is no better than gossip near the backyard clothesline. Rumors generally have no factual basis and real decisions cannot be made on the basis of such ephemeral information. 99% of the time you will get burned and lose profits by following the crowd. Assess the situation with your own eyes and make your own judgments with sound information you can count on.

If you trade enough times in a day you are bound to hit the big one. Trading any one currency willy nilly or trading many currencies without really understanding what is going on is a formula for failure. Each currency needs to be well understood before trades can be launched with any real knowledge how the market will likely be responding to market stimuli as they are unfolding. Your percentage of successful, profitable trades will go up only if you concentrate your efforts in a specific area you have analyzed well.

You will make money in the end if you keep your eyes on the future prize and make enough short term trades one after another. Your mistaking apples for oranges if you are looking long term, but trading short term. You have to pay attention to what you are doing when you are doing it. Short term trading responds to circumstances unfolding in the not too distant future. Events that may not take place for a long time will have minimal effect on short term markets and will not be indicative of profitable trades in the shorter time frame.

You need to always have a trade in the hopper to generate money in the Forex. The Forex ebbs and flows like the tides in the ocean. Depending on the movement in the market, there may or may not be an opening for a profitable trade. Do not jump the gun and trade for tradings sake. Rather, trade only when there is a clear indication that the contemplated trade will end up being a profitable one. This will keep losses to a minimum.

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Tips For Minimizing Risk In Forex Trading

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Speculative investments like Forex trades are made in hopes of profits, but there is always a chance of losing money. This kind of risk can be found in the stock market, the commodities market, and any kind of business. However, Forex traders take measures to protect their investments by heeding the following suggestions.

Follow current events. Keep up with world news and politics by reading journals, magazines, and newspapers and of course, watching the news.

Work to understand economics. Take a college course for some basic background in the field, and further your knowledge by reading articles and books about this subject. Familiarize yourself with works written by eminent economists like John Maynard Keynes, John Kenneth Galbraith, and Walter Williams.

Make a habit of reading periodicals such as The Wall Street Journal and Investors Business Daily.

Obtain a demo account, and practice with it before venturing into the market.

Find a trustworthy broker with whom you are comfortable doing business.

Reach out to other traders who know what they’re doing.

Study Forex charts, and be mindful of historical trends.

Sharpen your skills in a Forex trading course.

Use the Internet to do research on Forex.

Only invest money that you don’t need for anything else. If you lose this money, then at least it is a loss you can afford and you won’t be out of money needed for important expenses.

Forex trading is often described as a game, but it is not a pastime to be dabbled in timidly. You must be well-armed and in a position to look after your investments. Let s look at the example of Jerry Sparks. He started out with only a bachelor s degree in history with a minor in political science, but went back to school for some economics and business classes. He watched CNN, CNBS, MSNBC, and Fox News on a regular basis. He also visited all the major websites, and read several magazines. Jerry Sparks was determined to earn enormous profits from the Forex market, and he succeeded. He only invested risk capital, meaning he could live without the money if it were lost to him. He also spent time practicing with his demo account before entering real trades. Jerry was a Forex trader who did extremely well for years by following the tips set above.

However, Jerry s friend Sam Franks was not as successful. Sam was bored by economics and never bothered to take a single course in it. The name John Maynard Keynes was totally unfamiliar to him. He also knew very little of history or politics. Sam went ahead and invested his life savings in the Forex market without even first attempting to use a demo account practice. He knew practically nothing about inflation, historical trends, the currencies he was trading, or the activities affecting his investment. Sam s ignorance cost him some of his capital. The difference between these two traders is significant. Jerry Sparks educated himself, kept abreast of the latest news, was prepared for losses, and made a killing. Sam Franks neglected to minimize risks to his capital, and lost some of his life savings.

The tips in this article are intended to help you trade Forex, and most of them are about being well-informed. You should understand the forces that affect the market. Let s say for example that a country is experiencing a significant amount of inflation. Therefore, it might not be wise to invest in its currency. However, you may profit by hedging against that particular currency. This scenario illustrates the advantages of staying informed, and this is possible in all avenues of life, no matter what your age or background.

Such information can be obtained from all sorts of sources. There are many good classes available, some of them online. You can also educate yourself outside of a classroom. Books are just one great source. People with similar interests meet in online forums and chat rooms to share stories and tips. You can even learn from the masters: some economists write columns for newspapers and magazines or have their own websites. From these, you can gain insight into the way their minds work and discover what currencies they would invest in. By constantly obtaining information from multiple sources, you can hone your decision-making skills, and difficult decisions will become less so when you have more information. Like any other job, you are more likely to succeed if you are better prepared.

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The Role Of Emotions In Forex Trading

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Emotions have no place in forex trading. If you depend on your gut feelings you are certain to lose unless, of course, your gut is an expert in trading strategies!

Your trading decisions must be based strictly on your understanding of the past and current market trends, and the strategies you have developed based on this. The currency market is highly volatile, subject to sudden and frequent fluctuations in currency prices. It is natural that this will cause extreme swings in one s emotions. However, you should stick to the trading strategy you had worked out earlier even when emotions run high. The only winning mantra in forex trading is to have a strategy, analyze the market, and to patiently persevere in your efforts. Failure to follow these golden rules will only result in losses.

Going by what you feel is a losing proposition. You might ask how can acting on one s gut feeling be so disastrous. Decisions made based on emotions affect your trading in several ways. Expert traders will always tell you that you must develop a trading strategy or system, and keep to it irrespective of whatever happens when you trade. The system will tell you when to make the trade, what currency to buy, and what price to use for your entry. This is the only sure way to make the most profit. In sticking to your system you might feel that you are going against the data that you see. But be assured that there is no other way of maximizing your profit except by strictly keeping to the system that you have determined to be profitable.

If you are new to forex trading, be aware that the most powerful tool you can use is a system based on the prevailing market trend. Experienced traders always make use of this and they make huge profits. These experts will tell you that when your gut feeling is contrary to your system, it is the system which will be the winner, and not your gut feeling.

Perseverance is an important factor. Market trends do not progress in a smooth line upwards or downwards. They trend to be spiky line with dips and spurts. However, within these jumps and dips it will be possible to see a pattern. Outside factors sometimes cause sudden plunges or upward spiraling. If the currency you are trading in takes a sudden nose dive, all you may want to do is to cut your losses and quit trading. But if your system tells you that you should keep trading, do not give in to your panic attack. Similarly, if you become exuberant when the value of the currency you are trading starts going up, and want to buy a lot of it, you should follow your system which will tell you when to maximize your profit and when to stop trading.

A mechanical system will help you keep emotions out of trading because it will not be have panic attacks or become exuberant, or be hopeful that a run of bad losses will change. A mechanical system does away with emotional involvement in trading, a major factor that causes heavy losses. A successful system, whether it is your own or someone else’s, will tell you when to trade and when to quit. It will also give you the mitigating factors, and an exit strategy.

Let s summarize with a trading system example:

When should you buy currency? When a currency drops more than five pits, your analysis will give you a buy order.

When should you trade one currency for another? You exit trading either to maximize your gain or minimize your loss. This will be indicated respectively by the take-profit or stop-loss orders set in your system.

What factors permit changing a decision? Though forex market moves in predictable patterns, there are always variations of a trend within a pattern. When you consider these variations you will know if they would really make a difference. This is where wishful thinking can come in if you allow emotions to interfere with your trading.

How will you trade out of a currency? Your exit strategy will give you a simple stop-loss order when your loss reaches 5%, or a take-profit order when your profit reaches 40% In other words, your system will tell you when to start trading and when to keep on trading, and when to quit, and your emotions will have no chance of playing havoc with your trading.

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The Lowdown On Day Trading

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Day trading is a style of trading in the currency market, commonly referred to as the forex (short form for foreign exchange) market in which a trader completes his entire trade activity during a single day. This involves quick buying and selling to make profits from the fluctuations in the currency exchange rates during the course of the day. A limited number of transactions are made during the day with the purpose of optimizing gains from the volatile forex market.

The concept of day trading can be confusing depending upon the method or system employed, in the trading process. Currency rates keep fluctuating during the entire day, depending upon many factors like supply, demand, important political or economic decisions and even on rumors. When compared with other markets like stock markets, forex markets are easily affected by rumors. Real-time events, happenings across the world affect the currency rates fluctuations seriously. Mere gossip and rumors can bring the rates down or push them up without any clear logic or reason. An expert trader who is able to analyze these events and trends in an accurate manner can make significant gains through day trading.

The currency market is the premier liquid market in the world involving daily forex trading volumes exceeding 2 trillion US dollars. This enormous daily trading volumes of forex market ensures that it remains as the world s largest and most efficient market. The practice of day trading is the prime reason for some of the liquidity and huge trade volumes of forex market. The key difference between day trading and other forms of trading is that the holding period for the currency is short and nothing is held beyond the close of trading for that particular day.

The currency market is open throughout the day, with no market closing involved, and hence the rule is slightly changed. The currency market remains open from Sunday afternoon to Friday afternoon and trading goes on in a continuous manner, enabling you to pick your convenient time of trade instead of being tied down to a trading time schedule.

HOW TO MAKE MONEY IN DAY TRADING

The superficial difference between a day trader and an investor is the length of time for which each one of them holds on to their trades. The real difference is in their mindsets regarding short term vs. long term and liquidity. An investor buys with an intention to hold on on a long term basis as he is confident of its steady increase in value, resulting in profits over an extended period of time. A day trader is like a surfer who rides the waves of the many price fluctuations in the currency market.

LIMITING OF THE LOSS IN DAY TRADING

Minimizing losses in day trading can be a hard as well as a tricky issue for a new trader. Let’s say you make a trade in a currency with a downward trend, at a point which you presume to be pretty close to the support point. It may be that the currency price bounces up and keeps on rising further down. This can lead to a situation where you re losing money at a point where you were supposed to be reaping profits. The obvious choices in front of you are either to hold on to the trade as per your initial plan or to limit the losses by exiting the trade before it slips further below the permissible loss levels.

If you want to be a winner in day trading, you must maximize your wins and limit your losses. Ensure that you set your stops and stick to them without wavering. Similarly, if your forex trading system dictates, decide in advance regarding the profit you plan to make in a specific trade and set a limit order to exit the trade as soon as the currency hits the preset mark.

YOU MUST KNOW WHAT YOU RE DOING

As in every other business, those who take their time to learn the forex market in an exhaustive manner, so as to accurately analyse its trends, and master the ins and outs of the trade, are more likely to be richly rewarded. Those who jump in without any forethought or without the necessary preparations essential for the forex market, are doomed right from day one and are destined to incur heavy financial losses. You must never forget the fact that high profit potential is always accompanied by higher risks. Ensure that you re doing the necessary ground work by absorbing the correct training. Read as many informative books on the subject before you start with your own trading. Harnessing the key skills, necessary knowledge and expertise in the forex market is very important if you want be successful in this field.

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The Impact Of The Euro In Foreign Currency Exchange

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The foreign exchange market is known as the Forex. The Forex is the largest and most liquid trading market in the world. The Forex does not have a specific trading place almost never closes. Compare that the Stock Exchange which is located in New York City and has limited hours. Every day over $2,000,000,000 is traded on the Forex.

The Forex operates 24 hours a day during the business week. Six pairs of major currencies make up 90% of the trading activity on the Forex.

The six currency pairs are the euro and the US dollar with the representation (EUR/USD), the Japanese yen and the US dollar known as (JPY/USD), the US dollar and the Swiss Franc(USD/CHF), the Australian dollar and the US dollar (AUD/USD), the British pound and the US dollar (GBP/USD) and the Canadian dollar and the US dollar (USD/CAD). Each of these currencies acts a little differenly on the Forex. these currency pairs change on a daily basis.

The Euro is a critical part of the foreign exchange market because it represents not just one country but 12 European countries. The twelve countries are Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain and Sweden. Denmark and the United Kingdom do not use the euro as their official currency. The euro is used as currency in much of the European union and is roughly equal to the US dollar, naturally this varies with the exchange rate.

The euro was created in 1999 when all of the European countries locked the value in place relative to the euro. Therefore, from then on, all of the currencies were worth the same as the euro. From then on the euro was used throughout Europe, across borders without the need to change currency in different countries. Once this was accomplished the euro gained acceptance throughout Europe. The Forex is both positively and negatively impacted by the use of the euro throughout so many countries.

One important benefit is the reduction in the exchange rate. Therefore, investment became easier and less costly. Overall, the import and export of products was simplified leading to higher profits as the risks in the changes of currency values was eliminated. Therefore, the intra-European trade was increased by removing the risks. The obvious benefit to using a single currency is eliminating the need for currency conversion, thus eliminating the associated fees.

These fees are charged by the institutions that perform the exchange. Even if these fees are low, they add up. Do that a few times and the fees quickly add up. Eliminating these fees helps the economy. It is important to keep in mind that by creating a single currency, Europe broadened and deepened its overall economy. This impacts the Forex and how the euro performs. This means an increase in the liquidity of the European markets. This results in an increase in competition even when the euro is not more widely used and accepted. This impact is in the way consumers spend their currency throughout the continent.

This results in additional money entering the stock market. Now that the euro is established as a major currency, its participation in trades on the Forex will increase. The euro is quickly competing with the US dollar in dominating the Forex. The euro is accepted throughout the world, expanding from its conception in Europe. Individuals and business using the euro benefit by not having to exchange their money.

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