What is FOREX?

The Foreign Exchange Market (Forex) is the arena in which a nation's currency is exchanged for that of another at a mutually agreed rate. It was created in the 1970's when international trade transitioned from fixed to floating exchange rates, and is now considered to be the largest financial market in the world because of its huge turnover.

Introduction to Forex

All currencies are traded in pairs and each is assigned with an abbreviation. Here are some of them (Table 1):

EUR	Euro
USD	US Dollar
GBP	British Pound
JPY	Japanese Yen
CHF	Swiss Franc
AUD	Australian Dollar
CAD	Canadian Dollar
NZD	New Zealand Dollar
SGD	Singapore Dollar

'Base' currency is the first currency in the pair. 'Quote' currency, or 'term' currency is the second currency in the pair.

USD	/	JPY	=	120.25
Base currency	�	Quote currency	�	Rate

This abbreviation specifies how much you have to pay in the quote currency to obtain one unit of the base currency (in this example, 120.25 Japanese Yen for one US Dollar). The minimum rate fluctuation is called a point or a pip.

Most currencies, except USD/JPY, EUR/JPY, CHF/JPY and GBP/JPY where a pip is 0.01, have 4 digits after the period (a pip is 0.0001), and sometimes they are abbreviated to the last two digits. For example, if EURUSD is traded at 1.2389/1.2391 the quote may be abbreviated to 89/91.

The currency pairs on Forex are quoted as the Bid and Ask (or Offer) prices:

�	�	Bid	�	Ask
USD / JPY	=	120.25	/	120.28

Bid is the rate at which you can sell the base currency, in our case it's the US dollar, and buy the quote currency, i.e the Japanese Yen.

Ask ( or Offer) is the rate at which you can buy the base currency, in our case the US dollar, and sell the quote currency, i.e. the Japanese Yen.

Spread is the difference between the Bid price and the Ask price.

Pip is the smallest price increment a currency can make. Also known as a point. e.g. 1 pip = 0.0001 for EUR/USD, and 0.01 for USD/JPY.

Currency Rate is the value of one currency expressed in terms of another. The rate fluctuation depends on numerous factors including the supply and demand on the market and/or open market operations by a government or by a central bank.

1.0 lot size for different currency pairs (Table 2)

Currency	1.0 lot size	1 pip
EURUSD	EUR 100,000	0.0001
USDCHF	USD 100,000	0.0001
EURUSD	EUR 100,000	0.0001
GBPUSD	GBP 100,000	0.0001
USDJPY	USD 100,000	0.01
AUDUSD	AUD 100,000	0.0001
USDCAD	USD 100,000	0.0001
EURCHF	EUR 100,000	0.0001
EURJPY	EUR 100,000	0.01
EURGBP	EUR 100,000	0.0001
GBPJPY	GBP 100,000	0.01
GBPCHF	GBP 100,000	0.0001
EURCAD	EUR 100,000	0.0001
NZDUSD	NZD 100,000	0.0001
USDSEK	USD 100,000	0.0001
USDDKK	USD 100,000	0.0001
USDNOK	USD 100,000	0.0001
USDSGD	USD 100,000	0.0001
USDZAR	USD 100,000	0.0001
CHFJPY	CHF 100,000	0.01

Spreads & Margins

Alpari (UK)’s mission is to provide innovative currency trading technology combined with quality execution, and competitive margins.

Margin is the collateral required by Alpari (UK) to open and maintain a position:

• • • An open position of less than 3,000,000 USD (3M) nominal value carries a maximum leverage of 1:500.
    • An open position of 3M - 5M USD carries a leverage of 1:500 for the first 3M and a leverage of 1:200 for the remaining 2M.
    • An open position of 5M - 10M USD carries a leverage of 1:500 for the first 3M, a leverage of 1:200 for the next 2M and a leverage of 1:100 for the remaining 5M.
    • For open positions higher than 10M USD, the first 3M carries a leverage of 1:500, the next 2M carries a leverage of 1:200, the next 5M carries a leverage of 1:100. Everything above carries a leverage of 1:33.

For example, a client opens a position of 12 million USD (for example, 120 lots in USDCHF). His margin requirements will be the following:

Nominal value of open position	Funds required to open position	Maximum leverage offered
First 3 million	= 3,000,000 / 500 = 6,000 USD	1:500
Next 2 million	= 2,000,000 / 200 = 10,000 USD	1:200
Next 5 million	= 5,000,000 / 100 = 50,000 USD	1:100
Remaining 2 million	= 2,000,000 / 33 = 60,606 USD	1:33
TOTAL: 12 million	= 126,606 USD

Balance is the total financial result of all completed transactions and deposits/withdrawals on the trading account.

Floating Profit/Loss is current profit/loss on open positions calculated at the current prices.

Equity is calculated as balance + floating profit - floating loss.

Free margin means funds on the trading account, which may be used to open a position. It is calculated as equity less necessary margin.

Calculating profit/loss

For example, EUR/USD exchange rate is 1.2505/1.2507 and your leverage is 1:100. You believe that EUR/USD will go up and buy 0.1 lot of EUR/USD at 1.2507 (Ask price) - for the contract size refer to Table 2. As we can see from Table 2, 1.0 lot of EUR/USD is 100,000 EUR, which means that 0.1 lot (our example deal size) is 10,000 EUR.

So, you buy 10,000 EUR and sell 10,000*1.2507=12,507 USD. In fact to fund this position you do not have to have 12,507 USD but only 125.07 USD. The rest of the money (in our example 12,381.93 USD) is leveraged to you by Alpari (UK).

The leverage (or gearing) mechanism allows you to open and hold a position much larger than your trading account value. 1:100 leverage means that when you wish to open a new position, you need to support a deposit 100 times less than the value of the contract you are interested in.

For example, you believe that EUR/USD is moving higher and buy 10,000 EUR and sell 12,507 USD. Assuming you are right and EUR/USD goes up to 1.2599/1.2601 and you decide to close the position: when you close a long position you sell the base currency (10,000 EUR in our example) and buy the quote currency (10,000*1.2599 = 12,599 USD):

Transaction	EUR	USD
Open a position: buy EUR and sell USD	+ 10,000	- 12,507
Close a position: sell EUR and buy USD	- 10,000	+ 12,599
Total:	0	+ 92

NB: When you close a short position you buy the base currency and sell the quote currency.

To fund this position you only need 100 EUR (approximately 125 USD) not 10,000 EUR. The profit on this position is 92 pips (1.2599-1.2507=0.0092). A pip or point is a minimal rate fluctuation. For EUR/USD 1 pip is 0.0001 of the price (see Table 2).

This example shows a favourable outcome. If EUR/USD had fallen you would realise a loss and not a profit. This loss will be magnified as a result of leveraging. For example, if you close the position at 1.2419, your loss would be $88. Should you have doubts about your understanding of risks, please consult a qualified financial adviser.

Lot Size is the number of base currency, underlying asset or shares in one lot defined in the contract specifications. For details refer to the Table 2.

Lot is an abstract notion of the amount of base currency, shares or other underlying asset on the trading platform.

Transaction (or deal) size is lot size multiplied by the number of lots.

Long Position is a buy position whereby you profit from an increase in price. In respect of currency pairs: buying the base currency against the quote currency.

Short Position is a sell position whereby you profit from a decrease in price. For currency pairs: selling the base currency against the quote currency.

Completed Transaction consists of two counter deals of the same size (open and close a position): buy then sell or vice versa.

Leverage is the term used to describe margin requirements: the ratio between the collateral and the value of the contract. 1:100 leverage means that you can control $100,000 with only $1,000 (1%).

Rollover / Interest Policy

Foreign exchange trading at Alpari (UK) is dealt on a "Spot" basis only. This means that all trades settle two business days from inception, as per market convention. The settlement date is referred to as the value date. Alpari (UK) does not arrange physical delivery of currencies hence, all positions left open from 10:59:45 p.m. to 10:59:59 p.m. (London time) will be rolled over to a new Value Date.

As a result, positions are subject to a swap charge or credit based on the webpage.

Please note that since 03 June 2007 Alpari (UK) Limited no longer closes and reopens the positions which are open at 11:00 pm London time. Instead we have introduced a more convenient method of rollover which involves debiting or crediting a customer’s trading account when he/she holds open positions overnight.

The cost of rollover is based on the interest rate differential of the two currencies. Let’s assume that the interest rates in the EU and USA are 4.25% p.a and 3.5% p.a respectively. Every currency trade involves borrowing one currency to buy another. If you have a buy position of 1.0 lot in EUR/USD, then you earn 4.25% on your Euros and borrow USD at 3.5% per year.

In other words:

• If you have a long position (i.e. bought) and the first currency in the currency pair has a higher overnight interest rate than the second currency, then you receive a gain.
• If you have a short position (i.e. sold) and the first currency in the currency pair has a higher overnight interest rate than the second currency, then you lose the difference.
• If you have a long position (i.e. bought) and the first currency in the currency pair has a lower overnight interest rate than the second currency, then you lose the difference.
• If you have a short position (i.e. sold) and the first currency in the currency pair has a lower overnight interest rate than the second currency, then you receive a gain.
  Please note that if you open and close a position before 10:59:45 p.m. (London time) you will not be subject to a rollover.

The act of rolling the currency pair over is known as tom.next, which stands for tomorrow and the next day.

NB: When you roll an open position from Wednesday to Thursday, then Monday next week becomes the value date, not Saturday; therefore the rollover charge on a Wednesday evening will be three times the value indicated on the "Rollover/Interest Policy" webpage.

Why trade Forex?

Unlike other financial markets Forex has no physical location, like stock exchanges, for example. It operates through the electronic network of banks, computer terminals or via telephone. The lack of a physical exchange enables Forex to operate on a 24-hour basis, spanning from one time zone to another across the major financial centres (Sydney, Tokyo, Hong Kong, Frankfurt, London, New York etc). In every financial centre there are many dealers, who buy and sell currencies 24 hours a day during the whole business week. Trading begins in the Far East, New Zealand (Wellington), then Sydney, Tokyo, Hong Kong, Singapore, Moscow, Frankfurt-on-Maine, London and ends in New York and Los Angeles. Below there are approximate trading hours for regional markets (London time):

Japan	00:00-06:30
Continental Europe	06:30-13:00
Great Britain	8:30-15:30
USA	14:30-21:30

Forex has some advantages which make it very popular among investors:

• Liquidity. Forex is the largest financial market in the world, with the equivalent of over $3-4 trillion changing hands daily whereas traded volume on the stock markets equates to only 500 billion US dollars.
• Flexibility. Forex is a 24-hour market, which offers a major advantage over other markets, for example, stock exchanges which are only open during regional business hours. You can respond to breaking news immediately if the situation requires it and customise your trading schedule.
• Lower transaction costs. Traditionally there are no commissions or charges on Forex, except for the spread.
• Margin. Our 1:100 leverage (only for deposits below $ 100,000) is a powerful tool. You need to support a deposit of 1,000 US dollars to make a deal with $100,000. Such high leverage combined with rapid rate fluctuations can make this market profitable but at the same time risky: please see Risk Warning below.

Risk Warning

Under margin trading conditions even small market movements may have a great impact on the customer's trading account. You must consider that if the market moves against you, you may sustain a total loss greater than the funds deposited. You are responsible for all the risks, financial resources you use and for the chosen trading strategy.

Forex History - The Evolution OF FX Markets

The Gold Exchange and the Bretton Woods Agreement

In 1967, a Chicago bank refused a college professor by the name of Milton Friedman a loan in pound sterling because he had intended to use the funds to short the British currency. Friedman, who had perceived sterling to be priced too high against the dollar, wanted to sell the currency, then later buy it back to repay the bank after the currency declined, thus pocketing a quick profit. The bank’s refusal to grant the loan was due to the Bretton Woods Agreement, established twenty years earlier, which fixed national currencies against the dollar, and set the dollar at a rate of $35 per ounce of gold.

The Bretton Woods Agreement, set up in 1944, aimed at installing international monetary stability by preventing money from fleeing across nations, and restricting speculation in the world currencies. Prior to the Agreement, the gold exchange standard--prevailing between 1876 and World War I--dominated the international economic system. Under the gold exchange, currencies gained a new phase of stability as they were backed by the price of gold. It abolished the age-old practice used by kings and rulers of arbitrarily debasing money and triggering inflation.

But the gold exchange standard didn’t lack faults. As an economy strengthened, it would import heavily from abroad until it ran down its gold reserves required to back its money; consequently, the money supply would shrink, interest rates rose and economic activity slowed to the extent of recession. Ultimately, prices of goods had hit bottom, appearing attractive to other nations, who would rush into buying sprees that injected the economy with gold until it increased its money supply, and drive down interest rates and recreate wealth into the economy. Such boom-bust patterns prevailed throughout the gold standard until the outbreak of World War I interrupted trade flows and the free movement of gold.

After the Wars, the Bretton Woods Agreement was founded, where participating countries agreed to try and maintain the value of their currency with a narrow margin against the dollar and a corresponding rate of gold as needed. Countries were prohibited from devaluing their currencies to their trade advantage and were only allowed to do so for devaluations of less than 10%. Into the 1950s, the ever-expanding volume of international trade led to massive movements of capital generated by post-war construction. That destabilized foreign exchange rates as setup in Bretton Woods.

The Agreement was finally abandoned in 1971, and the US dollar would no longer be convertible into gold. By 1973, currencies of major industrialized nations floated more freely, as they were controlled mainly by the forces of supply and demand. Prices were floated daily, with volumes, speed and price volatility all increasing throughout the 1970s, giving rise to new financial instruments, market deregulation and trade liberalization.

In the 1980s, cross-border capital movements accelerated with the advent of computers and technology, extending market continuum through Asian, European and American time zones. Transactions in foreign exchange rocketed from about $70 billion a day in the 1980s, to more than $1.5 trillion a day two decades later.

What is Forex (Foreign Exchange)

Foreign Exchange (FOREX) is the arena where a nation's currency is exchanged for that of another. The foreign exchange market is the largest financial market in the world, with the equivalent of over $1.9 trillion changing hands daily; more than three times the aggregate amount of the US Equity and Treasury markets combined. Unlike other financial markets, the Forex market has no physical location and no central exchange (off-exchange). It operates through a global network of banks, corporations and individuals trading one currency for another. The lack of a physical exchange enables the Forex market to operate on a 24-hour basis, spanning from one zone to another in all the major financial centers.

Traditionally, retail investors' only means of gaining access to the foreign exchange market was through banks that transacted large amounts of currencies for commercial and investment purposes. Trading volume has increased rapidly over time, especially after exchange rates were allowed to float freely in 1971. Today, importers and exporters, international portfolio managers, multinational corporations, speculators, day traders, long-term holders and hedge funds all use the FOREX market to pay for goods and services, transact in financial assets or to reduce the risk of currency movements by hedging their exposure in other markets.

MG Financial, now operating in over 100 countries, serves all manner of clients, comprising speculators and strategic traders. Whether it’s day-traders looking for short-term gains, or fund managers wanting to hedge their non-US assets, MG's allows them to participate in FOREX trading by providing a combination of live quotes andthat attracts traders with an orientation towards fundamental and/or technical analysis.

What is Forex (Foreign Exchange, FX) ?

For those of you that are new to the foreign exchange (forex) market, it is important to familiarize yourselves with this market’s characteristics and unique attributes. The forex market allows traders to buy and sell distinct currency pairs. No commission is charged per trade, the broker is compensated through the buy and sell price differential – commonly known as the “spread”. Below are a few guidelines to start trading with Advanced Currency Markets – your gateway to the largest and most liquid market on earth.
What is Forex (Foreign Exchange, FX) ?
ACM offers online forex trading services for traders wanting to make speculative transactions on the exchange rate between two currencies. These rates may be influenced by world economic and political events, currency rate differentials, as well as many other factors including extreme weather conditions (hurricanes), acts of terror etc. Forex is the largest marketplace in the world with more than 3.2 trillion dollars changing hands daily and so making it one of the most attractive and lucrative markets.
How does the foreign exchange market work?
The forex market allows you to buy and sell currencies against each other and speculate on the differences in exchange rates. Making a transaction on the forex market is simple: the procedures are identical to that of any other market so switching to trading currencies is straightforward for most traders.
	Buying/Selling - B/S
	If you want to open a position (i.e.: place an order to sell – to make a profit if the exchange rate falls) you have to choose the amount (i.e.: 100.000 EURUSD) from the drop down menu on the platform and then click the mouse on the sell currency button: SELL (if you want to place an order to buy, you should act in reverse). This will open a position in the market and you will receive an immediate notification of it on your trading station. To close an open position, you have to do the opposite of the initial operation – in our case buy the 100.000 EURUSD back. Different order types also exist to open or close a position under a certain condition.
	How does the B/S system work?
	As with any market, for each currency pair, there are 2 prices. The difference between them is called the spread. The spread is measured in points or pips – lowest decimal figure in a currency rate. For a EURUSD a pip equals 0.0001 (or 10 dollars on 100.000), for EURJPY a pip equals 0.01 (or 1000 yen on 100.000). More information on P/L calculation on the following page: profit and loss.
Forex currencies quotation system
Currencies are quoted in pairs, for example – EUR/USD or USD/JPY. The first currency in the pair is called the base currency and the second is called the counter currency. The base currency is the ‘basis’ for purchases and sales. For example, if you buy EUR/USD, then you acquire Euros and sell Dollars. You do this if you expect the Euro to grow against the Dollar. It is also possible for a currency pair to be quoted as USD/EUR, but this method is used extremely rarely. Each transaction must have 2 sides – a buy and a sell (or a sell and a buy). By this we mean that it is impossible to buy 100.000 EUR/USD and then exchange it for another currency pair (i.e.: EUR/JPY) without closing the first position. Also please note that no physical currency delivery will be made. For these purposes banks and exchange companies, which specialize in low-rate currency conversions are available.

Shift in dollar sentiment

The dollar made further gains against the Euro during Thursday on the back of continuing favourable US data. The dollar strengthened to a high of 1.2680 against the Euro in late New York and retained these gains in early Europe on Friday before attempting a fresh rally. The Dow Jones index was weak with another decline of over 100 points, but this failed to dampen dollar optimism, especially as there was a decline in oil prices with a move to below US$49 p/b. A sustained downturn in stock prices would, however, potentially cause some damage to the dollar.

The US retail sales report was stronger than expected with a 1.4% increase for April compared with expectations of a 0.7% increase. The underlying increase was also strong at 1.1%. Jobless clams rose to 340,000 in the latest week, but this did not receive any significant attention. It may, however, become more of an issue within the next few weeks if claims remain higher as it would create doubts over the US employment outlook.

The strong retail sales data built on the much lower than expected trade deficit on Wednesday to boost confidence in the economy and dollar. Fears over a slowdown in the economy have eased and there will be some fresh speculation over a more aggressive Fed stance on interest rates. The more likely outcome is that the Fed will continue with a policy of 0.25% rate increases, especially as the seasonal considerations have probably overstated economic strength. Structural fears have also eased, but caution is still required as the data throughout May is being distorted by seasonal considerations. This will, however, be of secondary importance in the very short term and the dollar will retain a firm bias, especially as there is likely to be a significant shift in sentiment. There will also be the potential for a capitulation of short dollar positions against the Euro which could encourage a further advance.

Russia announced that it would be likely to increase Euro weightings in the currency basket, but again this did not have a significant impact. The longer-term implications are still potentially significant and will offer Euro support.

Australian dollar correction

The Australian dollar pushed to highs just above the 0.85 level against the US dollar on Tuesday before retreating to 0.8470. The correction weaker gathered pace in local trading on Wednesday with a move to lows around 0.8410 and losses extended to just below 0.84 in Europe.

There were no significant domestic releases with global trends tending to dominate. The currency was undermined by a drop in commodity prices and the weaker trend for global stock markets which reduced demand for the Australian dollar. The currency will be vulnerable to further selling pressure if there is a sustained increase in risk aversion and a move away from high-yield instruments. There will be the potential for a limited Australian bounce from around the 0.84 level, but the underlying correction weaker is liable to be more extensive over the next few days.

Euro targets record highs

The dollar was again unable to push through the 1.3550 level against the Euro and weakened back to lows around 1.3640 after weaker than expected US data, close to the record dollar low seen in December 2004. The US currency also weakened to a two-year low on a trade-weighted basis with markets looking to challenge record Euro highs. The dollar remained under pressure in early Europe on Wednesday with lows around 1.3650.

The US data was weaker than expected with existing home sales falling by 8.4% in March to an annual rate of 6.12mn, the lowest reading since June 2003. There was a further rise in inventories which will cause concern, although prices held firm.

Consumer confidence weekend to 104.0 in April from 108.2 the previous month with the present conditions and expectations components both weakening.

The data overall will reinforce market concerns over US economic conditions and maintain fears that the housing-related difficulties will undermine the wider economy. Expectations of a third-quarter interest rate cut increased after the data and the lack of yield support will keep the dollar on the defensive. Confidence will also be damaged if there is a weak reading for durable goods orders as it would suggest that the manufacturing sector is still struggling.

Global fears protect dollar

The Euro fell sharply to lows around 1.4620 on Tuesday, the largest daily fall of the year as confidence weakened, although a key feature was increased global fears. The dollar strengthened to highs just beyond 1.46 on Wednesday before some consolidation after the sharp gains.

The US PMI index for the services sector fell very sharply to 41.9 in January from 54.4 the previous month while the new composite index also fell substantially. An index around this level is consistent with recession conditions which will revive fears that the US economy is weakening sharply with a high risk of negative first-quarter growth.

The data is a negative dollar factor and will invite speculation over another emergency Fed interest rate cut. The US currency will secure further protection from fears that the damage is spreading to Europe while there is also the potential for capital repatriation back to the US.

Dollar dependent on defensive support

The Euro pushed to highs of 1.27 as Wall Street secured opening gains. The Euro and US stocks were both unable to sustain opening gains and it weakened back to the 1.26 region. Headline consumer prices should also decline sharply on Wednesday which will given the Fed some degree of policy flexibility.

The latest NAHB housing index weakened further to a record low of 9 in October from 14 the previous month. The association noted that lenders had pulled back from new financing while consumer confidence had also weakened sharply. The housing starts data will, therefore, be watched closely on Wednesday amid fears of a further downturn in housing activity.

In this environment, there will be additional pressure for fresh policy measures to support the economy and Fed Governor Stern suggested that the Fed Funds rate could be cut to below the current 1.0% if conditions warrant.

Congressional negotiations surrounding the auto sector will continue to be watched closely while Treasury Secretary Paulson defended the switch of emphasis for the TARP programme. Acrimonious discussions would tend to unsettle the dollar.

Limited scope for Sterling gains - 25-11-08

The UK currency tested support below the 1.49 level against the dollar on Monday while it also weakened to beyond 0.85 against the Euro. In the pre-budget report, the government confirmed that the VAT sales tax rate would be cut by 2.5% to 15.0% until the end of 2009 while there was a total tax cut package of GBP20bn. There were further measures to underpin companies while there were plans to raise taxes in the medium term.

The budget deficit estimates were revised up sharply with the fiscal 2009/10 deficit forecast at a record GBP118bn which would be at least 8% of GDP. The package may underpin sentiment to some extent on hopes for a boost to spending, but fears over the underlying fundamentals will certainly continue and are liable to increase given the severe budget pressures.

A sharp rally in the UK stock market index pushed the UK currency to highs above 1.5150 against the dollar and was consolidating close to 1.51 on Tuesday.

The latest mortgage-lending data continued to indicate a weak market while Bank of England Governor King was generally downbeat over the economy and stated that the bank would take all action necessary to meet the inflation target.

best times to trade currencies

Forex is a 24 hour market and there will be good setups for profitable trades in the Asian, European and US sessions. It pays to look at historical price data on forex charts to see what time of the day you could be watching the market and what time you could be doing something else. The aim is to trade when the average trading range is worthwhile and stay out of the market when price is in a narrow sideways range.

There are good online and downloadable tools at forex market hours

The market opens on Monday morning in Wellington New Zealand .8 am Wellington time is 8pm GMT,9pm BST,4pm EDT (Sunday evening New York time)

MARKET OPEN TIMES

(Summer Northern Hemisphere)

GMT	Sydney	Tokyo	Frankfurt	London	New York
2200					1800
2300					1900
0000					2000
0100					2100
0200					2200
0300					2300
0400					0000
0500					0100
0600					0200
0700					0300
0800					0400
0900					0500
1000					0600
1100					0700
1200					0800
1300					0900
1400					1000
1500					1100
1600					1200
1700					1300
1800					1400
1900					1500
2000					1600
2100					1700

The market closes for the week at 4pm EDT on Friday.

where BST is British Summer time ,EDT is Eastern Daylight Time USA.Check your local time at http://forex.timezoneconverter.com

The most active pairs during the London session are EURUSD with 39% of the trading volume, GBPUSD with 23%, USDJPY with 17%, USDCHF with 6% and USDCAD with 5%.

New York is the second largest forex market place. The busiest time is 8am to noon EST. News releases can result in a volatile market.

Sometimes volatility is low in the Tokyo session and sometimes good moves occur. The USDJPY is the most active pair with 78% of the volume followed by EURUSD with 15% and EURJPY with 5%.

forex

Most brokers have a free news plug in with their deal station. Headline economic data moves the forex markets and currency traders can take advantage of that.The news is released at certain times on the economic calendar and is reported instantaneously by news outlets including Bloomberg,Reuters,Dow Jones,Trade The News and CNBC making it universally accessible.Some of these agencies charge traders a lot of money for instant news so traders can trade the spikes that occur sometimes when the figure is outside the expected range.Sometimes, the news will affect the markets for days.

We trade with technical analysis and fundamentals.We pinpoint entries and exits with technical analysis.Market sentiment is driven primarily by the economic and geopoplitical news of the day.The key players such as central banks,multinational companies,hedge funds and top tier investment banks formulate their trades by analyzing the most recent economic news and geopolitical developments and pronouncements from G-7 monetary authorities.The release of the economic figures drives the price of a currency pair towards an important Fibonacci level, Pivot level ,support level or resistance level.

It is important to look at an economic calendar to see if the market is waiting for the release of a major fundamental announcement.Price may go into consolidation before the release time or it may move a lot as traders take a position beforehand.If the released figure varies considerably from the expected figure, the price will move a considerable distance.Some data releases are lot more important than others.

You can open a trade when the market settles down soon after a news release or if you are really daring you can open a trade 10 minutes before a news release,but have a stop loss in place for protection.The market can move 100pips in 30 seconds occasionally.Trading the news is not always clear cut.Price can go in opposite direction to what seems logical.Also, figures from previous months can be revised.

Major reports released for USA include Non-Farm Payrolls,Trade Figures,Retail Sales,Durable Goods,Consumer PriceIndex,Treasury International Capital,Current Account and Advan

Economic Calendars For Forex Traders

Economic Calendars For Forex Traders Links to good economic calendars for the forex market. It is best to compare the figures on a few calendars as substantial differences can occur in consensus. Daily FX Economic Calendar Forex News Today FX Forex Factory The London Forex Blog You need technical analysis and fundamentals to trade currencies profitably.There is a need to understand the basics of economics so you can think for yourself and learn who the market participants are and which reports and statements drive the market. It is important to know exactly when these announcements will be made so you can take advantage of the big moves that follow or avoid losing through a sudden surprise reaction.Economic calendars show in advance what time the economic data release will take place.Before a trade is taken, we look at an economic calendar for opportunities and threats. If traders are expecting an interest rate to rise and it does,there usually will not be much of a movement because the information will already have been discounted by the market.However, if the interest rate does not rise as expected, then the market may react violently.

Mini Forex Account

A mini forex account is designed for those new to online trading and those with limited investment capital. Those with less than US$5,000 often favour mini accounts although regular accounts may be opened with a minimum of $2000-$5,000. The amount varies from broker to broker.

A mini forex account can be opened with a minimum of US$300-500 and this figure varies between brokers.

A mini forex account is intended to introduce traders to the excitement of forex trading while minimising risk.

• A mini forex account can be opened at anytime but many traders practice on a demo account first to test their trading strategies and techniques.
• Trading size is normally 1/10th the size of a regular account. Some brokers have smaller lot sizes. This reduces the risk associated with forex trading.
• Margin requirements differ depending on the broker. The NFA states the margin should be no less than 1% of the base currency traded. However not all brokers follow these guidelines. Some brokers offer margins as low as US$50 per lot on their minis.
• Some brokers have software in their Trade Stations that automatically calculates the required margin while others manually set the margin and vary it accordingly.

The CFTC is enforcing a 1% margin requirement for registered FCMs and their affiliates that only offer trading in the Forex Market.

The new NFA rule requires a minimum 1% margin at all time to maintain an open trade. (Note this may change from time to time so although we use 1% as the example at some stage in the future the margin maybe different. However using similar calculations one can easily calculate the new margins)Some deal stations automatically calculate this according to the formula and hence the margin requirements are continually varying.

How you can choose better entry and exit levels in currency trades

If you would like an easy,fast way to increase your forex trading profits, we know exactly how to do it. Using Fibonacci ratios is something we do extremely well and we have been using Fibonacci analysis for years. When we first started trading forex, we had horrible results. Then we started to apply Fibonacci techniques to our trading. Our profits and our confidence increased. Fibonacci retracements or extension targets offer a high degree of precision and may be used as leading indicators.

If you are interested in knowing how to increase your profits in forex trading, then you'd be interested in Fibonacci analysis because professional traders are responding to Fibonacci levels. Fibonacci levels become a self fulfilling prophecy because so many traders are reacting to them.

"Practical Fibonacci Methods For Forex Trading" covers everything you need to know about using Fibonacci levels for entries, exits and stops. Position, swing and intra day traders will find this information useful. You'll learn how to boost your trading skills using precision trading.

Imagine being able to understand how the forex market works and predict market turning points. It truly is possible, but you need to know how.

That's what this new e-book could help you to do and it is illustrated with the following charts:

5 Daily charts

7 4hr charts

4 1hr charts

3 30min charts

3 15min charts

Every section in the book is there because "you asked for it." Well, not "you" really. But from real live questions. Questions from people who like using Fibonacci levels for entries, logical profit objectives and stops... A simple questionnaire was emailed out, and people like you sent us their most pressing question on using Fibonacci levels for entries, exits and stops...

Then we answered them!

Which means no fluff. Just the real answers you want to know.

It's the key to the mint.

Here's a sneak peak at what you'll discover in "Practical Fibonacci Methods For Forex Trading".

- How to Identify low risk entry points.

- Position yourself before explosive moves occur.

- Enter strong moves safely at a point where your stop loss will not be hit.

- Wait for a retracement,then enter a trade.

- Predetermine logical profit targets

- Minimize losses.

- Simple ways to locate high probability trades

- Proven steps to Using Fibonacci support and resistance as a leading indicator

- 2 simple keys to find exit points (1) Fibonacci retracements (2) Fibonacci extensions.

- Discover in a matter of minutes how to find stronger support and resistance levels with Fibonacci convergence. Professional traders look for convergences.

- Proven strategies for calculating future turning points on all time frames.

That's why you should own this book today (in fact, you can be reading in as little as 5 minutes

Become a confident trader.

If you are sick and tired of watching your investments plummet while others make money,this could be the most important message your ever read.We are full time forex traders and we identify high profitability trading setups.

When you trade forex ,you are up against the best forex traders in the world.You need a forex method that ends the week,month and year in the black.Have your forex trading systems failed you lately? Join the group that make money consistently. If you’re a beginner and don’t know where to start, try these strategies first.

Maybe you’ve bought forex trading systems or methods before and your trading results still weren’t up to scratch. We have the solution you need. Why suffer with unproductive results? Our entry setups are easy to pick. We’re using well known indicators which are available in most free or fee based forex charts.

Our method is not 100% mechanical.There is some decision making involved. You can count on these tested strategies to select the right entries and exits.With repetition comes mastery.You will be able to see patterns and formations quickly. One of the most frustrating modes to be in is searching for years for a trading method that grows your trading account balance. You’ll lack confidence.

If you're going to change things,then the time to get moving is now.We've discovered a proven way to siphon pips out of the forex market.

A forex trading method with a high winning percentage is rewarding psychologically, keeps your morale high and is enjoyable to trade. A string of profits will build your confidence. See our trade of the week page which is updated at the end of each trading week .If you are looking for a system with no losing trades, forget trading and find another business or hobby. Losses have to kept small and wins should be larger than losses.We have forward tested each strategy in real time.We started offering our CI System in 2003 but in 2007 we replaced it with improved strategies.

The platform

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To meet the serious needs of experienced market traders, as well as those just starting out, Saxo Bank offers the SaxoTrader, the most intuitive and complete multi-product online trading platform in the market. The multi-award winning SaxoTrader combines a secure trading environment with a massive and comprehensive choice of trading products.

SaxoTrader benefits:

• Complete product range – 160+ FX crosses (incl. Spot Gold/Silver), 6,000+ CFDs, 16 Index-tracking CFDs, Stocks from 22 exchanges, as well as FX Options, Futures contracts and other derivatives
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What Drives Currency Prices

What Drives Currency Prices

The key to making money in the forex is understanding what makes currency pairs move. Ultimately, it is investors who make currency pairs move as they buy and sell different currencies, but these investors buy and sell for a reason. Either they see something happening fundamentally in the global economy that makes them believe a currency is going to get stronger or they see something happening fundamentally that makes them believe a currency is going to get weaker. In other words, they watch the fundamentals and make their decisions according to what they see.

Fundamentals make currency pairs move. If the economic fundamentals in the United States are improving, the U.S. dollar (USD) will most likely be getting stronger because forex investors will be buying dollars. Conversely, if the economic fundamentals in the United States are declining, the U.S. dollar (USD) will most likely be getting weaker because forex investors will be selling dollars.

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Getting Started

Thousands of investors, just like you, are taking advantage of the profit potential of the forex market. Once you understand what drives the forex market, all you have to do is open a trading account, do your research and click a few buttons in your online trading station. Then sit back and monitor your trades. It may take a little practice, but before long, you'll be making money like a seasoned professional. Start letting your money work for you.

Forex Investors Trade Currency Pairs

Everything is relative in the forex market. The euro, by itself, is neither strong nor weak. The same holds true for the U.S. dollar. By itself, it is neither strong nor weak. Only when you compare two currencies together can you determine how strong or weak each currency is in relation to the other currency.

Currencies always trade in pairs. You never simply buy the euro or sell the U.S. dollar. You trade them as a pair. Some of the most well-known currency pairs are:

EUR/USD	(Euro / U.S. dollar)
GBP/USD	(British pound / U.S. dollar)
USD/JPY	(U.S. dollar / Japanese yen)

Investors, just like you, make money every day by trading currency pairs. By determining what is going to happen to a currency pair in the future, investors can act today to take advantage of coming price movements.

Currency pairs can do one of the following three things:

• They can go up
• They can go down
• They can go sideways

If you can determine which way a currency pair is going to move, you can become quite profitable.

How to Trade Forex

Trading foreign exchange is exciting and potentially very profitable, but there are also significant risk factors. It is crucially important that you fully understand the implications of margin trading and the particular pitfalls and opportunities that foreign exchange trading offers. On these pages, we offer you a brief introduction to the Forex markets as well as their participants and some strategies that you can apply. However, if you are ever in doubt about any aspect of a trade, you can always discuss the matter in-depth with one of our dealers. They are available 24 hours a day on the Saxo Bank online trading system, SaxoTrader.

The benchmark of its service is efficient execution, concise analysis and expertise – all achieved whilst maintaining an attractive and competitive cost structure. Today, Saxo Bank offers one of Europe's premier all-round services for trading in derivative products and foreign exchange. We count amongst our employees numerous dealers and analysts, each of whom has many years experience and a wide and varied knowledge of the markets – gained both in our home countries and in international financial centres. When trading foreign exchange, futures and other derivative products, we offer 24-hour service, extensive daily analysis, individual access to our Research & Analysis department for specific queries, and immediate execution of trades through our international network of banks and brokers. All at a price considerably lower than that which most companies and private investors normally have access to.

The combination of our strong emphasis on customer service, our strategy and trading recommendations, our strategic and individual hedging programmes, along with the availability to our clients of the latest news and information builds a strong case for trading an individual account through Saxo Bank.

Terms of trading are agreed individually depending on the volume of your transactions, but are generally much lower in cost when compared to banks and brokers. Your margin deposit can be cash or government securities, bank guarantees etc. Large corporate or institutional clients may be offered trading facilities on the strength of their balance sheet. The minimum deposit accepted for an individual trading account depends on the account type. Trade confirmations and real-time account overview are built into SaxoTrader, while further account information can be produced in accordance with your specific requirements.

Working with statistics

Trade Balance

The trade balance is a measure of the difference between imports and exports of tangible goods and services. The level of the trade balance and changes in exports and imports are widely followed by foreign exchange markets.

The trade balance is a major indicator of foreign exchange trends. Seen in isolation, measures of imports and exports are important indicators of overall economic activity in the economy.

It is often of interest to examine the trend growth rates for exports and imports separately. Trends in export activities reflect the competitive position of the country in question, but also the strength of economic activity abroad. Trends in import activity reflect the strength of domestic economic activity.

Typically, a nation that runs a substantial trade balance deficit has a weak currency due to the continued commercial selling of the currency. This can, however, be offset by financial investment flows for extended periods of time.

Gross Domestic Product

The Gross Domestic Product (GDP) is the broadest measure of aggregate economic activity available. Reported quarterly, GDP growth is widely followed as the primary indicator of the strength of economic activity.

GDP represents the total value of a country's production during the period and consists of the purchases of domestically produced goods and services by individuals, businesses, foreigners and the government.

As GDP reports are often subject to substantial quarter-to-quarter volatility and revisions, it is preferable to follow the indicator on a year-to-year basis. It can be valuable to follow the trend rate of growth in each of the major categories of GDP to determine the strengths and weaknesses in the economy.

A high GDP figure is often associated with the expectations of higher interest rates, which is frequently positive, at least in the short term, for the currency involved, unless expectations of increased inflation pressure is concurrently undermining confidence in the currency.

HISTORY

History
Brief history of Forex trading

Initially, the value of goods was expressed in terms of other goods, i.e. an economy based on barter between individual market participants. The obvious limitations of such a system encouraged establishing more generally accepted means of exchange at a fairly early stage in history, to set a common benchmark of value. In different economies, everything from teeth to feathers to pretty stones has served this purpose, but soon metals, in particular gold and silver, established themselves as an accepted means of payment as well as a reliable storage of value.

Originally, coins were simply minted from the preferred metal, but in stable political regimes the introduction of a paper form of governmental IOUs (I owe you) gained acceptance during the Middle Ages. Such IOUs, often introduced more successfully through force than persuasion were the basis of modern currencies.

Before World War I, most central banks supported their currencies with convertibility to gold. Although paper money could always be exchanged for gold, in reality this did not occur often, fostering the sometimes disastrous notion that there was not necessarily a need for full cover in the central reserves of the government.

At times, the ballooning supply of paper money without gold cover led to devastating inflation and resulting political instability. To protect local national interests, foreign exchange controls were increasingly introduced to prevent market forces from punishing monetary irresponsibility.

In the latter stages of World War II, the Bretton Woods agreement was reached on the initiative of the USA in July 1944. The Bretton Woods Conference rejected John Maynard Keynes suggestion for a new world reserve currency in favour of a system built on the US dollar. Other international institutions such as the IMF, the World Bank and GATT (General Agreement on Tariffs and Trade) were created in the same period as the emerging victors of WW2 searched for a way to avoid the destabilising monetary crises which led to the war. The Bretton Woods agreement resulted in a system of fixed exchange rates that partly reinstated the gold standard, fixing the US dollar at USD35/oz and fixing the other main currencies to the dollar - and was intended to be permanent.

Introduction to Trading Forex

Foreign Exchange

This short introduction explains the basics of trading Forex online, a brief explanation of the markets and the major benefits of trading Forex online. There are also two scenarios describing the implications of trading in a bear as well as a bull market to better acquaint you with some of the risks and opportunities of the largest and most liquid market in the world.

As an additional aid for those who are new to Forex, there is also a glossary at the bottom of this text which explains some of the terms used in connection with currency trading.

Overview

Foreign exchange, Forex or just FX are all terms used to describe the trading of the world's many currencies. The Forex market is the largest market in the world, with trades amounting to more than USD 3 trillion every day. Most Forex trading is speculative, with only a low percentage of market activity representing governments' and companies' fundamental currency conversion needs.

Unlike trading on the stock market, the Forex market is not conducted by a central exchange, but on the “interbank” market, which is thought of as an OTC (over the counter) market. Trading takes place directly between the two counterparts necessary to make a trade, whether over the telephone or on electronic networks all over the world. The main centres for trading are Sydney, Tokyo, London, Frankfurt and New York. This worldwide distribution of trading centres means that the Forex market is a 24-hour market.

Why Trade Forex?

• 24 hour trading

  One of the major advantages of trading Forex is the opportunity to trade 24 hours a day from Sunday evening (20:00 GMT) to Friday evening (22:00 GMT). This gives you a unique opportunity to react instantly to breaking news that is affecting the markets.

• Superior liquidity

  The Forex market is so liquid that there are always buyers and sellers to trade with. The liquidity of this market, especially that of the major currencies, helps ensure price stability and narrow spreads. The liquidity comes mainly from banks that provide liquidity to investors, companies, institutions and other currency market players.

• No commissions

  The fact that Forex is often traded without commissions makes it very attractive as an investment opportunity for investors who want to deal on a frequent basis.
  Trading the “majors” is also cheaper than trading other cross because of the high level of liquidity. For more information on the trading conditions of Saxo Bank, go to the Account Summary on your SaxoTrader and open the section entitled “Trading Conditions” found in the top right-hand corner of the Account Summary.

• 100:1 Leverage

  Leverage (gearing) enables you to hold a position worth up to 100 times more than your margin deposit. For example, a USD 10,000 deposit can command positions of up to USD 1,000,000 through leverage. You can leverage the first USD 25,000 of your investment up to 100 times and additional collateral up to 50 times.

• Profit potential in falling markets

  Since the market is constantly moving, there are always trading opportunities, whether a currency is strengthening or weakening in relation to another currency. When you trade currencies, they literally work against each other. If the EURUSD declines, for example, it is because the US dollar gets stronger against the euro and vice versa. So, if you think the EURUSD will decline (that is, that the euro will weaken versus the dollar), you would sell EUR now and then later you buy euro back at a lower price. In case that the EURUSD indeed declines, then you can take your profit. The opposite trading scenario would occur if the EURUSD appreciates.

Trading on Margin

Trading on means that you can buy and sell assets that represent more value than the capital in your account. Forex trading is usually conducted with relatively small margin deposits. This is useful since it permits investors to exploit currency which tend to be very small. A margin of 1.0% means you can trade up to USD 1,000,000 even though you only have USD 10,000 in your account. A margin of 1% corresponds to a 100:1 (or “gearing”). (Because USD 10,000 is 1% of USD 1,000,000.) Using this much leverage enables you to make profits very quickly, but there is also a greater risk of incurring large losses and even being completely wiped out. Therefore, it is inadvisable to maximise your leveraging as the risks can be very high. For more information on the trading conditions of Saxo Bank, go to the Account Summary on your SaxoTrader and open the section entitled “Trading Conditions” found in the top right-hand corner of the Account Summary.

Trading Forex

A currency trade is the simultaneous buying of one currency and selling of another one. The currency combination used in the trade is called a (for example, the euro/US dollar, or the GB pound/Japanese yen.). The most commonly traded currencies are the so-called “majors” – EURUSD, USDJPY, USDCHF and GBPUSD.

The most important Forex market is the spot market as it has the largest volume. The market is called the market because trades are settled immediately, or “on the spot”. In practice this means two banking days.

Forward Outrights

For forward outrights, settlement on the value date selected in the trade means that even though the trade itself is carried out immediately, there is a small interest rate calculation left. The interest rate differential doesn't usually affect trade considerations unless you plan on holding a position with a large differential for a long period of time. The interest rate differential varies according to the cross you are trading. On the USDCHF, for example, the interest rate differential is quite small, whereas the differential on NOKJPY is large. This is because if you trade e.g. NOKJPY, you get almost 7% (annual) interest in Norway and close to 0% in Japan. So, if you borrow money in Japan, to finance the trade and buying NOK, you have a positive interest rate differential. This differential has to be calculated and added to your account. You can have both a positive and a negative interest rate differential, so it may work for or against you when you make a trade.

Glossary

• Appreciation

An increase in the value of a currency.

• Ask

The price requested by the trader. This usually indicates the lowest price a seller will accept.

• Base currency

The currency that the investor buys or sells (i.e. EUR in EURUSD).

• Bear

Someone who believes prices are heading down. A bear market is one in which there has been a sustained fall in prices and which does not look like it will recover quickly.

• Bid

The price offered by the trader. This usually indicates the highest price a purchaser will pay.

• Bid/Ask

The Bid rate is the rate at which you can sell. The Ask (or offer) rate is the rate at which you can buy.

• Bull

Someone who is optimistic about the market. A bull market is characterised by enthusiastic and sustained buying.

• cross

When trading with currencies, the investor buys one currency with another. These two currencies form the cross: for example, EURUSD.

• Cross rate

An exchange rate that is calculated from two other exchange rates.

• Depreciation/decline

A fall in the value of a currency.

• Exchange rate

What one currency is worth in terms of another, for example the Australian dollar might be worth 58 US cents or 70 yen. Currencies traded freely on foreign-exchange markets have a spot rate (applying to trades settled “spot”, i.e., two working days hence) and a forward rate. Countries can determine their exchange rates in a variety of ways. 1. A floating exchange rate system where the currency finds its own level in the market. 2. A crawling or flexible peg system which is a combination of an officially fixed rate and frequent small adjustments which in theory work against a build-up of speculation about a revaluation or devaluation. 3. A fixed exchange-rate system where the value of the currency is set by the government and/or the central bank.

• EURUSD

Means that you trade EUR against dollars. If you buy euro you pay in dollars and if you sell euro you receive dollars.

• FX, Forex, Foreign Exchange

All names for the transaction of one currency for another, e.g. you buy GBP 100.00 with USD 150.25 or sell USD 150.25 for GBP 100.00.

• Interbank

Short-term (often overnight) borrowing and lending between banks, as distinct from a banks business with their corporate clients or other financial institutions.

• Interest rate differential

The yield spread between two otherwise comparable debt instruments denominated in different currencies.

• Leverage (gearing)

The investor only funds part of the amount traded.

• Long

To buy.

• Long position

A position that increases its value if market prices increase.

• Liquid (-ity)

The capacity to be converted easily and with minimum loss into cash. A liquid market is one in which there is enough activity to satisfy both buyers and sellers. Ultra-short-dated treasury notes are an example of a liquid investment.

• Margin

The deposit required when entering into a position as well as to hold an open position. Your margin status can be monitored in the Account Summary.

• NYSE

The New York Stock Exchange.

• Open position

A position in a currency that has not yet been offset. For example, if you have bought 100,000 USDJPY, you have an open position in USDJPY until you offset it by selling 100,000 USDJPY, thus “closing” the position.

• Over the counter

When trading takes place directly between two parties, rather than on an exchange. Over the counter trades can be customised whereas exchange-traded products are often standardised.

• Pips

A pip is the smallest unit by which a Forex cross price quote changes. So if EURUSD bid is now quoted at 0.9767 and it moves up 2 pips, it will be quoted at 0.9769.

• Position

Traders talk of “taking a position” which simply means buying or selling currency cross. “Position” can also refer to a trader's cash/securities/currencies balance, whether he or she is short of cash, has money to lend, is overbought or oversold in a currency, etc.

• Risk

Trying to control outcomes to a known or predictable range of gains or losses. Risk management involves several steps which begin with a sound understanding of one's business and the exposures or risks that have to be covered to protect the value of that business. Then an assessment should be made of the types of variables that can affect the business and how best to protect against unwelcome outcomes. Consideration must also be given to the preferred risk profile – whether one is risk – averse or fairly aggressive in approach. This also involves deciding which instruments to use to manage risk and whether a natural hedge exists that can be used. Once undertaken, a risk-management strategy should be continually assessed for effectiveness and cost.

• Secondary currency (variable currency or counter currency)

The currency that the investor trades the base currency against (i.e. USD in EURUSD).

• Short position

A position that benefits from a decline in market prices.

• Short

To sell.

• Speculative

Buying and selling in the hope of making a profit, rather than doing so for some fundamental business-related need.

• Spot

A Spot rate is the current market price of an asset.

• Spot market

The part of the market calling for spot settlement of transactions. The precise meaning of “spot” will depend on local custom for a commodity, security or currency. In the UK, US and Australian foreign-exchange markets, “spot” means delivery two working days hence.

• Spread

The difference between the bid and the ask rate.