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By Tom Newman On August 4, 20104 Comments“Buy low, sell high” is not just strategy for trading stocks but works equally as well when you’re investing in Forex. When you’re trading stocks you study a company’s prospectus, try to map the market trends and study the volatility and volume. Trading in Forex requires an extensive knowledge of world affairs including political nuances and foreign policy as well as general stock market knowledge.
For instance, everyone knows that Iraq is operating under sanctions from various countries and its trade is limited. The dinar isn’t worth much at this time and some people would call you a fool if you decided to invest in it. The financial outlook for the dinar doesn’t look very bright right now even though Iraq is rich in natural resources. A dinar is worth less than one American penny at present; you could secure quite a bit of Iraqi currency with very few dollars. But would it be worth it and would you get a return on your investment?
This is where strategy and your knowledge of world affairs comes in. On the surface the casual investor would think that investing in the dinar would be nothing more than finding a place to park your cash. But the investor that keeps up with current events and stays up to date with political projections might see it differently.
In order to successfully invest in Forex, one needs to have some degree of imagination and be able to project the result of current foreign policy along with the personalities of world leaders. The Iraqi dinar, for example, would be a worthwhile investment once Iraq was relieved of all the trade embargos and other restrictions that have been placed on the country. The recent moratorium on drilling in the Gulf of Mexico plus the ever increasing sympathy of the United States government with the culture of the Middle East points to sanctions being relaxed or removed in regards to Iraq. Thus, the dinar would skyrocket in value and any dollars invested in it would produce a handsome return.
As you can see, a little imagination combined with studying current political trends is essential in deciding what to buy when you’re investing in Forex. You won’t always be right when you draw conclusions about the results of political trends and foreign policy. However, anyone with a basic knowledge of how the world economy works can be reasonably certain that the motive of profit will prevail no matter what world leaders claim their policies are.
When you are trying to decide whether to invest in a particular currency you need to look into all future scenarios and map out all the ways that the world economy-and particularly major government players-would profit if that currency rose or fell. Assess the political climate and attitudes of all the countries involved, who could profit from that currency’s movement and what their motivations are. Once you pin down a probably future scenario you can decide whether or not that particular Forex investment would be a good one to add to your portfolio.
Join us at FXChartTrader.com home of the FX Chart Trader System to discuss this and more. We want to help you be a successful Forex Trader and learn to read the economic news of the world.
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By Tom Newman On August 10, 2010
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FX Chart Trader is pleased to sponsor “An Introduction to NinjaTrader” Tuesday August 10th at 5:30 PM EDT (New York Time)
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By Tom Newman On July 17, 2010
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EURUSD PRICE ACTION
The Art of Forex Trading can be pretty tricky. The market can can change direction or trick you into believing the direction has changed. Your Trading Edge should include the use of different technicals and fundamentals. The development of your Edge should include:
- Market Filters: You will want to see the big picture
- Market Dynamics: Pattern and Price Movement Knowledge
- Time Frame : The Proper Use of Time Frames Necessary to Trade
- Zone Wave Trading: Setting Up the Importance’s of Measured Moves
- Tools: Fibonacci, Bands Waves and Moving Averages Telling the Picture
- Trade Setups: Know the Market Fundamentals with Specific market Setups to Identify Buy & Sell Zone and Targets
Your trading edge will guide your decision to consistent trading profits. The in and out of trading with more wins than losses will lend your edge to a profitable system. You trading edge is something that you as a trader will develop over time and understanding of market condition with a trading system and process that makes sense to you.
Your Trading Edge is the most important aspect of consistent trading. Take the time to develop a trading edge that will guide your decision making activities. You can start to develop a edge by understanding price action , use of filters, market setups and disciplined trading activities.
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By Tom Newman On April 10, 2010
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Forex trading is an extremely lucrative investment to get into. It is the exchange of foreign currencies world wide sold for a profit depending on what the market does. The market is the people, banking institutions, and international corporations that make up the more then 1.5 to 3 trillion dollars of activity that takes place everyday. But there are still some people who are confused as to exactly what forex trading is and how it works. So in this short article I am going to explain it really simply so that you get the basic concept down.
With forex trading you are trying to buy currencies at an exchange rate for another currency, this is called a currency pair. For example you might exchange the US dollar for the Japanese yen or you may exchange the Canadian dollar for the Mexican peso. You are going to use the American dollar as the unit to determine what the value of the other currencies are, because the less the American dollar is worth the less of any international currency it will buy you. This rule applies to every other currency as well. If the currency would get you less in US dollars then the currency isn’t worth much.
What you are trying to do with forex trading is make what it known as a pip. This is a fluctuation in the right direction for your investment. Decimal format is used to calculate the exact exchange rate for currency internationally. For instance a US dollar might get you 1.5617 euros. You make a profit when the number moves up a point. The more this number moves up the more pips you make. A pip can be a unit of twenty dollars, ten dollars, or less depending on what type of account you are playing with and the size of the lot.
Trading the forex is not like the stock market where they are governed by the SEC. Most of the trading is done over the phone or online. A great portion of the money that is exchanges comes from only five percent of the market banks and large corporations. The other 95% comes from small time investors who may have a few thousand dollars in their account to play with.
Of course there is a lot of technical jargon involved like, Fibonacci retracement, which means the level at which a market trend will break, and fundamental analysis which simply means information you are fed over the news. These kinds of terms intimidate most people, but trust me they are easy to learn and there is no reason why you can pick them all up.
The basic point is to buy one currency at an exchange rate that will rise up enough in value to be able to buy more of a currency which is worth less now because of the increased value all centralized around the US dollar. The 0.0001 example I gave above is spot on for most of the major markets, but for the smaller ones sometimes the price might be measured differently.
I hope this article has been helpful in helping you to understand just how forex trading works.
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By Tom Newman On March 18, 2010
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Yes they will, get involved this week and let the CTFC know how these proposed rules will affect your trading . You can go online at http://www.fxdc.org/email.html to voice your thoughts. The time is here for the Forex Industry to clean itself up. Don’t let the action of a few individuals change the rules for you. 10 to on leverage will definitely cut into the opportunities presented in the Forex Market. Get involved and let the CFTC know your position. See the post from the FXDC
THE ISSUE: CFTC Proposed Regulatory Changes
How Will These Changes Hurt the American Economy and the Forex Industry?
Click here to read FXDCs full statement in response to these harmful proposals.
Should the 10 to 1 leverage rule proposed by the CFTC be adopted:
- 90% of the hundreds of thousands of live accounts currently in the U.S. system can be expected to go offshore.
- Thousands of high paying, white collar jobs that require an advanced education and range from software developers to accountants to foreign exchange dealers will be eliminated, or moved out of the United States.
- The United States will cost itself billions of dollars in trade revenue.
- Forex fraud will worsen, not improve.
- Unregulated dealers from around the world will thrive as a result of the 10 to 1 leverage rule. These unregulated forex dealers dont have to worry about capital requirements, risk management models, marketing ethics, dealing practices or even returning a customers funds.
The case against the 10 to 1 leverage rule is clear. The rule will be a boon to foreign forex dealers (both regulated and unregulated), who will grow entirely at the expense of retail forex dealers in the United States. Thousands of high paying jobs will be lost and the potential for tens of thousands of more jobs will forever vanish as well. Consumers will be hurt and more vulnerable to fraud. And the United States will toss away one of the most promising export industries that it has, all in the midst of 10% unemployment.
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By Tom Newman On March 10, 2010
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Forex trading continues to intimidate a lot of people who are not educated on the subject. They have often referred to it as being nightmarish because there are so many technical terms they don’t understand and people are pretty comfortable with the standard stock market way of investing. In this article I will attempt to tell you why any regular Joe can get started in this market and make a profit.
Blue bloods versus the blue collar
Even though the rules of the game changed in the 1970s getting into forex trading was still very difficult for the small time everyday working person to do. You could only get in if you were a large financial institution or a multi national corporation who had business entities all over the world.
Not up until the 80s were the rules of the game really changes so that a small time investor could come to the playing table. With the advent of what is called marginal accounts anyone can get started now and leverage large amounts of money. There are margin accounts that allow 100-1 and some that allow 200-1 so anyone really can get started.
Technical jargon
Some people who are more educated on the subject of forex trading will often try to intimidate people by throwing a bunch of technical jargon their way that they don’t understand. The average Joe doesn’t have to be intimidated anymore because there is numerous software products designed to help them spot market trends and fluctuations so that they can get in at a low price and sell high.
This is not to say this kind of software is completely effective, but it is very powerful at helping people who may not be too advanced in forex to spot signals to set stop limit orders and stop loss orders, which are just ways of helping you to get in low and then sell high or limit loss of investment.
Practicing your skill
When you trade online you have the option to use what is called a demo account. This is usually set up by your broker for a period of about thirty days to help you get more educated on the subject of trading forex. These accounts are a creative way for you to paper trade, meaning practice without having any real money on the line.
These accounts last for about thirty days, and you can sharpen your skills to the point where even when you decide to get in with real money you can open a forex marginal account like a micro or mini, and just play around with some real money for a while before you upgrade.
As you can see it is definitely possible for a complete regular Joe to get started in this game and progress their skills to the point where they can play with larger amounts and lots. You are able to practice on paper first using a demo account to hone your skills and you can utilize special software to help you learn how to spot powerful indicators and profitable market trends.
Let me know if you have any questions I might be able to answer.
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By Tom Newman On March 4, 2010
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Forex traders who wanted to deal seriously on the forex market needs forex trading training to ensure that they will be able to learn the ropes. It is very important because forex markets are highly competitive, fragile and volatile. Proper education on forex trading enables the traders in minimizing some of these risks. Novice traders should really take forex trading training to increase their chances of surviving in the forex market.
Forex trading training involves learning different forex trading terminologies, processes, and concepts. These are essentials that would help a beginner to gain confidence in trading forex.
Forex trading training teaches beginners to make forex charts. In this manner, they are also oriented on making proper analysis and enhance their decision making in a more accurate way in times of selling or buying forex. These are the best characteristics that beginners should acquire because the forex trader’s future depends on their ability to take charge of forex market order flows.
The things that are learned in the forex trading training also involve the basics about order types, margins, bids, leveraging, and rollovers. These are important common terminologies that should be learned by the traders before getting started. In addition to this, beginners also learn about trading psychology on how to deal with discipline, patience, stress, risk management, and commitment. It teaches the traders to use their head when doing the trade instead of their heart.
Forex trading training also tackles about market mechanics, forex trading software tools, reading forex charts, closing a trade, and knowing the best bidding time.
Forex trading training also helps the beginners in tracking the reasons why market shifts happens. If traders understands and read forex charts properly, then they would be able to identify market problems and make sound decisions when trading.
Just remember, a smart and successful trader is an educated trader. Don’t skimp on learning the ins and out of Forex. And make sure you have an excellent resource or two to help you.
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By Tom Newman On February 2, 2010
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How many times have you ever started out with just a plain chart, added a few indicators,you know the ones that you thought were the best from you arsenal of trading. The BB what, the red and white movings lines and all the other ones that you thought really made a big difference in your trading. You used them this way and that way with this setting and that setting, but you never really could understand when you did exactly what they said you lost money and more money,but then you made a little and little more and a little more and then you lost a lot, but you closed the trade before it got too bad, and then you started all over again looking for the perfect set of indicators and the exact same thing happened that happened before.
So now what , What do you do, well the first thing to do is start with the question what are my motives and objectives for trading? then you can take the first step in designing a system that works around objectives and the style of trading you want to do.
Start thinking about you and how you trade!!!!!!!!!!!!!!!!!!
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By Tom Newman On January 18, 2010
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