Analysis of a FOREX Chart!!

In all media references, you may have heard about Foreign Exchange. Still, a lot of people have little idea when it comes to forex trading, especially reading the forex chart. People seldom realize its importance because they probably have not participated in it.

But it is actually quite easy to understand the forex chart, as long as you know what to look for. There are essentially two basic approaches for buying and selling currencies and this is where the understanding of a forex chart comes in.

First off is the Fundamental Analysis approach. This approach doesn't depend on forex charts at all. Instead, it uses economic and political factors to establish trades. Charts are essentially used just for reference regarding exiting and entering trades. The other approach is the Technical Analysis approach. This approach, meanwhile, tries to forecast the direction of prices by studying historical price movement on a particular chart. Technical analysts observe the relation between price and time.

To know how currencies are related to one another is very important. A forex chart always shows to your RIGHT, the value of the currency so one can buy a unit of the currency found to the LEFT. Recorded horizontally, time will be found somewhere at the chart? bottom alongside the price scale to the right. Price scale always stands for the currency to the east in the forward slash.

The most popular way of observing price or time movement on a forex chart is by means of the Japanese candle sticks. In order to watch price movement, one must pay attention to Japanese candle sticks. In case you don? know, a lot of traders depend on these sticks in making decisions in trading. A Japanese candle stick provides a way to examine price movement for a currency pair over a given timeframe. How much "time" each candle represents depends on the timeframe of the chart. If the chart below were a one-hour chart, each red and blue candle on it would represent the price activity for the currency pair over the course of one hour. If the chart were a daily chart, each candle would represent price activity for one day. It does not really matter what the timeframe is. You just have to remember that a candle represents price activity for the timeframe of whatever chart you are viewing.

The following are the basic parts and whatnot of a typical forex chart. The fat red section is the body of that candlestick. The lines protruding from the top and bottom are the upper and lower wicks. The bodies of the candles can be of varying sizes in a forex chart. There may also be times when there are no bodies in the chart at all. This is not something out of the ordinary. The same goes for the wicks. The wicks can be of varying sizes, or there just might not be any wicks at all. The length of the body and the wick is determined by the price range for that candle. Longer candles had more price movement during the time they were open. The very top of a candle? wick is the highest price for the currency pair, while the wick? bottom represents. When a candle is considered "bullish", this means there were more buyers than sellers during the time the candle was open.

Reading a forex chart actually becomes simple once you completely understand its symbols and figures.

Fundamental Analysis in Forex Trading!!

How do FOREX traders plan their strategies? What do they rely on to make their trading plans? Analysis. Both Technical and Fundamental Analysis. Lets look at how Fundamental Analysis is used in FOREX trading. This is an analysis of the economic and political conditions that are prevalent which might have an effect positive or negative on currency prices. It is an analysis of so many factors economic policies, the inflation rate, growth rate and they all go into reports that traders use to give their trading a better edge.

How do traders use Fundamental Analysis? They use it essentially to plot their entry and exit points into the market. They can only do this well if they have a broad overview of the conditions that affect that particular currency. The forces of supply and demand that have an effect on currency prices are influenced a great deal by the economic environment around them, the most important factors being how strong the economy is and what its interest rates are. The strength of the economy in turn is a reflection of the amount of foreign investment, the GDP and the trade balance.

A clearer picture emerges looking at the Indicators that are released periodically in a country. Two main ones are international trade and interest rates. In international trade, a deficit balance would be an unfavorable indicator as it would show that there are more imports than exports. This means that there is more money going out than coming in and this could have a negative effect on the value of the currency. Here, of course, there could be exceptions as some countries do operate on deficit balances and this has already been taken into account as far as their currency valuation goes.

How do interest rates affect currencies? This operates in a rather complex way. Very often one finds that high rates bring in foreign investment but also see a selling-off of holdings. So a potential strengthening of the currency could be offset by the stock market plummeting. How, then, does one arrive at any kind of consensus about which way things can go? Economic watchdogs generally use their nose guided by past experience and trends.

Other indicators that are also used include Durable Goods Orders, the Consumer Price Index (CPI), Retail Sales and Purchasing Manager's Index (PMI). The other factors that add to the overall economic picture are the GDP or the Gross Domestic Product which is a total valuation of all the services and goods in any country and the Money2Money Supply which is the value of all the currency in that market.

Indicators are released at periodic intervals. They could be weekly or monthly. The US has a total of 28 main ones. These are invaluable for traders when they formulate their strategies.

Choosing a Forex Trading Software!!

With the growth of the Internet and its accessibility to the general masses, every FOREX broker maintains a software package for his clients to transact and get information about market prices online. With the increasing popularity of online trading with traders, the FOREX brokers are improvising their tools keeping in mind the clients needs in terms of software tools.

The two basic types of the FOREX trading software are - web based and client based. Since the most crucial functionality of the online trading tool must be the ability to provide market information at real time and updating it in the flash of a second; the software must be able to perform with minimal processing delay and must be accurate to deliver the entry and exit points for the trade.

The web based software is the one which is on the broker's website. There is no installation required on the clients computer. The client based software is the one which is first downloaded and then installed on the clients machine which is in synch with the brokers. The web based client software is considered to be more popular due to their convenience, safety and reliability characteristics as the users can log in to them using their unique account from any computer and from any location over an Internet connection. Whereas the client based software has the restriction of using one chosen computer for every trade.

The web based software is the one which is on the broker's website. There is no installation required on the clients computer. The client based software is the one which is first downloaded and then installed on the clients machine which is in synch with the brokers. The web based client software is considered to be more popular due to their convenience, safety and reliability characteristics as the users can log in to them using their unique account from any computer and from any location over an Internet connection. Whereas the client based software has the restriction of using one chosen computer for every trade.

The FOREX software is aided by a series of data servers which hold the web site content and user transactions. These servers are reliable in securing the user information and data integrity and ensure accurate transaction processing. Since servers are subject to power outages and natural disasters, at least two sets of servers in separate locations are maintained to ensure maximum uptime and data backups guaranteeing the integrity of the users financial data in case of server failure.

One of the problems in online trading software/tools is the processing or the data transmission delays. There are a number of factors that result in a delay in data transmission for software like Internet connection speeds and the physical distance between the client machine and main server. To avoid these obstacles in trading the FOREX traders should have a reasonably high-speed modern computer and a fast paced stable Internet connection to ensure the full functionality of the FOREX software offered by their broker. Also the broker must be chosen in the same area as ones trading place to avoid the delays in this extremely volatile market.

Most popular trading software have integrated charting functions with a variety of viewing functions facilitating the access of real-time price quotes for most currency pairs and they allow the trader to buy or sell at market prices or enter and exit the market using stops or limits. Some brokers offer advanced packages like the ability to trade directly from the chart and full analytical functions in their software for a monthly fee.

Forex Trading: A part time or freelance activity

Like most people when I started trading the foreign exchange I had very little time to monitor trades because of my job and other responsibilities. However this does not mean you can not make plenty of money trading the foreign exchange. Intrigued? Please grab nice cup of tea or coffee and read on.

If you have already tried you hand at trading the foreign exchange market I am sure you are aware it is not as easy as you thought. Like most newbie's you more than likely started trading the 5 minute or 15 minute charts. The thought of all that money right there in the market waiting to be taken was too tempting. I know I have been there!

Let me say one thing before we go any further, if you can not make consistent money on the daily charts then you won't be able to do it on the lower time frames! Trading the lower time frames is where 95% of traders loose there money! You should focus your attention on the longer time frames, check them every evening and plan your trades for the coming month. Almost all the most successful traders plan and take their trades based on the daily charts, do you think they watch the 5 minute charts? No, they are not interested in them at all.

Here is what you need to do, pick a couple of your favorite pairs to trade, limit yourself to 1 good trade a week, this means your trade needs to be planed and have good technical reasons for price to go in your favor. Keep your charts clean and simple, use support and resistance with price action for setups. Never risk more than 3% of your account on any one trade no matter what the stop size is.

Today's brokers offering micro lots (.10c) it is easy to get your position size correct no matter how small your account is. If you have two really good setups in one week and you don't know which one to take just take them both but use half of your normal risk per trade on each. If you do what I have outlined I guarantee you will see an improvement in you trading results it is not difficult to increase your trading account by 10-15% each month while only take 1 trade a week.

Trading the foreign exchange from daily charts can be easily done while having a full time day job, I do it and you can too, you just have to be willing to put in a little extra hard work on planning your trades when you come home. I hope this helps you on your way to consistent profits from the forex market.

Courtsey:Dean Saunders

Forex and Day Trading Tips!!

Online trading is great way for serious investors to make money, but inexperienced traders often wind up with big losses. A good set of instructions can minimize the risks and save months of expensive trial-and-error learning.

Day Trading

Day Trading had its heyday during the bull market of the 1990's. All the amateurs have since dropped out, but day trading is still being practiced by professionals. There are fewer opportunities in the current market, but skilled investors can still find them if they know what to look for.

FOREX Trading

The Foreign Exchange Market (FOREX), the world's largest financial exchange market, originated in 1973. It has a daily turnover of currency worth more than $1.2 trillion dollars.

Unlike many other securities, FOREX does not trade on a fixed exchange rate; instead, currencies are traded primarily between central banks, commercial banks, various non-banking international corporations, hedge funds, personal investors and not to forget, speculators. Previously, smaller investors were excluded from FOREX due to the huge amount of deposit involved. This was changed in 1995, and now smaller investors can trade alongside the multi-nationals. As a result, the number of traders within the FOREX market has grown rapidly, and many FOREX courses are appearing to help individual traders increase their skills.

As a matter of fact, it's advisable to take FOREX training even before opening a trading account. It is vital to know the market mechanics of FOREX, leveraging in FOREX, rollovers and the analysis of the FOREX market. Due to this fact, potential FOREX traders would do well to either enroll in a FOREX training courses or even purchase some books regarding FOREX trading.

There are pros and cons to enrolling into a FOREX course. For beginners a FOREX course is a rapid method of learning the basics of FOREX trading. Not much time is spent on history of the market or arcane economic theories. Often, on-line or phone support from a skilled FOREX trader is available to answer any questions. Also, the information is condensed and practical, often with graphs and charts.

The disadvantage is the price, as courses are more expensive than a paperback from the bookstore. Also, the course may just teach the approach of the trader who wrote it, and individuals have different trading strategies. The student may grow accustomed to the logic and focus of the teacher without coming to realise that nothing is predictable in the FOREX market, and many different strategies will bring profits in varying market circumstances. Also, knowledge of practical applications may not be enough, as the FOREX is highly unpredictable and there are many external factors, such as political issues, affecting the flow of finances in the market.

The best advice would be to do some background research on the FOREX market first, and then enroll in a course.

Selecting a Forex Broker!!

Selecting a forex broker is not an easy process. You need to think about what kind of trader your are and select the best forex broker for your style of trading. If you're a day trader and like to execute many trades each day, you may want to find a forex broker that offers low spreads. We pay spreads for exvery trade we execute and the larger the spread, the more commission you will pay to your broker for your trades.

A good forex broker will explain various forex trading systems and strategies to their clients and will assist in their process of putting these strategies to workThe advice from forex brokers will basically. The advice you receive from your broker will basically include technical analysis approaches and research methods followed by experienced traders and brokers that boost the client trader's performance as a forex trader.

In the earlier days of forex trading, the banks and large financial institutions had sole access to the forex market, but now with the advent of the internet technology, things have changed. As more novice traders have taken up forex trading as a home based business, the forex brokers are also realizing the importance of this trend and moving away from the conventional banks. More and more forex brokers hrough internet based businesses and offer their clients a complete suite of services based online. Today's forex brokers recognize that their customers are no longer the rich individuals or large institutions and have tailored their forex trading strategies to conform with the needs of their new, home based, middle class client. They know that the stakes for this type of client are lower and that they wish to maximize their profit but have a different appetite for risk. Also, in terms of certification, it is useful to work with an NFA (National Futures Association) member broking house.

Forex brokers that offer sound advice and have well recognized and verified credentials are, of course, the ones that you should be looking for. Additionally, don't rely blindly on the advice of a forex broker. If it sounds too good to be true, it probably isn't. Learn to trust your own judgment and ask your forex broker lots of questions. A reliable broker won't be bothered by this.

Let your needs guide you and your trading level help you choose the right broker for you. It will typically depend on whether you are a novice or an experienced forex trader. There are many forex trading brokerage firms that are targeted towards the beginner in forex trading. These will generally offer detailed research material and plenty of advice for the newbie trader. Additionally, these types of firms will provide access to forex trading software that will simulate the real trading environment and help to make the forex trader accustomed to using the tools of the trade.

For experienced forex traders, these types of detailed instructions may not actually be required, since these individuals will know their way around the forex market. For them, there are different forex brokerage firms that will offer advice with a greater emphasis on the logic behind the forex trading strategy and will go into greater depth on this matter. To find the best fit, read about various forex brokers, ask friends, ask about the forex broker's package offering and take the trials offered by a few of the online forex trading firms.

Courtsey: Andrew Daigle is the owner, creator and author of many successful websites including a free forex training web site ForexBoost and CashCurve, a resource for making money online.